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State of M.P. and ors. Vs. Smt. Sugandhi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 213 of 1973
Judge
Reported inAIR1980MP19
ActsLand Acquisition Act, 1894 - Sections 9(3), 18 and 31(2)
AppellantState of M.P. and ors.
RespondentSmt. Sugandhi and ors.
Appellant AdvocateM.V. Tamaskar, Govt. Adv.
Respondent AdvocateK.M. Agarwal and ;R.P. Sinha, Advs.
Cases Referred and Kachrulal Hiralal v. Gurudwara Board
Excerpt:
- - the writ petition failed. 11. radhabai preferred an unsuccessful appeal to the high court. or at any rate, having failed to make reasonable enquiries with regard to the existence of persons interested, constructive notice ought to be attributed to him. but omission or failure to serve notice due to want of requisite information, or due to bona fide mistake or due to inadvertence, would not make the proceedings bad, or the award illegal, or the vesting without jurisdiction. it is mandatory and failure of such a notice renders subsequent proceedings illegal and invalid. ' in the eventuality of the failure of compliance with the provisions of notice under section 9, the party concerned would have no opportunity to make its claim to compensation known to the collector and the collector.....malik, j. 1. the two first appeals nos. 213 of 1973 and 49 of 1972 are being disposed of by this common judgment.2. the facts may be briefly stated the post master general, central circle, nagpur, wrote to the collector, raipur, on 9-11-1961 that land measuring 19500 square feet out of nazul plots nos. 2/11 and 2/24 was required for an auto exchange building and that steps be taker-for its acquisition. the usual notifies ions under section 4 read with section 17(4) and section 6 of the land acquisition act were issued on the 20th august, 1962 and 21st december, 1962 respectively. thereafter, public notices were issued as contemplated by section 9(1) of the act on 7-11-1962 (sic) (1963?) and 29-1-1963 (see ex. p-31 and ex. p-30). special notice came to be giver to radhabai alone vide ex......
Judgment:

Malik, J.

1. The two First Appeals Nos. 213 of 1973 and 49 of 1972 are being disposed of by this common judgment.

2. The facts may be briefly stated the Post Master General, Central Circle, Nagpur, wrote to the Collector, Raipur, on 9-11-1961 that land measuring 19500 square feet out of Nazul plots Nos. 2/11 and 2/24 was required for an Auto Exchange building and that steps be taker-for its acquisition. The usual notifies ions under section 4 read with Section 17(4) and section 6 of the Land Acquisition Act were issued on the 20th August, 1962 and 21st December, 1962 respectively. Thereafter, public notices were issued as contemplated by Section 9(1) of the Act on 7-11-1962 (sic) (1963?) and 29-1-1963 (See Ex. P-31 and Ex. P-30). Special notice came to be giver to Radhabai alone vide Ex. P-32 which was served on her through her husband Birdichand on 4-1-1963. Radhabai appeared before the Land Acquisition Officer and objected to acquisition of some portion of the land over which stood a private Jain temple. She even filed B petition in the High Court under Article 226 of the Constitution calling in question the acquisition proceedings. The writ petition failed. However, that portion of the land over which stood the temple and the residential apartments, was left out from acquisition and only 11986 square feet land was acquired. Radhabai had claimed com pensation at the rate of Rs. 100/- per square foot. The Land Acquisition Officer determined the compensation at the rate of Rs. 4/- per square foot. The award was made on llth May. 1963 and Radhabai came to be paid the amount of Rs. 55,135.60 Nps. through her husband Birdichand on 13th July, 1963. Radhabai was directed to deliver possession of the land to the Posts and Telegraphs Department.

3. On the 26th July, 1963, Dammulal son of Babulal (whose legal representatives are respondents 1 to 12 in both the First Appeals) made an application before the Collector that he alone was entitled to receive the whole compensation and that no notice was served on him nor on Satisb Chandra (respondent No. 23) who occupied a portion of the building for his Office of 'Paras Film Exchange'. Dammulal also contended that compensation determined was too inadequate. He claimed a reference under Section 18 of the Land Acquisition Act to Court. Dammulal said that he acquired knowledge of the acquisition proceedings on the 24th July, 1963.

4. Dammulal, at the same time, moved the High Court for quashing the acquisition proceedings by a petition under Art. 226 of the Constitution. His contention in the petition was that mandatory provisions of Sections 9(3) and 12(2) of the Land Acquisition Act were deliberately disregarded, that there was enough material on record to indicate that he was the only person interested in the land sought to be acquired and that omission to give notice to him was wilful and mala fide. The petition was dismissed by the High Court on the ground that the allegations of wilful omission to issue notices could more properly be investigated in a regular Civil Suit (see Ex. P-2, copy of the judgment in Miscellaneous Petition No. 254 of 1963 decided on 22-12-1965). Dammulal's legal representatives then filed the regular Civil Suit out of which this appeal No. 213 of 1973 arises.

5. Collector, Raipur to whom an application for reference under Section 18 of the Land Acquisition Act was made, refused to make a reference. Dammulal having died in the meantime, his legal representatives moved the High Court once again for directing the Collector to make the reference which, they said, was fully competent. The decision of this Court in that writ petition is reported in Smt. Sugandhibai v. Collector, Raipur AIR 1969 Madh Pra 78, The placitum reads:

'(D) Section 18 does not provide that a reference can be claimed only by a person who has been served with notices under sections 9 and 12. Any person interested who has not accepted the award has a statutory right, if he applies within limitation to require the Collector to refer his objections to the Court. The definition under Section 3(b) of the expression 'person interested' also does not require that a person to come within the definition must be one who is noticed under sections 9 and 12. The fact of notice may affect the question of limitation within which an application for reference should be made under Section 18, but it has nothing to do with the eligibility of a person for making the application.

(E) The disability arising under Section 31, from acceptance of the compensation is limited to the person who receives compensation without protest. Other persons interested who dispute the award and who apply within limitation under Section 18 cannot he shut out in having their objection investigated by a Civil Court on the ground that the compensation amount was paid to a rival claimant before the application under Section 18 is made.

(F) The question whether the entire acquisition is invalid is wholly outside the scope of Section 18 and a reference under that section is limited to quantum and apportionment of compensation. The question raised in the Civil Suit about validity of acquisition proceedings is not triable in the reference and conversely questions raised in reference under Section 18 are not triable in the civil suit. Person, who challenges the entire acquisition proceedings in the civil suit has also a statutory right to claim the determination of his objection as to the quantum of compensation and apportionment, by a reference under Section 18 on the footing that acquisition proceedings are valid. Right conferred under Section 18 is not lost, simply because the person is also seeking by a suit, nullification of the entire acquisition proceedings.

6. This Court having found that the question of invalidity of an acquisition proceeding being wholly outside the scope of reference under Section 18 of the Land Acquisition Act, the scope under Section 18 being limited to quanturn and apportionment of compensation, both the civil suit and the reference under Section 18 could be proceeded with. A suit for nullification of the acquisition proceedings and the determination of compensation in the Reference under Section 18 on the footing that the acquisition proceedings were valid, the Court said, were not mutually destructive.

7. The Collector was directed to make a reference under Section 18 of the Land Acquisition Act and a reference came to be made. The Court has determined compensation at the rate of Rs. 12/- per square foot. The First Appeal No. 49 of 1972 arises out of the award made in the Reference case.

8. The relief claimed in the regular suit was: A declaration that the acquisition proceedings vide Land Acquisition Case No. 13-A/82 of 1961-62 culminating in an award of Rs. 55,135.60 Nps. in respect of 11986 square feet out of plots Nos. 2/11 and 2/24 situate in Moudha-para, Raipur, did not affect right and title of Dammulal, nor of the plaintiffs, who were his legal representatives. That the defendants were liable to be restrained from interfering with the plaintiffs' possession till appropriate and valid acquisition proceedings were restarted. In the alternative, the plaintiffs said that the Collector, the Land Acquisition Officer, Radhabai and her husband Birdichand, were all jointly and severally liable to pay the amount of Rs. 55135.60 Nps to the plaintiffs.

The trial Court, i.e. the III Additional District Judge, Raipur, has granted the first relief. He gave a declaration that the Land Acquisition proceedings were null and void as against Dammulal and his heirs from the stage of Section 9(3) of the Land Acquisition Act, that is to say, unless special notice was served on Dammulal (now his legal representatives) and unless compensation was re-determined after service of such special notice, the proceedings of acquisition would not be valid. The Collector has come up in appeal.

9. It would be relevant to give some facts. Chunnilal, father of Radhabai was Dammula's paternal uncle. Dam-mulal's father Babulal was Chunnilal's real brother. They, as the finding in Civil Suit No. 8-A of 1955 decided on 19-11-1959 (Ex, P-l) goes, constituted a joint Hindu family. Chunnilal died on 28-8-1947 in a state of joint ness. The Nazul plot No. 2/11 of Moudhapara was obtained on 5-8-1940 in the name of Chunnilal Dammulal. Some houses were built on a portion. On 8-10-1953, Dammulal obtained lease of Nazul plot No. 2/24 also. The houses which were built were given Municipal numbers 5/249, 5/250 and 5/251. The houses and the Nazul plots 2/11 and 2/24 came to be known as Bada.

Disputes arose sometime after the death of Chunnilal. In 1955 Radhabai brought a Civil Suit -- Civil Suit No. 8-A of 1955, in the Court of the First Additional District Judge, Raipur, for a declaration that she was the exclusive owner of the Bada. That the property was the self earned and separate property of Chunnilal which on his death, had passed to his daughters, Radhabai being one of them, who had come to live in one of the houses in or about 1951.

Dammulal's defence was that Chunnilal and Dammulal's father Babulal eonstituted a joint Hindu family. The property was acquired by the nucleus of the joint family and continued joint till Chunnilal's death. The property passed by survivorship to Dammu-lal. In the alternative, Dammulnl pleaded that Chunnilal had left a will bequeathing the property to him. The will was dated 17-7-1946.

10. Radhabai lost the suit. It was held that Dammulal had acquired the property by survivorship and Radhabai had no interest whatsoever in that property.

11. Radhabai preferred an unsuccessful appeal to the High Court. The High Court confirmed the decree of the Additional District Judge on the 8th February, 1963. Radhabai's petition for special leave to appeal was also dismissed by the Supreme Court on 25-11-1963. Thus, it was finally adjudicated that the Bada belonged to Dammulal alone and Radhabai had no right or title in the suit property. (The land acquisition proceedings, it may be noted, had commenced when the appeal before the High Court was pending, but payment of compensation was made to Radhabai after the appeal stood decided).

12. The plaintiff's case was that Shri Pradhan who was the Land Acquisition Officer, had wilfully, fraudulently and perversely omitted to serve notices contemplated by Section 9(3) of the Land Acquisition Act on Dammulal. He had knowledge that Dammulal was interested in the land sought to be acquired; or at any rate, having failed to make reasonable enquiries with regard to the existence of persons interested, constructive notice ought to be attributed to him. Since the acquisition proceedings were vitiated by wilful refusal to serve notices under Section 9(3) and appeared colourable and mala fide, the land would not validly vest in the Government. The following circumstances, the plaintiffs said, led to that inference, (a) The very letter which the Divisional Engineer, Posts and Telegraphs, wrote to Shri Pradhan, the Land Acquisition Officer, on 19/21st June, 1962 (Ex. P-22) mentioned that the plots Nos. 2/11 and 2/24 belonged to Dammulal, son of Babulal Jain, (b) The Officer in his communication dated 22-11-1961 wrote that plot No. 2/11 in Block No. 95 was held by and recorded in the name of Chunnilal Dammulal. (c) The land acquisition proceedings dated 29-11-1969 recorded that the plot in question was held on permanent lease by Chunnilal Dammulal. The proceeding appeared signed by the Nazul Officer, (d) The Maintenance Khasra (Nazul) for the years 1957-58 to 1960-61 recorded possession of Dammulal. A copy of the Khasra was on the records of the land acquisition case. (e) Satishchandra had his office of Cinema Film Distribution. He was one of the occupiers of the plot and had notice under Section 9(3) being given to him, he would have informed of the acquisition proceedings to Dammulal. (f) That Shri Pradhan had to face a Departmental Enquiry for his misconduct and corrupt motives relating to these land acquisition proceeding. But before the enquiry could be concluded, he committed suicide. (Shri Pradhan's widow has been made a party to the suit.)

13. The Officer pleaded that Radha-bai alone was in possession of the plot sought to be acquired. The land acquisition proceedings were in open Court. The notifications under Sec-lions 4 and 6 and the public notice under Section 9(1) should normally inform everyone who was interested in the land of the acquisition, as it did Radhabal The demarcation, survey, preparations of maps and spot inspections were notoriously done and should have attracted attention of the occupiers and through them the owners. Even though special notice was not given to Dammulal due to want of knowledge of his interest or due to inadvertence, no mala fides or motives could be attributed to the Officers. Rather, it appeared that Dammulal had deliberately ad-stained from taking part in the proceedings. He could not, therefore, challenge the acquisition and the award.

14. Radhabai's heirs pleaded that Chunnilal and Babulal had separated long back and carried on their separate business. That it was Chunnilal who had purchased plot No. 2/11 out of his own funds. That plot No. 2/24 though purchased in the name of Dammulal, was purchased out of the earnings of the cinema which Dammulal was managing on behalf of Radhabai.

15. Gyanchand and Pawan Kumar, sons of Eirdichand, further pleaded that they were separate from their father Birdichand.

16. Mrs. Pradhan denied liability and the allegations of corruption and motives levelled against her husband.

17. The learned Additional District Judge found in favour of the plaintiffs that Dammulal alone was the person interested in the land and he alone could claim compensation. Radhabai had no interest or title. That the decision in Civil Suit No. 8-A of 1955 dated the ' 19th November, 1959 which was confirmed by the High Court, operated as res judicata. That non-service of special notice as contemplated by Section 9(3) of the Land Acquisition Act to Dammulal was wilful and fraudulent and, therefore, fatal to the acquisition. The Court said that the provisions of Section 9(3) were mandatory. The Court made no order on the alternative relief claimed but observed that it was for the State Government to decide whether the amount wrongfully paid to Radhabai should or should not be recovered from her heirs. The Court, as said above, quashed the proceedings after the stage of public notice issued under Section 9(1) and directed that the Land Acquisition Officer shall proceed from the stage of special notice as contemplated under Section 9(3) of the Act. Dammulal (now his heirs) had, the Court said, a right to be heard before an award was made.

18. In this appeal, the following points arise for consideration: (i) whether the provisions of Section 9(3) as to notices were directory or mandatory, and whether imperfect compliance or non-compliance of those provisions invalidated the award absolutely (ii) What would be the effect where reference had been claimed under Section 18 of the Act by the person in-, terested, who had no special notice but who acquired knowledge of the acquisition proceedings after the award was made and when the reference on his account had been entertained (iii) Whether a suit could lie for the relief of declaration claimed (which in fact, has been allowed under the decree) where the Act had made exhaustive and self contained provisions under Section 18, and where the claim in substance was not to challenge the acquisition but to get fair and reasonable compensation determined (iv) Could mala fides be attributed to the officers and could the State be made liable to pay compensation amount over again to the plaintiffs, or should Radhabai's heirs alone be made liable to pay back the compensation to the plaintiffs ?

19. The finding of the learned Additional District Judge that the decision given in Civil Suit No. 8-A of 1955 would operate as res judicata between the rival claimants Dammulal and Radhabai, and that the question of title as between them was finally adjudicated in that suit, must be confirmed. The question of title could not be permitted to be re-agitated by Radhabai. Radhabai was found to have no interest over Nazul plots Nos. 2/11 and 2/24 and the houses built thereon. Dammulal alone had succeeded to the property by survivorship on the death of Chunnilal. He alone was the person interested who could claim compensation from the Land Acquisition Officer.

20. It is admitted that Dammulal was not served with any special notice as contemplated by Section 9(3) of the Land Acquisition Act. But omission or failure to serve notice due to want of requisite information, or due to bona fide mistake or due to inadvertence, would not make the proceedings bad, or the award illegal, or the vesting without jurisdiction. There are conflicting authorities no doubt on the construction of the provision of notice under Section 9(3) of the Act. Some Courts have held the provision to be mandatory. To refer to one such authority, see Maniram v. State of Punjab, (AIR 1975 Punj & Har 135). The placitum reads:

'(A) Land Acquisition Act (1894), Section 9(3) -- Service of notice under. It is mandatory and failure of such a notice renders subsequent proceedings illegal and invalid. Shivdev Singh v. State of Bihar (AIR 1953 Pat 201). Dissented from.'

In the eventuality of the failure of compliance with the provisions of notice under Section 9, the party concerned would have no opportunity to make its claim to compensation known to the Collector and the Collector would, on his own, give the award which may not measure up to the expectation of the party concerned. In that case the said party would perforce have to initiate proceedings under Section 18 of the Act in the Court of the District Judge and expend money and energy in claiming what he, if he had notice, would otherwise have claimed before the Collector and may well have been awarded by the Collector. Hence prejudice to such a party is obvious in the event of the failure of the Collector to serve upon him the requisite notice under Section 9. Velagpudi Kanaka Durga v. District Collector, Krishna District Chilakapudi, (AIR 1971 Andh Pra 310), Laxmanrao Kristrao v. Provincial Govt. of Bombay, (AIR 1950 Bom 334), State of Punjab v. Karnail Singh (ILR (1965) 2 Punjab 525) relied on Shivdev Singh v. State of Bihar (AIR 1963 Pat 201); Dissented from.

The contrary view of the provision being directory has been taken in numerous other authorities of different High Courts. To refer to one of them, see Lakhbir Chand v. Land Acquisition Collector, Delhi, (AIR 1979 Delhi 53). The placitum may be usefully reproduced :

The question whether a particular provision of a statute which on the face of it appears mandatory inasmuch as it used the word 'shall' is merely directory cannot be resolved by laving down any general rule and depends entirely upon the facts of each case. It depends on the intent of the legislature and the same is to be gathered not only from the language of the particular provision but also various other provisions contained in the Statute and other factors. The Court must in each case look to the nature and design of the statute and the consequences flowing from its violation to determine whether it is mandatory or directory. Not only the language used but the object or purpose of the legislation has to be determined.

The scheme of the Act is that no real prejudicial consequences follow in the non-service of a notice or service of a defective or short notice under Sections 9 and 10' and thus the provisions cannot be held as mandatory. The condition of service of notice up to the making of the award are imposed merely for administrative purposes. The failure to issue notice or failure to issue a correct notice under Sections 9(3) and 10 cannot nullify the subsequent proceedings to the extent that the Government's title by acquisition should fail.

The object in enacting Sub-section (31 of Section 9 is to afford to the persons occupying the land or interested in it to make a claim for compensation so that the Collector may decide the compensation payable to them. Thus in resnonse to the notice under Section 9(3) the only matter which can be agitated before the Collector by any person interested relates more or less to the question of compensation in respect of the land sought to be acquired. After the Collector has taken the orders for the acquisition of land under Section 7, the acquisition is complete except for the determination and apportionment of the compensation. If notices under Section 9(3) or 10(1) are not served, or defective notices are served and the award is made, the right of the persons interested are not prejudiced in the matter of compensation. The proceeding resulting in the award after notices under Sections 9(3) or 10(1) are administrative and not judicial. The enquiry up to award merely gives a decision as to what sum shall be tendered to the owners of the land. An award by the Collector is strictly speaking an offer made to the person interested in the land notified for acquisition, the latter may accept the offer, but is not bound to do so. If a judicial ascertainment of the market value of the land is desired by the person interested, he can obtain it by requiring the matter to be referred by the Collector to the Court If there be any dispute as to the persons entitled, it can still be determined under Section 30 or 31 of the Act on a reference'.

The construction placed by Chadha, J. in Lakhbir Chand's case has our respectful concurrence. That is the construction spelt out in the majority judgment rendered in Dr. G. H. Grant's case. Dr. G. H. Grant v. State of Bihar (AIR 1966 SC 2371. Their Lordships' observations in paras 16 and 19 are in the following words:

'An award by the Collector is strictly speaking an offer made to the person interested in the land notified for ac-question: the latter may, but is not bound to accept the offer. He may ask for a reference to the Court for adjudication of his claim or adequate compensation. He may even accept the compensation under protest relating to the sufficiency of the amount and ask for a reference. It is also open to the Government, even after the award is made, but before possession is taken, to withdraw from acquisition of any land in exercise of the powers conferred by Section 48 of the Land Acquisition Act Thus it is not the award of the Collector which is the source of the right to compensation; the award merely qualifies appropriate Government's offer which is made because the Government has taken over, or intends to take the land of the owner under the authority given by the Act. The scheme of the Act also supports this.

The Collector is not authorized finally to decide the conflicting rights of the persons interested in the amount of compensation; his primary concern is with the acquisition of the land. It is true that while determining the amount of compensation which may be offered, he has to apportion the amount of compensation between the persons known or believed to be interested in the land. of whom, or of whose claims, he has information, whether they have appeared before him or not. But the apportionment by him does not determine finally the rights of the persons interested in the amount of compensation : his award is only conclusive between the Collector and the persons interested and not among the persons interested. The Collector has no power to adjudicate finally upon the title to compensation that dispute has to be decided1 either in a reference under Section 9(3) or 10(1) or under Section 30 or in a separate suit. Consequently the payment of compensation under Section 31 to the person declared by the award to be entitled thereto discharges the state of its liability to pay compensation (subject to any modification by the Court), leaving it open to the claimant to compensation to agitate his right, though devolved on him after the award in a reference under section 30 or by a separate suit.'

21. A person who has not appeared in the acquisition proceedings because he was not served with notice, is yet entitled to raise dispute relating to apportionment, measurement and the amount of compensation and ask the Collector to make a reference under Section 9(3) or 10(1) to Court. The determination of compensation by the Land Acquisition Collector, under the scheme of the Act, is an offer not only to those who might have appeared before him and advanced their claims, but also to those who for some reason did not participate in the determination of the offer but had interest in the land acquired. The compensation that the Land Acquisition Collector determines is for the whole body of persons interested in the land, whether or not they appear before him. The provision of Section 9(3) of the Act could not then be mandatory.

22. Coming to the second and third points, the acquisition not having been challenged on the ground of colourable exercise of power, and the declaration under Section 6 having become final and conclusive under Section 6(3) of the Act, and the plaintiffs having chosen to claim a reference under Section 18 for enhancement of compensation on the basis of the award made by the Land Acquisition Officer, a suit to challenge the award at the same time, would be adopting an inconsistent position. That cannot be permitted to be done (See: Tincori Das v. L. A. Collector, Alipore ((1966) 70 Cal WN 1100). The jurisdiction of the Court under Section 18 in matters relating to measurement of land, the amount of compensation, the person to whom it is payable and the apportionment of the compensation among the persons interested, is exclusive and special and the same jurisdiction cannot be concurrently exercised by ordinary Courts. Where rights and liabilities are created under a statute and jurisdiction has also been conferred on a special Court for investigating the matters, limited though they may be in controversy, the special Court alone would exercise jurisdiction in those matters.

23. In the present case, the controversy raised is with respect to the quantum of compensation and the person to whom it is payable. No Civil Court would determine compensation when a reference under Section 18 is pending before the special Court. The special Court alone would 'fix reasonable compensation. On the second point, the rival claimants had their title decided in Civil Suit No. 8-A of 1955 and that would operate as res judicata. Compensation was payable to Dammulal alone.

24. The award given by a Land Acquisition Officer after it is filed in the Collector's Office, becomes final and conclusive evidence as between the Collector and the persons interested whether they have appeared before him or not, as regards true area, value of the land and apportionment of compensation among the persons interested. The correctness and the finality of the award continues unless it is set aside or modified on a reference under Section 18. Reference having been made in the present case, a declaration that the proceedings were void from the stage of special notice under Section 9(3), would be redundant. To call upon the Land Acquisition Officer to revise his offer when the Court was seized of the jurisdiction to determine fair market value, would be creating complication and conflict. That will serve no purpose. The judicial ascertainment of the market value would govern the field. We are, therefore, of the opinion that proceedings before the Land Acquisition Officer could not be re-opened from the stage of Section 9(3) when a reference was already made under Section 18 at the instance of Dammulal. We set aside the decree giving such a declaration.

25. As to the fourth point, normally the State is not a necessary or a proper party to a suit for recovery of compensation alleged to have been paid to a wrong person. Having paid the amount after the award was made, to a person who came forward to claim it, the State should normally stand absolved from the liability. The person who ought to have received the compensation for reason of his better title has his remedy against the person to whom the money has been wrongly paid. Third proviso to Section 31(2) of the Land Acquisition Act saves such a right to the person lawfully entitled to compensation, to claim the same from the person to 'whom the amount has bom wrongly paid. There are, however, authorities for the proposition that where the Collector has shown negligence in paying to a wrong person (such negligence as would be actionable), the Collector should be asked to pay again. It is not right, the authorities say, that the Government should throw on a party whose property it has compulsorily acquired, the risk and burden of recovering the compensation from someone to whom the Government has wrongly paid it. (See K. N. K. R. M. K. Chattyar Firm v. Secy, of State AIR 1933 Rang 176. The Deputy Collector, Cocanada v. The Maharaja of Pittapur (1926) ILR 49 Mad 519).

26. In the present case, Dammulal never appeared before the Land Acquisition Officer. There was never any dispute before him as to his title, to receive compensation. The Collector, after the award Was filed, was bound to pay the money to Radhabai who had appeared before him and had, by producing some documents, convinced him that she was an heir of Chunnilal, entitled to receive compensation. The learned Additional District Judge attributed negligence, fraud and collusion, to the Land Acquisition Officer for the following reasons (i) The initial letter from the Engineer, Posts and Telegraphs (Ex. P-22) mentioned Dammulal to be owner, (ii) The Nazul Officer communicated that the plot was in the name of Chunnilal Dammulal. (iii) The maintenance khasra recorded Dammulal's possession, (iv) That there had been litigations between Dammulal and Radhabai and a reasonable enquiry would have revealed that Radhabai had no interest in the land.

27. As against this, the following circumstances would absolve the Officers of collusion or mala fides attributed to them:

(a) That notifications under Section 4 and Section 6 were duly published.

(b) Radhabai came forward to protest against acquisition on the ground that there stood a small Jain temple on a small portion. The Land Acquisition Officer went to the spot along with Nazul surveyors to inspect the temple and gave his report to the State Government.

(c) That the plot was time and again surveyed and measured for the purposes of repairing maps.

(d) Radhabai was admittedly one of the occupants of Pais House since 1952. She was asserting her claim as Chunnilal's daughter and daughter she was. She had produced a copy of the order showing that it was Chunnilal whose bid was accepted for the plot in question though ultimately the document of lease was taken in the name of Chunnilal Dammulal.

(e) That public notice under Section 9(1) was given by beat of drums, not once but twice and the notice was also affixed at a conspicuous place.

(f) If Radhabai could learn of the acquisition proceedings, why could the other occupier Satish Chandra not learn of it. His office, as the evidence goes, was very close to the Office of the Deputy Collector Land Acquisition.

(g) The Land Acquisition case was not dealt with by Pradhan alone. Once or twice it was transferred to other Deputy Collector, per distribution of business. Even the file was marked to the Collector.

(h) The Land Acquisition Officer, in the absence of anybody else coming forward, could reasonably presume that Radhabai alone was the person interested.

(i) Collusion and corrupt motive could hardly be imagined when the compensation fixed by Pradhan was at too modest a figure (Rs. 4/ per square foot when the Court has fixed it at Rs. 12/- per square foot).

28. If these circumstances were to weigh, the inference would be the other way round that Dammulal had acquired knowledge of the acquisition proceedings but abstained from taking part on the excuse of lion-service of special notice, till the payment came to be made to Radha-bai. Soon, therefore, he moved the Collector for a reference. We do not, however, go that far. We would accept the finding of the learned Additional District Judge that Dammulal acquired knowledge of the acquisition proceedings on the date mentioned by him. Nonetheless, we would absolve the Officers of fraud and collusion and of negligence. The Land Acquisition proceedings were held in open Court and were given the usual publicity. Omission to serve notice on Dammulal was just accidental or inadvertent. No doubt, Dammulal's name was in the maintenance Khasra and also in the letter Ex. P-22 to attract the Land Acquisition Officer's attention but as it usually happens, the issuance of notices is felt to the care of ministerial staff and despite repeated orders of the Land Acquisition Officer to issue notices to all persons interested, the staff did not check up who those persons could be. They seemed satisfied with the presence of Radhabai who, admittedly, occupied the premises.

29. Disagreeing, therefore, with the learned Additional District Judge, we hold that the Officers were not guilty of such negligence that they or the State on their behalf should be made liable to pay the amount of compensation over again. Radhabai's heirs alone should be made liable to refund the amount of compensation received by her. We accordingly decree the plaintiffs' claim for the alternative relief of refund of Rs. 55135.60 Nps. against Radhabai's heirs i.e. her husband Birdi-chand and her two sons, Gyanchand and Pawan Kumar. They shall pay to the plaintiffs their costs of the suit and also of this appeal. Having regard to the circumstances, Birdichand, Gyanchand, and Pawan Kumar are also made liable to pay the costs of the appellants and of Smt Subalaxmi widow of B. R. Pra-dhan both of this appeal and the suit.

The First Appeal No. 213 of 1973 is accordingly accepted and a decree for the relief of refund is granted as above. Counsel's fee as per schedule. First Appeal No. 49 of 1972:

30. Having decreed plaintiff's claim against Radhabai's heirs for refund of Rs. 55135.60 Nps., the only point that arises for consideration in this appeal is whether quantum of compensation has been fairly determined by the Court. The Land Acquisition Officer had fixed market value of the leasehold rights at Rs. 4/- per square foot. The Court, on appraisal of evidence, was inclined to fix it at Rs. 25/- per square foot but since the plaintiffs had initially advanced their claim at Rs. 12/- per square foot, the Court said that they were estopped from claiming anything more. The Court accordingly determined compensation at the rate of Rs. 12/- per square foot. The Collector has appealed to bring down the compensation to the figure offered by the Land Acquisition Officer. The plaintiffs have, on the other hand, filed a cross-objection claiming Rs. l,20,000/~ over and above the figure arrived at by the Court.

31. The first contention of the learned Government Advocate was that the Nazul lease in favour of Chunnilal Dammulal was for a period of ten years and expired by efflux of time on 31-3-1950. Dammulal's position, therefore, was that of a lessee holding over, as if the lease was renewed either month to month or year (to year) according to the purpose for which the land was leased. The effect of holding over would have the incidents as prescribed by section 116 of the Transfer of Property Act. Admittedly, the counsel said, though the lease provided for a renewal, the lease till the date of acquisition had not been renewed. It might be that the lessee continued to pay the rental and authorities continued to receive it but that only kept the lease alive from year to year. And ultimately, as the position now stands, the lease has been renewed for the land except that portion which has been compulsorily acquired. The counsel argued that the Land Acquisition Officer and the Court below overlooked this aspect of the matter. They did not consider the effect of the expiry of the lease and its non-renewal after 31-3-1950. All that the plaintiffs were entitled to, the counsel said, was compensation determined at one year's purchase, that is, the capitalization of one year's net rental value.

32. In advancing this argument, the Counsel has overlooked the Revenue Book Circulars relating to Nazul. We propose to refer to the relevant clauses from book Circular Section IV Serial No. 1.

'Clause 12.: Nazul land can be disposed of in the following ways:

(1) by permanent lease;

(2) by temporary lease;

(3) on no claim agreement?

(4) on annual licence; and

(5) transfer in favour of a department of the State Government or other State Governments or the the Government of India and vesting in favour of a local body'.

'Clause 13: Permanent leases are granted either through auction or without auction.X X X X X '

Clause 19 deals with the procedure for application for permanent lease.

Clause 21 deals with auctions of leasehold rights.

Clause 23 deals with upset price, premium and rent.

Clause 28 deals with execution of the lease after the payment of full amount of the premium bid. The permanent leases have to be executed in Form 'F'.

Form 'F', as the Head Note runs, is meant for 'Lease of Intra Municipal Nazul for Building Purposes.' The Indenture of the lease has to contain the premium, demise, term, rent, taxes, the period within which the building has to be constructed, reservations as to the area to be left out, regulations relating to erection, re-erection and alteration, direction for proper maintenance, restriction as to trade or business which could be carried on with the previous permission of the Collector except those which were unregulated, unless they caused annoyance or nuisance to neighbours. Clause (7) of the Indenture deals with assignment, the lessee's rights are assignable and heritable. Only an intimation is required to be given to the Collector, Clause (8) refers to covenant of quiet enjoyment by the lessee so long he paid the rent and observed conditions of the lease. The clauses relating to 'Re-entry' and 'Renewal'' are important and may be reproduced fully:

'Re-entry: Provided that if the said rent or any part thereof shall at any time be in arrear and unpaid for one calendar month next after the date whereon the same shall have become due, whether the same shall have been lawfully demanded or not, as also upon the breach or non-observance by the lessee of any of the said conditions, the lessor may notwithstanding the waiver of any previous cause or right of re-entry enter upon the said land and repossess it as if this demise had not been made, the lessee in such case being entitled within three calendar months from the date of such re-entry to remove all buildings and fixtures which at any time during the currency of the demise shall have been erected or affixed by him upon the said land: Provided further that when any cause or right of re-entry arises under the foregoing proviso, it shall be lawful for lessor, as the consideration for the non-exercise of the power of re-entry to receive from the lessee a sum of money not exceeding Rs. 500/- as the Collector may fix and, if the lessee fails to pay, such sum within the time fixed by the Collector's order, to recover the same as an arrear of land revenue or exercise the right of re-entry under the foregoing proviso.'

'Renewal: The lessor further covenants that it will at the end of the term hereby granted and so on from time to time thereafter, at the end of each successive further term of years as shall be granted at the request and cost of the lessee, execute to him a renewed lease of the said land for the term of thirty years:

Provided that the rent may be enhanced for the grant of every renewed lease and that every renewed lease shall contain such of the conditions herein contained as shall be applicable and such other conditions as may be thought fit for the future:

Provided further that the decision of the lessor about the rent to be fixed and the conditions to be imposed at each successive renewal shall be final'.

33. To revert to Clause 28 of the Book Circular Section IV Serial No. 1 about renewal, following instructions may be noticed:

'If the lessee fails to execute the renewed lease deed, the refusal will amount to withdrawal or abandonment of his demand for renewal. As such, if after service of a notice intimating that unless he executes the lease deed within a specified time it shall be deemed that he does not desire to continue to hold the land on lease; he still fails to execute the lease deed, in that case it may be inferred that he has withdrawn or abandoned his demand for renewal and action to dispose of the land by auction and to evict the lessee as a trespasser may be taken. In the alternative, it is also open to Government to sue the lessee under Section 27A of the Specific Relief Act, 1877 (I of 1877), for specific performance of the agreement of lease constituted by his application for renewal and' the order granting it, if he, being in possession refuses or neglects to execute the renewed lease.

If after executing the renewed lease deed the lessee does not appear before the registering Officer when the document is presented on behalf of Government for registration, the Sub-Registrar should be requested under Section 36 of the Registration Act (XVI of 1908) to summon him, and, thereafter, to proceed to register the document if its execution is admitted. If execution is denied and, therefore, registration is refused under Section 35(3) ibid, an application may be made to the District Registrar under Section 73 ibid, who will make the necessary enquiry and, if he finds that the document has been executed by the lessee, order its registration. In case of refusal by the Registrar by an order passed under section 76, a suit lies under Section 77 ibid.

X X X X X xIt is unlikely that any lessee will decline to execute a fresh lease-deed, should anyone refuse to do so, however, the lease already executed by him will nevertheless be valid as it would appear that the registration thereof is not compulsory in view of the provisions contained in Section 90(1)(d) of the Registration Act, 1908 (XVI of 1908).

Formal leases should be issued to all persons, who take up land, but for land hitherto held on no formal lease, but assessed, no indenture need be prepared unless the holder so desires and is prepared to pay the necessary stamp duty and have the document registered. The power of the Government to recover land revenue in the absence of a lease is based on Section 58 of the M. P. Land Revenue Code, 1959.'

Clause 31 says that breach of condition of a lease is condoned by acceptance of rent.

Clause 32 deals with Temporary leases which are granted in form 'E' but normally do not exceed a term of five years.

Clause 35 deals with renewal of leases, both temporary and permanent, and how in the latter case either during settlement or on expiry of the usual period of 20 or 30 years fixed under the lease, the land revenue or rent payable for the plot should be re-assessed. The renewal is to be granted in form 'H' which in every respect is similar to form 'F' the original Indenture.

It would be relevant to refer to S. 103 of the M. P. Land Revenue Code, 1959:

Section 103: 'The land revenue or rent fixed for any land in an urban area under a settlement or a lease from Government with rights of renewal made before the coming into force of this Code shall, notwithstanding the expiry of the term of such settlement or lease continue in force until the assessment on such land is fixed in accordance with the provisions of this Chapter'.

34. We are dealing with a lease granted in Form 'F' which comes under the category of 'Permanent lease' as per Clause 12 (1) of the Book Circular. The very fact that the lease was granted for building purposes, would attach to it the incidence of permanency since nobody would take a plot to build a residential house thereon if he were required to pull it down after 10 or 20 or 30 years. The lease is made assignable and heritable. The reading of the two clauses of the Lease Indenture relating to right of 're-entry' and 'renewal' makes it clear that 'renewal' shall be granted at the request of the lessee. The right of re-entry does not arise on expiry of the term of lease, but for nonpayment of rent or upon breach or non-observance of the conditions imposed upon the lessee under the Indenture of Lease. The instructions quoted in para 33 above, dealing with renewal, emphasise upon continuance of the lease even if the lessee does not come forward to get a new Indenture registered. All that is required is that he should continue paying rent as per lease till the new assessment is made.

35. We are in no manner of doubt that the building lease granted in form T' is a permanent lease. The fixation of initial term of 10, 20 or 30 years is not intended for putting an end to the lease on the expiry of the term, but to provide for better rental income or revenue with the value of the plot going up. A lessee who pays rent regularly and who abides by the conditions of lease faithfully, has a right to get a renewal. The lessor has no power to refuse renewal to such a lessee.

36. The learned counsel for the claimants cited two apt authorities where similar leases were construed as permanent leases. They are Maharaj Kumar Arfan Rasul Khan v. U. P. Govt ILR (1960) 2 All 71 and Kachrulal Hiralal v. Gurudwara Board, Nanded AIR 1979 Bom 31.

37. Coming to the quantum of compensation determined by the Court, the claimants contended that the Court, having found the reasonable market rate for the leasehold right was Rs. 25/-per square foot, could not have made the award at Rs. 12/- per square foot simply because the claimants initially, either due to ignorance of the real market value or due to inadvertence, mentioned in their application for reference that they should at least have been paid at Rs. 12/- per square foot. They amended the application as soon as they realized their mistake and inserted the figure of Rs. 60/- for Rs. 12/-. The amendment having been permitted, the initial mistake stood rectified as if the claim at the rate of Rs. 12/- was never advanced and as if the demand was at the rate of Rs. 60/- per square foot right from the inception.

The counsel further argued that section 25(3) of the Land Acquisition Act, would govern the rule as to amount of compensation. The claimants had no notice served upon them under S. 9 of the Land Acquisition Act and they had not preferred any claim before the Collector in pursuance of that notice. Section 25(1) was not attracted. Nor was section 25(2) attracted when they had not refused to make a claim or omitted to make it without sufficient reason, they had come to know of the acquisition proceeding after the payment was made to Radhabai under the award. Section 25(3), the counsel said, puts no restrictions on the higher side. It only says that the award shall not be for an amount less than that offered by the Collector.

The learned counsel submitted that the doctrine of estoppel has been misapplied by the Court. Where upper and lower limit of compensation was governed by statutory provisions, in the present case by Section 25, the question of estoppel would hardly arise as soon as the claimants satisfied the Court that the upper limit could go to what the Court ultimately determined and not to what the claimants inadvertently mentioned in their application for reference.

38. We need not go into the academic questions raised by the learned counsel for the claimants, since we are of the opinion that the market value determined at Rs. 12/- per square foot was very reasonable and the claimants could not expect to get anything more. In our appraisal of the evidence, the reasonable market value of the plot on the date of notification under section 4 of the Land Acquisition Act was near-about Rs. 12/- per square foot and not Rs. 25/- as the learned Additional District Judge found. To discuss the evidence in brief, Atmaram Dalai (A. W. 1), Rajab Ali (A. W. 2) and Satish Chandra (A. W. 3) could hardly be believed when they say that an offer to purchase the land was made in or about 1961-62 at Rs. 22/- to Rs. 25/- per square foot but the bargain did not mature because Dammulal was demanding Rs. 30/- per square foot. Had that been so, with the offer of Rajjab Ali, Nawal Kishore and Guru Bachan Singh fresh in his mind, Dammulal, could not have claimed compensation at the rate of Rs. 12/- per square foot in his application dated ' 5-11-1963 for reference under Section 18. The claimants reiterated their demand at the rate of Rs. 12/- per square foot in their application dated 18-4-1969 addressed to the First Additional District Judge. Raipur (at page 48 of the Paper Book), This is what they said in para 5:

'That the land acquired is situated in the heart of Raipur Town and on main road in Mohadapara Ward which is a very good business locality and the market rate of land is about Rs. 12/- to Rs. 20/- per square foot since last so many years. The present value is Rs. 25/- per square foot'.

In para 6, the claimants make a demand of Rs. 143832/- at the rate of Rs. 12/- per square foot and Rs. 21574/-for compulsory acquisition. The claimants' application made after six years, quoting the market rate on the date of notification at Rs. 12/- per square foot, demolishes completely the evidence of an offer coming to them in 1961-62 at Rs. 22/- to ' Rs. 25/- per square foot. Besides, that throws overboard the plea of inadvertence or ignorance in quoting the rate at Rs. 12/-.

39. The three witnesses had1 been very evasive in their answers to questions in cross-examination. To refer to Atmaram's cross-examination, he refused to tell at what rate, plot near Santosh Garage was eold, at what rate Jaskaran Daga's land was sold and at what rate Anand Transport building was sold. The sales of Anand Transport building and one relating to Wali Mohammad Company were made through this Dalal's intervention, yet he refused to tell the rate that worked out for the plot. Rajjab Ali likewise, refused to tell at what price Jaskaran Daga had sold his building. Rajjab Ali was occupying one of its shops.

39A. The three witnesses could not be believed at all. Their testimony was worthless in the determination of market value. The claimants relied very strongly on an auction of Nazul plot knocked down in favour of Santosh Singh for Rs. 30.000/-. The plot just measured 273 square feet and was situated opposite the State Bank, on the main road. Santosh Singh deposited only l/4th of the bid amount. He did not deposit the 3/4th amount and the plot had to be re-auctioned on 26-5-1965. One Lilaram purchased it for Rs. 17.000/-. The learned Additional District Judge rightly said that Santosh Singh's bid was not a genuine one. It was a bid out of rivalry or jealousy for a co-bidder, never intended to be carried out. The bid in 1965 was genuine, no doubt, but would not afford a basis for determining market value in August, 1902. The learned Judge was of the view that in 1962, the price could be fixed at 30% of what it was in 1965. The plot 2/11, he said, was almost of the same size and potential value as one sold to Lilaram.

40. The following factors have been overlooked by the learned Judge. The plot sold to Lilaram was sold for commercial purpose. The plot with which we are dealing was leased out for residential purpose, with restrictions as to the space being built upon. Lilaram's pldt was just sufficient for a shop, measuring only 273 square foot on the road side. The plot 2/11 which measures 11000 square feet goes 100' deep. A belt of 20 feet on the road side alone could be used for commercial purpose. The rest 4/5th of the plot could not be converted into shops. If that area were to be converted into shops, the layout would entail a good deal of expense: roads and lanes would have to be left out. The average value of the plot then would not exceed Rs. 12/- per square foot. Put it this way: Rs. 30/- per square foot for the first belt of 20 feet lengthwise (running parallel to the road) and the rest at an average rate of Rs. 8/- per square foot. It comes to Rs. 12/- per square foot approximately. The learned Additional District Judge has given a chart in para 16 of his order. Nine sales of Nazul plots of Mohadapara have been shown in the chart. The rates vary between Rs. 2.07 to Rs. 14.78 per square foot. The Land Acquisition Officer, on the basis of these sales, said that the plot having site value, was being sold at Rs. 10/- to Rs. 15/- per square foot. The plot 2/11 had its site value. He should then have fixed the rate somewhere between Rs. 10/- and Rs. 15/-. One fails to understand how he fixed the rate at Rs. 4/- per square foot. The rate fixed by the learned Additional District Judge at Rs. 12/- per square foot is very reasonable. As said above, Lilaram's purchase of 273 square feet in 1965 would not afford any basis for fixing rate for plot No. 2/11. If the front land were to be valued at exceptionally high rate, the land being ideally suited for erection of shops, the back portion would hardly fetch l/4th the price since it would be used for entirely different and less profitable purpose. Besides, the plot is much bigger in size and the bigger the size, the lesser the rate.

41. We are, therefore, not inclined to increase the rate above Bs. 12/- per square foot. The appeal and the cross-objection, both must fail. Both are dismissed.

42. In the result, the claimants shall be paid at the rate of Rs. 12/- per square foot, with 15% solatium for compulsory acquisition, less Rupees 55135.60 Nps. for which decree has been awarded against Radhabai's heirs. Possession is still with the claimants and, therefore, interest at 6% per annum shall be payable only if payment is delayed and possession is taken earlier The interest shall then be calculated from the date possession is taken over.

Parties shall bear their own costs of the appeal and the cross-objection. Counsel's tee as per schedule.


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