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The Secretary of State for India, Represented by the Collector of Salem, and anr. Vs. Kuppusami Chetti - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in78Ind.Cas.82
AppellantThe Secretary of State for India, Represented by the Collector of Salem, and anr.
RespondentKuppusami Chetti
Excerpt:
land acquisition act (i of 18 4) - property subject to mortgage--payment of compensation money to mortgagor without notice to mortgagee--suit against government for recovery of money due on mortgage--mortgagee's remedies. - - before the whole of the money had been paid over, or rather while the crown was in a position to get back some of the money that had been paid over, the mortgagee made his claim and, ultimately, when his claim was found to be a good one, he received the balance of the compensation money which had not been irrevocably paid over to the mortgagor. he then proceeded to sue on his mortgage and after many vicissitudes, he ultimately got a decree having established his mortgage to be good one against the mortgagor.1. the chief justice--in this case certain land was taken many years ago under the land acquisition act and ultimately the value was fixed and compensation allowed at rs. 270. in the course of the proceedings under the land acquisition act, a mortgage by the owner of the land in favour of the present respondent came to light. the revenue authorities who were enquiring into the matter came to the conclusion that the mortgage was a sham and not an effective transaction. when the award was made, the mortgagee who had not come in and claimed and was not taking any part in the proceedings, was disregarded and a part of the money was paid over to the mortgagor, the owner of the land. before the whole of the money had been paid over, or rather while the crown was in a position to get back some.....
Judgment:

1. The Chief Justice--In this case certain land was taken many years ago under the Land Acquisition Act and ultimately the value was fixed and compensation allowed at Rs. 270. In the course of the proceedings under the Land Acquisition Act, a mortgage by the owner of the land in favour of the present respondent came to light. The Revenue authorities who were enquiring into the matter came to the conclusion that the mortgage was a sham and not an effective transaction. When the award was made, the mortgagee who had not come in and claimed and was not taking any part in the proceedings, was disregarded and a part of the money was paid over to the mortgagor, the owner of the land. Before the whole of the money had been paid over, or rather while the Crown was in a position to get back some of the money that had been paid over, the mortgagee made his claim and, ultimately, when his claim was found to be a good one, he received the balance of the compensation money which had not been irrevocably paid over to the mortgagor. He then proceeded to sue on his mortgage and after many vicissitudes, he ultimately got a decree having established his mortgage to be good one against the mortgagor. Apparently he has been unable to execute that decree, although he has got the whole of the principal sum and interest except Rs. 8 from the balance of compensation money referred to above, and he has been out of pocket in respect of his costs in the mortgage suit, which costs no doubt he would be able as between himself and his mortgagor to add to his security. He now sues the Secretary of State and the present Land Acquisition Collector of Salem, treating the present Collector apparently as responsible for the act of his predecessors, and he frames his plaint in general terms by stating the facts, namely, that he was a mortgagee, that the then Collector had notice of his mortgage and that, notwithstanding that he had notice of his mortgage, he paid the money over to the mortgagor. The Crown (in which expression I include the Secretary of State and the Collector) replies 'you have no cause of action against the Crown at all, and secondly, if you had a cause of action it has long since been barred by limitation.' In my judgment, the Crown is right on its first contention, and it is, therefore, unnecessary to consider the second contention, though, as at present advised, I think that the Crown is also right on that.

2. The compensation money payable under the Land Acquisition Act is payable under that Act and that Act only. Any rights in respect of it are creatures of the Statute and nothing else. The Statute in creating the rights has given the remedies to be exercised in respect of those rights, and the law is quite clear that, where a new right is brought into existence and a remedy in respect of that right is given at the same time by the same Statute, that remedy is exclusive of any ordinary rights. The leading authority on the point is the decision of Willes, J., in the Wolverhampton New Water Works Go, v. Haw-kesford (1859) 6 C.B. 336 : 28 L.J.C. 242 : 6 Jur. 1104 : 7 V.R. 464 : 120 R.R. 151 : 141 E.R. 486. The principles of the Land Acquisition Act seem to be that the Crown should, in the first instance, be allowed to recognise the person in possession as ostensible owner. There is nothing in the Act to show that it is to recognise mortgagees as such at all. It can make its award to the mortgagor, the ostensible owner of the property. The mortgagee can come in and, within a certain time and within certain limits, can apply to have the matter referred for the decision of the District Court. The Collector himself, if he has any doubt as to who is entitled to the money, can also refer it. Within a certain time, up to six months, the time varying according as the claimant has, or has not, had notice under the Land Acquisition Act, but with the outside limit of six months, the claimant may himself institute proceedings under the Act; so that the real owner of the property which has been acquired in this way is not left without a remedy. After the expiration of six months, it is provided by Section 31 of the Act, that he can take proceedings against the person who has received the money. So that the whole scheme of the Act is that down to a certain date before the money is paid over, if persons intervene and make a claim, their rights shall be enquired into and their rights established; but that after the money is paid over by the Crown to somebody else, they must take proceedings against that somebody else. Those being the only remedies given by the Act, I can find no sort of cause of action against either of the present defendants.

3. It was suggested that some cause of action might be framed in part for a wrong, breach of duty, or something of that sort against the Collector, but the view was not pressed possibly in view of the fact that we have not the right Collector before the Court : and admittedly any action for tort would have long since been barred by limitation. Under these circumstances, in my judgment, the Crown is right and this appeal must be allowed, and allowed with costs throughout.

4. I ought to add that a great part of this claim, in fact all except Rs. 8 being in respect of costs incurred as between the mortgagor and the mortgagee, I cannot ascertain any principle of law under which either of the defendants, even if otherwise liable, could be made liable for that.

5. In the result, C.M.A. No. 200 of 1922 is allowed with costs throughout.

6. C.M.A. No. 254 of 1922 and C.E.P. No. 522 of 1922 are dismissed, but without costs.

Waller, J.

7. I agree to the order proposed.

8. It seems to be obvious that plaintiff was aware of the award. He should, therefore, have applied under Section 18 of the Land Acquisition Act for a reference to the Civil Court. This course he did not adopt. Failing that, he was entitled, under Section 31 of the Act, to sue the persons to whom the compensation money had been paid wrongly. This course he did adopt and obtained a decree. He now sues the Secretary of State and the present Land Acquisition Collector for the balance due on the decree plus the costs incurred in getting the decree. I am of the opinion that he has not been able to show that he has any cause of action against the defendants. The compensation money was properly paid to the ostensible owner of the property, as plaintiff, did not appear and claim a reference to the Civil Court. After that, he was limited by the Act to a suit under Section 31 and that against the persons to whom the money was wrongly paid. He had no other remedy at all.

9. I agree that the appeal should be allowed with costs throughout.

10. C.M.A. No. 254 of 1922 and C.R.P. No, 422 of 1922.

11. I also agree to the order proposed in respect of these.


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