Industry/Allottee has no right to be impleaded as a party in the compensation matter

Industry / Allotee cannot be participant in a legal dispute if the landowner moves court seeking enhancement of compensation for the property.

The mere fact that the Government chooses to determine the allotment price with reference to compensation price determined by the court does not provide any locus to an allottee to contest the claim for enhancement of compensation.

Supreme Court of India: Dated: FEBRUARY 21, 2017:

The Apex Court bench headed by Justice AK Goel : has ruled that the allottee cannot be a participant in a legal dispute if the landowner moves court seeking enhancement of compensation for the property.

"We hold that the post-acquisition, allottee has no locus to be heard in the matter and is neither a necessary nor a proper party."

The bench headed by Justice AK Goel gave the judgment on a petition filed by landowners from Gurgaon challenging a Punjab and Haryana high court judgment that allowed Maruti Suzuki India Limited (MSIL) to intervene in proceedings pertaining to determination of compensation.

This gives setback to industries that were allotted public land after the government acquires it from farmers more so Maruti Suzuki India Limited (MSIL).

The Apex Court verdict clarifies industries should not be heard if the farmers raise a dispute over compensation, even though the final amount computed has to be paid by the allottee.

In the present case if the landowners’ demand is accepted, MSIL might have to cough out Rs. 900 crore.

Haryana acquired the land in different phases for setting-up Industrial Model Township by the Haryana State Industrial Development Corporation (HSIDC). A substantial part was allotted to MSIL.

The SC found fault with the HC verdict that allowed MSIL’s plea to be heard because according to the lease deed, it was liable to pay the additional sum if the court ordered an increase.

A clause in the deed of allotment in favor of the allottee provides for payment of additional price as a consequence of enhancement of compensation.

Allowing the appeals of land owners and setting aside the High Court order, the apex court remanded back the matter to the High Court once again for fresh decision in accordance with law and directed the concerned parties to appear before the High Court on March 27, 2017.

Central Government Act
The Land Acquisition Act, 1894

3. Definitions: In this Act, unless there is something repugnant in the subject or context,[(f) the expression - public purpose includes PART VII

ACQUISITION OF LAND FOR COMPANIES

For order, see detailed reasons recorded in a separate order passed today in RFA No. 2373 of 2010 titled as "Madan Pal Vs. State of Haryana and another".

(RAJESH BINDAL)
October 6, 2015 JUDGE
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RFA No.4316 of 2010 (O&M) LAC No.168 of 2006 Date of Decision 06.10.2015
Satish Kumar Gupta ...... Appellant.
Versus
State of Haryana and others ..... Respondents.
CORAM : HON'BLE MR.JUSTICE RAJESH BINDAL
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
R.F.A. No. 2373 of 2010 (O&M) Date of decision: February 11, 2011
Madan Pal .. Appellant
v.
State of Haryana and another .. Respondents
(Rajesh Bindal) Judge
February 11, 2011

1. These appeals have been preferred against judgment and order dated 06th October, 2015 passed by the High Court of Punjab and Haryana at Chandigarh in R.F. A. Nos.4316 of 2010 etc. etc.

2. Question for consideration is whether a post-acquisition allottee of land is necessary or proper party or has any locus to be heard in the matter of determination of compensation under the scheme of the Land Acquisition Act, 1894 (the Act).

If not, whether the impugned order permitting additional evidence and directing remand is sustainable.

3. Facts giving rise to the question may be briefly noted. Huge chunks of land were acquired by the State of Haryana in different phases for the public purpose of setting-up Industrial Model Township by the Haryana State Industrial Development Corporation (HSIDC) in Gurgaon District in Haryana. Substantial part of the acquired land was allotted by the HSIDC to Maruti Suzuki India Limited (MSIL).  One of the clauses in the Conveyance Deed executed in favor of the allottee provided that if compensation was enhanced, the allottee shall be liable to pay additional price on that basis. This Court found merit in the arguments of the land owners that an important piece of evidence was not taken into account which necessitated remand.  The matter was remanded to the High Court for fresh disposal and it was also observed that MSIL was free to file and appropriate application for its impleadment or for leave to act as intervener.

4. Thereafter, the matter was dealt with by the High Court in the impugned judgment.

The High Court held that the allottee had a right to be impleaded as a party for the following reasons:

a) The State or the local authority for whose benefit the land is acquired may not lead proper evidence or advance effective arguments.

b) A clause in the deed of allotment in favour of the allottee provides for payment of additional price as a consequence of enhancement of compensation.

c) As a result of enhancement of compensation by the Reference Court, the company in question was required to pay about Rs.900 crores.

d) Under Order 1 Rule 10(2) CPC the Court can add or delete a party at any stage.

e) Section 50 of the Act provides a right to a local authority or a company for whose benefit the land is acquired to be represented before the Collector or the Court in the process of determination of compensation.

f) The principle behind giving the right of representation to a local authority or a company for whose benefit the land is acquired can also be applied to any person who is liable to pay the enhanced compensation treating such person to be the "person interested" under Section 3(b) of the Act.

5. After permitting the allottee to be impleaded as a party, the High Court also allowed application to lead additional evidence on the ground that the acquiring authority did not defend the case properly.

Similar application filed by the HSIDC to lead additional evidence was also allowed and, thereafter, on considering the additional evidence it was observed that it was not possible for the High Court to assess the compensation as there was no site plan showing the location of the transactions relied.

It was also considered necessary to give an opportunity to MSIL, who was impleaded for the first time. On that basis the matter was remanded to the Reference Court for fresh decision.

6. Aggrieved by the order of the High Court these appeals have been preferred. Contentions of the appellants are as follows:

(i) The post-acquisition allottee had no right to be heard in the matter of compensation

(ii) Applications for impleadment have been filed by MSIL 12 years after the acquisition and applications for additional evidence were also filed after a long delay and for the first time after remand by this Court, which could not be considered within the scope of Order XLI Rule 27 of CPC.

(iii) Application for additional evidence was rejected by this Court in the earlier round. The remand by this Court was limited to the question whether there was a need for further enhancement in the light of evidence which was not earlier considered.

7. On the other hand, learned counsel for the MSIL as well as the HSIDC and other allottees have supported the impugned judgment.

They submit that since allottees have to pay the enhanced compensation, they ought to be treated as "person interested" under Section 3 (b) of the Act.

9. To determine the question whether the post-acquisition allottee of land is necessary or proper party or has any locus to be heard in the matter of determination of compensation, we may refer to the scheme of the Act. The acquisition may either be for a "public purpose" as defined under Section 3(f) or for a company under Part-VII of the Act.

If the acquisition is for a public purpose (as the present case), the land vests in the State after the Collector makes an award and the possession is taken. Till the award is made, no person other than State comes into the picture. Once the land vests in the State, the acquisition is complete. Any transferee from the State is not concerned with the process of acquisition. The State may transfer the land by public auction or by allotment at any price with which the person whose land is acquired has no concern.

The mere fact that the Government chooses to determine the allotment price with reference to compensation price determined by the Court does not provide any locus to an allottee to contest the claim for enhancement of compensation.

16. The only other justification in the impugned judgment which has been relied upon by the respondents is lack of sincerity on the part of the State authority for whose benefit the acquisition has been made viz. HSIDC, which by itself cannot be a valid ground to permit post-acquisition allottee to be treated as a necessary or proper authority under Order I Rule 10 of CPC to proceedings for determination of compensation.

The view taken in the impugned judgment cannot be sustained on any principle or precedent.

17. We may now refer to an order of this Court dated 15th July, 2004 which has been relied upon in the impugned judgment in para 31. There is no consideration of the principle of law and thus, the said order without there being contest on the principle of law could not be treated as a precedent for deciding the legal issue at hand.

18. Accordingly, we hold that the post-acquisition allottee has no locus to be heard in the matter and is neither a necessary nor a proper party.

19. The other part of the impugned order permitting additional evidence and remanding the case for fresh decision is uncalled for. No case was made out for permitting additional evidence on settled principles under Order XLI Rule 27 of CPC.

20. It is clear that neither the Trial Court has refused to receive the evidence nor it could be said that the evidence sought to be adduced was not available despite the exercise of due diligence nor it could be held to necessary to pronounce the judgment. Additional evidence cannot be permitted to fill-in the lacunae or to patch-up the weak points in the case .

There was no ground for remand in these circumstances.

21. We may also refer to the argument that this Court, while remanding the matter in the earlier round, had given liberty to the MSIL to file an application for impleadment or to act as an intervener which implied that such application was to be accepted. We do not find any merit in this contention also.

It cannot be held that any right was crystallized by the said observation and such prayer had to be considered according to law. We have already held that the post-acquisition allottee had no right in the matter.

22. For the above reasons, we allow these appeals and set aside the impugned order and remand the matter to the High Court once again for fresh decision in accordance with law.

The parties are directed to appear before the High Court on 27th March, 2017.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 1587-1636 OF 2017
SATISH KUMAR GUPTA ETC. ETC. …APPELLANTS
VERSUS
STATE OF HARYANA & ORS. ETC. ...RESPONDENTS
WITH
CIVIL APPEAL NOs.1637 OF 2017, 1638-1653 OF 2017, 1655-1658 OF
2017, 1659-1663 OF 2017, 1664 OF 2017, 1665-1669 OF 2017,
1670-1675 OF 2017, 1677-1691OF 2017, 1692 OF 2017, 1693 of 2017,
1694 of 2017, 1695 OF 2017, 1696 OF 2017, 1699-1701 OF 2017, 1702
OF 2017, 1703-1780 OF 2017, 1783-1852 OF 2017, 1853-1927 OF
2017, 1930-2003 OF 2017, 2004-2058 OF 2017, 2059-2111 OF 2017,
2112-2114 OF 2017, 2117-2118 OF 2017, 2123-2126 OF 2017,
2127-2128 OF 2017, 2129-2132 OF 2017, 2133-2138 OF 2017,
2139-2143 OF 2017, 2144-2145 OF 2017, 2146-2200 OF 2017,
2201-2203 OF 2017, 2204 of 2017, 2205-2206 OF 2017, 2207-2214 OF
2017, 2215-2219 OF 2017, 2220 OF 2017, 2221-2223 OF 2017, 2224
OF 2017, 2226-2227 OF 2017, 2228 OF 2017, 2232-2246 OF 2017 AND
2249-2279 OF 2017.

…………..…………………………….J.
[ ADARSH KUMAR GOEL ]

.….……………………..……………..J.
[ UDAY UMESH LALIT ]

 

Kumar Doab 
on 27 February 2017
Published in Property Law
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