REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4105-4107 OF 2022

Gregory Patrao and Ors. …Appellant(s)

Versus

Mangalore Refinery and

Petrochemicals Limited & Ors. …Respondent(s)

J U D G M E N T

M.R. SHAH, J.

1.Feeling aggrieved and dissatisfied with the impugned judgment

and order passed by the High Court of Karnataka at Bengaluru in First

Appeal No. 259 of 2021 and other allied first appeals, by which the High

Court has set aside the judgment and award passed by the learned

Reference Court and has remanded the matter to the Reference Court to

decide the references afresh after affording an opportunity to all the

parties including respondent No. 1 herein - M/s. Mangalore Refineries &

Petrochemicals Ltd., Mangalore (MRPL), the original claimants / original

landowners have preferred the present appeals.

1

2.The lands belonging to the original claimants/original

landowners/appellants herein were acquired under Section 28(4) of the

Karnataka Industrial Areas Development Act, 1966 (hereinafter referred

to as “KIAD Act, 1966”) under three different notifications. The lands

were sought to be acquired for the development of the Karnataka

Industrial Areas Development Board (hereinafter referred to as “KIADB”)

for establishment of industrial areas. The Land Acquisition Officer after

affording an opportunity of hearing to the owners of the land passed an

award on 06.10.2009. At the instance of the landowners, the references

were made to the Reference Court. The Reference Court vide judgment

dated 29.07.2020 enhanced the amount of compensation.

2.1Feeling aggrieved and dissatisfied with the judgment and award

passed by the Reference Court dated 29.07.2020, enhancing the

amount of compensation, respondent No.1 herein – MRPL, who was

allotted the land as a lessee by the KIADB, preferred the present

appeals before the High Court and prayed for leave to appeal. It was

the case on behalf of the MRPL that as the MRPL is the beneficiary of

the acquisition and under the agreement between the KIADB and MRPL,

the latter has to pay the additional amount of compensation and,

therefore, the burden to pay the additional compensation would be upon

the MRPL, therefore, MRPL ought to have been heard by the Reference

Court. It was the case on behalf of the MPRL that MRPL can be said to

2

be a “person interested”. Heavy reliance was placed upon the decisions

of this Court in the case of Himalayan Tiles and Marble (P) Ltd. Vs.

Francis Victor Countinho (Dead) By LRs', (1980) 3 SCC 223; UP

Awas Evam Vikas Parishad Vs. Gyan Devi (Dead) by LRs. and Ors.,

(1995) 2 SCC 326; Neelagangabai & Another Vs. State of Karnataka

& Others, (1990) 3 SCC 617; and Neyvely Lignite Corporation Ltd.

Vs. Special Tahsildar (Land Acquisition) Neyvely and Others, (1995)

1 SCC 221.

2.2On the other hand, it was the case on behalf of the original owners

that the MRPL, being an allottee from the KIADB and the beneficiary of

the land acquisition proceedings is the KIADB and not the MRPL and the

amount awarded by the Land Acquisition Officer was deposited by the

KIADB, MRPL cannot be said to be a ‘person interested’. Relying upon

the decision of this Court in the case of Peerappa Hanmantha Harijan

Vs. State of Karnataka, (2015) 10 SCC 469, it was prayed to dismiss

the appeals.

2.3By the impugned common judgment and order and mainly relying

upon the decision of this Court in the case of UP Awas Evam Vikas

Parishad (supra), the High Court has granted the permission to MRPL

to file the appeals challenging the judgment and award passed by the

Reference Court and thereafter has quashed and set aside the judgment

and award passed by the Reference Court by holding that the MRPL can

3

be said to be a “person interested” and therefore, ought to have been

heard before enhancing the amount of compensation. Thereafter, the

High Court has remanded the matter back to the Reference Court for a

decision afresh after affording an opportunity to all the parties to adduce

evidence including MRPL.

2.4Feeling aggrieved and dissatisfied with the impugned common

judgment and order passed by the High Court, the original

claimants/original landowners have preferred the present appeals.

3.Shri Shailesh Madiyal, learned counsel appearing on behalf of the

appellants – original claimants has vehemently contended that in the

facts and circumstances of the case, the High Court has erred in

quashing and setting aside the judgment and award/order passed by the

Reference Court in the appeals preferred by MRPL by holding that

MRPL can be said to be a “person interested” and therefore, MRPL

ought to have been heard by the Reference Court before enhancing the

amount of compensation.

3.1Shri Madiyal, learned counsel appearing on behalf of the

appellants has submitted that in the present case the real issue is as to

whether in an acquisition under KIAD Act, 1966, a post-acquisition

allottee of a parcel of land is a necessary party in the proceedings for the

determination of the compensation.

4

3.2It is urged that in terms of Section 28(1) of the KIAD Act, 1966, the

acquisition is carried out by the State Government “for the purpose of

development by the Board, or for any other purpose, in furtherance of

the objects of the said Act”. That in the present case, the acquisition

was carried out by the State Government for the purposes of

“establishment of industry and to develop it” through the KIADB. It is

submitted that even the preliminary/final notifications do not mention that

the acquisition was for the MRPL. It is further urged that in terms of

Section 28(8) of the KIAD Act, 1966, the State Government, after it has

taken possession of the land, transfers the land to the KIADB and,

thereafter in terms of Section 32(2) of the KIAD Act, 1966, the KIADB is

empowered to deal with the land so transferred in accordance with the

regulations made and the directions given by the State Government in

this behalf. It is submitted that therefore, the company to which a land is

allotted under the KIAD Act, 1966 cannot be said to be the beneficiary of

the acquisition. It is submitted that as such the beneficiary is in fact the

KIADB which in turn allots the acquired land to companies such as

MRPL.

3.3It is submitted that as such the issue involved in the present

appeals is not res integra in view of the direct decision of this Court in

the case of Peerappa Hanmantha Harijan (supra). That this Court, in

the above case dealing with an acquisition under the KIAD Act, 1966

5

itself, repelled the claim of the post-acquisition allottee company that it

has a right to participate in the award proceedings for determination of

the market value of the land. It is submitted that this Court, after

considering, inter alia, the scheme of the KIAD Act, 1966 held that the

allottee company is not a beneficiary of the acquired land under the

KIAD Act, 1966. That in the said decision, it is further observed and held

that Section 54 of the Land Acquisition Act, which provides a right to

appeal is only available to the landowners, State Government and the

beneficiary of the acquired land and not the allottee company. It is

submitted that in the present case, KIADB can be said to be a

beneficiary of the acquired land and not the allottee company - MRPL. It

is submitted that therefore, the appeals filed by the respondent No.1 –

MRPL before the High Court were not at all maintainable and the High

Court ought to have dismissed the said appeals in view of the law laid

down in the case of Peerappa Hanmantha Harijan (supra).

3.4Now, so far as, reliance placed by the High Court on the judgments

of this Court in UP Awas Evam Vikas Parishad (supra) and Himalayan

Tiles and Marble (P) Ltd. (supra) while passing the impugned common

judgment and order, it is vehemently submitted by learned counsel

appearing on behalf of the appellants – original landowners that the High

Court has committed a grave error in relying upon the aforesaid

decisions. That both the aforesaid decisions, which have been heavily

6

relied upon by the High Court while passing the impugned common

judgment and order are not applicable at all with respect to an

acquisition under the KIAD Act, 1966.

3.5Hence, the aforesaid decisions do not apply to the facts and

circumstances of the present case, since the said judgments pertain to

the acquisition under Part VII of the Land Acquisition Act r/w Section 50

of the Land Acquisition Act, which provides for direct acquisition for a

company/local authority. It is submitted that the conclusion of this Court

at para 24 of UP Awas Evam Vikas Parishad (supra) clearly states that

a company or local authority for whom a land is being acquired has a

right to participate before the Reference Court. But in the present case,

the land has been acquired for the KIADB, which is neither a company

nor a local authority.

3.6It is submitted that as such the decisions of this Court in the case

of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and

Marble (P) Ltd. (supra) have been considered and distinguished by this

Court in the case of Peerappa Hanmantha Harijan (supra) (at paras 61

and 62).

3.7It is further submitted that even in the subsequent decision, this

Court in the case of Satish Kumar Gupta Vs. State of Haryana, (2017)

4 SCC 760 relying upon the case of Peerappa Hanmantha Harijan

(supra) has distinguished the judgments in the case of UP Awas Evam

7

Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd.

(supra), and has held and taken a view that a post-acquisition allottee of

land is neither a necessary or proper party nor has any locus to be heard

in the matter of determination of compensation under the scheme of the

Land Acquisition Act.

3.8It is further submitted by learned counsel appearing on behalf of

the appellants that as such the High Court has committed a grave error

in not following a binding precedent of this Court rendered in the case of

Peerappa Hanmantha Harijan (supra). That the aforesaid judgment of

this Court was binding upon the High Court but the High Court has not

followed the same and has observed on the basis of an erroneous

reasoning that the decision of this Court in UP Awas Evam Vikas

Parishad (supra), being a decision of Three Judge Bench as compared

to a decision of Two Judge Bench in Peerappa Hanmantha Harijan

(supra) binds the High Court. It is submitted that the High Court has not

properly appreciated and considered the fact that the decision of this

Court in the case of UP Awas Evam Vikas Parishad (supra) was

subsequently considered and distinguished by this Court in the case of

Peerappa Hanmantha Harijan (supra). Therefore, the High Court was

bound by the decision of this Court in the case of Peerappa Hanmantha

Harijan (supra) even on the doctrine of stare decisis as embodied in

8

Article 141 of the Constitution and reliance is placed on the following

decisions of this Court:-

“Director of Settlements, A.P. Vs. M.R. Apparao, (2002)

4 SCC 638 (para 7); Rashmi Metaliks Ltd. Vs. Kolkata

Metropolitan Development Authority, (2013) 10 SCC

95 (para 7) and Bir Singh Vs. Mukesh Kumar, (2019) 4

SCC 197 (para 30).

3.9Making the above submissions, it is prayed to allow the present

appeals.

4.Present appeals are vehemently opposed by Ms. Shalini Sati

Prasad, learned counsel appearing on behalf of the respondent No.1 –

MRPL.

4.1It is submitted by learned counsel appearing on behalf of the

respondent No.1 – MRPL that the present appeals raise the question as

to whether respondent No.1 – MRPL can be said to be a “person

interested” for the purpose of Section 18(1) of the Land Acquisition Act,

1894 and consequently, whether the respondent No. 1 was a proper

party in the proceedings before the Learned Reference Court. It is

submitted that as such there is no infirmity in the impugned judgment

and order passed by the High Court as the High Court has relied upon

9

the direct judgments of this Court in the case of UP Awas Evam Vikas

Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra).

4.2Learned counsel appearing on behalf of the MRPL has vehemently

submitted that the MRPL can be said to be a “person interested” for the

purpose of Sections 18 and 20 of the Land Acquisition Act and Section

29(4) of the KIAD Act, 1966 and therefore was a proper party in the

proceedings before the Reference Court.

4.3It is submitted that there is no requirement under Section 28(1) or

Section 28(4) of the KIAD Act, 1966 to make a statement in the

notification as to the specific company for which the land is intended to

be acquired. It is submitted that even otherwise in the agreement

between KIADB and the MRPL, liability to pay the enhanced amount of

compensation would be upon the MRPL and therefore, before enhancing

the amount of compensation, the Reference Court ought to have heard

the MRPL. That the MRPL cannot be made liable to bear the financial

burden of the enhanced awarded amount without a fair chance of

contesting the enhancement by the Reference Court. Therefore, the

High Court has rightly remanded the matter to the Reference Court to

provide the MRPL, who is a “person interested”, an opportunity to be

heard before awarding the enhanced amount of compensation to the

landowners.

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4.4It is further submitted by the learned counsel appearing on behalf

of respondent No.1 – MRPL that as per Section 2(11) of the KIAD Act,

1966, the expression “person interested” has the same meaning

assigned to it in Section 3 of the Land Acquisition Act. That as per

Section 3(b) of the Land Acquisition Act, the expression “person

interested” includes all persons claiming an interest in compensation to

be made on account of the acquisition of the land under the said Act;

and a person shall be deemed to be interested in land if he is interested

in an easement affecting the land.

4.5It is submitted that in the present case, KIADB constituted under

the KIAD Act, 1966 had executed an agreement with the MRPL dated

08.12.1994. Accordingly, in view of the said agreement with the KIADB,

the land was acquired pursuant to the three different notifications issued

by the State under Section 28(4) of the KIAD Act, 1966. That the land

was granted to respondent No. 1 - MRPL by the State Level Single

Window Clearance Committee whose approvals are binding on all

departments and authorities in terms of Section 8 of the Karnataka

Industries Facilitation Act 2002. It is submitted that therefore, MRPL can

be said to be a “person interested” in the acquired land.

4.6On the submission that the MRPL can be said to be a “person

interested” under the relevant provisions of the Land Acquisition Act

and/or KIAD Act, 1966 and therefore a proper party before the

11

proceedings, the learned counsel appearing on behalf of the respondent

No.1 has heavily relied upon the judgments of this Court in the case of

UP Awas Evam Vikas Parishad (supra); Himalayan Tiles and Marble

(P) Ltd. (supra) as well as another decision of this Court in the case of

Delhi Development Authority Vs. Bhola Nath Sharma (Dead) by

L.Rs. and Ors., 2011 (2) SCC 54.

4.7It is further submitted that as such and being well aware that the

land had been acquired for the MRPL, the appellants herein in fact had

impleaded MRPL as a party respondent in their petition challenging the

acquisition before the High Court. Therefore, thereafter in the

references made for enhancement of compensation, the landowners

ought to have impleaded the MPRL, being an affected and proper party.

4.8Learned counsel appearing on behalf of the MRPL has further

submitted that MRPL cannot be made liable to bear the financial burden

of the enhanced amount of compensation without being given a fair

chance of contesting the enhancement of the amount of compensation.

Reliance is placed upon paras 22 and 41 of the case of UP Awas Evam

Vikas Parishad (supra). It is submitted that the ratio of this Court in the

case of UP Awas Evam Vikas Parishad (supra) in paras 22 and 41 has

not been considered and distinguished by this Court in the case of

Peerappa Hanmantha Harijan (supra). It is submitted that therefore,

even if it is presumed that the respondent No. 1 - MRPL does not have

12

any right to be impleaded in the proceedings before the learned

Reference Court, the principles of natural justice and the doctrine of

legitimate expectation would be attracted so as to ensure that the

respondent No. 1 – MRPL is not rendered remediless while being

burdened with the financial implications of the orders passed by the

learned Reference Court in the absence of any opposition to the

enhancement.

4.9Making above submissions and relying upon the above decisions,

it is prayed to dismiss the present appeals.

5.Heard the learned counsel for the respective parties at length.

6.The short question, which is posed for the consideration of this

Court is, whether, respondent No.1 – MRPL, who is simply an allottee of

the land by the KIAD Board, after the acquisition of the lands under

Section 28 of the KIAD Act, 1966, which was for the benefit of Karnataka

Industrial Areas Development Board (KIADB) can be said to be a

“person interested” under the provisions of KIAD Act, 1966 and

therefore, was a proper party in the reference proceedings initiated at

the instance of the original landowners?

7.While answering the aforesaid issue/question, it is required to be

noted that in the present case, the land has been acquired under the

provisions of the KIAD Act, 1966 and the notification has been issued

under Section 28(1) of the KIAD Act, 1966. The land has been acquired

13

by the State Government for KIADB under three different notifications.

After the lands were acquired, respondent No.1 – MRPL has been

allotted the lands acquired as per the agreements between the KIADB

and the MRPL. The present is not an acquisition under the provisions of

the Land Acquisition Act and therefore, as such, neither Section 50 of

the Land Acquisition Act, 1894 nor any other provisions of the Land

Acquisition Act, 1894 shall be applicable with respect to the lands

acquired under the provisions of the KIAD Act, 1966. Taking into

consideration, the aforesaid factual aspects, the impugned judgment and

order passed by the High Court in which it has heavily relied upon the

decisions of this Court in the case of UP Awas Evam Vikas Parishad

(supra) and Himalayan Tiles and Marble (P) Ltd. (supra) are required

to be considered.

7.1At the outset, it is required to be noted that as such, the issue

involved in the present appeal in respect of the acquisitions under the

KIAD Act, 1966 and the right of the subsequent allottee to participate in

the reference proceedings and whether the subsequent allottee can be

said to be a “person interested” under the provisions of the KIAD Act,

1966 is no longer res integra. While deciding the acquisition under the

very KIAD Act, 1966 and the right of the subsequent allottee, who has

been allotted the land by the KIADB in the case of Peerappa

Hanmantha Harijan (supra) after distinguishing the decision of this

14

Court in the case of UP Awas Evam Vikas Parishad (supra) and

Himalayan Tiles and Marble (P) Ltd. (supra), it is specifically observed

and held by this Court that an allottee company cannot be said to be a

beneficiary or a “person interested” entitled for hearing before

determination of compensation. By observing and holding so, this Court

had an occasion to consider the entire scheme of acquisition under the

KIAD Act, 1966 and has distinguished the acquisition under the Land

Acquisition Act, 1894. Before this Court also, the High Court remanded

the matter at the instance of the allottee company in the writ petition filed

by the allottee company to the Reference Court. This Court set aside

the same while holding that the allottee company, who has been allotted

the land under the provisions of the KIAD Act, 1966, can neither be said

to be a beneficiary nor a “party interested” entitled for hearing before

determination of compensation. This Court in the case of Peerappa

Hanmantha Harijan (supra) considered in detail the allotment/lease

agreement in favour of the allottee/lessee and also the relevant

provisions of the KIAD Act, 1966 and has observed in paragraphs 50 to

54 as under:-

“50. On a careful examination of the aforesaid clauses

of the lease agreement executed between the parties

in respect of the land of the appellants, it becomes

manifestly clear that the said agreement is executed

by KIADB in favour of the Company after allotment of

15

land was made in favour of the Company as provided

under Regulations 10( a) and ( c) of

the KIADB Regulations respectively by following the

procedure of inviting applications and submission of

the applications by the interested parties along with the

required deposits towards the cost of the land. Further,

Clauses 5(a) and (b) of the lease agreement referred

to supra, would clearly state that the premium

indicated in Clause 1 of the lease agreement

represents the tentative cost of the land and in the

event of the lessor incurring payment of amounts to the

landowners over and above the awards made by the

acquiring authority by virtue of the award passed by

the competent court of law or in view of the provisions

of the LA Act in respect of demised premises or any

part thereof, the same shall be met by the lessee

within one month from the date of receipt of the

communication signed by the Executive Member or

any other officer authorised by the lessor. Clause 5(b)

also makes similar provision to that effect between the

lessor and the lessee.

51. From a careful reading of the aforesaid clauses of

the lease agreement along with the provisions of

Section 32(2) of the KIAD Act and Regulations 4, 7,

10(b), (c) and (d) of the KIADB Regulations, it is clear

that the Company is only the lessee by way of

allotment of the land as the same has been allotted

by KIADB in its favour and has executed the lease deed

in its favour in respect of the allotted land.

52. In view of the aforesaid documents, namely, the

notifications issued under Sections 28(1) and 28(4) of

the KIAD Act by the State Government, it can be safely

concluded by us that the acquisition of the land

involved in these proceedings is for the purpose of

industrial development by KIADB in Sedam Taluk.

16

Therefore, the beneficiary of the acquired land is

only KIADB but not the Company as claimed by it. A

reading of Section 28(5) of the KIAD Act makes it clear

that the land which is acquired by the State

Government statutorily vests absolutely with it. After

following the procedure provided under Sections 28(6)

and (7) of the KIAD Act, the State Government takes

possession of the acquired land from the

owners/person/persons who are in possession of the

land and transfers the same in favour of KIADB for its

development and disposal of the same in accordance

with Regulation 10(a) of the KIADB Regulations,

referred to supra.

53. In the instant case, a perusal of the provisions of

the lease agreement executed between the parties

referred to supra and Regulation 10 clauses (a), (c),

(d) and (e) of the KIADB Regulations make it

abundantly clear that the Company is only the

allottee/lessee of the acquired land and as per Clauses

5(a) and (b) of the lease agreement referred to supra,

the premium indicated in the lease agreement in

respect of the allotted land in its favour represents the

tentative cost of the land. It has been further specified

in the lease agreement that in the event of the lessor

incurring the payment of amounts to the landowners

over and above the awards made by the acquiring

authority by virtue of awards passed by the competent

court of law in view of the provisions of the Land

Acquisition (Amendment) Act, 1984 in respect of

demised premises or any part thereof, the same shall

be met by the lessee within one month from the date of

receipt of communication signed by the Executive

Member or any other officer authorised by the lessor.

In view of the above conditions of the lease

agreement, neither KIADB nor the Company can

contend that the acquisition of the land involved in

these proceedings is in favour of the lessee Company.

17

Therefore, the Company is neither a beneficiary nor an

interested person as claimed by them in terms of

Section 2(11) of the KIAD Act or under Section 3(b) of

the LA Act as per which, “person interested” includes

all persons claiming an interest in compensation to be

made on account of the acquisition of land under the

KIAD Act and that a person shall be deemed to be

interested in the land if he is interested in an easement

affecting the land. It is necessary to examine Section

3(b) read with Section 9 of the LA Act, which deals with

notice to persons interested and Section 11, which

deals with enquiry and award to be passed by the

Deputy Commissioner/Land Acquisition Officer.

54. A careful reading of the aforesaid provisions of the

LA Act, the KIAD Act and the KIADB Regulations would

clearly go to show that the Company is neither a

beneficiary, nor an interested person in the land as on

the date of acquisition of the land, as the land was

acquired by the State Government in favour

of KIADB who is the beneficiary and it has allotted in

favour of the Company after the acquired land was

transferred in its favour by the State Government and

executed the lease agreement referred to supra.”

7.2Thereafter, this Court distinguished the nature of acquisition under

the Land Acquisition Act from the acquisition under the KIAD Act, 1966

by observing as under in paragraphs 57, 58 and 60 to 65:-

“57. For the acquisition of land under the provisions of the

LA Act in favour of a company the mandatory procedure as

provided under Part VII of the LA Act and Rules must be

adhered to, that is not the case in the acquisition of land

involved in these proceedings as the acquisition of land is

under the provisions of the KIAD Act and therefore the

reliance placed upon the provision of Section 3(f)(viii) of

18

Karnataka LA Amended Act 17 of 1961 is not applicable to

the facts of the case on hand and therefore, the said

provision cannot be made applicable to the case on hand.

58. The definition of “public purpose” under the LA Act

cannot be imported to the acquisition of land by the State

Government for the industrial development under the

provision of the KIAD Act as the words “development”,

“industrial area” and “industrial estate” have been clearly

defined under sub-sections (5), (6) and (7) of Section 2 of

the KIAD Act which reads thus:

“2. (5) ‘Development’ with its grammatical

variations means the carrying out of levelling,

digging, building, engineering, quarrying or other

operations in, on, over or under land, or the

making of any material change in any building or

land, and includes redevelopment; and ‘to

develop’ shall be construed accordingly;

(6) ‘Industrial area’ means any area declared to

be an industrial area by the State Government by

notification which is to be developed and where

industries are to be accommodated; and

industrial infrastructural facilities and amenities

are to be provided and includes, an industrial

estate;

(7) ‘Industrial estate’ means any site selected

by the State Government where factories and

other buildings are built for use by any industries

or class of industries.”

X X X X

60. The reliance placed upon the provisions of Sections

50(1) and (2) of the LA Act, also are not applicable to the

case on hand for the reason that Section 50 of the LA Act

applies to the acquisition of land in favour of a company by

19

the State Government by following the mandatory procedure

contemplated under Part VII of the LA Act and relevant rules

framed for that purpose. Therefore, the claim made by the

Company that it has got every right to participate in the

proceedings for determination and redetermination of the

market value of the acquired land and award of

compensation passed by the Land Acquisition Officer or

Deputy Commissioner or before the Reference Court or the

appellate court is wholly untenable in law and therefore, the

submissions made on behalf of the Company cannot be

accepted and the same is rejected.

61. Further, both the learned Senior Counsel on behalf

of KIADB and the Company have placed reliance on various

decisions rendered by this Court in support of their above

respective legal submissions that the Company is an

interested person and, therefore, it has got right to

participate in the proceedings before the Reference Court for

determination of compensation before passing the award

either by the Land Acquisition Officer or the Deputy

Commissioner or the Reference Court at the instance of the

owner or any other interested person. These include

judgments rendered by this Court in U.P. Awas Evam Vikas

Parishad v. Gyan Devi [(1995) 2 SCC 326] , Himalayan Tiles

and Marble (P) Ltd. v. Francis Victor Coutinho [(1980) 3 SCC

223] and P. Narayanappa v. State of Karnataka [(2006) 7

SCC 578] and other decisions which are not required to be

mentioned in this judgment as they are all reiteration of the

law laid down in the above cases.

62. The reliance placed on the various decisions of this

Court by both the learned Senior Counsel on behalf

of KIADB and the Company, is misplaced as none of the said

judgments relied upon are applicable to the fact situation in

the present case for the reason that those cases dealt with

reference to the acquisition of land under the provisions of

the LA Act, either in favour of the company or development

authorities, whereas in the case on hand, the acquisition

20

proceedings have been initiated under the KIAD Act for

industrial development by KIADB. Further, the original

acquisition record in respect of the acquired land involved in

the proceedings by the learned Standing Counsel on behalf

of the State of Karnataka as per our directions issued vide

our orders dated 17-11-2014 [Peerappa Hanmantha

Harijan v. State of Karnataka, 2014 SCC OnLine SC 1678,

wherein it was directed: “Issue notice to the State

Government. The learned counsel for the petitioners to take

out notice to the learned Standing Counsel appearing for the

State Government. Dasti, in addition, is also permitted. Mr

V.N. Raghupathy, learned counsel accepts notice for the

State of Karnataka and Mr Nishanth Patil, learned counsel

accepts notice for Karnataka Industrial Area Development

Board (for short ‘KIADB’). The learned counsel appearing for

the State Government and the learned counsel appearing

for KIADB are directed to produce the relevant records in

respect of the proceedings relating to land acquisition

involved in these matters. There shall be stay of the effect

and operation of the impugned order during the pendency of

these petitions. List the matters after four weeks. In the

meanwhile, all the respondents are at liberty to file written

statements, if any.”] and 24-3-2015 [Peerappa Hanmantha

Harijan v. State of Karnataka, 2015 SCC OnLine SC 1707,

wherein it was directed: “Heard Ms Kiran Suri, learned

Senior Counsel for the petitioners in SLPs (C) Nos. 31624-

25 of 2014 in part. List all the matters as part for further

hearing. Vide order dated 17-11-2014, learned counsel for

the State as well as the learned counsel for KIADB were

directed to produce the relevant records in respect of the

proceedings relating to land acquisition involved in these

matters, record as well as the records relating to allotment of

land. However, as per office records, nothing has been

produced so far. In this view of the matter, the learned

counsel for the State as well as the learned counsel

for KIADB are directed to comply with the order dated 17-11-

2014 and produce the relevant records in respect of the

proceedings relating to land acquisition and the allotment of

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land involved in these matters before the next date of

hearing. List the matters on 15-4-2015.”], do not disclose the

fact that the acquisition of lands covered in the acquisition

notifications are in favour of the Company. Thus, the

acquisition of land in favour of KIADB is abundantly clear from

the preliminary and final notifications issued by the State

Government and thereafter following the procedure under

sub-sections (6) and (7) of Section 28 of the KIAD Act, it took

possession of the acquired land from the owners who were

in possession of the same and was transferred in favour

of KIADB for its disposal for the purpose for which lands were

acquired as provided under Section 32(2) of the KIAD Act

read with the Regulations referred to supra framed

by KIADB under Section 41(2)(b) of the KIAD Act. Therefore,

the reliance placed upon the judgments of this Court by the

learned Senior Counsel on behalf of the Company

and KIADB, are wholly inapplicable to the fact situation and

do not support the case of the Company.

63. In view of the foregoing reasons recorded by us on the

basis of the acquisition notifications issued by the State

Government under the statutory provisions of the KIAD Act

and therefore, we have to answer Points (i), (ii) and (iii) in

favour of the landowners holding that the Company is neither

the beneficiary nor interested person of the acquired land,

hence, it has no right to participate in the award proceedings

for determination of the market value and award the

compensation amount of the acquired land of the appellants.

Hence, the writ petition filed by the Company questioning the

correctness of the award passed by the Reference Court

which is affirmed by the High Court is not at all maintainable

in law. On this ground itself, the writ petition filed by the

Company should have been rejected by the High Court,

instead it has allowed and remanded the case to the

Reference Court for reconsideration of the claims after

affording opportunity to the Company, which order suffers

from error in law and therefore, the same is liable to be set

aside.

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64. Further, the learned Judge of the High Court has

erroneously held that the allottee Company is a beneficiary

of the acquired land of the appellants, which finding of the

learned Judge is not correct both on facts and in law. The

findings and reasons recorded by the High Court in the

impugned judgment in allowing the writ petition and

quashing the award of the Reference Court and remanding it

back to the Reference Court and allowing the Company to

participate in the proceedings for redetermination of

compensation for the acquired land is wholly impermissible

in law and the same are in contravention of the provisions of

the KIAD Act, the LA Act, the KIADB Regulations and the

lease agreement, which has been executed by KIADB in

favour of the Company and therefore, the impugned

judgment and order [State of Karnataka v. Peerappa

Hanmantha Harijan, Review Petition No. 2537 of 2013 in

MFA No. 32157 of 2012, order dated 22-9-2014 (KAR)] is

liable to be set aside by allowing the appeals of the owners.

65. Further, the learned Single Judge of the High Court has

further committed an error in law in not appreciating Section

54 of the LA Act, which provision provides the right to appeal

to the landowners, or State Government and beneficiaries of

the acquired land but not to the company which is the

lessee. When the company does not have the right to file an

appeal against the award it also has no right to file a writ

petition. KIADB has filed the belated appeal after disposal of

the appeal filed by the appellants by the High Court and

against which award it has filed the present appeal

questioning the correctness of the same and prayed for

enhancement of compensation and the said appeal is being

disposed of by this common judgment after adverting to the

rival legal contentions urged on behalf of the parties. The

High Court has rightly dismissed the belated appeal filed

by KIADB.”

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7.3This Court thereafter had considered the decisions in the case of

UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and

Marble (P) Ltd. (supra) and has distinguished the same and has

observed and held that the decisions in the case of UP Awas Evam

Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd.

(supra) shall not be appliable with respect to the acquisition under the

KIAD Act, 1966. Once, this Court in the subsequent decision in the case

of Peerappa Hanmantha Harijan (supra) dealt with and considered the

earlier decisions in the case of UP Awas Evam Vikas Parishad (supra)

and Himalayan Tiles and Marble (P) Ltd. (supra) and distinguished the

same and observed and held with respect to the acquisition under the

KIAD Act, 1966 that the allottee company can neither be said to be a

“person interested” nor entitled for hearing before determination of

compensation, the said ratio was binding upon the High Court. Thus, it

was not open for the High Court to not follow the binding decision of this

Court in the case of Peerappa Hanmantha Harijan (supra) by

observing that in the subsequent decision in the case of Peerappa

Hanmantha Harijan (supra), the earlier decisions in the case of UP

Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble

(P) Ltd. (supra) have not been considered. The High Court has not

noted that as such while deciding the case of Peerappa Hanmantha

Harijan (supra), this Court did consider the earlier decisions in the case

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of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and

Marble (P) Ltd. (supra) and had clearly distinguished the same. Not

following the binding precedents of this Court by the High Court is

contrary to Article 141 of the Constitution of India. Being a subsequent

decision, in which the earlier decisions were considered and

distinguished by this Court, the subsequent decision of this Court was

binding upon the High Court and not the earlier decisions, which were

distinguished by this Court.

7.4Under the circumstances, the High Court has committed a

grave/serious error in passing the impugned judgment and order by

relying upon the judgments of this Court in the case of UP Awas Evam

Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd.

(supra) and by not following the subsequent decision of this Court in the

case of Peerappa Hanmantha Harijan (supra).

7.5Now, so far as the reliance placed upon the decisions of this Court

in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan

Tiles and Marble (P) Ltd. (supra) relied upon by the respondent No.1 –

MRPL and even relied upon by the High Court is concerned, at the

outset, it is required to be noted that the said decisions were with respect

to the acquisition under the Land Acquisition Act, 1894 and the

provisions of Land Acquisition Act, 1894, more particularly, Section 50 of

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the Land Acquisition Act fell for consideration before this Court. As

observed and held by this Court in the subsequent decision in the case

of Peerappa Hanmantha Harijan (supra), the acquisition under the

Land Acquisition Act, 1894 and the acquisition under the KIAD Act, 1966

are both distinct and the provisions under both the Acts are

distinguishable.

7.6We see no reason to take a different view than the view taken by

this Court in the case of Peerappa Hanmantha Harijan (supra) that the

MRPL being a subsequent allottee after the land was acquired by

KIADB, can neither be said to be a beneficiary nor a “person interested”

for the purpose of determination of compensation. Under the

circumstances, the impugned judgment and order passed by the High

Court taking a contrary view is unsustainable and the same deserves to

be quashed and set aside.

8.In view of the above and for the reasons stated above, present

appeals succeed. The impugned common judgment and order passed

by the High Court setting aside the judgment and award/order passed by

the Reference Court and remanding the matter to the Reference Court is

hereby quashed and set aside. The judgment and order passed by the

Reference Court Is hereby restored.

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Present appeals are allowed accordingly. However, in the facts

and circumstances of the case, there shall be no order as to costs.

………………………………….J.

[M.R. SHAH]

NEW DELHI; ………………………………….J.

JULY 11, 2022. [B.V. NAGARATHNA]

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