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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5804 OF 2015

(Arising out of SLP (C) No.19819 of 2013)

PEERAPPA HANMANTHA HARIJAN (D)

BY LRS. & ORS. …APPELLANTS

Vs.

STATE OF KARNATAKA & ANR. …RESPONDENTS

WITH

CIVIL APPEAL NOS.5806-5807 OF 2015

(Arising out of SLP (C) Nos.31624-31625 of 2014)

AND

CIVIL APPEAL NOS.5808-5810 OF 2015

(Arising out of SLP (C) Nos.3482-3484 of 2015)

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted in all the special leave petitions.

2.Challenge in the appeal arising out of SLP No. 19819 of

2013 is arising out of the impugned judgment and order

dated 05.03.2013 passed in Misc. First Appeal No.32157 of

2012 (LAC) by the High Court of Karnataka, Circuit Bench at

Gulbarga (filed against the judgment and order dated

29.09.2012 of Principal Civil Judge (Sr. Divn.), Gulbarga,

Reference Court in LAC No. 943 of 1997) whereby, the High

Court upheld the quantum of compensation awarded by the

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Principal Civil Judge (Sr. Divn.) and declined to interfere

with the same and dismissed the appeal filed by the

appellants.

3.Challenge in the appeals arising out of the SLP

Nos.31624-31625 of 2014 is preferred against the judgment

and order dated 22.09.2014 passed in Review Petition No.

2537 of 2013 in MFA No. 32157 of 2012 (filed by the KIADB)

and Writ Petition No. 100860 of 2013 (filed by the Company)

of the Karnataka High Court, Gulbarga Bench whereby the

High Court has remanded the matter to the Reference Court

for reconsideration of the case.

4.Challenge in the appeals arising out of SLP

Nos.3482-3484 of 2015, filed by the Karnataka Industrial

Area Development Board is arising out of the judgment and

order dated 22.09.2014 passed by the High Court of

Karnataka, Gulbarga bench, in Review Petition No. 2537 of

2013 in MFA No. 32157 of 2012, Misc. First Appeal No. 30702

of 2013 and writ petition No. 100860 of 2013, whereunder

the High Court was pleased to dispose of the above

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mentioned appeal and petitions by remitting the matter to

the Reference Court to give an opportunity of hearing to

the beneficiary and incidentally to the petitioner therein

(the allottee Company). The said appeals were filed by the

KIADB as it was aggrieved of certain observations made in

the judgment, while remanding the case, which affects the

merits of the case.

5. This is the most pathetic case of a land owner, and

after his death his legal heirs, who have been made to

litigate the case for more than three decades to get just

and reasonable compensation, after having lost their land

in the acquisition proceedings at the instance of the

Karnataka Industrial Areas Development Board (in short

‘KIADB’) which was their only source of income and

livelihood, which right to livelihood is a fundamental

right guaranteed under Article 21 of the Constitution of

India as held by this Court Constitution Bench in the case

of Olga Tellis & Ors. v. Bombay Municipal Corporation &

Ors.

1

The matter has been pending before the courts for

1 (1985) 3 SCC 545

Page 4 4

more than three decades. The appellant-landowners have been

crying for justice for enforcement of their legitimate

right of getting just and reasonable compensation under the

Land Acquisition Act, 1894 (for short “the L.A. Act”). The

land in the instant case has been acquired by the State

Government of Karnataka in exercise of its power of eminent

domain under Section 28 of the Karnataka Industrial Areas

Development Act, 1966 (in short ‘the KIAD Act’) at the

instance of KIADB. The said acquisition of land had been

done by the State Government for the purpose of

establishment of industries in the land vide notifications

under Section 28(1) and 28(4) of the KIAD Act. By an

earlier notification issued by the State Government under

Section 3 of the KIAD Act, the land involved in these

proceedings had also been included in the an Industrial

Area. The KIAD Act provides for securing the establishment

of industrial area in the State of Karnataka with a view to

promote the establishment and orderly development of

industries therein after formation of Industrial Estate in

the acquired land.

Page 5 5

The relevant facts which are required for the purpose

of considering the rival legal contentions urged on behalf

of the parties in these appeals are stated in brief

hereunder.

6. The appellant (since deceased), represented by his

legal representatives was the absolute owner of the land

bearing survey No. 306/9/1, measuring 5 acres 20 guntas at

Malkhed village in Sedam Taluka, Gulbarga District,

Karnataka. It is claimed that on 12.2.1981, the predecessor

of M/s Rajashree Cement Works, a unit of M/s Ultra Tech

Cement Ltd. (originally a unit of India Rayon & Industries

Ltd.) made a proposal to the State of Karnataka-respondent

to set up a cement manufacturing plant and applied for

acquisition and allotment of 1187 acres and 5 guntas of

land towards setting up of a factory, residential colony

etc at Malkhed, Gulbarga. This fact is not supported by the

original land acquisition record of the government produced

before this Court by the State government’s counsel.

7.The state government issued preliminary notification

dated 18.06.1981 under Section 28(1) of the KIAD Act for

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acquisition of land measuring 1187.15 acres in favour of

the KIADB which included the land of the appellants. The

notification also stated that the acquisition of land was

for the purpose of establishment of industries. The State

Government on 24.11.1981 issued declaration as contemplated

under section 28(4) of the KIAD Act. The state government

on 03.12.1981 issued notices upon the interested parties

under Section 28(6) of the KIAD Act.

8.The Special Deputy Commissioner, Gulbarga, vide award

dated 28.05.1982 fixed the market value of the acquired

land at Rs.1700/- per acre along with other statutory

payments such as 15% solatium and statutory interest

payable on the compensation amount.

9.On 07.06.1990, the state government took possession of

the acquired land from the landowner and transferred the

same to the KIADB which in turn, allotted the same in

favour of the Company as per the provisions of the KIAD Act

and relevant provisions of the Karnataka Industrial Areas

Development Board Regulations, 1969 (hereinafter the “KIADB

Regulations”). The appellants received the compensation

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under protest and made an application on 20.06.1982 to the

Special Deputy Commissioner to make reference of the award

to the Reference Court for enhancement of compensation

under Section 18(1) of the L.A. Act. The reference

application filed by the appellants before the Deputy

Commissioner under Section 18(3) of the Act dated 12.4.1991

was numbered as Misc. Petition No.101 of 1991. The Special

Deputy Commissioner, vide supplementary awards dated

30.12.1992 and 02.01.1993 granted solatium at the rate of

30% in view of the provisions under the Land Acquisition

(Amendment) Act (No.68 of 1984). The reference papers were

sent by the Land Acquisition Officer to Principal Civil

Judge (Sr. Divn.), Gulbarga, was registered as LAC No. 943

of 1997. The learned judge refused to condone the delay of

the application filed by the appellants under Section 18(3)

of the L.A. Act on the ground that the date of first

application had been interpolated. A Civil Revision

Petition was filed by the appellants before the High Court

against the order of the Principal Civil Judge, which was

dismissed by the learned single judge of the Karnataka High

Court vide order dated 21.08.2003.

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10.Aggrieved by the same, the appellants filed an appeal

before this Court being Civil Appeal No.3244 of 2005. This

Court set aside the order of the Reference Court and

remanded the case to it with a direction to re-decide the

application of the appellants on merits and to re-determine

the market value of the acquired land and award

compensation accordingly. This Court further held that the

Reference Court erred in holding that the petition of the

appellants was barred by limitation as the award could be

said to have been passed only on 07.06.1990, the date on

which the state government took possession of the acquired

land and compensation was offered to the appellants. It was

further held by this Court that the Deputy Commissioner did

not have the jurisdiction to pass the award in the first

place on 28.05.1982, as all the acquisition proceedings

with respect to the notifications of the state government

dated 24.11.1981 had been stayed by the learned single

Judge of the Karnataka High Court vide an interim order

dated 05.03.1982 in Writ Petition Nos. 9356 to 9361 of

1982, filed by the appellants and other land owners who

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were affected by the acquisition of land and the interim

order was operating on the date of passing of the award

referred to supra, which fact was neither noticed by the

Reference Court nor by the High Court.

11.Accordingly, the amended claim petition was filed by

the appellant (since deceased) before the Reference Court

after remand order passed by this Court seeking

compensation at the rate of Rs.2,50,000/- per acre before

the Principal Civil Judge, Gulbarga, who relied upon the

judgment and order of the Karnataka High Court dated

27.02.2005 in MFA No. 3796 of 2005 and Cross Objection No.

213 of 2005, which had relied upon the sale deeds of the

sites carved out in Sy. No.389 at the rate of Rs.7.5/- per

sq. feet. The reference of the Sy. No.414/2 of the same

village according to which the sale deed had been executed

at the rate of Rs.13/- per sq. feet in the year 1985-1986

was also relied on, on the basis of which the learned

Principal Civil Judge allowed the claim petition of the

appellants in part and enhanced the compensation awarded

initially from Rs.1,700/- per acre of land to Rs.1,37,000/-

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per acre of land after re-determination of the market value

of the land and awarded the other statutory benefits

payable to the owners under the provisions of the L.A. Act

vide order dated 29.09.2012 passed in LAC No. 943 of 1997.

12.Aggrieved by the said judgment and order of Reference

Court passed in LAC No. 943 of 1997, the appellants

preferred MFA No. 32157 of 2012 before the Karnataka High

Court, Gulbarga Bench. The State Government, through KIADB

belatedly preferred MFA 30702 of 2013 before the High Court

after the dismissal of the above Miscellaneous appeal of

the appellants seeking for enhancement. The learned single

Judge of the High Court held that the Reference Court while

fixing the market value of the acquired land had taken into

consideration the fact that it has got the Non-Agricultural

(NA) potential and had also deducted charges towards the

waiting period as well as development charges at the rate

of 30% and had re-determined the market value of the

acquired land at Rs.1,37,000/- per acre. Therefore, the

learned single Judge of the High Court has held that the

same did not call for its interference and accordingly

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dismissed the appeal of the appellants vide judgment and

order dated 05.03.2013.

13.Aggrieved by the said judgment and order, the

appellants-land owners filed the present appeal arising

out of special leave petition No. 19819 of 2013 before this

Court seeking for enhancement of compensation after re-

determination of the market value of the land on the basis

of the award passed by the High Court in MFA No. 3796 of

2005 and Cross Objection No. 213 of 2005 on the ground that

on an examination of Ext. P.5, which is the village map of

the land, it becomes abundantly clear that the land covered

in the award passed in the Cross Objection NO. 213 of 2005

is comparable to the land of the appellants which were

acquired by the State Government for industrial development

at the instance of KIADB.

14.While the matter was yet to be heard by this Court, the

respondent-State through KIADB filed Review Petition

No.2537 of 2013 before the High Court in MFA No.32157 of

2012. It had also filed belated MFA No. 30702 of 2013

Page 12 12

against the judgment and Award passed by the Reference

Court in LAC No. 943 of 1997 M/s Ultra Tech Cement Ltd.

through its Unit M/s. Rajashree Cement Ltd. filed Writ

Petition No. 100860 of 2013 before the High Court on

19.03.2013 questioning the correctness of the award of

compensation passed in favour of the land owners on the

ground that they are the necessary party to the reference

proceedings before the Reference Court and they were not

notified in the said proceedings. The learned single Judge

set aside the judgment and award order of the Reference

Court by allowing the above writ petition and directed it

to afford an opportunity of hearing to the alleged

beneficiary-Company to participate in the proceedings and

to decide the matter on merits in accordance with law after

affording opportunity to the Company.

15.Aggrieved by the supplementary awards passed by the

Special Deputy Commissioner dated 30.12.1992 and

02.01.1993, the Company filed Writ Petition No. 8707 of

1993 before the High Court of Karnataka challenging the

legality and validity of the same. The learned single judge

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held that after the amendment in the L.A. Act, the land

owners were entitled for 30% of solatium and additional

benefits under Sections 23(1-A), 23(2) and 28 for the

reason that the acquisition proceedings in the case were

pending as on 30.04.1982 in respect of the lands as no

award had been passed by the Special Deputy Commissioner on

or before 30.04.1982. The learned single judge further held

that the Special Deputy Commissioner was justified in

passing a supplementary award, awarding benefits under the

above said provisions of the L.A. Act. Hence, it was

concluded by the learned single judge that the Company

cannot have any grievance as against the supplementary

awards and dismissed the Writ Petition.

16.Being aggrieved, the Company filed Writ Appeal No. 4321

of 1998 before the Division Bench of the Karnataka High

Court for setting aside the order of dismissal dated

17.06.1998 passed in the writ petition by the learned

single judge. The learned Division Bench allowed the appeal

of the Company and set aside the supplementary awards dated

30.12.1992 and 02.01.1993 of the Special Deputy

Page 14 14

Commissioner by judgment and order dated 29.05.2000 holding

that since the appellants had entered into an agreement

with the State Government and KIADB as well as the Company

as regards the compensation, the initial award had attained

finality and thus, the Special Deputy Commissioner did not

have the jurisdiction to pass the supplementary awards. The

Division Bench further held that the said land had been

allotted by KIADB in favour of the Company and that the

Special Deputy Commissioner had no power to pass

supplementary awards when no reference was pending.

However, the rejection order passed in the reference case

by the Reference Court affirmed by the High Court in the

above Civil Revision Petition was set aside by this Court

in the Civil Appeal No.3244 of 2005 vide its judgment and

order dated 27.04.2011. Thereafter, the Reference Court

re-determined the market value of the acquired land of the

appellants-landowners as directed by this Court in which

proceedings the state government through KIADB was a party.

17.The learned senior counsel on behalf of the appellants

Ms. Kiran Suri has contended that the Company need not be

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party to the proceedings as it is not the beneficiary of

the acquired land in terms of the provisions of the KIAD

Act and L.A. Act to be party in the proceedings for

determination of the market value of the acquired land

before the Reference Court.

18.The learned senior counsel has further contended that

the State Government through KIADB should not have been

allowed to file either MFA or writ petition after the same

matter had already been decided by the High Court at the

instance of the appellants. In support of her above legal

submission she has placed reliance upon the decision of

this Court in the case of Ramchandra Dahdu Sonavane (dead)

by LRs and Ors. v. Vithu Hira Mahar (dead) by LRs . And Ors

2

on the question of res judicata wherein this Court has

observed that once the matter which was the subject matter

of lis stood determined by a competent court, no party

thereafter can be permitted to reopen it in a subsequent

litigation. Such rule was brought into the statute book

with a view to bring such litigation to an end whose

ultimate purpose is to harass the other party. It is

2 (2009) 10 SCC 273

Page 16 16

further contended by the learned senior counsel that the

matter is concluded by the High Court in the MFA filed by

the appellants and as such the question of reviewing the

judgment and order passed by it does not arise unless there

is an error apparent on the face of the record. She has

placed reliance on the case of Hari Das v. Usha Rani Banik

3

.

Reliance has also been placed on the decision in the case

of Ballarpur Industries Ltd & KIADB v. Civil Judge

4

in

support of the contention that the lessee/ allottee need

not be a party to the proceedings either before the Land

Acquisition Collector or before the Reference Court as

provided under Section 20 (c) of the L.A. Act, 1894.

19.Referring to the Review Petition and the appeal filed

by the State of Karnataka, represented by KIADB before the

High Court, it is further contended by the learned senior

counsel on behalf of the appellants that at the relevant

point of time when the matter was decided in MFA of the

appellant/owners by the High Court at the instance of the

land owners, no appeal was filed by the KIADB questioning

the correctness of the re-determination of the market value

3 (2006) 4 SCC 78

4 (ILR) 1987 KAR 3445

Page 17 17

of the acquired land and the award passed by the Reference

Court, which has been confirmed by the High Court holding

that the market value of the land of the owners at

Rs.1,37,000 per acre. The same could not have been

interfered with by the High Court in the writ petition as

the Company is not entitled to challenge the award by

filing writ petition. The belated MFA filed by the KIADB

was rightly dismissed by the High Court. It was further

contended by the learned senior counsel that neither the

review petition filed by the KIADB nor the Writ Petition

filed by the Company should have been entertained by the

High Court as the same was not maintainable for more than

one reason. Firstly, the Company had no locus standi to

challenge the award passed by the Reference Court in the

Writ Petition, when the remedy of appeal was provided to

the aggrieved party viz. to the State Government and the

KIADB. Secondly, the High Court had rightly rejected the

review petition and belated Misc. First Appeal filed by the

KIADB after disposal of the MFA filed by the landowners

seeking for enhancement of compensation.

Page 18 18

20.It is further contended by the learned senior counsel

on behalf of the appellants that the High Court has

committed a serious error in law by remanding the matter

back to the Reference Court to give an opportunity to the

Company without recording the specific finding as to

whether the Company is a beneficiary of the acquired land

either under the provisions of KIAD Act or the L.A. Act. It

is further submitted by the learned senior counsel on

behalf of the appellants that this specific issue was

raised before the High Court, the same was not answered and

therefore, there is no question of remanding the matter

back to the Reference Court without recording the finding

with valid and cogent reasons.

21.It is further contended by the learned senior counsel

appearing on behalf of appellants that the High Court has

committed a serious error in law in remanding of matter to

the Reference Court after about 33 years of initiation of

acquisition proceedings in a casual manner without

examining the relevant provisions of the KIAD Act, L.A.

Act, Regulations and the law laid down by this Court in

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this regard. It is impermissible in law for the High Court

to entertain a non maintainable Writ Petition filed by the

Company which is an allottee, and it has no right under

the provisions of the L.A. Act to get impleaded as a party

either in the reference proceedings or avail appeal remedy

provided under Section 54 of the L.A. Act against the award

passed by the Reference Court as it has no right under the

provisions of the L.A. Act to question the correctness of

the award with regard to the re-determination of quantum of

compensation as it is governed by the terms and conditions

of the order of allotment and lease deed executed by it

when the law on this aspect is clear with regard to the

right of the Company as it is an allottee and therefore,

the Writ Petition filed by it questioning the correctness

of award passed by the Reference Court is not maintainable

in law and the order of remand passed by the High Court in

exercise of its extraordinary, discretionary and

supervisory jurisdiction under Articles 226 and 227 of the

Constitution of India, is void ab initio in law as the Writ

Petition proceedings before the High Court are not at all

maintainable in law. Further, the order of remand passed by

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the High Court without even deciding the legal right of the

Company which was claimed by it stating that it is a

beneficiary even though it is admittedly a lessee of the

acquired land, which was allotted in its favour by the

KIADB on the market value of the acquired land as per the

provisions of the KIAD Act and Regulations. The letter

dated 07.04.1982 relied upon by the state government

clearly shows that the KIADB had intimated the Indian Rayon

Corporation Ltd., that the land to an approximate extent of

971.07 acres has been decided to be allotted in favour of

the Company on lease cum sale basis for a period of 21

years. One of the conditions at No.14 of the above said

letter shows that the KIADB, on being satisfied that the

land is not being put to use for the purpose for which it

was asked for will be free to re-enter upon and take

possession of the whole or that part of the land which has

not been put to proper use by the Company. It is further

submitted by the learned senior counsel that the agreement

dated 30.03.2005 entered between KIADB and the Company

relied on by the Company shows that the Company had applied

for grant of lease of 27 acres 21 guntas of land including

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that of the landowners and the lease of the same is made by

KIADB in favour of the Company for a period of 21 years

which is independent from the acquisition proceedings

initiated by the State Government at the instance of the

KIADB in the case on hand. It is submitted that all the

documents produced by the Company, which are relied upon

would show that either the acquired land of the owners is

for industrial development and that the Company is the

lessee of the lands acquired in favour of KIADB. The

material documents produced in these proceedings either by

the state government or KIADB to assume the fact that the

acquisition of the land is made at the behest of and at the

expense of the Company is not factually correct. This fact

is evident from the acquisition notifications issued by the

state government under the provisions of the KIAD Act. On

the contrary, as per the acquisition notifications it is

acquired in favour of the KIADB for the formation of an

Industrial Estate in the Industrial Area. Therefore, the

Company cannot assert that it is either a beneficiary of

the acquisition of land or a person interested for the

purposes of KIAD Act or L.A. Act to give an opportunity for

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it to participate in the proceedings to determine the

market value of the acquired land either before the Special

Deputy Commissioner or Reference Court to pass an award,

awarding just and reasonable compensation in favour of the

appellants in respect of their acquired land.

22.It is further contended by the learned senior counsel

on behalf of the appellants that as per Section 29 of the

KIAD Act, where any land is acquired by the State

Government, it shall pay for such acquisition cost of the

acquired land in accordance with the provisions of the Act.

The notifications issued by the state government under

Sections 28(1) & 28(4) of the KIAD Act would clearly show

that the land is acquired by the state government not in

favour of any particular Company but for KIADB for

establishing industries in the industrial area as notified

by the state government under Section 3 of the KIAD Act.

Therefore, there is no specific role of the Company to take

part in the proceedings either before the Land Acquisition

Officer or the Reference Court for the purpose of

determining just and reasonable compensation of the land

Page 23 23

payable to the land owners.

23.Further, the learned senior counsel has vehemently

contended that the High Court committed an error in law by

applying the law laid down by this Court in the case of DDA

v. Bhola Nath Sharma

5

, to the facts of the case on hand. In

that case, the acquisition of the land covered was at the

instance of the DDA, and the DDA was asked to pay the

compensation amount determined in respect of the

acquisition of the land in favour of the

respondent-landowners therein. In the facts of the present

case, the acquisition of land was not at the instance of

the Company but at the instance of the KIADB which fact is

evident from the acquisition notifications issued by the

state government for the purpose of formation of industrial

estate to establish industries in the industrial area

already declared by the KIADB.

24.It is further contended by the learned senior counsel

on behalf of the appellant-owners that the High Court has

erred in not following the law laid down by the Division

5 (2011) 2 SCC 54

Page 24 24

Bench of the High Court in the case of Ballarpur Industries

v. Court of Civil Judge

6

, wherein it was held by the court

as under:

“28. Provisions of Ss. 29 and 30 provide for the

determination of compensation in respect of the

land acquired. Payment of compensation is in

accordance with the provisions of the Act. See.

29(2) contemplate determination of compensation

by agreement between the State Government and

the person to be compensated. Before such an

agreement is arrived at between the Government

and the person to be compensated, the Act does

not require the KIADB to be a party to the

negotiations or to the agreement. No provision

of the Act contemplates a tripartite discussion

or agreement in this regard. Similarly, no other

private person like the Company has a say in

this matter.

29. It is only when such an agreement cannot be

reached, State Government has to refer the case

to the 'Deputy Commissioner' for determination

of the amount of compensation. On receipt of

reference, the Dy. Commissioner has to issue

notice under S. 29(4) on the owner or occupier

of the land and on all persons known or believed

to be interested herein to appear before him and

state their respective interests in the said

land. Here, again, no provision to notify the

KIADB or the Company is contemplated.”

(emphasis laid by this Court)

6 ILR 1987 Kar 3445

Page 25 25

25.Further, it is contended by the learned senior counsel

on behalf of the appellants that this Court issued notice

and permitted Dasti in SLP No.19819 of 2013 arising out of

the judgment and order passed by the High Court in MFA

32157 of 2012 vide order dated 11.07.2013. This Court has

also additionally mentioned in the said order that the

notice shall indicate that this Court is likely to grant

leave, set aside the impugned order and enhance the

compensation awarded by the Reference Court.

26.On the other hand, Mr. Ranjit Kumar, learned Solicitor

General and Mr. Mohan Parasaran, the learned senior counsel

on behalf of the respondents-KIADB contended that the High

Court having set aside the award passed by the Reference

Court on the ground that the Company has claimed to be the

beneficiary of the acquired land is neither a party in the

reference proceedings nor heard and therefore, the

Reference Court must decide the matter afresh as directed

by the High Court in the order of remand passed by it with

regard to the compensation of the acquired land to be

awarded after hearing all the interested parties including

Page 26 26

the Company. Further, it is urged that the High Court has

erred in holding that compensation awarded by the Reference

Court in favour of the land owners is just and proper.

27.It is further contended by the learned senior counsel

on behalf of the respondents that the Reference Court has

not taken into account and considered the sales statistics

of the similar lands during the relevant period to that of

acquired land which were produced at the time of

re-determination of the market value of the land. The High

Court has erred in not noticing the fact that the amount of

compensation awarded by the Reference Court is 1000 times

more than the value indicated in the sales statistics. It

is further contended by them that the High Court erred in

not considering the application filed under Order 41 Rule

27 of the Code of Civil Procedure, 1908 for production of

the certified copies of the sale deeds of the land in the

vicinity of the acquired land during the relevant period

and to show that the compensation re-determined by the

Reference Court in respect of the land of the appellants is

exorbitant and unconscionably on the higher side.

Page 27 27

28.On the basis of the rival legal contentions, the

following points would arise for our consideration:

1)Whether the allottee Company ( M/s Ultra Tech

Cement Ltd.) is either a beneficiary or interested

person entitled for hearing before determination of

the market value to award just and reasonable

compensation in respect of the acquired land of the

appellants either before the Deputy Commissioner or

Reference Court?

2)Whether the Writ Petition filed by the allottee

Company before the High Court is maintainable in

law?

3)Whether the order of remand allowing the Writ

Petition of the allottee Company to the Reference

Court is legal and valid?

4)Whether the owners of the land are entitled for

the enhanced compensation?

5)If so, what award?

29.The point Nos.1, 2 and 3 are answered together as they

are inter-related by assigning the following reasons:

It is an undisputed fact that the acquisition of land

of the appellants was acquired along with the lands of the

other owners at the instance of the KIADB by the state

Page 28 28

government in exercise of its power under Section 28 of the

KIAD Act in favour of the KIADB for the purpose of

formation of industrial estate in the Industrial Area to

establish industries at Sedam Taluk, Gulbarga District.

30. Section 28 (1) of the KIAD Act, envisages that if, at

any time, the State Government is of the opinion that any

land is required for the purpose of development by KIADB or

for any other purpose in furtherance of the objects of this

Act, it may by notification, give notice of its intention

to acquire such land. The Land Acquisition Officer after

considering the cause, if any, shown by the owner of the

land and by any other person interested therein and after

giving such owner and person an opportunity of being heard,

may pass such orders as it may deem fit for acquiring the

land for establishment of industries. When the state

government is satisfied that any land should be acquired

for the purpose specified in the notification issued under

Section 28(1) of the KIAD Act, and after such orders passed

by the State government as per Section 28(3) of the KIAD

Act are passed, the state government shall issue the

declaration notification in the official Gazette to that

Page 29 29

effect as per Section 28(4) of the KIAD Act declaring the

land mentioned in the notification under section 28 (1) of

the Act to be acquired in favour of the KIADB for the

purpose of industrial development by it.

31.As can be seen from the facts of the case on hand, in

the notification under Section 28(1) of the KIAD Act, the

purpose specified by the State Government for acquisition

of the land of the appellants and other land owners is for

establishment of industries by the KIADB. Further, it

should also be remembered that in terms of the Act, the

ownership of the land after acquisition by publication of

the notification under Section 28(4) of the KIAD Act shall

absolutely vest in the State Government under Section 28(5)

of the Act and the same will be free from all encumbrances.

32.The State Government thereafter may by issuing notice

in writing, order any person who may be in possession of

the land to surrender or deliver possession of the land

thereof in its favour or any person duly authorised by it

within 30 days of the service of the notice. As per Section

28(7) of the KIAD Act, if any person refuses or fails to

Page 30 30

comply with the order made under sub-Section (5), then the

state government or any officer authorised by it in this

behalf may take possession of the land from either owner or

interested person. Section 28(8) of the KIAD Act, in

express terms states that where the land has been acquired

by the state government for the KIADB, the state

government, after it has taken possession of the land from

either owner or interested person may transfer the land to

the KIADB for the purpose for which the land has been

acquired by it.

33.Further, the provision under Section 29 of the KIAD Act

speaks of the compensation payable in relation to the

acquired land to either owners or interested persons of

such land and that the State Government shall pay such

compensation in respect of the acquired land in accordance

with the provisions of the KIAD Act. Section 30 of the

KIAD Act states that the provisions of the L.A. Act shall

mutatis mutandis apply in respect of holding enquiry and to

pass an award of compensation by the Deputy Commissioner by

determining the market value of the land. The case may be

referred to the Reference Court for the apportionment of

Page 31 31

the compensation payable to such person or persons if there

is any dispute regarding claims and the payment of

compensation in respect of the acquired land under Chapter

VII of the KIAD Act. In view of the above statutory

provisions of the KIAD Act, the provisions of Sections 11,

18 and 30 of the L.A. Act are applicable for the purpose of

determination of just and reasonable compensation of the

acquired land payable to the land owners either by the

Deputy Commissioner or Reference Court.

34.Further, it is necessary for us to examine Section

32(2) of the KIAD Act, which provides that any land

transferred in favour of the KIADB by the State Government,

developed by or under the control and supervision of the

KIADB shall be dealt with by it in accordance with the

Regulations framed by it after approval by the state

government and as per directions given by the state

government in that behalf. Section 40 of the KIAD Act

confers power upon the state government to frame Rules

after previous publication by way of notification.

Page 32 32

35.Further, Section 41 of the KIAD Act confers power upon

the KIADB by notification to make regulations consistent

with the Act and the rules made thereunder to carry out the

purposes of the Act with the previous approval of the State

Government. Section 41 (2) (b) of the KIAD Act is most

relevant for the purpose of this case, which states that

the KIADB can frame regulations laying down the terms and

conditions under which it may dispose of the land acquired

in its favour by the State Government under the provisions

of Section 28(1) and (4) of the KIAD Act.

36.Further, it is also important in this case to refer to

the relevant provisions under the KIADB Regulations.

Regulation 4 under Chapter II of the KIADB Regulations

prescribes the form of application to be filed and

submitted by the applicant for the allotment of land or

shed in an Industrial Area. It also provides that the

application shall be made to the Executive Member of the

KIADB in the prescribed form (Form-I) obtained from it in

duplicate along with an earnest money. This proviso was

Page 33 33

inserted by notification dated 13.09.2002, w.e.f.

03.10.2002.

37.Regulation 5 of the KIADB Regulations pertains to the

manner of disposal of land/shed in each Industrial Area or

part thereof, whether by lease, lease-cum-sale, sale,

auction-sale, auction-lease, assignment or otherwise. It

also provides that in each case, the KIADB will also have

the discretion to decide the detailed conditions in such

agreement which shall be binding on the applicant.

38.Regulation 7 of the KIADB Regulations provides for the

KIADB to notify the availability of land, the manner of

disposal, the last date for submission of applications and

such other particulars as the KIADB may consider necessary

in each case, by giving wide publicity through newspapers

having circulation in and outside the state of Karnataka,

and invite applications from industrialists or persons

intending to start industries in the Industrial Area.

39.Regulation 9 of the KIADB Regulations provides for the

KIADB to register all the applications which are complete

in order in the Register maintained in Form 2 and grant

Page 34 34

receipts for all sums received as application fee, initial

deposit or other deposits.

40.Regulation 10 of the KIADB Regulations provides that

the KIADB after being satisfied that the person, firm or

Company who makes an application is likely to start

production within a reasonable period, and is not one which

is declared obnoxious under Regulation 14, may make an

allotment in his/their favour thereafter. Clause (b) of

the Regulation 10 of the KIADB Regulations empowers the

KIADB to constitute sub-committees for considering the

applications for allotment of plots and also delegate its

power to the Executive Member of the Board; if necessary

for the purpose of allotment of industrial plant/ shed.

Clause (c) of the Regulation 10 of the KIADB Regulations

empowers Executive Member to notify such applicant to whom

an allotment is made and to execute the agreement in Form 3

or 4 or 5 as the case may be with such modification as may

be required in each case on such date, time and place.

Clause (d) of Regulation 10 of the KIADB Regulations

provides that failure to execute the agreement or to pay

Page 35 35

the sums demanded by the Executive Member as per notice

given under Regulation 10 (c) will render the allottee to

have deemed to have declined the allotment; Clause (e) of

Regulation 10 grants the discretion to the KIADB or the

Executive Member with the authority of the KIADB to grant

extension of time for complying with the terms of the

notice issued under Regulation 10 (c) with or without

payment of interest at nine per cent on the sums payable to

the KIADB in terms of the said notice for the extended

period.

41.The aforesaid provisions of the KIAD Act and KIADB

Regulations make it abundantly clear that the acquisition

of the agricultural land in the notified Industrial Area

vide notifications issued under Section 28(1) and (4) of

the KIAD Act, empowers the State Government to acquire the

land for the purpose of industrial development by the KIADB

after the acquired land possession is transferred in its

favour by the State Government.

42.Sections 29 and 30 of the KIAD Act read with Sections

11, 18 and 30 of the L.A. Act would clearly mandate that

Page 36 36

both the state government and the KIADB are liable, jointly

or severally, to pay the compensation to the owners or

interested persons of the acquired land. The market value

of the acquired land is required to be determined by the

Reference Court by applying the provisions of Section 18 of

the L.A. Act, after passing an award as provided under

Section 11 and notifying the same to the landowners or

interested persons under Section 12(2) of the L.A. Act if

the owners are not satisfied with either the compensation

awarded by the Deputy Commissioner or with regard to the

area of acquisition of land.

43.A careful reading of the regulations referred to supra

make it abundantly clear that the land acquired shall be

disposed off by the KIADB by inviting applications from the

eligible applicants, notifying the availability of land,

prescribing the manner of such disposal and fixing the last

date for submitting applications and giving such

particulars as it may consider absolutely necessary by

publishing it in the newspapers having wide circulation in

and outside the state of Karnataka.

Page 37 37

44.In the appeals arising out of SLP (C) Nos. 31624-31625

of 2014, it has been specifically mentioned in Annexure

P-1, that the lands specified in the schedule mentioned in

the notification are required for the development by the

KIADB for the establishment of the industries therein. In

exercise of powers conferred by sub-Section (1) of Section

28 of the KIAD Act, the state government had given notice

to the landowners of its intention to acquire the said land

in favour of industrial development by the KIADB.

45.Clause 1 of Annexure P-5, which is a copy of the

agreement made between KIADB and M/S Rajshree Cements reads

thus:

“An agreement made at Gulbarga the Second day of

April, 2005 between the Karnataka Industrial

Area Development Board having its office at

Kapnoor 1st Stage Industrial Area Humnabad Road

Gulbarga represented by Sr. G.H. SREEDHARA,

Deputy Development Officer hereinafter called

the ‘lessor’ (which term shall wherever the

context so permits, and include its successors

in interest) of the one part M/s. Rajashree

Cement, Aditya Nagar, Malkhed, represented) by

Sri Sunil Kothari Vice-President (F&C)

hereinafter called the ‘lessee’ (which term

shall wherever the context so permits, mean and

include his/her/its heirs, executor,

administrators, assignee and legal

representatives) of the other part....

Page 38 38

NOW IT IS HEREBY AGREED BETWEEN THE PARTIES

HERETO as follows:

1.In consideration of the sum of Rs. 65,704.00

paid by the lessee to the lessor as premium

and of the rent hereby reserved and of the

covenants and agreements on the part of the

lessee hereinafter contained the lessor

hereby demise unto the lessee all that piece

of land known as Sy. Nos. 306, Sy. Nos.

306/9/1, 306/10/J of Malkhed (J) village

Sedam Taluk and Sy. Nos. 323/1, 324/1, 325/1

of Diggaon village Chittapur Taluk District

Gulbarga containing by admeasurements 27

acres 21 Guntas or thereabouts and more

fully described in the first schedule

hereunder written and delineated on the plan

annexed hereto and thereon surrounded by a

red colour boundary line together with the

buildings and erections now or at any time

hereafter standing and being thereon and

together with all rights, easements and

appurtenances thereto belonging except and

reserving unto the lessor all mines and

minerals in and under the said land, or any,

part thereof to hold the land and premises

hereinbefore expressed to be there by

demised (hereinafter referred to as the

‘demised premises’) unto the lessee for the

terms of 21 years computed the the 31

st

day

of March, 2005 unless the lease is

determined earlier under clause – 4 hereof

PAYING therefore yearly, during the said

term unto the lessor at the office of the

Executive Member or as otherwise required

the yearly rent of R.100/- the said rent to

be paid over a period of 21 years without

any deductions whatsoever on the 31

st

day of

March month in each and every year.

Provided always that in case any payment is

not made on the date on which day it becomes

Page 39 39

due amount in shall be charged interest at

18% per annum or such rates as may be fixed

by the lessor from time to time the due date

to the date of payment.”

(Emphasis laid by this court)

46.The said lease deed is executed between the parties

viz. KIADB and the Company with such terms and conditions

as mentioned under Clauses 5 (a) and (b) which are

extracted hereunder:

“5(a) The premium indicated in clause I of this

agreement represents the tentative cost of land.

In the event of lessor incurring the payment of

amounts to the land owners over and above the

awards made by the acquiring authority by virtue

of awards passed by the competent court of law or

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 or any other officer authorized by the

lessor. Further, in the event of lessor

incurring the payment amounts to the land owners

for the Malkies and structures existing on the

demised premises, the same shall be met by the

lessor within one month from the date of receipt

of communication signed by the Executive Member

or any other officer authorised by the lessor.

b) As soon as it may be convenient the lessor

will fix the price of the demised premises at

which it will be sold to the lessee and

communicate it to the lessee and decision of the

lessor in this regard will be final and binding,

on, the lessee. The lessee shall pay the balance

of the value of the property, if any after

adjusting the premium and the total amount of

Page 40 40

rent paid by the lessee and earnest money deposit

within one month from the date of receipt of

communication signed by the lessor or any other

officer authorised in this behalf by the lessor.

On the other hand, if any sum is determined as

payable by the lessor to the lessee after the

adjustment as aforesaid, such sum shall be

refunded to the lessee before the date of

execution of the sale deed.”

(Emphasis laid by this court)

47.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 the KIADB in favour

of the Company after allotment of land was made in favour

of the Company as provided under Regulation 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 land owners over and above the

Page 41 41

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 L.A. 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.

48.From a careful reading of the aforesaid clauses of the

lease agreement along with the provision Section 32(2) of

the KIAD Act and Regulation Nos. 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 the KIADB in its favour and has

executed the lease deed in its favour in respect of the

allotted land.

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

notifications issued under Section 28(1) and 28(4) of the

KIAD Act by the State Government, it can be safely

Page 42 42

concluded by us that the acquisition of the land involved

in these proceedings is for the purpose of industrial

development by the KIADB in the Sedam Taluk. Therefore,

the beneficiary of the acquired land is only the 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 the KIADB for its

development and disposal of the same in accordance with

Regulation 10(a) of the KIADB Regulations, referred to

supra.

50.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

Page 43 43

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 land

owners 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 authorized by

the lessor. In view of the above conditions of the lease

agreement, neither the KIADB nor the Company can contend

that the acquisition of the land involved in these

proceedings is in favour of the lessee Company. 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 L.A. Act as per

which, “person interested” includes all persons claiming an

Page 44 44

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 L.A. 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.

51.A careful reading of the aforesaid provisions of the

L.A. Act, 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.

52.The strong submissions made by learned senior counsel

Page 45 45

on behalf of the respondents Dr A.M.Singhvi and Mr. Basava

Prabhu Patil, in interpreting the aforesaid provisions of

Sections 3(b),9,11 and 20(b) read with Section 54 of the

L.A. Act are totally misplaced and misconceived for the

reason that the Company cannot be considered as “person

interested” to claim interest in the compensation to be

made to the owners on account of the acquisition of the

land of the appellants/owners and other landowners.

53.Further strong reliance has been placed by the learned

senior counsel on behalf of the Company upon Section 3(f)

(viii) of the L.A. Act, as amended by the Karnataka

legislature by Act No.17 of 61 to show that the Company is

an ‘interested person’ in the proceedings of determination

of the market value of the acquired land and passing of an

award. Section 3 (f) (viii) includes the provision of land

for acquisition in favour of a company- a) where the land

is needed for the construction of some work, and such work

is likely to prove substantially useful to the public; or

b) where the land is needed by a building co-operative

society or corporation for the construction of houses. The

Page 46 46

said contention of the learned senior counsel is wholly

misconceived as the said provision has no application to

the fact situation.

54.The acquisition of land under the provisions of the

L.A. Act in favour of a Company the mandatory procedure as

provided under part VII of the L.A. 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 KIAD Act and therefore the reliance

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

Karnataka L.A. Amended Act of 17/1961 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.

55.The definition of “public purpose” under the L.A. Act

cannot be imported to the acquisition of land by the State

Government for the industrial development under the

provision of 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 :-

Page 47 47

“(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 re-development; 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 infrastructure 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.

56.Reliance has also been placed by the learned senior

counsel upon Sections 3(b), 9 and 20(b) of the L.A. Act,

which provisions deal with service of notice to all persons

interested in the possession of the acquired land except

such (if any) of them as have consented without protest to

receive payment of compensation awarded for the purpose of

holding an enquiry by the Special Deputy Commissioner for

determination of compensation of the acquired land. None of

the above provisions of the L.A. Act supports the case of

Page 48 48

either the KIADB or the Company. Therefore, the contention

urged on their behalf that the Company is an interested

person in the acquired land for determination of

compensation to be paid to the landowners for their

acquired land is wholly untenable and therefore, the same

cannot be accepted by this Court.

57.The reliance placed upon the provisions of Sections 50

(1) and (2) of the L.A. Act, also are not applicable to the

case on hand for the reason that Section 50 of the L.A. Act

applies to the acquisition of land in favour of a Company

by the State Government by following the mandatory

procedure contemplated under Part VII of the L.A. 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

re-determination 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

Page 49 49

cannot be accepted and the same is rejected.

58.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 Land Acquisition Officer or 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 the cases of U.P Awas Evam Vikas v. Gyan

Devi, (1995) 2 SCC 326, Himalayan Tiles and Marble Pvt Ltd

v. Francis Victor (1980) 3 SCC 223, and P Narayanappa and

anr v. State of Karnataka & Ors ., (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.

The reliance placed on the various decisions of this

Court by both the learned senior counsel on behalf of the

Page 50 50

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 L.A. Act, either in favour of the Company

or Development Authorities, whereas in the case on hand,

the acquisition proceedings have been initiated under the

KIAD Act for industrial development by the 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 and

24.3.2015, 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 the 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

Page 51 51

favour of the 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 the 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 the KIADB, are wholly inapplicable to the fact

situation and do not support the case of the Company. 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 the point nos.1, 2 and 3

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

Page 52 52

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 re-consideration 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.

59.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 re-determination of

compensation for the acquired land is wholly impermissible

in law and the same are in contravention of the provisions

of the KIAD Act, L.A. Act, the KIADB Regulations and the

lease agreement, which has been executed by the KIADB in

favour of the Company and therefore, the impugned judgment

Page 53 53

and order is liable to be set aside by allowing the appeals

of the owners.

60.Further, the learned single Judge of the High Court has

further committed an error in law in not appreciating

Section 54 of the L.A. Act, which provision provides the

right to appeal to the land owners, 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. The 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 the KIADB.

61.Therefore, the appeal filed by KIADB questioning the

order of remand passed in the Writ Petition and Review

Page 54 54

Petition is liable to be set aside. The appeal has been

filed by the KIADB as it is aggrieved of the findings and

certain observation recorded against them by the High Court

and it has got reasonable apprehension that the Reference

Court may not appreciate the facts and evidence that may be

produced before it. For the reasons stated above, the

appeal filed by the KIADB has no merit and they have become

unnecessary hence, the same are liable to be dismissed.

Accordingly, we dismiss the same.

Answer to Point Nos. 4 & 5 regarding enhancement of

Compensation

62.Since the appeals arising out of S.L.P. Nos.

31624-31625 are allowed and the appeals arising out of

S.L.P. Nos. 3482-3484 of 2015 filed by the State of

Karnataka through Special Deputy Commissioner, Gulbarga,

wherein it has sought to set aside certain findings in the

impugned judgment and order dated 02.09.2014 passed in

Review Petition No. 2537 of 2013 filed in MFA No. 32157 of

2012 and Writ Petition No. 100860 of 2013 passed by the

Page 55 55

learned Judge, are dismissed, we are required to consider

the appeal arising out of SLP (C) No. 19819 of 2013 filed

by the appellants as they are aggrieved by the inadequate

compensation awarded by the Reference Court, which has been

upheld by the High Court.

63.The Reference Court vide its judgment and order dated

29.09.2012 enhanced the compensation from Rs 1,700/- per

acre to Rs. 1,37,000/- per acre. The Reference Court relied

on the judgment and order of the Karnataka High Court dated

27.02.2005 in MFA No. 3796 of 2005 and Cross Objection No.

213 of 2005, which pertains to the same village, where the

lands of the owners were acquired for establishment of

industries under notification in the year 1988. The High

Court in the said case questioned the correctness of

determination of market value by the Reference Court at Rs.

5.7/- per sq. ft. in Cross Objection No. 213 of 2005 filed

by the respondent-landowner in the said appeal. In arriving

at the market value of the land under acquisition, the said

compensation was made on the basis of the average of the

various rates covered under various sale-deeds under

Page 56 56

different sites, carved out from the lands in survey

numbers which lands are adjacent to the land covered in the

said MFA and Cross Objection, located at different places

and sold on different dates, which had been taken at

Rs.6.33 per sq.ft. The same had been escalated by 10% on

the ground that the date of preliminary notification in

that case was issued on 03.11.1988. The said sites under

the said sale-deeds referred to above were sold two to

three years earlier. The High Court held that taking the

average of the prices of different sites situated at

different places and sold at different points of time is

not permissible in law. The High Court took the value of

the plot as would be the most beneficial to the claimant

which was Rs.7.5/- per sq.ft for land carved out of Sy. No.

389 and at Rs. 13/- per sq. ft for the land carved out of

Sy. No. 414/2. The High Court enhanced the compensation

accordingly, after deduction of 10% towards escalation

charges.

The Reference Court in the present case after taking

the aforesaid criteria of developmental charges,

de-escalation charges and waiting period charges, awarded

Page 57 57

the compensation at Rs 7.5/- per sq.ft. in relation to the

land of the appellants in the present case. The

compensation was fixed at Rs.7.5 x 43,560 sq.ft. which came

to Rs.3,26,700/- after giving the necessary deduction

towards developmental charges was made at the rate of 25%

and 5% towards waiting period and expenses for conversion

i.e. 30%, which came to Rs.98,000/- deducted from

Rs.3,26,700/-. This was determined as the market value of

the land as on the date of the preliminary notification

dated 03.11.1988 as in the MFA No. 3796 of 2005 and Cross

Objection No. 213 of 2005. Since in the instant case, the

notification was issued on 18.06.1981, de-escalation

charges were deducted at the rate of 5% for 8 years, and an

award of Rs.1,37,000/- per acre was arrived at in the

present case by the Reference Court as compared to

Rs.2,50,000/- per acre as demanded by the appellants, which

was upheld by the High Court.

64.The correctness of the same has been challenged by the

learned senior counsel on behalf of the appellants

contending that the methodology adopted by the High Court

in determining the market value of the land covered in the

Page 58 58

MFA 3796 of 2005 and Cross Objection No. 213 of 2005 by

deducting charges including developmental charges, waiting

period charges, de-escalation and conversion expenses is

arbitrary and unreasonable. The same could not have been

adopted by the High Court.

65.Mr. Ranjit Kumar, the learned Solicitor General

appearing on behalf of the respondent State placed reliance

on the decision of this Court in the case of Chandrashekar

and Ors. v. Land Acquisition Officer and Another

7

, and

contends that the deduction to be made from the value of

the acquired land to be kept aside for providing

developmental infrastructures like roads, parks etc and

second component under the head of “development” should not

exceed upper benchmark of 67%. It was further contended

that the deductions towards the de-escalation and waiting

charges can be made at appropriate rates but all the

deductions put together should not exceed upper benchmark

of 75%. In the Chandrashekar case referred to supra, the

High Court had allowed 55% under the heading of

development, 10% under de-escalation and 5% under waiting

7 (2012) 1 SCC 390

Page 59 59

period which works out cumulatively to 70%. This Court had

held that it did not call for any interference which is

well within the upper benchmark of 75%.

66.It is further contended by the learned Solicitor

General that the lands acquired by way of notification Sy.

No. 389 were acquired in 1988, which could not be compared

to the land in the instant case, which had been acquired by

way of notification seven years earlier in 1981. It is

further contended by him that the lands covered in this

case are situated at 4 kms away from the land in Sy. No.

414/2, by relying on the village map. Hence, it is

contended by the learned Solicitor General that the same

could not have been taken by the Reference Court as the

criteria to re-determine the market value of the land of

the appellants in the award passed in respect of the land

covered in the notification of 1988. Therefore, it is

submitted that the enhancement of compensation sought by

the appellants is without any basis, hence they are not

entitled for the same and prayed for the dismissal of the

appeal.

67.It is further contended by the learned senior counsel

Page 60 60

on behalf of the KIADB that on the basis of the sale

statistics, the sale deeds produced in this appeal along

with counter statements after collecting the same from the

Sub-Registrar’s office in relation to the lands which are

sold nearby to the acquired land should be applied for the

purpose of re-determination of the market value of the

acquired land. It is contended that if the said sale-deeds

are taken into consideration, the appellants are not even

entitled to the compensation of Rs.1,37,000/- awarded by

the Reference Court, which award is affirmed in the MFA

filed by the appellant landowners. Therefore, he prayed for

dismissal of the appeal of the landowners seeking for

enhancement.

68.The learned senior counsel Mr. Mohan Parasaran,

appearing on behalf of the respondent KIADB in the

connected appeals arising out of SLP (C) Nos.3482-3484 of

2015 has vehemently requested this Court, if this Court is

of the view to re-determine/enhance the compensation, then

it may confine it to the owners of the land involved in

this case only for the reason that the said benefit cannot

be extended to other land owners as a vast extent of land

Page 61 61

has been acquired by the state government in the 1981

notification along with the land of the owners herein for

the purpose of industrial development by the KIADB and will

have serious financial implications on the part of the

allottee if the benefit is extended to all land owners

whose lands were acquired vide 1981 notification.

69.This Court at the time of issuing notice in the Civil

Appeal arising out of SLP (c) No. 19819 of 2013 has

indicated to the respondents that the owners are entitled

for enhancement of compensation and directed the Registry

of this Court to secure the original LAC record from the

Reference Court. We have heard the learned counsel on

behalf of the parties at length and perused the records

made available for our perusal.

70. The statutory notifications of acquisition of land

would clearly go to show that the land of the appellants

was acquired way back in the year 1981 for the purpose of

establishment of industries The land of the appellants has

non-agricultural potentiality, which fact is proved from

the notifications published by the State Government under

Page 62 62

Sections 28(1) and (4) of the KIAD Act, as the State

Government specifically mentioned therein that the

acquisition of the land of the appellants is for the

industrial development and establishment of industries

which is for non agricultural and commercial purpose.

71.Further, the land which has been covered under

notification in 1988 is also adjacent to the residential

sites which were formed. The land owners in that case

produced the sale deeds of the year 1986 and 1988

respectively, which was 2 years and 2 months earlier

respectively to the notification issued in the year 1988

and some of which were two to three years earlier. Taking

the said relevant facts into consideration, the High Court

of Karnataka re-determined the compensation at Rs. 7.5/-

per sq. ft of land bearing Sy. No. 389 covered in award

passed in MFA No. 3796 of 2005 and Cross Objection No. 213

of 2005 after giving deduction towards the developmental

charges, de-escalation and conversion charges. The same

method should be applied in the case on hand.

72.Further, the High Court ought to have taken into

Page 63 63

consideration the relevant fact that though the final

notification for the land covered in MFA No. 3796 of 2005

and Cross Objection No. 213 of 2005 was in the year 1988,

it was for the industrial development and the said land was

also leased in favour of the allottee Company by the KIADB

to be used for the industrial development. The land along

with the other lands covered in 1981 notification was also

acquired by the State Government for the purpose of the

industrial development and allotted to the Company for the

development of the industrial estate. Therefore, apart from

the fact that there was a gap of 7 years in which the lands

of the appellants were notified for acquisition to the land

covered in MFA No. 3796 of 2005 and Cross Objection No. 213

of 2005, it is an admitted fact that there is similarity in

the nature of the land and the purpose for which they were

acquired.

73. Keeping in mind that the land in question has got

non-agricultural potentiality, a 25% deduction towards

development charges and 5% deduction towards waiting period

for every year and expenses for conversion by the Reference

Court is definitely on the higher side. Hence, the same is

Page 64 64

required to be rejected, as it is erroneous and suffers

from error in law. Further, the reliance placed by the

learned Solicitor General on Chandrashekar’s case referred

to supra is misplaced, as the case has no relevance to the

facts of the case on hand. The total amount of charges

deducted in that case were to the tune of 55%. In the

instant case, a 30% deduction was made towards development

and waiting charges. As per the survey conducted by the

state government, it is an undisputed fact that mineral is

available in the land and the Company is extracting the

same to be used as raw material for the manufacture of

cement in its factory. Therefore, though the land in the

present case is a short distance away from the lands

covered in MFA No. 3796 of 2005 and Cross Objection No. 213

of 2005, both have been acquired for the purpose of

industrial development and sought to be used for the same

purpose by the Company. The land of the appellants herein

along with other lands that was acquired vide notification

in 1981 have been allotted in favour of the Company for the

purpose of extracting the mineral of limestone which is the

raw material used for the purpose of manufacturing the

Page 65 65

cement used for the commercial purpose. Therefore, the land

of the appellants is acquired for the non-agricultural

potentiality and the same is used for commercial purpose.

Therefore, determining deductions towards de-escalation at

5% per year for 7 years and 10% towards waiting and other

incidental charges would justify the re-determination of

the market value of the land of the appellants. There is no

need to deduct the developmental charges as has been done

by the Reference Court and Appellate Court in respect of

the land covered under MFA No. 3796 of 2005 and Cross

Objection No. 213 of 2005 upon which strong reliance has

been placed by the learned senior counsel for the

appellants, for the reason that there is no development

activities involved in respect of the land involved in

these appeals, as the same is being used by the Company for

extraction of minerals from the land, which are used as a

raw material for the purpose of manufacturing cement and

also for development of infrastructure of its factory.

Therefore, the enhancement of compensation at Rs.1,92,000/-

per acre as per the calculation below would be just and

reasonable.

Page 66 66

CALCULATION

i.Per sq ft = Rs.7.5/-

ii.Per acre = Rs.7.5 X 43,560 square feet=

Rs.3,26,700/- per acre.

iii.Incidental and other charges @ 10%= Rs.32, 670/-

iv.After the above deduction = Rs.2,94,030/-

v.De-escalation charges = 5% for 7 years (5% x 7 x

2,94,030/- = Rs.1,02,910/- per acre(rounded off)

vi.Compensation = Rs. 2,94,030/- (-) Rs. 1,02,910/- =

Rs. 1,91,120/-

vii.Final Compensation= Rs.1,92,000/- (rounded off)

74.It would be relevant to state here that compensation of

market value has to be determined notwithstanding the fact

that the date of the notification issued under Section

28(1) of the KIAD Act has not been taken into

consideration, but the criteria for determination of

market value of the land put to uses to which it is

reasonably capable of being put to in the future shall be

considered by the Court, as was held by the Privy Council

in the case of Raja Vyricherla Narayana Gajapatiraju v.

Revenue Divisional Officer, Vizagapatam

8

, wherein the law

on the subject has been succinctly laid down as under :

“The compensation must be determined therefore by

reference to the price which a willing vendor

8 AIR 1939 Privy Council 98

Page 67 67

might reasonably expect to obtain from a willing

purchaser. The disinclination of the vendor to

part with his land and the urgent necessity of

the purchaser to buy must alike be disregarded.

Neither must be considered as acting under

compulsion. This is implied in the common saying

that the value of the land is not to be estimated

at its value to the purchaser. But this does not

mean that the fact that some particular purchaser

might desire the land more than others is to be

disregarded. The wish of a particular purchaser,

though not his compulsion, may always be taken

into consideration for what it is worth. But the

question of what it may be worth, that is to say,

to what extent it should affect the compensation

to be awarded is one that will be dealt with

later in this judgment. It may also be observed

in passing that it is often said that it is the

value of the land to the vendor that has to be

estimated. This, however, is not in strictness

accurate. The land, for instance, may have for

the vendor a sentimental value far in excess of

its "market value". But the compensation must not

be increased by reason of any such consideration.

The vendor is to be treated as a vendor willing

to sell at "the market price", to use the words

of Section 23 of the Indian Act.

It is perhaps desirable in this connection

to say something about this expression "the

market price". There is not in general any market

for land in the sense in which one speaks of a

market for shares or a market for sugar or any

like commodity. The value of any such article at

any particular time can readily be ascertained by

the prices being obtained for similar articles in

the market. In the ease of land, its value in

general can also be measured by a consideration

of the prices that have been obtained in the past

for land of similar quality and in similar

positions, and this is what must be meant in

general by "the market value" in Section 23. But

Page 68 68

sometimes ii happens that the land to be valued

possesses some unusual, and it may be, unique

features as regards its position or its

potentialities. In such a case the arbitrator in

determining its value will have no market value

to guide him, and he will have to ascertain as

best he may from the materials before him, what a

willing vendor might reasonably expect to obtain

from a willing purchaser, for the land in that

particular position and with those particular

potentialities. For it has been established by

numerous authorities that the land is not to be

valued merely by reference to the use to which it

is being put at the time at which its value has

to be determined [that time under the Indian Act

being the date of the notification under Section

4 (1)], but also by reference to the uses to

which it is reasonably capable of being put in

the future.”

(Emphasis laid by this Court)

The above position of law laid down by the Privy Council

has been reiterated by this Court in a catena of cases. In

view of the same, we are of the considered view that the

market value of the land covered in MFA No. 3796 of 2005

and Cross Objection No. 213 of 2005 has to be applied to

the land of the appellants in the present case for the

reason that in both the notifications as the required land

has been put to use for the industrial development by the

KIADB, and the lands have been allotted to the Company for

the purpose of extracting sand stone from the lands which

Page 69 69

is used as raw material for manufacture of cement and for

providing infrastructure of the Company. However, having

regard to the facts and circumstances of the present case,

considering the fact that acquisition of the land was made

in the year 1981, it would be just and proper to fix the

compensation as per the above referred calculation at

Rs.1,92,000/- per acre, with all statutory benefits such as

solatium at 30% as provided under Section 23 (2) and

statutorily payable interest under Sections 23(1-A) and 28

of the L.A. Act, from the date of taking possession of the

land till the date of payment. The appellants are also

entitled to costs throughout as provided under Section 27

of the L.A. Act. The Respondents are directed to pay the

compensation to the appellants-landowners as directed

above, within eight weeks from the date of the receipt of

the copy of this judgment and award after proper

computation in the above terms.

(I)Accordingly, the appeals arising out of SLP

(C) Nos.31624-31625 of 2014 for setting aside

the judgment and order of remand passed by the

High Court in Writ Petition No. 100860 of 2013

Page 70 70

(filed by the Company) and the Review Petition

No. 2537 of 2013 (filed by KIADB) are allowed

and set aside the same by allowing these

appeals.

(II)The appeals arising out of SLP (C)

Nos.3482-3484 of 2015 filed by the KIADB for

setting aside the observations and findings

recorded in the judgment and order of remand

passed by the High Court at the instance of

KIADB and the Company are dismissed as it is

unnecessary in the light of the setting aside

of the impugned judgment and order of remand

to the Reference Court by this Court.

(III) The appeal arising out of SLP (C) No.

19819 of 2013 filed by the landowners for

enhancement of compensation in respect of

their acquired land is allowed as clearly

mentioned in the penultimate paragraph of this

judgment i.e. enhancement of the compensation

amount from Rs.1,37,000/- to 1,92,000/- per

acre along with solatium at the rate of 30%

Page 71 71

under Section 23 (2)and statutorily payable

interest under Sections 23 (1-A), 28 of the

L.A. Act upon the compensation awarded in this

appeal. The appellants are also entitled to

the costs of the proceedings throughout as

provided under Section 27 of L.A. Act. The

memo of costs may be filed within three weeks

to prepare the decree.

I.A. No. 2 for impleadment of Ultra Tech Cement Ltd. is

dismissed as not maintainable, however, they have been

heard in the matter.

…………………………………………………………………… J.

[V.GOPALA GOWDA]

…………………………………………………………………… J.

[C.NAGAPPAN]

New Delhi,

July 30, 2015

Page 72 72

ITEM NO.1A-For Judgment COURT NO.2 SECTION IVA

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

Civil Appeal No(s).5804/2015 @ SLP(C) No.19819/2013

PEERAPPA HANMANTHA HARIJAN(D) BY LRS.& OR Appellant(s)

VERSUS

STATE OF KARNATAKA Respondent(s)

WITH

Civil Appeal No(s).5806-5807/2015 @ SLP(C) Nos. 31624-31625/2014

Civil Appeal No(s).5808-5810/2015 @ SLP(C) Nos. 3482-3484 /2015

Date : 30/07/2015 These appeals were called on for pronouncement of

JUDGMENT today.

For Appellant(s)

Dr. (Mrs.) Vipin Gupta,Adv.

Mr. Anup Jain,Adv.

For Respondent(s)

For M/s. Khaitan & Co.

Mr. Abhijat P. Medh,Adv.

UPON hearing the counsel the Court made the following

O R D E R

Hon'ble Mr. Justice V.Gopala Gowda pronounced the

judgment of the Bench comprising His Lordship and Hon'ble Mr.

Justice C. Nagappan.

Leave granted.

The appeals arising out of SLP(C) Nos.31624-31625/2014

Page 73 73

are allowed, the appeals arising out of SLP(C)

Nos.3482-3484/2015 are dismissed and the appeal arising out of

SLP(C) No.19819/2013 is allowed in terms of the signed

Reportable Judgment.

I.A. No. 2 for impleadment of Ultra Tech Cement Ltd. is

dismissed as not maintainable, however, they have been heard in

the matter.

Pending application(s), if any, stands disposed of.

(VINOD KR.JHA) (VEENA KHERA)

COURT MASTER COURT MASTER

(Signed Reportable Judgment is placed on the file)