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Non-reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6599 OF 2002

Manager, Matha Nagar School … Appellant

Vs.

Greater Cochin Development Authority  & Ors. … Respondents

WITH  CIVIL APPEAL No.6600 of 2002

Greater Cochin Development Authority … Appellant

Vs.

The Manager, Matha Nagar School   & Ors. … Respondents

J U D G M E N T

R.V.RAVEENDRAN, J.

C.A. No.6599/2002 is filed by Matha Nagar School, Cochin, (for short  

'the  School')  where  the  issue  involved  is  the  validity  of  a  demand  for  Rs.  

76,48,237/- by the Greater Cochin Development Authority (‘GCDA’ for short)  

towards the cost 50.44 Ares of of land delivered by GCDA to the school. C.A.  

No.6600  of  2002  is  filed  by  GCDA  against  the  judgment  dated  23.1.2001  

passed by a Division Bench of the Kerala High Court allowing the writ petition

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(O.P. No.8749 of 1995) filed by  the Matha Nagar School and declaring that the  

acquisition notification dated 11.4.1987 issued by GCDA under section 4 of the  

Land Acquisition Act and consequential proceedings including the award, are  

not binding on the 50.44 Ares of land  allotted to the school by GCDA. As the  

two  appeals  have  common  issues  and  are  inter-linked  they  are  heard  and  

disposed of by this common judgment.

2.One T.V.Joseph was the owner of land bearing survey No.330/1 (subsequently  

numbered as Sy.No.330/4 of Elamkulam) measuring a little less than an hectare  

(97.91 Ares) adjoining the Matha Nagar Church and school. In view of the land  

use  being  freezed  under  the  'Elamkulam  Road  Scheme',  he  was  finding  it  

difficult to put the land to optimum use. He was also in urgent need of funds for  

his  family  needs.  He  therefore  wrote  a  letter  dated  4.8.1981  requesting  the  

GCDA to purchase his land excluding the portion occupied by his residence and  

give  him the  market  price  therefor.  GCDA  on  considering  the  said  request  

made an order dated 11.12.1981 accepting the proposal and agreed to purchase  

the  said  land  (which  had  been  approximately  valued  at  Rs.2,59,975/-)  and  

authorized its Special Tehsildar (LA) GCDA to take advance possession of the  

land and pay him Rs.1,25,000 as advance on account. Accordingly possession  

was taken on 14.12.1981.

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3.The school which was functioning near the said land was in urgent need of  

additional land for its expansion. Therefore it requested GCDA to allot them an  

extent of one and quarter acre out of the said land. The GCDA Board considered  

the request  and resolved on 28.2.1982 to transfer 1 acre 24.541 cents to the  

school. In pursuance of it, the Planning Committee of GCDA at its meeting on  

17.12.1983 decided to sell the said extent of land to the school without any kind  

of  development on the following conditions  :  (a)  the possession of  the land  

would  be  transferred  on  payment  of  a  provisional  sum  subject  to  final  

determination  of  the  value;  (b)  the  sale  deed  would  be  executed  only  on  

payment of full consideration;  (c)  the provisional value of the land to be sold to  

the school was Rs.8000 per Are for the dry land portion and Rs.5000 per Are for  

the wet land portion; and (d) the School should pay an additional amount to be  

determined  by  GCDA  subsequently  as  its  profit.  Thereafter,  the  Board  of  

GCDA passed a resolution on 31.3.1984 approving the proposal by the Planning  

Committee  to  sell  the  said  extent  of  land  to  the  school.  It  directed  that  the  

provisional amount to be collected will be subject to final determination and the  

School  should  pay  50% of  the  land  cost  determined  by  LAO as  additional  

amount. The School sent a letter dated 5.4.1984 to GCDA confirming that it was  

agreeable to pay the cost of acquisition plus 50%. In pursuance of the above, the  

GCDA sent a communication dated 17.4.1984 to the school informing that 1  

acre 24.541 cents of land was allotted to it subject to a provisional payment of

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Rs.310000, the actual value to be determined on completion of land acquisition  

proceedings.  It  was made clear that the sum of Rs.3,10,000/- was not to be  

considered as the final land value and no sale deed will be executed until the  

land value was fixed and the full amount is paid. It was also informed that the  

decision of the Board fixing the sale price would be final and if the amount paid  

by the School, was not sufficient, it may recover the balance amount by having  

resort  to  revenue  recovery  proceedings.  In  pursuance  of  it,  the  school  paid  

Rs.3,10,000/- to GCDA on 7.5.1984 and took possession of the land, which was  

confirmed by issue of  a possession certificate by GCDA on 9.5.1984.

4.GCDA however did not finalize the full price payable to to T. V. Joseph. It is  

stated that though proceedings were initiated under the Kerala Land Acquisition  

Act (which contained special provision for award based on private agreement).  

GCDA did not proceed further in the matter. When matters stood thus, T.V.  

Joseph died, his legal representatives/successors (hereinafter referred to as the  

“land owners”) started interfering with the possession of the School, apparently  

on the ground they had not received the full consideration for the land from  

GCDA. Therefore the school by letter dated 15.2.1985 requested the GCDA to  

pay the  balance  sale  price  to  the  landowners.  That  was  not  done.  The land  

owners filed a suit (O.S. No.436/1985) for getting back the land as the payment  

was not  made.  They also filed a writ  petition (OP No.9445/1985) seeking a

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direction to GCDA to return the land to them and for declaring the Ernakulam  

Town Planning scheme with reference to which the said land was taken, to be  

inoperative and void. A learned Single Judge of the High Court by order dated  

21.10.1985  dismissed  the  writ  petition  holding  that  the  land  owners  had  

delivered  possession  of  the  land  to  GCDA  on  receiving  a  part  of  the  

compensation and therefore the landowners were entitled to only payment of  

balance of the compensation and not for return of the land. The writ appeal filed  

by the landowners was also dismissed on 10.1.1986 and attained finality.

5. Even thereafter GCDA did not arrive at any settlement with  the land  

owners.  On the ground that  the proceedings initiated under the Kerala Land  

Acquisition Act relating to the acquisition of the land had lapsed in September  

1986, fresh proceedings were initiated for acquisition by issue of a notification  

under section 4(1) of the Land Acquisition Act, 1894 ('LA Act' for short) by the  

state  government  at  the  instance  of  GCDA.  It  was  followed  by  a  final  

declaration (gazetted on 16.8.1988) under section 6(1) of the LA Act and an  

award  was  made  valuing  the  land  at  Rs.  19150/-  per  Are  for  dry  land  and  

Rs.5530/-  per  Are  for  wet  land.  Not  being  satisfied  the  landowners  sought  

reference to the civil court and the reference court by award dated 31.1.1991  

determined the compensation as Rs.13500 per cent in regard to 0.1906 hectares  

of dry land and Rs.12,000 per cent in regard to 0.7885 hectares of wet land. The

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reference court also awarded 30% solatium on the enhanced land value and 9%  

interest from 24.12.1981 to 23.12.1982 and thereafter at 15% per annum. The  

reference  court  denied  additional  compensation  under  section  23(1A) of  LA  

Act. The award of the reference court was challenged by the State Government  

in LAA No.  852 of  1992 and the High Court  by judgment dated 24.5.2001  

modified the award by fixing the land value as Rs.10500 per cent uniformly for  

both dry and wet lands with interest  as awarded by the reference court.  The  

High Court upheld the award of solatium, but denied interest on solatium.

6. In the meanwhile,  on the basis of the compensation determined by the  

reference court, GCDA made a demand on the school on 5.1.1993, stating that a  

sum  of  Rs.52,16,060.12  was  due  towards  the  land  cost  with  solatium  and  

interest, and after deducting a sum of Rs.3,10,000 already paid by the school,  

balance  due  was  Rs.49,06,065.02  and  on  adding  Rs.26,08,032.50  (50%  of  

Rs.52,16,065/)  towards  the  profit  of  GCDA   the  total  amount  due  was  

Rs.75,14,097.52 and called upon the school to pay the same. The school sent a  

reply dated 18.2.1993 contending that the land had been acquired from the land  

owner at an agreed price of Rs.4500/- per Are for dry land and Rs.2500/- per  

Are for wet land and therefore it was only liable to pay the value on that basis  

and therefore, the demand was illegal and invalid. Thereafter a revenue recovery  

notice dated 23.4.1993 was sent claiming payment of Rs.73,73,616/- followed

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by another notice dated 28.7.1993 demanding Rs.76,48,237/-. Feeling aggrieved  

the school filed a writ petition (O.P. No.13813/1993). A learned Single Judge of  

the High Court dismissed the petition by order dated 15.6.1994. He held that the  

school had agreed to pay the enhanced amount as determined by GCDA and a  

public development authority like GCDA could not be expected, after paying  

the market price determined by the court to the land owner, to receive only a  

small portion thereof from the allottee. He therefore held that the school was  

liable to pay the amount demanded. The said decision of the learned Single  

Judge was challenged in W.A.No.1204/1994 which was dismissed by judgment  

dated 21.10.1994, subject however to an observation that if there was any error  

in calculation of the amount claimed by GCDA, the school may get the amount  

checked by GCDA and pay only the actual amount due. The said judgment is  

challenged by the school in CA No.6599/2002.

7. When  the  Division  Bench  rendered  the  said  judgment  upholding  the  

demand,  apart  from filing an SLP challenging the said judgment,  the school  

filed another  writ  petition in  (O.P.No.8741/1995)  challenging the acquisition  

notification  dated  11.8.1987  under  section  4(1)  of  the  LA  Act  and  all  

consequential  proceedings  therefrom,  as  being  null  and  void.  The  said  writ  

petition was allowed by a Division Bench of the High Court by judgment dated  

23.1.2001.  The High Court held that T.V.Joseph had agreed for a compensation

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of Rs.2,59,975/- determined by GCDA and on that basis the land had vested in  

GCDA and GCDA had also sold a portion of it to the school and therefore there  

was  no  question  of  any  'lapse  of  acquisition'  nor  was  there  any  need  for  a  

subsequent acquisition in a proceeding initiated under preliminary notification  

dated  11.8.1987;  and  therefore  the  land-owners  were  entitled  to  claim only  

balance  of  the  price.  The  High  Court  also  held  that  as  the  school  was  in  

possession, without issuing any notice to it, fresh proceedings for acquisition  

could not have been commenced and that was a colourable exercise of power.  

Lastly, the High Court found that in regard to a neighbouring land, in similar  

circumstances, a consent award had been made with reference to the agreement  

between the landowners and the GCDA, and therefore a similar procedure ought  

to  have  been  followed  instead  of  initiating  a  fresh  acquisition  proceedings.  

Consequently,  the  High  Court  held  that  the  preliminary  notification  dated  

11.8.1987 and consequential proceedings for acquisition were not binding on  

the  land  that  was  allotted  by  the  GCDA  to  the  school.  The  said  order  is  

challenged by GCDA in CA No.6600/2002.  

8. On the contentions urged, the following questions arise for consideration:

(i) Whether the land of T.V. Joseph had vested in GCDA and therefore it was  unnecessary  to  initiate  fresh  acquisition  proceedings  under  preliminary  notification dated 11.8.1987 followed by final declaration dated 16.8.1988 and  award ?

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(ii) Whether the school is liable to pay for the land given to it, only at the rate of  Rs.4500 per are of dry land and Rs.2500 per are of wet land? Or whether they  are liable to pay the actual acquisition cost incurred by GCDA?

(iii)Whether GCDA is entitled to claim from the School, 50% of the amount  acquisition cost, as profit in addition to the actual acquisition cost?

Re : Question (i)

9. The order dated 11.12.1981 of GCDA accords sanction for acquisition of  

T.V.Joseph’s  land  and  refers  to  the  approximate  valuation  in  1981  as  

Rs.2,59,975. Even though possession was taken, only an advance of Rs.125000,  

was paid to the land-owner. There was no agreement on price, nor any consent  

award. There is nothing to show that T. V. Joseph or his LRs. had agreed to  

receive Rs.2,59,975/- as full and final price. Even the resolution allotting a part  

of the land to the school stated that the possession of the land had been taken in  

advance of the acquisition proceedings and full compensation was yet to be paid  

to the landowner. It is possible that if GCDA had paid the entire value to the  

landowner in the year 1981 itself by negotiating the final price, the landowner  

might  have  accepted  Rs.2,59,975 or  some increase  thereon in  full  and final  

settlement. But except paying an advance of Rs.125000 and taking possession,  

GCDA did not complete the transaction. Therefore it  cannot be said that the  

land  vested  in  GCDA,  merely  on  negotiations  and  possession,  without  any  

declaration  under  section  6  or  an  award.  Consequently  the  acquisition  

proceedings  initiated  by  issue  of  a  notification  dated  11.8.1987  under

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section 4(1) of the Act, cannot be said to be redundant or unnecessary. But for  

such acquisition proceeding, the land would not have legally vested in GCDA  

and the school might not have got a valid title to the land in spite of delivery of  

possession. The proceedings for acquisition and the consequential proceedings  

for determination of compensation can not  therefore be said to be illegal  or  

irregular.

Re : Question (ii)

10. The contention of the school that it was liable to pay only at the rate of  

Rs.4500 per are for dry land and Rs.2500 per are for the wet land, is wholly  

untenable.  The  proceedings  of  the  GCDA  Planning  Committee  dated  

17.12.1983 makes it  clear that what was initially to be collected was only a  

provisional amount, that the tentative rate of Rs.8000 per are for dry land and  

Rs.5000  per  are   for  the  wet  land  mentioned  in  the  proceedings,  were  

provisional subject to finalization, and that full cost to be paid by the School  

would be known only after full settlement of the claim of the landowners. Again  

by letter dated 17.4.1984 GCDA informed that Rs.310000 was not the actual  

cost but was only a provisional on account payment and the school had to pay  

the actual amount determined in the land acquisition proceedings.   In fact the  

school  had  given  a  letter  dated  5.4.1984  offering  to  pay  the  amount  so  

determined. The School, having taken possession of the land by agreeing to pay

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the actual acquisition cost, cannot contend that the acquisition proceedings were  

null and void. It should also be noted that when there were delays and laches on  

the part of GCDA, the school remained a silent spectator without taking any  

legal action to quicken the process. It can not therefore escape its liability to pay  

the actual cost determined with reference to the compensation paid to the land  

owners.

Re : Question (iii)

11. This takes us to the next question as to whether GCDA should get 50% in  

addition to the cost as its profit. The proceedings dated 17.12.1983 provided that  

profit  to  be  recovered  from the  school  will  be  finalized  later.  It  should  be  

noticed  that  the  profit  that  it  was  contemplating  at  that  juncture  was  with  

reference to a price in the range of Rs.8000 per Are of dry land and Rs.5000 per  

Are for wet lands.  The said proceedings did not  say that  50% of the  actual  

amount  paid  to  the  landowners  should  be  paid  as  profit.  The  letter  dated  

17.4.1984 also does not say that 50% should be paid as profit. The Board of  

GCDA at  its  meeting  on 31.3.1984 while  approving the  recommendation  of  

Planning  Committee  to  sell  1  acre  24.541  cents  to  the  school  without  

development, stipulated that the transfer of land will be after payment of cost of  

the  land  determined  with  reference  to  the  actual  amount  paid  for  the  land

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towards the land acquisition plus 50% thereof. The school also by letter dated  

5.4.1984 stated that it was agreeable to pay the land acquisition cost plus 50%.  

12. If  GCDA, to say the least,  had acted with lack of care,  diligence and  

expedition.  As  noticed  above,  the  landowner  offered  the  land  on  4.8.1981,  

GCDA  agreed  to  purchase  the  land  on  11.12.1981,  paid  an  advance  of  

Rs.125000 and took possession on 14.12.1981. There was no impediment  to  

negotiate and arrive at a final  price with the land owner and pass a consent  

award. GCDA also had the sum of Rs.310,000/- received from the school at its  

disposal for paying any agreed price and the said sum would have covered the  

amount that was initially assessed as the value of the land namely Rs.259,975/-  

or even something more. Instead of negotiating the price and paying the balance  

in  full  and  final  settlement,  GCDA without  any  cause  or  justifiable  reason,  

failed  to  settle  the  matter  with  T.  V.  Joseph,  protracted  the  entire  matter  

necessitating acquisition proceedings to be initiated on 11.8.1987.  

13. If GCDA had acted promptly and diligently by paying the amount due to  

the landowner from the amount recovered from the school, the huge liability to  

the land owner could have been avoided and even 50% profit that would have  

been payable by the school would have been nominal. Further, even as per the  

condition stipulated by GCDA, 50% could be claimed as profit,  only on the

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actual compensation and not on the solatium or interest paid by GCDA. GCDA  

cannot be permitted to make a profit out of its own delay and negligence. As the  

entire agreement to pay 50% profit to GCDA was in the context of a negotiated  

price being paid to the land owner and that was thwarted by the negligence and  

inaction on the part of GCDA, it cannot, in addition to saddling the school with  

a huge liability towards the cost of land, arbitrarily claim as profit, 50% of the  

huge  acquisition  cost  most  of  which  is  made  up  of  interest.  We  therefore  

consider it appropriate to  restrict the 50% profit claimed by GCDA, only on the  

amount indicated by it as the probable cost of the land in its proceedings dated  

17.12.1983.  

14. GCDA has provided a statement showing the actual cost of the land given  

to the school (50.44 Ares) on the basis of acquisition cost, from which figures at  

(i), (ii) and (iii) are extracted. We have arrived at the amount due to GCDA in  

the following manner :

(i)Total cost of acquisition of 97.91 ares Rs.89,29,131.08            of land (compensation with statutory  

payment and interest as per judgment  of the High Court)

(ii) Cost incurred by GCDA per are Rs.     91,197.34

(iii)Actual cost of 50.44 Ares Rs.45,99,994.00

(iv) Profit at 50% on the tentative cost of 50.44 ares of the land (shown as Rs.8000/- per  

         are for 20% and Rs.5000/- per are for            the remaining 80% of the land, average

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         being Rs.5600/- per are).            Rs. 141,232.00 --------------------

Total of (iii + iv) Rs.47,41,226.00

(v) Less : Amount already paid by School Rs.  3,10,000.00 -------------------

Balance amount payable by School Rs.44,31,226.00 ============

14. In view of the above and with the intention of doing complete justice  

between the parties we direct as follows :

(i) The school shall pay Rs.44,31,226/- to GCDA in full and final settlement  

within four months from today.  (If the school has paid any amount in addition  

to Rs.310,000/-, it will be entitled to adjustment thereof). If the school fails to  

pay the same within the time granted, the school shall be liable to pay interest  

on the amount due at 15% per annum from this date to date of payment.

(ii)  The landowners  will  be entitled to the compensation  and other  statutory  

benefits as awarded by the High Court in the judgment dated 24.5.2001 in LAA  

No.852/1992. They will not be entitled to claim any additional amount under  

section 23(1A) or interest on solatium by way of review or amendment. [This is  

because  the  judgment  has  an  error  benefiting  the  landowners  as  it  awards  

interest  from  the  date  of  taking  possession  instead  of  from  the  date  of  

preliminary  notification  and  because  the  order  dated  24.5.2001  specifically  

denying additional amount under Section 23(1A) and interest on solatium has  

attained finality.]

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(iii) GCDA will not be entitled to claim any other amount from the school for  

the 50.44 ares of land.  

(iv) Parties to bear their respective costs.

……………………….J. (R. V. Raveendran)

New Delhi; ………………………J. July 9, 2009. (P. Sathasivam)