IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.      OF 2008

@   SPECIAL LEAVE PETITION (CIVIL) NO. 5983 OF 2007   

Mootha Venkateswara Rao (Dead) Tr. Lrs.             ... Appellants

Vs.

Godhavari Co-op Milk P. Union  Ltd. & Ors.    ... Respondents

J U D G M E N T  

ALTAMAS KABIR, J.

1. Leave granted.

2. Pursuant to a notification under Section 4

(1) of the Land Acquisition Act, 1894 dated

8th June,  1978,  the  Government  of  Andhra

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Pradesh acquired 5 acres of land in Survey

No.  212/1B  of  Ramanayyapeta  in  Kakinada

Municipality  for  the  purpose  of

construction of a mini-dairy. The appellant

herein  was  the  claimant  before  the  Land

Acquisition  Officer,  who  passed  an  award

fixing  the  market  value  of  the  land  at

Rs.28,750/-  per  acre.   Possession  of  the

lands was taken on 31st August, 1978.  The

appellant,  herein,  challenged  the

acquisition  itself  by  way  of  a  Writ

Petition  No.4082  of  1979,  which  was

dismissed  on  9th July,  1984.  The  appeal,

which  was  preferred  from  the  judgment  of

the learned Single Judge, being Writ Appeal

No.  670  of  1985,  was  allowed  on  7th

February, 1991.  The matter was carried to

this Court by the respondents herein in SLP

(C)  No.19302  of  1991,  which  ultimately

ended in a compromise.  The Special Leave

Petition was disposed of on 1st September,

1992,  in  pursuance  of  the  Memorandum  of

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Settlement filed by the parties, wherein it

was  agreed  that  the  date  of  Notification

would be treated as 7th February, 1991, for

all purposes, and, accordingly, the market

value  of  the  lands  as  prevailing  on  the

said date was to be taken for determination

of compensation.

3. Subsequent to the said order passed by this

Court, the matter was again taken up by the

Reference  Court.   After  taking  into

consideration  further  evidence  which  was

led  and  the  materials  on  record,  the

Reference Court fixed the market value at

Rs.800/- per square yard and aggrieved by

the same the respondents herein preferred

an appeal to the High Court, being First

Appeal No. 836 of 2003.  During the hearing

of the appeal, the Memorandum of Settlement

arrived at between the parties was referred

to and while on behalf of the respondents

herein, it was contended that the Reference

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Court had wrongly fixed the market value of

the acquired lands at Rs.800/- per square

yard,  on  behalf  of  the  appellant  herein,

particular emphasis was laid on the fourth

paragraph of the Memorandum of Settlement,

which reads as follows:-

“The  compensation  determined  by the  learned  Subordinate  Judge, Kakinada will have to be paid to the respondent  within  a  period  of  eight weeks  thereafter.   In  default,  the Acquisition will stand set aside the rights and liabilities of the parties will be determined in accordance with law.”   

4. The  High  Court  was,  however,  of  the  view

that despite the fact that payment had not

been  made  in  terms  of  the  Memorandum  of

Settlement, since the main appeal was being

heard, the entire acquisition as such could

not  be  washed  away,  which  would  be

detrimental to both the parties.  It is on

such note that the appeal was taken up for

final decision though, ultimately, the same

was dismissed.

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5. This appeal has been filed by the heirs of

the original claimant, who had died in the

meantime,  mainly  on  the  question  as  to

whether  the  High  Court  had  erred  in  not

setting aside the acquisition proceedings in

terms  of  the  compromise  which  had  been

arrived at between the parties and recorded

in the order dated 1st September, 1992 passed

in  SLP(C)  No.19302  of  1991.   The  other

ground,  which  had  been  taken  by  the

appellant  is  whether  the  High  Court  acted

correctly  in  directing  the  respondents  to

pay the compensation amount, which amounted

to  extending  the  time  for  making  such

deposit which was contrary to the terms of

the Memorandum of Settlement.

6. Appearing  for  the  appellants,  Mr.  R.

Nariman,  learned  Senior  Advocate,  confined

his submissions to the two points indicated

hereinabove. Learned counsel urged that once

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a compromise had been arrived at between the

parties, the terms whereof had been reduced

to writing in the form of a Memorandum of

Settlement,  it  was  not  open  to  the  High

Court  to  ignore  the  terms  and  conditions

contained therein upon observing that since

the  main  appeal  was  being  heard,  the

acquisition proceedings could not be washed

away.  Mr.  Nariman  submitted  that  the

approach  of  the  High  Court  was  entirely

wrong  since  by  operation  of  law  the

acquisition  proceedings stood set aside on

the  failure  of  the  respondents  to  comply

with  the  terms  of  the  Memorandum  of

Settlement.

7. Mr.  Nariman  urged  that  in  accordance  with

the  terms  of  the  Memorandum  of  Settlement

the learned Subordinate Judge, Kakinada, was

directed  to  determine  the  compensation

payable to the appellant herein for the land

acquired, in accordance with the provisions

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of the Land Acquisition Act, 1894.  Certain

other  benefits  to  which  the  appellant  was

entitled  was  also  indicated  in  the  said

order.  However,  what  was  of  utmost

importance  was  the  condition  that  the

compensation which was to be determined by

the  learned  Subordinate  Judge,  Kakinada,

would  have  to  be  paid  to  the  appellant

within a period of 8 weeks thereafter, in

default  the  acquisition  would  stand  set

aside and the rights and liabilities of the

parties  would  be  determined  in  accordance

with  law.  Mr.  Nariman  submitted  that  in

accordance with the terms of the Memorandum

of Settlement the learned Subordinate Judge

determined  the compensation payable to the

appellant  on  23.1.2003  and  payment  of  the

compensation  amount,  as  per  the

determination of the value of the acquired

lands by the Subordinate Judge, was to be

made on or before 23.3.2003. However, even

when the Special Leave Petition was filed on

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2.3.2007, no deposit had been made in terms

of the Memorandum of Settlement.

8. Mr.  Nariman  submitted  that  since  the

acquisition itself stood set aside in terms

of  the  Memorandum  of  Settlement,  the  only

course left open to the respondents was to

issue  a fresh Notification for acquisition

of the lands in question and to proceed in

accordance  with  law,  thereafter,  in

computing  the compensation payable for the

land  on  account  of  such  acquisition.  Mr.

Nariman also submitted that the High Court

had  acted  beyond  its  jurisdiction  and

authority in unilaterally extending the time

for  depositing  the  compensation  amount,

since  according  to  the  terms  of  the  same

Memorandum  of  Settlement  the  acquisition

proceedings had been set aside.

9. On  the  other  hand,  Mr.  L.  Nageshwar  Rao,

learned  Senior  Advocate,  submitted  that

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attempts  had  been  made  to  deposit  the

compensation  amount  with  the  Divisional

Officer, Kakinada, by sending Demand Drafts

for  amounts  of  Rs.2,13,87,500/-  and

Rs.11,14,34,033.   An  application  was  also

moved  on  behalf  of  the  respondent  State

before  the  Second  Additional  Senior  Civil

Judge,  Kakinada,  seeking  permission  to

deposit the said amount, but such prayer was

rejected  on  22.8.2007,  on  the  ground  that

the  Special  Leave  Petition  was  pending

before this Court. A Civil Revision Petition

filed  against  the  said  order  is  still

pending decision in the High Court. Mr. Rao

submitted that ultimately by an order dated

11.10.2007 the High Court granted leave to

the  State  authorities  to  deposit  the

decretal amount before the Second Additional

Senior  Civil  Judge,  Kakinada,  without

prejudice to the rights and contentions of

the  parties.  Pursuant  thereto,  the  amount

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was  said  to  have  been  deposited  on

22.10.2007.

10. It was submitted that admittedly there was a

delay in making the deposit in terms of the

Memorandum  of  Settlement  which  formed  the

basis of the order dated 1.9.1992 passed by

this Court in Civil Appeal No. 3476 of 1992

filed  by  the  Andhra  Pradesh  Dairy

Development Corporation, but such delay was

not  intentional  as  various  proceedings

intervened  in  the  meantime.  Mr.  Rao

submitted  that  in  the  appeal,  being  F.A.

No.836  of  2003,  filed  by  Andhra  Pradesh

Dairy  Development  Corporation,  the

respondent No.2 herein, an interim order was

passed by the High Court on 23rd April, 2003,

staying the operation of the Order dated 23rd

January,  2003,  passed  by  the  Principal

Senior  Civil  Judge,  Kakinada,  fixing  the

market  value  of  the  acquired  land  at

Rs.800/-  per  square  yard  as  on  7.2.1991,

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which  continued  to  be  operative  till  the

appeal  itself  was  dismissed  by  the  High

Court  on  9.6.2006.  It  was  also  submitted

that immediately after the pronouncement of

the Judgment by the High Court, steps were

taken to deposit the compensation amount as

per the Memorandum of Settlement by making

an application before the Second Additional

Senior  Civil  Judge,  Kakinada,  praying  for

leave to make such deposit in the execution

proceedings which had been commenced in the

meantime.  While  granting  such  prayer,  the

High  Court  directed  that  stay  of  the

execution would be subject to the condition

of the respondent herein depositing 1/4th of

the  enhanced  compensation  in  two  equal

instalments within four months from the date

of  the  order,  failing  which  the  said

petition  would  stand  dismissed.  Since  the

respondents were unable to deposit the said

amount they filed an application before the

High Court seeking extension of time to make

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such  deposit.   On  the  other  hand,  the

appellant herein filed Writ Petition No.6832

of 2003 for restitution of the possession of

the acquired land. However, the High Court

by its order dated 30.4.2003 dismissed the

Writ Petition and granted the respondents a

further  period  of  two  months  for  making

payment of Rs.2 crores in instalments within

a period of two months and stayed further

proceedings  pursuant  to  the  order  dated

23.1.2003  passed  by  the  Principal  Senior

Civil Judge, Kakinada.

11.  Mr.  Rao  submitted  that  in  view  of  the

aforesaid proceedings and the interim order

staying  the  execution  proceedings,  the

respondents  were  unable  to  keep  to  the

timing  in  making  the  deposit.  Mr.  Rao

submitted  that  keeping  in  mind  all  the

aforesaid facts, the High Court had rightly

not  bound  itself  to  the  time  period

stipulated  in the Memorandum of Settlement

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for depositing the compensation amount. Mr.

Rao  urged  that  if  the  submission  made  on

behalf of the appellant was to be accepted,

the  only  effect  will  be  that  a  fresh

Notification under Section 4(1) of the 1894

Act would have to be issued and the date for

calculation of the compensation amount would

have  to  be  taken  from  the  fresh  date  of

publication, which was likely to result in a

substantial enhancement of the compensation

payable  for  acquisition  of  the  land  in

question.

12. On  a  careful  consideration  of  the

submissions made on behalf of the respective

parties, it is clear that the only question

which  we  are  called  upon  to  decide  is

whether  having  regard  to  the  conditions

imposed in the Memorandum of Settlement, the

acquisition  proceedings  would  stand  set

aside in view of the default committed by

the State and its authorities in depositing

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the  amount  awarded  within  the  time

stipulated in the Settlement.

13. Admittedly, the order passed by the Second

Senior Civil Judge, Kakinada, was to be the

basis of the compensation to be awarded to

the  appellants  herein.  However,  the  said

order also came to be challenged in the High

Court  and a  stay was  also granted  to the

execution  thereof,  which  lasted  till  the

appeal was finally dismissed on 9.6.2006. It

is only after the dismissal of the appeal

and the vacation of the stay order that the

respondents began to take steps for deposit

of  the  compensation  amount  as  per  the

Memorandum of Settlement. It is, therefore,

obvious  that  because  of  intervening

circumstances,  the  time  schedule

contemplated in the Memorandum of Settlement

for  deposit  of  the  compensation  amount  by

the  respondent stood disturbed. Because of

the stay order granted by the High Court,

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the  respondents  were  released  from  the

obligation  of  making  such  deposit  within

eight  weeks  from  the  date  on  which  the

compensation  was determined by the learned

Subordinate  Judge,  Kakinada  (Second

Additional Senior Civil Judge). In our view,

once the respondents stood released of the

obligation of making the deposit within the

time  specified  in  the  Memorandum  of

Settlement by the orders of Court, it will

no longer be available to the appellant to

claim that because of the default in making

the  deposit,  the  acquisition  should  stand

set  aside  in  terms  of  the  Memorandum  of

Settlement.  The  questions  posed  by  Mr.

Nariman at the beginning of the submissions,

have therefore, to be answered against the

appellant and in favour of the respondent.

Firstly, the acquisition proceeding does not

stand set aside on account of the default on

the part of the respondents in making the

deposit  within  8  weeks  from  the

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determination of the value of the acquired

land  by  the  learned  Subordinate  Judge,

Kakinada.  Consequentially, even the second

question raised by Mr. Nariman that the High

Court  had  acted  without  jurisdiction  in

extending  the  time  for  making  the  deposit

cannot also be sustained.

14. We,  therefore,  see  no  reason  to  interfere

with the impugned judgment of the High Court

and  the  appeal  is  accordingly  dismissed.

Since, the deposits are said to have already

been made pursuant to the permission granted

by the High Court, the claimants to the said

compensation  will  be  entitled  to  withdraw

the same upon proper identification.

15. There will be no order as to costs.

……………………………………….J. (ALTAMAS KABIR)

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……………………………………….J. (MARKANDEY KATJU)

New Delhi Dated 3.12.2008

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