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CASE NO.: Appeal (civil)  2266-2268 of 2005

PETITIONER: State of Karnataka & Anr.                                        

RESPONDENT: Sangappa Dyavappa Biradar & Ors.                                 

DATE OF JUDGMENT: 30/03/2005

BENCH: N. Santosh Hegde & S.B. Sinha

JUDGMENT: J U D G M E N T [Arising out of  S.L.P. (Civil) Nos.5216-5218 of 2004]

S.B. SINHA, J :

       Leave granted.

                These appeals are directed against the judgment and order dated  18.2.2003 passed by a Division Bench of the High Court of Karnataka,  Bangalore in Writ Appeal Nos. 1677, 2500 and 2501 of 2000 whereby and  whereunder the  writ appeals filed by the Respondents herein were allowed,  reversing the judgment and order passed by a learned  Single Judge of the  said court dismissing the writ petitions filed by the Respondents herein.   

       Keeping in view the point involved in these appeals, it is not  necessary to state the fact  of the matter in great details.  Suffice it to point  out that for the purpose of  submergence and construction of canal for the  Upper Krishna Project, the Appellant State intended to acquire some lands  including the lands belonging to the Respondents herein.  The parties  entered into  negotiations as regard the price of the lands; pursuant whereto  and in furtherance whereof  consent awards were passed by the Special Land  Acquisition Officer.  The amount of compensation awarded in terms of  the  consent award was also received by the Respondents in full satisfaction of  their claim.  The Respondents, however, filed applications for reference to  the Civil Court in terms of Section 18 of the Land Acquisition Act, 1894  (hereinafter referred to as "the Act") claiming enhanced compensation.  The  said prayer was rejected by the Collector by an order dated 23.8.1999.  The  Respondents thereafter filed writ petitions before the High Court which were  marked as Writ Petition Nos. 41354, 36840 and 36748 of 1999 praying  therein for quashing of  the said order  as also for a direction upon the  Respondent No.2 to refer the applications filed by them to the Civil Court  for determining the amount of  compensation in respect of the acquired  lands.  By  reason of   judgments and orders dated 6.1.2000 and 19.1.2000,  the said writ petitions were dismissed on the ground that the parties having  entered into settlement as regard the price of the lands acquired and as a  consent award had been passed pursuant thereto, recourse to Section 18 of  the Act was impermissible.  The Respondents herein filed writ appeals  against the said judgments.   The Division Bench of the High Court rejected  the contention of the Respondents herein to the effect that the agreement  between the parties had not been drawn up in terms of the form prescribed  under Rule 10(b) of the Land Acquisition Rules and furthermore did not  conform to the requirements of Article 299 of the Constitution of India.  It,   however, allowed the said writ appeals on the premise that the amount of   compensation was not paid to the Respondents herein in terms of the  agreement  entered into by and between the parties and in any event, the  Respondents could not have been deprived of their statutory right of

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obtaining solatium and interest in terms of the Act, directing  :

"\005We direct the respondents to compute  the balance  amounts payable to the claimants within an outer limit of  twelve weeks from today and to disburse the same to the  claimants immediately thereafter.  With these directions,  the appeals to stand disposed of.  Parties to bear their  own costs.

       We clarify, that the claimants would be entitled to  not only the statutory benefits but whatever interest that  they are lawfully entitled to."

               The Appellants are, thus, before us.

       Mr. Sanjay R. Hegde, the learned Counsel appearing on behalf of the  Appellants, would submit that the Division Bench of the High Court  committed a gross error in passing the impugned judgment insofar as it  failed to take into consideration the scope, object and purport  of Section 18  of the  Act.  Relying on the judgments of this Court in State of Gujarat and  Others vs. Daya Shamji Bhai and Others [(1995) 5 SCC 746] and Ishwarlal  Premchand Shah and  Others vs. State of  Gujarat and Others [(1996) 4 SCC  174], the learned counsel would contend that as the awards passed by the  Land Acquisition Officer were  consent awards,  reference to the Civil Court  in terms of Section 18 thereof was impermissible.   

       Ms. Kiran Suri, the learned counsel appearing on behalf the  Respondents, on the other hand, would contend that the reference in terms of  Section 18 of the Act was maintainable as the Respondents were made to  sign certain forms which contained blank columns as regard the amount of  compensation payable to them. The learned counsel would submit that the  Respondents were, in any event,  entitled to the amount of  solatium as also  interest on the awarded amount.  Even in relation to a consent award, it was  argued, the Land Acquisition Officer is required to exercise a statutory  power in terms of the provisions of the Act and the same having not been  done, the Appellant was entitled to obtain an order of reference to the Civil  Court.  Reliance, in this connection, has been placed on Assam Railways &  Trading Co. Ltd. vs. The Collector of Lakhimpur and Another [(1976) 3  SCC 24].

       By reason of  the Government Order No. Kam.E.140 AKW 98 dated  19.6.1998, it was directed that the lands should be classified mainly into two  categories i.e. dry land and wet land, the amount of compensation payable  therefor were specified therein.  The parties thereafter entered  into  agreements culminating in passing of the consent awards, the relevant  stipulations whereof are as under :

       "Whereas the S.L.A.O. has negotiated the market  price of the land to be acquired with the owner of the  above land and the owner has agreed to the rate of  Rs.1,14,000/- per acre for the land in question, including  the other statutory benefits of 30% solatium and 12%  additional market value which rate fixed as above and it  does not include the compensation payable to the owner  for the structures, trees and other improvements made on  the land in question.  Which compensation would be  subsequently assessed by the competent technical  authority and the value so arrived at would be added to  the price of the land determined through this consent.

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       The above compensation has been arrived at by  mutual consent and as a consequence the owner hereby  agrees to execute an indemnity bond and also agrees with  the Government as follows :

       1. The owner is agreeable to the rate of  Rs.1,14,000/- inclusive of 30% Solatium and 12%  Additional Market Value per acre which is fixed by  mutual consent between the Government and the owner.   The owner binds himself to this compensation and  undertakes not to seek any enhancements hereafter."

       After the said consent awards were passed,  statements were  also  made by the respective villagers declaring that they would not approach   ’any court for enhancement of the compensation for any other reason’.

       It is not in dispute that in terms of  the said consent awards, the  amount of compensation included  solatium and additional market value.   The landholders, as noticed hereinbefore, also waived their right to file any  application for enhancement of the amount of compensation.

The sole question, thus, which arose for consideration before the High  Court was as to whether the applications  filed by the Respondents herein in  terms of Section 18 of the Act before the Special Land Acquisition Officer  seeking reference to the Civil Court for determination of quantum of  compensation,  were  maintainable.

Section 18  of the Act reads as under :                

"18. Reference to Court .(1) Any person interested  who has not accepted the award may, by written  application to the Collector, require that the matter be  referred by the Collector for the determination of the  Court, whether his objection be to the measurement of  the land, the amount of compensation, the persons to  whom it is payable, or the apportionment of the  compensation among the persons interested.

(2) The application shall state the grounds on  which objection to the award is taken :

       Provided that every such application shall be made  \026

       (a) if the person making it was present or  represented before the Collector at the time when he  made his award, within six weeks from the date of the  Collector’s award;

       (b) in other cases, within six weeks of the receipt  of the notice from the Collector under section 12, sub- section (2); or within six months from the date of the  Collector’s award, whichever period shall first expire."

       A right of a landholder to obtain an order of reference would arise  only when he has not accepted the award.  Once such award is accepted, no  legal right in him survives for claiming a reference to the Civil Court.   An  agreement between the parties as regard the value of the lands acquired by  the State is binding on the parties.  So long as such agreement and  consequently the consent awards are not set aside in an appropriate

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proceeding by a court of law having jurisdiction in relation thereto, the same  remain binding.  It is one thing to say that agreements are void or voidable in  terms of the provisions of the Indian Contract Act  having been obtained by  fraud,  collusion, etc, or are against public policy  but it is another thing to  say that without questioning the validity thereof, the Respondents could have  maintained their writ petitions.   We have noticed hereinbefore that even in  the writ petitions, the prayers made by the Respondents were for quashing  the order dated 23.8.1999 passed by the Special Land Acquisition Officer  and for issuance of a direction upon him to refer the matter to the Civil  Court.  The High Court while exercising its jurisdiction under Article 226 of  the Constitution of India, thus, could not have substituted the award passed  by the Land Acquisition Officer by reason of the impugned judgment.   Furthermore, the question as regard the validity of the agreements had not  been raised before the High Court.  As indicated hereinbefore, the Division  Bench of the High Court had also rejected the contention raised on behalf of  the Respondents herein to the effect that the agreements did not conform to  the requirements of Article 299 of the Constitution of India or had not been  drawn up in the prescribed proforma.

An award under the Act is passed  either on consent of the parties or  on adjudication of rival claims.  For the purpose of passing a consent award,  it was not necessary to comply with the provisions of Article 299 of the  Constitution of India.  An agreement between the parties need not  furthermore be strictly in terms of a prescribed format.   

       The Respondents having accepted the award without any demur were  estopped and precluded from maintaining an application for reference in  terms of Section 18 of the Act.    It is also trite that by reason of such  agreement, the right to receive amount by way of solatium or interest etc.  can be waived.   

       In Daya Shamji Bhai (supra), this Court held :

       "The right and entitlement to seek reference  would, therefore, arise when amount of compensation  was received under protest in writing which would  manifest the intention of the owner of non-acceptance of  the award.  Section 11(2) opens with a non-obstante  clause "notwithstanding anything contained in sub- section (1)" and provides that "if at any stage of the  proceedings,  the Collector is satisfied that all the persons  interested in the land who appeared before him have  agreed in writing on the matters to be included in the  award of the collector in the form prescribed by rules  made by the appropriate Government, he may, without  making further enquiry, make an award according to the  terms of such agreement.  By virtue of sub-section (4),  "notwithstanding anything contained in the Registration  Act, 1908, no agreement made under sub-section (2)  shall be liable to registration under that Act".   The award  made under Section 11(2) in terms of the agreement is,  therefore, an award with consent obviating the necessity  of reference under Sectin 18."

                In Ishwarlal Premchand Shah (supra),  it was held :   

"8. It is true that on determination of compensation  under sub-section (1) for the land acquired, Section 23(2)  enjoins to award, in addition to the market value, 30%  solatium in consideration of compulsory nature of  acquisition. Equally, Parliament having taken notice of  the inordinate delay in making the award by the Land

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Acquisition Officer from the date of notification  published under Section 4(1) till passing the award under  Section 11, to offset the price pegged during the  interregnum, Section 23(1-A) was introduced to award an  amount calculated @ 12% per annum on such market  value, in addition to the market value of the land, for the  period commencing on and from the date of the  publication of Section 4(1) notification to the date of  award of the Collector or date of taking possession of the  land whichever is earlier. Under Section 28, interest was  directed to be paid on the excess compensation at the rate  specified therein from the date of taking possession of the  land to the date of deposit into court of such excess  compensation. These three components are in addition to  the compensation determined under sub-section (1) of  Section 23. They intended to operate in different  perspectives. One for compulsory acquisition, the other  for the delay on the part of the Land Acquisition Officer  in making the award and the third one for deprivation of  the enjoyment of the land from the date of taking  possession till determination of the compensation. The  three components are in addition to the determination of  market value under sub-section (1) of Section 23. They  are not integral to determination of compensation under  sub-section (1) of Section 23 but in addition to, for the  circumstances enumerated hereinbefore. In a private sale  between a willing vendor and a willing vendee, parties  would arrive at consensus to pay and receive  consolidated consideration which would form the market  value of the land conveyed to the vendee. For public  purpose, compulsory acquisition under the Act gives  absolute title under Section 16 free from all  encumbrances. Determination of the compensation would  be done under Section 23(1) on the basis of market value  prevailing as on the date of the publication of the  notification under Section 4(1). It would, therefore, be  open to the parties to enter into a contract under Section  11(2), without the necessity to determine compensation  under Section 23(1) and would receive market value at  the rates incorporated in the contract signed under  Section 11(2) in which event the award need not be in  Form 14.

9. This Court in State of Gujarat v. Daya Shamji  Bhai1 had considered the similar contentions and held  that once the parties have agreed under Section 11(2) of  the Act, the Land Acquisition Officer has power under  Section 11(2) to pass the award in terms thereof and that  the award need not contain payment of interest, solatium  and additional amount unless it is also part of the contract  between the parties. The same ratio applies to the facts in  this case. In view of the above clauses in the agreements  the appellants are not entitled to the payment of  additional amounts by way of solatium, interest and  additional amount under the provisions of the Act."

       Assam Railways & Trading Co. Ltd. (supra) whereupon Ms. Suri  placed reliance is not applicable to the fact of the present case.  Therein  negotiations had taken place between the parties whereupon the Railway  Administration became prepared to pay Rs.2500/- per bigha towards the sale  price of  the land but the transaction was not completed, having regard to the  fact that under the State Railway Rules,  land from private parties could be  acquired only by taking recourse to acquisition proceedings.  Thereafter, in  the land acquisition proceedings, an award was made by the Land  Acquisition Collector allowing compensation at the rate of  Rs.1000/- per

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bigha.  It is in that situation, the negotiation between  the parties was  highlighted stating that although the same did not fructify into a binding  contract, there was at least a "gentleman’s agreement" regarding the price  which indicated what a willing purchaser was ready to pay for the land.    In  the factual backdrop of that case this Court observed :

"\005Assuming this was an agreement which bound the  parties, the Collector had still the jurisdiction to  determine the market value of the land..."

       Keeping in view the fact that the condition precedent for maintaining  application for reference under Section 18 is  non-acceptance of the award  by the awardee, in our considered opinion, the Division Bench acted  illegally and without jurisdiction in passing the impugned judgment.  The  learned Single Judge was right in concluding that the writ petitions were not  maintainable.    

       For the reasons aforementioned, the impugned judgments cannot be  sustained which are set aside accordingly.  The appeals are allowed.   However, in the facts and circumstances of the case, there shall be no order  as to costs.