LAND ACQUISITION BY HOUSING SOCIETIES THROUGH ILLEGAL CONTRACTS CANNOT BE LEGALISED 2012 SC

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Justice G.S. Singhvi, and Justice Asok Kumar Ganguly in the case of Bangalore City Cooperative Housing Society Ltd vs State Of Karnataka Decided on 02-02-2012 Discussed following case law on the subject of land acquisition in favour of Housing Societies. In this case also the Estate Agent, namely, M/s. Rejendra Enterprises with whom the appellant had entered into an agreement dated 21.2.1988 had played crucial role in the acquisition of land. The tenor of that agreement does not leave any manner of doubt that the Estate Agent has charged huge money from the appellant for getting the notifications issued under Sections 4(1) and 6(1) of the 1894 Act and sanction of layout plan by the BDA. The respondents could not have produced any direct evidence that the Estate Agent had paid money for facilitating the acquisition of land but it is not too difficult for any person of reasonable prudence to presume that the appellant had parted with crores of rupees knowing fully well that a substantial portion thereof will be used by the Estate Agent for manipulating the State apparatus. Therefore, we do not find any justification to invoke the doctrine of prospective overruling and legitimize what has been found by the Division Bench of the High Court to be ex-facie illegal. In Narayana Reddy v. State of Karnataka ILR 1991 (3) KAR 2248, the Division Bench of the High Court considered whether the acquisition of land made on behalf of 7 house building cooperative societies including H.M.T. Employees' Cooperative Society and Vyalikaval House Building Cooperative Society was for a public purpose as defined in Section 3(f)(vi) or the same was colourable exercise of power by the State Government. A reading of the judgment shows that when the writ petitions questioning the acquisition of land were placed before the learned Single Judge, he felt that the points which were raised by the petitioners had not been considered in the earlier judgment of the Division Bench in Narayana Raju v. State of Karnataka ILR 1989 KAR 376, which was confirmed by this Court in Narayana Raju v. State of Karnataka ILR 1989 KAR 406 and referred the matter to the Division Bench under Section 9 of the Karnataka High Court Act. The Division Bench first considered whether the acquisition of land on behalf of house building cooperative societies was for a public purpose. After noticing the relevant statutory provisions, the Division Bench referred to the judgments of this Court in State of Gujarat v. Chaturbhai Narsibhai AIR 1975 SC 629, General Government Servants Cooperative Housing Society Limited v. Kedar Nath (1981) 2 SCC 352 and M/s. Fomento Resorts and Hotels Limited v. Gustavo Ranato Da Cruz Pinto AIR 1985 SC 736 and held that the earlier decisions support the writ petitioners' plea that they were entitled to be heard before the Government could grant approval for the acquisition of land on behalf of cooperative societies, but their plea cannot be accepted in view of the latter judgment. The Division Bench further held that the aggrieved person can raise all points during the course of an inquiry held under Section 5A of the 1894 Act. The Division Bench then referred to the averments contained in Writ Petition Nos.7683, 7699/1988 in which the acquisition of land for various House Building Cooperative Societies was challenged, the advertisement issued by the society, agreement entered into between HMT Cooperative Society and the Estate Agent who assured that he will get the acquisition approved at an early date subject to payment of the specified amount, various reports including the one prepared by G.V.K.Rao, order dated 14.1.1991 passed by the State Government and quashed the acquisition. ………. The Division Bench of the High Court held that the whole acquisition was vitiated due to malafides and manipulations done by the House Building Cooperative Societies through the Estate Agent. The Division Bench also referred to Section 23 of the Contract Act, judgment of Supreme Court in Rattan Chand Hira Chand v. Askar Nawaz Jung JT 1991 (1) SC 433 and held as under: “Applying the ratio of the above judgment, there can be no doubt that the Agreements entered into between the six respondent- Societies and their respective agents in which one of the condition was payment of huge sums of money by the Society to the agent in consideration of which the agent had to get the Preliminary and Final Notifications issued by the Government, was for the purpose of influencing the Government and to secure approval for acquisition of the lands and therefore opposed to public policy.” ……. The question however, for our consideration is, whether the impugned Notifications are liable to be quashed. In our opinion, once it is clear that the Agreement entered into between the Societies and the agents concerned, under which the purport of one of the clauses was that the agent should influence the Government and to procure Preliminary and Final Notifications under Sections 4 and 6 of the Act respectively are opposed to public policy, the impugned Notifications being the product or fruits of such an agreement are injurious to public interest and detrimental to purity of administration and therefore cannot be allowed to stand. ………… The irresistible inference flowing from the facts and circumstances of these cases is, whereas the power conferred under the Land Acquisition Act is for acquiring lands for carrying out housing scheme by a housing society, in each of the cases the acquisition of lands is not for a bona fide Housing Scheme but is substantially for the purpose of enabling the concerned office bearers of respondent-Societies and their agents to indulge in sale of sites in the guise of allotment of sites to the Members/Associate Members of the Society and to make money as alleged by the petitioners and therefore it is a clear case of colourable exercise of power. Thus the decision of the Government to acquire the lands suffers from legal mala fides and therefore the impugned Notifications are liable to be struck down. ……….. If requirement of Section 3(f)(vi) is not strictly enforced, every housing cooperative society shall approach the appropriate Government for acquisition by applying Section 3(f) (vi) instead of pursuing the acquisition under Part VII of the Act which has become more rigorous and restrictive. In this background, it has to be held that the prior approval, required by Section 3(f)(vi), of the appropriate Government is not just a formality; it is a condition precedent to the exercise of the power of acquisition by the appropriate Government for a housing scheme of a cooperative society.

LAND ACQUISITION CASE LAW DIGEST

Land Acquisition Case Law Digest Collections

ACQUISITION OF LANDS FOR LYING GAS PIPELINE DISTRICT COURT HAS JURISDICTION TO DETERMINE APPROPRIATE COMPENASATION

MANUAL OF LAW REGARDING THE SUBJECT

Filing the application for enhanced compensation under Section 10(2) of the Petroleum and Minerals, Pipelines (Acquisition of Right of User in Land) Act, 1962, (hereinafter referred to as 'the Act'). The Act provides for the acquisition of right of use of the land for laying pipelines for transport of petroleum and minerals and for matters connected therewith. As per the provisions of the Act, the owners of the land are entitled to compensation for the damages caused to the land. This is to be determined by the competent authority under the Act.

The owners of the land were not satisfied with the order passed by the competent authority. They have approached the District Court by challenging the order passed by the competent authority, Section 10(2) of the Act says thus: "If the amount of compensation determined by the competent authority under Sub-Section (1) is not acceptable to either of the parties, the amount of compensation shall, on application by either of the parties to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, be determined by that District Judge".

Section 17 of the Act provides for framing of Rules by the Central Government. Accordingly, Rules have been framed as the Petroleum and Minerals, Pipelines (Acquisition of Right of User in Land) Rules, 1963. Rule 4 of the above Rules says that any person interested in any land may file before the competent authority a claim for compensation within 60 days of the date of publication of the declaration under Section 6(1). There is a proviso stating that the competent authority may admit any claim within thirty days after the expiry of the period specified in this sub-rule, if he is satisfied that the applicant had sufficient cause for not making the application within such specified periods. Rule 5 deals with the application to the District Judge for determination for compensation. It says that any party aggrieved by the determination of the amount of compensation may prefer an application to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, not later than ninety days of the receipt of the intimation from the competent authority under Rule 4(3).

In Mangu Ram v. Delhi Municipality, AIR 1976 SC 105, the Supreme Court held as follows: "There is an important departure made by the Limitation Act, 1963 in so far as the provision contained in Section 29, Sub-section (2) is concerned. Since under the Limitation Act, 1963, Section 5 is specifically made applicable by Section 29, Sub-section (2), it can be availed of for the purpose of extending the period of limitation prescribed by a special or local law if the applicant can show that he had sufficient cause for not presenting the application within the period of limitation".
In Mukri Gopalan v. C.P. Aboobacker, AIR 1995 Supreme Court 2272, the Supreme Court held as follows: "When the first schedule of the Limitation Act prescribes no time limit for a particular appeal, but the special law prescribes a time limit for it, it can be said that under the first schedule of the Limitation Act all appeals can be filed at any time, but the special law by limiting it provides for a different period. While the former permits the filing of an appeal at any time, the latter limits it to be filed within the prescribed period. It is therefore, different from that prescribed in the former and thus Section 29(2) would apply even to a case where a difference between the special law and Limitation Act arose by the omission to provide for limitation to a particular proceeding under the Limitation Act. Once the two conditions namely (i) There must be a provision for period of limitation under any special or local law in connection with any suit, appeal or application, (ii) The said prescription of period of limitation under such special or local law should be different from the period prescribed by the schedule to the Limitation Act are satisfied Section 29(2) on its own force will get attracted to appeals filed before Appellate Authority under Section 18 of the Rent Act. When Section 29(2) applies to appeals under Section 18 of the Rent Act, for computing the period of limitation prescribed for appeals under that Section, all the provisions of Sections 4 to 24 of the Limitation Act would apply. Section 5 being one of them would therefore get attracted. It is also obvious that there is no express exclusion anywhere in the Rent Act taking out the applicability of Section 5 of the Limitation Act to appeals filed before Appellate Authority under Section 18 of the Act. Consequently, all the legal requirements for applicability of Section 5 of the Limitation Act to such appeals in the light of Section 29(2) of Limitation Act can be said to have been satisfied".
In the said act and rules since there is no express exclusion of the Limitation Act, Section 5 of the Limitation Act can be applied.

The above guidelines is from JUSTICE S Sankarasubban OF KERAL HIGH COURT in Petronet Cck Ltd. vs Vijayan Decided on 18 January, 2005

COMPENSATION – COMPARITIVE METHOD AND BELTING METHOD DISCUSSED BY SC 2003 SC

Justice S. N. Variava & Justice H. K. Sema in Smt. Lila Ghosh vs The State of West Bengal reported in AIR 2004 SC 288,

HELD: VALUATION ARRIVED AFTER COMPARING SIMILAR LAND : Regarding valuation of land acquired in the instant case, on the basis of valuation of the adjoining land, the land in the instant case had frontage of only 170 ft on less wide road, appreciation of 5% can be given for frontage. In the earlier judgment averaging price of sale instances of small plots the value was fixed at Rs.11,260. It is well known that large piece of land would never fetch the same price as small piece of land, therefore, for largeness 5% depreciation can be given. Giving the above appreciation and depreciation, the price remains Rs.11,260 per cottah. Earlier acquisition was for year 1974 and on basis of 10% appreciation per annum appreciation of 95% is given for 9+ years which is Rs.10,697. To the figure of Rs.11,260 if Rs.10,697 is added the value would be Rs.21,957 per cottah. Therefore, compensation is payable at the rate of Rs.21,957 per cottah. Further, the claimants will be entitled to solatium at the rate of 30% and additional compensation at the rate of 12% from the date of publication of notification to the date of passing of award.

BELTING METHOD: The acquisition of land was for the purposes of film studio. It was a compact block of land which was acquired for a specific purpose. The land was not acquired for development into small plots where the value of plots near the road would have a higher value whilst those further away may have a lesser value. In such cases where a compact block is acquired the belting method would not be the correct method.

POTENTIALITY INCREASE:- In the earlier judgment while determining the average market price, on the basis of the comparable units situated in a newly developed post residential locality potentiality has been taken into consideration in arriving at the figure of Rs.11,260, therefore, the grant of additional percentage towards potentiality does not arise. Thus the Reference Court and High Court erred in giving a 10% increase for potentiality.

LARGE PLOT VS SMALL PLOTS:- The normal rule is that if a plot is large, then there must be depreciation for largeness, large plots always fetch less than small plots. Therefore, there is no question of appreciation for largeness.

PAYMENT OF INTEREST Section 34 shows that interest is payable only if the compensation, which is payable, is not paid or deposited before taking possession. The question of payment or deposit of compensation will not arise if there is no acquisition proceedings. In case where possession is taken prior to acquisition proceedings a party may have a right to claim compensation or interest. But such a claim would not be either under Section 34 or Section 28. Interest under these Sections can only start running from the date compensation is payable. Normally, this would be from the date of the Award. There may be cases under Section 17 where by invoking urgency clause possession has been taken before the acquisition proceedings are initiated. In such cases, compensation, under the Land Acquisition Act, would be payable by virtue of the provisions of Section 17. As in cases under Section 17 compensation is payable interest may run from the date possession was taken. However, the instant case does not fall into this category. In the instant case, if after giving credit for the amounts paid or deposited, it is found that compensation payable has not been paid or deposited then interest thereon, either under Section 28 or 34 will be payable from the date of the Award till payment.