AI Structured Summary
Not yet generated for this judgment
Judgment
S.K. Keshote, J.—On 23rd September, 1999, this matter was placed for hearing on the Board but despite of calling the matter in three
rounds none was present for the respondents, and it was adjourned to 6th October, 1999. On 6th October, 1999, also the matter was called for
hearing in three rounds but as none was present for the respondents and taking into consideration the fact that in the matter an important question
does arise for the consideration, the same was adjourned for today. Today also none of the respondents are present.
By this petition, the petitioner Gujarat State Cooperative Land Development Bank Ltd., Ahmedabad is praying for quashing and setting aside
the circular dated 17th July, 1985 of the respondent No. 1. Further prayer has been made that the respondents be directed to pay the amount of
compensation to the petitioner which has been determined in respect of the lands of the agriculturists which were mortgaged with the petitioner-
Bank. This petition was admitted on 10th July, 1989.
The facts of the case, in brief, are that the petitioner- Bank is a registered Cooperative Bank under the provisions of the Gujarat Cooperative
Societies Act, 1961. The petitioner advances loans to the agriculturists for agricultural purposes. It has various branches in the State. While
granting loans to the agriculturists for agricultural purposes, the petitioner insists upon the execution of mortgage in respect of the lands owned and
possessed by these agriculturists. The advance is given on the mortgage executed by the agriculturists. The petitioner submits that the lands which
are mortgaged with the petitioner by the agriculturists are sometimes acquired by the State Government either wholly or partly but the claim of the
petitioner in respect of mortgage is not taken into account by the respondent NO. 1 and its officers and the compensation amount is paid to the
agriculturists in complete disregard of the petitioner''s right and interest in respect of the mortgaged lands. The respondent No. 1 has issued a
circular dated 17th July, 1985 in respect of the recovery of dues of the petitioner bank from the amount of compensation payable to the
mortgagors of the petitioner- Bank. Under this circular, the respondent No. 1 has drawn attention of the concerned officers about the provisions as
contained in sub-section (1) of section 73 of the Transfer of Property Act and instructed that when the portion of land is acquired which is
mortgaged to the petitioner bank then the proportionate amount of compensation should be paid to the petitioner and remaining amount to the
owners. This circular is under challenge in this case.
The petitioner has given out reference of the case of agriculturists, viz. Khodabhai Jinkabhai Baria and Ambalal Govindbhai of Vedpur. Their
lands were acquired by the respondent No. 2 under the Land Acquisition Act. Those lands were mortgaged to the petitioner -Bank by those
persons and the petitioner Bank was entitled to notice u/s 9 of the Land Acquisition Act but the respondent without giving any notice to the
petitioner has paid compensation of the acquisition of land to these agriculturists. The petitioner under its letter dated 18th October, 1985 informed
to the respondent No. 2 that it is entitled for amount of compensation which is payable on acquisition of the lands of the agriculturists as the same
are mortgaged by them to it. This letter was followed by the letter dated 9th January, 1986 of the petitioner to the respondent NO. 2. Another
letter has been written by the petitioner to the respondent NO. 2 in this matter on 2nd April, 1986 and complaint has been made that the amount of
compensation has been paid to the agriculturists without notice and information to the petitioner who is entitled for notice u/s 9 of the Land
Acquisition Act. Time and again the petitioner requested the respondent No. 2 to inform the petitioner about the same and issue notice to the
petitioner under subsection-2 of section 9 of the ACt, but the respondent No. 2 has ignored the same and not paid the amount of compensation
due and payable to the petitioner.
Learned counsel for the petitioner contended that the lands are got mortgaged to secure repayment of loan advances by the petitioner. This is a
mortgage with the petitioner, the mortgagors are left with only a right of redemption. So all right, title and interest in the lands except the right of
redemption vests in the mortgagee and on acquisition of the said lands or part thereof whatever amount of compensation is to be paid to the owner
of the lands has to be paid to the petitioner. In case the amount of loan is less than the amount of compensation received there may be some
semblance of justification to pay the balance of amount to the agriculturists and not proportionate amount to the petitioner. It has next been
contended that where the land which is sought to be acquired by the respondent No. 2 is under mortgage of the petitioner, the petitioner should
have been given notice u/s 9 of the Land Acquisition Act otherwise in such matters the petitioner will not come to know about the acquisition of
land and the agriculturists will get the full amount of compensation which will result in committing fraud with the bank. In all the matters, it is also not
possible to keep watch by the petitioner. If notice is given to the petitioner then it can make statement before the officer concerned and the Bank''s
money which is a public money may not be lost. It is further submitted that as per the provisions as contained in subsection 2 of section 73 of the
Transfer of Property Act, the petitioner is entitled for entire amount of compensation which was determined by the respondent NO. 2 for
acquisition of the land of the agriculturists which are mortgaged with the petitioner. Attacking on the circular, lastly the learned counsel for the
petitioner contended that when the land has been mortgaged and even the part of the land is acquired there cannot be any justification to allow the
petitioner only to take proportionate amount of compensation, it is contrary to provisions of section 73 of the T.P. Act.
Nobody is present on behalf of the respondents to make submissions in this case. Not only this but even the respondents have not cared to file
reply to the special civil application and this court is not having any assistance of the respondents in the matter.
I have given my thoughtful consideration to the submissions of the learned counsel for the petitioner.
The circular dated 17th July, 1985 is there on the record of this special civil application and therefrom I find that the respondent No. 1 has given
direction to its officers that the proportionate compensation can only be given to the mortgagee, here the petitioner. It is only a proportionate
amount has to be paid out of the amount of compensation determined by the Land Acquisition Officer under the provisions of the Land Acquisition
Act for acquisition of land of the agriculturists which were mortgaged with the petitioner. So in case where 1/4 of the total land mortgaged with the
petitioner by the agriculturist has been acquired then 1/4 of the compensation determined by the respondent No. 2 for acquisition of the land can
only be paid to the petitioner.
Section 73 of the Transfer of Property Act provides that where the mortgaged property or any part thereof or any interest therein is acquired
under the Land Acquisition Act, 1894 or any other enactment for the time being in force providing for compulsory acquisition of the immovable
property, the mortgagee shall be entitled to claim payment of mortgage money, in whole or in part, out of the amount due to the mortgagor as
compensation. As stated earlier, except the right of redemption of the mortgaged land, the right, title and interest therein vests in the mortgagee. In
case where the loan has been taken by the agriculturists for agricultural purposes and in later point of time, the land in question is acquired as a
whole or part thereof, the bank has first and foremost claim to the total exclusion of the claim of the mortgagor on the amount of compensation.
However, this claim shall be to the extent of outstanding amount of loan and in case the outstanding amount of loan exceeds the amount of
compensation to be found payable on acquisition of these lands then the bank will take whole of the amount but where it is less than the amount of
compensation determined, the balance will go to the agriculturists. Section 73 of the T.P. Act is very clear which has not been taken care of by the
respondent No. 1 while making circular aforesaid. It is the right of the mortgagee and in fact a legal entitlement to claim payment of mortgaged
money in whole or in part out of the amount due to the mortgagor as compensation. This circular is in total contravention of provisions of section
73 of the T.P. Act. Otherwise also, I fail to see what purpose will be served in case this circular is allowed to stand. The money has been given by
the Bank for agricultural purposes and in case the land itself has been acquired the bank''s money has to be recovered from the compensation
otherwise ultimately it will be a loss to the nation. The people''s money which is to be given for agricultural purposes to the agriculturists as loan will
be taken by the agriculturists and as the land has been acquired or it is fortuitous circumstance that the land has been acquired, the land will go in
the acquisition and substantial portion of the compensation will also go in the pocket of the mortgagor and no property will be available with the
agriculturists wherefrom the petitioner could have recovered the amount of loan. The proportionate amount of the compensation if only given to the
petitioner then the other agriculturists will not be benefitted by the scheme of advancing of loan to them for agricultural purposes. It is true that the
land will go but when they have taken the money of the bank it is also legal obligation on the agriculturists to pay that amount. Leaving apart this, if
ultimately the loan amount is not paid, the petitioner has legal right to recover this amount by foreclosure of the mortgage land. That absolute right is
with the petitioner and in case where the land has been acquired by this circular how such a legal right of the petitioner can be deprived of. The
provisions of this circular go contrary to the legal rights which are accrued to the petitioner by mortgage of land to it by the agriculturists. This
circular is detrimental to the rights of thousands of agriculturists as for nonpayment of the amount of loan ultimately the bank''s money will go and it
will not be available for disbursement to other agriculturists and secondly it is a loss of public money. Section 73 of the T.P. Act is a specific
provision and the circular which has been made contrary to that provision otherwise cannot be allowed to stand. No explanation is forthcoming
from the respondents for this circular. The reply has not been filed nor anybody is present on behalf of the respondents to make oral submissions
also which goes to show that in substance they are agreeable that the circular has no legal sanctity or legality or validity.
As a result of the aforesaid discussion, this petition succeeds and the same is allowed and the circulatar dated 17th July, 1985 of the respondent
No. 1 is quashed and set aside. Rule is made absolute accordingly with no order as to costs.