Karnataka Electricity Board vs The State of Karnataka and Others

Shah, J.—Leave granted.

Question involved in these appeals is--whether award passedby the Land Acquisition Officer (hereinafter referred to as"LAO") isin conformity with the agreement between the parties. As such, thereis not much difference between the two but for one on the other reasonparties including the LAO have taken unjustified stand. Hence thislitigation.

Appellant Karnataka Electricity Board Challenged the orderdated 26.7.2000 passed by the learned Single Judge rejecting its WritPetition No. 4804 of 1999, before the Division Bench of the HighCourt of Karnataka at Bangalore by filling Writ Appeal Nos. 6027-35of 2000 (LA). Those appeals were dismissed by the impugnedjudgment and order dated 10.1.2001. Hence these appeals.

In Writ Petition No. 4804 of 1999, appellant challenged theaward dated 27.7.1998 passed by the LAO granting compensation @Rs. 14,250/- per gent as agreed between the parties and also directingthe appellant to pay solatium as well as interest on the said amount @9% per annum for the first year and @ 15% per annum for thesubsequent years from the date of issue of notification u/s 4(1). The LAO also directed that compensation amount should be50% of the total value as directed by the Member Secretary. UrbanDevelopment Authority, Cauvery as the land was undeveloped area,despite the agreement that compensation was to be paid for 2/3rd landand 1/3rd was to be deducted on the ground that it was undeveloped.The writ petition was disposed of by the learned Single Judge byholding that there was not much difference between the amountawarded by the LAO and the amount payable under the Agreement.The Court also held that award was strictly in accordance with theLand Acquisition Act. The appeals were also dismissed by theDivision Bench of the High Court on the ground that as the appellantwas not willing to sign and submit form-D and had raised certainobjections with regard to the payment of solatium, the LAO wasjustified in passing the award in accordance with law. The courtobserved that appellant even though a statutory body resiled from theagreement and committee its breach.

For dealing with the contentions raised in these appeals, wewould narrate the facts in brief. Admittedly, an agreement dated 2ndFebruary, 1995 was entered into between the appellant and respondentNos. 2 to 6 (claimants) for acquisition of 21 acres 14 gents of landbelonging to the claimants, situated in R.S. No. 222 and 226, HaveriTown for the purpose of establishing a 220 K.V. capacity electricitypower station. The said agreement inter alia provides that-

(a) appellant was looking for land in Haveri town for the useof Karnataka Electricity Board (hereinafter referred to as'KEB') and to install power station for public purpose;

(b) appellant and claimants negotiated for the purpose ofacquisition of land and consideration was fixed bymutual discussion at Rs. 14250/- (rupees fourteenthousand two hundred and fifty only) per gent;

(c) it was expressly made clear that the claimants haveagreed to receive consideration @ Rs. 14,250/- per gentonly for the 2/3rd area of the scheduled property and handover the entire scheduled property to K.E.B.

(d) claimants have agreed voluntary to accept theconsiderations as it was a profitable consideration pergent and it was fair market value of the property;

(e) appellant and claimants have agreed to apply to the LandAcquisition Officer, Haveri to acquire the land and to paythe compensation to the claimants and also to hand overthe land to K.E.B. in the manner prescribed under theLand Acquisition Act, 1894.

In pursuance to the aforesaid agreement, parties inter aliacovenanted as under:- (As per the agreement,1st Party is claimantsand 2nd Party is K.E.B.):-

that the first party agreed that the market value of theproperty of the schedule property is Rs. 14,250/- pergent and it shall not exceed at any cost more thanRs. 14,250/- per gents;

that the first party has agreed to receive consideration at arate of Rs. 14,250/- per gent only for the 2/3rd area of theschedule property and to hand over the entire scheduleproperty to the second party;

.....

that the first party agreed that he will receive the agreedconsideration amount through land acquisition officer inthe manner prescribed by law and also agree to hand overthe possession of the property immediately on executionof this agreement. Second party may enter into theschedule property to install the power station accordingto their requirements or utilise the said property in anymanner as it deems fit;

Similarly, K.E.B. agreed as under:-

.....

that the second party shall pay consideration amount atRs. 14,250/- per gent of only 2/3rd area of the scheduleproperty and to take possession of the entire scheduleproperty;

that the second party shall bear all the incidentalexpenditure required to acquire the schedule land;

that the second party agreed to pay to the first partysolatium amount to be fixed by the land acquisitionofficer.

The agreement was signed by both the parties on 2nd February,1995. On the basis of the said agreement and on the joint request ofthe parties, the State Government issued the Notification underSection 4 of the Land Acquisition Act on 08.9.1995. Enquiry underSection 5A of the Act was held and Section 6 Notification was issuedon 26.9.1996. Before that, appellant was directed to deposit a sum ofRs. 57,62,402/- by letter dated 3.5.1996 on the basis of agreed amountand hence on 4.7.1996 appellant deposited the same by demand draftdated 29.6.1996.

In the present case, the dispute arises mainly because ofunjustified stand taken by the parties including the LAO in norpassing an award on the basis of the written agreement which wasproduced before him. Firstly, it was unjustified stand taken by theofficers of the appellant that claimants were not entitled to solatium.As quoted above, it was specifically mentioned in the covenant thatthe appellant had agreed to pay to the claimants solatium amount to befixed by the LAO. Solatium amount is required to be fixed underSection 23(2) of the Land Acquisition Act @ 30%. After agreeing topay the solatium, it was totally unreasonable on the part of the officersof the appellant to contend that they were not bound to pay thesolatium as there was no compulsory acquisition.

Secondly, the LAO also took an unjustified stand that appellantshould sign the Form of agreement as prescribed under the rules (asprovided under Sub-section (2) of Section 11 of the Land AcquisitionAct), even though the agreement signed by both the parties wasproduced before him and at the request of parties, the land acquisitionproceedings were initiated. The learned Additional Solicitor Generalhas produced before us the Form-D prescribed under Rule 10B of theRules framed by the State Government under the Land AcquisitionAct. The said form only contemplates the signatures of the landowners i.e. claimants and that of an officer authorised under Article 299 of the Constitution of India on behalf of and under the directionof the Governor of Karnataka. The Form also prescribed indemnitybond which is required to be executed by the claimants. Thisprescribed Form nowhere provides that the person for whose benefitthe property is acquired, should sign the said form. Thirdly, it is alsoto be stated that the claimants took unjustified stand that they wereentitled to recover interest on the amount as provided u/s 23(1)(a).

In our view, the learned Additional Solicitor General rightlycontended that undisputedly there was a written agreement betweenthe parties, which was produced before the LAO and the LAO wasbound to pass award in accordance with the agreement. Law on thissubject is settled. Granting to interest, solatium and additionalamount would depend upon contract between the parties. { State of Gujarat, etc. Vs. Daya Shamji Bhai, etc., ; Ishwarlal Premchand Shah and others Vs. State of Gujarat and others, ; Kanta Prasad D. Patel Vs. Municipal Corporation of Greater Bombay and Others, .

We also agree with the learned Single Judge that the differencein the compensation awarded by the LAO and the agreement is notmuch. Further, as the appellant has agreed to pay to the claimantssolatium amount to be fixed by the LAO, therefore, award grantingsolatium cannot be said to be, in any way, illegal or erroneous.However, as there is no specific agreement on payment of interest inthe facts of the present case, the award passed by the LAO grantingthe same cannot be justified. Further, as the appellant had agreed topay consideration amount at the rate of Rs. 14,250/- per gent for 2/3rdarea of the schedule property, it was not open to the LAO to awardcompensation for one half area of the schedule property.

In this view of the matter, award passed by the LAO required tobe modified accordingly. It is ordered that the claimants shall be paidcompensation at the agreed rate of Rs. 14,250/- per gent for 2/3rd areaof the schedule property and not 50% thereof. As directed by theLAO, claimant also would be entitled to get 30% of solatium and onthe said amount of solatium they would be entitled to have interest inview of the decision rendered by the Constitution Bench of this Courtin Sundr v. Union of India [(2000) 7 SCC 211]. However, theaward directing that the appellant shall pay interest @ 9% per annumfor the first year and @ 15% per annum for the subsequent years fromthe date of issue of notice u/s 4(1) of the land Acquisition Act on the amount ofcompensation is set aside.

The appeals stand allowed accordingly. There shall be no orderas to costs all-throughout.