A five-Judge Bench of the Apex Court in U.P. Awas Evam Vikas Parishad v. Gyan Devi[1] (hereafter referred to as 'Gyan Devi') by four to one[2] declared that notice to a local authority or a company at whose instance the Government acquires land is imperative as "the right conferred under Section 50(2) of the LA Act carries with it the right to be given adequate notice by the Collector as well as the reference court".
As a result of this decision, thousands of awards made without notice to the local authority by the Principal Civil Court of Original Jurisdiction, and also the judgments in the appeals therefrom, stand vitiated. These decisions need to be set aside for de novo hearing after notice to the local authority or the company, at whose instance the lands were acquired in the past by the Government. The enormous efforts, put in by the expropriated landowners for these years for compensation for their compulsorily acquired land, have unfortunately turned into a damp squib.
In arriving at this decision, many factors were not considered by the Court; the contrary judicial opinion of the various High Courts[3] that consistently held the field prior to Gyan Devi[1], was not examined; the earlier dicta of the Apex Court in the right perspective was also not examined properly. Besides, Gyan Devi[1] dealt with several other rights of a local authority, though not in issue, and by obiter declared law in respect thereto also. This situation necessitates a critical examination of Gyan Devi[1].
Power of eminent domain: An attribute of sovereign power
At the outset, the question is whether a local authority/company has locus standi under the Land Acquisition Act, 1894 (in short "the LA Act"), for it is no longer res integra that the power of eminent domain is an attribute of sovereign power of the State exercisable in pro bono publico.
The provisions of the LA Act show that where acquisition of a land for a local authority or a company is made, though the machinery for acquisition is set in motion at the behest of such beneficiary of the acquisition, the acquisition is done by the State only. Sections 16 and 17(1) of the Act are the clear pointers that on taking possession of land by the Collector, it "thereupon vests absolutely in the Government free from encumbrances". It is only by reason of the subsequent action of transfer of such land by the Collector to a beneficiary (local authority or a company, as the case may be) that such beneficiary becomes its owner. Section 17-A, implanted in the LA Act by various State Legislatures, brings home this point.
The Supreme Court also has had this understanding in Nagpur Improvement Trust v. Vithal Rao[4] . For a seven-Judge Bench of the Supreme Court, speaking through S.M. Sikri, C.J., ruled that "the acquisition is for the trust and may be at its instance, but nevertheless the acquisition is by the Government". The same view was reiterated in Om Prakash v. State of U.P.[5]
It is equally settled position of law that the vesting of landowners' title in the State, in turn, culminates into accrual of an irrevocable and enforceable "right to compensation" in favour of the owner against the State. Conversely, the obligation to pay compensation qua the landowner is not that of a local authority/company but that of the Government. Various provisions such as Sections 27, 28, 31 and 34 of the LA Act in unmistakable terms also establish this position. The Supreme Court's view was not different in Hissar Improvement Trust v.Rukmani Devi[6] where it was ruled thus: (SCC pp. 807-08, para 7)
"[I]nsofar as the landowner is concerned, his right to be compensated is enforceable against the State. It is the liability of the Collector in terms of the relevant provisions to pay the amount awarded, together with interest in the event of the amount not being paid in time...."
Hon'ble Sahai, J. in his dissenting judgment in Gyan Devi[1] stuck to this view when he observed thus: (SCC p. 356, para 36)
"... whenever a company, an industrial unit or any government department needs any land for any purpose, it moves the Government and it is after examination of the proposal made by the person concerned that a decision is taken whether the land should be acquired or not, and thereafter so far as the acquiring body is concerned, it is not required to be impleaded in the proceedings as under the Act it is duty and responsibility of the Collector/Land Acquisition Officer to take up the matter, proceed in accordance with the procedure provided under the Act and determine compensation payable to the claimant."
Unfortunately, this crucial conceptual position pertaining to the privity between an expropriated landowner qua the State, or the local authority qua the State was not considered by the majority in Gyan Devi[1]. In fact according to this view, there exists no lis respecting compensation between such a landowner and a local authority/company, and a local authority/ company is a stranger qua the expropriated landowner.
Necessary v. proper party : its distinction
In both the majority and minority judgments in Gyan Devi[1], the issue of necessity of service of a notice upon a local authority was examined from the standpoint, namely: its status as a party - whether it is a "necessary" or a "proper party", since such consideration was relevant to ascertain the consequences of non-impleadment of a local authority in the reference proceedings.
The principle underlying the distinction between these terms came to be identified by the Supreme Court in Udit Narain Singh Malpaharia v. Additional Member, Board of Revenue[7] , wherein it was observed thus: (SCR p. 681)
"... The law on the subject is well settled: It is enough if we state the principle. A necessary party is one without whom no order can be made effectively, a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding."
Rule 10(2) of Order 1 of the CPC also indicates as to who is to be termed as a necessary qua proper party. These provisions, inter alia, empower the court to add the name of any person, namely, (i) "who ought to have been joined" and (ii) "whose presence before the court may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the issues involved in the suit."
The first apparently refers to necessary parties, as rightly pointed out by the Supreme Court in Razia Begum v. Sahebzadi Anwar Begum[8] thus: (SCR p. 1118)
"...'who ought to have been joined', apparently have reference to the necessary parties in the sense that suit cannot be effectively disposed of without their presence on record."
The latter expression, namely, "whose presence before the court may be necessary in order to enable the court effectually and completely adjudicate upon and settle all the questions involved in the suit" also came to be explained by the Supreme Court inRamesh Hirachand Kundanmal v. Municipal Corpn. of Greater Bombay[9] thus: (SCC p. 531, para 14)
"... The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights." (emphasis supplied)
This view came to be reiterated in Anil Kumar Singh v. Shivnath Mishra[10] thus: (SCC p. 150, para 10)
"10. A person may be added as a party defendant to a suit though no relief may be claimed against him/her provided his/her presence is necessary for a complete and final decision on the question involved in the suit. Such a person is only a proper party as distinguished from a necessary party."
Thus, the settled view is: For being a necessary party, a right to some relief against him in respect of the subject-matter of the suit must exist. In contrast to a necessary party, a party would be a proper party, when two other parties are in dispute in an action at law and the determination of such dispute directly affects the legal rights of a third person or such third person is bound to foot the bill.
Local authority: a proper party
In the light of the discussion above, the issue is whether the local authority is a proper party or a necessary party. The majority inGyan Devi[1] categorically affirmed that it is a proper party by reasoning thus: (SCC p. 343, para 21)
"... A local authority for whom land is being acquired has a right to participate in the acquisition proceedings in the matter of determination of the amount of compensation while they are pending before the Collector and to adduce evidence in the said proceedings. While it is precluded from seeking a reference against the award of the Collector it can defend the award and oppose the enhancement of the amount of compensation sought before the reference court by the person interested in the land. Moreover the local authority has a right to appear and adduce evidence before the reference court. Having regard to the aforesaid circumstances, we are of the opinion that the presence of the local authority is necessary for the decision of the question involved in the proceedings before the reference court and it is a proper party in the proceedings."
Sahai, J. in his minority judgment, ruled to the contrary that the local authority is neither a necessary party nor a proper party in the proceedings for compensation under the LA Act. He reasoned thus: (SCC p. 358, para 36)
"A local authority is not even a proper party in the sense that the court or the claimant or the interested person seeking reference or filing appeal are not required to implead them as in absence of their appearance, and leading any evidence their presence is immaterial for complete and final decision of the proceedings."
From the Supreme Court decisions themselves, it thus emerges that a local authority does not satisfy the test of being a "necessary party" for reasons namely, the liability of payment of compensation qua ex-landowner is of the State alone; an award made in the presence of the State and in the absence of the local authority is legal and enforceable, besides bringing the result intended - a vested right to the expropriated landowner to recover the additional amount of compensation, as determined by the court; and an ex-landowner has got no right to any relief to get compensation against a local authority or correspondingly the court cannot, in law, make its award against a local authority.
A local authority however, satisfies the test of a "proper party". It is true that the reference proceedings are between the State and the ex-landowners, but the award made in the reference proceedings affects the legal rights of the local authority, as it is, in law, bound to foot the bill of the enhanced amount of compensation to the State with no escape from its such obligation. To put it differently, the lis between the State and the ex-landowner leads to a result, which prejudicially affects a local authority. The minority view of Sahai, J. seems to be a narrow one.[11]
Non-joinder of a proper party : not fatal
It is common ground that neither majority nor the minority inGyan Devi[1] holds the local authority to be a "necessary party". Taking the majority view that the local authority is a proper party to be correct, the question to be answered now is whether the non-joinder of local authority would vitiate the award of the reference court?
As already discussed, it is settled that a judgment rendered in the absence of a property party is good and binding. It was reiterated by the Supreme Court in G.M. South Central Rly. v. A.V.R. Siddhantti[12] wherein Sarkaria, J. said: (SCC pp. 341-42, para 15)
"[T]he necessary parties to be impleaded are those against whom the relief is sought, and in whose absence no effective decision can be rendered by the Court... The employees who were likely to be affected as a result of the re-adjustment of the petitioner's seniority ... were, at the most, proper parties and not necessary parties, and their non-joinder could not be fatal to the writ petition."
The proviso, added to Rule 9 of Order 1 of the CPC, further reinforces this proposition by engrafting an exception to the general rule that "no suit shall be defeated by reason of misjoinder or non-joinder of parties except non-joinder of a necessary party."
It is settled that if the non-joinder is only of a proper party (as contrasted with a necessary party), it is not itself fatal to the suit, as arraying a proper party is not a matter of initial jurisdiction of the court, but of judicial discretion[13] .
Thus, there has been a judicial consensus that non-joinder of a proper party is not fatal; it does not vitiate a judgment though rendered in its absence; and would be effective and valid. It is, in fact, only to have a complete and final decision of the questions involved in the proceedings, the presence of a proper party is deemed necessary. Hence, the statement of law by the majority that failure to implead a local authority or a company (though a proper party) vitiates the award of the reference court, is not in consonance with the precedents.
Local authority: not a "person interested"
Both the majority and the minority hold the view that a local authority/ company is not a "person interested" within the meaning of Section 3(b) of the Act for the purposes of Section 18(1) and the contrary view taken in Himalyan Tiles & Marbles (P) Ltd. v. Francis Victor Coutinho[14] was overturned[15] .
It cannot be gainsaid that the statement of law that a local authority or a company is not a "person interested" is well founded. To hold otherwise leads to anomalies. But what worries is that even after holding that a local authority is not "person interested" within the meaning of Section 3(b) of the Act and is only a proper party, the majority ruled that a notice by the Collector, or the reference court is imperative and failure to do so vitiates the award. This conclusion does not seem to be coherent.
Statutory requirement of service of notice whether express or implied: lacking
The view taken by the majority while construing the requirement to notice is that "the right conferred under Section 50(2) of the LA Act carries with it the right to be given adequate notice by the Collector as well as the reference court". The next question is whether such inference drawn by the majority can be said to be in consonance with the context and the scheme of the Act? Whether a "right to notice" is implied in Section 50(2) of the Act?
"Imply" means suggest as a legal consequence; suggest indirectly rather to state it directly[16] . "Implied covenant", with reference to a contract, has been said as "one which may reasonably be inferred from whole agreement and circumstances, attending its execution, and 'implication' when used in that sense is synonymous with 'intention' ". Requirement of a notice under Section 50(2) of the LA Act, hence, can be implied only when the intention can be gathered from the reading of the Act as a whole.
An analytical approach to Section 50(2) with reference to its context and the scheme of the LA Act reveals that implication of a "right to notice" therein does not appear justifiable, as any construction made independent of the context and the scheme outlined in Part III of the LA Act is not tenable, as it may lead to anomalies and incongruities.
Part III of the Act, titled as "Reference to the Court and procedure thereon" spells out the provisions pertaining to a reference to the Court and procedure to be followed. To begin with, Section 19 of the Act enjoins the Collector to furnish the requisite information in writing to the Court in respect of the matters, as enumerated in the clauses (a) to (d) of sub-section (1). None of these clauses requires any information regarding a local authority or a company.
Section 20, in particular, significantly deals with the "service of notice" and such notices are to be served on the class of persons, named in clauses (a) to (c). Most notably, none of the said clauses mandates service of a notice upon the local authority or the company for whom the Collector acquires the land exhibiting absence of the legislative desire, for compulsory service of a notice upon such local authority or the company. Else the legislature could have conveniently laid the requirement of such a notice. To illustrate, the Karnataka State Legislature, in its wisdom, amended Section 20 of the Act by substituting its clause (c), which requires the service of a notice on "the person or authority for whom it is made".
Further Section 50, sub-section (2) does not also expressly require service of a notice upon a local authority or a company. The expression used therein, namely, "may appear and adduce evidence" does not deserve a construction as "shall be called upon to appear and adduce evidence, if any". Such construction by interpretative process is rather re-writing the provision or reading what is not stated therein and merits to be eschewed. In this connection, it is relevant to note that Section 50, sub-section (2) of the Act stands amended in its application to the State of Gujarat by the Land Acquisition (Gujarat Unification and Amendment) Act, 1965 which substituted the expression "may appear and adduce evidence" by the words "shall be called upon to appear and adduce evidence". What has been amended specifically by the Gujarat Legislature does not deserve to be read in Section 50(2) of the Principal Act without there being specific amendment.
The right under Section 50(2) of the LA Act, if considered in the entirety of the scheme of the Act, is exercisable by a local authority at its own option. Such local authority may either opt to remain represented through the Collector, who sets in motion the machinery for acquisition of a land and finally acquires it; or if such local authority so desires, it may come forth to participate in reference proceedings by appearing on its own before the reference court. For effective exercise of the right of participation, a local authority ought to be vigilant to apprise itself of the particulars of the reference proceedings. At any rate, the right envisaged in Section 50(2), though valuable, is limited in its nature. If a local authority apprehends that the Collector may fail or is failing in his duty to adduce adequate and material evidence before the reference court, it is not to sleep over and then to complain.
Further, the right of a local authority to participate on its own in the proceedings for determination of compensation or to seek its impleadment by moving a petition at its option is alien to the "right to notice" and both these rights are distinct.
Incidentally, the two earlier decisions, referred to in this regard by the majority, viz., Neelagangabai v. State of Karnataka[17] and Krishi Upaj Mandi Samiti v. Ashok Singhal[18] are distinguishable.
In Neelagangabai[17], the land was acquired by the State of Karnataka under the Act, as modified by the Land Acquisition (Mysore Extension Amendment) Act, 1961. The said Amendment Act substituted clause (c) in Section 20 of the Act by a new provision, which necessitated service of a notice, "if the acquisition is not made for the Government, the person or authority for whom it is made". So, as rightly pointed out by Sahai, J., the decision in Neelagangabai[17] was the Court's response to a mandatory provision in the Karnataka Act[19] .
Similarly, in Ashok Singhal[18], Section 54 of the Krishi Upaj Act ordained notice to the Krishi Upaj Mandi Samiti concerned and such statutory requirement of notice was not complied with therein. Further, Ashok Singhal[18] was based on concession of the counsel for the respondent, and, therefore, cannot have precedential value.
The majority, in its judgment, also referred to Union of India v.Kolluni Ramaiah[20] . In this case, a ground by the counsel of the Union of India was to the effect that properly speaking the Union of India ought to have been made a party both before the arbitrator and the High Court. The ground has been inadvertently quoted in the majority judgment treating the above ground as if it were the Court's observations in Kolluni Ramaiah[20].
Thus, the view taken by the majority that the right of appearance and adducing evidence under Section 50(2) of the Act "imposes an obligation on the Collector as well as the reference court to give a notice to the local authority with regard to the pendency of those proceedings and the date on which the matter of determination of amount of compensation would be taken up" does not appear to be in consonance with the letter and spirit of Section 50, sub-section (2) of the Act, nor is it called for by way of contextual construction.
Option to participate v. Right of impleadment
Let's further consider sub-section (2) of Section 50 of the Act. In terms of sub-section (2), a local authority or a company can "appear and adduce evidence", before the Collector or the reference court and for this purpose, it may also move an application for being brought on record by way of its addition in the array of parties. It goes without saying that even without such application, the local authority would be at liberty for appearance and adduction of evidence in terms of the clear legislative sanction outlined in Section 50(2) of the Act.
There can no quarrel with the proposition that if a necessary party is declined its "right to notice"/"right to be heard"/"right to impleadment", the order so passed would be ineffective, nullity or non-est factum, as failure to give a notice to a necessary party takes away the jurisdiction of the court to pass an order against it. But to the contrary, the option to participate/seek impleadment available to a local authority, as a proper party in terms of Section 50(2) of the LA Act, has no bearing with the jurisdiction of the court to make its award.
Sahai, J. in Gyan Devi[1] elaborately dealt with the issue thus: (SCC p. 358, para 37)
"... An acquiring body may have locus to appear on its own but so long it does not appear it is not a necessary party the non-impleadment of which vitiates the proceedings. Between the locus and right of impleadment there is world of difference. The two cannot be equated. A person having locus may not be denied appearance but a person who is necessary party cannot be denied impleadment. The former is permissive the latter is mandatory. A local body may have locus to appear for the limited purposes but once it opts to keep out it cannot claim to be necessary party whose non-impleadment renders the proceedings invalid."
However, the scene changes, if a local authority seeks its impleadment suo motu and such application is rejected by the reference court. In that case, it may amount to a jurisdictional error, as it would mean denial of opportunity to appear and adduce evidence to the local authority. And this denial may vitiate the award. In a catena of precedents, rejection of such application of the local authority by the reference court was ruled as illegal and arbitrary.
The decision in Union of India v. Sher Singh[21] was relied upon by the majority in Gyan Devi to conclude that an award is bad for want of notice to a local authority. This reliance was apparently wrong. Notably, in Sher Singh[21], the issue before the court was not the validity of the reference court's award for want of the notice to the Union of India, but the correctness or otherwise of the rejection of the suo motu application for impleadment by the Union of India.
Right to defend acquisition proceedings
One more aspect needs consideration. The right of a local authority to defend acquisition proceedings, when the same are questioned in the court of law has to be examined. Such right is distinct and different and has no nexus with the "right to notice" in reference proceedings.
The conclusion by the majority that a local authority has locus standi to defend acquisition proceedings by filing an appeal is unexceptionable, but reliance in that regard by the majority on Section 50, sub-section (2) of the Act to support its conclusion seems contrary to its plain language, as it applies, ex facie, only to proceedings "for the purpose of determining the amount of compensation". However, there exist other reasons to justify the locus of a local authority to defend the acquisition proceedings initiated for its benefit; and also to the maintain its appeal therefrom. Acquisition proceedings are initiated at the behest of a local authority, which is to be directly benefited by the acquisition and, hence, an attempt to deprive it from such land, whether acquired or under acquisition, would entail civil consequences. A local authority, therefore, with the leave of the court should be entitled to defend acquisition proceedings, and also to maintain its appeal therefrom or to take recourse to appropriate and befitting remedy.
Right to appeal v. Right to notice
In the majority judgment, it was ruled that "[i]n the event of enhancement of the amount of compensation by the reference court if the Government does not file an appeal the local authority can file an appeal against the award in the High Court after obtaining leave of the court".[22] But it needs to be emphasised that the "right to appeal" of a local authority against the award of the reference court is distinct from the "right to notice" by the reference court.
The precise reason for availability of such right to a local authority, though, incidentally, not taken note of in the majority judgment, is that an appeal lies against the award of the reference court to the High Court under Section 54 of the LA Act read with Section 96 CPC. Section 96 CPC is of a wide import, permitting an appeal to be laid by an "aggrieved person", which includes a person, though not a party, if his interest is prejudicially affected by the impugned order of the court[23] .
A local authority fulfils the test of "aggrieved person", as the burden to pay the enhanced amount of compensation is necessarily to be borne by a local authority and, therefore, an appeal lies at its instance with the leave of the court. In this view, the minority opinion on this issue seems to be wrong.
Nevertheless such "right to appeal" has no nexus, whatsoever, with the "right to impleadment" or the "right to notice". It is not open to a local authority to contend that since the "right to appeal" is exercisable at its option, hence, it has a "right to be given notice" also by the Collector or the reference court.
Requirement of notice - to apply prospectively
Even after declaring that non-service of notice to local authority is not fatal, Sahai, J., made it incumbent for the Collector and the Court to issue notice to the local authority in the proceedings for determination of compensation in future cases. Such view by Sahai, J., amounts to judicial legislation, intended to ensure principles of fairness and justice. His observations are instructive. He observed: (SCC p. 361, para 41)
"Fair procedure and just treatment is the core of our jurisprudence. No one should suffer for omission in law or technicalities in rules. Therefore when the law permits the local body to lead evidence then it is implicit in it that the local authority can legitimately expect to be informed or intimated of the proceedings. It would be in consonance with principle of fairness. Otherwise the right to lead evidence shall hang on the oft-chance of the authority having come to know of the proceedings."
Finally, Sahai, J., observed as follows: (SCC p. 362, para 41)
"...Therefore, to obviate any dispute in future proceedings it appears appropriate to hold that even though the language of the section does not provide for issuance of any notice it is incumbent on the Collector or the court while determining compensation to intimate the local body by issuing notice to lead evidence.... But the obligation of the Collector or the court to issue notice shall be prospective in operation. That is it shall apply to only those proceedings which are initiated hereinafter or are pending before the Collector or court. It shall not be available in appeals pending against the order passed in reference in High Court or this Court except in those rare cases where the local authority is able to establish that it had no knowledge about the proceedings at any stage and the proceedings were vitiated because of fraud or collusion."
However, as against the above reasoning, the majority ruled to the contrary that the requirement of the notice to the local authority is implicit in the "right to appear and adduce evidence", as envisaged in Section 50(2) of the Act, and also held that the failure to give such notice would vitiate the award of the reference court. Such statement of law by the majority is to apply to all pending appeals also, except the matters that stand finally concluded. The minority view would have obviated unpleasant consequences explained above.
In the entirety of the matter, the majority view in Gyan Devi[1]needs reconsideration by a larger Bench of the Supreme Court, as the same is not only in conflict with the precedents but also has adverse impact on administration of justice.1
Cite as : (1998) 5 SCC (Jour) 21
No comments:
Post a Comment