MAHESH LALL SEAL AND ORS. v. UNION OF INDIA AND ORS

Citation: [2006] SUPP. 5 S.C.R. 696

Court: Supreme Court of India

Bench: ARIJIT PASAYAT, S.H. KAPADIA

Case summary

MAHESH LALL SEAL AND ORS. v. UNION OF INDIA AND ORS.pdf

Judgment text

MAHESH LALL SEAL AND ORS. v. UNION OF INDIA AND ORS. SEPTEMBER I, 2006 [ARIJIT PASAYAT AND SH. KAPADIA, JJ. ) .. ,,.

Requisition and Acquisition ofImmovable Property Act, 1952-Sections 8(/)(a)(b) and I I-Property acquired 12 years after agreement-Payment received by claimants under protest-State Government issuing notification appointing arbitrator-Notification challenged on the ground that there was no referable dispute-Meanwhile award passed by arbitrator-Validity of notification upheld by Single Judge and Division Bench-Award challenged-Subsequent Division Bench holding that findings by earlier Division Bench were tentative and setting aside award on the ground that arbitration proceedings were without jurisdiction as there was no referahle dispute-Whether subsequent Division Bench right in holding that findings by earlier Division Bench were tentative in nature-In the circumstances, held, finding by earlier Division Bench could not be held to be tentative and issue stands concluded by earlier Division Bench--Practice and procedure.

Property belonging to appellants-claimants was acquired by Union of India on 3. 3. 1987 under Section 8(1)(a) of Requisition and Acquisition of Immovable Property Act, 1952 at fixed price of Rs. 18,98,00fli. in terms of agreement dated 18. 7. 75. On 26. 5. 93 claimants received the entire amount of Rs. 18,98,000/- under protest. State Government issued notification appointing arbitrator under Section 8(1)(b) of 1952 Act to which Union of India objected by filing Objections on the ground that on account of agreement between parties on 18. 7. 75 and signing of Form Kon 26. 5. 93 by claimants, the Arbitrator could not make award under Section 8(3) of the 1952 Act beyond the agreed amount of Rs. 18,98,000/-. Claimants filed claim petitions before Arbitrator claiming compensation in respect of acquired property @ R~. 3,00,000/- per kattah. On 5. 1. 98 Union of India filed written objection before arbitrator stating that fair market value of acquired lands on 3. 3. 87 would ·• not exceed Rs.

70,000/- per kattah. Union of India also filed writ petition seeking cancellation of appointment of arbitrator. However, there was no stay of proceedings before the arbitrator by the High Court. Claimants agreed to MAHESH LALL SEAL v. U. 0. 1 697 receive compensation@ Rs. 70,000/- per kattah as suggested by Union of India in its objection dated 5. 1. 98. On 21. 1. 2000 Union of India moved application before Arbitrator saying that concession made on 5. 1. 98 by Advocate conceding rate of Rs. 70,000/- per kattah was without obtaining - . ;instructions and the claimants were not entitled to receive compensation at the said rate. Arbitrator on 18. 5. 2000 dismissed the objection dated 21. 1. 2000 filed by Union of India and also came to the conclusion that dispute regarding compensation did exist and the Arbitrator had jurisdiction to try and decide such dispute. Writ Petition preferred by Union of India against decision dated 18. 5. 2000 of the arbitrator was dismissed by High Court.

Earlier writ petition filed by Union of India seeking cancellation of appointment of arbitrator was also dismissed by Single Judge on 28. 9. 2000 holding that there existed dispute as to amount ofcompensation payable for acquisition ofthe premises on 3. 3. 87 and State Government was competent to appoint an arbitrator under Section 8(l)(b) of the 1952 Act. Arbitrator announced award on 25. 10. 2000 assessing market value at the rate of Rs. 70,000/- per Kattah as on 3. 3. 87. Aggrieved by the decision of the Single Judge dated 28. 9. 2000, Union of India preferred writ appeal which was dismissed by Division Bench holding that notification issued under Section 8(1)(b) of the 1952 Act appointing arbitrator was valid in law without going into the question of validity of the Award. When claimants filed writ petition for realization of compensation as per the Award, Union of India filed appeal before Division Bench under Section II of the 1952 Act against award dated 25. 10. 2000.

Union of India again contended that notification appointing arbitrator was not valid as there existed no dispute to be referred to arbitration; that award was passed on the basis of concession made by Union of India without noticing that the same were subsequently withdrawn ; and that claimants were not entitled to sofatium and interest as awarded. Division Bench allowed appeal and set aside award dated 25. 10. 2000 on the ground that arbitration proceedings were without jurisdiction as there was no referable dispute holding that there was no res- ... judicata as the findings given by earlier Division Bench were tentative in nature; and that arbitrator erred in fixing compensation @ Rs. 70,000/- per kattah as there was no material on record for assessing valuation, particularly when no evidence was taken by the arbitrator. Hence, this appeal by the claimants. Partly allowing the appeal, the Court Held: I. I.

There is a difference between the validity of the notification 698 SUPREME COL:RT REPORTS [2006] SUPP. 5 S. C. R. issued under Section 8(1)(b) of the Requisition and Acquisition of Immovable Property Act, 1952 on one hand and the validity of the Award on merits announced by the Arbitrator on 25. 10. 2000 on the other. In the earlier round of litigation the question which arose for determination before the High Court was: whether the notification issued under Section 8(l)(b) of the 1952 Act appointing an arbitrator was valid in law. In that litigation there was no question ofdeciding on merits the validity of the Award dated 25. 10. 2000. A concurrent finding was recorded by Single Judge and by the Division Bench upholding the validity of the notification under Section 8(l)(b) of the 1952 Act. The notification was upheld. By no stretch of imagination one can say that the concurrent findings given were tentative in nature. 1707-A, B, q 1. 2.

It is important to note that the premises in question were acquired on 3. 3. 87 which is 12 years after the agreement dated 18. 7. 75. Under the scheme of the 1952 Act as in the case of Land Acquisition Act fair market value has to be determined as on the date of acquisition. In this case acquisition had taken place on 3. 3. 87. If the contention of Union of India is to be a~cepted it would amount to pegging of the price which is not permissible under the law of acquisition. The Division Bench in the earlier round had given a finding that the premises in question are located in a posh area. In the earlier round a concurrent finding was given by the High Court, both by Single Judge and by the Division Bench, that the claimants had received compensation under protest. In the circumstances, it cannot be said by the subsequent Division Bench that the earlier findings were tentative. (707-C, D, El 2.

Before the Arbitrator the claimants had asked for enhancement of compensation at the rate of Rs. 3,00,000/- per kattah. In reply, on 5. 1. 98 Union of India stated that the fair rate was Rs. 70,000/- per kattah. On 21. 1. 2000 p an affidavit is filed by Union of India before the Arbitrator saying that the advocate had no authority to concede the rate at Rs. 70,000/- per kattah. By decision dated 18. 5. 2000 the objections filed by Union of India dated 21. 1. 2000 were rejected. The decision of the Arbitrator was challenged in a writ petition. This writ petition was also dismissed by the High Court and, therefore, it is not open to Union of India now to say that Rs. 70,000/- per kattah was not the fair rate. This issue was also, therefore, concluded. 1707-E, F, G) 3. Before the Arbitrator the claimants had submitted a valuation report under which the valuer has relied upon sale instance and had calculated the fair market value of the acquired property at Rs. 73,900/- per kattah.

In fact, even the Arbitrator in the impugned Award has referred to the report of the MAHESH LALL SEAL v. U. 0. 1. [KAPADIA•. I. ] 699 ·, expert valuer and also to the sale instance dated 18. 7. 86 and, therefore, it cannot be said that the impugned Award is based only on the concession made by Union of India vide its objections dated 5. l. 98. 1707-G; 708-A, Bl 4. On behalf of the claimants, it has been stated that the claimants will not press their claim for solatium. In the circumstances, the question as to whether the claimants were entitled to solatium under provisions of the 1952 Act is not required to be examined. However, the interest awarded by the Arbitrator at the rate of 15% per annum from the date of acquisition till payment is on the higher side and accordingly payment of interest at the rate of9% per annum instead of 15% per annum is directed. 1708-B, q 5. Union of India isdirected to pay compensation that is land value at the rate of Rs.

70,000/- per kattah in respect of Danga and Bastu land and Rs. 35,000/- per kattah for the pond land without solatium with interest at the rate of9% per annum from the date of acquisition till payment, less the amount which has already been paid till date. (708-F, Cl CIVIL APPELLATE JURISDICTION: Civil Appeal No. 723 of2006. From the Judgment and Order dated 6. 12. 2004 of the High Court of Calcutta in F. M. A. T. No. 151/2004. Bhaskar Gupta, Avijit Bhattacharjee and Saumya Kr. for the Appellants. Vikas Singh, A. S. G. , Indra Sawhney, Anil Katiyar, Tara Chand Sharma and Neelam Sharma for the Respondents. The Judgment of the Court was delivered by KAPADIA, J. This civil appeal by grant of special leave appeal seeks to challenge judgment and order dated 6. 12. 04 passed by a Division Bench of the Calcutta High Court allowing F. M. A. T. No. 151 of2004 filed by Union of India (respondents herein) challenging the Award of the Arbitrator dated 25. 10. 2000.

Before the High Court the main contention advanced by Union of India, on whose behest the property was acquired, was that the claimants had entered into agreement with the Government on 18. 7. 75 for sale of properties under Section 8(l)(a) of the Requisitioning and Acquisition of Immovable Property Act, 1952 (hereinafter referred to as "the 1952 Act") at a fixed price of Rs. 18,98,000/- and in terms of such agreement the full price was paid upon execution of an agreement in Form Kon 26. 5. 93 and, therefore. there was no question of any dispute being referred to arbitration. The short question which arises for determination in this civil appeal is: whether the impugned Award of the Arbitrator dated 25. 10. 2000 was null and void on account of absence of referable dispute to the Arbitrator. The background facts are as follows: At all material times, appellants (claimants) were the joint owners of Dag Nos. 6I3, 6I4, 617 and 6I8 measuring 7. 16 acres in area, witlrin Mouza Nainan, P. S.

Baranagar, District North 24 Parganas, being portion of premises No. 46, B. T. Road, Calcutta (hereinafter referred to as "the acquired property"). The said acquired property was initially requisitioned by Union of India under Defence of India Act and Rules. This was on 22. 4. I942. On 3. 3. I987 the said property was acquired under the I952 Act along with other properties when Form J was published. Up to 31. 12. 74 the rent of the subsequent Division Bench however holds that on 5. 1. 98 written objections were filed on behalf of Union of India under which it was conceded that the rate of the fair market value was Rs. 70,000/- per kattah and not Rs. 3,00,000/ - per kattah as cont. ended by the claimants. However, these written objections dated 5. 1. 98 were subsequently withdrawn on 21. 1. 200 and, therefore, the Arbitrator erred in fixing compensation at the rate of Rs. 70,000/- per kattah.

The subsequent Division Bench observed that there was no material on record for assessing valuation, particularly, when no evidence was taken by the Arbitrator. In the circumstances, the subsequent Division Bench has set aside the Award dated 25. 10. 2000. Hence this civil appeal by the claimants. The short question which arises for determination is: whether the subsequent Division Bench was right in holding that the findings given by the earlier Division Bench on the maintainability of the arbitration proceedings, · were tentative in nature and, therefore. not binding on the subsequent Division Bench. On behalf of Union of India it was vehemently urged that no interference is called for in the present case. It was contended on behalf of Union of India that this Court had granted liberty to Union of India vide its order dated 18. 3. 2002 to pursue other remedies permissible under law.

It was urged that even the Division Bench of the Calct1tta High Court clarified the position vide order dated 14. 1. 2003 saying that Union of India was free to challenge the Award and, therefore, according to Union of India, it was open to it to raise the same contentions regarding maintainability of arbitration proceedings once again in the appeal filed before the Division Bench against the Award under Section I I of the 1952 Act. In this connection, it was submitted by Ld. Additional Solicitor General that the findings of the earlier Division Bench dated 28. 8. 2001 were tentative in nature and, therefore, the subsequent Division • Bench was right in holding, vide impugned judgment, that the arbitration proceedings were not maintainable as the acquisition had taken place under the agreement dated 18. 7. 75. Consequently, according to Union of India, the Award has been rightly set aside by the Division Bench vide impugned MAHESl-1 LALL SEAL r. U. 0. 1. IKAPADIA.

J] >judgment dated 6. 12. 2004. We find merit in this civil appeal. There is a difference between the validity of the notification issued under Section 8(l)(b) of the 1952 Act on one hand and the validity of the Award on merits announced by the Arbitrator on 25. 10. 2000 on the other. In the earlier round of litigation the question which arose for determination before the High Cou11 was: whether the notification issued under Section 8(1)(b) of the 1952 Act appointing an arbitrator was .. valid in law. In that litigation there was no question of deciding on merits the validity ofthe Award dated 25. I0. 2000. A concurrent finding was recorded by learned Single Judge and by the Division Bench upholding the validity of the notification under Section 8(l)(b) of the 1952 Act. The notification was upheld. By no stretch of imagination one can say that the concurrent findings given were· tentative in nature.

In this connection, it is important to note that the premises in question were acquired on 3. 3. 87 which is 12 years after the agreement dated 18. 7. 75. Under the scheme of the 1952 Act as in the case of Land Acquisition Act fair market value has to be determined as on the date of acquisition. In this case acquisition had taken place on 3. 3. 87. If the contention of Union of India is to be accepted it would amount to pegging of the price which is not permissible under the law of acquisition. The Division Bench in the earlier round had given a finding that the premises in question are located in a posh area. In the earlier round a concurrent finding was given by the High Court, both by learned Single Judge and by the Division Bench, that the claimants had received compensation under protest. In the circumstances, it cannot be said by the subsequent Division Bench that the earlier findings were tentative. There is one more fact which is required to be noted.

Before the Arbitrator the claimants had asked for enhancement of compensation at the rate of Rs. 3,00,000/- per k_attah. In reply, on 5. 1. 98 Union of India stated that the fair rate was Rs. 70,000/- per kattah. On 21. 1. 2000 an affidavit is filed by Union of India before the Arbitrator saying that the advocate had no authority to concede the rate at Rs. 70,000/ - per kattah. By decision dated 18. 5. 2000 the objections filed by Union oflndia dated 21. 1. 2000 were rejected. The decision of the Arbitrator was challenged in a writ petition C. O. No. 12072 of 2000. This writ petition was also dismissed by the High Court on 30. 8. 2000 and, therefore, it is not open to Union of India now to say that Rs. 70,000/- per kattah was not the fair rate. This issue was also, therefore, concluded.

~ i Lastly, the most important point to be noted is that before the Arbitrator the claimants had submitted a valuation report under which the valuer has relied upon sale instances and had calculated the fair market value of the acquired property at Rs. 73,900/- per kattah (SEE: Valuation report dated 20. 12. 96 at page 97 of Volume I filed in the Calcutta High Court in F. M. A. T. No. 151 of 2004 - Part! ). In fact, even the Arbitrator in the impugned Award has referred to the report of the expert valuer and also to the sale instance dated 18. 7. 86 and, therefore, it cannot be said that the impugned Award is based only on the concession made by Union of India vide its objections dated 5. 1. 98. .. Before concluding we may mention that Shri Bhaskar Gupta, learned senior advocate appearing on behalf of the claimants, has stated that the claimants will not press their claim for solatium.

In the circumstances, we are not required to examine the question as to whether the claimants were entitled to solatium under provisions of the 1952 Act. However, we are of the view that the interest awarded by the Arbitrator at the rate of 15% per annum from the date of acquisition till payment is on the higher side and accordingly we direct payment of interest at the rate of 9% per annum instead of 15% per annum. For the above stated reasons, we find merit in the civil appeal and accordingly we set aside the impugned judgment dated 6. 12. 2004 delivered by the Division Bench ofthe Calcutta High Court in F. M. A. T. No. 151 of2004 and accordingly we direct payment of compensation to the claimants at the rate of Rs. 70,000/- per kattah in respect of Danga and Bastu land and at the rate of Rs.

35,000/- per kattah for the pond land with interest at the rate of 9% per annum from the date of acquisition till payment as ordered by the Arbitrator less amounts paid and received by the claimants till today. We may clarify that in the Award the Arbitrator granted interest on the aggregate amount of land value + solatium for the period of one year from the date of acquisition on p the basis that Union of India shall pay the requisite amount within three months from the date of the Award. However, Union of India unnecessarily litigated on unstatable points, as stated above, and in the process interest ' continued to accrue and, therefore, we direct Union of India to pay 0 compensation that is land value at the two above-mentioned rates of Rs. 70,000/ - per kattah in respect of Danga and Bastu land and Rs.

35,000/- per kattah for the pond land without solatium with interest at the rate of 9% per annum from the date of acquisition till payment, less the amount which has already been paid till date. Accordingly, the civil appeal is partly allowed with no order as to costs. A. K. T. Appeal partly allowed.