The Karnataka High Court held that the right to seek reference arises only after the disposal of the proceeding under Section 30 of the Land Acquisition Act, 1894 (LA Act).

The Court held thus in an appeal preferred by the Chief Officer of the Town Municipal Council, Holenarasipur, the beneficiary of land acquisition against the judgment and award of the Senior Civil Judge.

A Division Bench of Justice Anu Sivaraman and Justice Anant Ramanath Hegde observed, “In the backdrop of the discussions supra if the judgment of the Apex Court in MADAN AND ANOTHER supra is considered, the ratio in the said case can be extended to the present case as well. This Court is conscious of the fact that in the case of MADAN supra, the Apex Court was dealing with a case where a right to compensation of a person was adjudicated in terms of a decision under Section 30 of the Act of 1894 whereas here the right of the contesting respondents in respect of the compensation was adjudicated under Section 12 of the Act of 1894. However, the said award was put to test invoking Section 30 of the Act of 1894 by a third party. Admittedly, compensation was not released in favour of contesting respondents because of the pendency of a dispute under Section 30 of the Act of 1894. Thus, the right to seek reference must be held to have arisen only after the disposal of the proceeding under Section 30 of the Act of 1894.”

Advocate Kesavareddy M represented the appellant while AGA Azrd J Dundge represented the respondents.

In this case, a land having Municipal Katha was the subject matter of the land acquisition under the LA Act. An award was passed in 2009 which took note of the objection filed by a third person who claimed a share in the compensation. The Special Land Acquisition Officer in his award, observed that the objections would be considered on merits or the amount would be deposited before the Civil Court. Later, the said officer under Section 30 of LA Act referred the matter to the court for adjudication.

The Reference Court rejected the application of the third party and held that contesting respondents were entitled to compensation. Thereafter, the land loser sought a reference seeking enhancement of compensation. The Reference Court partly allowed the claim for compensation enhancement and aggrieved by the enhancement, the beneficiary was before the High Court. The appellant apart from raising a contention that the reference was barred by the limitation, also raised a plea that the compensation awarded was on the higher side.

The High Court after hearing the arguments of parties noted, “In the case on hand the Land Acquisition Officer himself has referred the third party claim for adjudication by the Court under Section 30 of the Act of 1894. In other words his “offer on compensation” is referred to Court for final adjudication.”

The Court said that the interpretation that cause of action has arisen to seek reference once the award is pronounced or served on the land loser under Section 12 of LA Act, aims at defeating the right guaranteed under Article 300A of the Constitution.

“Thus, the said interpretation is not accepted. And for the reasons recorded above this Court is of the view that there is a compelling reason to harmoniously construe the interplay among Sections 12, 18 and 30 of the Constitution of India to ensure that the right to property guaranteed under Article 300 A of the Constitution does not become illusory”, it added.

Furthermore, the Court said that the reference is in time but it disagreed with the reasoning in the impugned judgment of the Reference Court which applied Section 14 of the Limitation Act, 1963 to hold that the reference is in time.

“More importantly, as noticed there is no endorsement relating to service on the land loser on the notice at Ex.P.1 said to have been issued under Section 12(2) of the Act of 1894. The appellant though has produced few documents to show that the respondents have admitted the service of notice, it is relevant to note that the said documents are not accompanied by the application under Order XLI Rule 27 of the Code making valid grounds for delayed production”, it observed.

The Court also noted that not providing for de-escalation while determining the value of the land cannot be upheld and there has to be de-escalation. It added that 10% de-escalation per year would be appropriate because the land was already converted before it was acquired.

Accordingly, the High Court partly allowed the appeal, modified the judgment and award, and held that the respondents/claimants are entitled to Rs. 483/- per square foot for the land acquired with all consequential benefits.

Cause Title- The Chief Officer, Town Municipal Council v. C Mohammad Firoz & Ors.


Appellant: Advocate Kesavareddy M

Respondents: AGA Azrd J Dundge and Advocate Pratheep KC.

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