GREGORY PATRAO AND ORS. versus MANGALORE REFINERY AND PETROCHEMICALS LIMITED & ORS.

[2022] 12 S.C.R. 97

GREGORY PATRAO AND ORS.

MANGALORE REFINERY ANDPETROCHEMICALS LIMITED & ORS.

(Civil Appeal Nos. 4105-4107 of 2022)

JULY 11, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Land Acquisition: Karnataka Industrial Areas DevelopmentAct, 1966 (KIAD Act) – s.28 – Persons interested – Proper party –Right of subsequent allottee to participate in reference proceedings– The lands of the appellants were acquired u/s.28(4) of the KIADAct for establishment of industrial areas – Land Acquisition Officerafter affording opportunity of hearing to the owners of the landpassed award on 06.10.2009 – References made to the ReferenceCourt at the instance of landowners – Reference Court enhancedthe amount of compensation – Respondent No.1 (MRPL) was allottedthe land as lessee by the Karnataka Industrial Areas DevelopmentBoard (KIADB) – MRPL preferred the appeals before High Courton the ground that it ought to have been heard by the ReferenceCourt as it was beneficiary of the acquisition and under theagreement between the KIADB and MRPL, MRPL has to pay theadditional amount of compensation – High Court held that MRPLcan be said to be ‘person interested’ and therefore, ought to havebeen heard before enhancing the amount of compensation – Thematter was remanded back to Reference Court for fresh decisionafter giving an opportunity of hearing to all parties including MRPL– On appeal, held: There is no reason to take different view thanthe view taken in the case of *Peerappa Hanmantha Harijan v. Stateof Karnataka that MRPL being subsequent allottee after the landwas acquired by KIADB, can neither be said to be beneficiarynor ‘person interested’ for the purpose of determination ofcompensation – The judgment and order passed by the High Courtquashed.

Constitution of India: Art.141 – Binding Precedent – Held:Not following the binding precedents of Supreme Court by the HighCourt is contrary to Art.141 of the Constitution of India.

98SUPREME COURT REPORTS

AAllowing the appeals, the Court

HELD : The land has been acquired under the provisionsof the KIAD Act, 1966 and the notification has been issued underSection 28(1) of the KIAD Act, 1966. The land has been acquiredby the State Government for KIADB under three differentBnotifications. After the lands were acquired, respondent No.1 –MRPL has been allotted the lands acquired as per the agreementsbetween the KIADB and the MRPL. The present is not anacquisition under the provisions of the Land Acquisition Act andtherefore, as such, neither Section 50 of the Land AcquisitionAct, 1894 nor any other provisions of the Land Acquisition Act,C1894 shall be applicable with respect to the lands acquired underthe provisions of the KIAD Act, 1966. There is no reason totake different view than the view taken by this Court in thecase of Peerappa Hanmantha Harijan that the MRPL being asubsequent allottee after the land was acquired by KIADB, canDneither be said to be beneficiary nor “person interested” forthe purpose of determination of compensation. Under thecircumstances, the impugned judgment and order passed by theHigh Court taking contrary view is unsustainable. [Paras 7,7.6][106-F-H; 107-A-B; 115-D]

*Peerappa Hanmantha Harijan v. State of Karnataka(2015) 10 SCC 469 : [2015] 9 SCR 498 – relied on.

Himalayan Tiles and Marble (P) Ltd. v. Francis VictorCountinho (Dead) By LRs’ (1980) 3 SCC 223 : [1980]3 SCR 235; UP Awas Evam Vikas Parishad v. GyanFDevi (Dead) by LRs. and Ors. (1995) 2 SCC 326 : [1994]4 Suppl. SCR 646 – distinguished.

Neelagangabai & Another v. State of Karnataka &Others (1990) 3 SCC 617 : [1990] 3 SCR 20; NeyvelyLignite Corporation Ltd. v. Special Tahsildar (LandGAcquisition) Neyvely and Others (1995) 1 SCC 221 :[1994] 4 Suppl. SCR 567; Satish Kumar Gupta v. Stateof Haryana (2017) 4 SCC 760 : [2017] 1 SCR 767;Rashmi Metaliks Ltd. v. Kolkata MetropolitanDevelopment Authority (2013) 10 SCC 95 : [2013] 17SCR 345; Bir Singh v. Mukesh Kumar (2019) 4 SCCH197 : [2019] 2 SCR 24 – referred to.

GREGORY PATRAO AND ORS. v. MANGALORE REFINERYAND PETROCHEMICALS LIMITED & ORS.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4105-4107 of 2022.

From the Judgment and Order dated 06.09.2021 of the High Courtof Karnataka at Bengaluru in M.F.A. No.259 of 2021 (LAC) c/w M.F.A.No. 377 of 2021 (LAC) and M.F.A. No.247 of 2021 (LAC).

Shailesh Madiyal, Vaibhav Sabharwal, Ms. Neha Jain, RajanParmar, Advs. for the Appellants.

Ms. Shalini Sati Prasad, Jeevan B. Panda, Meher Tandon forM/s Khaitan & Co., Advs. for the Respondents.

The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Karnataka at Bengaluru in FirstAppeal No. 259 of 2021 and other allied first appeals, by which the HighCourt has set aside the judgment and award passed by the learnedReference Court and has remanded the matter to the Reference Courtto decide the references afresh after affording an opportunity to all theparties including respondent No. 1 herein - M/s. Mangalore Refineries& Petrochemicals Ltd., Mangalore (MRPL), the original claimants/original landowners have preferred the present appeals.

2. The lands belonging to the original claimants/originallandowners/appellants herein were acquired under Section 28(4) of theKarnataka Industrial Areas Development Act, 1966 (hereinafter referred

Ato as “KIAD Act, 1966”) under three different notifications. The landswere sought to be acquired for the development of the KarnatakaIndustrial Areas Development Board (hereinafter referred to as“KIADB”) for establishment of industrial areas. The Land AcquisitionOfficer after affording an opportunity of hearing to the owners of theland passed an award on 06.10.2009. At the instance of the landowners,Bthe references were made to the Reference Court. The Reference Courtvide judgment dated 29.07.2020 enhanced the amount of compensation.

2.1 Feeling aggrieved and dissatisfied with the judgment and awardpassed by the Reference Court dated 29.07.2020, enhancing the amountof compensation, respondent No.1 herein – MRPL, who was allottedCthe land as lessee by the KIADB, preferred the present appeals beforethe High Court and prayed for leave to appeal. It was the case on behalfof the MRPL that as the MRPL is the beneficiary of the acquisition andunder the agreement between the KIADB and MRPL, the latter has topay the additional amount of compensation and, therefore, the burden toDpay the additional compensation would be upon the MRPL, therefore,MRPL ought to have been heard by the Reference Court. It was thecase on behalf of the MPRL that MRPL can be said to be “personinterested”. Heavy reliance was placed upon the decisions of this Courtin the case of Himalayan Tiles and Marble (P) Ltd. Vs. FrancisVictor Countinho (Dead) By LRs’, (1980) 3 SCC 223; UP AwasEEvam Vikas Parishad Vs. Gyan Devi (Dead) by LRs. and Ors.,(1995) 2 SCC 326; Neelagangabai & Another Vs. State ofKarnataka & Others, (1990) 3 SCC 617; and Neyvely LigniteCorporation Ltd. Vs. Special Tahsildar (Land Acquisition) Neyvelyand Others, (1995) 1 SCC 221.F2.2 On the other hand, it was the case on behalf of the originalowners that the MRPL, being an allottee from the KIADB and thebeneficiary of the land acquisition proceedings is the KIADB and notthe MRPL and the amount awarded by the Land Acquisition Officerwas deposited by the KIADB, MRPL cannot be said to be ‘personGinterested’. Relying upon the decision of this Court in the case ofPeerappa Hanmantha Harijan Vs. State of Karnataka, (2015) 10SCC 469, it was prayed to dismiss the appeals.

2.3 By the impugned common judgment and order and mainlyrelying upon the decision of this Court in the case of UP Awas EvamHVikas Parishad (supra), the High Court has granted the permission to

MRPL to file the appeals challenging the judgment and award passed bythe Reference Court and thereafter has quashed and set aside thejudgment and award passed by the Reference Court by holding that theMRPL can be said to be “person interested” and therefore, ought tohave been heard before enhancing the amount of compensation.Thereafter, the High Court has remanded the matter back to theReference Court for decision afresh after affording an opportunity toall the parties to adduce evidence including MRPL.

2.4 Feeling aggrieved and dissatisfied with the impugned commonjudgment and order passed by the High Court, the original claimants/original landowners have preferred the present appeals.

3. Shri Shailesh Madiyal, learned counsel appearing on behalf ofthe appellants – original claimants has vehemently contended that in thefacts and circumstances of the case, the High Court has erred in quashingand setting aside the judgment and award/order passed by the ReferenceCourt in the appeals preferred by MRPL by holding that MRPL can besaid to be “person interested” and therefore, MRPL ought to havebeen heard by the Reference Court before enhancing the amount ofcompensation.

3.1 Shri Madiyal, learned counsel appearing on behalf of theappellants has submitted that in the present case the real issue is as towhether in an acquisition under KIAD Act, 1966, post-acquisitionallottee of parcel of land is necessary party in the proceedings forthe determination of the compensation.

3.2 It is urged that in terms of Section 28(1) of the KIAD Act,1966, the acquisition is carried out by the State Government “for thepurpose of development by the Board, or for any other purpose, infurtherance of the objects of the said Act”. That in the present case, theacquisition was carried out by the State Government for the purposes of“establishment of industry and to develop it” through the KIADB. It issubmitted that even the preliminary/final notifications do not mentionthat the acquisition was for the MRPL. It is further urged that in termsof Section 28(8) of the KIAD Act, 1966, the State Government, after ithas taken possession of the land, transfers the land to the KIADB and,thereafter in terms of Section 32(2) of the KIAD Act, 1966, the KIADBis empowered to deal with the land so transferred in accordance withthe regulations made and the directions given by the State Government

Ain this behalf. It is submitted that therefore, the company to which landis allotted under the KIAD Act, 1966 cannot be said to be the beneficiaryof the acquisition. It is submitted that as such the beneficiary is in factthe KIADB which in turn allots the acquired land to companies such asMRPL.

B3.3 It is submitted that as such the issue involved in the presentappeals is not res integra in view of the direct decision of this Court inthe case of Peerappa Hanmantha Harijan (supra). That this Court,in the above case dealing with an acquisition under the KIAD Act, 1966itself, repelled the claim of the post-acquisition allottee company that ithas right to participate in the award proceedings for determination ofCthe market value of the land. It is submitted that this Court, afterconsidering, inter alia, the scheme of the KIAD Act, 1966 held that theallottee company is not beneficiary of the acquired land under theKIAD Act, 1966. That in the said decision, it is further observed andheld that Section 54 of the Land Acquisition Act, which provides rightDto appeal is only available to the landowners, State Government and thebeneficiary of the acquired land and not the allottee company. It issubmitted that in the present case, KIADB can be said to be beneficiaryof the acquired land and not the allottee company - MRPL. It is submittedthat therefore, the appeals filed by the respondent No.1 – MRPL beforethe High Court were not at all maintainable and the High Court ought toEhave dismissed the said appeals in view of the law laid down in the caseof Peerappa Hanmantha Harijan (supra).

3.4 Now, so far as, reliance placed by the High Court on thejudgments of this Court in UP Awas Evam Vikas Parishad (supra)and Himalayan Tiles and Marble (P) Ltd. (supra) while passing theFimpugned common judgment and order, it is vehemently submitted bylearned counsel appearing on behalf of the appellants – originallandowners that the High Court has committed grave error in relyingupon the aforesaid decisions. That both the aforesaid decisions, whichhave been heavily relied upon by the High Court while passing theGimpugned common judgment and order are not applicable at all withrespect to an acquisition under the KIAD Act, 1966.

3.5 Hence, the aforesaid decisions do not apply to the facts andcircumstances of the present case, since the said judgments pertain tothe acquisition under Part VII of the Land Acquisition Act r/w SectionH50 of the Land Acquisition Act, which provides for direct acquisition for

company/local authority. It is submitted that the conclusion of this Courtat para 24 of UP Awas Evam Vikas Parishad (supra) clearly statesthat company or local authority for whom land is being acquired hasa right to participate before the Reference Court. But in the presentcase, the land has been acquired for the KIADB, which is neither acompany nor local authority.

3.6 It is submitted that as such the decisions of this Court in thecase of UP Awas Evam Vikas Parishad (supra) and Himalayan Tilesand Marble (P) Ltd. (supra) have been considered and distinguishedby this Court in the case of Peerappa Hanmantha Harijan (supra) (atparas 61 and 62).

3.7 It is further submitted that even in the subsequent decision,this Court in the case of Satish Kumar Gupta Vs. State of Haryana,(2017) 4 SCC 760 relying upon the case of Peerappa HanmanthaHarijan (supra) has distinguished the judgments in the case of UP AwasEvam Vikas Parishad (supra) and Himalayan Tiles and Marble(P) Ltd. (supra), and has held and taken view that post-acquisitionallottee of land is neither necessary or proper party nor has any locusto be heard in the matter of determination of compensation under thescheme of the Land Acquisition Act.3.8 It is further submitted by learned counsel appearing on behalfof the appellants that as such the High Court has committed graveerror in not following binding precedent of this Court rendered in thecase of Peerappa Hanmantha Harijan (supra). That the aforesaidjudgment of this Court was binding upon the High Court but the HighCourt has not followed the same and has observed on the basis of anerroneous reasoning that the decision of this Court in UP Awas EvamVikas Parishad (supra), being decision of Three Judge Bench ascompared to decision of Two Judge Bench in Peerappa HanmanthaHarijan (supra) binds the High Court. It is submitted that the HighCourt has not properly appreciated and considered the fact that thedecision of this Court in the case of UP Awas Evam Vikas Parishad(supra) was subsequently considered and distinguished by this Court inthe case of Peerappa Hanmantha Harijan (supra). Therefore, theHigh Court was bound by the decision of this Court in the case ofPeerappa Hanmantha Harijan (supra) even on the doctrine of staredecisis as embodied in Article 141 of the Constitution and reliance isplaced on the following decisions of this Court:-

EFG

A“Director of Settlements, A.P. Vs. M.R. Apparao, (2002) 4SCC 638 (para 7); Rashmi Metaliks Ltd. Vs. KolkataMetropolitan Development Authority, (2013) 10 SCC 95(para 7) and Bir Singh Vs. Mukesh Kumar, (2019) 4 SCC197 (para 30).

B3.9 Making the above submissions, it is prayed to allow the presentappeals.

4. Present appeals are vehemently opposed by Ms. Shalini SatiPrasad, learned counsel appearing on behalf of the respondent No.1 –MRPL.

4.1 It is submitted by learned counsel appearing on behalf of therespondent No.1 – MRPL that the present appeals raise the question asto whether respondent No.1 – MRPL can be said to be “personinterested” for the purpose of Section 18(1) of the Land Acquisition Act,1894 and consequently, whether the respondent No. 1 was properDparty in the proceedings before the Learned Reference Court. It issubmitted that as such there is no infirmity in the impugned judgmentand order passed by the High Court as the High Court has relied uponthe direct judgments of this Court in the case of UP Awas Evam VikasParishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra).

4.2 Learned counsel appearing on behalf of the MRPL hasvehemently submitted that the MRPL can be said to be “personinterested” for the purpose of Sections 18 and 20 of the Land AcquisitionAct and Section 29(4) of the KIAD Act, 1966 and therefore was aproper party in the proceedings before the Reference Court.

F4.3 It is submitted that there is no requirement under Section28(1) or Section 28(4) of the KIAD Act, 1966 to make statement inthe notification as to the specific company for which the land is intendedto be acquired. It is submitted that even otherwise in the agreementbetween KIADB and the MRPL, liability to pay the enhanced amountof compensation would be upon the MRPL and therefore, beforeGenhancing the amount of compensation, the Reference Court ought tohave heard the MRPL. That the MRPL cannot be made liable to bearthe financial burden of the enhanced awarded amount without fairchance of contesting the enhancement by the Reference Court.Therefore, the High Court has rightly remanded the matter to theReference Court to provide the MRPL, who is “person interested”, anH

opportunity to be heard before awarding the enhanced amount ofcompensation to the landowners.

4.4 It is further submitted by the learned counsel appearing onbehalf of respondent No.1 – MRPL that as per Section 2(11) of theKIAD Act, 1966, the expression “person interested” has the samemeaning assigned to it in Section 3 of the Land Acquisition Act. That asper Section 3(b) of the Land Acquisition Act, the expression “personinterested” includes all persons claiming an interest in compensation tobe made on account of the acquisition of the land under the said Act;and person shall be deemed to be interested in land if he is interestedin an easement affecting the land.4.5 It is submitted that in the present case, KIADB constitutedunder the KIAD Act, 1966 had executed an agreement with the MRPLdated 08.12.1994. Accordingly, in view of the said agreement with theKIADB, the land was acquired pursuant to the three different notificationsissued by the State under Section 28(4) of the KIAD Act, 1966. Thatthe land was granted to respondent No. 1 - MRPL by the State LevelSingle Window Clearance Committee whose approvals are binding onall departments and authorities in terms of Section 8 of the KarnatakaIndustries Facilitation Act 2002. It is submitted that therefore, MRPLcan be said to be “person interested” in the acquired land.

4.6 On the submission that the MRPL can be said to be “personinterested” under the relevant provisions of the Land Acquisition Actand/or KIAD Act, 1966 and therefore proper party before theproceedings, the learned counsel appearing on behalf of the respondentNo.1 has heavily relied upon the judgments of this Court in the case ofUP Awas Evam Vikas Parishad (supra); Himalayan Tiles andMarble (P) Ltd. (supra) as well as another decision of this Court inthe case of Delhi Development Authority Vs. Bhola Nath Sharma(Dead) by L.Rs. and Ors., 2011 (2) SCC 54.

4.7 It is further submitted that as such and being well aware thatthe land had been acquired for the MRPL, the appellants herein in facthad impleaded MRPL as party respondent in their petition challengingthe acquisition before the High Court. Therefore, thereafter in thereferences made for enhancement of compensation, the landowners oughtto have impleaded the MPRL, being an affected and proper party.

A4.8 Learned counsel appearing on behalf of the MRPL has furthersubmitted that MRPL cannot be made liable to bear the financial burdenof the enhanced amount of compensation without being given fairchance of contesting the enhancement of the amount of compensation.Reliance is placed upon paras 22 and 41 of the case of UP Awas EvamVikas Parishad (supra). It is submitted that the ratio of this Court inBthe case of UP Awas Evam Vikas Parishad (supra) in paras 22 and41 has not been considered and distinguished by this Court in the case ofPeerappa Hanmantha Harijan (supra). It is submitted that therefore,even if it is presumed that the respondent No. 1 - MRPL does not haveany right to be impleaded in the proceedings before the learned ReferenceCCourt, the principles of natural justice and the doctrine of legitimateexpectation would be attracted so as to ensure that the respondent No.1 – MRPL is not rendered remediless while being burdened with thefinancial implications of the orders passed by the learned ReferenceCourt in the absence of any opposition to the enhancement.D4.9 Making above submissions and relying upon the abovedecisions, it is prayed to dismiss the present appeals.

5. Heard the learned counsel for the respective parties at length.

6. The short question, which is posed for the consideration of thisCourt is, whether, respondent No.1 – MRPL, who is simply an allotteeEof the land by the KIAD Board, after the acquisition of the lands underSection 28 of the KIAD Act, 1966, which was for the benefit ofKarnataka Industrial Areas Development Board (KIADB) can be saidto be “person interested” under the provisions of KIAD Act, 1966 andtherefore, was proper party in the reference proceedings initiated atFthe instance of the original landowners?7. While answering the aforesaid issue/question, it is required tobe noted that in the present case, the land has been acquired under theprovisions of the KIAD Act, 1966 and the notification has been issuedunder Section 28(1) of the KIAD Act, 1966. The land has been acquiredGby the State Government for KIADB under three different notifications.After the lands were acquired, respondent No.1 – MRPL has beenallotted the lands acquired as per the agreements between the KIADBand the MRPL. The present is not an acquisition under the provisions ofthe Land Acquisition Act and therefore, as such, neither Section 50 ofthe Land Acquisition Act, 1894 nor any other provisions of the Land

Acquisition Act, 1894 shall be applicable with respect to the landsacquired under the provisions of the KIAD Act, 1966. Taking intoconsideration, the aforesaid factual aspects, the impugned judgment andorder passed by the High Court in which it has heavily relied upon thedecisions of this Court in the case of UP Awas Evam Vikas Parishad(supra) and Himalayan Tiles and Marble (P) Ltd. (supra) are requiredto be considered.

7.1 At the outset, it is required to be noted that as such, the issueinvolved in the present appeal in respect of the acquisitions under theKIAD Act, 1966 and the right of the subsequent allottee to participate inthe reference proceedings and whether the subsequent allottee can besaid to be “person interested” under the provisions of the KIAD Act,1966 is no longer res integra. While deciding the acquisition under thevery KIAD Act, 1966 and the right of the subsequent allottee, who hasbeen allotted the land by the KIADB in the case of PeerappaHanmantha Harijan (supra) after distinguishing the decision of thisCourt in the case of UP Awas Evam Vikas Parishad (supra) andHimalayan Tiles and Marble (P) Ltd. (supra), it is specificallyobserved and held by this Court that an allottee company cannot be saidto be beneficiary or “person interested” entitled for hearing beforedetermination of compensation. By observing and holding so, this Courthad an occasion to consider the entire scheme of acquisition under theKIAD Act, 1966 and has distinguished the acquisition under the LandAcquisition Act, 1894. Before this Court also, the High Court remandedthe matter at the instance of the allottee company in the writ petitionfiled by the allottee company to the Reference Court. This Court setaside the same while holding that the allottee company, who has beenallotted the land under the provisions of the KIAD Act, 1966, can neitherbe said to be beneficiary nor “party interested” entitled for hearingbefore determination of compensation. This Court in the case ofPeerappa Hanmantha Harijan (supra) considered in detail theallotment/lease agreement in favour of the allottee/lessee and also therelevant provisions of the KIAD Act, 1966 and has observed in paragraphs50 to 54 as under:-

“50. On careful examination of the aforesaid clauses of thelease agreement executed between the parties in respect of theland of the appellants, it becomes manifestly clear that the saidagreement is executed by KIADB in favour of the Company after

allotment of land was made in favour of the Company as providedunder Regulations 10(a) and (c) of the KIADB Regulationsrespectively by following the procedure of inviting applicationsand submission of the applications by the interested parties alongwith the required deposits towards the cost of the land. Further,Clauses 5(a) and (b) of the lease agreement referred to supra,would clearly state that the premium indicated in Clause 1 of thelease agreement represents the tentative cost of the land and inthe event of the lessor incurring payment of amounts to thelandowners over and above the awards made by the acquiringauthority by virtue of the award passed by the competent court oflaw or in view of the provisions of the LA Act in respect of demisedpremises or any part thereof, the same shall be met by the lesseewithin one month from the date of receipt of the communicationsigned by the Executive Member or any other officer authorisedby the lessor. Clause 5(b) also makes similar provision to thateffect between the lessor and the lessee.

51. From careful reading of the aforesaid clauses of the leaseagreement along with the provisions of Section 32(2) of the KIADAct and Regulations 4, 7, 10(b), (c) and (d) of the KIADBRegulations, it is clear that the Company is only the lessee by wayof allotment of the land as the same has been allotted by KIADB inits favour and has executed the lease deed in its favour in respectof the allotted land.

52. In view of the aforesaid documents, namely, the notificationsissued under Sections 28(1) and 28(4) of the KIAD Act by theState Government, it can be safely concluded by us that theacquisition of the land involved in these proceedings is for thepurpose of industrial development by KIADB in Sedam Taluk.Therefore, the beneficiary of the acquired land is only KIADB butnot the Company as claimed by it. reading of Section 28(5) ofthe KIAD Act makes it clear that the land which is acquired bythe State Government statutorily vests absolutely with it. Afterfollowing the procedure provided under Sections 28(6) and (7) ofthe KIAD Act, the State Government takes possession of theacquired land from the owners/person/persons who are inpossession of the land and transfers the same in favour of KIADB forits development and disposal of the same in accordance withRegulation 10(a) of the KIADB Regulations, referred to supra.

53. In the instant case, perusal of the provisions of the leaseagreement executed between the parties referred to supra andRegulation 10 clauses (a), (c), (d) and (e) of the KIADB Regulationsmake it abundantly clear that the Company is only the allottee/lessee of the acquired land and as per Clauses 5(a) and (b) of thelease agreement referred to supra, the premium indicated in thelease agreement in respect of the allotted land in its favourrepresents the tentative cost of the land. It has been furtherspecified in the lease agreement that in the event of the lessorincurring the payment of amounts to the landowners over andabove the awards made by the acquiring authority by virtue ofawards passed by the competent court of law in view of theprovisions of the Land Acquisition (Amendment) Act, 1984 inrespect of demised premises or any part thereof, the same shallbe met by the lessee within one month from the date of receipt ofcommunication signed by the Executive Member or any otherofficer authorised by the lessor. In view of the above conditionsof the lease agreement, neither KIADB nor the Company cancontend that the acquisition of the land involved in theseproceedings is in favour of the lessee Company. Therefore, theCompany is neither beneficiary nor an interested person asclaimed by them in terms of Section 2(11) of the KIAD Act orunder Section 3(b) of the LA Act as per which, “person interested”includes all persons claiming an interest in compensation to bemade on account of the acquisition of land under the KIAD Actand that person shall be deemed to be interested in the land if heis interested in an easement affecting the land. It is necessary toexamine Section 3(b) read with Section 9 of the LA Act, whichdeals with notice to persons interested and Section 11, which dealswith enquiry and award to be passed by the Deputy Commissioner/Land Acquisition Officer.

54. careful reading of the aforesaid provisions of the LA Act,the KIAD Act and the KIADB Regulations would clearly go to showthat the Company is neither beneficiary, nor an interested personin the land as on the date of acquisition of the land, as the landwas acquired by the State Government in favour of KIADB who isthe beneficiary and it has allotted in favour of the Company afterthe acquired land was transferred in its favour by the StateGovernment and executed the lease agreement referred to supra.”

A7.2 Thereafter, this Court distinguished the nature of acquisitionunder the Land Acquisition Act from the acquisition under the KIADAct, 1966 by observing as under in paragraphs 57, 58 and 60 to 65:-

“57. For the acquisition of land under the provisions of the LAAct in favour of company the mandatory procedure as providedBunder Part VII of the LA Act and Rules must be adhered to, thatis not the case in the acquisition of land involved in theseproceedings as the acquisition of land is under the provisions ofthe KIAD Act and therefore the reliance placed upon the provisionof Section 3(f)(viii) of Karnataka LA Amended Act 17 of 1961 isnot applicable to the facts of the case on hand and therefore, theCsaid provision cannot be made applicable to the case on hand.

58. The definition of “public purpose” under the LA Act cannotbe imported to the acquisition of land by the State Governmentfor the industrial development under the provision of the KIADAct as the words “development”, “industrial area” and “industrialDestate” have been clearly defined under sub-sections (5), (6) and(7) of Section 2 of the KIAD Act which reads thus:

“2. (5) ‘Development’ with its grammatical variations meansthe carrying out of levelling, digging, building, engineering,quarrying or other operations in, on, over or under land, or themaking of any material change in any building or land, andincludes redevelopment; and ‘to develop’ shall be construedaccordingly;

(6) ‘Industrial area’ means any area declared to be anindustrial area by the State Government by notification whichis to be developed and where industries are to beaccommodated; and industrial infrastructural facilities andamenities are to be provided and includes, an industrial estate;

(7) ‘Industrial estate’ means any site selected by the StateGovernment where factories and other buildings are built foruse by any industries or class of industries.”

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60. The reliance placed upon the provisions of Sections 50(1)and (2) of the LA Act, also are not applicable to the case on handfor the reason that Section 50 of the LA Act applies to the

acquisition of land in favour of company by the State Governmentby following the mandatory procedure contemplated under PartVII of the LA Act and relevant rules framed for that purpose.Therefore, the claim made by the Company that it has got everyright to participate in the proceedings for determination andredetermination of the market value of the acquired land and awardof compensation passed by the Land Acquisition Officer or DeputyCommissioner or before the Reference Court or the appellatecourt is wholly untenable in law and therefore, the submissionsmade on behalf of the Company cannot be accepted and the sameis rejected.

61. Further, both the learned Senior Counsel on behalf of KIADB andthe Company have placed reliance on various decisions renderedby this Court in support of their above respective legal submissionsthat the Company is an interested person and, therefore, it has gotright to participate in the proceedings before the Reference Courtfor determination of compensation before passing the award eitherby the Land Acquisition Officer or the Deputy Commissioner orthe Reference Court at the instance of the owner or any otherinterested person. These include judgments rendered by this Courtin U.P. Awas Evam Vikas Parishad v. Gyan Devi [(1995) 2 SCC326] , Himalayan Tiles and Marble (P) Ltd. v. Francis VictorCoutinho [(1980) 3 SCC 223] and P. Narayanappa v. State ofKarnataka [(2006) 7 SCC 578] and other decisions which arenot required to be mentioned in this judgment as they are allreiteration of the law laid down in the above cases.

62. The reliance placed on the various decisions of this Court byboth the learned Senior Counsel on behalf of KIADB and theCompany, is misplaced as none of the said judgments relied uponare applicable to the fact situation in the present case for thereason that those cases dealt with reference to the acquisition ofland under the provisions of the LA Act, either in favour of thecompany or development authorities, whereas in the case on hand,the acquisition proceedings have been initiated under the KIADAct for industrial development by KIADB. Further, the originalacquisition record in respect of the acquired land involved in theproceedings by the learned Standing Counsel on behalf of theState of Karnataka as per our directions issued vide our orders

dated 17-11-2014 [Peerappa Hanmantha Harijan v. State ofKarnataka, 2014 SCC OnLine SC 1678, wherein it was directed:“Issue notice to the State Government. The learned counsel forthe petitioners to take out notice to the learned Standing Counselappearing for the State Government. Dasti, in addition, is alsopermitted. Mr V.N. Raghupathy, learned counsel accepts noticefor the State of Karnataka and Mr Nishanth Patil, learned counselaccepts notice for Karnataka Industrial Area Development Board(for short ‘KIADB’). The learned counsel appearing for the StateGovernment and the learned counsel appearing for KIADB aredirected to produce the relevant records in respect of theproceedings relating to land acquisition involved in these matters.There shall be stay of the effect and operation of the impugnedorder during the pendency of these petitions. List the matters afterfour weeks. In the meanwhile, all the respondents are at liberty tofile written statements, if any.”] and 24-3-2015 [PeerappaHanmantha Harijan v. State of Karnataka, 2015 SCC OnLineSC 1707, wherein it was directed: “Heard Ms Kiran Suri, learnedSenior Counsel for the petitioners in SLPs (C) Nos. 31624-25 of2014 in part. List all the matters as part for further hearing. Videorder dated 17-11-2014, learned counsel for the State as well asthe learned counsel for KIADB were directed to produce therelevant records in respect of the proceedings relating to landacquisition involved in these matters, record as well as the recordsrelating to allotment of land. However, as per office records,nothing has been produced so far. In this view of the matter, thelearned counsel for the State as well as the learned counselfor KIADB are directed to comply with the order dated 17-11-2014and produce the relevant records in respect of the proceedingsrelating to land acquisition and the allotment of land involved inthese matters before the next date of hearing. List the matters on15-4-2015.”], do not disclose the fact that the acquisition of landscovered in the acquisition notifications are in favour of theCompany. Thus, the acquisition of land in favour of KIADB isabundantly clear from the preliminary and final notifications issuedby the State Government and thereafter following the procedureunder sub-sections (6) and (7) of Section 28 of the KIAD Act, ittook possession of the acquired land from the owners who werein possession of the same and was transferred in favour

of KIADB for its disposal for the purpose for which lands wereacquired as provided under Section 32(2) of the KIAD Act readwith the Regulations referred to supra framed by KIADB underSection 41(2)(b) of the KIAD Act. Therefore, the reliance placedupon the judgments of this Court by the learned Senior Counselon behalf of the Company and KIADB, are wholly inapplicable tothe fact situation and do not support the case of the Company.

63. In view of the foregoing reasons recorded by us on the basisof the acquisition notifications issued by the State Governmentunder the statutory provisions of the KIAD Act and therefore,we have to answer Points (i), (ii) and (iii) in favour of thelandowners holding that the Company is neither the beneficiarynor interested person of the acquired land, hence, it has no right toparticipate in the award proceedings for determination of themarket value and award the compensation amount of the acquiredland of the appellants. Hence, the writ petition filed by the Companyquestioning the correctness of the award passed by the ReferenceCourt which is affirmed by the High Court is not at all maintainablein law. On this ground itself, the writ petition filed by the Companyshould have been rejected by the High Court, instead it has allowedand remanded the case to the Reference Court for reconsiderationof the claims after affording opportunity to the Company, whichorder suffers from error in law and therefore, the same is liable tobe set aside.64. Further, the learned Judge of the High Court has erroneouslyheld that the allottee Company is beneficiary of the acquiredland of the appellants, which finding of the learned Judge is notcorrect both on facts and in law. The findings and reasons recordedby the High Court in the impugned judgment in allowing the writpetition and quashing the award of the Reference Court andremanding it back to the Reference Court and allowing theCompany to participate in the proceedings for redetermination ofcompensation for the acquired land is wholly impermissible in lawand the same are in contravention of the provisions of the KIADAct, the LA Act, the KIADB Regulations and the lease agreement,which has been executed by KIADB in favour of the Company andtherefore, the impugned judgment and order [State ofKarnataka v. Peerappa Hanmantha Harijan, Review Petition

No. 2537 of 2013 in MFA No. 32157 of 2012, order dated 22-9-2014 (KAR)] is liable to be set aside by allowing the appeals ofthe owners.

65. Further, the learned Single Judge of the High Court has furthercommitted an error in law in not appreciating Section 54 of theBLA Act, which provision provides the right to appeal to thelandowners, or State Government and beneficiaries of the acquiredland but not to the company which is the lessee. When the companydoes not have the right to file an appeal against the award it alsohas no right to file writ petition. KIADB has filed the belated appealafter disposal of the appeal filed by the appellants by the HighCCourt and against which award it has filed the present appealquestioning the correctness of the same and prayed forenhancement of compensation and the said appeal is beingdisposed of by this common judgment after adverting to the rivallegal contentions urged on behalf of the parties. The High CourtDhas rightly dismissed the belated appeal filed by KIADB.”

7.3 This Court thereafter had considered the decisions in the caseof UP Awas Evam Vikas Parishad (supra) and Himalayan Tilesand Marble (P) Ltd. (supra) and has distinguished the same and hasobserved and held that the decisions in the case of UP Awas EvamEVikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd.(supra) shall not be appliable with respect to the acquisition under theKIAD Act, 1966. Once, this Court in the subsequent decision in thecase of Peerappa Hanmantha Harijan (supra) dealt with andconsidered the earlier decisions in the case of UP Awas Evam VikasParishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra)Fand distinguished the same and observed and held with respect to theacquisition under the KIAD Act, 1966 that the allottee company canneither be said to be “person interested” nor entitled for hearing beforedetermination of compensation, the said ratio was binding upon the HighCourt. Thus, it was not open for the High Court to not follow the bindingGdecision of this Court in the case of Peerappa Hanmantha Harijan(supra) by observing that in the subsequent decision in the case ofPeerappa Hanmantha Harijan (supra), the earlier decisions in thecase of UP Awas Evam Vikas Parishad (supra) and Himalayan Tilesand Marble (P) Ltd. (supra) have not been considered. The HighCourt has not noted that as such while deciding the case of Peerappa

Hanmantha Harijan (supra), this Court did consider the earlierdecisions in the case of UP Awas Evam Vikas Parishad (supra) andHimalayan Tiles and Marble (P) Ltd. (supra) and had clearlydistinguished the same. Not following the binding precedents of this Courtby the High Court is contrary to Article 141 of the Constitution of India.Being subsequent decision, in which the earlier decisions wereconsidered and distinguished by this Court, the subsequent decision ofthis Court was binding upon the High Court and not the earlier decisions,which were distinguished by this Court.7.4 Under the circumstances, the High Court has committed agrave/serious error in passing the impugned judgment and order by relyingupon the judgments of this Court in the case of UP Awas Evam VikasParishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra)and by not following the subsequent decision of this Court in the case ofPeerappa Hanmantha Harijan (supra).

7.5 Now, so far as the reliance placed upon the decisions of thisCourt in the case of UP Awas Evam Vikas Parishad (supra) andHimalayan Tiles and Marble (P) Ltd. (supra) relied upon by therespondent No.1 – MRPL and even relied upon by the High Court isconcerned, at the outset, it is required to be noted that the said decisionswere with respect to the acquisition under the Land Acquisition Act,1894 and the provisions of Land Acquisition Act, 1894, more particularly,Section 50 of the Land Acquisition Act fell for consideration before thisCourt. As observed and held by this Court in the subsequent decision inthe case of Peerappa Hanmantha Harijan (supra), the acquisitionunder the Land Acquisition Act, 1894 and the acquisition under the KIADAct, 1966 are both distinct and the provisions under both the Acts aredistinguishable.

7.6 We see no reason to take different view than the viewtaken by this Court in the case of Peerappa Hanmantha Harijan (supra)that the MRPL being subsequent allottee after the land was acquiredby KIADB, can neither be said to be beneficiary nor “personinterested” for the purpose of determination of compensation. Underthe circumstances, the impugned judgment and order passed by the HighCourt taking contrary view is unsustainable and the same deserves tobe quashed and set aside.

8. In view of the above and for the reasons stated above, presentappeals succeed. The impugned common judgment and order passed by

Athe High Court setting aside the judgment and award/order passed bythe Reference Court and remanding the matter to the Reference Courtis hereby quashed and set aside. The judgment and order passed by theReference Court Is hereby restored.

Present appeals are allowed accordingly. However, in the factsBand circumstances of the case, there shall be no order as to costs.

Devika Gujral(Assisted by : Neha Sharma, LCRA)

Appeals allowed.