WP/18346/2019 of The Citizen Co-Operative Society Limited, Vs State of Andhra Pradesh, on 31 December 2019

ORDER:

This writ petition is filed under Article 226 of the Constitution of India to issue Writ of Mandamus declaring the inaction of the third respondent in receiving and adjudicating upon the claim of the petitioner for compensation under Award No.7/2017-2018 dated 01.06.2018 in respect of Ac.6-83 cents in Sy.Nos.1 and 4 of Taduvai Village, Jangareddygudem Mandal, West Godavari District as illegal, arbitrary, contrary to the provisions of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act 2013 (for short ‘Act No.30 of 2013) and unconstitutional and consequently direct the third respondent to adjudicate on the claim of the petitioner for Compensation under Award No 7/2017-2018 dated 01.06.2018 in respect of Ac.6-83 cents in Sy.Nos. 1 and 4 of Taduvai Village, Jangareddygudem Mandal, West Godavari District.

The petitioner is a society registered under Multi-State Cooperative Societies Act, 2002 and it provides credit facilities to the needy members. The petitioner extended credit facility to the members of the family of the sixth respondent, they availed five loans from the petitioner society, mortgaging an extent of Ac.6-83 cents in Sy.Nos.1 and 4 of Taduvai Village, Jangareddygudem Mandal, West Godavari District. The land is in the name of late Mrs. Nirmala, the mother of the sixth respondent, who expired in 2015. She herself executed the loan documents along with others including the sixth respondent.

The said borrowers committed default in repayment of loan. The petitioner society filed Arbitration Petitions before the learned Arbitrator vide File Nos.ARS/20/2011, ARS/21/2011, ARS/22/2011, ARS/23/2011, ARS/24/2011 for recovery of dues. The same were allowed and the petitioner was awarded interest and costs vide awards dated 09.03.2013. Aggrieved by the awards dated 09.03.2013, the sixth respondent, his mother Mrs. Nirmala and other family members preferred appeals before the Court of III Additional District Judge, Ranga Reddy District. The said Court in Arbitration O.P.No.506,509,508,505 & 507 of 2013 passed orders dismissing the appeals on 31.03.2017 and the orders became final. The petitioner filed Execution Petitions before the Court of IX Additional District Judge, Kovvuru, West Godavari and it is pending before it.

While the matter stood thus, the mortgaged land was acquired by the Government and awards are passed determining the compensation payable to the owners of the property i.e. mortgagee. The IX Additional District Judge, Kovvuru, West Godavari, vide orders dated 30.01.2018 passed garnishee order against the fifth respondent- Project Officer, attaching EP schedule amount of Rs.44,00,000/- (E.P.No.27 of 2018), Rs.44,00,000/- (E.P.No.28 of 2018), Rs.44,00,000/- (E.P.No.29 of 2018), Rs.35,00,000/- (E.P.No.30 of 2018) and Rs.10,00,000/- (E.P.No.31 of 2018) i.e. total amount of Rs.1,77,00,000/-relating to Mrs. Nirmala M. Venkataramaiah, M. Adinarayana Chowdary s/o Venkataramaiah, the sixth respondent.

w/o

The fifth respondent – R&R Officer & Project Officer, ITDA, K.R. Puram, West Godavari District passed Land Acquisition Award dated 01.06.2018 while referring that Citizen Cooperative Society Limited, Hyderabad, has also filed a petition to stop payment of compensation to the borrowers, as the land was pledged to the society. Surprisingly, in the land acquisition proceedings mentioned, the name of sixth respondent was mentioned instead of the original owner Mrs. Nirmala, as per the revenue records and other proceedings. While the borrowers mortgaged Ac.6-83 cents of land to the society, the award indicates only Ac.6-57 cents and as the entire land is acquired, the petitioner is entitled to compensation for the remaining Ac.-0-26 cents also.

The petitioner made several representation to the land acquisition authorities laying claim for compensation amount. The fifth respondent referred the representation made by the petitioner in the award to the third respondent on 06.11.2019 and the petitioner also sent the claim to the third respondent, but the same was refused on 07.11.2019. As such, the petitioner having no other alternative, approached this Court seeking a direction as stated supra.

It is the specific contention of the petitioner that, as per Section 64 of Act No.30 of 2013, (1) Any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by the Collector for the determination of the Authority, as the case may be, whether his objection be to the measurement of the land, the amount of the compensation, the person to whom it is payable, the rights of Rehabilitation and Resettlement under Chapters V and VI or the apportionment of the compensation among the persons interested: Provided that the Collector shall, within a period of thirty days from the date of receipt of application, make a reference to the appropriate Authority: Provided further that where the Collector fails to make such reference within the period so specified, the applicant may apply to the Authority, as the case may be, requesting it to direct the Collector to make the reference to it within a period of thirty days. (2) The application shall state the grounds on which objection to the award is taken, provided that every such application shall be made— (a) person making it was present or represented before the Collector at the time when he made his award, within six weeks from the date of the Collector‘s award; (b) in other cases, within six weeks of the receipt of the notice from the Collector under Section 21, or within six months from the date of the Collector‘s award, whichever period shall first expire: Provided further that the Collector may entertain an application after the expiry of the said period, within a further period of one year, if he is satisfied that there was sufficient cause for not filing it within the period specified in the first proviso.

Therefore, the petitioner filed this petition as referred in the Award claiming compensation. Thereupon a reference is made under Section 64 to the third respondent, but the third respondent did not entertain the claim of this petitioner while keeping the reference pending before the third respondent and such action of the third respondent is illegal and arbitrary and requested to issue a direction to entertain the claim of this petitioner and adjudicate it, in accordance with law, as stated above.

During hearing, Sri Srinivas Rao Bodduluri, learned counsel for the petitioner would contend that when this petitioner is claiming right to recover the amount and the said amount of compensation was attached by way of garnishee order by filing execution petition, the petitioner can be described as a person interested as defined under Section 3(x) of Act No.30 of 2013 and only at the objection of

this petitioner, reference was made to the third respondent and the said fact is reflected in the award. But, for one reason or the other, the third respondent is not accepting the claim of this petitioner. Therefore, learned counsel for the petitioner sought a direction as stated above.

Whereas, learned Government Pleader for Land Acquisition submitted that, when a reference is made to the third respondent under Section 64 of Act No.30 of 2013, it is for the third respondent to decide as to who is the person interested, whether this petitioner falls within the definition of ‘interested person’ under Section 3(x) of Act No.30 of 2013 and order payment of compensation. But, the Land Acquisition Officer is unconcerned with the proceedings before the third respondent and requested to pass appropriate orders.

It is no doubt true that the land was acquired vide Award No.7/2017-2018 dated 01.06.2018 in respect of Ac.6-83 cents in Sy.Nos.1 and 4 of Taduvai Village, Jangareddygudem Mandal, West Godavari District and the petitioner made claim before the Land Acquisition Officer. The claim of this petitioner is also mentioned under Title, Interest and Apportionment of Compensation in Column No.7 of Page No.12 of the Award, wherein it is specifically stated as follows:

Thus, the reason for reference is the claim set-up by this petitioner, based on the mortgage. When the petitioner made claim and reference is made at its instance, the petitioner is entitled to file its claim before the third respondent. The petitioner sent representation to the third respondent on 06.11.2019 and to the fourth respondent/District Collector on 11.09.2019, but no purpose was served and on the other hand, they were not taken into consideration by the third respondent and returned.

When the third respondent felt that the petitioner is also a person interested as defined under Section 3(x) of Act No.30 of 2013 and made a reference under Section 64 for apportionment of compensation among the persons interested, it is for the third respondent to decide whether the petitioner is entitled to such apportionment of claim or whether the petitioner being the mortgagor would fall within the definition of ‘person interested’ as defined under Section 3(x) of Act No.30 of 2013 and whether he is entitled for any apportionment of any amount of compensation payable to the original owner and cannot reject the claim of the petitioners.

The word ‘person interested’ is defined under Section 3(x) of Act No.30 of 2013 as follows:

"person interested" means-

(i) all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act; on account of the acquisition of land under this Act;

(ii) the Scheduled Tribes and other traditional forest dwellers, who have lost any forest rights recognized under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006; who have lost any forest rights recognized under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006;

(iii) a person interested in an easement affecting the land;

(iv) persons having tenancy rights under the relevant State laws including share-croppers by whatever name they may be called; and including share-croppers by whatever name they may be called; and

(v) any person whose primary source of livelihood is likely to be adversely affected; adversely affected;

The petitioner is a mortgager of the land acquired and such mortgage creates an interest in the property, since the petitioner is entitled to proceed against the property in the event of default committed by the mortgagees in payment of amount due i.e. mortgage amount. If the petitioner is not allowed to make a claim, it is difficult to realize the property being a charge holder over the property. The mortgagor is entitled to proceed over the property to recover the amount which created a charge over the property and if the compensation is paid to the original owners or claimants, it would directly frustrate the mortgage itself, though he is the first charge holder to proceed over the property. Therefore, the petitioner is entitled to claim apportionment of compensation.

The term ‘person interested’ is also defined under Section 3(b) of the Land Acquisition Act, 1894 (old Act) and it is identical to the definition of ‘person interested’ under Section 3(x) of Act No.30 of 2013.

According to Section 3(b) of the Land Acquisition Act, 1894, the expression ‘person interested’ includes all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act; and a person shall be deemed to be interested in land if he is interested in an easement affecting the land. The term ‘person’ as defined in the General Clauses Act, 1897m Section 3(39) means both natural and artificial persons. The term ‘person interested’ seeks to include a person having an interest in an easement affecting the land in question. A beneficiary is also a ‘person interested’ to determine just and proper compensation for the acquired land. Denial of the right of the beneficiary would amount to violation of Article 14 of the Constitution of India. (vide Neyvely Ligmite Corporation Limited v. Special Tahsildar (Land Acquisition)[1]). This term, in the views of the Supreme Court is an “inclusive one and must be liberally construed to enforce all persons who may be directly or indirectly interested either in the title of the land or in the question of compensation”. (vide Himalayan Tiles v. F.V. Countinho[2]and Neelagaganbhai v. State of Karnataka[3])

But, the petitioner being the Cooperative Society and a mortgagor of the land acquired is a ‘person interested’ or not, has to be determined by the third respondent and more particularly, when the reference was made on its application to the Land Acquisition Officer. Hence, the petitioner is entitled to file its claim and rejection of the claim of this petitioner at the threshold, without conducting any enquiry is a serious illegality and violative of fundamental right guaranteed under Article 14 of the Constitution of India, as held by the Apex Court in Neyvely Ligmite Corporation Limited v. Special Tahsildar (Land Acquisition) (referred supra). Therefore, the third respondent being a Public Officer, cannot deny the remedy available to this petitioner when a claim is made before the third respondent. Otherwise, such denial would amount to failure to discharge public duty by the third respondent, being a public officer. Hence, the alleged return of the claim of this petitioner by the third respondent is an illegality and consequently, the third respondent is directed to 1 (1995) 1 SCC 211

2 AIR 1980 SC 1118

3 (1990) 3 SCC 617

1 (1995) 1 SCC 211

2 AIR 1980 SC 1118

3 (1990) 3 SCC 617

receive the claim of this petitioner and determine whether the petitioner would fall within the ambit of definition of ‘person interested’ under Section 3(x) of Act No.30 of 2013 and determine whether the petitioner is entitled to apportionment of the compensation awarded to the original owners, in accordance with law.

Though execution petitions are pending for recovery of the amount, based on the awards passed by the Arbitrator and a garnishee order was issued, the compensation cannot be paid to the claimants to the extent of attached amount. But, mere pendency of execution petitions and passing of garnishee order is not a ground to reject the claim of the petitioner, if the petitioner is a person interested under Section 3(x) of Act No.30 of 2013. In view of the facts and circumstances of the case, it is a fit case to issue direction as prayed for.

In the result, writ petition is allowed, directing the third respondent/Land Acquisition and Rehabilitation and Resettlement Authority to receive the claim of this petitioner, adjudicate whether the petitioner would fall within the ambit of definition of ‘person interested’ under Section 3(x) of Act No.30 of 2013 and also determine whether the petitioner is entitled to apportionment of the compensation awarded to the original owners, being a mortgagee, in accordance with law. No costs.

Consequently, miscellaneous applications pending if any shall stand closed.

Date:31.12.2019

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JUSTICE M. SATYANARAYANA MURTHY