IN THE HIGH COURT OF KARNATAKA AT BANGALORE BEFORE THE HON'BLE MR. JUSTICE ANAND BYRAREDDY WRIT PETITION NO OF 2011 (LA-KIADB)

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1 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 09 TH DAY OF OCTOBER 2012 BEFORE THE HON'BLE MR. JUSTICE ANAND BYRAREDDY WRIT PETITION NO OF 2011 (LA-KIADB) BETWEEN: Karnataka Industrial Areas Development Board, No.14/3, 2 nd Floor, R.P.Building, Nrupathunga Road, Bangalore , Represented by its The Chief Executive Officer and Executive Member: Mr. T. Sham Bhatt..PETITIONER (By Shri. I. Gopala Krishna, Advocate,) AND: 1. The Special Land Acquisition Officer and Competent Authority, National Highways Authority of India, No.678/3, Neerubhavi Kempanna Layout, Hebbal, Bangalore

2 2 2. Perk Inn International Limited, No.183, Vibhava, 2 nd Cross, 1 st Block, Koramangala, Bangalore , Represented by its Managing Director: Mr. K. Karunakaran. 3. M/s. Karunai Software International Limited, No.183, Vibhava, 2 nd Cross, 1 st Block, Koramangala, Bangalore , Represented by its Managing Director: Mr. K. Karunakaran. RESPONDENTS (By Smt. Shilpa Shah, Advocate for M/s. Singhania and partners for Respondent No.1 Shri. Sandesh.J.Chouta, Advocate for Respondent Nos. 2 and 3) ***** This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the impugned order passed by the first respondent dated in the proceedings vide Annexure-G and direct the second respondent to refund forthwith the compensation received by it to the first respondent and in turn, direct the first respondent to refund the said amount to the petitioner. This petition coming on for Hearing, this day, the Court made the following:

3 3 O R D E R Heard the learned Counsel for the petitioner and the learned Counsel for the respondents. 2. The petitioner, Karnataka Industrial Areas Development Board (Hereinafter referred to as the KIADB, for brevity), a statutory body, has preferred this writ petition in the following background: The petitioner claims that pursuant to a registered leasecum-sale agreement, had leased an extent of 11 acres 15¾ guntas of land in Survey Nos. 37/1E1, 37/1D, 38/1A, 39/1, 0/1, 42 and 43 of Konappana Agrahara, Begur Hobli, Bangalore South Taluk, dated to the second respondent to set up a hotel and resort. The petitioner again had executed a lease-cum-sale agreement dated in favour of the second respondent in respect of land bearing Survey Nos. 36/1A(P), 36/1B(P), 37/1C(P), 37/1B(P), 37/2(P), 43(P) and 37/1A(P) measuring 5 acres 7 guntas of Konappana Agrahara, Begur Hobli and again, at

4 4 the request of the Managing Director of respondents 2 and 3, had executed a lease-cum-sale agreement dated in favour of the third respondent in respect of land bearing Survey Nos. 36/1A(P), 36/1B(P), 37/1C(P), 37/1B(P), 37.2(P), 434(P) and 38/1A(P) measuring an extent of 5 acres and 7 guntas. It transpires that a preliminary notification dated under Section 3A of the National Highways Act, 1956 (Hereinafter referred to as the NH Act, for brevity) and a Final notification dated , were issued to acquire that lands for widening National Highway No.7 at Electronic City II Phase, Bangalore. On realignment of the lands acquired, an extent of 46,392 Square Feet in Plot No.32 and an extent of 14,310.8 Square Feet in Plot No.2 had been acquired. The compensation was determined at `2,67,73,700/- by the first respondent. It is the claim of the petitioner that it is the lessor who continues to be the owner of the property in question and was entitled to the compensation amount. It transpires that the second

5 5 respondent had laid claim before the first respondent for release of the compensation amount. Even though the petitioner was the lessor and owner of the land, without notice to the petitioner, the entire amount of compensation had been released in favour of the second respondent. The KIADB did carry on correspondence with the first respondent in respect of the acquisition. However, the first respondent had passed an order at Annexure-G contrary to the provisions of the NH Act. It is this which is the subject matter of the present proceedings. The learned Counsel for the petitioner would draw attention to Section 3H(4) of the NH Act, which provides that if there is a dispute regarding apportionment of the compensation amount, the competent authority is mandatorily required to refer the dispute to a competent civil court of original jurisdiction, within whose limits the land is situated. The first respondent could not have released a large amount of compensation in favour of the second respondent notwithstanding that there was no absolute sale deed in favour of the second respondent and the second respondent was in

6 6 possession as a lessee under the petitioner. This is a glaring circumstance and hence it is surprising and inexplicable that the first respondent had overlooked the relationship of the parties in releasing the entire amount of compensation in favour of the second respondent without even notice to the petitioner. 3. The learned Counsel for the first respondent would submit that it is incorrect to state that the amount has been released in favour of the second respondent without notice to the petitioner. On the other hand, there was wide publicity to the proceedings and a paper publication had been issued insofar as the disbursement of the compensation amount is concerned. Since the petitioner did not choose to appear before the first respondent and as the second and third respondents had satisfied the first respondent as to their entitlement, the amount has been released in their favour. The further contention that there was a mandate under Section 3H(4) to refer the matter to a competent civil court for

7 7 adjudication is not entirely correct. Section 3H(3) provides that where several persons claim to be interested in the amount deposited, the competent authority shall determine the persons, who in its opinion, are entitled to receive the amount payable. Therefore, the learned Counsel would submit that there is sufficient discretion available to the first respondent to have determined the compensation amount payable to the second respondent and that there is no inequity in such amount having been disbursed, as it is not denied that the second respondent is in possession of the property under a long term lease-cum-sale agreement, which ultimately would fructify into absolute ownership and therefore, there is no irregularity, which warrants interference by this court. 4. Respondents 2 and 3 have filed statement of objections to contend that the impugned order discloses a finding of fact and judicial application of mind. The petitioner only seeks this court to sit in appeal as it were in respect of the order. The petitioner never appeared before the competent authority. It was at the

8 8 instance of the said respondents that there was realignment of the road and modification of the proposed route, for otherwise the acquisition would have rendered the property in question as being landlocked and unusable and it is at the instance of the respondents that there was a modification and realignment which resulted in the modified acquisition proceedings and the compensation being released. It is also contended that respondents 2 and 3 had established their entitlement in the following background: The Managing Director of respondents 2 and 3 and his wife were said to be the absolute owners of lands in various survey numbers, now described as plot No.32 by the KIADB, in the industrial area that is formed in Koppana Agrahara Village, Begur Hobli, Bangalore South Taluk. In the year 1996, they had planned to develop the land and set up a hotel and resort and had applied to the Department of Tourism in respect of the same through the Single Window Agency of the Department of Tourism, which had cleared the project as on The respondents then

9 9 approached the petitioner KIADB with a proposal in respect of plot No.32. The respondents requested the petitioner that they would voluntarily surrender 11 acres 15¾ guntas of land in survey Nos. 37/1D, 37/1E1, 38/1A, 39/1, 40/1, 42 and 43 in plot No.32 in the industrial area to the KIADB and that in turn, they be permitted by the KIADB to establish a hotel and resort. 5. The petitioner had agreed and in furtherance of the understanding and assurance given by the KIADB, the respondents had surrendered the aforesaid lands free of cost to the Special Land Acquisition Officer, KIADB, with an understanding that the same would be reallotted to the respondent Perk Inn International Hotels and that such land would be reconveyed to the respondent. The KIADB, at the time of acquiring the said lands, had not paid any compensation in respect of the acquisition to the respondents. It is contended that the petitioner did allot the land to the respondents for setting up a hotel and resort and handed over

10 10 possession on and the respondents were called upon to pay a sum of `5,75,000/- towards developmental charges and the allotment was confirmed. By a further correspondence, the said respondents had sought for additional land to an extent of acres to establish its project. However, instead of reconveying the land, the KIADB executed a lease-cum-sale agreement dated , in respect of 11 acres 15¾ guntas of land. Respondent No.2 accepted the said lease-cum-sale agreement without demur, though it was understood that the land was reconveyed and not granted by way of a lease-cum-sale agreement. Respondent No.2 did not choose to oppose in order not to create bad blood and in the expectation that the project may come forward. Thereafter, a supplementary lease-cum-sale agreement dated had been executed whereby an extent of 5 acres 7 guntas was allotted and as consideration for the same, a sum of `1,04,00,000/- as allotment consideration at the rate of `20,00,000/- per acre was collected from the respondents and a lease-cum-sale agreement was executed on Thereafter,

11 11 the petitioner, by an order dated terminated the lease agreement on the ground that the purpose for which the land was leased was not fulfilled. 6. Being aggrieved by that respondent No.2 had filed a writ petition before this court in W.P.No.21984/2004, which was allowed and the KIADB was directed to consider the request of the respondent to implement the project within a period of 24 months. In the meanwhile, on , the first respondent initiated acquisition proceedings to acquire a large extent of land for widening National Highway No.7 at Electronic City from Kilometres to While suppressing the fact that the first respondent had issued a preliminary notification, the petitioner on granted extension of time to the respondent. Thereafter on , the first respondent had issued a Final Notification for acquiring the said extent of land. Being aggrieved by the plan of the first respondent to build an elevated road, which would render the property held by respondents 2 and 3 useless for its project, had filed a writ petition

12 12 in W.P.No.12730/2006, to consider realignment of road. The petition was dismissed. The second respondent had preferred an appeal against the dismissal of the writ petition. During the pendency of the appeal, the first respondent proposed a modified plan and filed a memo, on the basis of which, the writ appeal was disposed of. It is pursuant to that modified plan that the land was acquired and the entire compensation was deposited in a sum of `2,67,73,700/- for acquisition of 1.39 acres of land in plot No.32 and plot No.2 of the industrial area. 7. Respondents 2 and 3 had addressed the first respondent that the lands in question are held by them under a lease-cum-sale agreement and the compensation amount can be paid to them as they are in possession and enjoyment of the lands. The first respondent had sought clarification from the petitioner by letter dated , a copy of which is produced at Annexure-A to the petition. On , a board meeting is said to have been held by the petitioner to decide on the clarification sought and in furtherance of the board meeting, a letter has been issued to the

13 13 first respondent to arrange payment of the compensation in favour of the Chief Executive Officer of the KIADB. Insofar as payment of compensation for the widening of the road is concerned, the first respondent proceeded to address the same in terms of Section 3H(3) of the NH Act and on the basis of the available documents filed by the parties. The authority decided to release the entire compensation to the second respondent. It is admitted by the respondents that after deduction of income-tax and on execution of an indemnity bond, the monies had been released in favour of the second respondent. 8. It is not clear whether the petitioner had appeared before the first respondent and did contest the proceedings, though there is material to indicate that the first respondent had specifically addressed the petitioner to call upon and seek clarification as regards payment of compensation and though a resolution had been passed directing the first respondent to pay the amounts in favour of the Chief Executive Officer of the petitioner, there is no indication as to the actual participation at the inquiry by the third

14 14 respondent. The third respondent, however, having proceeded in terms of Section 3H(3), though it would have been a case to have been considered under Section 3H(4), since there was indeed a rival claim by the petitioner, the amount having now been released in favour of the second respondent, the course open would be to treat the matter as one which was liable to be referred to a competent civil court having jurisdiction. It would be appropriate to allow the petition while issuing an appropriate direction to the first respondent to despatch the relevant records and refer the matter for adjudication before a competent civil court. Insofar as the amount of compensation that is paid is concerned, it is on record that an indemnity bond has also been executed by the second respondent. In addition, it would be appropriate if the civil court should call upon the respondent to furnish security for due payment of the amount if the ultimate result of the proceedings should be in favour of the petitioner. The writ petition is allowed in part. The first respondent is directed to refer the matter to a competent civil court for

15 15 adjudication as to the persons entitled to compensation or proportion thereof as between the petitioner and respondent No.2. Sd/- JUDGE nv