Bombay High Court
Yeshwant Gajanan Joshi And Ors. vs The Hindustan Petroleum Corpn. Ltd. And ... on 19 February, 1988
Equivalent citations: AIR1988BOM408, 1988(2)BOMCR494, AIR 1988 BOMBAY 408, (1988) 2 BOM CR 494, (1988) 29 REPORTS 577, (1988) MAH LJ 455
JUDGMENT Jahagirdar, J.
1. These petitions involve common questions of law and fact and are therefore, being disposed of by this common judgment.
2. First we will narrate the facts in Writ Petition No. 269 of 1985. The petitioners in this petition contend that two awards were made in Compensation Cases Nos. 22 of 1984 and 23 of 1984 by the Competent Authority under the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962, hereinafter referred to as "the Act". These awards, which were made on 18th of July, 1984 and 10th of July, 1984 respectively, directed payment of certain sums as compensation to the petitioners, but the Hindustan Petroleum Corporation Ltd., which is respondent No. 1, is not paying compensation as per the said awards. Hence this petition, asking for a writ of mandamus requiring respondent No. 1, hereinafter referred to as "the Corporation", to pay to the petitioners the amounts of compensation as per the awards. Respondent No. 2 in this petition is the Competent Authority.
3. By issuing certain notifications as contemplated under the Act the Corporation acquired the right of user of the lands of the petitioners, leading the petitioners to file applications for compensation as per the provisions of the Act. The Competent Authority heard the applications of the petitioners and determined certain sums as compensation payable to the petitioners. The Corporation is, therefore, obliged to pay the compensation so fixed by the Competent Authority.
4. Writ Petition No. 834 of 1985 has been filed by the Corporation for setting aside the aforesaid awards on the ground that the awards were null and void as the same were given without giving an opportunity to the Corporation to lead evidence on its behalf or to lead evidence in rebuttal of the material which had been taken on record by the Competent Authority behind the back of the Corporation.
5. In order to appreciate the rival contentions in the light of the facts which, in our opinion, have been established, it would be advantageous to refer to the provisions of the Act. The Act has been enacted by the Parliament, as the preamble to the Act mentions, to provide for the acquisition of right of user in land for laying petroleum pipelines for the transport of petroleum and minerals and for matters connected therewith. It should be stated that the acquisition contemplated under the Act is not acquisition of the land as such but acquisition of right of user in land for the purpose of laying petroleum pipelines. Section 3 of the Act empowers the Central Government to issue a notification of its intention to acquire the right of user in land if it appears to the Central Government that it is necessary in the public interest that for the transport of petroleum or any mineral from one locality to another, pipelines may be laid by the Central Government or by any State Government or by a corporation and that for the purpose of laying such pipelines, it is necessary to acquire the right of user in any land. On the issue of the said notification, any person authorised by the Central Government or by the State Government or by the corporation may lawfully enter upon the land for the purpose of surveying the same to see if the same is necessary or useful for the stated purpose. Objections to the notification issued under Section 3 can be lodged by any person interested in the land and those objections are to be decided by the Competent Authority and his decision is regarded as final.
6. Where no objection is lodged or where the objections lodged are overruled, the Central Government may issue a declaration under Sub-section (1) of Section 6 that the right of the user in the land for laying the pipelines should be acquired and on such declaration being made, the right of user in the land specified therein vests absolutely in the Central Government free from all encumbrances. After such vesting, the Central Government or the State Government or the corporation is entitled to proceed to lay the pipelines as provided for under Section 7 of the Act. Section 8 also authorises any of these three authorities to enter into the land for inspection. Consistent with the purpose for which the land is acquired, there are certain restrictions imposed upon the owner or the occupier of the land. Such owner or occupier is entitled to use the land for the purpose for which such land was put to use immediately before the date of notification of the intention to acquire the right of user under Section 3(1). However, he cannot construct, after the declaration made under Sub-section (1) of Section 6, any building or any other structure, nor can he do any excavation for the purpose of any tank, well, reservoir or dam. The owner is also precluded from planting any trees. The owner or the occupier is also enjoined not to do any act or permit any act to be done which will or is likely to cause any damage in any manner whatsoever to the pipeline. This is the sum and substance of the acquisition proceedings and the effect of the same on the rights of the owner or the occupier of the land.
7. Next comes the provision for compensation for the right so acquired. We have already seen that after the issue of the notification under Section 3, any person authorised is entitled to enter upon the land and make a survey of the same. This would naturally cause some damage to the land. We have also seen that after the issue of the declaration under Section 6, when the right for the user of the land for the stated purpose becomes vested in the Central Government, pipelines can be laid and are laid. This also naturally causes damage to the land. We have also again seen that after the pipelines are laid, the authorised person can under Section 8 of the Act enter upon the land for inspection. This also is likely to cause damage or lessor injury to a person interested in the land. Section 10 of the Act provides that whenever such damage or loss or injury is caused to or sustained by any person interested in the land, as a result of the actions taken under Sections 4. 7 and 8 of the Act, the Central Government, the State Government or the corporation, as the ease may be shall be liable to pay compensation to the person injured for the damage, loss or injury. The amount of such compensation is to be determined by the Competent Authority in the first instance. "Competent Authority" means any person or authority authorised by the Central Government to perform the functions of the Competent Authority under the Act. One more form of compensation is also payable and that is provided under Sub-section (4) of Section 10. Where the right of user of any land has vested in the Central Government, the State Government or the corporation, as the case may be, additional compensation is payable to the owner and to any other person whose right of enjoyment in the land has been affected in any manner whatsoever by reason of such vesting. Compensation is to be calculated at 10 per cent of the market value of that land on the date of the notification under Sub-section (1) of Section 3. This, presumably, takes care of the injury or loss sustained by the owner or occupier of the land by the restrictions placed upon the use of the land under Section 9 of the Act.
8. Sub-section (2) of Section 10 of the Act ought to be reproduced : --
"If the amount of compensation determined by the competent authority under Sub-section (1) is not acceptable to either of the parties, the amount of compensation shall, on application by either of the parties to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, be determined by that District Judge." (Emphasis provided).
It is obvious from the aforesaid provision that there are two parties before the Competent Authority when the latter proceeds to determine the amount of compensation payable under the Act. One party, obviously, is the party whose land is affected by the acquisition proceedings; the other party necessarily is the party who has to pay the compensation. Either of the parties can make an application to the District Judge complaining about the amount of compensation one way or the other. The decision of the District Judge on an application preferred by either of the parties is made final by Sub-section (6) of Section 10. Section 14 provides that no civil Court shall have jurisdiction in respect of any matter which the Competent Authority is empowered to determine and no injunction will be granted by any Court or other authority in respect of any action taken or proposed to be taken in pursuance of any power conferred by or under the Act.
9. We will now proceed to take notice of certain rules which have been framed by the Central Government in exercise of its powers under Section 17. Rule 4 provides for the period of limitation for the application to be made by any person interested in any land for claiming compensation before the Competent Authority. Claim for compensation for damages sustained by a person by reason of the exercise of powers conferred by Section 4 has to be filed within two months from the date on which the notification under Sub-section (1) of Section 3 ceases to have effect if the right has not been acquired. Otherwise, namely when the right is acquired, it has to be claimed within 60 days from the date of the publication of the declaration under Section 6( 1) of the Act. Application for damages sustained as a result of the action taken under Section 7 has to be made within 60 days from the date of the termination of the operations. Similar period is also provided for damages sustained as a result of the action under Section 8. We have already noticed that apart from the damages that may be caused as a result of the actions taken under Sections 4, 7 and 8, certain damage may also occur to the owner of the land, which is referred to in Section 10(4). Compensation for such damage has to be asked for within 60 days from the date of the publication of the declaration made under Section 6( 1) of the Act.
10. Sub-rule (3) of Rule 4 is as follows :--
"The competent authority shall, on receipt of the claim for compensation, make such inquiry as it deems fit and fix the compensation and thereafter inform the parties referred to in Sub-sections (2) and (5) of Section 10 of the amount of compensation so fixed."
It is provided in Rule 5 that any party aggrieved by the determination of the amount of compensation may prefer an application to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, not later than 90 days of t he receipt of the intimation from the Competent Authority under Rule 4. There is a provision in Rule 6 that the Central Government or the State Government or the corporation should deposit the compensation, the intimation of which is given under Rule 4, in the treasury specified in that behalf. Rule 7 deals with notice to claimants and reference of disputes to the District Judge and Rule 8 provides for the mode of service of notice.
11. We have thus noted that there are three broad divisions of the Act. One relates to the procedure for acquisition of the right of user in any land and matters incidental thereto, the second relates to the compensation payable to the owner or occupier of land in four different situations;
and the third division deals with the authorities which have to determine the amount of compensation.
12. The claimants in Writ Petition No. 269 of 1985 as well as in Writ Petition No. 270 of 1985 have contended that the Competent Authority was appointed for determining the amount of compensation payable to them and that authority made two awards in what have been numbered as Compensation Cases Nos. 22 of 1984 and 23 of 1984. The Competent Authority has fixed the amounts of compensation, which amounts are not being deposited by the Corporation, which in the instant case is the acquiring body, in the treasury, nor is it paying the same to the claimants, despite being called upon to do so by notice. The Corporation has resisted the claims made by the claimants in these two Writ Petitions by filing its own Writ Petitions, namely, Writ Petitions Nos. 834 of 1985 and 835 of 1985, by contending that the awards made by the Competent Authority are a nullity in law, because the said Authority did not follow the procedure prescribed by the Act -- which procedure is mandatory. It has been urged on behalf of the Corporation that while proceeding to determine the compensation, the Competent Authority relied only upon the material which had been supplied to him by the claimants behind its back. The Competent Authority did not disclose the material on which he was going to rely and the material on the basis of which he ultimately came to pass the awards. No notice of the material that was tendered on behalf of the claimants and which had come in the possession of the Competent Authority was sent to the Corporation. Nor was the Corporation, at any stage of the proceedings, called upon to meet the case made out, if at all by the claimants before the Competent Authority. The procedure envisaged under the Act necessarily calls for an inquiry. An inquiry means hearing both the parties and disclosing to the other side the material produced by one side. The Competent Authority in the instant case has not followed this procedure which is implied in the concept of inquiry contemplated under the Act. Apart from this, the now well established rule of audi alteram partem (hear the other side) has been thrown to the winds by the Competent Authority while determining the compensation payable to the claimants.
13. In reply to this challenge on behalf of the Corporation, it has been urged on behalf of the claimants through Mr. R. V. Pai that in the first place, there is no obligation on the part of the Competent Authority to hear the Corporation or any other acquiring body. The Act gives complete discretion to the Competent Authority to hold such inquiry as he deems fit. If in the instant case, he proceeded to collect the material, which material to a great extent was sent by the claimants to the Corporation itself, it should be held that he has conformed to the procedure prescribed by law. He has thereafter urged that when these acquisition proceedings were going on, there was a large-scale agitation in the area which made it difficult for the acquisition authorities to proceed with the acquisition proceedings. As a result, a meeting was called of the officers of the Corporation and local influential persons in which the modality of the acquisition as well as of determining the compensation was decided. The Competent Authority, Mr. Pai says, followed this modality of determining the compensation on the basis of consensus which was evolved in the said meeting. In any case, says Mr. Pai, in the instant case, the Corporation had an alternative remedy of making an application to the District Court if the Corporation was aggrieved by the amount of compensation determined by the Competent Authority. The Corporation cannot challenge the awards in collateral proceedings, such as the writ petitions. Having failed to approach the District Court as provided for in the Act, the Corporation cannot now be allowed to say that the awards are non est.
14. We will deal with these submissions made by Mr. Pai. We remain totally unimpressed by the contention of Mr. Pai that the Competent Authority was not under an obligation to hear the Corporation. It is true, as Mr. Pai has pointed out, that the word "inquiry" is not to be found in the Act but in Sub-rule (3) of Rule 4. The provisions contained in the Rules cannot be said to enlarge the duties of an officer, which are otherwise mentioned with sufficient clarity in the Act itself. For the present, we will proceed by ignoring Rule 4(3). That a party should be heard before any order is passed affecting the interest of that party is a rule which is now well-entrenched in the law of India. At some time, there was a debate as to whether the rule audi alteram partem could be invoked in the case of administrative action. Even that debate has now become obsolete because by series of decisions, which we do not think necessary to enumerate, it has been held that before passing any order affecting the interest or rights of any party, that party must be heard This is the most elementary of the several principles of natural justice which have now become embedded in the administrative law of this country. If this is so in respect of administrative action, the principle has got greater application in the case of bodies which are by the nature of the duties to be performed by them quasi-judicial. That both the parties should be heard by a quasi-judicial body before it proceeds to give any decision was never in doubt even before that rule was extended to hearings in the field of administrative action. The analysis of the provisions of the Act, which we have made, clearly shows that the Competent Authority is not discharging merely an administrative function. On the other hand, he is clearly discharging quasi-judicial function when he is proceeding to determine compensation payable by the acquiring body, such as the Corporation, to the owners or the occupiers of the lands. It is inconceivable that the determination of the compensation can be made only on the basis of the material supplied by the claimants without giving an opportunity to the other side, who has to pay the compensation, to show, if possible, that the amounts claimed by the claimants are exaggerated or that they were not entitled to any compensation at all. This principle is at the core of all judicial and quasi-judicial functions. The very fact that as a result of an order made by the Competent Authority. one person has to pay the compensation and another has the right to receive that compensation, shows that both the parties must be heard before the determination of the compensation. It can be demonstrated if possible, by the party paying the compensation that no damage was done or damage was not done to the extent claimed by the owner or the occupier of the land. No compensation can be paid without ascertaining the damage or the injury caused. The ascertainment of the damage or injury caused has to be done by the Competent Authority not merely on the basis of the allegations made by the claimants but with the assistance of the parties who are likely to be affected by any order for compensation that may be passed by him. We are of the opinion that no authority is needed for a proposition that a quasi-judicial body or an authority must hear both the sides before determining any issue which is in lis between the two parties. The law relating to audi alteram partem has a long history in this country and has, in this respect, been lucidly summarised in a recent judgment of the Supreme Court in Institute of Chartered Accountants of India v. L. K. Ratna, . Though that was in the field of administrative law, the principles enunciated therein have naturally application with greater force in the case of quasi-judicial function which is required to be discharged by the Competent Authority.
15. It is for this reason that the rule provided that the Competent Authority shall hold such inquiry as he deems fit. It is true that no detailed procedure which he has to follow while discharging his quasi-judicial function has been prescribed by the rules, but an inquiry he must hold. Inquiry in the context of the function which he is discharging must mean hearing both sides; giving opportunity to each side to meet the case of the other side; disclosing the material relied upon by one side to the other side; and necessarily the duty not to act behind the back of one or the other side to the proceedings before him. He is left free to frame a procedure of his own. He may, for example, accept evidence on affidavits for which he has been given power under Section 12(c) of the Act. He may issue commission for the examination of witnesses for which also he has been given power under Section 12(e). He may collect any public record from any Court or office for which also there is an authority under Section 12(d) of the Act. He may not, for example, require the collection of oral evidence in which case the cross-examination of the witnesses becomes redundant. Despite this wide field of discretion, which is available to him, the obligation to hold an inquiry, properly understood and outlined by us above, is inescapable.
16. There is an additional reason which is disclosed in the Act itself to come to the conclusion that the Competent Authority must hold an inquiry in which both the parties are heard Sub-section (2) of Section 10, which we have already reproduced above, provides for an application to be made by either of the parties to the District Judge. This application is naturally made when the amount of compensation is not acceptable to either of the parties. From this it is clear that there are two parties before the Competent Authority and those two parties naturally are not before him for ritual each of them has been given a right to make an application to the District Court complaining of the amount of compensation one way or the other. If this is so, how can it be contended that the Competent Authority can pass an award without hearing one or the other side ?
17. Mr. Pai's attempt to draw an analogy between the functions of the Competent Authority under the Act and the Land Acquisition Officer under the Land Acquisition Act is misconceived. Though, as he points out, there is some sort of inquiry under Section 9 of the Land Acquisition Act, the Land Acquisition Officer does not hear anybody except the claimant. It is the claimant alone who has been given the right to approach the District Court under Section 18 of the Land Acquisition Act for enhancement of the compensation if he is aggrieved by an amount awarded by the Land Acquisition Officer. In our opinion, this analogy is totally misconceived. In the first place, before the Land Acquisition Officer there are no parties. The Land Acquisition Officer is acting on behalf of the Government which is the acquiring body. The only contesting party is the owner of the land, who is a claimant. Under the Land Acquisition Act, the compensation fixed by the Land Acquisition Officer is in the nature of an offer made by him which offer may be accepted by the owner of the land. If he does not accept the offer, he approaches the District Court under Section 18 of the Land Acquisition Act for enhancement of the compensation In the District Court, naturally, both the claimant and the Government are heard. There is no right given to the Government to approach the District Court under Section 18 of the Land Acquisition Act.
18. Mr. Pal thereafter canvassed the view that alternative remedy is provided by the Act itself and this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, should not set aside the award of compensation which could have been got modified by the Corporation by approaching the District Court. Though the existence of an alternative remedy is sometimes held as a bar to the invocation of the jurisdiction of this Court under Article 226 of the Constitution, it is not an absolute bar. On the other hand, it is subject to certain well established exceptions. If, for example, an order passed or an award made is a nullity, it can be challenged on that ground directly under Article 226 of the Constitution. As early as in Baburam Prakash Chandra v. Antarim Zila Parishad, , the Supreme Court pointed out as follows : --
"There are at least two well-recognised exceptions to the doctrine with regard to the exhaustion of statutory remedies. In the first place, it is well settled that where proceedings are taken before a Tribunal under a provision of law, which is ultra vires it is open to a party aggrieved thereby to move the High Court under Article 226 for issuing appropriate writ for quashing them on the ground that they are incompetent, without his being obliged to wait until those proceedings run their full course......... In the second place, the doctrine has no application in a case where the impugned order has been made in violation of the principles of natural justice."
An order which is non est on account of the violation of the basic principle, of natural justice, namely, audi alteram pattem, need not be even appealed from. See Hussein Miya Dosnmiya v. Chandubhai Jethabhai, . It can be challenged at any time even by way of defence as has been done in the present case. Even if one regards the application to the District Court as an appeal, the existence of the provision of appeal does not wash away the original sin of the infraction of the rule of natural justice. Even in the administrative field it has now been held that if natural justice is violated at the first stage, the right of appeal is not so much a true right of appeal as a corrected remedy. In such a case right of appeal is not a right of appeal at all. The Supreme Court in the case of Institute of Chartered Accountants of India v. L. K. Ratna, , has referred to certain passages in Wade's Administrative Law and the observations of Megarry, J. in Leary v. National Union of Vehicle Builders, (1971) 1 Ch 34, in this regard. The following from the observations of Megarry, J. may profitably extracted again here : --
"If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal."
19. We now turn to the next submission of Mr. Pai, namely that there is only a formal infraction of the rule of natural justice if at all and the Competent Authority in the instant case has followed the procedure which was evolved by a consensus in a meeting held on 17th of December, 1983. It has been brought to our attention that this meeting was attended by the M.L.A. of Panvel and high officers of the Corporation, such as the General Manager and the Finance Officer. Mr. P. L Kullarwar, who was the Competent Authority, was also present in the meeting. The Tahsildar, the Chairman and Vice-Chairman of the Panchayat Samiti, Panvel, the Sarpanch were also present. It has been mentioned to us that in the meeting it was decided that 80 per cent ad hoc compensation for the land and full compensation for the trees would be paid on 5th of January, 1984, Compensation for the right of user of the land should be paid at Rs. 7,000 per acre. Valuation of the wells would be done by the Deputy Engineer, in Zilla Parishad. Paragraph 5 of the minutes of this meeting is as follows : --
"Regarding compensation for vegetables and cereals, assessment of damages would be made by Agriculture Officer, after verification at site and the rates for vegetables would be provided by the Krishi Utpadan Bajar Samiti. Assessment of Area of vegetables would be done by the Talathi and the Company Officers by visiting the sites."
If the Competent Authority in the instant case had strictly followed the procedure which, as Mr. Pai says, was evolved by consensus at the meeting probably one would have held that the Corporation acquiesced in the procedure and after having done so could not make a grievance after the compensation was determined by the Competent Authority. On the material which has been placed before us on affidavits, it is noticed by us that this procedure also has not been strictly followed For example, the Agriculture Officer has not assessed the damages in respect of vegetables and cereals after verification at site, but has done the same by making a theoretical calculation on the basis of yield per acre and taking the figures, if at all, of the prices from the Agricultural Produce Market Committee. We have also noticed that there are similar other irregularities which were not warranted by the so-called consensus procedure.
20. What has struck us most surprising is the award of compensation by the Competent Authority in respect of a land which was in fact withdrawn from the acquisition proceedings, and that is in respect of Gat No. 84. Admittedly, through this land no pipeline has been laid, but still the award proceeds on the basis that the pipeline has been laid. These are some only of the several irregularities which were inevitable, from the manner in which the Competent Authority held "inquiry" for the determination of the compensation in these cases. Even the material supplied to the Competent Authority by the persons mentioned in the consensus resolution was not disclosed to the Corporation. The Competent Authority himself has filed an affidavit-in-reply, naturally, in Writ Petition No. 834 of 1985 in which he has been indicted for not following the rules of natural justice. In paragraph 7 of his affidavit, after referring to the meeting which was held on 17th of December 1983, he has stated as follows :--
"I say that it was not necessary for me to call for remarks from the First Petitioner in the light of the aforesaid meeting."
It is clear from this that he had not called for remarks from the Corporation on the material which the claimants put before him. Mechanically he has denied that no evidence was recorded by him and also denied that no opportunity was given to the petitioners. The basis of this denial is the fact alleged by him in his affidavit that one Mr. Dalvi, Liaison Officer of the Corporation was deputed by the Corporation as the Corporation's representative. However, we refuse to accept his further assertion that Mr. Dalvi was heard in the matter before deciding the amount of damages to be granted Mr. Ganoo, appearing for Mr. Kullarwar, who was the Competent Authority at the relevant time, has not been able to show that the material on the basis of which the amount of compensation was determined was ever made available for comment or for inspection to the Corporation or its Officers. Mr. R. V. Desai, appearing for the Competent Authority Officer now in office, has made available for our perusal the entire record of these cases. We have gone through each and every page of this record and we do not find that Mr. Dalvi or any other officer of the Corporation was posted with the knowledge of the material on which the claimants based their case, nor is there anything to show that the material was collected in the presence of Mr. Dalvi or any other officer of the Corporation. It is true that we find that sometimes the material was forwarded by the claimants to the office of the Corporation which, in turn, passed on the same to the Competent Authority. This seems to be so because the Competent Authority was having his office in the office of the Corporation. There has been, in our opinion, thus a flagrant violation of the first principle of natural justice, namely, hear the other side. We are, however, not inclined to give much credence to the allegations made on behalf of the Corporation against Mr. Kullarwar. Mr. Kullarwar probably mistook that he had to follow the procedure evolved in the consensus meeting and he thought that he had followed that procedure. He had an imperfect understanding of the duty which was cast upon him and the manner in which that duty was to be discharged. From the material on record we also notice that he has been the Land Acquisition Officer and one cannot seriously condemn him if he followed the procedure of a Land Acquisition Officer without being educated about the provisions of law governing the duties of a Competent Authority under the Act.
21. Before we proceed to pass the order, we wish to make it clear that the proceedings for compensation pursuant to the applications made by the claimants will be taken up afresh by the present Competent Authority. The parties will be given fresh opportunities to present their case. They should even be allowed to produce fresh evidence, if they so desire, and no part of their claim shall be dismissed on the ground of limitation
22. In the result, the rule is discharged in each of Writ Petitions Nos. 269 of 1985 and 270 of 1985 with no order as to costs. The rule is made absolute in terms of prayer clause (a) in Writ Petitions Nos. 834 of 1985 and 835 of 1985 with no order as to costs. The compensation cases stand restored to the file of the Competent Authority who will, after giving opportunity to both the sides, as mentioned above, proceed to determine the compensation amounts. The awards shall be made by him on a day, previous notice of which is given by him to the parties concerned at least 10 days in advance so that either party may, if it so desires, approach the District Court.