Author: Nikitha Panchagnula, Student at University College of Law, Osmania University.
Date of decision: June 2, 2021
Bench: M. S. Ramachandra Rao, T. Vinod Kumar
Original copy: View
Issues in Question:
- If the award passed by the District Collector is valid under The Requisitioning and Acquisition of Immovable Property Act, 1952 and is binding on the arbitrator?
- If the act of the arbitrator is justified in granting an award of compensation at Rs. 1,000/- per sq. yd in relation to the acquired land?
- If the arbitrator is justified in declaring 1/3rd deduction towards the public and community amenities and others from the said acquired land?
- Whether the arbitrator also should have awarded solatium to the owners of the land?
- If the arbitrator has committed a mistake in granting an interest @ 15% per annum from the date of the award till the date of the notification and 12% per annum from the date of the award till the date of realization?
Background of the case:
- In the year 1978, a show cause notice was issued to the land owners in respect of 83,732 sq. yards located in Kanchanbagh village, Bandlaguda Mandal, Hyderabad District by the District Collector, Hyderabad as to why this land should not be requisitioned under section 3 of the Requisitioning and Acquisition of Immovable Property Act, 1952 for establishing the Defence Research and Development Laboratory (DRDL) under the Defence Ministry, Union of India. The land owners have filed a responder asking the collector to withdraw the said notice. Later, the District Collector issued another notice to the landowners directing them to surrender the possession of land in 30 days. The State under section 7(1) then took the possession of the land from the owners of the land and handed over the same to the Department of Defence of Union of India.
- The land owners filed a Writ Petition claiming that no compensation has been paid until that date and that no arbitrator was appointed for fixing the amount of compensation under the Act and that the acquisition cannot be considered to be valid by merely issuing notification without paying the compensation. The Court in this Writ Petition has set aside the acquisition permitting the Union of India, Director General of Defence Estates, Defence Estate Officer to initiate the fresh proceedings and to determine the compensation payable.
- This order was then challenged by the Union of India in a Writ Appeal in the High Court of Andhra Pradesh before a division bench which has stayed the order of the learned single judge bench and directed the following:
- That the Union of India shall deposit Rs. 20,57,347/- with an interest @15% per annum from the date of judgement of learned single judge before the Land Acquisition Officer
- The land owners may request the collector to refer to arbitration if they are not satisfied with the compensation
- The land acquisition officer shall issue a fresh notification to acquire the said land as per the order of learned single judge
- A fresh notice was issued by the District Collector for acquiring the property under section 7(1) of the Act after which the Writ Appeal was dismissed. Later, an SLP was filed by the Union of India against the dismissal of the said Writ Appeal and the same was dismissed. Thereafter, a review petition was filed to review the above order but the same was also dismissed extending the time period for acquisition.
- The Land Acquisition Officer has claimed that the said land was declared to be a ‘surplus land’ under The Urban Land(Ceiling & Regulation) Act, 1976 and hence the compensation to the landowners was not payable. The land owners conveyed that the said land was exempted by the government from the provisions of the Act by a G.O. and thereafter filed a Writ Petition challenging the declaration of land as ‘surplus land’. This was disposed of by the Hon’ble High Court directing the Commissioner(Appeals), Urban Land Ceiling to take a decision on the matter basing upon which the District Collector has to pass an order. Dissatisfied with the order of the District Collector, a Writ Petition was filed before the Hon’ble High Court of Andhra Pradesh wherein, an interim order was passed directing the District Collector to pay compensation with an interest of 18% per annum.
- A Writ Petition was filed by the land owners for the appointment of arbitrator to determine the compensation. Therefore, Justice Vaman Rao(Retd) was appointed as the Sole Arbitrator to determine the amount of compensation payable. He passed an award and the same was challenged before the Hon’ble High Court for the State of Telangana under section 11 of The Requisitioning and Acquisition of Immovable Property Act, 1952.
- The Court has passed the following order keeping in view and considering the contentions of GP for Arbitration, Asst. Solicitor General and the Senior counsel (representing the land owners).
- The District Collector has no jurisdiction to pass an award under the Act and if any order is passed by him, it shall not stand binding on the arbitrator as it is the arbitrator who has the power to pass an award under section 8(1)(c) of the Act.
- The arbitrator has rightly fixed the amount of compensation at Rs.1,000/- per sq.yd in relation to the acquired land which appeared just and reasonable to him keeping in view the circumstances prevailed in the case.
- The ⅓ deduction made by the arbitrator from the said acquired land towards public and community amenities is not warranted. The proper and appropriate percentage of deduction shall be 10% based on the circumstances of the case. For this, the Hon’ble Court has relied on Indraj Singh Vs. Haryana[(2013) 14 SCC 491] where the Hon’ble Supreme Court held that 1/3rd deduction is harsh in respect of developed land and that 10% deduction is proper. It has also relied on Spl. Tehsildar Land Acquisition Vs. A. Mangala Gowri(Smt)[(1991) 4 SCC 218] where it held where the acquired land is in the midst of already developed land with amenities of roads, drainage, electricity etc. then deduction of 1/3 would not be justified.
- The Court agreed with the view of the arbitrator that he had fixed the compensation with an interest of 12% per annum from the date of the award till the date of realization keeping in view the special circumstances prevailing in the case and that it was not necessary to grant solatium separately in addition to the compensation fixed by the arbitrator. Therefore, the Court ordered that the land owners shall be paid compensation for the total of 75,359 sq.yds-8373 (10% deduction)
- This is a critical case enshrining the concept of parties autonomy in deciding the mechanism to resolve a dispute. Since, the parties have agreed mutually to have an arbitrator appointed to resolve the dispute aroused between them, the right of the Sole Arbitrator has surpassed the right of the District Collector and other authorities under the Act in giving an award.