PETITIONER: KERALA STATE HOUSING BD. Vs. RESPONDENT: RAMAPRIYA HOTELS DATE OF JUDGMENT28/07/1994 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. VENKATACHALA N. (J) CITATION: 1994 SCC (5) 672 JT 1994 (5) 113 1994 SCALE (3)565 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
K. RAMASWAMY, J.- The two appeals arise from the same
judgment, the first one by the Housing Board and the second
by the State, respondents before the Kerala High Court in OP
No. 704 of 1982 dated 26-7-1989. The respondent-company had
entered into an agreement on 30-5-1977 agreeing that “first
party (respondent-company) is satisfied of their own will
that on a consideration of all relevant facts and
circumstances and the prevailing conditions Rs 1100 (Rupees
eleven hundred only) per cent including all improvements
situated on this land will be a fair value and proper price
for the property”. “The first party will accept without
protest on their behalf value-compensation at Rs 1100
(Rupees eleven hundred only) per cent inclusive of solatium
and value for all structures and improvements on the
property to be acquired and referred to in the schedule
hereunder”, “will not dispute the declaration of
compensation awarded”. “Entering into this agreement as it
will be for his own benefit and he stands to gain by the
implementation of the said agreement.” The second party
(Land Acquisition Collector) “is empowered to make an award”
“at the rate of Rs II 00 (Rupees eleven hundred only) per
cent inclusive of solatium and value for all
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structures and ‘improvements in and upon the said land”.
Pursuant thereto notification under Section 3(1) of the
Kerala Land Acquisition Act, 1961 (Act 21 of 1962 for short
“the Act”) was published in the State Gazette acquiring
2.69.11 hectares in Survey Nos. 1759 part and 1127 parts in
Trivandrum for the housing scheme envisaged by the
appellants. Possession of the land was taken on 1-2-1978
but since declaration under Section 6 was not published
within two years from the date of publication of Section
3(1) notification, on 12-6-1979 fresh notification under
Section 3(1) was published. The respondents questioned the
notification by filing a writ petition on 10-8-1979 which
was disposed of on 13-10-1980 upholding the fresh
notification. A declaration under Section 6 was published
on 18-1-1981 and a notice under Section 9(3) to make the
award was served on the respondents pursuant to which the
respondents laid claim at Rs 30,000 per cent for
compensation. The District Collector made an award on 21-8-
1981 at Rs 1100 per cent and on 19-9-1981 the respondents
filed an application under Section 20 for reference to the
civil court. Since the reference was not made writ petition
OP No. 704 of 1982, came to be filed on 26-1-1982 which as
stated earlier was allowed by the High Court under the
impugned judgment.
2.The High Court found that the property under acquisition
along with other properties, was hypothecated by equitable
mortgage to Indian Bank, branch at Trivandrum, which as
mortgagee was entitled to claim an interest in compensation
payable to the mortgagor. Since the bank was not a party to
the contract, no award under Section 16 of the Act could
have been made. It also found that, by operation of the
proviso to sub-section (1) of Section 16, since four years
had elapsed from the date of the agreement, namely, 13-5-
1977, the award based on the agreement became void.
However, to avoid delay since award had already been made,
the High Court directed the Collector to refer the claim
under Section 20 to the civil court without reference to the
agreement which had become void. Accordingly the writ
petition was allowed. Shri R.F. Nariman, the learned Senior
Counsel for the Housing Board contended that the view of the
High Court is clearly illegal. Section 16 contemplates
execution of an agreement between the owner of the land and
the Land Acquisition Officer to fix market value at the
agreed rate which binds the parties. It is open to the
respondents to waive the requirement of entering into a
contract by all parties. Even otherwise the respondents had
suppressed the fact of hypothecation to have executed an
equitable mortgage of the property in favour of the Indian
Bank claiming that respondent alone had exclusive title to
the property, the respondent company is estopped to contend
that under Section 16 no award can be made in the absence of
the mortgagee as a party to the agreement. He also
contended that “such date” referred to in proviso to Section
16(1), is referable to the date of the notification under
Section 3(1). From the date of the second notification
which came to be published after the execution of the
contract, the period of four years would begin to run from
the date of the second notification and the award having
been made within four years from that date, the Collector
was within his power to make the award under
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Section 16 and the finding of the High Court that the award
became void after the expiry of four years from the date of
the agreement is clearly erroneous. In view of the
agreement, no reference under Section 18 can be made to the
civil court. Shri K.K. Venugopal, learned Senior Counsel
for the respondents resisted the contentions.
3. The first question that arises for consideration is
whether the phrase “all persons interested agree” in Section
16(1) required that each and every party having an interest
in the compensation should necessarily be a party to the
agreement. To appreciate whether this broad construction
could alone subserve the legislative intent, should be
considered in the light of the language in Section 16 and
purpose it seeks to serve and its effects, require
consideration. Section 16(1) reads thus:
“16. (1) If the Collector and all the persons
interested agree, whether before or after the
date of publication of the notification under
subsection (1) of Section 3, as to the amount
of compensation to be allowed, the Collector
shall make an award under his hand for the
same:
Provided that an agreement executed before the
date of publication of the notification under
sub-section (1) of Section 3 shall not be
binding on the persons interested after the
expiry of four years from such date.
(2) Such award shall be filed in the
Collector’s office and shall,subject to
the proviso to sub-section (1), be conclusive
evidence, as between the Government and all
persons interested, of the value of the land
and the amount of compensation allowed for the
same.”
4.A reading of sub-section (1) no doubt indicates that if
the Collector and all the persons interested agree, whether
before or after the date of publication of the notification
under sub-section (1) of Section 3 as to the amount of
compensation to be allowed, the Collector shall make an
award under his hand for the same. It is stated in Maxwell
on Interpretation of Statutes, 11th Edn., p. 32 1, that two
or more words which are susceptible of analogous meaning are
coupled together noscitur a sociis, they are to be
understood as used in their cognate sense. They take, as it
were, their color from each other, that is, the more general
is restricted to a sense analogous to the less general. At
pp. 334 and 335, it is further stated that the effect of the
words of analogous meaning on each other and that of
specific words on the more general one which closes the
enumeration of them, as well as of their subordination to
the more general principle gathering the intention from a
review of the whole enactment and giving effect to its
paramount object. At p. 338, it is stated that unless the
contrary intention appears, in statutes passed after 1850,
words importing the masculine gender include females, the
singular includes the plural, and the plural the singular.
In Craies on Statute Law, 7th Edn. at p. 177, it is stated
that the words of limitation are not to be read into a
statute, if it can be avoided. But in some cases a
limitation may be put on the construction of the wide terms
of a statute. At p. 178, it is stated that one of the
safest guides to the construction of sweeping general words
which it is difficult to apply in their full literal sense
is to examine other words of like import in the same
instrument, and to see what limitations must be imposed on
them. At p. 183, it is stated that the
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question whether, when the legislature has used general
words in a statute, not following particular or specific
words, those words are to receive any (and, if so, what)
limitation is one which may sometimes be answered by
considering whether the intention of the legislature on this
point can be gathered from other parts of the statute. At
p. 184, it is stated that sometimes by considering the cause
and necessity of making the Act, sometimes by comparing one
part of the Act with another, and sometimes by foreign
circumstances, so that they have ever been guided by the
intent of the legislature, which they have always taken
according to the necessity of the matter, and according to
that which is consonant to, reason and good discretion. The
statute has to be construed according to the intent of the
legislature. In Maharashtra State Financial Corpn. v.
Jaycee Drugs and Pharmaceuticals Pvt. Ltd.1, this Court
held that it is settled rule of interpretation that
statutory provisions should be construed in a manner which
subserves the purpose of the enactment and does not defeat
it and that no part thereof is rendered surplus or otiose.
The object of Section 16 is that the Collector and the owner
of the land should agree for payment of compensation to the
land acquired after obtaining the approval of the valuation
from the District Collector or the Board of Revenue, as the
case may be, under Section 17 of the Act, with a view to
make the award expeditiously and to avoid further
litigation, protraction and prompt payment of compensation
to the owner of the land. It is an enabling provision. The
person or persons interested in the compensation would
always be at liberty to agree by a contract with the
Collector to make an award in terms thereof. It is true
that Indian Bank, Trivandrum Branch was a mortgagee by
deposit of title deeds by the respondent and economic it was
not a party to the agreement. The object of Section 16(1)
is to determine market value expeditiously and award
compensation in terms of agreement to avoid needless delay.
Therefore, in the light of the purpose and object of Section
16 all persons must be interpreted to mean not only in a
plural but also singular which would include any one, if
more than one person are interested in the compensation, to
mutually enter into an agreement with the Collector. The
agreement will bind the contracting parties alone and the
award made under Section 16(1) may not thereby bind others.
By its implication, absence of other persons who have
similar interest in the compensation does not render the
agreement executed by one among them void. Section 16 is a
beneficial provision and it is always open to the parties to
waive the mandatory provision of entering into the agreement
by all the persons jointly with the Collector under Section
16(1). In Dhirendra Nath Gorai & Subal Chandra Shaw v.
Sudhir Chandra Ghosh2, this Court held that a party can
waive mandatory procedure. Accordingly we hold that though
Indian Bank as a mortgagee was interested in the
compensation by operation of Section 73(2) of the Transfer
of Property Act to realise the amount due to it from the
mortgagor from the compensation payable from hypothecated
lands under compulsory acquisition, its non-joinder as a
party to the agreement does not
1 (1991) 2 SCC 637, 651 (para 16)
2 (1964) 6 SCR 1001 : AIR 1964 SC 1300
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render the agreement void nor become unenforceable nor
renders the jurisdiction of the Collector to make the award
under Section 16(1) as illegal or void. May be, as stated
earlier, neither the contract nor the award binds the non-
party when it was entered into in an individual capacity by
the contracting party. The finding of the High Court that
no award could have been made in respect of respondent-
company, therefore, is clearly erroneous and unsustainable.
It is accordingly set aside. We are informed that the
Indian Bank was paid of its debt and its request for
reference under Section 18 was negatived by the
Collector, which became final.
5.The crucial question whether a period of 4 years envisaged
in proviso to Section 16(1) should be reckoned from the date
when the agreement was executed or from the date the
publication of the notification, under Section 3(1) after
the agreement was executed and what would be the meaning of
the words “from such date”? Before considering these
questions, it is necessary to note few material facts and
the preexisting law. Unmended Section 16(1) gave power to
the Collector and all persons interested in the
compensation, to agree for fixation of the amount of
compensation by an award by consent. It is otherwise known
as statutory agreement. There was no limitation prescribed
for making the award by the Collector. Sub-section (2)
makes the award conclusive evidence between the Government
and the persons agreed of the value of the land and the
amount of compensation allowed for the same. In other
words, by an agreement, the value of the amount gets pegged
down under the agreement, to the date of issuance of the
notification under Section 3(1) of the Act, which is the
same as Section 4(1) of the Land Acquisition Act (1 of
1894), a condition precedent for a declaration to follow
under Section 6 of the Act. The claimant foregoes the right
of reference under Section 18 of the Act. It is notorious
that after publication of the notification under Section
4(1) of the Central Act and declaration under Section 6,
years would roll by before making the award under Section 1
1 of the Central Act. In State of Gujarat v. Patil Raghav
Natha3 the period of limitation under Bombay Land Revenue
Act for exercise of the power under Section 65 came up for
consideration. This Court held that: (SCC p. 193,para11)
“[T]hat there is no period of limitation
prescribed under Section 21 1, but it seems to
us plain that this power must be exercised in
reasonable time and the length of the
reasonable time must be determined by the
facts of the case and the nature of the order
which is being revised.”
In Mansaram v. S.P Pathak4 this Court held that the power
must be exercised “in a reasonable manner and the reasonable
exercise of the power and it is exercised within a
reasonable time”. In the context of land acquisition, this
Court in State of M.P v. Vishnu Prasad Sharma5 had held that
after the publication of the notification under Section 4(1)
requiring particular land in a locality, it must
expeditiously issue “declaration under
3 (1969) 2 SCC 187 :(1970) 1 SCR 335
4 (1984) 1 SCC 125
5 (1966) 3 SCR 557 : AIR 1966 SC 1593
679
Section 6 to that effect”. That after pegging the price by
the issuance of the notification under Section 4(1) the
Government have no power to issue successive declarations
under Section 6 in respect of parcels of land covered by
notification under Section 4(1) at different times.
Parliament amended Section 6 by the Land Acquisition
(Amendment and Validation) Act, 1967 and gave power to the
Government to make different declarations from time to time
in respect of different parts of lands covered by the same
notification under Section 4(1). However, it introduced a
proviso prescribing limitation of 3 years from the date of
the publication of the notification. In the Land
Acquisition (Amendment) Act, 1984 it was further reduced to
one year. Equally Section 11-A was made by 1984 Amendment
Act prescribing 2 years’ limitation from the date of
publication of the declaration to make the award in respect
of the proceedings taken under the Act and the proviso
thereto gives further three years to make the award in the
pending proceedings from the date of the commencement of
1984 Amendment Act. On expiry thereof, “proceedings for the
acquisition of the land shall lapse”. It is thus clear from
the legislative mandate that the completion of passing of
the award after the initiation of the acquisition
proceedings are being unduly delayed and now it is enjoined
to be done within 2 years from the date of publication of
the declaration under Section 6. The Kerala Legislature
recognising the same situation prevailing under the Act the
Kerala Land Acquisition Amendment Act, 1980, suitably
amended Sections 3 and 6 of that Act, Section 16(1) was also
amended. Preceding thereto a Division Bench of that court
in Kalyankutti Ammal v. State of Kerala6 interpreted the
agreement and Section 16(1) and held that the agreement
under Section 16(1) becomes void after the notification
under Section 3(1) lapsed. To give effect to such a lapsed
agreement Section 16(1) was suitably amended and proviso to
Section 16(1) was made. The statement and objects in this
behalf undoubtedly support the contention of the counsel for
the Board that the word, “from such date” would be referable
to the date of the publication of notification under Section
3(1), but in interpreting the effect of the proviso the
court has to look into the purpose and the effect of the
main Section 16(1) on the agreement entered into by the
Collector and the person interested in the compensation. It
is seen that the agreement ties the owner of the land with
the market value mentioned thereunder, but undue delay in
making the award leads to manifest injustice. Having had
the power to make an award under the agreement and without
any limitation the Collector would be left with his
discretion to make the award leisurely at his whim or he may
delay the issuance of the notification under Section 3(1) or
may issue successive declarations under Section 6. This
arbitrary exercise of power would result in hardship and
manifest injustice to the owner of the land which would be
violative of not only Article 14 of the Constitution, but
also becomes an unfair procedure offending Article 21.
Therefore, the legislature introduced the proviso. “Such
date” referred to in the proviso, by necessary implication,
must be referable to the date of the agreement, though by
strict construction it may lead to the conclusion that
“such date” may be referred to
6 ILR (1981) 2 Ker 53
680
the date of the publication of the notification under
Section 3(1). When two views are possible, to avoid
manifest injustice, unjustness and arbitrariness or
unconstitutionality of the statute, construction in favour
of sustaining the constitutionality should be leaned.
6. In Tribhovandas Haribhai Tamboli v. Gujarat Revenue
Tribunal7 this Court held that the proper function of a
proviso is to except and deal with a case which would
otherwise fall within the general language of the main
enactment, and its effect is to be confined to that case.
Where the language of the main enactment is explicit and
unambiguous, the proviso can have no repercussion on the
interpretation of the main enactment, so as to exclude from
it, by implication what clearly falls within its express
terms. The scope of the proviso, therefore, is to carve out
an exception to the main enactment and it excludes something
which otherwise would have been within the rule. It has to
operate in the same field and if the language of the main
enactment is clear, the proviso cannot be torn apart from
the main enactment nor can it be used to nullify by
implication what the enactment clearly says, nor set at
naught the real object of the main enactment, unless the
words of the proviso are such that it is its necessary
effect. In that case it Was held that by reading the
proviso consistent with the provisions of Section 88 of the
Bombay Tenancy and Agricultural Act, the object of the main
provision was sustained. In A.N. Sehgal v. Raje Ram
Sheoran8 another Bench interpreting proviso in the Haryana
Service of Engineers Rules, 1960 held that the proviso to
Rule 5(2)(a) cannot be applied to confer the benefit of
regular appointment on every promotee appointed in excess of
50% quota. This Court harmoniously read the main provision
and the proviso and gave effect to the rule.
7. It would, thus, be clear that Section 16(1) and its
proviso should be read in the context of Section 16(2) and
if so harmoniously read to give effect to the scheme of
Section 16, “such date” must be referable to the date of the
agreement and not to the date of the notification published
under Section 3(1) of the Act. Thus considered, we are
broadly in agreement with the High Court on this aspect and
hold that after the expiry of four years from the date of
the agreement, namely 13-5-1977, the Collector ceased to
have power to pass the award under Section 16(1). It is to
be seen that the agreement validly executed, does not become
void after expiry of the period prescribed under the
statute. It remains valid, but becomes unenforceable.
Since the proviso prescribes a limitation on the exercise of
the power by the Collector under Section 16(1) to make an
award in terms of the contract, on its expiry he ceases to
have power to make award in terms of the agreement. Since
the High Court had not quashed the award with a view to
avoid further delay, and directed the Collector to make a
reference under Section 18 of the Act to the civil court, we
are informed that such a reference was, in fact, made by the
Collector and is pending. By interim orders this Court
stayed further proceedings of the reference. Accordingly we
dismiss the appeals and
7 (1991) 3 SCC 442
8 1992 Supp (1) SCC 304: 1993 SCC (L&S) 675 :(1993) 24 ATC
559
681
direct the civil court to expeditiously determine the market
value according to law. However, it is made clear that the
observation of the High Court in the judgment under appeals
“that the civil court shall not be bound by the terms of the
agreement Ex. P-1 in the matter of determining the
compensation” cannot come in the way of the Land Acquisition
Collector relying upon the agreement as a piece of evidence
as to what the parties had thought to be the market value of
the acquired property with reference to the date of
publication of preliminary notification and the court
deciding on its evidentiary value in the matter of
determination of the market value of the acquired property.
8. The appeals are dismissed, but in the circumstances
parties would bear their respective costs.
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