Supreme Court Clarifies “Person Interested” in KIAD Act Land Acquisition: Gregory Patrao vs. MRPL (2022)

Date of the Judgment: July 11, 2022
Citation: 2022 INSC 602
Judges: M.R. Shah, J. and B.V. Nagarathna, J.
Can a company that is allotted land by the Karnataka Industrial Areas Development Board (KIADB) after the land has been acquired be considered a “person interested” in the land acquisition proceedings? The Supreme Court of India addressed this question, clarifying the rights of post-acquisition allottees under the KIAD Act. This judgment clarifies whether such allottees have the right to be heard in matters of compensation enhancement. The bench comprised Justices M.R. Shah and B.V. Nagarathna, with the judgment authored by Justice M.R. Shah.

Case Background

The case involves land acquired under Section 28(4) of the Karnataka Industrial Areas Development Act, 1966 (KIAD Act) for the development of industrial areas by the Karnataka Industrial Areas Development Board (KIADB). The Land Acquisition Officer passed an award on October 6, 2009, determining compensation for the landowners. Dissatisfied with this amount, the landowners sought a reference to the Reference Court, which enhanced the compensation on July 29, 2020.

Mangalore Refinery and Petrochemicals Limited (MRPL), the company to whom the land was allotted by KIADB, appealed the Reference Court’s decision, claiming they were a “person interested” as they would bear the financial burden of the increased compensation. The High Court of Karnataka allowed MRPL’s appeal, set aside the Reference Court’s order, and remanded the matter for a fresh hearing, including MRPL. The original landowners then appealed to the Supreme Court.

Timeline

Course of Proceedings

The High Court of Karnataka allowed MRPL’s appeal, holding that MRPL was a “person interested” and should have been heard by the Reference Court before the compensation was enhanced. The High Court relied on the decisions in UP Awas Evam Vikas Parishad vs. Gyan Devi (Dead) by LRs. and Ors., (1995) 2 SCC 326 and Himalayan Tiles and Marble (P) Ltd. vs. Francis Victor Countinho (Dead) By LRs’, (1980) 3 SCC 223. The High Court then remanded the matter to the Reference Court for a fresh decision after allowing all parties, including MRPL, to present evidence.

Legal Framework

The primary legal framework in this case is the Karnataka Industrial Areas Development Act, 1966 (KIAD Act). Specifically, the following sections are relevant:

• Section 28(1) of the KIAD Act, 1966: This section allows the State Government to acquire land for the purpose of development by the Board or any other purpose in furtherance of the objects of the Act.
• Section 28(4) of the KIAD Act, 1966: This provision allows the State Government to acquire land for the development of industrial areas.
• Section 28(8) of the KIAD Act, 1966: This section states that after the State Government takes possession of the land, it transfers the land to the KIADB.
• Section 32(2) of the KIAD Act, 1966: This section empowers the KIADB to deal with the transferred land according to regulations and directions given by the State Government.
• Section 2(11) of the KIAD Act, 1966: This section defines “person interested” as having the same meaning as in Section 3 of the Land Acquisition Act, 1894.
• Section 3(b) of the Land Acquisition Act, 1894: This defines “person interested” as including all persons claiming an interest in compensation made on account of the acquisition of land.

The KIAD Act is designed to facilitate industrial development in Karnataka. The acquisition of land under this Act is for the benefit of the KIADB, which then allots the land to companies like MRPL.

Arguments

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether respondent No.1 – MRPL, who is simply an allottee of the land by the KIAD Board, after the acquisition of the lands under Section 28 of the KIAD Act, 1966, which was for the benefit of Karnataka Industrial Areas Development Board (KIADB) can be said to be a “person interested” under the provisions of KIAD Act, 1966 and therefore, was a proper party in the reference proceedings initiated at the instance of the original landowners?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the specific provisions of the KIAD Act, 1966, and its previous ruling in Peerappa Hanmantha Harijan. The Court emphasized that the KIAD Act creates a distinct process for land acquisition, different from the Land Acquisition Act, 1894. The Court also emphasized that the allottee company, MRPL, was not the beneficiary of the acquisition. The Court’s reasoning was based on the following points:

• The land was acquired for the KIADB, not directly for MRPL.
• The KIADB allots the land to companies after the acquisition process is complete.
• The KIAD Act does not grant any right to post-acquisition allottees to participate in compensation proceedings.
• The Court was bound by its previous decision in Peerappa Hanmantha Harijan, which had already settled the issue.

The Court also noted that the High Court had erred by not following the binding precedent set by the Supreme Court in Peerappa Hanmantha Harijan and by misapplying the principles from cases related to the Land Acquisition Act, 1894.

The Court rejected the alternative interpretation that MRPL, being financially affected, should be considered a “person interested.” The Court emphasized the statutory framework of the KIAD Act, which does not provide for such a role for post-acquisition allottees. The Court’s decision was based on the legal framework and the binding precedent set by the Supreme Court.

The decision was unanimous, with both judges concurring that MRPL is not a “person interested” under the KIAD Act.

“The short question, which is posed for the consideration of this Court is, whether, respondent No.1 – MRPL, who is simply an allottee of the land by the KIAD Board, after the acquisition of the lands under Section 28 of the KIAD Act, 1966, which was for the benefit of Karnataka Industrial Areas Development Board (KIADB) can be said to be a “person interested” under the provisions of KIAD Act, 1966 and therefore, was a proper party in the reference proceedings initiated at the instance of the original landowners?”

“We see no reason to take a different view than the view taken by this Court in the case of Peerappa Hanmantha Harijan (supra) that the MRPL being a subsequent allottee after the land was acquired by KIADB, can neither be said to be a beneficiary nor a “person interested” for the purpose of determination of compensation.”

“Under the circumstances, the impugned judgment and order passed by the High Court taking a contrary view is unsustainable and the same deserves to be quashed and set aside.”

Key Takeaways

• A company that is allotted land by the KIADB after the land has been acquired is not considered a “person interested” in the land acquisition proceedings under the KIAD Act.
• Post-acquisition allottees do not have the right to be heard in matters of compensation enhancement under the KIAD Act.
• Acquisitions under the KIAD Act are distinct from those under the Land Acquisition Act, and precedents from the latter do not apply.
• High Courts are bound by the precedents set by the Supreme Court, especially when a previous decision has considered and distinguished earlier rulings.

Directions

The Supreme Court quashed and set aside the High Court’s judgment and restored the judgment and order passed by the Reference Court.

Development of Law

The ratio decidendi of this case is that a post-acquisition allottee of land under the KIAD Act, 1966, is not a “person interested” and does not have the right to participate in proceedings for determination of compensation. This decision reaffirms the precedent set in Peerappa Hanmantha Harijan and clarifies the distinct nature of land acquisition under the KIAD Act compared to the Land Acquisition Act. The Supreme Court has maintained its earlier position of law.

Conclusion

The Supreme Court’s judgment in Gregory Patrao vs. Mangalore Refinery and Petrochemicals Limited & Ors. clarifies that a company allotted land by the KIADB after acquisition is not a “person interested” and has no right to participate in compensation proceedings. This decision reinforces the importance of adhering to statutory frameworks and following binding precedents, particularly in land acquisition matters under the KIAD Act.