2009 (9) TMI 587 - HC - Companies Law

Court orders compensation increase for company due to Land Acquisition Officer's failure to serve mandatory notices.

The court held that the Land Acquisition Officer's failure to serve mandatory notices to the company violated the Land Acquisition Act. It directed the ... Compensation at the rate of ₹ 2,50,000 per acre for land admeasuring acres 113.44 cents belonging to the company under liquidation which was acquired for a public purpose demanded by official liquidator Held that:- It would help in appropriately and rateably distributing the assets amongst the creditors of the company in winding up as well as observing the priority amongst them as spelt out under section 529A of the Companies Act properly and correctly also. Thus find merit in the contentions canvassed on behalf of the company under liquidation, therefore direct the first respondent to re-determine the amount of compensation payable for the land of an extent of acres 113.44 cents belonging to it which stood acquired in terms of the notifications published in the District Gazettes of Nellore under sub-section (1) of section 4 on May 6, 2006 and July 1, 2006, at the rate of ₹ 2,50,000 per acre. Direct the official liquidator to convey his unequivocal consent to accept and receive compensation for the lands belonging to the company under liquidation acquired by the State compulsorily at the rate of ₹ 2,50,000 per acre, within 30 days from today. Issues Involved:1. Justification of the Land Acquisition Officer in passing awards without notice to the company.2. Re-determination of compensation payable to the company at par with other landowners.Detailed Analysis:Issue 1: Justification of the Land Acquisition Officer in Passing Awards Without Notice to the CompanyThe official liquidator of M/s. DCL Maritech Ltd., a company under liquidation, sought directions for the Land Acquisition Officer to pay compensation at Rs. 2,50,000 per acre for land acquired for public purposes. The company was ordered to be wound up on February 19, 2003, and the official liquidator was appointed. The State Government acquired 242.72 acres for a thermal power project and 113.44 acres for Krishnapatnam port. The Land Acquisition Officer deposited Rs. 1,91,62,592 as compensation for the latter acquisition with the Principal Senior Civil Judge's Court, Nellore, as no claims were made.The official liquidator argued that the Land Acquisition Officer failed to serve mandatory notices under Section 9(3) of the Land Acquisition Act to the company, which was in liquidation, thus violating the Companies Act, 1956. The Land Acquisition Officer admitted that notices could not be served as the company's whereabouts were unknown. The award was passed without the company's participation, fixing compensation at Rs. 1,20,000 per acre, whereas other landowners received Rs. 2,50,000 per acre.The court held that the Land Acquisition Officer's failure to serve mandatory notices to the company at its registered office in Hyderabad violated Section 9(3) of the Land Acquisition Act. The court emphasized that the service of notice is mandatory and integral to the statutory scheme, and the Land Acquisition Officer's actions were not in compliance with the required legal procedures.Issue 2: Re-determination of Compensation Payable to the Company at Par with Other LandownersThe official liquidator contended that the company court has exclusive jurisdiction over claims involving the company under liquidation, as per Section 446 of the Companies Act. The claim for compensation should be dealt with by the company court, not the civil court, as the Land Acquisition Officer's award was not final and could be challenged.The court agreed, stating that the company court has the power to deal with all issues concerning claims by or against the company for distributing its assets among creditors. The court directed the Land Acquisition Officer to re-determine the compensation at Rs. 2,50,000 per acre, similar to the compensation awarded to other landowners who consented to the amount.The court ordered the official liquidator to convey consent for the revised compensation within 30 days. The Land Acquisition Officer was directed to pass a fresh award and deposit the differential amount before the court by January 31, 2010.Conclusion:The court allowed the application, directing the Land Acquisition Officer to re-determine the compensation for the company's land at Rs. 2,50,000 per acre and deposit the differential amount with the court. The court emphasized the mandatory nature of serving notices and the exclusive jurisdiction of the company court in matters involving companies under liquidation.