1994 (7) TMI 344 - SC - Central Excise

Supreme Court clarifies non-joinder impact on agreement validity & Collector's jurisdiction

KERALA STATE HOUSING BOARD Versus RAMAPRIYA HOTELS PVT. LTD.

The Supreme Court held that the non-joinder of the Indian Bank as a party to the agreement did not render the agreement void nor the jurisdiction of the ... - Issues Involved:1. Validity of the award made u/s 16 of the Kerala Land Acquisition Act, 1961.2. Interpretation of the phrase 'all persons interested agree' in Section 16(1).3. Calculation of the four-year period in the proviso to Section 16(1).Summary:1. Validity of the Award Made u/s 16 of the Kerala Land Acquisition Act, 1961:The High Court found that the property under acquisition was hypothecated by equitable mortgage to Indian Bank, 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 u/s 16 of the Act could have been made. The High Court 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, the award based on the agreement became void. However, the Supreme Court held that the non-joinder of the Indian Bank as a party to the agreement does not render the agreement void nor unenforceable, nor does it render the jurisdiction of the Collector to make the award u/s 16(1) illegal or void.2. Interpretation of the Phrase 'All Persons Interested Agree' in Section 16(1):The Supreme Court considered whether the phrase 'all persons interested agree' required that each and every party having an interest in the compensation should necessarily be a party to the agreement. The Court held that the object of Section 16 is to determine market value expeditiously and award compensation in terms of the agreement to avoid needless delay. Therefore, '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 is 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 u/s 16(1) may not thereby bind others.3. Calculation of the Four-Year Period in the Proviso to Section 16(1):The crucial question was whether the period of four years envisaged in the proviso to Section 16(1) should be reckoned from the date when the agreement was executed or from the date of the publication of the notification u/s 3(1) after the agreement was executed. The Supreme Court held that 'such date' referred to in the proviso must be referable to the date of the agreement. Thus, after the expiry of four years from the date of the agreement, the Collector ceased to have power to pass the award u/s 16(1). The agreement remains valid but becomes unenforceable after the period prescribed under the statute.Conclusion:The Supreme Court dismissed the appeals and directed the civil court to expeditiously determine the market value according to law. The observation of the High Court that the civil court shall not be bound by the terms of the agreement in determining the compensation cannot prevent the Land Acquisition Collector from relying upon the agreement as evidence of the market value of the acquired property. The appeals were dismissed with parties bearing their respective costs.