1988 (2) TMI 481 - HC - Indian Laws

Court overturns awards due to lack of natural justice, remands for fair compensation determination

Yeshwant Gajanan Joshi and Ors. Versus The Hindustan Petroleum Corpn. Ltd. and Ors.

The Court found that the Competent Authority failed to adhere to the principles of natural justice by not allowing the Corporation to contest the ... - Issues Involved:1. Non-payment of compensation by the Corporation as per the awards.2. Validity of the awards made by the Competent Authority without hearing the Corporation.3. Procedure for determining compensation under the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962.4. Application of the principles of natural justice, specifically audi alteram partem.5. Availability of alternative remedy and its implications on the jurisdiction of the High Court under Article 226 of the Constitution.Issue-wise Detailed Analysis:1. Non-payment of compensation by the Corporation as per the awards:The petitioners contended that the Competent Authority under the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962, made awards in Compensation Cases Nos. 22 of 1984 and 23 of 1984, directing the Corporation to pay certain sums as compensation. Despite these awards, the Corporation did not pay the compensation, leading the petitioners to seek a writ of mandamus requiring the Corporation to pay the amounts as per the awards.2. Validity of the awards made by the Competent Authority without hearing the Corporation:The Corporation filed Writ Petition No. 834 of 1985, challenging the validity of the awards on the grounds that the awards were null and void. The Corporation argued that the Competent Authority made the awards without giving the Corporation an opportunity to lead evidence or rebut the material considered by the Competent Authority. The Corporation contended that the Competent Authority relied solely on the material provided by the claimants, without disclosing this material to the Corporation or allowing it to contest the claims.3. Procedure for determining compensation under the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962:The Act provides a framework for acquiring the right of user in land for laying petroleum pipelines and for determining compensation for any damage, loss, or injury caused by such acquisition. The Competent Authority is responsible for determining the compensation, which can be challenged by either party before the District Judge. The Act and the rules framed under it mandate that the Competent Authority must hold an inquiry to determine compensation, which implies hearing both parties and disclosing the material relied upon by one side to the other.4. Application of the principles of natural justice, specifically audi alteram partem:The Court emphasized the importance of the principle of audi alteram partem, which requires that both parties be heard before any order affecting their interests is passed. The Court held that the Competent Authority, while determining compensation, was performing a quasi-judicial function and was therefore obligated to hear both the claimants and the Corporation. The Court found that the Competent Authority failed to follow this principle, as it did not disclose the material provided by the claimants to the Corporation or allow the Corporation to contest the claims.5. Availability of alternative remedy and its implications on the jurisdiction of the High Court under Article 226 of the Constitution:The Court addressed the argument that the Corporation had an alternative remedy of approaching the District Court to challenge the amount of compensation. The Court held that the existence of an alternative remedy does not bar the jurisdiction of the High Court under Article 226, especially when the impugned order is a nullity due to the violation of natural justice principles. The Court cited precedents to support the view that an order made in violation of the principles of natural justice can be challenged directly under Article 226.Conclusion:The Court concluded that the Competent Authority did not follow the mandatory procedure of holding an inquiry and hearing both parties before determining the compensation. The awards made by the Competent Authority were thus set aside, and the compensation cases were restored to the file of the present Competent Authority. The parties were to be given fresh opportunities to present their case, and the Competent Authority was directed to determine the compensation amounts after proper inquiry, with notice given to the parties at least 10 days in advance. The rule was discharged in Writ Petitions Nos. 269 of 1985 and 270 of 1985, and the rule was made absolute in terms of prayer clause (a) in Writ Petitions Nos. 834 of 1985 and 835 of 1985.