Common Oral Judgment

1. The present First Appeal is filed under Section 54 of the Land Acquisition Act, 1894 (hereinafter, referred to as "the Act"), read with Section 96 of the Code of Civil Procedure, 1908 (for short "CPC"), by appellant - original opponent No. 2, challenging the judgment and decree dated 16.05.2008 passed by the learned Principal Senior Civil Judge, Gandhinagar in L.A.R. Case Nos. 137 to 139 of 2004.

2. Heard learned advocate, Ms. Aishwarya Reddy with learned advocate, Ms. Prabhdeep Kaur for M/s Trivedi and Gupta for the appellant and learned AGP, Mr. Chirag Upadhyay for respondent No. 2.

3. Learned advocate for the appellant contended that the learned Reference Court has exceeded its jurisdiction by granting compensation / rent beyond the period of limitation of three years. It is contended that the Special Land Acquisition Officer in L.A.Q. Case No. 11/2002/G passed an award dated 02.06.2003 under Section 35(3) of the Act. The claimants were awarded rental compensation at Rs.5/- per sq. mtr. The learned Reference Court in the Reference Proceedings took into consideration Exhibit -16 which is a judgment pertaining to Village - Por, District - Gandhinagar and awarded additional amount of rental compensation. It is further contended that, under the temporary acquisition proceedings, the claimants are neither entitled to any statutory benefits nor entitled to receive compensation beyond the period of three years. It is contended that the learned Reference Court has erred in granting interest at the rate of 9% per annum on additional amount of rent till realization as well as, in directing the appellant to go on paying the increased rate of rent. Learned advocate for the appellant has relied upon the decision in the case of "Oil and Natural Gas Corporation Ltd. vs. Sankarji Hemaji & 1" dated 13.03.2008, rendered by the Hon'ble Division Bench of this Court in First Appeal No. 790 of 2007 and allied matters, and contended that a similar issue cropped-up before the Hon'ble Division Bench wherein, after considering the law, it was held that the learned Reference Court has no jurisdiction to grant rental compensation beyond the period of three years. It is also held that the claimants under temporary acquisition proceedings are not entitled to statutory benefits and / or interest on rental compensation.

4. A further reliance has been placed upon by learned advocate for the appellant on the decision in the case of "Deputy General Manager vs. Patel Dahiben Manibhai & 1", dated 13.12.2010 in First Appeal No. 2751 of 2009 wherein the Co-ordinate Bench of this Court has relied upon the aforesaid decision of First Appeal No. 790 of 2007 and allied matters, and has remanded the Reference Proceedings to the learned Reference Court. It is contended that considering the time consumed in litigating, instead of remanding the matter back to the learned Reference Court, on the ground of want of jurisdiction, the impugned judgment and order on the point of granting interest and on directing the appellant to go on paying the increased rate of rent be quashed and set aside. Except above, no other submissions were canvassed by learned advocate for the appellant.

5. Per contra, learned AGP for respondent No. 2 has also supported the contention of learned advocate for the appellant and contended that the learned Reference Court has exceeded its jurisdiction by granting rent beyond the prescribed period of three years' time limit and has further erred in granting interest on additional amount of rent. Except above, no other submissions were canvassed by learned AGP for respondent No. 2.

6. I have considered the submissions canvassed by learned advocates for the parties and perused Record and Proceedings. The limited contention which has been raised by learned advocate for the appellant in the present appeal is whether the learned Reference Court has jurisdiction to award interest on additional amount of rent as well as direction to the appellant to go on paying the increased rate of rent beyond the statutory time limit of three years.

7. At this stage, it would be apposite to consider Sub-section (1) and (2) of Section 35 of the Land Acquisition Act, 1894 and the same is reproduced hereunder:

          "35. Temporary occupation of waste or arable land. Procedure when difference as to compensation exists

          1. Subject to the provisions of Part VI of this Act, whenever it appears to the [appropriate Government] that the temporary occupation and use of any waste or arable land are needed for any public purpose, or for a company, the [appropriate Government may direct the Collector to procure the occupation and use of the same for such term as it shall think fit, not exceeding three years from the commencement of such occupation.

          2. The Collector shall thereupon give notice in writing to the persons interested in such land of the purpose for which the same is needed, and shall, for the occupation and use thereof, for such term as aforesaid, and for the materials (if any) to be taken therefrom, pay to them such compensation, either in a gross sum of money, or by monthly or other periodical payments, as shall be agreed upon in writing between him and such persons respectively."

          The said provision mandates that in the cases of temporary occupation of the land, the maximum time limit is fixed at three years from commencement of such occupation. In the cases of temporary acquisition, the acquiring authority has a right to acquire a land for a period of three years and for that, claimants are entitled to receive compensation in the form of rent for a period of three years. The Act does not contemplate any contingency where the period of acquisition exceeds beyond three years. It is settled proposition of law that the claimants can ask for compensation under Sub-section (3) of Section 35 of the Act if the persons interested differ as to sufficiency of compensation or apportionment thereof. In the case of "Oil and Natural Gas Corporation Ltd. vs. Pandya Prahladbhai Manilal and Others" reported in 2006(3) GLH 662, the Co-ordinate Bench in paragraph Nos. 13 and 14 has observed as under:

          "13. So far as the provisions of the Act are concerned, as per the scheme of the Act, under Sec. 36 of the Act, possession can be taken by the Collector from the land owners on payment of such compensation or on execution of such agreement or on making a reference under Sec. 35 and such possession can be continued for a period of three years. On the expiration of the term the Collector shall restore the land to the persons and shall also make or tender to the persons interested compensation for the damage if any done to the land and not provided for by the agreement. However, if the land has become permanently unfit, and if the parties so require, the appropriate Government can proceed to acquire the land as if it was needed permanently for a public purpose. If there is any difference as to the condition of the land at the expiration of the term, or as to any matter connected with the said agreement, the Collector shall refer such difference to the decision of the Court. As stated above, this Reference under Sec. 37 is after expiration of the term. Thus, considering the scheme of the Act, on the expiry of the term, the Collector has to restore the possession. If there is any agreement between the acquiring body and the land owners, the occupation can be continued subject to the terms and conditions of such agreement. While handing over the possession on the expiration of the term, if there is any difference as to the condition of land etc. the Collector can make a Reference for the decision of the Court. The said Reference under Sec. 37 is altogether different than the Reference under Sec. 35(3) of the Act. However, one thing is certain; the Collector has no power to make a Reference under Sec. 35(3) of the Act for "sufficiency of compensation or apportionment thereof" for any period exceeding three years from the commencement of such occupation."

          "14. It is required to be noted that if the acquiring body has retained the possession after the stipulated period under Sec. 35 of the Act, the acquiring body and the land owners can mutually agree the quantum of compensation/rent by mutual understanding. Such fixation of rent is clearly de hors the provisions of the Act and if any dispute arises between the acquiring body [which cannot be said to be acquiring body at all after expiry of the period of three years] and the land owners, the proper remedy is to approach the appropriate civil court for getting the dispute resolved through ordinary civil proceedings. If the acquiring body has retained the possession of the lands after the stipulated period, the land owners can move the Collector under Sec. 36 of the Act to restore the land, and if at that time, it is found that the land has become permanently unfit to be used for the purpose for which it was used immediately before the temporary occupation, and if there is any difference as to the condition of the land at the expiration of the term or as to any matter connected with the said agreement, the Collector can refer such difference to the decision of the Court under Sec. 37 of the Act. However, as stated above, this reference is altogether different from the reference under Sec. 35(3) of the Act."

8. In the case of "Patel Shambhubhai Bhaichanddas vs. State of Gujarat and Another" reported in 2007(2) GLH 272, the Co-ordinate Bench of this Court while considering the issue of acquisition under Section 35 of the Act has held that the Collector in a Reference under Section 35, has power to determine sufficiency of compensation / rent only if retention of land upto a maximum period of three years and that repossession after the stipulated period can be sought only by availing a remedy provided under a common law. In paragraph Nos. 5.4, 5.5 and 10.1 in the aforesaid decision, the Co-ordinate Bench of this Court has observed as under:

          "5.4. If the present facts are taken into consideration, Mr. Ajay Mehta has informed the court that the rent was revised on January 1, 1997 and raised to Rs. 2-50 paise; again on January 1, 2000 it was raised to Rs. 3-75 and lastly on January 1, 2005 it was raised to Rs. 5-00 paise and the possession of the land is allowed to be retained beyond the period of three years. Thus, periodically the rent has been revised and increased by the O.N.G.C. The revision has been accepted by the persons interested in the land. This fact is not disputed by Mr. Patel. The O.N.G.C. has therefore, retained possession with the consent of the persons interested in the land. Thus, upon expiration of agreed term or statutory period by implication new agreement has come into existence. In the circumstances, even when after the expiration of agreed period the occupant has continued to remain in possession, it cannot be said to be unauthorized possession."

          "5.5. The reference under Sec. 35(3) is different than reference under Sec. 18 of the Act. Under Sec. 35(3), it is the Collector who is bound to make the reference on his own motion when the persons interested in the land differs as to sufficiency of compensation. So is the case for reference under Sec. 37. Whereas under Sec. 18 of the Act, person interested and who has not accepted the award made by the Land Acquisition Officer, has to make written application to the Collector to require him to refer the matter for the determination of the Court. Under Sec. 35(3) the Collector gets power to refer the matter only for the limited purpose i. e for deciding the sufficiency of the compensation or apportionment. Again this has to be for the limited period because provisions of Secs. 35 and 36(1) of the Act apply for maximum period of 3 years. Therefore, it is obvious that the Collector gets power to refer the dispute as to sufficiency of compensation which may arise within the agreed term or maximum period of three years. Any dispute which crosses this time limit cannot be the subject matter of the decision of the Court. In other words the Collectors reference has to confine itself to the controversy arising within the prescribed period under Sec. 35(1) of the Act. The matter of compensation is contained in Sec. 35 of the Act. In such reference, therefore, the Court is required to give its decision in relation to difference as to the sufficiency of compensation only for maximum period of 3 years and not beyond that even when the reference is made within stipulated period. Any decision on the reference beyond period of three years cannot be termed as legal and in accordance with the provision of the and hence it is without jurisdiction. Of course the parties may take this decision in consideration to determine rent for the period beyond three years, but obviously under the Act it has no application nor it binds parties for the period subsequent to expiration of maximum three years."

          "10.1. To sum up the entire discussion, which can be done while answering the questions stated in paragraph 5 of the judgment, as under:

          Considering the provisions of Sec. 35(1) of the Act, the occupant is not authorized to retain the possession of the land beyond the maximum period of three years, unless fresh procedure, as prescribed under Sec. 35(2) is followed or parties have arrived at consensus for retention of the possession by the occupant beyond three years. So far as the facts of the case on hand are concerned, the possession of O.N.G.C. cannot be termed as unauthorized, illegal and wrongful because of the implied consent of the appellants. Since the Collector under Secs. 35 and 36(1) of the Act is required to exercise power in relation to occupation of land for maximum period of three years, he cannot refer the difference as to the sufficiency of the compensation for the period subsequent to expiration of the term agreed upon by the parties or the maximum period of three years. The Court in its decision cannot cover any period subsequent to the expiration of the agreed term or three years. Such decision to that extent cannot be said to be legal and in accordance with the provisions of Chapter VI. It is immaterial whether the Reference is made within stipulated period or afterwards. Further when the Collector fails to act in accordance with the provisions of Sec. 36(2) of the Act, on expiration of the maximum period of three years, the person interested in the land has to resort to remedy provided under common law, since the Act is totally silent on this aspect. Even for claiming mesne profits in appropriate case, such person has to take recourse to remedy under common law when the possession of the land in question is stated to be unauthorized or wrongful. So far as the present case is concerned, in view of the fact that the possession is not unauthorized, the appellants are not entitled to receive any mesne profits. However, the appellants are entitled to have additional compensation for a period of three years commencing from the date of occupation at the rate of Rs. 0-50 paise per sq. mtr. For the period beyond three years, if the appellants want additional compensation, they have to approach the Civil Court under common law as subsequent retention of possession is on account of consensus arrived at amongst the parties which is contractual arrangement and not under the Act. Of- course, if parties so intend, it is open for them to take the decision of the Court as a guideline or as basis for determining the rent for further period. "

          The Hon'ble Division Bench of this Court, in the case of Sankarji Hemaji (Supra) in paragraph Nos. 36 and 37 has considered the case of Pandya Prahladbhai Manilal (Supra) and upheld Patel Shambhubhai Bhaichanddas (Supra) and came to the conclusion that granting of compensation beyond the period of three years in Reference under Section 35 of the Act is without jurisdiction and the judgment and order of the learned Reference Court was quashed and set aside. In the present case, an admitted fact surfaces on record that the acquisition of the land in question was under Section 35 of the Act and the learned Reference Court, while exceeding its jurisdiction has relied upon Exhibit - 16, which is a decision pertaining to Village - Por. I have been informed by learned advocate for the appellant during the course to submissions that the Exhibit -16 decision was assailed by the Deputy General Manager, O.N.G.C. before this Court by way of First Appeal No. 2751 of 2009 and the Co-ordinate Bench of this Court vide oral judgment dated 13.12.2010 has quashed and set aside the impugned judgment and order and remanded back the Reference Cases for re-consideration to the learned Reference Court. Undisputedly, the Act does not provide for granting of compensation / rent beyond the period of three years in cases of temporary acquisition. It is also submitted by learned advocate for the appellant that the possession still vests with the appellant and the appellant has been paying annual rent to the claimants regularly. In such an eventuality, i.e., when possession is retained by the acquiring body beyond the period of three years, the land owners can apply to the Collector under Section 36 of the Act to restore the possession of the land and if the land is found to be wasted and cannot be used for the purpose it was being used prior to the taking of possession by the acquiring body, the Collector can refer the dispute to the decision of the Court under Section 37 of the Act, but in no circumstances, the Reference Court can award any compensation / rent beyond the period of three years. Similarly, the claimants are also entitled to any statutory benefits under the Act as envisaged under the cases of permanent acquisition. The proceedings under Section 35(3) of the Act, and the proceedings under Section 18 of the Act operate in different spheres. Under Section 18 of the Act, a person who is not satisfied with the grant of award of compensation by the Special Land Acquisition Officer, may approach the learned Reference Court for claiming higher compensation then awarded by the Land Acquisition Officer, whereas, under Sub-section (3) of Section 35 of the Act, the Collector gets the jurisdiction to refer the matter by deciding sufficiency of compensation or apportionment. It is to be noted herein that such exercise under Section 35(3) of the Act is limited for a period of three years and the learned Reference Court in the overall view of the Act, has no jurisdiction to consider any claim for compensation / rent beyond the period three years as contemplated under Sub-section (1) of Section 35 of the Act. Upon expiration of the period, the provisions of the Act, will cease to apply, except the purpose as indicated under Section 36(2) of the Act.

9. In view of the above settled proposition of law, I am of the opinion that the impugned judgment and order is required to be quashed and set aside to the extent to directing the appellant to pay interest at the rate of 9% per annum on additional amount of rent from the date of taking possession till realization and further directing the appellant to go on paying increased rate of rent. Resultantly, the First Appeal is partly allowed. The claimants are entitled to additional amount of rental compensation at Rs.6.05 paisa per sq. mtr. (Rs.11.05 paisa less Rs. 5/-) per annum for three years from the date of taking possession till realization. The excess amount deposited by the appellant be refunded back to the appellant after following due process. Record and proceedings be sent back to the concerned Court / Tribunal.