Land Acquisition Dispute: Supreme Court Overturns High Court’s Decision in Mangalore Refinery Case

The case of Gregory Patrao & Others vs. Mangalore Refinery and Petrochemicals Ltd. & Others revolved around the land acquisition for industrial development under the Karnataka Industrial Areas Development Act, 1966 (KIAD Act). The dispute was whether the beneficiary company, Mangalore Refinery and Petrochemicals Ltd. (MRPL), was a “person interested” in the compensation determination process.

The Supreme Court, in its judgment delivered by M. R. Shah and B. V. Nagarathna, set aside the Karnataka High Court’s order that had remanded the matter to the Reference Court. The Supreme Court held that MRPL, being an allottee post-acquisition, was not a “person interested” and had no right to contest the compensation awarded to landowners.

Background of the Dispute

The lands of the original claimants were acquired under Section 28(4) of the KIAD Act for the development of the Karnataka Industrial Areas Development Board (KIADB). The sequence of events was as follows:

The Land Acquisition Officer issued an award on 6 October 2009.
Landowners sought enhanced compensation, leading to a Reference Court decision on 29 July 2020, which increased the amount.
MRPL, being the lessee of the land from KIADB, challenged the compensation enhancement before the Karnataka High Court, arguing that it should have been heard as a “person interested” under the Land Acquisition Act.
The High Court ruled in favor of MRPL and remanded the matter to the Reference Court for a fresh hearing.
The landowners, dissatisfied with the High Court’s decision, approached the Supreme Court.

Petitioners’ Arguments

The landowners argued that:

The acquisition was carried out for KIADB, not MRPL.
MRPL, as an allottee post-acquisition, was not a “person interested” under the KIAD Act.
KIADB, and not MRPL, was responsible for compensation payments.
MRPL had no right to contest the compensation determination.
The High Court failed to follow Supreme Court precedents, particularly Peerappa Hanmantha Harijan vs. State of Karnataka, which held that an allottee company is not a “person interested.”

Respondents’ Arguments

MRPL, on the other hand, contended that:

It had a financial interest in the compensation determination as it would bear the cost of enhanced compensation.
The High Court correctly relied on UP Awas Evam Vikas Parishad vs. Gyan Devi and Himalayan Tiles and Marble (P) Ltd. vs. Francis Victor Coutinho to establish its right to be heard.
As per the agreement between KIADB and MRPL, MRPL was liable for additional compensation and should have been involved in the proceedings.
The High Court was correct in remanding the matter for fresh determination with MRPL as a party.

Supreme Court’s Judgment

The Supreme Court ruled that the High Court erred in holding that MRPL was a “person interested.” The key findings were:

KIADB, and not MRPL, was the beneficiary of the land acquisition.
MRPL was only an allottee post-acquisition and did not qualify as a “person interested” in compensation proceedings.
Precedents in Peerappa Hanmantha Harijan and Satish Kumar Gupta vs. State of Haryana clearly distinguished between beneficiaries and post-acquisition allottees.
The High Court incorrectly relied on UP Awas Evam Vikas Parishad and Himalayan Tiles, which applied to acquisitions under the Land Acquisition Act, whereas this case involved the KIAD Act.

The Court observed:

“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.”

Key Directives from the Supreme Court

The High Court’s order was quashed.
The Reference Court’s original judgment enhancing compensation was restored.
MRPL was deemed ineligible to contest compensation enhancement.
KIADB remained the sole beneficiary and responsible entity for land acquisition and compensation.

Implications of the Judgment

This judgment reinforces the distinction between a post-acquisition allottee and a direct beneficiary in land acquisition cases. Key takeaways include:

Only the acquiring authority and landowners have rights in compensation determination.
Allottees who receive land post-acquisition cannot claim to be “persons interested.”
Courts must follow established precedents to avoid misinterpretation of legal provisions.

Conclusion

The Supreme Court’s ruling ensures that landowners’ rights are not diluted by entities that acquire land post-acquisition. The decision upholds the principle that only those directly affected by acquisition have a say in compensation proceedings.

This case sets an important precedent in land acquisition law, clarifying that industrial allottees cannot interfere in compensation matters, thereby preventing unnecessary litigation and ensuring fair compensation for landowners.

Petitioner Name: Gregory Patrao and Others.
Respondent Name: Mangalore Refinery and Petrochemicals Limited & Others.
Judgment By: Justice M. R. Shah, Justice B. V. Nagarathna.
Place Of Incident: Mangalore, Karnataka.
Judgment Date: 11-07-2022.

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