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Ergo Update

27-Apr-2020

On 26 February 2020, the Hon'ble Calcutta High Court (High Court) passed a judgment on various civil revisional applications filed under Article 227 of the Constitution of India whereby the High Court held that the pre-acquisition role and intra-acquisition liability of payment of compensation makes a private partner in a township development project under a Public Private Partnership model (PPP) a necessary party or a person interested in the referenced proceedings under Section 18 of the Land Acquisition Act, 1894 (LA Act).

Brief background

The revisional applications arose out of land acquisition proceedings which commenced in the year 2004 in one of the premier districts of the state of West Bengal for setting up of a township project under a public-private partnership model. The acquisition of the land was the obligation of the government body under the State of West Bengal and the implementation of the project was the obligation of the private partner who was to be selected by a tender process.  The civil revisional applications were filed by the private partner against an order passed by the Learned Additional District Judge whereby the application of the private partner for being added as a party Respondent in the land acquisition reference cases under section 18 of LA Act were rejected. The cases pertained to owners of the land seeking enhancement of compensation awarded to them.

High Court proceedings at the first instance

The private partner thereafter filed a Writ Petition challenging the enhancement award passed by the District Judge before the High Court, primarily on the issue of violation of principles of natural justice. The private partner challenged the orders of enhancement stating that the private partner was a “person interested” as defined under section 3 (b) of the LA Act and the private partner was required to be heard before making any enhancement of the award of compensation as the private partner was under an obligation to make payment towards the cost of acquisition including any enhancement thereof. The private partner relied on the settled proposition of law that the private partner is a person interested and was entitled to be heard by the Reference Court before the compensation was enhanced.

The said Writ Petition was allowed by the High Court whereby it was held that the enhancement orders and/or judgments passed by the District Judge under Section 18 of the LA Act, are null and void as the same were passed in violation of principles of natural justice.

The private partner thereafter made applications under Order 1 Rule 10 of CPC before the District Court where the land acquisition proceedings were pending relying upon the order of the High Court. The private partner sought quashing of the execution proceedings on the basis that the parent enhancement order under the LA proceedings has been held to be a nullity by the High Court. The Application by the private partner to be joined to the proceedings was rejected by the Court. The order dated 23 August 2017 by which the Learned District Judge dismissed the application under Order 1 Rule 10 (2) read with section 151 of the Code of Civil Procedure, 1908 for being added as a party respondent in the land acquisition cases, was solely passed relying on the decision of the Supreme Court of India in Satish Kumar Gupta  v State of Haryana [(2017) 4 SCC 740] and held that the private partner is not a “person interested” and further observed that the Private Partner is a post-acquisition allottee. Against such order of rejection, a revisional application was filed under Article 227 of the Constitution of India.

Appeal proceedings before the Division Bench of the High Court by the land owners against the judgment and order allowing the writ petition

Simultaneously, the land owners filed an Appeal before the High Court against the final judgment and order of the writ petition. During pendency of the revisional applications, the appeal was decided against the private partner.  The Division bench of the High Court allowed the appeal and set aside the judgment and order with a leave granted to the private partner to pursue other remedies available under law to it.  However, the Division Bench did not categorically decide on the point of “person interested” and allowed the Appeal on the point of conduct of the private partner (being the writ petitioner). The said judgment has been challenged and is presently pending before the Supreme Court of India.

ANALYSIS OF THE JUDGMENT PASSED IN THE REVISIONAL APPLICATION:

The judgment sheds much needed light and clarity on the aspect of a “person interested” in cases of Public Private partnerships (PPP) in land acquisition cases and recognizes a private partner to be a person interested. The judgment in most unconditional terms has recognised a Private Partner in a PPP model to be a necessary party in land acquisition proceedings, thus clothing them with much needed rights to keep their interests protected.

The judgment garners much significance as the Calcutta High Court has in categoric terms interpreted a “person interested” under the gamut of the Land Acquisition Act. This is especially relevant since the LA Act being considerably old does not contemplate recent concepts like PPPs. The judgment has breathed life into the age-old Act by interpreting the same in context of this modern world and concepts relevant at present. This is the first case in the country which dealt with the issue whether a private partner in a PPP model is an interested person or not. While approving the contention that the private partner is an interested person under Section 3 (b) of LA Act has confirmed that the definition “person interested” under Section 3 (b) of the LA Act be read more liberally and should not be a restrictive definition.

Further, in the current scenario, where Governments are taking steps towards affordable housing which is only possible under the PPP model, the obligation towards acquisition rests with the government and/or its authorities. If the definition of “person interested” is not given a liberal meaning then private partners who are responsible for making payment towards cost of compensation will be discouraged to participate in such projects. This judgment is definitely a positive impetus for private parties involved in development projects under PPP model.

-       N G Khaitan (Senior Partner), Shounak Mitra (Partner) and Rishav Dutt (Principal Associate)

For any queries please contact: editors@khaitanco.com

Nand Gopal Khaitan (partners) , Shounak Mitra (partners)

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