Holding

The State is bound to modify the scheme in accordance with the compromise and must pay compensation for the entire land at the market rate as of 19 April 1983.

Summary

The appellant, Akhara Brahm Butha, entered into a compromise with the Improvement Trust, with the State of Punjab also a party, to exclude 12 kanals of land from a town‑improvement scheme and to receive compensation for the remaining land at a fixed rate. Although the collector awarded compensation based on the agreement, the land was not released and the appellant’s contempt petitions failed. A writ petition seeking implementation of the compromise was dismissed by the Punjab and Haryana High Court on the ground that the State was not a party to the agreement. On appeal, the Supreme Court held that the State, having joined the compromise, is bound to modify the scheme and cannot back out, rejecting the State’s claim of discretion under s.41 of the Punjab Town Improvement Act. The Court ordered that no part of the land be returned; instead, compensation for the entire area must be paid at the market rate prevailing on 19 April 1983, with valuation to be fixed under s.18 of the Land Acquisition Act. The appeal was allowed.

Issues considered

Whether the State of Punjab, as a party to a compromise, is bound to modify the town‑improvement scheme despite the discretion conferred by s.41 of the Punjab Town Improvement Act, 1922.
Whether the State can be compelled to honour the compensation terms of the compromise and cannot withdraw from it.
Whether the land should be released to the appellant or compensation should be paid for the entire acquired area at market value.
Whether the High Court erred in holding that the State was not a party to the agreement.

Legislation cited

Land Acquisition Act, 1894s. 12, s. 18
Punjab Town Improvement Act, 1922s. 41

Subjects

land acquisitioncompensationcompromise agreementscheme modificationstate discretionPunjab Town Improvement ActLand Acquisition Actcontempt petitionvaluation

Judgment

AKHARA BRAHM BUTA, AMRITSAR A
v.
STATE OF PUNJAB AND ANOTHER

AUGUST 24, 1992

[LAUT MOHAN SHARMA AND DR. A.S. ANAND, JJ.] B

Land Acquisition Act, 1894 :

Ss. 12, JS-Award-Compensation-Agreement between palties includ-
ing State-Pait of agreement given effect in awartf-State bound to modify the
scheme in terms of agreement.
c
•
Punjab Town Improvement Act, 1922 :

S.41-State Government-Power to sanction, reject or return scheme-
Agreement by State to modify scheme under Land Acquisition Act-lm- D
plemeniation of-Whether discretionary on palt of State .

.In pursuance of the High Court's judgment based on a compromise
.1 to which the State Government was also a party, a portion of daimant's
land acquired under .the Land AcquisitioD Act, 1894 was to be exclude<!
from the Scheme and for the. remaining land the compensation was to be E
paid at the stipulated rate. Although the compensation was awarded in
terms of the judgment, yet the land was not released. The claimant, being
unsuccessful in two successive contempt petitions for implementation of
the judgment, filed a writ petition .which was dismissed by the High Court
on the ground that the State was not a party to the compromise.
F
On claimant's appeal by special leave to this Court, it was contended
on behalf of the respondent State that in view of s. 41 of the Punjab Town
Improvement Act, 1922, it was the discretion of the State Government to
have agreed or not with the modiOcation of the Scheme and it could not
be forced to take a particular decision. G
Allowing the appeal, this Court,

HELD: 1.1. The State is bou11d to modify the scheme in view of its
stand before the High Court in pursuance of which the judgment in the
earlier writ petition was given. The collector while making the award relied H: ·.
1
2 SUPREME COURT REPORTS [1992] SUPP. 1 S.C.R.

A upon the agreement and fixed the compensation accordingly. Having taken
advantage of the agreement in part and having repeatedly agreed to the
terms of the compromise between the appellant and the Improvement
Trust, the State Government cannot be permitted to back out of it. The
conclusion of the High Court is clearly erroneous. [p.3 A-CJ

B 2. Since houses have already been constructed 90 the acquired land
and appellant is willing to accept only compensation for the entire land at
the market rate as on 19.4.1983, no part of the land under acquisition shall
be given back to the appellant, but the compensation for the entire area
shall be paid at the market rate prevailing on 19.4.1983, the date on which
C the instant writ petition was dismissed by the High Conrt. The valuation
will be fixed by the Civil Court in the same manner as it is done on
reference under s. 18 of the Land Acquisition Act. [p.3 D-F)

CIVILAPPELLATEJURISDICTION: Civil Appeal No.1C543of1983.

D From the Jndgment and Order dated 19.4.1983 of the Punjab and
Haryana High Court in Civil Writ Appeal No. 6300 of 1982.

Anant Vijay Palli, E.C. Agrawala, Atul Sharma, Ms. Rina Agarwal
and Ms. Purnima Bhat for the Appellant.

E A.S. Sohal, G.K. Bansal, Sanjay Bansal and R.S. Sodhi for the
Respondents.

The Judgment of the Court was delivered by

SHARMA, J. In a writ petition filed by the appellant challenging the
F land acquisition proceeding an agreement was reached between the appellant
and the Improvement Trust for excluding 12 Kanals ofland from the Scheme
and to pay the appellant the compensation for the remaining land at the rate of
2 rupees per square yard. The State was a party and joined the compromise
through its counsel. The matter was disposed of by the judgment at pages 44 to
46. The Scheme, however, does not appear to have been formally modified
G and the appellant had to file an application for coI<tempt, which was again
disposed of by the order at page 48. The Improvement Trust, through its
counsel gave an undertaking to release the land in presence of State counsel.
Still the judgment was not implemented and the appellant had to file a second
application for contempt which was dismissed at pages 54 to 62 by leaving the
.H controversy open to be decided in an appropriate proceeding. In these cir-
AB. BlJTA 1·. STATE OF PUNJAB [SHARMA, J.] 3

cumstances the present writ petition out of which this appeal arises, wes filed by A
the appellant for implementation of the compromise. The High Court has dis-
missed the petition on the ground that the State was not a party to the agreement.

2. The conclusion of the High Court is clearly erroneous. The learned
counsel for the State has argued that in view of section 41 of the Punjab
Town Improvement Act, 1922 it was the discretion of the State Govern- B
ment to have agreed with the modification ·of the Scheme or not and the
State cannot be forced to take a particular decision. This argument is
clearly erroneous as the State is bound to modify the Scheme in view of its
stand before the High Court in pursuance of which the judgment in the
earlier writ petition was given. It also appears that the Collector while c
making the Award relied upon the oaid agreement and fixed the compen-
sation of the entire area at Rs. 2 per square yard only. Having taken
advantage of the agreement in part and ha\ing repeatedly agreed to the
terms of the compromise between the appellant and the Improvement
Trust, the State Government cannot now be permitted to back out.
D
3. The learned counsel for the Improvement Trust, Amritsar, has stated
that houses have already been constructed on the acquired land in accord-
ance with the Scheme and it will be against the public interest to distrub the
position now. The counsel for the appellant, after taking instruction, indicated
the willingness of the appellant to accept only compensation for the entire
E
land to be calculated at the market rate prevailing on.'\pril 19, 1983. We have
considered the relevant circumstances and we are of the view that the stand
taken by the appellant is fair. Acconlingly, we direct that no part of the land in
question shall be given back to the appeilant but the compensation for the
entire area shall be be paid at the market rate prevailing on April 19, 1983, the
date on which the present writ petition was dismissed by the High Court. The F
valuation will be fixed by the Civil Court in the same manner as it is done on
reference under section 18 of the land Acquisition Act. Let the High Court
pass necessary orders sending the matter to the Civil Court for fixing the
valuation without delay and let the Civil Court determine the valuation as
expeditiously as may be possible. The appellant will be paid the compen;ation G
within a period of thrne months from the final determination of the valuation.

4. The appeal is allowed in the above terms. There will be no order
as to costs.

R.P. Appeal allowed. •
l