Holding

A consent award accepted by the landowner bars any right to invoke Section 18 for reference to a civil court, and such awards are valid without compliance with Article 299 or a prescribed format.

Summary

The Karnataka State Government acquired land for a canal project and, after negotiations, entered into consent agreements with the landowners, resulting in consent awards that included market value, solatium and additional market value. The landowners received the compensation and thereafter filed applications under Section 18 of the Land Acquisition Act, 1894 seeking a reference to a civil court for enhanced compensation. The Collector rejected these applications, and the High Court initially dismissed the writ petitions but later a Division Bench allowed them, directing the government to pay any balance amounts. The Supreme Court held that once a consent award is accepted, the landowner cannot invoke Section 18, as acceptance extinguishes the right to reference the court, and the agreement is binding unless set aside by a competent court. Consequently, the Division Bench was found to have acted without jurisdiction, and the appeals by the State were allowed, overturning the High Court’s decision.

Issues considered

Whether a landowner who has accepted a consent award under Section 11(2) of the Land Acquisition Act, 1894 can file an application for reference to a civil court under Section 18 for enhanced compensation.
Whether compliance with Article 299 of the Constitution is required for a consent award to be valid.
Whether the agreement between the State and landowners, even if not in the prescribed format, is binding and precludes further claims.

Legislation cited

Land Acquisition Act, 1894s. 11(2), s. 18

Subjects

land acquisitionconsent awardSection 18 referencecompensationsolatiumestoppelArticle 299contractual agreementacceptance of award

Judgment

STATE OF KARNATAKA AND ANR. A
v.
SANGAPPA DY AV APPA BIRADAR AND ORS.

MARCH 30, 2005

[N. SANTOSH HEGDE AND S.B. SINHA, JJ.] B

Land Acquisition Act, 1894:

ss. 11 (2) and (I 8)-Consent award-Compensation received by land
holders in full satisfaction of their claim-Applications for reference in terms C
of s. I 8 for enhancement ofcompensation-Held, not maintainable-Cond(tion
precedent for maintaining application for reference u/s I 8 is non-acceptance
of award by the awardee-For passing a consent award, it is not necessary
to comply with provisions ofArticle 299 of the Constitution-Nor an agree1i1ent
between the parties need be strictly in terms of a prescribed formqt- D
Constitution of India-Article 299-Government contract-Deeds and
documents-Agreement-Format-Estoppel.

The appellant-State Government, for the purpose of acquiring land
for construction of a canal, entered into negotiations with the responde:Ot-
land-owners as regards price of the land. Resultantly consent awards w~re E
passed and compensation was received by the landowners in full
satisfaction of their claim. Later, the landowners filed applications for
reference to civil court in terms ofs.18 of the Land Acquisition Act, 1894,
claiming enhanced compensation. The Collector rejected the applicatio~s.
Single Judge of the High Court also dismissed the writ petitions of the F
landowners. However, the Division Bench allowed their writ appeal.
Aggrieved, the State Government filed the present appeals.

Allowing the appeals, the Court

HELD : 1.1. A right of a landholder to obtain an order of referem:e G
would arise only when he has not accepted the award. Once such award
is accepted, no legal right in him survives for claiming a reference to th.e
civil court. An agreement between the parties as regards the value of the
lands acquired by the State is binding on the parties, unless it is set aside
in an appropriate proceeding by a competent court. Even in the writ
1197 H
1198 SUPREME COURT REPORTS [2005] 2 S.C.R.

A petitions, the prayers made by the respondents were for quashing the order
passed by the Collector declining to make a reference u/s. 18 and for
issuance of a direction upon him to refer the matter to the civil court. The
question as regards the validity of the agreements had not been raised
before the High Court. The High Court while exercising its jurisdiction
B under Article 226 of the Constitution of India, thus, could not have
substituted the award passed by the Land Acquisition Officer by reason
of the impugned judgment. (1202-F-H; 1203-A-BI

1.2. The respondents having accepted the award without any demur
were estopped and precluded from maintaining an application for
C reference in terms of Section 18 of the Act. Besides, they also waived their
right to file any application for enhancement of the amount of
compensation. It is also trite that by reason of such agreement, the right
to receive amount by way of solatium or interest etc. can be waived.
However, in the instant case, it is not in dispute that in terms of the consent
awards, the amount of compensation included solatium and additional
D market value. (1201-G-H; 1202-A; 1203-D-EI

1.3. Keeping in view the fact that the condition precedent for
maintaining application for refer~nce under s.18 is non-acceptance of the
award by the awardee, the Division Bench of the High Court acted illegally
and without jurisdiction in passing the impugned judgment. The Single
E Judge was right in concluding that the writ petitions were not
maintainable. (1205-G-HI

State of Gujarat and Ors. v. Daya Shamji Bhai and Ors., (19951 5 SCC
746 and Jshwar/al Premchand Shah and Ors. v. State of Gujarat and Ors.,
F 119961 4 sec 174, relied on.

Assam Railways & Trading Co. Ltd. v. The Collector of lakhimpur and
Anr., (19761 3 SCC 24, held inapplicable.

2. An award under the Act is passed either on consent of the parties
G or on adjudication of rival claims. For the purpose of passing a consent
award, it was not necessary to comply with the provisions of Article 299
of the Constitution of India. An agreement between the parties need not
furthermore be strictly in terms of a prescribed format. (1203-C-D)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2266-2268 of
H 2005.
STATE v. SANGAPPADYAVAPPABIRADAR[SINHA,J.] 119Q
From the Judgment and Order dated 18.2.2003 of the Karnataka High A
~, Court in W.A. No. 250 I, 2500 and 1677 of 2000.

Sanjay R. Hegde for the Appellants.

Ms. Kiran Suri, Himanshu Hultan and Mali Santosh for the Respondents.
B
The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

These appeals are directed against the judgment and order dated
18.2.2003 passed by a Division Bench of the High Court of Kamataka, C
Bangalore in Writ Appeal Nos. I 677, 2500 and 250 I of 2000 whereby and 1

whereunder the writ appeals filed by the Respondents herein were allowed,
reversing the judgment and order passed by a learned Single Judge of the
said court dismissing the writ petitions filed by the Respondents herein.

Keeping in view the point involved in these appeals, it is not necessary D
to state the fact of the matter in great details. Suffice it to point out that for
the purpose of submergence and construction of canal for the Upper Krishna
Project, the Appellant State intended to acquire some lands including the
lands belonging to the Respondents herein. The parties entered into
negotiations as regard the price of the lands; pursuant whereto and in
furtherance whereof consent awards were passed by the Special Land ,E
Acquisition Officer. The amount of compensation awarded in terms of the
consent award was also received by the Respondents in full satisfaction of
their claim. The Respondents, however, filed applications for reference to the
Civil Court in terms of Section 18 of the Land Acquisition Act, 1894
(hereinafter referred to as "the Act") claiming enhanced compensation. The F
said prayer was rejected by the Collector by an order dated 23.8.1999. The
Respondents thereafter filed w~it petitions before the High Court which were
marked as Writ Petition Nos. 41354, 36840 and 36748 of 1999 praying
therein for quashing of the said order as also for a direction upon the
Respondent No. 2 to refer the applications filed by them to the Civil Court G
for determining the amount of compensation in respect of the acquired lands.

By reason of judgments and orders dated 6.1.2000 and 19.1.2000, the
said writ petitions were dismissed on the ground that the parties having
entered into settlement as regard the price of the lands acquired and as a
consent award had been passed pursuant thereto, recourse to Section 18 of fl
1200 SUPREME COURT REPORTS [2005] 2 S.C.R.

A the Act was impermissible. The Respondents herein filed writ appeals against
the said judgments. The Division Bench of the High Court rejected the r
contention of the Respondents herein to the effect that the agreement between
the parties had not been drawn up in terms of the form prescribed under Rule
1O(b) of the Land Acquisition Rules and furthermore did not conform to the
B requirements of Article 299 of the Constitution of India. It, however, allowed
the said writ appeals on the premise that the amount of compensation was not
paid to the Respondents herein in terms of the agreement entered into,t:>y and
between the parties and in any event, the Respondents could not have been
deprived of their statutory right of obtaining solatium and interest in terms
of the Act, directing :
c " ...... We direct the respondents to compute the balance amounts
payable to the claimants within an outer limit of twelve weeks from
today and to disburse the same to the claimants immediately thereafter.
With these directions, the appeals to stand disposed of. Parties to bear
their own costs.
D
We clarify, that the claimants would be entitled to not only the
statutory benefits but whatever interest that they are lawfully entitled
to."

The Appellants are, thus, before us.
E Mr. Sanjay R. Hegde, the learned Counsel·appearing on behalf of the
Appellants, would submit that the Division Bench of the High Court committed
a gross error in passing the impugned judgment insofar as it failed to take
' into consideration the scope, object and purport of Section 18 of the Act.
Relying on the judgments of this Court in State of Gujarat and Ors. v. Daya
F Shamji Bhai and Ors., [1995] 5 SCC 746 and lshwarlal Premchand Shah and
Ors. v. State of Gujarat and Ors., [1996] 4 SCC 174], the learned counsel
would contend that as the awards passed by the Land Acquisition Officer
were consent awards, reference to the Civil Court in terms of Section 18
thereof was impermissible.

G Ms. Kiran Suri, the learned counsel appearing on behalf the Respondents,
on the other hand, would contend that the reference in terms of Section 18
of the Act was maintainable as the Respondents were made to sign certain
forms which contained blank columns as regard the amount of compensation
payable to them. The learned counsel would submit that the Respondents
H were, in any event, entitled to the amount of solatium as also interest op the
STATE v. SANGAPPA DY AVAPPA BIRADAR [SINHA, J.] 1201

~i awarded amount. Even in relation to a consent award, it was argued, the Land A
Acquisition Officer is required to exercise a statutory power in terms of the
provisions of the Act and the same having not been done, the Appellant was
entitled to obtain an order of reference to the Civil Court. Reliance, in this
connection, has been placed on Assam Railways & Trading Co. Ltd v. The
Collector of Lakhimpur and Anr., [1976] 3 SCC 24.
B
By reason of the Government Order No. Kam.E.140 AKW 98 dated
I 9.6.1998, it was directed that the lands should be classified mainly into two
categories i.e. dry land and wet land, the amount of compensation payable
therefor were specified therein. The parties thereafter entered into agreement~

..,_._
culminating in passing of the consent awards, the relevant stipulations whereof
are as under :
c
"Whereas the S.L.A.O. has negotiated the market price of the
land to be acquired with the owner of the above land and the owner
has agreed to the rate of Rs. 1, 14,000 per acre for the land in question,
including the other statutory benefits of 30% solatium and 12% D
additional market value which rate fixed as above and it does not
include the compensation payable to the owner for the structures,
trees and other improvements made on the land in question. Which •,
compensation would be subsequently assessed by the competent
technical authority and the value so arrived at would be added to the
price of the land determined through this consent. E
The above compensation has been arrived at by mutual consent
and as a consequence the owner hereby agrees to execute an indemnity
bond and also agrees with the Government as follows :

I. The owner is agreeable to the rate of Rs. 1,14,000 inclusive of F
30% Solatium and 12% Additional Market Value per acre which is
fixed by mutual consent between the Government and the owner. The
owner binds himself to this compensation and undertakes not to seek
any enhancements hereafter."

After the said consent awards were passed, statements were also made G
by the respective villagers declaring that they would not approach 'any court
for enhancement of the compensation for any other reason'.

It is not in dispute that in terms of the said consent awards, the amount
of compensation included solatium and additional market value. The
H
1202 SUPREME COURT REPORTS [2005] 2 S.C.R.

A landholders, as noticed hereinbefore, also waived their right to file any
application for enhancement of the amount of compensation.

The sole question, thus, which arose for consideration before the High
Court was as to whether the applications filed by the Respondents herein in
tenns of Section 18 of the Act before the Special Land Acquisition Officer
B seeking reference to the Civil Court for· determination of quantum of
compensation, were maintainable.

Section 18 of the Act reads as under :

"18. Reference to Court.(!) Any person interested who has not
c accepted the award may, by written application to the Collector, require
that the matter be referred by the Collector for the determination of -
the Court, whether his objection be tO the measurement of the land,
the amount of compensation, the persons to whom it is payable, or
the apportionment of the compensation among the persons interested.

D (2) The application shall state the grounds on which objection to
the award is taken :

Provided that every such application shall be made -

(a) if the person making it was present or represented before the
E Collector at the time when he made his award, within six weeks from
the date of the Collector's award;

(b) in other cases, within six weeks of the receipt of the notice
from the Collector under section 12, sub-section (2); or within six
months from the date of the Collector's award, whichever period
F shall first expire."

A right of a landholder to obtain an order of reference would arise only
when he has not accepted the award. Once such award is accepted, no legal
right in him survives for claiming a reference to the Civil Court. An agreement
between the parties as regard the value of the lands acquired by the State is
G binding on the parties. So long as such agreement and consequently the
consent awards are not set aside in an appropriate proceeding by a court of
law having jurisdiction in relation thereto, the same remain binding. It is one
thing to say that agreements are void or voidable in tenns of the provisions
of the Indian Contract Act having been obtained by fraud, collusion, etc, or
H are against public policy but it is another thing to say that without questioning
STATE v. SANGAPPADYAVA~PABIRADAR[SJNHA,J.] 1203

the validity thereof, the Respondents could have maintained their writ petitions. A
We have noticed hereinbefore that even in the writ petitions, the prayers
made by the Respondents were for quashing the order dated 23.8.1999 passed
by the Special Land Acquisition Offo;er and for issuance of a direction upon
him to refer the matter to the Civil Court. The High Court while exercising
its jurisdiction under Article 226 of the Constitution of India, thus, could not
have substituted the award passed by the Land Acquisition Officer by reason B:
of the impugned judgment. Fu.rthermore, the question as regard the validity
of the agreements had not been raised before the High Court. As indicated
hereinbefore, the Division Bench of the High Court had also rejected the
contention raised on behalf of the Respondents herein to the effect that the
agreements did not conform to the requirements of Article 299 of the C
Constitution of India or had not been drawn up in the prescribed proforma.

An award under the Act is passed either on consent of the parties or on
adjudication of rival claims. For the purpose of passing a consent award, it
was not necessary to comply with the provisions of Article 299 of the
Constitution of India. An agreement between the parties need not furthermore D
be strictly in terms of a prescribed format.

The Respondents having accepted the award without any demur were
estopped and precluded from maintaining an application for reference in
terms of Section 18 of the Act. It is also trite that by reason of such agreement,
the right to receive amount by way of solatium or interest etc. can be waived. E
In Daya Shamji Bhai (supra), this Court held :

"The right and entitlement to seek reference would, therefore,
arise when amount of compensation was received under protest in
writing which would manifest the intention of the owner of non- F
acceptance of the award. Section 11 (2) opens with a non-obstante
clause "notw~thstanding anything contained in sub-section (I)" and
provides that "if at any stage of the proceedings, the Collector is
satisfied that all the persons interested in the land who appeared
before him have agreed in writing on the matters to be included in the G
award of the collector in the form prescribed by rules made by the
J. appropriate Government, he may, without making further enquiry,
make an award according to the terms of such agreement. By virtue
of sub-section (4), "notwithstanding anything contained in the
Registration Act, 1908, no agreement made under sub-section (2)
H
1204 SUPREME COURT REPORTS [2005] 2 S.C.R.

A shall be liable to registration under that Act''. The award made under
Section I I (2) in terms of the agreement is, therefore, an award with
consent obviating the necessity of reference under Sectin I 8."

In lshwarlal Premchand Shah (supra), it was held :

B "8. It is true that on determination of compensation under sub-
section (I) for the land acquired, Section 23(2) enjoins to award, in
addition to the market value, 30% solatium in consideration of
compulsory nature of acquisition. Equally, Parliament having taken
notice of the inordinate delay in making the award by the Land
Acquisition Officer from the date of notification published under
c Section 4( I) till passing the award under Section I I, to offset the
price pegged during the interregnum, Section 23(1 "A) was introduced
to award an amount calculated @ 12% per annum on such market
value, in addition to the market value of the land, for the period
commencing oil and from the date of the publication of Section 4(1)
notification to the date of award of the Collector or date of taking
D
possession of the land whichever is earlier. Under Section 28, interest
was directed to be paid on the excess compensation at the rate specified
therein from the date of taking possession of the land to the date of
deposit into court of such excess compensation. These three
components are in addition to the compensation determined under
E sub-section (1) of Section 23. They intended to operate in different
perspectives. One for compulsory acquisition, the other for the delay
on the part of the Land Acquisition Officer in making the award and
the third one for deprivation of the enjoyment of the land from the
date of taking possession till determination of the compensation. The
three components are in addition to the determination of market value
F
und~r sub-section (I) of Section 23. They are not integral to
determination of compensation under sub-section (I) of Section 23
but in addition to, for the circumstances enumerated hereinbefore. In
a private sale between a willing vendor and a willing vendee, parties [
would arrive at consensus to pay and receive consolidated
G consideration which would form the market value of the land conveyed
to the vendee. For public purpose, compulsory acquisition under the
Act gives absolute title under ~ection 16 free from all encumbrances. L
Determination of the compensation would be done under Section
23( I) on the basis of market value prevailing as on the date of the
publication of the notification under Section 4( I). It would, therefore,
H
STATE v. SANGAPPADYAVAPPA BIRADAR [SINHA,J.] 1205

be open to the parties to enter into a contract under Section 11 (2), A
without the necessity to determine compensation under Section 23(1)
and would receive market value at the rates incorporated in the contract
signed under Section 11 (2) in which event the award need not be in
Form 14.

9. This Court in State of Gujarat v. Daya Shamji Bhail had B
considered the similar contentions and held that once the parties have
agreed under Section 11 (2) of the Act, the Land Acquisition Officer
has power under Section 11(2) to pass the award in terms thereof and
that the award need not contain payment of interest, solatium and
additional amount unless it is also part of the contract between the C
parties. The same ratio applies to the facts in this case. In view of the
above clauses in the agreements the appellants are not entitled to the
payment of additional amounts by way of solatium, interest and
additional amount under the provisions of the Act."

Assam Railways & Trading Co. Ltd (supra) whereupon Ms. Suri placed D
reliance is not applicable to the fact of the present case. Therein negotiations
had taken place between the parties whereupon the Railway Administration
became prepared to pay Rs. 2500 per bigha towards the sale price of the land
but the transaction was not completed, having regard to the fact that under
the State Railway Rules, land from private parties could be acquired only by
taking recourse to acquisition proceedings. Thereafter, in the land acquisition E
proceedings, an award was made by the Land Acquisition Collector allowing
compensation at the rate of Rs. I 000 per bigha. It is in that situation, the
negotiation between the parties was highlighted stating that although the
same did not fructify into a binding contract, there was at least a "gentleman's
agreement" regarding the price which indicated what a willing purchaser F
was ready to pay for the land. In the factual backdrop of that case this Court
observed :

" ........... Assuming this was an agreement which bound the parties,
the Collector had still the jurisdiction to determine the market value
of the land ... "
G
Keeping in view the fact that the condition precedent for maintaining
application for reference under Section 18 is non-acceptance of the award by
the awardee, in our considered opinion, the Division Bench acted illegally
and without jurisdiction in passing the impugned judgment. The learned Single
Judge was right in concluding that the writ petitions were not maintainable. H
1206 SUPREME COURT REPORTS [2005) 2 S.C.R.

.A For the reasons aforementioned, the impugned judgments cannot be
sustained which are set aside accordingly. The appeals are allowed. However,
in the facts and circumstances of the case, there shall be no order as to costs.

R.P. Appeal· allowed.

-

L