Case Note & Summary
The petitioner, M/s D C B Bank Limited, filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bengaluru. The bank sought a direction to the Assistant Commissioner and Special Land Acquisition Officer (respondents 1 and 2) to consider its representation dated 25.07.2022 and to deposit the compensation amount for acquired land into the loan account of the third respondent-borrower, which was secured by mortgage of the property under acquisition. The bank argued that as a mortgagee, it had a vested interest in the property and was entitled to the compensation. The court, presided over by Justice Krishna S Dixit, dismissed the petition, holding that the mortgagee's interest is not recognized under the land acquisition regime. The compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is payable only to the 'person interested' as defined in the Act, which does not include a mortgagee. The court noted that the bank's remedy lies in civil court for recovery of the loan or under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and not by way of a writ petition. The petition was dismissed with no order as to costs.
Headnote
A) Land Acquisition - Compensation - Entitlement of Mortgagee - Section 31 of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - The petitioner-bank, as mortgagee of the acquired land, sought direction to the Special Land Acquisition Officer to deposit compensation to the borrower's loan account. The Court held that the mortgagee's interest is not recognized under the land acquisition regime and the compensation is payable only to the person interested as defined under the Act. The bank's remedy lies in civil court for recovery of loan, not in writ jurisdiction. (Paras 1-3)
B) Constitutional Law - Writ Jurisdiction - Article 226 of Constitution of India - The Court declined to entertain the writ petition as the dispute was essentially contractual between the bank and borrower, and the bank had alternative remedies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or civil suit. (Para 3)
Issue of Consideration
Whether a mortgagee bank is entitled to have land acquisition compensation deposited to its loan account in priority over the borrower/landowner.
Final Decision
The writ petition is dismissed. No order as to costs.
Law Points
- Mortgagee not entitled to compensation under Section 31 of RFCTLARR Act
- 2013
- Mortgagee's interest not recognized under land acquisition law
- Writ remedy not available for contractual dispute
Case Details
2023 LawText (KAR) (03) 23
WP No. 18206 of 2022 (LA-RES)
Smt. Sreedevi K B for Sri. Patil J M (for petitioner); Sri. R Srinivasa Gowda, AGA for R1 & R2
The Assistant Commissioner, Chitradurga Sub Division; Special Land Acquisition Officer, Tumkur-Chitradurga-Davanagere New Direct Railway Line Project; Channakeshavareddy
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution of India seeking direction to land acquisition authorities to deposit compensation to loan account of borrower.
Remedy Sought
Petitioner bank sought direction to respondents 1 and 2 to consider its representation dated 25.07.2022 and to deposit compensation amount to the loan account of the 3rd respondent-borrower.
Filing Reason
Non-consideration of the bank's representation requesting deposit of compensation to the loan account secured by mortgage of the acquired property.
Issues
Whether a mortgagee bank is entitled to have land acquisition compensation deposited to its loan account in priority over the borrower/landowner.
Whether the writ court should entertain a petition when alternative remedies are available.
Submissions/Arguments
Petitioner argued that mortgage is a recognized mode of transfer under Transfer of Property Act, 1882, and as mortgagee, the bank has a vested interest in the property entitling it to compensation.
Petitioner expressed anguish over non-consideration of its representation by the 2nd respondent.
Ratio Decidendi
A mortgagee's interest is not recognized under the land acquisition regime; compensation under Section 31 of the RFCTLARR Act, 2013 is payable only to the 'person interested' as defined in the Act. The bank's remedy lies in civil court or under SARFAESI Act, not by writ petition.
Judgment Excerpts
Petitioner –Bank is grieving before the Writ Court against non-consideration of its representation dated 25.07.2022...
Learned counsel for the Petitioner vehemently argues that mortgage is one of the five traditional modes of transfer recognized by the provisions of the Transfer of Property Act, 1882...
Procedural History
The petitioner bank filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bengaluru on 16.03.2023, seeking direction to the land acquisition authorities to deposit compensation to the loan account of the borrower. The petition was dismissed at the preliminary hearing stage.
Acts & Sections
- Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: Section 31
- Constitution of India: Article 226, Article 227
- Transfer of Property Act, 1882:
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002:
