Case Note & Summary
The petitioner, Damu Patil, owned agricultural land in Dhule, which was acquired for the Lower Tapi Project under the Land Acquisition Act, 1894, and compensation was deposited. The petitioner had borrowed money from Dhule Vikas Sahakari Bank Ltd. (respondent no.3) and mortgaged his house property. When he defaulted, the bank obtained a recovery certificate under Section 101 of the Maharashtra Cooperative Societies Act and attached the property. The petitioner applied to the reference court (2nd Joint Civil Judge, Senior Division, Dhule) for release of the compensation, citing health reasons. By order dated 11.11.2014, the Civil Judge restrained the petitioner from withdrawing the amount, holding that the bank's claim must be satisfied from the compensation because it had a charge on the land. Aggrieved, the petitioner filed the present writ petition challenging that order. The High Court framed a single question: whether compensation under the Land Acquisition Act could be withheld due to a charge created by a bank on the acquired property. The petitioner argued that the bank failed to raise objections at the stages of notifications under Sections 6 and 9, that a government circular limited the bank's share to one-fifth of the compensation, and that the charge extinguished upon acquisition. The bank argued it had a valid charge and recovery certificate, and that the cited judgments were inapplicable. The court examined Sections 3(b), 6, 9, and 30 of the Land Acquisition Act. Section 3(b) defines 'person interested' to include all persons claiming an interest in compensation. The court held the bank, as a charge holder, was an interested person and could seek apportionment under Section 30. The argument that failure to object at the Sections 6 and 9 stages barred a claim under Section 30 was rejected, as those stages concern notification and invitation of claims, not final apportionment. The judgments cited were distinguished as they concerned co-owners seeking impleadment, not creditors' rights. The court also noted the government circular did not limit the bank's claim to one-fifth and that the Collector must ensure loan satisfaction before releasing the balance to the landowner. The High Court upheld the Civil Judge's order and dismissed the writ petition, directing that the bank's dues be satisfied first from the compensation amount.
Headnote
A) Land Acquisition - Apportionment of Compensation - Sections 3(b) and 30, Land Acquisition Act, 1894 - Bank's Charge on Acquired Land - The petitioner's land was acquired and compensation deposited, but a cooperative bank had a charge due to a loan and sought recovery. The High Court held the bank is an 'interested person' under Section 3(b) and entitled to claim apportionment of compensation under Section 30. The petitioner's argument that the bank must object at the notification stage under Sections 6 and 9 was rejected. The court upheld the lower court's restraint order, directing that compensation be used to first satisfy the bank's dues, with the remainder to the landowner. (Paras 2, 8, 9, 10, 11, 16, 17)
Issue of Consideration
Whether the amount deposited by the Government towards compensation payable under the Land Acquisition Act, 1894, can be withheld on account of any charge created by any bank on the property, which is under acquisition ?
Final Decision
The High Court dismissed the writ petition, upheld the order of the Civil Judge (S.D.) Dhule dated 11.11.2014, and held that the respondent no.3 bank, having a charge on the acquired land, is an interested person entitled to claim apportionment of compensation under Section 30 of the Land Acquisition Act, 1894. The petitioner was not entitled to withdraw the entire compensation amount; the bank's loan dues must be satisfied first.
Law Points
- Compensation under Land Acquisition Act can be withheld for charge created by bank on acquired property
- Bank with charge is an 'interested person' under Section 3(b)
- Section 30 allows dispute as to apportionment
- Failure to object at notification stage does not bar claim under Section 30
- Government circular prescribing 1/5th amount not binding
Case Details
2017 LawText (BOM) (01) 100
Writ Petition No.2516/2016
V.M. Kanade, Sangitrao S. Patil
B.R. Waramaa, A.S. Shinde, A.S. Sawant
The Deputy Collector Acquisition No.1, Land Acquisition Officer, State of Maharashtra, Special Recovery Officer, Dhule Vikas Sahakari Bank Ltd.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging an order of the Civil Judge (S.D.) Dhule that restrained the petitioner from withdrawing land acquisition compensation due to a bank charge.
Remedy Sought
Petitioner sought quashing of the Civil Judge's order and direction to release the entire compensation amount to him.
Filing Reason
The Civil Judge's order prevented withdrawal of compensation because of pending recovery proceedings by the bank.
Previous Decisions
The 2nd Joint Civil Judge, Senior Division, Dhule, by order dated 11.11.2014, dismissed the petitioner's application for release and held that the compensation should be used to first satisfy the bank's loan amount.
Issues
Whether the compensation amount under Land Acquisition Act, 1894, can be withheld by a bank claiming a charge on the acquired land?
Whether the bank's failure to object at the stage of Sections 6 and 9 of the Act precludes it from claiming apportionment under Section 30?
Submissions/Arguments
Petitioner argued that respondent no.3 bank had not raised any objection at the stage of Sections 6 and 9 of the Land Acquisition Act and therefore could not now claim apportionment under Section 30.
Petitioner relied on a government circular No.1687/288/(3993)/A2 dated 6.7.1987, stating that only 1/5th of the compensation could be paid to the bank.
Petitioner contended that the bank's charge on the land extinguished upon acquisition, and the compensation should be paid entirely to him.
Respondent bank argued that it had a charge on the property due to a loan and mortgage, and had obtained a recovery certificate under Section 101 of the Maharashtra Cooperative Societies Act.
Respondent bank submitted that the judgments cited by the petitioner were not applicable to the facts of the case, as they pertained to impleadment of co-owners, not creditors.
The State supported the bank's position and contended that the Collector must ensure loan satisfaction before releasing compensation.
Ratio Decidendi
A bank or creditor having a charge on land acquired under the Land Acquisition Act, 1894, is an 'interested person' under Section 3(b) and may claim apportionment of compensation under Section 30 to recover its dues. Failure to raise objections under Sections 6 and 9 does not bar such a claim.
Judgment Excerpts
Whether the amount deposited by the Government towards compensation payable under the Land Acquisition Act, 1894, can be withheld on account of any charge created by any bank on the property, which is under acquisition ?
It is not possible to accept the submission of the learned counsel for the petitioner that only if a person raises an objection at the stage of notification u/s 6 or u/s 9, he can raise an objection u/s 30. The said submission is without any substance.
The learned Judge observed that the claimant should not be allowed to defeat the bank's claim while collecting compensation directly from the Court.
Procedural History
The petitioner, a landowner, took a loan from respondent no.3 cooperative bank, mortgaging his property. The land was acquired for a project and compensation deposited. The bank initiated recovery proceedings under Section 101 of the Maharashtra Cooperative Societies Act, obtained a recovery certificate, and attached the property. The petitioner filed an application before the 2nd Joint Civil Judge (S.D.), Dhule, for release of the compensation amount, which was rejected by order dated 11.11.2014, restraining withdrawal and directing satisfaction of the bank's dues. Aggrieved, the petitioner filed the present writ petition. The High Court heard the matter and dismissed the petition on 24.01.2017.
Acts & Sections
- Land Acquisition Act, 1894: 3(b), 6, 9, 11, 18, 30
- Code of Civil Procedure, 1908: Order I Rule 10
- Maharashtra Cooperative Societies Act: 101
