This Land Acquisition Appeal Is ... vs Unknown
2023 Latest Caselaw 5398 AP

      HON'BLE SRI JUSTICE U.DURGA PRASAD RAO
                        AND
     HON'BLE SMT. JUSTICE KIRANMAYEE MANDAVA

                        L.A.A.S.No.1 of 2023

JUDGMENT: (Per Honble Sri Justice U. Durga Prasad Rao)

      This land acquisition appeal is filed by the rival claimant

aggrieved by the order dated 09.11.2022 in L.A.O.P. No.3/2019 in

Award No.3/2018 dated 09.08.2018 passed by the learned Presiding

Officer, Land Acquisition, Rehabilitation and Settlement Authority,

Visakhapatnam Region (for short, 'the LARA') holding that in

respect of the land of Ac.3.07 cents covered by Award No.3/2018

acquired for establishment of International Green Field Airport at

Bhogapuram, the claimant is entitled to the awarded compensation

but not the rival claimant.


2.    The factual matrix of the case is thus:

      (a) The bone of contention between the appellant / rival

claimant and claimant / 1st respondent is an extent of Ac.3.07 cents

of land in Sy.No.156/2 of Kavulavada Village of Bhogapuram

Mandal, out of Ac.9.64 cents which was notified for acquisition. An

extent of Ac.5.91 cents was concerned, award was passed in favour ::2::

of five owners leaving balance of Ac.3.73 cents. Out of said

balance, in respect of Ac.3.07 cents, the claimant/respondent and

appellant/rival claimant made claims. The remaining extent of

Ac.0.66 cents belongs to Vempada Narsayamma and others.

(b) So far as the history of subject land is concerned,

originally Ac.9.04 cents belongs to B.China Narayana Murthy and

his mother Vidyavathi. The claimant purchased the said land i.e.,

Ac.6.42 cents in Sy.No.156 and Ac.2.62 cents in Sy.No.77 in the

year 1998-99 under registered sale deeds and obtained pattadar

passbooks and title deeds. However, even prior to his purchase, his

vendor obtained loan from State Financial Corporation (SFC) for

establishing a modern rice mill at Kavulavada Village by offering an

extent of Ac.0.50 cents and plant and machinery thereon as primary

security and an extent of Ac.4.00 cents i.e., Ac.3.00 cents in

Sy.No.77 and Ac.1.00 cents in Sy.No.156 as collateral security. As

the borrower failed to pay the loan amount, the SFC initiated

proceedings U/s 29 of State Financial Corporation and sold both

primary and collateral security in public auction. In the said auction,

the appellant/rival claimant purchased the primary and collateral ::3::

securities including Ac.4.00 cents of land which was part of the land

purchased by the respondent/claimant. He was also given Pattadar

Passbook and Title Deed in the year 2007 without reducing the

extent of land which was already purchased by the

respondent/claimant.

(c) While so, questioning the propriety of auction sale, the

borrower-Bandaru China Narayana Murthy filed W.P.No.20203 of

2004 against the auction sale. Similarly, questioning the sale of

collateral security, the respondent/claimant filed W.P.No.24645 of

2005. A learned single Judge of the common High Court of A.P. by

two separate orders, allowed both the writ petitions setting aside the

auction sale in respect of primary as well as collateral security.

(d) Aggrieved by the order passed in W.P.No.20203/2004, the

auction purchaser filed W.A.No.32/2009, whereas SFC filed

W.A.No.33/2009. Further, aggrieved by the order passed in

W.P.No.24645/2005, SFC filed W.A.No.295/2009. The auction

purchaser has not filed any appeal against the order passed in

W.P.No.24645/2005. All these writ appeals were heard together by

a Division Bench of the common High Court of A.P. and by ::4::

judgment dated 29.04.2011 the Division Bench allowed W.A.Nos.32

& 33 of 2009 and consequently dismissed W.P.No.20203/2004.

Thus, the Division Bench upheld the sale of primary security.

(e) So far as W.A.No.295/2009 is concerned, learned standing

counsel for the SFC conceded before the Division Bench that the

SFC cannot sell the collateral security in exercise of power

conferred on the Corporation U/s 29 of State Financial Corporation

Act in the light of judgment in Karnataka State Financial

Corporation v. N. Narasimahaiah1. In that view, the Division

Bench dismissed W.A No.295/2009 by confirming the order in

W.P.No.24645/2005. However, liberty was granted to the

Corporation to proceed against the collateral security under ordinary

law of contract before an appropriate forum.

3. In the light of above background facts concerning the subject

land of Ac.3.07 cents, the LARA embarked upon deciding the right

of the claimant vis-a-vis rival claimant over the said property. The

said authority in its judgment made the following important

observations before deciding the rights of the rival parties over the

subject land:

(2008) 5 SCC 176 = MANU/SC/1212/2008 ::5::

(i) In view of the orders passed in W.P.Nos.20203/2004 and 24645/2005 by the High Court, it is graphically clear that the vendor of the claimant has title to the subject property and that is the reason why she offered the same as collateral security for sanction of loan to the principal borrower.

(ii) The High Court categorically held in unequivocal terms that the SFC cannot proceed with auction of collateral security U/s 29 of SFC Act when the borrower offered primary security. In this regard, the W.P.No.24645/2005 filed by the claimant was allowed and W.A.No.295/2009 filed by SFC was dismissed and thus the said finding became final.

(iii) As per evidence of Branch Manager of SFC (RW-2), the SLP was preferred on the file of Hon'ble Apex Court challenging only the validity of Section 29 of SFC Act. It is therefore distinct that the finding given by the High Court that the property offered as a collateral security cannot be auctioned has become final.

(iv) The claimant produced his pattadar passbook and title deed along with registered sale deed dated 20.03.1999 obtained from the principal borrower and his mother covered by Ex.C1 to C3. Thus these documents which are not in dispute would show the title of the claimant. Per contra, the rival claimant through Ex.B1 to B4 exhibited the registered sale deed and pattadar passbook ::6::

and title deed issued by competent revenue officials after he purchased the subject property in the auction held by SFC. However it is unknown, how come the same revenue official i.e., the Tahsildar issued pattadar passbook and title deed for the same land in favour of the rival claimant without cancelling the earlier pattadar passbook and title deed issued in favour of the claimant. Of course, more than these documents the point in issue is the title over the property.

(v) The rival claimant admitted that the claimant filed W.P No.24645/2005 and the said writ petition was registered by himself and SFC but denied the suggestion that he suffered adverse order in the writ petition as well as writ appeal and claimed as if the Division Bench in the appeal passed order in his favour which is not correct.

4. With the above observations the LARA gave the finding that

the evidence on record and the orders in concerned writ petitions

and writ appeals showed that the auction held by SFC in respect of

subject property was set aside by the High Court and consequently

the vendor of the claimant got right, title and interest and the sale

deed executed by her in favour of the claimant is binding on the

rival claimant as well as SFC. Accordingly, the authority has ::7::

allowed the reference in favour of the claimant i.e.,

Sekharamahanthi Surya Rao and held that he is entitled for

compensation amount along with the interest accrued thereon.

Hence the present L.A.A.S.

5. Heard arguments of Kella Poli Naidu, learned counsel for

appellant/rival claimant and Sri T. Sai Surya, learned counsel for

respondent and learned Government Pleader for appeal.

6. Both the learned counsel reiterated their pleadings in their

respective arguments. The counsel for appellant vehemently argued

that the rival claimant is the purchaser of the subject property and

other property in the auction held by the SFC for a valuable

consideration and pattadar passbooks and title deeds were also

issued in his favour confirming his title and possession, but the

claimant purchased the property subject to the collateral security

offered by his vendor for the loan granted by SFC and therefore the

appellant/rival claimant holds a better title than the claimant. Per

contra, learned counsel for claimant argued that in

W.P.No.24645/2005 as well as in the corresponding ::8::

W.A.No.295/2009, the High Court of A.P. has clearly held that the

SFC had no power or authority U/s 29 of the SFC Act to sell the

collateral security in the public auction without intervention of the

Court and therefore the auction sale held by the SFC in favour of the

rival claimant in respect of collateral security was set aside and

consequently the sale deeds executed in favour of the claimant by

the borrowers became valid and as such the appellant/rival claimant

cannot harp that he purchased the subject property in the auction

sale.

7. We find considerable force in the submission of learned

counsel for respondent/claimant. The orders of this Court in

W.P.No.24645/2005 and the corresponding W.A No.295/2009

would manifest that in view of the judgment in KSFC v. N.

Narasimahaiah (supra 1), the SFC cannot put in auction the

property covered by collateral security by exercising the power U/s

29 of SFC Act. Accordingly, the auction sale held in respect of the

property covered by collateral security was set aside, meaning

thereby the claimant's right was confirmed and rival claimant's ::9::

purchase was set aside. The rival claimant has not carried out the

matter further having suffered the adverse order in the aforesaid

matters. Therefore, now he cannot clamour that still he has better

right, title and possession over the subject property than the

claimant. Such a claim is against the facts and law. The LARA has

rightly held so and its order, in our considered view, does not suffer

any legal infirmity warranting interference.

8. Accordingly, the LAAS No.1/2023 is dismissed. No costs.

As a sequel, interlocutory applications if any pending, shall

stand closed.

_________________________ U.DURGA PRASAD RAO, J

____________________________ KIRANMAYEE MANDAVA, J

09.11.2023 krk ::10::

HON'BLE SRI JUSTICE U.DURGA PRASAD RAO AND HON'BLE SMT. JUSTICE KIRANMAYEE MANDAVA

L.A.A.S.No.1 of 2023

09th November, 2023

krk