Kerala High Court
The State Of Kerala vs Cadburys India Ltd on 5 November, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN
&
THE HONOURABLE MR.JUSTICE K. BABU
Friday, the 5th day of November 2021 / 14th Karthika, 1943
IA.NO.2/2021 IN LA.APP. NO. 23 OF 2021
LAR 73/2002 OF THE SUB COURT, SULTHANBATHERY.
---
APPLICANT/APPELLANT/1ST RESPONDENT IN LAR:
THE STATE OF KERALA, REPRESENTED BY DEPUTY COLLECTOR,
WAYANAD.
RESPONDENTS/RESPONDENTS/CLAIMANTS &
SUPPLEMENTAL 2ND RESPONDENT IN LAR:
1.M/S.CADBURYS INDIA LTD.,CABDURY'S HOUSE, 19-3,
DESAI ROAD.
2.GENERAL MANAGER ,COCOA OPERATIONS, CADBURYS INDIA LTD.,
PB NO.17, VADUVATHOOR, KOTTAYAM 686 010.
3.GEORGE POTHEN,S/O.GEORGE, HOPE ESTATE, VELLARIMALA,VYTHIRI TALUK,
WAYANAD. (POWER OF ATTORNEY HOLDER OF SRI. GEORGE JOHN
& SRI. P.C. MATHEW). 673 576.
4.KERALA INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION- 672 123.
Application praying that in the circumstances stated in the
affidavit filed therewith the High Court be pleased to stay the execution
of the award in L.A.R.No.73/2002 dated 19.06.2019 before the Sub Court,
Sulthan Bathery, in the interest of justice.
This Application coming on for orders upon perusing the application
and the affidavit filed in support thereof, and upon hearing the arguments
of Special GOVERNMENT PLEADER for the petitioners and of M/S.BIJU ABRAHAM
& B.G.BHASKAR, Advocates for the respondent 3,and of Standing Counsel for
the respondent 4, the court passed the following:
P.T.O.
EXT.R10:09/05/2000- copy of rough sketch.
EXT.R12: 30/08/1991- copy of lease deed number 2548/91.
EXT.R13: 16/01/1998- copy of sale deed number 100/98.
EXT.R14: 11/10/1999-copy of sale deed number 3357/99.
EXT.A1:29/06/1998- copy of sale deed number 2097/98.
EXT.A2: 27/02/1986- copy of sale deed number 664/86.
EXT.A3:22/11/1998-copy of sale deed number 3334/98.
EXT.A4:28/11/1998- copy of sale deed number 3335/98.
"CR"
ANIL K. NARENDRAN & K. BABU, JJ.
---------------------------------------------------
I.A. No.2 of 2021 in L.A.A.No.23 of 2021
----------------------------------------------------
Dated this the 5th day of November, 2021
ORDER
Anil K. Narendran, J.
This is an application filed by the appellant, namely, the State
of Kerala, represented by the Deputy Collector, Wayanad, seeking
an order to stay the execution of the award dated 19.06.2019 in
L.A.R.No.73 of 2002 on the file of the Sub Court, Sulthan Bathery.
The appellant filed L.A.A.No.23 of 2021, under Section 54 of the
Land Acquisition Act, 1894, challenging the enhancement of
compensation awarded by the reference court. The appeal was filed
with a delay of 446 days, which was condoned by the order of this
Court dated 30.03.2021 in C.M.Application No.1 of 2021, on
payment of a cost of Rs.10,000/-, payable by the appellant to the
3rd respondent herein, within three weeks. The 3 rd respondent
challenged that order before the Apex Court in S.L.P.(C)No.8431 of
2021. By the order dated 09.07.2021, the Apex Court dismissed
that Special Leave Petition.
2. Claiming further enhancement of the compensation
awarded by the reference court in L.A.R.No.73 of 2002, the 3 rd
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
respondent herein filed L.A.A.No.268 of 2019. On 30.10.2019,
Registry was directed to number that appeal on condition that its
maintainability will be decided later. Thereafter, on 11.11.2019,
this Court admitted that appeal on file. The learned Government
Pleader took notice for the 1st respondent-State and notice by
speed post was ordered to respondents 2 to 4.
3. The interim relief sought for in this interlocutory
application is opposed by the 3 rd respondent, who is the 3rd
claimant in L.A.R.No.73 of 2002, raising various contentions. In the
counter affidavit, it is pointed out that the 3 rd respondent has filed
L.A.A.No.268 of 2019 before this Court claiming further
enhancement of the compensation awarded by the reference court
in L.A.R.No.73 of 2002, which has already been admitted on file.
4. Heard the learned Special Government Pleader for the
appellant-State, the learned counsel for the 3rd respondent/3rd
claimant and also the learned Standing Counsel for Kerala
Industrial Infrastructure Development Corporation (KINFRA), the
requisitioning authority.
5. The learned counsel for the 3rd respondent would
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
contend that the enhancement of compensation awarded by the
reference court in L.A.R.No.73 of 2002 cannot be said to be
abnormal considering various parameters prescribed under Section
23 of the Land Acquisition Act, 1894. Further, the 3 rd respondent
has already filed L.A.A.No.268 of 2019 before this Court claiming
further enhancement of the compensation awarded by the
reference court. That appeal has already been admitted. Therefore,
the 3rd respondent is entitled for disbursement of the entire
amount of enhanced compensation awarded by the reference court
in L.A.R.No.73 of 2002, during the pendency of the appeal, i.e.,
L.A.A.No.23 of 2021. In view of the bar under Order XLI, Rule 5(3)
of the Code of Civil Procedure, 1908, in order to stay the execution
of the judgment and decree of the reference court the appellant-
State has to deposit the amount disputed in the appeal, within a
time limit to be specified by this Court or furnish security in
respect of such amount as this Court may think fit. The mandate of
Rule 5(3) is not obviated by the operation of Order XXVII, Rule 8A
of the Code. The learned counsel would submit that, in case this
Court finds that the 3rd respondent is not entitled for disbursement
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
of the entire amount of enhanced compensation awarded by the
reference court, pending disposal of L.A.A.No.23 of 2021, the 3 rd
respondent is prepared to offer as security for disbursement of
such amount, the remaining land having an extent of 60 Acres, by
creating equitable mortgage, the value of which will be higher than
the amount of enhanced compensation awarded by the reference
court, for the acquired land having an extent of 50 Acres.
6. Per contra, the learned Special Government Pleader
would submit that the reference court awarded enhancement of
compensation without any legal basis, as contended in the appeal.
Ext.R13 sale deed No.100/98 dated 16.01.1998 and Ext.R14 sale
deed No.3357/99 dated 11.10.1999, whereby Jenmom right in
respect of the acquired land was transferred, shows the actual land
value of the acquired land. As evident from Ext.R10 rough sketch,
the acquired land is situated at a considerable distance from
Kalpetta town and it is not similarly situated as the properties
covered by Exts.A1 to A4 sale deeds. As per Ext.R13 sale deed
dated 16.01.1998, the Jenmom right over the land covered by
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
Ext.R12 lease deed No.2548/91 dated 30.08.1991, having an
extent of 117.48 Acres, and the right to collect lease rent has been
sold by some Tharavadu members to Shri.Impichi and
Shri.Sasidharan, for a consideration of Rs.50,000/-. The said
Impichi and Sasidharan sold the Jenmom right to collect lease rent
over the said property to Shri.George Pothan, Shri.George John
and Shri.P.C. Mathew, for a consideration of Rs.55,000/-, as per
Ext.R14 sale deed dated 11.10.1999. The proposal made by
KINFRA to the Government for acquisition of land was on
26.02.1999. Survey records verification was done on 16.09.1991
and the Government accorded sanction for land acquisition on
13.07.1999. The learned Special Government Pleader would also
rely on Section 72 of the Kerala Land Reforms Act, 1963, which
deals with vesting of landlords' rights over tenanted holdings in
Government. The learned Special Government Pleader would
submit that considering the grounds raised in this appeal, the
appellant-State is entitled for an order of stay of operation and
execution of the judgment and decree of the reference court. In
case this Court finds that the appellant is not entitled for an
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
absolute stay of the execution proceedings, the condition for
deposit may be limited to 30% of the enhanced compensation
awarded by the reference court. The learned Standing Counsel for
the 2nd respondent requisitioning authority also raised similar
contentions.
7. The learned counsel for the 3rd respondent contented
that the entitlement of the claimant for land value of the acquired
land has already been decided in the judgment of a learned Single
Judge of this Court dated 18.07.2001 in O.P.No.17804 of 2001.
That original petition was filed by T.N. Hariprasad and T.N.
Balakrishnan Nair, who are members of Thoriambath Tharavadu,
which owned extensive lands including 20.2500 Hectares in
R.S.No.266/3 of Kalpatta Village, which was acquired at the
instance of KINFRA. In paragraph 3 of the judgment dated
18.07.2001, this Court noticed the averment in that original
petition that, M/s.Cadburys India Ltd., the 1 st respondent herein,
has surrendered their tenancy right over the acquired land to
Shri.George John and Shri.P.C. Mathew, who are arrayed as
respondents 8 and 9 in that original petition, on payment of
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
Rs.2.70 Crores by demand draft. Since the Land Acquisition Officer
was doubtful about the validity of the oral surrender, the matter
was referred to the civil court under Section 30 of the Land
Acquisition Act. In the judgment dated 18.07.2021 in
O.P.No.17804 of 2001, this Court noticed that, in award No.3 of
2000 dated 30.09.2000, the Land Acquisition Officer has also
discussed the devolution of the right over the acquired land and
concluded that, as per records, the lease hold right is vested with
M/s.Cadburys India Ltd. and the Jenmom right is vested with
Shri.George Pothan, Shri.Geroge John and Shri.P.C. Mathew. In the
judgment dated 18.07.2001, one of the questions that was
considered by the learned Single Judge was as to whether the
original petitioners, who belongs to Thoriambath Tharavadu, are
entitled for any notice in the award enquiry.
8. Order XXVII of the Code of Civil Procedure deals with
suits by or against the Government or public officers in their
official capacity. Order XXVII, Rule 8A, inserted by Adaptation
Order, 1937, provides that no security to be required from
Government or a public officer in certain cases. As per Rule 8A, no
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
such security as is mentioned in Rules 5 and 6 of Order XLI shall
be required from the Government or, where the Government has
undertaken the defence of the suit, from any public officer sued in
respect of an act alleged to be done by him in his official capacity.
9. Order XLI of the Code deals with appeals from original
decrees. Order XLI, Rule 1 deals with form of appeal. As per Rule
1(3), where the appeal is against a decree for payment of money,
the appellant shall, within such time as the Appellate Court may
allow, deposit the amount disputed in the appeal or furnish such
security in respect thereof as the Court may think fit. Sub-rule (3)
of Rule 1 was inserted by Section 87 of the Code of Civil Procedure
(Amendment) Act, 1976, with effect from 01.02.1977.
10. Order XLI, Rule 5 of the Code deals with stay by
appellate court. As per Rule 5(1), an appeal shall not operate as a
stay of proceedings under a decree or order appealed from except
so far as the appellate court may order, nor shall execution of a
decree be stayed by reason only of an appeal having been
preferred from the decree; but the appellate court may for
sufficient cause order stay of execution of such decree. As per Rule
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
5(2), where an application is made for stay of execution of an
appealable decree before the expiration of the time allowed for
appealing therefrom, the court which passed the decree may on
sufficient cause being shown, order the execution to be stayed.
11. As per Order XLI, Rule 5(3) of the Code, no order for
stay of execution shall be made under sub-rule (1) or sub-rule (2)
unless the court making it is satisfied (a) that substantial loss may
result to the party applying for stay of execution unless the order
is made; (b) that the application has been made without
unreasonable delay; (c) that security has been given by the
applicant for the due performance of such decree or order as may
ultimately be binding upon him. As per Rule 5(4), subject to the
provisions of sub-rule (3), the court may make an ex parte order
for stay of execution pending the hearing of the application. As per
Rule 5(5), notwithstanding anything contained in the foregoing
sub-rules, where the appellant fails to make the deposit or furnish
the security specified in sub-rule (3) of Rule 1, the court shall not
make an order staying the execution of the decree. Sub-rule (5) of
Rule 5 was inserted by Section 87 of the Code of Civil Procedure
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
(Amendment) Act, 1976, with effect from 01.02.1977.
12. Order XLI, Rule 6 of the Code deals with security in
case of order for execution of decree appealed from. As per Rule
6(1), where an order is made for the execution of a decree from
which an appeal is pending, the court which passed the decree
shall, on sufficient cause being shown by the appellant, require
security to be taken for the restitution of any property which may
be or has been taken in execution of the decree or for the payment
of the value of such property and for the due performance of the
decree or order of the appellate court, or the appellate court may
for like cause direct the court which passed the decree to take
such security. As per Rule 6(2), where an order has been made for
the sale of immovable property in execution of a decree, and an
appeal is pending from such decree, the sale shall, on the
application of the judgment-debtor to the court which made the
order, be stayed on such terms as to giving security or otherwise
as the court thinks fit until the appeal is disposed of.
13. Order XLI, Rule 7 of the Code, prior to its repeal by
Adaptation Order, 1937, provided that no security to be required
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
from the Government or a public officer in certain cases. As per
Rule 7, no such security as is mentioned in Rules 5 and 6 shall be
required from the Secretary of State for India in Council or, where
the Government has undertaken the defence of the suit, from any
public officer sued in respect of an act alleged to be done by him in
his official capacity.
14. Though Order XLI, Rule 7 of the Code was repealed by
Adaptation Order, 1937, Order XXVII, Rule 8A, inserted by
Adaptation Order, 1937, which covers suits by or against the
Government or public officers in their official capacity, provides
that no security be required from Government or a public officer in
certain cases. As per Rule 8A, no such security as is mentioned in
Rules 5 and 6 of Order XLI shall be required from the Government
or, where the Government has undertaken the defence of the suit,
from any public officer sued in respect of an act alleged to be done
by him in his official capacity.
15. In Land Acquisition Collector v. Sita Dei and
another [AIR 2007 Orissa 152], a decision relied on by the
learned counsel for the 3rd respondent, one of the contentions
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
raised before a learned Single Judge of the Orissa High Court, by
the appellant-Land Acquisition Collector was that, in view of the
provisions under Order XXVII, Rule 8A of the Code of Civil
Procedure, the State Government cannot be asked to deposit the
decretal amount or furnish security as contemplated under Order
XLI, Rule 1(3) or Order XLI, Rule 5(5) of the Code. Per contra, the
respondent-claimant contended that, as per the provisions of
Order XLI, Rule 1(3) and Rule 5(5) of the Code the appellant shall
deposit the differential decretal amount or furnish security for such
amount in order to obtain an order of stay of the decree. Despite
the existence of Order XXVII, Rule 8A of the Code, the State has to
make the deposit, as Order XLI of the Code nowhere exempts the
State or the Development Authority from depositing the decretal
amount. Considering this aspect, the Apex Court and the High
Court have in many cases directed the appellant State to deposit
the entire or part of the decretal dues, as a condition for grant of
stay. It was also argued that the Land Acquisition Act is a special
and self-contained Act, where deposit of the awarded amount at
different stages of the proceedings is contemplated, and as such
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
the provisions of Order XXVII, Rule 8A of the Code would not be
applicable in an appeal filed under Section 54 of the said Act, as
the provisions of the Code which are inconsistent with the
provisions of the Land Acquisition Act, have been made non
applicable to Land Acquisition proceedings, including appeals. The
appellant-Land Acquisition Collector contended that the provisions
of Order XXVII, Rule 8A of the Code not being in conflict with the
provisions of the Land Acquisition Act, the same would be
applicable to Land Acquisition proceedings. Right from the
beginning, the State Government has been exempted from
demand of security or deposit in appeals as a condition for grant of
stay. Even before Order XXVII, Rule 8A of the Code came into
force, there was Order XLI, Rule 7 of the Code in this regard. This
exemption has been provided, as solvency of the State
Government cannot be doubted. In Sita Dei, in view of the rival
submissions, the following points emerged for consideration;
(i) Whether in an appeal under Section 54 of the Land
Acquisition Act, 1894, the State without deposit of the
differential decretal amount can get order of stay of the
execution proceeding?
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
(ii) Whether in view of Order XXVII, Rule Rule 8A of the Code
the appellant State is exempted from depositing the
differential decretal amount or security as envisaged under
Order XLI, Rule 1(3) and Rule 5(5) of the Code?
16. In Sita Dei, it was noticed that, Rule 1(3) and Rule
5(5) of Order XLI of the Code were introduced by the Code of Civil
Procedure (Amendment) Act, 1976. Prior to that the State
Government was exempted from being required to furnish security,
as per the provision of Order XLI, Rule 7 of the Code. This
provision was omitted and by way of amendment re-enacted as
Order XXVII, Rule 8A of the Code. Order XLI, Rule 1(3) imposes an
obligation on the appellant, who has appealed against a decree for
payment of money, either to deposit the amount in dispute in
appeal or furnish such security in respect thereof as the court may
direct. By the introduction of Order XLI, Rule 5(5) it is intended
that, where an appeal is against a decree for payment of money,
the appellant must deposit the amount in dispute in appeal or
furnish security notwithstanding anything contained in Order XLI,
Rule 5(1), 5(3) or 5(4). Order XXVII, Rule 8A of the Code however
provides an exception. It says that no such security as mentioned
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
in Order XLI, Rules 5 and 6 shall be required from the
Government. Order XLI, Rule 5(5) expressly mentions furnishing
security as specified in Rule 1(3). So Rule 5(5) mentions about the
security under Rule 5(3)(c). A conjoint reading of the above noted
provisions would show that although an appellant appealing
against a money decree is required to deposit the disputed
decretal amount or furnish security for such amount, the
Government-appellant in such situation is not liable to furnish
security in view of Order XXVII Rule 8A of the Code. Keeping this
provision in mind the Division Bench in Collector,
Cuttack v. Padma Charan Mohanty [(1980) 50 CLT 191] held
that, while granting stay in the execution case the State-appellant
is not to be called upon for furnishing security for the due
performance of the decree as may ultimately be binding upon it,
because the solvency of the State Government cannot ever be in
doubt. In State of Orissa v. Pratibha Prakash Bhawan and
others [(1990) 69 CLT 323], after analysing the provisions of
Order XLI, Rule 1(3), Order XLI, Rule 5(5) and Order XXVII, Rule
8A of the Code, the Court came to the conclusion that security as
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
contemplated under Rules 1(3) and 5(5) cannot be demanded
from the State Government, but deposit of the entire or part of
disputed decretal amount can be directed as a condition for grant
of stay of a money decree. It was observed that Order XXVII, Rule
8A of the Code exempts the State Government from furnishing
security, but does not bar the court to demand deposit of the
decretal amount as a condition for grant of stay.
17. In Sita Dei, it was noticed that, in Prativa Prakash
Bhawan learned Single Judge did not differ from the ratio laid
down by the Division Bench in Padma Charan Mohanty, but
interpreting the provisions an observation was only made that
demand for deposit of the decretal amount is not prohibited under
Order XXVII, Rule 8A of the Code. In Chief General Manager,
Telecom, Orissa v. V.N. Enterprises [(2004) 1 OLR 687] the
Division Bench directed the Central Government to deposit the
decretal amount and allowed the respondent to withdraw a part of
it without furnishing bank guarantee. The Division Bench also took
the view that Order XXVII, Rule 8A, of the Code does not prohibit
the court from insisting upon the Government or public officer to
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
deposit the entire or part of the disputed decretal amount. In
State of U.P. v. Ratan Lal [(1995) Supp.3 SCC 539], in a land
acquisition matter, the Apex Court directed the State to deposit
50% of the amount awarded by the reference court and allowed
the claimant to withdraw 50% of such amount without security and
the balance 50% on furnishing security. A close reading of the
provisions of Order XLI, Rule 1(3), Rule 5(5), Order XXVII, Rule 8
of the Code along with the case laws referred to supra make it
clear that in an appeal against a money decree the appellant-State
cannot be asked to furnish security for the disputed decretal
amount, but it can be asked to deposit of the entire disputed
decretal amount or part thereof, before grant of stay of execution
of the money decree.
18. In Sita Dei, on the applicability of Order XXVII, Rule 8A
of the Code to a Land Acquisition Appeal, it was noticed that, the
Land Acquisition Act is a self-contained Act and Section 53 of the
Act provides that the provisions of the Code of Civil Procedure shall
apply to all proceedings before the court under the Land
Acquisition Act, so far as the provisions are not inconsistent with
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
the provision of the Land Acquisition Act. So the provisions of the
Code shall apply to all proceeding under the Land Acquisition Act,
unless the provisions are inconsistent with the spirit and contents
of the Land Acquisition Act. Chapter V of the Land Acquisition Act
deals with deposit of the awarded amount, at every stage. In
Prem Nath Kapur v. National Fertilizers Corporation of India
Ltd. [(1996) 2 SCC 71], while dealing with the matter relating to
the Land Acquisition Act, the Apex Court observed in paragraph 16
of the judgment that, by operation of Section 53 of the Land
Acquisition Act, Order XXI, Rule 1 of the Code being inconsistent
with the express provisions contained in Sections 28 and 34 of the
Land Acquisition Act stands excluded. In Sita Dei, it was noticed
that, Order XXVII, Rule 8A of the Code speaks about security only.
It says that security mentioned in Rules 5 and 6 of Order XLI of
the Code cannot be demanded from the State Government but it
does not say that deposit of the decreetal amount cannot be
demanded in an appeal from a money decree. So, this provision is
not inconsistent with the provisions of the Land Acquisition Act.
Whenever any provision of the Code is inconsistent with the
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
express provision of the Land Acquisition Act, in view of the bar
provided in Section 53 of the Act, the specific provision contained
in the Land Acquisition Act would prevail. In Gurpreet
Singh v. Union of India [(2006) 8 SCC 457] the Apex Court
observed that the Land Acquisition Act does not contemplate
anything about security but contemplates deposit of the award in
court at every stage of the proceeding, under Sections 28, 31, 34
of the said Act.
19. In Sita Dei it was noticed that, in majority of cases
compensation for the acquired land is not paid promptly and the
land owners have to wait for decades to get their actual dues
which they are entitled to be paid. In their anxiety to gear up the
process of payment of compensation, the Land Acquisition Act was
drastically amended raising solatium from 15% to 30%, interest
from 6% to 9% for the first year of the Government taking over
possession and 15% for subsequent years till payment or deposit
is made. So, the legislative intent can be achieved if the
compensation amount is deposited in the court so that the same
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
can be disbursed soon after the termination of the Land Acquisition
proceeding, without leaving the landowner to lengthy process of
execution proceedings. On many occasion the Apex Court and the
High Courts have issued direction to the State Government to
deposit the awarded amount or part thereof and have allowed the
claimant to lake that amount on furnishing security or guarantee.
In Sita Dei, it was concluded that, the bar provided under Order
XXVII, Rule 8A of the Code about demand of security from the
State Government not being inconsistent with the provision of the
Land Acquisition Act, would hold the field. But there being no
specific bar in the said provision about deposit of the awarded
amount and the spirit of the amended Land Acquisition Act being
for ensuring prompt payment of compensation to the land owners,
the State Government can be directed to deposit the differential
award amount as a condition for grant of stay of any execution
proceeding.
20. In Union of India v. Amitava Paul [AIR 2015
Calcutta 89], another decision relied on by the learned counsel
for the 3rd respondent, a Full Bench of the Calcutta High Court held
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
that, compliance of the direction of court under Order XLI, Rule
1(3) of the Code for making deposit or furnishing security by the
appellant of the disputed decretal amount is a condition precedent
for grant of stay of execution of a money decree. In the event of
non-compliance of such direction, the court shall have not
jurisdiction to grant an order of stay in view of Order XLI, Rule
5(5) of the Code. However, when the appellant is the Government
such jurisdictional embargo imposed by Order XLI, Rule 5(5) is
obviated by the operation of Order XXVII, Rule 8A of the Code,
which exempts the Government from furnishing security as
mentioned in Order XLI, Rule 5 and 6 of the Code. Hence, where
the Government is the appellant the court shall have jurisdiction to
entertain and grant an order of stay of execution of a money
decree without insisting on furnishing of security under Order XLI,
Rule 1(3) of the Code, provided the court is satisfied as to the
existence of conditions engrafted in sub-clause (a) and (b) of Rule
5(3) of Order XLI. On the question whether operation of Order
XXVII, Rule 8A of the Code absolutely bars the discretion of the
appellate court to direct the appellant-Government to deposit
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
whole or part of the disputed decretal amount as a condition for
grant of stay of execution of a money decree, the Full Bench
noticed that, Order XXVII, Rule 8A of the Code was engrafted to
exempt the Government to furnish security as a guarantee for due
performance of a decree as mentioned in Rule 5 and 6 of Order
XLI. Notwithstanding such exemption, discretionary power of the
court to grant stay of execution of a decree can be exercised in
favour of the appellant Government only if it satisfies the court as
to the existence of clauses (a) and (b) of Rule 5(3) of Order XLI.
As 'substantial loss' to the appellant is a condition precedent to
grant stay, execution of a money decree is ordinarily not stayed
since satisfaction of a money decree does not amount to
irreparable injury to the appellant, as the remedy of restitution is
available to him in the event the appeal is allowed, as held by the
Apex Court in Sihor Nagar Palika Bureau v. Bhabhlubhai
Virabhai [(2005) 4 SCC 1]. Under such circumstances, when the
court chooses to exercise its discretion in favour of the appellant-
State to grant stay of execution of a money decree it must balance
the equities between the parties and ensure that no undue
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
hardship is caused to a decree holder due to stay of execution of
such decree. Hence, in appropriate cases, the court in its discretion
may direct deposit of a part of the decretal sum so that the decree
holder may withdraw the same without prejudice and subject to
the result of the appeal. Such direction for deposit of the decretal
sum is not for the purpose of furnishing security for due
performance of the decree but an equitable measure ensuring part
satisfaction of the decree without prejudice to the parties and
subject to the result of the appeal as a condition for stay of
execution of the decree. To hold that the court is denuded of such
equitable discretion while granting stay of execution of a money
decree in favour of the Government, would cause grave hardship
to deserving decree holders, who in the facts of a given case may
be entitled to enjoy part satisfaction of the decree without
prejudice and subject to the result of the appeal, as a condition for
stay of execution of the entire decree. Hence, the Full Bench
opined that, although Order XXVII, Rule 8A of the Code may
exempt the appellant Government from the mandatory obligation
of furnishing security in terms of Order XLI, Rule 1(3) of the Code
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
for seeking stay of execution of a money decree, as provided
under Order XLI, Rule 5(5), the said provision cannot be said to
operate as an absolute clog on the discretion of the court to direct
the deposit of the decretal amount as a condition for grant of stay
of execution of the decree, in appropriate cases, more particularly
when such direction is coupled with the liberty to the decree holder
to withdraw a portion thereof in part satisfaction of the decree,
without prejudice and subject to the result of the appeal. The Full
Bench held that, Order XXVII, Rule 8A of the Code does not
exempt the appellant Government from satisfying the court as to
the existence of conditions (a) and (b) of Rule 5(3) of Order XLI, in
order to obtain stay of execution of the decree appealed against.
21. In Pam Developments Pvt. Ltd. v. State of West
Bengal [(2019) 8 SCC 112] the Apex Court approved the law
laid down by the Full Bench of the Calcutta High Court in Amitava
Paul [AIR 2015 Calcutta 89]. The Apex Court noticed that, a
plain reading of Order XXVII, Rule 8A of the Code would make it
clear that the same is only regarding security as mentioned in
Rules 5 and 6 of Order XLI, which is not to be demanded from the
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
Government while considering the stay application filed by the
Government. It, however, does not provide that the decretal
amount cannot be required to be deposited in the appeal against a
money decree. When Order XXVII, Rule 8A of the Code was
incorporated in the year 1937, Rule 5 of Order XLI had only four
sub-rules. Rule 5(5) of Order XLI was inserted by the Code of Civil
Procedure (Amendment) Act, 1976, with effect from 01.02.1977.
Prior to that, it was Rule 5(3)(c) which provided that no order for
stay of execution was to be made unless the court was satisfied
that security had been given by the applicant for performance of
the decree. It was in such context, when only security had to be
given at the time of grant of stay, that Rule 8A of Order XXVII was
incorporated to give certain protection to the Government by
providing for no requirement of security from the Government. It
was probably for the reason that the Government is always
considered to be solvent, thus was exempted from providing
security under Order XXVII, Rule 8A of the Code. However, in the
year 1976 sub-rule (5) to Rule 5 of Order XLI was inserted, which
provides that, notwithstanding anything contained in the foregoing
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
sub-rules, where the appellant fails to make the deposit or furnish
the security specified in sub-rule (3) of Rule 1, the court shall not
make an order staying the execution of the decree. The same
provides for making of deposit or furnishing security by the
decree-holder seeking stay. It would thus mean that after 1977,
the appellate court had the power to direct for deposit of the
decretal amount, which was earlier limited only to furnishing of
security under sub-rule (3) of Rule 5 of Order XLI of the Code.
After insertion of sub-rule (5), there was no amendment to Order
XXVII, Rule 8A of the Code to exempt the State Government for
making such deposit, which would mean that Rule 8A does not
exempt the Government from making deposit, which the court has
the power to direct under Order XLI, Rule 5(5) of the Code.
22. In view of the law laid down in the decisions referred to
supra, conclusion is irresistible that, though Order XXVII Rule 8A of
the Code exempt the appellant-State from the mandatory
obligation to furnish security in terms of order XLI Rule 1(3) of the
Code, seeking stay of execution of the judgment of the reference
court awarding enhanced compensation to the claimant, in a
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
reference under Section 18 of the Land Acquisition Act, in order to
seek stay of execution in an appeal filed under Section 54 of the
Act, the appellant-State has to satisfy the Court as to the existence
of the conditions enumerated in Rule 5(3) of Order XLI of the
Code.
23. In Atma Ram Properties (P) Ltd. v. Federal Motors
(P) Ltd. [(2005) 1 SCC 705] the Apex Court held that, mere
preferring of an appeal does not operate as stay on the decree or
order appealed against nor on the proceedings in the court below.
A prayer for the grant of stay of proceedings or on the execution of
decree or order appealed against has to be specifically made to the
appellate court and the appellate court has discretion to grant an
order of stay or to refuse the same. The only guiding factor
indicated in Order XLI, Rule 5 of the Code is the existence of
sufficient cause in favour of the appellant on the availability of
which the appellate court would be inclined to pass an order of
stay. While passing an order of stay under Order XLI, Rule 5 of the
Code, the appellate court does have jurisdiction to put the
applicant on such reasonable terms as would in its opinion
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
reasonably compensate the decree holder for loss occasioned by
delay in execution of decree, by the grant of stay order, in the
event of the appeal being dismissed and insofar as those
proceedings are concerned. Such terms, needless to say, shall be
reasonable.
24. In Anderson Wright and Co. v. Amar Nath Roy
[(2005) 6 SCC 489] the Apex Court reiterated that, as held
in Atma Ram Properties (P) Ltd. [(2005) 1 SCC 705], once a
decree has been passed, in the event of execution of decree being
stayed, the appellants can be put on such reasonable terms, as
would in the opinion of the appellate court reasonably compensate
the decree holder for loss occasioned by delay in execution of the
decree by the grant of stay in the event of the appeal being
dismissed.
25. In Malwa Strips Private Ltd. v. Jyothi Ltd. [(2009)
2 SCC 426] the Apex Court noticed that, Order XLI, Rule 1(3) of
the Code provides that, in an appeal against a decree for payment
of amount the appellant shall, within the time permitted by the
appellate court, deposit the amount disputed in the appeal or
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
furnish such security in respect thereof as the court may think fit.
The appellate court, indisputably, has the discretion to direct
deposit of such amount, as it may think fit, although the decretal
amount has not been deposited in its entirety by the judgment
debtor, at the time of filing of the appeal. But while granting stay
of the execution of the decree, it must take into consideration the
facts and circumstances of the case before it. It is not to act
arbitrarily either way. If a stay is granted, sufficient cause must be
shown, which means that the materials on record were required to
be perused and reasons are to be assigned. Such reasons should
be cogent and adequate. An exceptional case has to be made out
for stay of execution of a money decree. On the facts of the case
on hand, the Apex Court noticed that, the High Court has not said
that any exceptional case has been made out. It did not arrive at
the conclusion that it would cause undue hardship to the
respondent if the ordinary rule to direct payment of the decretal
amount or a part of it and/or directly through the judgment debtor
to secure the payment of the decretal amount is granted. The Apex
Court held that, a strong case should be made out for passing an
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
order of stay of execution of the decree in its entirety.
26. In view of the law laid down in the decisions referred to
supra, while passing an order of stay under Order XLI Rule 5 of the
Code, in an appeal filed by the State under Section 54 of the Act,
challenging the enhancement of compensation awarded by the
reference court, this Court has jurisdiction to put the appellant-
State on such reasonable terms as would be reasonably
compensate the decree holder for loss occasioned by the delay in
execution of the decree. Any such condition imposed by the Court
under Order XLI Rule 5 of the Code shall be reasonable. A strong
case should be made out for passing an order of stay of execution
of the decree in its entirety. Merely for the reason that, dissatisfied
with the compensation awarded by the reference court, the
claimant filed another appeal under Section 54 of the Act seeking
further enhancement of the compensation, it cannot be contended
that, in the appeal filed by the State the appellate court can direct
the State to deposit, under Order XLI, Rule 5(3) and Rule 5(5) of
the Code, whole of the amount of compensation awarded by the
reference court.
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
27. In Viluben Jhalejar Contractor v. State of Gujarat
[(2005) 4 SCC 789] the Apex Court held that, Section 23 of the
Land Acquisition Act, 1894 specifies the matters required to be
considered in determining the compensation; the principal among
which is the determination of the market value of the land on the
date of the publication of the notification under Section 4(1) of the
Act. One of the principles for determination of the amount of
compensation for acquisition of land would be the willingness of an
informed buyer to offer the price therefor. It is beyond any cavil
that the price of the land which a willing and informed buyer would
offer would be different in the cases where the owner is in
possession and enjoyment of the property and in the cases where
he is not. Market value is ordinarily the price the property may
fetch in the open market if sold by a willing seller unaffected by
the special needs of a particular purchase. Where definite material
is not forthcoming either in the shape of sale of similar lands in the
neighbourhood at or about the date of notification under Section
4(1) or otherwise, other sale instances as well as other evidences
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
have to be considered. The amount of compensation cannot be
ascertained with mathematical accuracy. A comparable instance
has to be identified having regard to the proximity from time angle
as well as proximity from situation angle. For determining the
market value of the land under acquisition, suitable adjustment
has to be made having regard to various positive and negative
factors vis-à-vis the land under acquisition by placing the two in
juxtaposition. The purpose for which acquisition is made is also a
relevant factor for determining the market value.
28. The question as to whether the enhanced compensation
awarded by the reference court in L.A.R.No.73 of 2002 would met
the requirement of Section 23 of the Land Acquisition Act is an
issue that requires detailed consideration in this appeal filed by the
State under Section 54 of the Act. Pending consideration of that
appeal, the appellant-State is entitled for an order of stay of
execution of the judgment and decree of the reference court, on
terms. For passing an order of stay of execution of the decree in its
entirety a strong case should be made out by the appellant.
29. Having considered the arguments of the learned Special
I.A. No.2 of 2021 in
L.A.A.No.23 of 2021
Government Pleader, the learned counsel for the claimant and also
the learned Standing Counsel for KINFRA, referred to hereinbefore
at paragraphs 5 to 7, in the light of the law laid down in the
decisions referred to supra, we find that the appellant-State is
entitled for an order of stay of operation and execution of the
judgment and decree dated 19.06.2019 of the Sub Court, Sulthan
Bathery, in L.A.R.No.73 of 2002, on deposit of 50% of the
enhanced compensation awarded by the reference court, together
with proportionate interest and cost, within a period of three
months from this date. On such deposit being made, the reference
court shall permit withdrawal of that amount, in terms of the
judgment and decree in L.A.R.No.73 of 2002.
Sd/-
ANIL K. NARENDRAN, JUDGE
Sd/-
K. BABU, JUDGE
bkn
05-11-2021 /True Copy/ Assistant Registrar
