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Wednesday, September 4, 2013

suit for specific performance of compromise order = compromise was arrived at, whereby, the respondent No.2 agreed to re-convey the land to the extent of 1.16 acres to the appellant. This was on the condition that the respondent No.2 would use the remaining 1 acre land for building the administrative block. The appellant was also required to use the re-conveyed parcel of land for industrial purposes. = Thus, there was no breach of the compromise on the part of the Government which would necessitate her to file a suit for specific performance. Once it is held that the Government retracted its steps well in time, there could not be any decree of specific performance based on the alleged breach of the compromise. ; non-issue of the notice under Section 80 could not be permitted to be raised for the first time in the second appeal, when this contention was not raised seriously at any stage earlier.

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                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.1361 OF 2006

Tarabai (Dead) Through L.Rs.                       … Appellant (s)


Govt. of Karnataka & Ors.                                … Respondent (s)


                      CIVIL APPEAL NO.3789-3791 OF 2007

                             J U D G  E M E N T

H.L. Gokhale J.

            These appeals are filed  to  challenge  a  common  judgment  and
order dated 30.9.2005 passed by a learned Single  Judge  of  Karnataka  High
Court in Regular Second Appeal No.137/2001 and RSA  No.215/2001.   Both  the
appeals, which were decided by the learned  Single  Judge,  were  concerning
the land which was owned by the appellant Tarabai (now deceased) along  with
her family members.
The land consisted of  2  acres  16  guntas  in  Survey
No.16/1A and 1B in Jangamarakoppa Village in District Hubli.
The  Assistant
Commissioner, Dharwad had initiated acquisition  proceedings  for  acquiring
the said land by publishing a notification under the Land  Acquisition  Act,
1894, for the purposes of constructing an administrative  building  for  the
benefit of the Small Scale Industries Development  Corporation.  
The  Chief
Manager, Industrial State Zone-2, Hubli, of this corporation  is  respondent
no.2 in these appeals.
2.          Initially the acquisition proceedings  were  challenged  by  the
above referred appellant by filing a Writ  Petition  bearing  No.   366/1969
before the Karnataka High Court, but during the pendency of the  petition  a
compromise was arrived at, 
whereby, the respondent No.2 agreed to  re-convey
the land to the extent of 1.16 acres to the  appellant.   
This  was  on  the
condition that the respondent No.2 would use the remaining 1 acre  land  for building the administrative block.  
The appellant was also required  to  use
the re-conveyed parcel of land for industrial purposes.  
The compromise  was
taken on record and the said Writ Petition  was  disposed  of  by  the  High Court by its order dated 11.12.1970.
3.          The appellant received the compensation for the 1 acre of  land,
and a deed of reconveyance was executed on 25.8.1971  with  respect  to  the
remaining  parcel  of  land.  
It,   however,   so   transpired   that   the
administrative block was not constructed immediately. 
 On  the  other  hand, the said parcel of land was allotted to one M/s Basanth Tiles (appellant  in RSA No.137/2001). 
 On coming to know about this development,  the  appellant
filed  Original  Suit  No.519/1984  on  8.10.1984  in  the  Court  of  First
Additional Munsiff at Hubli.
The appellant contended  that  the  respondent
No.2 had acted in contravention of the  compromise,  and  the  allotment  of
land in favour of M/s Basanth Tiles was illegal.
The  appellant,  therefore,
sought specific performance of the compromise, and return of the  said  land
of 1 acre.
It was, however, pointed out by  Deputy  Commissioner,  Dharwad,
respondent No.3 herein (defendant No.3 in the suit) that  the  allotment  in
favour of M/s Basanth Tiles was in fact a mistake, and they had taken  steps
to withdraw the same on 16.8.1984 i.e. well before the filing of  the  suit.
M/s Basanth Tiles who were defendant No.4 in the  said  suit  contested  the
same by contending that they were bona-fide purchasers of  the  said  parcel
of land, and had carried out certain  developments  on  the  land.  
 It  was
claimed that they had constructed a bore well and  a  compound  wall  around
the property.
4.          The Trial Court framed various  issues,  recorded  the  evidence
thereon, and examined the relevant documents,  particularly  the  compromise
memo arrived at between the parties, and dismissed the suit by its  judgment
and order dated 22.2.1992.
(i)    The Trial Court held that the Government had  become  absolute  owner
in view of the  compulsory  acquisition  of  the  property,  and  since  the
respondent No.2 had not obtained the sanction of  the  State  Government  to
enter into the compromise, the memo of compromise had no  legal  force.   It
was further held that the respondent No.2 could not have withdrawn the  land
from acquisition.  The Trial Court, therefore, held that the  appellant  had
failed to establish the necessary ingredients to get a  decree  of  specific
(ii)  It was also held by the  Trial  Court  that  since  the  notice  under
Section 80 of C.P.C. was sent on 31.10.1978, and since it was replied to  on
12.3.1979, the suit which was filed on  8.10.1984  was  clearly  beyond  the
period of limitation.  Thus on both these counts the Trial  Court  dismissed
the suit.
5.          The appellant filed a Regular Appeal bearing no.56/1992  against
this judgment in the Court of Additional Civil Judge (Sr. Division),  Hubli.

(i)    The Appellate Court reversed the findings of the  Trial  Court.   The
First Appellate Court held that the respondent  No.2  had  admitted  in  the
written statement that the compromise was legal, and had  been  acted  upon,
and therefore it  could  not  be  contended  that  the  compromise  was  not
enforceable.  In para 20 of the judgment it was also  observed  that  though
the Government of Karnataka was not a signatory to the  compromise,  it  had
not opposed it, and its consent could always be  deemed  and  inferred  from
its conduct.  The Appellate Court also  did  not  accept  the  plea  of  the
respondent No.2 that the plot was kept for  constructing  an  administrative
building. If that was so, it would not have been  allotted  to  M/s  Basanth
Tiles.  The Court,  therefore,  held  that  the  respondents  had  acted  in
contravention of the compromise and, therefore, the appellant  was  entitled
to enforce the same.
(ii)  As far as limitation is concerned,  the  First  Appellate  Court  held
that the limitation will have to be calculated from the  date  of  allotment
of said land to M/s Basanth Tiles which was  30.5.1984,  and  therefore  the
filing of the suit on 8.10.1984  was  within  limitation.    (iii)       The
First Appellate Court, however,  accepted  the  contention  of  M/s  Basanth
Tiles that it had effected improvement on the land and, therefore,  directed
the appellant to pay an amount of Rs.1,50,000/- to them  to  get  possession
of the suit land.  The Court also  directed  the  appellant  to  refund  the
amount of compensation to respondents No.1 to 3  which  the  appellants  had
received.  On these terms, the First Appellate Court directed  the  land  to
be re-conveyed to the appellants.
(iv)  The Court held that the appellants were always ready  and  willing  to
perform their part of the contract but there was a breach  on  the  part  of
respondent No.2 and, therefore, the decree had to  be  passed.   The  appeal
was therefore allowed by  its  judgment  and  order  dated  30.10.2000,  and
thereby the suit filed by the appellant was decreed.
6.          The Government of Karnataka  carried  the  matter  to  the  High
Court in Regular Second Appeal No. 215/2001,  and  M/s  Basanth  Tiles  also
filed RSA No.137/2001.  Both these appeals  were  heard  and  decided  by  a
Single Judge of the Karnataka High Court together.  The  questions  of  law,
though not very precisely spelt out, but considered by  the  High  Court  in
its judgment were as follows:-
            “(i)  Whether the First Appellate Court is justified in  law  in
      granting  a  decree  for  reconveyance  in  the  absence  of  any  de-
      notification made by the State Govt. under  Section  48  of  the  Land
      Acquisition Act ?

            (ii)  Whether in the facts and circumstances of  the  case,  the
      respondent No.6 being a bonafide purchaser and  when  the  petitioners
      were  entitled  only  for  damages,  was  the  First  Appellate  Court
      justified in decreeing the suit for reconveyance ?

            (iii) Whether the suit was barred by limitation?

            (iv)  Whether there is any mandatory compliance  of  Section  80
      C.P.C, prior to the institution of suit?

            (v)   Whether the compromise memo, alleged to  have  been  filed
      before the Court in Writ Petition No.366/1969 is not  binding  on  the
      respondent – Govt. since it had not signed the compromise memo?”

 7.         The High Court answered the above questions as follows:-
           “(i)  That the lower Appellate Court had committed an  error  in
      granting a decree for reconveyance although  there  was  no  cause  of
      action for the plaintiff to move to the Civil Court to seek  an  order
      of reconveyance. This was  because  the  respondent  authorities  took
      steps to revoke the allotment made in favour  of  Basanth  Tiles,  and
      proceeded to act in terms of the compromise well before the  suit  was
      filed. Besides there was no  notification  withdrawing  the  concerned
      land from the acquisition under Section 48  of  the  Land  Acquisition
      Act. The first question of law was therefore held  in  favour  of  the

           (ii) Neither was the plaintiff entitled to reconveyance, nor was
      M/s Basanth Tiles entitled to retain possession of the suit  property,
      having  regard  to  the  stand  of  the  Government   and   also   the
      circumstances in which the allotment was made in their favour. As  far
      as the claim of M/s Basanth Tiles for the improvements was  concerned,
      the High Court found that the suit had been  filed  immediately  after
      coming to know about the allegedly illegal allotment made in favour of
      M/s Basant Tiles.   Therefore,  the  improvements  if  any,  would  be
      minimal, and if any improvement had been so made after filing  of  the
      suit, those would be at the risk  of  M/s  Basanth  Tiles.   The  High
      Court, therefore, rejected the contention of M/s Basanth Tiles for any

           (iii) On the issue of limitation, the High Court held in  favour
      of the appellant that the real starting point of  the  limitation  was
      the date of the alleged breach by respondent Nos. 1  to  3  when  they
      allotted the suit land to M/s Basanth Tiles on  30.5.1984.   The  suit
      was therefore held to be within limitation.

           (iv)  The High Court held that the issue of a  mandatory  notice
      under Section 80 C.P.C. was not seriously contested by the respondents
      at the appropriate stage, and in fact there was  a  notice  issued  as
      early as in 1978,  calling  upon  the  respondents  to  re-convey  the
      property in terms of the compromise. The conduct  of  the  respondents
      throughout showed that the suit had not been seriously objected to  or
      contested on this point. Under such circumstances the contention could
      not be permitted to be raised for the first time in the Second appeal.
       The issue was therefore decided in favour of the appellants.

           (v)   It could not be said  that  the  compromise  entered  into
      between the parties was not binding on the Government.   However,  the
      requirement of the third defendant/respondent was shown  to  be  still
      surviving, and the allotment of land to M/s  Basanth  Tiles  was  made
      erroneously, and steps were taken for canceling  this  allotment  even
      before filing of the suit.  Besides there was no time  limit  provided
      for constructing the administrative building. Such being the case, the
      petitioner-plaintiff had no cause of action.”

8.          For the aforesaid reasons the High Court allowed the  appeal  in
RSA No. 215 of 2001 filed by the Government, and dismissed RSA  No.  137  of
2001 filed by M/s Basanth Tiles.  No order was made with  respect  to  cost.
The  High  Court  held  that  the  Government  was  entitled  to  take  back
possession of the said land from M/s  Basanth  Tiles.   Being  aggrieved  by
this judgment and order the Civil Appeal No. 1361 of 2006 has been filed  by
Tarabai (Dead) through her L.Rs., and Civil Appeal No. 3789-3791 of 2007  is
filed by M/s Basanth Tiles.
9.          As far as the Civil Appeal No.1361 of 2006 preferred  on  behalf
of Tarabai by her L.Rs. is concerned, these  appellants  can  not  have  any
grievance with respect to the finding of the High Court that the suit  filed
by her was within limitation. The High Court has  rendered  a  finding  that
the contention with respect to the alleged non-issue  of  the  notice  under
Section 80 could not be permitted to be raised for the  first  time  in  the
second appeal, when this contention was not raised seriously  at  any  stage
earlier. These appellants can certainly not have any objection with  respect
thereto.  In fact a finding was rendered in their favour by the  High  Court
that there was a notice issued as early as in 1978 for seeking  reconveyance
of the property in terms of the compromise concerned.
10.         The main grievance which Tarabai  through  her  L.Rs  have  with
respect to the High Court judgment is concerning the finding that there  was
no cause of action for Tarabai to move the Civil Court to seek an  order  of
reconveyance.  This observation of the High Court was based on a finding  of
fact that the Government had moved to  revoke  the  allotment  made  to  M/s
Basanth Tiles even before the filing of the suit by Tarabai.   In  fact  the
Trial Court had held that the Government and its officers had not  acted  in
contravention of the compromise.  
Therefore, there was  no  reason  for  the
First Appellate Court to reverse this finding of fact which is based on  the material on record. 
Thus, there was no breach of the compromise on the  part
of the Government which would necessitate her to file a  suit  for  specific performance.    
Once it is held that  the  Government  retracted  its  steps
well in time, there could not be any decree of  specific  performance  based on the alleged breach of the compromise.  The finding of the High  Court  in
this  behalf,  therefore,  cannot  be  disturbed  at  the  instance  of  the
11.         Similarly, it cannot be disputed that there was no  notification
issued for withdrawing the land from acquisition as required  under  Section
48 of the Land Acquisition Act.  
The concerned parcel  of  land,  therefore,
continued to remain with the Government.  
There  was  undoubtedly  delay  on
the part of the Government in taking steps which it was  expected  to  take,
namely, to construct the administrative building, but that by itself  cannot
be a ground for decree  of  specific  performance.   
In  the  circumstances,
there is no substance in the appeal filed by Tarabai through her L.Rs.
12.   (i)   As far as the appeal filed by M/s Basanth  Tiles  is  concerned,
they cannot be unhappy with respect to the dismissal of the  suit  filed  by
Their only grievance can be with respect to  the  observations  of
the High Court that Government can recover the land from M/s  Basant  Tiles.
It is submitted on their behalf that these observations could  not  be  made
in a suit filed by Tarabai against the Government. 
Here we  must  note  that
the sole reason for Tarabai to file her suit was this very  allotment.  
the  Government  specifically  contended  and  established  that  steps  for
cancellation of the allotment were initiated before filing of the suit,  the
suit had to fail. 
It was accepted by the Government that there was an  error
in allotting the land to M/s Basanth Tiles.  The claim of M/s Basanth  Tiles
could only be through the Government.  
If there was an error on the part  of
Government in making the allotment, the Government could  certainly  retract
its steps, cancel the allotment and proceed to  recover  the  land,  by  due
M/s Basanth  Tiles  has  not  raised  any  plea  such  as  that  of
promissory  estoppel  against  the  Government  to  claim  any  right.   
observations made by the High Court are to be seen in this context.
(ii)  M/s Basanth Tiles were essentially  aggrieved  by  these  observations
and not so much  with  respect  to  the  observations  that  they  were  not
entitled to any damages.  
The High Court has explained as  to  why  no  such
claim for damages could be made against the Government in the present  suit.

13.         Although various authorities were cited on behalf  of  both  the
appellants on certain peripheral issues, inasmuch as  the  principal  issues
involved in the matter were as  discussed  earlier  hereinabove,  and  since
there was no effective challenge on those aspects, it is not  necessary  for
us to go into those submissions.  
We  may,  however,  add  that  though  the
impugned decision arrived at by the learned Judge is a correct one, we  wish
that he would have been more careful in the manner in which the judgment  is
14.         Both the appeals are, therefore, dismissed, though  without  any
order as to costs.

                                  [ H.L. Gokhale ]

                                     [ Ranjana Prakash Desai ]

New Delhi
Dated : September 3, 2013

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