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2013 Supreme(SC) 1163

SUPREME COURT OF INDIA
G.S. Singhvi and V. Gopala Gowda, JJ.
Daulat Sitaram Kodone and Ors. – Appellant
Vs.
State of Maharashtra and Ors. – Respondents
C.A. No. 6361 of 2013 (Arising out of SLP (C) No. 31367 of 2011)
Decided On: 06.08.2013

Headnote:

Maharashtra Project Affected Persons Rehabilitation Act, 1999 - Contract Act - Section 23 – Infrastructure law - Irrigation Development Corporation - Project - Plots of land – Construction - Compensation of Rs. 50,000 - In furtherance of aforesaid resolution, Appellants surrendered plots and they were given compensation of Rs. 50,000/- by executing separate agreements - After two years and a half, Governing Council of Corporation decided that project affected persons of Village Sawargaon would be paid a total sum of Rs. 1,006.55 lakhs towards compensation - Appellants represented for payment of higher compensation on ground that 272 project affected persons were paid compensation at rate of Rs. 3,70,055/-. representations of Appellants were rejected by competent authority and writ petition filed by them was dismissed by Division Bench of High Court by recording - Held, In Central Inland Water Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr., AIR 1986 SC 1571 a two-Judge Bench invoked theory of unconscionable contract and contract opposed to public policy and struck down rule which empowered employer to terminate services of even a permanent employee without holding any inquiry or giving action-oriented notice by equating same with Henry VIII Clause - High Court was not right in refusing to direct Corporation and other official Respondents to pay compensation to Appellants at par with other landowners and Division Bench of High Court committed serious error by dismissing writ petition - Impugned order is set aside and it is declared that Appellants are entitled to compensation at rate of Rs. 3,70,055/-, as was done in cases of other project affected persons - Appeal is allowed.

Judgement Key Points

Key Points: - The Appellants surrendered plots and accepted Rs. 50,000/- compensation based on a 2006 resolution but later sought higher compensation after other villagers received Rs. 3,70,055/- (!) (!) (!) . - The High Court dismissed the writ petition, ruling that the Appellants were disentitled to further claims because they had entered into a binding agreement and belonged to a different class than those who did not (!) . - The Supreme Court held the agreements were unreasonable, unconstitutional, and violative of Section 23 of the Contract Act as they were opposed to public policy (!) . - Citing Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, the Court struck down the refusal to ensure parity, declaring the High Court's decision a serious error (!) (!) . - The appeal was allowed, the impugned order was set aside, and the Appellants were declared entitled to compensation at the rate of Rs. 3,70,055/- (!) . - The official Respondents were directed to pay the balance compensation amount within three months (!) .

What are the rights of project affected persons who entered into agreements for lower compensation to claim parity with similarly situated persons receiving higher compensation later?

What is the validity of contracts that are opposed to public policy or violate Section 23 of the Contract Act, 1872?

How to determine if a High Court's refusal to direct compensation parity constitutes a serious error when other similarly situated persons receive higher compensation?


JUDGMENT :

1. Leave granted. Till March, 1997 the Appellants were residents of Village Sawargaon, Taluka Pauni, District Bhandara, Maharashtra. Their land got submerged in Gosikhurd irrigation project. They were declared as project affected persons under the Maharashtra Project Affected Persons Rehabilitation Act, 1999 (for short, 'the Act') and were allotted residential plots in Village Pagora. However, due to lack of basic amenities in the area they could not construct the houses.

2. In the 29th meeting of the Governing Council of Vidarbha Irrigation Development Corporation, Nagpur (for short, 'the Corporation') held on 13.12.2006 it was resolved that the project affected persons who do not want plots of land may be given a compensation of Rs. 50,000/-.

3. In furtherance of the aforesaid resolution, the Appellants surrendered the plots and they were given compensation of Rs. 50,000/- by executing separate agreements.

4. After two years and a half, the Governing Council of the Corporation decided that the project affected persons of Village Sawargaon would be paid a total sum of Rs. 1,006.55 lakhs towards compensation. The Appellants represented for payment of higher compensation on the ground that 272 project affected persons were paid compensation at the rate of Rs. 3,70,055/-. The representations of the Appellants were rejected by the competent authority and the writ petition filed by them was dismissed by the Division Bench of the High Court by recording the following observations:

The case of the Petitioners is that now the other villagers of village Sawargaon are now receiving higher compensation/amount than what was paid to the Petitioners in the year 2006-2007 and hence their names should again be included in the list of project affected persons and they also are entitled to higher compensation. In this background the Petitioners seek the aforesaid reliefs. We do not find any legal right in the Petitioner to claim the relief sought by this petition. In pursuance of the decision/resolution of the State Government dated 13.12.2006 the Petitioners entered into an agreement with the State Government and accepted the amount of Rs. 50,000/- from the State of Maharashtra and gave up their right in the plots allotted to them entered into between the parties, it is clear that the Petitioners have agreed that they would not make any further claim after accepting a sum of Rs. 50,000/- from the State. In such circumstances, merely because the other villagers from village Sawargaon are receiving higher sum after lapse of a period of four years the Petitioners cannot seek to include their names in the list of project affected persons once again and to claim higher compensation on the ground that higher compensation is now being paid to the other villagers who had not entered into any agreement with the State of Maharashtra. The case of the Petitioners and the other villagers of village Sawargaon fall in two different classes. The Petitioners having accepted the amount of Rs. 50,000/- in pursuance of the government resolution of the year 2006 are now disentitled from claiming higher compensation on the ground the other villagers of Sawargaon are receiving higher compensation as they had not entered into an agreement with the State Government at the relevant time.

5. Although the Appellants and the Respondents have not given the total area of the land acquired for implementation of the project, there is no substantive dispute between the parties that other similarly situated persons were paid higher compensation instead of residential plots.

6. Mrs. Madhavi Diwan Learned Counsel representing Respondent Nos. 1, 2 and 3 relied upon the agreement executed by the Appellants and argued that they cannot seek higher compensation after more than three years of the allotment of plots and the mere fact that higher compensation was paid to other landowners cannot entitle them to seek mandamus for grant of similar relief. She further argued that


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