Trilok Sudhirbhai Pandya vs Union Of India & Ors

Trilok Sudhirbhai Pandya ...... Appellant

Versus

Union of India & Ors. ...... Respondents

WITH

CIVIL APPEAL NO. 8630 OF 2011

(Arising out of SLP (C) No. 17021 OF 2008)

Nilkanth Sudhirbhai Pandya ...... Appellant

Versus

Union of India & Ors. ...... Respondents

AND

CIVIL APPEAL NO. 8631 OF 2011

(Arising out of SLP (C) No. 29771 OF 2009)

Laljibhai Kadvabhai Savaliya & Ors. ...... Appellants

Versus

Gas Transportation and Infrastructure

Co. Ltd. & Ors. ...... Respondents

2

JUDGMENT

A. K. PATNAIK, J.

Civil Appeals arising out of SLP (C) Nos.17022 of 2008 and

17021 of 2008:

Leave granted.

2. These are appeals against the common order dated

06.12.2007 of the Division Bench of the High Court of

Gujarat in Special Civil Application Nos.9015 of 2007

and 9016 of 2007.

3. The facts very briefly are that the Government of Gujarat

by its letter dated 31.01.2006 requested the Government

of India for approval of the nomination of persons to be

appointed as Competent Authority for acquisition of right

of user under the Petroleum and Minerals, Pipelines

(Acquisition of Right of User in Land) Act, 1962 (for short

`the Act') and one of the persons was Shri V.I. Gohil,

Retired Deputy Collector. In the letter dated 31.01.2006

of the Government of Gujarat making the aforesaid

request to the Government of India, it was stated that the

3

expenses of pay and allowances and any other

incidentals of the officials shall be borne by the

respondent no.4-company from the date of their joining

in the respondent no.4-company. The Government of

India approved the appointment of Shri V.I. Gohil and

issued a notification under Section 2(a) of the Act

authorizing Shri V.I. Gohil to act as the Competent

Authority under the Act for laying of the pipelines by

respondent no.4 for transportation of natural gas in the

State of Gujarat from the LNG terminals at Jamnagar

and Hazira in Gujarat for distribution to various

consumers located in the State of Gujarat and in the

adjoining States of Rajasthan and Madhya Pradesh in

respect of all the districts of Gujarat. The Competent

Authority under the Act then issued notices under

Section 6(1) of the Act to the appellants for the

acquisition of the right of user of their properties and

although the appellants filed objections to the proposed

acquisition, the same was decided against the appellants.

The appellants then filed claims for compensation under

4 Section 10 of the Act before the Competent Authority and

the claim for compensation was taken up for hearing at

the office of the respondent no.4. The appellants raised

preliminary objections to the sitting of the Competent

Authority at the premises of the respondent no.4 in view

of the fact that the claim for compensation was in respect

of the acquisition of right of user for the project of the

respondent no.4.

4. When such preliminary objections were of no avail, the

appellants filed writ petitions (Special Civil Application

Nos.9015 of 2007 and 9016 of 2007) before the High

Court of Gujarat challenging the notification dated

07.03.2006 of the Government of India appointing Shri

V.I. Gohil as the Competent Authority for determination

of compensation payable to the appellants under the Act

for acquisition of the right of user in respect of their

properties on the ground that the Competent Authority is

likely to act with bias considering the fact that his pay

and allowances and all other incidentals are being borne

by the respondent no.4-company and the Competent

5

Authority is virtually an employee of the respondent no.4.

By the impugned order dated 06.12.2007, the High Court

held that simply because the Competent Authority was

discharging the function from the premises of the

respondent no.4 and was getting pay and allowances and

perquisites directly from RGTIL and was provided rent

free accommodation and use of the vehicle of the

respondent no.4, the appointment of the Competent

Authority cannot be held to be as one vitiated by the

bias. The High Court relied on the decision of this Court

in Hindustan Petroleum Corporation Ltd. v. Yashwant

Gajanan Joshi and Others [1991 Supp (2) SCC 592]

wherein a similar challenge to the appointment of an

employee of Hindustan Petroleum Corporation Limited as

Competent Authority under the Act on the ground of bias

was rejected by this Court. The High Court also held

that the Competent Authority was not adjudicating any

rights of the landowners against the respondent no.4 and

his primary duty was to determine the compensation as

provided under Section 10 of the Act, which also has in-

6 built guidelines for such determination and if the owner

of the land is aggrieved with the determination of

compensation, he has a remedy by way of filing an

application before the District Judge for determination of

the compensation. The High Court accordingly dismissed

the writ petitions.

5. The learned counsel for the appellants submitted that the

High Court wrongly relied on the decision of this Court in

Hindustan Petroleum Corporation Ltd. v. Yashwant

Gajanan Joshi and Others (supra) because the acquisition

of the right of user in that case was for a public sector

company and an employee of a public sector company

had been appointed as the Competent Authority, but in

the present case the acquisition of right of user was in

favour of the respondent no.4, which is a private sector

company and this private sector company was paying the

salary, allowances and all other incidentals of the

Competent Authority. They submitted that in the

aforesaid case of Hindustan Petroleum Corporation Ltd. v.

Yashwant Gajanan Joshi and Others (supra) this Court

7

has observed that it would altogether be a different case

if it was a case of a private employer and his employee

was appointed as a Competent Authority and had further

observed that a case of person in private employment

cannot be equated with that of a person in public

employment. They submitted that the law is well-settled

that not only actual bias but also the apparent likelihood

of a bias vitiates the appointment of an adjudicating

authority. In support of this submission, they relied on

the decisions of this Court in Ranjit Thakur v. Union of

India and Others [(1987) 4 SCC 611], Rattan Lal Sharma

v. Managing Committee, Dr. Hari Ram (Co-Education)

Higher Secondary School, and Others [(1993) 4 SCC 10]

and Indian Oil Corporation and Others v. Raja Transport

Private Limited [(2009) 8 SCC 520]. They submitted that

the very fact that the expenses of pay and allowances and

all other incidentals of the Competent Authority are

directly borne by the respondent no.4 is enough to

establish that the Competent Authority is an employee of

the respondent no.4 and there were sufficient

8

circumstances to create a reasonable apprehension in

the mind of the appellants that the Competent Authority

was likely to act with bias while determining the

compensation payable to the appellants.

6. In reply, learned counsel for the respondents submitted

that the respondent no.4 had no role in the appointment

of the Competent Authority and it was the State

Government which made the recommendation and the

Central Government which made the appointment by a

notification under Section 2(a) of the Act. He further

submitted that under Section 10 of the Act the

Competent Authority determines the compensation

payable to the landowners but it does not exercise a

judicial function. He submitted that the compensation

determined by the Competent Authority is only in the

first instance and if the amount so determined is not

acceptable to either of the parties then the compensation

shall, on an application by either of the parties, be

determined by the District Judge within the limits of

whose jurisdiction the land is situated. He further

9

submitted that the determination of the compensation by

the Competent Authority is also in accordance with the

statutory rules, and in particular Rules 4 and 4(a) of the

Petroleum and Minerals, Pipelines (Acquisition of Right of

User in Land) Act, 1962 and a perusal of these rules

would show that they contained in-built guidelines to be

followed by the Competent Authority while determining

the compensation payable to the landowners. He

submitted that this Court had in Hindustan Petroleum

Corporation Ltd. v. Yashwant Gajanan Joshi and Others

(supra) rejected a similar challenge to appointment of an

employee of the company in whose favour the right of

user is being acquired as the Competent Authority. He

finally submitted that it is well-settled that violation of

principles of natural justice will be a ground for the

Court to interfere only if actual prejudice is shown by the

person aggrieved. In support of this proposition, he

relied on State Bank of Patiala v. S.K. Sharma [(1996) 3

SCC 364], P.D. Agrawal v. State Bank of India [(2006) 8

SCC 776] and Ashok Kumar Sonkar v. Union of India 10

[(2007) 4 SCC 54]. He also cited the decision of this

Court in Union Carbide Corporation v. Union of India

[(1991) 4 SCC 584] in support this submission that an

appeal to a neutral District Judge as provided in Section

10 of the Act would wash away bias, if any, at the

original stage.

7. For deciding the questions raised in these appeals, we

have to refer to the relevant provisions of Sections 2(a), 5,

6, 10, 11 and 12 of the Act:

2(a) "Competent Authority" means any person or

authority authorised by the Central Government,

by notification in the Official Gazette, to perform

the functions of the Competent Authority under

this Act and different persons or authorities may be

authorised to perform all or any of the functions

of the competent authority under this Act in the

same area or different areas specified in the

notification."

5. Hearing of objections:-

(1) Any person interested in the land may, within

twenty-one days from the date of the notification

under sub-section (1) of section 3, object to the

laying of the pipelines under the land.

(2) Every objection under sub-section (1) shall be

made to the Competent Authority in writing and

11

shall set out the grounds thereof and the

Competent Authority shall give the objector an

opportunity of being heard either in person or

by a legal practitioner and may, after hearing all

such objections and after making such further

inquiry, if any, as that authority thinks

necessary, by order either allow or disallow the

objections.

(3) Any order made by the Competent Authority

under sub-section (2) shall be final.

6. Declaration of acquisition of right of user:-

(1) Where no objections under sub-section (1) of

section 5 have been made to the Competent

Authority within the period specified therein or

where the Competent Authority has disallowed

the objections under sub-section (2) of that

section, that authority shall, as soon as may be,

either make a report in respect of the land

described in the notification under sub-section

(1) of section 3, or make different reports in

respect of different parcels of such land, to the

Central Government containing his

recommendations on the objections, together

with the record of the proceedings held by him,

for the decision of that Government and upon

receipt of such report the

Central Government shall, if satisfied that such

land is required for laying any pipeline for the

transport of petroleum or any mineral, declare,

by notification in the Official Gazette, that the

right of user in the land for laying the pipelines

should be acquired and different declarations

may be made from time to time in respect of

different parcels of the land described in the

notification issued under sub-section (1) of

12 section 3, irrespective of whether one report or

different reports have been made by the

Competent Authority under this section.

(2) On the publication of the declaration under sub-

section (1), the right of user [in the land

specified therein shall vest absolutely in the

Central Government free from all

encumbrances.

(3) Where in respect of any land, a notification has

been issued under sub-section (1) of section 3

but [no declaration in respect of any parcel of

land covered by that notification has been

published under this section] within a period of

one year from the date of that notification, that

notification shall cease to have effect on the

expiration of that period.

(3-A) No declaration in respect of any land covered

by a notification issued under sub-section (1) of

section 3, published after the commencement of

the Petroleum Pipelines (Acquisition of Right of

User in Land) Amendment Act, 1977 (13 of

1977), shall be made after the expiry of three

years from the date of such publication.

(4) Notwithstanding anything contained in sub-

section (2), the Central Government may, on such

terms and conditions as it may think fit to impose,

direct by order in writing, that the right of user in

the land for laying the pipelines shall, instead of

vesting in the Central Government vest, either on

the date of publication of the declaration or, on

such other date as may be specified in the direction,

in the State Government or the corporation

proposing to lay the pipelines and thereupon the

right of such user in the land shall, subject to the

terms and conditions so imposed, vest in that State

13

Government or corporation, as the case may be, free

from all encumbrances.

10. Compensation.

(1) Where in the exercise of the powers conferred by

section 4, section 7 or section 8 by any person,

any damage, loss or injury is sustained by any

person interested in the land under which the

pipeline is proposed to be, or is being, or has

been laid, the Central Government, the State

Government or the corporation, as the case may

be, shall be liable to pay compensation to such

person for such damage, loss or injury, the

amount of which shall be determined by the

Competent Authority in the first instance.

(2) If the amount of compensation determined by

the Competent Authority under sub-section (1)

is not acceptable to either of the parties, the

amount of compensation shall, on application

by either of the parties to the District Judge

within the limits of whose jurisdiction the land

or any part thereof is situated, be determined by

that District Judge.

(3) The Competent Authority or the District Judge

while determining the compensation under sub-

section (1) or sub-section (2), as the case may

be, shall have due regard to the damage or loss

sustained by any person interested in the land

by reason of-

(i) the removal of trees or standing crops, if any,

on the land while exercising the powers

under section 4, section 7 or section 8;

14 (ii) the temporary severance of the land under

which the pipeline has been laid from other

lands belonging to, or in the occupation of,

such person; or

(iii) any injury to any other property, whether

movable or immovable, or the earnings of

such persons caused in any other manner:

Provided that in determining the compensation no

account shall be taken of any structure or other

improvement made in the land after the date of the

notification under sub-section (1) of section 3.

(4) Where the right of user of any land has vested in

the Central Government, the State Government

or the corporation, the Central

Government, the State Government or the

corporation, as the case may be, shall, in

addition to the compensation, if any, payable

under sub-section (1), be liable to pay to the

owner and to any other person whose right of

enjoyment in that land has been affected in any

manner whatsoever by reason of such vesting,

compensation calculated at ten per cent. of the

market value of that land on the date of the

notification under sub-section (1) of section 3.

(5) The market value of the land on the said date

shall be determined by the Competent Authority

and if the value so determined by that authority

is not acceptable to either of the parties, it shall,

on application by either of the parties to the

District Judge referred to in sub-section (2), be

determined by that District Judge.

(6) The decision of the District Judge under sub-

section (2) or sub-section (5) shall be final.

15 11. Deposit and payment of compensation.

(1) The amount of compensation determined under

section 10 shall be deposited by the

Central Government, the State Government or

the corporation, as the case may be, with the

Competent Authority within such time and in

such manner as may be prescribed.

(2) If the amount of compensation is not deposited

within the time prescribed under sub-section

(1), the Central Government, the

State Government or the corporation, as the

case may be, shall be liable to pay interest

thereon at the rate of six per cent. per annum

from the date on which the compensation had

to be deposited till the date of the actual

deposit.

(3) As soon as may be after the compensation has

been deposited under sub-section (1) the

Competent Authority shall, on behalf of the

Central Government, the State Government or

the corporation, as the case may be, pay the

compensation to the persons entitled thereto.

(4) Where several persons claim to be interested in

the amount of compensation deposited under

sub-section (1), the Competent Authority shall

determine the persons who in its opinion are

entitled to receive the compensation and the

amount payable to each of them.

(5) If any dispute arises as to the apportionment of

the compensation or any part thereof or as to

the persons to whom the same or any part

thereof is payable, the Competent Authority

shall refer the dispute to the decision of the

16

District Judge within the limits of whose

jurisdiction the land or any part thereof is

situated and the decision of the District Judge

thereon shall be final.

12. Competent Authority to have certain powers

of civil courts.

The Competent Authority shall have, for the

purposes of this Act, all the powers of a civil court

while trying a suit under the Code of

Civil Procedure, 1908 (5 of 1908), in respect of the

following matters, namely:-

(a) summoning and enforcing the attendance of any

person and examining him on oath;

(b) requiring the discovery and production of any

document;

(c) reception of evidence on affidavits;

(d) requisitioning any public record from any court

or office;

(e) issuing commission for examination of witnesses.

8. A reading of the Section 2(a) of the Act shows that the

person to be appointed as Competent Authority is to

perform all or any of the functions of the Competent

Authority under the Act in the same area or different

areas specified in the notification. Accordingly, the

Competent Authority is to hear objections of persons

17

interested in the land to the laying of the pipelines under

the land and the order passed by the Competent

Authority under Section 5 is final. On the basis of the

report of the Competent Authority, the Central

Government, if satisfied that the land is required for

laying any pipelines for the transport of petroleum or any

mineral, may declare under Section 6 of the Act that the

right of user in the land for laying the pipelines should be

acquired and on the publication of such declaration, the

right of user in the land specified in the declaration shall

vest absolutely in the Central Government free from all

encumbrances. Under Section 10 of the Act, the

Competent Authority in the first instance is to determine

the compensation payable to a person interested in the

land under which the pipeline is proposed to be, or is

being, or has been laid for any damage, loss or injury

sustained by him. Under Section 11, the amount of

compensation determined under Section 10 is to be

deposited with the Competent Authority within such time

and in such manner as may be prescribed and the

18

Competent Authority is to pay on behalf of the Central

Government, the State Government or the Corporation,

as the case may be, the compensation to the persons

entitled thereto and where several persons claim to be

interested in the amount of the compensation, the

Competent Authority is to determine the persons who in

its opinion are entitled to receive the compensation and

the amount payable to each of them. Under Section 12,

the Competent Authority has all the powers of a Civil

Court while trying a suit under the Code of Civil

Procedure, 1908 for summoning and enforcing the

attendance of any person and examining him on oath,

requiring the discovery and production of any document,

reception of evidence on affidavits, requisitioning any

public record from any court or office and issuing

commission for examination of witnesses.

9. The aforesaid reference to the various provisions of the

Act show that the Competent Authority has got vast

powers, which affects the rights of persons interested in

the land over which the pipeline is to be laid and on the

19

reports of the Competent Authority, the Central

Government and the State Government are to take

decisions affecting the rights of persons interested in the

land. Under the provisions of the Act, therefore, the

Competent Authority does not merely determine the

compensation at the first instance in accordance with the

statutory rules as has been contended by learned counsel

for the respondent no.4, but has to perform various other

quasi-judicial functions which are normally performed by

public servants whose pay, allowances and other

incidentals of service are met out of the public exchequer.

If instead of public servants, a person is appointed whose

pay, allowances and other incidentals are not paid out of

the public exchequer but directly paid by a private

employer such as the respondent no.4, for whom the

right of user is being acquired and by whom the

compensation is payable, persons interested in the land

will have reasonable grounds for assuming that such a

Competent Authority, who is dependent on a private

corporation for his salary, allowances, accommodation

20

and transport allowances, will have a bias in favour of

the private corporation.

10. This Court as early as in 1957 held in Manak Lal,

Advocate v. Dr. Prem Chand Singhvi and Others [AIR 1957

SC 425] that every member of a Tribunal that is called

upon to try issues in judicial or quasi-judicial

proceedings must be able to act judicially and it is of the

essence of judicial decisions and judicial administration

that judges should be able to act impartially, objectively

and without any bias. In the aforesaid decision, this

Court also held:

"But where pecuniary interest is not

attributed but instead a bias is suggested, it

often becomes necessary to consider

whether there is a reasonable ground for

assuming the possibility of a bias and

whether it is likely to produce in the minds

of the litigant or the public at large a

reasonable doubt about the fairness of the

administration of justice. It would always

be a question of fact to be decided in each

case."

In the aforesaid decision, the observations of Viscount Cave

L.C. in Frome United Breweries Co. v. Bath Jusstiees (1926

Appeal Cases 586 at p.590) that the rule that every member of

21

a Tribunal must be able to act judicially and without bias

applies not only to judicial Tribunals but also in the case of

authorities which have to act as Judges of the rights of others.

In aforesaid decision, this Court also held that it would always

be a question of fact to be decided in each case whether there

is a reasonable ground for assuming the possibility of a bias

and whether it is likely to produce in the minds of the litigants

or the public at large a reasonable doubt about the fairness of

the administration of justice.

11. In Ranjit Thakur v. Union of India and Others (supra),

M.N. Venkatachaliah, J. writing the judgment for the

Court held in Paras 16 and 17 of the judgment:

"16. It is the essence of a judgment that it

is made after due observance of the judicial

process; that the court or tribunal passing it

observes, at least the minimal requirements

of natural justice; is composed of impartial

persons acting fairly and without bias and

in good faith. A judgment which is the

result of bias or want of impartiality is a

nullity and the trial `coram non-judice'.

17. As to the tests of the likelihood of bias

what is relevant is the reasonableness of the

22

apprehension in that regard in the mind of

the party. The proper approach for the

judge is not to look at his own mind and ask

himself, however, honestly, "Am I biased?"

but to look at the mind of the party before

him."

12. Thus, as per the judgment of this Court the test of

likelihood of bias is whether there is a reasonable

apprehension in the mind of the party before the Court or

the Tribunal that the Court or the Tribunal will not act

with fairness and without bias on account of certain

objective circumstances. There is no dispute in the

present case that the salary, allowances, accommodation

and transport were being borne by the respondent-

company directly. Thus, the Competent Authority was

virtually an employee of the respondent no.4-company

and there were grounds for the appellants to entertain a

reasonable apprehension in their mind that the

Competent Authority will not act fairly and is likely to act

with bias. In the judgment of this Court in Ranjit Thakur

v. Union of India and Others (supra) it has been held that

a judgment which is the result of bias or want of

23

impartiality is a nullity and the trial coram non-judice.

Thus, the entire proceedings for determination of

compensation before Shri V.I. Gohil would be a nullity.

13. In Hindustan Petroleum Corporation Ltd. v. Yashwant

Gajanan Joshi and Others (supra), relied on by the High

Court as well as learned counsel for the respondent no.4,

this Court has clearly made a distinction between a

public corporation and private employer. In para 13 of

the judgment, this Court has held:

".... It would be to broad a proposition to

extend the theory of bias to exclude persons

only because such person draws the salary

from the bodies like public corporation,

State Government. It would altogether be a

different case if it was a case of a private

employer and his employee. We cannot

equate the case of a person in private

employment with that of a person in public

employment. ..."

14. For the aforesaid reasons, we allow these appeals, set

aside the impugned orders of the High Court as well as

the proceedings for determination of compensation in the

case of the appellants only. We, however, make it clear

that this judgment will not affect any of the orders

24

passed by Shri V.I. Gohil with regard to acquisition of the

right of user as the appellants challenged the

appointment of Shri Gohil in the Writ Petitions before the

High Court in the present case only after he started the

proceedings for determination of compensation. We

direct that the Union of India will appoint another

unbiased person in place of Shri Gohil for determination

of compensation payable to the appellants. No costs.

Civil Appeal arising out of S.L.P. (C) No.29771 of 2009

Leave granted.

2. This is an appeal against the order dated 17.07.2009 of

the Division Bench of the High Court of Gujarat in

Special Civil Application No.15424 of 2008.

3. In Special Civil Application No.15424 of 2008, the

appellants had challenged the appointment of Shri V.I. Gohil

as Competent Authority under the Act by notification dated

07.03.2006 and the High Court relying on the earlier order

dated 06.12.2007 of the Division Bench of the High Court in

Special Civil Application Nos.9015 of 2007 rejected the

25

contention that the appointment of Shri V.I. Gohil as

Competent Authority was invalid.

4. For reasons stated in Civil Appeals arising out of SLP (C)

Nos.17022 of 2008 and 17021 of 2008, we allow this appeal,

set aside the impugned order dated 17.07.2009 in Special Civil

Application No.15424 of 2008 as well as the proceedings for

determination of compensation in the case of the appellants

only. We make it clear that this judgment will not affect any

orders passed by Shri V.I. Gohil with regard to acquisition of

the right of user as the appellants filed the Writ Petition before

the High Court in the present case only at the stage of

determination of compensation. We direct that the Union of

India will appoint another unbiased person in place of Shri

Gohil for determination of compensation payable to the

appellants. No costs.

..........................J.

(R. V. Raveendran)

..........................J.

(A. K. Patnaik)

New Delhi,

26

October 13, 2011.