CoramThe Honourable Mr v. The Deputy Salt Commissioner

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 26-4-2007CoramThe Honourable Mr.Justice N.PAUL VASANTHAKUMARW.P.Nos.12721, 12722, 12723 and 12795 of 2000L. Subramania Reddy...Petitioner in W.P.12721/2000V.S. Venkatesan...Petitioner in W.P.12722/2000M. Babu...Petitioner in W.P.12723/2000D. Nagabooshanam}}Ravichandra Reddy}...Petitioners in W.P.12795/2000Vs.1.The Deputy Salt Commissioner,Shastri Bhavan,Chennai - 600 006.2.The Tamilnadu Industrial DevelopmentCorporation Ltd.,rep.by its General Manager,19-A Marshalls Road,Egmore,Chennai - 600 008....Respondents in all petitionsThese writ petitions have been filed under Article 226 ofConstitution of India, praying this court to issue a writ of Mandamusdirecting the second respondent to pay compensation to the petitioners inrespect of the lands taken over by the second respondent which had beenleased out to the petitioners by the first respondent under registeredLease Deed and covered under Salt manufacturing Licence No.41, 15, 42 and29 datd 8.7.88,20.4.88 and 5.6.89.respectively.For Petitioners :Mr.T.R.Rajagopalan,Senior Counselfor Mr.G.JeremiahFor 1st Respondent :Mr.K.Ravindranath, SCGSCFor 2nd Respondent:Mr.Ranganathanfor M/s.King & Partridge https://hcservices.ecourts.gov.in/hcservices/ COMMON ORDERPetitioners in these writ petitions seek a direction to the secondrespondent to pay compensation to them in respect of the lands taken overby the second respondent, which had been leased out to the petitioners bythe first respondent under registered Lease Deeds and covered under Saltmanufacturing Licence No.41, 15, 42 and 29 respectively.2.Since the issue involved in all these writ petitions are commonand the facts are also identical, all these writ petitions are disposed ofby this common order.3.The brief facts necessary for disposal of these writ petitionsare as follows.(a)The petitioners were granted lease by the first respondent byseparate lease deeds for certain extent of lands in Athipattu village,Ponneri Taluk, for manufacture of salt. The period of lease was from1.1.1988 to 31.12.2007 in W.P.Nos.12721 to 12723/2000 and from 1.1.1988 to8.10.2005 in W.P.No.12795/2000. Petitioners were also granted licencesfor the manufacture of salt issued under the Central Excise Rules, 1944and the licences are valid upto 31.12.2007 in W.P.Nos.12721 to 12723/2000,and upto 8.10.2005 in W.P.No.12795/2000. The said lands belong to theGovernment of India and the petitioners were paying annual ground rent andthey produced maximum quantity of salt per acre. Some of the petitionerswere even granted lease prior to 1998. Petitioners, for the manufactureof salt, spent huge amounts for levelling their respective lands leasedout and prepared salt pans.(b) In the year 1998, North Madras Thermal Power Project wasestablished at Ennore and therefore petitioners could not produce salt asthe fly from the Thermal Power Station used to discolour the salt and itturned to blackish in colour. Apart from the said difficulty, there werelack of cheap labour and boats and also due to availability of freeiodised salt, petitioners could not majufacture salt. However, theycontinued to pay the rent.(c)On 25.2.1999, petitioners received an order from the firstrespondent stating that the lease granted to them is terminated for thebreach of condition No.22 and the petitioner's were required to pay theannual rent. Immediately after the receipt of order of termination,petitioners sent demand drafts for the amounts due to the first respondentand requested the first respondent to withdraw the order cancelling thelease and therefore petitioners continued in the possession of theleasehold lands. Petitioners also submitted representations to the SaltCommissioner at Jaipur and on 10.4.1999 No Due Certificates were alsoissued. https://hcservices.ecourts.gov.in/hcservices/ (d)The first respondent by communication dated 29.1.1999 informedthe petitioners that the Government of India, had decided to transfer thelands leased out to the petitioners to TIDCO, the second respondent hereinand the lessees will be paid compensation and possession would not behanded over to the second respondent until compensation is paid to thelessees. In view of the said communication, petitioners were under thebona fide impression that the earlier order determining lease had beenrevoked.(e)On 23.3.1999 the second respondent called upon the petitionersfor a meeting to be held on 30.3.1999 for the purpose of verifying thelease deeds and to determine the quantum of compensation. It was alsoinformed that if anyone fail to attend the meeting their lands would beresumed. Petitioners attended the meeting on 30.3.1999 and the quantum ofcompensation payable was also determined and thereafter petitionerssurrendered the lands to the representatives of the first respondent, whoin turn handed over the lands to the second respondent. However, thesecond respondent subsequently refused to pay the compensation on theground that the petitioners lease were determined by the first respondenton 25.2.1999, 23.9.1998, 16.11.1998 and 6.10.1998 respectively. Accordingto the petitioners, the said stand of the second respondent is contrary tothe communication issued by the first respondent dated 24.3.1999 and thepetitioners having been dispossessed of the salt pans, which they havemade by spending huge amounts in their respective leasehold lands andhaving not received the compensation, filed these writ petitions forissuance of a writ of mandamus.4.First respondent filed counter affidavit wherein it is statedthat since the petitioners have breached the lease deed condition No.22and defaulted in payment of rent, the respective lease was cancelled.Petitioners' application for reconsideration were pending. The Governmentof India, Ministry of Industries (Department of Industrial Policy andPromotion) by communication dated 6.1.1999 addressed to the SaltCommissioner, Jaipur, conveyed the approval of the Government of India tothe transfer of Salt Department land measuring 1434 Hectares to theGovernment of Tamil Nadu/TIDCO Ltd., for establishment of Petro ChemicalIndustrial Park at Ennore near Chennai including the lands leased out tothe petitioners herein. Letters were also issued to various saltlicensees of the Salt Department as well as to the second respondent on29.1.1999 mentioning the licence numbers and stated that the above saidlands could be taken over by the department for handing over to TIDCO assoon as TIDCO confirms that they had paid the compensation to alllicensees. The second respondent thereafter wrote letters to thepetitioners and requested the petitioners to come to TIDCO office on30.3.1999 and determined the amount of compensation payable to each of thepetitioners and therefore the decision of the first respondent wasaccepted and acted upon by the second respondent and only a formality ofaccepting the compensation and effectuating the transfer by handing overpossession remain. It is submitted in the counter affidavit that in spiteof cancellation of lease, the leasehold lands were to be handed over only https://hcservices.ecourts.gov.in/hcservices/ after receipt of compensation and it could not matter whether there wasany lease subsisting or to be cancelled. It is further stated thatcancellation of lease granted in favour of the petitioners are notrelevant to the issue for the payment of compensation and cannot be takenadvantage of by the TIDCO to withhold the compensation to the petitioners. It is again stated in the counter affidavit that the Government ofIndia in its order dated 6.1.1999 imposed condition, particularlycondition No.3 and stated that the State Government/TIDCO shall paycompensation to the lessees for extinguishing the leasehold rights, whichTIDCO and lessees may arrive at their mutual negotiations and the legalcase arising out of the transfer should also be taken care of and defendedby the TIDCO/State Government at their costs. Citing the said order, thefirst respondent states that the Salt Department should not be dragged onfor payment of compensation and TIDCO also agreed through its letter dated4.11.1999 to comply with the condition mentioned above. The secondrespondent also is bound to pay Rs.35,000/- per acre provisionally.5.The second respondent filed common counter affidavit and theobjection raised therein is that the lease granted in favour of thepetitioners were terminated for non-payment of rental arrears andtherefore they have no locus standi to make any claim against the secondrespondent to claim compensation.6.The learned counsel for the petitioner submitted that the leasegranted, even though was terminated, petitioners have paid their rentaldues and prayed for reconsideration of cancellation of lease and duringthe pendency of the said application for reconsideration, Government ofIndia took a decision to hand over the land to TIDCO for establishingPetro Chemical Industrial Park at Ennore with a condition that the lesseesshould be paid compensation by the second respondent at the time of takingpossession and the counter affidavit filed by the first respondent alsosupports the case of the petitioners.7.The learned counsel for the first respondent on the basis of thestatements made in the counter affidavit submitted that the petitionersare entitled to get compensation and the second respondent is bound to paythe same.8.The learned counsel appearing for the second respondentsubmitted that the lease having been terminated and the petitioners havingnot been dispossessed by the decision taken by the Government of India,they have no right to claim compensation as they were not having anysubsisting lease.9.I have considered the rival submissions made by the learnedcounsel for the petitioner as well as the learned counsel for therespondents.10.The point in issue is whether the petitioners are entitled toget compensation from the second respondent.11.It is not in dispute that the petitioners were granted lease bythe first respondent for manufacturing salt and they were also givenlicence to manufacture salt. It is also not in dispute that the https://hcservices.ecourts.gov.in/hcservices/ petitioners have developed the respective lands by establishing the SaltPans and spent huge amounts. The termination of lease granted in favourof the petitioners has not become final, as all the petitioners haveapplied for reconsideration of cancellation of lease and that they havepaid the entire rental arrears and the first respondent also issued No DueCertificate. Therefore, petitioners were in possession of theirrespective lands on the date when the decision was taken by the Governmentof India to hand over the lands, a total extent of 1434 Hectares. It isalso not in dispute that the second respondent is directed to paycompensation to the persons, who are likely to be affected by virtue ofhanding over of possession.12.The learned Senior Counsel for the petitioners submitted thatthe petitioners paid rental arrears and the first respondent issued no duecertificate to all the petitioners, the same is not disputed by thelearned counsel for the respondents. Therefore in the light of the standtaken by the first respondent in the counter affidavit stating thatcancellation of leases of the petitioners originally, is not relevant forpayment of compensation and cannot be taken advantage of by the TIDCO forwithholding the compensation. The said stand taken in the counteraffidavit is the specific stand of the first respondent even at the timeof argument. The second respondent having given possession of the lands,cannot contend that it is not bound to pay compensation to thepetitioners, particularly when the first respondent specifically statedthat the petitioners are bound to get compensation, which clearlyestablishes the fact that the cancellation of lease granted in favour ofthe petitioners have not become final. Petitioners also have paid therental arrears and the same is also not in dispute.13.Further the compensation is given not only for enjoyment of theland, but also for the amounts spent towards developing the said land bymaking Salt Pans. It cannot be disputed at this stage that thepetitioners have not developed the land by establishing Salt Pan asadmittedly the petitioners were granted lease by the first respondent andthey manufactured salt. Hence the compensation ordered to be given by thesecond respondent cannot be denied to the petitioners on the ground thatthere was no subsisting lease on the date of taking over possession. Eventhe second respondent has issued notice to the petitioners to hand overpossession, which also proves that factual aspect of possession of thepetitioners. Therefore the stand taken by the second respondent that thepetitioners are not entitled to get compensation is unsustainable. Infact the first respondent by communication dated 21.6.2000 directed thesecond respondent to pay compensation to the licensees and the petitionersare license holders for manufacture of salt. https://hcservices.ecourts.gov.in/hcservices/

14.In the result, the writ petition is allowed. The secondrespondent is directed to pay compensation to the petitioners for theirrespective lands, as fixed by the first respondent and Government ofIndia, within a period of eight weeks from the date of receipt of copy ofthis order. No costs. Connected miscellaneous petition is closed.vrSd/Asst. Registrar/true copy/Sub Asst.RegistrarTo1.The Deputy Salt Commissioner,Shastri Bhavan, Chennai - 600 006.2.The Tamilnadu Industrial Development Corporation Ltd.,rep.by its General Manager, 19-A Marshalls Road,Egmore, Chennai - 600 008.+ 4 cc to M/s. King and Partridge, Advocate sR Nos 28847.28848,28849,28850.+ One cc to Mr. G. Jermiah, Advocatae sR 29385VRK (co)sg 8/5/07Pre-Delivery Common Order in W.P.No.12721 to 12723 & 12795/200026-4-2007