Compensation Under Public Law Remedy – A Review of Uphaar Cinema Judgment

The decision of Supreme Court in case as regards Uphaar Cinema tragedy which occurred back in the year 1997 may have come along with several criticisms for reducing the amount of compensation. But, it has been able to throw light on certain imperative aspects of law, specifically the recourse which shall be adopted while awarding compensation under Public Law Remedy. Public Law remedy, as distinct from Private Law Remedy, can be exercised by the Constitutional Courts (High Courts and Supreme Court) under Article 226 and 32 of the Constitution of India, 1950. The judgment encompasses two parts, first part deals with the liability of the officials under Public Law, and secondly it deals with the amount of compensation which can be awarded under Public Law Remedy.

The appeals have been filed by Municipal Corporation of Delhi, Commissioner of Police (Licensing Authority) and M/s. Ansal Theatre and Clubotels Pvt. Ltd. These appeals are against order of Delhi High Court.

A separate judgment was delivered by Justice K.S. Radhakrishnan wherein he discussed the issue as regards Constitutional Tort.

Public Law Remedy

A Public Law can be defined as those laws which construct a relationship between Individuals and the state. Constitution is one such kind of law, and remedy provided therein under such law can be termed as a Public Law Remedy. In the instant case also, original suit had been filed before the Delhi High Court under Article 226 of the Constitution, on the ground that impugned irregularities and the negligence on the part of the appellants led to the infringement of Right to Life as provided under Article 21 of the Indian Constitution. The remedy provided by the court under such category will not be categorised under ordinary tort law, rather it would be categorised under Constitutional Tort Law. Supreme Court in this case relied on the judgment of Rabindra Nath Ghosal Vs. University of Calcutta and Ors. (2002) 7 SCC 478, where it had been held by the court that by means of moulding relief under Article 32 or 226 penalises the wrong doer or the state monetarily for the wrong which they have committed. Further, court was of the firm view that before any action can be taken against state, it shall be unquestionably being shown that the acts of the public functionaries were arbitrary and capricious that eventually left victim helpless.

Extent of the Liability of Public Functionaries under Public Law Remedy

In the instant case, court discussed its judgment in Rajkot Municipal Corporation v. M.J. Nakum (1997) 9 SCC 552, wherein it had been held by the court that a mere omission to do something which cannot reasonably give rise to a legal action against the state. Court relied on this judgment with reference to the contentions put forth by the MCD for exonerating it from all the claims. It can be concluded from this judgment that in order to succeed in a claim against the state under Public Law Remedy, claimant has to prove his claim substantially. A Canadian Judgment in the case of John Just v. Her Majesty The Queen -- (1989) 2 SCR 1228 was discussed by the court along with some English and other Canadian Cases. In this Case, Canadian Supreme Court had held that –

“...In order for a private duty to arise in this case, the plaintiff would have to establish that the Rockwork Section, having exercised its discretion as to the manner or frequency of inspection, carried out the inspection without reasonable care or at all. There is no evidence or indeed allegation in this regard......I would therefore dismiss the appeal.”

Supreme Court was of the view that just because an authority owes a public law duty under any statue, it cannot in any way mean that such a statue will give rise to a duty of care, The wordings of the judgment can be read as follows –

“A duty of care at common law can be derived from the authority's duty in public law to give proper consideration to the question" whether to exercise power or not (p.411). This public law duty cannot by itself give rise to a duty of care. A public body almost always has a duty in public law to consider whether it should exercise its powers but that did not mean that it necessarily owed a duty of care which might require that the power should be actually exercised............ An absolute rule to provide compensation would increase the burden on public funds”

Eventually, MCD was exonerated from its liability on the ground that an authority cannot in any manner be held liable merely because of the reason that it had discharge some duty, or it failed to discharge its duty in a proper manner. The same should be grave. MCD’s liability was only limited to the action which it ought to have taken against the parapet wall raised by the Licensees. At the time when the wall was raised, MCD was not the sanctioning authority, instead PWD was responsible. And by the time MCD was conferred with this sanctioning power, the wall was already in existence for some 20 years. And this turned out to be the prime factual point which eventually favoured MCD. Nonetheless, this did not exonerate Delhi Vidyut Board (“DVB”) and Licensees. Also, MCD was exonerated because parapet wall did not turn out be the prime reason for the tragedy to take place. Rather, it was the inside construction carried out by the Licensees in the hall.

Amount of Compensation under Public Law

While dealing with this matter, court came across the calculation carried out by the Delhi High Court while awarding damages to the claimant. High Court framed out the average income of the deceased persons, and thereafter multiplied it with the digit 15 in order to conclude the final amount to be awarded to each of the claimants. In this matter, High Court awarded Rs. 18 lakhs to the legal heirs of those deceased aged 20 years or more, and Rs. 15 lakhs to the legal heirs of those deceased persons aged 20 years or less. Supreme Court put itself in front of a question that whether the impugned method adopted by the High Court in awarding compensation could have actually been carried out by means of a Public Law Remedy under Article 32 and 226 of the Constitution. The nature of compensation awarded under Public Law Remedy is palliative in nature, and the same cannot be equated with the damages under civil law. A person can approach a civil court if he is not satisfied with the compensation under Public Law Remedy. This position can be derived from the stand of Supreme Court in the case of Rudul Sah vs. State of Bihar [1983 (4) SCC 141, and the same line of reasoning can be found in the case of Sube Singh vs. State of Haryana [2006 (3) SCC 178]. Further, Court while discussing the issue of compensation under Public Law in the case of Nilabati Behera alias Lalita Behera vs. State of Orissa [1993 (2) SCC 746]

“The compensation is in the nature of 'exemplary damages' awarded against the wrong doer for the breach of its public law duty and is independent of the rights available to the aggrieved party to claim compensation under the private law in an action based on tort, through a suit instituted in a court of competent jurisdiction or/and prosecute the offender under the penal law.”

Supreme Court, in the case, was of the opinion that considerable amount of compensation by means of Public Law Remedy is not safe and this turned out to be the reason for the reduction of compensation by the Supreme Court. Nonetheless, Supreme Court made arrangements for the speedily. In determining the amount of compensation, factors which play crucial role are

The first is the age of the deceased, the second is the income of the deceased and the third is number of dependants (to determine the percentage of deduction for personal expenses)

Reference as to these criterion can be made to the Judgment of Supreme Court in Sarla Verma v. Delhi Transport Corporation (2009) 6 SCC 121

But, the same amount shall exclusively be borne by the Licensees i.e. Theatre Owner.

Punitive Damages

Punitive damages are also known as exemplary damages, and are awarded so as to deter the defendant from carrying out any such action in future. In the instant case, Delhi High Court awarded Rs. 2.5 crore to the claimants by means of Punitive Damages. But this view of the High Court was not appreciated by the Supreme Court. High Court, while calculating the damages, took into account the 52 seats which had additionally been installed in the theatre. But, High Court ignored that fact that sanction was given to the installation of 37 seats by the Delhi High Court at the time of installation. Hence, Supreme Court calculated the benefit which was derived out by the theatre owners in the between the period 1979-1996, which eventually reduced the damages from Rs. 2.5 crore to Rs. 25 Lakhs.

Separate Judgment of Justice K.S. Radhakrishnan

The separate judgment of Justice Radhakrishnan dealt with the issue of Constitutional Tort. He aptly pointed out the shortcomings in the existing remedy under Public Law, and recommended that a specific legislation is urgently required so as to address the compensation claim under Public Law. He opined that most of the cases under Public Law which come before the court are very often based on violation of personal liberty, right to life or human rights.

Sovereign Immunity

Sovereign Immunity is a legal concept which depicts that a state cannot commit any wrong. But, there can be circumstances when state can be held liable for the wrongs committed by its functionaries, and for those acts no sovereign immunity can be claimed. In the absence of action against state, fundamental rights may act only as a unresponsive provisions. This issue was discussed by Justice Radhakrishnan, and he referred to the judgments of State of Rajasthan v. Vidyawati AIR 1962 SC 933, Kasturi Lal v. State of U.P. AIR 1965 SC 1039 to signify that there is a distinction between sovereign functions and non-sovereign functions of the state. While, state cannot be held liable for the former, it can incontestably be held liable for the latter. In N. Nagendra Rao v. State of A.P., AIR 1994 SC 2663, it had been held by the Supreme Court that in modern era, emphasis is more on the liberty, equality and rule of law and less emphasis is on the efficiency and dignity of the state as a juristic person in comparison to the former. Further, court in this case was of the view that when public official can be held liable in their personal capacity, there is no reason why state cannot be held liable for the same.

Constitutional Tort

Constitutional Tort, according to Justice Radhakrishnan, found its expression in the case of Devaki Nandan Prasad v. State of Bihar 1983 (4) SCC 20, For this purpose, case of Khatri & Others v. State of Bihar & Others (1981) 1 SCC 627, where a claim was brought before the court for the infringement of fundamental right enshrined under Article 21 of the Constitution.

Other Judgments - Sebastian M. Hongray v. Union of India, AIR 1984 SC 1026, Bhim Singh v. State of J. & K. (AIR 1986 SC 494), Saheli v. Commissioner of Police, Delhi, (AIR 1990 SC 513), Inder Singh v. State of Punjab (AIR 1995 SC 1949), Radha Bai v. Union Territory of Pondicherry AIR 1995 SC 1476, Lucknow Development Authority v. M.K. Gupta (AIR 1994 SC 787), Delhi Domestic Working Women's Forum v. Union of India, (1995) 1 SCC 14, Gudalure M.J. Cherian v. Union of India 1995 Supp (3) SCC 387, Sube Singh v. State of Haryana 2006 (3) SCC 178

In other words, it would not be wrong to say that sovereign immunity cannot be claimed for the cases involving violation of fundamental rights. This position of law can be found in the case of Nilabati Behera v. State of Orissa (AIR 1993 SC 1960), where in it had been held by the court that a remedy provided in the form of fundamental rights is based on the strict liability of the state, and the same cannot be compared with the remedies provided under private law, or in the words of the court –

“It is this principle which justifies award of monetary compensation for contravention of fundamental rights guaranteed by the Constitution when that is the only practicable mode of redress available for the contravention made by the State or its servants in the purported exercise of their powers, and enforcement of the fundamental right is claimed by resort to the remedy in public law under the Constitution by recourse to Articles 32 and 226 of the Constitution."

At the same, no strait jacket formula can be applied in computation of the compensation for claim made under Public Law (D.K. Basu vs. Union of India (1997) 1 SCC 416). And the remedy shall only be invoked under special and extreme circumstances where grave violation of fundamental rights has been proved.

abhinav.s@nujs.edu

Preliminary Decree - Not Sufficient for the Partition of a Hindu Joint Property

Amendment to the Hindu Succession Act, 1956 (“Act”) in the year 2005 turned to be an enabling provision for women by providing them with the rights over the ancestral property, which for long period of time was denied to them. Section 6 of the Act was amended so as for this purpose which provided rights to daughters equivalent to those of a sons in a family property by virtue of their birth. But, it shall be noted here that act so amended cannot be applied to the partitions or property arrangements executed before the commencement of the act. Statement of Objects and reason of the amendment act, if read carefully, will aptly connote that the said amendment to the act was indeed carried out because disallowing women from claiming any kind of share in the property was behaving as a discriminatory provision against the women. In other words, it was a gender biased provision. The date on which this amended act came into force was September 9, 2005.

Some of the ways by means of which a Hindu Joint Property can be divided are a registered instrument of a partition, and a decree of the court. In the former case, sometimes it becomes difficult to conclude at what stage of the trail a decree of the court can be considered to be sufficient for the final partition of a Hindu Joint Property. In other words, whether preliminary decree can be considered to be sufficient enough for the partition of a Hindu Joint Property? This question has recently been addressed by the Supreme Court in Ganduri Koteshwaramma & Ors v. Chakiri Yanadi & Ors Civil Appeal No. 8538 of 2011, where issue as regards the rights of the daughters/appellants under the amended act had come before the court.

Preliminary decree had been passed by the trial court in the year 1999, at a time when the impugned act was not amended by the legislature. Before the final decree passed, the act was amended in the year 2005 thereby conferring rights over the appellant on in the piece of property which they had not been holding any kind of share earlier. The same amendment was allowed by the trail court and the final decree was made only after taking into consideration the amended act. In the meantime, Sons/Respondent preferred an appeal before the Andhra Pradesh High Court, and interestingly High Court reversed the decree of trial court, and further high court was of the view that final decree shall always be in conformity with the preliminary decree after taking into consideration Order XX Rule 18 of CPC. Eventually, the matter came before the Supreme Court by means of a civil appeal.

Supreme Court aptly discussed the issue as regards the substance which one should provide to the preliminary decree. Court held that a suit for partition cannot said to have been disposed off only by means of a preliminary decree, and the same shall stand to be concluded only when the final decree has been passed. Further Court was of the opinion that the same preliminary decree can be amended as many times as court wants to amend before the final , and no provision under Civil Procedure can said to be a deterrent to the same. Court, while opining this, relied on the case of Phoolchand and Anr. Vs. Gopal Lal [AIR 1967 SC 1470], wherein it had been held by the court that –

"We are of opinion that there is nothing in the Code of Civil Procedure which prohibits the passing of more than one preliminary decree if circumstances justify the same and that it may be necessary to do so particularly in partition suits when after the preliminary decree some parties die and shares of other parties are thereby augmented. . . . .. So far therefore as partition suits are concerned we have no doubt that if an event transpires after the preliminary decree which necessitates a change in shares, the court can and should do so; ........... there is no prohibition in the Code of Civil Procedure against passing a second preliminary decree in such circumstances and we do not see why we should rule out a second preliminary decree in such circumstances only on the ground that the Code of Civil Procedure does not contemplate such a possibility. . . for it must not be forgotten that the suit is not over till the final decree is passed and the court has jurisdiction to decide all disputes that may arise after the preliminary decree, particularly in a partition suit due to deaths of some of the parties. . . . .a second preliminary decree can be passed in partition suits by which the shares allotted in the preliminary decree already passed can be amended and if there is dispute between surviving parties in that behalf and that dispute is decided the decision amounts to a decree.... ............"

Court also relied on the case of S. Sai Reddy vs. S. Narayana Reddy and Others [(1991) 3 SCC 647 11], wherein it had been held by the court that

“Unless and until the final decree is passed and the allottees of the shares are put in possession of the respective property, the partition is not complete”.

Eventually, court in this case, while appreciating the fact that this amended act shall not be applied to the partitions which had already been executed before this amended act, Court allowed the appeal.

Registered Deed of Conveyance - Only Valid form to transfer an Immovable Property

The abuse of General Power of Attorney Sales (“GPA Sales”) or Sale Agreement/General Power of Attorney/Will Transfers (“SA/GPA/WILL”) has come before the notice of the Supreme Court recently in the case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana wherein it has been held by the Court that transfer made by any of the means mentioned above does not transfer any kind of interest whatsoever as long as they are not duly registered. These kinds of sales, according the court, promotes sham sale of land and also furthers land mafia. Court further made it clear that such transaction shall not be confused with the genuine transfers made under By an earlier order of this case Suraj Lamp & Industries Pvt.Ltd. vs. State of Haryana & Anr. - 2009 (7) SCC 363, court opined the ill-effects which these transactions can entail. Court in this earlier order had held that –

“Recourse to `SA/GPA/WILL' transactions is taken in regard to freehold properties, even when there is no bar or prohibition regarding transfer or conveyance of such property, by the following categories of persons:

(a) Vendors with imperfect title who cannot or do not want to execute registered deeds of conveyance.

(b) Purchasers who want to invest undisclosed wealth/income in immovable properties without any public record of the transactions. The process enables them to hold any number of properties without disclosing them as assets held.

(c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin.”

Court clarified that these transaction leads to the evasion of income tax, wealth tax, stamp duty because of which a huge amount of loss has to be incurred by the state. State is not able to impose any of these taxes simply because of the reason that it is not possible, under these transactions, to indentify the real owner of the property in dispute because of the lack of the registration. Further, it has been argued by the court that these transactions are being used by several persons in order to hide black money. Further, it endangers the genuine purchaser since the vendor can again sell the same piece of property to some other person in return of consideration. In addition, court was of the view that it is used by the land mafia as a means to gain the property from a genuine purchaser by means of threat or force. Court, in this case, asked Gopal Subramaniam, former Solicitor General of India, for his view on the instant matter and he complied with the same. It has further been found out that those with ulterior motives either to indulge in black money transactions or land mafia continue to favour such transactions. It is very important to note here that registration is mandatory in cases where conveyance of the property is made, and this is the reason why no other form of transaction will be valid except where conveyance is made along with a registered deed.

Section 5 of the Transfer of Property Act, 1882 (“The Act”) defined what one can mean by the term “transfer of property”. Section 54 of the act stipulates the explanation of the term “sale”, and further signified how a sale shall be made. Section 53A of the act defines what is meant by part performance and the conditions under which a transferee would be able to save himself in case he has performed the imperative stipulations of the agreement to sell. It shall be noted here that agreement not in itself creates any interest in favour of the transferee.

Court further, while referring to its earlier judgment Suraj Lamp (Supra) in relation to the essence of registration, stated that –

"The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs. 100 and upwards to or in immovable property. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified.

To support the view that agreement to sale does not in itself create any interest over the property, court relied on the judgments of Narandas Karsondas v. S.A. Kamtam and Anr. (1977) 3 SCC 247, Rambaran Prosad v. Ram Mohit Hazra [1967]1 SCR 293 and Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614]. Court in the instance case added that contract of sale which is not registered would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property. In the case of GPA, court was of the view that it is usually executed between a principal and an agent under which certain powers are conferred over the agent by the principal to act on his behalf. Court opined that under this power, agents can surely a deed of conveyance. On the issue of will, court held that it is the transfer of property between the living humans because it only comes into existence after the death of the testator, and testator has the power to alter the will during his lifetime and the same cannot be considered as a valid transfer of property. Eventually court, while concluding the case stated that –

“We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of `GPA sales' or `SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act”