Judgment:
M. Ramakrishna, J.
1. The State Government represented by the Deputy Commissioner, Mysore District, Mysore, has in this Appeal challenged the correctness of the finding recorded by the learned District Judge, Mysore in C.C.A.Misc.No. 1/82 that a sum of Rs. 20,000/- being the interim compensation paid to the Ex-operator (first respondent herein) need not be deducted out of the amount of compensation for the value of the vehicle acquired and the entire compensation fixed shall be paid to secured creditor, Respondent- 2 herein.
2. A few facts that are necessary for the disposal of the Appeal are as follows:
First respondent M.S. Shivananda was the Ex-operator of the contract carriage bus bearing registration No. 6366, which came to be acquired and vested in the State Government under Section 4 of the Karnataka Contract Carriages (Acquisition) Act, 1976, (hereinafter referred to as the 'Act'). Later, however, when the operator made an application for compensation, it was referred to the Arbitrator, the learned District Judge, Mysore, under Section 6(1)(b) of the Act. The learned District Judge-Arbitrator recorded the evidence, held an enquiry, heard the learned Counsel on both sides and proceeded to make an award, assessing the value of the contract carriage so acquired in a sum of Rs. 77,890. Out of it, Rs. 6,500/- towards the due was deducted. So the net compensation for the vehicle acquired was determined at Rs. 71,390/-. The contention urged on behalf of the State that the State was entitled to deduction, out of the total compensation, of Rs. 20,000/- paid as interim compensation during the pendency of the proceedings was rejected by the learned Judge, following the order made by this Court in Writ Petition No. 817/1976, The relevant portion in the said order reads: 'The amount paid to the ex-operator, pursuant to the order passed by the High Court, cannot be deducted out of the amount payable to the ex-operator.'
3. Therefore, the questions that arise for consideration in this Appeal are, whether the District Judge-Arbitrator was justified in holding that the sum of Rs. 20,000/- paid as interim compensation to the ex-operator cannot be deducted from the award amount and that the entire amount of compensation has to be paid to the secured creditor.
4. We heard learned Government Advocate appearing for the appellant, though learned Counsel appearing for the respondents is absent. We perused the original records as well as the findings of the Court below. By a careful consideration of several factors including the order made by this Court in W.P.No. 817/1976 and the subsequent events which the learned Judge failed to consider in their proper perspective, the findings of the Court below are required to be reversed.
5. Admittedly, a sum of Rs. 20,000/-, Rs. 10,000/- on 8.6.1976 and another sum of Rs. 10,000/- on 20th April 1977 - was paid to the ex-operator-first respondent herein, following the order made by this Court in W.P.No. 817/1976.
6. In W.P.817/1976, and connected Writ Petitions, disposed of on 11th February 1976, referring to the Act as well as Ordinance, this Court has imposed several conditions. Condition No. 3, at page 6, is as follows:
'(3) The State Government shall pay, irrespective of the right of any financier over the contract carriages in question, a sum of Rs. 10,000/- in respect of each contract carriage to the Contract carriage operator concerned within 1.3.76, subject to the result of the Writ Petitions and any orders to be passed by this Court with regard to the claims of the petitioners, including their claim in respect of damages if any, in the event of their succeeding in the Writ Petitions. In the event of the petitions being dismissed, it is open to the State Government to adjust the above amount against the amount that may be due and payable to the concerned operator in respect of the vehicle. If it is ultimately found that any part of the amount paid under this order is in excess of the amount which would be due and payable to the operator under the provisions of the Ordinance, such excess amount shall be recoverable by the State Government as an arrear of land revenue. In order to enable the State Government to recover the said amount as an arrear of land revenue, the operator concerned shall execute an agreement in favour of the State Government, containing an appropriate terms in that behalf.'
7. Indeed, pursuant to the said condition, the first respondent executed an Agreement on 27.4.1976 which is found in original records at page 29. One of the conditions incorporated and undertaken by the first respondent, operator is that:
'WHEREAS the final award and payment of the cost of acquisition to the person interested is likely to take some time Government has agreed on the direction of the High Court to pay to the Operator a sum of Rs,10,000/- on the owner agreeing to execute a bond in the manner hereinafter appearing.
NOW, therefore in consideration of the sum of Rs. paid by the Government, the Operator hereby agrees with the Government as follows:-
(i) The Government shall be entitled to deduct all sums out of the cost of acquisition as provided in Section 10 of the Ordinance.
(ii) If it transpires that the said sum of Rs. 10,000/- is in excess of the amount which would be due and payable to the operator under the provisions of the Ordinance or if the Government shall be required to pay the cost of acquisition to any other person, the operator shall on demand refund to the Government, the said sum of Rs. 10,000/- or such lesser sum as may be determined by the Government with, interest at six per cent per annum from the date of payment as refundable by him to Government and shall also indemnity the Government against any loss or damage suffered or any costs charges or expenses incurred by the Government by reason of the payment to him in anticipation of the final award.'
8. A similar Agreement dated 14.3.1977 entered into by the parties and found at page 45, contains a similar condition. Therefore, there is no dispute that it is pursuant to the direction in Writ Petition No. 817/76, that the interim compensation was paid and the person who received the compensation had agreed in the Agreement executed by him in that behalf that the interim compensation has to be deducted from out of the compensation ultimately payable to him. On the face of what is discussed above, the learned Judge was not correct in holding that the interim compensation cannot be deducted from the total compensation for the acquisition of the vehicle in question.
9. Now the question is whether the second respondent - The Karnataka Bank would be entitled to be reimbursed out of the amount of award made in favour of the operator and in the event of the amount of award made by the Arbitrator not being sufficient to meet the commitment of the secured creditor-second respondent, how to deal with the said situation? Although this question came to be considered in paragraph 14 in detail, nonetheless, in paragraph 13, the learned Judge has reached the conclusion against the State Government. What is required to be considered is sub-clause 3 of Section 10. It reads:
'The amount due towards the claims of secured creditors are required to be deducted out of the award amount.'
10. But in the instant case, the claim of second respondent is Rs. 1,24,000/-. The question is whether in that event, the award amount not being sufficient to meet the said claim, what is the remedy. It is now brought to our notice by the learned Government Advocate that the second respondent already filed a suit in O.S.No. 284/1979, seeking a decree against the first respondent the ex-operator. Unfortunately, the total amount of the compensation awarded in the instant case is only Rs. 71,390/-. The said sum is not sufficient to make good the claim of the second respondent. Be that as it may, it is not the concern of the Arbitrator,
11. It is enough for this Court to say that having regard to the circumstances referred to above including the order made by this Court in W.P.No,817/1976, and the Agreement between the parties, the sum of Rs. 20,000/- having been paid by way of interim compensation to the ex-operator 1st Respondent shall be deducted out of the amount of compensation payable in favour of the first respondent.
12. It is open to the second respondent to pursue remedy available to him to recover the money payable to him from the first respondent in accordance with law.
13. Thus the conclusion reached on Point No. 2 is required to be reversed. It is accordingly reversed.
In the result, the Appeal is allowed.
The State Government shall be entitled to deduct of a sum of Rs. 20,000/- paid to the first respondent by way of interim compensation, pending disposal of the claim petition, out of Rs. 71,390/- payable to the first respondent by way of compensation. It shall pay the balance to the first respondent accordingly along with the interest awarded by the Court below.