SC judgement offers clarity on lapse of land acquisition process

[ecis2016.org] The top court has held that land acquisition proceedings would not lapse if the state had unconditionally offered payment or tendered the compensation

It is conventional wisdom that the Indian state enjoys the power of ‘eminent domain’, which refers to the power of the sovereign to acquire private immovable property for public use, provided the public nature of the usage can be demonstrated beyond doubt, by following a procedure established by law and upon payment of just compensation to the owner of such property. Payment of fair compensation to land owners in exchange of expropriation of their land by the state for public use, forms the most significant component of jurisprudence around land acquisition in India.

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Adhering to the principle that tendering of fair compensation by the state is the crux of land acquisition proceedings in India, a five-judge constitution bench of the Supreme Court of India, in its judgment dated March 6, 2020, in the Indore Development Authority v Manoharlal & Ors. Etc. (2020 (I) OLR 687), has held among other things that land acquisition proceedings would not lapse if the state had unconditionally offered payment or tendered the compensation. The bench clarified that if a person was tendered compensation but refused to accept such compensation, then, it is not open to him to claim lapse of acquisition due to non-payment or non-deposit of compensation.

The confusion over Section 24(2) of the Land Acquisition Act

The primary question before the bench pertained to the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (New LA Act) which deals with the class of cases in which land acquisition proceedings initiated under the now repealed Land Acquisition Act of 1894 (Old LA Act) would stand lapsed. Conflicting interpretations of this Section by two coordinate benches of the SC in the Pune Municipal Corporation & Anr. v. Harakchand Misirimal Solanki & Ors. (AIR 2014 SC 982) in 2014 and the Indore Development Authority v. Shailendra (Dead) Through Lrs. & Ors. (AIR 2018 SC 824) in 2018 led to a reference being made to the bench.

All about the Land Acquisition Act 2013

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Section 24 (2) of the New LA Act states that where an award under the Old LA Act has been made five years or more prior to the commencement of the New LA Act but the physical possession of the land has not been taken or the compensation has not been paid, the said proceedings shall be deemed to have lapsed. The bench had to decide whether the word ‘or’ used in between ‘physical possession of the land has not been taken’ and ‘compensation has not been paid’ should be interpreted as an ‘and’. The second key issue pertained to the meanings of ‘paid’ and ‘deposited’ as used in Section 24(2). The third key issue was to construe when the state can be considered to have failed to take physical possession of the acquired land under Section 24(2).

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SC ruling on lapse of land acquisition proceedings

Overruling all precedents and resolving the ambiguity relating to the interpretation of Section 24(2) of the New LA Act, the bench held that the word ‘or’ used in Section 24(2), should be read as ‘nor’ or as ‘and’. Since Section 24(2) prescribes two negative conditions, even if one condition is satisfied, there is no lapse of acquisition proceedings. Therefore, only if both the conditions mentioned under Section 24(2) have not been fulfilled before the New LA Act came into force, would the land acquisition proceedings lapse. The bench observed that the alternative interpretation would place an undue burden on the state in land acquisition proceedings.

The bench further held that the expression ‘paid’ in the main part of Section 24(2) does not include a deposit of compensation in court. In case a person has been tendered the compensation as provided under the Old LA Act, it is not open to him to claim that acquisition has lapsed under Section 24(2) due to non-payment or non-deposit of compensation in court. The bench went on to add that once the state has tendered the compensation under the Old LA Act, its obligation to pay is fulfilled.

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The bench also clarified that there is no requirement on the state to forcefully remove the previous land owners from the land, in order to claim possession and physically occupy the land. The bench held that once the state makes an award and issues a memorandum, the title no longer rests with the land owner. At this stage, possession vests in the state as an ‘indefeasible right’. So far as the calculation of the five-year time period mentioned under Section 24(2) is concerned, the bench clarified that any interim orders issued by courts must be excluded in the computation of time.

The bench concluded by observing that Section 24(2) of the New LA Act does not allow land owners to reopen settled proceedings, revive claims which are time-barred, or go into the legality of concluded proceedings. Section 24(2) shall only apply to pending proceedings, where the award was given at least five years prior to the commencement of the 2013 Act.

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Impact of the SC judgment on land acquisition

The SC’s judgment is expected to lay the foundation for the expeditious resolution of disputes related to pending acquisition proceedings initiated under the Old LA Act. One may reasonably assume that in the post-COVID-19 era, this would pave the way for rapid physical and allied infrastructure development activities, which were hitherto stuck or delayed due to multifarious litigations involving pending acquisition proceedings. This would undoubtedly augment the initiatives of the government, to achieve its objectives under the ‘Housing for All by 2022’ mission and speedy urban development, as more land parcels will come out of the snares of long-standing litigation and will be made available to the acquiring state or authority, for utilisation towards various infrastructure development and construction activities.

(Subhro Chatterjee is a partner at Khaitan & Co and Harshit Anand is an associate at Khaitan & Co)

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