Land Acquisition Lapse under the 2013 Act: Supreme Court Refers Issue to Larger Bench in Indore Development Authority vs. Shailendra (2017)

Introduction

Date of the Judgment: 7 December 2017

Citation: 2017 INSC 1045

Judges: Arun Mishra, J., Amitava Roy, J.

Can a land acquisition be deemed to have lapsed if the compensation amount, though awarded, was not deposited in the court but with the Land Acquisition Collector? The Supreme Court of India grappled with this question in a case involving the Indore Development Authority and landowners, ultimately referring the matter to a larger bench for a conclusive decision. This case highlights the complexities surrounding land acquisition laws and the interpretation of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Act of 2013).

The core issue revolves around the interpretation of Section 24 of the Act of 2013, specifically whether the non-deposit of compensation in court, as opposed to with the Land Acquisition Collector, leads to the lapse of acquisition proceedings. The bench, comprising Justices Arun Mishra and Amitava Roy, found that conflicting interpretations of this provision warranted a review by a larger bench.

Case Background

The Indore Development Authority (IDA) initiated land acquisition for the construction of a Ring Road and Link Road on the outskirts of Indore city. The IDA, established under the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 (the Adhiniyam of 1973), formulated Scheme Nos. 124(A) and (B) under Section 50(1) of the Adhiniyam of 1973.

The land was primarily acquired for the Link Road under Scheme 124(B), intended to connect a major road to the Ring Road. While the Ring Road was fully constructed, possession of the land acquired for the Link Road remained with encroachers, not the original landowners. The IDA deposited the compensation with the Land Acquisition Collector, informing the landowners to collect it. However, the landowners refused to accept the compensation.

The IDA published the schemes as per the Adhiniyam of 1973. On 6 February 1991, a request was made to the Collector to acquire the land, and on 2 March 1994, compensation was deposited with the Land Acquisition Collector. A notification under Section 4 of the Land Acquisition Act, 1894 (the Act of 1894) was issued on 23 December 1994, invoking Section 17(1) which dispensed with the enquiry under Section 5A. A declaration under Section 6 was published on 17 March 1995.

Respondent No. 1, the landowner, filed objections before the Land Acquisition Officer (LAO), claiming compensation of Rs. 32,50,000. The LAO passed an award on 14 March 1997, awarding Rs. 7,90,813 to Respondent No. 1. A belated Writ Petition (W.P.) No. 1182 of 1997 was filed to quash the acquisition proceedings, which was allowed on 28 August 1998, holding that the scheme had lapsed after three years and that the enquiry under Section 5A was illegally dispensed with.

A Letters Patent Appeal (LPA) No. 480 of 1998 was preferred before the Division Bench, and a status quo order was passed on 29 January 2000. The LPA was dismissed as not maintainable, but the Supreme Court remitted the matter to the High Court to file a writ appeal under the Madhya Pradesh Uchcha Nyayalaya (Khand Nyaypeeth Ko Appeal) Adhiniyam, 2005. On 4 April 2007, the High Court directed the maintenance of the status quo.

The respondent then filed an application under Section 24(2) of the Act of 2013, claiming that the proceedings had lapsed. The IDA resisted this claim, arguing that the acquisition was complete, the compensation was deposited, and construction was nearly complete.

Timeline:

Legal Framework

The case primarily revolves around the interpretation of the following legal provisions:

• Section 31 of the Land Acquisition Act, 1894: This section deals with the payment of compensation or deposit of the same in court. It mandates that the Collector shall tender payment of the compensation awarded to the persons interested. If they do not consent to receive it, or if there is a dispute, the Collector shall deposit the amount in the court to which a reference under Section 18 would be submitted.
  
  “31. Payment of compensation or deposit of same in Court. – (1) On making an award under section 11, the Collector shall tender payment of the compensation awarded by him to the persons interested entitled thereto according to the award and shall pay it to them unless prevented by some one or more of the contingencies mentioned in the next sub-section. (2) If they shall not consent to receive it, or if there be no person competent to alienate the land, or if there be any dispute as to the title to receive the compensation or as to the apportionment of it, the Collector shall deposit the amount of the compensation in the Court to which a reference under section 18 would be submitted…”
• Section 34 of the Land Acquisition Act, 1894: This section pertains to the payment of interest when the compensation amount is not paid or deposited before taking possession of the land. The Collector is liable to pay interest at a specified rate from the time of taking possession until the amount is paid or deposited.
  
  “34. Payment of interest.– When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of [nine per centum] per annum from the time of so taking possession until it shall have been so paid or deposited: [Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date or expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry.]”
• Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This section stipulates that land acquisition proceedings initiated under the Act of 1894 shall be deemed to have lapsed in certain cases. Specifically, if an award has been made five years or more before the commencement of the Act of 2013, but physical possession of the land has not been taken or the compensation has not been paid, the proceedings shall be deemed to have lapsed.
  
  “24. Land acquisition process under Act No. 1 of 1894 shall be deemed to have lapsed in certain cases.–(1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894,— (a) where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or (b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, as if the said Act has not been repealed. (2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 1894), where an award under the said section 11 has been made five years or more prior to the commencement of this 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 and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act: Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.”
• Section 12 of the Land Acquisition Act, 1894: This section deals with the finality of the award made by the Collector. It states that the award shall be filed in the Collector’s office and shall be final and conclusive evidence of the area and value of the land, and the apportionment of the compensation.
  
  “12. Award of Collector when to be final. – (1) Such award shall be filed in the Collector’s office and shall, except as hereinafter provided, be final and conclusive evidence, as between the Collector and the persons interested, whether they have respectively appeared before the Collector or not, of the true area and value of the land, and the appointment of the compensation among the persons interested. (2) The Collector shall give immediate notice of his award to such of the persons interested as are not present personally or by their representatives when the award is made.”

Arguments

The arguments presented by both sides centered on the interpretation of Section 24(2) of the Act of 2013 and its interplay with Sections 31 and 34 of the Act of 1894.

Arguments of the Indore Development Authority (IDA)

• The IDA argued that the proceedings had not lapsed because compensation was offered to the landowners, but they refused to accept it. The IDA had deposited the compensation with the Land Acquisition Collector, which should be considered sufficient compliance.
• The expression “compensation has not been paid” in Section 24(2) of the Act of 2013 does not mean that the amount has not been deposited under Section 31(2) of the Act of 1894. The only consequence of not depositing the amount in court is the payment of higher interest under Section 34 of the Act of 1894.
• The IDA contended that Section 24(2) applies only when no arrangement for payment of compensation has been made by the acquiring authority. In this case, the compensation was deposited with the Land Acquisition Collector, and the landowners refused to accept it.
• The IDA argued that landowners who have litigated to quash the land acquisition proceedings or have obtained interim orders cannot claim the benefit of Section 24 of the Act of 2013.
• The proviso to Section 24(2) uses the expression “where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries”. This proviso was not applicable as the claim was not made under the proviso to sub-section (2) of Section 24.
• The IDA submitted that in case of failure to deposit the amount before the Reference Court, the only consequence would be a higher rate of interest as per the amended provision of Section 34. The proceedings of acquisition would not lapse.
• The IDA argued that the deposit in the treasury in the landowner’s account cannot be said to be illegal or impermissible as that is as per the standing orders and it is a matter of procedure only where the deposit is made.
• The IDA relied on Hissar Improvement Trust vs. Rukmani Devi and Anr. (1990) (Supp) SCC 806, where the Supreme Court held that interest is payable to the landowner if compensation is not paid or deposited in time.
• The IDA also cited Shri Kishan Das & Ors. v. State of U.P. & Ors. AIR 1996 SC 274, where the Court observed that liability to pay interest arises when possession is taken and the amount is not deposited under Section 31.
• The IDA contended that the object of such deposit is to prevent unnecessary prolongation of the proceedings and accumulation of Collector’s liability for interest and when a party willfully refuses to receive payment by depositing the money in the court, the liability for interest will cease.
• The IDA argued that the Court is bound to prevent the abuse of process of law, and that landowners who deliberately do not accept compensation and repeatedly litigate cannot invoke Section 24.

Arguments of the Landowners

• The landowners argued that the impugned order of the High Court was correct and in line with the Supreme Court’s decisions in Pune Municipal Corporation & Anr. v. Harakchand Misirimal Solanki & Anr. (2014) 3 SCC 183 and Shree Balaji Nagar Residential Association v. State of Tamil Nadu (2015) 3 SCC 353.
• They contended that the proceedings had lapsed under Section 24(2) of the Act of 2013 as the compensation had not been paid.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered list but the core issue that the court identified was:

• Whether the land acquisition proceedings lapsed under Section 24(2) of the Act of 2013 when the compensation was not deposited in court as per Section 31(2) of the Act of 1894, but was deposited with the Land Acquisition Collector.

Treatment of the Issue by the Court

The following table demonstrates how the Court dealt with the issue:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court did not issue a final judgment on the merits of the case but referred it to a larger bench. The Court’s analysis focused on the interpretation of Section 24(2) of the Act of 2013 and its interplay with Sections 31 and 34 of the Act of 1894.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court noted that the High Court relied on Pune Municipal Corporation & Anr. v. Harakchand Misirimal Solanki & Anr. (2014) 3 SCC 183 and Shree Balaji Nagar Residential Association v. State of Tamil Nadu (2015) 3 SCC 353, but did not consider the difference between “payment” and “deposit” and the specific provisions of Sections 31 and 34 of the Act of 1894.
• The Court acknowledged the IDA’s reliance on Hissar Improvement Trust vs. Rukmani Devi and Anr. (1990) (Supp) SCC 806 and Shri Kishan Das & Ors. v. State of U.P. & Ors. AIR 1996 SC 274 regarding the payment of interest.
• The Court did not make any express comments on the other authorities cited.

The Supreme Court observed that the expression ‘compensation has not been paid’ in Section 24(2) does not relate to deposit of the amount as envisaged under Section 31(2) of the Act of 1894. The proviso to sub-section (2) of Section 24 uses the expression “where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries”. The Court noted that there is a vast difference between the provision of Section 24(2) and its proviso. The expressions payment and deposit are used with different objectives.

The Court also noted that Section 31 of the Act of 1894 clearly shows that the consequence of non-compliance of sub-section (1) or sub-section (2) thereof is not that the acquisition proceedings become invalid. The Act of 1894 never intended that the consequence of non-compliance of said provision of the Act, proceedings would become invalid.

The Court observed that there is already a reference made as to the applicability of section 24 in SLP [C] No.10742/2008 — Yogesh Neema & Ors. v. State of M.P. & Ors. vide order dated 12.1.2016. There are several other issues arising which have been mentioned above but have not been considered in Pune Municipal Corpn. (supra). Thus, here is a case where the matter should be considered by a larger Bench.

What weighed in the mind of the Court?

The Supreme Court’s decision to refer the matter to a larger bench was primarily influenced by the need for a clear interpretation of Section 24(2) of the Act of 2013, particularly concerning the meaning of “compensation has not been paid.” The Court recognized the conflicting interpretations and the need for a conclusive decision on whether the deposit of compensation with the Land Acquisition Collector, instead of the court, is sufficient to prevent the lapse of acquisition proceedings. The Court was also concerned about the implications of the High Court’s reliance on previous judgments without considering the specific nuances of the case.

Fact:Law Ratio

The Supreme Court’s decision to refer the matter to a larger bench indicates a strong emphasis on the legal interpretation of Section 24(2) of the Act of 2013. The factual aspects of the case, such as the deposit of compensation with the Land Acquisition Collector and the landowners’ refusal to accept it, were considered in the context of this legal question. The legal interpretation of “compensation has not been paid” and the distinction between “payment” and “deposit” were central to the Court’s reasoning. Therefore, the legal aspect of the case holds more weight than the factual aspect in the Court’s decision-making process.

Flowchart: Decision-Making Process

Conclusion

The case of Indore Development Authority vs. Shailendra (2017) is a significant one in the realm of land acquisition law in India. The Supreme Court’s decision to refer the matter to a larger bench underscores the complexities and ambiguities surrounding the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The core issue revolves around whether the deposit of compensation with the Land Acquisition Collector, instead of the court, suffices to prevent the lapse of acquisition proceedings. The Court’s analysis highlights the need for a clear and consistent interpretation of the law, especially concerning the rights of landowners and the obligations of acquiring authorities. The outcome of the larger bench’s decision will have far-reaching implications for future land acquisition cases in India.