Supreme Court clarifies compensation and rehabilitation for land acquisition under Coal Bearing Areas Act: Mahanadi Coal Fields Ltd. vs. Mathias Oram (2022) INSC 946 (3 November 2022)

Introduction

Date of the Judgment: 3 November 2022

Citation: (2022) INSC 946

Judges: Uday Umesh Lalit, CJI, S. Ravindra Bhat, J., Bela M. Trivedi, J.

How should the government fairly compensate and rehabilitate people whose lands are acquired for public projects, especially when the acquisition process is prolonged? The Supreme Court of India recently addressed this critical question in a case involving Mahanadi Coalfields Ltd. (MCL), a subsidiary of Coal India Ltd., and landowners from tribal communities whose lands were acquired for coal mining decades ago but were not compensated. The Court’s judgment seeks to bring closure to a long-standing dispute by clarifying the applicable laws and ensuring fair treatment for the displaced persons.

Case Background

The case revolves around land acquisition initiated in 1987 by the Central Government for coal mining in the Sundergarh district of Orissa (now Odisha). The preliminary notification under Section 4(1) of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (CBA Act) was issued on 11 February 1987, followed by a notification for acquisition under Section 7(1) of the CBA Act on 27 July 1987. The final declaration of acquisition under Section 9 of the CBA Act was made on 10 July 1989, vesting the land with the Central Government. On 20 March 1993, the Central Government vested the acquired land with MCL, effective from 17 November 1991.

The landowners, who were not paid compensation for their land, approached the High Court of Judicature at Orissa, seeking direction for compensation. The High Court directed the Central Government and MCL to determine and disburse compensation under the CBA Act. MCL then appealed to the Supreme Court.

Timeline

Legal Framework

The Supreme Court considered the following key legal provisions:

• The Coal Bearing Areas (Acquisition and Development) Act, 1957 (CBA Act): This Act governs the acquisition of land for coal mining. Key sections include:
  • Section 4(1): Preliminary notification for prospecting coal.
  • Section 7(1): Notification for acquisition of notified lands.
  • Section 9: Declaration of acquisition.
  • Section 11: Vesting of acquired land in a company.
  • Section 13(5): Determination of compensation.
• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (R&R Act, 2013): This Act aims to provide fair compensation and rehabilitation for those affected by land acquisition. Key sections include:
  • Section 105: Provisions of this Act not to apply in certain cases or to apply with certain modifications.
  • Section 108: Option to affected families to avail better compensation and rehabilitation and resettlement.
  • Section 41: Special provisions for Scheduled Castes and Scheduled Tribes.
  • Section 42: Reservation and other benefits for Scheduled Castes and Scheduled Tribes.
  • First Schedule: Determination of compensation.
  • Second Schedule: Rehabilitation and resettlement entitlements.
  • Third Schedule: Infrastructural amenities to be provided.
  • Fourth Schedule: Enactments to which the Act does not apply.
• Odisha Resettlement and Rehabilitation Policy, 2006 (R&R Policy 2006): State policy for rehabilitation and resettlement of displaced persons.

The Court also noted that the R&R Act, 2013, under Section 105, initially excluded acquisitions under the CBA Act. However, the Central Government issued a notification on 28 August 2015, under Section 105(3), to apply certain beneficial provisions of the R&R Act, 2013, to acquisitions under the CBA Act.

Arguments

The landowners and their representatives argued the following:

• The effective date for calculating compensation should be the date of survey of the concerned village, not the date of survey in Gopalpur village.

• The R&R Act, 2013, should apply to all cases where compensation had not been disbursed when possession was taken.

• The Commission erred in rejecting the applicability of the R&R Act, 2013, for villages Kiripsira, Jupurunga, Ratansara, and Tumulia.

• Affected individuals should have the option to avail benefits under either the State law or the R&R Act, 2013.

• The cut-off date for deciding resettlement benefits should be the date of the first survey in the concerned village.

• Grandsons and unmarried daughters over 30 years should be entitled to employment benefits under the amended R&R Policy 2006.

• Resettlement plots should be provided instead of cash compensation, as most displaced families belong to vulnerable communities.

• The benefits for Scheduled Tribes should be protected, given that Sundergarh is a Fifth Schedule area.

MCL argued the following:

• The Gopalpur approach of using September 2010 as the cut-off date for compensation should be uniformly applied.

• The Commission correctly declined to award compensation under the R&R Act, 2013, as this Court had clarified that only the Third Schedule of the Act would apply.

• The R&R Policy 2006 should apply, as it was in force when the Gopalpur report was approved.

• The definition of “family” should be interpreted in harmony with the intent of providing employment to one member of the displaced family.

• There was reluctance on the part of the villagers regarding resettlement sites.

• A one-time lumpsum amount should be awarded in lieu of plots.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. The date or dates on which compensation became reckonable (also referred to as the ‘cut-off date’).
2. Applicability of the R&R Act, 2013.
3. Whether the R&R Policy 2006 applied, or the subsequent policy of 2013.
4. If the latter policy (of 2013) applied, then for the purpose of employment benefits, whether the family unit was deemed to be represented by a singular member, or several of them.
5. Whether the Commission could re-open determinations based on change of policies of the State, after its report was accepted by this court.
6. Entitlement to housing plots.
7. Creation of facilities and amenities, such as schools, community centers, medical facilities, etc.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The following table summarizes how the Court treated each submission:

The Court also addressed how each authority was viewed:

• Mahanadi Coal Fields Ltd. & Anr v. Mathias Oram & Ors., (2010) 11 SCC 269: The Court relied on this case for the scheme proposed by the Solicitor General, which was accepted by the court, and the setting up of a Claims Commission.
• State of M.P. v. Narmada Bachao Andolan, (2011) 7 SCC 639: The Court used this case to emphasize the importance of rehabilitation for those displaced by land acquisition.
• Indore Development Authority v. Manohar Lal & Ors., (2020) 8 SCC 129: The Court cited this case to argue that provisions of the 2013 Act relating to determination of compensation must therefore apply.
• Other cases: The Court referred to other cases to highlight the trauma of displacement and the importance of rehabilitation, as well as the nature of the right to property.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by a combination of factors, including the need to provide justice to the displaced persons, the importance of adhering to legal principles, and the practical considerations of implementing the Court’s orders. The Court emphasized the following points:

• Justice for Displaced Persons: The Court acknowledged the long delays and hardships faced by the landowners, many of whom belong to tribal communities. The Court’s decision aimed at providing fair compensation and rehabilitation to these individuals.
• Adherence to Legal Principles: The Court carefully analyzed the provisions of the CBA Act, the R&R Act, 2013, and the R&R Policy 2006 to determine the applicable law and ensure that its decision was in accordance with legal principles.
• Practical Considerations: The Court recognized the need to bring closure to the long-standing dispute and avoid further delays. It sought to balance the need for fair compensation and rehabilitation with the practical considerations of implementing its orders.
• Protection of Tribal Rights: The Court emphasized the need to protect the rights of Scheduled Tribes and Scheduled Castes and ensure that they are not further marginalized by the land acquisition process.

The following table shows the ranking of sentiment analysis of reasons given by the Supreme Court:

The ratio of fact to law in the Supreme Court’s decision is as follows:

Conclusion

The Supreme Court’s judgment in Mahanadi Coal Fields Ltd. & Anr. vs. Mathias Oram & Ors. is a significant step towards ensuring fair compensation and rehabilitation for those displaced by land acquisition. The Court has clarified the applicability of the R&R Act, 2013, and the R&R Policy 2006, and has provided clear directions for the implementation of its orders.

The key directions given by the Supreme Court include:

• The cut-off date for determining compensation is September 2010, as per the Gopalpur model.
• The R&R Act, 2013, applies from 28 August 2015, for villages where reports were not approved before this date.
• The R&R Policy 2006, as amended in 2013, applies for employment benefits.
• A family unit would comprise the head of the family, one major son (or grandson if son is ineligible), and an unmarried daughter for employment benefits.
• Plots should be developed and allotted. If plots are unavailable, a one-time cash settlement of ₹25 lakhs should be provided.
• Facilities as per the Third Schedule of the R&R Act, 2013, must be provided.

Flowchart of the Land Acquisition and Compensation Process