Supreme Court Clarifies Compensation Disbursement in Land Acquisition Cases: Kazi Moinuddin Kazi Bashiroddin vs. MTDC (2022)

Date of the Judgment: 30 September 2022
Citation: 2022 INSC 848
Judges: Dinesh Maheshwari, J., Sudhanshu Dhulia, J. The judgment was authored by Justice Dinesh Maheshwari.

Can a government body withdraw compensation it deposited for land acquisition, claiming a mistake? The Supreme Court of India addressed this question in a recent case, focusing on the correct interpretation of its previous orders regarding compensation disbursement. This case clarifies how enhanced compensation should be released to landowners during the pendency of appeals by the acquiring agency. The bench comprised Justices Dinesh Maheshwari and Sudhanshu Dhulia, with Justice Maheshwari authoring the judgment.

Case Background

The case revolves around a land acquisition dispute in Aurangabad, Maharashtra. The Maharashtra Tourism Development Corporation (MTDC) acquired land belonging to the appellants for the Ajanta Verul Development Project. The appellants, dissatisfied with the initial compensation, sought an enhancement, which was partly granted by the Reference Court. MTDC then appealed this enhancement. The timeline of events is as follows:

Course of Proceedings

The appellants, dissatisfied with the compensation awarded by the Special Land Acquisition Officer (SLAO), sought a reference under Section 18 of the Land Acquisition Act, 1894. The Reference Court partly allowed their claim, enhancing the compensation. MTDC then filed an appeal in the High Court of Judicature at Bombay, Bench at Aurangabad. The High Court initially stayed the execution of the award on the condition that MTDC deposit 50% of the compensation. Subsequently, the High Court allowed the appellants to withdraw 50% of the deposited amount, with the remaining amount to be placed in a fixed deposit. The appellants then approached the Supreme Court, leading to the order dated 29.01.2018, which modified the High Court’s order, directing the release of 50% of the enhanced compensation without security and the remaining 50% with security. MTDC, after initially depositing an additional amount, sought to withdraw it, claiming a mistake, which was allowed by the High Court. This led to the present appeal before the Supreme Court.

Legal Framework

The case primarily involves the interpretation of orders passed by the High Court and the Supreme Court concerning the disbursement of compensation under the Land Acquisition Act, 1894. Specifically, it deals with the conditions for stay of execution of an award and the release of enhanced compensation to landowners during the pendency of appeals.

The relevant legal provision mentioned is:

• Section 4 of the Land Acquisition Act, 1894: This section deals with the publication of preliminary notification for acquisition of land.
• Section 6 of the Land Acquisition Act, 1894: This section deals with the declaration that the land is required for a public purpose.
• Section 18 of the Land Acquisition Act, 1894: This section provides for a reference to the court for determination of compensation when the landowner is not satisfied with the award.

Arguments

Appellants’ Arguments:

• The appellants argued that the Supreme Court’s order dated 29.01.2018 modified the High Court’s order dated 14.12.2016.
• They contended that the Supreme Court’s order directed the release of 50% of the *enhanced* compensation without security and the remaining 50% with security.
• They emphasized that they had lost their land in 2001 and should not be deprived of the compensation due to technicalities.
• They argued that the order of 29.01.2018 superseded the earlier interlocutory order of the High Court.
• They relied on similar orders passed by the Supreme Court in other cases, where 50% of the enhanced compensation was released without security and the remaining 50% with security.

Respondents’ (MTDC) Arguments:

• MTDC argued that the Supreme Court’s order dated 29.01.2018 only pertained to the 50% amount already deposited as per the High Court’s order dated 14.12.2016.
• They contended that the order of 29.01.2018 did not direct them to deposit the entire enhanced compensation amount.
• They submitted that the additional deposit made on 20.03.2018 was a mistake and they were entitled to withdraw it.
• They argued that the appellants were trying to take advantage of a misinterpretation of the order dated 29.01.2018.
• They relied on the order in Nayara Energy Limited v. The State of Gujarat & Ors. to argue that claimants should only be allowed to withdraw 25% of the enhanced compensation without security.

Issues Framed by the Supreme Court

The core issue before the Supreme Court was:

1. What is the correct interpretation of the Supreme Court’s order dated 29.01.2018 and its effect on the High Court’s order dated 14.12.2016?
2. Whether the order dated 29.01.2018 related to the entire enhanced amount of compensation or only the amount already deposited?

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

What weighed in the mind of the Court?

The Supreme Court emphasized that its orders should be understood on their substance rather than technicalities, especially in cases involving compensation for land losers. The Court noted that when two views are possible, the one that advances justice should be preferred. The Court also observed that the MTDC had initially understood the order of 29.01.2018 correctly when they deposited the remaining 50% of the compensation and their subsequent attempt to withdraw the amount was not justified.

The Court rejected the High Court’s interpretation, emphasizing that the order of 29.01.2018 was intended to ensure that the entire enhanced compensation reached the claimants, with 50% released without security and 50% with security. The Court noted that the MTDC had initially understood this correctly when they deposited the remaining 50% of the compensation.

The Court stated, “In our view, the order dated 29.01.2018 passed by this Court in Civil Appeal No. 1348 of 2018 is required to be interpreted and applied on its substance rather than technicalities.”

The Court further observed, “Moreover, when the matter relates to the payment of amount of compensation to the land losers, if at all two views are possible, the view that advances the cause of justice is always to be preferred rather than the other view, which may draw its strength only from technicalities.”

The Court also noted, “In fact, the applicant-MTDC had correctly understood the meaning, purport and effect of the order dated 29.01.2018 in the first instance when the remaining 50% of the amount of compensation was deposited on 20.03.2018.”

Key Takeaways

• Orders of the Supreme Court should be interpreted based on their substance rather than technicalities.
• In cases involving compensation for land acquisition, a view that advances justice should be preferred.
• When the Supreme Court modifies a High Court order, it is the modified order that prevails.
• The Supreme Court’s order dated 29.01.2018 directed the release of 50% of the *enhanced* compensation without security and the remaining 50% with security.
• Acquiring bodies cannot withdraw compensation deposited based on a claim of a mistake if the deposit was made in compliance with the spirit of the Court’s order.

Directions

The Supreme Court set aside the High Court’s order dated 03.12.2018 and rejected the application filed by MTDC for withdrawal of the deposited amount of compensation.

Development of Law

The ratio decidendi of this case is that when the Supreme Court modifies a High Court order regarding compensation, the modified order prevails and must be interpreted based on its substance rather than technicalities. This case clarifies that the order dated 29.01.2018 directed the release of 50% of the *enhanced* compensation without security and the remaining 50% with security, and not just the amount already deposited. This is a reiteration of the position of law as laid down in Wajidmiya Abdul Raheman Shaikh case.

Conclusion

The Supreme Court’s judgment in Kazi Moinuddin Kazi Bashiroddin vs. MTDC clarifies the interpretation of its orders regarding compensation disbursement in land acquisition cases. The Court emphasized that its orders should be understood on their substance, not technicalities, and that the intent was to ensure the entire enhanced compensation reaches the land losers with 50% released without security and 50% with security. The Court set aside the High Court’s order, preventing the withdrawal of the deposited amount by MTDC.