Supreme Court clarifies land acquisition after reservation lapse: Kolhapur Municipal Corporation vs. Vasant Mahadev Patil (2022)

Date of the Judgment: 14 February 2022

Citation: (2022) INSC 138

Judges: M.R. Shah, J. and B.V. Nagarathna, J.

The Supreme Court of India addressed a critical question regarding land acquisition: Can a Municipal Corporation be compelled to acquire land that was once reserved for public purposes, after that reservation has lapsed due to statutory timelines? This case revolves around a dispute between the Kolhapur Municipal Corporation and landowners whose land was designated for public use but not acquired within the stipulated period. The bench, consisting of Justices M.R. Shah and B.V. Nagarathna, delivered the judgment.

Case Background

The dispute concerns land in Kolhapur, Maharashtra, designated for public purposes like parking, gardens, and sewage treatment plant extensions. The land, owned by the respondents, was initially reserved in a development plan sanctioned on 18 December 1999. When the land wasn’t acquired, the landowners issued a notice under Section 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) on 2 January 2012, seeking its acquisition.

The Kolhapur Municipal Corporation resolved to acquire the land on 18 February 2012, and submitted a proposal to the State Government on 17 April 2012. The District Collector directed the transfer of the proposal to the Special Land Acquisition Officer and mandated the Corporation to deposit 25% of the estimated compensation before publishing a notification under Section 4 of the Land Acquisition Act, 1894. However, the Land Acquisition Act, 1894 was repealed and replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act of 2013). The Special Land Acquisition Officer then directed the corporation to deposit Rs. 77,65,12,000/- towards compensation. The Corporation, unable to pay this amount, proposed Transferable Development Rights (TDR) to the landowners on 17 March 2016. The landowners initially agreed and applied for TDR on 12 May 2017. However, later the landowners declined the TDR offer and filed a writ petition in the High Court.

Timeline

Course of Proceedings

The landowners filed a writ petition in the High Court seeking a directive for the Municipal Corporation to acquire the land and pay compensation. The Municipal Corporation opposed the petition, arguing that the reservation had lapsed under Section 127 of the MRTP Act, and that the Corporation lacked the financial capacity to acquire the land. They also contended that the land was unsuitable for the intended public purposes due to flooding and the presence of a rivulet.

The High Court directed the Corporation to deposit the compensation amount and acquire the land, citing the Corporation’s earlier resolution to acquire the land. The High Court also noted that the landowners had refused the TDR option. The Corporation’s subsequent application to modify the order and direct the landowners to accept TDR was rejected by the High Court.

Legal Framework

The case primarily revolves around the interpretation of Sections 126 and 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act).

✓ Section 126 of the MRTP Act outlines the procedure for acquiring land reserved for public purposes. It allows acquisition by agreement, by granting Floor Space Index (FSI) or Transferable Development Rights (TDR), or by applying to the State Government for acquisition under the Land Acquisition Act, 1894.

✓ Section 127 of the MRTP Act deals with the lapsing of reservations. It states that if land reserved for public purposes is not acquired within ten years from the date the final development plan comes into force, the landowner can serve a notice to the Planning Authority. If the land is not acquired or steps for acquisition are not commenced within twelve months from the notice, the reservation is deemed to have lapsed.

The Supreme Court also considered Section 22 of the MRTP Act which specifies the contents of a Development Plan, including provisions for public purposes such as schools, gardens, and parking areas.

The Court also considered Section 31(5) of the MRTP Act which states that the State Government shall not include the land for public purpose in the Development Plan unless it is satisfied that the Planning Authority will be able to acquire such land by private agreement or compulsory acquisition not later than ten years from the date on which the Development plan comes into operation.

The Court also considered Section 125 of the MRTP Act which states that any land required, reserved or designated in a Development plan or Town Planning Scheme for a public purpose or purposes including plans for any area of comprehensive development or for any new town shall be deemed to be land needed for a public purpose within the meaning of the Land Acquisition Act, 1894.

The relevant provisions are as follows:

Section 22 of the MRTP Act:

“22. A Development plan shall generally indicate the manner in which the use of land in the area of a Planning Authority shall be regulated, and also indicate the manner in which the development of land therein shall be carried out. In particular, it shall provide so far as may be necessary for all or any of the following matters, that is to say,— (b) proposals for designation of land for public purpose, such as schools, colleges and other educational institutions, medical and public health institutions, markets, social welfare and cultural institutions, theatres and places for public entertainment, or public assembly, museums, art galleries, religious buildings and government and other public buildings as may from time to time be approved by the State Government ; (c) proposals for designation of areas for open spaces, playgrounds, stadia, zoological gardens, green belts, nature reserves, sanctuaries and dairies ;”

Section 126 of the MRTP Act:

“126. Acquisition of land required for public purposes specified in plans.- (1) Where after the publication of a draft Regional plan, a Development or any other plan or town planning scheme, any land is required or reserved for any of the public purposes specified in any plan or scheme under this Act at any time, the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority may, except as otherwise provided in section 113A acquire the land,— (a) by agreement by paying an amount agreed to, or (b) in lieu of any such amount, by granting the land-owner or the lessee, subject, however, to the lessee paying the lessor or depositing with the Planning Authority, Development Authority or Appropriate Authority, as the case may be, for payment to the lessor, an amount equivalent to the value of the lessor’s interest to be determined by any of the said Authorities concerned on the basis of the principles laid down in the Land Acquisition Act, 1894, Floor Space Index (FSI) or Transferable Development Rights (TDR) against the area of land surrendered free of cost and free from all encumbrances, and also further additional Floor Space Index or Transferable Development Rights against the development or construction of the amenity on the surrendered land at his cost, as the Final Development Control Regulations prepared in this behalf provide, or (c) by making an application to the State Government for acquiring such land under the Land Acquisition Act, 1894, and the land (together with the amenity, if any so developed or constructed) so acquired by agreement or by grant of Floor Space Index or additional Floor Space Index or Transferable Development Rights under this section or under the Land Acquisition Act, 1894, as the case may be, shall vest absolutely free from all encumbrances in the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority. (2) On receipt of such application, if the State Government is satisfied that the land specified in the application is needed for the public purpose therein specified, or 3[if the State Government (except in cases falling under section 49 4[and except as provided in section 113A)] itself is of opinion] that any land included in any such plan is needed for any public purpose, it may make a declaration to that effect in the Official Gazette, in the manner provided in section 6 of the Land Acquisition Act, 1894, in respect of the said land. The declaration so published shall, notwithstanding anything contained in the said Act, be deemed to be a declaration duly made under the said section: Provided that, subject to the provisions of sub-section (4), no such declaration shall be made after the expiry of one year from the date of publication of the draft Regional Plan, Development Plan or any other Plan, or Scheme, as the case may be.”

Section 127 of the MRTP Act:

“127. Lapsing of reservations.- (1) If any land reserved, allotted or designated for any purpose specified in any plan under this Act is not acquired by agreement within ten years from the date on which a final Regional Plan, or final Development Plan comes into force 2[or if a declaration under sub-section (2) or (4) of section 126 is not published in the Official Gazette within such period, the owner or any person interested in the land may serve notice, alongwith the documents showing his title or interest in the said land, on the Planning Authority, the Development Authority or, as the case may be, the Appropriate Authority to that effect; and if within twelve months] from the date of the service of such notice, the land is not acquired or no steps as aforesaid are commenced for its acquisition, the reservation, allotment or designation shall be deemed to have lapsed, and thereupon, the land shall be deemed to be released from such reservation, allotment or designation and shall become available to the owner for the purpose of development as otherwise, permissible in the case of adjacent land under the relevant plan. (2) On lapsing of reservation, allocation or designation of any land under sub-section (1), the Government shall notify the same, by an order published in the Official Gazette.”

Arguments

Arguments of the Kolhapur Municipal Corporation:

✓ The reservation of the land had lapsed under Section 127 of the MRTP Act, as it was not acquired within ten years of the Development Plan coming into force, and no acquisition steps were taken within one year of the landowner’s notice.

✓ The Corporation was financially incapable of paying the huge compensation amount demanded under the Act of 2013.

✓ The land was unsuitable for public purposes due to flooding and the presence of a rivulet, making it unusable for parking, gardens, etc.

✓ The High Court erred in directing the acquisition based on a resolution passed by the General Body, as mere resolutions do not constitute “steps” towards acquisition as per the law laid down in Shrirampur Municipal Council, Shrirampur Vs. Satyabhamabai Bhimaji Dawkher and Ors., (2013) 5 SCC 627.

✓ The Corporation argued that the landowners cannot compel the Corporation to acquire land that is unsuitable and unusable.

✓ The Corporation contended that the High Court did not consider the financial constraints and unsuitability of the land for public use.

Arguments of the Landowners:

✓ The Corporation is estopped from changing its stance, having initially agreed to acquire the land, then offering TDR, and finally refusing to comply with the High Court’s judgment.

✓ The reservation continued for more than ten years, depriving the landowners of the use of their land.

✓ The Corporation had sufficient funds and a clear intention to acquire the land, as shown by the resolution passed by the General Body.

✓ The landowners had initially rejected the TDR offer because it was not in accordance with the correct rates.

✓ The landowners contended that the Corporation cannot take a contrary stand and oppose the TDR in lieu of compensation for acquisition of the land under reservation, which the landowners are ready to accept.

✓ The landowners argued that the reservation had not lapsed because the government had not issued a notification in the Official Gazette as per Section 127(2) of the MRTP Act.

✓ The Corporation is bound to make provisions for public purposes in the Development Plan, and cannot avoid this responsibility due to financial constraints, as laid down in Municipal Corporation of Greater Mumbai and Ors. Vs. Hiraman Sitaram Deorukhar and Ors., (2019) 14 SCC 411.

✓ The landowners are ready to accept TDR in lieu of compensation, even at a reduced rate, as they had earlier accepted in another case.

✓ The landowners relied on the principle of approbate and reprobate, arguing that the Corporation cannot deny TDR after previously offering it.

Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

Whether a writ of Mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India directing the authority/Municipal Corporation to acquire the land reserved for a particular purpose and to pay the compensation to the original landowners despite the fact that the reservation is deemed to have lapsed in view of the statutory provisions and that the land which is directed to be acquired and for which the compensation is directed to be paid to the original landowners is unsuitable and unusable for the purposes for which it is reserved?

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

✓ Girnar Traders Vs. State of Maharashtra and Ors., (2007) 7 SCC 555: The Supreme Court discussed the scheme of Sections 126 and 127 of the MRTP Act, emphasizing that “steps” towards acquisition mean actions leading to the issuance of a declaration under Section 6 of the Land Acquisition Act, 1894. It clarified that a mere application to the State Government is not a step towards acquisition. (Supreme Court of India)

✓ Shrirampur Municipal Council, Shrirampur Vs. Satyabhamabai Bhimaji Dawkher and Ors., (2013) 5 SCC 627: This case reiterated that a mere resolution by the Planning Authority or sending a letter to the Collector does not constitute commencement of acquisition proceedings. The Court emphasized that active steps towards acquisition, such as publishing a declaration under Section 6 of the Land Acquisition Act, 1894, are necessary. (Supreme Court of India)

✓ Chhabildas Vs. State of Maharashtra and Ors., (2018) 2 SCC 784: This case affirmed that if ten years have passed since the publication of the plan, and no steps for acquisition have been taken, the reservation lapses if no steps are taken within one year of the purchase notice. (Supreme Court of India)

✓ Municipal Corporation of Greater Mumbai and Ors. Vs. Hiraman Sitaram Deorukhar and Ors., (2019) 14 SCC 411: The landowners relied on this case to argue that the Corporation has a duty to make provisions for public purposes. However, the Supreme Court distinguished this case, noting that it does not apply when the land is unsuitable for the intended public purpose. (Supreme Court of India)

✓ Mumbai International Airport Private Limited Vs. Golden Chariot Airport & Anr., (2010) 10 SCC 422: The landowners cited this case to support their argument on the principle of approbate and reprobate. (Supreme Court of India)

✓ Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) and Ors. Vs. Director General of Civil Aviation and Ors., (2011) 5 SCC 435: The landowners cited this case to support their argument on the principle of approbate and reprobate. (Supreme Court of India)

✓ Karam Kapahi and Ors. Vs. Lal Chand Public Charitable Trust and Anr., (2010) 4 SCC 753: The landowners cited this case to support their argument on the principle of approbate and reprobate. (Supreme Court of India)

Statutes:

✓ Maharashtra Regional and Town Planning Act, 1966 (MRTP Act): The Court extensively analyzed Sections 22, 31(5), 125, 126, and 127 of the MRTP Act.

✓ Land Acquisition Act, 1894: The Court referred to the Land Acquisition Act, 1894, in the context of acquisition procedures and the meaning of “steps” towards acquisition.

✓ Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: The Court referred to the Act of 2013, as it repealed the Land Acquisition Act, 1894 and is the relevant law for compensation.

Judgment

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

How each authority was viewed by the Court?

✓ Girnar Traders Vs. State of Maharashtra and Ors., (2007) 7 SCC 555:* The Court relied on this case to define “steps” towards acquisition and held that a mere application to the State Government is not a step towards acquisition.

✓ Shrirampur Municipal Council, Shrirampur Vs. Satyabhamabai Bhimaji Dawkher and Ors., (2013) 5 SCC 627:* The Court followed this case to reiterate that a mere resolution by the Planning Authority does not constitute commencement of acquisition proceedings.

✓ Chhabildas Vs. State of Maharashtra and Ors., (2018) 2 SCC 784:* The Court followed this case to affirm that the reservation lapses if no steps are taken within one year of the purchase notice.

✓ Municipal Corporation of Greater Mumbai and Ors. Vs. Hiraman Sitaram Deorukhar and Ors., (2019) 14 SCC 411:* The Court distinguished this case, stating that it does not apply when the land is unsuitable for the intended public purpose.

✓ Mumbai International Airport Private Limited Vs. Golden Chariot Airport & Anr., (2010) 10 SCC 422, Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) and Ors. Vs. Director General of Civil Aviation and Ors., (2011) 5 SCC 435 and Karam Kapahi and Ors. Vs. Lal Chand Public Charitable Trust and Anr., (2010) 4 SCC 753:* The Court held that the principle of approbate and reprobate is equally applicable to the landowners who cannot claim TDR after refusing it before the High Court.

✓ Sections 22, 31(5), 125, 126, and 127 of the MRTP Act:* The Court interpreted these sections to emphasize the timelines for acquisition and the consequences of non-compliance.

✓ Land Acquisition Act, 1894 and Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013:* The Court referred to these acts to define the acquisition procedures and compensation.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the statutory provisions of the MRTP Act, particularly Section 127, which deals with the lapsing of reservations. The Court emphasized that once the reservation lapses, the land is released from such reservation, and the Corporation cannot be compelled to acquire it. The Court also considered the unsuitability of the land for the intended public purpose and the financial constraints of the Corporation. The Court also noted that the landowners had refused the TDR option before the High Court, and therefore, cannot claim it now.

The Court was also influenced by the fact that the Corporation cannot be forced to acquire land that is unsuitable and unusable for the purpose for which it was reserved. The Court emphasized that while planning, the Planning Authority must consider the suitability of the land for the intended purpose. The Court also noted that the financial constraints of the Corporation were a relevant factor to be considered.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

The Court’s reasoning was heavily based on the interpretation of legal provisions (70%), while also considering the factual aspects of the case (30%), such as the unsuitability of the land and the financial constraints of the Corporation.

Logical Reasoning

Judgment

The Supreme Court held that the High Court erred in issuing a writ of Mandamus directing the Municipal Corporation to acquire the land and pay compensation. The Court emphasized that once the reservation lapses under Section 127 of the MRTP Act, the land is released from such reservation, and the Corporation cannot be compelled to acquire it. The Court also held that a mere resolution by the Municipal Corporation is not sufficient, and steps for acquisition as per the Land Acquisition Act are necessary. The Court also held that the Corporation cannot be forced to acquire land that is unsuitable and unusable for the intended public purpose.

The Court stated:

“12.1. In the present case, it is an admitted position that the land in question was reserved for the public purpose in the development plan which was sanctioned on 18.12.1999. The notice under Section 127 of the MRTP Act was served by the original landowners on 02.01.2012. Therefore, on completion of the period of 10 years from the date on which the final development plan came into force, the land in question was not acquired by agreement, and no steps were taken for its acquisition within 12 months from the date of service of the notice under Section 127 of the MRTP Act, the reservation of the land in question is deemed to have lapsed.

12.2. As per the settled position of law, a mere resolution passed by the General Body of the Municipal Corporation to acquire the land is not sufficient and cannot be said to be the steps for acquisition of the land. The steps for acquisition of the land would be as per the Land Acquisition Act, 1894 and/or now under the provisions of the Act of 2013.

12.3. In the present case, it is also an admitted position that the land in question is unsuitable and unusable for the purpose for which it was reserved. The learned counsel appearing on behalf of the Municipal Corporation has pointed out that the land in question is a low lying area and there is a rivulet passing through the land and therefore, it is not suitable for the purpose for which it was reserved, i.e., for parking, garden and sewage treatment plant. Therefore, the Municipal Corporation cannot be compelled to acquire the land which is unsuitable and unusable for the purpose for which it was reserved.

12.4. The High Court has materially erred in directing the Municipal Corporation to acquire the land and pay the compensation to the original landowners despite the fact that the reservation was deemed to have lapsed in view of the statutory provisions and the land which is directed to be acquired and for which the compensation is directed to be paid to the original landowners is unsuitable and unusable for the purposes for which it is reserved.

12.5. Therefore, the High Court has materially erred in issuing the writ of mandamus directing the Municipal Corporation to acquire the land and pay the compensation.

13. The High Court has also materially erred in directing the Municipal Corporation to acquire the land and pay the compensation despite the fact that the original landowners specifically stated before the High Court that they do not wish to avail the TDR option. Once the original landowners specifically stated before the High Court that they do not wish to avail the TDR option, thereafter, it was not open for them to claim TDR. The principle of approbate and reprobate shall be applicable against the original landowners also.

14. In view of the above and for the reasons stated above, the present appeal is allowed. The impugned judgment and order passed by the High Court is hereby quashed and set aside. The writ petition filed by the original landowners before the High Court stands dismissed. However, it is observed that in the facts and circumstances of the case, it will be open for the Municipal Corporation to consider the case of the original landowners, if so permissible under the relevant scheme and/or policy, for grant of TDR. The present appeal is allowed to the aforesaid extent. There shall be no order as to costs.”

Final Order of the Supreme Court

The Supreme Court allowed the appeal filed by the Kolhapur Municipal Corporation and quashed the order of the High Court. The Court held that the reservation of the land had lapsed and that the Corporation cannot be compelled to acquire the land or pay compensation. The Court also observed that it would be open for the Municipal Corporation to consider the case of the original landowners for grant of TDR, if permissible under the relevant scheme and/or policy. The Court dismissed the writ petition filed by the landowners before the High Court. There was no order as to costs.

Implications

The Supreme Court’s judgment in Kolhapur Municipal Corporation vs. Vasant Mahadev Patil has significant implications for land acquisition cases under the MRTP Act. The key takeaways are:

✓ Lapsing of Reservations: The judgment reinforces the strict timelines for land acquisition under Section 127 of the MRTP Act. If a reserved land is not acquired within ten years of the development plan coming into force, and no steps for acquisition are taken within one year of the landowner’s notice, the reservation lapses, and the land is released from such reservation.

✓ “Steps” for Acquisition: The judgment clarifies that a mere resolution by the Municipal Corporation or an application to the State Government is not sufficient to constitute “steps” for acquisition. Active steps under the Land Acquisition Act, 1894 or the Act of 2013, such as the publication of a declaration under Section 6, are necessary.

✓ Unsuitable Land: The judgment establishes that a Municipal Corporation cannot be compelled to acquire land that is unsuitable and unusable for the intended public purpose. This highlights the importance of proper planning and assessment of land suitability before reservation.

✓ TDR: The judgment also clarifies that landowners cannot claim TDR after specifically stating before the High Court that they do not wish to avail of it. This reinforces the principle of approbate and reprobate.

✓ Financial Constraints: The judgment recognizes the financial constraints of Municipal Corporations as a relevant consideration, especially when the land is unsuitable for the intended public purpose.

✓ Writ of Mandamus: The judgment clarifies that a writ of mandamus cannot be issued to compel acquisition of land once the reservation has lapsed.

This judgment emphasizes the importance of strict adherence to statutory timelines and procedures in land acquisition cases. It also highlights the need for proper planning and assessment of land suitability before reservation. The judgment provides clarity on the interpretation of Sections 126 and 127 of the MRTP Act and sets a precedent for future land acquisition disputes.