Supreme Court clarifies land acquisition compensation when awards are delayed by court orders: Faizabad-Ayodhya Development Authority vs. Dr. Rajesh Kumar Pandey & Ors. (2022) INSC 518 (20 May 2022)

Date of the Judgment: 20 May 2022
Citation: (2022) INSC 518
Judges: M.R. Shah, J. and B.V. Nagarathna, J.

When land is acquired by the government, is the landowner entitled to higher compensation under the new law if the compensation award was delayed because of a court order? The Supreme Court of India recently tackled this question in a series of appeals. The core issue was whether landowners should receive compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act, 2013) if the award under the old Land Acquisition Act, 1894 (Act, 1894) was not declared due to court-ordered stays.

The bench, comprising Justices M.R. Shah and B.V. Nagarathna, delivered a unanimous judgment. Justice M.R. Shah authored the opinion for the court.

Case Background

These appeals arose from various cases where Development Authorities acquired land for public purposes. In each case, the landowners had challenged the acquisition through writ petitions in the High Court of Judicature at Allahabad, often obtaining interim stay orders that prevented the authorities from declaring awards under Section 11 of the Act, 1894. The key issue was whether the landowners should receive compensation under the Act, 2013, which provides for higher compensation, because the awards were not declared by the time the Act, 2013 came into force.

In Civil Appeal No. 2915 of 2022, the Faizabad Development Authority acquired land in 2005, including land belonging to the respondents. The High Court granted an interim stay, preventing the Authority from taking possession of these specific plots. Consequently, the award for these plots was not declared, while awards for the rest of the acquired land were made.

In Civil Appeal Nos. 2917, 2918 and 2919 of 2022, the Moradabad Development Authority faced similar situations. Landowners challenged the acquisition, and due to interim orders, awards could not be declared under the Act, 1894. The High Court directed the authorities to determine compensation under the Act, 2013, leading to these appeals.

Timeline:

Course of Proceedings

The landowners in all the cases filed writ petitions in the High Court of Judicature at Allahabad, challenging the acquisition proceedings. In Civil Appeal No. 2915 of 2022, the landowners sought a stay on the acquisition of their specific plots, which was granted. The High Court eventually directed the State Government to consider the landowners’ application under Section 48(1) of the Act, 1894, which was later rejected. The landowners then filed another writ petition, arguing that since no award had been made under Section 11 of the Act, 1894, they were entitled to compensation under Section 24(1) of the Act, 2013.

In Civil Appeal Nos. 2917, 2918 and 2919 of 2022, the landowners challenged the acquisition on the ground that the award was not made within two years of the declaration under Section 6 of the Act, 1894. During the hearing, they also argued that since no award had been made, they were entitled to compensation under Section 24(1) of the Act, 2013. The High Court, in all the cases, ruled in favor of the landowners, directing the authorities to determine compensation under the Act, 2013.

Legal Framework

The Supreme Court examined the interplay between the Land Acquisition Act, 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, particularly focusing on Section 24 of the Act, 2013.

Section 11 of the Land Acquisition Act, 1894 outlines the process for the Collector to inquire into objections and make an award determining the compensation to be paid. Section 11A of the Land Acquisition Act, 1894 mandates that the Collector must make an award within two years from the date of the declaration under Section 6 of the Act, 1894, failing which the entire acquisition proceeding would lapse. However, the Explanation to Section 11A of the Land Acquisition Act, 1894 specifies that the period during which any action or proceeding is stayed by a court order is excluded from this two-year period.

Section 24 of the Act, 2013 addresses the lapse of land acquisition proceedings initiated under the Act, 1894. Sub-section (1) of Section 24 of the Act, 2013 states:

“Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 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.”

This means that if no award under Section 11 of the Act, 1894 has been made, the compensation would be determined as per the Act, 2013. However, the court needed to interpret this provision in the context of court-ordered stays.

Arguments

The Development Authorities argued that the High Court erred in directing them to declare awards under Section 24(1) of the Act, 2013. They contended that the awards under Section 11 of the Act, 1894 could not be declared due to the pendency of writ petitions and interim stay orders granted by the High Court. They emphasized that there was no inaction on their part, and they should not be penalized for complying with court orders.

The Authorities relied heavily on the Constitution Bench decision in Indore Development Authority vs. Manoharlal and Ors., (2020) 8 SCC 129, particularly paragraph 366.8, which held that the period of interim orders passed by the court should be excluded when computing the five-year period for lapse of acquisition under Section 24(2) of the Act, 2013. They argued that the same principle should apply to cases where awards could not be declared due to court orders.

The landowners contended that Section 24(1) of the Act, 2013 clearly states that if no award has been declared under Section 11 of the Act, 1894, the provisions of the Act, 2013 would apply. They argued that there is no specific provision in Section 24(1) of the Act, 2013 to exclude the period of interim stay or pendency of writ petitions. They also relied on the decision of this Court in Indore Development Authority (supra), arguing that the moment it is found that no award has been declared under Section 11 of the Act, 1894 at the time of commencement of Act, 2013, the landowner shall be straightaway entitled to the compensation under Section 24(1) of the Act, 2013.

The landowners in Civil Appeal Nos. 2917, 2918 and 2919 of 2022 further argued that the Moradabad Development Authority had stated in its counter-affidavit that the award would be declared under Section 24(1) of the Act, 2013, and therefore, the High Court’s direction should not be interfered with.

Submissions of the Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

✓ Whether in a case where an award under Section 11 of the Land Acquisition Act, 1894 could not be declared by the Authority due to the pendency of the writ petition and/or the interim stay granted by the High Court, which was filed by the landowners and consequently as on the date on which the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act, 2013) came into force, there was no award declared under Section 11 of the Act, 1894, the original landowners shall be entitled to compensation determined under sub-section (1) of Section 24 of the Act, 2013?

Treatment of the Issue by the Court

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

Authorities

The Supreme Court relied on several authorities to reach its decision:

Judgment

The Supreme Court held that landowners cannot claim compensation under the Act, 2013, if the award under the Act, 1894 was delayed due to court orders. The Court emphasized that the intent of the Act, 2013 was not to benefit litigants who obtained stay orders and that such an interpretation would lead to discrimination among landowners.

The Court also discussed how each authority was viewed:

✓ Indore Development Authority vs. Manoharlal and Ors., (2020) 8 SCC 129: The Court followed the principle laid down in this case that the period of stay has to be excluded while computing the period of 5 years for lapse of acquisition under Section 24(2) of the Act, 2013. The court extended the same principle to the interpretation of Section 24(1) of the Act, 2013.

✓ Other authorities were used to support the principles of restitution, that the law does not compel a man to do what he cannot possibly perform, and that the act of the court shall prejudice no man.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors. The Court emphasized the principle of restitution, stating that no party should benefit from a situation created by their own actions, such as obtaining interim stay orders. The Court also highlighted that the intent of the Act, 2013 was not to reward litigants who delay acquisition proceedings but to ensure fair compensation for landowners.

The Court also considered the practical implications of its decision, noting that if landowners who obtained stay orders were allowed to claim compensation under the Act, 2013, it would lead to discrimination among landowners whose lands were acquired under the same notification. This would create an unfair advantage for those who litigated and obtained stay orders, which was not the intention of the Parliament.

The Court also relied on the principle that the law does not compel the performance of the impossible and that an act of the court should not prejudice any party. The Court also observed that the authorities should not be penalized for not declaring the award due to the pendency of writ petitions and interim stay orders.

The sentiment analysis of the reasons given by the Supreme Court is as follows:

The ratio of fact:law was analyzed as follows:

The Court’s reasoning followed a logical pathway:

Conclusion

The Supreme Court’s judgment clarified that the benefit of higher compensation under the Act, 2013, is not automatically available to landowners whose awards were delayed due to court orders. The Court emphasized that the period during which the acquisition proceedings were stayed by the court must be excluded while determining the applicability of the Act, 2013. This decision ensures that the intent of the Act, 2013, which is to provide fair compensation, is not misused by litigants who delay the acquisition process.

The Court also concluded that the statement made by the authority in its counter-affidavit to declare the award under Section 24(1) of the Act, 2013, will not bind the Court to pass a judgment against the law.

This ruling has significant implications for land acquisition cases across India, particularly in situations where court orders have caused delays in the declaration of awards. It reinforces the principle that the law should not be interpreted in a way that rewards litigants for delaying legal proceedings.