Supreme Court clarifies land acquisition lapse under Section 24(2) of the 2013 Act: Land and Building Department vs. Manish Sethi (2023)

Date of the Judgment: February 17, 2023
Citation: 2023 INSC 124
Judges: M.R. Shah, J., C.T. Ravikumar, J., and Sanjay Karol, J.

Can a land acquisition be deemed to have lapsed if the compensation hasn’t been paid, even if possession has been taken? The Supreme Court addressed this critical question in a recent case concerning the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The court clarified that if possession of the land has been taken, the acquisition does not lapse even if compensation has not been paid. This judgment has significant implications for landowners and acquisition authorities alike. The judgment was delivered by a three-judge bench comprising Justices M.R. Shah, C.T. Ravikumar, and Sanjay Karol, with Justice M.R. Shah authoring the opinion.

Case Background

The Land and Building Department and the Land Acquisition Collector appealed a decision by the High Court of Delhi. The High Court had ruled that the land acquisition in question had lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the “Act, 2013”). The High Court based its decision on the fact that compensation had not been paid to the landowners, relying on a previous Supreme Court judgment in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors. However, the appellants argued that possession of the land had been taken on March 28, 2007.

Timeline

Course of Proceedings

The High Court of Delhi ruled in favor of the landowners, stating that the acquisition had lapsed under Section 24(2) of the Act, 2013, because compensation had not been paid. The High Court relied on the Supreme Court’s decision in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors. The Land and Building Department and the Land Acquisition Collector then appealed to the Supreme Court.

Legal Framework

The case revolves around Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This section deals with the lapse of land acquisition proceedings if certain conditions are met. The Supreme Court also considered the interpretation of this section in light of its previous judgments, particularly the Constitution Bench decision in Indore Development Authority Vs. Manoharlal and Ors.

Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 states:

“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 Act 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.”

Arguments

The appellants (Land and Building Department and the Land Acquisition Collector) argued that the High Court erred in applying the decision in Pune Municipal Corporation, which had been overruled by a Constitution Bench in Indore Development Authority. They emphasized that possession of the land had been taken on March 28, 2007, and therefore, the acquisition could not be deemed to have lapsed under Section 24(2) of the Act, 2013. The appellants relied on the interpretation of Section 24(2) as laid down in Indore Development Authority, where it was held that the word “or” between possession and compensation should be read as “nor” or “and.”

The respondents (Manish Sethi and Ors.) argued that since compensation had not been paid, the acquisition should be deemed to have lapsed under Section 24(2). They relied on the High Court’s decision, which was based on the interpretation of Section 24(2) in Pune Municipal Corporation, where it was held that if either possession was not taken or compensation was not paid, the acquisition would lapse.

Issues Framed by the Supreme Court

The core issue before the Supreme Court was:

1. Whether the acquisition of land in question is deemed to have lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, given that possession was taken on March 28, 2007, but compensation was allegedly not paid?

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 the following authorities:

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s judgment. The Court held that the acquisition did not lapse under Section 24(2) of the Act, 2013, because possession of the land had been taken on March 28, 2007. The Court emphasized that the word “or” in Section 24(2) should be read as “nor” or “and,” as clarified in Indore Development Authority. Therefore, both non-possession and non-payment of compensation are required for the acquisition to lapse. Because possession was taken, the acquisition did not lapse, regardless of whether compensation was paid.

Authorities Viewed by the Court:

Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors. [(2014) 3 SCC 183]* was overruled by the Constitution Bench of the Supreme Court in Indore Development Authority Vs. Manoharlal and Ors.. The Court stated that the interpretation of Section 24(2) in Pune Municipal Corporation was incorrect.

Indore Development Authority Vs. Manoharlal and Ors. [(2020) 8 SCC 129]* was relied upon by the Court. The Constitution Bench clarified that the word “or” in Section 24(2) should be read as “nor” or “and.” This meant that both non-possession and non-payment of compensation were required for the acquisition to lapse.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of Section 24(2) of the Act, 2013, as clarified by the Constitution Bench in Indore Development Authority. The Court emphasized that the word “or” in Section 24(2) should be read as “nor” or “and,” meaning both non-possession and non-payment of compensation are necessary for a deemed lapse. The Court noted that the High Court had incorrectly relied on the overruled decision of Pune Municipal Corporation. The fact that possession had been taken on March 28, 2007, was a crucial factor in the Court’s decision.

The Court’s reasoning was based on the following:

“The decision of this Court in the case of Pune Municipal Corporation and Anr. (supra) has been overruled by the Constitution Bench of this Court in the case of Indore Development Authority Vs. Manoharlal and Ors. reported in (2020) 8 SCC 129.”

“The word “or” used in Section 24(2) between possession and compensation has to be read as “nor” or as “and”. The deemed lapse of land acquisition proceedings under Section 24(2) of the 2013 Act takes place where due to inaction of authorities for five years or more prior to commencement of the said Act, the possession of land has not been taken nor compensation has been paid.”

“In other words, in case possession has been taken, compensation has not been paid then there is no lapse. Similarly, if compensation has been paid, possession has not been taken then there is no lapse.”

Key Takeaways

• ✓ Land acquisition proceedings will not lapse under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, if possession of the land has been taken, regardless of whether compensation has been paid.
• ✓ The word “or” in Section 24(2) should be interpreted as “nor” or “and,” as clarified by the Supreme Court in Indore Development Authority Vs. Manoharlal and Ors..
• ✓ The decision in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors. has been overruled and cannot be relied upon for interpreting Section 24(2).

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The judgment clarifies the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. It reinforces the position of law established in Indore Development Authority Vs. Manoharlal and Ors., which overruled Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors.. The ratio decidendi is that for land acquisition proceedings to lapse under Section 24(2), both possession must not be taken and compensation must not be paid. This settles the legal position that non-payment of compensation alone is insufficient for the acquisition to lapse if possession has been taken.

Conclusion

The Supreme Court’s decision in Land and Building Department and Anr. vs. Manish Sethi and Ors. clarifies that land acquisitions do not lapse under Section 24(2) of the 2013 Act if possession has been taken, even if compensation has not been paid. This judgment reaffirms the interpretation of Section 24(2) as laid down in Indore Development Authority, ensuring that the word “or” is read as “nor” or “and.” This ruling has significant implications for land acquisition proceedings, providing clarity on the conditions under which acquisitions can be deemed to have lapsed.