Supreme Court Clarifies Land Acquisition Rights of Subsequent Purchasers: Shiv Kumar vs. Union of India (2019)

Introduction

Date of the Judgment: 14 October 2019

Citation: Civil Appeal No. 8003 of 2019 (Arising out of S.L.P. (C) No.24726/2019 D.No.25495 of 2019)

Judges: Arun Mishra, J., M.R. Shah, J., B.R. Gavai, J.

Can a person who buys land after the government has already started the process to acquire it, claim that the acquisition is invalid under the new land acquisition law? The Supreme Court of India addressed this important question in a recent case. The core issue was whether a subsequent purchaser of land can invoke the provisions of Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, to challenge the acquisition made under the Land Acquisition Act, 1894. The three-judge bench, consisting of Justices Arun Mishra, M.R. Shah, and B.R. Gavai, delivered the judgment.

Case Background

The case revolves around land in Village Pansali, Delhi, which the government sought to acquire for the Rohini Residential Scheme. The initial notification for acquisition under Section 4 of the Land Acquisition Act, 1894 was issued on 27 October 1999. This was followed by a declaration under Section 6 on 3 April 2000, and the government took possession of the land on 12 May 2000. However, on 5 July 2001, Shiv Kumar and another person purchased the land through a registered sale deed from Satya Narain, who held a Power of Attorney from the original owners.

The purchasers participated in the compensation proceedings under Sections 9 and 10 of the 1894 Act, and an award was passed on 3 April 2002. An unauthorized colony named Deep Vihar also came up in the area. The purchasers claimed that they remained in possession of the land even after the award and that their land was part of the unauthorized colony which was provisionally regularized by the Government of NCT of Delhi. They argued that since the government had not taken actual physical possession, the acquisition should lapse under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which came into force on 1 January 2014. The purchasers then filed a writ petition in the High Court of Delhi, seeking a declaration that the acquisition had lapsed. The High Court dismissed the petition, leading to the appeal before the Supreme Court.

Timeline

Arguments

The purchasers argued that the High Court erred in dismissing their writ petition, contending that they, as subsequent purchasers, are entitled to seek a declaration that the acquisition had lapsed under Section 24(2) of the 2013 Act. They relied on the Supreme Court’s decision in Government (NCT of Delhi) v. Manav Dharam Trust & Anr. (2017) 6 SCC 751, which held that subsequent purchasers are affected by the acquisition and can seek a declaration of lapse. They also argued that the High Court wrongly dismissed their petition based on the fact that their land was part of an unauthorized colony.

The government, represented by the Additional Solicitor General, argued that the purchase of land after the issuance of a notification under Section 4 of the Land Acquisition Act, 1894, is void. They contended that the purchasers had no right to question the land acquisition or invoke Section 24 of the 2013 Act. The government further argued that the decision in Manav Dharam Trust was per incuriam because it ignored several prior decisions of the Supreme Court holding that a sale after a Section 4 notification is void.

The core of the purchasers’ argument was that they were not challenging the acquisition proceedings themselves but were seeking a declaration that the acquisition had lapsed due to the operation of Section 24(2) of the 2013 Act. They contended that the previous rulings regarding the locus standi of subsequent purchasers to challenge acquisition proceedings were not applicable in this context.

The government’s primary argument was that the sale was void, and therefore the purchasers had no legal standing to challenge the acquisition or claim any benefit under the 2013 Act. They relied on a long line of Supreme Court judgments that stated that any transaction after a Section 4 notification does not bind the government and the purchaser’s only right is to receive compensation.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

• Whether a purchaser of property after the issuance of a notification under Section 4 of the Land Acquisition Act, 1894, can invoke the provisions contained in Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered various legal authorities to arrive at its decision. These authorities are categorized below based on the specific legal point they address:

Purchases After Section 4 Notification are Void:

• U.P. Jal Nigam, Lucknow through its Chairman & Anr. v. Kalra Properties (P) Ltd., Lucknow & Ors. (1996) 3 SCC 124 – Held that a sale after a Section 4 notification is void against the State, and the purchaser has no right to challenge the acquisition.
• Sneh Prabha (Smt.) & Ors. v. State of U.P. & Anr. (1996) 7 SCC 426 – Stated that a subsequent purchaser cannot take advantage of land policy, as they purchase at their own peril after a Section 4 notification.
• Meera Sahni v. Lieutenant Governor of Delhi & Ors. (2008) 9 SCC 177 – Reiterated that a subsequent purchaser cannot challenge acquisition proceedings and is only entitled to compensation.
• V. Chandrasekaran & Anr. v. Administrative Officer & Ors. (2012) 12 SCC 133 – Held that a purchaser after a Section 4 notification cannot challenge land acquisition on any ground.
• Rajasthan State Industrial Development and Investment Corpn. v. Subhash Sindhi Cooperative Housing Society, Jaipur & Ors. (2013) 5 SCC 427 – Affirmed that a subsequent purchaser cannot challenge acquisition proceedings and can only claim compensation.
• Rajasthan Housing Board v. New Pink City Nirman Sahkari Samiti Ltd. & Anr., (2015) 7 SCC 601 – Held that a person who purchases land after a Section 4 notification cannot challenge the proceedings.
• M. Venkatesh & Ors. v. Commissioner, Bangalore Development Authority, etc. (2015) 17 SCC 1 – Held that a sale after a preliminary notification is void and the purchaser has limited right to claim compensation.

Power of Attorney Transactions:

• Suraj Lamp and Industries Pvt. Ltd. through Director v. State of Haryana & Anr. (2012) 1 SCC 656 – Held that a power of attorney is not an instrument of transfer and does not create any right, title, or interest in immovable property.

Per Incuriam Decisions:

• Mamleshwar Prasad v. Kanahaiya Lal, (1975) 2 SCC 232
• A.R. Anutulay v. R.S. Nayak, (1988) 2 SCC 602
• State of Uttar Pradesh v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139
• State of B. Shama Rao v. Union Territory of Pondicherry, AIR 1967 SC 1480
• Municipal Corporation of Delhi v. Gurnam Kaur, (1989) 1 SCC 101
• Narmada Bachao Andolan (III) v. State of Madhya Pradesh, AIR 2011 SC 1989
• Hyder Consulting (UK) Ltd. v. State of Odisha, (2015) 2 SCC 189
• Sant Lal Gupta v. Modern Coop. Societies Ltd. 2010 13 SCC 336

Overruled Judgment:

• Government (NCT of Delhi) v. Manav Dharam Trust & Anr. (2017) 6 SCC 751 – Overruled. The Supreme Court held that this judgment was per incuriam as it failed to consider the binding precedents and provisions of the 2013 Act.

Relevant Legal Provisions:

• Section 4 of the Land Acquisition Act, 1894
• Section 6 of the Land Acquisition Act, 1894
• Section 9 of the Land Acquisition Act, 1894
• Section 10 of the Land Acquisition Act, 1894
• Section 11 of the Land Acquisition Act, 1894
• Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Section 3(c) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Section 3(m) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Section 3(r) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Section 3(x) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Section 11(4) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013

Judgment

How each authority was viewed by the Court:

✓ The Supreme Court relied on a consistent line of judgments, including U.P. Jal Nigam v. Kalra Properties [CITATION], Sneh Prabha v. State of U.P. [CITATION], Meera Sahni v. Lieutenant Governor of Delhi [CITATION], V. Chandrasekaran v. Administrative Officer [CITATION], Rajasthan State Industrial Development Corpn. v. Subhash Sindhi Cooperative Housing Society [CITATION], Rajasthan Housing Board v. New Pink City Nirman Sahkari Samiti Ltd. [CITATION], and M. Venkatesh v. Commissioner, Bangalore Development Authority [CITATION], to establish that a purchase after a Section 4 notification is void and confers no right on the purchaser to challenge the acquisition or claim benefits under the 2013 Act.

✓ The Court also relied on Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana [CITATION] to hold that transactions made through power of attorney, agreement to sell, or will do not confer any title or interest in immovable property.

✓ The Court overruled Government (NCT of Delhi) v. Manav Dharam Trust [CITATION], stating it was per incuriam for not considering binding precedents and the provisions of the 2013 Act. The Court emphasized that a Division Bench cannot ignore decisions of larger benches or coordinate benches.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the established legal principle that a sale of land after a notification under Section 4 of the Land Acquisition Act, 1894, is void ab initio. This principle was consistently upheld in numerous prior judgments of the Supreme Court. The Court emphasized that such a sale does not confer any title or right on the purchaser to challenge the acquisition or claim benefits under the 2013 Act.

The Court also focused on the intention of the 2013 Act, which is to benefit the original landowners and affected families, not those who purchase land after the acquisition process has begun. The Court noted that allowing subsequent purchasers to claim benefits would be against public policy and would encourage exploitative practices. The Court also highlighted that the purchasers were trying to take advantage of a void transaction which cannot be validated.

Fact:Law Ratio

The ratio of Fact:Law indicates that the court’s decision was primarily driven by legal considerations (80%) rather than factual aspects (20%) of the case.

Logical Reasoning

The Supreme Court rejected the argument that the purchasers were only seeking a declaration of lapse and not challenging the acquisition proceedings. The Court emphasized that the declaration sought was to get the property back, which is not permissible when the transaction is void.

The Court also rejected the argument that the 2013 Act confers any new rights on purchasers whose sale is void. Instead, the Court noted that Section 11(4) of the 2013 Act prohibits such transactions without the Collector’s permission.

The Court highlighted that the purchasers were trying to take advantage of an illegal transaction and that the provisions of the 2013 Act were intended to benefit original landowners, not those who purchase land after the acquisition process has begun.

The Court concluded that the decision in Manav Dharam Trust was per incuriam and did not lay down the law correctly. The Court emphasized the binding nature of the decisions of larger benches and coordinate benches.

The Court quoted from the judgment as follows:

“It is crystal clear that for seeking the relief under section 24, the proceedings for taking possession under Act of 1894 have been put into question as illusory one, and possession continues with appellants.”

“Given that, the transaction of sale, effected after section 4 notification, is void, is ineffective to transfer the land, such incumbents cannot invoke the provisions of section 24.”

“The declaration that acquisition has lapsed under the Act of 2013 is to get the property back whereas, the transaction once void, is always a void transaction, as no title can be acquired in the land as such no such declaration can be sought.”

Key Takeaways

The Supreme Court’s judgment has several practical implications:

• ✓ Purchasers of land after a notification under Section 4 of the Land Acquisition Act, 1894, cannot challenge the acquisition proceedings or claim benefits under Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
• ✓ Such sales are considered void ab initio, and the purchasers have no legal standing to seek a declaration that the acquisition has lapsed.
• ✓ Transactions made through power of attorney, agreement to sell, or will, do not confer any title or interest in immovable property and cannot be the basis for claiming any rights related to land acquisition.
• ✓ The judgment reinforces the principle that the benefits of the 2013 Act are intended for original landowners and affected families, not for those who purchase land after the acquisition process has begun.
• ✓ The decision in Government (NCT of Delhi) v. Manav Dharam Trust has been overruled, and the legal position regarding the rights of subsequent purchasers in land acquisition cases has been clarified.

Directions

The Supreme Court did not give any specific directions other than dismissing the appeal.

Development of Law

The ratio decidendi of this case is that a person who purchases land after the issuance of a notification under Section 4 of the Land Acquisition Act, 1894, cannot invoke the provisions of Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, to challenge the acquisition. This judgment reaffirms the settled position of law that such sales are void ab initio and do not confer any rights on the purchaser. The Supreme Court has overruled the decision in Government (NCT of Delhi) v. Manav Dharam Trust, thereby clarifying the legal position and reinforcing the binding nature of precedents set by larger benches and coordinate benches.

Conclusion

In conclusion, the Supreme Court dismissed the appeal, holding that purchasers of land after a Section 4 notification cannot challenge the acquisition or claim benefits under the 2013 Act. The Court reaffirmed that such sales are void and that the 2013 Act is intended to benefit original landowners, not subsequent purchasers. This judgment clarifies the legal position on the rights of subsequent purchasers in land acquisition cases and overrules a previous conflicting decision.