Supreme Court Clarifies Land Acquisition Under KIAD Act: Applicability of 2013 Act (25 January 2017)

Case Background

The respondents owned land in Anganahalli Village, Karnataka. The Karnataka Industrial Areas Development Board (KIADB) sought to acquire this land, along with other lands, for industrial development. A preliminary notification was issued on 15th September 2000, under Section 28(1) of the KIAD Act. Following this, a final notification was issued on 15th June 2005 under Section 28(4) of the KIAD Act for a total of 153 acres and 10 guntas of land.

The KIAD Act outlines a process for compensation, prioritizing agreement between the State Government and the landowner. If no agreement is reached, the matter is referred to the Deputy Commissioner, who determines compensation using procedures of the Land Acquisition Act, 1894. In this case, an Advisory Committee was formed to determine compensation, and a meeting was held on 9th September 2005, to fix compensation with the consent of the landowners. The appellants claimed that a consensus was reached to fix the market rate at Rs. 6,50,000 per acre. However, the respondents denied being party to this agreement.

Timeline:

Course of Proceedings

The respondents filed a writ petition in the High Court of Karnataka, seeking to quash the preliminary and final notifications, arguing that the acquisition proceedings had lapsed because no award was passed within two years of the final notification as required under Section 11A of the Land Acquisition Act, 1894. The Single Judge of the High Court ruled that the respondents were not party to the consent award but allowed the appellants to proceed with fixing the market value as of the date of the final notification.

The respondents then appealed to the Division Bench of the High Court, arguing that the mandatory notice under Section 28(2) of the KIAD Act was not served, and that Section 11A of the Land Acquisition Act, 1894, was applicable, causing the acquisition to lapse. The Division Bench allowed the appeal, quashing the acquisition proceedings, stating that the New LA Act of 2013 was applicable and that the acquisition had lapsed due to non-payment of compensation and non-passing of the award within two years.

Legal Framework

The case revolves around the interpretation of the KIAD Act, the Land Acquisition Act, 1894 (Old LA Act), and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (New LA Act).

Section 28 of the KIAD Act outlines the process for land acquisition, including the issuance of preliminary and final notifications. Section 29 of the KIAD Act deals with compensation, stating that compensation should be determined by agreement. If no agreement is reached, the case is referred to the Deputy Commissioner.

Section 30 of the KIAD Act states that the provisions of the Land Acquisition Act, 1894, shall apply to the Deputy Commissioner’s inquiry and award. However, the Supreme Court had previously held that Section 11A of the Old LA Act, which stipulates a two-year time limit for passing the award, does not apply to acquisitions under the KIAD Act.

The New LA Act of 2013 repealed the Old LA Act. Section 24 of the New LA Act deals with the lapse of acquisition proceedings under certain conditions.

The key legal provisions are:

• Section 28 of the Karnataka Industrial Areas Development Act, 1966 (KIAD Act):
  “(1) If at any time, in the opinion of the State Government, any land is required for the purpose of development by the Board, or for any other purpose in furtherance of the objects of this Act, the State Government may by notification, give notice of its intention to acquire such land.”
• Section 29 of the KIAD Act:
  “(1) Where any land is acquired by the State Government under this Chapter, the State Government shall pay for such acquisition compensation in accordance with the provisions of this Act. (2) Where the amount of compensation has been determined by agreement between the State Government and the person to be compensated, it shall be paid in accordance with such agreement.”
• Section 30 of the KIAD Act:
  “The provisions of the Land Acquisition Act, 1894 (Central Act 1 of 1894) shall mutatis mutandis apply in respect of the enquiry and award by the Deputy Commissioner, the reference to court, the apportionment of compensation and the payment of compensation, in respect of lands acquired under this Chapter.”
• Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (New LA Act): Deals with the lapse of acquisition proceedings.

Arguments

The appellants argued that the compensation was fixed at Rs.6,58,000/- per acre with the consent of the landowners, and the compensation for the respondents’ land was deposited in the Civil Court due to an internal dispute among the respondents. They contended that no award under the Old LA Act was required since the compensation was fixed by consent. They also argued that Section 24(2) of the New LA Act was not applicable, and if at all, Section 24(1) would apply, which does not lead to a deemed lapse of acquisition.

The respondents argued that they had not consented to the compensation and that the Advisory Committee’s decision was not binding on them. They argued that because no consent award was passed, the provisions of Section 24(2) of the New LA Act should apply, leading to the lapse of the acquisition proceedings due to the non-passing of the award within the stipulated time.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (New LA Act), are applicable in the instant case when the land is acquired under the provisions of the KIAD Act?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the Division Bench of the High Court was incorrect in applying Section 24 of the New LA Act to the acquisition proceedings under the KIAD Act. The Court emphasized that the KIAD Act is a self-contained code, and the provisions of the Old LA Act, specifically Section 11A, do not apply to acquisitions under the KIAD Act.

The Court noted that the Single Judge’s decision was correct in directing the appellants to determine the compensation in accordance with Section 29 of the KIAD Act. The appellants were directed to fix the compensation as expeditiously as possible.

The Court also considered the authorities on this point.

The Court quoted from the judgment:

• “The KIAD Act is of course a self-contained code.”
• “The said Act is primarily a law regulating acquisition of land for public purpose and for payment of compensation.”
• “Acquisition of land under the said Act is not concerned solely with the purpose of planned development of any city.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the KIAD Act is a self-contained code, and therefore, the provisions of the Old LA Act, specifically Section 11A, do not apply to acquisitions under the KIAD Act. The court emphasized that the KIAD Act has its own procedures for land acquisition and compensation, which are distinct from those under the Old LA Act. The court also considered the fact that the appellants had acted in good faith, even though they had made an error in assuming the respondents had consented to the compensation.

The court’s reasoning was primarily based on legal interpretation and precedent, rather than on the specific facts of the case.

Logical Reasoning

Key Takeaways

• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, does not automatically apply to land acquisitions under the Karnataka Industrial Areas Development Act, 1966.
• The KIAD Act is a self-contained code, and the time limits for passing awards under the Old Land Acquisition Act do not apply to acquisitions under the KIAD Act.
• Land acquisition proceedings under the KIAD Act do not lapse if the award is not passed within two years, as the KIAD Act has its own procedure for compensation.

Directions

The Supreme Court directed the appellants to fix the compensation in accordance with the provisions of Section 29 of the KIAD Act as expeditiously as possible.

Development of Law

The ratio decidendi of the case is that the KIAD Act is a self-contained code and the provisions of the Old LA Act, specifically Section 11A, do not apply to acquisitions under the KIAD Act. This reaffirms the position established in M. Nagabhushana vs. State of Karnataka [(2011) 3 SCC 408] and clarifies that the New LA Act does not alter this position. There is no change in the previous position of the law, but a clarification of the existing legal framework.

Conclusion

The Supreme Court’s judgment clarifies that the provisions of the New LA Act do not automatically apply to land acquisitions under the KIAD Act. The KIAD Act is a self-contained code, and the time limits for passing awards under the Old LA Act do not apply to acquisitions under the KIAD Act. The Court set aside the Division Bench’s judgment and restored the Single Judge’s direction, requiring the appellants to determine compensation under Section 29 of the KIAD Act.