Supreme Court clarifies “paid” and “physical possession” under Section 24 of the 2013 Land Acquisition Act: Indore Development Authority vs. Manohar Lal (2020) INSC 242 (06 March 2020)

Date of the Judgment: 06 March 2020
Citation: (2020) INSC 242
Judges: Arun Mishra, Indira Banerjee, Vineet Saran, M. R. Shah, S. Ravindra Bhat, JJ.

Can a land acquisition be deemed to have lapsed if the compensation has been tendered but not accepted, or if possession has been taken but not formalized through a physical act? The Supreme Court of India recently addressed this crucial question in a batch of appeals concerning Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the 2013 Act). This judgment clarifies the meaning of “paid” and “physical possession” in the context of land acquisition, impacting both landowners and acquiring authorities.

The five-judge bench, led by Justice Arun Mishra, examined the interpretation of Section 24 of the 2013 Act, which provides for the lapsing of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (the 1894 Act). The court considered various aspects of the provision, including the meaning of the terms “paid” and “physical possession,” the effect of interim court orders, and whether Section 24 revives stale claims.

Case Background

The case arose from a series of appeals challenging the interpretation of Section 24 of the 2013 Act. The core issue revolved around whether land acquisition proceedings initiated under the 1894 Act could be deemed to have lapsed if certain conditions were not met. The primary contention was regarding the interpretation of the terms “paid” and “physical possession” as used in Section 24(2) of the 2013 Act.

The main parties involved were the Indore Development Authority (IDA) and various landowners. The IDA sought a clarification on the interpretation of Section 24, arguing that the High Courts had incorrectly applied the provisions, leading to the revival of settled land acquisition cases. The landowners, on the other hand, sought to uphold the interpretation that favored the lapsing of acquisition proceedings where compensation was not fully paid or possession was not physically taken.

The relief sought was a definitive interpretation of Section 24 of the 2013 Act, particularly regarding the conditions for the lapsing of land acquisition proceedings and the criteria for determining whether compensation was “paid” and physical possession was “taken.”

Timeline

Course of Proceedings

The case reached the Supreme Court after a series of conflicting interpretations of Section 24 of the 2013 Act by different High Courts and benches of the Supreme Court. A three-judge bench in Pune Municipal Corporation & Anr v Harakchand Misrimal Solanki & Ors had interpreted Section 24 of the Act of 2013. However, a two-judge bench in Yogesh Neema & Ors v State of Madhya Pradesh doubted the decision in Sree Balaji Nagar Residents Association v State of Tamil Nadu (which had followed Pune Municipal Corporation) and referred the issue to a larger bench. Later, in another appeal, Indore Development Authority v Shailendra, the matter was referred to a larger bench.

The Supreme Court noted that cases which had been concluded were being revived, and landowners, despite refusing compensation, were invoking Section 24 to seek a fresh acquisition. The court also felt that several issues relating to the interpretation of Section 24 had not been considered in Pune Municipal Corporation. Consequently, a three-judge bench in IDA v Shailendra opined that the decision in Pune Municipal Corporation appeared to be per incuriam.

Subsequently, in Indore Development Authority v Shyam Verma & Ors and State of Haryana v Maharana Pratap Charitable Trust (Regd) & Anr, the matter was referred to the Chief Justice of India to constitute an appropriate bench to resolve the larger issues. This led to the constitution of a five-judge bench to address the questions of law.

Legal Framework

The core of the case revolves around Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This section acts as a transitional provision, addressing how acquisitions initiated under the old Land Acquisition Act, 1894, would be handled under the new Act.

Section 24(1) states that if no award has been made under Section 11 of the 1894 Act, then the compensation will be determined under the 2013 Act. However, if an award has been made, then proceedings will continue under the 1894 Act. Section 24(2) is an exception to Section 24(1), which states that if an award was made five years or more before the commencement of the 2013 Act, and either physical possession was not taken or compensation was not paid, the proceedings would lapse.

The proviso to Section 24(2) states that if compensation has not been deposited in the accounts of the majority of land owners, then all the beneficiaries would be entitled to compensation under the 2013 Act.

Other relevant provisions include:

• Section 11 of the Land Acquisition Act, 1894: This section deals with the making of an award by the Collector.
• Section 16 of the Land Acquisition Act, 1894: This section states that the land vests absolutely in the government free from all encumbrances when the Collector takes possession.
• Section 17 of the Land Acquisition Act, 1894: This section deals with special powers in case of urgency, allowing the Collector to take possession of land even before an award is made.
• Section 31 of the Land Acquisition Act, 1894: This section deals with the payment of compensation or deposit of the same in court.
• Section 34 of the Land Acquisition Act, 1894: This section deals with payment of interest if compensation is not paid or deposited on time.
• Section 77 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This section deals with payment of compensation or deposit of the same in Authority.
• Section 80 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This section deals with payment of interest.
• Section 114 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This section deals with repeal and saving.
• Section 6 of the General Clauses Act, 1897: This section deals with the effect of repeal.

Arguments

Arguments on behalf of the Union, States, and Acquiring Bodies:

• The Solicitor General (SG) argued that the Court should overrule the ratio in Pune Municipal Corporation, emphasizing that it did not consider various interpretations of Section 31 of the 1894 Act.
• It was contended that Section 24 is a transitional provision and should be interpreted in line with legislative intent, rather than imposing new standards on past proceedings.
• The SG submitted that Section 24(2) is an exception to Section 24(1)(b), and the contingencies for lapsing should be interpreted to save past transactions where possible.
• The proviso to Section 24(2) was argued to be an exception to Section 24(2), not Section 24(1)(b), and that it provides a middle path by protecting acquisitions where compensation for the majority of landholdings has been deposited.
• The SG argued that the word “or” in Section 24(2) should be read as “and,” making the conditions for lapsing conjunctive rather than disjunctive.
• The expression “paid” should be construed reasonably, not literally, and should include tendering payment, depositing in the treasury, or payment into court, as visualized in Section 31(2) of the 1894 Act.
• It was argued that “deposit” does not necessarily mean “deposit in the Court” and can include deposit in the treasury.
• The learned ASG and other counsel argued that the legislature cannot be presumed to intend an anomalous situation where refusal by a few landowners would result in the lapsing of entire acquisition proceedings.
• It was contended that the mode of taking possession includes drawing a panchnama, and the period covered by an interim order of a court should be excluded for the purpose of Section 24(2).

Arguments on behalf of the Landowners:

• The Act of 2013 is a transformative and radical measure, a welfare state law, unlike the colonial 1894 Act.
• Section 24 should be given effect strictly, as Parliamentary intent was to ensure that acquisition proceedings did not result in oppression and hardship.
• The term “paid” should be literally construed, meaning actual tender of compensation, and in the event of refusal, deposit with the Reference Court.
• The disjunctive word “or” in Section 24(2) should be given its literal meaning, and the two conditions for lapsing should be read disjunctively.
• The proviso to Section 24(2) is an independent provision that operates on its own terms and is linked to Section 24(1)(b), and not Section 24(2).
• There is no valid reason to exclude the period covered by an interim order of a court from the five-year period under Section 24(2).
• The maxim “actus curiae neminem gravabit” has no application here, as it is not a specific rule of law.
• The State’s argument regarding the interpretation of ‘physical possession’ is incorrect. An important distinction is required to be drawn in respect of de jure / constructive / deemed possession and ‘physical’ possession.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. What is the meaning of the expression “paid”/”tender” in Section 24 of the 2013 Act and Section 31 of the 1894 Act? Whether non-deposit of compensation in court under section 31(2) of the Act of 1894 results into lapse of acquisition under section 24(2) of the Act of 2013. What are the consequences of non-deposit in Court especially when compensation has been tendered and refused under section 31(1) of the Act of 1894 and section 24(2) of the Act of 2013? Whether such persons after refusal can take advantage of their wrong/conduct?
2. Whether the word “or” should be read as conjunctive or disjunctive in Section 24(2) of the Act of 2013?
3. What is the true effect of the proviso, does it form part of sub-Section (2) or main Section 24 of the Act of 2013?
4. What is mode of taking possession under the Land Acquisition Act and true meaning of expression the physical possession of the land has not been taken occurring in Section 24(2) of the Act of 2013?
5. Whether the period covered by an interim order of a Court concerning land acquisition proceedings ought to be excluded for the purpose of applicability of Section 24(2) of the Act of 2013?
6. Whether Section 24 of the Act of 2013 revives barred and stale claims? In addition, question of per incuriam and other incidental questions also to be gone into.

The Court also framed the following sub-issues:

• Whether the word “or” in Section 24(2) of the Act of 2013 used in between possession has not been taken or compensation has not been paid to be read as “and” ?
• Whether proviso to Section 24(2) of the Act of 2013 has to be construed as part thereof or proviso to Section 24(1) (b)?
• What meaning is to be given to the word “paid” used in Section 24(2) and “deposited” used in the proviso to Section 24(2)?
• What are the consequences of payment not made?
• What are the consequences of the amount not deposited?
• What is the effect of a person refusing to accept the compensation?

Treatment of the Issue by the Court

Authorities

Decision of the Court

The Supreme Court delivered a comprehensive judgment, clarifying the interpretation of Section 24 of the 2013 Act. The key findings of the court are as follows:

1. Meaning of “Paid”: The court held that the term “paid” in Section 24(2) of the 2013 Act does not mean deposit in the treasury or court. It means that the amount has been tendered and made unconditionally available to the landowner. Deposit is a separate concept under Section 31 of the 1894 Act, and non-deposit does not automatically lead to lapse of acquisition. The court clarified that if compensation is tendered and refused, it does not mean that compensation has not been “paid”.
2. Interpretation of “or”: The court held that the word “or” in Section 24(2) should be read as “nor” or “and,” making the conditions for lapsing conjunctive rather than disjunctive. This means that for acquisition proceedings to lapse, both conditions (non-payment of compensation and non-taking of physical possession) must be met, not just one.
3. Effect of Proviso to Section 24(2): The proviso to Section 24(2) was held to be a part of Section 24(2) itself, not Section 24(1)(b). The proviso provides for higher compensation under the 2013 Act if compensation has not been deposited in the accounts of the majority of landowners.
4. Mode of Taking Possession: The court clarified that the drawing of a panchnama is a valid mode of taking possession, and actual physical possession is not always required. The court also observed that once possession is taken, the land vests absolutely in the State.
5. Exclusion of Time for Interim Orders: The period covered by an interim order of a court should be excluded for the purpose of Section 24(2), as the court’s order should not prejudice either party.
6. Revival of Stale Claims: The court held that Section 24 does not revive stale and barred claims, nor does it reopen concluded proceedings.

The court overruled the decision in Pune Municipal Corporation & Anr v Harakchand Misrimal Solanki & Ors (2014) 3 SCC 183, and Sree Balaji Nagar Residents Association v State of Tamil Nadu (2015) 3 SCC 353. The court clarified that the interpretation of Section 24 should be consistent with the legislative intent and should not lead to anomalous situations or the revival of stale claims.

Impact of the Judgment

The Supreme Court’s judgment in Indore Development Authority vs. Manohar Lal has significant implications for land acquisition cases in India. The key impacts include:

• Clarity on “Paid” and “Physical Possession”: The judgment provides much-needed clarity on the interpretation of “paid” and “physical possession” under Section 24 of the 2013 Act. It clarifies that “paid” does not require deposit in court, and “physical possession” can be achieved through drawing a panchnama.
• Reduced Lapsing of Acquisition Proceedings: By interpreting “or” as “and,” the judgment reduces the likelihood of land acquisition proceedings lapsing. Both non-payment of compensation and non-taking of physical possession must be proven for the proceedings to lapse.
• Protection of Acquisitions: The judgment protects acquisitions where compensation has been tendered and refused, or where possession has been taken through a panchnama. This prevents landowners from exploiting technicalities to seek higher compensation or the lapsing of acquisition proceedings.
• Consistency with Legislative Intent: The judgment aligns the interpretation of Section 24 with the legislative intent, ensuring that the provision is applied as a transitional provision and not as a means to revive stale claims.
• Overruling of Conflicting Judgments: The overruling of Pune Municipal Corporation and Sree Balaji Nagar Residents Association provides a clear and consistent interpretation of Section 24, resolving the conflicting views of different High Courts and benches of the Supreme Court.
• Impact on Landowners and Acquiring Authorities: Landowners can no longer rely on technicalities to seek the lapsing of acquisition proceedings. Acquiring authorities now have a clearer understanding of their obligations and the conditions for a valid acquisition.
• Finality to Land Acquisition Proceedings: The judgment brings finality to land acquisition proceedings, preventing the reopening of settled matters and ensuring that the acquisition process is not unduly delayed.

Overall, the judgment in Indore Development Authority vs. Manohar Lal has brought much-needed clarity and consistency to the interpretation of Section 24 of the 2013 Act, impacting both landowners and acquiring authorities in India.

Key Takeaways

The Supreme Court’s judgment in Indore Development Authority vs. Manohar Lal provides significant clarity on the interpretation of Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Here are the key takeaways:

• “Paid” means tendered and made unconditionally available: The term “paid” in Section 24(2) does not require deposit in court or treasury; it means the compensation has been tendered and made available to the landowner.
• “Or” is read as “and”: The word “or” in Section 24(2) should be interpreted as “and” or “nor,” making the conditions for lapsing conjunctive. Both non-payment of compensation and non-taking of physical possession must be met for acquisition proceedings to lapse.
• Proviso to Section 24(2) is part of Section 24(2): The proviso is part of Section 24(2), not Section 24(1)(b), and it provides for higher compensation in certain situations.
• Panchnama is a valid mode of taking possession: Actual physical possession is not always required; drawing a panchnama is a valid mode of taking possession.
• Interim order period is excluded: The period covered by an interim order of a court should be excluded for the purpose of Section 24(2).
• Section 24 does not revive stale claims: Section 24 does not revive stale and barred claims or reopen concluded proceedings.
• Overruling of previous judgments: The court overruled the decisions in Pune Municipal Corporation & Anr v Harakchand Misrimal Solanki & Ors and Sree Balaji Nagar Residents Association v State of Tamil Nadu.

This judgment has brought much-needed clarity to the interpretation of Section 24, ensuring that land acquisition proceedings are handled in a consistent and fair manner.