Supreme Court clarifies who is a “person interested” under Land Acquisition Act: Shrachi Burdwan Developers vs. State of West Bengal (2021)

Date of the Judgment: October 5, 2021
Citation: 2021 INSC 684
Judges: M.R. Shah, J. and A.S. Bopanna, J.
Can a private developer challenge a land acquisition award if they are not directly named in the proceedings? The Supreme Court of India addressed this critical question in a recent case, clarifying the definition of a “person interested” under the Land Acquisition Act. This judgment clarifies the rights of parties involved in land acquisition and the scope of judicial review. The bench comprised Justices M.R. Shah and A.S. Bopanna, who delivered a unanimous verdict.

Case Background

The Burdwan Development Authority (BDA) initiated the acquisition of land for a satellite township in Burdwan, West Bengal. Notifications under Section 4 of the Land Acquisition Act were issued in April and May 2005, stating the land was for public purpose. Subsequently, a declaration under Section 6 of the Act was published. Paschim Bardhaman Krishi Kalyan Samity, a group of farmers, challenged these notifications, alleging the acquisition was for private benefit. The High Court dismissed this petition, affirming the acquisition was for public purpose.

Following this, an unregistered Memorandum of Agreement (MoA) was executed between BDA and Bengal Shrachi Housing Development Ltd. (Bengal Shrachi) on March 8, 2006, for development of the acquired land under a public-private partnership. The Land Acquisition Collector then declared an award under Section 12(1) of the Act, with the amount paid by BDA. On February 26, 2007, the State of West Bengal took possession of the land and handed it to BDA, who then transferred it to Bengal Shrachi. Landowners then sought references to the Reference Court under Section 18 of the Act, which enhanced the compensation from Rs. 5,80,700 per acre to Rs. 35,00,000 per acre.

Shrachi Burdwan Developers Private Limited (Shrachi Burdwan), claiming to be an interested party, filed a writ petition before the High Court of Calcutta challenging the enhanced compensation. They argued that they were not given an opportunity to be heard in the reference proceedings.

Timeline

Course of Proceedings

The Reference Court enhanced the compensation for the acquired land. Shrachi Burdwan, not initially a party to the reference proceedings, filed a writ petition (Writ Petition No. 9778(W) of 2012) before the High Court of Calcutta, seeking to challenge the enhanced compensation, claiming to be a “person interested” under Section 3(b) of the Land Acquisition Act. The Single Judge of the High Court allowed the writ petition, setting aside the Reference Court’s award and remanding the matter for a fresh hearing, including Shrachi Burdwan.

The landowners appealed this decision. The Division Bench of the High Court overturned the Single Judge’s order, holding that the writ petition was not maintainable. Subsequently, Shrachi Burdwan filed Civil Appeal No. 5856 of 2021 before the Supreme Court. Separately, the landowners filed Civil Appeal Nos. 5857-5880 of 2021, challenging a subsequent order by the Single Judge that had again quashed the Reference Court’s awards in related execution proceedings.

Legal Framework

The case revolves around the interpretation of Section 3(b) of the Land Acquisition Act, which defines a “person interested” as:

“3(b) The expression “person interested” includes all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act; and a person shall be deemed to be interested in land if he is interested in an easement affecting the land;”

The core issue was whether Shrachi Burdwan, as a developer who had an agreement with the BDA, could be considered a “person interested” entitled to be heard in the reference proceedings. The Supreme Court also considered the scope of Article 226 of the Constitution of India, which grants High Courts the power to issue writs for the enforcement of fundamental rights and other purposes.

Arguments

Arguments by Shrachi Burdwan Developers Private Limited:

• Shrachi Burdwan argued that it was a “person interested” under Section 3(b) of the Land Acquisition Act because the ultimate financial burden of the enhanced compensation would fall on them.
• They contended that they should have been impleaded as a party in the reference proceedings under Section 18 of the Act.
• They argued that the High Court had the power to entertain the writ petition under Article 226 of the Constitution of India, challenging the judgment and award passed by the Reference Court.
• They relied on several Supreme Court judgments to support their claim that the High Court should intervene when there is a violation of natural justice.

Arguments by the Landowners:

• The landowners argued that Shrachi Burdwan was not a “person interested” under Section 3(b) of the Land Acquisition Act as they were not the direct beneficiaries of the acquisition.
• They contended that the acquisition was for public purpose at public expenses, and the allottee company cannot be said to be a person interested.
• They argued that a writ petition under Article 226 was not maintainable to challenge the Reference Court’s award under Section 26 of the Act.
• They cited the Supreme Court’s decision in Peerappa Hanmantha Harijan (Dead) by Legal Representatives and Ors. Vs. State of Karnataka and Anr., (2015) 10 SCC 469, to support their argument that the company had no right to file an appeal under Section 54 of the Land Acquisition Act.
• They also contended that the company was neither an interested nor a proper party and had no locus to be heard.

Submissions Table:

Innovativeness of the argument: The innovative argument of Shrachi Burdwan was that they are a “person interested” because the ultimate financial burden of the enhanced compensation would fall on them, even though they were not the direct beneficiaries of the acquisition. This argument sought to expand the traditional interpretation of “person interested” under the Land Acquisition Act.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues:

1. Whether the appellant, Shrachi Burdwan, could be considered a ‘person interested’ within the definition of Section 3(b) of the Land Acquisition Act.
2. Whether the High Court was justified in entertaining a writ petition under Article 226 of the Constitution of India, challenging the judgment and award passed by the Reference Court.
3. Whether the Single Judge of the High Court was correct in setting aside the judgment and award passed by the Reference Court.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

• Peerappa Hanmantha Harijan (Dead) by Legal Representatives and Ors. Vs. State of Karnataka and Anr., (2015) 10 SCC 469, Supreme Court of India: This case was cited by the landowners to argue that the appellant company had no right to file the present appeal under Section 54 of the Land Acquisition Act as they are not person aggrieved in this case.
• Satish Kumar Gupta and Ors. Vs. State of Haryana and Ors. (2017) 4 SCC 760, Supreme Court of India: This case was cited by the landowners to argue that the appellant company cannot be said to be either interested or proper party and has no locus to be heard.
• Hindu Kanya Maha Vidyalaya, Jind and Anr. Vs. Municipal Committee, Jind and Ors., (1988) Supp. SCC 719, Supreme Court of India: This case was cited by the landowners to argue that the land has been acquired for public purpose at public expenses for HISDC.

Legal Provisions Considered by the Court:

• Section 3(b) of the Land Acquisition Act: This section defines “person interested.” The court considered whether the appellant fell within this definition.
• Section 18 of the Land Acquisition Act: This section deals with the reference to the court when a person is not satisfied with the compensation amount. The court considered whether the appellant should have been impleaded in the reference proceedings under this section.
• Section 54 of the Land Acquisition Act: This section deals with appeals in land acquisition matters. The court considered whether the appellant had the right to file an appeal under this section.
• Article 226 of the Constitution of India: This article grants High Courts the power to issue writs. The court considered whether the High Court was justified in entertaining a writ petition under this article.

Authority Table:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court did not comment on the authorities cited by the appellant.
• The Supreme Court accepted the landowners’ argument that the appellant was not a “person interested” and that the High Court should not have entertained a writ petition under Article 226 in this case.
• The Supreme Court held that the High Court should not have entertained the writ petition under Article 226, especially when an alternative remedy of appeal was available.

The Supreme Court held that the High Court should not have entertained the writ petition under Article 226 of the Constitution of India challenging the judgment and award passed by the Reference Court. The Court emphasized that the appellant had an alternative remedy of filing an appeal under Section 54 of the Land Acquisition Act, subject to the High Court granting leave to appeal.

The Court observed that the question of whether Shrachi Burdwan was a ‘person interested’ under Section 3(b) of the Act was a disputed question of fact and a contentious issue. Therefore, the High Court should not have entertained the writ petition under Article 226.

The Supreme Court noted that the Single Judge of the High Court, while passing the impugned judgment and order, had not maintained judicial discipline and had passed the judgment and order contrary to the order passed by the Division Bench. The order passed by the Division Bench was binding on the learned Single Judge.

The Supreme Court also noted that the Single Judge had not appreciated that initiating fresh proceedings under Section 18 of the Land Acquisition Act would create several problems, including the question of limitation.

The Court stated, “The question is not about maintainability of the writ petition. The question is with respect to the entertainability of the writ petition and for the reasons stated above, we are of the firm opinion that the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the judgment and award passed by the Reference Court, more particularly, when the appellant would have a remedy to file the appeal under Section 54 with the leave of the Court and if at all the Appellate Court – High Court grants leave to prefer the appeal challenging the judgment and award passed by the Reference Court.”

The Court also observed, “Even otherwise, it is required to be noted that even while passing the judgment and order in Writ Petition No. 9778(W) of 2012, the learned Single Judge remanded the matter to the Reference Court for fresh consideration after giving an opportunity to Shrachi Burdwan, the appellant herein (which as such has been set aside by the Division Bench and confirmed by this Court today) and despite the same by the impugned judgment and order in revision applications, the learned Single Judge has set aside the judgment and award passed by the Reference Court in all the 24 cases and not remanded the matter to the Reference Court but has observed that it will be open for the original landowners to initiate fresh proceedings under Section 18 of the Land Acquisition Act, impleading Shrachi Burdwan – the appellant as a party.”

The Court further observed, “Learned Single Judge has not appreciated that to initiate fresh proceedings under Section 18 of the Land Acquisition Act now would create so many problems including the question of limitation etc.”

The Supreme Court allowed the appeals filed by the landowners (Civil Appeal Nos. 5857-5880 of 2021), setting aside the impugned judgment and order passed by the Single Judge of the High Court. The proceedings before the Executing Court were restored.

The Court clarified that the appellant, Shrachi Burdwan, could pursue remedies available to them under law, including filing an appeal under Section 54 of the Land Acquisition Act, subject to the leave to appeal granted by the High Court. The Court emphasized that the question of whether Shrachi Burdwan was a ‘person interested’ would be considered by the High Court in the appeal proceedings.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The availability of an alternative remedy: The Court emphasized that the appellant had an alternative remedy of filing an appeal under Section 54 of the Land Acquisition Act, subject to the leave to appeal granted by the High Court.
• The disputed nature of facts: The Court noted that the question of whether Shrachi Burdwan was a ‘person interested’ under Section 3(b) of the Act was a disputed question of fact and a contentious issue.
• Judicial discipline: The Court observed that the Single Judge of the High Court had not maintained judicial discipline and had passed the judgment and order contrary to the order passed by the Division Bench.
• The potential for complications: The Court noted that initiating fresh proceedings under Section 18 of the Land Acquisition Act would create several problems, including the question of limitation.

Sentiment Analysis Table:

Ratio Table (Fact:Law):

Logical Reasoning Flowchart:

Key Takeaways

• Alternative remedies: Parties must exhaust alternative remedies, such as appeals, before approaching the High Court under Article 226.
• “Person Interested”: The definition of “person interested” under Section 3(b) of the Land Acquisition Act is not to be expanded to include parties whose interest is not direct.
• Judicial Discipline: Single Judges of High Courts must maintain judicial discipline and follow the orders of Division Benches.
• Procedural Compliance: Courts should be cautious about setting aside orders when there are alternative remedies available and when it would create more problems.

Directions

The Supreme Court directed the Executing Court to proceed further with the execution petitions, subject to any stay granted by the Appellate Court and subject to any further orders passed by the High Court in the applications for leave to appeal/the appeals to be preferred by Shrachi Burdwan.

Development of Law

The ratio decidendi of this case is that a party cannot invoke the writ jurisdiction of the High Court under Article 226 of the Constitution of India when an alternative remedy of appeal is available under the Land Acquisition Act. The Court also clarified that the definition of “person interested” under Section 3(b) of the Land Acquisition Act should not be expanded to include parties who do not have a direct interest in the compensation.

Conclusion

The Supreme Court’s judgment in Shrachi Burdwan Developers Private Limited vs. The State of West Bengal & Ors. clarifies the scope of “person interested” under the Land Acquisition Act and emphasizes the importance of exhausting alternative remedies before approaching the High Court under Article 226. The judgment also underscores the need for judicial discipline in the High Courts. It leaves open the question of whether a developer can be considered a “person interested” and directs the High Court to decide this issue in a proper appeal.

Category

Parent Category: Land Acquisition Act, 1894

Child Categories:

• Section 3(b), Land Acquisition Act, 1894
• Section 18, Land Acquisition Act, 1894
• Section 54, Land Acquisition Act, 1894
• Article 226, Constitution of India
• Person Interested
• Writ Jurisdiction
• Alternative Remedy
• Judicial Discipline

FAQ

Q: What does “person interested” mean under the Land Acquisition Act?

A: Under Section 3(b) of the Land Acquisition Act, a “person interested” includes anyone who claims an interest in the compensation for the acquired land. This usually refers to landowners, but the Supreme Court has clarified that it does not automatically include parties who are not direct beneficiaries of the acquisition.

Q: Can a private developer challenge a land acquisition award?

A: A private developer can challenge a land acquisition award if they are considered a “person interested” under the Act. However, the Supreme Court has clarified that they must first exhaust all other available legal options (such as filing an appeal) before filing a writ petition under Article 226 of the Constitution of India.

Q: What is the significance of Article 226 of the Constitution in this case?

A: Article 226 grants High Courts the power to issue writs for the enforcement of fundamental rights and other purposes. The Supreme Court held that the High Court should not have entertained a writ petition under Article 226 in this case because an alternative remedy (appeal) was available.

Q: What is the main takeaway from this judgment?

A: The main takeaway is that parties must exhaust all available legal remedies before approaching the High Court under Article 226. Also, the definition of “person interested” under Section 3(b) of the Land Acquisition Act should not be expanded to include parties whose interest is not direct.

Q: What should I do if I am affected by a land acquisition?

A: If you are affected by a land acquisition, you should first seek legal advice to understand your rights and options. You may have the right to seek enhanced compensation and you should follow the legal process of filing an appeal if you are not satisfied with the award.