Supreme Court Lapses Land Acquisition for Non-Payment of Compensation: Malik Industry vs. State of Haryana (2017)

Date of the Judgment: 12 December 2017

Citation: (2017) INSC 713

Judges: Kurian Joseph, J., Amitava Roy, J.

Can land acquisition proceedings be deemed invalid if the landowners haven’t received their compensation, even if the funds have been deposited with the Land Acquisition Collector? The Supreme Court of India addressed this critical question in a recent case, focusing on the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Court examined whether the mere deposit of compensation with the Collector, without actual payment to the landowners, is sufficient to prevent the lapse of acquisition proceedings. Justices Kurian Joseph and Amitava Roy formed the bench, delivering a unanimous decision.

Case Background

Malik Industry and another party (referred to as “the appellants”) had their land acquired by the State of Haryana. The appellants were aggrieved by the acquisition process and approached the Supreme Court of India. During the pendency of the appeals, the appellants filed an interlocutory application. They argued that, under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as “the 2013 Act”), the entire land acquisition should be considered to have lapsed. The core of their argument was that they had not received the compensation for their land; the amount had only been deposited with the Land Acquisition Collector.

Timeline:

Legal Framework

The central legal provision in this case is 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 under certain conditions. Section 24(2) of the 2013 Act 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:
Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.”

This provision essentially says that if an award was made five or more years before the 2013 Act came into effect, and either physical possession hasn’t been taken or compensation hasn’t been paid, the acquisition proceedings are deemed to have lapsed. The proviso further clarifies that if compensation for most land holdings hasn’t been deposited in the beneficiaries’ accounts, all beneficiaries are entitled to compensation under the 2013 Act.

Arguments

The appellants argued that the land acquisition proceedings should be considered lapsed because they had not received payment of the compensation. They contended that depositing the amount with the Land Acquisition Collector was not equivalent to payment to the landowners. They relied on Section 24(2) of the 2013 Act, asserting that the non-payment of compensation triggered the lapse of the acquisition.

The respondents, on the other hand, admitted that the compensation was not paid to the landowners, but deposited with the Land Acquisition Collector. However, they did not provide any counter argument in the judgment.

The innovativeness of the argument made by the appellants was that they focused on the literal interpretation of the term ‘paid’ in the Section 24(2) of the 2013 Act, emphasizing that mere deposit with the collector does not equate to payment to the landowners.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the land acquisition proceedings should be considered to have lapsed under Section 24(2) of the 2013 Act, given that the compensation was not paid to the landowners but deposited with the Land Acquisition Collector.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court relied on the following authority:

The Court also considered Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The court interpreted the term ‘paid’ in this section to mean that the compensation must be directly received by the landowners and not merely deposited with the Land Acquisition Collector.

Judgment

The following table summarizes how the Court treated each submission made by the parties:

The Supreme Court viewed the authority Pune Municipal Corporation & Anr., v. Harakchand Misirimal Solanki & Ors., (2014) 3 SCC 183* as directly applicable to the present case. The Court stated that the ratio of the case squarely applied and held that the land acquisition proceedings initiated against the appellants stood lapsed. The Court emphasized that the compensation must be paid to the landowners and not merely deposited with the Land Acquisition Collector.

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 2013 Act and the precedent set in Pune Municipal Corporation & Anr., v. Harakchand Misirimal Solanki & Ors., (2014) 3 SCC 183*. The Court emphasized that the term “paid” in Section 24(2) of the 2013 Act requires actual payment to the landowners, not merely depositing the compensation with the Land Acquisition Collector. The Court’s reasoning focused on the need to protect the rights of landowners and ensure they receive the compensation they are entitled to. The Court also gave weight to the fact that the respondents admitted that the compensation was not paid to the landowners.

The Court’s reasoning was that the term “paid” in Section 24(2) of the 2013 Act requires actual payment to the landowners, not merely depositing the compensation with the Land Acquisition Collector. The Court observed that the respondents admitted that the compensation amount was not paid to the appellants, but was only deposited with the Land Acquisition Collector. The Court relied on the judgment in Pune Municipal Corporation & Anr., v. Harakchand Misirimal Solanki & Ors., (2014) 3 SCC 183*, which held that depositing compensation in the treasury is not equivalent to payment to the landowners. The Court stated:

“Therefore, the judgment of this Court in Pune Municipal Corporation & Anr., v. Harakchand Misirimal Solanki & Ors., reported in (2014) 3 SCC 183, as it stands today, squarely applies to these appeals.”

The Court also noted that:

“It is admitted that in the case of the appellants, the compensation amount has not been paid to them; it was only deposited with the Land Acquisition Collector.”

The Court concluded that:

“Accordingly, the appeals are allowed. The land acquisition proceedings initiated against the appellants stand lapsed.”

Key Takeaways

• ✓ Land acquisition proceedings lapse if compensation is not paid directly to landowners, even if the amount is deposited with the Land Acquisition Collector.
• ✓ The term “paid” in Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 requires actual payment to the landowners.
• ✓ Government authorities must ensure that compensation is disbursed to the landowners to avoid the lapse of acquisition proceedings.
• ✓ Landowners have a right to receive their compensation, and mere deposit with the collector does not satisfy this requirement.
• ✓ This judgment reinforces the importance of adhering to the provisions of the 2013 Act to protect the rights of landowners.

Directions

The Supreme Court allowed the appeals and declared the land acquisition proceedings against the appellants lapsed. However, the Court provided the respondents with the opportunity to initiate fresh acquisition proceedings under the 2013 Act within six months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that the term “paid” in Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, means that the compensation must be directly received by the landowners and not merely deposited with the Land Acquisition Collector. This judgment reinforces the interpretation of Section 24(2) as established in Pune Municipal Corporation & Anr., v. Harakchand Misirimal Solanki & Ors., (2014) 3 SCC 183* and does not introduce any new legal principles, but rather applies existing principles to the facts of the case.

Conclusion

In the case of Malik Industry & Anr. vs. State of Haryana & Ors., the Supreme Court held that land acquisition proceedings lapse if compensation is not paid directly to the landowners, even if the amount is deposited with the Land Acquisition Collector. The Court emphasized that the term “paid” in Section 24(2) of the 2013 Act requires actual payment to the landowners. This decision reinforces the importance of protecting the rights of landowners and ensuring they receive the compensation they are entitled to under the law. The Court allowed the appeals and declared the land acquisition proceedings lapsed, while giving the respondents the opportunity to initiate fresh acquisition proceedings under the 2013 Act within six months.