Supreme Court Orders Fresh Compensation for Land Acquisition Delay: Loonkaran Gandhi vs. State of Maharashtra (2023)

Date of the Judgment: 6 September 2023
Citation: Not Available
Judges: Justice Surya Kant and Justice J.K. Maheshwari

Can the State delay compensation for land acquisition indefinitely? The Supreme Court of India recently addressed this critical issue in a case where a landowner waited decades for fair compensation. The core issue revolved around the legality of acquisition proceedings under the Nagpur Improvement Trust Act, 1936 (NIT Act) and the Land Acquisition Act, 1894 (LA Act), specifically focusing on the impact of delays in determining and paying compensation to the landowner. The bench, comprising Justice Surya Kant and Justice J.K. Maheshwari, delivered the judgment.

Case Background

In 1943, the father of the appellant (referred to as the ‘landowner’) purchased two plots of land in Mouza Khamla, District Nagpur, Maharashtra, at an auction for Rs. 880. These plots were previously owned by ‘Ex-Malguzar Pande.’ The sale deeds were executed on 02 March 1944, and the revenue records were updated in the landowner’s name on 09 May 1962. In 1962, the Nagpur Improvement Trust (NIT) initiated the ‘Ajni Street Scheme,’ requiring land, including the landowner’s plot. A notification was published on 12 July 1962, under Section 39 of the NIT Act, similar to Section 4 of the LA Act, but it did not include the specific plot numbers of the landowner. A final declaration was made on 16 January 1969. In 1970, NIT constructed a road on 5390 sq. ft. of the landowner’s land, which was part of a larger plot measuring 9800 sq. ft. This road has been in public use since then.

Despite the land being used for public purposes, the landowner was not adequately compensated. Notices were issued under Section 9(3) of the LA Act on 18 July 1974, 07 September 1974, and 18 October 1977, but none of these notices mentioned the specific plot number belonging to the landowner. The landowner filed a claim, requesting that his land be discharged from acquisition proceedings, as his plot number was not mentioned in the notices. The Special Land Acquisition Officer (SLAO) separated the landowner’s case from other claims on 01 August 1981. The landowner then requested an alternate plot in the same vicinity, as the road was already constructed on his land. This request was denied on 06 March 1987. The landowner then sent a legal notice on 02 September 1987, seeking details of the acquisition proceedings, but received no clear response. After several representations, the landowner filed a writ petition in 1992 before the High Court of Judicature at Bombay, Nagpur Bench, seeking compensation and damages.

Timeline:

Course of Proceedings

The High Court of Judicature at Bombay, Nagpur Bench, partly allowed the writ petition, directing NIT to consider granting an alternate plot to the landowner by 31 January 2010 or, failing that, to determine compensation and pay damages as per Section 48-A of the LA Act by 30 April 2010. NIT rejected the request for an alternate plot, stating that there was no provision under the NIT Act to grant an alternate plot in lieu of compensation. The award was not passed within the stipulated time by the High Court. The matter then reached the Supreme Court, where the appellant initially sought an alternate plot, but later agreed to accept compensation at the current market rate. However, NIT stated that compensation at the current market rate was not possible and informed that an award of Rs. 54,717 had been passed. The appellant then submitted a valuation report showing the current market value of the land at Rs. 3,93,45,696, and requested the Court to use its powers under Article 142 of the Constitution of India to grant appropriate relief.

Legal Framework

The case is governed by the Nagpur Improvement Trust Act, 1936 (NIT Act), and the Land Acquisition Act, 1894 (LA Act). The NIT Act allows the NIT to acquire land for development schemes with the prior sanction of the State Government, using the LA Act as a guide. Section 59 of the NIT Act states that the NIT may acquire land under the LA Act as modified by the NIT Act. Section 61(b) of the NIT Act specifies that the provisions of the LA Act apply to land acquisition, subject to modifications in the Schedule of the NIT Act. Section 67 of the NIT Act clarifies that the LA Act provisions are applicable for determining compensation for acquired land. The Schedule of the NIT Act modifies the LA Act by adding Section 17-A and Section 48-A.

• Section 17-A of the LA Act (as modified by the NIT Act):
  “In every case referred to in section 16 or section 17, the Collector shall, upon payment of the cost of acquisition, make over change of the land to the Trust and the land shall thereupon vest in the Trust, subject to the liability of the Trust to pay any further costs which may be incurred on account of its acquisition.” This section deals with the transfer of land to the Trust after payment of acquisition costs.
• Section 48-A of the LA Act (as modified by the NIT Act):
  “(1) If within a period of two years from the date of the publication of the declaration under section 6 in respect of any land, the Collector has not made an award under section 11 with respect to such land, the owner of the land shall, unless he has been to a material extent responsible for the delay, be entitled to receive compensation for the damage suffered by him in consequence of the delay. (2) The provisions of Part III of this Act, shall apply so far as may be, to the determination of the compensation payable under this section.” This section provides for compensation for damages suffered due to delays in passing the award.

The Supreme Court highlighted that the applicability of Section 11 of the LA Act, which deals with enquiry and award, and Section 16 of the LA Act, which deals with the power of the Collector to take possession, is essential even in acquisitions under the NIT Act. Additionally, Section 9 of the LA Act, concerning the issuance of notices to interested parties, is an integral part of the acquisition process. The court also noted that Section 11-A of the LA Act, which mandates that an award be passed within two years, does not apply to acquisitions under the NIT Act.

Arguments

Appellant’s Submissions:

• The appellant argued that the acquisition proceedings should lapse due to non-compliance with Section 11A of the LA Act, which requires the award to be passed within two years.
• The appellant initially sought an alternate plot of land in the same vicinity as compensation, arguing that possession of his land was taken in 1970, and a road was constructed on it.
• The appellant contended that there was an inordinate delay in determining compensation, and the authorities had not followed due process, especially since his land was not specifically mentioned in the initial acquisition notifications.
• The appellant argued that the ex-parte award passed was without notice, violating Section 12(2) of the LA Act.
• The appellant requested the Court to invoke Article 142 of the Constitution and order compensation based on the current market value of the land, given the prolonged delay.

Respondent’s Submissions (NIT and State):

• The respondents argued that Section 11A of the LA Act is not applicable to acquisitions under the NIT Act, as the NIT Act is a complete code in itself.
• The respondents contended that the grant of an alternate plot is not possible under the NIT Act.
• The respondents argued that the order passed by SLAO on 01 August 1981, separating the papers of the land owner, was not an order of discharge, and thus, the land was still under acquisition.
• The respondents claimed that the delay was partly attributable to the landowner and that the compensation awarded was adequate.
• The respondents argued that the writ petition was filed after an inordinate delay and should be dismissed on the ground of laches.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the High Court’s judgment negating the appellant’s plea for the acquisition proceedings to lapse under Section 11A of the LA Act is liable to be interfered with?
2. Whether the decision of NIT refusing to grant an alternative plot, as directed by the High Court, requires interference in this appeal?
3. Whether, in the peculiar facts of the case, considering the delay in determining compensation despite time-bound directions by the High Court, what suitable relief can be granted to the appellant?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• Nagpur Improvement Trust vs. Vasantrao and Others [CITATION] and Bankatlal vs. Special Land Acquisition Officer and Another [CITATION]: The Supreme Court relied on these cases to confirm that Section 11A of the LA Act does not apply to acquisitions under the NIT Act.
• Section 17-A of the LA Act (as modified by the NIT Act): The Court observed that passing of an award is a necessary pre-condition to vest the land with NIT.
• Section 48-A of the LA Act (as modified by the NIT Act): The Court relied on this section to direct compensation for damages suffered due to the delay.
• Tukaram Kana Joshi and Others vs. Maharashtra Industrial Development Corporation [CITATION]: The Court referred to this case to emphasize the obligation of the State to provide adequate compensation and rehabilitation.
• Bhimandas Ambwani (Dead) through LRs vs. Delhi Power Company Limited [CITATION]: The Court followed this case to address inordinate delays in compensation and to direct that the award be made as per the current date.
• Delhi Airtech Services Pvt. Ltd. and Another vs. State of U.P. and Another [CITATION]: The Court followed this case to mould the relief instead of holding the acquisition to have lapsed.
• K. Krishna Reddy and Others vs. Special Deputy Collector, Land Acquisition Unit II [CITATION]: The Court used this case to highlight the effect of non-determination and delay in payment of compensation on the land loser.

What weighed in the mind of the Court?

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

• Inordinate Delay: The Court was deeply concerned about the inordinate delay of over five decades in determining and paying compensation to the landowner. This delay was seen as a violation of the landowner’s rights and a failure of the state authorities to act diligently.
• Violation of Rights: The Court emphasized that the right to property is a human and civil right, and the state cannot deprive individuals of this right without providing adequate compensation in a timely manner. The court noted that the authorities treated the landowner as a “subject” rather than a “citizen.”
• Need for Fair Compensation: The Court recognized that the value of money diminishes over time due to inflation. Therefore, compensation based on the market value at the time of the original notification would not be fair. The court emphasized the need to provide compensation that reflects the current value of the land.
• Statutory Obligations: The Court highlighted the statutory obligations of the state authorities to complete acquisition proceedings promptly and to make payments of requisite compensation. The court noted that the authorities failed to adhere to the time-bound directions given by the High Court.
• Balancing State Power and Individual Rights: The Court aimed to strike a balance between the state’s eminent domain and the fundamental rights of the individual. It emphasized that while the state has the power to acquire land for public purposes, it must do so in a manner that is fair and just to the land owners.
• Moulding Relief: The Court invoked its power to mould relief under Article 142 of the Constitution to ensure that justice was done in the case. The court recognized the need to provide a practical solution that addresses the specific circumstances of the case.

Fact:Law Ratio Analysis:

The ratio of Fact to Law is 40:60. This indicates that while the Court considered the factual aspects of the case, such as the inordinate delay and the specific circumstances of the land acquisition, the legal aspects, including the interpretation of the NIT Act and the LA Act, along with the relevant precedents, played a more significant role in its final decision.

Key Takeaways

• Timely Compensation: The judgment emphasizes the importance of timely compensation in land acquisition cases. The State and its authorities have a duty to ensure that land owners are compensated fairly and promptly.
• Adherence to Legal Procedures: The authorities must adhere to the legal procedures laid down in the applicable statutes, including the issuance of proper notices and the determination of compensation within a reasonable time.
• No Lapsing of Acquisition under NIT Act: Section 11A of the LA Act, which provides for lapsing of acquisition proceedings, does not apply to acquisitions under the NIT Act.
• Compensation for Delay: Land owners are entitled to compensation for damages suffered due to delays in the acquisition process, as per Section 48-A of the LA Act.
• Fair Market Value: In cases of inordinate delay, compensation should be determined based on the market value of the land at a later date, rather than the date of the original notification.
• Balancing State Power and Individual Rights: The judgment highlights the need to balance the state’s power to acquire land for public purposes with the fundamental rights of land owners to receive fair and timely compensation.

Directions

The Supreme Court issued the following directions:

1. The ex-parte award dated 30 April 2013, is set aside.
2. The Special Land Acquisition Officer (SLAO) is directed to determine the compensation afresh.
3. The SLAO shall take the market value of the subject land as on the date of passing of the ex-parte award, i.e., 30 April 2013.
4. The appellant is entitled to all other statutory benefits as per the provisions of the LA Act, calculated from the date of notification.
5. The appellant is also entitled to compensation for damages suffered due to delay, as per Section 48-A of the LA Act.
6. The SLAO shall complete the exercise within four months from the date of appearance of theparties.
7. The parties are directed to appear before the SLAO on 22 September 2023.