Supreme Court quashes High Court order directing land acquisition: Kolhapur Municipal Corporation vs. Vasant Mahadev Patil (2022)

Introduction

Date of the Judgment: 14 February 2022
Citation: 2022 INSC 179
Judges: M.R. Shah, J. and B.V. Nagarathna, J. (authored by M.R. Shah, J.)

Can a Municipal Corporation be forced to acquire land that is unsuitable for its intended purpose, especially after the reservation for that purpose has lapsed? The Supreme Court of India recently addressed this critical question, overturning a High Court decision that mandated such an acquisition. This case highlights the importance of adhering to statutory timelines in land acquisition and ensuring the suitability of land for public purposes.

Case Background

The dispute revolves around land owned by Vasant Mahadev Patil (now deceased, represented by legal heirs) in Kolhapur. This land, measuring 3 Hectors and 65 Ares, was designated in the city’s development plan of 1999 for various public purposes, including parking, a garden, and an extension of a sewage treatment plant. The Kolhapur Municipal Corporation did not acquire the land within the stipulated time. Consequently, the landowners issued a notice under Section 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) on 02 January 2012, requesting the land’s acquisition.

The Municipal Corporation resolved to acquire the property on 18 February 2012 and submitted a proposal to the State Government on 17 April 2012. The District Collector directed the proposal to the Special Land Acquisition Officer (SLAO) on 07 July 2012, requiring the Corporation to deposit 25% of the estimated compensation before publishing a notification under Section 4 of the Land Acquisition Act, 1894. However, the Land Acquisition Act, 1894 was repealed and replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act of 2013). The SLAO then directed the Corporation to deposit Rs. 77,65,12,000 as compensation on 06 October 2015. Unable to afford this, the Corporation offered Transferable Development Rights (TDR) to the landowners on 17 March 2016, which the landowners initially accepted on 12 May 2017. The SLAO later reduced the compensation to Rs. 43,41,29,400 on 22 September 2016, noting the land’s location in a flood-prone area.

The Corporation stated that TDR was subject to the landowners surrendering the land after carrying out necessary developments at their own cost, as per the Development Control Rules. The Corporation contended that the land was in a high flood line, with a rivulet passing through it, making it unsuitable for public purposes without significant development. The landowners then rejected the TDR offer and filed a writ petition in the High Court, seeking a mandamus to compel the Corporation to acquire the land and pay compensation.

Timeline

Legal Framework

The case primarily revolves around the interpretation and application of the following legal provisions:

• Section 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act): This section deals with the lapsing of land reservations. It states that if land reserved for public purposes is not acquired within ten years from the date the final development plan comes into force, and if the landowner serves a notice for acquisition, the reservation lapses if no acquisition or steps for acquisition are commenced within twelve months of the notice.
  
  “127. Lapsing of reservations.- (1) If any land reserved, allotted or designated for any purpose specified in any plan under this Act is not acquired by agreement within ten years from the date on which a final Regional Plan, or final Development Plan comes into force or if a declaration under sub-section (2) or (4) of section 126 is not published in the Official Gazette within such period, the owner or any person interested in the land may serve notice, alongwith the documents showing his title or interest in the said land, on the Planning Authority, the Development Authority or, as the case may be, the Appropriate Authority to that effect; and if within twelve months from the date of the service of such notice, the land is not acquired or no steps as aforesaid are commenced for its acquisition, the reservation, allotment or designation shall be deemed to have lapsed, and thereupon, the land shall be deemed to be released from such reservation, allotment or designation and shall become available to the owner for the purpose of development as otherwise, permissible in the case of adjacent land under the relevant plan.”
• Section 126 of the MRTP Act: This section outlines the procedure for acquiring land for public purposes specified in development plans. It allows acquisition by agreement, by granting Floor Space Index (FSI) or Transferable Development Rights (TDR), or by applying to the State Government for acquisition under the Land Acquisition Act, 1894 (now the Act of 2013).
  
  “126. Acquisition of land required for public purposes specified in plans.- (1) Where after the publication of a draft Regional plan, a Development or any other plan or town planning scheme, any land is required or reserved for any of the public purposes specified in any plan or scheme under this Act at any time, the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority may, except as otherwise provided in section 113A acquire the land,—
  (a) by agreement by paying an amount agreed to, or
  (b) in lieu of any such amount, by granting the land-owner or the lessee, subject, however, to the lessee paying the lessor or depositing with the Planning Authority, Development Authority or Appropriate Authority, as the case may be, for payment to the lessor, an amount equivalent to the value of the lessor’s interest to be determined by any of the said Authorities concerned on the basis of the principles laid down in the Land Acquisition Act, 1894, Floor Space Index (FSI) or Transferable Development Rights (TDR) against the area of land surrendered free of cost and free from all encumbrances, and also further additional Floor Space Index or Transferable Development Rights against the development or construction of the amenity on the surrendered land at his cost, as the Final Development Control Regulations prepared in this behalf provide, or
  (c) by making an application to the State Government for acquiring such land under the Land Acquisition Act, 1894,
  and the land (together with the amenity, if any so developed or constructed) so acquired by agreement or by grant of Floor Space Index or additional Floor Space Index or Transferable Development Rights under this section or under the Land Acquisition Act, 1894, as the case may be, shall vest absolutely free from all encumbrances in the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority.”
• Section 19 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This provision, which replaced Section 6 of the Land Acquisition Act, 1894, deals with the declaration of land acquisition for public purposes.
• Section 22 of the MRTP Act: This section specifies the matters to be included in a Development Plan, including the reservation of land for public purposes.
  
  “22. A Development plan shall generally indicate the manner in which the use of land in the area of a Planning Authority shall be regulated, and also indicate the manner in which the development of land therein shall be carried out. In particular, it shall provide so far as may be necessary for all or any of the following matters, that is to say,—
  (a) proposals for allocating the use of land for purposes, such as residential, industrial, commercial, agricultural, recreational ;
  (b) proposals for designation of land for public purpose, such as schools, colleges and other educational institutions, medical and public health institutions, markets, social welfare and cultural institutions, theatres and places for public entertainment, or public assembly, museums, art galleries, religious buildings and government and other public buildings as may from time to time be approved by the State Government ;
  (c) proposals for designation of areas for open spaces, playgrounds, stadia, zoological gardens, green belts, nature reserves, sanctuaries and dairies ;
  (d) transport and communications, such as roads, high-ways, park-ways, railways, water-ways, canals and air ports, including their extension and development ;
  (e) water supply, drainage, sewerage, sewage disposal, other public utilities, amenities and services including electricity and gas ;
  (f) reservation of land for community facilities and services ;
  (g) proposals for designation of sites for service industries, industrial estates and any other development on an extensive scale ;
  (h) preservation, conservation and development of areas of natural scenary and landscape ;
  (i) preservation of features, structures or places of historical, natural, architectural and scientific interest and educational value and of heritage buildings and heritage precincts ;
  (j) proposals for flood control and prevention of river pollution ;
  (k) proposals of the Central Government, a State Government, Planning Authority or public utility undertaking or any other authority established by law for designation of land as subject to acquisition for public purpose or as specified in a Development plan, having regard to the provisions of section 14 or for development or for securing use of the land in the manner provided by or under this Act ;
  (l) the filling up or reclamation of low lying, swampy or unhealthy areas or levelling up of land ;
  (m) provisions for permission to be granted for controlling and regulating the use and development of land within the jurisdiction of a local authority including imposition of fees, charges and premium, at such rate as may be fixed by the State Government or the planning Authority, from time to time, for grant of an additional Floor Space Index or for the special permissions or for the use of discretionary powers under the relevant Development Control Regulations, and also for imposition of conditions and restrictions in regard to the open space to be maintained about buildings, the percentage of building area for a plot, the location, number, size, height, number of storeys and character of buildings and density of population allowed in a specified area, the use and purposes to which buildings or specified areas of land may or may not be appropriated, the sub-division of plots, the discontinuance of objectionable users of land in any area in reasonable periods, parking space and loading and unloading space for any building and the sizes of projections and advertisement signs and boardings and other matters as may be considered necessary for carrying out the objects of this Act.”
• Section 31(5) of the MRTP Act: This section states that the State Government should not include a land reservation in a Development Plan if it is not satisfied that the Planning Authority can acquire the land within ten years.

Arguments

Arguments on behalf of the Kolhapur Municipal Corporation:

• Lapse of Reservation: The Corporation argued that the land reservation had lapsed due to non-acquisition within the stipulated time under Section 127 of the MRTP Act. The Corporation contended that since the land was not acquired within ten years of the development plan coming into force, and no steps were taken within twelve months of the landowner’s notice, the reservation was deemed to have lapsed. The Corporation relied on the decisions in Girnar Traders vs. State of Maharashtra [(2007) 7 SCC 555], Shrirampur Municipal Council vs. Satyabhamabai Bhimaji Dawkher [(2013) 5 SCC 627], and Chhabildas vs. State of Maharashtra [(2018) 2 SCC 784] to support their argument that the reservation had lapsed by operation of law.

• Financial Inability: The Corporation stated that it was financially incapable of paying the huge compensation amount of Rs. 43,41,29,400, as its entire budget for land acquisition was only Rs. 21 crores. The Corporation argued that it was practically impossible to acquire the land given its financial constraints.

• Unsuitability of Land: The Corporation contended that the land was unsuitable and unusable for public purposes like parking and gardens because it was flood-prone, with a rivulet passing through it. The Corporation argued that significant development work would be required to make the land usable, which the landowners were unwilling to undertake.

• No Commencement of Acquisition: The Corporation argued that a mere resolution to acquire the land or sending a letter to the Collector does not constitute the commencement of acquisition proceedings, as held in Shrirampur Municipal Council, Shrirampur (supra). They submitted that the actual commencement of acquisition proceedings would be the issuance of a declaration under Section 6 of the Land Acquisition Act, 1894, or Section 19 of the Act of 2013.

Arguments on behalf of the Landowners:

• Estoppel and Doctrine of Election: The landowners argued that the Corporation was estopped from changing its stand after initially agreeing to acquire the land, then offering TDR, and finally refusing to comply with the High Court’s judgment. They contended that the Corporation was barred from changing its stance due to the law of estoppel and the doctrine of election, based on the decisions in Mumbai International Airport Private Limited vs. Golden Chariot Airport & Anr. [(2010) 10 SCC 422], Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) and Ors. vs. Director General of Civil Aviation and Ors. [(2011) 5 SCC 435], and Karam Kapahi and Ors. vs. Lal Chand Public Charitable Trust and Anr. [(2010) 4 SCC 753].

• Continuous Reservation: The landowners argued that their land was reserved for over ten years, depriving them of the right to develop or use it. They contended that the Corporation could not now refuse acquisition due to a lack of funds after keeping the land under reservation for so long.

• Corporation’s Resolution: The landowners pointed out that the Corporation had passed a resolution to acquire the land and had made budgetary provisions for compensation, indicating a clear intention to acquire the land.

• No Lapse of Reservation: The landowners argued that the reservation had not lapsed because the government had not issued a notification in the Official Gazette as per Section 127(2) of the MRTP Act. They also contended that the Corporation did not raise the lapse of reservation before the High Court.

• Obligation for Public Purposes: The landowners argued that the Corporation was obligated to make provisions for public purposes like parking and gardens in the Development Plan, as per Section 22 read with Section 31(5) of the MRTP Act. They relied on the decision in Municipal Corporation of Greater Mumbai and Ors. vs. Hiraman Sitaram Deorukhar and Ors. [(2019) 14 SCC 411].

• Willingness to Accept TDR: The landowners stated that they were willing to accept TDR in lieu of compensation, even at a reduced ratio, as they had done for a portion of their land reserved for a playground.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

“Whether a writ of Mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India directing the authority/Municipal Corporation to acquire the land reserved for a particular purpose and to pay the compensation to the original landowners despite the fact that the reservation is deemed to have lapsed in view of the statutory provisions and that the land which is directed to be acquired and for which the compensation is directed to be paid to the original landowners is unsuitable and unusable for the purposes for which it is reserved?”

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Girnar Traders vs. State of Maharashtra [(2007) 7 SCC 555] – Supreme Court of India: This case was relied upon to explain the scheme of Sections 126 and 127 of the MRTP Act and to define what constitutes “steps” for acquisition. The Court emphasized that the steps must be towards the actual acquisition of land, not just preliminary actions.
• Shrirampur Municipal Council vs. Satyabhamabai Bhimaji Dawkher [(2013) 5 SCC 627] – Supreme Court of India: This case clarified that a mere resolution by the Planning Authority or sending a letter to the Collector does not constitute the commencement of acquisition proceedings. The Court held that the publication of a declaration under Section 6 of the Land Acquisition Act, 1894 (now Section 19 of the Act of 2013) is a conclusive step.
• Chhabildas vs. State of Maharashtra [(2018) 2 SCC 784] – Supreme Court of India: This case reiterated that if a period of ten years has elapsed from the date of publication of the plan, and no steps for acquiring the land have been taken, then once a purchase notice is served under Section 127, steps to acquire the land must follow within a period of one year from the date of service of such notice, or else the land acquisition proceedings would lapse.
• Mumbai International Airport Private Limited vs. Golden Chariot Airport & Anr. [(2010) 10 SCC 422] – Supreme Court of India: This case was cited by the landowners to argue that the Corporation was estopped from changing its stand.
• Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) and Ors. vs. Director General of Civil Aviation and Ors. [(2011) 5 SCC 435] – Supreme Court of India: This case was also cited by the landowners to support the argument of estoppel.
• Karam Kapahi and Ors. vs. Lal Chand Public Charitable Trust and Anr. [(2010) 4 SCC 753] – Supreme Court of India: This case was cited by the landowners to argue that the Corporation was estopped from changing its stand.
• Municipal Corporation of Greater Mumbai and Ors. vs. Hiraman Sitaram Deorukhar and Ors. [(2019) 14 SCC 411] – Supreme Court of India: This case was cited by the landowners to argue that the Corporation was obligated to make provisions for public purposes.

Statutes:

• Maharashtra Regional and Town Planning Act, 1966 (MRTP Act): The court extensively discussed Sections 22, 31(5), 126, and 127 of this Act.
• Land Acquisition Act, 1894: The court referred to this Act in the context of the procedure for land acquisition.
• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: The court discussed Section 19 of this Act, which replaced Section 6 of the Land Acquisition Act, 1894.
• Unified Development Control and Promotion Regulations, 2020 (UDCPR, 2020): The court referred to Clauses 11.2.2 and 11.2.3 of these regulations regarding TDR.

Judgment

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

How each authority was viewed by the Court?

• Girnar Traders vs. State of Maharashtra [(2007) 7 SCC 555]*: The Court followed this authority to define the steps for acquisition and to emphasize that the steps must be towards the actual acquisition of land.
• Shrirampur Municipal Council vs. Satyabhamabai Bhimaji Dawkher [(2013) 5 SCC 627]*: The Court followed this authority to clarify that a mere resolution or letter does not constitute the commencement of acquisition proceedings.
• Chhabildas vs. State of Maharashtra [(2018) 2 SCC 784]*: The Court followed this authority to reiterate that the acquisition proceedings would lapse if the land is not acquired or steps are not commenced within one year of the purchase notice.
• Mumbai International Airport Private Limited vs. Golden Chariot Airport & Anr. [(2010) 10 SCC 422]*: The Court did not apply this authority, stating that the landowners were also bound by the same principle of approbate and reprobate.
• Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) and Ors. vs. Director General of Civil Aviation and Ors. [(2011) 5 SCC 435]*: The Court did not apply this authority, stating that the landowners were also bound by the same principle of approbate and reprobate.
• Karam Kapahi and Ors. vs. Lal Chand Public Charitable Trust and Anr. [(2010) 4 SCC 753]*: The Court did not apply this authority, stating that the landowners were also bound by the same principle of approbate and reprobate.
• Municipal Corporation of Greater Mumbai and Ors. vs. Hiraman Sitaram Deorukhar and Ors. [(2019) 14 SCC 411]*: The Court acknowledged the obligation for public purposes but held that it was overridden by the statutory lapse of reservation.

What weighed in the mind of the Court?

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

• Statutory Compliance: The Court emphasized the importance of adhering to the statutory timelines prescribed under the MRTP Act. The Court held that the reservation of the land had lapsed due to non-acquisition within ten years of the final development plan and the failure to take steps within twelve months of the landowner’s notice under Section 127 of the MRTP Act.
• Unsuitability of Land: The Court considered the fact that the land was unsuitable for the intended public purposes due to its flood-prone nature and the presence of a rivulet. The Court held that the Corporation could not be compelled to acquire land that was not usable for the purposes for which it was reserved.
• Financial Constraints: While not the sole factor, the Court acknowledged the financial constraints of the Corporation in paying the huge compensation amount. The Court noted that the Corporation’s entire budget for land acquisition was significantly less than the compensation demanded.
• Principles of Natural Justice: The Court considered that the landowners also had a right to use their land, and the Corporation could not keep the land under reservation indefinitely without taking any steps for acquisition.
• Balance of Equities: The Court balanced the public interest in providing public amenities with the rights of the landowners and the financial constraints of the Corporation. The Court held that a writ of mandamus could not be issued to compel the acquisition of land that was unusable and whose reservation had lapsed.

Final Order

The Supreme Court quashed the High Court’s order, which had directed the Kolhapur Municipal Corporation to acquire the land and pay compensation to the landowners. The Supreme Court held that the High Court had erred in issuing a writ of mandamus to compel the Corporation to acquire land that was unsuitable for public purposes and whose reservation had lapsed.

Flowchart of Events

Ratio of the Judgment

Conclusion

The Supreme Court’s decision in Kolhapur Municipal Corporation vs. Vasant Mahadev Patil underscores the importance of adhering to statutory timelines in land acquisition processes. It clarifies that a Municipal Corporation cannot be compelled to acquire land that is unsuitable for its intended purpose, particularly when the reservation for that purpose has lapsed under the MRTP Act. The judgment reinforces the principle that the acquisition of land must be based on a balance of public interest, the rights of landowners, and the financial capacity of the acquiring authority. This case serves as a significant precedent for future land acquisition disputes, highlighting the need for planning authorities to be diligent in acquiring land within the prescribed timeframes and to ensure the suitability of land for public purposes.