Supreme Court Remands Land Acquisition Case: APMC vs. State of Karnataka (22 March 2022)

Date of the Judgment: 22 March 2022

Citation: 2022 INSC 206

Judges: M.R. Shah, J. and B.V. Nagarathna, J.

Can a land acquisition be deemed to have lapsed if the authorities did not take possession or pay compensation within a specific timeframe? The Supreme Court of India recently addressed this question in a case involving the Agricultural Produce Marketing Committee (APMC) and the State of Karnataka. The core issue revolved around whether certain land acquisitions had lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This judgment was delivered by a bench comprising Justices M.R. Shah and B.V. Nagarathna.

Case Background

The case involves land acquisitions initiated by the Agricultural Produce Marketing Committee (APMC), Bangalore, for establishing a mega market. These acquisitions were carried out in three parts. The first acquisition involved 172 acres 22 guntas of land owned by the Jamanlal Bajaj Seva Trust (Trust). The second acquisition was for 104 acres 5 guntas, also owned by the Trust. A third acquisition of 3 acres 34 guntas is not part of the appeals before the Supreme Court.

The first acquisition began with a notification under Section 4(1) of the Land Acquisition Act, 1894, on 3 September 1994. This notification was challenged by the Rajajinagar House Building Co-operative Society, which was dismissed by the High Court of Karnataka on 23 December 1995. A declaration under Section 6 of the Act, 1894, followed on 10 October 1996. The APMC deposited Rs. 9,14,14,873 on 19 August 1998, towards the approximate cost of acquisition. However, further proceedings were stalled due to a stay order by the High Court on 16 September 1998, in a writ petition filed by the same cooperative society, and another stay on dispossession on 8 February 1999, in a writ petition filed by the Trust.

The second acquisition began with a notification under Section 4(1) read with Section 17(4) of the Act, 1894, on 13 April 1999. An enquiry under Section 5A was dispensed with. A final notification under Section 6(1) was issued on 26 October 1999, for 100 acres 11 guntas of land. The Vishwaneedam Trust filed a writ petition challenging this acquisition, and the High Court granted a stay of dispossession for 35 acres. The APMC claims to have taken possession of 65 acres 19 guntas on 6 October 2000. An award was made by the State Land Acquisition Officer on 22 May 2002, and the Trust accepted the compensation under protest. The Trust also filed a Land Acquisition Case seeking enhancement of compensation, which is still pending.

Timeline:

Legal Framework

The case primarily involves the interpretation and application of two key legislations:

• The Land Acquisition Act, 1894: This Act governed land acquisition in India before the enactment of the 2013 Act. Key provisions include:
  • Section 4(1): This section deals with the publication of a preliminary notification for land acquisition. The source document states, “That a notification was issued under Section 4(1) of the Land Acquisition Act, 1894…on 03.09.1994”.
  • Section 6: This section deals with the declaration of intended acquisition. The source document states, “Thereafter a notification/declaration under Section 6 of the Act, 1894 was issued on 10.10.1996”.
  • Section 17: This section pertains to the urgency clause, allowing the government to take possession of land before the award is made. The source document states, “That a notification under Section 4(1) read with Section 17(4) of the Act, 1894, dispensing with the requirement of hearing was issued on 13.04.1999”.
• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This Act replaced the 1894 Act and introduced new provisions for compensation and rehabilitation. The key provision in this case is:
  • Section 24(2): This section deals with the lapse of acquisition proceedings if possession has not been taken or compensation has not been paid within a specified period. The source document states, “declared that the acquisitions of the lands in question has lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013”.

Arguments

Appellant (APMC) Arguments:

• Non-Applicability of Section 24(2): The appellant argued that Section 24(2) of the Act, 2013, should not apply to the acquisition of 172 acres of land because no award was declared due to stay orders from the High Court. They contended that the High Court erred in declaring the acquisitions lapsed under this section. They further submitted that the period during which the stay orders were in operation should be excluded for the purpose of Section 24(1)(a) of the Act, 2013.

• Award and Possession for 100 Acres: For the 100 acres of land at Herohalli Village, the APMC argued that an award was declared for 65 acres, possession was taken, and compensation was deposited. The respondent also withdrew Rs 2.37 crores. Therefore, the acquisition could not be said to have lapsed under Section 24(2) of the Act, 2013.

• Justification for Non-Deposit of Compensation: The APMC argued that it had a valid reason for not depositing the entire compensation amount. Proceedings under the Karnataka Land Reforms Act (KLR Act) were pending before the Land Reforms Tribunal. The Tribunal had to determine if the Trust held any excess vacant land. The APMC believed it was appropriate to wait for the outcome of the proceedings under the Land Reforms Act before depositing the compensation.

• Legality of Possession: The APMC contended that the High Court erred in holding that the possession of 65 acres of land was illegal because it was taken by invoking the urgency clause without complying with the deposit of 80% compensation as required under Section 17 of the Act, 1894.

• No Quashing of Notifications: The APMC pointed out that the High Court had not quashed the notifications under Sections 4 and 6 of the Act, 1894, for 172 acres and 100 acres of land, respectively. The High Court directly considered the applicability of the Act, 2013, and held that the acquisitions had lapsed under Section 24(2) of the Act, 2013.

• Reliance on Indore Development Authority: The APMC relied on the decision of the Constitution Bench in Indore Development Authority vs. Manoharlal & Ors., (2020) 8 SCC 129, to argue that the High Court’s decision that the acquisitions had lapsed under Section 24(2) of the Act, 2013, was not sustainable.

Respondent (Trust) Arguments:

• Trust’s Activities: The respondent argued that the Trust is not an ordinary landowner but an organization established in 1960. The land in question was purchased in 1960 and is used to carry out Gandhian activities and further the Trust’s objectives.

• State’s Lack of Intention to Pay Compensation: The respondent contended that the High Court rightly observed that the State Government/APMC had no intention of paying compensation for the acquisition of the subject lands. They deliberately abandoned the acquisition or allowed it to lapse.

• Legality and Validity of Notifications: The respondent also made detailed submissions on the legality and validity of the notifications under Sections 4 and 6 of the Act, 1894, for the acquisitions of 172 acres and 100 acres of land, respectively.

• High Court’s Decision: The respondent fairly conceded that in view of the subsequent decision of the Supreme Court in Indore Development Authority (supra), the view taken by the High Court that the acquisitions have lapsed under sub-section (2) of Section 24 of the Act, 2013, is unsustainable. However, they submitted that the learned Single Judge and the learned Division Bench of the High Court were right in holding so, considering the law prevailing at that time when the learned Single Judge decided the matters.

Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues for consideration, but rather addressed the core issue of whether the High Court was correct in declaring that the land acquisitions had lapsed under Section 24(2) of the Act, 2013. The Supreme Court noted that the High Court had not adjudicated on other issues raised by the parties.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

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

How each authority was viewed by the Court?

The Supreme Court’s reasoning was primarily based on the interpretation of Section 24(2) of the Act, 2013, as clarified in Indore Development Authority vs. Manoharlal & Ors., (2020) 8 SCC 129*. The court held that the High Court’s decision was unsustainable in light of this judgment. The Supreme Court specifically mentioned that all judgments rendered on the basis of Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183* are overruled. The decisions in Sree Balaji Nagar Residential Assn. v. State of T.N., (2015) 3 SCC 353* and Indore Development Authority v. Shailendra, (2018) 3 SCC 412* were also overruled or held not to be good law in light of the discussion in Indore Development Authority vs. Manoharlal & Ors.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to adhere to the precedent set by the Constitution Bench in Indore Development Authority vs. Manoharlal & Ors. The court emphasized that the interpretation of Section 24(2) of the Act, 2013, had been clarified by the Constitution Bench, and the High Court’s decision was contrary to this interpretation. The court also noted that the High Court had not adjudicated on other issues raised by the parties and that a comprehensive decision was necessary to avoid further delays and remands.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

Logical Reasoning:

The Supreme Court considered the alternative interpretation of Section 24(2) of the Act, 2013, as laid down in Pune Municipal Corporation vs. Harakchand Misirimal Solanki, but rejected it based on the Constitution Bench’s decision in Indore Development Authority vs. Manoharlal & Ors. The court emphasized that the Constitution Bench had clarified that the word “or” in Section 24(2) should be read as “nor” or “and,” and that the deemed lapse of land acquisition proceedings occurs only if both possession has not been taken and compensation has not been paid. The Supreme Court also emphasized that the period of subsistence of interim orders passed by the court has to be excluded in the computation of five years.

The Supreme Court’s decision was to set aside the High Court’s judgment and remand the matter back to the Single Judge for a fresh decision. The court directed the Single Judge to adjudicate on all other issues raised by the parties, except the issue related to the lapse of acquisition proceedings under Section 24(2) of the Act, 2013.

The court also observed that the High Court ought to have adjudicated on all the issues raised and not to have decided and disposed of the writ petitions, adjudicating only on one issue which has been found to be erroneous. The court noted that the Division Bench also did not apply its mind to this aspect of the matter.

The Supreme Court quoted the following from the judgment:

• “Therefore, the courts should adjudicate on all the issues and give its findings on all the issues and not to pronounce the judgment only on one of the issues.”
• “By such a practice, it would increase the burden on the appellate court and in many cases if the decision on the issue decided is found to be erroneous and on other issues there is no adjudication and no findings recorded by the court, the appellate court will have no option but to remand the matter for its fresh decision.”
• “The High Court or the civil courts which may have granted interim orders in favour of the land owners, ought to consider the aforesaid aspect before applying Section 24(2) of the Act, 2013 in favour of the land owners.”

Key Takeaways

• The Supreme Court has reaffirmed the interpretation of Section 24(2) of the Act, 2013, as laid down in Indore Development Authority vs. Manoharlal & Ors., clarifying that the word “or” should be read as “nor” or “and.”
• Land acquisition proceedings will not lapse under Section 24(2) if either possession has been taken or compensation has been paid. Both conditions must be unfulfilled for the acquisition to lapse.
• The period during which stay orders are in operation must be excluded when calculating the five-year period for lapse under Section 24(2).
• Lower courts are expected to adjudicate on all issues raised by parties and not just one issue before passing a final judgment to avoid remands.
• Landowners cannot take advantage of delays caused by interim orders obtained by them to claim that the acquisition has lapsed.

Directions

The Supreme Court has given the following directions:

• The matters are remitted back to the learned Single Judge to decide and dispose of the writ petitions afresh and in accordance with law and on their own merits.
• The learned Single Judge is to adjudicate all other issues which were framed and pronounce the judgment on all the points framed for consideration.
• The aforesaid exercise shall be completed within a period of twelve months from the date of receipt of the present order.
• Writ Appeal No. 1089 of 2021 be heard first and be decided and disposed of on or before 31.12.2022.

Specific Amendments Analysis

There is no specific amendment analysis in this judgment.

Development of Law

The ratio decidendi of this case is that the interpretation of Section 24(2) of the Act, 2013, as clarified in Indore Development Authority vs. Manoharlal & Ors., must be followed. The Supreme Court has reiterated that the word “or” in Section 24(2) should be read as “nor” or “and,” and that the deemed lapse of land acquisition proceedings occurs only if both possession has not been taken and compensation has not been paid. This judgment reinforces the position that land acquisitions will not lapse if either possession has been taken or compensation has been paid. This is a change from the previous position of law as interpreted in Pune Municipal Corporation v. Harakchand Misirimal Solanki.

Conclusion

The Supreme Court allowed the appeals filed by the APMC and set aside the High Court’s judgment, which had declared that the land acquisitions had lapsed under Section 24(2) of the Act, 2013. The Supreme Court remitted the matter back to the Single Judge for a fresh decision on all other issues, except the lapse of acquisitions under Section 24(2) of the Act, 2013, inlight of the decision in Indore Development Authority vs. Manoharlal & Ors. The Supreme Court reiterated the importance of adhering to the precedent set by the Constitution Bench and directed the lower courts to adjudicate all issues raised by the parties before passing a final judgment. The judgment has significant implications for land acquisition cases across India, clarifying the interpretation of Section 24(2) of the 2013 Act and ensuring a more consistent approach in the application of this provision.