Supreme Court Reverses High Court on Land Acquisition Lapse: HSIIDC vs. Honeywell (2023)

Date of the Judgment: April 11, 2023

Citation: Civil Appeal No. 2052 of 2023

Judges: M.R. Shah, J. and C.T. Ravikumar, J.

Can a land acquisition be deemed to have lapsed if the acquiring body has taken possession and paid compensation? The Supreme Court of India recently addressed this critical question in a batch of appeals, overturning several High Court judgments that had declared land acquisitions lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the “Act 2013”). The core issue revolved around the interpretation of Section 24(2) of the Act 2013 and its application to cases where land acquisition proceedings had commenced under the Land Acquisition Act, 1894 (the “Act 1894”). The Supreme Court bench, comprising Justices M.R. Shah and C.T. Ravikumar, delivered the judgment.

Case Background

The appeals before the Supreme Court arose from a series of cases where the High Court had declared land acquisitions lapsed under Section 24(2) of the Act 2013. These cases generally fell into two categories:

✓ Cases where the original writ petitioners had challenged the acquisition proceedings under the Act 1894 on various grounds before the High Court, and later sought a declaration of deemed lapse under Section 24(2) of the Act 2013.

✓ Cases where the writ petitions were filed solely for a declaration that the acquisition had lapsed under Section 24(2) of the Act 2013, without challenging the original acquisition under the Act 1894.

The primary contention of the landowners was that they had not received compensation and that possession of the land was not taken over by the acquiring body, thus triggering the deemed lapse under Section 24(2) of the Act 2013. The Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) and the State of Haryana appealed these High Court decisions.

Timeline:

Legal Framework

The core of the dispute revolves around Section 24(2) of the Act 2013, which states:

“Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 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.”

This provision was interpreted by the High Court to mean that if either possession was not taken or compensation was not paid, the acquisition would lapse. However, the Supreme Court’s interpretation in Indore Development Authority v. Manoharlal & Others Etc., (2020) 8 SCC 129, clarified that if either of the two conditions were satisfied, i.e., possession was taken or compensation was paid/tendered, the acquisition would not lapse.

Arguments

Arguments by the Landowners/Original Writ Petitioners:

• ✓ The landowners argued that they had not received compensation for their land.
• ✓ They contended that physical possession of the land had not been taken over by the acquiring body.
• ✓ They relied on the High Court’s interpretation of Section 24(2) of the Act 2013, which stated that if either possession was not taken or compensation was not paid, the acquisition would lapse.
• ✓ Some landowners disputed the possession reports, asserting that actual physical possession was not taken.

Arguments by the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) and the State of Haryana:

• ✓ The HSIIDC and the State of Haryana argued that possession of the land had been taken over.
• ✓ They contended that compensation had been paid or deposited.
• ✓ They relied on the Supreme Court’s decision in Indore Development Authority v. Manoharlal & Others Etc., (2020) 8 SCC 129, which clarified the interpretation of Section 24(2) of the Act 2013.
• ✓ They submitted that once possession was taken and compensation was paid, the acquisition proceedings under the Act, 1894 need not be quashed.

The innovativeness of the arguments was in the landowners’ attempt to use the literal interpretation of Section 24(2) to their advantage, while the acquiring bodies relied on the clarified position of law by the Supreme Court.

Issues Framed by the Supreme Court

The Supreme Court considered the following key issue:

1. Whether the High Court was correct in declaring that the acquisition with respect to the lands in question is deemed to have lapsed under Section 24(2) of the Act, 2013, based on the premise that either possession was not taken or compensation was not paid.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following key authorities:

Judgment

How each authority was viewed by the Court?

✓ Indore Development Authority v. Manoharlal & Others Etc., (2020) 8 SCC 129: The Supreme Court relied heavily on this Constitution Bench decision, which clarified that the acquisition would not lapse if either possession was taken or compensation was paid/tendered. The Court used this authority to overturn the High Court’s judgments.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the legal interpretation of Section 24(2) of the Act 2013, as clarified by the Constitution Bench in Indore Development Authority. The Court emphasized that the High Court had erred in its interpretation of the provision, and that the acquisition would not lapse if either possession was taken or compensation was paid. The Court also took into consideration the factual aspects of whether possession was taken and compensation was paid/tendered.

Fact:Law Ratio

Logical Reasoning

Key Takeaways

• ✓ The Supreme Court clarified that under Section 24(2) of the Act 2013, a land acquisition would not lapse if either possession of the land was taken or compensation was paid/tendered.
• ✓ The Court reversed the High Court’s decisions that had declared land acquisitions lapsed based on the premise that both possession and compensation were required.
• ✓ The matters were remanded back to the High Court to decide on the other issues raised by the original writ petitioners, except for the applicability of Section 24(2) of the Act 2013.
• ✓ The judgment reinforces the legal position established in Indore Development Authority, providing clarity on the interpretation of Section 24(2) of the Act 2013.

Directions

The Supreme Court directed the High Court to:

• ✓ Reconsider the writ petitions on their merits, excluding the issue of the deemed lapse under Section 24(2) of the Act 2013.
• ✓ Decide and dispose of the writ petitions on remand at the earliest, preferably within nine months from the date of the order.
• ✓ Consider all contentions and defenses available to the respective parties, except the submission of the applicability of Section 24(2) of the Act 2013.

Development of Law

The ratio decidendi of this case is that Section 24(2) of the Act 2013 does not require both possession and compensation to be satisfied for an acquisition to not lapse. The Supreme Court reiterated the position of law as laid down in Indore Development Authority, thus reinforcing the interpretation of Section 24(2) of the Act 2013. This judgment clarifies that if either of the two conditions – possession or compensation – is met, the acquisition will not lapse.

Conclusion

The Supreme Court’s judgment in Haryana State Industrial And Infrastructure Development Corporation Ltd. (HSIIDC) & Others vs. M/s Honeywell International (India) Pvt. Ltd., reverses the High Court’s decisions on the interpretation of Section 24(2) of the Act 2013. The Supreme Court clarified that the land acquisition would not lapse if either possession was taken or compensation was paid/tendered. The cases have been remanded to the High Court for consideration of other issues, excluding the applicability of Section 24(2) of the Act 2013. This ruling reinforces the legal position established in Indore Development Authority, providing clarity on the interpretation of Section 24(2) of the Act 2013.

Category

• Land Acquisition
  • Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
  • Section 24(2), Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
  • Land Acquisition Act, 1894
• Supreme Court Judgments
  • Land Acquisition Cases
  • Interpretation of Statutes

FAQ

Q: What does Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 say?

A: Section 24(2) of the Act 2013 states that if land acquisition proceedings were initiated under the Land Acquisition Act, 1894, and an award was made five years or more before the 2013 Act came into force, the proceedings would lapse if physical possession was not taken OR compensation was not paid.

Q: What did the Supreme Court clarify about Section 24(2)?

A: The Supreme Court clarified that the acquisition would not lapse if either possession of the land was taken OR compensation was paid/tendered. It is not necessary for both conditions to be met.

Q: What happens if a landowner has not received compensation or if possession has not been taken?

A: If either compensation has been paid/tendered or possession has been taken, the acquisition will not lapse under Section 24(2) of the Act 2013.

Q: What should a landowner do if they believe their land acquisition should have lapsed?

A: Landowners should seek legal advice and review the specific facts of their case, including whether possession was taken and whether compensation was paid/tendered.

Q: What is the significance of the Indore Development Authority case?

A: The Indore Development Authority case is a Constitution Bench decision of the Supreme Court that clarified the interpretation of Section 24(2) of the Act 2013. This case is the basis for the Supreme Court’s decision in this case.