Supreme Court settles the scope of ‘land’ under the Land Acquisition Act: State of Maharashtra vs. Reliance Industries Ltd. (2017) INSC 794 (15 September 2017)

Date of the Judgment: 15 September 2017
Citation: (2017) INSC 794
Judges: Arun Mishra, J., Mohan M. Shantanagoudar, J.
Can the government acquire a building or part of a building without acquiring the underlying land? The Supreme Court of India recently addressed this complex issue in a case involving the State of Maharashtra and Reliance Industries Ltd. The core question was whether the definition of “land” under the Land Acquisition Act, 1894, permits the acquisition of a building or part of it without acquiring the land on which it stands, particularly when the land is owned by the government or a port trust. The Supreme Court, in this judgment, clarified the scope of the term “land” under the Land Acquisition Act, 1894, and settled the legal position regarding the acquisition of buildings without the underlying land. The judgment was delivered by a bench of Justices Arun Mishra and Mohan M. Shantanagoudar.

Case Background

The case involves two separate writ petitions filed before the High Court of Judicature at Bombay. The first petition, W.P. No. 1956/1994, was filed by Reliance Industries Ltd. concerning the requisition and subsequent acquisition of premises on the third floor of their building, “Reliance Centre,” located in Mumbai. The second petition, W.P. No. 1384/1997, was filed by Express Newspapers regarding the acquisition of the second floor of their building, “Express Building,” also in Mumbai. In both cases, the government sought to acquire parts of the buildings under the Land Acquisition Act, 1894, while the land on which these buildings stood was owned by either the government or the Port Trust.

The State Government had initially requisitioned the properties under the Bombay Land Requisition Act, 1948, for use by various government departments. Subsequently, the government initiated acquisition proceedings under the Land Acquisition Act, 1894. The High Court quashed the acquisition proceedings, holding that a part of a building could not be acquired without acquiring the underlying land. The State of Maharashtra then appealed to the Supreme Court.

Timeline:

Course of Proceedings

The High Court of Judicature at Bombay quashed the acquisition proceedings initiated by the State Government, ruling that the acquisition of a part of a building without the underlying land was not permissible under the Land Acquisition Act, 1894. The High Court held that the definition of “land” under the Act included not only the physical land but also benefits arising out of the land and things attached to the earth. It concluded that acquiring a part of a building without the land was unsustainable. The State of Maharashtra appealed this decision to the Supreme Court of India.

Legal Framework

The Supreme Court examined the definition of “land” under Section 3(a) of the Land Acquisition Act, 1894, which states:

“3. Definitions. – In this Act, unless there is something repugnant in the subject or context, – (a) the expression “land” includes benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth”

The Court also considered Section 49 of the Land Acquisition Act, 1894, which deals with the acquisition of part of a house or building. Section 49(1) states:

“49. Acquisition of part of house or building. – (1) The provisions of this Act shall not be put in force for the purpose of acquiring a part only of any house, manufactory or other building, if the owner desires that the whole of such house, manufactory or building shall be so acquired: Provided that the owner may, at any time before the Collector has made his award under section 11, by notice in writing, withdraw or modify his expressed desire that the whole of such house, manufactory or building shall be so acquired: Provided also that, if any question shall arise as to whether any land proposed to be taken under this Act does or does not form part of a house, manufactory or building within the meaning of this section, the Collector shall refer the determination of such question to the Court and shall not be take possession of such land until after the question has been determined.”

The Court emphasized that the definition of “land” is inclusive and that Section 49 allows for the acquisition of part of a building, provided the owner does not insist on the acquisition of the whole building.

Arguments

Arguments by the Appellants (State of Maharashtra):

• The definition of ‘land’ under Section 3(a) of the Land Acquisition Act, 1894, is inclusive and covers part of a building without the land on which it is built.
• The High Court did not correctly interpret the definition of ‘land’, which has a wide amplitude.
• When the Government or Port Trust owns the land, acquiring only the necessary part of the building is sufficient, and it is not necessary to acquire the land again which is already owned by the government.
• Section 49 of the Land Acquisition Act, 1894, allows for the acquisition of a part of a house or building.
• The concept of dual ownership is well-settled, and a building or part thereof belonging to an independent owner can be acquired.
• Many things, such as fisheries, can be acquired without acquiring the land.
• Under Section 16 of the Land Acquisition Act, 1894, the property acquired vests with the Government free from all encumbrances, and the holders of such encumbrances are entitled to compensation.

Arguments by the Respondents (Reliance Industries Ltd. & Express Newspapers):

• The definition of ‘land’ under Section 3(a) of the Land Acquisition Act, 1894, is inclusive but does not mean that ‘land’ includes benefits arising out of land and things attached to the earth.
• The inclusive definition cannot take away the ordinary meaning of ‘land’.
• The object of the Land Acquisition Act, 1894, is to acquire land in the ordinary sense, and a mere building without the underlying land cannot be acquired.
• Section 49 of the Land Acquisition Act, 1894, does not empower the acquisition of a building or part thereof without the underlying land.
• Acquiring a building or part thereof without acquiring the underlying land would be an overreach of the State’s power of eminent domain.
• The State has an obligation to compensate the owner for the land, and by not acquiring the land, the State is avoiding its obligation.
• The interpretation of Section 3(a) of the Land Acquisition Act, 1894, has to be consistent with the limitations on the State’s power of eminent domain as interpreted under Article 300A of the Constitution of India.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Meaning of land under Section 3(a) of the Land Acquisition Act, 1894.
2. Interpretation of the term ‘includes’.
3. Object and scheme of the Land Acquisition Act, 1894.
4. Whether the State must acquire its own land underneath a building or other interest.
5. Acquisition of part of a building without land under Section 49 of the Land Acquisition Act, 1894.
6. Violation of Article 300A of the Constitution of India by acquisition in part.
7. Whether the valuation method of a building mandates the acquisition of land.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court relied on 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 Court relied on Municipal Corporation of Greater Bombay & Ors. v. Indian Oil Corporation Ltd. [1991] Supp. 2 SCC 18* to support the inclusive definition of land.
• The Court used P. Rami Reddy & Ors. v. State of Andhra Pradesh & Ors. [1988] 3 SCC 433* to highlight that the definition of land is comprehensive and includes structures.
• The Court cited Mrinalini Roy Ratna Prova Mondal & Ors. v. State of West Bengal & Ors. [1997] 9 SCC 113* to support that fisheries are included in the definition of land.
• The Court used C.I.T., Andhra Pradesh v. M/s. Taj Mahal Hotel, Secunderabad [1971] 3 SCC 550* to interpret the term “includes” as an enlarging term.
• The Court used S.K. Gupta & Anr. v. K.P. Jain & Anr. [1979] 3 SCC 54* to support that an inclusive definition expands the meaning of the word.
• The Court used P. Kasilingam & Ors. v. P.S.G. College of Technology & Ors. [1995] Supp. 2 SCC 348* to support that an inclusive definition expands the meaning of the word.
• The Court cited Jagir Singh v. State of Bihar [1976] 2 SCC 942* to define the term ‘owner’.
• The Court cited Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. & Ors. [1987] 1 SCC 424* to support the use of inclusive definitions.
• The Court relied on Hari Chand & Ors. v. Secretary of State AIR 1939 PC 235* to hold that the government can acquire a building on land it already owns.
• The Court cited R. Umraomal & Ors. v. State of Tamil Nadu & Anr. AIR 1986 Mad. 63* to support the view that the government does not need to acquire its own land.
• The Court cited Collector of Bombay v. Nusserwanji Rattanji Mistri and Ors. AIR 1955 SC 298* to hold that the government acquires only outstanding private interests.
• The Court relied on Special Land Acquisition Officer and Rehabilitation Officer, Sagar v. M.S. Seshagiri Rao & Anr. AIR 1968 SC 1045* to support the view that the State does not acquire its own interest in the land.
• The Court used State of Bihar & Anr. v. Kundan Singh & Anr. AIR 1964 SC 350* to interpret Section 49 and hold that the owner must express a desire to acquire the whole building before the award.
• The Court approved the interpretation of the High Court of Bombay in Jagannath Ganeshram Agrawal & Anr. v. State of Maharashtra & Anr. AIR 1986 Bom. 241* which held that a part of a building can be acquired.
• The Court cited S.P. Jain v. Krishna Mohan Gupta & Ors. [1987] 1 SCC 191* to support the view that the law should take a pragmatic view.
• The Court distinguished Raja Shyam Chunder Mardraj v. Secretary of State for India Council (1907-08) 12 CWN 569*, Dasarath Sahu v. Secy. of State AIR 1916 Pat 330(1)*, and Makhan Lal v. Secy of State AIR 1934 All 260* and overruled them.
• The Court held that State of Kerala v. P.P. Hassan Koya AIR 1968 SC 1201* did not help the respondents as it was held that the acquisition of the entire interest in the part is required.

What weighed in the mind of the Court?

The Supreme Court emphasized the inclusive nature of the definition of ‘land’ under Section 3(a) of the Land Acquisition Act, 1894. The Court reasoned that the definition includes not only the physical land but also benefits arising from the land and things attached to the earth. This interpretation allows for the acquisition of a part of a building without the underlying land, especially when the land is owned by the government or a port trust. The Court also noted that Section 49 of the Act permits the acquisition of a part of a house or building, provided the owner does not insist on the acquisition of the whole. The Court highlighted the concept of dual ownership, where the building and the land may belong to different owners, and stated that the acquisition of a building or part thereof without the underlying land does not violate Article 300A of the Constitution of India, as long as fair compensation is provided. The Court also noted that the State does not need to acquire its own land and can acquire the building or part of it standing on that land.

Logical Reasoning

The Court considered alternative interpretations but rejected them, stating that the inclusive definition of “land” allows for the acquisition of a building or part of it without the underlying land, particularly when the land is owned by the government. TheCourt emphasized that the purpose of the Land Acquisition Act is to acquire land for public purposes, and this purpose can be achieved even by acquiring only a building or part of it. The Court also reasoned that the method of valuation of the building can be determined separately without requiring the acquisition of the land.

Ratio Decidendi

The Supreme Court held that the definition of “land” under Section 3(a) of the Land Acquisition Act, 1894, is inclusive and encompasses not only the physical land but also benefits arising out of the land and things attached to the earth. Therefore, a building or part of it can be acquired without acquiring the underlying land, especially when the land is owned by the government or a port trust. The Court also held that Section 49 of the Act allows for the acquisition of part of a building, provided the owner does not insist on the acquisition of the whole. The Court further clarified that the acquisition of a building or part thereof without the land does not violate Article 300A of the Constitution of India, as long as fair compensation is provided.

Obiter Dicta

While the primary focus of the judgment was on the interpretation of the definition of “land” and the permissibility of acquiring a building without the underlying land, the Court also made several observations that could be considered obiter dicta:

• The Court emphasized the importance of a pragmatic approach when interpreting legal provisions and noted that the law should not be interpreted in a manner that leads to absurd or impractical results.
• The Court highlighted the concept of dual ownership, where the ownership of the land and the building can be separate, and this concept is recognized under the law.
• The Court reiterated the principle that the State does not need to acquire its own land and can acquire the building or part of it standing on that land.
• The Court clarified that the valuation of a building or part of it can be assessed separately, considering all relevant factors, and the method of valuation does not mandate the acquisition of the land.

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was delivered by a bench of two judges, and both judges agreed on the interpretation of the law and the outcome of the case.

Conclusion

The Supreme Court’s judgment in State of Maharashtra v. Reliance Industries Ltd. (2017) INSC 794, clarified the scope of the term “land” under the Land Acquisition Act, 1894, and settled the legal position regarding the acquisition of buildings without the underlying land. The Court held that the definition of “land” is inclusive and allows for the acquisition of a building or part thereof without the underlying land, especially when the land is owned by the government. This judgment has significant implications for land acquisition proceedings in India, particularly in cases where the government seeks to acquire buildings or parts of buildings standing on land already owned by the government or a port trust. The judgment also emphasized the importance of fair compensation for the acquired property and highlighted the need for a pragmatic approach in interpreting legal provisions. This judgment has also settled the law related to the acquisition of a building or a part of a building without the underlying land. The judgment also clarified the scope of Section 49 of the Land Acquisition Act, 1894.