Supreme Court shifts land acquisition date for fair compensation: Bernard Francis Joseph Vaz vs. Government of Karnataka (2025) INSC 3 (02 January 2025)

Case Background

From 1995 to 1997, the appellants purchased residential sites in Gottigere Village, Karnataka. They became the absolute owners of these sites through registered sale deeds. On April 3, 1997, the Government of Karnataka and Nandi Infrastructure Corridor Enterprise Ltd. (NICE) signed a Framework Agreement (FWA) for the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP). The government agreed to acquire 20,193 acres of land for the project. This included both private and government land.

On October 14, 1998, NICE requested the Karnataka Industrial Areas Development Board (KIADB) to provide the necessary land. KIADB issued a preliminary notification on January 29, 2003, under Section 28 of the Karnataka Industrial Areas Development Act, 1966, to acquire land for BMICP. The appellants submitted objections to this notification. However, on July 5, 2003, a final notification was issued by the Special Deputy Commissioner KIADB. The KIADB took possession of the appellants’ land on November 22, 2005, and handed it over to NICE and its sister concern, Nandi Economic Corridor Enterprises Ltd. (NECE). However, no compensation was awarded to the landowners immediately.

Timeline

Course of Proceedings

In 2009-10, landowners filed writ petitions in the High Court of Karnataka. They sought to quash the acquisition notifications or, alternatively, to receive residential sites of equal dimension. The High Court dismissed these petitions on June 15, 2011, stating the acquisition could not be quashed at such a late stage. However, it allowed the landowners to approach authorities if any rehabilitation program was available.

On February 12, 2016, landowners requested a rehabilitation scheme. After no action was taken, they filed further writ petitions. On March 24, 2017, the High Court directed the State and KIADB to consider their request. Contempt petitions were filed in 2018-19 due to non-compliance. On April 22, 2019, the Special Land Acquisition Officer (SLAO) passed an award, shifting the preliminary notification date to 2011 based on the Advocate General’s opinion. This resulted in higher compensation. The High Court dismissed the contempt petitions on November 27, 2019, allowing the landowners to challenge the award.

NICE and NECE filed writ petitions on June 19, 2019, challenging the award because of the shifted date. The landowners filed an impleadment application on January 5, 2021, and a substantive writ petition on June 1, 2021. They argued that compensation should reflect the current market value. On April 18, 2022, the High Court quashed the award and directed fresh awards. The appellants’ writ petition was dismissed as it did not survive. The Division Bench of the High Court dismissed the appeal on November 22, 2022, stating the issue of shifting the date was premature.

Legal Framework

The case primarily involves the Karnataka Industrial Areas Development Act, 1966 (KIAD Act). Section 28 of the KIAD Act allows the KIADB to acquire land for industrial development. Specifically, Section 28(1) allows for a preliminary notification for land acquisition. Section 28(2) requires seeking objections from landowners.

Section 30 of the KIAD Act makes the provisions of the Land Acquisition Act 1894 (1894 LA Act) applicable for determining compensation. The 1894 LA Act outlines the process for land acquisition and compensation. Section 11 of the 1894 LA Act specifies that compensation should be determined based on the market value of the land at the time of the preliminary notification.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 LA Act) was also referenced. The court noted that the 1894 LA Act applies to the case, but considered the principles of fair compensation under the 2013 LA Act.

Article 300-A of the Constitution of India states that no person shall be deprived of their property except by authority of law. This has been interpreted to include the right to fair compensation.

Arguments

Appellants’ Arguments:

• The appellants argued that the High Court incorrectly dismissed their appeal as premature. They contended that the issue of shifting the date for market value consideration was decided against them by the learned Single Judge.
• They submitted that over 21 years had passed since the preliminary notification, and they had not received compensation.
• Relying on Ram Chand and Others v. Union of India and Others and Tukaram Kana Joshi and Others Through Power-of-Attorney Holder v. Maharashtra Industrial Development Corporation and Others, they argued that in exceptional cases, compensation should be based on the market value at the time of the award.
• They also argued that compensation should be determined as per the 2013 LA Act, given Section 30 of the KIAD Act, which makes the 1894 LA Act applicable. They cited Maharashtra State Road Transport Corporation v. State of Maharashtra and Others.

Respondents No. 6 and 7 (Project Proponents) Arguments:

• They submitted that they had repeatedly requested KIADB to pass awards between 2009 and 2012.
• They argued that they were forced to file writ petitions in 2013 to direct the passing of awards, and initiated contempt proceedings in 2015 due to non-compliance.
• They contended that if additional compensation or shifting of date was granted, the liability should fall on the State Government or KIADB, not them. They cited Competent Authority v. Barangore Jute Factory and Others, arguing that shifting of date is rare.
• They argued that compensation should not be awarded under the 2013 LA Act, as this was a new argument.
• They stated that the appellants never sought directions to pass awards and that steps were taken only after the Project Proponents’ proceedings.

Respondent No. 1 (State of Karnataka) Arguments:

• The State argued that the appellants’ claims were premature as they had not exhausted remedies under the ongoing award proceedings.
• They contended that the High Court had held that the issue of shifting the date could only be examined after the award was passed.

Respondents No. 2 to 5 (KIADB and related authorities) Arguments:

• They submitted that the SLAO passed the award on April 22, 2019, based on the Advocate General’s opinion regarding shifting of the date.
• They argued that the High Court had quashed the award and directed fresh awards.
• They stated that fresh awards had been passed, and if the appellants were aggrieved, they could take steps as per the law.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered list. However, the core issue before the court was:

• Whether the High Court was correct in dismissing the writ appeal as premature, particularly regarding the shifting of the date for determining the market value of the land.
• Whether the landowners were entitled to compensation based on the market value of the land at the time of the award, rather than the date of the preliminary notification.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on several cases and legal provisions to reach its decision. These are categorized below:

Shifting of Date for Compensation:

• Ram Chand and Others v. Union of India and Others (1994) 1 SCC 44 – Supreme Court of India: The Court noted that compensation should be paid at an early date and that market value at the time of notification is often a fraction of the current value.
• Haji Saeed Khan and Others v. State of U.P. and Others (2001) 9 SCC 513 – Supreme Court of India: The Court shifted the date of notification to the date of taking possession to ensure fair compensation.
• Competent Authority v. Barangore Jute Factory and Others (2005) 13 SCC 477 – Supreme Court of India: The Court shifted the date for compensation to the date of taking possession, emphasizing that compensation should reflect the loss suffered by landowners.
• Tukaram Kana Joshi and Others Through Power-of-Attorney Holder v. Maharashtra Industrial Development Corporation and Others (2013) 1 SCC 353 – Supreme Court of India: The Court highlighted the importance of fair compensation and the right to property as a human right.

Right to Property and Fair Compensation:

• Vidya Devi v. State of Himachal Pradesh and Others (2020) 2 SCC 569 – Supreme Court of India: The Court emphasized that the right to property is not just a constitutional right but also a human right, and deprivation must be by authority of law with just compensation.
• Ultra-Tech Cement Ltd. v. Mast Ram and Others 2024 SCC OnLine 2598 – Supreme Court of India: The Court reiterated that fair compensation is a sine qua non for any acquisition process, and the State has a duty to ensure timely payment.
• K. Krishna Reddy and Others v. Special Deputy Collector, Land Acquisition Unit II, LMD Karimnagar, Andhra Pradesh (1988) 4 SCC 163 – Supreme Court of India: The Court highlighted the importance of timely compensation, noting the diminishing purchasing power of money over time.

Relevant Legal Provisions:

• Section 28 of the Karnataka Industrial Areas Development Act, 1966 (KIAD Act): This section deals with the acquisition of land for industrial development.
• Section 30 of the KIAD Act: This section makes the provisions of the Land Acquisition Act 1894 applicable for determining compensation.
• Section 11 of the Land Acquisition Act 1894 (1894 LA Act): This section specifies that compensation should be determined based on the market value of the land at the time of the preliminary notification.
• Article 300-A of the Constitution of India: This article states that no person shall be deprived of their property except by authority of law.

Authorities Considered Table

Judgment

The Supreme Court analyzed the submissions and authorities to arrive at its judgment. The following table summarizes how each submission was treated:

The Court also analyzed how each authority was used:

• Ram Chand and Others v. Union of India and Others:* The Court used this case to highlight the issue of delayed compensation and the disparity between market value at the time of notification and the time of the award.
• Haji Saeed Khan and Others v. State of U.P. and Others:* This case was cited to demonstrate that the Court had previously shifted the date of notification to ensure fair compensation.
• Competent Authority v. Barangore Jute Factory and Others:* The Court relied on this case to support the argument that the date of notification could be shifted to the date of possession to ensure adequate compensation.
• Tukaram Kana Joshi and Others Through Power-of-Attorney Holder v. Maharashtra Industrial Development Corporation and Others:* This case was used to emphasize the right to property as a human right and the need for fair compensation.
• Vidya Devi v. State of Himachal Pradesh and Others:* The Court cited this case to reinforce that the right to property is a constitutional and human right, and deprivation must be by law with just compensation.
• Ultra-Tech Cement Ltd. v. Mast Ram and Others:* This case was cited to underscore the State’s duty to ensure timely payment of fair compensation.
• K. Krishna Reddy and Others v. Special Deputy Collector, Land Acquisition Unit II, LMD Karimnagar, Andhra Pradesh:* The Court used this case to highlight the importance of timely compensation and the diminishing purchasing power of money over time.

What weighed in the mind of the Court?

The Supreme Court was deeply concerned about the prolonged delay in providing compensation to the landowners. The Court emphasized that the landowners had been deprived of their property for over two decades without receiving fair compensation. The Court highlighted the following points:

• Constitutional Right: The Court emphasized that the right to property, although not a fundamental right, is a constitutional right under Article 300-A, and deprivation must be by authority of law with fair compensation.
• Human Right: The Court also recognized the right to property as a human right, highlighting the need for just compensation and protection against arbitrary deprivation.
• Timely Compensation: The Court stressed that timely compensation is crucial, as the value of money diminishes over time due to inflation. The delay in providing compensation was viewed as a travesty of justice.
• State’s Responsibility: The Court noted that the State has a responsibility to ensure that landowners are fairly compensated and that it cannot abdicate this duty.
• Inaction of Authorities: The Court criticized the lethargic attitude of the State and KIADB, which led to the prolonged deprivation of compensation.
• Justice and Equity: The Court emphasized that it was exercising its powers under Article 142 of the Constitution to do complete justice and to ensure that the landowners received fair compensation.

Logical Reasoning

Reasoning

The Supreme Court’s reasoning was based on several key aspects:

1. Rejection of Prematurity: The Court first addressed the High Court’s dismissal of the appeal as premature. It noted that the single judge had already decided against the appellants on the issue of shifting the date for market value. Therefore, the cause of action remained, and the Division Bench should have considered the appeal on its merits.
2. Analysis of Legal Provisions: The Court analyzed the relevant legal provisions, including Section 28 of the KIAD Act, Section 30 of the KIAD Act (making the 1894 LA Act applicable), and Section 11 of the 1894 LA Act. It acknowledged that the 1894 LA Act specifies that compensation should be based on the market value at the time of the preliminary notification.
3. Consideration of Precedents: The Court extensively discussed previous judgments, particularly those where the Court had shifted the date of notification to ensure fair compensation. The Court relied on Ram Chand, Haji Saeed Khan, Barangore Jute Factory, and Tukaram Kana Joshi to support the argument that the date could be shifted in exceptional circumstances.
4. Right to Property: The Court emphasized the significance of the right to property as a constitutional and human right. It cited Vidya Devi and Ultra-Tech Cement Ltd. to underscore that deprivation of property must be by authority of law with fair compensation.
5. Delayed Compensation: The Court highlighted the injustice caused by the prolonged delay in providing compensation. It noted that the landowners had been deprived of their property for over two decades without receiving fair compensation. The Court cited K. Krishna Reddy to emphasize the importance of timely compensation.
6. Exercise of Power under Article 142: The Court, finding that the SLAO had no power to shift the date of preliminary notification, exercised its powers under Article 142 of the Constitution to do complete justice. It directed the SLAO to determine compensation based on the market value as of April 22, 2019.
7. Balancing Interests: The Court also balanced the public interest in the project with the rights of the landowners. It noted that quashing the acquisition proceedings would not be in the public interest and would lead to further delays and expenses.

The Court considered the alternative interpretation that the compensation should be based on the date of the preliminary notification as per the 1894 LA Act. However, it rejected this interpretation due to the extraordinary delay and the injustice it would cause to the landowners. The Court emphasized that the constitutional provisions under Article 300-A should not be a mockery and that fair compensation is paramount.

The Supreme Court’s decision was unanimous, with both judges concurring on the judgment. There were no minority opinions.

The Court quoted the following from the judgment:

“The authorities are enjoined by the statute concerned to perform their duties within a reasonable time, and as such they are answerable to the Court why such duties have not been performed by them, which has caused injury to claimants.”

“The right to property is now considered to be not only a constitutional or statutory right, but also a human right. Human rights are considered to be inalienable rights since they are derived from the dignity and worth of a human being. The State is bound to make good the loss suffered by the claimants in the process of acquisition of their property.”

Conclusion

The Supreme Court’s judgment in Bernard Francis Joseph Vaz vs. Government of Karnataka is a significant ruling that underscores the importance of fair compensation in land acquisition cases. The Court’s decision to shift the date for determining market value to the date of the award, rather than the preliminary notification, highlights the need to protect landowners from the negative impacts of prolonged delays in acquisition proceedings. The Court emphasized that the right to property, although not a fundamental right, is a constitutional and human right, and that deprivation must be by authority of law with just compensation.

Key Takeaways:

• Fair Compensation: Landowners are entitled to fair compensation that reflects the current market value of their land, especially when there are significant delays in the acquisition process.
• Timely Process: The State has a duty to ensure that land acquisition proceedings are carried out in a timely manner and that landowners are not made to suffer due to administrative delays.
• Constitutional and Human Rights: The right to property is not only a constitutional right but also a human right, and the State must respect this right by providing just compensation.
• Judicial Intervention: The Supreme Court can exercise its powers under Article 142 of the Constitution to do complete justice and ensure that landowners receive fair compensation, even when there are procedural or statutory hurdles.

Impact and Implications:

• Precedent: This judgment sets a precedent for future land acquisition cases where there are significant delays in the acquisition process. It clarifies that landowners should not be penalized for the State’s inaction.
• State Accountability: The judgment holds the State accountable for its actions and emphasizes the need for timely and fair compensation. It sends a strong message that the State cannot abdicate its responsibility to protect the rights of landowners.
• Protection of Landowners: The judgment provides a significant layer of protection for landowners, ensuring that they receive fair compensation and are not deprived of their property without due process.
• Future Land Acquisitions: The judgment may lead to a more streamlined and efficient land acquisition process, as the State will be more careful to avoid delays and ensure timely compensation.

In conclusion, the Supreme Court’s judgment in this case is a landmark decision that reaffirms the importance of fair compensation, timely process, and the protection of property rights. It serves as a reminder that the State must act responsibly and ensure that landowners are not unfairly deprived of their property without just compensation.