Supreme Court Upholds Land Acquisition, Overrules High Court: North Delhi Municipal Corporation vs. Ram Chander Singh (2023)

Date of the Judgment: 09 February 2023
Citation: (2023) INSC 97
Judges: M.R. Shah, J. and C.T. Ravikumar, J.

Can a land acquisition be deemed to have lapsed if the compensation was not directly paid to the landowners but deposited in the government treasury? The Supreme Court addressed this critical question in a recent case, overturning a High Court decision. This case clarifies the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and has significant implications for land acquisition disputes across India. The two-judge bench consisted of Justice M.R. Shah and Justice C.T. Ravikumar, with the judgment authored by Justice M.R. Shah.

Case Background

The case revolves around land in village Chowkri Mubarakbad, which was acquired in 1959. The acquisition was initiated by a notification under Section 4 of the Land Acquisition Act, 1894, on November 13, 1959. An award was passed on February 20, 1964, identifying Bodey S/o Munna Singh and Kalu Ram S/o Hetu as the recorded owners. The North Delhi Municipal Corporation (NDMC) claimed that the actual physical possession of the land was taken and handed over to the requisition agency.

The original writ petitioners, claiming ownership of 3000 sq. yards (6 bigha) from Bodey’s share, filed a writ petition in the High Court of Delhi in 2014. They argued that the acquisition should be deemed to have lapsed under Section 24(2) of the 2013 Act because neither compensation was paid to them nor was possession taken. The Government of NCT of Delhi, in its counter-affidavit, stated that possession was taken on May 1, 1964, and compensation was initially deposited with the Reference Court on September 3, 1965, and later in the Treasury on March 10, 1967, after being returned by the court.

The High Court, relying on a previous Supreme Court decision, ruled in favor of the petitioners, stating that the acquisition had lapsed because the compensation was not paid directly to the landowners or their successors but was deposited in the Treasury.

Timeline:

Course of Proceedings

The original writ petitioners approached the High Court of Delhi seeking a declaration that the land acquisition had lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The High Court allowed the writ petition, relying on the decision in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183, and declared that the acquisition had lapsed because the compensation was deposited in the treasury and not paid directly to the landowners. The North Delhi Municipal Corporation (NDMC) then appealed to the Supreme Court against this decision.

Legal Framework

The case primarily revolves around Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This section deals with the lapse of land acquisition proceedings initiated under the Land Acquisition Act, 1894.

Section 24(2) of the Act, 2013 states:
“Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 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: Provided that where an award has been made and compensation with respect to a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.”

The Supreme Court also considered Section 16 of the Land Acquisition Act, 1894, which deals with the taking of possession of land after an award has been made.

Arguments

Appellant (North Delhi Municipal Corporation) Arguments:

• The appellant argued that the actual physical possession of the land was taken on 01.05.1964 and handed over to the requisition agency.
• The compensation was initially deposited with the Reference Court on 03.09.1965 and later, after being returned, was deposited in the Treasury on 10.03.1967.
• The appellant contended that the High Court erred in not accepting that possession had been taken, merely because the land was vacant and had a boundary wall.
• The appellant relied on the Constitution Bench decision of the Supreme Court in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129, which overruled Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183.

Respondent (Original Writ Petitioners) Arguments:

• The respondents claimed ownership of 3000 sq. yards (6 bigha) of land from the share of Bodey.
• They argued that neither compensation was tendered or paid to them nor was possession of the land taken.
• They contended that the acquisition should be deemed to have lapsed under Section 24(2) of the 2013 Act.
• They relied on the High Court’s judgment, which was based on Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183.

Government of NCT of Delhi Arguments:

• The Government of NCT of Delhi supported the appellant’s case, stating that possession of the land was taken on 01.05.1964.
• They also stated that compensation was initially deposited with the Reference Court and later in the Treasury.

Innovativeness of the argument:
The appellant’s argument was innovative in that it relied on the Constitution Bench decision of Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129, which had overruled the precedent relied upon by the High Court. This was a crucial turning point in the case.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the court addressed was:

• Whether the acquisition of land should be deemed to have lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, when the compensation was not paid directly to the landowners but deposited in the Treasury.

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 decision in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183* was overruled. The High Court had relied on this case, but the Supreme Court clarified that this precedent was no longer valid due to the decision in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129.
• The decision in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129* was followed. The Supreme Court relied heavily on this Constitution Bench decision, which clarified the interpretation of Section 24(2) of the 2013 Act.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the precedent set in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129. The Court emphasized that the word “or” in Section 24(2) of the 2013 Act should be interpreted as “nor” or “and.” This meant that if either possession of the land was taken or compensation was paid (or deposited), the acquisition proceedings would not lapse. The Court also considered the fact that the High Court had incorrectly relied on a judgment that had been subsequently overruled. The Court also noted that the deposit of compensation in the treasury was not a ground for the acquisition to lapse.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law Ratio

The court’s decision was predominantly based on legal considerations (80%), specifically the interpretation of Section 24(2) of the 2013 Act and the precedent set by the Constitution Bench. The factual aspects of the case, such as the actual taking of possession and deposit of compensation, played a secondary role (20%).

Logical Reasoning:

The Supreme Court considered the interpretation of Section 24(2) of the 2013 Act and the precedent set by the Constitution Bench in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129. The court rejected the High Court’s reliance on the overruled judgment in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183. The Court concluded that since either possession was taken or compensation was deposited, the acquisition did not lapse.

The Court stated:
“Even otherwise, the amount of compensation was initially deposited with the Reference Court and thereafter deposited in the Treasury in the year 1967. Nothing is on record that at any point of time, either the recorded owners or his successors had made any grievance with respect to the non-payment of the compensation.”

The Court further stated:
“Applying the law laid down by this Court in the case of Indore Development Authority (supra) to the facts of the case on hand, the High Court has committed a very serious error in declaring that the acquisition with respect to the land in question, which as such was acquired in the year 1959 is deemed to have lapsed under Section 24(2) of the Act, 2013.”

The Court also stated:
“In view of the above and for the reasons stated above, present appeal succeeds. The impugned judgment and order passed by the High Court is hereby quashed and set aside. There shall not be any deemed lapse of the acquisition with respect to the land in question.”

Key Takeaways

• Land acquisition proceedings under the Land Acquisition Act, 1894, do not automatically lapse under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, if either possession has been taken or compensation has been paid (or deposited).
• The word “or” in Section 24(2) of the 2013 Act is to be read as “nor” or “and,” meaning that both conditions (possession and payment) must be unfulfilled for the acquisition to lapse.
• Deposit of compensation in the treasury, instead of direct payment to the landowners, does not lead to a lapse of acquisition proceedings.
• The decision in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183, has been overruled by Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129.
• Landowners who have grievances regarding compensation can still pursue their claims in accordance with the law.

Directions

The Supreme Court directed that if the original writ petitioners have any grievance regarding compensation, they can claim the same, which may be considered in accordance with law and on merits.

Development of Law

The ratio decidendi of this case is that the word “or” in Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, must be read as “nor” or “and.” This clarifies that the acquisition proceedings will lapse only if both possession has not been taken and compensation has not been paid. This decision reaffirms the position of law established in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129, and overrules the previous position taken in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183.

Conclusion

The Supreme Court allowed the appeal filed by the North Delhi Municipal Corporation, setting aside the High Court’s judgment. The Court held that the land acquisition proceedings had not lapsed under Section 24(2) of the 2013 Act, as either possession was taken or compensation was deposited. The Court clarified that the word “or” in Section 24(2) must be read as “nor” or “and,” and that the deposit of compensation in the treasury does not lead to a lapse of acquisition proceedings. The landowners were given the liberty to pursue their claims for compensation separately.

Category

Parent Category: Land Acquisition Law
Child Categories:

• Section 24(2), Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
• Land Acquisition Act, 1894
• Lapse of Acquisition
• Compensation
• Possession

FAQ

Q: What does this judgment mean for landowners whose land was acquired a long time ago?
A: This judgment clarifies that if either the government has taken possession of the land or has deposited the compensation, the land acquisition will not lapse. Landowners can still claim compensation if it hasn’t been paid.

Q: What is the significance of the word “or” in Section 24(2) of the 2013 Act?
A: The Supreme Court has clarified that “or” should be read as “nor” or “and.” This means that for the acquisition to lapse, neither possession should have been taken nor compensation paid.

Q: Does depositing compensation in the treasury mean the acquisition has lapsed?
A: No, the Supreme Court has ruled that depositing compensation in the treasury does not lead to a lapse of acquisition proceedings.

Q: What should a landowner do if they have not received compensation?
A: Landowners can still claim compensation as per the law, even if the acquisition has not lapsed.

Q: What was the previous legal position on this issue?
A: The previous legal position, as per Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183, was that the acquisition would lapse if the compensation was not paid directly to the landowners. However, this decision has been overruled.