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

Date of the Judgment: February 9, 2023
Citation: 2023 INSC 107
Judges: M.R. Shah, J. and C.T. Ravikumar, J.
Can a land acquisition be deemed to have lapsed if compensation was deposited in the treasury instead of directly to the landowners? The Supreme Court of India recently addressed this critical question in a case involving the North Delhi Municipal Corporation. The core issue revolved around the interpretation of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, specifically whether depositing compensation in the treasury constitutes payment to landowners. This judgment clarifies the conditions under which land acquisition proceedings can be deemed to have lapsed. The bench comprised Justices M.R. Shah and C.T. Ravikumar, with the judgment authored by Justice M.R. Shah.

Case Background

The case originated from a land acquisition notification issued on November 13, 1959, under Section 4 of the Land Acquisition Act, 1894, for land in village Chowkri Mubarakbad. The award for compensation was passed on February 20, 1964. The recorded owners of the land were Bodey S/o Munna Singh and Kalu Ram S/o Hetu. The North Delhi Municipal Corporation (NDMC) claimed that it took physical possession of the land and handed it over to the requisition agency. However, the original writ petitioners, claiming ownership of 3000 sq. yards (6 bigha) from Bodey’s share, argued that neither compensation was paid to them nor was possession taken. They filed a writ petition seeking a declaration that the acquisition had lapsed under Section 24(2) of the 2013 Act.

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, holding that the acquisition had lapsed because the compensation was not paid to the original owners but was deposited in the treasury. The North Delhi Municipal Corporation then appealed to the Supreme Court against this decision.

Legal Framework

The primary legal provision in question is 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 if physical possession of the land has not been taken or compensation has not been paid. The relevant portion of the 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.”

The Supreme Court also considered Section 31 of the Land Acquisition Act, 1894, which deals with the payment of compensation. The court also referred to Section 16 of the Land Acquisition Act, 1894, which deals with the vesting of land in the State after possession is taken.

Arguments

Appellant (North Delhi Municipal Corporation) Arguments:

• The appellant argued that the physical possession of the land was taken on May 1, 1964, and handed over to the requisition agency.
• The compensation was initially deposited with the Reference Court on September 3, 1965, but was returned. It was then deposited in the Treasury on March 10, 1967.
• The appellant contended that the High Court erred in relying on the judgment in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183, which was subsequently overruled.
• The appellant submitted that the deposit of compensation in the treasury fulfills the requirement of payment under the Land Acquisition Act, 1894.

Respondent (Original Writ Petitioners) Arguments:

• The respondents argued that neither the compensation was paid to them nor was the possession of the land taken.
• They claimed that the deposit of compensation in the treasury does not constitute payment to the landowners.
• They relied on the judgment in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183 to support their claim that the acquisition had lapsed.

Government of NCT of Delhi:

• The Government of NCT of Delhi supported the appellant’s claim that physical possession of the land was taken on May 1, 1964.
• It also stated that the compensation was deposited with the Reference Court and later in the Treasury.

Issues Framed by the Supreme Court

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

• Whether the acquisition of land is deemed to have lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, if the compensation was deposited in the treasury instead of being paid directly to the landowners and if the possession of the land was taken by the authorities.

Treatment of the Issue by the Court

Authorities

Cases:

• Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183 – High Court relied on this case. (Supreme Court of India)
• Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129 – This case overruled Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183. (Supreme Court of India)

Legal Provisions:

• Section 4 of the Land Acquisition Act, 1894 – Notification for land acquisition.
• Section 6 of the Land Acquisition Act, 1894 – Declaration of intended acquisition.
• Section 16 of the Land Acquisition Act, 1894 – Vesting of land in the State after possession.
• Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – Lapse of acquisition proceedings.
• Section 31 of the Land Acquisition Act, 1894 – Payment of compensation.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the physical possession of the land was taken by the authorities in 1964 and the compensation, though not directly paid to the landowners, was deposited in the treasury. The court emphasized that the judgment in Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183, which the High Court relied upon, had been specifically overruled by a Constitution Bench in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129. The court also noted that the original landowners had not raised any grievance regarding non-payment of compensation for a long time. The court’s reasoning focused on the interpretation of Section 24(2) of the 2013 Act, clarifying that the word “or” between possession and compensation should be read as “nor” or “and.” This means that the acquisition lapses only if both possession has not been taken and compensation has not been paid.

The Supreme Court stated, “The deemed lapse of land acquisition proceedings under Section 24(2) of the 2013 Act takes place where due to inaction of authorities for five years or more prior to commencement of the said Act, the possession of land has not been taken nor compensation has been paid.” The Court further clarified, “In other words, in case possession has been taken, compensation has not been paid then there is no lapse. Similarly, if compensation has been paid, possession has not been taken then there is no lapse.” The Court also noted, “The expression “paid” in the main part of Section 24(2) of the 2013 Act does not include a deposit of compensation in court.”

Key Takeaways

• Land acquisition proceedings will not lapse if either possession has been taken or compensation has been paid (or deposited in the treasury).
• The word “or” in Section 24(2) of the 2013 Act should be read as “nor” or “and.”
• The overruling of Pune Municipal Corporation and Anr. Vs. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183 by Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129 is a significant clarification of the law.
• Landowners who have not received compensation can still claim it, but the acquisition itself will not be deemed to have lapsed if possession was taken and compensation was deposited.

Directions

The Supreme Court directed that if the original writ petitioners have any grievance regarding compensation, they can claim it, and it should be considered in accordance with the law.

Development of Law

The ratio decidendi of this case is that for land acquisition proceedings initiated under the Land Acquisition Act, 1894, to lapse under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, both physical possession of the land must not have been taken, and compensation must not have been paid. The Supreme Court clarified that the term “paid” does not necessarily mean direct payment to the landowner but includes deposit in the treasury. This judgment reaffirms the position of law established in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129, and clarifies the interpretation of Section 24(2) of the 2013 Act.

Conclusion

The Supreme Court allowed the appeal of the North Delhi Municipal Corporation, setting aside the High Court’s judgment. The court held that the land acquisition in question had not lapsed under Section 24(2) of the 2013 Act. This decision reinforces the principle that if either possession has been taken or compensation has been deposited, the acquisition proceedings will not lapse. The judgment also underscores the importance of adhering to the legal position clarified in Indore Development Authority Vs. Manoharlal and Ors. (2020) 8 SCC 129.