ACQUISITION WON’T LAPSE IF GOVT DOESN’T PAY, SAYS SC

Says govt obligation is complete once compensation amount is in the treasury

NEWDELHI: The Supreme Court on Friday ruled that land acquisition proceedings initiated under an earlier law, the Land Acquisition Act of 1894 (1894 Act), will not lapse even if compensation is not deposited by the government in court after owners declined to accept the money, as long the compensation has been tendered into the government treasury.

Once the compensation amount is tendered in the treasury, the state’s obligation is complete with respect to the payment of compensation, a Constitution Bench held. At the crux of the row was the interpretation of Section 24 of the new land acquisition law of 2013.

NEWDELHI:THE Supreme Court on Friday ruled that land acquisition proceedings initiated under an earlier law, the Land Acquisition Act of 1894 (1894 Act), will not lapse even if compensation is not deposited by the government in court after owners declined to accept the money, as long the compensation has been tendered into the government treasury.

Once the compensation amount is tendered in the treasury, the state’s obligation is complete with respect to the payment of compensation, a five-judge Constitution Bench held in a judgment.

At the crux of the controversy, was the interpretation of Section 24 of the new land acquisition law of 2013, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (2013 Act). Section 24(2) of this Act provided for deemed lapse of land acquisition proceedings initiated under the 1894 Act provided certain conditions are satisfied.

The deemed lapse was intended to benefit landowners who could be allowed to claim lapse of proceedings which were initiated under the 1894 Act so that they could be subject to the more favourable proceedings under the 2013 Act.

“The expression paid in the main part of Section 24(2) of the Act of 2013 does not include a deposit of compensation in court….non-deposit of compensation (in court) does not result in the lapse of land acquisition proceedings”, the bench headed by justice Arun Mishra ruled.

The bench therefore, concluded that landowners, who had refused to accept the compensation under the earlier Act, cannot take benefit of deemed lapse of acquisition under Section 24 of the new act of 2013.

“The obligation to pay is complete by tendering the amount under Section 31(1). Land owners who had refused to accept compensation or who sought reference for higher compensation, cannot claim that the acquisition proceedings had lapsed under Section 24(2) of the Act of 2013”, the court held. Importantly, the court held that the proceedings under the 1894 Act will lapse as provided in section 24(2) of the new act only if the award of compensation under the earlier act was made five years prior to the date of commencement of the new act. Thus, if either the possession was taken by the government or compensation was tendered, the landowners will not be entitled to fresh acquisition proceedings under the new law. All previous judgments by the Supreme Court in this regard, were overruled by the court.

THE LAWS

In the 1894 Act, Section 31 provided for payment of compensation or deposit of the same in the court. This provision required that the Collector should tender payment of compensation to the persons interested who are entitled to compensation. Section 18 provided for reference to court if landowner has any objection to the award of compensation.

If due to any contingency contemplated in Section 31(2), the compensation has not been paid, the Collector should deposit the amount of compensation in the court to which the reference can be made.

The 2013 Act put in place an entirely new regime for compulsory acquisition of land and provided for a new scheme of compensation, rehabilitation and resettlement to the affected families whose land has been acquired or is proposed to be acquired .

BACKGROUND

In 2014, a three-judge bench of the Supreme Court comprising justices RM Lodha, Madan Lokur and Kurian Joseph held even if the award of compensation has been made under the 1894 act, unless the compensation is paid to the landowners or deposited before the court, the land acquisition will lapse as provided in section 24(2) of 2013 Act. Deposit of compensation amount in the treasury will not be sufficient to discharge the obligation, the court ruled .

However, another three-judge bench of the Supreme Court, in February 2018, delivered a judgment in which it took a view opposite to that ruling.

It held that non-deposit of compensation in court under section 31(2) of the 1894 Act will not result in a lapse of acquisition under section 24(2) of the Act of 2013. Due to the failure of deposit in court, the only consequence at the most in appropriate cases may be of a higher rate of interest on compensation and not lapse of acquisition.

CONTROVERSY

This 2018 judgment created a controversy because it held the earlier 2014 judgment to be per incuriam, that is, a judgment delivered ignoring the law. As per the established legal principles, if a bench disagrees with the judgment of another bench of equal strength, it should be referred to a larger bench which was not adhered to in this matter.

In fact, immediately after the judgment was delivered similar matters came up before a bench comprising justices Madan Lokur and Kurian Joseph who were on the bench which had delivered the 2014 judgment. They took strong objection to the 2018 judgment. Justice Dipak Misra, who was then the Chief Justice of India, formed a Constitution bench to settle the issue.

“Due to this judgment, the benefit of the new Act might not go to the landowners under the previous regime. The object of Section 24(2), which was to bring landowners from the previous regime under ambit of the more favourable new regime of 2013 Act, might be hit”, Supreme Court advocate Balaji Srinivasan told HT.