The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”) was passed with a view to address various inadequacies in the existing Land Acquisition Act, 1894 (“1894 Act”). The 2013 Act contains provisions for enhanced compensation as well as rehabilitation and resettlement. The 2013 Act not only aims to safeguard the interests of landowners, but, also other displaced and affected persons including tenants and those whose main source of livelihood is dependent on the acquired land.

The 2013 Act came into force on 01-01-2014. Section 24 of the 2013 Act deals with the lapsing of proceedings that had been initiated under the 1894 Act and were pending as on 01-01-2014 in certain cases. Section 24 divides pending acquisitions as on 01-01-2014, into three broad categories:

1. Where the award has not been passed.
2. Where the award has been passed within 5 years prior to 01-01-2014.
3. Where the award has been passed more than 5 years prior to 01-01-2014.

The proceedings in the first and second categories of cases do not lapse. For cases in the first category, the acquisitions survive and compensations are to be determined as per the 2013 Act and, for cases in the second category, the compensations continue to be determined as per the 1894 Act. As far as cases in the third category are concerned, where, the award has been passed more than 5 years prior to 01-01-2014, the proceedings may lapse on the fulfillment of conditions, namely:

1. Physical possession of the land has not been taken; or
2. Compensation has not been paid.

As far as cases falling under the third category are concerned, certain interpretational issues arose immediately after the enactment of the 2013 Act. One of the issues was whether the satisfaction of both the aforesaid conditions was required for the proceedings to lapse or whether even the satisfaction of any one of the aforesaid conditions was sufficient for the proceedings to lapse. Another issue was, if the landowners had refused to accept the compensation, whether the deposit of the compensation in the treasury would amount to the compensation having been paid and would save the acquisition.

Indore Development Authority and Ors. v. Manoharlal and Ors. (“IDA-II”)[1]

A five-judge bench was constituted in IDA-II, to answer these issues and to resolve the conflict arising from the judgments in the Pune Municipal Corporation Case (3 judge bench)[2] and the Indore Development Authority Case (3 judge bench, hereinafter “IDA-I”)[3]. The Apex Court, in Pune Municipal Corporation Case, had held that where landowners had refused to accept the compensation, the money had to be deposited in Court. The deposit of compensation in the treasury after this refusal would not be regarded as payment of compensation thereby leading to a lapse of proceedings initiated under the 1894 Act. The correctness of this view was doubted by IDA-I.

The 5-judge Bench overruled the Pune Municipal Corporation Case and upheld IDA-I and concluded that the Government’s obligation to pay compensation was complete when it tendered or offered the compensation to the landowners. It was also held that the Government was not obligated to deposit the compensation in Court on the landowner’s refusal to accept the same. It was further held that the deposit of the compensation in the treasury instead of the Court caused no prejudice to the landowner and that the consequence of non-deposit in Court was limited to a higher rate of interest being payable as per Section 34 of the 1894 Act. The Court also held that the non-deposit of compensation in Court did not result in a lapse of the acquisition proceedings. Furthermore, it was held that the proceedings did not lapse if the compensation tendered was refused by the landowner or reference was sought for a higher compensation.

Another crucial issue was whether both the conditions mentioned in Section 24(2), that is, non-payment of consideration and failure to take possession, were necessary for the lapse of acquisition. Therefore, the Court had to decide whether the ‘or’ in ‘the physical possession of the land has not been taken or the compensation has not been paid’ had to be interpreted as disjunctive (or) or as conjunctive (and/nor).

It was held that when two negative conditions are separated by an ‘or’, as per principles of statutory interpretation, they had to be read as conjunctive, that is, ‘nor’/’and’. In light of this, the Court held that the ‘or’ in Section 24(2) has to be read as ‘nor’/‘and’. This implies that if the award has been passed 5 years or more before 01.01.2014, and neither physical possession was taken, nor compensation was paid, the proceedings would lapse. However, even if either of them was done, then the proceedings would be saved.

Conclusion

Though the IDA- II judgment has put some crucial interpretational issues to rest, it might be seen as an escape route for the Government, because acquisition proceedings initiated under the 1894 Act can now be saved since the Government may have merely tendered or offered compensation to the landowner.

[The author is an Associate in Commercial Litigation practice of Lakshmikumaran & Sridharan, New Delhi]

1. [1] 2020 SCC OnLine SC 316.
2. [2] Pune Municipal Corporation and Ors. v. Harakchand Misirimal Solanki and Ors. (2014) 3 SCC 183.
3. [3] Indore Development Authority and Ors. v. Shailendra (Dead) through LRs and Ors. (2018) 3 SCC 412.