Plain English Summary of the Judgment

हिन्दी

 

In this case, a five-judge Bench of the Supreme Court resolved ambiguities pertaining to State land acquisition lapses under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (‘2013 Act’). A central question was whether failures by the State to pay landowners compensation could lapse land acquisition proceedings. Complexities arose out of the fact that the Court had to resolve how the 2013 Act interacts with its repealed predecessor –  The Land Acquisition Act, 1894 (‘LA Act’).

 

In particular, the Court had to settle the correct interpretation of section 24(2) of the 2013 Act read with various provisions of the LA Act. Section 24(2) states that land acquisition proceedings initiated under the LA Act will lapse if the State has yet to take physical possession of the land ‘or’ failed to pay compensation to the landowners. The Union argued that this ‘or’ had to be interpreted as conjunction, i.e. as an ‘and’. In other words, it argued that only if both conditions were met, could a land acquisition lapse.

 

Ultimately, the Bench comprising Justices Arun Mishra, Indira Banerjee, Vineet Saran, M.R. Shah and S. Ravindra Bhat agreed with the Union. Relying on case-law, it established that ‘or’ should be interpreted as a ‘nor’ in this specific statutory context, which is the equivalent of a conjunctive ‘and’. Further, it observed that the alternative interpretation would place an undue burden on the State in land acquisition proceedings. A few persons refusing compensation could lapse the acquisition of a vast tract of land for public use.

 

The controversy

Part of what made this case so controversial is that the reference to a five-judge Bench arose out of unusual circumstances. The reference was made in the context of two prior conflicting judgments on the interpretation of section 24(2). In February 2018, the three-judge Bench in Indore Development Authority v Shailendra (Dead) set aside the three-judge Bench judgment in Pune Municipal Corporation v Harakchand Misirmal Solanki (2014). Generally, in common law, a Bench cannot overturn a judgment of a Bench of the same strength.  The Indore Development Authority judgment created chaos as it meant reopening all prior cases which had relied on Pune Municipal Corporation as precedent.

 

Further controversy arose because Justice Arun Mishra had led the Bench that delivered the 2018 judgment. The 2018 judgment held that failure to pay landowners could not alone lapse land acquisition. Various counsels argued that Justice Mishra should recuse himself from the current case, contending that he suffered from a perceived bias. However, Justice Mishra authored a 62-page order refusing to do so.

 

                                            Image source: Sandeep Saxena, The Hindu

 

The below summary limits itself to the March 6th 2020 judgment. A summary of the recusal order can be found here.

 

Central issues

Before proceeding into what the judgment held, below are the specific issues that arose before the Bench.

 

As indicated above, one of the primary issues pertained to the interpretation of ‘or’ in section 24(2). The provision states, “where an award [under the LA Act] has been made five years or more prior to the commencement of this [2013] 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”. The Bench had to decide if this ‘or’ should be interpreted as an ‘and’. That is to say, can land acquisition proceedings lapse if only one of the contingencies is met, or must both be met?

 

The second key issue pertained to the meanings of ‘paid’ and ‘deposited’ in section 24(2). Should ‘paid’ be understood to mean ‘deposited’? In other words, does the duty to pay compensation require the acquiring authority to deposit money in the landowner’s bank account or in the relevant court? Alternatively, can the acquiring authority be relieved of its obligation to pay, once it has tendered the appropriate compensation?

 

There were several other issues before the Bench. As this summary aims to remain relatively concise, it will not address each of them. However, there are two others that must be briefly mentioned. First, what conditions must the State fulfil to take “physical possession” of acquired land? Second, to which clause(s) does the proviso in Section 24 of the 2013 Act apply – is it limited in its application to Section 24(2)?

 

In what follows, our summary explains how Justice Arun Mishra addresses each of these issues in the judgment that he authored on behalf of the other four judges on the Bench.

 

‘Or’ vs. ‘and’

Section 24(2) of the 2013 Act specifies when on-going land acquisition proceedings under the LA Act can lapse. In particular, it applies to proceedings under the LA Act where an award has been made at least five years prior to the commencement of the 2013 Act on 1 January 2014. Section 24(2) defines two conditions that can lead to a lapse: non-possession by the State or non-payment to the landowner(s). The question before the Bench was whether both or only one, of these conditions, has to be met to lapse proceedings.

 

This hinged on the correct interpretation of ‘or’. Assuming common parlance, the use of ‘or’ in the provision would imply that only one of the conditions has to be met to lapse an acquisition. For example, if the State fails to pay the landowners, then the proceedings would lapse.

 

However, relying on Patel Chunibhai Dajibha, Justice Mishra held that ‘or’ in this context must be interpreted conjunctively. He observed that, as per G.P. Singh’s Principles of Statutory Interpretation (14th Ed.), two negative conditions connected by an ‘or’ in a statute, must be construed as ‘cumulative’. That is to say, ‘or’ should be read as “nor”/ “and”.

 

Justice Mishra underpinned his conclusion by observing the contradictory consequences that would follow from the alternative interpretation. He reasoned that if ‘or’ were held to be disjunctive, then absurdities would follow. To illustrate this, he relied on section 16 of the old LA Act. Section 16 vests land in the State ‘free from all encumbrances’ once it has made an award under section 11 of the LA Act. In effect, he held that once the State makes an award and takes possession, it becomes the ‘absolute owner of the land’. There then exists no mechanism for reversing the process and lapsing the land acquisition, according to Justice Mishra. He added that nowhere in the LA Act, nor the 2013 Act, is a payment a pre-condition for taking possession. He concluded that to allow proceedings to lapse after the State has taken possession due to non-payment, would contradict the provisions of the LA Act.

The meaning of ‘paid’

As described above, section 24(2) states that land acquisition proceedings under the LA Act may lapse, if the State fails to pay the beneficiary landowners: “where…the compensation has not been paid the said proceedings shall be deemed to have lapsed”. However, the provision does not specify precisely what such a payment entails. The counsels representing the interests of landowners argued that payment requires either a completed payment to a landowner or a deposit in the relevant courts (if the payment is disputed).

 

Justice Mishra held that once the State has tendered the compensation under section 31(1) of the LA Act, its obligation to pay is fulfilled. He referred to Black’s Law Dictionary, which defines the noun ‘tender’ as an ‘unconditional offer of money’. The Dictionary specifies that “the tender may save the tendering partner from a penalty of non-payment”. Justice Mishra concluded that once the State tenders the compensation, the land acquisition cannot lapse under section 24(2).

 

Relying on case law on statutory interpretation, he reasoned that ‘paid’ could not mean ‘deposited’ in section 24. He reasoned that when two different terms are used in the same statute, they cannot be given the same meaning, as this would be contrary to legislative intent. He concluded that Parliament could not have intended ‘paid’ in section 24 to mean ‘deposited’.

 

Justice Mishra overturned the finding in Pune Municipal Corporation that paying compensation cannot entail a deposit in the treasury.

 

He also clarified that in instances where a beneficiary has not received a payment, the State may have to pay interest on the original compensation as per sections 31 and 34 of the LA Act (equivalent in 2013 Act: s 77 & 80).

Mode of possession

In addition to disputing the meaning of ‘paid’ in section 24(2), the opposing counsels also disagreed about what ‘physical possession’ entails. When can the State be found to have failed to take physical possession of acquired land? Justice Mishra resolved this potential ambiguity by relying on the provisions of the LA Act. He held that the State must issue a memorandum in order to take possession of the land.

 

He clarified that there is no requirement on the State to forcefully remove the previous landowners from the land in order to claim possession. He held that once the State makes an award and issues a memorandum, the title no longer rests with the landowner. At this stage, possession vests in the State as an “indefeasible right”, he reasoned. Therefore, no representative of the State has to physically occupy the land.

 

Application of the proviso

A more technical issue that arose was the scope of the proviso in section 24. The proviso comes at the end of section 24, after sub-section (2)(b). In essence, it provides for a mechanism for landowners to seek compensation under the 2013 Act, when the State has deposited compensation to a majority of the other beneficiaries (landowners) in a land acquisition proceeding under the LA Act.

 

The question that arose was whether the proviso should be read as a part of sub-section (2)(b) or the entirety of section 24. This would determine how the Court would interpret the proviso itself and the other sub-sections of section 24.

 

Relying on case law, Justice Mishra held that a proviso must be read as a part of the provision it is appended to. In this instance, the proviso is appended to sub-section (2)(b). He added that sub-section (2)(b) ends with a semi-colon, implying that the proviso belongs to it. He concluded that the proviso only applies to sub-section (2)(b).

 

In effect, Justice Mishra’s observations entail (among other things) that when compensation is not deposited in a majority of landowners’ accounts in proceedings under the LA Act, they are payable in terms of the provisions of the 2013 Act.

 

Other important findings

In addition to the above, there are other important observations worth brief mentioning.

 

Naturally, the judgment overrules Pune Municipal Corporation. While Pune Municipal Corporation had held that the State must deposit compensation in a landowner’s account or with the court to complete its obligation to pay, Justice Arun Mishra concluded that tendering compensation was sufficient. Perhaps less expectedly, Justice Mishra also overturned his 2018 judgment in Indore Development Authority: ‘the decision too cannot prevail’ (para 362). He observed that in Indore, the interpretation of ‘or’ had never been ‘placed for consideration’ before the Bench. In sum, this March 4th 2020 judgment overturns all previous judgments on the interpretation of section 24(2) of the 2013 Act.

 

The judgment also addresses the fact that there is an excess of litigation around land acquisition proceedings. Justice Mishra specified that landowners cannot use section 24(2) to re-open concluded LA Act proceedings. He observed that section 24(2) does not ‘give rise to a new cause of action to question the legality of concluded proceedings’. Section 24(2) shall only apply to pending proceedings, where the award was given at least five years prior to the commencement of the 2013 Act.

 

As to the calculation of this five year time period, Justice Mishra clarified that any interim orders issued by courts must be excluded in the computation of time.

 

Please note that while this summary provides an overview of the key observations in the judgment, it is not exhaustive.