SC: Non-deposit of Compensation in Court doesn’t Result in Lapse of Land Acquisition


February 12, 2018

Case name: In Indore Development Authority v. Shailendra (Dead) through LRs. & Others


Date of Judgment: February 08, 2018

In this recent case, Three-Judge Bench of the Supreme Court analysed the correctness of its decision in the case of Pune Municipal Corporation & Anr. v. Harakchand Misirimal Solanki[1]. In this case, the Supreme Court held that land acquisition would be deemed to have lapsed and would be covered under the The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) entitling the land owners to higher compensation if compensation for land acquired under the Land Acquisition Act 1894 has not been paid to the land owner.

The core issue in the case arose with reference to the interpretation of Section 24 of 2013 Act and section 31 of the Land Acquisition Act 1894.

What does Section 24 of the 2013 Act say?

The Supreme Court in the case of Aligarh Development Authority v. Megh Singh & ors[2]. elucidated on the law relating to lapse of acquisition proceedings under Section 24 of 2013 Act.

The Apex Court stated that Section 24 of the 2013 Act envisages mainly two situations:

  • Where the     land       acquisition     proceedings         had already    been     initiated      under       the     1894   Act    but   no    award   was passed till the date the new Act came into force;
  • Where the Award has     been      passed       but        neither    the    owner      has     been dispossessed nor has he been paid the compensation;

Under the first situation, where the award had not been passed, the acquisition proceedings could continue, but the compensation will have to be determined under the scheme of 2013 Act.

Under the second situation, there is a statutory lapse of the proceedings.

There is also an incidental third situation, where award under the Land Acquisition Act, 1894 Act had already been passed prior to coming into force of the 2013 Act, but payment is yet to be made and possession is yet to be taken. In that case, the further proceedings after the award could continue under the old Act of 1894 but if either payment or possession has not taken effect in five years prior to the 2013 Act, then proceedings will lapse.

Also read Important Judgments on Lapse of Land Acquisition under 2013 Act

The Court in the case extensively deliberated on the statutory provisions and by majority unanimously held that the Pune Municipal Corporation case has to be held per incuriam, the following reasons:

  • The High Court has quashed land acquisition, in Pune Municipal Corporation case (supra), as such provisions of section 24(2) of the Act of 2013 could not be said to be applicable. It was not surviving acquisition then compliance of section 24(2) by taking possession or by payment of compensation for five years or more did not arise as acquisition had been quashed by the High Court in 2008.
  • It was not held in Pune Municipal Corporation case that High Court has illegally set aside the acquisition. In case, High Court had set aside the acquisition in an illegal manner then also maxim ‘actus curiae neminum gravabit’ would have come to the rescue to save acquisition from being lapsed and a period spent in appeal in this Court was to be excluded.
  • The provisions of Section 24(2) could not be said to be applicable to the case once acquisition stood quashed in 2008 by the High Court. Thus, there was no occasion for this court to decide the case on aforesaid aspect envisaged under section 24(2) of the Act of 2013.
  • That statutory rules framed under section 55 of Act of 1894 and orders having statutory force issued under, constitutional provisions or otherwise by various State Governments were not placed for consideration before this court in Pune Municipal Corporation case (supra)
  • Provisions of section 34 prevailing practice of deposit, and binding decisions thereunder section 34 of the Act of 1894 were not placed for consideration of this court while deciding the case.
  • The proviso to section 24(2) was not placed for consideration which uses different expression ‘deposited’ than ‘paid’ in main section 24(2) which carry a different meaning.
  • What is the meaning of expression ‘paid’ as per various binding decisions of this court when the obligation to pay is complete as held in Straw Board Manufacturing Co. Ltd., Saharanpur v. Gobind (supra), Management of Delhi Transport Undertaking v. The Industrial Tribunal, Delhi & Anr. (supra),
  • Indian Oxygen Ltd. v. Narayan Bhoumik (supra) and the Benares State Bank Ltd. v. The Commissioner of Income Tax, Lucknow, (supra) and other decisions were not placed for consideration.
  • The binding decisions of the court as to the consequence of non-deposit in Hissar Improvement v. Smt. Rukmani Devi & Anr. (supra), Kishan Das & Ors. v. State of U.P. & Ors. (supra) and Seshan & Ors. v. Special Tehsildar & Land Acquisition Officer, SPICOT, Pudukkottai (supra) etc. were not placed for consideration while deciding the case.
  • The maxim “nullus commodum capere potest de injuria sua propria” i.e. no man can take advantage of his own wrong of filing litigation and effect of refusal to receive compensation was not placed for consideration while deciding the aforesaid case.
  • There is no lapse of acquisition due to the non deposit of amount under the provisions of Act of 1894 or Act of 2013. In this regard, the provision of section 77 and 80 relating to payment and deposit under Act of 2013 which corresponds to section 31 and 34 were not placed for consideration of this court while rendering the aforesaid decision.
  • The past practice for more than a century, of deposit in treasury, as per rules/ orders and decisions were not placed for consideration. It was not open to invalidate such deposits made in treasury without consideration of the provisions, prevailing practice, and decisions under the Act of 1894.
  • The decision rendered in Pune Municipal Corporation case and other decisions following, the view taken in Pune Municipal Corporation case are per incuriam.

Bench’s Verdict

  • Interpretation of the word “paid” in Section 24- That the word ‘paid’ in section 24 of the Act of 2013 has the same meaning as ‘tender of payment’ in section 31(1) of the Act of 1894. They carry the same meaning and the expression ‘deposited’in section 31(2) is not included in the expressions ‘paid’ in section 24 of the Act of 2013 or in ‘tender of payment’ used in section 31(1) of the Act of 1894. The words ‘paid’/tender’ and ‘deposited’ are different expressions and carry different meanings within their fold.

In section 24(2) of the Act of 2013 in the expression ‘paid,’ it is not necessary that the amount should be deposited in court as provided in section 31(2) of the Act of 1894. Non-deposit of compensation in court under section 31(2) of the Act of 1894 does 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 as envisaged under section 34 of the Act of 1894 and not lapse of acquisition.

Once the amount of compensation has been unconditionally tendered and it is refused, that would amount to payment and the obligation under section 31(1) stands discharged and that amounts to discharge of obligation of payment under section 24(2) of the Act of 2013 also and it is not open to the person who has refused to accept compensation, to urge that since it has not been deposited in court, acquisition has lapsed. Claimants/landowners after refusal, cannot take advantage of their own wrong and seek protection under the provisions of section 24(2).

  • The normal mode of taking physical possession under the land acquisition cases is drawing of Panchnama.
  • The provisions of section 24 of the Act of 2013, do not revive barred or stale claims such claims cannot be entertained.
  • That Provisions of section 24(2) do not intend to cover the period spent during litigation and when the authorities have been disabled to act under section 24(2) due to the final or interim order of a court or otherwise, such period has to be excluded from the period of five years as provided in section 24(2) of the Act of 2013.
  • There is no conscious omission in section 24(2) for the exclusion of a period of the interim order. There was no necessity to insert such a provision. The omission does not make any substantial difference as to legal position.
  • The principle of actus curiae neminem gravabit[3] is applicable including the other common law principles for determining the questions under section 24 of the Act of 2013. The period covered by the final/ interim order by which the authorities have been deprived of taking possession has to be excluded. Section 24(2) has no application where Court has quashed acquisition.

The entire case can be accessed here.

[1] 2014 (3) SCC 183

[2] IV (2016) SLT 153

[3] An act of Court shall prejudice none