Dealing with two conflicting judgments of the Supreme Court on the interpretation of Section 24 (2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, a five-judge Constitution Bench on 7 March 2020 ruled that proceedings under the Land Acquisition Act, 1894 will not lapse if the compensation payable to the land owner is tendered by depositing it in the treasury even if the land owner refuses to accept it. Section 24 (2) of the Act states that an acquisition will lapse if physical possession of the land has not been taken “or” the compensation has not been paid.
  1. The Bench, comprising Justices Arun Mishra, Indira Banerjee, Vineet Saran, M R Shah and S Ravindra Bhat, said the word “or” must be read as “and”, meaning thereby that the acquisition will lapse only if physical possession has not been taken “and” compensation not paid.
  2. It also said: “We are of the considered opinion that Section 24 cannot be used to revive dead and stale claims and concluded cases. They cannot be inquired into within the purview of Section 24 of the Act of 2013
  3. The provisions of Section 24 do not invalidate the judgments and orders of the Court, where the rights and claims have been lost and negatived. 
  4. There is no revival of the barred claims by operation of law. Thus, stale and dead claims cannot be permitted to be canvassed on the pretext of enactment of Section 24. 
  5. In exceptional cases, when in fact, the payment has not been made, but possession has been taken, the remedy lies elsewhere if the case is not covered by the proviso.
  6. The Bench ruled that deemed lapse of land acquisition proceedings under Section 24 (2) of the 2013 Act will take place only “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. 
  7. 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.
  8. It said a land owner cannot insist that the compensation must be deposited in court or the acquisition under the 1894 Act would fail. Mere tendering of the compensation, it said, was enough. 
  9. In case a person has been tendered the compensation as provided under Section 31(1) of the Act of 1894, it is not open to him to claim that acquisition has lapsed under Section 24(2) due to non-payment or non-deposit of compensation in court. 
  10. 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.
  11. The Bench held that 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. The consequence of non-deposit is provided in proviso to Section 24 (2), it said, adding that “in case it has not been deposited with respect to majority of land holdings, then all beneficiaries (landowners) as on the date of notification for land acquisition… shall be entitled to compensation in accordance with the provisions of the Act of 2013.
  12. Non-deposit of compensation (in court) does not result in the lapse of land acquisition proceedings, the Bench said. It said the mode of taking possession of the land under the 1894 Act and as contemplated under Section 24(2) of the 2013 Act is by drawing of inquest report/memorandum. 
  13. Once award has been passed on taking possession under Section 16 of the Act of 1894, the land vests in State” and “there is no divesting provided under Section 24 (2) of the Act of 2013, it ruled.
  14. The matter was referred to the five-judge Bench in 2018 as two benches of the court had delivered conflicting judgments on the issue.
  15. One decision came from a three-judge bench of Chief Justice of India R M Lodha and Justices Madan B Lokur and Kurian Joseph (all retired since) in 2014 in Pune Municipal Corporation & Anr v Harakchand Misrimal Solanki & Ors matter.
  1. The second ruling was in 2018 by a bench of Justices A K Goel (since retired), Arun Mishra and Mohan M Shantanagoudar in Indore Development Authority vs Shailendra. It held that the 2014 ruling “per incuriam” (passed without due regard to the law).
  2. The 2014 ruling had said that merely depositing the compensation in the treasury cannot be treated as compensation paid.
  3. On February 8, 2018, the bench of Justices Mishra, Goel and Shantanagoudar, by a 2:1 decision in the Indore Development Authority matter, ruled that compensation not availed of within a stipulated five-year period could not be ground for cancellation of land acquisition — the order by the Constitution Bench reaffirms the view in the 2018 ruling .
  4. But days later, on February 21, another bench of Justices Lokur, Joseph and Deepak Gupta took exception to the February 8 order. 
  5. Raising questions about a three-judge bench overruling another three-judge bench, this new bench requested High Courts and other Supreme Court benches, which were hearing matters likely to be impacted by the February 8 order, to defer hearings till it decided whether to send the matter to a larger bench. Subsequently, it was referred to a five-judge bench.