Can the Government Take Your Land Without Payment?

The case reached the Supreme Court from an order of the Madhya Pradesh High Court, Indore Bench, dated 30 November 2015. That order was passed in Writ Appeals Nos. 514, 799 and 772 of 2006. The lead matter was S.L.P. (C) Nos. 9036-9038 of 2016, heard along with a long list of other appeals. The Court was clear that it was not deciding any individual landowner's case on its facts. It was answering a reference on how Section 24 of the 2013 Act should be read, so the judgment does not narrate Manoharlal's own story or what the High Court held.

What the Court did record was why the reference became necessary. In Indore Development Authority v. Shailendra, the matter was referred to a larger Bench on 7 December 2017. The Court there noticed that "cases which have been concluded are being revived". Some landowners had deliberately refused compensation and told courts they did not want it at any cost. After losing, they kept agitating through successive petitions and interim orders.

The Union, the States and acquiring bodies, including development authorities, argued through Solicitor General Tushar Mehta. They had three main answers to the landowners. First, "or" in Section 24(2) must be read as "and", so both failures must exist before an acquisition lapses. Second, once possession is taken by panchnama, title vests in the State under Section 16 and cannot be undone. Third, if compensation was tendered and the owner refused it or asked for a higher amount in a reference, the owner cannot say it was never paid. They added that land had already been handed to beneficiaries, infrastructure built and third-party interests created.

The landowners, led by Senior Advocate Shyam Divan, called the 2013 Act a welfare law replacing a colonial one. They said either failure, no possession or no payment, should be enough to lapse the acquisition. They argued that "paid" means actually paid, or deposited in the Reference Court where the Act of 1894 required it. They said possession must be real physical possession, and that the time a court's interim order was running should not be taken out of the five years.

Section 24(2) says that where an award was made five years or more before the 2013 Act began, "but the physical possession of the land has not been taken or the compensation has not been paid", the proceedings are deemed to have lapsed. Read plainly, "or" suggests that either failure is enough. Most decisions that followed Pune Municipal Corporation v. Harakchand Misrimal Solanki, a three-Judge Bench ruling, and Sree Balaji Nagar Residents Association v. State of Tamil Nadu had read it that way.

The chain of references then built up. In Yogesh Neema v. State of Madhya Pradesh, a two-Judge Bench doubted the decision in Sree Balaji Nagar and referred the issue to a larger Bench. Sree Balaji Nagar had followed Pune Municipal Corporation and had also held that Section 24(2) does not exclude any period during which the land acquisition proceeding might have remained stayed on account of stay or injunction granted by any court. In Indore Development Authority v. Shailendra, a three-Judge Bench also referred the matter on 7 December 2017. It felt that Pune Municipal Corporation had not considered several aspects and, prima facie, appeared to be per incuriam. Further references followed, and the five-Judge Bench framed six questions.

The grey areas were these:

• whether "or" means "and";
• whether "paid" includes a deposit in court;
• whether the proviso belongs to Section 24(2) or Section 24(1)(b);
• what counts as taking physical possession;
• whether stayed time counts toward the five years;
• whether Section 24 revives stale claims.

The Court applied the rule that negative conditions joined by "or" are cumulative. It read "or" in Section 24(2) as "nor" or "and". It also reasoned that the other reading would let a landowner keep both the land and the compensation, with no provision for the State to take the money back. The Court stated the result in these words:

• The Court closed the loophole that would have let either failure alone cancel an acquisition. If possession was taken, the land vests absolutely in the State even if compensation is unpaid, and the owner is paid with interest under Section 34 of the 1894 Act. Where the amount was not paid or deposited on or before taking possession, that interest is 9% a year from the time of taking possession. If any of it is still not paid or deposited within one year of taking possession, interest on that amount is 15% a year from the end of that year. If compensation was paid, there is also no lapse even where possession was not taken.
• The Court held that "paid" in Section 24(2) does not include a deposit in court, because the proviso uses the different word "deposited". Once compensation is tendered under Section 31(1), the authority's duty is complete. A landowner who refused it, or who sought a reference for higher compensation, cannot claim lapse. Non-deposit, including deposit in the treasury instead of court, does not lapse the acquisition. If compensation was not deposited for a majority of holdings, all beneficiaries named in the Section 4 notification become entitled to compensation under the 2013 Act.

The Court also held that the proviso is part of Section 24(2), not Section 24(1)(b). It held that a panchnama is the mode of taking possession, and a landowner who re-enters afterwards is a trespasser. Time during which a court's interim order was in force is not counted in the five years. Section 24(2) applies to proceedings pending on 1 January 2014 and gives no new cause of action to reopen concluded acquisitions. The Court overruled Pune Municipal Corporation and Sree Balaji Nagar, along with the decisions that followed them. It also overruled Velaxan Kumar v. Union of India and Narmada Bachao Andolan v. State of M.P. on the mode of taking possession.

• Gather the papers that show which of the two conditions was met: the Section 4 notification, Section 6 declaration, Section 9 notice, the Section 11 award, the possession panchnama or memorandum, records of tender or payment, treasury deposit records, and any court orders staying possession or payment. The judgment says the facts must be gauged in each individual case.
• The judgment does not name a special forum or set a filing deadline for a Section 24(2) claim. It records such claims being raised in the High Courts and the Supreme Court. It also says a landowner who sought a reference for higher compensation gets the amount fixed by the Reference Court.
• Check the Section 4 notification. If compensation was not deposited for a majority of holdings, the beneficiaries recorded there on the date of that notification are the ones entitled to compensation under the 2013 Act.
• Avoid the main mistake. Do not assume that non-payment alone cancels an acquisition. If the State took possession, or compensation was tendered and refused, Section 24(2) does not help. The Court also said that delay is fatal when challenging acquisitions, and that challenges to possession or to the mode of deposit must be brought within a reasonable time, not after decades.