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• The Supreme Court reaffirmed its February 2018 ruling on Section 24 on land acquisition compensation awards given by a three-judge bench led by Justice Arun Mishra in the Indore Development Authority.
  
• It also has overruled an earlier co-ordinate Bench ruling in the Pune Municipal Corporation case of 2014 under the Right to Fair Compensation and Transparency in the Act of 2013.

What is the provision and why it needed interpretation?

• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 (2013 Act) replaced the Land Acquisition Act, 1894 (1894 Act).
• The new Act provides for higher compensation to those deprived of land by the government for both public and private sector projects.
• It also mandates consent of a majority of land-owners, and contains provisions for rehabilitation and resettlement.
• Under Section 24(2) land acquisition made under the old law of 1894 lapses if the award of compensation had been made five years before the new Act came into force, but has not been paid.
• In such cases, the process will have to be gone through afresh under the new Act, which mandates higher compensation.

Issue over compensation

• There are cases in which farmers and other land-owners have refused the compensation, leading to delay in the government taking possession.
• In this situation, the compensation amount is deposited in the government treasury. According to one interpretation, if this is done, the acquisition process is saved.
• Then again, others contend that such cases will fall under the new Act because compensation has not been paid to the land-owners, and the lapsing clause in Section 24 should be applied.
• If, through interpretation, a long-pending land acquisition process is closed under the old law and fresh acquisition proceedings started under the new one, the land-owners stand to benefit, but project proponents will have to pay higher compensation.
• Therefore, the provision concerned is often a subject of litigation.

What happened in the case before the Supreme Court?

• On January 24, 2014 the court ruled that the acquisition of a piece of land had “lapsed” because the compensation awarded had neither been paid to the landowners/persons interested nor deposited in the court.
• The deposit of the compensation amount in the government treasury was held to be “of no avail” as it was not equivalent to the compensation being “paid”.
• Based on this judgment, subsequent cases were decided on the same principle: acquisition that had taken place earlier than five years before the new Act commenced would lapse if compensation amount was not paid to the land-owners or, in cases in which the owners refused to accept compensation, deposited in court.

How was this precedent dealt with in another case in 2018?

• The same question arose in Indore Development Authority vs. Shailendra. Another Bench did not accept the earlier Bench’s view.
• On February 8, 2018, the majority, consisting of the first two judges, ruled that the acquisition would not lapse merely because the compensation amount was not deposited in court, but was instead deposited in the treasury.
• It ruled that the past practice of more than a century, under which the amount was deposited in the treasury, was not taken into account by the earlier Bench.
• Some provisions and orders that allowed this practice were not placed before that Bench. Further, the land acquisition in that particular case had been quashed by a High Court in 2008.
• Since it was not a subsisting process, the question under Section 24(2), whether the acquisition lapsed because of non-payment of compensation or non-deposit in the court, did not arise at all.
• On these grounds, Justice Mishra and Justice Goel overruled the earlier judgment and held that it was per incuriam, that is a verdict passed in disregard of law and, therefore, wrong.

What does the controversy mean for land-owners and project proponents?

• A ruling that old acquisitions lapse for non-deposit of compensation will be more beneficial to land-owners and farmers as they stand to get higher compensation and rehabilitation and resettlement measures.
• On the other hand, project proponents feel such an interpretation would mean that those who refused to take compensation, even after it had been fixed and the money deposited in the government treasury, would be taking advantage of their own wrong.

Present ruling

On Acquisition

• The provision said that in such cases if the physical possession has not been taken “or” the compensation is not paid, the acquisition proceeding is “deemed to have lapsed”.
• The court held that a land acquisition proceeding under Section 24(2) would only lapse if the authorities have neither taken physical possession nor paid the compensation due to the landowner for five or more years prior to January 1, 2014.
• For this an “or” in the Section was “interpreted” as an “and”.
• Further, the Bench held that Section 24(2) of the Act of 2013 does not give rise to a new cause of action to question the legality of concluded proceedings of land acquisition.

On compensation

• The government if it so wishes would have to initiate “fresh acquisition proceedings” under the new Act of 2013 which provides for “fair-compensation”.
• The judgment however said compensation would be considered paid if the amount is put in the Treasury.
• There was no obligation that the amount should be deposited in the court in order to sustain the land acquisition proceedings under the 2013 Act.
• Thus there is no lapse if possession has been taken and compensation has not been paid. Similarly, there is no lapse if compensation has been paid and possession not taken of the land.