Indore Development Authority v.

Manoharlal and Ors

(S.L.P. (C) NOS.9036-9038 OF 2016)

Decided on 06 March 2020

Facts:

The underlying issue, in broad terms, was whether deposit of compensation by government in
treasury can be deemed as payment to landowner as per Section 24(2) of the 2013 Land
Acquisition Act so as to save the proceedings taken under the 1894 Land Acquisition Act from
being lapsed.

In 2014, a three judge bench in Pune Municipal Corporation case held that in case land owners
are not willing to accept the compensation, the same has to be deposited in Court. Mere deposit
of compensation in treasury cannot be regarded as payment as per Section 24(2). In other words,
land acquisition proceedings under the 1894 Act will lapse.

This view held field for nearly over three years, until a two judges bench comprising Justice
Arun Mishra and Amitava Roy doubted its correctness in the Indore Development Authority case
in December 2017 and referred it to larger bench.

The larger bench (a three judge bench) which considered the reference was also headed by
Justice Arun Mishra. This three judge bench (by 2:1 majority) held the decision in Pune
Municipal Corporation to be per incuriam. While Justices Arun Mishra and A K Goel were in the
majority, Justice Mohan M Shantanagoudar dissented by stating that a three judge bench cannot
overrule a precedent laid down by a co-ordinate bench.

Shortly, another three-judge bench (Justices Madan B Lokur, Kurian Joseph and Deepak Gupta)
took objection to this course adopted by Justice Arun Mishra-led bench in the Indore
Development Authority case, and stayed the operation of Indore Development Authority case.

It was only after this that a two-judge bench headed by Justice Arun Mishra thought it fit to refer
the issue to the CJI for determination by a larger bench.
Issue raised:

1. What is the meaning of the expression paid'/tender' in Section 24 of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
(Act of 2013') and Section 31 of the Land Acquisition Act, LA (Act of 1894')? Whether non-
deposit of compensation in court under section 31(2) of the Act of 1894 results into lapse of
acquisition under section 24(2) of the Act of 2013. What are the consequences of non- deposit in
Court especially when compensation has been tendered and refused under section 31(1) of the
Act of 1894 and section 24(2) of the Act of 2013? Whether such persons after refusal can take
advantage of their wrong/conduct?

2. Whether the word or' should be read as conjunctive or disjunctive in Section 24(2) of the Act
of 2013?

3. What is the true effect of the proviso, does it form part of sub-Section (2) or main Section 24
of the Act of 2013?

4. What is mode of taking possession under the Land Acquisition Act and true meaning of
expression the physical possession of the land has not been taken occurring in Section 24(2) of
the Act of 2013?

5. Whether the period covered by an interim order of a Court concerning land acquisition
proceedings ought to be excluded for the purpose of applicability of Section 24(2) of the Act of
2013 ?

6. Whether Section 24 of the Act of 2013 revives barred and stale claims? In addition, question
of per incuriam and other incidental questions also to be gone into.

Contention:

The learned SG, counsel for the Union, arguing that this Court should overrule the ratio in Pune
Municipal Corporation (supra) and other judgments which followed it, contended that the Court
did not consider the various interpretations of Section 31 of the (repealed) Land Acquisition Act,
(“LA Act” hereafter). He urged that the provisions of the Act of 2013, vis-à-vis the timelines and
consequences that would ensue if the acquisition proceeding prolongs, were not examined. He
highlighted that Section 24 is a transitional provision and such provisions should be given an
interpretation which accords with legislative intent, rather than so as to impose hitherto absent
standards, upon past proceedings, or proceedings initiated under the previous regime, but which
have not worked themselves out. He urged that there is a presumption in favour of restricted
retrospective applicability of any provision in an enactment unless a contrary intention appears.
It is submitted that designedly, it is the stage of passing of award under Section 11 of the LA
Act, that represents the determinative factor in the segregation for the applicability of the
provisions of the Act of 2013 or the LA Act. It is urged that the opening part of the provision in
Section 24(1) is a non-obstante clause providing for a limited overriding effect of the Land
Acquisition Act, in case of the contingencies mentioned in Section 24 (1) (a) and (b) of the Act
of 2013.

Rationale:

In March 2019, the Supreme Court formed a Constitution Bench to examine the correctness of
two contradictory three-judge Bench decisions. The decisions concerned the lapse of land
acquisition proceedings due to compensation disputes.

The controversy arose on February 8th 2018, when a three-judge Bench by a 2:1 majority
in Indore Development Authority v Shailendra (Dead) set aside a 2014 decision in Pune
Municipal Corporation v Harakchand Misirmal Solanki (2014) by another three-judge Bench.

In Pune Municipal Corporation, the Court had held that land acquisition can void under section
24(2) of the Land Acquisition Act of 2013, if compensation has not been deposited in the bank
accounts of the land owners or with the court. It was categorically clarified that money in the
government treasury will not be treated as a payment to a landowner.

But by a 2:1 judgment in Indore Development Authority, the Court held that land acquisitions
could not lapse due to a land-owner’s refusal to accept compensation within 5 years. It held that
once compensation has been tendered, but the person refuses to accept it, this amounts to a
discharge of the obligation under section 31(1) of the Land Acquisition Act, 1894. In addition,
the judges in the majority – Justices Mishra and AK Goel held the previous 2014 Pune
Municipal Corporation judgment to be ‘per incuriam’. Justice Shantanagoudar dissented. 
The new judgment created chaos as it meant reopening the various High Court decisions that
were settled under the principle evolved in Pune Municipal Corporation.

Following Indore Development Authority, when a similar land acquisition matter came up before
a three-judge Bench on February 21st, 2018 in Haryana v GD Goenka Tourism Corporation,
Jutices Madan Lokur and Kurian Joseph raised judicial impropriety concerns. They also sat on
the Pune Municipal Corporation Bench. 

Following the eruption of the controversy, the then CJI Dipak Misra on February 26th 2018
formed a Constitution Bench to decide if the 2018 Bench could have invalidated the earlier
decision of the 2014 Bench. The matter was not taken up during the remainder of his tenure and
was only subsequently listed by the succeeding Chief Justice Ranjan Gogoi.

On October 12th 2019, the Court listed the matter for October 15th before a Bench comprising
Justices Arun Mishra, Indira Banerjee, Vineet Saran, M.R. Shah and Ravindra Bhat.

Before final arguments could begin, various counsels argued that Justice Arun Mishra ought to
recuse himself from the Bench. They submitted that as he had led the the Bench that delivered in
the 2018 Indore Development Authority judgment, he suffered from a perceived bias. On
October 24th 2019, he delivered a more than 60-page order dismissing these arguments.

On March 4th 2020, the five-judge Bench overturned Pune Municipal Corporation and held that
land acquisition proceedings cannot lapse merely due to a failure to pay compensation to
landowners. It held that a lapse will only occur if the State also fails to take physical possession
of the land. Further, it held that payment does not require the State to deposit money in a
landowner’s account – tendering compensation is sufficient. Justice Mishra authored the
judgment.

 The judgment does not address the issue of whether a Bench can set aside a judgment of an
earlier Bench of the same strength.
Defects in the law:

Though the judgment has put some crucial interpretational issues to rest, it might be seen as an
escape route for the Government, because acquisition proceedings initiated under the 1894 Act
can now be saved since the Government may have merely tendered or offered compensation to
the landowner.

Inference:

The present landmark judgment provided clarification on the inadequacies in the interpretation of
2013 Act. It also addressed the mischievous created by landowners who file case if not satisfied
by the compensation provided by the government. I believe it was a necessary step in view of the
pending land acquisition proceedings in the court burdening the court and causing hindrance to
our judicial system.