Summary
The Supreme Court set aside a High Court direction that UltraTech pay the supplementary land acquisition award for land acquired as a safety zone for a cement project it later took over from Jaiprakash Associates (JAL). Under the NCLT-sanctioned Scheme, proceedings pending before the effective date stayed with JAL, which still owned the land and had paid the main award. Return of the land under Section 101 of the 2013 Act was refused, and the State, having handed over possession before full compensation was paid, was directed to pay the landowners with interest and recover the sum from JAL.
Issues
- Whether the acquired land and the liabilities attached to it passed to the appellant under the Scheme of Arrangement with JAL.
- Whether the appellant or JAL was liable to pay the compensation under the Supplementary Award dated 02.05.2022.
- Whether the land could be returned to the landowners under Section 101 of the 2013 Act, and what is the scope of that provision.
- Whether the State, as a welfare State, was bound to ensure full and prompt payment of the compensation.
Provisions considered
- Sections 391 to 394 (Scheme of Arrangement, Clauses 1.1(w)(ix) and 7.1), Companies Act, 1956The Scheme excluded from the transferred 'JAL Business' litigations pertaining to it as of the Closing Date and kept with JAL all proceedings initiated or pending before the Effective Date (29.06.2017); the acquisition proceedings begun in 2008 with compensation still undetermined fell within 'other proceedings' and remained JAL's liability. (¶¶ 21, 22, 23, 24, 25, 26, 27)
- Section 101, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013Return requires that the land be unutilised for five years from taking possession; land acquired and serving as a mining safety zone is in use, and the provision, a beneficial one for landowners, cannot be invoked by the defaulting acquiring body to obtain a refund. (¶¶ 34, 35, 36, 37, 38, 40)
- Section 38(1), Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013Full payment of compensation is a precursor to taking possession; handing over possession to JAL in 2019 before the supplementary award envisaged in the 2018 award was passed contravened this sequence. (¶¶ 51, 52, 55)
- Section 41, Land Acquisition Act, 1894Acquisition for a company requires an agreement for the company to pay the cost of acquisition to the Government, with the land transferred only on such payment; JAL was therefore bound to pay before transfer, and the transfer before the supplementary compensation was fixed contravened Section 41. (¶¶ 53, 54, 55)
- Section 17(4) and Section 5A, Land Acquisition Act, 1894The urgency clause was invoked, dispensing with the landowners' right to object under Section 5A, which placed an onerous duty on the State to secure fair compensation expeditiously. (¶¶ 3, 45)
- Article 300A, Constitution of IndiaThe landowners' sub-rights in acquisition, including fair compensation and an efficient, timely process, are corresponding duties of the State; leaving the supplementary compensation unpaid for over two years and disclaiming responsibility under the tripartite MOU offended Article 300A. (¶¶ 43, 44, 45, 46, 47, 48)
Held
- Under Clause 7.1 of the Scheme, the land acquisition proceedings for the safety-zone land, begun before the Effective Date of 29.06.2017 and with compensation still undetermined then, remained with JAL; JAL, having paid the 2018 award without protest after the Effective Date, could not shift liability for the supplementary award, which merely continued that award. (¶¶ 26, 27, 28, 29, 39)
- The land was not among the assets transferred under the Scheme and remained owned by JAL; liabilities arising from it could not be fastened on the appellant merely because the land was integral to the cement project, and any inter se ownership dispute cannot impede the landowners' right to compensation. (¶¶ 30, 31, 32)
- Section 101 requires both non-utilisation and a five-year lapse from possession; land acquired as a safety zone for the residents' protection was in use throughout, and a party that failed to use the land cannot rely on Section 101 to seek return and a refund, as that would let it profit from its own default. (¶¶ 35, 36, 38, 40)
- The High Court misapplied Clause 7.1, wrongly treated JAL as taken over by the appellant and the appellant as having paid the 2018 award, ignored that JAL still owned the land, and overlooked the Supreme Court's earlier order in Tonnu Ram requiring orders consistent with the Scheme. (¶ 42)
- When land is acquired under eminent domain, and particularly under the urgency clause, the State bears a constitutional duty to ensure prompt payment of determined compensation, which is payable without any request by the landowners; it cannot abdicate that duty by pointing to its limited role under an agreement with the beneficiary company and should have paid from its treasury and recovered from JAL. (¶¶ 45, 46, 47, 48, 49, 50)
- Handing over possession to JAL before the supplementary compensation was determined and paid contravened Section 38(1) of the 2013 Act and Section 41 of the 1894 Act. (¶¶ 51, 52, 54, 55)
Result
Appeal allowed; High Court order of 12.07.2022 set aside; the State and the Land Acquisition Collector directed to pay Rs. 3,05,31,095 with 9% interest from 02.05.2022 to the landowners within fifteen days and to recover the amount from JAL.