Lapsation of Land Acquisition Proceedings
Author: Sriharsh Raj
The Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act) provides for just and fair compensation to those families whose land has been acquired or proposed to be acquired, or are affected by such acquisition. These provisions would apply when the land has been acquired by the government for its own use, hold and control, including for Public Sector Undertakings and for public use. In addition to this, these provisions would also be applicable in case land is acquired for public-private partnership projects and for private companies for a public purpose. As, the LARR Act repealed the Land Acquisition Act, 1894 (LA Act), one of the most important questions that arose was, what would happen to the land acquisition undergoing till the time new Act comes into effect.
Section 24 of the LARR Act addressed the concern. It provided that those cases of land acquisition that were initiated under the previous regime and no award under section 11 of the said Act was made, would be granted compensation as per the new Act. However, if an award under Section 11 of the previous act was made, then the proceedings would be governed by the provisions of the previous act i.e. the LA Act. The previous act would be considered as not repealed for such cases. In the scenario where the award, under the previous Act, was passed at least five years prior to the commencement of the LARR Act, and neither the possession was taken nor the compensation was paid, the acquisition would stand lapsed. In this article, firstly, I will analyse the interpretation of Section 24(2) of the LARR Act, i.e. when can a land acquisition proceeding be considered to have lapsed. Secondly, Iwill interpret the distinction between the terms “paid” and “deposited” under Section 24 of the LARR Act and at what moment is compensation considered to have been paid.
When can proceedings under Land Acquisition lapse?
Section 24(2) of the LARR Act carves out an exception to Section 24(1)(b) of the LARR Act. It provides that where the award has been passed under the 1894 Act, but neither the physical possession of the land has been taken, nor any compensation is paid, proceedings shall lapse. Essentially, there are two requirements for a proceeding under land acquisition to lapse; First, physical possession should not have been taken and, second, compensation should not have been paid. In the case of Indore Development Authority v. Manoharlal & Ors. Etc., the court had to determine whether the above-mentioned two conditions are cumulative in nature or whether the conditions are in the alternative In order to answer this question, the court analysed the scope of the word “or”. Going by the literal meaning of “or” would mean that either one of the conditions had to be satisfied for a proceeding to lapse. However, the court, relying on Principles of Statutory Interpretation, held that when “or” shall be read as “nor” or “and” in situations where negative conditions are connected by “or” and they are to be construed cumulatively. However, if “or” connects two positive conditions, they would be construed as an alternative. Essentially, under Section 24(2) of the LARR Act, a land acquisition proceeding can be said to have lapsed only when both the conditions have been satisfied, i.e. the government failed to take possession and pay compensation.
The interpretation of “or” as “nor” or “and” was further supported by referring to the LA Act. Under Section 11 of the Act, once the award has been made, the land would be free from all encumbrances. Further, under Section 16, the Collector can take possession of the land once the award has been made under Section 11 of the Act. Thus, it is inferred from the LA Act that the land acquisition proceedings would lapse only when the possession of the land is not taken. Once, the award has been passed, and the possession has been taken under Section 16, the owner of the land loses his title, and the State becomes the “absolute owner of the land”. The LA Act provided that in case the Collector fails to deposit the compensation, he shall pay the amount with interest at nine per cent per annum as specified under Section 34 of the Act. Thus, according to the LA Act, under no scenario would non-payment of compensation lead to lapsation of land acquisition. Possession of land is independent of payment of compensation. The same spirit can be found in the LARR Act, 2013. The act does not provide for failure to pay compensation as a ground for lapse of land acquisition proceedings. Further, like Section 34 of the 1894 Act, Section 80 of the 2013 act provides that in case of failure to pay compensation, the Collector will have to pay the amount at nine per cent interest. Thus, if the proceedings are allowed to lapse after the awards have been passed and the possession has been taken, but compensation has not been paid, it will violate the fundamentals of the act.
When is compensation said to have been paid?
Another issue which is connected with the above issue is the use of the term “paid” and “deposited” in Section 24(2) and proviso to Section 24(2), respectively. Section 24(2) of the LARR Act provides for where awards have been passed five years or more prior, but the possession has not been taken or the compensation has not been “paid”. Proviso to this section uses the expression “compensation in respect of a majority of landholding has not been deposited in the account of beneficiaries”. The court referred to Section 31 of LA Act to interpret the provisions of Section 24(2) of LARR Act, as Section 31 of the LA Act deals with payment and deposit of compensation. Section 31(1) clearly provides that once the award has been passed, the payment of compensation shall be tendered by the Collector to the beneficiaries. Section 31(2) provides that in case the collector is prevented from making payment due to contingencies provided in the section, he shall “deposit” the compensation to the court. Section 24(2) of the LARR Act uses the expression “paid”, thereby meaning that compensation has not been tendered for payment. This is different from the term “deposited” used in the proviso, which is used in case the payment is prevented.
Justice Mishra while making reference to Black’s Law Dictionary, held that once the state tenders the compensation, the proceedings under Section 24(2) cannot lapse.In case, the beneficiary has not received the payment, the state is responsible for paying him the compensation with interest as per Section 77 & 80 of the LARR Act.
While the judgement in Indore Development Authority gives clarity as to the interpretation of various provisions and terms of the LARR Act, such interpretation may work in adverse to the interest of the land holders. The court held that land acquisition proceedings would not lapse if the possession has been taken and the compensation was “tendered” to the landowner. It also held that non-payment of compensation would not result in lapsation of land acquisition proceedings. Further, according to the LARR Act, once the award has been passed and the possession has been taken, the ownership of the land passes to the State, thus stripping off the title from the land loser. In a study conducted by Centre for Policy Research, it was shown that almost eighty-three per cent of the cases instituted under Section 24 of the LARR Act were on the grounds of failure to pay compensation to the land losers.
Since LARR Act is a welfare legislation, it becomes important to ensure that the interests of the land losers are also taken into consideration. However, the court failed to do so. The act provides no mechanism to ensure payment of compensation. In case of failure to pay, the land losers will receive the amount with interest, but ‘when’ remains unanswered. It is no hidden fact that in India, it takes years for a civil matter to be settled. Under such scenario, the land loser has no alternative but to wait for the compensation to be paid by the relevant authorities. Since, the land loser is stripped of the title as soon as the possession is taken, compensation should also be provided at the same time. The court while interpreting the term “paid” held that it could not mean “deposited in the account of beneficiary” for the reason that the word “deposited” is used in the proviso to Section 24 and not in the main section. However, it failed to notice that the consequence in the proviso was different because it dealt with a scenario where there were multiple land holders.
The LARR Act repealed the LA Act and introduced significant changes. However, it opened a wide array of questions regarding the status quo of land acquisition proceedings instituted under the previous Act. The language of Section 24(2) of the LARR Act gave an impression that those proceedings under which an award has been passed, but the possession has not been taken or the compensation has not been paid would stand lapsed under this Act. However, the court had a different stance on this. They held that the term “or” would act as “and” in the provision. They justified this with the help of general principles of statutory interpretation and other case laws. If the court did not clarify the interpretation of the provision, there would have been a plethora of cases before the courts all across the country regarding the lapsation of land acquisition proceedings. Further, the court in this case also explained the difference between the term “paid” and “deposit” in Section 24 and held that once the payment of compensation has been tendered, the proceedings cannot lapse.
[The author is a student of Law at the West Bengal National University of Juridical Sciences (NUJS), Kolkata and a member of the Centre for Research and Studies in Land, Mineral and Real Estate Laws, NUJS.]
Notes and References
 Land Acquisition, Rehabilitation and Resettlement Act, 2013, Preamble.  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §2.  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §2(2).  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §24(1)(a).  Land Acquisition Act, 1894, §11.  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §24(1)(b).  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §24(2).  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392, ¶96.  Id.  Id.  Justice G P Singh, Principles of Statutory Interpretation (14th ed., 2016).  Patel Chunibhai Dajibha, etc. v. Narayanrao Khanderao Jambekar and Anr, AIR 1965 SC 1457.  Land Acquisition, Rehabilitation and Resettlement Act, 2013, §24(2).  Land Acquisition Act, 1894.  Land Acquisition Act, 1894, §11.  Land Acquisition Act, 1894, §16.  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392, ¶115.  Supreme Court Observer, Land Acquisition- Indore Development Authority v. Manoharlal, available at https://www.scobserver.in/court-case/land-acquisition-case/land-acquisition-plain-english-summary-of-judgment (Last visited on July 20, 2020).  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392, ¶118.  Supra note 18.  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392, ¶200.  Supra note 18.  Id.  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392.  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392.  Indore Development Authority v. Manoharlal & Ors. Etc, 2019 SCC OnLine SC 1392, ¶118.  Wahi, N., Bhatia, A., Gandhi, D., Jain, S., Shukla, P., and Chauhan, U, Land Acquisition in India: A Review of Supreme Court Cases from 1950 to 2016, available at https://www.cprindia.org/system/tdf/policy-briefs/Land%20Rights%20Report%20Final.pdf?file=1&type=node&id=5891&force=1 (Last visited on August 3, 2020).