Disputes Regarding Ownership Of Acquired Land Cannot Impede Legitimate Rights Of Original Landowners To Receive Compensation: Supreme Court
The Supreme Court observed that the disputes regarding the ownership of the subject land cannot be an impediment to the legitimate rights of the original landowners to receive compensation.
The Court clarified the liability concerning compensation for land acquisition associated with a cement project in Himachal Pradesh.
A Bench of Justice J.B. Pardiwala and Justice Manoj Misra observed, “In our considered view, disputes regarding the ownership of the subject land, if any cannot be an impediment to the legitimate rights of the original landowners to receive compensation. Therefore, the contention of JAL that the Appellant should pay the amount as determined under the Supplementary Award because the subject land was integral to the cement project is rejected.”
Senior Advocate Navin Pahwa represented the appellant, while Senior Advocate Ranjit Kumar appeared for the respondents.
The State of Himachal Pradesh issued a notification in 2008 under Section 4 of the Land Acquisition Act, 1894 (the Act), to acquire land for the Jaypee Himachal Cement project, a unit of M/s Jaiprakash Associates Ltd. (JAL). This land acquisition was for creating a safety zone around the mining area, which posed safety risks due to its proximity to residential zones.
During the pendency of the acquisition proceedings, JAL entered into an agreement with the Appellant for the transfer of the cement project in question. In this regard, a Scheme of Arrangement was signed between UltraTech Cement Ltd. (appellant), JAL and Jaypee Cement Corporation Ltd. (Scheme) under the relevant provisions of the Companies Act, 1956.
Due to disputes over the valuation of the land, structures, and crops, some landowners did not allow proper assessment during the acquisition process. Consequently, the Himachal Pradesh High Court stayed the acquisition proceedings in 2011. However, in 2016, the Court allowed the acquisition for public purposes such as infrastructure development and cement manufacturing.
In 2018, the Land Acquisition Collector (LAC) passed an Award determining compensation for the landowners, which was paid by JAL. However, the landowners filed further petitions for supplementary compensation, particularly for damages to structures and crops that were not accounted for earlier.
The Supreme Court held that the appellant was not liable for the payment of compensation under the supplementary award. The liability, according to the Court, was of JAL as per the Scheme of Arrangement.
The Court explained that Section 41 of the Act necessitated an agreement between the appropriate government and the company for whose purpose the land is being acquired. “One of the purposes of such an agreement is to ensure that payment towards the cost of acquisition is made by the company to the appropriate government and it is only upon such payment that the land is transferred to the company. Thus, it can be said that JAL was mandated to make the requisite payment to the State of Himachal Pradesh prior to the subject land being transferred to it,” the Court explained.
The Bench pointed out Section 38 of the Act which indicated that the payment of full and final compensation to the land owners was a precursor to taking possession of the land sought to be acquired.
“It is clear from the facts that the acquisition proceedings herein failed to confirm to this statutorily mandated sequence of events. It is regrettable that the State of Himachal Pradesh, being a welfare state, did not ensure payment of compensation to the Respondent Nos. 1-6 before taking possession of their land. In fact, the landowners had to approach the High Court to seek directions to the LAC for passing of the supplementary award which was finally passed on 02.05.2022 that is, after a period of almost four years from the date of passing of the Award of 2018,” the Court remarked.
Consequently, the Court ordered, “We clarify that the State shall recover the said amount from JAL as the liability to pay the cost of acquisition of the subject land ultimately falls on JAL.”
Accordingly, the Supreme Court allowed the appeal.
Cause Title: M/s. Ultra-Tech Cement Ltd. v. Mast Ram & Ors. (Neutral Citation: 2024 INSC 709)
Appearance:
Appellant: Senior Advocate Navin Pahwa; Advocates Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Victor Das, Geetika Sharma, Sudipto Sicar and Manavi Agarwal; AOR E.C. Agrawala
Respondents: Senior Advocate Ranjit Kumar; AAG Puneet Rajta; Advocates Subhash Chandran Kr, Virender Thakur, Krishna Lr, Sarthak Chiller, Rohit Lochav, Sharmila Upadhyay, Pawan R Upadhyay and Sarvjit Pratap Singh; AOR Biju P Raman, Himanshu Tyagi and Vikrant Narayan Vasudeva