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Synopsis

The Supreme Court recently observed that the State cannot abdicate its constitutional and statutory responsibility of payment of compensation by arguing that its role is limited to initiating acquisition proceedings.

The apex court said that any delay in the payment of compensation to the landowners after taking away ownership of the subject land from them is in contravention of the spirit of the Constitutional scheme of Article 300A and the idea of a welfare State. 

"Acquisition of land for public purpose is undertaken under the power of eminent domain of the government much against the wishes of the owners of the land which gets acquired. When such a power is exercised, it is coupled with a bounden duty and obligation on the part of the government body to ensure that the owners whose lands get acquired are paid compensation/awarded amount as declared by the statutory award at the earliest," a bench of Justices J B Pardiwala and Manoj Misra said.

The court was dealing with a case related to acquisition of 54.16 bighas of land initiated in 2008 for a safety zone and mining area around a cement plant established by Jaiprakash Associates Ltd (JAL) in Himachal Pradesh's Solan district. The cement project was subsequently transferred to M/s Ultratech Cement Ltd by a scheme approved by NCLT, Mumbai, and NCLT Allahabad in 2017. The state government also acknowledged the transfer in 2017.

The appellant Ultratech Cement was aggrieved with the impugned order of the high court of July 12, 2022, directing it to pay the compensation amount at the first instance and left it open for it to recover the same from JAL later, if permissible in law.

The apex court, however, noted that the subject land was not covered under the list of assets transferred to the appellant under the scheme and remained in the ownership of the JAL to date.

It rejected a contention of JAL that the liabilities arising out of the said land should be fastened upon the appellant without any such liabilities being covered by the scheme, not even on the strength of the argument that the subject land was integral to the cement project.

The bench said that the issue regarding the ownership of the subject land could be decided between the parties i.e., the appellant and JAL amongst themselves, and disputes, if any, regarding the ownership of the subject land, could not be an impediment to the legitimate rights of the original landowners to receive compensation. 

JAL also raised the issue of the substantial delay in the acquisition, which allegedly frustrated its purpose, and it could not make any use of the land. It said that it did not require the said land which should have been returned to the original landowners and the amount of Rs 10,77,53,842 paid under the award of 2018 should have been refunded.

The court, however, said that the party which fails to utilise the land cannot plead for the return of the land and consequent refund of the compensation paid, as that would be tantamount to taking advantage of its own wrong or default.

When JAL has already paid the compensation amount as determined under the previous award without any demur, it cannot be allowed to question its liability under the supplementary award and make a plea for return of the land at this stage on the ground that the purpose of the land is frustrated due to delay, it said.

"The acquisition of the subject land was done as a safety measure for the residents of the area and not to be used actively in the cement project. No other use except that the subject land may pose hazard to the residents was envisaged during the acquisition proceedings. JAL cannot pray for return of the land as that would result in endangering the lives and property of the original landowners," the bench said.

The court thus held that the high court's order could not be sustained by which the appellant was directed to make payment of the amount determined by the supplementary award for the portions of land that were neither in its ownership nor possession. 

Discussing the role of the state government, the bench said, "The state government, in peculiar circumstances, was expected to make the requisite payment towards compensation to the landowners from its own treasury and should have thereafter proceeded to recover the same from JAL. Instead of making the poor landowners to run after the powerful corporate houses, it should have compelled JAL to make the necessary payment".

The court opined that in the present case, the Government of Himachal Pradesh as a welfare State ought to have proactively intervened in the matter with a view to ensure that the requisite amount towards compensation is paid at the earliest. 

It noted that although the requirement to pass a supplementary award for the purpose of determining additional compensation for the standing trees, damaged structures, houses, etc had been envisaged and recorded in the Award of June 08, 2018, yet the possession of the subject land came to be handed over to JAL by the possession certificate of June 07, 2019 without passing such a supplementary award. 

"We are of the considered view that the omission or lapse to complete such exercise before taking possession of the land could be said to be in contravention of the mandate of Section 38(1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013," the bench said.

The court also pointed out that a bare reading of Section 38 of the 2013 Act indicates that the payment of full and final compensation to the land owners is a precursor to taking possession of the land sought to be acquired from such persons. 

"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," the bench said.

In fact, the court also said, the landowners had to approach the high court to seek directions to the Land Acquisition Collector for passing of the supplementary award which was finally passed on May 02, 2022 that is, after a period of almost four years from the date of passing of the Award of 2018. 

In this case, the acquisition proceedings for the subject land commenced in 2008. The court referred to Section 41 of the Land Acquisition Act, 1894 which pertains to the process required to be followed in cases of acquisition of land for companies, including 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 said.

In this case, even before the amount of compensation could be determined by way of a supplementary award, the subject land stood transferred to JAL. "This, in our view, is in contravention of Section 38 of the 2013 Act and Section 41 of the 1894 Act respectively," the bench said.

The court directed the State of Himachal Pradesh and the Land Acquisition Collector, Arki, to pay the amount of Rs 3,05,31,095 to the landowners, along with 9% interest thereupon from the date of passing of the supplementary award i.e., May 02, 2022 till the date of realisation within a period of 15 days. The total amount paid by the State would be recovered from JAL, the court added.

Case Title: M/s Ultra-tech Cement Ltd Vs Mast Ram & Ors