Deemed Lapsing of Land Acquisition Proceedings under Section 24(2) of the 2013 Act: A Critical Analysis of Judicial Evolution in India

Deemed Lapsing of Land Acquisition Proceedings under Section 24(2) of the 2013 Act: A Critical Analysis of Judicial Evolution in India

Introduction

The enactment of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as the "2013 Act") marked a paradigm shift in the legal framework governing land acquisition in India. Repealing the colonial-era Land Acquisition Act, 1894 (hereinafter referred to as the "1894 Act"), the 2013 Act aimed to provide a more equitable, transparent, and humane process for land acquisition, with a strong emphasis on fair compensation, rehabilitation, and resettlement of affected families. Section 24 of the 2013 Act serves as a crucial transitional provision, delineating the fate of acquisition proceedings initiated under the repealed 1894 Act.

Among its sub-sections, Section 24(2) has been the subject of extensive judicial interpretation and considerable debate. This provision introduces a "deeming fiction" whereby land acquisition proceedings initiated under the 1894 Act are considered to have lapsed under specific circumstances, primarily related to delays in taking possession or paying compensation. The legislative intent behind Section 24(2) appears to be to address the plight of landowners whose lands were notified for acquisition long ago under the 1894 Act, but where the acquisition process remained incomplete, leaving them in a state of uncertainty. This article critically analyzes the evolution of judicial interpretation of Section 24(2), tracing its journey from initial pronouncements to the authoritative clarification by a Constitution Bench of the Supreme Court of India, and examines its implications for landowners and acquiring authorities.

The Legislative Mandate: Section 24(2) of the 2013 Act

Section 24 of the 2013 Act, titled "Land acquisition process under Act No. 1 of 1894 shall be deemed to have lapsed in certain cases," reads as follows:

"24. (1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 1894),—

(a) where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or

(b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, 1894, as if the said Act has not been repealed.

(2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 1894), where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act:

Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act."[1]

The essential ingredients for the applicability of the main part of Section 24(2) are:

  • Land acquisition proceedings were initiated under the 1894 Act.
  • An award under Section 11 of the 1894 Act was made five years or more prior to the commencement of the 2013 Act (i.e., on or before December 31, 2008, as the 2013 Act commenced on January 1, 2014).
  • Either physical possession of the land has not been taken, or the compensation has not been paid. (This interpretation of "or" was subject to significant judicial evolution).

If these conditions are met, the proceedings are "deemed to have lapsed." The proviso offers an alternative outcome concerning compensation under certain conditions.

Initial Judicial Interpretation: The Era of Pune Municipal Corporation

In the initial years following the enactment of the 2013 Act, the Supreme Court and various High Courts rendered several judgments interpreting Section 24(2). The landmark decision during this period was Pune Municipal Corporation And Another v. Harakchand Misirimal Solanki And Others.[2]

The Disjunctive Interpretation of "Or"

The Supreme Court in Pune Municipal Corporation[2] held that the word "or" in Section 24(2) between the phrases "physical possession of the land has not been taken" and "the compensation has not been paid" should be read disjunctively. This meant that if either of the two conditions (non-possession or non-payment) was satisfied, the acquisition proceedings would lapse, provided the award was made five years or more prior to the 2013 Act's commencement. This interpretation was reiterated in several subsequent cases, including Delhi Development Authority v. Sukhbir Singh And Others[3] and Sree Balaji Nagar Residential Association v. State Of Tamil Nadu And Others.[4] The Court in Delhi Development Authority v. Virender Lal Bahri And Others[5] also emphasized this disjunctive reading, stating that "Physical possession of the land, if not taken, or compensation, if not paid, are fatal to the land acquisition proceeding".

The Meaning of "Compensation Paid"

A crucial aspect of the Pune Municipal Corporation[2] judgment was its interpretation of the phrase "compensation has not been paid." The Court ruled that for compensation to be considered "paid," it must be actually tendered to the landowners or, in case of refusal, dispute, or disability, deposited in the Reference Court as mandated by Section 31 of the 1894 Act. Merely depositing the compensation amount in the government treasury was held insufficient to constitute payment for the purposes of Section 24(2). This principle was consistently applied in cases like Sukhbir Singh[3] and various High Court rulings.[6]

The Imperative of Physical Possession

The requirement of taking "physical possession" was generally understood to mean actual, de facto possession of the land by the acquiring authority. If such possession was not taken, it could trigger the lapsing provision.

Non-Exclusion of Litigation Period

In Sree Balaji Nagar Residential Association,[4] the Supreme Court held that the five-year period stipulated in Section 24(2) was absolute and did not exclude any period during which land acquisition proceedings might have been stayed by a court order. The legislature was deemed to have consciously omitted any provision for excluding such periods, unlike other sections in the 1894 Act (e.g., Explanation to Section 11A). This view was followed by High Courts, for instance, in Enugutala Satyam v. The District Collector (Land Acquisition).[7]

Numerous High Court decisions, such as Girish Chhabra v. Lt. Governor Of Delhi[8] and Surender Singh v. Union Of India & Ors.,[9] applied these principles, leading to the lapsing of many acquisition proceedings.

The Paradigm Shift: Indore Development Authority v. Manoharlal

Conflicting interpretations and the significant implications of Section 24(2) led to a reference to a five-Judge Constitution Bench of the Supreme Court in Indore Development Authority v. Manoharlal And Others.[10] This judgment, delivered in March 2020, comprehensively re-examined and clarified the provisions of Section 24(2), leading to a paradigm shift in its understanding and application.

Revisiting "Or": A Conjunctive Reading

The most significant departure from the earlier line of judgments was the interpretation of the word "or" in Section 24(2). The Constitution Bench in Indore Development Authority[10] held that "or" should be read as "and" (or "nor"). This means that for acquisition proceedings to be deemed lapsed under Section 24(2), both conditions must be met: (i) physical possession of the land must not have been taken, and (ii) compensation must not have been paid. If either possession has been taken or compensation has been paid, the proceedings would not lapse. The Court reasoned that a disjunctive reading would lead to absurd outcomes and frustrate the public purpose for which land is acquired.[11]

Redefining "Compensation Paid" and "Possession Taken"

Compensation Paid:

The Constitution Bench clarified that if the acquiring authority had tendered the compensation to the landowners as per Section 31(1) of the 1894 Act, but they refused to accept it, the obligation of the authority is discharged. The deposit of such refused compensation into the government treasury would be considered as "paid" for the purpose of Section 24(2), and the state could not be faulted for the landowners' refusal or for litigation preventing payment.[10] Failure to deposit compensation in court under Section 31(2) of the 1894 Act might attract higher interest under Section 34 but would not, by itself, lead to a lapse of proceedings if compensation was otherwise offered or made available. The Court observed that Section 24(2) was not intended to benefit those who deliberately avoided receiving compensation.[12]

Possession Taken:

Regarding "physical possession," the Court in Indore Development Authority[10] held that the mode of taking possession under the 1894 Act, typically by drawing up a panchnama or memorandum, is sufficient. It is not necessary for the acquiring authority to dispossess every occupant from every inch of the land. Once possession is taken in accordance with law (e.g., under Section 16 of the 1894 Act), the land vests absolutely in the State, free from all encumbrances. Section 24(2) does not provide for the divesting of land that has already vested in the State. This was also affirmed in Ayodhya Faizabad Development Authority And Another v. Ram Newaj And Others.[13]

Exclusion of Period Covered by Court Orders

Overruling the view in Sree Balaji Nagar Residential Association,[4] the Constitution Bench in Indore Development Authority[10] held that any period during which the acquiring authority was restrained by a court order from taking possession or paying compensation must be excluded while computing the five-year period mentioned in Section 24(2).

The Proviso to Section 24(2)

The Court clarified that the proviso to Section 24(2) is to be treated as part of Section 24(2) and not Section 24(1)(b).[13] The proviso stipulates that where an award has been made (under the 1894 Act, typically five years or more prior to the 2013 Act) and compensation in respect of a majority of landholdings has not been deposited in the accounts of the beneficiaries, then all beneficiaries specified in the Section 4 notification become entitled to compensation under the 2013 Act. The Court in Indore Development Authority[10] explained that the proviso does not deal with the lapsing of proceedings; rather, it provides for enhanced compensation under the 2013 Act if its specific condition (non-deposit of compensation for a majority of holdings in beneficiaries' accounts) is met. This operates independently of the main conditions for lapse.

No Revival of Stale Claims or Concluded Proceedings

Crucially, the Constitution Bench emphasized that Section 24(2) does not give rise to a new cause of action to question the legality of proceedings that were already concluded. It does not revive stale or time-barred claims, nor does it permit landowners to reopen issues like the mode of taking possession or the deposit of compensation in the treasury instead of the court, if these issues had attained finality.[10], [13], [12]

Implications of the Evolving Jurisprudence

The journey of Section 24(2) through judicial interpretation reflects the complexities inherent in balancing private property rights with the State's power of eminent domain for public purposes. The initial interpretations, particularly the disjunctive reading of "or" and the strict view on "compensation paid," led to a significant number of acquisition proceedings being declared lapsed. This provided relief to many landowners who had been in limbo for years.

The Constitution Bench ruling in Indore Development Authority[10] substantially altered this landscape. By adopting a conjunctive reading of "or" and a more pragmatic view on "compensation paid" and "possession taken," the judgment has narrowed the scope for deemed lapsing of acquisitions. This decision gives more weight to the actions taken by acquiring authorities, particularly where they have made bona fide efforts to complete the acquisition process but were hindered by litigation or refusal by landowners to accept compensation.

While the ruling in Indore Development Authority[10] brings greater certainty to the interpretation of Section 24(2) and aims to prevent the undoing of acquisitions vital for public projects, it also underscores the necessity for acquiring authorities to act diligently and adhere to statutory procedures. For landowners, the avenues for claiming lapse have been curtailed, but the proviso still offers a pathway to enhanced compensation under the 2013 Act in specific circumstances of non-deposit for the majority. The principle that stale and concluded claims cannot be revived under the guise of Section 24(2) reinforces the finality of legal proceedings.

Conclusion

Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, represents a legislative attempt to address historical injustices and inefficiencies in land acquisition processes under the repealed 1894 Act. Its interpretation has undergone a significant evolution, culminating in the authoritative pronouncements of the Constitution Bench in Indore Development Authority v. Manoharlal.[10]

Under the current legal position, land acquisition proceedings initiated under the 1894 Act, where an award was made five years or more prior to January 1, 2014, will be deemed to have lapsed only if both physical possession (which can be evidenced by a panchnama/memorandum) has not been taken and compensation has not been paid (where an offer of compensation or deposit in the treasury due to landowner's refusal can constitute payment). Furthermore, any period covered by interim court orders restraining the authorities is to be excluded from the five-year calculation. The proviso to Section 24(2) independently allows for enhanced compensation under the 2013 Act for all beneficiaries if compensation for a majority of landholdings has not been deposited in their accounts.

The judicial journey of Section 24(2) highlights the delicate balance the courts must strike between upholding the legislative intent to protect landowners from interminable acquisition processes and ensuring that public interest projects are not unduly hampered. The clarity provided by Indore Development Authority[10] serves as a definitive guide for future application of this critical provision, emphasizing diligence, fairness, and the finality of concluded proceedings in the realm of land acquisition law in India.

References