'Land Acquisition Compensation Can't Be Different Based On Nature Of Ownership' : Supreme Court Strikes Down NOIDA Authority's Classification

The Supreme Court, on Monday, stuck down the classification made by the Greater NOIDA Authority between Pushtaini and Gair-Pushtaini Landholders for the purpose of granting compensation upon acquisition.

In 1998, the Board of Directors of NOIDA (New Okhla Industrial Development Authority) had classified the landholders into ‘Pushtaini’ and ‘Gair-pushtaini’ for the purposes of granting additional compensation upon acquisition. The ‘Pushtaini’ landholders were given additional compensation @Rs. 3 per sq. yard along with 15% on the compensation awarded for rehabilitation bonus and 10% area of acquired land. The ‘Gair-pushtainis’ were denied these additional benefits. In 2009, the State Government had granted approval for the enhanced compensation paid to a certain class of landholders. Thereafter, petitions were filed before the Allahabad High Court challenging the decision of the Board and the approval granted by the State Government. In 2016, the Division Bench of the High Court upheld the classification as reasonable and bearing direct nexus with the object sought to be achieved. A batch of petitions was filed assailing similar classification made by the Greater Noida Authority. While deciding the matter, the Division Bench of the High Court had disagreed with the decision of the co-ordinate Bench in the NOIDA matter. Therefore, the issue was referred to the Full Bench of the Allahabad High Court. By way of its order dated 30.03.2018, the Full Bench upheld the classification.

While striking down the classification, the Bench comprising Justice Krishna Murari and Justice S. Ravindra Bhat held -

1. The Land Acquisition Act does not envisage any differential compensation on the basis of such classification;
2. The mischief rendered by the classification can be severed and the remaining part of the executive actions that seek to grant compensation for the purpose of rehabilitation would remain valid in law;
3. The ex-gratia payment and increased base amount shall be given to all landowners in the concerned area;
4. Any claim to differentiate between classes of person to be backed by empirical data;
5. Even if classification has a rational nexus to the objective of notification, it must be legitimised by the parent statute.

The judgment authored by Justice Krishna Murari observed -

“The establishment of Greater Noida, as discussed above, was done for a noble purpose, i.e., to accommodate in the city all those who came travelling from every corner of the country in search of a better life. While doing so however, as can be seen in the present case, some residents whose land was subject to acquisition in the pursuit of the said aim, were faced with discrimination. In such circumstance, it becomes the duty of this Court to dispense justice, and rectify the harm caused to those at the receiving end of the discrimination.”

Factual Background

Since early 1970, the wave of liberalization influenced people from all over the country to migrate to Delhi for job opportunities. To contain the influx of migrants and to provide dignified living to them, the Union Government decided to develop residential and industrial areas around the capital, which was on its journey to become a global city. Thus, Gurgaon and NOIDA were developed. Eventually, these two areas were not sufficient to meet the needs of the migrating population and the township of Greater Noida had to be created. It was created in exercise of power under Section 3 of the UP Industrial Area Development Act, 1976 by the Uttar Pradesh Government. The Greater Noida Authority issued notifications dated 03.10.2005 and 05.01.2006 under Section 4(1) and Section 6(1) of the Land Acquisition Act, 1894 to acquire about 580 hectares of land. The acquisition entailed litigation. A Full Bench of the Allahabad High Court directed the Authority to pay additional compensation to the landholders at the rate of 64.70% of the already paid compensation and a further direction was issued to allot developed Abadi land to the extent of 10% of their acquired land, subject to a cap of Rs.2,500/- square meter. However, the High Court had not made any distinction between Pushtaini and Gair Pushtaini landholders. The High Court’s decision was confirmed by the Supreme Court in 2015.

In 2006, an agreement was entered into between the Greater Noida Authority and the landholders under Rule 4(2) of the Land Acquisition Rules, 1997. In view of the Board’s 1998 decision, the Pushtaini landholders were paid compensation @ Rs. 322 per sq. yard, while the Gair Pushtainis were paid compensation @ Rs. 280 per sq yard. Eventually, the Pushtaini landholders were also given additional compensation and it was approved by the State Government in 2009.

Analysis by the Supreme Court

Tracing etymology of ‘Pushtaini’ and ‘Gair Pushtaini’

At the threshold the Court traced out the etymology of the words ‘Pushtaini’ and ‘Gair Pushtaini’. It noted that ‘Pushtaini’ is a Persian word which originated from ‘Pusht’ which means ‘back’. The word is historically used in the context of ancestry. ‘Gair’ has its roots in Urdu and means ‘other than’. Thus ‘Gair Pushtaini’ would mean one which is not ‘Pushtaini’. Interestingly, the Court observed that ancestry as a ‘tool for inclusivity’ and using the word ‘Pushtaini’ to exclude compensation would be ‘an historically inaccurate interpretation’. It noted -

“While this is not consequential to the merits of the case, it is in our opinion a worthwhile observation, for law has to power to legitimize the meaning of words and can change the context in which a word used, and in turn can change the course of history itself.”

Landholders by signing the 2006 agreement has not forfeited their right to seek revised compensation

The Authority pleaded that the appellant landlords had approached the High Court without exhausting the remedies provided under the Land Acquisition Act. The Apex Court was not impressed with the line of argument as the challenge in the writ petition was based on violation of Article 14 of the Constitution, which is a fundamental right. It noted that availability of an alternative remedy cannot bar the jurisdiction of a Constitutional court. The Court was also not inclined to accept the Authority's argument that the agreement being consented to cannot be challenged in court. It noted that the agreement was also entered into by the landholders where later granted additional compensation. Furthermore, at the time of signing the agreement there did not exist the classification of ‘Pushtaini’ and ‘Gair-pushtaini’ landholders.

The classification of ‘Pushtaini’ and ‘Gair-Pushtaini’ Landholders for payment of compensation at different rate is violative of Article 14

Reasonable Classification Test

The Court thought it would be fit to test the classification in the present case on the touchstone of the reasonable classification test introduced in State of West Bengal v. Anwar Ali Sarkar (1952) AIR 75 and followed in RC Cooper v. Union of India (1970) 1 SCC 248, Navtej Singh Johar And Ors. v. Union of India (2018) 10 SCC 1. It noted that the Full Bench of the High Court held the classification was based on one class of landowners being the sons of the soil while the other being landowner who do not have direct attachment to the land. The object of classification was held to be rehabilitation of the original residents (sons of the soil). The Apex Court could not agree with the assumption that only the Pushtaini landowners permanently reside in the land or it is their primary source of income in absence of any empirical data. It noted that there are many Gair-Pushtaini landholders whose primary source of income is also the concerned land. The Court also failed to find any nexus between the object and classification. The Court also opined that the burden of proof was on the Authority to justify the classification.

Wednesbury Principle

To determine the extent of its inference with the administrative decision of the Authority the Court referred to the Wednesbury Principle as introduced by the Apex Court in Om Kumar And Ors. v. Union of India (2001) 2 SCC 386. Thereafter, it noted that the classification is contrary to law as it has no footing in the Land Acquisition Act or UP Land Acquisition Rules. The classification was made without taking into account any empirical data. On the contrary it has taken into consideration an irrelevant factor like cut-off date to make the classification. The Court noted that the cut-off date by itself, without any context of the landowners on ground, is not indicative of who the most adversely affected landowners are. Thus, the Court thought it fit to strike down the classification. But, it referred to the proportionality test before doing so.

Proportionality Test

The Court relied upon the five-pronged test in K.S. Puttaswamy And Anr. v. Union of India And Ors. (2017) 10 SCC 1 and the more recent test in Gujarat Mazdoor Sabha And Anr. v. State of Gujarat (2020) 10 SCC 459 wherein the Court held that in order to determine validity of state action, it must pass the following conditions - (i) The interfering with the fundamental rights must have a state purpose, (ii) the said rights infringing measure must be based on a rational nexus between the interference and the state aim,(iii) the measures bust be necessary to achieve the state aim,(iv) the restrictions must be necessary to protect the legitimate objective and (v) The state should provide sufficient safeguards for the possibility of an abuse of such rights infringing interference.

The Court held that the classification does not have a rational nexus of the object sought to be achieved and is violative of the first two prongs of the proportionality test. It was noted that it also violated the third and the fourth principles of the proportionality test - Section 23 of the Land Acquisition Act already provides for compensation for rehabilitation which is also the subject matter of classification. It noted that the classification can lead to a situation where Gai-pushtaini landholders who need to be rehabilitated cannot rehabilitate without compensation for it. The same would be contrary to the intent of Section 23. In this regard, the Court observed -

“In the presence of an already existing provision in the act, the classification created by the GNOIDA authority, must exist in furtherance of the said Section, and not in contrast of.”

Lastly, it noted that the lack of substantive guidelines and safeguards for the classification violated the fifth prong of the proportionality test.

The classification is in violation of the judgment of the Supreme Court in Nagpur Improvement Trust and another vs. Vithal Rao and others

The classification in the present case was also held to be in contravention to the judgment of the Supreme Court in Nagpur Improvement Trust and another vs. Vithal Rao and others (1973) 1 SCC 500. In the Nagpur Improvement Trust case the Court held that the authority, while acquiring land, cannot distinguish between types of owners, as the object of achieving land for public purposes is met with, irrespective of the type of owner whose land is being acquired.

Case details

Ramesh Chandra Sharma And Ors. v. State of Uttar Pradesh And Ors.| 2023 LiveLaw SC 123  | Civil Appeal No. 8819 of 2022| 20th February, 2023 | Justice Krishna Murari and Justice S. Ravindra Bhat

For Appellant(s) Mr. Prashant Kanha, Adv. Mr. Gaurav Shrivastava, AOR Mr. Salman Khurshid, Sr. Adv. Mr. S.G. Hasnain, Sr. Adv. Mr. Aftab Ali Khan, AOR Mr. Syed Mohd. Fazal, Adv. Ms. Azra Rehman, Adv. Mr. M.Z. Choudhary, Adv. Mr. Pradeep Kant, Sr. Adv. Mr. Rohit Kumar Singh, AOR Mr. Simranjeet Singh Rekhi, Adv. Mr. Harsh Jain, Adv. Mr. Shubham Kumar, Adv.

For Respondent(s) Mr. Ravindra Kumar Raizada, Sr. A.A.G. Ms. Alka Sinha, Adv. Mr. Anuvrat Sharma, AOR Mr. Ravindra Kumar, Sr. Adv. Mr. Binay Kumar Das, AOR Ms. Neha Das, Adv. Ms. Priyanka Das, Adv. Mr. Pradeep Kant, Sr. Adv. Mr. Rohit Kumar Singh, AOR Ms. Kamini Jaiswal, Adv. Ms. Rani Mishra, Adv. Mr. Omanakuttan K. K., AOR

Summary - Supreme Court stuck down the classification made by the Greater NOIDA Authority between Pushtaini and Gair-Pushtaini Landholders for the purpose of granting compensation upon acquisition.

Constitution of India - Article 14 - classification between Pushtaini and Gair-pushtaini Landowners is based on one class of landowners being sons of the soil, while the other class being mere landowners, who are not directly attached to the land- not reasonable classification- The justification given by the GNOIDA Authority, and the Full-bench of the High Court assumes that only Pushtaini landowners permanently reside in the subject land or that the subject land is the primary source of income only for Pushtaini landowners, and this assumption has been backed by no empirical data produced by the authority-t. Many Gair-pushtaini landholders, whose main area of residence or their main source of income is also the subject land, would be subject to great discrimination and injustice, if the same compensation that has been granted to the pushtaini landholders is not extended to them - Para 38 to 40

Constitution of India - Article 14- Test of classification - To survive the rigors of Article 14, the impugned classification must not only make it through the test of reasonableness, but also clear the Wednesbury Principle, and by extension the Proportionality test - Para 41

Constitution of India - Article 14 - Test of proportionality- The classification, as discussed above, if allowed to exist, can lead to several Gair-pushtaini landowners who may also need to be rehabilitated, cannot rehabilitate themselves without compensation for the same. Such a mischief, if allowed to exist, would not only nullify the purpose of the Act, but also violate the third and fourth principle of the proportionality test, and hence is liable to be struck down - Para 55

Land Acquisition - When the purpose of the acquisition of the land is for the benefit of the public at large, then the nature of the owner of the said land is inconsequential to the purpose. If such a classification on the basis of the nature of owner is allowed, then on the same grounds, there might be a possibility of future classifications where power holding members of the society may get away with a larger compensation, and the marginalized may get lesser compensation- Para 59

Land Acquisition - The Land Acquisition Act does not distinguish between classes of owners, and uniformly provides compensation to all class of landowners. The classification made between Pushtaini landowners and Gair-pushtaini landowners, on the basis of the reasoning mentioned above, is violative of the law laid down in the Nagpur Improvement Trust and another vs. Vithal Rao and others (1973) 1 SCC 500 and Article 14 of the Constitution.

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