Land Acquisitions From 50 Years Ago Would Also Lapse If Treasury Deposit Not Taken As 'Paid' Under Sec 24, Observes SC

Senior Advocate Shyam Divan on Wednesday resumed his arguments before the Five Judge Constitution Bench in the Indore Development Authority case on the interpretation of Section 24 of the new Land Acquisition Act.

"There is no provision for refund of compensation already paid (in case of lapse)", ventured Justice Indira Banerjee on Wednesday.

"There is no question of any unjust enrichment in this Act. There can be virtually no situation where the State has paid and also allowed the party to be in physical possession. It is a very rare case", replied Mr. Diwan.

"In a situation of money had and received, the party cannot be allowed to retain it and the State can frame the rules, in exercise of its rule-making power, for its return...", he continued.

"Rules can be framed only when there is a provision in the Act. Rules can't be beyond the Act...How can it be said whether 12% or 20% interest is payable?", noted Justice Vineet Saran.

"Where the project is in jeopardy, because the land is in small pockets and the payment has been made but the possession is not taken, you may continue with fresh acquisition...", suggested Mr. Diwan.

"We have to give that interpretation which doesn't make the section absurd...If we read [the 'or' in section 24(2)] disjunctively, then what happens where compensation has been paid?", wondered Justice Banerjee.

"If we read 'or' as 'and', then there is no problem. We have to look for two negatives straight. But if we read 'or' as 'or', then the exigency would arise. The provision is not saying that if payment is made but possession is not taken, then there would be lapse", said Justice Mishra.

"Under section 13A of the old Act, the Collector got an opportunity to correct any clerical errors in the award and any excess amount paid could be recovered as a arrears of land revenue. But now there would be issues of limitation. Also, several landowners may have gone. So there is neither a provision for refund under the old Act now nor the new one", added Justice Ravindra Bhat.

"In West Bengal, a lot of cases came where the land was acquired, the notification was issued but the compensation had not been paid. The land is being used for a public purpose, say widening of a road or for a bridge. It can't be the legislative intention that the bridge be pulled down...but if the compensation is not paid and the possession is not taken, they are sitting just on the award and not bothering to do anything, in such cases, the acquisition should not (survive)", remarked Justice Bannerjee.

"Look at the expression 'deemed to have lapsed'. There is an inherent concept of statutory restitution in this. The legislature could not have intended that someone retain any benefit unreasonably...", replied Mr. Diwan.

"Why can't he say that I was deprived of the use of my property, so why should I refund?", asked Justice Mishra.

"The law does not take care of this situation...", stated Justice Saran. "The law provides for lapse!", repeated Mr. Diwan.

"Where payment is made, no consequence is given. Where possession has been taken, no consequence is given. If we read 'or' as 'and', where possession is taken and payment is made to some, either in the treasury or elsewhere, but not to the majority, then we come to the proviso...Sec 24(1)(b) says that if an award was passed under section 11 of the old Act then that Act shall continue to apply. It is a complete provision. There is no need to add the proviso to it. The proviso would be repugnant, irreconcilable there. How can we apply enhanced compensation under the new Act to (1)(b)? It would be the greatest repugnancy...We would be doing harm to (2) also if the proviso is bodily lifted and placed after (1)(b). Those people who suffered for 5 years would not get higher compensation..", reflected Justice Mishra.

"When you have a legislative mandate that requires payment in the reference court, then the legislature is within its power to draw the line at 5 years, even if possession is taken", asserted Mr. Diwan.

"Say, a large tract of land is acquired but different pockets of land are acquired under different notifications. Some have been paid but the majority have not been paid. The idea is that same higher compensation is given to all", commented Justice Banerjee.

"Or if the acquiring body does not have the arrangement of money, then higher compensation for all", added Justice Mishra.

"If there is deemed lapsing, there cannot be enhanced compensation! It has to be either one or the other", said Mr. Diwan.

"'Deposit' (in proviso) consequence is higher compensation. 'Paid' (in 24(2)) consequence is lapse. So does 'paid' include 'deposit' also?", questioned Justice Mishra.

"Deposit in the account of the beneficiaries is equivalent to payment to the beneficiaries. The legislature is contemplating a situation where payment has been made. Not paid is a situation contemplated in terms of 31(1) and 31(2)", responded Mr. Diwan.

"Suppose payment is tendered and it is refused and then it is deposited in the treasury and not the court. Then it will be a lapse because the deposit was not in the court. That is your case. But is it contemplated in 'paid'? The compensation is tendered and you are refusing it. Now you want to take benefit of the refusal also?", pressed Justice Mishra.

"If we interpret it your way that deposit in the treasury is illegal, then we have to draw the line somewhere. Otherwise, acquisitions from 50 years ago would also lapse...", he continued.

"Suppose a large tract of land is acquired. Half the people have accepted the compensation while the other half are litigating. And no possession has been taken for anybody. Then would the lapse be for all?', asked Justice Saran.

"If physical possession is with (the landowners), then it would be lapse", said the Senior Advocate.

"50% is where the connection between (2) and the proviso becomes relevant, It is neither majority or minority...it is large tract of land, say for a housing, with some pockets here and some there. This is actually happening! Where possession has been taken and the title given and further passed on also. Can we say it has lapsed in such a situation...the proceeding is not individual but operating on the whole", Justice Bhat elaborated.

"If somebody is saving possession by a status quo order and the payment has been made, then?", asked Justice Mishra.

"The benchmark indications in (2) are physical possession not taken or payment not made. They are not qua the entire section 4 notification, the whole tract of land, but as to that specific area...limited lapse is a possibility...but the scheme of the proviso is different. And the test is different...", said Mr. Diwan.

"We declare lapse for a certain shareholding. Say, some family members have taken the compensation and gone. If only 1/4th lapses and the remaining 3/4ths is undivided, then? Is this how the Parliament envisaged it?", Justice Bhat wanted to know.

When Mr. Diwan sought to submit that the proviso is independent and self-contained, Justice Mishra asked, "Then it should not have been a proviso but sub-section (3)...when should it operate? Where the award is passed under the old Act but within 5 years prior to the commencement of the new Act? Where the award was passed more than 5 years before but the two steps (of possession and compensation) were not taken, and hence, there is a lapse?"

"If 'deposited' is 'paid', then (2) becomes otiose. There is no lapse", continued the judge.

"If the award was made more than 5 years before and the payment is not made or the physical possession is retained with the owner, then there will be a lapse...the proviso requires a ministerial act, a determination as to majority", answered Mr. Diwan.

"And if the award has made within 5 years (prior to the commencement of the new Act), say only 3 days or 5 days before, then what about higher compensation?", probed Justice Mishra.

"How do you reconcile the proviso with the 1894 Act? 1894 Act is conclusive that there is no lapse for any reason...The proviso would become zero. Because if no payment is made, where is the question of higher compensation? The proviso is also negative. Where the compensation is not deposited, then it speaks of a higher compensation..."

"If 'or' is read as 'or, the acquisition will lapse. Then where is the question of higher compensation? (1)(b) says the old Act will apply but it is subject to (2). (2) is the exception to (1)(b)", stated Justice M. R. Shah.

"Awards from prior to 1/1/2009 are covered by the main part of (2). And if it is not in the situation of 5 years or more, then only higher compensation is payable. But the higher compensation is not automatic. It is in the limited situation where the for majority qua the notification, deposit as not been made", argued Mr. Diwan.

"(1)(b) is a self-contained code in as much as it speaks of the application of the 1894 Act. If possession is taken and the payment is not made, and it is also not deposited, then only he proviso comes in. It is a beneficial provision. Where the award was made 5 years or more before and the payment is not made, then the cnsequne os only higher compensation...why should we ridicule the language of (1)(b)? if the payment has to been made for 5 years, why should the person be deprived of 6 times compensation (if the proviso is read with (1)(b))?", asked Justice Mishra.

"There is no requirement of 5 years in the proviso...", Mr. Diwan sought to suggest.

"Both (1)(a) and the proviso speak of higher compensation. If the same result was to be obtained, then why did the legislature make two provisions?", interjected Justice Mishra.

"Where there is no award under the old Act, compensation under the new Act........where the award is there and the majority have been paid, then continue under the old Act.....where award is there but majority have not been paid, this is the proviso where money is not deposited in the accounts of the beneficiaries", averred Mr. Diwan.

"If you see section 7, 19 and several other sections, it shows that the Legislature is conscious that the proviso can be placed after a particular sub- section. So if the intention was to place it after section 24(1)(b) they would have done so." said Justice Saran.

"If use read the proviso independently of section 24(2) but with (1)(b), then if the award was made 5 years ago, there would be a lapse, if 'or' is read as 'or'. Now we apply the proviso within 5 years, considering (1)(b) is not carved out in the manner to make a difference of time then how does the non- deposited part apply? If it deposited then 1984 Act will apply? Is this interpretation permissible? If the proviso is lifted, it will lose its non- obstinate nature" ventured Justice Mishra.

"Also, (1)(b) ends with a full- stop while (2) has a Collin," observed Justice Shah.