State Government Can Be ‘Person Interested’ In Getting Compensation Under Coal Bearing Areas (Acquisition And Development) Act : Supreme Court

The Supreme Court held that a State Government can be said to be the ‘person interested’ in getting the compensation under Coal Bearing Areas (Acquisition and Development) Act, 1957.

In this case, some lands owned by the State Government of Odisha were acquired by the Government of India under Section 9 of the Coal Bearing Areas (Acquisition and Development) Act, 1957. The State Government issued the demand notice to Mahanadi Coalfields Ltd for a sum of Rs. 70 lakhs towards premium for Government land and Rs. 40 lakhs towards compensation. The Orissa High Court dismissed the challenge against this demand notice by dismissing the writ petition filed by Mahanadi Coalfields Ltd. Therefore, the company approached the Apex Court.

One of the issues considered in the appeal was whether the State Government is a person interested in the land shall be entitled to the compensation/rental ?

The court noted that, as per Section 11, the Government company in whose favour the order has been issued by the Central Government shall be deemed to be the lessee and shall be liable to pay the compensation/rental, etc., to the ‘person interested’.

"The State Government being the original owner can be said to be deemed lessor and ‘person interested.’ As per Sub-section (2) of Section 11 of the Act, the Government company in whose favour the order is issued under Section 11 can be said to be the deemed lessee of the State Government. Therefore, the State Government can be said to be the ‘person interested’ in getting the compensation. Therefore, the High Court is absolutely right in observing and taking the view that being ‘person interested’ the State Government is entitled to the compensation/rental, etc.", the bench observed.

The court also held that the compensation/rental payable with respect to the lands by the lessee/deemed lessee is different than the royalty which is for extraction of minerals in the lands in question. 

"In that view of the matter over and above the amount of royalty the coal company/Government company shall be liable to pay the compensation and surface land rent, etc., Therefore, the High Court is absolutely justified in confirming the respective demand(s). The amount of royalty cannot be mixed with the compensation/loss caused to the State Government due to loss of land and surface land rent as the State Government is entitled for the adequate compensation. If the submission made on behalf of the appellant is accepted in that case nothing would be paid towards the lands except the amount of royalty under Section 18(a) of the Act, which is for extraction of minerals.", the court said while dismissing the appeal.

Case details

Mahanadi Coalfields Ltd vs State of Odisha | 2023 LiveLaw (SC) 51 | CA 220 OF 2023 | 20 Jan 2023 | Justices M R Shah and C T Ravikumar

For Appellant(s) Mr. K. M. Nataraj, ASG Mr. Soumyajit Pani, Adv. Mr. Nakul Chengappe K.K. Adv. Mr. Siddharth Jain , AOR

For Respondent(s) Mr. Sibo Sankar Mishra, AOR Mr. Umakant Mishra, Adv. Mr. Niranjan Sahu, Adv. Ms. Apoorva Sharma, Adv. Mr. Debabrata Dash, Adv.

Headnotes

Coal Bearing Areas (Acquisition and Development) Act, 1957 ; Section 2(d), 11 - The State Government being the original owner can be said to be deemed lessor - The State Government can be said to be the ‘person interested’ in getting the compensation. (Para 5)

Coal Bearing Areas (Acquisition and Development) Act, 1957 ;  Section 18(a) - The compensation/rental payable with respect to the lands by the lessee/deemed lessee is altogether different than the royalty. Royalty is for extraction of minerals in the lands in question - The amount of royalty cannot be mixed with the compensation/loss caused to the State Government due to loss of land and surface land rent as the State Government is entitled for the adequate compensation. (Para 5.1,6)

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