Adopt The Same Approach Towards The New Land Acquisition Act That Has Made IBC Workable: Shyam Diwan Tells SC

A Five Judge Constitution Bench headed by Justice Arun Mishra on Thursday continued the hearing the matters relating to the interpretation of Section 24 of the new Land Acquisition Act.

"The 2013 Act is a radical departure from the old scheme. It is a Welfare State law bringing in new entitlements which were missing in the old regime. The colonial law (the Act of 1894) was witnessing resistance from the citizens, who were engaging in multiple rounds of litigation, and that is why the new Act was brought in", began Senior Advocate Shyam Diwan appearing for a framer association.

He urged the five-judge constitution bench headed by the justice Arun Mishra to adopt the same approach towards the new Land Acquisition Act that has made workable the IBC (under section 7 of which the old management is shown out, as held by the court time and again, most recently in the SBI case) and the 1996 Arbitration Act (which replied its 1940 predecessor).

"Any statistics as to how many acquisitions have taken place since the coming into force of the 2013 Act?", asked Justice Vineet Saran. Mr. Diwan replied that he would find out.

In reference to section 101 of the new Act, which stipulates that any land acquired, if remaining un-utilised for five years post the taking over of possession, shall be returned to the original owner or to the Land Bank of the appropriate government, Justice Ravindra Bhat asked,

"You acquire the land, pay the higher compensation, undertake the rehabilitation, and if you can't use it, it goes back to the owner. Is there any provision as to refund by the owner?"

"There is an implied restitution. As per my understanding of section 24, there can be no unjust enrichment", answered Mr. Diwan.

On the responsibility for rehabilitation of the divested owners being incorporated in the scheme of the Act, Justice Indira Bannerjee opined that it had its roots in the Singur Tata Nano controversy, while Justice Mishra expressed that Justice Patnaik was the pioneer in this direction, with the several judgments on rehabilitation, more specifically the Narmada Bachao Andolan case.

On the enhanced quantum of compensation, Justice Bhat remarked, "When the threshold is kept so high, dubious practices tend to creep in".

"Private parties won't play by the 6 times value. They will enter into negotiations and people will jump to sell even if they are offered 3 or 4 times. The idea is wholesome and salutary but in the end, dubious practices creep in...the land owners are not getting the benefit. They are being ousted and then being left remediless. This is blatant fraud...", agreed Justice Mishra. "This is why I asked how many acquisitions have taken place since then", commented Justice Saran.

On Pune Municipal Corporation (2014)

"The PMC said the Bombay High Court decision is wrong. This court said that if they take a view on section 24(2), they would not have to go into the merits of that case", advanced Mr. Diwan.

"Once the High Court has quashed the acquisition, there is no question of the applicability of 24. How could the state acquire possession and pay compensation after that?", noted Justice Mishra.

"Even if there was a stay, and we don't see a stay, there was no question of payment. There could be no acquisition until this court set aside that judgment. How could any acquiring authority be expected to pay pr take possession?", added Justice Bhat.

Asserting that the compensation was to be made over or deposited in accordance with section 31, he submitted, "2 petitions were filed before the award and 7 after the award. It was said that 24(2) does not apply because 27 crores had been deposited in the treasury as there had been no reference"

"Let us tell you that a recall application is pending in this very case. Compensation was accepted and collected by several land owners...was there any occasion to offer compensation after 2008? Is there any finding as to whether possession was taken or not? They just went by the treasury, without looking at possession", inquired Justice Mishra.

"The judgment could have been set aside, but they, without looking at the merits, got into 24...it was no appeal, only a petition. It could have been simply rejected", said Justice Bhat.

"Because the amount is not in a reference court, 24(2) applies and the acquisition lapses!", insisted Mr. Diwan.

"The award was made in Januray, 2008. There was period in between to make the payment. The acquisition was quashed in December, 2008. There was no occasion to pay then. The 5 years period doesn't matter. The PMC didn't have the foresight that the new Act would be passed. And there is nothing in the old Act to pay (upfront)", observed Justice Bhat.

"The acquisition was not restored. Where is the occasion for this court to decide the application (under section 24) of the landowners? The new Act was not in question in PMC", agreed Justice Saran.

"It was not moot! The application was made and the argument was pressed! 24 was extremely relevant and they needn't have decided the merits first", Mr. Diwan refused to relent.

Citing the 2016 Sukhbir Singh case on the working of the 1894 Act, he quoted that "the statutory scheme is that the Collector is to tender payment of compensation awarded by him to the persons who are interested and entitled on the date of making the award itself...the Collector must be armed with the amount of compensation payable to persons interested as soon as the award is made". "If accepted, it is the duty of the Collector to make payment as soon as possible. It is only in a situation where the persons interested refuse consent to receive monies payable, or there be no person competent to alienate the land, or if there be any dispute as to title to receive compensation or its apportionment, is the Collector to deposit the amount of compensation in the reference court. It is only after these steps have been taken that the Collector may take possession of the land...Where such compensation is neither paid or deposited on or before taking possession of the land, interest is payable...", he narrated.

"We are deciding the matter afresh. Prima facie we are not bound by anything", assured Justice Mishra, with Justice Saran adding that it gave Mr. Diwan the opportunity to convince the court independently. "This was the decision of a three-judge bench of this court that had heard all arguments. I shall accord it the respect that I extend to all other judgment of this court. Your Lordships may choose to disagree with it...they said, 'we allow the appeal and hat the Bombay High Court was in error'. Reversed! Then on 24(2), the conclusion was the same- 'we allow 24(2)", pressed Mr. Diwan.

On exclusion of period of stay

The Senior Counsel relied on Sree Balaji Nagar Residential Association (2014) to suggest that "From a plain reading of Section 24 of the 2013 Act it is clear that Section 24(2) of the 2013 Act does not exclude any period during which the land acquisition proceeding might have remained stayed on account of stay or injunction granted by any court."

"Suppose there is a wrong decision and the injunction is operating on account of that. Does this Act take care of that case?". asked Justice Mishra.

"1 person has accepted the compensation and the possession is taken. Another person, who has no merit as per section 4, is litigating one after the other. Whether benefit would be given to only few or to the entire body? Can quashing be partial or has to be as a whole?", he elaborated.

"For those who accept and go, 24(2) doesn't come in at all. it is only for those who hold out", added Justice Bhat.

"Suppose the possession was taken in 60s or the 70s or the 80s, everything was concluded and development has taken place. Now it is contended that the possession was not taken in accordance with the law. How far do we go?", inquired Justice Mishra.

"5 years is 1 thing, 100 years is another thing. Pari delicto would apply. Can the court come to your aid?", articulated Justice Bhat.

"In certain cases, we may have to quash the acquisition. Can the benefit of 24(2) be given to intermediaries? The Proviso says the benefit is only for recorded owners", noted Justice Mishra.

In reference to Indore Developmement Authority, Justice Indira Bannerjee observed, "The court relies on the Explanation in sections 6 and 11A (of the Old Act) specifically saying that the period would be excluded. This was abundant caution by the legislature"

"Because of an order of status quo or injunction, the possession may not have been taken and the payment may not have been made. It could not have been the intention that either party suffer should the proceedings finally fail", she continued.

"The basic idea was that if for a long time, the acquiring authority has done nothing, it should go back to the landowner. But if the land owner has enjoyed an order of injunction from a court of law, and then ultimately failed, and in the meantime 5 years have elapsed, I don't think such party should get the benefit of 24(2)", she explained.

"Possible. But when the 2013 Act was brought in, the Parliament was aware that if it wants to exclude, it can", replied Mr. Diwan.

"Probably the legislative intervention was clarificatory. Otherwise, there would have been a burst of litigation as to whether or not to exclude", said Justice Bhat.

"The Parliament said that instead of burdening the court with individual cases, we shall lay down the defining criteria as award made 5 years or more prior to the commencement of the 2013 Act, and physical possession of land being taken or payment of compensation being made...it could lead to individual cases where one gets the benefit despite an unmeritorious stay, but it would also result in benefit where the stay was meritorious", Mr. Diwan sought to argue.

"If the stay granted is meritorious, the party will succeed. But where the stay is ultimately vacated, the party can't...", countered Justice Bannerjee.

On physical possession

"Is it open for us to examine the validity of possession? If they say the possession is not in accordance with the law, what do we do in such cases? Do we quash the Panchnama? The government is helpless...homes have come up...how many years after suffering the Panchnama can you challenge it? What is the purport of physical possession? In some cases, we have seen pictures to determine who is in possession. Can we still do this after 20-3- years? Can we still give a conclusive finding after decades that the possession was not taken in accordance with the law?", asked Justice Mishra.

"If a party is continuously agitating to protect his possession, his property...if under a status quo order, the possession is with the landowner, any acquisition under the old Act will be deemed to have lapsed", responded Mr. Diwan.

"For giving such benefit, we have to deem a class. Whether it is their own fault that they have not paid or taken possession, or other it is the fruit of litigation...where it is argued that the owner is still on possession because the possession was not taken in accordance with the law, do we quash an act from even 100 years back? Where to draw the line? If we give plain interpretation, more than 5 years could mean more than 100 years also? Purposive interpretation has to be given, otherwise not just 1894 but even 1870 would be invalidated...", iterated Justice Mishra.

""Law has to be applied uniformly. Only few persons cannot be allowed to be kicked out or vacated. If (the acquisition) has to go, then everyone must get the fruits? Let's be socialist. How should we distinguish?", wondered Justice Mishra.

"Suppose a huge chunk of land is acquired, say for a hydro project, which is expected to take 5-6 years or even longer. Full compensation is paid and the possession is taken by Panchnama. Housing is there and it is said possession will be taken later. They are unable to take full possession because it is a big project. Then?", Justice Shah wanted to know.

"Even in case of Narmada, they are paid but they have not been dispossessed...the submergence is happening gradually", added Justice Mishra.

Justice Shah mentioned about seasonal cultivation.

"Physical possession mean who has dominion and control over land. If you have not done so for 5 years, then sorry!", repeated Mr. Diwan.

"What is most worrying is lack of stay and not taking possession. If nothing is done for 5 years, then lapsing is a penal provision. But if they are not able to complete the project for some reason? Should they still suffer it?", questioned Justice Shah.

"I think we should not be so overwhelmed by the factor of stay so as to deny 24(2)...", asserted Mr. Diwan.

"So where do we stop? On which date?", asked Justice Mishra again.

On stare decisis

Relying on the earlier line of decisions of the court, when Mr. Diwan suggested that the bench keep in mind the principle of state decisis, Justice Mishra observed, "You must not lose sight of the fact that in those cases the finding was that possession was not taken or compensation was not paid. In some cases, possession not taken and in some cases, payment only. None considered 'and' and 'or', conjunctive, disjunctive"

"The entire gamut of facts, the new arguments are not considered anywhere. Even the proviso was not gone into. One or two decisions were taken and they were broadly followed", continued the judge.

"24 was being invoked for the first time and everything was being challenged. There was no verification as to whether payment was made or not. Payment not made or possession not taken- and the entire thing goes....Can we say that we have now decided enough cases and they should be followed? That we are bound them, whether they are right or not? Let's not disturb the law?...We should have stopped in 2016 when the reference was pending but we decided 100s of cases...Should we not go into injunction at all? We should close this now?"

"Even in Indore Development Authority, several things were not considered...several arguments which are being made now! What about competing interests and balancing?", demanded Justice Mishra.