Kerala High Court Clears Acquisition Of Tea Estate Land For Wayanad Victims' Rehabilitation; Says Compensation To Be Settled Between Companies

For context, after the landslide on July 30, 2024 in the Chooralmala, Mundakkai and Puncharimattom villages in Wayanad, the State Government had decided to build a model township to rehabilitate displaced families permanently and restore the livelihood of the region.

The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon upheld the earlier directions of a Single Judge permitting the State to take over 64.4075 hectares of plantation land for disaster rehabilitation under the Disaster Management Act, 2005, while ensuring that landowners are compensated in accordance with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act, 2013).

Pursuant to the judgement of the Single Judge, the compensation was calculated at Rs. 26,56,10,769 for the land acquired. An appeal was filed by Elstone Tea estates, challenging the adequacy of compensation and the Court by interim orders had calculated Rs. 44,33,65,643 as compensation, which has been deposited by the State before the Registrar, High Court.

The State had also instituted a civil suit seeking declaration that the entire land in question, including the portion acquired, belongs to it. The Court observed that the appellant had executed a bond as per the earlier judgment and is obliged by the bond in civil suit initiated by the State, if the civil Court finds that the title is with the State. It thus directed the release of Rs. 24 crore to the appellant by an earlier order.

M/s Padhoor Plantations Pvt. Ltd., represented by the same Managing Director as that of M/s Elstone Tea Estate Ltd., approached the Court claiming that their land was taken over without giving notice to them as the said company is a distinct and different entity.

The Advocate General submitted that if Padhoor Plantations has any claim in respect of the land taken over from Elstone Tea Estate, it can be resolved between the companies.

The bench thus observed that the individual claim of the companies regarding the compensation must be settled between themselves.

“Undoubtedly, if any land beyond the extent of 64.4075 hectares is taken over, the company would be entitled to make an independent claim in that regard. However, as to the land already taken over, the issue is one between M/s. Elstone Tea Estates Ltd. and M/s. Padhoor Plantations Pvt. Ltd., which they may resolve inter se. We accordingly clarify that the individual claims of the companies concerning compensation must be settled between themselves, and no further claim shall lie by M/s. Padhoor Plantations Pvt. Ltd. in respect of the land presently taken over, unless it is established that the acquisition exceeded the extent of 64.4075 hectares.” the bench observed.

The Court has also permitted release of the remaining amount with the Registry, subject to conditions protecting the State's financial interest pending resolution of a civil suit in which the State claims ownership of the land.

The Bench directed the balance compensation to be released only after the Elstone Tea Estate and Padhoor Plantations file a joint affidavit indicating the apportionment of the compensation amount between them. It has also directed the appellants to issue a bond for the entire compensation amount before release.

It has also stated that if the State succeeds in the pending civil suit, the companies must refund the amount with a minimum of 6% interest, though the State is free to claim a higher interest.

The bench has also reaffirmed that although the acquisition was carried out under the Disaster Management Act, the State must determine the compensation using valuation under LARR Act. Both the companies have been given liberty to approach a civil court for enhanced compensation under the LARR Act if they are dissatisfied with the amount awarded.

The Court thus, disposed of the appeal and connected petitions.

The Court had earlier closed an appeal against acquisition of Nedumbala Estate for rehabilitation of Wayanad Landslide noting a Government Order had excluded Nedumbala Estate from being acquired.

Case Title: M/S Elstone Tea Estates Ltd. v State of Kerala and Ors. and Connected cases

Case No: WA 229/ 2025 and connected case

Citation: 2025 LiveLaw (Ker) 742

Counsel for Appellant/ Petitioner: K Babu Thomas, Drishya Dileep, Marykutty Babu

Counsel for Respondents: M S Imthiaz Ahammed, M A Fayaz, B Ashok Shenoy, P S Gireesh, Arjun R Naik, Sunil K P, Umasankar U U, Meharban, Muhammed Bani M, C E Unnikrishnan (Spl. GP to AG), S Kannan (Sr. GP), M H Hanil Kumar (Spl. GP), K Gopalakrishna Kurup (AG), T Swetha, John K George, M B Shyni, V R Anilkumar, Eldhose Joy, Ajith P C, Amarjith Vaduvankuty, Vishnuja Biju, Nihala Ahammed Kabeer K, Sarafudheen T