Landowners Who Agree To Compensation Settlement Can't Later Claim Statutory Benefits : Supreme Court

Landowners who voluntarily enter into a compensation agreement under the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997 (“Act”) cannot later invoke statutory provisions to claim additional benefits such as interest, observed the Supreme Court.

“a contract voluntarily entered into between the parties, shall not be disturbed by taking recourse to the statutory provisions, which are sought to be excluded by such contract. A party to a contract cannot be permitted to have recourse to two different modes, especially after having accepted the compensation under the contract without any demur or protest. It is not open to either of the parties to resile from the terms of the agreement arrived at.”, a bench of Justices MM Sundresh and N Kotiswar Singh observed.

The acquisition proceedings began in 2011. In 2018, landowners participated in a negotiation meeting under Section 7(2) and agreed to a significantly enhanced compensation ₹1500/sq.ft for residential and ₹900/sq.ft for agricultural land, over 250% above the guideline value. Many withdrew their legal challenges after this agreement. The State formally approved the negotiated sum in 2019.

However, the dispute arose when, despite having accepted the settlement, the landowners approached the Madras High Court, seeking additional statutory interest under Section 12 of the Act from the date of the initial acquisition notice. Aggrieved by the High Court's decision on an application prompted the Appellant-State Government approached the Supreme Court.

The judgment authored by Justice Sundresh overturned the Madras High Court's ruling, holding that once the landowner had voluntarily agreed to accept compensation on specific terms forming a complete and final package, there was no scope to later claim any additional amounts, whether as solatium or otherwise.

“This Court has repeatedly held that a settlement arrived at under the concerned statute cannot be allowed to be reopened or modified.”, the court said.

“In our considered view, the High Court, after having correctly considered the contract along with the rights and liabilities of the parties arising under it, has wrongly pressed into service Section 12 of the 1997 Act, which is a provision for the payment of interest from the date of taking possession till the date of payment or deposit of the amount. Under the contract, no room is given to any of the parties to seek any remedy available under the Act. Once there is a final agreement, all disputes with respect to determination of rent and interest would get subsumed within the contract itself. Any interpretation to the contrary, would be violative of Section 7(2) and Section 7(4) of the 1997 Act.”, the court held.

Accordingly, the appeal was allowed.

Cause Title: THE GOVERNMENT OF TAMIL NADU, REP. BY ITS SECRETARY, TRANSPORT DEPARTMENT & ORS. VERSUS P.R. JAGANATHAN & ORS ETC.

Citation : 2025 LiveLaw (SC) 1126

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Appearance:

For Petitioner(s) Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Balaji Subramaniam Aag, Adv. Ms. G. Indira, AOR Mr. P Gandepan, Adv. Mr. Akash Kundu, Adv. Ms. Amrita Kumari, Adv. Ms. Anjali Singh, Adv. Ms. Raniba Pangnila, Adv. Mr. D. Kumanan, AOR

For Respondent(s) Ms. Aishwarya Bhati, A.S.G. Mr. Ashwarya Sinha, AOR Ms. Surbhi Kumari, Adv. Ms. Poornima Singh, Adv. Mr. Sankalp Mahindru, Adv. Mr. S. Gowthaman, AOR Mr. B. Karunakaran, Adv. Mr. Nishanth G, Adv. Ms. Pooja Lakshmi, Adv. Mr. S. Nagamuthu, Sr. Adv. Mr. M.P. Parthiban, AOR Ms. Priyaranjani Nagamuthu, Adv. Mr. Bilal Mansoor, Adv. Mr. Shreyas Kaushal, Adv. Mr. S. Geyolin Selvam, Adv. Mr. Alagiri K, Adv. Mr. Shivansh Sharma, Adv. Mr. Saurabh Jain, Adv. Mr. Prayag Jain, Adv. Mr. Kaushik Poddar, AOR Mr. Rajinder Singh, AOR Mr. R Sharath, Adv. Mr. Abhishekh Singh, Adv. Mr. Arjun Sharma, Adv.