In IndoreDevelopment Authority v Manoharlal & Ors., delivered by a Constitution Bench of the Supreme Court on 06.03.2020 ("IDA 2020"), the Apex Court has sought to put to rest a controversy that arose in the interpretation of Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ("2013 Act"). Section 24 deals with the validity or lack thereof, of land acquisition proceedings initiated under the now repealed Land Acquisition Act, 1894 ("1894 Act"). Two Full Bench decisions of the Supreme Court had earlier reached opposing conclusions on the interpretation of Section 24 which is how the matter came to be placed before a 5-judge bench. The Constitutional Bench has adopted the view of the earlier Indore Development Authority v Shailendra& Ors. decided on 08.02.2018 ("IDA 2018").
A study conducted by the Centre for Policy Research ("CPR Study") which the authors of this piece were a part of, showed that between 2014 and 2016, there were over 270 cases brought before the Supreme Court under Section 24. In less than 1% of these cases was the acquisition of land held to be valid under Section 24. These drastic figures show the importance of Section 24 and the impact its interpretation will have on the land acquisition landscape. We argue that Section 24 has been incorrectly interpreted throughout its chequered legal history in the past 6 years and that this Constitution Bench decision has only entrenched the past mistakes. We analyze Section 24 of the 2013 Act and present a case for its literal interpretation in light of the related provisions of the old land acquisition law; the purpose of the 2013 Act; the two conflicting judgements on interpretation of Section 24; and data from land acquisition litigation at the Apex Court level since independence.
What does Section 24 of the 2013 Act say?
Section 24 envisages more than one scenario wherein proceedings initiated under the 1894 Act would be deemed to have lapsed. First off, it says that where no award under Section 11 of the 1894 Act was made, the provisions of the 2013 Act would apply vis-à-vis compensation. It then deals with a situation where an award under Section 11 of the 1894 Act was made but the award was made five years or more prior to the commencement of the 2013 Act. In these situations, if (i) physical possession of the land had still not been taken, or (ii) compensation had not been paid, land acquisition proceedings under the 1894 Act would lapse.
The difficulty that arose in the interpretation of Section 24 was with respect to the word 'paid'. Two different possibilities emerged as candidates for its meaning: (i) 'paid' could mean that the amount was actually paid to the people whose land was acquired ("beneficiaries"); or (ii) 'paid' could mean that the amount was tendered/offered by the State to the beneficiaries who refused to receive it and subsequently, it was deposited into a court or government treasury.
Nothing in the text of the statute suggests that the Legislature intended the meaning to be along the lines of point (ii) above. In fact, a literal interpretation of the Section makes it obvious that 'paid' means what we understand it to mean in a colloquial sense, namely, that it was actually paid to a beneficiary. This observation is also buttressed by the proviso to Section 24. The proviso says that when there are multiple beneficiaries, all of them shall be entitled to compensation as per the 2013 Act if compensation in respect of a majority of the land holders had not been deposited into their accounts. The fact that the Legislature unambiguously used two different words, 'paid' and 'deposited', in the same section for different purposes clearly means that the words are supposed to carry different meanings, a conclusion that will be further elaborated upon below.
This position is also confirmed by reference to Section 31 of the 1894 Act. Section 31 provided for 'payment of compensation or deposit of same in court'. It stipulated that on making an award under Section 11 of the 1894 Act, the collector had to tender payment to the beneficiaries and pay it to them. This mandatory obligation could only be departed from if the collector was prevented from executing the payment due to the beneficiaries' refusal to receive the compensation, dispute as to land title or as to the apportionment of compensation. In all these cases, the collector was obliged to deposit the compensation in court. Thus, the 1894 Act drew a very clear distinction between payment and deposit. Given that Section 24 of the 2013 Act refers to the 1894 Act, it can be said that the legislatures had notice of the distinction under the 1894 Act and when they used the two terms in different contexts in Section 24, they sought to carry forward the respective meanings accorded to the two terms in Section 31 of the 1894 Act.
Although there is little need to resort to other tools of interpretation when the literal meaning is clear, it is pertinent to observe that the 2013 Act is a welfare legislation. It had been introduced to remedy the turmoil that the land holders had been through under the old law. Therefore, a colloquial interpretation would also be in tune with these objectives of the 2013 Act.
What did the Supreme Court do in Pune Municipal Corporation?
In PuneMunicipal Corporation v. Harakchand Misirimal Solanki & Ors., decided on 24.01.2014, a Full Bench speaking through Lodha J. analyzed Section 24 of 2013 Act and Section 31 of 1894 Act. The Court appreciated the distinction between payment and deposit in Section 31 as explained by us above and held that, while enacting Section 24 of the 2013 Act, Parliament definitely had view of Section 31 which would mean that it did not intend to equate the words 'paid' to 'offered' or 'tendered'. It refers to this distinction multiple times in the judgment.
However, curiously, it did not accord a literal interpretation to Section 24 and concluded that compensation shall be regarded as 'paid' for the purposes of Section 24 if it has been offered to that person and has been deposited in court. It said that it was coming to this conclusion as not doing so would amount to ignoring the procedure, mode and manner of deposit under Section 31. However, it failed to elaborate its reasoning further which is where, in our respectful view, the Court faltered. Thus, according to Pune Municipal Corporation, it will not be considered as 'paid' if the compensation was paid into the government treasury instead of the court, which is indeed what had happened in the facts of that case.
What did the Supreme Court do then in Indore Development Authority?
We have presented a common critique of IDA 2020 and IDA 2018 as the Constitution Bench has taken forward the reasoning advocated in IDA 2018. In IDA 2018, a Full Bench speaking through Mishra J. disagreed with the decision in Pune Municipal Corporation.
The most striking feature of IDA 2018 was that it did not consider the literal/colloquial meaning of the word 'paid' at all. Instead, it went on to say that the word 'paid' could not mean 'deposited in the account of a beneficiary' because the word 'deposit' had only been used in the proviso to Section 24 and not in the main Section. It also laid emphasis on the fact that the consequence of the proviso was not that the proceedings would lapse- it was only that compensation would have to be paid as per the 2013 Act. However, it failed to notice that the consequence in the proviso was different because it dealt with a scenario where there were multiple land holders. For land acquisition to lapse and to be restarted could prove to be an administrative nightmare in such scenarios.
In any case, it then went on to observe (without much reasoning) that even the word 'deposit' in the proviso to Section 24(2) did not refer to 'deposit in court' but to a deposit made with a land acquisition officer or with the treasury. Notably, this is not what the text of the proviso says. However, the Court relied on this inference to say that, because of this, even the word 'paid' in Section 24(2) could not just refer to a 'deposit in court'. It eludes the authors of this piece as to how such a jump could ever be made. Nevertheless, with this reasoning, the Court then arrived at the conclusion that the word 'paid' necessarily had to mean 'tender'. Even if the amount which had been tendered was refused, the obligation to pay was complete and hence, the word 'paid' in Section 24(2) meant 'tender'. Although the Court seeks to base its conclusion in Section 31 of the 1894 Act, it is inescapable that the Court effectively upends the scheme of that Section. It culls out a meaning of 'paid' nowhere to be found in Section 31.
In IDA 2020, the Court took one step forward from its reasoning in IDA 2018. The Court interpreted the word 'paid' but said that it would be unfair to hold it against the Collector that the landowner refused to accept payment or that she was prevented from making a payment. Section 31 of the 1894 Act was known to the Court. Even then, the Court did not consider that the Collector could have deposited this money into court even if the land loser refused to accept it. While this may have not been an interpretation in consonance with the text of the provision, it certainly would have continued the position laid down post-Pune Municipal Corporation and not upset the state of affairs. The Court seems to lay emphasis on the fact that neither the 1894 Act nor the 2013 Act contain any provision that provides for lapse of proceedings. Therefore, it said that even Section 24 could not provide for it. This reasoning, in our view, thoroughly lacks merit. Just because no other provision in the two statutes contemplated such a measure does not mean that Section 24 could not.
The Court also based its decision on the reasoning that, if a landowner has refused to accept the compensation tendered, she cannot then take advantage of her own wrong. However, this reasoning fails to appreciate the fact that the 2013 Act is a welfare legislation and Section 24(2) only deals with scenarios where an award of compensation had been made five years or more prior to the enactment of the 2013 Act. Therefore, it only applies in cases where an award had been made before January 1, 2009. The landowners did not refuse the compensation because they expected the proceedings to lapse. Grossly unjustified compensation offers have consistently been a major cause of the refusal to accept the offer. The CPR Study showed that in cases that had travelled to the Supreme Court, litigants on an average spent as many as 20 years just to receive their share of compensation. Out of 445 such cases between 1950 to 2016, 392 (a whopping 88%) saw an increase in the compensation, with 10% cases seeing no change in compensation and a minor decrease in compensation in a mere 7 cases. What is even more telling is the fact that the average compensation awarded by the Supreme Court was about 6 times of the original award made by the Collector. Naturally, the Supreme Court statistics only reveal the top of the pyramid and the actual numbers of such cases pending before the High Courts and the Trial Courts would be a lot more.
It is fair to assume that the Parliament would be privy to these trends when enacting a welfare statute such as the 2013 Act. Section 24(2) is very evidently then designed to cater to that section of society which has been passing through the corridors of several courts from a time prior to January 1, 2009, at the very least only to receive their fair due. The State ought to have been more proactive in pursuing acquisition and fair in the assessment and handover of compensation, if it seriously wanted that parcel of land. Given the laxity of the State apparatus, it was only fair that land holders be accorded the whole gamut of benefits under the 2013 Act. This surmise as to legislative intent is also backed by numbers. The CPR Study showed that in relation to the cases under Section 24 of the 2013 Act, almost 83% of them were where no compensation whatsoever had been paid to the land losers and 11% of them were cases where neither compensation was paid nor had any physical possession of the land been taken. As mentioned earlier, being cognizant of the legislative intent, the Supreme Court invalidated the acquisition proceedings in a whopping 95% of these cases and remitted 3.5% to be decided by lower courts.
These numbers also underscore two further points. First, they show that even though the position in Pune Municipal Corporation was untenable as a matter of interpretation, it was still preferable to the position under Indore Development Authority. If 83% of the cases didn't even have the compensation being actually paid or being deposited in court, the land owners were left in a precarious position where they had no certainty either as to their land or to compensation. With compensation deposited in court, the aggrieved can always litigate the quantum with some assurance that the amount is available in court.
Second, IDA 2020 concluded that the word 'or' in Section 24(2) should be read as 'nor/and', thereby requiring both compensation not being paid and possession of the land not having been taken as preconditions for lapse. Section 24(2) is unambiguous in its wording that either of these conditions must be satisfied. The Constitution Bench has committed a grave error of law by interpreting a non-controversial point incorrectly. It seemed to rely on assumptions such as: (i) Section 24 is a penal provision as it seeks to 'punish the acquiring authority for its lethargy in not taking physical possession nor paying the compensation'; and (ii) if 'two negative conditions qualified by "or" is used, then "or" should be read as "nor" or "and"' in case of absurdity'. Given that there is no absurdity, and that Section 24 is not a penal provision by any stretch of imagination, relying on these assumptions and holding 'or' to mean 'nor/and' is patently incorrect. As the data shows, only in 11% cases was neither compensation paid nor had any physical possession of the land been taken.
With this decision of the Constitution Bench, the most direct implication could potentially be that land holders whose lands had been acquired even prior to January 1, 2009 may now, 11 years later, not only stand to lose their lands but also have to revive and pursue cases through multiple courts just to receive a fair share of compensation. Those in the upper echelons of society are often elusive to the strains of poverty. This decision is yet another testament to that.
Dhruva Gandhi is an Advocate at the Bombay High Court and has completed his BCL at the University of Oxford and B.A., LL.B (Hons.) at the National Law School of India University, Bangalore.