The land acquisition law has one of its legs stuck in the Supreme Court

The court has to decide whether private companies, under some circumstances, can continue to enjoy the advantage the colonial-era land acquisition law gave them over land owners

Under the 1894 vintage Land Acquisition Act, land owners often held back trying to negotiate a better compensation from the government for their forcefully acquired lands. Thousands of such cases landed up in prolonged litigation. So, when the Congress drafted the Land Acquisition, Rehabilitation and Resettlement (LARR) Act, it brought in a special provision to address these legacy disputes.

Section 24 (2) of the LARR states that after initiating land acquisition for a project under the 1894 law, if the physical possession has not been taken by the developer or the compensation not paid to the land owners for more than five years, the acquisition process would lapse. In such cases, the government would have to initiate fresh acquisition under the LARR.

The Congress-led United Progressive Alliance (UPA) government, which enacted the LARR, said the provision was introduced to extend the benefits of new law to land owners in cases where acquisition under the old law was not complete.

This is one of the key provisions that the Bharatiya Janata Party (BJP) tried to knock out, first with the Union government’s ordinance and then with the failed amendment to LARR.

But what BJP failed to achieve on this count Reliance Industries secured as relief for itself and other private companies from the Gujarat High Court, albeit temporarily.

This is a story as much about Section 24(2) of LARR as it is about the complex workings of the apex court.

The specific provision 24(2) had the BJP-led Centre and several state governments worried. They believed if farmers and other land owners began using the clause, many unfinished projects would get delayed and investments would be hampered. But the BJP’s ordinance failed to pass because of strong Opposition in Parliament.

Farmers and land owners across the country approached courts to get either their land back or a better deal from project developers using this clause. In hundreds of judgments, the Supreme Court (SC) and the state high courts (HCs) across the country decided in favour of land owners until in one in which the Gujarat High Court in 2017 decided in favour of a private company, Reliance Industries Limited (RIL).

From then on, the legal tangles over the provision have got only more complicated and remain unresolved to date.

The Reliance case

RIL began developing a special economic zone (SEZ) in Jamnagar in 2005. For this, the state government initiated land acquisition in five villages in 2006 under the Land Acquisition Act, 1894. According to the company’s submission to the court, it paid Rs 61 crore to farmers for acquiring 16.4 square kilometres of land. In addition, it deposited Rs 52 crore more with the state government to acquire another 9 square kilometres, which farmers had refused to give up. The collector deposited this amount in the state treasury.

But the farmers were not willing to let go. The acquisition of land, as was often the case, got stalled — for nearly a decade.

On January 1, 2014, the new LARR Act came into force. The farmers who had not given up physical possession of the land to the Reliance SEZ in Bhavnagar until January 1, 2014, approached the Gujarat High Court in August that year, demanding that acquisition of their land be declared lapsed under LARR’s provision 24(2).

They were banking upon a judgment which had already been passed by a three-judge Bench the Supreme Court headed by Justice R M Lodha. The Bench had given its judgment (in Pune Municipal Corporation vs Harakchand Misirimal Solanki) on how the provision should be understood. The Bench had held that the compensation amount deposited in the state treasury would not be considered as paid to the land owners. A land acquisition initiated five years earlier where the developer had not taken possession of the land would not lapse only if the compensation was either paid into the accounts of the land owners or was deposited in a legal court from which the land owners could claim it with interest at any point of time, the judgment said.

While the Reliance case was being heard in the Gujarat High Court, the BJP brought its ordinance in December 2014 trying to annul the reading of the LARR by the Justice Lodha Bench of the Supreme Court. The ordinance said the land acquisition would not lapse if the compensation was deposited in the court or “any other designated account”. The ordinance also said the period for which physical possession of land was held up due to litigation would be exempted from calculating the five years for the application of Section 24 (2).

The ordinance, however, lapsed in August 2015. But four months later, Reliance filed a counter petition to that of farmers’ in the Gujarat High Court demanding that either Section 24 (2) be declared invalid or not be applied on private projects. The high court agreed with Reliance and decided in December 2017 that since the state government was responsible for handing over physical possession of the land to Reliance, the company could not be held responsible for the delay. It also said that as long as a private company had deposited the compensation amount with the state government it had completed its duty of paying compensation.

The farmers challenged the HC judgement favouring Reliance in the Supreme Court in January 2018. The matter came up before a two-judge Bench headed by Justice Arun Mishra. While the case was still being heard, another three-judge Bench headed by him gave a judgment on February 8 that year (in a separate case, Indore Development Authority Vs Shailendra) that if land owners were offered compensation and they refused to accept it, the land acquisition would not lapse.

This judgment would have benefitted RIL in its case that was supposed to come up before Mishra in a few weeks. The interpretation by Mishra’s Bench of the original law was the same as the changes that the BJP government wanted to bring to Section 24 (2) through the ordinance.

Mishra’s judgment was, however, stayed by another three-judge SC Bench headed by Justice Madan Lokur, within two weeks, in a separate matter. Lokur’s Bench argued that it was legally incorrect for a three-judge Bench (headed by Mishra) to overturn the 2014 judgment by another three-judge Bench (headed by Lodha). Incidentally, Lokur was part of the three-judge Bench that had delivered the 2014 judgment in favour of land owners. The issue is now pending with a bigger constitutional Bench. The Bench has not been formed. It is now five years since the 1894 colonial-era land acquisition law was repealed. Yet, its ghost haunts the LARR.

How the 1894 land acquisition law haunts LARR

2006: Gujarat initiates land acquisition for a Reliance SEZ under the 1894 law

Jan 1, 2014: LARR comes into force, says land acquisition initiated under the 1894 law would lapse if the project developer has not taken possession of the land for five years or compensation is not deposited either in land owners’ account or in a court 

Jan 24, 2014: An SC Bench decides land acquisition under the1894 law would lapse in such cases even if the developer has deposited the compensation in a government treasury

Aug 2014: Farmers who had not given up possession of their land to the Reliance SEZ approach the state high court demanding land acquisition under the old law should lapse

Dec 2014: The Centre brings in LARR ordinance, which says the land acquisition in such cases will not lapse if the compensation is deposited in any “designated account”

Aug 2015: The ordinance lapses amid opposition

Dec 2015: Reliance approaches the Gujarat HC demanding that the clause on lapse of land acquisition should not apply to private companies

Dec 2017: The HC decides in Reliance’s favour

Jan 2018: Farmers challenge the HC judgment in the SC. A two-judge Bench headed by Justice Arun Mishra hears the matter

Feb 8, 2018: In a separate case, a three-judge Bench headed by Mishra orders if land owners refuse the compensation they are offered, the land acquisition will not lapse

Feb 21, 2018: Another three-judge SC Bench headed by Justice Madan Lokur stays the order of the Justice Mishra Bench

Feb 22, 2018: The matter is referred to a larger Constitutional Bench. The cases remain pending