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by sayum
28 January 2026 6:55 AM
“Where a landowner is neither named in an inquiry nor accused of wrongdoing, the benefits legally due to him cannot be mechanically cancelled” – In a significant decision safeguarding the rights of landowners against arbitrary administrative action, the Supreme Court of India set aside the cancellation of a compensation award granted to a landowner whose name did not appear in any inquiry, FIR, or refund proceeding.
Holding that the entire land acquisition award could not be struck down wholesale due to alleged irregularities affecting only a few beneficiaries, the Bench comprising Justice K. Vinod Chandran and Justice Sanjay Kumar restored both the original and enhanced compensation awarded to the appellant, observing:
“The appellant herein was not a landowner who was proceeded against based on the inquiry report… Nor has it found any identity of cause or similarity in quantum or an unjust enrichment based on the prevailing market value, insofar as the appellant is concerned.”
“Natural Justice Violated — Orders Cannot Prejudice a Person Who Was Not Even Party to the Proceedings”
The controversy arose from the acquisition of land for a Special Railway Project in Chhattisgarh under the Railways Act, 1989. An award dated 12.02.2018 was passed by the Competent Authority under Section 20-F, followed by an enhancement on 28.06.2019 by the Arbitrator under Section 20-F(6). Later, allegations of collusion and excessive compensation led to an inquiry, FIRs, and the setting aside of certain compensation awards by the Chhattisgarh High Court.
However, Niraj Jain, the appellant, was neither impleaded in the High Court proceedings nor named in the inquiry or FIR. Yet, his compensation was also set aside along with those of five others who were named respondents.
The Supreme Court found this to be a grave violation of natural justice.
“Orders passed in proceedings to which the appellant was not a party cannot prejudice his vested rights,” the Court categorically held.
“Judicial Interference Cannot Be Based on Guilt by Association”
The Supreme Court strongly rejected the assumption that because certain landowners allegedly colluded with officials to receive inflated compensation, all awards from the same acquisition must be tainted.
“Whether the setting aside of an award of compensation on grounds of collusion and unjust enrichment against some landowners would ipso facto result in the entire award being set aside is the question arising in this appeal,” the Court noted at the outset — and answered it firmly in the negative.
The Bench found no justification in mechanically extending the effect of the High Court’s ruling to landowners who had no allegation against them, were not made parties, and had not been accused of excess claim or benefit.
“Railways Act Does Not Allow Review Power — Cancellation of Award Without Jurisdiction”
Importantly, the Court also found that the administrative orders cancelling the compensation and arbitral award were without jurisdiction, as neither the Competent Authority nor the Arbitrator under the Railways Act or the 2016 Rules has any power of review.
“The Railways Act of 1989 does not confer any power to review on the Competent Authority or the Arbitrator appointed under the 2016 Rules,” the Court declared, holding the subsequent administrative cancellations legally unsustainable.
The cancellation orders — which had kept the disbursal of enhanced compensation in abeyance and later nullified the award — were quashed for being in excess of statutory authority.
“High Court Ought Not to Have Ignored Individual Claims in a Bulk Setting Aside”
The Court strongly criticized the High Court’s failure to distinguish between tainted and untainted landowners. It noted that while the High Court proceedings involved only five respondents out of 550 landowners, its ruling led to the blanket cancellation of the entire acquisition award, affecting even those not accused of any illegality.
“The learned Single Judge ought to have noticed that the challenge is only against the five respondents impleaded therein and the setting aside can affect only them,” the Supreme Court observed.
This, it said, amounted to a "mechanical extension of adverse findings", which is arbitrary and illegal when there is no identity of cause or factual similarity.
“Restoration of Compensation with Interest and Solatium Directed Within Three Months”
In allowing the appeal, the Court restored both:
It directed the authorities to disburse the balance compensation along with interest and solatium within a period of three months, after deducting any amount already paid.
“The entire award amounts, deducting what has already been granted, with interest and solatium as applicable till the date of disbursement, shall be disbursed within a period of three months,” the Court ordered.
A Clear Line Drawn Between Tainted and Innocent — Landmark in Land Acquisition Jurisprudence
This ruling reinforces the principle that individual accountability and procedural fairness are paramount in land acquisition cases — especially where compensation is concerned.
The Supreme Court’s judgment offers critical protection to innocent landowners, ensuring that allegations of corruption against a few cannot become grounds to strip all beneficiaries of their rightful entitlements.
The decision also underscores that administrative overreach and judicial shortcuts must be checked through strict adherence to natural justice, due process, and statutory limits.
Date of Decision: January 27, 2026
