Land Acquisition: Refusal to Accept Compensation Doesn't Trigger Deemed Lapse : Supreme Court

In a significant ruling, the Supreme Court has held that the refusal to accept compensation offered to landowners does not automatically lead to the deemed lapse of land acquisition. The bench, comprising Justice M. R. Shah and Justice Manoj Misra, declared that "deemed lapse does not occur when either possession is not taken or compensation is not paid," overturning a previous High Court decision. The judgment, delivered on March 17, 2023, clarifies the conditions under which land acquisition can be deemed to have lapsed under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The case before the court involved a dispute where the original landowner had refused to accept the compensation offered for their land acquisition. Although possession of the land had been taken, the landowner continued to be in physical possession, cultivating the land. The High Court had previously declared the acquisition as deemed lapsed, considering the landowner's refusal to accept compensation. However, the Supreme Court opined that the crucial factors for deemed lapse were non-payment of compensation and non-possession, which were not established in this case.

Furthermore, the court addressed the issue of a consent award in the context of the Land Acquisition Act, 1894. It was noted that the refusal by the landowner to accept the compensation awarded under the consent award did not automatically result in the cancellation of the acquisition. Despite the cancellation of the compensation order, the acquisition and the consent award remained valid. The High Court's decision to set aside the consent award due to non-implementation and non-payment of compensation was deemed incorrect by the Supreme Court.

The judgment emphasized the legal significance of taking possession of the land through the proper procedure. It stated that drawing a panchnama, a formal document recording the taking over of possession, is a legally permissible mode of possession. In this case, possession had been taken at the time of the consent award, and the landowner's reluctance to hand over possession played a role in the court's decision to reject the claim of deemed lapse.

The court concluded that the issue of subsequent orders, such as the cancellation of an earlier compensation order, was not within the scope of the writ petition. The restoration of the earlier order would not affect the deemed lapse, as the refusal to accept compensation remained the crucial factor in determining the status of the acquisition.

Date of Decision: March 17, 2023

STATE OF GUJARAT & ORS.   vs JAYANTIBHAI ISHWARBHAI PATEL     

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