In this article, Smita Singh discusses whether the period of court stay is excluded for reckoning five years for lapsing of land acquisition under the new law or not.

The new law on land acquisition

For over a hundred years and since the time of British rule, Land Acquisition Act 1884 (LA Act/ Old law) was the central legislation enabling the state to wield power of eminent domain to acquire private property.

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act/New Law) come into force on 1/1/2014, thereby repealing the LA Act. It re-enacted the law regulating the exercise of power of eminent domain. The objective of the New Law is to inter alia provide for:

1. A humane, participative, informed and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanisation with the least disturbance to the owners of the land and other affected families;
2. Just and fair compensation to the affected families whose land has been acquired;
3. Adequate provisions for affected persons for their rehabilitation and resettlement; and
4. Ensuring that the cumulative outcome of compulsory acquisition should be that affected persons become partners in development leading to an improvement in their post acquisition social and economic status.

Provision for deemed lapsing of certain acquisition proceedings

Section 24(2) LARR Act provides that the land acquisition proceedings initiated under the Old Law shall be deemed to have lapsed where an award was made five years or more prior to the commencement of New Law but:

• Physical possession of the land was not been taken; or
• Compensation had not been paid.

Notable aspects of Section 24(2) of LARR Act

Section 24(2) of LARR Act has no express stipulation to exclude period for which the acquiring authority was precluded from taking possession or paying compensation, due to operation of court stay obtained by the landowner/s, for reckoning five years for deemed lapsing of acquisition.

At the same time, the LARR Act, specifically provides for exclusion of period of operation of stay granted by the court/s for reckoning period for the following:

1. Lapsing of Preliminary Notification if Final notification is not published within period stipulated [proviso to section 19(7)]; and
2. For payment on interest on market value from date of preliminary notification [explanation to section 69(2)].

Pertinently, the Parliamentary Committee when discussed the proposed Law, the Delhi Government had put forward a case that period during which acquisition proceedings remained stayed by court order should be excluded.  Yet, in Section 24 such exclusion is not incorporated.

Later, the Central Government had issued Ordinance[1] to amend LARR Act to exclude of period of stay for reckoning five years contemplated in Section 24(2) of the LARR Act.  However, the said ordinance lapsed.

Soon after enactment of the LARR Act, large number of litigation concerning the scope and applicability of its section 24(2) arose.

Decision in Sree Balaji Nagar Residential Assn. v. State of T.N.

A Division Bench of Supreme Court in Sree Balaji Nagar Residential Assn. v. State of T.N.[2], considered effect of section 24(2) of LARR Act on acquisition proceedings where award had been passed five years earlier to coming into force of LARR Act, but the respondent state could not take possession of the land, due to operation of interim stay obtained by the landowner from courts. The Bench held that Section 24(2) of LARR Act does not exclude any period during which the acquisition proceeding remained stayed on account of interim order granted by any court. The bench held:

1. The intention of the legislature in enacting Section 24(2) of LARR Act is to be culled out from its wordings and on the basis of other relevant provisions of the said Act.
2. A plain reading of Section 24 shows that it does not exclude any period during which the land acquisition proceeding might have remained stayed by court order.
3. In the LARR Act itself, the proviso to Section 19(7) in the context of limitation for publication of declaration under Section 19(1) and the Explanation to Section 69(2) for working out the market value of the land in the context of delay between preliminary notification and the date of the award, specifically provide that the period during which the acquisition proceedings were held up on account of any stay be excluded.
4. Legislature has consciously omitted to extend the period of five years indicated in Section 24(2) even if the proceedings had been delayed on account of an order of stay granted by a court or for any reason. Such casus omissus cannot be supplied by the court.
5. Even in the repealed LA Act, the legislature had brought about amendment in Section 6 to add Explanation 1 for excluding the period when the proceeding suffered stay by an order of the court, in the context of limitation provided for publishing the declaration under Section 6(1) of the Act. To a similar effect, the Explanation to Section 11-A was added.
6. Clearly the legislature has, in its wisdom, made the period of five years under Section 24(2) LARR Act absolute and unaffected by any delay in the proceedings on account of any order of stay by a court.
7. The plain wordings used by the legislature are clear and do not create any ambiguity or conflict. In such a situation, the court is not required to depart from the literal rule of interpretation.

The ruling in Indore Development Authority and Ors. vs. Shailendra

Recently, in Indore Development Authority and Ors. vs. Shailendra (Dead) through L.Rs. and Ors[3], alarger Bench of three learned Judges of Supreme Court overruled the decision in Sri Balaji. The reasoning in Indore Development Authority can be summed up as below:

1. When an interim order staying taking of possession or further proceedings etc., operated everything stood still; it precluded the authorities to pay compensation and take possession.
2. When a party is disabled to perform a duty and it is not possible for him to perform a duty; it is a good excuse. The consequences of interim orders could not be used against the State. No person can be made to suffer because of court’s fault or delay.
3. One cannot be permitted to obtain unjust injunction or stay orders and take advantage of own actions.  No litigant can derive benefit of pendency of a case in a court of law. The court should not confer benefit upon an unscrupulous litigant and cause unjust enrichment, the doctrine of restitution compels the court not to provide benefit of Section 24(2) to such litigant.
4. In case of any interim order passed during the pendency of litigation, it merges in the final order.
5. The Parliamentary Committee though noted the suggestions for incorporating a provision to exclude the period of stay and though ordinance had been promulgated to incorporate provision for exclusion of period of stay, the actual legal position, could not be ignored.
6. The principle that if something is expressed in a provision anything contrary is impliedly excluded, has no applicability in context of Section 24(2). Merely because express provisions are made in Sections 19 and 69 of LARR Act to exclude the period of stay, casus omissus cannot be inferred in respect of Section 24.
7. The intent behind section 24(2) of LARR Act is that authority should not have kept pending acquisition due to their laxity; it never intended to apply in case where the authority was disabled from proceeding further due to court order or conduct of the land owners.  Section 24 of LARR Act aims only at expeditious completion of acquisition proceedings.  Lethargy of authorities for five years or more is not tolerated by the legislature, the provision does not provide protection to cases where litigations were pending.
8. Section 24 did not exclude the principles of common law.
9.  An incumbent must succeed or fail in final decision in a pending litigation on what case he has set up in the petition. In case the possession is continued under cover of court’s order or the compensation could not be disbursed due to court order, Section 24(2) could not be invoked. The policy of law [in accordance with Section 24(2)] is not to benefit a litigant or to confer undeserving benefit by involving any lis and to reap fruits on the bases of possession on illegal basis without any right.

Pending reference before larger Bench

Presently the correctness of decision in case of Indore Development Authority is under consideration by a larger Bench of five learned Judges of Supreme Court[4].

An alternative argument

The enactment of LARR Act is an event subsequent to the grant of interim order staying the acquisition proceedings. A possible view point is that under the New Law express provision for lapsing of acquisition having been made under section 24(2), the maxim that an act of court shall prejudice no man, may have no application. The subsequent legislation provides a fresh cause of action. It is not a case of action of court causing prejudice, but a subsequent legislation that confers benefit on landowners and enables lapse of acquisition. Such lapsing is automatic and independent of reason for not taking of possession or paying compensation. The equitable maxim that an act of court shall prejudice no man should not thus negate/override the plain language of section 24(2).

Having regard to the provisions in Sections 19 and 69 of LARR Act explicitly providing for period of stay and also having regard to similar provisions in the repealed LA Act[5], the legislature is deemed to be aware that in several land acquisition cases the possession could not be taken or compensation could not be paid on account of operation of interim orders granted by the courts. Yet legislature did not incorporate any provision to exclude such period for reckoning five years under Section 24(2). A further view point could thus be that when the plain language of Section 24(2) of LARR Act does not exclude the duration of any interim order for reckoning five years, the court may not look for intent of legislature.

The intent of the legislature, if at all relevant, could well be to put an end to the acquisition proceedings which have not been completed by five years.  In such cases the interest of the acquiring authority as well as the land owner is sought to be balanced. It is relevant to note that under the Land Acquisition laws the compensation payable to land looser is determined with reference to the date of Preliminary Notification.  If a land owner chooses to challenge the acquisition proceedings, eventually loose the same after several years, he is entitled to compensation at a rate prevailing on the date of Preliminary Notification, which by passage of time could have been rendered illusory. After deemed lapsing under New Law, while acquiring authority reserves the right to acquire the land afresh, the land owner is assured of transparent acquisition process and fair compensation on the date when fresh acquisition proceedings are initiated.  There appears to be nothing in Section 24(2) of the LARR Act which seeks to deprive the land owner of the benefit of lapse of acquisition proceedings which remained incomplete for reasons whether on account of lethargy of the acquiring authority, the court delays or the fault of the land owner himself.

Also in all cases where interim order continued to operate, it cannot be assumed that the same was due to fault of the land owners only. The delay could well be on account of lethargy of the acquiring authority or the court’s inability to deal with the case expeditiously.  One can find several instances where proceedings are lost on account of technicalities like law of limitation, non-joinder of necessary parties etc.  In such cases the owners could not be assumed to be the only defaulters.

An approach as aforesaid would further the laudable objective of New Law.

[1]Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014

[2] (2015) 3 SCC 353

[3]2018(2)SCALE1

[4]  As per order dated 6/3/2018 in Special Leave to Appeal (C) No.9798-9799/2016

[5] Section 6 and 11A of LA Act