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Delay in payment of compensation of amount determined on land acquisition entitles an aggrieved landowner to interest as a statutory right – Bombay High Court directs Land Acquisition Authority under the Govt. of Maharashtra, to pay an amount of Rs.1.61 crores to the Petitioners

Where a petitioner landowner is deprived of compensation under Award, passed in land acquisition proceedings, and his land is acquired and handed over to the requisitioning body, the State is liable to pay interest along with compensation to the landowner.  Further, in the event of there being a dispute on title of the land, or if the landowner disputes the Award, the Acquiring Authority is statutorily bound to deposit the compensation amount with the Reference Authority before taking possession of the land under award.  Failure to do so shall render the Acquiring Authority (the State) liable to pay interest to the landowners up to the date of release of compensation as per the provision of law.  Importantly, interest under the Act of 2013 being a statutory obligation on the part of the Acquiring Authority, the landowners have the remedy to invoke High Court’s writ jurisdiction to claim and recover interest due, if conditions as laid down in Section 77 are met with.

2023 SCC OnLine Bom 2158

By way of a Writ Petition under Article 226 of the Constitution of India, the Petitioners sought directions of the Bombay High Court to recover compensation due under an Award passed under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act of 2013).  The Petitioners also invoked the Court’s writ jurisdiction to secure a direction to the Land Acquisition Authority (read the State of Maharashtra) to pay interest for delay in paying the compensation amount due to them under the Award.  The issue of payment of compensation and interest on delayed payment is covered under Chapter X from Sections 77 to Section 80 of the Act.  During the pendency of the Writ Petition, the compensation amount was released to the Petitioners within one year of filing of the Writ.  Interest was granted to the Petitioners vide the Hon’ble Court’s judgement and order dated October 6, 2023.

In their submissions before the Bombay High Court Bench of Justice B. P. Colabawalla and Justice M. M. Sathaye, the Petitioners, laid out the entire facts and circumstances of the issue and contended that the Petitioners were entitled to interest under Section 80 of the Act as the State had failed to comply with the provisions of Section 77(2) of the Act.

Land acquisition assumes a large percentage of litigation space around the country.  India, being a growing economy, exposed to new means and methods of growth, including, advancement in technology, changing needs of infrastructure, ever-increasing demands of creating newer amenities to cater to the populace, land acquisition has become the major mode of creating a pool of land for use under “public purpose”.  When the State, in discharge of its public duty to create new infrastructure requires land, it invokes its statutory powers under various land acquisition laws and acquires private lands.  One such statute governing acquisition of land is the Act of 2013.

Right to property though no longer a Fundamental Right, but by virtue of the 44th Amendment Act to the Constitution of India (w.e.f 20-06-1979), Article 300-A, dealing with the right to property mandates that no person shall be deprived of property except by authority of law.  The Act of 2013, which superseded the Land Acquisition Act, 1886, contains adequate safeguards to protect a person’s rights in property.  One such collection of rights is under Chapter X of the Act of 2013 which is a culmination in a sequence of provisions of how the law would operate to ensure adequate compensation after a person’s property is acquired by the State. 

In this matter before the Bombay High Court, the Petitioners properties were acquired as a part of a block of 23 dissenting landowners who did not agree to the private acquisition of various lands within the periphery of the Bhendi Bazar area for purpose of the development of the Saifee Burhani Upliftment Trust’s project (SBUT).  The SBUT approached the State of Maharashtra and the Mumbai Municipal Corporation for purpose of acquisition.  Invoking the provisions of the MRTP Act and the Right to Fair Compensation Act, the State Government acquired the 23 parcels of lands.  In the case of the petitioners before the High Court, land was acquired and they were deprived of their land by operation of law, without payment of compensation.  The Petitioners persistently followed up with the office of the Land Acquisition Officer and the Collect of Greater Mumbai, but to no avail.  Many visits and consequential compliances later, the Petitioners filed a writ before the High Court seeking to recover their due compensation as per the Award. The Petitioners also invoked the statutory provision of payment of interest to the landowners in the event of delay in payment or deposit of the compensation amount with the reference authority. 

The law governing the acquisition of the Petitioners lands provides that the compensation determined by the land acquisition authority should be compulsorily paid to the landowner before the land is acquired.  Alternatively, the amount of compensation should be deposited with the Reference Authority if certain conditions are met with, in situations where the compensation cannot be paid before acquisition.  If the acquisition authority fails to comply with either of the conditions, then interest becomes due and payable under Section 80 of the Act at the rate of nine percent for the first year of delay.  In cases where payment of compensation is delayed beyond one year then interest rates increases to fifteen percent.

Discussing the situations where compensation cannot be paid before acquisition, the law under Section 77(2) lays down three such situations.   Firstly, where the landowners do not agree to receive the amount, secondly where there is no competent (eligible) person to receive the compensation and thirdly where there is a dispute on the issue of title of the landowner and such issues are to the acquiring authority’s knowledge.  In such situations, though the law does not bar the acquisition, but it only statutorily mandates that the compensation amount be deposited with the Reference Authority by the acquiring authority.  Alternatively, if the aggrieved landowner communicates that he is not satisfied with the compensation determined and will seek a reference to the authority, he can either accept the compensation amount without prejudice to challenge the quantum or refuse to accept the compensation.  In the latter situation, the statutory duty of depositing the amount with the reference authority is also to be met with.

The Petitioners case involved a dispute on the title of holding of the land and the dispute was raised by the acquiring authority.  However, the Petitioners produced documentary evidence, which related back to the period when the process for acquisition had commenced, to prove that the title documents and all relevant information was adequately submitted with the authority.  The Petitioners successfully proved that in the course of the various compliances which the acquiring authority made the Petitioners go through, the fact of the documents being in the possession of the authority were repeatedly placed on record.  The documents relating to letter of administration of the original landowners being the Petitioners parents were produced before the Court along with the dates of the documents being submitted.  The Petitioners had also communicated to the land acquisition authority that they were not satisfied with the Award and intended to challenge the Award and such communication was in response to the Authority calling upon the original landowners to receive the compensation.

In its judgement, reserved on 11 August 2023 and pronounced on 6 October 2023, the Bombay High Court held that if the acquiring authority had a dispute as to the tile of the petitioner-landowners, it was duty bound to deposit the amount with the reference authority prior to acquiring the land and depriving the landowners of their land as well as the compensation.  Further, it also held that the Petitioners had made their dissent to the Award known in very clear terms.  The conditions of Section 77(2) were therefore fully met with, and the Land Acquisition Authority failed in discharge of its statutory duty.  This failure therefore entitled the Petitioners to their claim of interest under Section 80 of the Act of 2013 and accordingly it directed the Land Acquisition Authority to pay the amount of interest within eight weeks of the judgement and order.

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