Gujarat HC reads down Section 24(2) of Right to Fair Compensation and Transparency in Land Acquisition Act [Read judgment]

The Gujarat High Court has read down Section 24(2) of Right to Fair Compensation and Transparency in Land Acquisition Act, Rehabilitation and Resettlement Act, 2013..The Court held that Section 24(2) will not apply to land acquisition proceedings initiated under the provisions of the Land Acquisition Act, 1894, to the extent of acquisition of land covered by Part-VII, where awards are passed and compensation is deposited by the beneficiary Company in terms of the award..The significant ruling came in a petition filed by Reliance Industries Limited. The judgment was delivered by Chief Justice R Subhash Reddy and Justice Vipul M Pancholi..The case has its genesis in the acquisition of land by the Gujarat government for Reliance under Part-VII of the Land Acquisition Act, 1894, which relates to acquisition of land for companies..Pursuant to the consent award and the contested awards, Reliance was handed over actual and physical possession to the extent of 95% of the lands notified..However, some of the landowners challenged the acquisition but the same was rejected right up to the Supreme Court..Meanwhile, the 1894 Act was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013..As per Section 24 of the new Act, if land was acquired under the 1894 Act, five years or more prior to the coming into force of the new Act, and if physical possession was not taken or compensation not paid, then the acquisition will be deemed to be lapsed..This threatened the acquisition of the remaining 5 percent land prompting Reliance to challenge Section 24..It was the case of the petitioners that Section 24 is unreasonable and unconstitutional since it extinguishes the vested right of the company to obtain possession of the land holdings acquired for it by the State, by prescribing a period of limitation for taking possession and disbursement of compensation, which operates as a fait accompli by enactment of the very provision..It was also the petitioner’s contention that Section 24 imposes an obligation on the State Government with retrospective effect to take over possession of the lands and to pay compensation to the landholders within five years from the award, failing which acquisition would lapse and such provision is made applicable to acquisitions made under the Act of 1894, which did not contain such provision at all. According to the petitioners, obligations are imposed retrospectively and in a manner which does not give an opportunity of compliance, but imposes a penalty for failure to comply with such obligation, which did not even exist at the relevant time..It was the contention of the Central government that only because petitioner Company had entered into an agreement with the State Government and notifications under Sections 4 and 6 were issued under the Land Acquisition Act, 1894, does not mean that the land stood vested in the company..It was further submitted that Section 48 of the Land Acquisition Act, 1894 empowers withdrawal of acquisition before taking possession of the land. Unless the possession is taken over, the land does not vest either with the State Government or with the company for which the acquisition is proposed..The central government also contended that even if any right had accrued in favour of the petitioner company by virtue of agreement with the State Government, the same does not in any way make Section 24 unconstitutional. While agreeing that the Land Acquisition Act, 1894 did not contain any provision prescribing any time limit for taking possession, it was submitted that if the petitioner Company was really interested in immediate recovery of possession, it ought to have pursued with the Collector to do the needful..Importantly, the Centre submitted that the object of Section 24 was to see that incomplete acquisitions may not be governed by the Land Acquisition Act, 1894 and the persons whose lands were under contemplation of acquisition under the Land Acquisition Act, 1894 may not be discriminated and they also be given benefit of the Act of 2013..The Court first addressed the submission of the government that no rights have accrued to the company despite notifications being issued and agreement being entered into with the company. Turning down the same, the Court held,.“It may be that, as the possession is not taken by the government so as to hand it over to the beneficiary petitioner company, there may not be vested right over possession. However, in view of the agreement entered into by government with the beneficiary company, various steps have been taken by the authorities, including passing of the awards and further deposit of entire compensation with the authorities by the petitioner in terms of the award, it cannot be said that no rights have accrued to the petitioners.” .Regarding the power of the government to withdraw notification under Section 48, the Court held that the same is not absolute in cases of acquisition of land for company covered by Part-VII of the Land Acquisition Act, 1894..The Court then proceeded to hold that when while applying the provision under Section 24(2) of the Act of 2013, a distinction has to be drawn for acquisition of land by the government for its own purpose, and the acquisition of land covered by Part-VII of the Land Acquisition Act, 1894, where acquisition is for companies..“In its application to the lands which are acquired under the Repealed Act for the government for its own purpose, the said provision cannot be held to be arbitrary. Keeping in mind the objectives of the Act of 2013, it appears that such provision is made as a beneficial measure for the owners of lands whose lands were acquired, but possession was not taken for 5 years. .At the same time, in its application to the acquisition of lands covered by Part-VII of the Land Acquisition Act, 1894, which provided acquisition of lands for companies, it is to be noticed that the company cannot take possession on its own of the acquired land. Even after the deposit of compensation as determined in the awards, it is an obligation on the part of the State to take possession from the owners of the land and to hand over the same to the beneficiary company in terms of the agreement…. In such event, its application to the acquisition covered by Part-VII of the Land Acquisition Act, 1894 is to be held arbitrary and unreasonable and is required to be read down”.The Court therefore held that Section 24(2).“is to be read down by holding that the said provision cannot be applied to the acquisition of lands covered by Part-VII of the Land Acquisition Act, 1894, where award is passed and compensation is deposited by the beneficiary Company as per the terms of the award.” .Interestingly, the High Court has expressly referred to the judgment of the Supreme Court in Shayara Bano v. Union of India, in which it was held that arbitrariness can be a ground for striking down a law made by the Parliament..“…in the latest judgment in the case of Shayara Bano v. Union of India, reported in (2017) 9 SCC 1, while reviewing the earlier case-law on the subject, with majority view, the Hon’ble Supreme Court has held that legislation can be struck down on the ground that it is arbitrary and therefore violative of Article 14 of the Constitution….The ratio decided by the Hon’ble Supreme Court in the aforesaid judgement supports the plea of the petitioners in the case on hand.” .Read the judgment below