Constitution Bench Land Acquisition & Section 24(2)•2 min read•(2020) 8 SCC 129

Indore Development Authority v. Manoharlal and Others

Bench: Five-Judge Constitution Bench (Arun Mishra, Indira Banerjee, Vineet Saran, M.R. Shah & S. Ravindra Bhat, JJ.)
Land Acquisition & Property Rights (RFCTLARR)
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Core Legal Ratio Decidendi

"Lapsing under Section 24(2) of the 2013 Land Acquisition Act requires the concurrent fulfillment of both negative conditions—neither taking physical possession nor tendering compensation; satisfaction of either saves the acquisition."

I
Step 1

Issues Before the Court

  1. (i)

    What is the true interpretation of Section 24(2) of the RFCTLARR Act, 2013 regarding when land acquisition proceedings initiated under the 1894 Act lapse?

  2. (ii)

    Does the conjunction 'or' in Section 24(2) ('physical possession has not been taken OR compensation has not been paid') mean that fulfilling either one condition causes lapsing, or must both conditions be satisfied?

  3. (iii)

    What constitutes valid payment of compensation—deposit in the government treasury, or mandatory deposit into the Reference Court?

R
Step 2

Law & Rules Applicable

  1. (i)

    Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act), Section 24(2).

  2. (ii)

    Land Acquisition Act, 1894, Section 31.

  3. (iii)

    Overruled: Pune Municipal Corporation v. Harakchand Misirimal Solanki.

A
Step 3

Application to Facts & Circumstances

A bitter jurisdictional conflict arose between two coordinate benches of the Supreme Court (Pune Municipal Corporation in 2014 vs. Indore Development Authority in 2018) concerning whether non-deposit in court causes automatic lapsing of multimillion infrastructure acquisitions.

The 5-Judge Constitution Bench unanimously reconciled the statutory text: the word 'or' in Section 24(2) must be read conjunctively as 'nor' or 'and'. Acquisition proceedings lapse under Section 24(2) ONLY if the State has failed on BOTH counts: (1) physical possession has not been taken, AND (2) compensation has not been paid.

If the State has taken physical possession through a Panchnama memorandum, the acquisition is protected even if compensation remains unpaid. Conversely, if compensation was tendered, the acquisition does not lapse even if physical possession was delayed.

The Court held that 'compensation has not been paid' does not require actual deposit in court; tendering compensation into the government treasury satisfies the statutory requirement if the landholder refused or failed to collect it.

Furthermore, landowners who obtained stay orders or injunctions from courts cannot count the period of judicial stay towards the 5-year calculation.

C
Step 4

Conclusion & Ruling

  1. (i)

    Section 24(2) of the 2013 Act is triggered only upon the cumulative failure of the State to take physical possession and to pay compensation.

  2. (ii)

    Taking possession through panchnama memorandum signed by panchas vests the land in the State free from all encumbrances.

  3. (iii)

    Landowners who refused compensation deposited in the treasury cannot claim deemed lapsing of acquisition.

Authorities Cited

Full texts open on Indian Kanoon in a new tab.

  1. Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183Full text of Pune Municipal Corporation v. Harakchand Misirimal Solanki on Indian Kanoon
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