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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8468 OF 2015  (Arising out of Special Leave Petition (C) No. 28369 of 2012)

The Working Friends Coopertive House            .....Appellant  Building Society Ltd.

      Versus

The State of Punjab & Ors.                       …Respondents   

J U D G M E N T

Madan B. Lokur, J.

1. Leave granted.

2. The  question  for  consideration  is  whether  the  compulsory

acquisition of the appellant’s land under the Land Acquisition

Act, 1894 lapses in view of the provisions of Section 24(2) of The

Right  to  Fair  Compensation  and  Transparency  in  Land

Acquisition, Rehabilitation and Resettlement Act, 2013 (for short

‘the Act’).  In our opinion, the question must be answered in the

affirmative and it must be held that the compulsory acquisition

of the appellant’s land has lapsed.

The Facts

3. A notification was issued by the State Government under

Section 4 of the Land Acquisition Act, 1894 on 12th November,

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1992  proposing  to  acquire  a  large  chunk of  land.   This  was

followed by a notification under Section 6 of the Land Acquisition

Act issued on 21st July, 1993.  Although, a large chunk of land

was acquired by virtue of these two notifications, the appellant is

concerned only with its land admeasuring about 14.90 acres.

4. The compulsory acquisition of the appellant’s land led to

proceedings for adjudication of the compensation due from the

State Government.  Accordingly, an Award was passed by the

Land  Acquisition  Collector  on  22nd February,  1995  and  the

compensation determined at Rs.35,52,528/-.  For reasons that

are  not  clear,  the  compensation  was  not  tendered  to  the

appellant  but  was  deposited  in  the  Treasury.   The  appellant

challenged the quantum of compensation in the Reference Court

and when that was enhanced, the enhanced compensation was

deposited in the Reference Court.

5. Feeling  aggrieved  by  the  acquisition  of  its  land,  the

appellant preferred C.W.P. No. 2996 of 1995 in the Punjab and

Haryana High Court  wherein the above two notifications were

challenged.  As an interim measure, the High Court directed the

maintenance  of  status  quo  and  since  the  appellant  was  in

actual, physical, vacant and peaceful possession it continued to

remain so in view of the interim orders.

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6. The  writ  petition  filed  by  the  appellant  was  eventually

dismissed by the High Court  by  the impugned judgment  and

order dated 24th April, 2012.

7. The  appellant  has  challenged  the  decision  of  the  High

Court  in  this  Court  and  during  the  pendency  of  this  appeal,

Parliament  enacted  the  Act  which came into  force  with  effect

from 1st January, 2014.

Proceedings in this Court

8. As  a  result  of  the  coming  into  force  of  the  Act,  the

appellant  moved  I.A.  No.  4  of  2014  in  this  Court  being  an

application  for  directions  to  the  effect  that  the  acquisition

proceedings  by  which  the  appellant’s  land  was  acquired  had

lapsed.  Reference was made in the application to the provisions

of Section 24(2) of the Act as well as a decision of this Court in

Pune  Municipal  Corporation  v.  Harakchand  Misirimal

Solanki.1  It was stated in the application that the appellant was

in possession of the acquired land and that the respondents had

only taken paper possession thereof.  It was also stated that the

compensation for  the  compulsory  acquisition  of  the  land was

deposited in the Treasury and not in the Reference Court and

that  the  appellant  has  not  withdrawn  the  compensation  so

awarded.  The enhanced compensation was, however, deposited

1 (2014) 3 SCC 183

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in the Reference Court.   

9. A reply to I.A. No.4 of 2014 was filed by respondent no. 3

on or about 12th August, 2014 in the form of a counter affidavit.

It was stated in the reply that the entire acquired land was taken

over by the Land Acquisition Collector and handed over to the

then Estate Officer, Urban Estates, Punjab.  The compensation

of Rs. 35,52,528/- was deposited with the Treasury of the State

Government and subsequently deposited in the Reference Court

by the Land Acquisition Collector on 26th June, 2014.  However,

the enhanced compensation of Rs. 2,91,77,074/- was deposited

in the Reference Court.   

10. With  regard  to  possession  of  the  acquired  land  it  was

stated that the respondents are in actual, physical possession of

the land.  On this basis, it was contented that this appeal itself

deserves dismissal.

11. The respondents filed an additional affidavit in response

to  the  application  on  or  about  20th February,  2015.   In  the

additional affidavit it was reiterated that physical possession of

the entire acquired land was taken over from the land owners by

the Land Acquisition Collector  and handed over to the Estate

Officer, Urban Estates, Punjab in 1995.  It was stated that the

physical  possession  of  the  acquiring  department  was  also

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reflected in the revenue records.  It was stated that in the reply

to the writ petition filed in the High Court it was pointed out as

early  as on 28th March,  1995 that  possession of  the acquired

land had been taken over by the respondents.

12. With regard to the payment of compensation, it was stated

in  the  additional  affidavit  that  the  compensation  due  to  the

appellant was deposited in the Government Treasury on 7th July,

1995  and  the  enhanced  compensation  was  deposited  in  the

Reference Court first on 3rd September, 2004 and thereafter on

24th February,  2012.   It  was  further  stated  that  the  original

compensation awarded to the appellant, that is, Rs. 35,52,528/-

was subsequently deposited in the Reference Court by the Land

Acquisition Collector on 26th June, 2014 after the Act came into

force.

Law on the subject

13. The law on the subject is now no longer res integra.  The

leading  judgment  in  respect  of  Section  24(2)  of  the  Act  was

delivered in Pune Municipal Corporation. It  was  concluded

in paragraph 20 of the aforesaid decision, that the Award had

been  made  by  the  Land  Acquisition  Collector  more  than  five

years prior to the commencement of the Act and compensation

had  not  been  paid  to  the  landowners/persons  interested  nor

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deposited  in  the  Court.   It  was  held  that  the  deposit  of

compensation  in  the  Government  Treasury  is  of  no  avail.

Consequently,  there  was no option but  to  hold  that  the  land

acquisition  proceedings  were  deemed  to  have  lapsed  under

Section 24(2) of the Act. Paragraph 20 reads as follows:-

“From the above, it is clear that the award pertaining to  the  subject  land  has  been  made  by  the  Special Land Acquisition Officer more than five years prior to the  commencement  of  the  2013  Act.   It  is  also admitted position that compensation so awarded has neither  been  paid  to  the  landowners/persons interested nor deposited in the court.  The deposit of compensation amount in the Government treasury is of  no  avail  and cannot  be  held  to  be equivalent  to compensation  paid  to  the  landowners/persons interested.   We  have,  therefore,  no  hesitation  in holding that the subject land acquisition proceedings shall be deemed to have lapsed under Section 24(2) of the 2013 Act.”

14. Subsequently,  this  decision  was  followed  in  Union  of

India v. Shiv Raj.2  It was held, after examining the Objects and

Reasons for the Act that since the possession of  the acquired

land had not been taken and compensation had been deposited

with the Revenue Department, it could not be termed as “deemed

payment”  of  the  compensation  as  held  in  Pune  Municipal

Corporation.   Accordingly,   the appeals filed by the Union of

India were liable to be dismissed.   In this context,  it  may be

noted that reference was also made to two other decisions of this

2 (2014) 6 SCC 564

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Court namely Bharat Kumar v. State of Haryana3 and Bimla

Devi v. State of Haryana4 which were to the same effect.

15. The issue again came up for consideration in Sree Balaji

Nagar Residential Association v. State of Tamil Nadu5 and

the decision rendered in Pune Municipal Corporation and Shiv

Raj  were followed.  In that case, it was noted that there is a lack

of clarity on the issue whether compensation has been paid for

majority of the land holding under acquisition, but there was no

dispute that possession of the land under consideration had not

been taken by the  State  or  any other  authority.   It  was also

noted that more than five years had elapsed since the making of

the Award.  On this basis, it was held that Section 24(2) of the

Act was applicable and the land acquisition proceedings must be

deemed to have lapsed.

16. Finally, in  Karnail Kaur v. State of Punjab6 the issue

was once again examined, this time a little more elaborately but

there was no deviation from any of the decisions rendered by this

Court.  The additional submission made in this case on behalf of

the State of Punjab and negatived by this Court, related to The

Right  to  Fair  Compensation  and  Transparency  in  Land

Acquisition,  Rehabilitation  and  Resettlement  (Amendment)

3 (2014) 6 SCC 586 4 (2014) 6 SCC 583 5 (2015) 3 SCC 353 6 (2015) 3 SCC 206

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Ordinance,  2014,  whereby  a  second  proviso  was  inserted  in

Section 24(2) of the Act.  The Ordinance came into force with

effect from 1st January, 2015 and it was held by this Court that

the  Ordinance  had  only  prospective  effect  and  was  not

retrospective.   Therefore,  the  period  of  the  grant  of  stay  or

injunction by any Court from taking possession of the acquired

land would not  be  excluded retrospectively  for  computing the

period of five years referred to in Section 24(2) of the Act.   This

issue does not arise in so far as the present appeal is concerned

since no argument based on the Ordinance was raised and in

any  case  the  Ordinance  has  since  lapsed.   However,  we  are

mentioning this only to highlight the fact that the interpretation

of Section 24(2) of the Act has been considered by this Court

from all possible angles.

17. The issue of retrospectivity of the Ordinance has also been

considered  in  Radiance Fincap (P)  Ltd.  v.  Union of  India,7

Arvind Bansal  v.  State  of  Haryana8 and  Rajiv  Choudhrie

HUF v. Union of India.9  

18. On the issue of retrospectivity, we may only mention the

view  taken  by  a  Constitution  Bench  of  this  Court  in

Commissioner of Income Tax v. Vatika Township Pvt. Ltd.10

7 MANU/SC/0064/2015 8 MANU/SC/0260/2015 9 MANU/SC/0261/2015 10 (2015) 1 SCC 1

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It was held in paragraph 29 or the Report as follows:-

“The  obvious  basis  of  the  principle  against retrospectivity is the principle of “fairness” which must be  the  basis  of  every  legal  rule  as  was  observed  in L’Office  Cherifien  des  Phosphates  v. Yamashita-Shinnihon  Steamship  Co.  Ltd.  Thus, legislations  which  modified  accrued  rights  or  which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of  supplying  an  obvious  omission  in  a  former legislation or to explain a former legislation.  We need not note the cornucopia of  case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties.”   

19. Applying the law laid down by the Constitution Bench,

it must be held that the appellant had an accrued right which

must  be  recognized  by  Section  24(2)  of  the  Act.   The

Ordinance  which purported  to  take away such an accrued

right  would  have  to  be  treated  as  prospective  unless  the

legislative intent was clearly to give it retrospective effect.  As

mentioned above, this issue does not arise in the present case

but is being mentioned only to buttress the conclusion arrived

at by this Court in Karnail Kaur and subsequent decisions.

20. In  so  far  as  the  facts  of  the  present  appeal  are

concerned, there is considerable doubt whether the appellant

is  in  possession  of  the  acquired  land  or  whether  the

respondents are in possession of the acquired land.  It is not

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necessary for us to go into this issue at all.  This is for the

reason  that  one  of  the  requirements  mentioned  in  Section

24(2) of the Act is that the compensation should have either

been paid to the land owner or should have been deposited in

the  Reference  Court.   The  admitted  position  is  that  the

compensation  of  Rs.  35,52,528/-  was  neither  paid  to  the

appellant nor was it deposited in the Reference Court.  It was

admittedly  deposited  in  the  Government  Treasury  of  the

State.  The deposit was, apart from anything else, made only

after the Act came into force and was perhaps with a view to

get over the provisions of  Section 24(2)  of  the Act and the

prayer made in I.A. No. 4.  Unfortunately, even the deposit of

the  compensation  amount  in  the  Reference  Court  on  26th

June, 2014 does not come to the aid of the appellant under

any  circumstances  and  cannot  be  taken  as  “deemed

payment”.   

21. Taking into account all the facts of the appeal as well

as  the  consistent  view  taken  by  this  Court  on  several

occasions, we have no hesitation in coming to the conclusion

that  acquisition  proceedings  in  so  far  as  the  appellant  is

concerned lapsed with the enactment of the Act.

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22. The judgment and order passed by the High Court is

consequently  set  aside  and  it  is  held  that  the  acquisition

proceedings  initiated  by  the  notifications  dated  12th

November, 1992 and 21st July, 1993 followed by the Award

dated 22nd  February, 1995 have lapsed only in so far as the

appellant is concerned.  

23. The appeal is allowed.  

    .....…………………….J                                          (Madan B. Lokur)

New Delhi;       .....…………………….J   October 12, 2015                          (R.K. Agrawal)

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