The Court clarified the correct interpretation of Section 24(2) of the 2013 Land Acquisition Act. Among other things, it held that land acquisition proceedings cannot lapse merely because the State could not deposit compensation in a landowner's account.
In March 2019, the Supreme Court formed a Constitution Bench to examine the correctness of two 3 judge Bench decisions dealing with lapsing land acquisition due to compensation disputes.
The controversy arose on 8 February, 2018, when a three judge Bench by a 2:1 majority in Indore Development Authority v. Shailendra (Dead) set aside a 2014 decision in Pune Municipal Corporation v. Harakchand Misirmal Solanki (2014) by another three judge Bench.
In Pune Municipal Corporation, the Court had held that land acquisition can void under section 24(2) of the Land Acquisition Act of 2013, if compensation has not been deposited in the bank accounts of the land owners or with the court. It was categorically clarified that money in the government treasury will not be treated as a payment to a landowner.
But by a 2:1 judgment in Indore Development Authority, the Court held that land acquisitions could not lapse due to a land-owner's refusal to accept compensation within 5 years. It held that once compensation has been tendered, but the person refuses to accept it, this amounts to a discharge of obligation under section 31(1) of the Land Acquisition Act, 1894. In addition, the majority judges - Justices Mishra and AK Goel held the previous 2014 Pune Municipal Corporation judgment to be ‘per incuriam’, while Justice Shantanagoudar dissented.
The new judgment created chaos as it meant reopening the various High Court decisions that were settled under the principle evolved in Pune Municipal Corporation.
Following Indore Development Authority, when a similar land acquisition matter came up before a 3 judge Bench on 21 February, 2018 in Haryana v. GD Goenka Tourism Corporation, Jutices Madan Lokur and Kurian Joseph raised judicial impropriety concerns. They also sat on the Pune Municipal Corporation Bench.
Following the eruption of the controversy, the then CJI Dipak Misra on February 26, 2018 formed a Constitution Bench to decide if the 2018 Bench could have invalidated the earlier decision of the 2014 Bench. The matter was not taken up during the remainder of his tenure and was only subsequently listed by the succeeding Chief Justice Ranjan Gogoi.
On 12 October 2019, the court listed the matter for 15 October before a Bench comprising Justices Arun Mishra, Indira Banerjee, Vineet Saran, M.R. Shah and Ravindra Bhat.
Before final arguments could begin, various counsels argued that Justice Arun Mishra ought to recuse himself from the Bench. They submitted that as he had led the the Bench that delivered in the 2018 Indore Development Authority judgment, he suffered from a perceived bias. On 24 October 2019, he delivered a more than 60-page order dismissing these arguments.
On 4 March 2020, the five-judge Bench overturned Pune Municipal Corporation and held that land acquisition proceedings cannot lapse merely due to a failure to pay compensation to landowners. It held that a lapse will only occur if the State also fails to take physical possession of the land. Further, it held that payment does not require the State to deposit money in a landowner's account - tendering compensation is sufficient. Justice Mishra authored the judgment.
The judgment does not address the issue of whether a Bench can set aside a judgment of an earlier Bench of the same strength.
NOTE regarding "LAWYERS" section below: for simplicity's sake we have grouped all counsels together which argued in favour of the State under 'respondents' and all counsels who argued in favour of landowners under 'petitioners'. These counsels did not technically always represent respondents or petitioners.
1. 1) Can a Supreme Court decision on a question of law be overruled by a subsequent Supreme Court bench of the same strength? Or does the subsequent bench need to refer the matter to the Chief Justice for formation of a larger bench?
2. 2) Does the government's land acquisition lapse on non-deposit of compensation under the 2013 Land Acquisition Act?