Day 11 Arguments

Land Acquisition

November 27th 2019

In today’s hearing, Sr. Adv. Shyam Divan made his submissions on what the payment of compensation under the 2013 Land Acquisition Act entails. This is a critical issue as the Solicitor General (who appeared for the state of Haryana) had sought to argue that the obligation to pay compensation is completed once the payment is deposited in the treasury. Challenging this, Sr. Adv. Divan argued that for the payment to be completed, it has to be made to the bank account of the land owner.


Reliance on Section 31 of 1894 Act

The day’s arguments started off with Sr. Adv. Divan pointing out the nature of section 31 of the 1894 Land Acquisition Act (this provision under the 1894 Act provided for the payment of compensation upon the passing of an award during the acquisition proceedings and the deposit of the compensation in the reference court under certain contingencies). As per him, the provision lays down a framework under which the compensation has to be paid either directly to the entitled persons or to the reference court in case such persons refuse to receive compensation. Nowhere, stated Sr. Adv. Divan, has the provision provided for the payment of compensation to the treasury.


At this point, the Bench enquired whether a deposit should be made to the reference court even if the entitled persons have not sought a reference under section 18. To this, Sr. Adv. Divan pointed to the language used in Section 31 which indicates that the intent is to have the money deposited in the court to which the reference would be submitted irrespective of whether the reference is actually made or not. Thus, he submitted that it is the duty of the concerned authority to find out the concerned reference court and deposit the compensation there.

Validity of Standing Orders

Sr.Adv.Divan then sought to counter the arguments made by the Solicitor General on the mechanism provided under the Standing Orders issued by the Government (as per SG’s submissions, Standing Orders allow for deposit into the treasury). He argued that if a Standing Orders provide for deposit of compensation in the treasury, the same should be deemed to be outside the competence of the body which framed the said Orders. He placed reliance on section 55 of the 1894 Act to assert that it is beyond the competence of the Government to make rules which provide for deposit of payment in the treasury.


Nevertheless, the Bench pointed out that the Standing Orders themselves have not been challenged and it was pointless to go into this question. The Bench further observed that if it were to accept the counsel’s submissions, all acquisition proceedings, where deposit has been made into the treasury, would lapse.


Refund of compensation

The Bench was keen to know the practical impact of some of the propositions advanced by Sr.Adv. Divan. For instance, it enquired as to what would happen if payment is made with the possession still remaining with the land owner. Particularly, it wondered if the person can be made to return the compensation to the government. Sr.Adv. Divan responded that in such cases, the government can frame rules to ensure that such compensation is returned. Nevertheless, the Bench pointed out that since there was no provision in the Act providing for return of compensation, it would not be possible for the government to frame such a rule. Sr.Adv. Divan conceded to this observation of the Bench.


It was also possible for the landowner to refuse repaying the compensation on the ground that they were deprived of the enjoyment of the property, stated the Bench.

Proviso to Section 24

Thereafter, Sr. Adv. Divan submitted that the proviso appearing in section 24 and section 24 itself override section 24(1). He envisaged three scenarios involving acquisitions under the 1894 Act and their outcomes under the 2013 Act:

  • If no award has been passed under the 1894 Act – section 24(1)(a) will apply
  • If an award has been passed under the 1894 Act but no compensation has been paid –section 24(1)(b) to apply
  • If an award has been passed under the 1894 Act and compensation has been paid but physical possession not taken – section 24(2) to apply


He then went on to cite the decision in Padmasundara Rao to argue that if the legislature does not specifically exclude a time period, the same cannot be excluded for the purpose of computation. Thus, any time lost to injunctions passed by a court cannot be excluded while determining the 5 year time period for the purpose of section 24(2), submitted Sr. Adv. Divan.


The oral arguments will resume tomorrow.

(Court reporting by Abhishek Sankritik)