The Supreme Court has ruled that disputes between rival claimants over entitlement and apportionment of land acquisition compensation cannot be resolved merely on the basis of physical possession or an “enjoyment survey”.
The bench of Justice J.B. Pardiwala and Justice Manoj Misra has observed that where competing claims regarding title and entitlement to compensation exist, the dispute must be adjudicated by the competent civil court in accordance with the statutory mechanism under the Land Acquisition Act, 1894.
The bench set aside the judgment of the Telangana High Court which had upheld a series of Lok Adalat awards concerning compensation for land acquired for mining operations.
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The bench found that the awards could not be treated as valid settlements because the rival claimants were neither all made parties to the settlement nor signatories to the awards.
The dispute arose out of acquisition of approximately 489.04 guntas of land in Kommepalli, Sathuapalli Mandal, for mining operations undertaken by the Singareni Collieries Company Limited. Notifications under Section 4(1) of the Land Acquisition Act, 1894, were issued on December 19, 2010.
The Land Acquisition Officer subsequently passed an award dated December 30, 2013, determining compensation at ₹3,48,935 per acre. Since disputes existed regarding title and apportionment of the compensation, the matter was referred to the Principal District Judge, Khammam under Sections 30 and 31 of the 1894 Act.
During the pendency of proceedings before the High Court, the acquiring body proposed a settlement. The matter was consequently referred to the High Court Legal Services Committee. The claimants agreed to receive enhanced compensation of ₹10,95,000 per acre, while steps were proposed for resolving the underlying title dispute through the Lok Adalat mechanism.
A coordination meeting was held on May 30, 2015, involving representatives of the claimants, the Land Acquisition Officer, senior officials of Singareni Collieries Company Limited and other authorities.
Among other things, an “enjoyment survey” was proposed to determine the individual extent of land based on title deeds, along with surveys concerning structures, borewells and trees. The authorities also agreed to conduct a Gram Sabha and thereafter organize a Lok Adalat for resolution of the dispute.
Following the process, the Lok Adalat Bench at Khammam passed 16 awards on March 29, 2016, concerning approximately 363 guntas forming part of the reference proceedings. The High Court subsequently disposed of the original writ proceedings, recording that the compensation claims had been settled before the Lok Adalat.
However, some claimants subsequently challenged the awards, principally contending that the Land Acquisition Officer had failed to determine who was legally entitled to compensation and in what proportion.
A significant development came when the Principal District Judge, Khammam, communicated with the High Court in November 2017.
The District Judge specifically stated that all disputed title holders had neither been made parties to the settlement before the Lok Adalat nor signed the awards. The communication further recorded that the Lok Adalat awards had been passed in the names of individual interest holders without recording terms of compromise or settlement between the rival claimants.
According to the communication, the reference to the Lok Adalat had two distinct components: settlement regarding the quantum of compensation and settlement among the rival title holders concerning entitlement to the compensation. However, all disputed title holders were not joined in the compromise and were not signatories to the awards.
The High Court nevertheless upheld the awards. It treated the proceedings as effectively resembling a representative or class action proceeding under Order I Rule 8 of the Code of Civil Procedure, 1908, and concluded that the awards could be regarded as settlements reached with the consent of the parties.
The Supreme Court disagreed with the High Court’s approach.
The Court examined Sections 29, 30 and 31 of the Land Acquisition Act, 1894, which govern apportionment and payment of compensation where multiple persons claim an interest in acquired land.
Under Section 29, persons interested in compensation can agree among themselves regarding its apportionment. But where such an agreement does not exist and a dispute arises regarding the persons entitled to compensation or the manner of apportionment, Section 30 permits the Collector to refer the dispute to the competent civil court.
The Supreme Court emphasized that once compensation is deposited in court because of a dispute concerning title or apportionment, the Collector’s role concerning apportionment comes to an end. What remains is a dispute among the interested persons regarding their respective entitlement to the compensation.
A key principle laid down by the Court was that an agreement concerning apportionment under Section 29 necessarily requires the concurrence of all persons interested in the apportionment.
The Court held that a partial or truncated consensus involving only some claimants cannot qualify as an agreement under Section 29 because those excluded from the arrangement continue to remain in dispute.
Applying this principle, the Court held that the Land Acquisition Officer had correctly referred the dispute to the civil court under Section 30 because the existence of rival claims demonstrated that there was no complete agreement among the claimants.
One of the most significant aspects of the judgment concerns the use of an “enjoyment survey” to determine who should receive compensation.
The Supreme Court explained that an enjoyment survey essentially records physical occupation of land at a particular point in time. It does not establish the legal title, right or interest under which the person occupies the property.
Therefore, the Court held that the results of such a survey cannot conclusively determine entitlement to compensation.
The Court stressed that physical possession can arise in a variety of circumstances and does not necessarily establish ownership or a legally enforceable interest in the property. Consequently, public compensation cannot be distributed simply to the person who happens to be in possession or appears before the authorities first.
The Supreme Court also rejected the argument that the Lok Adalat proceedings could be treated as a representative proceeding similar to a class action under Order I Rule 8 CPC.
The Court observed that the essential foundation of a representative proceeding is a common interest or common grievance among the persons being represented. That principle cannot be extended to a situation where the claimants are actually rivals fighting against each other over entitlement to compensation.
In the present matter, the claimants did not have a common interest in relation to the compensation. Instead, their interests were adverse because each claimant’s entitlement potentially affected the entitlement of the others.
The Court therefore held that treating the rival claimants as one class effectively eliminated the very dispute that the Section 30 reference was intended to resolve.
The Court further relied on Regulation 17(2) of the NALSA Lok Adalat Regulations, 2009, which requires an award to bear the signatures of the parties between whom the settlement has been arrived at.
In the present case, there was nothing on record to demonstrate that all parties involved in the dispute over payment of compensation had agreed to the settlement. The Court consequently held that the awards could not be treated as binding upon claimants who had not signed them.
The Supreme Court also reiterated the principle that a Lok Adalat award binds the parties who actually enter into the settlement. A person who has not agreed to the settlement cannot ordinarily be compelled to accept its terms.
The Supreme Court ultimately concluded that the Telangana High Court had erred in upholding the Lok Adalat awards.
The Court found two fundamental defects. First, the awards did not constitute settlements between all the claimants whose competing claims had been referred under Section 30. Second, the awards lacked the signatures of all parties between whom the alleged settlement was supposed to have been reached.
The Court also noted that once a dispute regarding apportionment had been referred under Section 30, the acquiring body was no longer the party against whom the rival claimants were litigating their entitlement. The dispute thereafter was essentially between the competing persons interested in the compensation.
Allowing the appeal, the Supreme Court set aside the impugned judgment of the Telangana High Court and remitted the matter to the Principal District Judge, Khammam, for a de novo hearing of the reference.
The Supreme Court directed that the proceedings be completed expeditiously, preferably within six months from the date of pronouncement of the judgment, after duly putting all concerned parties to notice. The reference court was directed to determine the apportionment issue independently and without being influenced by the observations made by the Supreme Court.
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