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2024 (9) TMI 1315 - SC - Indian LawsRequirement to pay the requisite amount towards compensation as determined in the Supplementary Award - Scheme of Arrangement between the Appellant and JAL under Sections 391 to 394 of the Companies Act, 1956 - HELD THAT - A bare reading of Section 38 of Companies Act, 2013 indicates that the payment of full and final compensation to the land owners is a precursor to taking possession of the land sought to be acquired from such persons. It is clear from the facts that the acquisition proceedings herein failed to confirm to this statutorily mandated sequence of events. It is regrettable that the State of Himachal Pradesh, being a welfare state, did not ensure payment of compensation to the Respondent Nos. 1-6 before taking possession of their land. In fact, the landowners had to approach the High Court to seek directions to the LAC for passing of the supplementary award which was finally passed on 02.05.2022 that is, after a period of almost four years from the date of passing of the Award of 2018. Section 41 necessitates an agreement between the appropriate government and the company for whose purpose the land is being acquired. One of the purposes of such an agreement is to ensure that payment towards the cost of acquisition is made by the company to the appropriate government and it is only upon such payment that the land is transferred to the company. Thus, it can be said that JAL was mandated to make the requisite payment to the State of Himachal Pradesh prior to the subject land being transferred to it. Thus, even before the amount of compensation could be determined by way of a supplementary award as stipulated in the Award dated 08.06.2018, the subject land stood transferred to JAL - this is in contravention of Section 38 of the 2013 Act and Section 41 of the 1894 Act respectively. The impugned order dated 12.07.2022 passed by the High Court is set aside - appeal allowed.
Issues Involved:
1. Whether the subject land and all other liabilities associated with it were transferred to the Appellant in terms of the Scheme? 2. Whether it was the Appellant or JAL who was legally obliged to pay the compensation amount determined under the Supplementary Award? 3. Whether the land in terms of Section 101 of the 2013 Act can be returned to the Respondent Nos. 1-6 at this stage under the scheme of the Act? 4. Whether the State of Himachal Pradesh, being a welfare state, had the responsibility to ensure full payment of compensation amount determined under the Supplementary Award dated 02.05.2022? Issue-wise Detailed Analysis: I. Scheme of Arrangement between the Appellant and JAL under Sections 391 to 394 of the Companies Act, 1956 Analysis: - The Scheme of Arrangement between the Appellant and JAL was sanctioned by the NCLT, Mumbai and Allahabad respectively. The Effective Date of the Scheme was 29.06.2017. - Clause 1.1(w) of the Scheme defines the "JAL Business" and lists the assets and liabilities transferred to the Appellant. Clause 7.1 specifies that all legal or other proceedings by or against JAL initiated or pending before the Effective Date shall remain with JAL. - The subject land was acquired under the 1894 Act for a safety zone for the cement plant, with acquisition proceedings starting before the Effective Date. The liability to pay compensation under the Supplementary Award falls within the meaning of 'other proceedings' under Clause 7.1. - JAL paid the compensation amount under the Award of 2018 without contesting its liability. Therefore, JAL cannot now argue that the Appellant should pay the amount determined under the Supplementary Award. - The subject land was not covered under the list of assets transferred to the Appellant under the Scheme and remains in JAL's ownership. Therefore, the liability to pay compensation under the Supplementary Award cannot be imposed on the Appellant. II. Return of Acquired Land under the 2013 Act Analysis: - JAL contended that the substantial delay in acquisition frustrated its purpose and requested the return of the land to the original landowners. - Section 101 of the 2013 Act governs the return of unutilized land, requiring the land to remain unutilized for at least five years from the date of taking possession. - The land was acquired as a safety zone for the cement plant, a purpose it has served throughout. Therefore, the condition of being unutilized is not satisfied. - The Supplementary Award was a continuation of the Award of 2018, and JAL cannot now question its liability under the Supplementary Award or request the return of the land. III. Impugned Order of the High Court Analysis: - The High Court directed the Appellant to pay the compensation amount determined under the Supplementary Award and recover it from JAL if permissible. - The High Court misapplied Clause 7.1 of the Scheme and incorrectly recorded that the Appellant had made the payment under the Award of 2018. - The ownership of the subject land continued with JAL, and the Appellant cannot be directed to pay compensation for land not in its ownership or possession. - The High Court failed to consider the order of the Supreme Court in Tonnu Ram, which emphasized the need to examine the Scheme's purport in determining liability. IV. Role of the State under Article 300-A of the Constitution Analysis: - The Right to Property includes the duty of the State to provide fair compensation expeditiously. - The State of Himachal Pradesh failed to ensure payment of compensation to the landowners, violating their rights under Article 300-A. - The State should have made the compensation payment from its treasury and recovered it from JAL, instead of making the landowners pursue powerful corporate entities. - The State's failure to complete the compensation determination before taking possession of the land contravened Section 38 of the 2013 Act and Section 41 of the 1894 Act. Conclusion: - The appeal is allowed, and the High Court's order dated 12.07.2022 is set aside. - The State of Himachal Pradesh and the Land Acquisition Collector, Arki, are directed to pay the compensation amount of Rs. 3,05,31,095/- along with 9% interest from 02.05.2022 within fifteen days. The State shall recover this amount from JAL.
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