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TMI Blog2024 (9) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Justice [ J. B. Pardiwala ] And Justice [ Manoj Misra ] JUDGMENT J.B. PARDIWALA, J.: For the convenience of exposition, this judgment is divided into the following parts: - INDEX I. FACTUAL MATRIX 3 II. SUBMISS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaluation of their houses, trees, structures, etc., standing on the subject land for the purpose of determination of compensation. 5. The acquisition proceedings ultimately came to be challenged by some of the landowners before the High Court by way of CWP No. 2949 of 2009 titled as Premlal Ors. v. State of Himachal Pradesh Ors. and CWP No. 481 of 2010 titled as Chunni Lal Ors. v. State of Himachal Pradesh Ors. inter alia, on the ground that sub-section (4) of Section 17 of the 1894 Act could not have been invoked as the acquisition was not for any public purpose. The High Court passed an ad interim order dated 14.12.2011 granting stay on the acquisition proceedings. 6. The High Court by a common judgment dated 23.06.2016 dismissed the writ petitions referred to above inter alia, on the ground that acquisition of the lands in question was for a public purpose as the said land contained vital raw material (limestone) for the manufacturing of cement and the usage of such mineral wealth would advance the public purpose of infrastructure development. 7. As the writ petitions stood dismissed, the Land Acquisition Collector, Arki proceeded to pass the Award No. 1/2018 dated 08.06.2018 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid by JAL. Thus, the total additional amount determined was Rs. 3,05,31,095/- (Rupees Three Crore Five Lakh Thirty One Thousand and Ninety Five). However, the High Court recorded on 20.06.2022 that the said amount had not been deposited in terms of its order dated 23.05.2022. 11. During the pendency of the acquisition proceedings, JAL entered into an agreement with the Appellant herein for the transfer of the cement project in question. In this regard, a Scheme of Arrangement was signed between the Appellant, JAL and Jaypee Cement Corporation Ltd. (the unit of JAL operating the cement project) (the Scheme ) under the relevant provisions of the Companies Act, 1956. The Scheme was approved by the National Company Law Tribunal ( NCLT ) Mumbai Bench on 15.02.2017 and NCLT Allahabad Bench on 02.03.2017. 12. On 21.06.2017, the Director of Industries, Department of Industries, Government of Himachal Pradesh issued a letter to JAL and the Appellant acknowledging the approval given by the Joint Secretary to the Government of Himachal Pradesh as regards the transfer of the cement plant, as per the Scheme approved by the NCLT and as per the Tripartite Agreement between the Appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired for JAL. Accordingly, the LAC had issued a possession certificate dated 07.06.2019 in favour of JAL and handed over spot possession of the subject land to it under Section 16 of the 1894 Act. The subject land was duly mutated in the name of JAL vide Mutation No. 232 dated 12.11.2020. The High Court failed to take into consideration the fact that the subject land had not been transferred as an asset to the Appellant under the Scheme. To establish the same, the Appellant had placed on record and referred to a Chart of Comparison of Khasra Numbers under the Scheme and the Khasra Numbers which were transferred to JAL under the Award dated 08.06.2018 contending that none of the Khasra Numbers of the subject land or portions thereof overlap with the Khasra Numbers of the land/assets transferred under the Scheme. Therefore, since the Appellant was not enjoying the possession or benefit, if any, of the subject land, the liability of paying the compensation under the Supplementary Award could not have been fastened on it. e. As per the Scheme, the Appellant only purchased certain assets listed in the Schedule-I and Schedule-IA thereof on a slump exchange basis and did not take over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor was it transferred under the Scheme to the Appellant. III. SUBMISSIONS ON BEHALF OF THE RESPONDENT NOS. 1-6 17. Mr. Biju P. Raman, the learned counsel appearing for the Respondent Nos. 1-6 made the following submissions: a. The subject land forms a part of the safety zone area meant for the cement plant that was being operated by the cement unit of JAL. The District Administration acquired 56.14 bhigas of land and the Award for the same was passed on 08.06.2018 by the LAC, Arki. b. The plant/project had been taken over by the Appellant herein by acquiring all the assets and liabilities of JAL in the year 2017 and all movable and immovable assets and liabilities ancillary thereto were transferred to the Appellant, which was affirmed by a tripartite Memorandum of Understanding signed between the Appellant, JAL and the Government of Himachal Pradesh (the MOU ) dated 29.06.2017. c. The High Court vide order dated 12.07.2022 recorded the submission of the Respondent Nos. 1-6 that the payment towards the Award No. 1 of 2018 pertaining to the subject land was deposited by the Appellant. d. The Appellant and JAL are trying to escape from their legal obligation and liability to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NT NO. 11 19. Mr. Ranjit Kumar, the learned senior counsel appearing for the Respondent No. 11 i.e., M/s Jaiprakash Associates Limited (JAL) made the following submissions: a. During the process of passing of the Supplementary Award dated 02.05.2022, JAL had clarified that that it had handed over the cement project to the Appellant on 29.06.2017 and the subject land was acquired for the purpose of mining activities and safety zone. It was asserted that the subject land was an integral part of the cement project. Therefore, whosoever was operating the cement plant and carrying out the mining activities was responsible for maintaining the safety zone. Accordingly, it was the duty of the Appellant to pay the amount determined under the Supplementary Award. b. During the course of the hearing of the Writ Petition No. 2350 of 2018, the Appellant had stated that it did not require the subject land for its projects. The Counsel contended that since JAL had already handed over the cement project to the Appellant and the subject land was acquired for the purpose of safety zone for the said project, the Appellant cannot say that they never had any need for this particular land. c. Although t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Scheme? ii. Whether it was the Appellant or JAL who was legally obliged to pay the compensation amount determined under the Supplementary Award? iii. 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? In other words, what is the scope of Section 101? iv. 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? VII. ANALYSIS A. Scheme of Arrangement between the Appellant and JAL under Sections 391 to 394 respectively of the Companies Act, 1956 21. An analysis of the Scheme agreed between the Appellant and JAL as sanctioned by the NCLT, Mumbai and NCLT, Allahabad respectively is the key to determine who should pay the amount determined under the Supplementary Award dated 02.05.2022. With respect to the Scheme, the following questions need to be looked into: i. Whether the dispute pertaining to payment of the requisite amount under the Supplementary Award arose before or after the Effective Date fixed in the Scheme? ii. Whether the subject land is an integral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Closing Date; (viii) any intellectual property of Transferor1; (ix) litigations pertaining to the JAL Business as of the Closing Date; (x) freehold plot of land admeasuring about 1087 square metres at Varanasi and land admeasuring 24.7 acres outside the Balaji plant in Krishna, Andhra Pradesh; (xi) 180 megawatt power plant at Churk, Uttar Pradesh; (xii) railway siding in Turki, Rewa, Madhya Pradesh; (xiii) Related Party payables or receivables; and (xiv) Ghurma limestone mine, Padrach limestone mine and Bari dolomite mine It is clarified that the guarantee listed in Schedule III B, which shall be updated as of the Closing Date, shall be the only guarantees which shall be taken over by the Transferee on the Closing Date [ Emphasis Supplied ] 24. The parties by way of Clause 1.1(w)(ix) agreed that all litigations pertaining to the business and assets being transferred to the Appellant that arose before or on the Closing Date would not be transferred to the Appellant and will remain with JAL. 25. The aforesaid aspect has been further elaborated under Clause 7 of the Scheme which is reproduced below: 7. LEGAL PROCEEDINGS 7.1 All legal or other proceedings (whether civil or criminal, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherever required. 7.3 The Transferor1, the Transferor2 and the Transferee shall give full and timely cooperation to each other for the pursuit of such case or matter. The Transferee shall promptly give necessary authorization, power of attorney, board resolution, etc. for pursuit of such case or matter to the Transferor1 and the Transferor2. [ Emphasis Supplied ] 26. Clause 7.1 of the Scheme states without any ambiguity that any legal or other proceeding by or against JAL or its unit operating the cement project relating to the JAL Business as defined in Clause 1.1(w), initiated on or arising and pending before the Effective Date shall remain with JAL. 27. It is pertinent to note that the subject land was acquired under the compulsory provisions of the 1894 Act to provide a safety zone for the cement plant and mining areas. Therefore, the land was acquired in connection with the JAL Business. The acquisition proceedings began with the notification issued under Section 4 dated 25.07.2008 which was stayed by the High Court of Himachal Pradesh on 14.12.2011. After the disposal of the writ petitions filed by the original landowners, the operation of the stay on the acquisition proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the Appellant without any such liabilities being covered by the Scheme, not even on the strength of the argument that the subject land was integral to the cement project. 32. We may only say that the issue regarding the ownership of the subject land may be decided between the parties i.e., the Appellant and JAL amongst themselves. In our considered view, disputes regarding the ownership of the subject land, if any cannot be an impediment to the legitimate rights of the original landowners to receive compensation. Therefore, the contention of JAL that the Appellant should pay the amount as determined under the Supplementary Award because the subject land was integral to the cement project is rejected. B. Return of acquired land under the 2013 Act 33. It is the case of JAL that the substantial delay in acquisition of the subject land has frustrated its purpose, and it could not make any use of the land. It was submitted that if the Appellant does not require the said land, then it should be returned to the original landowners and the amount of Rs. 10,77,53,842/- paid under the Award of 2018 should be refunded to JAL. 34. The return of acquired land is governed by Section 101 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries) GoHP that the main dumping site of the project at Baga - Sehnali is situated above village Bhalag and during the unprecedented I I heavy rain season of 2007 08, muck had over flown into the Bhalag Nallah endangering the Safety Zone area under proposed acquisition [ Emphasis Supplied ] 38. Therefore, the acquisition of the subject land was done as a safety measure for the residents of the area and not to be used actively in the cement project. No other use except that the subject land may pose hazard to the residents was envisaged during the acquisition proceedings. JAL cannot pray for return of the land as that would result in endangering the lives and property of the original landowners. We find that the subject land has been in use all throughout the operation of the cement project by serving as a safety zone and the condition of being unutilized is not satisfied. 39. It is not in dispute that the Supplementary Award had to be passed as the compensation for standing crops, structures and other damages for the subject land which could not be fixed and evaluated under the Award No. 1 dated 08.06.2018. The same was also recorded in the Award of 2018. We find that the pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with JAL despite the Scheme being brought into effect on 29.06.2017. The Appellant cannot be directed to make payment of the amount determined by the Supplementary Award for the portions of land which are neither in its ownership nor possession. iv. The High Court also failed to consider the order of this Court in Tonnu Ram (supra) dated 16.12.2019 which imposed a duty on the executing court to examine the purport of the Scheme propounded by the NCLT and pass orders strictly in consonance therewith. It was held that it would be open to the Appellant to take support of the relevant provisions of the Scheme in support of the argument that the liability to pay the dues remains with JAL as per the stated scheme. D. Role of the State under Article 300-A of the Constitution 43. The Right to Property in our country is a net of intersecting rights which has been explained by this Court in Kolkata Municipal Corporation Anr. v. Bimal Kumar Shah Ors., 2024 SCC OnLine SC 968. A division bench of this Court identified seven non-exhaustive sub-rights that accrue to a landowner when the State intends to acquire his/her property. The relevant observations of this Court under the said judgment are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011) 10 SCC 404 that the right to property is now considered to be not only a constitutional or statutory right, but also a human right. This Court held in Tukaram Kana Joshi and Ors. thr. Power of Attorney Holder v. M.I.D.C. and Ors., (2013) 1 SCC 353 that in a welfare State, the statutory authorities are legally bound to pay adequate compensation and rehabilitate the persons whose lands are being acquired. The non-fulfilment of such obligations under the garb of industrial development, is not permissible for any welfare State as that would tantamount to uprooting a person and depriving them of their constitutional/human right. 47. That time is of the essence in determination and payment of compensation is also evident from this Court s judgment in Kukreja Construction Company Ors. v. State of Maharashtra Ors., 2024 SCC OnLine SC 2547 wherein it has been held that once the compensation has been determined, the same is payable immediately without any requirement of a representation or request by the landowners and a duty is cast on the State to pay such compensation to the land losers, otherwise there would be a breach of Article 300-A of the Constitution. 48. In the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of three months for the compensation and a period of six months for the monetary part of rehabilitation and resettlement entitlements listed in the Second Schedule commencing from the date of the award made under section 30: Provided that the components of the Rehabilitation and Resettlement Package in the Second and Third Schedules that relate to infrastructural entitlements shall be provided within a period of eighteen months from the date of the award: Provided further that in case of acquisition of land for irrigation or hydel project, being a public purpose, the rehabilitation and resettlement shall be completed six months prior to submergence of the lands acquired [ Emphasis supplied ] 52. A bare reading of Section 38 as reproduced above 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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