Indore Development Authority Vs Manoharlal & Ors. : Land Acquisition Act

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.    

Important Statute

Section 24 of the LA Act deals with lapse in certain cases. 

In case the award is not given, then  all provisions of the act relating to the determination of compensation shall apply. In case the award is given, then the proceeding shall continue under the provision of the LA Act as if the act is not repealed.

Land acquisition process under Act No. 1 of 1894 shall be deemed to have lapsed in certain cases.–

(1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894,—

(a) where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or

(b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, as if the said Act has not been repealed.

(2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (1 of 1894), where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act:

Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.


1. Interpretation of the word “or” in Section 24(2) where the physical possession of the land has not been taken or the compensation has not been paid brings the confusion that the word “or” means that the lapse will be applied if only one condition is fulfilled or should both be met? Should it be interpreted as “and” ?

2. Meanings of the words “paid” and “deposited” in Section 24(2). Should “paid” be understood as “deposited” ?   Does the duty to pay the compensation require the acquiring authority to deposit money in the landowner’s bank account or in relevant court? Alternatively, can the acquiring authority be relieved of its obligation to pay, once it has tendered the appropriate compensation?

3. What should be the appropriate process of “Physical possession” ?


“Or” v. “And”

The question of law is that should only one or both the conditions have to be met to lapse proceedings. 

  1. The counsels argued for the correct interpretation of “or” in common parlance. “Or” means it would imply only one of the conditions has to be met. 
  2. Justice Mishra relied on Patel Chunibhai Dajibha book and held that the “or” in this context must be interpreted conjunctively. 
  3. He observed that as per G.P. Singh’s principles of statutory interpretation (14th Edition), 2 negatives conditions connected by an “or” in a statute must be construed as “cumulative”. That is “or” should be read as “nor” or “and”. 
  4. The court observed that contradictory consequences would follow from alternative interpretation. 
  5. He reasoned that if “ or” was held to be disjunctive, then absurdities would follow.
  6. Section 16 of the old LA Act- Section 16 vests land in state “free from all encumbrances” once it has made an award under section 11 of LA Act.
  7. In effect, once the state makes an award and takes possession, it becomes the absolute owner of the land.” There then exists no mechanism for reversing the process and lapsing the land acquisition. He added that nowhere in the LA Act, not the 2013 Act, is the payment a pre-condition for taking possession. 
  8. To allow proceedings to lapse after the state has taken possession due to non-payment would contradict the provisions of the LA Act.

What is the meaning of “Paid”?

  1. Section 24 (2) states that the proceeding under the LA Act if the state fails to pay the beneficiary landowners.
  2. However, it does not specifically entail what a payment should entail.
  3. The counsels, in interest of the landowners, argued that payment requires either a completed payment to a landowner or deposit in the relevant courts (if payment is disputed)
  4. Justice Mishra considered compensation under Section 31(1) of the LA Act.
  5. Black Law’s dictionary defines “Tender” as “unconditional offer of money”. The tender may serve the tendering partner from the penalty of non-payment. 
  6. Concluded that once the state tenders the compensation, the land acquisition cannot lapse under Section 24 (2).
  7. Paid could not mean deposited in Section 24. When 2 different terms are used in the same statute, they cannot be given the same meaning as contrary to the legislative intent.

Mode of possession- 

  1. The state must issue a memorandum in order to take possession of the land. 
  2. There is no requirement of the state to forcefully remove the previous landowners from the land in order to claim possession.
  3. Once the state makes an award and issues a memorandum, the title no longer rests with the landowner.
  4. Possession vests with the state as an “indefeasible right”. 
  5. Therefore, no representative of the state has to physically occupy the land.

Main Relevant Extracts

  1. The Act of 2013 repeals and replaces the Land Acquisition Act, 1894, a general law for acquisition of land of public purposes, which had been in force for almost 120 years, with a view to address certain inadequacies and/ or shortcomings in the said Act.
  2. It is urged that Section 24 (2) opens with a non obstante clause carving out an exception only from Section 24 (1). It visualizes that land acquisition proceedings which had been initiated under the LA Act, an award under Section 11 of the LA Act had been made. Consequently, Section 24(2) has no relation to Section 24(1)(a) as it does not contemplate an award under Section 11 of the LA Act at all. It is, therefore, a limited exception to Section 24 (1)(b).
  3. Therefore, if only a minority of the claimants are disbursed with the compensation, such claimants would get benefit of compensation under the Act of 2013 to a limited extent without lapsing. Thus, it is clear that even if the acquisition does not lapse, all the beneficiaries to whom the compensation is payable would be entitled to compensation under the Act of 2013.
  4. It was submitted that Section 24(2) intended a limited retrospective operation: yet such retrospectivity operated and has to be construed narrowly considering the nature and width of Section 24(2) and the drastic consequences flowing from it.
  5. The learned SG referred to Zile Singh v. State of Haryana where a three-judge Bench held that retrospectivity should not be presumed to have been given to a provision, unless it says so clearly, or through necessary implication
  6. It was also emphasized that Section 24(2) is retrospective in nature and cannot be held to be prospective; nevertheless.
  7. It was submitted that Parliament did not intend that settled matters should be undone, and whatever had attained finality, in acquisition matters, should not be reopened. (Para 23)
  8. It was submitted that hitherto, in accord with Pune Municipal Corporation (supra) and Balaji Nagar Residential Assn. v. State of Tamil Nadu most decisions had accepted that the expression “or”- (occurring in Section 24 (2)), where an award has been made under the old Act, 5 years before the commencement of the Act of 2013 “but the physical possession of the land has not been taken or the compensation has not been paid” – is to be read disjunctively, i.e., that if either condition is satisfied, the acquisition would lapse. However, submitted the learned SG, the true and correct interpretation of the term “or” would be that it ought to be construed as a conjunctive word.
  9. It was urged that on a true construction and taking the literal, natural and grammatical meaning of the provisions in the context referred above and keeping in mind the object it can safely be concluded that the words “paid” and “deposit” are expressions of the same act namely making the amount available (i.e. tendering) for being taken by those entitled to it.
  10. It was therefore submitted that the word “paid” does not and cannot mean actual de-facto payment as it would amount to adding words which do not exist in the provision. Similarly, the word “deposit” cannot mean “deposit in the Court” as that was never the legislative intent nor can it be deduced from any accepted interpretive process.
  11. It was submitted that this Court, whilst interpreting Section 24 of the Act of 2013, for the first time in Pune Municipal Corporation [supra] and subsequent judgments, presumed that the word “paid” occurring in Section 24(2) of the Act of 2013 would have to be interpreted as per Section 31 of the LA Act. It is submitted that the said presumption neither has any justification nor any such justification is examined in the said judgments.
  12. It was submitted that the requirements for lapsing (of acquisition)in Section 24(2), are subject to an award under Section 11 of the LA Act being made five years prior to the commencement of the Act of 2013 viz. 1.1.2014. If the award is made and the following two situations occurred, the proceedings will lapse; one, physical possession has not been taken or (to be read as “and”) and two, compensation has not been Paid.
  13. The word used to connect these two conditions is “or”; if it is not read conjunctively, disastrous consequence leading to absurd result would emanate once possession is taken over vesting occurs under Section 16 of the LA Act. Section 24(2) contains no stipulation that such vesting of title of land stands nullified or divested. If the intention of Parliament was to divest the State of its title that had to be stated in plain and clear language. It was emphasized that the conjunctive use of “or” in Section 24 (2) would have not only momentous consequences to the State, but innocent third parties, who would be exposed to the risk of being divested title to the lands and properties, perfected by them, as allottees or subsequent purchasers. Merely because a person who has received compensation clungs on to the possession of the land and the same shall lead to lapsing cannot be the intention of Parliament. Similarly, one who received compensation, is not obliged to return the money to the State in the event of lapsing under Section 24(2) of the Act of 2013. It was urged, therefore, that absence of provision to return the compensation received to Government convincingly points to Parliamentary intent that “or” should be read as “and”; thus, only if neither possession is taken (of acquired lands) nor is compensation paid, (i.e., tendered to the party or parties) would the acquisition under the LA Act lapse. Learned counsel also relied on several decisions in this Context.


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