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Necessity To Review The Policies For Utilizing The Acquired Land After Indore Development Authority V. Manoharlal By The State Governments

The Land Acquisition Act, 1894 has governed the field of acquisition for more than 120 years and the country has witnessed an era of Compulsory Acquisition as the Act bestowed unbridled and wide powers in the State for acquiring the land and at the same time did not contain adequate provisions for compensation, rehabilitation, and resettlement of the displaced persons. For removing the shortcomings, the Parliament repealed and replaced more than a century old Act by enacting Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Act of 2013 brought numerous changes in the field of acquisition and also contained a saving clause for acquisition proceedings initiated/ concluded under the Land Acquisition Act, 1894 in the form of Section 24. On one hand, where the acquisition initiated under the Act of 1894 were saved as per Section 24(1), on the other hand, Section 24(2) of the Act of 2013 provided for the provision of deemed lapsing of the acquisition proceedings already concluded under the Act of 1894 in case the compensation has not been paid or the physical possession of the land has not been taken.

For a long time Section 24(2) of the Act of 2013 remained subject to different interpretations by way of judicial pronouncements, and the controversy cropped up around the same has been now settled by the 5-Judge Constitution Bench of the Hon'ble Supreme Court of India in Indore Development Authority v. Manoharlal and others, AIR 2020 SC 1496. The Judgment besides being a landmark as far as the interpretation of Section 24(2) of the Act of 2013 is concerned, has elaborately discussed various other aspects relating to the law of acquisition. One such facet which had remained a matter of uncertainty was when does the land vest in the State and what is the valid mode of taking possession of the land and further does possession taken by way of recording panchnama amounts to `physical or actual possession' in view of the fact that the possession has been retained by the original landowner.

Before touching aspect of the mode of taking possession, it is imperative to discuss the significance of possession as far as the law of land acquisition is concerned. Section 16 of the Act of 1894 provides that with the taking of possession of the land, the land vests in the State free from all encumbrances. The word 'vesting' has many connotations, however in general parlance, it means having obtained an absolute and indefeasible right, it can be vesting of title, possession, or limited interest in the context in which it has been used in the particular Act.^[1*] As far as the Act of 1894 is concerned, the vesting is related to possession of the land which implies that the land vests in the State and that too free from all encumbrances, the moment the possession of the land is taken. The title of the landholder ceases and the state becomes the absolute owner and in possession of the property. Thereafter there is no control of the landowner in the property^[2*].

[1* National Textile Corporation Ltd. v. Nareshkumar Badrikumar Jagad & Ors. 2011(12) SCC 695]

[2* Para 256, Indore Development Authority v. Manoharlal and others AIR 2020 SC 1496.]

The Hon'ble Supreme Court has further held that the act of vesting of the land in the State is with possession, any person retaining the possession, thereafter, has to be treated as a trespasser and has no right to possess the land which vests in the State free from all encumbrances.^[3*] Suffice to mention here that the Act of 1894 does not contain any provision to withdraw from the acquisition once the land has vested in the State. The only provision provided is Section 48 which empowers the State to withdraw from the acquisition but only in cases where the possession of the land has not been taken. This further affirms the view that once the land is vested, there can be no divesting because even the power under Section 48 of the Act of 1894 cannot be exercised by the government to withdraw from the acquisition. This had been a settled position of law that no power under section 48 can be exercised after the possession of the land is taken.^[4*] While reiterating the view taken earlier, the Constitution Bench went on to hold that that once the land vests in the State, it cannot be divested, even if there is some irregularity in the acquisition proceedings. There is nothing in the Act of 1894 to show that non-compliance thereof will be fatal or will lead to any penalty.^[5*]

[3* Para 244 Indore Development Authority v. Manoharlal and others AIR 2020 SC 1496.]

[4* Mysore Urban Development v. Veer Kumar Jain 2010 (5) SCC 791; Northern Indian Glass Industries v. Jaswant Singh and Ors., (2003) 1 SCC 335; Gulam Mustafa v. State of Maharashtra, (1976) 1 SCC 800]

[5* Para 141 Indore Development Authority v. Manoharlal and others AIR 2020 SC 1496

The aforesaid settled position of law takes us to the next facet i.e. what is the valid mode of taking possession. The common practice to take possession in the acquisition cases is by recording the memorandum or panchnama. However, despite it being a recognized mode of taking possession, there had always remained uncertainty not only in judicial pronouncements but also in the State Machinery as in some instances the recording of panchnama was construed as possession, however, at times the factum of the possession having been retained by the landowner, even if the panchnama had been recorded, was found suffice to use the power under Section 48 of the Act of 1894. It is pertinent to mention that the State Government had formed the policies for release of land from acquisition taking aid of Section 48 of the Act of 1894, as there is no provision for release in the Act itself, wherein the landowner has remained in the possession of the land despite there being the recording of the memorandum.

However, the law has undergone a sea change after the authoritative pronouncement in Indore Development Authority v. Manoharlal (Supra) thereby categorically observing that when the State acquires the land and draws up a memorandum of taking possession, it amounts to taking the physical possession of the land. To quote^[6*]:

'.....On the large chunk of property or otherwise which is acquired, the Government is not supposed to put some other person or the police force in possession to retain it and start cultivating it till the land is used by it for the purpose for which it has been acquired. The Government is not supposed to start residing or to physically occupy it once possession has been taken by drawing the inquest proceedings for obtaining possession thereof. Thereafter, if any further retaining of land or any re-entry is made on the land or someone starts cultivation on the open land or starts residing in the outhouse, etc., is deemed to be the trespasser on land which in possession of the State. The possession of trespasser always inures for the benefit of the real owner that is the State Government in the case'.

[6* Para 245, Indore Development Authority v. Manoharlal and others AIR 2020 SC 1496]

Once this is the legal position, a fundamental question arises on the power of the State Government to release the acquired land given the respective policies, framed under Section 48 of the Act of 1894 as in the majority of cases for which the power was being exercised earlier, the panchnama had already been recorded and the land was released in accordance with the policy because the landowner had retained the possession.

In view of the Indore Development Authority (Supra) the title of the landowner ceases once the possession is taken by recording panchnama and thus, no power under Section 48 of the Act of 1894 can be exercised as with taking of possession, the land vests in the State and the withdrawal from acquisition can be made only when the possession of the land has not been taken. Suffice to mention that there is no other provision in the Act dealing with the return of the land to the landowner. The position regarding the return of the land to the erstwhile owner after having achieved the public purpose is also well settled in a series of judgments. The Hon'ble Supreme Court in State of Kerala v. M. Bhaskaran Pillai, 1998(1) R.C.R.(Civil) 651 while answering the question as to whether the government can assign the land to erstwhile owners had observed that it is settled law that where the land is acquired for a public purpose and the said public purpose has been achieved, the rest of the land can be used for any other public purpose and if the land is not required for any other purpose, it should be put to public auction.

Therefore, any release being made now would be lacking the backing of any law and in such eventuality, even the provision contained in Section 101 of the Act of 2013, which provides for the return of the unutilized land to the original landowner cannot be resorted to as the said power has been vested with the Government to be used in respect of the acquisition carried under Act of 2013 only and thus, cannot be made applicable to an acquisition made under Act of 1894.

Therefore, the State Governments has herculean task to reframe the policies for utilizing the vast tracts of land at their disposal in view of the aforesaid proposition of law and thus, should take a conscious decision for utilizing the land in the best public interest keeping in consideration the Directive Principles of State policy aiming at social and economic welfare.

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