Land acquisition proceedings lapse where possession is not taken and compensation remains unpaid.

The petitioners claimed ownership and possession of agricultural land situated at Village Kumerdi, Tehsil Sanwer, District Indore, acquired for Indore Development Authority’s Town Development Scheme No. 139. The IDA initiated the scheme under Section 50 of the Madhya Pradesh Town and Country Planning Act, 1973, followed by notifications under Sections 4 and 17 of the Land Acquisition Act, 1894, dispensing with the Section 5-A inquiry. A declaration under Section 6 was published on 29 October 2002 and an award was passed on 23 November 2004.

The petitioners challenged the acquisition in earlier proceedings. In Writ Appeal No. 321/2006, the Division Bench set aside the invocation of urgency to the extent relevant and permitted the petitioners to raise objections under Sections 5-A and 48 of the 1894 Act. The Supreme Court subsequently granted liberty to approach the competent authority and also permitted the petitioners to raise the issue under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The petitioners filed objections under Sections 5-A and 48 in 2016, but those objections remained undecided. They disputed the IDA’s claim that possession had been taken pursuant to a possession panchnama dated 10 October 2005. One of the alleged witnesses, Ramprasad, later filed an affidavit stating that he had not visited Kumerdi and had signed documents concerning land at Bhorasala.

The petitioners further asserted that compensation had neither been paid nor validly deposited, that they remained in possession and continued cultivation, and that the original purpose of acquisition had changed after the Master Plan and completion of the MR-10 road and flyover.

1. Whether the acquisition proceedings stood vitiated or lapsed because the petitioners’ objections under Section 5-A of the Land Acquisition Act, 1894 were not adjudicated after the Division Bench permitted them to raise such objections.

2. Whether physical possession of the land had been legally taken, notwithstanding the disputed possession panchnama and the petitioners’ continued possession.

3. Whether non-payment or non-tendering of compensation attracted Section 24(2) of the 2013 Act and resulted in lapse of the acquisition proceedings.

4. Whether the change in the development plan and the alleged alteration or disappearance of the original public purpose invalidated or rendered unnecessary the acquisition.

5. Whether the High Court could exercise jurisdiction under Article 226 to quash the acquisition proceedings in view of the disputed questions concerning possession and compensation.

The Court applied Sections 4, 5-A, 6, 9, 11-A, 31 and 48 of the Land Acquisition Act, 1894, holding that an affected landowner is entitled to a meaningful hearing under Section 5-A and that further acquisition proceedings cannot validly proceed before such objections are adjudicated.

Section 48 permits withdrawal from acquisition where possession has not been taken.

Section 24(2) of the 2013 Act was considered in light of Indore Development Authority v. Manoharlal, (2020) 8 SCC 129, which held that lapse ordinarily requires failure to take possession and failure to pay compensation, and that the statutory mode of possession is through a lawful possession memorandum or panchnama.

The Court relied on Gaurav Agroplast Ltd. v. State of M.P., W.P. No. 603/2000, for the principle that a defective or unsupported possession panchnama may amount to an empty formality.

It also relied on Rajesh Kumar Tiwari v. State of M.P., W.P. No. 11203/2015, regarding non-service and non-payment of compensation, Narpat Singh v. Jaipur Development Authority, (2002) 4 SCC 666, and Lal Bahadur v. State of U.P., (2018) 15 SCC 407, concerning use of acquired land for the notified public purpose, and Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675, concerning the supervisory jurisdiction of the High Court under Article 226.

The Court found that the earlier Division Bench order had effectively restored the matter to the stage at which the petitioners were entitled to pursue objections under Section 5-A and Section 48. Since those objections had remained pending for several years, the subsequent proceedings, including the award relied upon by the respondents, could not be treated as legally conclusive against the petitioners.

The Court also declined to accept the possession panchnama as reliable evidence because it was not signed by the petitioners or their representatives, the alleged witness had specifically denied witnessing possession at Kumerdi, and the petitioners’ continued cultivation and possession were supported by the record and photographs.

The respondents’ deposit of compensation with the Collector was held insufficient to establish payment within the meaning of Section 31, particularly when the amount had neither been tendered to the petitioners nor deposited before the competent reference court.

Applying Section 24(2) of the 2013 Act and the factual finding that neither lawful possession nor compensation had been established, the Court concluded that the acquisition had lapsed.

The Court further held that the notified purpose had materially changed: the MR-10 road and flyover had already been completed, while the remaining proposed industrial or development purposes were no longer consistent with the subsequent development plan. This supported the conclusion that continuation of the acquisition was arbitrary and legally unsustainable.

In these circumstances, the Court held that Article 226 jurisdiction could be exercised because the record disclosed arbitrariness, violation of the petitioners’ constitutional right under Article 300-A, and failure to comply with mandatory acquisition procedure.

It held that the respondents had failed to establish lawful taking of possession or payment of compensation, that the Section 5-A objections had remained undecided, and that the original public purpose had materially changed.

The petitioners were consequently permitted to use and enjoy their lands, subject to the respondents’ liberty, if otherwise permissible in law, to initiate fresh acquisition proceedings under the 2013 Act.