Lok Adalat Cannot Decide Rival Land-Compensation Claims Without Consent of All Claimants, Rules Supreme Court

For Singareni Collieries Company Ltd.’s mining operations, the State acquired approximately 489.04 acres in Kommepalli and Kistaram villages under the Land Acquisition Act, 1894.

The Land Acquisition Officer determined compensation at ₹3,48,935 per acre and, because of disputes concerning title and apportionment, referred the matter to the civil court under Sections 30 and 31 of the Act, 1894.

During the pendency of writ proceedings challenging the acquisition award, the acquiring body offered enhanced compensation of ₹10,95,000 per acre.

The Lok Adalat subsequently passed 16 awards in favour of individual claimants, but the awards did not record any compromise among the rival title claimants and were not signed by all disputing parties.

The High Court upheld the awards, treating the proceedings as analogous to a representative or class action under Order I Rule 8 of the CPC.

Whether the High Court was correct in referring the dispute regarding title and apportionment of compensation, already pending before the civil court under Sections 30 and 31 of the Land Acquisition Act, 1894, to the Lok Adalat in the manner adopted

Whether Order I Rule 8 of the CPC, or the principles underlying it, could be applied to treat the Lok Adalat awards as a representative settlement binding on non-signatory and rival claimants

Sections 29, 30 and 31 of the Land Acquisition Act, 1894 provide the governing scheme: apportionment may be settled by agreement only when all persons interested concur under Section 29; otherwise, a dispute regarding apportionment or entitlement to compensation must be referred to and adjudicated by the civil court under Section 30, while the compensation must be deposited in court under Section 31.

The Court relied on G.H. Grant (Dr) v. State of Bihar , holding that the Collector cannot finally adjudicate conflicting rights to compensation and that such disputes must be resolved by the competent court.

The Court relied on Sharda Devi v. State of Bihar , for the principle that an apportionment agreement is binding only among persons who consent to it.

Under Regulation 13(6) of the NALSA Lok Adalat Regulations, 2009, a Lok Adalat cannot adjudicate disputed claims but may facilitate compromise or settlement; Regulation 17(2) requires the award to bear the signatures of the parties to the settlement.

Section 19(5) of the Legal Services Authorities Act, 1987 empowers a Lok Adalat to facilitate compromise or settlement, not to determine rival title claims.

Order I Rule 8 of the CPC presupposes a community or commonality of interest among the persons represented and cannot transform adverse rival claims into a representative proceeding.

The reference under Sections 30 and 31 itself demonstrated that the Collector had identified a genuine dispute concerning the persons entitled to compensation and its apportionment; once the compensation was deposited, the dispute was exclusively between the rival claimants, and the acquiring body ceased to be the opposing party.

The Lok Adalat awards did not embody a valid Section 29 agreement because all persons interested were not joined, the rival claimants had not consented, and the appellants had not signed the awards.

The enjoyment survey could establish only physical possession at the time of the survey; it could not conclusively determine legal title or entitlement to compensation.

By relying on the survey and title documents to distribute compensation, the Lok Adalat effectively adjudicated the very dispute that had been referred to the civil court, contrary to its statutory and regulatory limits.

The High Court’s invocation of Order I Rule 8 was also erroneous because the claimants had adverse and competing interests rather than a common grievance or community of interest capable of representative protection.

The High Court erred in treating the proceedings as analogous to a representative action under Order I Rule 8 of the CPC.

The impugned High Court judgment was set aside, and the matter was remitted to the Principal District Judge, Khammam, for a de novo hearing of the reference after issuing notice to all concerned parties.

The reference was directed to be decided expeditiously, preferably within six months from the date of judgment and uninfluenced by the Supreme Court’s observations.

The appeal was accordingly allowed.