Holding

The Scheme of Arrangement retains the liability for the Supplementary Award with JAL, Section 101 does not apply, and the State must pay the compensation to the landowners and recover it from JAL.

Summary

The Supreme Court examined a dispute arising from the acquisition of 56.14 bighas of land for a safety zone around a cement plant, where the original award of compensation was paid by Jaiprakash Associates Ltd (JAL) and a supplementary award was later issued. The key issue was whether the liability for the supplementary compensation fell on Ultra‑Tech Cement Ltd (the appellant) or JAL, given the Scheme of Arrangement approved by the NCLT that transferred the cement business but excluded certain liabilities. The Court held that the Scheme’s Clause 7.1 expressly retained pending litigation and related liabilities, including the land‑acquisition compensation, with JAL because the acquisition proceedings began before the Scheme’s effective date. It further ruled that Section 101 of the 2013 Act did not apply because the land was utilized as a safety zone, and that the State of Himachal Pradesh, as a welfare state, must ensure prompt payment of compensation under Article 300‑A. Consequently, the State and the Land Acquisition Collector were directed to pay the supplementary compensation to the landowners and recover the amount from JAL.

Issues considered

Whether the subject land and associated liabilities were transferred to the appellant under the Scheme of Arrangement.
Whether the appellant or JAL is legally obliged to pay the compensation determined under the Supplementary Award.
Whether Section 101 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 permits the return of the land to the original owners at this stage.
Whether the State of Himachal Pradesh, as a welfare state, bears the responsibility to ensure full payment of the compensation under the Supplementary Award.

Legislation cited

Companies Act, 1956s. 391, s. 392, s. 393, s. 394
Constitution of Indias. Article 300-A
Land Acquisition Act, 1894s. 17, s. 4, s. 41
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013s. 101, s. 30, s. 38

Subjects

Section 101Section 38Section 391-394Article 300-ACompensationLand acquisitionScheme of ArrangementLiabilityWelfare StateReturn of landSupplementary Award

Judgment

[2024] 9 S.C.R. 443 : 2024 INSC 709

M/s Ultra-Tech Cement Ltd.
v.
Mast Ram & Ors.
(Civil Appeal No. 10662 of 2024)
20 September 2024
[J.B. Pardiwala* and Manoj Misra, JJ.]

Issue for Consideration
Whether the subject land and all other liabilities associated with it
were transferred to the Appellant in terms of the Scheme; Whether
it was the Appellant or JAL who was legally obliged to pay the
compensation amount determined under the Supplementary
Award; Whether the land in terms of Section 101 of the Right
to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 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; 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.

Headnotes†
Land Acquisition Act, 1894 – Land Acquisition, Rehabilitation
and Resettlement Act, 2013 – The High Court allowed the writ
petition filed by the Respondent Nos. 1 to 6 herein (original
petitioners) and directed the Appellant herein to pay the
requisite amount towards compensation as determined in the
Supplementary Award dated 02.05.2022 passed by the Land
Acquisition Collector (LAC) (Respondent No. 10) in the first
instance with liberty to recover the same from JAL (Respondent
No. 11) if permissible under the legal relationship between the
two companies – Correctness:
Held: An analysis of the Scheme agreed between the Appellant
and JAL is the key to determine who should pay the amount
determined under the Supplementary Award dated 02.05.2022 –
Clause 1.1 (o) defines the “Effective Date” as the date on which
the Scheme becomes effective in accordance with its terms, which
shall be the Closing Date [defined in Clause 1.1(k) and Clause

* Author
444 [2024] 9 S.C.R.

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10.1] – The said date was decided to be 29.06.2017 among the
parties – 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 – 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 – The facts indicate that the land
acquisition proceedings had commenced before the Effective Date
of the Scheme (i.e. 29.06.2017) and the compensation remained
undetermined as on the Effective Date – These facts attract
the application of Clause 7.1 of the Scheme as the acquisition
proceedings and the liability to pay compensation associated with it
squarely falls within the meaning of ‘other proceedings’ as intended
by the parties under the said Clause – JAL has also not disputed
that it had made payment of the amount determined under the
Award of 2018 i.e., Rs. 10,77,53,842/- after the Effective Date of
the Scheme – The said amount has already been disbursed to
the landowners – After the LAC determined the amount under the
Award dated 08.06.2018, JAL paid the same without any protest
or reference to the Scheme – Therefore, at the stage of the
Supplementary Award pertaining to the same land and same
original landowners, JAL cannot be allowed to take the plea that
the payments with respect to the subject land were required to be
made by the Appellant. [Paras 21, 22, 24, 26, 27, 28, 29]
Land Acquisition, Rehabilitation and Resettlement Act,
2013 – s.101 – 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:
Held: The necessary conditions for the application of Section
101 are: (1) the land should be unutilized; and (2) the period it
remains not in use should be at least five years from the date
of taking of possession – There is no merit in the contention
of JAL that the land be returned to the original landowners –
[2024] 9 S.C.R. 445

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

While period of five years has elapsed from the date of taking of
possession by JAL, the first condition that the land should remain
unutilized is not fulfilled – The subject land was acquired for the
purpose of providing a safety zone to the mining area of the
cement plant – 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 – It is also found 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 – 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
passing of Supplementary Award was not a fresh exercise but rather
a continuation/extension of the Award of 2018 – Therefore, when
JAL has already paid the compensation amount as determined
under the previous Award without any demur, it cannot be allowed
to question its liability under the Supplementary Award and make
a plea for return of the land at this stage on the ground that
the purpose of the land is frustrated due to delay in acquisition
proceedings. [Paras 35, 36, 37, 38, 39]
Land Acquisition, Rehabilitation and Resettlement Act, 2013 –
s.101 – Scope of:
Held: The instant section was introduced in the 2013 Act for
the first time as a beneficial provision for the landowners whose
lands were usurped but remained unutilized or were not used
in accordance with the purpose stated in the notifications under
Section 4 – However, the application of the Section is warranted
only in the circumstances where the return of the land would
benefit the landowners – The party which has failed to utilize the
land cannot plead for the return of the land and consequent refund
of the compensation paid, as that would tantamount to taking
advantage of its own wrong or default. [Para 40]
Constitution of India – Art.300-A – Role of the State under
Article 300-A of the Constitution – Responsibility of State to
ensure full payment of compensation determined:
Held: It is settled that once the compensation has been determined,
the same is payable immediately without any requirement of a
446 [2024] 9 S.C.R.

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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 – In the
instant case, the Government of Himachal Pradesh as a welfare
State ought to have proactively intervened in the matter with a view
to ensure that the requisite amount towards compensation is paid
at the earliest – The State cannot abdicate its constitutional and
statutory responsibility of payment of compensation by arguing that
its role was limited to initiating acquisition proceedings under the
MOU signed between the Appellant, JAL and itself – This Court finds
that the delay in the payment of compensation to the landowners
after taking away ownership of the subject land from them is in
contravention to the spirit of the constitutional scheme of Article
300A and the idea of a welfare State – The State Government,
in peculiar circumstances, was expected to make the requisite
payment towards compensation to the landowners from its own
treasury and should have thereafter proceeded to recover the
same from JAL – Instead of making the poor landowners to run
after the powerful corporate houses, it should have compelled JAL
to make the necessary payment – Also, the State of Himachal
Pradesh, being a welfare state, did not ensure payment of
compensation to the Respondent Nos. 1-6 before taking possession
of their land – A bare reading of Section 38 of the 2013 Act
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 – In fact, the landowners had
to approach the High Court to seek directions to the LAC for
passing of the supplementary award which was finally passed on
02.05.2022 that is, after a period of almost four years from the date
of passing of the Award of 2018 – Further, Section 41 of 1894 Act
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 – However, 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
[2024] 9 S.C.R. 447

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

JAL – This is in contravention of Section 38 of the 2013 Act and
Section 41 of the 1894 Act respectively – Thus, the Respondent
Nos. 7 (State of Himachal Pradesh) and 10 (LAC) are directed
to pay the compensation amount of Rs. 3,05,31,095/- – The total
amount paid by the State shall be recovered from the Respondent
No. 11 (JAL). [Paras 47, 48, 50, 52, 54, 55, 58]

Case Law Cited
Kolkata Municipal Corporation & Anr. v. Bimal Kumar Shah & Ors.
[2024] 5 SCR 831 : 2024 SCC OnLine SC 968 – relied on.
Roy Estate v. State of Jharkhand [2009] 7 SCR 343 : (2009) 12
SCC 194; Union of India v. Mahendra Girji (2010) 15 SCC 682;
Mansaram v. S.P. Pathak [1984] 1 SCR 139 : (1984) 1 SCC 125;
Dharnidhar Mishra (D) and Another v. State of Bihar and Others
[2024] 6 SCR 714 : 2024 SCC OnLine SC 932; State of Haryana v.
Mukesh Kumar [2011] 14 SCR 211 : (2011) 10 SCC 404; Tukaram
Kana Joshi and Ors. thr. Power of Attorney Holder v. M.I.D.C. and
Ors. [2012] 13 SCR 29 : (2013) 1 SCC 353; Kukreja Construction
Company & Ors. v. State of Maharashtra & Ors., 2024 SCC OnLine
SC 2547; Premlal & Ors. v. State of Himachal Pradesh & Ors.,
CWP No. 481 of 2010 – referred to.

List of Acts
Land Acquisition Act, 1894; Land Acquisition, Rehabilitation and
Resettlement Act, 2013; Companies Act, 1956; Constitution of India.

List of Keywords
Section 101 of Land Acquisition, Rehabilitation and Resettlement
Act, 2013; Section 38 of Land Acquisition, Rehabilitation and
Resettlement Act, 2013; Section 41 of Land Acquisition Act, 1894;
Sections 391-394 of the Companies Act, 1956; Article 300-A of
the Constitution of India; Payment of compensation; Return of
acquired land; Agreement with appropriate government; Power to
take possession of land to be acquired.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10662 of 2024
From the Judgment and Order dated 12.07.2022 of the High Court of
Himachal Pradesh at Shimla in CWP No.2350 of 2018
448 [2024] 9 S.C.R.

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Appearances for Parties
Navin Pahwa, Sr. Adv., Mahesh Agarwal, Rishi Agrawala, Ankur
Saigal, Victor Das, Ms. Geetika Sharma, Sudipto Sicar, Ms. Manavi
Agarwal, E. C. Agrawala, Advs. for the Appellant.
Puneet Rajta, A.A.G., Ranjit Kumar, Sr. Adv., Subhash Chandran
Kr, Virender Thakur, Ms. Krishna Lr, Biju P Raman, Himanshu
Tyagi, Vikrant Narayan Vasudeva, Sarthak Chiller, Rohit Lochav,
Ms. Sharmila Upadhyay, Pawan R Upadhyay, Sarvjit Pratap Singh,
M/s. Unuc Legal Llp, Advs. for the Respondents.
Judgment / Order of the Supreme Court

Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*

I. FACTUAL MATRIX ………………………………………… 3

II. SUBMISSIONS ON BEHALF OF THE APPELLANT …..... 8

III. SUBMISSIONS ON BEHALF OF THE RESPONDENT
NOS. 1-6 ………………………………….......................... 12

IV. SUBMISSIONS ON BEHALF OF THE RESPONDENT
NO. 10 …........................................................................... 13

V. SUBMISSIONS ON BEHALF OF THE RESPONDENT
NO. 11............................................................................. 15

VI. ISSUES FOR DETERMINATION ………………………… 17

VII. ANALYSIS ………………………………………………….. 18

A. Scheme of Arrangement between the Appellant and
JAL under Sections 391 to 394 respectively of the
Companies Act, 1956 …………………..................... 18

* Ed. Note: Pagination as per the original Judgment.
[2024] 9 S.C.R. 449

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

B. Return of acquired land under the 2013 Act ………… 25

C. Impugned Order of the High Court …...……………… 28

D. Role of the State under Article 300-A of the
Constitution ……...…................................................. 30

VIII. CONCLUSION ……………………………………………... 37

1. Leave Granted.
2. This appeal arises from the order passed by the High Court of
Himachal Pradesh at Shimla dated 12.07.2022 in Civil Writ Petition
No. 2350/2018 filed by the Respondent Nos. 1 to 6 herein (original
petitioners) by which the High Court allowed the writ petition and
directed the Appellant herein to pay the requisite amount towards
compensation as determined in the Supplementary Award dated
02.05.2022 passed by the Land Acquisition Collector, Arki (“LAC”)
(Respondent No. 10) in the first instance with liberty to recover the
same from M/s Jaiprakash Associates Limited (“JAL”) (Respondent
No. 11) if permissible under the legal relationship between the two
companies.
I. FACTUAL MATRIX
3. The State of Himachal Pradesh (Respondent No. 7) issued a
notification dated 25.07.2008 under Section 4 of the Land Acquisition
Act, 1894 (the “1894 Act”) through its Department of Industries
declaring its intention to acquire the subject land admeasuring 56-14
bigha, situated at Mauza Bhalag, Tehsil Arki, District Solan, Himachal
Pradesh (the “subject land”) in favour of Jaypee Himachal Cement
project, a unit of JAL, invoking special powers in cases of urgency
as provided under Section 17 of the 1894 Act. It appears that the
purpose for acquiring the subject land was to create a safety zone
surrounding the mining area. In other words, the subject land was
situated in the vicinity of the leasehold area of the mining project
and could not have been otherwise used for residential purposes
or creation of any other structures. Subsequently notifications were
also issued under Sections 6 and 7 respectively of the 1894 Act.
4. It appears from the materials on record that during the acquisition
proceedings, some of the landowners, including the Respondent Nos.
450 [2024] 9 S.C.R.

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1-6 herein did not allow the authorities to undertake the 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 as per
Section 11(1) of the 1894 Act and Section 24(1)(a) of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 (the “2013 Act”) determining the
compensation to the tune of Rs. 10,77,53,842.27/- (Rupees Ten
Crore Seventy Seven Lakh Fifty Three Thousand Eight Hundred and
Forty Two and Twenty Seven paisa Only) along with the incidental
charges @ 2% amounting to Rs. 9,09,315.12/-. The LAC clarified
in the award passed by him that the compensation amount towards
the houses and other structures constructed prior to the date of
notification under Section 4, whose survey was not allowed by the
landowners during the acquisition proceedings would be considered
in the supplementary award that may be passed separately after the
reports regarding the valuation of structures were received.
8. The amount as determined under the Award dated 08.06.2018 was
deposited by JAL and disbursed to the landowners. The possession
certificate dated 07.06.2019 in respect of the subject land was issued
in favour of JAL. Subsequently, the entries in the revenue record of
the subject land in favour of JAL came to be mutated on 12.11.2020.
[2024] 9 S.C.R. 451

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

9. Being dissatisfied with the Award dated 08.06.2018, the Respondent
Nos. 1-6 herein filed writ petition no. 2350 of 2018 before the High
Court on 16.09.2018, praying for a direction to the LAC to pass a
supplementary award after quantifying the compensation for the
damage caused to the structures and standing crops on the subject
land for the period between 2008 and 2018 as well as for a direction
to the LAC to pass a fresh award under the provisions of the 2013
Act to provide additional amount @ 12% on market value with effect
from the date of notification under Section 4 till the date of Award
dated 18.06.2018. On 12.07.2019, the Respondent Nos. 1-6 also
filed a Reference Petition under the 2013 Act praying inter alia for
the enhancement of the amount of compensation determined under
the Award dated 08.06.2018.
10. On 24.11.2021, the High Court passed an order directing the
LAC to pass a supplementary award in accordance with law. On
23.05.2022, the High Court recorded that the supplementary award
dated 02.05.2022 had been passed in compliance with its order dated
24.11.2021 under which an additional amount of Rs. 3,02,75,605/-
along with incidental charges @ 2% of total assessment value was
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, JAL and Government
of Himachal Pradesh respectively, entered into on 29.06.2017.
452 [2024] 9 S.C.R.

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13. In such circumstances, the High Court examined the relationship
between the Appellant and JAL and also referred to the Scheme
for the purpose of determining the issue as to who should pay the
compensation amount determined under the Supplementary Award
to the Respondent Nos. 1-6 respectively.
14. On 12.07.2022, the High Court relying on Clause 7.1 of the Scheme,
passed the impugned order, directing the Appellant to pay the
compensation amount at the first instance and left it open for the
Appellant to recover the same from JAL later, if permissible in law.
15. In view of the aforesaid, the Appellant is before this Court with the
present appeal.
II. SUBMISSIONS ON BEHALF OF THE APPELLANT
16. Mr. Navin Pahwa, the learned senior counsel appearing for the
Appellant made the following submissions:
a. The High Court, in its impugned order, erred in directing
the Appellant to pay the compensation amount determined
under the Supplementary Award because the initial Award
dated 08.06.2018 as well as the Supplementary Award dated
02.05.2022 were passed by the LAC fixing the liability to pay
compensation on JAL.
b. The High Court failed to consider that under the Scheme
between the Appellant and JAL, as sanctioned by NCLT,
Mumbai on 15.02.2017 and NCLT, Allahabad on 02.03.2017,
all contingent liabilities pertaining to matters relating to the
“JAL Business” (as defined in Clause 1.1(w) of the Scheme),
including those of pending litigations where the disputed
claims were not crystallized on or before the effective date,
i.e., 29.06.2017, would be the sole liability of JAL. Since the
acquisition proceedings for the subject land were initiated by a
notification under Section 4 of the 1894 Act dated 25.07.2008,
therefore, the litigation was pending as on 29.06.2017 (the
“Effective Date”) and the disputed claim was not crystallized till
the passing of the Supplementary Award dated 02.05.2022.
c. The High Court erred in recording that the Appellant had made
the payment under the Award dated 08.06.2018, whereas
factually, it was JAL who had paid the compensation amount
[2024] 9 S.C.R. 453

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

under the said Award. The High Court also failed to consider that
by making the payment under the Award dated 08.06.2018, JAL
had accepted its liability for claims arising out of the acquisition
proceedings.
d. The subject land was 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 JAL. Mr. Pahwa
clarified that JAL is a surviving entity and the High Court had
erred in understanding that JAL stood merged or transferred
with the Appellant.
f. Mr. Pahwa also brought our attention to the order passed
by this Court dated 16.12.2019 in Ultratech Cement Ltd. v.
Tonnu Ram, SLP (C) (Diary) No. 42997 of 2019 wherein this
Court clarified that the impugned judgment of the High Court of
Himachal Pradesh could not have been construed as permitting
third party to pursue claim for recovery against the Appellant
in disregard of the Scheme and the executing court would be
duty-bound to examine the purport of the Scheme and pass
orders strictly in consonance therewith.
454 [2024] 9 S.C.R.

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The relevant observations made by this Court in Tonnu Ram
(supra) are reproduced below:
“…It cannot be construed as permitting third party
to pursue claim for recovery against the petitioner in
disregard of the scheme of arrangement propounded
by the NCLT in respect of respondent No.4- M/s.
Jaiprakash Industries.
Despite this clear position, if any third party intends to
pursue remedy against the petitioner, the Executing
Court would be duty bound to examine the purport
of the stated scheme propounded by the NCLT
and pass orders strictly in consonance therewith.
It would be open to the petitioner to invite attention
of the Executing Court or any other Forum about the
relevant provisions in the scheme in support of the
argument that the liability to pay the dues will remain
that of respondent No.4- M/s. Jaiprakash Industries
as per the stated scheme.”
[Emphasis supplied]
g. The senior counsel also submitted that JAL had made a
declaration on oath in Form-16A under Order XXI Rule 41(2)
of the Code of Civil Procedure, 1908 dated 04.12.2023 in Civil
Revision Petition No. 174 of 2022 titled Tohnu Ram (Deceased)
v. M/s Ultratech Cement Ltd. before the High Court of Himachal
Pradesh which read as follows:
“…(e) Other Property: List of Property of Jaiprakash
Associates Ltd., i.e. Land measuring 56-14 bigha,
situate at village bhalag, PO Kandhar, Tehsil Arki,
Distt. Solan (HP), vide which the Mutation was
attested on 12.11.2020 in favour of Jaiprakash
Associates Ltd…”
Therefore, in view of the above, the subject land remained in
ownership of JAL and the Appellant had no connection with the
subject land, directly or indirectly and that the subject land was neither
acquired for the benefit of the Appellant nor was it transferred under
the Scheme to the Appellant.
[2024] 9 S.C.R. 455

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

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 compensation amount
as determined under the Supplementary Award to the
Respondents and are in collusion with each other creating
an inter-se dispute with the intention of depriving the original
landowners of their legitimate right to receive compensation
due to them.
e. The subject land was acquired for public purpose and was
being utilized by the Appellant for its purposes.
IV. SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 10
18. Mr. Puneet Rajta, the learned Additional Advocate General appearing
for the Respondent No. 10 i.e., the Land Acquisition Collector, Arki
made the following submissions:
a. The subject land was acquired in the year 2018 for providing a
safety zone to the cement plant which had already been taken
over by the Appellant in the year 2016.
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b. The acquired land is being utilized by the Appellant as a safety
zone for the cement plant being run by them. However, the land
is recorded in the name of JAL.
c. The role of the State was limited to the extent of initiating the
acquisition proceedings and as per the MOU signed with the
Government of Himachal Pradesh, all costs pertaining to the
acquisition/transfer of land would be borne by the company
only. It was clarified that the State had no role to play in the
business of manufacturing or running the cement plant of the
company and all payments under the Award No. 1 of 2018 dated
08.06.2018 stood paid to the landowners by JAL.
d. The Supplementary Award was passed on 02.05.2022 in
accordance with the direction of the High Court dated 16.09.2018
in CWP No. 2350 of 2018 and the High Court through a separate
order dated 12.07.2022 directed the Appellant to make the
payment to the landowners and recover the said amount from
JAL. The said order was challenged by the Appellant and this
Court while issuing notice vide order dated 22.08.2022 directed
that there shall be a stay of operation and implementation of
the impugned order of the High Court.
e. The land is being used by the Appellant for the purpose of
operating the cement plant however, they are raising disputes
only with the view to deny the rights of the landowners. Therefore,
the liability for payment of compensation be fixed as against the
Appellant or JAL. It was submitted that if the State was directed
to compensate the landowners, it would have to do so out of
public funds and seek reimbursement.
V. SUBMISSIONS ON BEHALF OF THE RESPONDENT 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
[2024] 9 S.C.R. 457

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

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 the State Government had handed over the symbolic
possession of the subject land in favour of JAL on 07.06.2019 yet
the physical possession of this land remained with the villagers/
landowners including Respondent Nos. 1-6 who had illegally
occupied the subject land and had constructed houses/structures
on the same even after the deliverance of the Award dated
08.06.2018 and the Supplementary Award dated 02.05.2022.
d. It was submitted that the substantial delay in the issuance of
the Award by the LAC had frustrated the purpose of acquisition
for JAL. Since the entire project has been under the custody
and possession of the Appellant, it is the appropriate party to
address the issue of the requirement of the subject land for the
purpose of Mining Activities & Safety Zone. If the Appellant is not
interested in the subject land, then the same should be returned
to the original landowners (Respondent Nos. 1-6 herein) and
the amount deposited as an award of Rs. 10,77,53,842/- in the
year 2018 should be refunded to JAL.
e. Mr. Kumar contended that according to the statement provided by
the Appellant to the High Court, it can be reasonably concluded
that the Appellant does not require the land in question, which
was acquired for the purpose of Mining Activities and Safety Zone
for the Cement project. Therefore, the Appellant may proceed
to submit an application in this regard to the Government of
Himachal Pradesh, as submitted before the High Court.
f. The Counsel reiterated that JAL had sold out and handed over
the entire cement project to the Appellant in the year 2017,
which included the acquired private land and government land
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diverted for this purpose. It was submitted that the subject land
was required for an entity involved in cement production in the
area, therefore, the responsibility for maintaining the Safety Zone
of the cement project was with the Appellant. If the Appellant is
not interested in the acquired subject land, then the same may
be returned and the amount of Rs. 10,77,53,842/- deposited
as award in the year 2018 be refunded to JAL.
VI. ISSUES FOR DETERMINATION
20. Having heard the learned counsel appearing for the parties and having
gone through the materials on record, the following four questions
fall for our consideration: -
i. Whether the subject land and all other liabilities associated with
it were transferred to the Appellant in terms of 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?
[2024] 9 S.C.R. 459

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

ii. Whether the subject land is an integral part of the cement
project and the liability of paying compensation under the
Supplementary Award for the said land can be imposed on the
Appellant despite the said land not being in its name?
22. Clause 1.1 (o) defines the “Effective Date” as the date on which the
Scheme becomes effective in accordance with its terms, which shall
be the Closing Date [defined in Clause 1.1(k) and Clause 10.1]. The
said date was decided to be 29.06.2017 among the parties.
23. Clause 1.1(w) defines the business and assets transferred by JAL
to the Appellant. The definition of the same is reproduced below:
“…(w) “JAL Business” means the business of
manufacturing, sale and distribution of cement and clinker
manufactured at the JAL Cement Plants, including all
rights to operate such business, its movable or immovable
assets, captive power plants, DG sets, coal linkages, rights,
privileges, liabilities, guarantees, land, leases, licenses,
permits, mining leases, prospecting licenses for mining of
limestone, letters of intent for mining of limestone, tangible
or intangible assets, goodwill, all statutory or regulatory
approvals, logistics, marketing, warehousing, selling
and distribution networks (marketing employees, offices,
depots, guest houses and ether related facilities for the JAL
Business), employees, existing contracts including fly-ash
contracts, railway sidings, fiscal incentives in relation to the
JAL Business, more particularly described in Schedule I
hereto, but does not include
(i) construction equipment and such assets to be listed
in Schedule II.
(ii) any liability including contingent liability disclosed in
the balance sheet of JAL Business on the Closing
Date provided to the Transferee, other than those
included in the JAL Financial Indebtedness and JAL
Net Working Capital;
(iii) any guarantee or deposits for any disputes;
(iv) the JAL Excluded Employees;
(v) JAL Non Moving Stores, Doubtful Receivables of
the JAL Business, non-recoverable debtors, loans
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or advances in the books of the Transferor1. For
this purpose, non-recoverable debtors; loans or
advances shall refer to such debtors; loans or
advances for which Transferor1 has not received
any confirmation for the receivables as mentioned
in Clause 9.1 (i);
(vi) coal mitting block - Mandla (North) and the related
guarantees, deposits etc;
(vii) fiscal incentives in relation to the JAL Business that
accrue up to the 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:
[2024] 9 S.C.R. 461

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

“7. LEGAL PROCEEDINGS
7.1 All legal or other proceedings (whether civil or
criminal, including before any statutory or judicial
or quasi-judicial authority or tribunal) by or against
the Transferor1 and /or the Transferor2, initiated on
or arising and pending before the Effective Date,
and relating to the JAL Business and the JCCL
Business shall remain with the Transferor1 and/or the
Transferor2, as the case may be.
7.2 In the event any case or matter pertaining to
contingent liabilities being in the nature of disputed claims,
not crystallized on the Closing Date or guarantees listed in
Schedule III A and Schedule XI A or any similar instrument
by whatsoever name called which have been advance
against disputes related to the JAL Business or the JCCL
Business existing on the Closing Date, or pertaining to NPV
of afforestation charges in respect of mining land being
Block 1, 2, 3, 4 and Ningha of Dalla Plant and Jaypee Super
Plant, by force of law are transferred to the Transferee, then
the Transferor1 and the Transferor 2, shall have full control
in respect of the defence of such proceedings including
filing the necessary appeals, revisions, etc.. provided that
the Transferor1 and the Transferor2, as the case may be,
shall not, take any action that is detrimental to the operation
of the JAL Business and the JCCL Business. Provided that
in respect of such cases pertaining to immovable properties
which are part of the JAL Business or the JCCL Business,
as the case may be the Transferee shall have a right to
participate in such proceedings to ensure that no action
detrimental to the operation of JAL Business and the JCCL
Business is taken. It is clarified that: (a) any liabilities in
respect of cases or matter referred to in this Clause 7.2
shall be paid by the Tranferor1 or the Transferor2 and if
paid by the Transferee, the same shall be reimbursed by
the Transferor1 or the Transferor2 within 7 (seven) days
of such payment; and (b) the aforesaid bank guarantees
provided by the Transferor1 and the Transferor2 in respect
of the contingent liabilities being in the nature of disputed
claims related to the JAL Business or the JCCL Business
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shall continue wherever required and the Transferee shall
have no obligation to replace such bank guarantees on the
Closing Date and in the event the period of any such bank
guarantee expires after the Closing Date, the Transferor1
and /or the Transferor2, as the case may be, shall renew
or replace such guarantees 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
proceedings came to an end on 23.06.2016. As the next step towards
the proceedings, an Award dated 08.06.2018 was passed. The
facts indicate that the land acquisition proceedings had commenced
before the Effective Date of the Scheme (i.e. 29.06.2017) and the
compensation remained undetermined as on the Effective Date. To
our understanding, these facts attract the application of Clause 7.1
of the Scheme as the acquisition proceedings and the liability to pay
compensation associated with it squarely falls within the meaning of
‘other proceedings’ as intended by the parties under the said Clause.
28. JAL has also not disputed that it had made payment of the amount
determined under the Award of 2018 i.e., Rs. 10,77,53,842/- after
[2024] 9 S.C.R. 463

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

the Effective Date of the Scheme. The said amount has already
been disbursed to the landowners. There is nothing on record to
show that the payment of compensation amount at that time was
contested by JAL.
29. Further, the exercise of determination of compensation amount which
is a part of the acquisition proceedings remained pending even
after the Effective Date of the Scheme. After the LAC determined
the amount under the Award dated 08.06.2018, JAL paid the same
without any protest or reference to the Scheme. Therefore, at the
stage of the Supplementary Award pertaining to the same land and
same original landowners, JAL cannot be allowed to take the plea
that the payments with respect to the subject land were required to
be made by the Appellant.
30. As regards the contention of JAL that the subject land formed an
integral part of the cement project transferred to the Appellant for
the purpose of payment of compensation determined under the
Supplementary Award, we find it difficult to accept the same. The
subject land was acquired as a safety zone for the cement project
and in light of the several safety hazards as stated in the Award No.
1 of 2018, the land had to be acquired to safeguard the lives and
property of the original landowners.
31. However, we take notice of the fact that the subject land was not
covered under the list of assets transferred to the Appellant under
the Scheme and remains in the ownership of the JAL till date. While
we agree that the acquisition of the subject land was done for the
purposes of the cement project, we cannot accept the contention of
JAL that the liabilities arising out of the said land should be fastened
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.
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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 of the 2013
Act which is reproduced below:
“101. Return of unutilised land.– When any land acquired
under this Act remains unutilised for a period of five
years from the date of taking over the possession, the
same shall be returned to the original owner or owners or
their legal heirs, as the case may be, or to the Land Bank
of the appropriate Government by reversion in the manner
as may be prescribed by the appropriate Government.
Explanation.—For the purpose of this section, “Land
Bank” means a governmental entity that focuses on the
conversion of Government owned vacant, abandoned,
unutilised acquired lands and tax-delinquent properties
into productive use.”
[Emphasis Supplied]
35. The necessary conditions for the application of Section 101 are: (1)
the land should be unutilized; and (2) the period it remains not in use
should be at least five years from the date of taking of possession.
36. We do not find any merit in the contention of JAL that the land be
returned to the original landowners. While we agree that a period
of five years has elapsed from the date of taking of possession by
JAL, the first condition that the land should remain unutilized is not
fulfilled.

37. The subject land was acquired for the purpose of providing a safety
zone to the mining area of the cement plant. The objective for acquiring
the subject land mentioned in the Award of 2018 is reproduced below:
“…3. Compulsory Acquisition by invoking the provisions
of Section 17 (4)
[2024] 9 S.C.R. 465

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

During the process of Notification issued under Section
- 4 of the Land Acquisition Act, the matter was taken up
for compulsory acquisition U/s 17(4) of Land Acquisition,
Act, 1894 with the Govt. or Himachal Pradesh for the
reasons that the land area under acquisition fell just
below the mine leasehold area and was necessarily
required as Mining Area Safety Zone. As the land area
under acquisition cannot be allowed for any residential
purpose in view of safety reasons and because the
land proposed for acquisition is located just along
the bank or Bhalag Nallah and most of the residents
of village Bhalag had been constructing structures in
large numbers on the right Bank of Nallah in Bhalag
village, therefore provisions of compulsory acquisition
needed to be invoked.
Furthermore, to invoke the provisions of compulsory
acquisition, it was submitted vide this office letter No.
2766 dated 06.01.2009 to Pr. Secretary (Industries) 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 passing of Supplementary
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Award was not a fresh exercise but rather a continuation/extension
of the Award of 2018. Therefore, when JAL has already paid the
compensation amount as determined under the previous Award
without any demur, it cannot be allowed to question its liability under
the Supplementary Award and make a plea for return of the land at
this stage on the ground that the purpose of the land is frustrated
due to delay in acquisition proceedings.
40. At this stage, it is necessary for us to discuss the purport of Section
101 of the 2013 Act. The instant section was introduced in the 2013
Act for the first time as a beneficial provision for the landowners
whose lands were usurped but remained unutilized or were not used
in accordance with the purpose stated in the notifications under
Section 4. However, the application of the Section is warranted only
in the circumstances where the return of the land would benefit the
landowners. The party which has failed to utilize the land cannot
plead for the return of the land and consequent refund of the
compensation paid, as that would tantamount to taking advantage
of its own wrong or default.
C. Impugned Order of the High Court
41. The High Court directed the Appellant herein to pay compensation
amount determined under the Supplementary Award at the first
instance and if permissible, recover the same from JAL.
42. We find that the High Court’s reasoning for passing such a direction
is unsustainable for the following reasons:
i. The High Court has referred to Clause 7.1 of the Scheme but
has not applied it correctly in any manner, thereby ignoring the
Scheme of Arrangement between the parties.
ii. The High Court has also recorded that JAL has been taken
over by the Appellant herein and that the Appellant had made
payment of compensation under the Award No. 1 of 2018 dated
08.06.2018. We find that these are incorrect facts on the basis
of the materials presented to us by the parties to this appeal.
JAL has only transferred the cement project and clinkerisation
business to the Appellant by way of the Scheme and is still
existing independently of the Appellant’s control in respect of
its other functions.
[2024] 9 S.C.R. 467

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

The documents on record also show that it was JAL that had
made payments under the Award of 2018 and not the Appellant.
iii. The High Court failed to consider that the ownership of the
subject land continued to be 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 reproduced below:
“…27.
… Seven such sub-rights can be identified, albeit non-
exhaustive. These are: i) duty of the State to inform the
person that it intends to acquire his property – the right
to notice, ii) the duty of the State to hear objections to
the acquisition – the right to be heard, iii) the duty of the
State to inform the person of its decision to acquire – the
right to a reasoned decision, iv) the duty of the State to
demonstrate that the acquisition is for public purpose –
the duty to acquire only for public purpose, v) the duty
of the State to restitute and rehabilitate – the right of
restitution or fair compensation, vi) the duty of the
State to conduct the process of acquisition efficiently
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and within prescribed timelines of the proceedings –
the right to an efficient and expeditious process, and
vii) final conclusion of the proceedings leading to vesting
– the right of conclusion…”
[Emphasis Supplied]
This Court held that a fair and reasonable compensation is the sine
qua non for any acquisition process.
44. In Roy Estate v. State of Jharkhand, (2009) 12 SCC 194; Union
of India v. Mahendra Girji, (2010) 15 SCC 682 and Mansaram
v. S.P. Pathak, (1984) 1 SCC 125, this Court underscored the
importance of following timelines prescribed by the statutes as well
as determining and disbursing compensation amount expeditiously
within reasonable time.
45. The subject land came to be acquired by invoking special powers in
cases of urgency under Section 17(4) of the 1894 Act. The invocation
of Section 17(4) extinguishes the statutory avenue for the landowners
under Section 5A to raise objections to the acquisition proceedings.
These circumstances impose onerous duty on the State to facilitate
justice to the landowners by providing them with fair and reasonable
compensation expeditiously. The seven sub-rights of the landowners
identified by this Court in Kolkata Municipal Corporation (supra)
are corresponding duties of the State. We regret to note that the
amount of Rs. 3,05,31,095/- determined as compensation under the
Supplementary Award has not been paid to the landowners for a
period of more than two years and the State of Himachal Pradesh
as a welfare State has made no effort to get the same paid at the
earliest.
46. This Court has held in Dharnidhar Mishra (D) and Another v.
State of Bihar and Others, 2024 SCC OnLine SC 932 and State
of Haryana v. Mukesh Kumar, (2011) 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
[2024] 9 S.C.R. 469

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

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, the Government of Himachal Pradesh as a
welfare State ought to have proactively intervened in the matter with
a view to ensure that the requisite amount towards compensation is
paid at the earliest. The State cannot abdicate its constitutional and
statutory responsibility of payment of compensation by arguing that
its role was limited to initiating acquisition proceedings under the
MOU signed between the Appellant, JAL and itself. We find that the
delay in the payment of compensation to the landowners after taking
away ownership of the subject land from them is in contravention to
the spirit of the constitutional scheme of Article 300A and the idea
of a welfare State.
49. Acquisition of land for public purpose is undertaken under the power
of eminent domain of the government much against the wishes of
the owners of the land which gets acquired. When such a power is
exercised, it is coupled with a bounden duty and obligation on the
part of the government body to ensure that the owners whose lands
get acquired are paid compensation/awarded amount as declared
by the statutory award at the earliest.
50. The State Government, in peculiar circumstances, was expected to
make the requisite payment towards compensation to the landowners
from its own treasury and should have thereafter proceeded to recover
the same from JAL. Instead of making the poor landowners to run
after the powerful corporate houses, it should have compelled JAL
to make the necessary payment.
51. Although the requirement to pass a supplementary award for the
purpose of determining additional compensation for the standing
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trees, damaged structures, houses, etc. had been envisaged and
recorded in the Award dated 08.06.2018, yet the possession of the
subject land came to be handed over to JAL vide the possession
certificate dated 07.06.2019 without passing such a supplementary
award. We are of the considered view that the omission or lapse to
complete such exercise before taking possession of the land could
be said to be in contravention of the mandate of Section 38(1) of the
2013 Act. The relevant portion of Section 38 is reproduced below:
“38. Power to take possession of land to be acquired. –
(1) The Collector shall take possession of land after
ensuring that full payment of compensation as well
as rehabilitation and resettlement entitlements are paid or
tendered to the entitled persons within a period 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 before taking possession of their land. In fact,
the landowners had to approach the High Court to seek directions to
the LAC for passing of the supplementary award which was finally
passed on 02.05.2022 that is, after a period of almost four years
from the date of passing of the Award of 2018.
[2024] 9 S.C.R. 471

M/s Ultra-Tech Cement Ltd. v. Mast Ram & Ors.

53. Further, the acquisition proceedings for the subject land had
commenced vide the notification under Section 4 dated 25.07.2008. In
such circumstances it is necessary to consider the relevant provisions
of the 1894 Act, more particularly Section 41 thereof which pertains
to the process required to be followed in cases of acquisition of land
for companies. The relevant portion of Section 41 of the 1894 Act
is reproduced below:
“41. Agreement with appropriate Government. –
If the appropriate Government is satisfied [after considering
the report, if any, of the Collector under section 5A, sub-
section (2), or on the report of the officer making an inquiry
under section 40 that the proposed acquisition is for any
of the purposes referred to in clause (a) or clause (aa)
or clause (b) of sub-section (1) of section 40, it shall
require the Company to enter into an agreement
with the appropriate Government, providing to the
satisfaction of the appropriate Government for the
following matters, namely :-
(1) the payment to the appropriate Government of the
cost of the acquisition;
(2) the transfer, on such payment, of the land to the
Company….”
[Emphasis supplied]
54. 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.
55. However, as discussed in the foregoing paragraphs, 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, in our view, is in
contravention of Section 38 of the 2013 Act and Section 41 of the
1894 Act respectively.
472 [2024] 9 S.C.R.

Digital Supreme Court Reports

56. Thus, we deem it appropriate to direct the Respondent Nos. 7 and
10 that is, the State of Himachal Pradesh and the Land Acquisition
Collector, Arki, to pay the amount of Rs. 3,05,31,095/- to the
Respondent Nos. 1-6 for expeditious conclusion of the acquisition
proceedings. However, we clarify that the State shall recover the
said amount from JAL as the liability to pay the cost of acquisition
of the subject land ultimately falls on JAL in view of the aforesaid
discussion.
VIII. CONCLUSION
57. For all the foregoing reasons, this appeal succeeds and is hereby
allowed in the aforesaid terms. The impugned order dated 12.07.2022
passed by the High Court is set aside.
58. The Respondent Nos. 7 and 10 are directed to pay the compensation
amount of Rs. 3,05,31,095/- (Rupees Three Crore Five Lakh
Thirty-One Thousand and Ninety-Five Only) along with 9% interest
thereupon from the date of passing of the Supplementary Award i.e.,
02.05.2022 till the date of realization, within a period of fifteen days
from today. The total amount paid by the State shall be recovered
from the Respondent No. 11 (JAL).

Result of the Case: Appeal allowed.

†
Headnotes prepared by: Ankit Gyan