Supreme Court Criticizes Himachal Pradesh for Delayed Rs 3 Crore Compensation in Land Acquisition Case

In a significant ruling on September 20, 2024, the Supreme Court of India admonished the State of Himachal Pradeshfor its failure to ensure the timely payment of Rs. 3,05,31,095 as additional compensation to landowners for land acquired in 2008. The land, situated in Arki Tehsil of Solan District, was acquired for the Jaypee Himachal Cement Projectoperated by M/s Jaiprakash Associates Limited (JAL). The bench, comprising Justice JB Pardiwala and Justice Manoj Misra, expressed concern over the state’s inability to protect the interests of landowners by ensuring prompt compensation, despite the considerable delay. The Court directed the state to pay the compensation with 9 percent interest from May 2022 and recover the amount from JAL, while emphasizing that delays in compensation violated the landowners’ constitutional rights under Article 300A.

Failure of the State to Pay Compensation

• The land acquisition process began in 2008 for the creation of a safety zone around the Jaypee Himachal Cement Project in Solan District.
• Despite an Award being issued in 2018, additional compensation for standing crops and structures was not evaluated.
• The Himachal Pradesh High Court directed the Land Acquisition Collector (LAC) to pass a Supplementary Award on May 2, 2022, determining an additional amount of Rs. 3,05,31,095.
• However, JAL refused to pay the additional amount.

Supreme Court’s Stance on Compensation and Welfare State Obligations

• The Supreme Court emphasized the state’s responsibility to ensure timely compensation, stating:
  “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 run after the powerful corporate houses, it should have compelled JAL to make the necessary payment.”

Right to Property under Article 300A

• The Court held that delays in paying compensation violated the landowners’ right to property under Article 300A of the Constitution.
  “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.”

Liability Between JAL and Ultra-Tech Cement

• The dispute also involved Ultra-Tech Cement, which took over JAL’s cement project in 2017.
• The Himachal Pradesh High Court had previously directed Ultra-Tech to pay the additional compensation, allowing it to recover the amount from JAL if permitted by their agreement.
• The Supreme Court found JAL responsible for the payment and set aside the High Court’s order.

Precedents on Land Acquisition and Compensation

• The Court cited Kukreja Construction Company & Ors. v. State of Maharashtra & Ors., where it was held that compensation must be paid immediately upon determination.
• It also referred to Kolkata Municipal Corporation v. Bimal Kumar Shah, outlining the seven rights landowners are entitled to when their property is acquired, including fair and prompt compensation.

Supreme Court’s Final Order

• The Court directed the State of Himachal Pradesh and the Land Acquisition Collector to pay the additional compensation with 9 percent interest and recover the amount from JAL.
• The Court criticized the state for allowing such a prolonged delay in compensating the landowners.

Click to read: M/s Ultra Tech Cement Ltd v. Mast Ram and Anr.