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Delhi Agricultural Marketing Board v. Bhagwan Devi (Dead), through her LR

Civil Appeal · 2025 INSC 367Decided 20 Mar 2025
C.A. No.-010757-010757 - 2017

Background

In 1963-69, about 33 acres near Narela, Delhi were compulsorily acquired by the government for the Delhi Agricultural Marketing Board to set up a grain market, and possession was taken over in 1986. Bhagwan Devi, who claimed ownership of a small portion of this land under earlier sale deeds, challenged the acquisition in the Delhi High Court. Rather than contest the writ petition, the Board entered into a private agreement in 1988, signed by its outgoing Chairman just a day before his term ended, agreeing to return half the disputed land to her, even though the Board itself had no conveyance deed transferring ownership from the government. The Board later had second thoughts, and the resulting dispute went to arbitration, where an award in 2007 upheld the agreement in Bhagwan Devi's favour; this was affirmed by the Delhi High Court.

Decision Breakdown

The Supreme Court held that once possession of acquired land is taken under Section 16 of the Land Acquisition Act, 1894, it vests absolutely in the government free of all encumbrances, and even the government itself could no longer withdraw from the acquisition at that stage under Section 48. The Board, which held no conveyance deed at all, therefore had no legal capacity to return any part of the land to Bhagwan Devi through a private agreement. The Court found the 1988 agreement, drafted even before the Board's own meeting approving it, to be a suspect, engineered device to undo a completed sovereign acquisition, and held that upholding it would amount to sanctioning "a fraud on the exercise of such sovereign power by the State." It ruled the agreement and the arbitral award upholding it were contrary to the fundamental policy of Indian law under Section 34(2)(b) of the Arbitration and Conciliation Act, 1996, and set aside the High Court judgments and the arbitral award.

Lesson Learnt

A public body cannot use a private contract or an arbitration award to reverse a completed government land acquisition or hand back land it never legally owned. Courts will strike down such arrangements as contrary to public policy, however long ago they were made or however far they proceeded through arbitration.

Official source (sci.gov.in)View Judgment (PDF)

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