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

Not available · 2024 INSC 709Decided 20 Sept 2024
Not available

Background

In 2008, the Himachal Pradesh government acquired land at Solan for a cement project run by Jaiprakash Associates Ltd. (JAL). After protracted litigation over the acquisition's validity, the Land Acquisition Collector (LAC) passed a 2018 award, deferring compensation for standing structures and trees to a later "supplementary award" since some landowners (Mast Ram and others) had not allowed a survey. Before that supplementary award was finalised, JAL transferred the cement business, including this land, to UltraTech Cement under an NCLT-approved Scheme of Arrangement (2017), and possession was handed to JAL/UltraTech without the supplementary award being passed: a step the Court later found violated the statutory sequence requiring full compensation before possession is taken. When the supplementary award (over Rs. 3 crore) was eventually passed in 2022, the Himachal Pradesh High Court directed UltraTech to pay it first, leaving UltraTech to recover the amount from JAL if legally possible. UltraTech appealed, arguing the Scheme of Arrangement made JAL solely liable for such pre-existing, uncrystallized claims.

Decision Breakdown

The Supreme Court held that possession of the acquired land should never have been transferred before full compensation (including for structures and standing crops) was determined and paid, as required by Section 38 of the 2013 Land Acquisition Act, and that Section 41 of the 1894 Act made JAL responsible for paying the cost of acquisition to the State before the land could be transferred to it. The Court criticized the State of Himachal Pradesh, as a welfare state exercising eminent domain, for failing to proactively ensure the affected landowners were paid despite the compensation liability ultimately resting with JAL: landowners should not be made to chase powerful corporations for money owed to them. It set aside the High Court's order directing UltraTech to pay first, and instead directed the State of Himachal Pradesh and the LAC to pay the supplementary compensation (with 9% interest) directly to the landowners within fifteen days, while separately recovering that amount from JAL, since the acquisition and its liabilities predated the transfer of the business to UltraTech.

Lesson Learnt

When the government exercises its power to compulsorily acquire private land, it bears a non-delegable duty to ensure the landowners are promptly paid full compensation. It cannot let citizens get caught in the middle of a payment dispute between corporations and must pay first, recovering from the responsible company afterward, because the right to property (and to be compensated for its loss) is treated as a constitutional and human right that cannot be indefinitely deferred.

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

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