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Nayara Energy Limited v. The State of Gujarat

Civil Appeal · 2020 INSC 713Decided 18 Dec 2020
Civil Appeal Nos. 4102-4103 of 2020
Justice Ashok Bhushan · Justice R. Subhash Reddy · Justice M.R. Shah

Background

Land belonging to certain farmers was acquired in 1996, and about 17 years later a Reference Court substantially enhanced their compensation. Nayara Energy (the acquiring body) appealed to the Gujarat High Court and sought a stay; the High Court allowed a stay only on condition that the company deposit 80% of the enhanced award, half of which the original landowners could withdraw without furnishing any security. Nayara challenged this condition before the Supreme Court, fearing it would be unable to recover the money if it ultimately won its appeal.

Decision Breakdown

The Supreme Court modified the High Court's interim order: instead of 80%, Nayara was directed to deposit the full 100% of the enhanced compensation (with interest and costs) as a condition for the stay. Of that deposited amount, only 25% could be withdrawn by the landowners without security (up from the High Court's 50% of 80%), while the remaining 75% would be kept in a fixed deposit pending the outcome of the main appeal. The Court balanced the farmers' long wait for compensation against the acquiring company's right to recover money if it eventually succeeded, and allowed the appeals to that extent.

Lesson Learnt

When a court grants a conditional stay pending appeal involving money already awarded to one side, it will try to strike a balance, ensuring the party awaiting compensation gets some immediate relief while protecting the paying party's ability to recover the money if the appeal succeeds.

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

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