Assignment on……

Recent Judgments Pronounced by the Supreme court On Literal Rule

of Interpretation

Submitted To Submitted By

Dr. Rakesh Meena Name – Kumari Diksha

Roll no- 210605

Sub- Interpretation of Statutes

Class- LL.M

Course – Department of Law

Session- 2021-2022

Semester- 1st

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 INTRODUTION

 WHAT IS INTERPRETATION - Laws are often enacted by legal experts under the
guidance of experts of different fields and hence, the wordings or phrases used in
these laws might cause confusion or result in ambiguity. Interpretation literally means
to explain or to understand. The basic purpose of interpretation is to help understand
the various statutes and provisions of law.

 LITERAL RULE OF INTERPRETATION- In order to interpret statutes, the

courts use various principles which help them understand the principles. One of the
principles is called the “Literal Rule of Interpretation”

The literal rule of interpretation has been termed as the primary rule of interpretation. As the
name suggests, the literal rule of interpretation means that the judge literally interprets the
statute. It can also be called the plain-meaning rule or the grammatical rule.

Statutes are constructed using the ordinary meaning of language given to the term and the
judges are not required to interpret the terms in any other way.

In the literal rule of interpretation, the courts are required to observe the ordinary and natural
meaning of words, interpret the phrase or words as it is. Judges are not required to add words
or modify meaning and they must observe the actual intent of the legislature. It is the safest
rule of interpretation.

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CASES…

1. Sushil Kumar Agarwal vs Meenakshi Sadhu - Supreme Court Important

Judgment
Civil Appeal No. 1129 of 2012

    Decided On, 09 October 2018

    At, Supreme Court of India

    By, THE HONOURABLE MR. JUSTICE A.M. KHANWILKAR & THE

HONOURABLE DR. JUSTICE DHANANJAYA Y. CHANDRACHUD

    For the Appellant: Shekhar Kumar, Advocate. For the Respondents: Rauf Rahim,
Advocate.

On 9th October, 2018, in the case of Sushil Kumar Agarwal vs Meenakshi Sadhu and Ors. [Civil
Appeal No.1129 of 2012],

By a judgment dated 9th October, 2018 in the matter of Sushil Kumar Agarwal vs. Meenakshi
Sandhu and Ors. [2018 (13) SCALE 778], the Hon'ble Supreme Court, relying on provisions
of Section 14 (3) (c) (prior to its amendment) of Specific Relief Act, 1963 ("Act"), settled
principles in relation to development agreements and enforcement thereof and held inter
alia that the said provisions do not prevent developers from seeking specific enforcement of
agreements granting them development rights against the owner of the property.

Facts
By and under a Development Agreement dated 14th April, 1992 ("Development
Agreement"), one Late Kalidas Sadhu (preceded by its successors-in-interest)
("Respondents") granted development rights in favour of one Sushil Kumar Agarwal
("Appellant") for construction of a building on premises situated at Kolkata. In terms
thereof:

i. The costs and expenses for sanction of the plan for construction of the building was to
be borne by the Appellant;

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 ii. The plan of the building would be prepared and submitted by the Appellant;
iii. the Respondents were entitled to retain 42% of the total constructed area on 'sole
owned' basis leaving the balance 58% as security for due payment of the construction
costs;
iv. The Respondents were entitled to demand any loss and/or damages suffered by him
for any illegal activities of the Appellant and the Appellant was also, in addition to
claim specific performance, entitled to claim damages from the Respondent for lapse
and negligence.

Upon execution of the aforesaid Development Agreement, the Appellant alleged that he
found that the premises were encumbered and therefore requested the Respondents to make
payments, who assured the Appellant that he will reimburse him before obtaining the
sanctioned building plan. Accordingly, the Appellant claimed to have made payment of Rs.
7,03,000/-.

Thereafter, the Respondent addressed a letter to the Appellant and denied the execution of the
agreement, which was protested by the Respondent. The parties thereafter met and modified
the terms of the Development Agreement pursuant to which (i) allocation of the Respondent
would be 47% instead of 42% and (ii) allocation of the Appellant would be 53% instead of
58%.

Thereafter, when the Appellant issued a notice upon the Respondent calling him upon to
make some payments for his share of the sanctioned fees, in reply to which, the Respondent
denied the same on the ground that the Development Agreement has been cancelled.

Against this, the Appellant instituted a suit in the City Civil Court seeking a declaration that
the cancellation of the Development Agreement was invalid. Subsequently, the Appellant
also amended the plaint, by which a prayer for specific performance of the Development
Agreement was included. This suit being dismissed by the City Civil Court on the ground that
there was no tangible evidence that the possession of the premises was handed over to the
Appellant, the Appellant preferred an appeal before the Hon'ble High Court of Calcutta. This
appeal was also dismissed by the Hon'ble High Court on the ground inter alia that the suit
was not maintainable in terms of Section 14 (3) (c) of the Act.

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Issue
The limited issue raised before the Hon'ble Supreme Court was whether in terms of Section
14 (3) (c) of the Act, there is a bar to a suit by a developer for specific performance of a
development agreement and whether the word 'defendant' in Section 14 (3) (c) (iii) has the
effect of confining the scope of the suit for specific performance only to a particular class
(consisting of owners) or whether a purposive interpretation to the legislation would be
required, so as to provide a broader set of remedies to both owners and developers.

Section 14 (3) (c)

In order to understand the issue vis-à-vis, we may consider the requisites of the Section 14 (3)
(c) of the Act, namely, the court may enforce specific performance of a contract for
construction of a building or execution of any other work on land provided:

i. the building to be constructed or the work to be executed is described in such a

manner in the contract so as to enable the court to determine the exact nature of
works;
ii. the plaintiff has a substantial interest in the performance of the contract;
iii. the interest is of such a nature that compensation in money for non-performance of the
contract would not be adequate relief; and
iv. the defendant has, pursuant to the contract, obtained possession of whole or part of the
land where the building is to be constructed or work is to be executed.

Interpretation of Section 14 (3) (c)

The court noted judgments of various High Courts wherein they have interpreted the
provisions of Section 14 (3) (c) of the Act and circumstances under which a development
agreement may be specifically enforced and observed that in order to grant specific
performance of the development agreement, it is essential to determine inter alia whether the
developer, pursuant to the development agreement, has an interest in the land.

In the matter at hand, the Appellant was permitted to carry out the construction of the
building and in consideration thereof, was to be paid an agreed remuneration by the
Respondent. It was also noted that the Appellant did not have any interest in the land. The
security interest so created was merely to secure payment of the remuneration. In the event
the remuneration was paid to the Appellant; no security would arise.

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Whilst determining the scope of Section 14 (3) (c) of the Act, the court noted that in the
event the provision is given a literal interpretation, the same would never have been able to
be enforced by the developer. This is because the words used under Section 13 (3) (c) (iii)
is "the Defendant has, by virtue of the agreement, obtained possession of the whole or any
part of the land". In the event this section is invoked by the developer, thereby making him
the plaintiff in the suit, the defendant, being the owner of the land, will not satisfy this
requirement in light of the fact that he would also be in legal possession of the land and have
a lawful title thereto, even prior to the execution of the agreement, thereby falling short of the
requirement of "...by virtue of the agreement..." stipulated thereunder. This would essentially
fall short of the intent of the Act and the developer, notwithstanding having interest in an
immoveable property, will be deprived of its rights to enforce performance of a contract
whereby such interest is created.

Further, it was also observed that in the event the provision is given a purposive
interpretation, a developer who has an interest in the land, may seek specific enforcement of
contract pursuant to which the same was vested upon him. However, in such a case, the
provisions of Section 14 (3) (c) (iii) will have no role to play in enforcement thereof and the
court, whilst exercising its discretionary power, will have to satisfy itself whether provisions
of Section 14 (3) (c) (i) and Section 14 (3) (c) (ii) of the Act have been satisfied.

Held
In additions to finding that the Appellant has no interest in the land and the alleged losses /
damages caused to the Appellant can be quantified, the court also observed that another
essential requirement of Section 14 (3) (c) of the Act, namely, that the building to be
constructed or the work to be executed is described in such a manner in the contract so as to
enable the court to determine the exact nature of works, is not satisfied either. In view
thereof, it held that specific performance cannot be granted.

Conclusion
With effect from 1st October, 2018, Section 14 of the Act stood amended to have the effect
of limiting it only to listing out of four categories of contracts which cannot be specifically
enforced. Whilst the Hon'ble Supreme Court has not examined the effect of the amended
provision in the matter, however, it will be interesting to see the holding of the purposive
interpretation given by the Hon'ble Supreme Court (to give effect to the intention of the Act)

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in cases where development agreements are sought to be specifically enforced by developers
having interest in immoveable properties.

It appears that it is intended that in the event a development agreement is executed whereby
the developer is not only entitled to construct the building but also receive considerations /
cash flows therefrom and consequently, a power of attorney is executed in favor of the
developer in order to enable to inter alia obtain approvals, sell units and receive
consideration, the same becomes irrevocable in its essence in view of provisions of Section
202 of Indian Contract Act, 1872 and thereby, in its nature, even in the absence of provisions
of Section 14 (3) (c) of the Act, becomes a contract in respect of which an aggrieved
developer may claim specific performance therefor.

2. Commissioner of Customs v. Dilip Kumar (2018) 9 SCC 1 (FB)(SC)

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION    
CIVIL APPEAL NO. 3327 OF 2007 COMMISSIONER OF
CUSTOMS (IMPORT), MUMBAI            …APPELLANT(S) VERSUS
M/S. DILIP KUMAR AND COMPANY & ORS.                …RESPONDENT(S)

In a judgment with far-reaching consequences, the Constitution Bench of the Supreme Court
in Civil Appeal No. 3327 of 2007, in the matter of Commissioner of Customs (Import),
Mumbai Vs Dilip Kumar & Company & Others, delivered its five judge decision on July 30,
2018. The Bench set up to examine the correctness of the ratio in Sun Export Corporation
Mumbai Vs Collector of Customs, Mumbai, as reported in (1997) 6 SCC 564, was mainly
concerned with the question as to what should be the interpretive rule to be applied while
interpreting a tax exemption provision/notification, especially when there is an ambiguity on
its applicability with reference to the entitlement of the assessee or the rate of tax to be
applied.

The Bench, after considering the decision in Sun Export’s case (three judge Bench), along
with other relevant case laws, concluded that the exemption notification should be interpreted
strictly; the burden of proving applicability would be on the assessee to show that his case

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comes within the parameters of the exemption notification. Also, when there is ambiguity in
an exemption notification which is subject to strict interpretation, the benefit of such
ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of
the Revenue. It also held that the ratio in Sun Export case (supra) is not correct and all the
decisions which took a similar view as in Sun Export case (supra) stand overruled.

The Court, while arriving at the aforesaid decision, examined various judgments that were for
and against the proposition that the benefit of ambiguity in a taxing statute must go to the
assessee, but held that the principle applicable to the taxing statute may not apply to an
exemption notification—as it is in the nature of exception and has to be construed strictly
even in the face of ambiguity. The benefit of ambiguity or obscurity in an exemption
notification, thus, cannot go to assessee but to the state, as exception operates even in the
domain of an exemption notification when it comes to ambiguity.

The judgment, though well-reasoned and properly dissects and analyses various case laws on
the subject, presents a devil in its implementation by the Executive. A vital point to consider,
and which appears to have been missed out and is raising quite a few eyebrows, is that if the
state is negligent or the wrongdoer, and an ambiguity appears/occurs for whatever reasons
including improper draftsman ship in an exemption notification—and the assesse interprets it
in a particular manner beneficial to him and if there is an ambiguity that is likely to have an
alternate interpretation and proceeds on that basis, should he be penalised by demand of duty,
interest and even penalty, simply because the government/Department of Revenue issuing an
exemption notification left ambiguities in its scope? It has to be remembered that the state has
all powers to delete, amend or alter any exemption notification, if ambiguity comes to its
notice.

Currently, the state has sufficiently armed itself even with the power to amend exemption
notification at any time during the course of the year, while the same was earlier being done
mostly at the time of the Budget. The peril inbuilt in the instant interpretation is that an
assessed suffers even though he has no hand in the drafting of the notification. For the
Revenue, it is “heads I win, tails you lose.”
In the matter of ITC Ltd Vs CCE, New Delhi, reported in 2004 (171) ELT 433 (SC), a
judgment that was incidentally not examined by the Constitution Bench in the Dilip Kumar
case, the following practical solution was provided by the Lordships while dealing with an

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ambiguity in the notification: “Presumably the phrase ‘badly drafted’ was used to mean that
the language of the Entry was ambiguous.

In case of such ambiguity ‘close reasoning’ will be employed—but without stretching the
language to arrive at the only reasonable construction. These decisions exemplify the general
rule of statutory construction that words have to be construed strictly according to their
ordinary and natural meaning, particularly when the statute is a fiscal one irrespective of the
object with which the provision was introduced.

Of course if there is ambiguity in the statutory language, reference may be made to the
legislative intent to resolve the ambiguity. But if the statutory language is unambiguous then
that must be given effect to. The legislature is deemed to intend and mean what it says. The
need for interpretation arises only when the words used in the statute are, on their own terms
ambivalent and do not manifest the intention of the legislature.” Therefore, the solution
provided was to first look for legislative intent behind the ambiguous notification rather than
giving outright benefit to the state.

The result of the Dilip Kumar judgment is that the assessee will end up paying for the
ambiguity which is caused/created or is left by the Revenue. The interpretation will not only
redefine justice by tilting it in the favour of the Revenue, but may also end up encouraging
the Revenue to become callous/casual while drafting exemption notifications. Armed with the
Dilip Kumar judgment, it will have nothing to lose but only gain out of loose ends of an
exemption notification through demands of duty, interest and penalties, and even extended
period demands, which it otherwise makes at the drop of a hat. The assessee in case of doubt
may have to either reach out authorities, and wait for their reply, which is often delayed as
field authorities, in turn, refer the matter to Board for interpretation and all this may even
defeat the purpose for those actually deserving exemption.

It is a cardinal principle of justice that one who does wrong, has to pay for it. But this may
not remain the case in the future with tax exemption notifications. With the state allowed to
have the cake and eat it too, it will eventually be a premium on casualness. Surely, not the
way the justice system may have wanted it to be.

Analysis

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The Conclusion in the given case, with due respect to the authorities, in our humble view
could also have been derived by applying the strict rule of interpretation. The exemption
provision provides that any building that is used for religious, charitable or educational
purposes are exempted from paying the building tax. The use of the term ‘religious purpose’
shows that the legislature did not intend to restrict the scope of application of the section to
religious buildings (say Temple, Church, etc.)/Educational buildings (say School, Colleges
etc.) The important factor to is to check whether the religious purpose/educational purpose is
getting achieved or not.

In other words, if the legislature intended that only the building having the place of worship
be exempted then it would have mentioned ‘Religious place’ instead of ‘Religious purposes’.

Further, the Rule of liberal interpretation cannot be applied as straight jacket formulae by the
taxpayers using this judgment. In order to apply the ratio of this judgment, one would have to
prove that its case falls within the meaning of ‘Beneficial Exemption’. Notably, what
construes as ‘Beneficial Exemption’ has not been explained in detail by the Hon’ble Division
Bench. In this regard, the Hon’ble Bench has just provided that an exemption provision
should be liberally construed if the provision aims to grant incentive for promoting economic
growth or otherwise has some beneficial reason behind it.

The principles derived by the Hon’ble Division Bench would surely have an impact on the
future litigations in the Country relating to availability of exemptions.

3. Canara Bank vs United Indian Insurance Corporation and Ors

Citation: CIVIL APPEAL NO. 1042 OF 2020.
Bench: J Deepak Gupta

The Supreme Court in the matter of Canara Bank vs United Indian Insurance Corporation
and Ors.  on February 06, 2020 held that the beneficiaries of the policies taken out by the
insured are also ‘consumers’ under the Consumer Protection Act, even though they are not
parties to the contract of insurance.

Brief Facts of the case

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  The claimants in the captioned appeal are farmers who had stored their produce in a
cold store, during the year 2012-2013.

Contention by the claimants (farmers, cold store)

1. The farmers contended that the cold store while levying general charges had also
charges for the insurance premium to be paid to the insurance company, therefore,
they were well within the ambit of filing the The cold store also pressed on the same
fact

2. The farmers also contended that they had entered into a tripartite agreement with the
bank regarding their loan as the cold store had got the stocks insured from the
insurance company and the stocks belonged to the farmers.

Contentions by the Insurance Company –

1. The insurance company was of the view that farmers had no locus standi to make any
claim as there was no privity of contract between farmers and the insurance company.

2. The insurance company further contended that farmers were not ‘consumers’ under the
Consumer Protection Act, 1986.

3. They further went on to deny that the farmers had actually produced the agricultural
produce and stored it in the cold store. They also contended that the fire was not
accidental and hence they were not liable to pay any compensation for the same.

Issue

Whether in facts of the present case, the farmers/ beneficiaries could be defined as
consumers?

Decision of State Commission

The Karnataka State Consumer Disputes Redressal Commission at Bangalore held that the
farmers had proved that the fire took place on account of electrical short circuit and no
element of human intervention or use of kerosene was found. The State Commission also
found that as per the tripartite agreement entered into between the farmers, the Bank and the
cold store, it was mandatory for the cold store to insure the goods so hypothecated by the
farmers with the Bank. The insurance company was held liable to pay the amount to the
farmers.

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Decision of the National Commission

The National Commission concurred with the findings of the State Commission and held that
the farmers very well fall within the definition of ‘Consumer’ under the Consumer Protection
Act, 1986..

Definition of "Consumer" is very wide- Supreme Court

In the subsequent appeal, the Hon’ble Supreme Court in consonance with the observations
made by the Hon’ble State Commission, Karnataka and Hon’ble National Commission
observed that the definition of ‘consumer’ under the Consumer Protection Act is very wide
and not only includes a ‘person who hires or avails of the services for consideration’ but also
includes ‘the beneficiary of such services ‘who may be a person other than the person who
hires or avails of services. In the present case, even though the farmers were not directly
involved in undertaking the services of the insurance company, they were certainly the
beneficiary to the same. The Hon’ble Court further disregarded other claims of the insurance
company including the claim that the fire was not accidental and was a result of human
intervention.

Considering the same, the Hon’ble Supreme Court held that the definition of ‘consumer’
includes beneficiaries who can take benefit of the insurance availed by the insured.

The Supreme Court vide this decision has come to the rescue of farmers by giving a vivid and
categorical representation to them within the definition of ‘consumer’ under the Consumer
Protection Act, 1986. While the decision does not clearly categorize ‘farmers’ as
‘consumers’, it surely provides a way for them to be considered as ‘consumer’ when they are
beneficiaries.

4. Macquarie Bank Limited vs. Shilpi Cable Technologies

CITATION Civil Appeal No. 15135 of 2017

COURT Supreme Court of India
JUDGES/CORAM Justice R.F. Nariman

Facts of the Case

The Corporate Debtor/Respondent (Uttam Galva Metallics) defaulted in the payment to the
Operational Creditor/Appellant (Macquarie Bank) amounting to USD 6,321,337 equivalent to

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Rs. 43,11,15,190. Although repeated reminders as to the payment of the debt via emails were
made, but such communications could not influence the Debtor to make the payment,
pursuant to which a Statutory Notice was sent by the Appellant under Section 433 and 434 of
the Companies Act. The reply to such notice denied the existence of any such outstanding
debt on the part of the Respondent. After, the Insolvency and Bankruptcy Code was enacted
in 2016, the Appellant furnished a Demand Notice to the Corporate Debtor under Section 8 of
the Code. The Respondent replied to the notice saying that there existed no outstanding
default on its part and simultaneously, also questioned the validity of the Purchase
Agreement. The Appellants approached the National Company Law Tribunal and applied for
the initiation of the Corporate Insolvency Resolution Process.

NCLT Order
The NCLT rejected the application of the Appellant based on two grounds that:

(1) The application for initiation of the Corporate Insolvency Resolution Process was
incomplete as it did not comply with the mandatory requirements under Section 9(3)(c) of the
Insolvency and Bankruptcy Code which required a certificate from a financial institution with
regards to the non-payment of the outstanding amount by the Corporate Debtor. The
certificate from the Appellant Bank itself was not held to be a certificate from a financial
institution as it was a foreign bank which did not fulfill any of the requirements to qualify as
a "financial institution" as per Section 3 (14)1 of the Code.

(2) There was an existence of dispute before the Demand Notice was furnished upon the
Corporate Debtor as per Section 8(2)(a) of the IB Code which was also raised at the time
when a reply to the Statutory Notice was furnished under Section 433 and 434 of the
Companies Act by the Respondent.

NCLAT Decision
The Appellants aggrieved by the order of the NCLT approached the National Company Law
Appellate Tribunal for remedy against the Respondent. But, the NCLAT upheld the NCLT
order stating that the application has to be complete before the initiation of the Corporate
Insolvency Resolution Process and that the appellant failed to comply with the mandatory
requirement of furnishing a certificate by a financial institution in which the Corporate
Debtor has its account with regards that it has failed to pay the outstanding debt. Moreover, it
reiterated that the Appellant Bank was not a "financial institution" as per Section 3(14) of the

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IB Code. Also, as it is a mandatory document which acts as an evidence to the existence of
default, it has to be necessarily furnished and without it the application is incomplete.

Furthermore, the Appellant tribunal took cognizance of the Demand Notice which was
furnished by the lawyer of the Appellant and noted that such Demand Notice has to be in
compliance with Form 3 under Rule 5 of the Insolvency and Bankruptcy Code Rules, 2016. It
was also observed that such Demand Notice was invalid as it has to be furnished as per Form
3 by the Creditor himself or by any authorized person on his behalf and lawyer cannot come
under such purview as there was absence of any authority by the Operational Creditor.

Thus, the appeal was dismissed based on such grounds and the issue relating to the 'existence
of the dispute' adjudicated by the NCLT was left unmentioned in the said order of NCLAT.

Supreme Court's Judgment

The Appellants further aggrieved by the order of the NCLAT appealed before the Hon'ble
Supreme Court. It was contended by the Appellants that if Section 9(3)(c) is read conjointly
with Rule 6 and Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, it could be observed that the requirement of the certificate by the
financial institution is not mandatory but is only directory in nature as it is just another
document along with the other documents which could be relied upon by the Operational
Creditor in order to prove the existence of an Operational Debt. On the other hand the
Respondent contended that Section 9 uses the word 'shall' which clearly shows the intention
of the legislature to make it a necessary and a mandatory requirement and cannot be
derogated upon.

The Hon'ble Supreme Court observed that a creative interpretation of Section 9(3)(c) is
necessary in the present case as the literal interpretation would be unreasonable and would
create hardships for Appellants and other foreign banks in the future. Also, the requirement of
certificate as a document is not necessary for substantiating the existence of default as it can
be proved by other documents as well. Also, in such cases where such certificates are
impossible to furnish, serious inconvenience will be caused to the innocent persons like
Appellant when such requirements are not even necessary to further the object of the Act.

While dealing with the other issue related to whether a lawyer can issue a demand notice on
behalf of the Creditor, the Hon'ble Supreme Court read sections 8 and 9 of the IB Code

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conjointly along with Section 30 of the Advocates Act which talks about the Right of the
Advocates to practice. The Hon'ble Supreme Court relied upon the judgment of "Byram
Pestonji Gariwala v. Union Bank of India"2 where a signature affected by the lawyer on
behalf of his client on a document related to a compromise was held to be effective in law. It
was observed in the judgment that "the courts in India have consistently realized the role of
lawyer when it comes to disputes and the extent and nature of the implied authority to act on
behalf of their clients, which included compromising matters on behalf of their clients. The
Court held there is no reason to assume that the legislature intended to curtail such implied
authority of counsel."

Therefore, the decision of the NCLT and NCLAT was overruled by the Hon'ble Supreme
Court and the matter was remanded back for consideration.

Conclusion
In my opinion, the Hon'ble Supreme Court did a fair job by overriding the procedural
irregularities by observing the subjective nature of the case where the general procedure was
clearly out of place. Also, the objective of the statute was kept in mind at all times by the
Supreme Court and language of the statute was construed in a manner which is not unjust to
any party. Moreover, a liberal interpretation of the procedural aspects of the case would help
the creditors recover their debts in an efficient manner, while not allowing the debtors to pull
out loopholes in order to evade liability while delaying the process on the expense of the
creditor.

5. Indore Development Authority v. Shailendra - Supreme Court Important Judgment

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.20982 OF 2017
INDORE DEVELOPMENT
AUTHORITY ...APPELLANT (S)

VERSUS
SHAILENDRA (DEAD)
THROUGH LRS.&
ORS. ...RESPONDENT (S)

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On 8th February, 2018, in the case of Indore Development Authority v. Shailendra (Dead)
Through Lrs. & Ors. [Civil Appeal No.20982 of 2017],

issue relating to interpretation of Section 24 of the Right to Fair Compensation and

Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and section 31
of the Land Acquisition Act, 1894 came up for consideration.

A three Judge Bench per majority held as follows:-

(i).“The word ‘paid’ in section 24 of the Act of 2013 has the same meaning as ‘tender of
payment’ in section 31(1) of the Act of 1894. They carry the same meaning and the
expression ‘deposited’ in section 31(2) is not included in the expressions ‘paid’ in section 24
of the Act of 2013 or in ‘tender of payment’ used in section 31(1) of the Act of 1894. The
words ‘paid’/tender’ and ‘deposited’ are different expressions and carry different meanings
within their fold. In section 24(2) of the Act of 2013 in the expression ‘paid,’ it is not
necessary that the amount should be deposited in court as provided in section 31(2) of the Act
of 1894. Non-deposit of compensation in court under section 31(2) of the Act of 1894 does
not result in a lapse of acquisition under section 24(2) of the Act of 2013. Due to the failure
of deposit in court, the only consequence at the most in appropriate cases may be of a higher
rate of interest on compensation as envisaged under section 34 of the Act of 1894 and not
lapse of acquisition. Once the amount of compensation has been unconditionally tendered
and it is refused, that would amount to payment and the obligation under section 31(1) stands
discharged and that amounts to discharge of obligation of payment under section 24(2) of the
Act of 2013 also and it is not open to the person who has refused to accept compensation, to
urge that since it has not been deposited in court, acquisition has lapsed.
Claimants/landowners after refusal, cannot take advantage of their own wrong and seek
protection under the provisions of section 24(2)”;

(ii) “The normal mode of taking physical possession under the land acquisition cases is
drawing of Panchnama”;

(iii) “The provisions of section 24 of the Act of 2013, do not revive barred or stale claims
such claims cannot be entertained”;

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(iv) “Provisions of section 24(2) do not intend to cover the period spent during litigation and
when the authorities have been disabled to act under section 24(2) due to the final or interim
order of a court or otherwise, such period has to be excluded from the period of five years as
provided in section 24(2) of the Act of 2013. There is no conscious omission in section 24(2)
for the exclusion of a period of the interim order. There was no necessity to insert such a
provision. The omission does not make any substantial difference as to legal position”; and

(v) “The principle of actus curiae neminem gravabit is applicable including the other
common law principles for determining the questions under section 24 of the Act of 2013.
The period covered by the final/ interim order by which the authorities have been deprived of
taking possession has to be excluded. Section 24(2) has no application where Court has
quashed acquisition.” 

Conclusion

Though the IDA- II judgment has put some crucial interpretational issues to rest, it might be
seen as an escape route for the Government, because acquisition proceedings initiated under
the 1894 Act can now be saved since the Government may have merely tendered or offered
compensation to the landowner.

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