'Land Acquisition Can’t Be Challenged After Compensation Is Accepted': SC On Company’s Plea Regarding Singur Land

New Delhi: The Supreme Court on Monday ruled that land acquired for Tata Motors' 'Nano' car project in Singur, West Bengal, will not be restored to the industrial entities which were operating there prior to the acquisition.

The apex court set aside a decision of the Calcutta High Court to restore land to a private company based on the 2016 Kedar Nath Yadav vs State of West Bengal precedent, whereby the land acquisition proceedings for establishing the manufacturing plant of TATA Motors’ were quashed.

The apex court said the 2016 verdict was anchored on the premise that the acquisition disproportionately affected vulnerable communities lacking financial resources and institutional access to challenge governmental action.

A bench comprising Justices Surya Kant and Joymalya Bagchi, citing the 2016 ruling, said it provided a targeted remedy for farmers and was not a general right for commercial entities, which accepted the acquisition for a decade. “In view of the above analysis, we hold that the reasoning in Kedar Nath Yadav (2016) does not enure to the benefit of respondent no.1 (a commercial entity). The restoration remedy was conceived for disadvantaged farming communities, not as general restitution for all affected parties”, said the apex court.

The bench said the acquisition attained finality qua respondent no 1 through its own inaction and it remained silent for an entire decade from 2006 to 2016, making no attempt to challenge the acquisition despite the award being passed on September 25, 2006.

The bench said once the proceedings conclude in the award and possession is taken without challenge, the court would not entertain any belated grievance from the interested person. “In stark contrast, affected farmers brought their plight before the high court through PIL in November, 2006 itself— challenging procedural violations at the earliest opportunity. Hence, respondent no.1 cannot now seek parity and question what had been conclusively settled”, said the apex court.

The bench held that respondent No.1 cannot claim the benefit of this court's directions in Kedar Nath Yadav, and added, “having accepted monetary settlement without challenge and remained passive during litigation spanning several years, it cannot now seek benefits from relief secured by others”. “The confluence of its commercial status, nature of the relief, and the practical impossibility of restoration due to intervening modifications collectively defeats this claim”, said the bench.

The bench said permitting industrial entities to claim restoration benefits from litigation they chose not to pursue would establish an undesirable precedent.

It said that such an approach would incentivize strategic inaction, encouraging parties to remain dormant during protracted litigation only to emerge as claimants after favourable outcomes are secured by others. The bench said this would undermine both the targeted nature of remedial relief and the fundamental principle that legal benefits flow from active pursuit of remedies, not passive opportunism.

“The instant appeal (filed by state government) is allowed and the impugned judgment dated October 11, 2018, passed by the division bench as well as the judgment dated April 24, 2017, of the single judge of the high court are hereby set aside”, said the apex court.

The bench noted that the cause of cultivators and farmers affected by the Singur project was espoused before the high court, inter-alia, on grounds that it disproportionately affected vulnerable agricultural communities and fertile land, with procedural violations including vitiated Section 5-A inquiry and non-application of mind by authorities. Respondent no.1 filed objections under Section 5-A on August 21, 2006, which were rejected.

The bench noted that despite possessing financial resources and institutional access, the respondent no. 1 never pursued the appellate remedies available under the Land Acquisition Act, 1894. “It accepted the entire compensation amount of INR 14,54,75,744 without protest and remained passive while cultivators pursued litigation for years. Having chosen not to contest the acquisition through available statutory mechanisms, Respondent No.1 now seeks the same relief that was granted to disadvantaged communities through PIL—a classic free-rider problem that judicial remedies cannot encourage”, said the apex court.

The bench said the proceedings before the high court commenced through a PIL specifically initiated to prevent poor farmers from losing their fertile agricultural land. “The express objective of PIL was to safeguard cultivators whose livelihoods faced extinction through large-scale acquisition. Extending such relief to industrial entities like Respondent No.1 would thus defeat the remedy's foundational intent”, said the bench.

The West Bengal government moved the apex court against the judgment dated October 11, 2018, passed by a division bench of the high court. The division bench upheld the order of the learned single judge of the high court directing the state to restore 28 Bighas of land (subject land), including all structures erected thereon, to M/s Santi Ceramics Private Limited (respondent no.1).

In 2006, pursuant to TATA Motors' decision to establish this facility in Singur, the appellants had initiated acquisition spanning over 1000 acres (Singur Project). The acquisition encompassed agricultural lands and lands converted for non-agricultural purposes. The instant appeal concerns restoration of the subject land, which formed part of the acquisition. The high court had accorded restoration in favour of respondent no.1 on ground of parity with cultivators to whom such a relief was granted by this court in Kedar Nath Yadav.

The company's objections under Section 5-A of the Land Acquisition Act, were rejected, after which it accepted Rs 14.55 crore compensation and did not challenge the acquisition.

In 2016, the apex court quashed the acquisition, citing mechanical rejection of objections and disproportionate harm to poor cultivators, and ordered land restored to “original landowners/cultivators.”

The top court permitted Santi Ceramics to remove remaining structures, machinery from the subject land within three months or alternatively it may request the state authorities to put the structures, machinery and other movable and immovable articles for public auction. It said Santi Ceramics shall be entitled to the auction proceeds after deducting expenses incurred on the auction process.

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