Municipal Corporation/Planning Authority cannot be compelled to acquire useless, unsuitable land and pay compensation to landowners, rules Top Court

Read Judgment: Kolhapur Municipal Corporation & Ors. V. Vasant Mahadev Patil (dead) Through L.r.s & Ors. 

Pankaj Bajpai

New Delhi, February 15, 2022: While observing that no Corporation and/or Planning Authority can be compelled to pay compensation and acquire the land which according to them is not suitable and/or usable for the purposes for which it is reserved, the Supreme Court highlighted that if within a period of one year from the date of receipt of purchase notice as per Section 127 of MRTP Act, 1996, a declaration u/s 19 of the 2013 Act, is not issued and the land is not acquired, then reservation/allocation under the Development Plan is deemed to have lapsed and the land is released from such reservation/ allocation.

A Division Bench of Justice M.R Shah and Justice B.V Nagarathna observed that once the reservation of land under the Development Plan is deemed to have lapsed by operation of law and it is released from reservation, no writ of Mandamus could have been issued by the High Court directing the Municipal Corporation to still acquire the land and to issue a declaration u/s 19 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. 

Going by the background of the case, as the land in Kolhapur owned by Vasant Mahadev Patil (Respondent land owners) was not acquired and/or used for the public purposes for which the same was reserved under the sanctioned development plan, the Respondent served a notice u/s 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). Accordingly, a proposal was submitted by Kolhapur Municipal Corporation (Appellant) to the State Government for compulsory acquisition of the subject property. By an order of the District Collector, the Corporation was directed to deposit 25% of the amount before publication of the notification u/s 4 of the Land Acquisition Act, 1894 (1894 Act), 25% of estimated compensation amount before the publication of a declaration u/s 6 of the 1894 Act and remaining 50% of the estimated compensation amount before the declaration of award u/s 11 of the 1894 Act. 

Pursuant to enactment of the 2013 Act, the Special Land Acquisition Officer directed the Corporation to deposit the amount of Rs.77,65,12,000/- towards compensation. Since the Corporation was not in a financial position to pay such a huge compensation amount and so requested the landowners to accept the Transferable Development Rights (TDR) in lieu of compensation amount as per the Development Control Rules of the Corporation. The landowners accepted the said proposal. In the meantime, the Special Land Acquisition Officer informed the Municipal Corporation to deposit 30% of the total amount of compensation and also informed that the land under reservation fell within the flood affected area and considering the valuation of the said area as per the market value, the amount of compensation was reduced from Rs.77,65,12,000/- to Rs. 43,41,29,400/-.

According to the Municipal Corporation, before the TDR proposal could be considered, it was necessary to carry out the required development work upon the said reserved land for making it suitable for the public purpose as per the reservation, to be carried out by the landowners. However, thereafter the landowners did not agree to avail of the TDR and the landowners approached the High Court. Thereafter, the High Court issued the writ of Mandamus directing the appellants to acquire the land in question and to issue a declaration u/s 19 of the 2013 Act. The High Court also observed that as there was already a resolution passed by the General Body of the Municipal Corporation to acquire the subject lands by taking recourse to law of compulsory acquisition, therefore, there was no option for the Municipal Corporation but to acquire the said land by taking recourse to the Act of 2013.

After considering the submissions, the Top Court found that while preparing a Development Plan and while designating a particular land and/or reserving a particular land for public purposes mentioned u/s 22(b) & (c) of MRTP Act, the Planning Authority has to bear in mind

and/or take into consideration whether the particular land, which is earmarked and/or reserved and/or designated for a public purpose, which will have to be acquired on payment of compensation is suitable and/or useable or not for the purposes for which it is reserved for public purposes. 

In the present case, the land in question is not at all suitable for the purposes for which it is reserved, and every year for a period of fifteen days to one month, the said area gets flooded during rainy season and that it will be necessary to carry out the required development work at a huge cost upon the said reserved land for making it suitable for public purposes as per reservation, added the Court. 

Speaking for the Bench, Justice Shah noted that as per Section 125 of MRTP Act, any land required, reserved or designated in a Development plan or Town Planning Scheme for a public purpose shall be deemed to be land needed for a public purpose within the meaning of the Land Acquisition Act, 1894. 

Therefore, mere Resolution being passed by the General Body of the Corporation to acquire the land and sending a letter to the Collector to acquire the land, without any further steps being taken under the Land Acquisition Act, namely no declaration u/s 6 thereof being issued within a period of one year from the receipt of the said purchase notice, would result in the reservation as deemed to have lapsed, added the Bench.

Justice Shah further pointed that notification in the Official Gazette is only a consequential act and it has nothing to do with the actual lapsing of reservation by operation of law as the reservation is deemed to have lapsed u/s 127(1), and therefore, issuance of the notification of lapse of the reservation of land is only a procedural act and non-issuance of such a notification in the Official Gazette with respect to lapse of the reservation, allocation or designation would not affect the lapse of the reservation u/s 127(1) of the MRTP Act.

Therefore, the Apex Court concluded that once it is found that the land is not usable and/or suitable for the purposes for which it has been reserved, the Corporation cannot still be compelled and directed to acquire the land and grant TDR in lieu of amount of compensation.