Supreme Court Directs Himachal Pradesh to Pay Compensation in Land Acquisition Case image for SC Judgment dated 20-09-2024 in the case of M/s. Ultra-Tech Cement Ltd. vs Mast Ram & Ors.
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Supreme Court Directs Himachal Pradesh to Pay Compensation in Land Acquisition Case

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The case of M/s. Ultra-Tech Cement Ltd. vs. Mast Ram & Ors. is a landmark judgment by the Supreme Court concerning land acquisition and the responsibility of compensation payment under the Land Acquisition Act, 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Supreme Court set aside the Himachal Pradesh High Court’s order and directed the State Government and the Land Acquisition Collector (LAC) to pay the compensation amount, which was to be recovered from M/s Jaiprakash Associates Ltd. (JAL).

Background of the Case

The dispute arose from the acquisition of 56.14 bighas of land in Mauza Bhalag, Tehsil Arki, District Solan, Himachal Pradesh, for creating a safety zone around a mining area operated by Jaypee Himachal Cement, a unit of JAL. The acquisition was challenged by landowners who alleged they were not adequately compensated.

  • July 25, 2008: The Himachal Pradesh government issued a notification under Section 4 of the Land Acquisition Act, 1894, initiating the acquisition.
  • 2011: Landowners challenged the acquisition, arguing that it did not serve a public purpose.
  • June 23, 2016: The High Court dismissed the landowners’ petition, ruling that the land was essential for cement production and infrastructure development.
  • June 8, 2018: The LAC awarded Rs. 10.77 crore as compensation but deferred payment for damages to houses, crops, and trees.
  • May 2, 2022: A supplementary award of Rs. 3.05 crore was issued to compensate for damages.
  • July 12, 2022: The High Court directed Ultra-Tech Cement to pay the compensation amount and recover it from JAL.
  • September 20, 2024: The Supreme Court set aside the High Court’s order, directing the Himachal Pradesh government to pay the amount and recover it from JAL.

Legal Arguments

Arguments by the Appellant (M/s. Ultra-Tech Cement Ltd.)

  • The High Court erred in directing Ultra-Tech to pay the compensation, as JAL was responsible for the land acquisition.
  • Under the Scheme of Arrangement approved by the NCLT, all pre-existing liabilities, including disputed claims, remained with JAL.
  • The land was never transferred to Ultra-Tech under the scheme, and it continued to be owned by JAL.
  • JAL had paid the initial Rs. 10.77 crore compensation, confirming its responsibility.

Arguments by the Respondents (Mast Ram & Ors.)

  • The land was acquired for the cement plant’s safety zone and was being used by Ultra-Tech.
  • The tripartite agreement between the Himachal Pradesh government, JAL, and Ultra-Tech transferred all project-related assets and liabilities to Ultra-Tech.
  • Ultra-Tech paid compensation in earlier cases, which implies it had accepted liability.
  • The delay in compensation violated the landowners’ constitutional rights.

Supreme Court’s Observations

1. Responsibility for Compensation Payment

The Court ruled that the liability for land acquisition compensation remained with JAL.

“The acquisition was for JAL, and the responsibility for compensation payments under the supplementary award should be borne by JAL.”

2. Non-Compliance with Statutory Obligations

The Court criticized the Himachal Pradesh government for failing to ensure timely compensation.

“The State of Himachal Pradesh, being a welfare state, had the responsibility to ensure full payment of compensation to the landowners.”

3. Misapplication of the High Court’s Order

The Court found that the High Court had misinterpreted the NCLT-approved Scheme of Arrangement.

“The High Court failed to correctly apply the provisions of the scheme, which clearly stated that JAL was responsible for pre-existing liabilities.”

4. Land Return Under the 2013 Act

JAL requested the return of the land under Section 101 of the 2013 Act, arguing that it had remained unused for five years.

“The land has been utilized as a safety zone, fulfilling its intended purpose, and therefore, cannot be returned.”

Final Verdict

The Supreme Court issued the following directives:

  • The Himachal Pradesh government and the LAC must pay Rs. 3.05 crore in compensation within 15 days.
  • The State shall recover the amount from JAL.
  • JAL’s request for the return of land was rejected.
  • The Supreme Court emphasized that compensation delays violate Article 300-A of the Constitution.

This ruling reinforces the principle that compensation payments must be made without undue delay and clarifies liability in corporate land acquisitions.


Petitioner Name: M/s. Ultra-Tech Cement Ltd..
Respondent Name: Mast Ram & Ors..
Judgment By: Justice J.B. Pardiwala, Justice Manoj Misra.
Place Of Incident: Himachal Pradesh.
Judgment Date: 20-09-2024.

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