Supreme Court Disposes LLP Land Acquisition Case as Infructuous After Application Withdrawal
In a significant ruling that highlights the practical realities of litigation, the Supreme Court of India recently disposed of a special leave petition concerning a land acquisition compensation dispute involving a Limited Liability Partnership (LLP), finding that the petition had become infructuous due to subsequent developments in the case. The matter involved Hydraulics and Pneumatics [India] LLP challenging a Punjab and Haryana High Court order that had set aside an executing court’s decision and remanded the matter for fresh consideration.
The case originated from land acquisition proceedings initiated by the government in 2012. The petitioner’s land was acquired under the Land Acquisition Act, 1894, with the initial award passed on May 29, 2013. The petitioner-LLP, which had been converted from a private limited company, challenged the award before the Reference Court, which subsequently enhanced the compensation to Rs. 70,000 per square yard in its award dated December 20, 2019. After deductions for development charges, the landowners were awarded Rs. 56,000 per square yard along with statutory benefits and interest.
During the pendency of an appeal (RFA No. 2532 of 2021) before the High Court challenging the Reference Court’s award, the petitioner-LLP filed an execution petition to enforce the award. It was at this stage that Respondent No. 1, Metal Arc Agri. LLP, entered the picture by filing an application under Order XXI, Rule 15(2) of the Code of Civil Procedure, 1908. This application was based on a supplementary agreement that purportedly showed Respondent No. 1 as a partner of the petitioner-LLP having acquired an 11.33% shareholding from one of the original partners, Anirudh Kumar.
The Executing Court rejected Respondent No. 1’s application, holding that “the LLP was having a separate entity, it was a juristic person distinct from shareholders and that the shareholder did not have any independent rights over the company’s assets.” This reasoning was based on the established legal principle from the Supreme Court’s judgment in Bacha F. Guzdar v. Commissioner of Income Tax, Bombay, which emphasizes the separate legal entity doctrine for companies and similar entities.
However, the Revisional Court (Punjab and Haryana High Court) took a different view. It held that “the award was in the nature of joint decree conferring and creating the rights in favour of all the partners in the LLP firm” and that Respondent No. 1 was therefore entitled to invoke Order XXI, Rule 15(2) of the CPC to protect their interest in the award. The High Court set aside the Executing Court’s order and remanded the matter for fresh consideration, directing that all parties be given an opportunity to produce relevant documents regarding the supplementary agreement.
Before the Supreme Court, the petitioner-LLP was represented by Senior Counsel Shri A.N.S. Nadkarni, who made several key arguments. He submitted that “the learned Revisional Court had grossly erred in interfering with the well reasoned judgment and order passed by the learned Executing Court” and that “the supplementary agreement itself is a bogus agreement being unsigned one and therefore not enforceable in law.” However, he fairly conceded that “insofar as the original partner Anirudh Kumar is concerned, the position is not disputed that he has 11.33% shareholdings.”
On the other side, Senior Counsel Shri Nidhesh Gupta, representing Respondent No. 1, defended the High Court’s decision, arguing that “the learned Revisional Court has rightly remanded the matter to the learned Executing Court for considering it afresh.” He raised concerns about the petitioner having withdrawn the entire compensation amount deposited by the State Government, warning that “if no orders are passed by this Court, Respondent No.1 would be left with no remedy.” He also revealed that he was appearing for Anirudh Kumar, who had filed an impeachment application, and that “out of the amount deposited in the Registry of this Court vide order dated 6th May 2024, some amount is already paid to Anirudh Kumar” and “the remaining amount is also required to be paid to Anirudh Kumar.”
The case took an interesting turn when the Supreme Court noted a crucial subsequent development. After the Court had entertained the proceedings and granted stay on December 14, 2023, Respondent No. 1 had filed an application before the Executing Court to withdraw its original application under Order XXI Rule 15(2) of the CPC. Simultaneously, a fresh application was filed under the same provision on behalf of Anirudh Kumar himself.
When confronted with this situation, Shri Gupta explained that “since the petitioner was opposing the application of Respondent No.1, Anirudh Kumar was left with no other alternative but to file an application himself.” The Court observed that “Respondent No.1 and the said Anirudh Kumar are two sides of the same coin,” indicating they were essentially representing the same interests.
This development proved decisive in the Supreme Court’s reasoning. The Court held that “When there is no application on behalf of Respondent No.1 pending before the learned Executing Court, the order passed by the Executing Court in favour of Respondent No.1 is totally rendered infructuous.” Since Respondent No. 1 had voluntarily withdrawn its application, the very basis of the High Court’s order—which had remanded the matter specifically for consideration of Respondent No. 1’s application—had disappeared.
Accordingly, the Supreme Court declared that “the special leave petition itself does not survive and is disposed of as such.” However, the Court provided clear directions regarding Anirudh Kumar’s fresh application, ordering that “the learned Executing Court to consider the same in accordance with law, after giving an opportunity to all the parties and decide the same expeditiously.”
The Court also directed that the amount deposited in the Registry be remitted back to the Executing Court for appropriate orders and clarified that “none of the observations made in the impugned judgment and order passed by the Revisional Court would be taken into consideration by the learned Executing Court while passing an order on the application under Order XXI Rule 15(2) of the CPC of the said Anirudh Kumar.”
This judgment demonstrates the Supreme Court’s practical approach to litigation, where subsequent developments can fundamentally alter the nature of a legal dispute. By recognizing that the withdrawal of the original application made the petition infructuous, the Court avoided deciding abstract legal questions and instead focused on the live controversy that remained—Anirudh Kumar’s application for his share of the compensation. The ruling also reaffirms the principle that LLPs, like companies, are separate legal entities distinct from their partners, while simultaneously ensuring that legitimate claims of individual partners are properly adjudicated through the appropriate legal channels.
Petitioner Name: Hydraulics and Pneumatics [India] LLP.Respondent Name: M/S. Metal Arc Agri. LLP and Others.Judgment By: Justice B.R. Gavai, Justice Augustine George Masih.Place Of Incident: Faridabad.Judgment Date: 07-05-2025.Result: dismissed.
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