Land Acquisition and Developer Disputes: Supreme Court Rules on Fraudulent Transfers in Haryana

The case of Rameshwar and Others vs. State of Haryana & Others revolves around the legality of land acquisition, subsequent releases, and alleged fraudulent transactions involving developers, private entities, and state officials. The Supreme Court, in a detailed judgment delivered by Uday Umesh Lalit, S. Ravindra Bhat, and Pamidighantam Sri Narasimha, examined whether various land transfers, collaboration agreements, and government actions amounted to a fraud on power.

The case originated from the notification issued under Section 4 of the Land Acquisition Act, 1894, for acquiring land in Haryana on 27 August 2004. The State later decided not to proceed with the acquisition on 29 January 2010, leading to transactions where landowners allegedly transferred lands to private developers at undervalued rates. The Supreme Court ruled that the state’s withdrawal from acquisition was a fraud on power, annulled the releases, and directed that the lands vest with the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC).

Background of the Dispute

The Supreme Court was called upon to adjudicate on various applications filed by multiple parties, including:

Haryana State Industrial and Infrastructure Development Corporation (HSIIDC)
Developers such as Paradise Systems Pvt. Ltd., Karma Lakelands Pvt. Ltd., Frontier Home Developers Pvt. Ltd., Express Greens/DLF Home Developers Ltd., ABW Infrastructure Ltd., and Kalinga Realtors Pvt. Ltd.
Homebuyers and property associations

The core of the dispute lay in the state’s decision to withdraw land acquisition and how developers allegedly manipulated the process to benefit from the policy shift. The Supreme Court scrutinized transactions where developers entered into agreements with landowners, applied for licenses, and engaged in high-value land transactions.

Petitioners’ Arguments

The landowners and developers argued that:

The land acquisitions were withdrawn legitimately, and they entered into transactions in good faith.
The collaboration agreements did not constitute a transfer of property but merely facilitated development.
They had invested substantial amounts in land development, making it inequitable to nullify the transactions.
Homebuyers had purchased units in completed projects, and their interests should be protected.

Respondents’ Arguments

HSIIDC and the state of Haryana contended that:

The transactions amounted to a fraud on power as the state was influenced by developers to withdraw acquisition.
Landowners were coerced into selling their lands at lower rates due to the fear of acquisition.
The developers were fully aware of the acquisition proceedings and deliberately entered into agreements to profit.
The land should be restored to the public domain, and only homebuyers with verified claims should be protected.

Supreme Court’s Judgment

The Supreme Court held that:

The withdrawal from acquisition was fraudulent and orchestrated to benefit developers.
The collaboration agreements executed during the suspect period (27 August 2004 to 29 January 2010) amounted to transfers of land.
Only homebuyers who had paid substantial amounts and taken possession should be protected.
All undeveloped and unallotted lands should vest with HSIIDC.
Developers who had made excessive profits would have to compensate HSIIDC.

Key Directives

Developers Required to Pay Compensation

The court directed developers such as Green Heights and Godrej to pay Rs. 5 crores per acre to HSIIDC as compensation for retaining their developed properties.

Inclusion of Lands in Deemed Award

The lands associated with Karma Lakelands, ABW Infrastructure, and Speed Town were included in the deemed award, meaning they would be treated as acquired lands.

Protection of Homebuyers

The court ordered that genuine homebuyers who had paid substantial amounts should receive ownership rights, while undeveloped land and unallotted properties should vest in HSIIDC.

Arbitration for Developer Claims

Developers such as Kalinga Realtors were granted the option to seek arbitration if they disputed the compensation amounts determined by HSIIDC.

Settlement of Homebuyer Claims

HSIIDC was directed to refund amounts to homebuyers who had not received possession, with a 6% annual interest on delayed payments.

Conclusion

The Supreme Court’s ruling underscores the importance of transparency in land acquisition and prevents misuse of power by state authorities and developers. The decision restores public confidence in land acquisition policies and ensures that fraudulent transfers do not go unchecked. The ruling also safeguards the interests of homebuyers while holding developers accountable for their actions.

This landmark judgment will serve as a precedent in cases involving large-scale land acquisitions and potential manipulation by private entities to subvert public policies for private gains.

Petitioner Name: Rameshwar and Others.
Respondent Name: State of Haryana and Others.
Judgment By: Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, Justice Pamidighantam Sri Narasimha.
Place Of Incident: Haryana.
Judgment Date: 21-07-2022.

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