The Supreme Court has clarified that a finding of collusion and unjust enrichment in certain land acquisition awards cannot automatically nullify compensation awards granted to other landowners who were neither implicated nor alleged to have participated in any wrongdoing. This ruling reinforces the principle that individual rights to fair compensation must be adjudicated independently, even amid systemic corruption.
Background & Facts
The Dispute
The dispute arose from the acquisition of land in Chhattisgarh for the Dallirajhara-Jagdalpur Special Rail Project. A total of 550 landowners received compensation under the award dated 12.02.2018. An inquiry revealed that five individuals, along with revenue officials and the Arbitrator, had colluded to inflate compensation amounts beyond market value, resulting in unjust enrichment. Based on this, an FIR was registered, accounts were frozen, and a writ petition was filed by Bastar Railways Private Limited seeking to set aside the entire award.
Procedural History
- 2018: Competent Authority issued compensation award to 550 landowners, including the appellant.
- 2019: Arbitrator granted enhancement to the appellant’s compensation under the Land Acquisition (Special Railway Projects) Rules, 2016.
- 2022: High Court, relying on a writ petition filed by Railways against five specific beneficiaries, set aside the entire award - including the appellant’s - on grounds of alleged collusion.
- 2022: High Court dismissed the appellant’s writ petition challenging the cancellation of his award.
- 2025: Appellant filed Special Leave Petition before the Supreme Court.
Relief Sought
The appellant sought restoration of his compensation award and enhancement, arguing that he was never named in the inquiry report, FIR, or writ petition alleging collusion. He contended that his award was lawfully determined and should not be invalidated due to misconduct by unrelated parties.
The Legal Issue
The central question was whether the setting aside of compensation awards based on collusion by a few beneficiaries ipso facto invalidates all other awards in the same acquisition process, even when those beneficiaries were not implicated or made parties to the proceedings.
Arguments Presented
For the Appellant
Mr. Shoeb Alam, Senior Counsel, argued that the High Court erred in treating the appellant’s award as part of a collective voidable transaction. He relied on State of Haryana v. Smt. Sunita to assert that each landowner’s entitlement is an independent right under Section 23 of the Land Acquisition Act, 1894, and cannot be nullified without individual adjudication. He emphasized that the appellant was neither a party to the writ petition nor named in the FIR, and the Railways had not challenged his specific award.
For the Respondent
The Additional Solicitor General contended that the entire compensation framework was tainted by systemic collusion, and setting aside the awards of the implicated parties necessitated a re-evaluation of all awards to prevent inequity. He cited Union of India v. Rameshwar Prasad to argue that courts may intervene broadly where public funds are misappropriated, even if not all beneficiaries are individually implicated.
The Court's Analysis
The Court rejected the notion that collective wrongdoing justifies collective punishment. It emphasized that individual entitlement to compensation is a statutory right, not a collective privilege. The Court noted that the High Court’s judgment in Annexure P-8 explicitly limited its findings to five named respondents, yet proceeded to set aside awards for all 550 landowners - an overreach that violated principles of natural justice.
"The award passed by the competent authority is null and void with respect to the respondents Bali Nagwanshi and Neelima Belsariya and others... There was no averment that the respondents 6 to 10 impleaded there in, were so impleaded in a representative capacity nor could such a plea be taken since the individual beneficiaries cannot be represented by a few of them."
The Court further observed that the Railways Act, 1989, and the 2016 Rules confer no power of review on the Competent Authority or Arbitrator to rescind awards retroactively. The abeyance order (Annexure P-7) and cancellation order (Annexure P-9) were therefore ultra vires. The Court held that the absence of any allegation against the appellant, the non-impleadment in the writ petition, and the failure of Railways to challenge his specific award rendered the cancellation unlawful.
The Court also distinguished this case from those involving systemic fraud where all awards are uniformly manipulated. Here, the evidence pointed to isolated misconduct, and the appellant’s award was determined independently, without reference to the inflated amounts.
The Verdict
The appellant won. The Supreme Court held that compensation awards cannot be invalidated merely because other beneficiaries in the same acquisition project engaged in collusion. The original award dated 12.02.2018 and the enhancement granted by the Arbitrator on 28.06.2019 were restored. The State must disburse the full amount, with interest and solatium, within three months.
What This Means For Similar Cases
Individual Awards Are Not Collective Targets
- Practitioners must challenge compensation cancellations on a case-by-case basis, demanding proof of direct involvement in misconduct
- Courts cannot presume guilt by association; absence from FIR or writ petition is a decisive factor
- Any attempt to void an award without naming the beneficiary as a party violates Article 14 and Article 21
Procedural Due Process Is Non-Negotiable
- The Competent Authority and Arbitrator have no inherent power to review or rescind awards post-disbursement
- Any re-evaluation must follow fresh proceedings with notice and opportunity of hearing
- Orders issued in abeyance or cancellation without individual adjudication are void ab initio
Evidence Must Be Specific, Not Speculative
- Generalized allegations of systemic corruption cannot justify blanket invalidation of awards
- Inquiry reports must clearly identify the beneficiaries whose awards are under challenge
- Courts must scrutinize whether the impugned order distinguishes between implicated and unimplicated parties
