A landmark ruling by the Supreme Court has clarified that a compensation award in land acquisition cannot be nullified for all beneficiaries merely because some recipients were found to have colluded with officials to obtain excessive payments. The judgment reinforces the principle that each landowner’s entitlement must be assessed individually, regardless of misconduct by others in the same acquisition process.
Background & Facts
The Dispute
The dispute arose from the acquisition of land in Chhattisgarh for the Dallirajhara-Jagdalpur Special Rail Project, notified on 31 August 2017. A total of 550 landowners received compensation under the award dated 12 February 2018. An inquiry later revealed that five individuals had received compensation far exceeding market value due to collusion with revenue officials. Based on this, an FIR was registered, accounts were frozen, and writ petitions were filed to set aside the awards granted to those specific individuals.
Procedural History
- 2018: Competent Authority issued compensation awards to 550 landowners, including the appellant Niraj Jain.
- 2019: Arbitrator granted enhancement to the appellant’s award under the Land Acquisition (Special Railway Projects) Rules, 2016.
- 2022: High Court, in a common judgment (Annexure P-8), set aside the awards of five named beneficiaries and directed recalculation for all, citing "colourable exercise of power" and unjust enrichment.
- 2022: The appellant’s enhanced award was also set aside (Annexure P-9) under the same order, despite no allegations being made against him.
- 2025: The appellant filed a Special Leave Petition challenging the High Court’s order.
Relief Sought
The appellant sought restoration of his original award dated 12 February 2018 and the enhancement granted by the Arbitrator on 28 June 2019, arguing that he was neither implicated in the inquiry nor a party to the writ petition that led to the cancellation.
The Legal Issue
The central question was whether the setting aside of compensation awards for a few landowners, due to proven collusion and fraudulent enrichment, ipso facto invalidates awards granted to other landowners who were not implicated, lacked any taint, and were not parties to the proceedings.
Arguments Presented
For the Appellant
The appellant, represented by Senior Counsel Shoeb Alam, argued that the High Court erred in applying a collective punishment approach. He relied on State of U.P. v. Rameshwar Prasad to assert that individual rights cannot be extinguished due to the misconduct of others. He emphasized that his award was determined independently, based on his land’s actual value, and that he was never named in the inquiry report or FIR. He further contended that the Railways Act, 1989, does not empower the Competent Authority to review or recall awards once passed.
For the Respondent
The State and Railways, represented by Additional Solicitor General Brijender Chahar and Senior Counsel Nachiketa Joshi, argued that the entire acquisition process was tainted by systemic corruption. They contended that the fraudulent awards to five beneficiaries rendered the entire award process suspect, justifying a blanket reset to prevent unjust enrichment. They cited Union of India v. Rameshwar Prasad to argue that courts must intervene to restore public trust in land acquisition, even if it affects innocent parties.
The Court's Analysis
The Court rejected the notion that fraud by a few can invalidate the rights of the many. It emphasized that the High Court’s order failed to distinguish between those who were directly implicated and those who were not. The Court noted that the writ petition filed by the Railways specifically named only five beneficiaries as respondents, and the judgment explicitly limited its findings to those individuals.
"The award passed by the competent authority is null and void with respect to the respondents Bali Nagwanshi and Neelima Belsariya and others, as the award was illegally determined against the provisions of law..."
The Court observed that the High Court’s order, while citing the above, erroneously extended its effect to all 550 landowners, including the appellant, who was neither named nor impleaded. The Court held that the principle of res judicata and natural justice require that only parties to a proceeding can be bound by its outcome. The appellant’s award was determined independently, and no evidence linked him to the collusion.
The Court further noted that the Railways Act, 1989, and the Rules of 2016 do not provide any statutory mechanism for the Competent Authority to review or recall an award after its issuance. The High Court’s action, therefore, amounted to judicial overreach, effectively creating a power not granted by law.
The Verdict
The appellant won. The Supreme Court held that an award of compensation in land acquisition cannot be set aside for innocent beneficiaries merely because other recipients engaged in fraud. The Court restored the appellant’s original award of 12 February 2018 and the enhancement granted by the Arbitrator on 28 June 2019, directing full disbursement within three months.
What This Means For Similar Cases
Individual Awards Are Presumptively Valid
- Practitioners must challenge compensation awards on an individual basis, not through collective nullification
- Any petition seeking to set aside an award must specifically name the beneficiary and allege facts particular to them
- Blanket cancellation of awards without individualized findings violates Article 14 and Article 300A
No Retroactive Review Under Railways Act
- Competent Authorities and Arbitrators lack statutory power to review or recall awards post-disbursement
- Courts cannot imply such powers; any cancellation must be grounded in express statutory authority
- Practitioners should raise this as a jurisdictional bar in any challenge to finalized awards
Fraud Must Be Proven Against Each Beneficiary
- Allegations of collusion or inflated valuation must be tied to specific individuals
- Generalized claims of "systemic corruption" cannot justify setting aside awards to uninvolved parties
- Evidence of fraud must be adduced in proceedings where the beneficiary is a party and given a fair hearing
