Section 24(2) RFCTLARR Act | Lapse of Acquisition Requires BOTH Non-Payment AND Non-Possession : Karnataka HC

The Karnataka High Court has clarified the stringent twin conditions under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 for declaring acquisition proceedings as lapsed. The Court held that mere deposit of compensation in treasury, without personal payment to landowners, does not satisfy the payment requirement if possession has already been lawfully taken. This judgment reinforces the absolute vesting principle under Section 16 of the Land Acquisition Act, 1894, where land vests in the State free from all encumbrances once possession is taken, barring subsequent divesting even if earlier acquisition proceedings lapse.

Background & Facts

The Dispute

The petitioners, Murugesh Mudaliar, Mohan Mudaliar, and late Sundarvelu Mudaliar (since abated), are legal heirs of Smt. Andalamma, who originally owned land measuring 3 acres 8 guntas in Survey No.20/1B, Madiwala Village, Begur Hobli, Bengaluru South Taluk. The dispute centers on two sets of acquisition proceedings:

1. Earlier Acquisition (1959-1965): Initiated by the State Government for the benefit of the City Improvement Trust Board (CITB), now Bangalore Development Authority (BDA), via:

   • Preliminary Notification dated 26.11.1959 under Section 4(1) of the Land Acquisition Act, 1894

   • Final Notification dated 28.09.1965 under Section 6(1)

   • Award passed on 02.09.1969, but approval granted only on 05.09.2000

   This acquisition was challenged in W.P. No.30558/2000 on grounds of non-compliance with Section 11A of the LA Act, leading to a declaration of lapse by the High Court on 18.07.2002. The Division Bench upheld this in W.A. No.4899/2002 on 23.03.2005.

2. Subsequent Acquisition (1995-1996): Initiated during the pendency of the earlier proceedings for the benefit of the Indian Institute of Astrophysics, via:

   • Preliminary Notification dated 14.09.1995

   • Final Notification dated 27.09.1996

   • Award passed on 16.11.1997 (later corrected to 24.09.2002)

   The petitioners challenged this acquisition in W.P. Nos.6522-6525/1998, contending lack of jurisdiction and public purpose. The High Court dismissed these petitions on 23.07.2002, and the Division Bench upheld the dismissal in W.A. Nos.4916-4918/2002 on 23.03.2005.

Key Facts

• Land Details: Survey No.20/1B, Madiwala Village, measuring 3 acres 8 guntas (2 acres 35 guntas subject to subsequent acquisition)

• Earlier Acquisition:

  • Preliminary Notification: 26.11.1959

  • Final Notification: 28.09.1965

  • Award: 02.09.1969 (approval: 05.09.2000)

  • Challenge: W.P. No.30558/2000 (lapse declared on 18.07.2002)

  • Appeal: W.A. No.4899/2002 (dismissed on 23.03.2005)

• Subsequent Acquisition:

  • Preliminary Notification: 14.09.1995

  • Final Notification: 27.09.1996

  • Award: 16.11.1997 (corrected to 24.09.2002)

  • Possession Mahazar: 12.07.2005

  • Section 16(2) Notification: 15.07.2005

  • Possession Certificate: 11.08.2005

  • Sale Deed: 05.09.2005 (BDA to KSRP)

• Compensation: Deposited in treasury as petitioners failed to receive it

• Possession: Petitioners claim continued possession with houses, sheds, and nursery activities; respondents deny this, asserting physical possession by Indian Institute of Astrophysics and KSRP

Procedural History

• 18.07.2002: High Court declares earlier acquisition (1959-1965) lapsed in W.P. No.30558/2000

• 23.03.2005: Division Bench dismisses W.A. No.4899/2002, upholding lapse

• 23.07.2002: High Court dismisses W.P. Nos.6522-6525/1998 challenging subsequent acquisition (1995-1996)

• 23.03.2005: Division Bench dismisses W.A. Nos.4916-4918/2002, upholding subsequent acquisition

• 12.07.2005: Possession mahazar drawn

• 15.07.2005: Section 16(2) notification issued

• 11.08.2005: Possession certificate issued

• 05.09.2005: Sale deed executed by BDA in favor of KSRP

• 25.01.2016: Trial Court dismisses O.S. No.2864/2008 (injunction suit by petitioners), holding KSRP in lawful possession

• 2014: Petitioners file W.P. No.46212/2014 seeking declaration of lapse under Section 24(2) of the 2013 Act

• 2018: Petitioners file W.P. No.13080/2018 challenging sale deed and possession certificate

• 17.04.2026: Judgment reserved

• 12.06.2026: Present judgment delivered

The Parties' Positions

For the Petitioners

• Lapse under Section 24(2): Contend that the subsequent acquisition proceedings (1995-1996) have lapsed because:

  • Compensation was not paid to them or deposited in court; mere treasury deposit is insufficient

  • Lawful physical possession was never taken; mahazar and Section 16(2) notification are inadequate

• Invalidity of Subsequent Acquisition: Argue that the State could not initiate fresh acquisition proceedings in 1995 while the earlier proceedings (1959-1965) were subsisting

• Continuing Possession: Assert they have remained in possession, with houses, sheds, and nursery activities on the land

• Relief Sought: Declaration that acquisition proceedings have lapsed under Section 24(2) of the 2013 Act, quashing of sale deed and possession certificate

For the Respondents

• No Lapse: Rely on Indore Development Authority v. Manoharlal ((2020) 8 SCC 129) to argue that lapse under Section 24(2) requires both non-payment and non-possession. Here, possession was taken, and compensation was deposited

• Vesting under Section 16: Contend that once possession is taken under Section 16 of the LA Act, land vests absolutely in the State free from encumbrances, barring divesting

• Finality of Proceedings: Argue that the subsequent acquisition proceedings were upheld in W.P. Nos.6522-6525/1998 and W.A. Nos.4916-4918/2002, attaining finality

• Independent Source of Title: Assert that the subsequent acquisition proceedings constitute an independent source of title, unaffected by the lapse of earlier proceedings

• Possession: Deny petitioners' continued possession, calling their photographs fabricated

• Delay and Laches: Contend that W.P. No.46212/2014 was filed 17 years after the award, suffering from delay

• Civil Remedy: Argue that validity of sale deed involves disputed questions of fact and title, requiring civil adjudication

The Legal Issue

The central questions before the Court were:

1. Whether the acquisition proceedings initiated pursuant to the Preliminary Notification dated 14.09.1995 and Final Notification dated 27.09.1996 have lapsed under Section 24(2) of the 2013 Act on grounds that:

   • Compensation was not paid, and

   • Lawful physical possession was not taken?

2. Whether the lapse of the earlier acquisition proceedings (1959-1965) automatically invalidates the subsequent acquisition proceedings (1995-1996)?

3. Whether the respondents established that pursuant to the subsequent acquisition proceedings:

   • Award was passed,

   • Possession was taken under Section 16 of the LA Act, and

   • Section 16(2) notification was issued, resulting in absolute vesting in the Government?

4. Whether the petitioners, after vesting under subsequent acquisition proceedings, can seek restoration of title or possession merely because the earlier acquisition proceedings lapsed?

Arguments Presented

For the Petitioners

• Twin Conditions for Lapse: Invoked Section 24(2) of the 2013 Act, arguing that both conditions - non-payment of compensation and non-taking of possession - are satisfied:

  • Compensation: Though deposited in treasury, it was not paid to them or deposited in court, failing the statutory requirement

  • Possession: Contend that lawful physical possession was never taken; mahazar and Section 16(2) notification are insufficient

• Invalidity of Subsequent Acquisition: Argued that the State lacked jurisdiction to initiate fresh acquisition proceedings in 1995 while the earlier proceedings (1959-1965) were subsisting

• Continuing Possession: Asserted they have remained in possession, with structures and activities on the land

• Res Judicata: Contended that the subsequent acquisition proceedings cannot be insulated from the lapse of the earlier proceedings

For the Respondents

• No Lapse: Relied on Indore Development Authority to argue that lapse under Section 24(2) requires both non-payment and non-possession. Here, possession was taken, and compensation was deposited

• Vesting under Section 16: Cited Sulochana Chandrakant Galande v. Pune Municipal Transport ((2010) 8 SCC 467) to argue that once possession is taken under Section 16, land vests absolutely in the State, barring divesting

• Finality of Proceedings: Emphasized that the subsequent acquisition proceedings were upheld in earlier litigation, attaining finality

• Independent Source of Title: Asserted that the subsequent acquisition proceedings constitute an independent source of title, unaffected by the lapse of earlier proceedings

• Possession: Denied petitioners' continued possession, calling their evidence fabricated

• Delay: Argued that W.P. No.46212/2014 was filed after 17 years, suffering from laches

• Civil Remedy: Contended that validity of sale deed involves disputed questions of fact and title, requiring civil adjudication

The Court's Analysis

The Court conducted a meticulous analysis of Section 24(2) of the 2013 Act and the vesting principle under Section 16 of the LA Act, relying heavily on authoritative precedents:

Lapse under Section 24(2): Twin Conditions

The Court examined the Constitution Bench judgment in Indore Development Authority v. Manoharlal, which held:

"366.3. The word 'or' used in Section 24(2) between possession and compensation has to be read as 'nor' or as 'and'. The deemed lapse of land acquisition proceedings under Section 24(2) of the 2013 Act takes place where due to inaction of authorities for five years or more prior to commencement of the said Act, the possession of land has not been taken nor compensation has been paid."

The Court emphasized that both conditions must coexist for lapse. Here, while compensation was deposited in treasury (not personally paid), possession was lawfully taken via:

• Possession Mahazar dated 12.07.2005

• Section 16(2) Notification dated 15.07.2005

• Possession Certificate dated 11.08.2005

• Sale Deed dated 05.09.2005 (BDA to KSRP)

The Court rejected the petitioners' contention that treasury deposit does not constitute payment, citing Indore Development Authority:

"366.5. In case a person has been tendered the compensation as provided under Section 31(1) of the 1894 Act, it is not open to him to claim that acquisition has lapsed under Section 24(2) due to non-payment or non-deposit of compensation in court. The obligation to pay is complete by tendering the amount under Section 31(1)."

Vesting under Section 16: Absolute and Unencumbered

The Court relied on Sulochana Chandrakant Galande to elucidate the absolute vesting principle under Section 16 of the LA Act:

"13. ... the property acquired becomes the property of Government without any conditions or limitations either as to title or possession. The legislature has made it clear that the vesting of the property is not for any limited purpose or limited duration."

Key holdings from Sulochana Chandrakant Galande applied:

• Once land vests in the State under Section 16, it is free from all encumbrances, and the original owner ceases to have enforceable rights except compensation

• No divesting is permissible under Section 24(2) of the 2013 Act once possession is taken

• Change of user or transfer between governmental authorities does not invalidate acquisition

• The original owner becomes persona non grata post-vesting, with no right to restoration

Independent Validity of Subsequent Acquisition

The Court held that the subsequent acquisition proceedings (1995-1996) constituted an independent source of title, unaffected by the lapse of the earlier proceedings (1959-1965). Key points:

• The subsequent acquisition was initiated during the pendency of the earlier proceedings but for a different public purpose (Indian Institute of Astrophysics)

• The petitioners independently challenged the subsequent acquisition in W.P. Nos.6522-6525/1998, which were dismissed on 23.07.2002

• The Division Bench upheld the subsequent acquisition in W.A. Nos.4916-4918/2002 on 23.03.2005, attaining finality

• The sale deed executed by BDA (relying on the lapsed earlier acquisition) is of lesser consequence because the real source of title is the subsequent acquisition proceedings

Possession: Official Records vs. Petitioners' Claims

The Court noted that the petitioners' claim of continuing possession was supported only by photographs and assertions, while the respondents produced:

• Possession Mahazar dated 12.07.2005

• Section 16(2) Notification dated 15.07.2005

• Possession Certificate dated 11.08.2005

• Sale Deed dated 05.09.2005

The Court also relied on the civil suit O.S. No.2864/2008, where the Trial Court held:

"43. ... evidence on record clearly shows that defendant no.2 [KSRP] is in lawful possession and enjoyment of the suit schedule property by paying tax to the Bruhat Bengaluru Mahanagara Palike. Hence, on perusal of the entire evidence on record it is much clear that, plaintiffs are not at all in possession and enjoyment of the suit schedule property."

Res Judicata and Finality

The Court emphasized that the subsequent acquisition proceedings were upheld in earlier litigation, attaining finality. The petitioners cannot reopen concluded proceedings under the guise of Section 24(2).

Civil Remedy for Disputed Questions

The Court noted that adjudication of the validity of the sale deed, source of title, and inter se rights between governmental authorities involves disputed questions of fact and title, which are inappropriate for writ jurisdiction. The petitioners' remedy, if any, lies before the civil court.

The Verdict

The Court dismissed both writ petitions, holding:

1. The acquisition proceedings initiated pursuant to the Preliminary Notification dated 14.09.1995 and Final Notification dated 27.09.1996 have not lapsed under Section 24(2) of the 2013 Act because:

   • Compensation was deposited (even if not personally paid), and

   • Lawful possession was taken (evidenced by mahazar, Section 16(2) notification, and possession certificate)

2. The land vested absolutely in the Government under Section 16 of the LA Act free from all encumbrances, and the petitioners ceased to have enforceable proprietary rights except the right to compensation

3. The subsequent acquisition proceedings (1995-1996) constitute an independent source of title, unaffected by the lapse of the earlier proceedings (1959-1965)

4. The petitioners cannot seek restoration of title or possession merely because the earlier acquisition lapsed

5. The sale deed executed by BDA (relying on the lapsed earlier acquisition) is of lesser consequence compared to the subsequent acquisition proceedings

What This Means For Similar Cases

Section 24(2) Lapse: Strict Twin Conditions

• Both non-payment AND non-possession required: Practitioners must note that Section 24(2) lapse is attracted only if both conditions coexist. Mere treasury deposit of compensation, without personal payment, does not suffice if possession is taken

• Possession mahazar and Section 16(2) notification critical: Official records evidencing lawful possession (mahazar, Section 16(2) notification, possession certificate) will defeat lapse claims

• No divesting post-vesting: Once possession is taken under Section 16, land vests absolutely in the State, and Section 24(2) cannot divest the Government

Vesting under Section 16: Absolute and Unassailable

• No encumbrances post-vesting: Land vests in the State free from all encumbrances, including easements, mortgages, or claims by original owners

• Change of user or transfer permissible: Government can change the user of acquired land or transfer it between authorities without invalidating acquisition

• No restoration right: Original owners cannot seek restoration even if land is used for a different public purpose or transferred

• Compensation is sole remedy: Post-vesting, original owners' only right is compensation; no proprietary claims survive

Subsequent Acquisition: Independent Validity

• Independent source of title: Subsequent acquisition proceedings constitute an independent source of title, even if earlier proceedings lapse

• Finality of proceedings: If subsequent acquisition proceedings are upheld in earlier litigation, they attain finality and cannot be reopened under Section 24(2)

• Civil remedy for disputed questions: Validity of sale deeds, source of title, and inter se rights between authorities involve disputed questions of fact, requiring civil adjudication

Delay and Laches: Procedural Hurdles

• Unexplained delay fatal: Petitions filed after significant delay (e.g., 17 years post-award) may be dismissed on grounds of laches

• Res judicata: Parties cannot reopen concluded proceedings under the guise of Section 24(2) if earlier litigation upheld the acquisition