Introduction:

The Supreme Court of India recently resolved a land acquisition compensation dispute involving Jaiprakash Associates Ltd. (JAL) related to a cement project in Himachal Pradesh. The dispute arose when JAL was held liable to pay over Rs. 3.05 crores as compensation to landowners whose land was acquired to establish a safety zone for a cement project initially run by JAL. The acquisition began in 2008, and complications emerged after JAL transferred the project to Ultra-Tech Cement Ltd. in 2017. In the case, M/s. Ultra-Tech Cement Ltd v. Mast Ram and Anr., the Court, led by Justice JB Pardiwala and Justice Manoj Misra, clarified the responsibilities for compensation.

JAL’s Arguments:

Jaiprakash Associates Ltd. argued that after transferring the cement project to Ultra-Tech in 2017, all related liabilities, including land acquisition compensation, should also transfer to Ultra-Tech. JAL claimed that since Ultra-Tech now owned and operated the project, it should bear the responsibility of maintaining the safety zone and paying any additional compensation, particularly the supplementary award passed by the Land Acquisition Collector (LAC) in 2022. JAL also invoked Section 101 of the Land Acquisition Act, 2013, claiming that unused land should be returned to the original owners and, therefore, JAL should not be held liable for supplementary payments.

Ultra-Tech’s Arguments:

Ultra-Tech Cement Ltd. countered that, under the scheme of arrangement approved by the National Company Law Tribunal (NCLT) in 2017, all liabilities related to pending disputes before the “Effective Date” of June 29, 2017, remained with JAL. Ultra-Tech stated that since the land acquisition and compensation dispute predated the transfer, JAL was responsible for the 2022 supplementary compensation. Ultra-Tech also clarified that it had not taken possession of the specific land in question, and that Clause 7.1 of the scheme explicitly stated that liabilities before the Effective Date were JAL’s responsibility.

Court’s Judgment:

The Supreme Court ruled in favor of Ultra-Tech, holding JAL liable for the compensation. It concluded that since the land acquisition process began in 2008—long before the Effective Date of the transfer—the responsibility for both the original and supplementary compensation rested with JAL.

The Court noted that JAL had already paid the initial 2018 compensation without contesting the project transfer and could not now shift the liability for additional compensation to Ultra-Tech. The land was intended as a safety zone, fulfilling the purpose of acquisition, dismissing JAL’s claim for returning the land under Section 101.

The judgment emphasized that JAL’s liability for compensation could not be passed on with the project transfer, and such disputes between JAL and Ultra-Tech should not interfere with the landowners’ rights. Additionally, the Court stressed the constitutional right to property under Article 300A, highlighting that delays in compensation violate this right. The Court directed the State of Himachal Pradesh and the Land Acquisition Collector to ensure the payment within 15 days, recoverable from JAL.