When ‘just compensation’ becomes just a word

Consider the plight of farmers like Natha from the movie Peepli Live, who receives a government notice that their land is to be acquired for a public project. An award is subsequently passed and the compensation is formally recorded as “tendered.” However, they never actually receive compensation because it is deposited in the government treasury instead of their account, often delayed by disputes over land title, missing documentation, or administrative negligence.

When they finally turn to court after realising that the land is gone and no compensation has arrived, they are told that since the payment was technically offered, the acquisition cannot lapse. This injustice persists, leaving them deprived of both their land and its due value.

Such inequity traps people like Natha in a maze of procedures, where the system keeps justifying itself while denying resolution. If Franz Kafka’s idea of The Trial was set in rural India, it would look a lot like Natha’s story in Peepli Live. Both capture the quiet devastation of landowners caught in a procedural labyrinth where the pursuit of justice itself becomes a form of punishment.

Natha’s story is just the tip of the iceberg; one that surfaces most visibly in the land acquisition jurisprudence of our country.

To expand on this, a 2024 Comptroller and Auditor General (CAG) report from Odisha noted that ₹120.94 crore of awarded compensation across 179 cases could not be disbursed to landowners because of procedural lapses. Moreover, the audit mentioned that 57.453 acres of land were taken over even without initiating any land acquisition proceedings. The question arises as to why such a problem exists.

The cause of this problem can be attributed to the case of Indore Development Authority v. Manoharlal (2020), which has been abused to create a mechanism wherein compensation can be treated as “tendered”. On March 18, 2025, the Supreme Court in State of Haryana v. Aalamgir reiterated this position, holding that under Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Land Acquisition Act), the acquisition of land does not lapse if the State has merely tendered payment, even if no compensation has been disbursed to the landowners. This judicial approach has been consistently reaffirmed by multiple High Courts across the country - notably by the Bombay, Punjab & Haryana and Madras High Courts.

This begs the question: Can the principle of “just compensation” truly be said to exist when the State merely tenders the compensation instead of actually paying it? In simpler terms, can the mere act of tendering be regarded as equivalent to payment made to the landowner?

In Manoharlal, the Bench headed by Justice Arun Mishra reinterpreted the word ‘or’ of Section 24(2) of the Land Acquisition Act. The Section originally provided:

“Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894, where an award under Section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid, the said proceedings shall be deemed to have lapsed.”

The key phrase for interpretation is “or the compensation has not been paid”. In simple terms, Parliament intended that if either of the twin conditions - failure to take possession or failure to pay compensation - were met, the acquisition would automatically lapse. The intention was straightforward where the State could not retain ownership of land without ensuring that the affected citizens were compensated. This provision served as a statutory safeguard against administrative inertia and prolonged deprivation of compensation. However, the practical implications are inclined towards something else.

The Court in Manoharlal read the word “or” under Section 24(2) of the Land Acquisition Act as “nor”/“and”. It held that both possession must remain untaken and compensation unpaid for the acquisition to lapse. This means that in practice, compensation often never reaches landowners due to outdated land records, bureaucratic delays, or missing bank details. Yet, through this judgment, the State can still claim it has “done its duty.”  This subtle but drastic change reversed the protection the statute meant to initially give. By judicially rewriting the conjunction to a disjunction, the judgment shifted the burden from the State to the citizen, allowing the government to retain land even when it had failed to pay. Former Chief Justice of India SA Bobde went ahead to call this order a gift of “laxity” to the government.

Moreover, the Court applied its interpretation retroactively, meaning that all pending cases under Section 24(2) would now be governed by this logic post-enactment of the 2013 Act. Thousands of landowners suddenly found their claims invalid. In Punjab alone, over 5,655 acquisition proceedings are pending since 2023. Many aggrieved families had waited years for either compensation or possession notices, neither of which came. Overnight, their cases collapsed, not on merit, but on semantics of whether compensation had been “paid” or merely “tendered,” as redefined by the Court.

The Act must move beyond this incongruous interpretation. Unless a larger bench of the Supreme Court revisits the interpretation of Section 24(2) and safeguards the guarantee intended by Parliament, “just compensation” will remain a hollow phrase. Currently, the Manoharlal interpretation enables the State to expropriate through procedure rather than the statute. Furthermore, if the judiciary continues to overlook this imbalance, the legislature must step in to restore the moral and constitutional equilibrium between landowners and the State.

Ultimately, we return to people like Natha, whose land is expropriated, compensation being still “tendered” on paper and never paid. To take without giving, after all, is not acquisition but confiscation. The observations by the CAG report are testaments that compensation for land acquisition, constitutionally protected by Article 300-A, has been hollowed out through procedural chicanery.

The Supreme Court has time and again iterated and reiterated that compensation for land acquired is a constitutional right - most significantly in KT Plantation v. State of Karnataka (2011) and Kolkata Municipal Corporation v. Government of Karnataka (2024). Cases like Manoharlal and Aalamgir, on the other hand, highlight a pattern that indicates procedural abuse. Unless and until the Court rectifies this fallacious interpretation, “just compensation” will remain just a word.

Parth Chhapolia is a student at Jindal Global Law School, OP Jindal Global University, Sonipat. He can be reached at chhapoliaparth@gmail.com