From land acquisition to canal project case, here're the key court orders

Builders in the dock over land acquisition

The Supreme Court last week prevented the attempt of builders who buy land cheap from farmers after the government’s publication of acquisition and claim higher compensation. Such transactions, whether by power of attorney, will or other modes, would be void, the court stated in its judgment in Shiv Kumar vs Union of India. The law is to benefit landowners in their rehabilitation. “The buyer has not been deprived of his livelihood but is a purchaser under a void transaction – the outcome of exploitative tactics played upon poor farmers who were unable to defend themselves,” the judgment emphasised and observed that “we have come across instances in which after notifications acquiring land, the property was purchased at throwaway prices by the builders and unscrupulous persons. It would be unfair and profoundly unjust and against the policy of the law to permit such a person to claim resettlement or claim higher compensation”. A purchaser cannot be said to be a landowner, according to the definition in land acquisition law. The Supreme Court thus dismissed the appeals of the buyers and upheld the ruling of the Delhi High Court. Incidentally, the apex court also set aside a 2017 judgment of its own (Manav Dharam Trust), as it was delivered by a smaller Bench, which had ignored the correct law laid down earlier by larger Benches.

Definition of commercial site

A rocky land used for quarrying cannot be treated as a “commercial site” and claim exemption from the Kerala Land Reforms Act, the Supreme Court ruled in its judgment in K H Nazar vs Mathew Jacob. Commercial sites are exempt from the purview of the Act, which allows the government to take over surplus land and provide accommodation to homeless persons. The question arose whether a rocky land used for quarrying can be treated as a ‘commercial site’ and, thereby, excluded from the applicability of the Act. A full Bench of the high court had held by majority that the land used for quarrying is not covered by the expression ‘commercial site’. Therefore, there can be no exemption for such land. The Supreme Court has now upheld that view. “A commercial site is a land on which there is a structure being utilised for an industrial or commercial purpose. Extension of the words ‘commercial site’ to quarries would result in defeating the purpose of the Act,” the judgment said, adding that breaking of rock into small pieces of stone is not a manufacturing activity.

Company case transferred to NCLT

Merely because the company court had ordered the winding up of a company, it does not follow that it should necessarily be liquidated and dissolved. Other options are available, namely, to resolve or revive the company. They should always be explored for which purpose the National Company Law Tribunal (NCLT) is invested with jurisdiction unless irrevocable steps towards liquidation have already been undertaken, the Delhi High Court stated in its judgment in Action Ispat & Power vs Shyam Metallics & Energy. While the winding-up petition was pending and a liquidator was appointed, State Bank of India, a secured creditor, sought transfer of the company case to the NCLT. This was allowed by the company judge. Action Ispat challenged it in the Delhi High Court, which dismissed the appeal. The judgment stated that the process under the Insolvency and Bankruptcy Code is meant to find the best possible solution in a given case which is beneficial to the company concerned, as well as its creditors and other stakeholders. Therefore, in the interest of equity and justice, and keeping in mind the special nature of the Code, if the company judge found it fit to transfer the winding-up petition to the NCLT on the application of a secured creditor, the high court would not ordinarily interfere in the order. The company judge rightly recalled the order of appointment of the liquidator since the liquidation was at its initial stage.

Environmental violation in canal project

The Jharkhand High Court has allowed the state government to show that it had not concealed environmental violations while calling a tender to construct a canal. The company, which succeeded in the bid, commenced the work but later it was stopped by a department of the government over the allegations of environmental violations. The company also found through a Right to Information reply that the project violated the central government gazette notification, the Forest Conservation Act, as well as the Forest (Conservation) Rules. The project had to be abandoned and the company suffered a huge loss. Therefore, Himanchal Construction Co sued the state government for Rs 10 crore, alleging that the government concealed the environmental violations and it suffered on that account. The court observed that when the notice inviting tender has been issued by one of the departments of the state, the other departments stopped the company from continuing with the work. Owing to the non-coordination between departments, the state was liable to pay compensation, it was argued. However, the district judge dismissed its petition on a “hyper-technical” ground, namely that the new facts were not incorporated in the original petition. The company appealed to the high court. It set aside the trial court order and allowed the company to pursue the suit, along with the new findings. 

Definition of consumer interpreted

The definition of ‘consumer’ in the Consumer Protection Act, despite an amendment, still seems to be a point of discord. The Supreme Court has set aside the judgment of the National Consumer Commission in a case in which a non-resident Indian who had worked in Denmark booked a shop under construction to start a business in India to earn a living. Though the builder had promised to deliver the shop in two years and was paid 80 per cent of the cost, the possession was not given, leading to a consumer complaint alleging deficiency in service and unfair trade practice. The National Commission held that he was not a consumer as he wanted to start a business and, therefore, he was not a consumer. However, the Supreme Court reversed the finding in the case, Sunil Kohli vs Purearth Infrastructure. The court stated that the person wanted to earn a living by self-employment. Such a person is a consumer according to the definition found in the Act.