The Supreme Court held that cancellation of a land acquisition award for fraud by some landowners does not invalidate awards of untainted owners, as Justices Sanjay Kumar and K Vinod Chandran restored compensation denied due to others’ alleged misconduct.
NEW DELHI: The Supreme Court has ruled that the annulment of a land acquisition award due to fraud and collusion involving certain landowners does not automatically invalidate the award for other landowners who were not implicated in the alleged misconduct.
A Bench comprised of Justice Sanjay Kumar and Justice K. Vinod Chandran upheld an appeal from a landowner whose compensation had been withheld and ultimately canceled solely because of proceedings initiated against other parties accused of unjust enrichment.
The central legal question was whether the cancellation of an award for excessive compensation resulting from collusion between some landowners and officials would affect the entire award associated with the land acquisition. The Supreme Court answered this negatively, thereby restoring the compensation award for the appellant, Niraj Jain, as he was neither named in the FIR nor involved in the proceedings contesting the fraudulent awards.
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Factual Background of the Case:
The dispute stemmed from the acquisition of land in Chhattisgarh for a Special Rail Project, officially notified on August 31, 2017, for the Rowghat-Jagdalpur line, spanning 140 km. After the initial award, certain landowners approached the Arbitrator under the Land Acquisition (Special Railway Projects) Rules, 2016, resulting in enhanced compensation.
An inquiry was later launched, alleging that excessive sums had been awarded in collusion with revenue officials. Following the Collector’s inquiry report, an FIR was filed against the Competent Authority, the Arbitrator, and specific beneficiaries of the alleged fraud. Bastar Railways Private Limited then submitted a writ petition to the High Court of Chhattisgarh, naming state officials and five specific landowners believed to be beneficiaries of this “colourable exercise of powers.”
On January 10, 2022, the High Court ruled in favor of the Railways, canceling both the award dated February 12, 2018, and the arbitral award dated July 11, 2019, and directing a recalculation of compensation. The appellant, Niraj Jain, who was a landowner from a different village, had also received an award on February 12, 2018, and an enhancement from the Arbitrator on June 28, 2019.
However, after the Collector’s inquiry report, the payment of his additional compensation was halted on August 2, 2019. Subsequently, on February 21, 2022, his award was nullified by the Commissioner of the Bastar Division, based on the High Court’s decision against the accused landowners. Jain’s subsequent writ petition challenging this decision was dismissed by the High Court, leading to the current Supreme Court appeal.
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Legal Issue : Whether the cancellation of an award for excessive compensation resulting from collusion between some landowners and officials would affect the entire award associated with the land acquisition.?
Arguments of Parties:
Senior Advocate Shoeb Alam, representing the appellant, argued that there was “neither identity of allegations nor is there any taint alleged” regarding the award made in Jain’s favor. He noted that only certain individuals out of 550 landowners faced proceedings. Jain claimed he was not a party to the Railways’ writ petition that led to the cancellation of the award, and there were no criminal proceedings against him.
On behalf of the Railways, Additional Solicitor General Brijender Chahar asserted that the order affirming the judgment to annul the initial award had been contested by the affected landowners in a separate Special Leave Petition (SLP). He argued that the present appeal should be held in abeyance until the other SLP was addressed.
Analysis of the Court:
The Supreme Court dismissed the Railways’ argument that the pending SLP impacted Jain’s case. The Court noted that the inquiry report and FIR targeted specific landowners who had profited unjustly.
Justice K. Vinod Chandran, writing for the Bench, stated,
“The appellant herein was not a land owner who was proceeded against based on the inquiry report, either for the purpose of freezing of account or arrayed as an accused in the FIR lodged.”
The Court pointed out that the Railways had included only five out of 550 landowners in their writ petition.
The Court asserted,
“Since the appellant herein had not been proceeded against for refund or by a prosecution launched, the result of the SLP filed by the others who were specifically proceeded against by the Railways would be of no consequence in the present case.”
Furthermore, the Bench noted that the High Court’s judgment relied on by the authorities expressly stated that the award was null and void only concerning specific respondents (Bali Nagwanshi and Neelima Belsariya and others).
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The Court emphasized,
“We cannot but observe that while the arbitral award and the initial award were set aside the learned Single Judge ought to have noticed that the challenge is only against the five respondents impleaded therein and the setting aside can affect only them.”
The Bench also highlighted that the Railways had not contested the arbitral award in favor of the appellant.
Highlighting the absence of statutory authority for review, the bench stated,
“Pertinent also is the fact that the Railways Act of 1989 does not confer any power to review, on the Competent Authority authorized by the Central Government or the Arbitrator appointed under the Rules of 2016.”
Final Order :
The Supreme Court held that the High Court “egregiously erred” in failing to overturn the orders that canceled the appellant’s award. The Court set aside the High Court’s judgment and the orders from the Commissioner of the Bastar Division.
The Bench ordered,
“The initial award as on 12.02.2018 passed in favour of the appellant and the enhancement granted by the Arbitrator on 28.02.2019 stands restored. The entire award amounts, deducting what has already been granted, with interest and solatium as applicable till the date of disbursement, shall be disbursed within a period of three months.”
The appeal was consequently allowed.
Case Title: Niraj Jain vs. Competent Authority-cum-Additional Collector, Jagdalpur & Ors. SLP (C) No. 7061 of 2025
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