Bombay High Court: Authority Cannot Withhold Compensation Amount Under Railways Act Once It Is Decided

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In the case of Premier Ltd. V. Union of India & others, Justices Ujjal Bhuyan and N.R. Borkar of the Bombay High Court on 3rd August 2020 interpreted relevant provisions of Railways Act, 1989.

Facts of the Case

The Central Government issued a notification for the acquisition of certain properties under a particular rail project. The Petitioner’s land was also acquired under this. The Respondent had decided the compensation amount for the acquisition of land, but it was not paid to the Petitioner due to illegal structures existing on the property. The Petitioner was asked to remove them to get this compensation.  

Petitioner’s Arguments

The Petitioner submitted the following arguments:

  1. The Respondent by their notifications did not ask for the land not to have any illegal structures on it. Therefore, the Respondent cannot ask the Petitioner to remove the structures from the property after the amount of compensation has been decided.
  2. As per law, the land is now absolutely transferred to the Central Government, and therefore, the Petitioner cannot remove the structures now.
  3. In the case of Chandraprabhaben Navinchandra B. v. State of Gujarat, the Gujarat High Court held that once the compensation is decided, it has to be paid without any conditions.

Respondent’s Arguments

The Respondent submitted the following arguments:

  1. The Petitioner allowed the encroachment on the land so that he can extract more money as compensation for removing said encroachments.
  2. The compensation was being withheld because of the illegal structures on the land, and according to the law, the land should be vacant. Therefore, the Petitioner should remove these structures after which the compensation can be given.
  3. According to the law, the land is still under physical possession of the Petitioner, and therefore, only the Petitioner can remove the encroachment.

Court’s Analysis

The court analyzed and interpreted various provisions of the Railways Act, 1989 to come to a decision. They observed the following:

First, there is no dispute on the fact that no law was violated in the advertisement for the acquisition of land. Second, If section 20-E of the act is interpreted, then it can be seen that the land shall rest with the government. Third, if section 20-H and section 20-I of the act are read together, then it can be understood that as soon as the compensation is decided, then it shall be given to the competent authority before the actual acquisition of the land. Fourth, the competent authority does not have the power to withhold the compensation amount under any condition. And lastly, the term ‘central government’ in the Railways act does not include railways.

Court’s Decision

After deliberation, the Court gave the following decision:

Firstly, the administration shall pay compensation to the Petitioner. Secondly, the government shall pay 6% interest on the compensation from the time of deposit of money to the Petitioner. Lastly, the Petitioner shall surrender the land within 60 days after receiving the notice.


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