Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-013839-013852 – 2025 |
| Diary Number | 22144/2020 |
| Judge Name | HON’BLE MR. JUSTICE M.M. SUNDRESH |
| Bench |
|
| Precedent Value | Binding on all courts |
| Overrules / Affirms | Overrules the High Court’s application of Section 12 to a voluntary agreement; affirms existing precedents on contract finality |
| Type of Law | Statutory interpretation; contract law; land acquisition |
| Questions of Law |
|
| Ratio Decidendi | Once parties enter into a voluntary agreement under Section 7(2)/(4) of the 1997 Act, it constitutes a concluded contract and excludes further recourse to the Act’s provisions—including Section 12 interest. The object of Section 7 is to encourage negotiated settlements that obviate formal award procedures; Section 12 applies only where no such agreement exists. Allowing interest after a final contract would violate the sanctity of agreement, the doctrine of approbate and reprobate, and Sections 7(2)/(4) themselves. The High Court’s invocation of Section 12 to reopen settled terms was therefore in error. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
|
| Facts as Summarised by the Court | Lease of Coimbatore aerodrome lands date from 1942 and were sub-leased by AAI. Acquisition notices issued in 2011 under the 1997 Act. In March 2018 parties agreed compensation at ₹1,500/sq ft (residential) and ₹900/sq ft (agricultural) under Section 7(2). Government order in November 2019 sanctioned payment of ₹189.3 crore. The High Court (18 Aug 2020) held this a “complete package” yet awarded Section 12 interest from the Section 3(2) notice until judgment, excluding stay period. The Supreme Court allowed appeals to the extent of interest. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All courts in India |
| Persuasive For | Administrative tribunals and negotiation committees in land acquisition |
| Overrules | High Court of Madras judgment dated 18 Aug 2020 applying Section 12 to a concluded agreement |
| Distinguishes | Cases where no consensual award under Section 7(2)/(4) exists and interest under Section 12 remains applicable |
| Follows | Union of India v. N. Murugesan (2022) 2 SCC 25; Ranveer Singh v. State of UP (2016) 14 SCC 191 |
What’s New / What Lawyers Should Note
- A Section 7(2)/(4) agreement under the TN Acquisition Act is a “concluded contract” excluding further statutory remedies.
- Section 12 interest does not run from the date of the Section 3(2) notice where parties have settled compensation by agreement.
- Finality of negotiated settlements is reinforced; parties may not approbate one part of a contract and reprobate another.
- Settlement terms, once accepted without protest, subsume claims for rent, solatium, and interest.
- Writ petitions cannot reopen a voluntary Section 7 agreement to seek additional interest.
Summary of Legal Reasoning
- Purpose and Scope of Section 7: Sections 7(2) and 7(4) encourage negotiated settlements and create a concluded contract once compensation is agreed.
- Exclusion of Statutory Provisions: A settled agreement under Section 7(2)/(4) excludes subsequent reference to award procedures and related statutory claims.
- High Court’s Error: Invoking Section 12 to award interest after a voluntary settlement violated the sanctity of contract and Sections 7(2)/(4).
- Doctrine of Approbate and Reprobate: Parties cannot accept compensation under a contract and later seek relief under the statute for the same subject matter.
- Precedential Support: Reliance on precedents affirming that consent awards are final and inclusive of all statutory claims.
Arguments by the Parties
Appellants (State of Tamil Nadu):
- The 2018 agreement was final, and respondents are estopped from seeking any additional relief, including interest under Section 12.
- Section 7 agreement is a complete package; writ jurisdiction cannot reopen it.
Respondent (AAI):
- No privity of contract with private landowners; target of interest claim is beyond AAI’s scope.
Private Respondents (Landowners):
- Entitled to just and fair compensation; no express exclusion of Section 12 from the agreement; statutory right to interest continues.
Factual Background
Landowners had leased aerodrome lands to Defence since 1942, later sub-leased by AAI. Acquisition proceedings under the 1997 Act began in 2011. In March 2018, parties negotiated compensation (₹1,500/₹900 per sq ft) under Section 7(2). The State sanctioned payment in November 2019. The Madras High Court (Aug 2020) treated the agreement as final but awarded interest under Section 12 from the acquisition notice until judgment. Appeals challenged the interest award.
Statutory Analysis
- Section 7(2)/(4), 1997 Act: Permits Government and landowner to agree on compensation; once agreed, payment follows agreement, and formal award procedures are excluded.
- Section 12, 1997 Act: Mandates interest at 9% per annum from possession until payment/deposit; applies only where no consensual settlement under Section 7 has been reached.
Alert Indicators
- 🚨 Breaking Precedent – The High Court’s extension of Section 12 to a Section 7 agreement is overturned.
- ✔ Precedent Followed – Affirms Supreme Court authority on finality of consent awards.
- 🔄 Conflicting Decisions – Resolves conflict with the Madras High Court’s 2020 judgment.