Eminent Domain and the Sovereign Power of the State: Analysing the Delhi Agricultural Marketing Board Case

A Division Bench of the Supreme Court consisting of Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar passed a judgment dated 20.03.2025 in the case of Delhi Agricultural Marketing Board through its Chairman Versus Bhagwan Devi (Dead) through her L.R. Civil Appeal No. 10757 of 2017 wherein the Supreme Court held that the beneficiary of the land acquisition cannot disregard the sovereign power of the State by entering into private agreement after the acquisition so as to reverse the usage of the power of eminent domain[1] by the State.

The present Appeal originates from Special Leave Petition No. 9491 of 2014 filed against the dismissal of petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (Act of 1996) by Order dated 01.07.2023 and dismissal of the Order under Section 37 of Act of 1996 by Division Bench of Delhi High Court on 27.09.2013.

Facts of the Case

The Government acquired 33 acres of land near Narela Bawana Road to shift and establish its grain market in Narela. On 30.10.1963, Notification under Section 4(1) of Land Acquisition Act 1894 (L.A. Act) was issued. Then on 10.01.1969, Declaration under section 6 of L.A. Act that land is required for a Public Purpose is issued and the Award determining compensation was issued on 19.09.1986. Out of the total land, the ownership of 6 bighas and 10 biswas in Khasra No. 296,298 and 303 of Village Mamoorpur was claimed by Bhagwan Devi under registered sale deeds in 1959 and 1971. On 22.09.1986, the Possession of the whole land was taken and handed over to the Agricultural produce Marketing Committee, Narela under the control of the Board.

Proceedings in Delhi High Court

Bhagwan Devi then filed the W.P. No. 149 of 1987 before Delhi High Court challenging acquisition of her land. The Board offered to resolve the matter by releasing and returning to her half of acquired extent claimed by her and retaining the remaining half. This Agreement between Board and Bhagwan Devi was entered on 30.09.1988. The Agreement stated that Bhagwan Devi would claim compensation as per the Award dated 19.09.1986 from Land Acquisition Collector and would have rights and remedies under the Act.  In light of the Agreement, the Writ Petition No. 149 of 1987 was disposed off.

In the Board Meeting held on 22.11.1988, the Board realized that land is still vested in the Government though possession was handed over to the Board. An Application was filed in the Delhi High Court and the Court passed an Order to recall the Order dated 05.10.1988 passed in the earlier Writ Petition. Bhagwan Devi had filed Applications seeking implementation of the Agreement dated 30.09.1988. Delhi High Court disposed off the above Applications on 30.09.1988 and left it open to Bhagwan Devi to avail appropriate remedies in accordance with law and permitted the Board to raise all such objections available to it.

Arbitration Proceedings

Bhagwan Devi sought arbitration under the Agreement dated 30.09.1988 by way of notice dated 30.09.2004. A Retired Judge of Delhi High Court was appointed as Arbitrator.  The Agreement dated 30.09.1988 was held void ab initio and could not be implemented as land acquisition authorities were not party to it and acquired land could not be returned without their consent. The Agreement was brought into existence with undue haste.

On 10.07.2007, the learned Arbitrator passed Award in favour of Bhagwan Devi holding Board was competent to enter into Agreement dated 30.09.1988 and return 3 bighas and 5 biswas of land to her. He directed the Board to comply with the said Agreement by performing its obligations and execute a conveyance deed in favour of Bhagwan Devi.

Appeal to Delhi High Court

The Board filed the petition under Section 34 of Arbitration and Conciliation Act 1996 for setting aside Arbitral Award dated 10.07.2007 before Delhi High Court claiming that the Award was against public policy. Delhi High Court dismissed the Petition by Order dated 01.07.2013 and Appeal filed under Section 37 of Act of 1996 was dismissed on 27.09.2013 by Division Bench of Delhi High Court.

Proceedings in Supreme Court

Against the dismissal of the above Appeal the Board filed SLP ( C)  No. 9491 of 2014 which resulted in the present appeal. The Court directed status quo to be maintained by Order dated 28.03.2014.

That on 13.01.2015, Bhagwan Devi died and the legal representatives were brought on record.

Analysis of the Legal Provisions involved

Delhi Agricultural Produce Marketing (Regulation) Act,1988 replaced the Act of 1976 to deal with acquisition of land by the Government. Section 6 of the Act of 1988 states that the Board shall be a body corporate and a local authority having perpetual succession with power to acquire, hold and dispose off property. Section 24(1) deals with acquisition of land for markets. The Proviso to Section 24(1) states once a proposal has been made by the Board, it shall not be withdrawn except for reasons recorded and approved by Lieutenant Governor.  The power of the Board though private negotiation and compulsory acquisition through the aegis of the Government always stood protected.

Analysis of the Hon’ble Supreme Court

The Supreme Court analyzed that the Award determining compensation was passed on 19.09.1986 and possession of the land was taken and handed over to the Board on 22.09.1986. Section 16 of Act of 1894 lays down that after taking possession on 22.09.1986, the acquired land vested absolutely in the Government free from all encumbrances. Section 48 lays down withdrawal from an acquisition where possession of the land has not been taken.

Therefore, in present case, it is not open to Government to withdraw from the acquisition of the subject land after possession was taken over by Bhagwan Devi on 22.09.1986. The Supreme Court analysed that whether the Board for whose benefit the land was acquired could have achieved the equivalent of such withdrawal by entering into an Agreement with Bhagwan Devi for returning part of the acquired land and whether this power could have been exercised in absence of any document of conveyance in its favour.

The Supreme Court held that the beneficiary of the land acquisition cannot disregard the sovereign power of the State by entering into private agreement after the acquisition so as to reverse the usage of power of eminent domain by the State. Doing this will amount to fraud on the exercise of sovereign power by the State. In view if this, the Supreme Court held that the Agreement dated 30.09.1988 to be in contravention of fundamental policy of Indian law.

In the end, Supreme Court held that the Courts exercising jurisdiction under Section 34 and 37 of the Arbitration and Conciliation Act 1996 erred grievously as they did not set aside Arbitral Award dated 10.07.2007 that had upheld Agreement dated 30.09.1988.

Conclusion:

In conclusion, the Supreme Court’s judgment in the case of Delhi Agricultural Marketing Board v. Bhagwan Devi serves as a significant reminder of the sanctity and inviolability of the power of eminent domain exercised by the State. The Court unequivocally held that once the State has acquired land under the Land Acquisition Act, it cannot be undermined or reversed through private agreements between parties, as such actions would constitute a fraud on the exercise of sovereign power. The decision underscores the importance of adhering to the constitutional framework governing land acquisition and reaffirms the notion that the sovereign power of the State cannot be compromised through extraneous agreements that contravene public policy. By striking down the Arbitral Award and declaring the 1988 Agreement invalid, the Court has reinforced the principles of transparency, fairness, and accountability in matters of public land acquisition. This ruling thus protects the integrity of governmental authority and ensures that the interests of the public, particularly in land acquisition for public purposes, remain paramount.

[1] Eminent domain is the right of the people or government to take private property for public use.

TRISHA SAXENA

SENIOR LEGAL ASSOCIATE

THE INDIAN LAWYER AND ALLIED SERVICES

 

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