The Supreme Court has held that the setting aside of a land acquisition award due to fraud and collusion by specific landowners does not ipso facto result in the invalidation of the award for other landowners who were not involved in the alleged irregularities.
A Bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran allowed an appeal filed by a landowner whose compensation had been withheld and subsequently cancelled solely based on proceedings initiated against other individuals accused of unjust enrichment.
The legal issue before the Court was whether the setting aside of a compensation award, on grounds of it being excessive and resulting in unjust enrichment of some landowners acting in collusion with officials, would result in the entire award with respect to the acquisition being set aside. The Supreme Court answered in the negative, restoring the compensation award in favor of the appellant, Niraj Jain, noting that he was neither named in the FIR nor party to the proceedings challenging the fraudulent awards.
Background of the Case
The dispute arose from the acquisition of land in Chhattisgarh for a Special Rail Project, notified on August 31, 2017, for the Rowghat-Jagdalpur line (140 km). Following the initial award, certain landowners approached the Arbitrator under the Land Acquisition (Special Railway Projects) Rules, 2016, and were granted enhanced compensation.
Subsequently, an inquiry was initiated alleging that excessive amounts were awarded in collusion with revenue officials. Based on the Collector’s inquiry report, an FIR was registered against the Competent Authority, the Arbitrator, and specific beneficiaries of the alleged fraud. The Bastar Railways Private Limited filed a writ petition before the High Court of Chhattisgarh, impleading the State officials and five specific landowners alleged to be beneficiaries of the “colourable exercise of powers.”
On January 10, 2022, the High Court allowed the Railways’ petition, setting aside the award dated February 12, 2018, and the arbitral award dated July 11, 2019, directing a recalculation of compensation.
The appellant, Niraj Jain, was a landowner in a different village who had also received an award on February 12, 2018, and an enhancement by the Arbitrator on June 28, 2019. Following the Collector’s inquiry report, the disbursement of his additional compensation was kept in abeyance on August 2, 2019. Later, on February 21, 2022, his award was set aside by the Commissioner, Bastar Division, relying on the High Court’s judgment against the accused landowners. The appellant’s writ petition against this action was dismissed by the High Court, leading to the present appeal before the Supreme Court.
Arguments of the Parties
Senior Advocate Shoeb Alam, appearing for the appellant, argued that there was “neither identity of allegations nor is there any taint alleged” with respect to the award passed in favor of the appellant. He submitted that out of 550 landowners, proceedings were taken only against specific individuals. The appellant contended that he was not made a party to the Railways’ writ petition where the award was set aside, and no criminal proceedings were initiated against him.
On behalf of the Railways, Additional Solicitor General Brijender Chahar contended that the order confirming the judgment setting aside the initial award had been challenged by the affected landowners in a separate Special Leave Petition (SLP). He argued that the present appeal should be kept in abeyance until the other SLP was heard.
Court’s Analysis
The Supreme Court rejected the Railways’ contention that the pending SLP had any bearing on the appellant’s case. The Court observed that the inquiry report and FIR were directed at specific landowners who had obtained unjust enrichment.
Justice K. Vinod Chandran, writing for the Bench, observed:
“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 noted that the Railways had impleaded only five persons out of 550 landowners in their writ petition. The Court stated:
“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.”
The Bench further pointed out that the High Court judgment relied upon by the authorities had categorically stated that the award was null and void with respect to specific respondents (Bali Nagwanshi and Neelima Belsariya and others). 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 Court also highlighted that the Railways had not challenged the arbitral award passed in favor of the appellant. It further noted a lack of statutory power for review, stating:
“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.”
Decision
The Supreme Court held that the High Court “egregiously erred” in not interfering with the orders cancelling the appellant’s award. The Court set aside the High Court’s judgment and the orders of the Commissioner, 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 allowed.
Case Details:
Case Title: Niraj Jain vs. Competent Authority-cum-Additional Collector, Jagdalpur & Ors.
Case No.: 2026 INSC 86 (Civil Appeal No. of 2026 @ SLP (C) No. 7061 of 2025)
Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran
