Acquisition compensation liability remains with transferor under scheme; State must ensure payment before recovery from JAL.

The Scheme of Arrangement did not transfer the subject land or the pending acquisition liability to the Appellant because the acquisition proceedings had begun before the effective date and the liability remained with JAL under the carved-out liabilities clause. The supplementary compensation was therefore payable by JAL, not the Appellant, and the High Court's contrary fastening of liability was unsustainable. Section 101 of the 2013 Act could not be invoked to return the land, as it was being used as a safety zone and was not unutilised for five years. The State was required to ensure payment of supplementary compensation first and could recover it from JAL.

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Issues: (i) Whether the subject land and the liabilities associated with it stood transferred to the Appellant under the Scheme of Arrangement; (ii) whether the Appellant or JAL was legally liable to pay the compensation under the Supplementary Award; (iii) whether the acquired land could be returned to the original landowners under Section 101 of the 2013 Act; and (iv) whether the State had the responsibility to ensure payment of the supplementary compensation.

Issue (i): Whether the subject land and the liabilities associated with it stood transferred to the Appellant under the Scheme of Arrangement.

Analysis: The Scheme carved out pending proceedings and liabilities connected with the JAL Business that had arisen on or before the Effective Date to remain with JAL. The acquisition proceedings had commenced long before the Effective Date and the supplementary compensation liability was still pending and uncrystallized on that date. The subject land was not included in the assets transferred under the Scheme and continued to remain in JAL's ownership.

Conclusion: The subject land and the corresponding acquisition liability did not stand transferred to the Appellant under the Scheme.

Issue (ii): Whether the Appellant or JAL was legally liable to pay the compensation under the Supplementary Award.

Analysis: The acquisition was undertaken for a safety zone connected with the cement project, but the land remained with JAL and the earlier compensation had already been paid by JAL without protest. The Supplementary Award was a continuation of the same acquisition proceedings, and the liability arising from those proceedings could not be shifted to the Appellant merely because the project had been transferred operationally. The High Court's direction fastening the liability on the Appellant was found unsustainable.

Conclusion: JAL, and not the Appellant, was liable for the compensation arising under the Supplementary Award.

Issue (iii): Whether the acquired land could be returned to the original landowners under Section 101 of the 2013 Act.

Analysis: Section 101 applies only where acquired land remains unutilised for five years after possession. The land in question was being used as a safety zone for the cement project and therefore could not be treated as unutilised. The provision was held to be intended for the benefit of landowners and could not be invoked by the party that failed to utilise the land to seek refund of compensation.

Conclusion: Return of the land under Section 101 of the 2013 Act was not permissible.

Issue (iv): Whether the State had the responsibility to ensure payment of the supplementary compensation.

Analysis: The Court emphasised the State's constitutional and statutory duty under Article 300-A and the acquisition framework to ensure fair and timely compensation. Possession had been taken before payment of the full supplementary amount, contrary to the statutory sequence. The State could not avoid responsibility by relying on the inter se arrangement between the companies and was required to make payment first and recover it from JAL.

Conclusion: The State was obliged to ensure payment of the supplementary compensation and was entitled to recover the amount from JAL.

Final Conclusion: The impugned order was set aside and the acquisition compensation liability was ultimately fixed on JAL, with the State directed to pay the landowners first and recover the amount from JAL.

Ratio Decidendi: Where acquisition proceedings and related compensation liabilities arise before the effective date of a transfer scheme, they remain with the transferor if the scheme so provides; and in land acquisition, the State must ensure timely payment of fair compensation before or contemporaneously with possession, with recovery inter se to follow as legally permissible.

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