Compulsory acquisition and vesting bar private re-transfer agreements that conflict with public policy and sustain no arbitral award.

Where land had already vested in the Government upon compulsory acquisition and taking of possession, a later private agreement could not validly require return of part of that land or support an arbitral award enforcing such transfer. The statutory scheme under the Land Acquisition Act, 1894 left no scope for withdrawal from acquisition after vesting, and the Board's governing framework did not permit unilateral divesting or re-transfer of compulsorily acquired land. An arrangement intended to undo a completed acquisition and defeat eminent domain for a public purpose was contrary to the fundamental policy of Indian law. The arbitral award founded on that agreement was therefore invalid and liable to be set aside.

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Issues: Whether the agreement executed after compulsory acquisition and vesting of the land could validly require return of a portion of the acquired land and support the arbitral award, and whether the award ought to have been set aside as being contrary to public policy and the fundamental policy of Indian law.

Analysis: Upon possession being taken under the Land Acquisition Act, 1894, the acquired land vested absolutely in the Government free from encumbrances, and withdrawal from acquisition was no longer available under Section 48. The statutory regime governing the Board required acquisition and holding of land through a conveyance and did not permit unilateral divesting or re-transfer of compulsorily acquired land at the Board's sole discretion. The agreement sought to reverse the effect of a completed compulsory acquisition by private arrangement, even though no conveyance deed had transferred title to the Board, and thereby attempted to defeat the exercise of eminent domain for a public purpose. Such an arrangement was incompatible with the fundamental policy of Indian law and could not sustain an award directing performance of that agreement.

Conclusion: The agreement and the arbitral award founded upon it were held to be invalid and liable to be set aside, and the refusal of the courts below to do so was found erroneous.

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