REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) NO.6933 OF 2007

Mahanadi Coal Fields Ltd. & Anr. …Petitioners

Versus

Mathias Oram & Ors. …Respondents

O R D E R

AFTAB ALAM,J.

1. Speaking  in  the  Constituent  Assembly  on November  25,  1949 Dr.  

B.R. Ambedkar, the chief architect of the Constitution of India made one of  

the most incisive remarks on it:

“On  the  26th of  January  1950,  India  would  be  a  democratic  country  in  the  sense  that  India  from that  day  would  have  a  government of the people, by the people and for the people. The  same thought comes to my mind. What would happen to her  democratic Constitution? Will she be able to maintain it or will  she lose it again? This is the second thought that comes to my  mind and makes me as anxious as the first…

…On the 26th of January 1950, we are going to enter into a life  of contradictions. In politics we will have equality and in social  and economic life we will have inequality. In politics we will  be recognizing the principle of one man one vote and one vote  one value. In our social and economic life, we shall, by reason  of  our  social  and  economic  structure,  continue  to  deny  the  principle of one man one value. How long shall we continue to  live this life of contradictions? How long shall we continue to  deny equality in our social and economic life? If we continue to

deny it  for long, we will  do so only by putting our political  democracy in peril. We must remove this contradiction at the  earliest  possible  moment  or  else  those  who  suffer  from  inequality  will  blow up  the  structure  of  political  democracy  which this Assembly has so laboriously built up.”

What would have been Dr. Ambedkar’s reaction to the facts of this case?  

This is one of the thoughts in our mind while dealing with the case.  

2. Since independence India has indeed covered a long way on the path  

of development and economic growth. It continues to take long strides on  

that path. But how far have we been able to live down the fears expressed by  

Dr. Ambedkar about our democratic Constitution? How far have we been  

able  to  get  rid  of  the  contradictions  in  our  life?  This  case  raises  these  

difficult questions.  

3. We are anxious that India should develop and grow fast and become  

strong to take its rightful place in the comity of nations.  

4. Development  is  reckoned  in  terms  of  investments  in  urban  

infrastructure, roads and highways, communication, technology, extraction  

and commercial exploitation of minerals, generation of power, production of  

steel and other essential metals and alloys. Creation of wealth is of utmost  

importance. Redemption lies in GDP (Gross Domestic product).

5. India  does  not  lack  material  resources  required  for  development.  

There are vast treasures of minerals lying buried deep inside its earth. But  

excavation of minerals from the bosom of the earth and putting them to good  

industrial and commercial use require lots of initial investment and highly  

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advanced  technology.  Those  too  are  now  available  as  blessings  of  

globalization. The imperialist’s formula of “philanthropy plus five percent”  

is the accepted norm. Public-Private Partnership (PPP) is the latest mantra.  

For some reasonable profits, companies and corporations, both Indian and  

multinational are willing and ready not only to do the mining for us but also  

to undertake the development of the region by providing schools, hospitals,  

and many similar amenities and facilities to the local population. Even the  

public sector undertakings are not lagging far behind in the race.  

6. But there is one catch. There is also the involvement of the human  

factor.  Most  of  the  mineral  wealth  of  India  is  not  under  uninhabited  

wasteland. It lies mostly under dense forests and areas inhabited by people  

who can claim to be the oldest dwellers of this ancient country. Any large  

scale mining, therefore, needs not only huge investments and application of  

highly  developed  technology  but  also  en  masse  relocation  of  the  people  

dwelling upon the land that needs to be mined or at any rate getting the land  

freed from its inhabitants, for whom it may be the only source of sustenance.  

But then we have the laws to handle such situations. There is the Mines and  

Minerals  (Development  & Regulation),  Act  1957,  the  Indian  Forest  Act,  

1927, the Forest Conservation Act, 1980, (in many States) laws restricting  

and regulating trade in forest produce and above all the Land Acquisition  

Act,  1894  and  its  clone  the  Coal  Bearing  Areas  (Acquisition  and  

Development) Act, 1957 that envisage compulsory acquisition of land by the  

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government for any public purpose on payment of its  market value (plus  

solatium for the compulsory nature of acquisition!) to the land holder. The  

law is  based on the twin sound principles  of  the  eminent  domain of  the  

sovereign and the largest good of the largest number.       

7. Seen thus, the whole issue of development appears to be so simple,  

logical and commonsensical. And yet, to millions of Indians, development is  

a dreadful and hateful word that is aimed at denying them even the source of  

their sustenance.  It is cynically said that on the path of ‘maldevelopment’  

almost every step that we take seems to give rise to insurgency and political  

extremism (which along with terrorism are supposed to be the three gravest  

threats to India’s integrity and sovereignty).  

8. The  resistance  with  which  the  state’s  well  meaning  efforts  at  

development and economic growth are met makes one to think about the  

reasons for such opposition to the state’s endeavours for development. Why  

is the state’s perception and vision of development at such great odds with  

the people it purports to develop? And why are their rights so dispensable?  

Why  do  India’s  GDP  and  HDI  (Human  Development  Index,  which  is  

broadly used as measure of life expectancy, adult literacy and standard of  

living)  present  such  vastly  different  pictures?  With  the  GDP  of  $  

1.16Trillion (for 2008) Indian economy is twelfth largest in US Dollar terms  

and it is the second fastest growing economy in the world. But according to  

the Human Development Report 2009 (published by UNDP), the HDI for  

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India  is  0.612  (for  2007)  which  puts  it  at  the  134th place  among  182  

countries. India has maintained the same HDI and rank since the previous  

year,  and  it  continues  to  be  categorized  under  “Medium  Human  

Development”.  

9. The counter argument goes like this. It is very often the process of  

development  that  most  starkly  confirms  the  fears  expressed  by  Dr.  

Ambedkar  about  our  democracy.  A  blinkered  vision  of  development,  

complete  apathy towards those  who are  highly adversely  affected by the  

development process and a cynical  unconcern for the enforcement  of the  

laws  lead  to  a  situation  where  the  rights  and  benefits  promised  and  

guaranteed under the constitution hardly ever reach the most marginalized  

citizens.

10. This  is  not  to  say  that  the  relevant  laws  are  perfect  and  very  

sympathetic towards the dispossessed. There are various studies that detail  

the impact of dispossession from their lands on tribal people. It is pointed  

out that even when laws relating to land acquisition and resettlement are  

implemented  perfectly  and  comprehensively  (and  that  happens  rarely!),  

uncomfortable questions remain. For a people whose lives and livelihoods  

are intrinsically connected to the land, the economic and cultural shift to a  

market economy can be traumatic.

11. On many occasions laws are implemented only partially. The scheme  

of land acquisition often comes with assurances of schools, hospitals, roads,  

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and employment. The initial promises, however, mostly remain illusory. The  

aims of income restoration and house resettlement prove to be very difficult.  

Noncompliance  with  even  the  basic  regulations  causes  serious  health  

problems for the local population and contamination of soil and water.

12.     But there is yet another far worse scenario where even the most basic  

obligation  under  the  law  is  not  complied  with  and  even  the  fig  leaf  of  

legality is dispensed with.

13. The case in question is a textbook example.  

14. But before going into the facts of the case two other things need to be  

stated. This case comes from Orissa which is one of the seven states where a  

particularly  violent  group  of  political  extremists,  has  been  able  to  gain  

sufficient strength to pose a threat to Constitutional governance of the state.  

This  group  openly  defies  the  democratic  system  of  the  country  and  is  

committed to overthrow the Constitution by brutal and murderous means.  

According to news paper reports, in the district of Sundergarh, where the  

acquired  lands  are  situated,  the  extremist  group looted  550 kilograms of  

explosives in April 2003 and in August 2009 blew up a railway station.  

15. The other fact is that this is not an isolated case. We have come across  

many such cases of land acquisition.  

16. Now, to the facts of the case:  Mahanadi Coalfields Ltd., the petitioner  

before this Court, is one of the subsidiaries of Coal India Ltd., the biggest  

coal  producing  organisation  in  the  country  and  one  of  the  ‘Navratnas’  

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among  India’s  public  sector  undertakings.  Mahanadi  Coalfields  Ltd.  has  

filed this SLP against the judgment and order passed by Orissa High Court  

on November 13, 2006 in Writ Petition (Civil) No.11463 of 2003. By the  

impugned judgment the High Court directed the Central Government and the  

petitioner (respondent no.1 before the High Court) to “proceed forthwith in  

accordance with the provisions of the [Coal Bearing Areas (Acquisition and  

Development) Act, 1957] to determine the compensation payable to the land  

owners  including  the  (writ)  petitioners  and  make  payment  of  the  

compensation  as  would  be  determined  in  accordance  with  law  as  

expeditiously  as  possible,  preferably  within  six  months  from the  date  of  

receipt of our order.”  

17. This order was passed in connection with lands of the writ petitioners  

(respondents  1  to  27  before  this  court)  and  others  that  were  taken  in  

acquisition as far back as in the year 1987.

18. The  Central  Government  issued  the  preliminary  notification  under  

section 4(1) of the Coal Bearing Areas (Acquisition and Development) Act,  

1957 Act on February 11, 1987, giving notice of its intention to prospect for  

coal  in  Revenue  Village  Gopalpur,  District  Sundergarh,  Orissa.  The  

notification also covered the lands of the respondents. This was followed by  

another notification under section 7(1) of the Act on July 27, 1987 giving  

notice of the Government’s intention to acquire the notified lands. Finally,  

the declaration of acquisition under section 9 of the Act was made by the  

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notification issued on July 10, 1989 as the result of which the notified lands,  

along with all rights therein, vested absolutely in the Central Government.  

On March 20, 1993, the Central Government issued the notification under  

section 11 of the Act vesting the acquired land and all rights therein in the  

petitioner company, retrospectively, with effect from November 17, 1991. It  

is undeniable that the lands of the writ petitioners (respondents before this  

court) were covered by the notifications under sections 7, 9 and 11 of the  

Act.  Nevertheless,  the  writ  petitioners,  and  others  whose  lands  were  

similarly acquired, were never paid any compensation for their lands. After a  

futile  running  from  pillar  to  post  for  about  fourteen  years,  the  writ  

petitioners knocked the doors of the High court, claiming compensation for  

their lands. Before the High Court, the relevant facts as noted above, were  

all  admitted. But it  seems that the claim of the writ  petitioners was over  

shadowed  by  the  dispute  between  the  coal  company  and  the  Central  

Government. The coal company took the stand that the lands of the writ  

petitioners, and some other lands, were not required by it and it proposed de-

notification  of  those  lands  (This,  after  more  than  twenty  years  of  

acquisition!). On behalf of the Central Government, however, it was stated  

that the coal company’s proposal for de-notification was rejected by order  

dated September 12, 2006. The High Court then referred to section 13(5) of  

the Act and pointed out that any person whose land is acquired under section  

9 of the Act must be paid compensation after taking into consideration the  

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factors  enumerated under that  sub-section of section 13.  The High Court  

expressed its concern that the writ petitioners were not paid compensation  

for  their  lands  taken  away  from  them  more  than  two  decades  ago  and  

disposed of the writ petition with the direction to both the coal company and  

the Central Government, as noted above.

19. The Central Government, apparently, did not take much notice of the  

High Court order but the coal company brought the matter to this court. It  

seeks to challenge the High Court order on the plea that it has no liability to  

pay compensation for the lands acquired by the Central Government since  

they are of no use for the purpose of mining operations nor are they likely to  

be needed in the near future as per the mining plan approved by the Central  

Government. Apart from this, the petitioner has taken some rather strange  

pleas.  It  is pleaded that  the acquisition proceedings were still  incomplete  

because no steps were taken for determining the market value of the lands  

and no compensation was paid to the land holders. If this is not adding insult  

to injury we do not know what else is! It is also alleged the lands are not in  

possession of the coal company and they are still in the possession of the  

land holders, including the writ petitioners. This last allegation is strongly  

denied by the writ petitioners.  

20. The SLP remains pending in this Court for the last three years. Now,  

twenty three years have passed and the writ petitioners remain unpaid of the  

compensation for their lands. In the meanwhile some of them (respondents 5  

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and  24)  are  reported  to  be  dead.  It  was  in  these  circumstances  that  on  

January  9,  2010  we  requested  Mr.  Gopal  Subramanium,  the  Solicitor  

General for India, to assist the court on behalf of the Central Government.  

He  immediately  realised  the  gravity  of  the  matter  and  the  deep  distress  

caused to the court by this case. He asked for some time to try to resolve the  

matter between the Central Government and the coal company at his own  

level and to ensure that the land holders whose lands were acquired are paid  

lawful compensation without any further delay. On the last date (May 13,  

2010) he informed this  Court  that he had been able to make the Central  

Government and the coal company agree to a scheme through which the  

whole matter may be resolved and compensation may be paid not only to the  

writ petitioners but to all the land holders whose lands were acquired. The  

scheme proposed  by  Mr.  Subramanium and  agreed  upon  by  the  Central  

Government and the Coal Company is as follows:  

“1.  The land in Village Gopalpur, District Sundergarh, Orissa  stands acquired by the Central  Government and ownership is  vested with MCL, which will determine and pay compensation  to the erstwhile landowners.  

“2. In respect of vast portions of the acquired land (excluding  the area where mining activities are being undertaken), actual  physical possession was never taken. The State of Orissa and its  officers  are  directed  to  assist  MCL in taking actual  physical  possession of the acquired land.

“3. Since the matter pertains to an acquisition of 1987 i.e. more  than two decades ago, the extent of actual physical possession  needs  to  be  re-ascertained,  it  is  necessary  that  the  genuine  landowners,  amount  of  compensation  payable,  status  of  

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possession, use to which the land has been put in the last two  decades,  is  discovered.  The entire land needs to be surveyed  again.

“4.  In  accordance  with  the  advice  of  the  learned  Solicitor  General,  a  Claims  Commission  needs  to  be  set  up  with  representatives of the Central Government as well as MCL. It is  submitted  that  the  Claims  Commission  will  consist  of  3  Members:-

(a) A former Judge of the High Court of Orissa (Chairman); (b)An officer  who has  held  a  post/office  equivalent  to  the  

rank of Secretary to the Government of India; (c) An officer to be nominated by Chairman, Coal India Ltd.

The Claims Commission will carry out the exercise referred to  above and submit a report on the compensation payable and the  persons to whom it should be paid, within a period six months.

“5.  The  above-said  report  will  be  submitted  to  the  Central  Government,  and  upon  formal  approval  by  the  Central  Government, MCL will make payment within a further period  of two months.  

“6.  Some  portions  of  the  land  have  been  determined  to  be  unsuitable for the Petitioner having regard to physical features  (mining being impossible, area being heavily populated, etc.).  The Claims Commission will  examine whether possession of  such portions has been taken over by the Petitioner. It would be  open  to  the  Claims  Commission  to  recommend  de- notification/release of the said land from acquisition.

“7.   In view of the special facts obtaining above, the Central  Government may be permitted to de-notify the said land from  the acquisition as a special case, since the land is not required  and possession also was never taken.

“8.  Even  in  the  case  of  the  de-notified  land,  suitable  compensation, in appropriate cases, may have to be paid to the  landowners. The Claims Commission may also give a report on  this aspect of the matter.

“9. The learned Solicitor General has opined that such matters  of uncertain acquisition or pending compensation claims lead to  unnecessary  social  tensions  and  the  Petitioner  must  act  in  a  

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spirit  of  good  governance.  Upon  examination  of  all  the  surrounding villages, in the light of the opinion of the learned  Solicitor General, for the sake of uniformity as well as fairness,  the  above  exercise  would  be  carried  out  for  the  following  villages as well:

i. Sardega ii. Jhupurunga

iii. Ratansara iv. Tikilipara v. Siarmal

vi. Tumulia vii. Karlikachhar

viii. Kulda ix. Bankibahal x. Balinga

xi. Garjanbahal xii. Bangurkela

xiii. Kiripsira xiv. Lalma R.F.

“It  must  be noted that  in  the  case  of  Sardega and Tikilipara  Villages, part-payment has already been made. Further, in the  case  of  Bankibahal  and  Balinga  Villages,  full  payment  has  already been made but possession has not been fully taken.

“10. The Petitioner and the Central Government shall assist in  the establishment of the Commission including the provision of  suitable  infrastructure.  The  honorarium  payable  to  the  Commission may be determined by this Hon’ble Court.

“11.  This  Order  is  being  passed  with  the  agreement  of  all  parties and in the peculiar facts and circumstances of this case.  The said order shall not operate as a precedent.”

21.     The  scheme  proposed  by  Mr.  Subramanium was  shown  to  Mr.  

Janaranjan Das, counsel, appearing for the writ petitioners-respondents and  

he also gave his express consent to it. We, accordingly, approve the scheme  

but with certain clarifications and modifications as stated below.  

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22.     We nominate Mr. Justice A.K. Parichha, a former Judge of the High  

Court of Orissa as Chairman of the Commission. Mr. Solicitor General in  

consultation  with  the  Secretary,  Ministry  of  Coal,  Government  of  India,  

shall nominate an officer who has held a post/office equivalent to the rank of  

Secretary  to  the  Government  of  India  as  one  of  the  members  of  the  

Commission within two weeks from today. Similarly, the Chairman, Coal  

India Ltd. shall nominate an officer as the other member of the Commission.  

Mr. Justice A.K. Parichha, shall be paid honorarium, equal to the monthly  

salary of a sitting High Court  Judge and he shall  be entitled to all  other  

facilities  as  available  to  a  sitting  judge  of  the  High  Court.  The  officer  

nominated by Mr. Subramanium/Secretary, Ministry of Coal, Government  

of  India,  shall  similarly  be  entitled  to  honorarium  and  other  facilities  

available  to  a  serving  officer  of  his  rank.  All  the  expenses  of  the  

Commission  shall  be  borne  by  Coal  India  Ltd.  The  Commission  shall  

prepare its report as envisaged in the scheme, first in respect of the lands in  

village Gopalpur, District Sundergarh, Orissa, as soon as possible and in any  

event  not  later  than  four  months  from  today.  In  case  the  Commission  

recommends  de-notification/release  of  any  portion  of  the  lands  earlier  

acquired,  it  would  also  determine  the  rate  or  the  amount  of  

compensation/mesne  profit  payable  to  the  land  holder.  The  Commission  

shall submit its report not to the Central Government but to this Court for  

approval  and  further  directions.  Any  de-notification/release  of  the  land  

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would be only subject to further orders passed by this Court in light of the  

Commission’s  report.  The  Commission  may  proceed  with  the  survey  in  

relation to the acquired lands in other villages, as suggested in paragraph 9  

of the scheme only after submitting its report in respect of village Gopalpur  

and subject to further orders by this court.

23.    The officers of the State Government and the coal company shall  

extend full help and cooperation to the Commission in preparing the report  

and in the discharge of their duties in terms of the scheme.

24.    We record our deep appreciation of Mr. Subramanium for sharing the  

feelings  of  the  court  and  for  his  effort  to  resolve  this  matter.  We may,  

however, remind him that his task is not over. It has only begun.    

25.     Put up on receipt of the Commission’s report.

……………………………….J   (AFTAB ALAM)

……………………………….J  (Dr. B.S. CHAUHAN)

New Delhi, July 19, 2010

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