2025 INSC 367 Non-reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10757 OF 2017

Delhi Agricultural Marketing Board,

through its Chairman …..... Appellant

Versus

Bhagwan Devi (Dead),

through her LR. ..…... Respondent

JUDGMENT

SANJAY KUMAR, J

1. Turning the law of land acquisition on its head, the

astonishing events that this appeal is founded on need to be narrated in

some detail.

2. An extent of 33 acres of land abutting the Narela-Bawana

Road was acquired by the Government to enable the Delhi Agricultural

Marketing Board (hereinafter, ‘the Board’) to shift and establish its grain

market in Narela. Notification under Section 4(1) of the Land Acquisition

Act, 1894 (for brevity, ‘the Act of 1894’), was issued on 30.10.1963.

Declaration under Section 6 of the Act of 1894 was issued on

10.01.1969 and the Award, determining the compensation, was made on

Signature Not Verified

19.09.1986. The acquired land included an extent of 6 bighas and 10

Digitally signed by
Deepak Guglani
Date: 2025.03.20
11:59:56 IST
Reason:

biswas situated in Khasra Nos. 296, 298 and 303 of Village Mamoorpur.

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Bhagwan Devi claimed ownership over this smaller extent under

registered sale deeds of the years 1959 and 1971. Possession of the

acquired land was taken and handed over on 22.09.1986 to the

Agricultural Produce Marketing Committee, Narela, under the control of

the Board. This ostensibly included the extent of 6 bighas and 10 biswas

claimed by Bhagwan Devi. She, then, filed W.P. No. 149 of 1987 before

the Delhi High Court challenging the acquisition of her land.

3. It is at this stage that the story took a curious turn. The Board

resolved to settle the matter out of Court with Bhagwan Devi by

releasing and returning to her half of the acquired extent claimed by her

and retaining the remaining half, i.e., 3 bighas and 5 biswas. The

agreement in this regard was executed on 30.09.1988 by the Board,

through its then Chairman, with Bhagwan Devi. This agreement stated

that Bhagwan Devi would claim compensation as per the Award dated

19.09.1986 from the Land Acquisition Collector and would have all the

rights and remedies provided to her under the Act of 1894. The

agreement further recorded that, with the prior consent of the Land

Acquisition Collector, the Board, which had become the absolute owner

of the acquired land that was mutated in its favour in the revenue

records, would execute a proper conveyance deed in respect of the

portion of land proposed to be returned to her thereunder, for valuable

consideration. The consideration to be paid by Bhagwan Devi was

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quantified as the proportionate compensation for half the land, as was

granted to her under the Award dated 19.09.1986, along with interest @

12 per cent per annum from the date of deposit of the compensation

amount by the Board with the Land Acquisition Collector till the date of

actual payment by Bhagwan Devi to the Board.

4. Clause (k) of the agreement provided that any dispute arising

between the parties touching upon the effect and meaning of the

agreement should be referred to the Chairman of the Board, whose

decision thereon would be final and binding upon the parties. This

agreement is stated to have been executed on behalf of the Board by its

then Chairman, just one day prior to his tenure coming to an end.

Though it is asserted that this action of the then Chairman was based on

the Minutes of the Board meeting held on 29.09.1988, there is no

mention of the same in the body of the agreement.

5. In any event, Writ Petition No. 149 of 1987 was disposed of

on 05.10.1988 in the light of this agreement. The Board seems to have

then realized that the land acquired for its benefit could not be released

in this manner and the issue was reconsidered in the Board’s meeting

held on 22.11.1988. The Minutes of this meeting recorded that, upon

enquiry, the authorities had informed the Board that though possession

of the acquired land was handed over to the Board, the land still vested

in the Government as no conveyance deed had been executed by the

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Government in favour of the Board. The Board, therefore, opined that it

was necessary to review the whole matter. This was brought to the

notice of the Delhi High Court by filing an application to recall the order

dated 05.10.1988 passed in W.P. No. 149 of 1987. Bhagwan Devi had

also filed applications seeking implementation of the agreement dated

30.09.1988. The applications were taken up together and disposed of by

the Delhi High Court on 06.08.2002. By the said order, the High Court

left it open to Bhagwan Devi to avail appropriate remedies in accordance

with law and permitted the Board to raise all such objections as were

available to it, including the one mentioned in its application.

6. The turn of events then became ‘curiouser and curiouser’, to

put it in the words of Lewis Carroll’s Alice. Having slept over the matter

for two years, by way of notice dated 30.09.2004, Bhagwan Devi sought

‘arbitration’ under clause (k) of the agreement dated 30.09.1988! She

then filed an application, in Arb. P. No. 278 of 2004, seeking appointment

of an arbitrator. The same was allowed by the Delhi High Court on

17.05.2006 and a retired Judge of the Delhi High Court was appointed.

The Board contended before the Arbitrator that the agreement dated

30.09.1988 was void ab initio and could not be implemented as the land

acquisition authorities were not party to it and the acquired land could

not be returned without their consent. It also pointed out that the

agreement was brought into existence with undue haste, inasmuch as

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the stamp papers therefor were purchased on 26.09.1988; the

agreement was drafted on 27.09.1988; the matter was put up before the

Board in its meeting held on 29.09.1988; and without confirmation of the

Minutes of the said meeting, the then Chairman signed the agreement

on 30.09.1988, which happened to be his last day in office.

7. However, the learned Arbitrator passed Award dated

10.07.2007 in favour of Bhagwan Devi, holding that the Board was

competent to enter into the agreement dated 30.09.1988 and return 3

bighas and 5 biswas of land to her. He accordingly directed the Board to

comply with the said agreement by performing its obligations thereunder

and execute a conveyance deed in favour of Bhagwan Devi. In turn,

Bhagwan Devi was also directed to perform her part of the agreement.

8. Aggrieved by the Award dated 10.07.2007, the Board filed a

petition, vide OMP No. 561 of 2007, under Section 34 of the Arbitration

and Conciliation Act, 1996 (for brevity, ‘the Act of 1996’), before the Delhi

High Court. One of the grounds urged by the Board was that the Award

was against public policy. However, by order dated 01.07.2013, a

learned Judge of the Delhi High Court dismissed the petition, upholding

the Award in its entirety. Aggrieved thereby, the Board preferred an

appeal under Section 37 of the Act of 1996 in FAO (OS) No. 436 of

2013. The appeal also failed as a Division Bench of the Delhi High Court

dismissed it on 27.09.2013.
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9. It is against the dismissal of the above appeal that the Board

filed SLP (C) No. 9491 of 2014, from which the present appeal

originates. By order dated 28.03.2014, this Court directed status quo

obtaining on that day to be maintained. Bhagwan Devi died on

13.01.2015 and her son was brought on record as her legal

representative. While so, an intervention application in IA No. 36403 of

2021 was filed by one Meena Sehrawat along with her sons, Pankaj and

Kunal. They put up a rival title over the subject land, claiming to be the

legal heirs of late Sanjay Sehrawat, the grandson of Bhagwan Devi’s

husband, late Kripa Ram, through his first wife. Be that as it may.

10. Initially, the Bombay Agricultural Produce Markets Act, 1939

(for brevity, ‘the Act of 1939’), was in force in Delhi. As per Section 16

thereof, if the Government was of the opinion that any land was needed

for the purposes of that Act, it could proceed to acquire it under the

provisions of the Act of 1894 and when such land vested in the

Government, it was to be transferred by the Government to the Market

Committee, on payment by the said Market Committee of the

compensation awarded and of all other charges incurred on account of

the acquisition, and on such transfer, the land would vest in that Market

Committee. Notably, this was the legal regime holding the field when the

notification and declaration were issued, in 1963 and 1969 respectively,

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for acquisition of the 33 acres of land, which included the subject extent

of 6 bighas and 10 biswas.

11. However, when the agreement dated 30.09.1988 was

executed, the Delhi Agricultural Produce Marketing (Regulation) Act,

1976 (for brevity, ‘the Act of 1976’), was the extant legislation as the Act

of 1939 stood repealed thereby. The Board was constituted under

Section 5 of the Act of 1976 and in terms of Section 5(3) thereof, it was

to be a body corporate, having perpetual succession with power, subject

to the provisions of the Act of 1976, to acquire and hold property.

12. Thereafter, the present Delhi Agricultural Produce Marketing

(Regulation) Act, 1998 (for brevity, ‘the Act of 1998’), replaced the Act of

1976. It contains similar provisions in Section 6 thereof, which states that

the Board, constituted under Section 5 thereof, shall be a body corporate

and a local authority, having perpetual succession with power, subject to

the provisions of the said Act, to acquire, hold and dispose of property.

Section 24(1) thereof deals with the acquisition of land for markets and

states that when any land is required for the purposes of the Act of 1998

and the Board is unable to acquire the same by agreement, such land

may, at the request of the Board, be acquired under the provisions of the

Act of 1894 and on payment of the compensation awarded under the Act

of 1894 by the Board and all other charges incurred in connection with

such acquisition, the land shall vest in the Board. The proviso to Section
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24(1), however, states that once a proposal has been made by the

Board, it shall not be withdrawn by it except for reasons recorded by it

and approved by the Lieutenant Governor. Section 24(2) of the Act of

1998 is of relevance and it reads as under:

‘(2) - The Board shall not, without the previous sanction of the
Lieutenant Governor, transfer any land which has been acquired
for the Board or Marketing Committee under sub-Section (1) or
vest in it or use such land for a purpose other than the purpose
for which it has been acquired, or is used, as the case may be.’

In effect, the power of the Board to acquire property, be it by

private negotiation or by compulsory acquisition through the aegis of the

Government, always stood protected. Such acquisition of property,

however, has to be in accordance with law, i.e., by way of a document of

conveyance. Further, as matters now stand, divesting of title in or a

different usage of the property compulsorily acquired for the Board is not

within its sole discretion.

13. In the case on hand, it is an admitted fact 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 the Act of 1894 puts it beyond doubt that, upon possession

being taking over on 22.09.1986, the acquired land vested absolutely in

the Government free from all encumbrances. Significantly, the power of

withdrawal from an acquisition, under Section 48 of the Act 1894, can be

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exercised by the Government only in respect of an acquisition where

possession of the land has not been taken. Therefore, it was not open

even to the Government to withdraw from the acquisition of the subject

land after possession was taken over on 22.09.1986, evidenced by

proper documentation.

14. In such a situation, the question that arises is 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. Further, the

question would also arise whether the Board could exercise such power

when there was no document of conveyance in its favour in respect of

this land. The statutory scheme of the laws applicable to the Board at

different points of time, set out supra, speaks to the contrary as it

manifests that there must be a document of conveyance for the Board to

acquire and hold such land. Admittedly, no such document was ever

issued by the Government actually transferring the subject land to the

Board, whereby it could claim absolute rights over it.

15. The Board had raised these issues before the learned

Arbitrator, apart from claiming that the agreement dated 30.09.1988 was

contrary to public policy, but the Award dated 10.07.2007 came to be

passed holding against the Board. Neither the Court exercising

jurisdiction under Section 34 nor the Court exercising appellate power

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under Section 37 dealt with these crucial issues. Section 34(2)(b) of the

Act of 1996 categorically provides that an Arbitral Award may be set

aside if the Court finds that it is in conflict with the public policy of India.

Explanation (1) thereto clarifies that an Award would be in conflict with

the public policy of India if it is in contravention of the fundamental policy

of Indian law or it is in conflict with the most basic notions of morality or

justice.

16. When the State uses its sovereign power of eminent domain

and acquires land for a public purpose, as in the case on hand, i.e., for

establishment of a grain market under the control of a statutory Board,

such an exercise cannot be set at naught by the beneficiary of such

acquisition, viz., the statutory Board, by entering into a private

agreement shortly after the acquisition so as to reverse the usage of the

power of eminent domain by the State. Validating this dubious enterprise

by a statutory beneficiary of a compulsory acquisition would be nothing

short of permitting a fraud on the exercise of such sovereign power by

the State. Viewed thus, the agreement dated 30.09.1988 was clearly in

contravention of the fundamental policy of Indian law and the Arbitral

Award dated 10.07.2007, upholding the said agreement, was equally so.

17. Further, the fact that the preparation of the agreement dated

30.09.1988, by purchase of stamp papers for the same and the drafting

thereof, took place even before the matter was considered by the Board

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in the meeting held on 29.09.1988 clearly revealed that there was

something suspect about the transaction. Given the further fact that the

only objective of the said agreement was to thwart the compulsory

acquisition of the subject land by returning a portion thereof to Bhagwan

Devi, the agreement was patently opposed to all tenets of law.

18. Viewed thus, we have no hesitation in holding that the Courts

exercising jurisdiction under Sections 34 and 37 of the Arbitration and

Conciliation Act, 1996, erred grievously in not setting aside the Arbitral

Award dated 10.07.2007 that had upheld the agreement dated

30.09.1988.

19. The appeal is accordingly allowed and the judgment dated

27.09.2013 of the Division Bench of the Delhi High Court in FAO (OS)

No. 436 of 2013 along with the judgment dated 01.07.2013 delivered by

the learned Judge of the Delhi High Court in OMP No. 561 of 2007 and

the Arbitral Award dated 10.07.2007 are set aside.

Pending applications shall stand closed in the light of this order.

Parties shall bear their own costs.

................................, CJI
Sanjiv Khanna

................................, J
Sanjay Kumar
March 20, 2025;
New Delhi.

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