Right Of User Acquisition Under PMP Act: Supreme Court 2016 in Laljibhai vs StateOf Gujarat Upholds Pipeline Land Acquisition. The Supreme Court in Laljibhai KadvabhaiSavaliya vs State Of Gujarat dealt with acquisition of right of user in land underPetroleum and Minerals Pipelines Act, 1962 for laying natural gas pipeline fromKakinada to Jamnagar. The Court on 05.10.2016 upheld the acquisition and explainedcompensation principles under Section 10 PMP Act. The Court also issued directionson appointment of Competent Authority. This blog explains Laljibhai vs State Of Gujaraton PMP Act, land use restrictions, and compensation.
Facts: Gas Pipeline; Section 3 Notification; Section 6 Declaration. The SupremeCourt in Laljibhai vs State Of Gujarat: Central Government issued Notification dated07.01.2006 under Section 3(1) PMP Act declaring intention to acquire right of user forKakinada-Hyderabad-Uran-Ahmedabad gas pipeline by RGTIL.Land in question: BlockNos.331, 342 and 364 of Village Gothan, District Surat. The Supreme Court in Laljibhaivs State Of Gujarat: Competent Authority held meetings, determined compensation atRs.181/- per sq.mtr and Rs.201/- per sq.mtr for industrial zone. 90% paid inadvance.The Supreme Court in Laljibhai vs State Of Gujarat: Section 6 Notificationdated 17.11.2007 vested right of user in RGTIL free from encumbrances. Landownerschallenged before Gujarat High Court. High Court dismissed petitions on 13.07.2009saying remedy is to approach District Judge under Section 10.Appellants challengedvalidity of PMP Act and compensation.The Supreme Court in Laljibhai vs State OfGujarat: Pipeline length over 1470 km. Outright acquisition under LA Act would be costlyand deprive agriculturists.
Acquisition Of Right Of User Vs Outright Acquisition. The Supreme Court inLaljibhai vs State Of Gujarat para 16: "What stands acquired is the right of user in theland...to lay pipeline...and not the land itself".Reason: Statement of Objects andReasons says "outright acquisition...is long-drawn and costly. Since pipeline will be laidunderground outright acquisition...is not necessary".The Supreme Court in Laljibhai vsState Of Gujarat: Section 18 PMP Act says it is "in addition to and not in derogation of"Land Acquisition Act. So LA Act can still be used where permanent structuresneeded.The Supreme Court in Laljibhai vs State Of Gujarat: Section 7(1) proviso barspipeline under residential land, land with permanent structure, or land appurtenant todwelling house. Pipeline to be laid under fallow or agricultural land only.The SupremeCourt in Laljibhai vs State Of Gujarat: Section 9 allows owner to continue using land forsame purpose as before. But bars: (i) construction, (ii) excavation of tank/well, (iii)planting tree.In our practice, this balances public interest in energy infrastructure withprivate land rights.Compensation Under Section 10 PMP Act: Two Elements. The Supreme Court inLaljibhai vs State Of Gujarat para 19: Section 10 has two parts:First part - Section 10(1)to (3): Compensation for "damage, loss or injury" due to entry, survey, laying,maintenance under Sections 4,7,8. Determined by Competent Authority, appeal toDistrict Judge.Second part - Section 10(4): "In addition" to above, 10% of market value ofland on date of Section 3 Notification. For acquisition of right of user simplicitor.TheSupreme Court in Laljibhai vs State Of Gujarat: Even if no actual damage, 10%compensation is still payable. This is for "acquisition of right of user simplicitor".TheSupreme Court in Laljibhai vs State Of Gujarat: Principles are "reasonable and cannot betermed as illusory". Cited Jilubhai Nanbhai Khachar to hold right of user is propertyright.Facts: Compensation by consent Rs.181/- to Rs.201/- per sq.mtr vs market rateRs.13.40. Provisional Rs.300/- deposited during High Court.Competent Authority: Judicial Member Required. The Supreme Court in Laljibhai vsState Of Gujarat para 25: Competent Authority has "vast powers" - hear objections underSection 5, make report under Section 6, determine compensation under Section 10. Haspowers of Civil Court under Section 12.The Supreme Court in Laljibhai vs State OfGujarat para 26: Cited Trilok Sudhirbhai Pandya on bias. Held: "CompetentAuthority...must be someone who is holding or has held a Judicial Office not lower inrank than that of a Subordinate Judge or is a trained legal mind". Reason: Article 14fairness. Otherwise "will not be consistent with doctrine of fairness".The Supreme Courtin Laljibhai vs State Of Gujarat: Past actions not invalidated. But Central Governmentmust "remedy the situation with appropriate measures".
Conclusion
Laljibhai Kadvabhai vs State Of Gujarat is landmark on pmp act right of userpipeline compensation supreme court 2016. Supreme Court 05.10.2016 upheldacquisition for natural gas pipeline as valid public purpose. Court clarified Section 10compensation has two independent heads. Court also mandated judicial member asCompetent Authority. Section 9 restrictions protect pipeline but allow continuedagricultural use. As the law stands, PMP Act is constitutional and enables cheaptransport of petroleum/minerals. The Supreme Court’s ruling in Laljibhai vs State OfGujarat guides all future pipeline projects.
