Statutory Benefits Cannot Be Claimed After Settlement, Reiterates Supreme Court

In a significant judgment that strengthens the finality of negotiated settlements in land acquisition cases, the Supreme Court of India in Government of Tamil Nadu v. P.R. Jaganathan & Ors. (2025 INSC 1332) held that once landowners voluntarily enter into a negotiated compensation agreement under Section 7 of the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997, they cannot later invoke statutory benefits—such as interest under Section 12—to claim additional amounts.

The Court reiterated that a concluded contract, voluntarily executed and duly acted upon, becomes sacrosanct and binding, thereby excluding the applicability of statutory remedies or additional claims under the 1997 Act.

The ruling assumes great significance in the realm of land acquisition law, particularly for States that utilise negotiated settlement mechanisms to expedite compensation payouts. It also reinforces core contractual doctrines such as approbate and reprobate, estoppel, and the sanctity of settlements, which have long guided judicial reasoning in compensation and acquisition disputes.

Factual Background

Long-standing possession of land by State authorities

The land in dispute, located in Singanallur and Kalapatti in Coimbatore District, had been under possession of the Central Government since 1942, when it was taken on lease for defence purposes. Over time, possession changed hands from the Defence Department to the Civil Aviation Department and eventually to the Airport Authority of India (AAI). The AAI paid lease rents to landowners under a tripartite agreement of 2006, fixing rent at 5% of the land value.

Initiation of acquisition proceedings

When the lands were required for expanding the Coimbatore Airport runway, acquisition proceedings were initiated under the 1997 Act. This triggered multiple litigations by landowners, who not only challenged the acquisition but also sought arrears of rent and interim protection.

Negotiated settlement under Section 7(2)

To resolve disputes swiftly, the State invoked Section 7(2), which allows the determination of compensation by agreement. A meeting on 06.03.2018 resulted in a settlement fixing compensation at:

• ₹1,500 per sq. ft. for residential land, and
• ₹900 per sq. ft. for agricultural land.

This settlement involved substantial enhancement—almost 250% above guideline value—and several landowners withdrew their challenges based on this agreement. The State approved the negotiated rates via G.O. (Ms) No. 173 dated 20.11.2019.

High Court’s Decision

While the High Court accepted the binding nature of the settlement, it nevertheless awarded interest under Section 12 from the date of notice under Section 3(2) till the date of judgment, reasoning that the authorities had been in possession far earlier. The State appealed before the Supreme Court, noting that this additional interest liability would amount to nearly ₹1,800 crores.

Issue

The principal question before the Supreme Court was:

• Can landowners who voluntarily enter into a settlement agreement under Section 7(2) of the 1997 Act subsequently claim additional statutory benefits, including interest under Section 12?

Specifically, the issues involved:

• Whether a concluded contract under Section 7 excludes application of Section 12.
• Whether landowners are estopped from claiming statutory benefits after accepting compensation without protest.
• Whether the High Court could rewrite terms of a concluded contract under Article 226.

Supreme Court’s Reasoning

1. Settlement agreements under Section 7 are binding and conclusive

The Court emphasised that Sections 7(2) and 7(4) promote negotiated settlements to bypass lengthy litigation and expedite compensation. Once parties enter into such an agreement, it becomes a concluded contract, governed entirely by its terms. The agreement’s execution “terminates the umbilical cord which connects the agreement to the other provisions” relating to statutory determination of compensation.

Thus, statutory provisions like Section 12 become inapplicable.

2. Statutory benefits cannot be superimposed on negotiated compensation

Section 12 applies only when compensation is determined by statutory process—not by negotiated agreement. The Court clarified that:

• A concluded contract excludes the operation of Section 12, which cannot be invoked to reopen a settlement.
• Parties cannot “take refuge under statutory provisions” after voluntarily contracting out of them.

3. Doctrine of approbate and reprobate

Invoking Union of India v. N. Murugesan (2022), the Court held that landowners who accepted compensation cannot later challenge the settlement. One cannot “blow hot and cold” by accepting the benefits of the agreement and subsequently seeking additional statutory relief. This forms a clear case of:

• Appropriation of benefits, and
• Reprobation of obligations.

4. High Court cannot rewrite contractual terms under Article 226

The Court reiterated that Article 226 is not meant to modify or rewrite contracts voluntarily entered into by parties. The High Court’s direction awarding interest amounted to rewriting the agreement, which the Supreme Court found impermissible.

5. No fraud, coercion, or deceit alleged

The Court noted that the settlement was voluntary, free from deceit, force, or suppression. Therefore, its terms must be honoured without dilution. The landowners themselves were initially satisfied, and only later invoked statutory rights—an afterthought that the Court declined to accept.

6. Precedents supporting contractual finality

The Court relied on a long line of cases reaffirming that consent awards and settlements cannot be reopened, including:

• Ranveer Singh v. State of U.P.,
• State of Karnataka v. Sangappa Dyavappa Biradar,
• NOIDA Authority v. Ravindra Kumar,
• State of Gujarat v. Daya Shamji Bhai, and
• Nathani Steels v. Associated Constructions.

These judgments consistently hold that accepting compensation without protest eliminates the statutory cause of action for seeking enhancement.

Judgment

The Supreme Court set aside the High Court’s award of interest under Section 12. It held that:

• The agreement was final and binding.
• Landowners were estopped from claiming any amount beyond what was contractually agreed.
• Section 12 had no application once parties opted for a consensual determination under Section 7(2).
• The High Court erred in granting interest, effectively rewriting the terms of the agreement.

Final Ruling

Statutory benefits cannot be claimed after a settlement is reached under Section 7 of the 1997 Act.

The appeals were allowed, and the High Court judgment was set aside to the extent it awarded statutory interest.

Conclusion

The Supreme Court’s ruling in Government of Tamil Nadu v. P.R. Jaganathan & Ors. is a resounding affirmation of the legal principle that statutory benefits cannot be claimed after a voluntarily negotiated settlement. The judgment reinforces the sanctity of contracts, prevents the reopening of consent-based settlements, and promotes administrative efficiency in land acquisition processes.

By emphasising the doctrines of estoppel, waiver, approbate and reprobate, the Court has once again made it clear that a party who willingly enters into a settlement cannot later attempt to resile from it by invoking statutory provisions meant for those who follow the regular acquisition route.

This decision will likely serve as a guiding precedent for future acquisition disputes where landowners, after accepting generous settlements, attempt to invoke statutory entitlements belatedly. It reasserts that the law does not permit parties to have it both ways—the benefits of settlement without the corresponding limitations.

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