A State Government can be considered the "person interested" in receiving compensation under the Coal Bearing Areas (Acquisition and Development) Act, 1957, according to the Supreme Court division bench led by Justices M. R. Shah and C. T. Ravikumar. This decision was given on 20th January 2023.

According to Section 11, the Government Company in whose favor the Central Government issued the order shall be assumed to be the lessee and shall be obligated to pay the compensation/rent, etc., to the "person interested," the court stated.

"The State Government being the original owner can be said to be deemed lessor and ‘person interested.’ As per Sub-section (2) of Section 11 of the Act, the Government company in whose favour the order is issued under Section 11 can be said to be the deemed lessee of the State Government. Therefore, the State Government can be said to be the ‘person interested’ in getting the compensation. Therefore, the High Court is absolutely right in observing and taking the view that being ‘person interested’ the State Government is entitled to the compensation/rental, etc.", the bench observed.

The court further determined that the compensation or rent that the lessee or considered lessee must pay with regard to the lands is distinct from the royalty that is due for the mineral extraction on the disputed lands.

"In that view of the matter over and above the amount of royalty the coal company/Government company shall be liable to pay the compensation and surface land rent, etc., Therefore, the High Court is absolutely justified in confirming the respective demand(s). The amount of royalty cannot be mixed with the compensation/loss caused to the State Government due to loss of land and surface land rent as the State Government is entitled for the adequate compensation. If the submission made on behalf of the appellant is accepted in that case nothing would be paid towards the lands except the amount of royalty under Section 18(a) of the Act, which is for extraction of minerals.", The appeal was denied, the court stated.

In this instance, the Government of India seized some lands that belonged to the State Government of Odisha under Section 9 of the Coal Bearing Areas (Acquisition and Development) Act, 1957. The State Government sent Mahanadi Coalfields Ltd. a demand letter requesting payment of Rs. 70 lakhs as a premium for using government land and Rs. 40 lakhs as compensation.

Whether the State Government should be entitled to compensation or rent was one of the questions that were examined in the appeal.

Case Title: Mahanadi Coalfields Ltd vs State of Odisha 
Citation: CA 220 OF 2023
Link:

Appearances of the Advocates:-

For Appellant(s)

Mr. K. M. Nataraj, ASG
Mr. Soumyajit Pani, Adv.
Mr. Nakul Chengappe K.K. Adv.
 Mr. Siddharth Jain , AOR

For Respondent(s)

Mr. Sibo Sankar Mishra, AOR
Mr. Umakant Mishra, Adv.
Mr. Niranjan Sahu, Adv.
Ms. Apoorva Sharma, Adv.
Mr. Debabrata Dash, Adv.