When Parliament replaced the colonial Land Acquisition Act, 1894 with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the 2013 Act” or “the LARR Act”), it faced a difficult transitional question: what to do with the vast stock of acquisitions already begun under the old law but left incomplete for years. Section 24 is the answer. Its second sub-section, section 24(2) of the Land Acquisition Act, created a limited retrospective remedy — a mechanism by which a stale 1894-Act acquisition could be deemed to have lapsed, compelling the State to begin afresh and, this time, to pay compensation on the far more generous 2013-Act scale.

For a landowner sitting on land notified a decade earlier but never physically taken over, this was transformative. For the State and its acquiring bodies, it was an existential threat to thousands of projects. Between 2014 and 2020 the provision generated one of the most intense doctrinal contests in modern Indian land law — a saga that ran from an expansive early reading in Pune Municipal Corporation, through a period of openly conflicting Supreme Court benches, to a five-judge Constitution Bench resolution in Indore Development Authority that narrowed the lapse window dramatically.

This article traces that saga and explains where s.24(2) stands today. It is a companion to our pillar article on compensation under the 2013 Act and to Spoke 1 on the statutory architecture of the LARR Act; readers new to the scheme may wish to begin there.

What Section 24(2) of the Land Acquisition Act Actually Says

Section 24 of the Land Acquisition Act governs the fate of acquisitions initiated under the 1894 Act as at the commencement of the 2013 Act on 1 January 2014. The default rule, in s.24(1), is one of continuity: proceedings pending under the old Act are, broadly, to continue — though where no award under s.11 of the 1894 Act had been made, compensation is to be determined under the new Act.

Section 24(2) is the exception, and it is narrow by design. It provides that where an award under s.11 of the 1894 Act was made five years or more before the commencement of the 2013 Act, and either physical possession of the land has not been taken or the compensation has not been paid, the acquisition proceedings “shall be deemed to have lapsed”. The State is then free to initiate the acquisition afresh, but only under the 2013 Act — which means the SIA process, the higher market-value multipliers, solatium and rehabilitation entitlements described elsewhere in this series.

The provision therefore turns on three elements: (i) an award at least five years old; (ii) the state of possession; and (iii) the state of payment. The entire litigation saga was, in substance, a fight over how the connective word between the second and third elements — “or” — was to be read.

Chapter one — Pune Municipal Corporation and the expansive reading (2014)

The first authoritative construction came within weeks of the new Act taking effect. In Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183, the Supreme Court read section 24(2) of the Land Acquisition Act expansively and in favour of the landowner.

Two features of that reading drove the subsequent flood of litigation. First, the Court treated the statutory conditions disjunctively, consistent with the plain “or”: a deemed lapse could follow from the absence of possession or from the non-payment of compensation, and a landowner did not have to establish both. Second, and more consequentially, the Court gave “compensation has not been paid” a demanding meaning. Payment, it held, was not satisfied by the acquiring authority merely tendering the amount or keeping it available. To count as “paid”, the compensation had to be deposited in the account of the landowner or, failing acceptance, deposited with the court in the manner contemplated by the 1894 Act. Money lying unremitted in the government treasury did not amount to payment.

The practical effect was immediate and enormous. In countless old acquisitions the awarded compensation had never been drawn — often because the landowner had refused it, or because it had simply been parked in the treasury — and possession, on paper, was frequently disputed. On the Pune Municipal Corporation test a great many long-dormant acquisitions were vulnerable to being declared lapsed, throwing them open to fresh proceedings at 2013-Act rates. A wave of lapse claims followed.

Chapter two — the years of conflict (2014–2018)

An expansive rule with such high stakes was bound to be tested, and it was. Over the following years different benches of the Supreme Court took materially different views of what section 24(2) of the land acquisition Act required — in particular, whether the disjunctive “or” truly meant that non-payment alone, even where the State had long since taken possession, could defeat an acquisition; and whether an authority that had deposited money in the treasury and stood ready to pay should be penalised for a landowner’s own refusal to receive it.

The result was a period of genuine doctrinal instability, with coordinate benches reaching irreconcilable conclusions on the same short sub-section. That kind of conflict — decisions of equal authority pointing in opposite directions — is precisely what a larger bench exists to settle. The disagreement was ultimately referred for authoritative resolution, and the stage was set for a Constitution Bench.

Chapter three — Indore Development Authority and the conjunctive reading (2020)

The controversy was settled by a five-judge Constitution Bench in Indore Development Authority v. Manoharlal, (2020) 8 SCC 129. On every point that mattered the Bench read s.24(2) narrowly, in the State’s favour, and it expressly overruled Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183.

The holdings that reshaped the law were these:

“Or” is to be read as “nor” — the conditions are conjunctive. The Bench held that, on a purposive reading of the scheme, the word “or” in s.24(2) must be read as “nor”. A deemed lapse does not follow from the failure of just one condition. The landowner must establish both that physical possession has not been taken and that compensation has not been paid. Where the State has taken possession, non-payment alone will not cause a lapse; where the State has paid (or tendered), the retention of possession alone will not either.

There is no deemed lapse for mere non-payment; tender suffices. The Court rejected the demanding Pune Municipal Corporation concept of “payment”. It is enough that the State has tendered the compensation; obligatory deposit in the landowner’s account is not a precondition. Crucially, depositing the amount in the government treasury suffices to discharge the payment limb. A landowner who has declined to receive compensation cannot rely on his own refusal to manufacture a lapse — the acquisition does not fail merely because the money remains undrawn.

Periods covered by an interim stay are excluded. The Bench also held that where the acquisition or the taking of possession was held up by an interim order of a court, the period during which the stay operated is to be excluded when reckoning the five-year and related timelines. An authority prevented by judicial order from proceeding cannot have that very delay counted against it.

Taken together, these holdings reversed the practical thrust of the earlier jurisprudence. The lapse remedy survived, but the conditions for invoking it became substantially harder to satisfy.

The practical landscape today

For anyone advising on an old 1894-Act acquisition, the position after Indore Development Authority can be stated compactly.

The lapse window has narrowed dramatically. Because “or” is now read as “nor”, a landowner seeking a declaration of lapse must prove both limbs together: that physical possession has not been taken and that compensation has not been paid, in addition to the threshold requirement that the award be five years or more old at the commencement of the 2013 Act. Establishing only one limb is fatal to the claim.

The payment limb is now easy for the State to satisfy. Tender is enough, and a deposit in the treasury counts as payment. A landowner’s refusal to accept the compensation does not keep the payment limb alive. In practice, this means most acquisitions in which any amount was awarded and made available will clear the payment hurdle.

Stay periods do not count. Time lost to interim orders is excluded from the computation, so an acquiring authority that was restrained by litigation cannot be defeated by the delay that restraint produced.

Where, then, can a lapse claim still succeed? The realistic space is confined to cases where the acquiring body genuinely did both nothing on the ground and nothing on payment — an old award, land that remains in the owner’s actual physical possession, and compensation that was never even tendered or deposited, with no intervening stay to explain the inertia. Such cases exist, particularly where projects were abandoned or forgotten, but they are the exception. The days when non-payment alone, or contested possession alone, could unravel an acquisition are over.

A word of caution is warranted. Section 24(2) remains a heavily litigated and factually sensitive area; whether possession was in truth taken, and whether compensation was in law tendered, are questions decided on the specific record. The doctrine is settled; its application to a given piece of land rarely is.

Key takeaways

• Section 24(2) of the 2013 Act allows an old 1894-Act acquisition to be deemed to have lapsed — reopening it at 2013-Act compensation — where the s.11 award is five years or more old at the commencement of the 2013 Act and the statutory possession/payment conditions are met.
• Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183 read the provision expansively: the conditions were disjunctive, and “payment” required deposit in the landowner’s account or with the court — mere tender or treasury deposit did not count. This triggered a wave of lapse claims.
• Conflicting benches followed, producing years of doctrinal instability and a reference to a larger bench.
• Indore Development Authority v. Manoharlal, (2020) 8 SCC 129 (Constitution Bench, five judges) overruled Pune Municipal Corporation: “or” is read as “nor” (conjunctive); there is no deemed lapse for mere non-payment; the State need only tender compensation, and deposit in the treasury suffices; and periods covered by interim stay are excluded.
• Today the lapse window is narrow. A landowner must show both no possession and no tender/payment, with stay periods excluded. Lapse still succeeds only where the State did genuinely nothing on both fronts.

Frequently asked questions

My land was acquired under the 1894 Act more than a decade ago and I never collected the compensation. Can I claim the acquisition has lapsed? Not on non-payment alone. After Indore Development Authority, non-collection does not by itself cause a lapse — if the State tendered the amount or deposited it in the treasury, the payment limb is satisfied notwithstanding that you never drew the money. You would also have to show that physical possession was never taken. Both limbs must be met.

What is the difference between the old rule and the current rule in one line? Under Pune Municipal Corporation either non-possession or non-payment could cause a lapse, and treasury deposit did not count as payment. Under Indore Development Authority you need non-possession and non-payment together, and treasury deposit does count as payment.

Does the time my case spent under a court stay count towards the five-year period? No. Indore Development Authority held that periods during which an interim stay operated are excluded from the reckoning. An authority that was judicially restrained does not lose the benefit of section 24(2) of the land acquisition act because of that delay.

Is there any situation in which a lapse claim can still succeed? Yes, but a confined one. Where the award is old, the land genuinely remains in your actual physical possession, compensation was never even tendered or deposited, and no interim order explains the delay, both limbs are satisfied and a lapse can be declared. These are the exception rather than the rule.

Sources & authorities

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, ss.24 and 24(2); s.11 of the Land Acquisition Act, 1894 (award).
• Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183 — expansive, disjunctive reading; “payment” required deposit in the landowner’s account or with the court; overruled.
• Indore Development Authority v. Manoharlal, (2020) 8 SCC 129 — Constitution Bench (five judges): “or” read as “nor” (conjunctive); no deemed lapse for mere non-payment; tender/treasury deposit suffices; interim-stay periods excluded; overruled Pune Municipal Corporation.

All authorities independently verified on 20 July 2026.

This article is for general information and does not constitute legal advice. Section 24(2) is a much-litigated and fact-sensitive provision; whether a particular acquisition has lapsed turns on the specific record of possession, payment and any intervening court orders. Readers should obtain advice on their own facts before acting. No lawyer–client relationship is created by this article.

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