The Supreme Court, in a judgment dated November 19, 2025, delivered by Justice M.M. Sundresh, allowed the appeals filed by the Government of Tamil Nadu, setting aside a Madras High Court direction to pay interest to landowners who had already entered into a final agreement for compensation under the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997 (1997 Act).
The core issue was whether a party to a concluded contract for compensation could later seek further relief, such as statutory interest, by taking refuge under the Act’s provisions.
🤝 The Contract vs. The Statute: Agreement is Sacrosanct
The Court emphasized that Section 7(2) and Section 7(4) of the 1997 Act facilitate amicable settlements by agreement between the Government and the landowners for determining compensation.
- Once an agreement is voluntarily entered into and compensation is fixed, the agreement becomes a concluded contract under the Indian Contract Act, 1872.
- The contract governs the rights and liabilities of the parties, and the statutory provisions of the 1997 Act, including the procedure for passing an award, reference, and appeal, are excluded.
- The negotiated amount, which in this case involved a substantial enhancement (250% hike) over the prevailing guideline value, was held to be a “complete package”.
🛑 Doctrine of Approbate and Reprobate Applied
The Court found that the landowners were initially inclined to accept the agreed-upon amount and only later sought interest, which constitutes a clear case of approbation and reprobation.
- The principle is that a party cannot be allowed to accept one part of a transaction (the higher compensation) while rejecting the rest (waiving other statutory claims).
- By agreeing to the compensation without protest, all possible disputes, including those related to rent and interest, were deemed to have been put to an end.
❌ High Court Erred in Invoking Section 12
The Supreme Court held that the High Court, despite correctly finding the agreement to be a “complete package,” committed a fundamental error by subsequently invoking Section 12 of the 1997 Act, which provides for interest from the date of taking possession.
- The Court ruled that Section 12 has no application to a case where a concluded agreement has been reached under Section 7.
- The High Court’s direction for the payment of interest, which the appellant Government stated would amount to approximately ₹1800 crores, was set aside.
The Court concluded that allowing the reopening of the contract through a writ petition under Article 226 would violate Sections 7(2) and 7(4) of the 1997 Act and undermine the sanctity of the settlement
Case: Government of Tamil Nadu v. P.R. Jaganathan & Others
Date of Decision: 19 November 2025