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Supreme Court 2016: PMP Act Constitutional; 10% Compensation + Damage MustBe Paid For Pipeline Right Of User. The Supreme Court in Laljibhai Kadvabhai Savaliyavs State Of Gujarat on 05.10.2016 examined constitutional validity of Petroleum andMinerals Pipelines Act, 1962. The Court upheld the Act and clarified that landowners areentitled to both: (1) compensation for actual damage, and (2) 10% of market value forright of user. The case arose from laying of natural gas pipeline through agriculturallands in Surat. This blog explains Laljibhai vs State Of Gujarat on PMP Act validity, landrestrictions, and appointment of Competent Authority.
Is PMP Act A Bypass Of Land Acquisition Act? The Supreme Court in Laljibhai vsState Of Gujarat: Appellants argued PMP Act is to "bypass due process" and amounts to"complete deprivation".The Supreme Court in Laljibhai vs State Of Gujarat para 16:Rejected. Held PMP Act is special enactment for "efficient and cheap means oftransportation". Outright acquisition of 1470 km pipeline would cause "tremendousincrease in costs" and deprive farmers.The Supreme Court in Laljibhai vs State OfGujarat: Ownership and possession remain with landowner. Only "right of user to laypipelines in sub-soil" is acquired.The Supreme Court in Laljibhai vs State Of Gujarat:Section 9 restrictions are to "safeguard and secure pipelines underneath". Land can stillbe used for agriculture.The Supreme Court in Laljibhai vs State Of Gujarat: Rejectedargument that "Corporation" means only public sector. Definition in Section 2(b)includes private companies. Pipeline is "common carrier" and serves public interest.Acommon mistake is to equate right of user with full acquisition. Laljibhai says it ispartial acquisition of property rights.
Section 10 Compensation: Damage + 10% Market Value.The Supreme Court inLaljibhai vs State Of Gujarat: Breakup of Section 10:Head 1: Actual loss - removal ofcrops, severance, injury to property, earnings. Determined by Competent Authority withregard to Section 10(3).
Head 2: Statutory 10% of market value for vesting of right of user under Section10(4). Independent of damage.The Supreme Court in Laljibhai vs State Of Gujarat:"Theoretically...there may not be any damage. However compensation under sub-section (4)...would still be independently payable".The Supreme Court in Laljibhai vsState Of Gujarat: In present case compensation Rs.181-201 per sq.mtr was by consentand far above 5-year average Rs.13.40. Plus Rs.300 provisional deposited. Notinadequate.The Supreme Court in Laljibhai vs State Of Gujarat: No time limit in Act forpayment, but "expected...to determine and deposit compensation within reasonabletime".Private Sector Pipelines And Judicial Competent AuthorityThe Supreme Court in Laljibhai vs State Of Gujarat: Natural gas is "environmentfriendly source of energy" and "activity of highest national importance". Private sectorparticipation allowed under PNGRB Act 2006.The Supreme Court in Laljibhai vs State OfGujarat: Important direction on Competent Authority. Compared with Metro Railway Actwhich requires Judicial Officer not below Subordinate Judge.The Supreme Court inLaljibhai vs State Of Gujarat para 26: "Competent Authority under PMP Act must also besomeone who is holding or has held a Judicial Office". Otherwise violates Article 14fairness.The Supreme Court in Laljibhai vs State Of Gujarat: Past appointments notinvalidated, but future appointments must follow this.
Conclusion
Laljibhai Kadvabhai vs State Of Gujarat settles law on petroleum mineralspipelines act compensation section 10 supreme court. Supreme Court 05.10.2016 heldPMP Act 1962 is valid. Landowners get dual compensation: actual damage + 10%market value. Section 9 restricts construction but not agriculture. Court also mandatedjudicial training for Competent Authority to ensure fairness. For energy, infrastructureand environment law, this judgment balances development with property rights. TheSupreme Court’s ruling in Laljibhai vs State Of Gujarat is key for all pipeline projects inIndia.
