Rental Compensation Payable Till Award Payment Where Possession Precedes Land Acquisition: Bombay High Court
The Court held that an executive policy governs entitlement; and the State cannot deny compensation for pre-acquisition dispossession.
Justice Manish Pitale, Justice Shreeram V. Shirsat, Bombay High Court
The Bombay High Court has held that where possession of land is taken prior to initiation of acquisition proceedings, the landowner is entitled to rental compensation from the date of such possession until actual payment of compensation under the acquisition award. The Court clarified that while the right to such compensation arises from executive policy rather than statute, it remains enforceable for the entire period of dispossession.
Elaborating further, the Court held that subsequent Government Resolutions modifying or cancelling earlier policies do not extinguish the entitlement to rental compensation, but only alter the method of its computation. It noted that policy evolution cannot operate to deny compensation for deprivation of property once possession has been taken without completing acquisition.
Justice Manish Pitale and Justice Shreeram V. Shirsat while adjudicating a writ petition filed against the State of Maharashtra and Pimpri Chinchwad Municipal Corporation (PCMC), challenging an order restricting rental compensation to a limited period, observed, “…we find that the respondents cannot escape liability of suitably compensating the petitioner, only on the basis of the purpose for which the land has been ultimately utilized. Hence, we hold that the payment of rental compensation to the petitioner is governed by the aforesaid executive instructions in the form of Government Resolutions”.
Advocate Rompal Singh Kohli appeared for the petitioner and Pooja Patil, AGP appeared for the respondents.
The petitioner owned land in Village Wakad, Pune, which was reserved for an octroi post under the development plan. According to the petitioner, PCMC took possession of the land in 2003 without initiating acquisition proceedings. A formal possession receipt was executed in 2006, while acquisition proceedings culminated only in 2015 with the passing of an award. The petitioner claimed rental compensation for the entire intervening period, citing State policy reflected in various Government Resolutions.
Earlier, the petitioner had approached the High Court seeking completion of acquisition proceedings, which were eventually concluded pursuant to judicial directions. However, when the petitioner sought rental compensation, PCMC granted a limited amount calculated only for the period between 2003 and 2006, prompting the present challenge.
The respondents contended that rental compensation has no statutory basis under the Land Acquisition Act, that earlier Government Resolutions providing for such compensation stood cancelled in 2003, and that the benefit was inapplicable to non-irrigation projects. It was also argued that the petitioner had already received compensation under the acquisition award.
Rejecting these submissions, the Court held that although rental compensation is not provided under the statute, it is recognised through executive instructions and equitable principles, as affirmed by the Supreme Court in State of Maharashtra v. Maimuma Banu & Ors. (2003) 7 SCC 448 and R. L. Jain (D) by LRS. vs. DDA & Ors., (2004) 4 SCC 79. The Bench observed that deprivation of possession prior to acquisition justifies compensation for use and occupation, irrespective of the statutory framework.
On interpreting the Government Resolutions, the Court held that the cancellation of earlier resolutions in April 2003 did not obliterate the entitlement. Subsequent resolutions issued in October and December 2003 preserved the right while altering the basis of computation.
“…We also find that restricting the effect of Government Resolution dated 17th October 2003 to only certain irrigation projects is also not sustainable, again in the light of the said position of law reiterated by the Supreme Court in the case of Union of India & Anr. vs. Tarsem Singh & Ors. (supra) that the use to which the land is put cannot be the basis for determining the relief to which the land owner would be entitled, as the fact that the land owner has been deprived of enjoyment of its own land in all such cases, can never be disputed”, the Bench further noted.
Applying these principles, the Court concluded that the petitioner was entitled to rental compensation from August 2003, when possession was taken, until payment of compensation under the 2015 award. It directed that the compensation be calculated at 8% per annum on the value of open land, in terms of the applicable Government Resolution, along with interest at 6% per annum for delayed payment.
Accordingly, the impugned order was quashed, and PCMC was directed to recompute and pay the amount within four months, after adjusting sums already disbursed.
Cause Title: M/s. Devi Construction LLP v. State of Maharashtra & Ors. [Neutral Citation: 2026:BHC-AS:16176-DB]
Appearances:
Petitioner: Rompal Singh Kohli a/w Sejal i/by C. K. Legal, Advocates.
Respondents: Pooja Patil, AGP, G. H. Keluskar, Advocates.