Supreme Court: Rental Or Damages For Use Awarded Only Where Possession Unlawfully Detained By Authority Before Notification Or Acquisition

The Supreme Court reiterated that rental or damages for use shall be awarded only where possession is unlawfully detained by the acquiring authority prior to notification or acquisition.

The Court reiterated thus in a Civil Appeal arising from a long-standing dispute concerning land situated in Nashik District.

The two-Judge Bench of Chief Justice of India (CJI) B.R. Gavai and Justice Augustine George Masih observed, “As held in R.L. Jain (supra), rental or damages for use shall be awarded only where possession is unlawfully detained by the acquiring authority prior to notification or acquisition. The claim thus with regard to the rental compensation as put forth by the Appellant at least prior to the date of purchase of the land at the hands of the Appellant cannot be accepted.”

The Bench said that the claim of rental compensation advanced, particularly for the period prior to the purchase date, is untenable in light of the settled position in law which confines the grant of rental compensation to cases involving unlawful and unauthorized occupation.

AOR E. C. Agrawala represented the Appellant, while AOR Shivaji M. Jadhav represented the Respondents.

Facts of the Case

In 1972, the Nashik Road-Deolali Municipal Council (now Nashik Municipal Corporation) reserved a land for public purposes i.e., high school, playground, and development plan (DP) roads under the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). The Municipal Council took possession of land for public use, albeit without recourse to the formal acquisition process prescribed under the Land Acquisition Act, 1894 (LA Act). Subsequently, a notification under Section 126(2) of the MRTP Act read with Section 6 of the LA Act was issued in 1978, acquiring only 1 hectare and 1 Ares for the stated public purpose, leaving the remaining 37 Ares outside the acquisition. Nevertheless, the Corporation continued to retain possession and use of the unacquired portion for road purposes, without any legal title as alleged. After the passing of the award, no further steps were taken for acquiring the remaining land.

The predecessor in interest of the Appellant i.e., the original owner submitted an application along with a development plan under Section 127 of the MRTP Act to the Respondent-Corporation. In 1998, the High Court directed the Corporation to consider fresh development plans. Thereafter, the Corporation rejected the development request. The High Court remanded the case for fresh hearing. The Supreme Court dismissed the Special Leave Petition (SLP) filed by the State. In 2011, the Appellant purchased a land measuring 37 Acres from the original owner vide a registered Conveyance Deed. Before the Appeal, as remanded by the High Court could be decided, a fire broke out in the Department of the Government because of which the records were destroyed. Various reminders were submitted by the Appellant but without any result. Hence, he approached the High Court, which allowed his Writ Petition.

Being aggrieved with the liberty granted to Corporation to put forth the claim of adverse possession, the Appellant filed an SLP. The Supreme Court allowed the same to the extent of setting aside the liberty granted to the Corporation. The Appellant, being aggrieved with regard to the assessment of the compensation as well as the non-grant of any benefit with regard to the illegal occupation of the land by the Municipal Corporation prior to the acquisition of the land i.e., from the year 1972 till 2017, preferred a reference against the award of the Special Land Acquisition Officer (SLAO). The Land Acquisition, Rehabilitation and Resettlement Authority, Nagpur (Resettlement Authority) allowed the same and enhanced the compensation. This was challenged by the Corporation before the High Court, which set aside the Resettlement Authority’s award. Hence, the Appellant was before the Apex Court.

Reasoning

The Supreme Court in view of the facts and circumstances of the case, noted, “The Reference Court proceeded to compute the average sale price as contemplated under Section 26(1)(b) read with Explanation 2 of the 2013 Act, by making reasonable adjustments keeping in view the size of the plots, their situation and the time-gap between the sale instances and the notification under Section 11. The sale instances taken into consideration by the Reference Court where the three out of the cited six which were highest in value when taken per square meter. Since these sale instances are of the year 2014 to 2016, with Section 11 notification being of 09.01.2017 to reach at the market price 10% increase was added. The market rate came out to ₹26,814/- (Rupees Twenty-Six Thousand Eight Hundred and Fourteen Only).”

The Court added that the said amount being in accordance with the statutory provisions could not have been interfered with by the High Court and the principles and the Judgments as has been relied upon by the High Court would not be applicable to the facts of the case as well as the mandate of the statute referred to.

“It is, therefore, established from the above documents that the Original Owner had not been deprived of the benefit of possession or usage of the property in question all through, which, as a matter of fact has been claimed by the Appellant. The documents clearly reveal, as has been referred to above, that the property had not been in exclusive possession of the Respondent - Corporation rather actual physical possession of the subject-property was with the Original Owner and utilisation thereof for all intent and purposes including taking benefit of ownership of the said property either in the form of loan or rent thereof stands admitted and established”, it said.

The Court was of the view that the Appellant would be entitled to compensation in the form of interest at the rate of 8% per annum on the amount for the concerned period.

“In the light of the above, the judgment and order of the High Court with regard to the denial of rental/compensation to the Appellant from the Respondent - Corporation is upheld. However, for the period 29.07.2011 to 08.05.2017 the Appellant is held entitled to compensation to the extent indicated above”, it concluded.

Accordingly, the Apex Court allowed the Appeal to the extent of restoring the award passed by the Reference Court and denied the claim of rental compensation.

Cause Title- Pradyumna Mukund Kokil v. Nashik Municipal Corporation and Others (Neutral Citation: 2025 INSC 1236)

Appearance:

Appellant: AOR E. C. Agrawala, Advocates Mahesh Agarwal, Kamaldeep Dayal, Ankur Saigal, Chirag Nayak, Kalyani Bhide, Prakash Ahuja, and Vinit Prakash Ahuja.

Respondents: AORs Shivaji M. Jadhav, Aaditya Aniruddha Pande, Advocates M.L. Patil, Brij Kishor Sah, Adarsh Kumar Pandey, Vignesh Singh, Aditya S. Jadhav, Rukhmini Bobde, Siddharth Dharmadhikari, Shrirang B. Varma, Soumya Priyadarshinee, Vinayak Aren, Amlaan Kumar, Jatin Dhamija, and Naveen Kumar Bhardwaj.

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