Computation Of Compensation By Reference Court & High Court At Lower Rate For Acquired Land Can’t Be Accepted: Supreme Court Directs Determination Of Compensation

The Supreme Court has directed the determination of compensation in a case, saying that the computation of compensation by the Reference Court and the High Court at a lower rate for the acquired land cannot be accepted.

A Civil Appeal was preferred against the Order of the Gujarat High Court in a First Appeal filed by the legal representatives of the original claimant, assailing the award passed by the Reference Court.

The two-Judge Bench of Justice J.K. Maheshwari and Justice Aravind Kumar held, “… we cannot lose sight of the fact that Collector of the District himself allotted the land of Survey No. 864 in the name of Harishchandra Hiralal Dalwadi at the rate of Rs. 65/- per square metre prior to acquisition, meaning thereby, the government wanted to fetch higher amount by allotting land to an individual. In such scenario, computation of compensation by Reference Court and High Court at a lower rate for the land acquired cannot be accepted. As such, said exemplar is also relevant to determine the fair and reasonable amount of compensation.”

The Bench reiterated that every case must be dealt with on its own facts bearing in mind that all factors are relevant to be understood by a prudent purchaser of land and the Judge while determining the compensation must keep those factors in mind.

Senior Advocate Harish P. Raval appeared on behalf of the Appellants while AOR Deepanwita Priyanka appeared on behalf of the Respondents.

Facts of the Case

The subject land was non-agricultural situated in Gujarat, which was acquired by the Gujarat Housing Board for residential/housing/construction purpose. A notification under Section 4 of the Land Acquisition Act, 1894 (LA Act) was published in 1985, followed by a notification under Section 6 in 1986. After inviting objections, compensation at the rate of Rs. 4.50/- per square metre was determined by the Land Acquisition Officer (LAO), which was enhanced to Rs. 45/- per square metre by the Reference Court along with 30% solatium on the market value, 10% severance charges, plus 12% per annum interest from the date of publication of notification under Section 4 till the date of award/date of taking possession of the land, whichever is earlier, plus 9% interest for one year from the date of taking of possession and 15% per annum till realization.

In Appeal, the High Court further enhanced the compensation to Rs. 53/- per square metre, including other statutory benefits as granted by the Reference Court. This was under challenge before the Apex Court. The question that arose for consideration before the Court was whether the compensation awarded by the Reference Court, marginally enhanced by the High Court along with other statutory benefits is fair and reasonable.

Reasoning

The Supreme Court in view of the facts and circumstances of the case, observed, “So far as contention of potentiality of the land qua compensation is concerned, the statement of Shripat Dattatreya (departmental witness) is relevant, whereby it is admitted by him that railway station and the bus station are one kilometer away from the place of acquisition, therefore, potentiality of the land cannot be doubted.”

The Court noted that during the hearing, it has not been objected by the Respondent that the subject land and the land indicated in exemplar Exhibit 53 are not adjoining, therefore, the land acquired, and the land of exemplar Exhibit 53 are adjoining.

“Proceeding further, since the land acquired is a non-agricultural land and its acquisition is for use and occupation by Housing Board for residential/housing/construction purpose, therefore, it is imperative for the Housing Board to have development of the land. Thus, for the purpose of development, some part of the subject land is required to be left. As we are accepting the exemplar of a piece of land situated in a colony developed by Navjivan Cooperative Society, therefore, at least 30% of the acquired land is required to be left by the Housing Board for the development out of the subject land”, it added.

The Court further said that if the value of Exhibit 53 – sale deed, which is a piece of plot, after leaving the land for development, in the said contingency, on deduction of 30% as the development cost is accepted, the compensation would come at the rate of Rs. 107/- per square metre, as rightly discussed by the Reference Court.

“As already noted above, even prior to the notification, the land was allotted by the Collector at the rate of Rs. 65/- per square metre [Exhibit 44]. Thus, even if we take mean of the documents Exhibit 44 and Exhibit 53 [i.e., (65 + 152.37) / 2] which comes to Rs. 108.68/- per square metre. The said value is also nearer to the value as determined in the above paragraphs i.e., Rs. 107 per square metre”, it added.

The Court also noted that the compensation as determined by the High Court at the rate of Rs. 53/- per square metre is on the lower side.

“Therefore, we direct that the compensation of the land be determined accepting value at the rate of Rs. 107/- per square metre and the question as posed is answered”, it directed.

Accordingly, the Apex Court partly allowed the Appeal and directed the Respondents to calculate the compensation and pay the same to the Appellants within 3 months.

Cause Title- Hiralal Motilal Parikh (Deceased through LRs) v. Spl. LAQ Officer & Anr. (Neutral Citation: 2025 INSC 815)

Appearance:

Appellants: Senior Advocate Harish P. Raval, AOR Anushree Prashit Kapadia, Advocates Urmi H Raval, Shreya Bansal, Shrestha Narayan, Siddhartha H Raval, and Shivangi Chawla.

Respondents: AOR Deepanwita Priyanka and Advocate Deepak Singh.

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