The Supreme Court of India, comprising a Bench of Justice Dipankar Datta and Justice Sheel Nagu, has held that disputed questions of fact in land acquisition compensation claims must be adjudicated by the High Court exercising first appellate jurisdiction, declining to act as a fact-finding forum under Article 136 of the Constitution. Disposing of cross-appeals arising from an interim stay order of the Gujarat High Court, the Supreme Court directed M/s JK Paper Ltd to deposit an additional ₹15 crore within two months before the Registrar General of the High Court to maintain an interim stay against the execution of an enhanced compensation award.
Background of the Case
The dispute traces back to land acquisition proceedings initiated under the erstwhile Land Acquisition Act, 1894, for acquiring 1,40,504 square meters (approximately 34.72 acres) of land bearing Block No. 207 in Village Gunsada for the benefit of M/s JK Paper Ltd. The Special Land Acquisition Officer had originally determined the land valuation at ₹124 per square meter.
Aggrieved by this valuation, the landowners—Bipinchandra Natwarlal Shah and two others—approached the Reference Court. By an award dated February 23, 2023, the Reference Court enhanced the valuation to ₹950 per square meter, granting along with it a 12% price escalation, 30% solatium, and interest at the rate of 9% for the first year and 15% thereafter from the date of receipt of possession.
Both the company and the landowners challenged the Reference Court’s award before the High Court of Gujarat in First Appeal No. 2489 of 2023 and First Appeal No. 1653 of 2023, respectively. While the landowners demanded further enhancement to ₹1,500 per square meter, the company contested the Reference Court’s assessment of ₹950 per square meter.
During the pendency of these appeals, the Executing Court issued a recovery warrant on May 23, 2025, directing the recovery of ₹67,48,34,981.00 from the company. The company subsequently moved stay applications before the High Court. On June 30, 2025, the High Court granted a conditional stay on the Reference Court’s award and execution proceedings, directing the company to deposit 50% of the awarded additional compensation along with statutory benefits and interest, permitting the landowners to withdraw half of that deposited sum upon furnishing security. The company had deposited ₹9,33,33,744 pursuant to the proceedings. Both parties thereafter approached the Supreme Court against the High Court’s interim order.
Submissions Before the Court
Senior Advocate Gopal Sankaranarayanan, appearing for M/s JK Paper Ltd, contended that the company had initially not been put in possession of approximately 24.77 acres of the land. It was further asserted that a gorge (nala) ran through the land causing severe waterlogging, which diminished the extent of useful land available to the company.
Senior Advocate Maninder Singh represented the landowners, while Advocate Deepanwita Priyanka appeared on behalf of the State of Gujarat.
Pursuant to earlier directions from the Supreme Court, the State of Gujarat placed an affidavit on record clarifying that on November 10, 2025, the Mamlatdar handed over the remaining 24.77 acres to the company, ensuring that the company now possessed the entire 34.72 acres of the acquired land.
Court’s Observations and Analysis
The Supreme Court summarily rejected the company’s contention regarding the gorge and waterlogging, barring it from raising the issue again before the High Court. Addressing the company’s assertion, the Bench observed:
“It appears that ever since the proceedings for acquisition of the subject land were initiated, the company had knowledge of the gorge (nala), the associated waterlogging and the other encumbrances. It is too late in the day for the company to claim that the gorge (nala) and the other encumbrances reduced the amount of useful land available to it, particularly when the land acquisition proceedings for the subject land were initiated as far back as 2005 for the benefit of the company. The company, therefore, shall not be entitled to raise any such issue before the High Court.”
Turning to the unresolved factual disputes—such as when the company initially took possession of portions of the land and the extent of such possession—the Bench emphasized that these questions directly affect the computation of the final compensation and interest payable.
Reiterating the scope of first appellate jurisdiction, the Supreme Court relied on its ruling in Malluru Mallappa (Dead) v. Kuruvathappa & Ors. (2020) 4 SCC 313, citing the following settled principle:
“It is a settled position of law that an appeal is a continuation of the proceedings of the original court. Ordinarily, the appellate jurisdiction involves a rehearing on law as well as on fact and is invoked by an aggrieved person. The first appeal is a valuable right of the appellant and therein all questions of fact and law decided by the trial court are open for reconsideration. Therefore, the first appellate court is required to address itself to all the issues and decide the case by giving reasons. The court of first appeal must record its findings only after dealing with all issues of law as well as fact and with the evidence, oral as well as documentary, led by the parties. The judgment of the first appellate court must display conscious application of mind and record findings supported by reasons on all issues and contentions…”
Emphasizing institutional restraint under its special leave jurisdiction, the Bench observed:
“Given that the first appeals preferred by the company and the landowners are still pending before the High Court which, as the first appellate court, remains the most appropriate forum to examine such disputed questions of facts and to conclusively determine the lis therein, this Court would be loath to exercise its jurisdiction under Article 136 to wade into the waters of a fact-finding court or tribunal to determine any disputed questions of fact.”
Decision and Directions
The Supreme Court directed that the High Court’s interim stay order shall continue for a period of two months. To balance the equities and protect the interests of justice considering the substantial sum involved, the Court directed M/s JK Paper Ltd to deposit an additional ₹15 crore with the Registrar General of the Gujarat High Court within two months:
- Deposit and Investment: The additional deposit of ₹15 crore will be without prejudice to the rights and contentions of the parties in the pending first appeals. The Registrar General has been directed to invest this amount in a short-term, interest-bearing Fixed Deposit account with a nationalized bank on an auto-renewal basis.
- Consequences of Default: If the company fails to deposit the ₹15 crore within the stipulated two-month period, the interim stay granted by the High Court shall automatically stand revoked, leaving the landowners free to pursue their claims before the Executing Court.
- Continuation of Stay: Should the deposit be made within the time granted, the interim stay will continue until further orders are passed by the High Court.
- Expedited Disposal: Noting that the land acquisition proceedings originated in 2005, the Supreme Court requested the Gujarat High Court to expedite the disposal of the pending first appeals in accordance with law, taking note of the delivery of possession of the remaining 24.77 acres made over on November 10, 2025. All other issues, save for the rejected argument regarding the gorge, were left open for the High Court’s determination.
The appeals were disposed of on these terms.
Case Details
Case Title: M/s JK Paper Ltd vs. Bipinchandra Natwarlal Shah & Ors. (with connected appeal)
Case No.: Civil Appeal No. [—] of 2026 (Arising out of SLP (C) No. 21774 of 2025) with Civil Appeal Nos. [—] of 2026 (Arising out of SLP (C) Nos. 23751-52 of 2025)
Bench: Justice Dipankar Datta and Justice Sheel Nagu
Date: October 07, 2026
