In a significant ruling, the Supreme Court of India has emphasized the principle that landowners must receive the highest possible compensation when their property is compulsorily acquired by the government. The case, originating from the acquisition of approximately 302.75 acres of land in Tauru village, Mewat District, Haryana, was initiated under the Land Acquisition Act, 1894, for developing residential sectors by the Haryana Urban Development Authority. The matter was heard by a bench comprising Justice Surya Kant and Justice K.V. Viswanathan.
The process began with a notification under Section 4 of the Land Acquisition Act on February 11, 2011, followed by another notification under Section 6 on February 10, 2012. The Land Acquisition Collector (LAC) initially awarded compensation of ₹45,00,000 per acre, including additional statutory benefits. However, the landowners found this amount inadequate and sought an enhancement through legal means. The Reference Court later increased the compensation to ₹92,62,500 per acre. Both the landowners and the State of Haryana challenged this decision in the Punjab and Haryana High Court, which reverted to the original award set by the LAC. Dissatisfied with this outcome, the landowners appealed to the Supreme Court.
Key Legal Issues
The Supreme Court identified two crucial issues for deliberation:
1. Whether the landowners were entitled to a higher rate of compensation.
2. How the compensation amount should be calculated based on the land’s market value.
Court’s Observations and Analysis
In its analysis, the Supreme Court highlighted that the compensation for acquired land should be determined based on its “market value,” as outlined in Section 23(1) of the Land Acquisition Act, 1894. The bench noted that the term “market value” refers to the amount that a willing buyer would pay to a willing seller, factoring in the land’s current condition, potential uses, and location.
The Court observed that the Reference Court had correctly increased the compensation to ₹92,62,500 per acre, reflecting the potential of the land, which is strategically located near significant amenities like the Sohna-Tauru bypass, educational institutions, healthcare facilities, and industrial areas. The land’s proximity to the Gurgaon-National Capital Region and the Bhiwadi Industrial Township further underscored its high market potential.
Justice Surya Kant, writing for the bench, quoted from the precedent set in Mehrawal Khewaji Trust v. State of Punjab, emphasizing:
“When land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of acquisition.”
The Supreme Court criticized the Punjab and Haryana High Court for relying on post-notification sales exemplars to reduce the compensation. It clarified that such sales could only be considered in exceptional situations, where better evidence is unavailable and there is no indication of an upward price trend due to the acquisition process.
After evaluating the evidence, the Supreme Court chose to rely on Exemplar P5, which represented the highest land value at ₹1,81,33,867 per acre, as the base rate for compensation estimation. The Court applied a 50% deduction for development costs, resulting in a fair and enhanced compensation figure. The judgment restored the Reference Court’s original award of ₹92,62,500 per acre, setting aside the High Court’s decision.
Parties, Lawyers, and Case Details
The case was brought before the Supreme Court as Horrmal (Deceased) through his LRs and others vs. State of Haryana and others. It involved multiple appeals consolidated under Civil Appeal arising from SLP (C) No. 7963/2023. The appellants, represented by Senior Advocates Narender Hooda, Sunil Dalal, and Gagan Gupta, argued for fairer compensation. The State of Haryana, represented by Additional Solicitor General Vikramjit Bannerjee, defended the lower compensation amount.
