The Supreme Court of India, in a judgment delivered on October 15, 2025, has set aside a Bombay High Court order and restored an enhanced compensation award of over ₹20 crore to a landowner whose property was utilized by the Nashik Municipal Corporation for decades before being formally acquired. While denying a larger claim for rental compensation dating back to 1972, the bench of CJI B. R. Gavai and Justice Augustine George Masih exercised its equitable jurisdiction to award interest as mesne profits to the landowner for the period between his purchase of the land and the final payment of compensation.
The case, Pradyumna Mukund Kokil vs Nashik Municipal Corporation and Others, centered on the correct valuation of acquired land under the 2013 Land Acquisition Act and the eligibility for compensation for unauthorized prior occupation by an acquiring authority.
Background of the Dispute
The dispute traces back to May 3, 1972, when the Nashik Road-Deolali Municipal Council (now Nashik Municipal Corporation) passed a resolution to reserve 13,800 sq. meters of land at Survey No. 8/1, Village Deolali, for a high school, playground, and roads under the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act).
On June 22, 1972, the Municipal Council took possession of 3,700 sq. meters of this land for public use without initiating a formal acquisition process. A subsequent notification on March 2, 1978, acquired only 10,100 sq. meters, leaving the 3,700 sq. meter parcel legally unacquired, though it remained in the Corporation’s possession and was used for road purposes.
The original owner, after serving a notice under Section 127 of the MRTP Act, successfully argued before the High Court in 1998 that the reservation on the unacquired 3,700 sq. meters had lapsed. However, the Corporation rejected his application for development permission, claiming ownership and possession. An appeal to the State Government in 2007 resulted in a directive to the Corporation to compensate the owner in cash or through Transferable Development Rights (TDR).
Following further litigation, the present appellant, Pradyumna Mukund Kokil, purchased the 3,700 sq. meter parcel from the original owner for ₹1.17 crore via a registered conveyance deed on July 29, 2011. After a series of court battles, including a Supreme Court order in 2017, the State Government was directed to acquire the land. A preliminary notification was issued on January 9, 2017, and an award of ₹8,69,46,650 was passed by the Special Land Acquisition Officer (SLAO) on April 29, 2017.
The appellant accepted this amount under protest and filed a reference. The Land Acquisition, Rehabilitation and Resettlement Authority enhanced the compensation to ₹20,20,11,533 and awarded a substantial sum of ₹238.87 crore as “rental compensation” for illegal occupation from 1972 to 2017. The Corporation challenged this in the High Court, which set aside the enhancement and the rental compensation, restoring the original SLAO award. This High Court judgment was the subject of the present appeal before the Supreme Court.
Arguments of the Parties
The appellant’s senior counsel presented two primary arguments:
- The Reference Authority correctly enhanced the compensation based on Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, by considering comparable sale instances, whereas the SLAO had wrongly relied on ready reckoner rates.
- The appellant was entitled to rental compensation for the unauthorized and illegal occupation of the land from 1972, based on the equitable principles enshrined in Section 28 of the 2013 Act and judicial precedents.
Conversely, the senior counsel for the respondent Corporation argued that the SLAO’s valuation was appropriate as the sale instances cited by the appellant were not comparable. It was further contended that rental compensation is not explicitly provided for under the 2013 Act and could not be granted under its residuary clauses.
Supreme Court’s Analysis and Findings
The Supreme Court, in its judgment authored by Justice Augustine George Masih, addressed the two core issues separately.
1. On the Assessment of Compensation:
The Court found that the Reference Authority had correctly applied the statutory method prescribed under Section 26(1)(b) of the 2013 Act. This section mandates determining market value by referencing the average sale price of similar lands from registered sale deeds in the preceding three years. The Court noted that the Reference Authority had properly considered six sale transactions produced by the claimant, found them genuine, and computed the average sale price after making reasonable adjustments for factors like size, situation, and time gap.
The judgment stated, “The market rate came out to ₹26,814/-… The said amount being in accordance with the Statutory provisions could not have been interfered with by the High Court.” The Court concluded that the High Court erred in setting aside the enhanced compensation determined by the Reference Authority.
2. On Rental Compensation and Unauthorised Occupation:
The Court conducted a detailed examination of the possession of the land. It observed that while the Corporation claimed to be in possession since 1972, various documents and pleadings suggested otherwise. The judgment highlighted that the original owner had mortgaged the property, faced SARFAESI proceedings where a receiver took possession, and the sale deed dated July 29, 2011, explicitly stated that possession was handed over to the appellant.
Based on this evidence, the Court concluded that the original owner was not deprived of possession or usage of the property. The judgment noted, “…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… The claim of rental compensation advanced by the Appellant, particularly for the period prior to the purchase date 29.07.2011, is untenable.”
However, the Court invoked the seventh parameter of Section 28 of the 2013 Act, which allows for consideration of “any other ground which may be in the interest of equity, justice and beneficial to the affected families.” The Court found that while the broad claim for rent from 1972 was falsified, the appellant was entitled to equitable compensation. The appellant had paid ₹1.17 crore for the land in 2011 but could not utilize it until the acquisition was completed in 2017.
The Court held, “…having regard to the equitable mandate of Section 28 (seventhly) to do complete justice to the affected parties, the Appellant is entitled to compensatory mesne-profits/interest on that payment for the period of the State’s occupation up to the date of actual payment of compensation.”
3. On Adverse Remarks and Costs by the High Court:
The Supreme Court found the adverse personal observations made by the High Court against the appellant and the imposition of ₹10 lakh in costs to be unjustified. The Court stated, “the Appellant was prosecuting the remedy as available to him under the Statute and advanced evidence in support of his such claims. In those circumstances the observations and the order for an exaction of costs… ought not to be permitted to stand.” These remarks and costs were accordingly expunged and waived.
The Final Decision
The Supreme Court allowed the appeal in part and issued the following directives:
- Enhanced Compensation Restored: The award of the Reference Court dated March 18, 2021, granting a total compensation of ₹20,20,11,533, is restored. This amount is to be paid with interest at 9% per annum for the first year from the date of the Section 11 notification (January 9, 2017) and 15% per annum thereafter until full realization, after deducting the amount already paid.
- Rental Compensation Denied: The claim for rental compensation from 1972 onwards is denied.
- Mesne Profits Granted: The appellant is entitled to interest at a rate of 8% per annum on his investment of ₹1,17,00,000 as mesne profits/compensation for the period from July 29, 2011, to May 8, 2017.
- Adverse Remarks and Costs Set Aside: The personal observations made by the High Court against the appellant are expunged, and the imposed costs are waived.
