Land Acquisition Compensation: Supreme Court settles compensation for lands acquired in Kukrola and Fazalwas (Haryana) (2025)

Date of the Judgment: 07 May 2025

Citation: 2025 INSC 638

Judges: Surya Kant, J., Ujjal Bhuyan, J.

When the government acquires land for public purposes, how should the compensation be determined, especially when the acquired land is near major infrastructure? The Supreme Court addressed this question in a recent case involving land acquired in the villages of Kukrola and Fazalwas in Haryana. The core issue revolved around whether the High Court was correct in awarding different compensation amounts for land acquired in these adjacent villages and how to appropriately assess the market value of the acquired lands. The judgment was delivered by a bench comprising Justice Surya Kant and Justice Ujjal Bhuyan.

Case Background

The case originates from the acquisition of land in several villages, including Fazalwas and Kukrola, in the District of Gurgaon, Haryana. The acquisition process began with a notification issued on April 25, 2008, under Section 4 of the Land Acquisition Act, 1894. The State of Haryana sought to acquire approximately 3510 acres of land for constructing the Chaudhary Devi Lal Industrial Model Township, an integrated complex for industrial, commercial, and public utility purposes.

Specifically, 221 kanals and 4 marlas of land were acquired from Kukrola, and 435 kanals 14 marlas from Fazalwas. Following the initial notification, a declaration under Section 6 of the Land Acquisition Act was issued on March 9, 2009, followed by notices under Section 9. The Land Acquisition Collector (LAC) then issued two separate awards on August 24, 2009, determining a uniform compensation of INR 30,00,000 per acre for both villages, along with additional solatium and interest.

Dissatisfied with the compensation, landowners filed Reference Petitions under Section 18 of the Land Acquisition Act. The Reference Court enhanced the compensation for Kukrola to INR 62,14,421 per acre on October 19, 2013, primarily relying on a sale deed (Ex. P-1) and applying a 10% annual escalation and a 30% development cut. Similarly, on November 15, 2013, the compensation for Fazalwas was also enhanced to INR 62,14,421 per acre, based on the proximity to Kukrola and the earlier award.

Both the State and the landowners, being aggrieved by the Reference Court’s awards, filed Regular First Appeals (RFAs) before the High Court. The High Court partly allowed the landowners’ appeals, modifying the compensation based on the ‘belting’ method, which assessed different compensation for lands abutting National Highway-8 (NH-8) up to a depth of 5 acres and for lands beyond that depth. The compensation was set at INR 87,24,885 per acre for Kukrola and INR 1,21,00,000 per acre for Fazalwas for lands closer to NH-8, while retaining the Reference Court’s award for lands beyond 5 acres.

Consequently, both HSIIDC and the landowners from Kukrola and Fazalwas appealed to the Supreme Court, challenging the High Court’s determination of compensation.

Timeline

Course of Proceedings

Landowners from both villages, dissatisfied with the compensation awarded by the LAC, filed Reference Petitions under Section 18 of the 1894 Act. The Reference Court enhanced the compensation for both Kukrola and Fazalwas to INR 62,14,421 per acre. Subsequently, both the State and the landowners, being aggrieved, filed Regular First Appeals (RFAs) before the High Court. The High Court partly allowed the landowners’ appeals, modifying the compensation for the acquired lands by adopting the ‘belting’ method.

Legal Framework

The legal framework for this case is primarily based on the Land Acquisition Act, 1894, particularly:

• Section 4: “…provides for the issuance of a notification by the State Government when land is needed for a public purpose.” This section initiates the land acquisition process.
• Section 6: “…provides for declaration of intended acquisition.” This declaration follows the Section 4 notification and confirms the government’s intention to acquire the land.
• Section 9: “…concerns the issuance of notices to interested parties to claim compensation for the acquired land.”
• Section 11: “…empowers the District Revenue Officer-cum-Land Acquisition Collector to make an award determining the compensation.”
• Section 18: “…allows landowners to file Reference Petitions if they are dissatisfied with the compensation awarded by the LAC.”
• Section 23: “…enumerates the factors to be considered in determining compensation, primarily the market value of the land at the date of the publication of the Section 4 Notification.”
• Section 25: Mentioned in the judgment in the context of Reference Court ignoring certain sale exemplars due to the confines of Section 25 of the 1894 Act.

These provisions of the Land Acquisition Act, 1894, provide the legal basis for the acquisition of land by the government for public purposes and the determination of fair compensation to the landowners.

Arguments

The arguments in this case were presented by three distinct groups: landowners from Kukrola, landowners from Fazalwas, and the HSIIDC/State of Haryana.

Arguments by Landowners from Kukrola:

• ✓ They argued for parity in compensation with Fazalwas, claiming the villages are adjacent and indistinguishable in terms of market value.
• ✓ They contended that the Reference Court arbitrarily applied a 30% development cut on all acquired land, which was accepted by the High Court for land beyond 5 acres, without any rationale.
• ✓ They claimed that the compensation for land acquired in Kukrola was unjustly assessed lower than that of Fazalwas, despite Kukrola being closer to the National Capital Region.
• ✓ They highlighted the high potentiality of the acquired lands due to their location and access to roads, including the MES Air Force Road, KMP Expressway, and NH-8.
• ✓ They argued that the High Court created an artificial classification by according differing values to lands closer to NH-8 and those farther away.

Arguments by Landowners from Fazalwas:

• ✓ They built upon the arguments of the Kukrola landowners and sought a further increase in compensation awarded by the High Court.
• ✓ They cited sale deed Ex. P-10, dated July 25, 2008, to show a significant increase in land value shortly after the preliminary notification, arguing that the High Court’s annual escalation of 10% was insufficient.
• ✓ They referred to previous judgments of the Supreme Court to support their claim that enhancement/escalation over the sale exemplar can be to the extent of 25% to 30%.
• ✓ They argued that landowners are entitled to compensation in line with the highest sale transaction.
• ✓ They presented additional sale deeds to demonstrate that land in Fazalwas was valued and sold at rates upwards of INR 2 crores.

Arguments by HSIIDC/State of Haryana:

• ✓ They countered the plea for enhancement of compensation for both villages and advocated for upholding the LAC Award as the just compensation.
• ✓ For Kukrola, they argued that sale exemplar Ex. P-1 was for commercial purposes and should not be relied upon, as private developers purchase land for speculative gains.
• ✓ They contended that deductions towards development cost are necessary when determining the market value of a large tract of agricultural land with reference to the sale transaction of a smaller portion.
• ✓ They cited previous judgments of the Supreme Court to support their argument for imposing a cut of 50% to 75% towards the development of acquired lands.
• ✓ They presented sale deeds to show lower land values in Kukrola and argued that the LAC had already awarded more than the just compensation.
• ✓ For Fazalwas, they argued that sale deed Ex. P-4 was for a commercial purpose and should have been eliminated from consideration.
• ✓ They stated that the High Court erroneously mentioned that HSIIDC had not filed any appeal against the enhancement of compensation by the Reference Court.

Issues Framed by the Supreme Court

1. Whether the High Court erred in awarding differing compensation amounts for lands acquired in the villages of Kukrola and Fazalwas?
2. Whether the quantum of compensation awarded is appropriate for both these villages; and if not, on what basis should the market value be assessed?

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following cases and legal provisions:

Cases Relied Upon:

• ✓ Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432 (Supreme Court of India): Relied upon for the principle that adjacent lands or villages possessing similar potential and advantages must be compensated equitably, unless distinctions are clearly and substantially justified.
• ✓ Land Acquisition Officer v. Karigowda, 2010 (5) SCC 708 (Supreme Court of India): Cited to support the legal position regarding compensation for adjacent villages and the use of sales statistics of adjoining lands.
• ✓ Kanwar Singh v. Union of India [(1998) 8 SCC 136 (Supreme Court of India): Referenced within the discussion of Karigowda, emphasizing that sale instances of adjacent villages can be considered for determining fair market value.
• ✓ Udho Dass v. State of Haryana & Ors., 2010 (12) SCC 51 (Supreme Court of India): Cited by landowners of Fazalwas to argue for a higher enhancement/escalation over the sale exemplar.
• ✓ General Manager Oil and Natural Gas Corporation Ltd. v. Rameshbhai Jivanbhai Patel & Anr., 2008 (14) SCC 745 (Supreme Court of India): Cited by landowners of Fazalwas to argue for a higher enhancement/escalation over the sale exemplar.
• ✓ Anjali Molu Dessai v. State of Goa and Anr., 2010 (13) SCC 710 (Supreme Court of India): Cited by landowners of Fazalwas to argue for a higher enhancement/escalation over the sale exemplar.
• ✓ Basavva v. LAO, (1996) 9 SCC 640 (Supreme Court of India): Cited by HSIIDC to argue for imposing a cut of 50% to 75% towards development of acquired lands.
• ✓ Kanta Devi v. State of Haryana, (2008) 15 SCC 201 (Supreme Court of India): Cited by HSIIDC to argue for imposing a cut of 50% to 75% towards development of acquired lands.
• ✓ Subh Ram v. State of Haryana, (2010) 1 SCC 444 (Supreme Court of India): Cited by HSIIDC to argue for imposing a cut of 50% to 75% towards development of acquired lands.
• ✓ Bijender v. State of Haryana, AIR 2017 SC 5811 (Supreme Court of India): Cited to define and explain the application of the ‘belting method’ in land acquisition.
• ✓ Shaji Kuriakose v. Indian Oil Corporation Ltd., (2001) 7 SCC 650 (Supreme Court of India): Cited to lay down descriptive factors that must be fulfilled before a sale deed can be used for comparison.
• ✓ Chimanlal Hargovinddas v. Spl. LAO, Poona & anr., (1988) 3 SCC 751 (Supreme Court of India): Cited regarding the consideration of post-Section 4 Notification sale deeds with appropriate deductions and the rationale for applying development cuts.
• ✓ Administrator General of West Bengal v. Collector, Varanasi, (1988) 2 SCC 150 (Supreme Court of India): Cited to support the principle that sale transactions involving smaller plots of land do not provide a reliable basis for valuing large-scale acquisitions.
• ✓ ONGC Ltd. v. Rameshbhai Jivanbhai Patel, (2008) 14 SCC 745 (Supreme Court of India): Cited to support the principle that sale transactions involving smaller plots of land do not provide a reliable basis for valuing large-scale acquisitions.
• ✓ A. Natesam Pillai v. Special Tahsildar, Land Acquisition, Tiruchy, 2010 INSC 494 (Supreme Court of India): Cited to emphasize the necessity of factoring in the escalation of land prices over time when determining market value and compensation.
• ✓ Valliyammal & Anr. vs Spl. Tahsildar (Laq) & Anr., (2011) 10 SCR 293 (Supreme Court of India): Cited to indicate the range of escalation rates (7.5% to 15%) previously sanctioned by the Court.
• ✓ Sajan v. State Of Maharashtra and ors., 2020 INSC 302 (Supreme Court of India): Cited regarding the range of deductions (20 to 75%) for development when determining the market value of a large tract of undeveloped agricultural land.
• ✓ Lal Chand v. Union of India, (2009) 15 SCC 769 (Supreme Court of India): Cited regarding the range of deductions (20 to 75%) for development when determining the market value of a large tract of undeveloped agricultural land.
• ✓ Ranvir Singh v. Union of India, (2005) 12 SCC 59 (Supreme Court of India): Cited to emphasize that the Collector’s rates serve only as a baseline for compensation and should not be relied upon as the sole basis for determining the Award.

Legal Provisions Considered:

• ✓ Section 4, Land Acquisition Act, 1894: Notification for land needed for public purpose.
• ✓ Section 6, Land Acquisition Act, 1894: Declaration of intended acquisition.
• ✓ Section 9, Land Acquisition Act, 1894: Issuance of notices to claim compensation.
• ✓ Section 11, Land Acquisition Act, 1894: Determination of compensation by the Land Acquisition Collector.
• ✓ Section 18, Land Acquisition Act, 1894: Filing of Reference Petitions by dissatisfied landowners.
• ✓ Section 23, Land Acquisition Act, 1894: Factors to be considered in determining compensation, including market value.

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• ✓ Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432:* The Court relied on this authority to emphasize the principle that adjacent lands with similar potential must be compensated equitably.
• ✓ Land Acquisition Officer v. Karigowda, 2010 (5) SCC 708:* The Court cited this case to support the legal position regarding compensation for adjacent villages and the use of sales statistics of adjoining lands.
• ✓ Bijender v. State of Haryana, AIR 2017 SC 5811:* The Court relied on this authority to define and explain the application of the ‘belting method’ in land acquisition.
• ✓ Shaji Kuriakose v. Indian Oil Corporation Ltd., (2001) 7 SCC 650:* The Court relied on this authority to lay down the factors that must be fulfilled before a sale deed can be used for comparison.
• ✓ Chimanlal Hargovinddas v. Spl. LAO, Poona & anr., (1988) 3 SCC 751:* The Court cited this case regarding the consideration of post-Section 4 Notification sale deeds and the rationale for applying development cuts.

What weighed in the mind of the Court?

The Supreme Court’s conclusion was primarily influenced by the need for equitable compensation, the comparable potential of the lands in Kukrola and Fazalwas, and the appropriateness of the belting method for valuation. The Court emphasized that lands with similar locational and developmental potential must be compensated equitably, and artificial boundaries should not obstruct the application of fairness.

The Court also considered the evidentiary basis for the compensation awarded, the validity of the sale exemplars, and the necessity of factoring in the escalation of land prices over time.

Fact:Law

The Supreme Court’s decision was influenced more by the factual aspects of the case (60%), such as the location and potential of the lands, than by purely legal considerations (40%).

Logical Reasoning

Issue 1: Differing Compensation Amounts

Start → Were the lands acquired through a common notification and for a common purpose? (Yes) ↓ Are the lands in Kukrola and Fazalwas virtually indistinguishable? (Yes) ↓ Is there any specific finding that the potential or advantages of the acquired lands in the two villages differ significantly? (No) ↓ Differential compensation is unsustainable → Parity in compensation across both villages

Issue 2: Quantum of Compensation

Start → Is the belting method appropriate for determining compensation? (Yes) ↓ Is the sale exemplar valid and comparable? (Yes) ↓ Are the escalation rate and development cut fair and reasonable? (Yes for outer belt, No for inner belt) ↓ Compensation for outer belt upheld, compensation for inner belt modified → Final compensation determined

The Supreme Court’s reasoning was based on ensuring fairness and equality in compensation, considering the specific circumstances of the land acquisition, and applying appropriate valuation methods.

Key Takeaways

• ✓ Lands with similar locational and developmental potential must be compensated equitably.
• ✓ Artificial boundaries created for administrative convenience cannot obstruct the application of fairness.
• ✓ The belting method is a recognized technique for valuing land based on proximity to key infrastructure.
• ✓ Compensation determination must factor in the escalation of land prices over time.

Directions

The Supreme Court provided the following directions:

1. The compensation granted for the ‘outer belt’ (lands beyond 5 acres from NH-8) by the High Court at INR 62,14,121 per acre is upheld.
2. The compensation granted for the ‘inner belt’ (lands situated in Kukrola and abutting the NH-8 up to a depth of 5 acres) is awarded parity with that of village Fazalwas, i.e., INR 1,21,00,000 per acre.

Development of Law

The ratio decidendi of the caseis that lands acquired through a common notification for a common purpose, possessing similar locational and developmental potential, must be compensated equitably, regardless of artificial administrative boundaries. The judgment reinforces the application of the belting method in land valuation and emphasizes the necessity of factoring in the escalation of land prices over time. This case clarifies the principles of equitable compensation in land acquisition cases and provides guidance for determining fair market value.

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was delivered unanimously by the bench comprising Justice Surya Kant and Justice Ujjal Bhuyan.

Related Judgments

• Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432
• Land Acquisition Officer v. Karigowda, 2010 (5) SCC 708
• Bijender v. State of Haryana, AIR 2017 SC 5811
• Shaji Kuriakose v. Indian Oil Corporation Ltd., (2001) 7 SCC 650
• Chimanlal Hargovinddas v. Spl. LAO, Poona & anr., (1988) 3 SCC 751

Full Judgment

The full judgment can be accessed at: [Link to Full Judgment] (Link to be added when available)