Supreme Court Enhances Compensation for Land Acquisition in Haryana: Acquainted Realtors LLP vs. State of Haryana (2021)

Date of the Judgment: April 8, 2021
Citation: (2021) INSC 179
Judges: Uday Umesh Lalit, J. and Vineet Saran, J.

When the government acquires land for development, how is fair compensation determined? The Supreme Court of India recently tackled this question in a case concerning land acquired in Haryana for an industrial township. The Court considered various factors, including the land’s location, potential for development, and previous sale instances, ultimately enhancing the compensation for the affected landholders. This case highlights the complexities of land acquisition and the judiciary’s role in ensuring equitable compensation.

Case Background

The case involves the acquisition of land for the Industrial Model Township, Phase-VI, Manesar, Gurgaon. The acquisition process began with a notification on September 27, 2005, under Section 4 of the Land Acquisition Act, 1894, for developing an integrated complex. This was followed by a declaration under Section 6 of the Act on June 2, 2006. The total land acquired was 465 acres 5 Kanals 7 Marlas across several villages. The Land Acquisition Collector initially assessed the market value at Rs. 12.50 lakhs per acre through awards dated January 24, 2007.

Timeline

Course of Proceedings

The matter was taken up by different reference courts at Gurugram. Initially, on December 18, 2010, the reference court awarded Rs. 46,07,890 per acre for Village Dhana. Subsequently, various reference courts awarded different amounts, with some granting Rs. 50,70,359 per acre for Villages Dhana and Kasan, and others granting Rs. 68,32,893 per acre for Village Bas Khusla. The High Court of Punjab and Haryana, in its judgment dated June 1, 2018, considered 114 appeals and 19 cross-objections. The High Court fixed the market value at Rs. 43,61,400 per acre, relying on a previous decision concerning nearby villages.

Legal Framework

The acquisition of land was initiated under the Land Acquisition Act, 1894. Specifically, Section 4 of the Act deals with the publication of a preliminary notification for the acquisition of land, while Section 6 concerns the declaration that the land is required for a public purpose. The Act provides a framework for the government to acquire private land for public use, with provisions for determining compensation for the affected landowners.

Section 4 of the Land Acquisition Act, 1894 states:
“Publication of preliminary notification and powers of officers thereupon.—(1) Whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.”

Section 6 of the Land Acquisition Act, 1894 states:
“Declaration that land is required for a public purpose.—(1) Subject to the provisions of Part VII of this Act, when the appropriate Government is satisfied, after considering the report, if any, made under section 5A, sub-section (2), that any particular land is needed for a public purpose, or for a company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorized to certify its orders, and such declaration shall be published in the Official Gazette, and shall state the district or other territorial division in which the land is situate, the purpose for which it is needed, its approximate area, and, where a plan shall have been made of the land, the place where such plan may be inspected.”

Arguments

The landholders argued that:

• ✓ The acquired lands abutted the Kundli-Manesar-Palwal Expressway, which was notified even before the present acquisition, giving the land high potential.
• ✓ The High Court wrongly rejected the sale deed dated April 28, 2004, which showed a sale price of Rs. 1.13 crores per acre.
• ✓ Post-acquisition sale deeds should have been considered, and compensation should have been determined by applying de-escalation to these values.
• ✓ Cumulative annual increase at 12% per annum should have been granted, based on the valuation in Wazir and another v. State of Haryana.

The State of Haryana contended that the High Court was correct in relying on the sale deed dated August 17, 2003, to determine the valuation for villages Shikohpur, Nawada Fatehpur, and Naharpur Kasan, and then applying the same valuation to the lands in question.

The innovativeness of the argument by the landholders was their reliance on the potential of the land due to its proximity to the Kundli-Manesar-Palwal Expressway and the submission that post-acquisition sales should have been considered.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues in this case. The court considered whether the landholders were entitled to any enhancement in compensation based on the arguments and evidence presented.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court’s view on the authorities:

• ✓ General Manager, Oil and Natural Gas Corporation Limited v. Rameshbhai Jivanbhai Patel and another [(2008) 14 SCC 745]: The Court referred to this case for principles on land price increases but did not apply the cumulative increase method.
• ✓ HSIIDC v. Roshan Lal and others: The Court noted that the values assessed in this case were theoretically higher, which benefitted the landholders.
• ✓ Wazir and another v. State of Haryana [(2019) 13 SCC 101]: The Court considered the principle of annual increase but ultimately opted for a flat 8% increase.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by a combination of factors. The court acknowledged that the proximity of the acquired lands to the Kundli-Manesar-Palwal Expressway added a dimension of potential development, even without direct access. Additionally, the court recognized that the one-year gap between the acquisition in HSIIDC vs. Roshan Lal and others and the present acquisition warranted an upward revision in the market value. However, the court also noted that the values in HSIIDC vs. Roshan Lal and others were already on the higher side.

The court’s reasoning was based on a balanced approach, considering both the potential for development due to the expressway and the existing higher valuations from previous cases. The court stated:

“…two aspects detailed hereinabove, definitely weigh in favour of the landholders. At the same time, it cannot be ignored that the values arrived at in HSIIDC vs. Roshan Lal and others (in the light of subsequent decision in Wazir and another vs. State of Haryana) were themselves on the higher side.”

The court also observed:

“Guided by the rule of thumb stated in said decision, and even while considering that the lands in the instant case were agricultural in nature and away from the Highway, in our considered view, two aspects detailed hereinabove, definitely weigh in favour of the landholders.”

The court concluded:

“In the totality of circumstances, in our view, the landholders must be held entitled to 8% flat increase over the market value assessed in HSIIDC vs. Roshan Lal and others.”

The Supreme Court rejected the argument for a cumulative annual increase, finding a flat 8% increase more appropriate given the specific circumstances of the case. The court also rejected the landholders’ reliance on post-acquisition sale deeds, as pre-acquisition instances were deemed sufficient.

Key Takeaways

• ✓ Landholders in the affected villages will receive enhanced compensation at Rs. 47,10,500 per acre, which is an 8% increase over the High Court’s assessment.
• ✓ Proximity to major infrastructure projects like expressways can be a significant factor in determining land value, even without direct access.
• ✓ Courts may consider the time gap between different acquisitions when determining fair compensation.
• ✓ While post-acquisition sale deeds can be relevant, pre-acquisition instances are preferred if they are adequate and appropriate.
• ✓ The principle of a flat increase can be applied instead of a cumulative annual increase, depending on the specific facts of the case.

Directions

The Supreme Court directed that the landholders would receive an 8% flat increase over Rs. 43,61,400 per acre, resulting in a compensation of Rs. 47,10,500 per acre, along with all statutory benefits.

Development of Law

The ratio decidendi of this case is that a flat 8% increase in market value is justified when considering the potential impact of nearby infrastructure projects and the time gap between acquisitions, even when the land is agricultural and away from the highway. This case clarifies that while cumulative annual increases may be considered, a flat increase can be more appropriate in certain situations. This judgement also clarifies that pre-acquisition sale instances are preferred over post-acquisition instances if they are adequate and appropriate.

Conclusion

The Supreme Court’s judgment in Acquainted Realtors LLP vs. State of Haryana has provided significant relief to landholders affected by the acquisition for the Industrial Model Township, Phase-VI, Manesar. The Court enhanced the compensation by 8%, acknowledging the potential impact of the Kundli-Manesar-Palwal Expressway and the time gap between the acquisitions. This case highlights the judiciary’s role in ensuring fair compensation for landholders and establishes important principles for future land acquisition cases.