Supreme Court Enhances Compensation for Land Acquisition: Ravinder Kumar Goel vs. State of Haryana (2023)

Date of the Judgment: February 15, 2023
Citation: Civil Appeal No. 1173 of 2023 (Arising out of SLP (Civil) No. 3585 of 2022)
Judges: A.S. Bopanna, J. and Hima Kohli, J.

Can land acquisition compensation be fairly determined when agricultural land is situated within an urban area? The Supreme Court of India recently addressed this question, concerning land acquired for the construction of an expressway. The Court considered whether the market value should be based on agricultural rates or the land’s potential for urban use. This case involves multiple appeals by land losers challenging the compensation awarded for their lands. The judgment was delivered by a two-judge bench comprising Justice A.S. Bopanna and Justice Hima Kohli, with Justice Bopanna authoring the opinion.

Case Background

The case revolves around land acquired by the Haryana Government for the construction of the Express Highway Phase VII. The preliminary notification for acquisition was issued on January 11, 2005, under Section 4 of the Land Acquisition Act, 1894, along with Section 17(2) for urgent acquisition. A declaration under Section 6 of the Act was made on May 31, 2005. The total land notified for acquisition was 798 Kanals and 2 Marlas, which included the appellants’ lands. The Land Acquisition Officer (LAO) passed an award on May 10, 2006, fixing the market value at Rs. 12,50,000 per acre for all types of land, based on rates provided by the Collector, Gurugram, on November 3, 2005.

Dissatisfied with the compensation, the land losers sought a reference under Section 18 of the Land Acquisition Act, 1894. The Reference Court enhanced the market value to Rs. 43,17,841 per acre on February 27, 2012. The High Court further enhanced the market value to Rs. 62,11,700 per acre on February 5, 2016, in appeals filed by both parties. This matter reached the Supreme Court, which remanded the cases back to the Reference Court on January 25, 2018, in the case of *Surender Singh vs. State of Haryana & Ors.* (2018) 3 SCC 278, allowing parties to lead further evidence.

After the remand, the Reference Court, on January 10, 2020, determined the market value at Rs. 22,00,754 per acre. Both the Haryana State Industrial and Infrastructure Development Corporation Ltd. (HSIIDC) and the land losers appealed this decision. The High Court, on October 7, 2021, reduced the market value to Rs. 14,52,010 per acre. Aggrieved by this, the land losers appealed to the Supreme Court.

Timeline:

Course of Proceedings

The land losers, dissatisfied with the initial compensation of Rs. 12,50,000 per acre awarded by the Land Acquisition Officer (LAO), sought a reference under Section 18 of the Land Acquisition Act, 1894. The Reference Court enhanced the compensation to Rs. 43,17,841 per acre. Both the land losers and the State of Haryana appealed to the High Court. The High Court further enhanced the compensation to Rs. 62,11,700 per acre.

The matter then reached the Supreme Court in the first round of litigation, which remanded the case back to the Reference Court for fresh consideration, allowing both parties to present additional evidence. After the remand, the Reference Court determined the market value at Rs. 22,00,754 per acre. Again, both parties appealed, and the High Court reduced the market value to Rs. 14,52,010 per acre. The land losers then appealed to the Supreme Court, leading to the present judgment.

Legal Framework

The primary legislation involved in this case is the Land Acquisition Act, 1894. The relevant provisions include:

• Section 4: This section deals with the publication of a preliminary notification for the acquisition of land.
• Section 6: This section pertains to the declaration of intended acquisition after the preliminary notification.
• Section 17(2): This section allows the government to take possession of land urgently in certain cases.
• Section 18: This section provides the mechanism for seeking a reference to the court for determination of compensation.

The Land Acquisition Act, 1894, provides the legal framework for the acquisition of private land by the government for public purposes. It outlines the procedures for notification, declaration, and determination of compensation. The Act ensures that land losers receive just compensation for their acquired lands.

Arguments

The land losers argued that their lands, though classified as agricultural, were situated within an urban agglomeration and had non-agricultural potential. They contended that the market value should not be determined by considering the land as agricultural or by applying yardsticks applicable to large tracts of agricultural land. They emphasized that their lands, though part of a larger acquisition, were small extents meant for urban use. They argued that the Reference Court had rightly relied on the sale deed dated December 7, 2004 (Ex.PX), but erred in deducting 35% towards development charges. They argued that since the acquired land was used for road construction, no development charges should be deducted.

The HSIIDC argued that the Reference Court was not justified in relying on the sale deed (Ex.PX) as it related to a small extent of land compared to the vast extent acquired. They contended that the HSIIDC had relied on nine sale exemplars of larger extents of agricultural land, which showed lower values per acre than the floor rates adopted by the High Court. They submitted that the High Court had correctly determined the market value by considering the time gap and adding escalation to the floor rates.

The land losers relied on the sale deed of a small piece of land (Ex.PX) to argue that the land had urban potential and should be valued accordingly. The HSIIDC relied on multiple sale deeds of larger agricultural lands, arguing that these represented the true market value of agricultural land.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was to determine the appropriate market value for the acquired lands. The Court also had to decide whether the High Court was justified in interfering with the Reference Court’s method of consideration and whether the High Court was correct in adopting the floor rates for fixing the market value.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

• State of Gujarat vs. Kakhot SinghJi VajesinghJi Vaghela (1968) 3 SCR 692: This case established the principle that the price agreed between a willing seller and a willing purchaser is generally the prevailing market price for similar lands.
• Atma Singh (Dead) through Lrs. and Ors. vs. State of Haryana and Anr. (2008) 2 SCC 568: This case held that sale instances of small pieces of land cannot be ignored while determining compensation for a large extent of land acquired and that the rule of deduction on development charges would not be uniformly applicable.
• C.R. Nagaraja Shetty (2) vs. Special Land Acquisition Officer and Estate Officer and Anr. (2009) 11 SCC 75: This case was cited by the appellants to argue that no deduction should be made for development charges when land is acquired for road widening.
• Piyara Singh & Anr. vs. State of Haryana & Ors. Etc. (2017) 2 SCALE 323: This case was cited by the appellants to argue against the deduction of development charges when small extents of land are acquired.
• JAG Mahender & Anr. Vs. State of Haryana & Ors. (Order dated 21.09.2017 in Civil Appeal No.15702/2017): This case discussed the deduction of development charges and referred to earlier decisions.
• Haryana State Agricultural Market Board & Anr. vs. Krishan Kumar & Ors. (2011) 15 SCC 297: This case dealt with the nature of development required in acquired lands and the general rule of deduction for development costs.
• Sabhia Mohammed Yusuf Abdul Hamid Mulla (Dead) by Lrs. & Ors. vs. Special Land Acquisition Officer & Ors. (2012) 7 SCC 595: This case discussed the deduction of development charges and the general rule of deduction of 1/3rd of the market value.

Judgment

The Court considered the following authorities:

• State of Gujarat vs. Kakhot SinghJi VajesinghJi Vaghela (1968) 3 SCR 692: The Court reiterated the principle that the price between a willing buyer and seller represents the market value.
• Atma Singh (Dead) through Lrs. and Ors. vs. State of Haryana and Anr. (2008) 2 SCC 568: The Court followed this authority, noting that sale instances of smaller extents cannot be ignored.
• C.R. Nagaraja Shetty (2) vs. Special Land Acquisition Officer and Estate Officer and Anr. (2009) 11 SCC 75: The Court distinguished this case, stating that it was based on a different fact situation.
• Piyara Singh & Anr. vs. State of Haryana & Ors. Etc. (2017) 2 SCALE 323: The Court distinguished this case based on its specific facts.
• JAG Mahender & Anr. Vs. State of Haryana & Ors. (Order dated 21.09.2017 in Civil Appeal No.15702/2017): The Court relied on this authority to determine the deduction for development charges.
• Haryana State Agricultural Market Board & Anr. vs. Krishan Kumar & Ors. (2011) 15 SCC 297: The Court considered this authority in relation to the nature of development required.
• Sabhia Mohammed Yusuf Abdul Hamid Mulla (Dead) by Lrs. & Ors. vs. Special Land Acquisition Officer & Ors. (2012) 7 SCC 595: The Court referred to this authority regarding the deduction for development costs.

What weighed in the mind of the Court?

The Supreme Court emphasized several points in its reasoning. The Court highlighted that the location of the land within an urban area and its non-agricultural potential were critical factors. It noted that the land was not being used for agriculture and was suitable for urban development. The Court also stressed the importance of considering sale exemplars that reflect the true market value, especially when dealing with smaller extents of land in urban areas. The Court also considered the development costs associated with constructing the expressway.

The Court’s reasoning was influenced by both the factual circumstances of the case (the location and non-agricultural use of the land) and the applicable legal principles (the determination of market value and the deduction for development costs).

The Court considered alternative interpretations, such as relying solely on the floor rates or the sale deeds of larger agricultural lands. However, these were rejected because they did not accurately reflect the urban potential and non-agricultural use of the land. The final decision was reached by considering the location, potential use, and the most comparable sale exemplar.

The Supreme Court held that the High Court was not justified in relying on the circular fixing the floor rates when other evidence was available. The Court emphasized that the Reference Court had rightly relied on the sale deed dated December 7, 2004 (Ex.PX), for a smaller extent of land in the same area. However, the Court held that the Reference Court was not justified in deducting 35% of the value towards development charges and reduced it to 25%.

The Court also addressed the issue of excess amounts paid to some land losers in the first round of litigation. While acknowledging that the excess amount is recoverable, the Court invoked the principle of *actus curiae neminem gravabit* to protect the land losers. It directed that the excess amount be refunded in three half-yearly installments, free of interest.

The majority opinion was delivered by Justice A.S. Bopanna, with Justice Hima Kohli concurring. There were no dissenting opinions.

The Court quoted the following from the judgment:

• “The irony in all these cases is that the appellants are land losers who have been divested from their land either fully or in part to construct an Express Highway over such land for the benefit of others to travel fast but the process to compensate them with a just and fair quantum of money instead of being on the fast track, has been tardy.”
• “The rule of deduction on development charges would not be uniformly applicable was also taken into consideration.”
• “Therefore, there can be no strait jacket formula that when the sale deeds for the sale of large extent are available and large extent of lands are acquired that alone should be reckoned as the exemplar. What is material is its comparability, which would depend on case to case basis and that is for the Court to analyze based on the evidence available on record.”

Key Takeaways

✓ Land acquisition compensation should consider the urban potential of land, even if classified as agricultural.
✓ Sale exemplars of smaller extents of land can be relied upon, especially in urban areas.
✓ Deduction for development charges should be based on the specific facts of the case, and not a uniform percentage.
✓ The principle of *actus curiae neminem gravabit* can be invoked to protect parties from the adverse effects of court orders.
✓ Market value should be determined based on the most comparable sale exemplar, considering the location and potential use of the land.

This judgment sets a precedent for future land acquisition cases, emphasizing the need to consider the urban potential of land and not solely rely on agricultural rates. It also highlights the importance of analyzing sale exemplars based on their comparability and the specific facts of each case.

Directions

The Supreme Court directed that:

• The judgment of the High Court dated 07.10.2021 was set aside.
• The judgment of the Reference Court dated 10.01.2020 was restored and modified.
• The market value of the acquired land was fixed at Rs. 25,20,000 per acre.
• The excess amount received by the land losers was to be refunded in three half-yearly installments, free of interest.
• If the amount is not refunded within the stipulated time, it shall carry interest at 9% p.a.

Development of Law

The ratio decidendi of the case is that when determining compensation for land acquisition, the potential urban use of the land must be considered, even if the land is classified as agricultural. The Court clarified that the market value should be determined based on comparable sale exemplars, with appropriate deductions for development costs. This judgment reinforces the principle that the compensation should be just and fair, taking into account the specific circumstances of each case.

This judgment does not change the previous position of law but clarifies the application of existing principles in cases where agricultural land has urban potential. It emphasizes the need for a case-by-case analysis when determining market value and development costs.

Conclusion

The Supreme Court’s judgment in *Ravinder Kumar Goel vs. State of Haryana* enhances the compensation for land losers by considering the urban potential of their lands. The Court set aside the High Court’s decision and restored the Reference Court’s judgment with modifications, fixing the market value at Rs. 25,20,000 per acre. The judgment emphasizes the importance of considering the specific circumstances of each case, including the location and potential use of the land, when determining fair compensation.