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

Date of the Judgment: 15 February 2023
Citation: 2023 INSC 129
Judges: A.S. Bopanna, J. and Hima Kohli, J.
Can land losers receive fair compensation when their land is acquired for public projects? The Supreme Court of India addressed this critical question in a recent judgment, highlighting the need for just compensation for those whose lands are taken for public infrastructure projects. The court considered appeals by land losers against the Haryana government, who were seeking enhanced compensation for their lands acquired for the construction of an expressway. The judgment was authored by Justice A.S. Bopanna, with Justice Hima Kohli concurring.

Case Background

The case involves multiple appeals by land losers whose lands were acquired for the construction of the Express Highway Phase VII, connecting National Highways 1, 10, 8, and 2 in Gurugram, Haryana. The preliminary notification for the acquisition was issued on 11 January 2005, under Section 4 read with Section 17(2) of the Land Acquisition Act, 1894. The declaration under Section 6 of the Act was made on 31 May 2005. The total land notified for acquisition was 798 Kanals and 2 Marlas, including the appellants’ lands.

Timeline

Course of Proceedings

The Land Acquisition Officer (LAO) initially fixed the market value at Rs. 12,50,000 per acre in an award dated 10 May 2006. Dissatisfied, 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 27 February 2012. Both the land losers and the State of Haryana appealed to the High Court, which further enhanced the market value to Rs. 62,11,700 per acre on 5 February 2016. Subsequently, the Supreme Court remanded the matter to the Reference Court on 25 January 2018, in the case of Surender Singh vs. State of Haryana (2018) 3 SCC 278, allowing parties to present further evidence. The Reference Court then determined the market value at Rs. 22,00,754 per acre on 10 January 2020. On appeal, the High Court reduced the market value to Rs. 14,52,010 per acre on 7 October 2021. Aggrieved by this, the land losers appealed to the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation and application of the Land Acquisition Act, 1894, specifically:

• Section 4: This section deals with the preliminary notification for land acquisition.
• Section 6: This section pertains to the declaration of intended acquisition.
• Section 17(2): This section allows for the acquisition of land in urgent cases.
• Section 18: This section provides for reference to the court in case of disagreement with the compensation awarded by the Land Acquisition Officer.

The core issue is determining the “market value” of the acquired land to ensure just compensation to the land losers. The Supreme Court also considered previous judgments on how to determine market value, particularly when dealing with agricultural land with non-agricultural potential.

Arguments

Arguments on behalf of the Land Losers:

• The land losers contended that their lands, though classified as agricultural, were located within an urban agglomeration and had non-agricultural potential. They argued that the market value should not be determined as agricultural land.
• They submitted that the Reference Court had rightly relied on a sale deed dated 7 December 2004 (Ex.PX), which indicated a higher market value.
• They argued that the Reference Court erred in deducting 35% of the value towards development charges, as the acquired land was used for constructing roads, not for further development.

Arguments on behalf of the Haryana State Industrial and Infrastructure Development Corporation Ltd. (HSIIDC):

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

Innovativeness of the argument: The land losers innovatively argued that the land, though classified as agricultural, should be valued as urban land due to its location and potential use, which was a departure from the conventional approach of valuing land based solely on its classification.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. Whether the High Court was justified in interfering with the Reference Court’s method of consideration.
2. Whether the High Court was correct in adopting the floor rates for fixing the market value, despite other evidence being available on record.
3. Whether the Reference Court had committed an error in not relying on the sale exemplars produced by the respondents without analyzing their comparability.
4. What is the appropriate deduction towards development charges?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• The Court followed the principle laid down in State of Gujarat vs. Kakhot SinghJi VajesinghJi Vaghela [CITATION], stating that the price between a willing seller and buyer is the prevailing market price.
• The Court relied on Atma Singh (Dead) through Lrs. and Ors. vs. State of Haryana and Anr. [CITATION], stating that sale instances of smaller pieces of land cannot be ignored.
• The Court distinguished the facts in C.R. Nagaraja Shetty (2) vs. Special Land Acquisition Officer and Estate Officer and Anr. [CITATION] and Piyara Singh & Anr. vs. State of Haryana & Ors. Etc. [CITATION], stating that they were rendered based on the specific facts of those cases.
• The Court considered JAG Mahender & Anr. Vs. State of Haryana & Ors. [CITATION], Haryana State Agricultural Market Board & Anr. vs. Krishan Kumar & Ors. [CITATION] and Sabhia Mohammed Yusuf Abdul Hamid Mulla (Dead) by Lrs. & Ors. vs. Special Land Acquisition Officer & Ors. [CITATION] to determine the appropriate deduction for development charges.

What weighed in the mind of the Court?

The Supreme Court emphasized the need for fair compensation for land losers. The court considered the location of the land, its potential for non-agricultural use, and the principle of a willing buyer and seller. The court also considered the fact that the land was being used for an expressway, which would require significant development, and accordingly, determined the deduction for development charges.

Logical Reasoning:

The court rejected the High Court’s reliance on floor rates, stating that the sale deed dated 7 December 2004 (Ex.PX) was a more appropriate exemplar. The court also considered the fact that the land was being used for an expressway, which would require significant development, and accordingly, determined the deduction for development charges.

The Supreme Court observed that the High Court was not justified in relying solely on the circular fixing the floor rates, especially when other evidence was available. The court also noted that the Reference Court had correctly relied on the sale deed dated 7 December 2004, which was for a smaller extent of land but was more comparable due to its location and potential use. The court stated, “the price agreed between a willing seller and a willing purchaser would be the price which is generally prevailing in the market in respect of the lands having similar advantages”. The court also noted that, “the sale instances of small pieces of land cannot be ignored while determining the compensation for a large extent of land acquired”. However, the Court also stated that, “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.”

The court also addressed the issue of development charges, noting that while a complete waiver was not justified, a 25% deduction was appropriate given the nature of the project and the fact that a smaller extent of land was being relied upon for valuation.

The court rejected the argument that no development charges should be deducted, stating that the construction of an expressway requires not just laying of roads but also providing several amenities. The court stated that, “it would not be justified in saying that no development cost at all would be incurred.”

Key Takeaways

• The market value of land should be determined based on its potential use and location, not just its classification as agricultural land.
• Sale instances of smaller pieces of land cannot be ignored while determining compensation for a large extent of land acquired.
• A deduction of 25% for development charges is appropriate when land is acquired for infrastructure projects like expressways.
• Land losers are entitled to just compensation, and the courts should consider all relevant factors to ensure fairness.
• If excess amount has been received by land losers, it is recoverable, but it shall be paid back in three half yearly installments free of interest.

Directions

The Supreme Court directed that:

• The judgment of the High Court is set aside.
• The judgment of the Reference Court is restored and modified.
• The market value of the acquired land is fixed at Rs. 25,20,000 per acre, payable with statutory benefits and costs.
• If any excess amount has been received by any of the land losers, the excess amount is recoverable and shall be paid back in three half yearly installments free of interest.

Development of Law

The ratio decidendi of this case is that when determining compensation for land acquisition, the potential use of the land, its location, and the nature of the project should be considered. The court also clarified that sale instances of smaller pieces of land cannot be ignored and that a deduction of 25% for development charges is appropriate for expressway projects. This judgment reinforces the principle of just compensation for land losers and provides a framework for future land acquisition cases.

Conclusion

The Supreme Court’s judgment in Ravinder Kumar Goel vs. State of Haryana (2023) provides significant relief to the land losers by enhancing the compensation for their acquired lands. The court emphasized that the market value of land should be determined based on its potential use and location, not just its classification as agricultural land. The court’s decision to rely on a sale deed for a smaller extent of land and to reduce the deduction for development charges to 25% reflects a balanced approach to ensuring just compensation for those whose lands are acquired for public projects. The judgment also highlights the importance of considering all relevant factors and evidence to arrive at a fair and equitable outcome.