Supreme Court Enhances Land Compensation in Noida Acquisition Case: New Okhla Industrial Development Authority vs. Harnand Singh (2024) INSC 509 (10 July 2024)

Introduction

Date of the Judgment: 10 July 2024

Citation: 2024 INSC 509

Judges: Surya Kant, J., K.V. Viswanathan, J.

When the government acquires land for development, how is the compensation determined? The Supreme Court of India recently addressed this question in a case involving the New Okhla Industrial Development Authority (NOIDA) and landowners in Village Chhalera Bangar. The core issue was the fair market value of the acquired land and whether the landowners were entitled to enhanced compensation. The judgment was delivered by a two-judge bench of Justices Surya Kant and K.V. Viswanathan.

Case Background

The case involves land acquisition initiated by the State of Uttar Pradesh/NOIDA on 05 January 1991, for approximately 492 acres in Village Chhalera Bangar for planned industrial development. A notification under Section 4(1) of the Land Acquisition Act, 1894 (the 1894 Act) was issued on this date. Subsequently, on 07 January 1992, a declaration under Section 6, along with an urgency clause under Section 17 of the 1894 Act, was issued. Possession of the land was taken on 30 March 1992, 07 August 1995, and 18 November 1995. The Land Acquisition Officer (LAO) issued an award on 17 August 1996, fixing compensation at INR 110 per sq. yd., relying on a sale deed from 16 December 1988.

Landowners sought enhanced compensation under Section 18 of the 1894 Act. The Reference Court granted compensation at rates of INR 233 and INR 222 per square yard, applying a 40% deduction for development on a market value of INR 390 per sq. yd. Some landowners appealed to the High Court of Judicature at Allahabad. In one set of appeals, the High Court reversed the deductions and directed compensation at INR 297.50 per sq. yd. without deductions, in its judgment dated 14 December 2007. However, in another set of appeals, the High Court refused to enhance compensation in its judgment dated 09 May 2008.

The High Court later clarified its judgment on 19 May 2010, enhancing compensation to INR 340 per sq. yd. Other similar appeals were also allowed, with compensation enhanced to INR 340 per sq. yd. Some landowners then approached the Supreme Court, but their Special Leave Petitions (SLPs) were dismissed on 05 February 2014. However, in a separate case, Bir Singh v. State of Uttar Pradesh, the Supreme Court enhanced compensation to INR 449 per sq. yd. on 09 November 2017, relying on a sale exemplar from 16 December 1988. Review and Curative Petitions against this order were dismissed on 06 March 2018 and 13 March 2019, respectively. Consequently, all pending First Appeals before the High Court were decided in line with Bir Singh, enhancing compensation to INR 449 per sq. yd.

The current appeals before the Supreme Court challenge High Court orders that granted compensation at INR 340 per sq. yd. before the Bir Singh judgment. Landowners seek parity with the INR 449 per sq. yd. rate. NOIDA also filed appeals challenging the enhanced compensation of INR 449 per sq. yd. granted to some landowners. Additionally, some landowners filed Miscellaneous Applications seeking a recall of the dismissal of their SLPs and to restore parity with Bir Singh.

Timeline

Course of Proceedings

The landowners, dissatisfied with the compensation awarded by the Land Acquisition Officer (LAO), sought an enhancement by filing references before the Additional District Judge, Ghaziabad, acting as the Reference Court, under Section 18 of the Land Acquisition Act, 1894. The Reference Court determined the market value of the land to be INR 390 per sq. yd., and after applying a 40% deduction for development, awarded compensation at rates of INR 233 and INR 222 per square yard. Aggrieved by this, some landowners filed appeals before the High Court of Judicature at Allahabad.

The High Court, in one set of appeals, reversed the deductions made by the Reference Court and directed the State/NOIDA authorities to recalculate the compensation at INR 297.50 per sq. yd. without deducting development charges. However, in another similar group of appeals, the High Court refused to enhance the compensation. Subsequently, the High Court clarified its earlier judgment and enhanced the compensation to INR 340 per sq. yd. The other alike appeals filed by similarly situated landowners were also allowed in part and the compensation was enhanced to INR 340 per sq. yd.

Some landowners approached the Supreme Court seeking further enhancement, but their Special Leave Petitions (SLPs) were dismissed on 05.02.2014. However, in Civil Appeal Nos. 18620-18623 / 2017 titled Bir Singh v. State of Uttar Pradesh, the Supreme Court further enhanced the compensation to INR 449 per sq. yd., relying on a sale exemplar dated 16.12.1988. The Review and Curative Petitions preferred by the State / NOIDA authorities against this order were dismissed. Consequently, all the First Appeals pending before the High Court, pertaining to the same acquisition came to be allowed in line with Bir Singh (supra), and compensation was accordingly enhanced to INR 449 per sq. yd.

The matters pending before the Supreme Court were categorized into two groups: (i) SLPs, Miscellaneous Applications and Civil Appeals preferred by landowners who had already been granted compensation at INR 340 per sq. yd. and who are now seeking parity with Bir Singh (supra) where compensation was enhanced to INR 449 per sq. yd.; and (ii) Civil Appeals preferred by NOIDA as against the enhanced compensation of INR 449 per sq. yd. granted to some of the landowners.

Legal Framework

The primary legal framework for this case is the Land Acquisition Act, 1894. Section 4(1) of the 1894 Act provides for the issuance of a notification for the acquisition of land. Section 6 allows for the declaration of intended acquisition, and Section 17 includes an urgency clause that allows for immediate possession of the land. Section 11 of the 1894 Act deals with the Land Acquisition Officer (LAO) issuing an award, determining the compensation for the land.

Section 18 of the 1894 Act allows landowners to seek a reference to the Reference Court for enhancement of compensation. Section 23(1) of the 1894 Act outlines the matters to be considered in determining compensation, primarily the market value of the land at the date of the Section 4(1) notification. It states:

“23. Matters to be considered in determining compensation. — (1) In determining the amount of compensation to be awarded for land acquired under this Act, the Court shall take into consideration— first, the market-value of the land at the date of the publication of the notification under Section 4, sub-section (1); secondly, the damage sustained by the person interested, by reason of the taking of any standing crops or trees which may be on the land at the time of the Collector’s taking possession thereof; thirdly, the damage (if any) sustained by the person interested, at the time of the Collector’s taking possession of the land, by reason of severing such land from his other land; fourthly, the damage (if any) sustained by the person interested, at the time of the Collector’s taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings; fifthly, if, in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence or place of business, the reasonable expenses (if any) incidental to such change; and sixthly, the damage (if any) bona fide resulting from diminution of the profits of the land between the time of the publication of the declaration under Section 6 and the time of the Collector’s taking possession of the land.”

Section 28A of the 1894 Act, introduced by the Land Acquisition (Amendment) Act, 1984, allows landowners to seek redetermination of compensation if any other affected person receives enhanced compensation.

Arguments

Arguments on behalf of NOIDA:

• NOIDA argued that the Supreme Court’s decision in Bir Singh v. State of Uttar Pradesh, which enhanced compensation to INR 449 per sq. yd., was based on a factual error. The Court had misread a sale exemplar, taking the extent of land (400 sq. yds.) as the value of the land (INR 400 per sq. yd.).

• The decision in Bir Singh is binding only on the parties to that case and should not be treated as a precedent for other landowners.

• Landowners cannot invoke Section 28A of the Land Acquisition Act, 1894 for re-determination of market value as this provision is restricted to compensation determined by the Reference Court. Reliance was placed on Ramsingbhai Jerambhai v. State of Gujarat (2018) 16 SCC 445.

• The sale deeds produced by landowners were of abadi land, whereas the acquired land was agricultural or non-abadi land.

• The acquired land is a large tract and requires substantial development before it can be used for industrial purposes.

• A uniform rate of compensation should be fixed for the entire acquisition, rather than individual rates for different parcels of land.

• The compensation should not be based on the current market value, as rates have increased due to planned development post-acquisition.

• The circle rate does not accurately reflect the market value of the acquired land, which was an undeveloped agricultural tract.

• The Miscellaneous Applications seeking to rely on Bir Singh for recalling the orders dismissing the SLPs are not maintainable due to significant delays.

• The land has already been allocated to third parties, and it is impossible to recover the enhanced compensation amount.

Arguments on behalf of the Landowners:

• The landowners acknowledged that the decision in Bir Singh was based on a factual error but claimed compensation not less than the rate awarded in Bir Singh.

• A sale exemplar dated 22 February 1989, showed a plot of 470 sq. yds. sold at INR 446 per sq. yd., which is similar to the sale instance relied upon in Bir Singh.

• The factors for evaluating the potentiality of land are the same as those used for fixing the circle rate.

• The circle rate is a crucial piece of evidence for determining market value.

• The acquired land is situated amidst developed areas, near the Amity Public School, a large golf course, a film city, and developed residential colonies and shopping areas.

• The acquired land is in the heart of NOIDA, a major industrial and commercial city, and is close to Delhi.

• Lands in nearby Sector 18 were acquired in 1976 for INR 7,200 to INR 10,200 per bigha, and plots were leased by NOIDA authorities in 1988 at much higher rates.

• Bir Singh cannot be revisited as the Review and Curative Petitions against it have been dismissed.

• Parity should be granted with Bir Singh, invoking Section 28A of the 1894 Act.

Submissions of the Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for deliberation:

1. Should compensation be enhanced, and if so, to what extent? How should the quantum be calculated?
2. Are the Miscellaneous Applications maintainable?
3. Can the landowners rely upon Section 28A of the 1894 Act to seek parity with Bir Singh (supra)?

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