Supreme Court Reduces Compensation for Land Acquisition in Haryana: HSIIDC vs. Satpal (2023)

Introduction

Date of the Judgment: 09 February 2023

Citation: 2023 INSC 113

Judges: M.R. Shah, J. and Hima Kohli, J.

When land is acquired by the government for public purposes, how should the compensation be calculated? The Supreme Court of India recently addressed this question in a case involving the acquisition of land in Haryana for industrial development. The core issue revolved around whether the High Court had correctly determined the market value of the acquired land and applied appropriate deductions. The Supreme Court, in this case, partly allowed the appeals filed by the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) and reduced the compensation awarded by the High Court. The judgment was delivered by a bench of Justices M.R. Shah and Hima Kohli.

Case Background

The case involves land acquired in villages Badh Malik, Jatheri, Pritampura, Akbarpur Barota, and Rasoi in District Sonipat, Haryana, for the construction of the Kundli-Manesar-Palwal (KMP) Expressway and the expansion of industrial sector 39. The present appeals specifically concern land acquired through notifications dated 30 June 2005 and 5 March 2007, in the villages of Badh Malik, Pritampura, and Rasoi. The Land Acquisition Officer initially awarded compensation at Rs. 16,00,000 per acre. The Reference Court enhanced this to Rs. 19,00,000 per acre for Badh Malik and Rasoi (notification of 30 June 2005) but did not increase compensation for Pritampura. For the 5 March 2007 notification, the Reference Court did not enhance compensation for Badh Malik and Pritampura but increased it to Rs. 23,00,000 per acre for Rasoi.

In the first round of litigation, the High Court enhanced the compensation significantly, applying a “belting system” that awarded higher rates for land closer to the road. The Supreme Court set aside these orders, disapproving of the belting system and directing the High Court to consider the land value prevalent before 13 August 2004. On remand, the High Court awarded Rs. 29,54,000 per acre for land acquired under the 30 June 2005 notification and Rs. 45,00,000 per acre for land acquired under the 5 March 2007 notification. HSIIDC appealed this decision, while the landowners’ appeals were dismissed earlier by the Supreme Court.

Timeline

Arguments

The counsel for HSIIDC argued that the High Court erred in enhancing the compensation to Rs. 29,54,000 per acre for the 30 June 2005 notification by relying on builder’s sale deeds (Exhibits P43 & P44) and not considering the sale deeds produced by the State. They contended that the acquired lands were agricultural and the High Court should have considered the market value as of 13 August 2004, as directed by the Supreme Court in the previous remand. Further, they argued that even if the High Court was correct in relying on Exhibits P43 & P44, the compensation should have been Rs. 24,43,693 per acre after applying a 50% cut, not Rs. 29,54,000.

Regarding the 5 March 2007 notification, HSIIDC argued that the High Court’s compensation of Rs. 45,00,000 per acre was excessive. They suggested that a reasonable increase of 8 to 12 percent cumulatively on the compensation awarded for the 30 June 2005 notification should have been applied. They also pointed out that the High Court had previously awarded Rs. 21,00,000 per acre for land acquired in the same villages under the 13 August 2004 notification.

The landowners argued that the High Court did not consider all relevant sale deeds and that the compensation awarded was too low. They cited sale deeds (Ex. P4, P3, P6, P7 & P5) from October 2005 and 2006 to support their claim that the market value of the land was much higher. They emphasized that as it was a compulsory acquisition, they were entitled to just compensation based on the fair market value.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

• Whether the High Court was justified in enhancing the compensation to Rs. 29,54,000/- per acre with respect to the land acquired vide notification dated 30.06.2005.
• Whether the High Court was justified in enhancing the amount of compensation to Rs. 45,00,000/- per acre with respect to the land acquired vide notification dated 5.3.2007.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

Authorities:

✓ The Supreme Court considered the cases of General Manager, Oil and Natural Gas Corporation Limited v. Rameshbhai Jivanbhai Patel and Another, [(2008) 14 SCC 745] and Mehrawal Khewaji Trust (Registered), Faridkot and others v. State of Punjab and others, [(2012) 5 SCC 432], which were cited by the landowners to support their claim for just compensation. However, the court did not rely on these cases as such but considered the facts of the present case to determine the compensation.

✓ The Court also considered Section 25 of the Land Acquisition Act, 1894, which the counsel for HSIIDC claimed was misinterpreted by the High Court. The Court did not explicitly interpret this provision but rather focused on the factual matrix of the case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure a fair and accurate assessment of compensation for the acquired land. The Court emphasized the following points:

• The High Court’s reliance on builder’s sale deeds (Ex. P43 & P44) without proper deductions.
• The need to consider the market value of the land prior to the initial acquisition notification of 13 August 2004.
• The application of a consistent approach in determining the compensation for both notifications.
• The rejection of the High Court’s method of applying a 10% cut on the sale deed (Ex. P4) for the second notification, as it was after the first notification.
• The need to apply a reasonable cumulative increase to the compensation for the second notification, based on the compensation awarded for the first notification.

The Supreme Court’s sentiment analysis indicates a balanced consideration of both factual and legal aspects. The emphasis on legal principles is slightly higher, reflecting the court’s focus on ensuring a fair and legally sound compensation process. The court’s reasoning shows a careful assessment of the facts, sale deeds, and previous orders to arrive at a just decision.

Key Takeaways

• The Supreme Court reduced the compensation awarded by the High Court for land acquired under notifications dated 30 June 2005 and 5 March 2007.
• For the 30 June 2005 notification, the compensation was reduced to Rs. 24,50,000 per acre.
• For the 5 March 2007 notification, the compensation was reduced to Rs. 30,73,280 per acre.
• The Court emphasized the importance of considering the market value of the land prior to the acquisition notification.
• The Court rejected the High Court’s method of applying a 10% cut on a sale deed that was executed after the first notification.
• The Court applied a cumulative increase of 12% on the compensation awarded for the first notification to determine the compensation for the second notification.

The judgment highlights the need for a fair and consistent approach in determining compensation for land acquisition. It also emphasizes that compensation should be based on the market value of the land prior to the acquisition notification and that subsequent sale deeds should not be the sole basis for determining compensation. The decision also clarifies the method for applying cumulative increases in compensation for subsequent acquisitions.

Directions

The Supreme Court directed that the landowners/claimants shall be entitled to compensation at the revised rates of Rs. 24,50,000 per acre for the land acquired under the 30 June 2005 notification and Rs. 30,73,280 per acre for the land acquired under the 5 March 2007 notification, along with all other statutory benefits available under the Land Acquisition Act, 1894.

Specific Amendments Analysis

There is no specific amendment discussed in this judgment.

Development of Law

The ratio decidendi of this case is that the compensation for land acquisition should be determined based on the market value of the land prior to the acquisition notification. It also clarifies that subsequent sale deeds should not be the sole basis for determining compensation and that a reasonable cumulative increase should be applied for subsequent acquisitions. This case reinforces the principles of fair compensation and the need for a consistent approach in land acquisition cases. There is no change in the previous position of law, but this case provides a clear application of existing principles.

Conclusion

In conclusion, the Supreme Court partly allowed the appeals filed by HSIIDC and reduced the compensation awarded by the High Court for land acquired in Haryana. The Court emphasized the need for a fair and consistent approach in determining compensation, based on the market value of the land prior to the acquisition notification. The judgment provides clarity on the method for calculating compensation in land acquisition cases and sets a precedent for future cases.