Supreme Court Remands Land Acquisition Case for Fresh Determination of Compensation: Surender Singh vs. State of Haryana (2018) INSC 25

Date of the Judgment: January 25, 2018

Citation: (2018) INSC 25

Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J.

When land is acquired for public purposes, how should the compensation be determined? The Supreme Court of India recently addressed this crucial question in a batch of appeals concerning land acquired for the construction of the Kundli-Manesar-Palwal (KMP) Expressway in Haryana. The Court, finding the previous compensation awards unsatisfactory, remanded the cases back to the Reference Court for a fresh determination of the land value.

The bench comprised Justices R.K. Agrawal and Abhay Manohar Sapre, with the majority opinion authored by Justice Abhay Manohar Sapre.

Case Background

The State of Haryana initiated the acquisition of approximately 520 acres of land across 15 villages for the construction of the KMP Expressway. This process began with a notification under Section 4 of the Land Acquisition Act, 1894 on January 11, 2005, followed by another notification on November 17, 2005, for land in four additional villages. Subsequently, declarations under Section 6 of the Act were issued on May 31, 2005, and February 8, 2006.

The Land Acquisition Officer (LAO) determined a uniform compensation rate of Rs. 12,50,000 per acre for all the acquired land. Dissatisfied with this rate, the landowners filed objections under Section 18 of the Act, leading to references to the Civil Court for re-determination of compensation. The Reference Court enhanced the compensation to Rs. 43,17,841 per acre. Both the landowners and the State appealed this decision to the High Court of Punjab & Haryana.

The High Court partly allowed the landowners’ appeals and further increased the compensation to Rs. 62,11,700 per acre, dismissing the State’s appeals. Aggrieved by the High Court’s decision, both the landowners and the State approached the Supreme Court. The landowners sought further enhancement, while the State argued for a reduction in the compensation.

Timeline

Course of Proceedings

The Land Acquisition Officer (LAO) determined a uniform compensation rate of Rs. 12,50,000 per acre for all the acquired land. Dissatisfied, the landowners filed objections under Section 18 of the Land Acquisition Act, 1894, leading to 41 land references to the Reference Court. The Reference Court enhanced the compensation to Rs. 43,17,841 per acre.

Both the landowners and the State of Haryana appealed the Reference Court’s decision to the High Court of Punjab & Haryana. The landowners sought further enhancement, while the State argued for a reduction to the rate fixed by LAO. The High Court partly allowed the landowners’ appeals, further enhancing the compensation to Rs. 62,11,700 per acre, and dismissed the State’s appeals.

The Supreme Court noted that there were 556 first appeals filed in the High Court against the award of the Reference Court, out of which 258 were filed by the landowners and 298 by the State.

Legal Framework

The case revolves around the Land Acquisition Act, 1894, particularly:

• Section 4: This section empowers the government to issue a notification for the acquisition of land for public purposes.
• Section 6: This section allows the government to declare its intention to acquire the land after the initial notification.
• Section 9: This section mandates the issuance of notices to landowners, informing them about the acquisition and inviting claims for compensation.
• Section 11: This section outlines the inquiry process by the Land Acquisition Officer (LAO) to determine the compensation.
• Section 18: This section allows landowners to file objections to the LAO’s award and seek a reference to the Civil Court for re-determination of compensation.
• Section 23: This section lists the factors to be considered in determining compensation for acquired land.
• Section 54: This section provides for appeals to the High Court against the decision of the Reference Court.

The core issue is the determination of “fair market value” as per Section 23 of the Land Acquisition Act, 1894, which requires considering factors such as the land’s potential, location, and comparable sales.

Arguments

Landowners’ Arguments:

• ✓ The landowners argued that the acquired land had significant potential due to its location, proximity to developed areas, and surrounding infrastructure.
• ✓ They contended that the High Court should have relied on at least one of the exemplar sale deeds (Exs-P1, P-10, P-12, P-13 and P-14) to establish the real market value, which would have resulted in a higher compensation than Rs. 62,11,700 per acre.
• ✓ They presented evidence to demonstrate the land’s potential, its strategic location, and its proximity to well-developed areas.

State of Haryana’s Arguments:

• ✓ The State argued that the High Court erred in enhancing the compensation and dismissing the State’s appeals.
• ✓ The State contended that the High Court did not properly address the issues raised by the State and cursorily disposed of the appeals, causing prejudice.
• ✓ The State argued that the compensation fixed by the LAO at Rs. 12,50,000 per acre was fair and adequate and that the Reference Court and High Court erred in enhancing the rate.

Innovativeness of the argument: The landowners innovatively used exemplar sale deeds to argue for a higher market value, while the State focused on procedural lapses and the adequacy of the initial compensation fixed by the LAO.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue:

1. Whether the High Court was justified in partly allowing the landowners’ appeals and further enhancing the rate of compensation from Rs.43,17,841/- per acre to Rs.62,11,700/- per acre, and whether the High Court was correct in dismissing the State’s appeals.
2. What is the fair market value of the acquired land? Is it Rs. 12,50,000 per acre (as fixed by the LAO), Rs. 43,17,841 per acre (as fixed by the Reference Court), Rs. 62,11,700 per acre (as fixed by the High Court), or any other rate?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

The Supreme Court also considered the following legal provisions:

• Section 4 of the Land Acquisition Act, 1894
• Section 6 of the Land Acquisition Act, 1894
• Section 9 of the Land Acquisition Act, 1894
• Section 11 of the Land Acquisition Act, 1894
• Section 18 of the Land Acquisition Act, 1894
• Section 23 of the Land Acquisition Act, 1894
• Section 54 of the Land Acquisition Act, 1894
• Section 13 of the Court Fees Act

Judgment

How each authority was viewed by the Court?

• Haryana State Industrial Development Corporation vs Pran Sukh & Others [2010 (11) SCC 175]*: The Supreme Court held that the High Court erred in solely relying on this case for determining compensation, as the acquired land in this case was spread across 15 villages and not just one village as in Pran Sukh’s case.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with the lack of a thorough and comprehensive assessment of the land’s market value. The Court noted that the High Court’s approach of applying a uniform rate to all acquired land, based on a case concerning a single village, was flawed. The Court emphasized the need to consider various factors such as the location, potential, and nature of the land in each of the 15 villages.

The Supreme Court’s decision was heavily influenced by the factual inadequacies in the evidence presented and the flawed methodology adopted by the High Court. The Court emphasized the need for a detailed and comprehensive evaluation of the land’s value.

The Supreme Court emphasized that the fair market value of the acquired land cannot be determined in isolation based on a single factor. The Court highlighted the need for the lower courts to consider various factors, including the location, potential, and nature of the land, and to ensure that all relevant aspects of the case are taken into account.

The Court observed that:

“The fair market value of the acquired land cannot be decided in isolation on the basis of only one factor. There are several other factors, which govern the determination of the rate. These factors need to be proved with sufficient evidence.”

The Court also stated that:

“It must appear that the Courts have made sincere endeavor to determine the fair market rate of the acquired land and while determining has taken into account all relevant aspects of the case. It is the duty of the landowners and the State to adduce proper and sufficient evidence to enable the Courts to arrive at a reasonable and fair market rate of the acquired land prevalent on the date of acquisition.”

The Court further noted that:

“We cannot countenance the cursory manner in which both the Courts below proceeded to determine the market rate of the acquired land. It has certainly caused prejudice to both the parties.”

The Supreme Court did not provide any alternative interpretations, but focused on the lack of proper evidence and the flawed methodology used by the High Court. The Court rejected the High Court’s decision and remanded the case for fresh adjudication.

The decision was unanimous, with both judges concurring on the need to remand the case.

The Supreme Court’s decision underscores the importance of a thorough and comprehensive evaluation of all relevant factors in determining the fair market value of acquired land. The Court’s analysis highlights the need for sufficient evidence and a proper methodology in land acquisition cases.

Key Takeaways

• ✓ Land acquisition compensation cannot be determined based on a single factor or a single precedent.
• ✓ Courts must consider the specific location, potential, and nature of the acquired land.
• ✓ Parties must adduce sufficient evidence to support their claims for compensation.
• ✓ Cases involving large tracts of land acquired across multiple villages require a detailed assessment of each area.
• ✓ The judgment highlights the need for a thorough and comprehensive evaluation of land value in land acquisition cases.

Directions

The Supreme Court directed the following:

• ✓ The cases are remanded to the Reference Court for fresh adjudication on merits.
• ✓ Parties are at liberty to adduce additional evidence, both oral and documentary.
• ✓ The Reference Court should decide the rate of land as prevalent on the date of acquisition, uninfluenced by any findings of the High Court or the Supreme Court.
• ✓ Parties are to appear before the Reference Court on 05.02.2018.
• ✓ The Reference Court should dispose of the cases within one year from the date of appearance of the parties.
• ✓ The Registry is directed to issue necessary certificates of refund of court fees to the appellants (landowners).

Development of Law

The ratio decidendi of this case is that the determination of fair market value in land acquisition cases requires a comprehensive assessment of multiple factors, including the location, potential, and nature of the land. The Court emphasized that a uniform rate cannot be applied to lands situated in different villages without considering their specific characteristics. This case does not change any previous position of law, but rather reinforces the existing principles of fair compensation in land acquisition cases.

Conclusion

The Supreme Court’s decision in Surender Singh vs. State of Haryana remands a complex land acquisition case back to the Reference Court for a fresh determination of compensation. The Court found that the High Court’s approach of applying a uniform rate based on a single precedent was flawed. The Supreme Court emphasized the need for a thorough and comprehensive evaluation of all relevant factors, including the location, potential, and nature of the acquired land, and directed the Reference Court to consider additional evidence from both parties. This judgment underscores the importance of a detailed and nuanced approach to determining fair compensation in land acquisition cases.