Supreme Court Upholds Compensation at Rs. 1,000 Per Square Yard in Land Acquisition Case: Radhey Sham vs. State of Haryana (2022)

Date of the Judgment: October 17, 2022

Citation: 2022 INSC 537

Judges: M.R. Shah, J., C.T. Ravikumar, J.

Can a state government, after initially accepting a compensation amount for land acquisition, later seek to reduce it? The Supreme Court of India recently addressed this question in a case involving land acquired for development in Haryana. The core issue revolved around whether the High Court was correct in reducing the compensation amount after the State had initially accepted the compensation determined by the Reference Court. The Supreme Court bench comprised Justices M.R. Shah and C.T. Ravikumar, with the judgment authored by Justice M.R. Shah.

Case Background

The case involves the acquisition of land in villages Hansi and Dhana, District Hisar, Haryana, for developing residential and commercial sectors (Sectors 3, 5 & 6). The acquisition was initiated under the Land Acquisition Act, 1894. A notification under Section 4 of the Land Acquisition Act, 1894 was issued on August 29, 2005, followed by a declaration under Section 6 on August 29, 2006. The Land Acquisition Collector (LAC) issued awards on August 3, 2007, determining compensation using a belting method, with rates varying based on proximity to major roads.

The landowners, dissatisfied with the compensation, sought references to the Reference Court. The Reference Court enhanced the compensation to Rs. 1,000 per square yard on May 31, 2014. The State of Haryana accepted this decision and did not file an appeal. However, the landowners appealed to the High Court seeking further enhancement. The High Court initially enhanced the compensation to Rs. 4,173 per square yard, relying on a previous Supreme Court decision. This decision was later set aside by the Supreme Court, which remanded the case back to the High Court.

On remand, the High Court sent the matter back to the Reference Court which assessed the compensation at Rs. 750 per square yard. The High Court, in the impugned judgment, then overturned the Reference Court’s decision and restored the original awards by the Land Acquisition Collector, reducing the compensation to between Rs. 166 and Rs. 200 per square yard. This led to the current appeals before the Supreme Court by the original landowners.

Timeline

Course of Proceedings

The landowners, dissatisfied with the Land Acquisition Collector’s award, sought a reference to the Reference Court, which enhanced the compensation to Rs. 1,000 per square yard. The State accepted this decision and did not appeal. The landowners, seeking further enhancement, appealed to the High Court. The High Court initially enhanced the compensation but this was overturned by the Supreme Court, which remanded the matter. On remand, the High Court sent the matter back to the Reference Court, which assessed the compensation at Rs. 750 per square yard. The High Court then overturned this decision and restored the original awards by the Land Acquisition Collector. This led to the present appeals before the Supreme Court.

Legal Framework

The case is governed by the Land Acquisition Act, 1894. Key provisions include:

• Section 4: “Publication of preliminary notification and power of officers thereupon.” This section deals with the initial notification for land acquisition.
• Section 6: “Declaration that land is required for a public purpose.” This section pertains to the formal declaration that the land is required for a public purpose.
• Section 11: “Enquiry and award by Collector.” This section empowers the Land Acquisition Collector to conduct an inquiry and make an award determining compensation.

Arguments

Arguments on behalf of the Landowners:

• The State accepted the Reference Court’s decision of May 31, 2014, which determined the market value at Rs. 1,000 per square yard. The landowners had appealed only for enhancement and the State had not appealed.
• The Supreme Court, in its earlier judgment dated May 16, 2018, had noted that the State had not appealed against the Reference Court’s decision of May 31, 2014. Therefore, the High Court should not have reduced the compensation below Rs. 1,000 per square yard.
• The sale deeds produced by the landowners show that the land value was higher than Rs. 1,000 per square yard.

Arguments on behalf of the State of Haryana:

• The matter was remanded to the Reference Court for a fresh decision. The Reference Court then assessed the compensation at Rs. 750 per square yard.
• The State’s failure to appeal the Reference Court’s decision of May 31, 2014, does not mean the landowners are automatically entitled to compensation at Rs. 1,000 per square yard.
• The High Court correctly considered all sale deeds and found that the landowners failed to prove that the Land Acquisition Collector’s award was erroneous.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issue:

1. Whether the High Court was justified in reducing the compensation below Rs. 1,000 per square yard, when the State had not challenged the Reference Court’s order determining the compensation at Rs. 1,000 per square yard.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• The Supreme Court distinguished the case of Ashrafi and Others v. State of Haryana and Others, (2013) 5 SCC 527, stating that it was not applicable to the present case due to the difference in the time of acquisition and the nature of the land.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the State had accepted the Reference Court’s decision of May 31, 2014, which determined the market value at Rs. 1,000 per square yard. The State did not challenge this decision, and the landowners had only appealed for enhancement. The Court also noted that the sale deeds relied upon by the landowners to claim a higher compensation were either too old or related to very small plots of land, making them unreliable for determining the market value of the acquired land.

The Court reasoned that once the State had accepted the Reference Court’s decision and not filed an appeal, the landowners were entitled to at least that amount of compensation. The Court also noted that the sale deeds relied upon by the landowners were either too old or related to small plots of land, making them unreliable for determining the market value of the acquired land.

The court stated, “Even otherwise, on a fair reading of the judgment and order dated 16.05.2018 passed by this Court and the subsequent order dated 28.08.2019 passed by the High Court, the matter was remanded to the Reference Court to consider the sale deeds for the purpose of enhancement of the amount of compensation, while considering the sale deeds relied upon by the landowners.”

The court further stated, “In any case, once the judgment and order passed by the Reference Court dated 31.05.2014 determining the compensation at Rs. 1,000/- per square yard attained finality so far as the State is concerned, the landowners shall be entitled to the compensation at least at Rs. 1,000/- per square yard.”

The Court also observed, “Most of the sale deeds relied upon by the landowners are much prior to the date of Section 4 notification (ranging between 1992 to 1994). Some of the sale deeds are post Section 4 notification. Only three to four sale deeds are nearer to Section 4 notification. However, all those sale deeds are with respect to small area of lands and even the price is also at variance. Therefore, it is not safe to determine the compensation relying upon those sale deeds which are nearer to Section 4 notification.”

Key Takeaways

• The Supreme Court held that once a state government accepts a compensation amount determined by the Reference Court and does not appeal, it cannot later seek to reduce that amount.
• Landowners are entitled to at least the compensation amount that the State had accepted.
• Sale deeds of small plots or those that are too old may not be reliable for determining the market value of acquired land.

Directions

The Supreme Court quashed the High Court’s judgment and restored the compensation at Rs. 1,000 per square yard.

Development of Law

The ratio decidendi of this case is that once a state government accepts a compensation amount determined by the Reference Court and does not appeal, it cannot later seek to reduce that amount. This clarifies the principle of finality in land acquisition matters, ensuring that landowners are not subjected to fluctuating compensation amounts after an initial acceptance by the acquiring authority. There is no change in the previous positions of law.

Conclusion

The Supreme Court partly allowed the appeals, setting aside the High Court’s decision and restoring the compensation at Rs. 1,000 per square yard. This decision upholds the principle that once a state government accepts a compensation amount determined by the Reference Court and does not appeal, it cannot later seek to reduce that amount. The Court also clarified the limitations of relying on old or small plot sale deeds for determining market value.