New Delhi: In a significant judgment addressing land acquisition compensation, the Supreme Court of India has firmly reiterated that comparable sale deeds used to determine market value must pre-date the official Section 4 Notification of the Land Acquisition Act, 1894. The two-Judge Bench of Justices Surya Kant and Ujjal Bhuyan delivered the ruling while settling a long-standing dispute over land acquired for the Chaudhary Devi Lal Industrial Model Township in Haryana.
The Court, while partly allowing cross-appeals filed by the Haryana Industrial and Infrastructure Development Corporation (HSIIDC) and various landowners, also ordered a substantial enhancement in compensation for certain plots, bringing the rate for “inner belt” land in one village to INR 1,21,00,000 per acre.
The Core Principle: Reflecting True Market Value
The central legal issue revolved around which sale deeds could be considered truly reflective of the acquired land’s market value. The Court observed that any sales recorded after the Section 4 Notification (issued on April 25, 2008, in this case) would be influenced by the announcement of the acquisition itself, potentially distorting the true market price.
The Bench emphasized:
“Comparable sale deeds may only be considered if they pre-date the Section 4 Notification, which would consequently be truly reflective of the market value of the acquired land at the relevant time.”
This directive aims to curb the use of inflated post-notification transactions to secure higher compensation, ensuring that the market value is assessed when a willing buyer would pay a willing seller at that specific point in time.
Background of the Dispute
The acquisition process began in 2008 for the purpose of establishing the Industrial Model Township across several villages. The District Revenue Officer-cum-Land Acquisition Collector (LAC) initially determined a uniform compensation of INR 30,00,000 per acre, relying solely on prevalent District Collector’s rates (the statutory minimum).
Dissatisfied, the landowners approached the Reference Court, which enhanced the compensation to INR 62,14,421 per acre. Further appeals led to the Punjab and Haryana High Court modifying the award, which still left both the State and landowners aggrieved, leading to the current appeal before the Apex Court.
Upholding the Belting Method and Correcting Disparity
The Supreme Court confirmed the validity of the ‘belting method,’ a system used in large-scale acquisitions to divide non-homogeneous land into categories (belts) based on factors like proximity to major infrastructure (like NH-8) or developmental potential.
Crucially, the Court addressed a compensation disparity between two villages, Kukrola and Fazalwas, both of which had land abutting National Highway 8 (NH-8). The Court found no factual basis to value the ‘inner belt’ lands (up to five acres deep from the highway) in Kukrola differently from those in Fazalwas.
Accordingly, the Supreme Court enhanced the compensation for Kukrola’s inner belt to INR 1,21,00,000 per acre, aligning it with the compensation awarded to Fazalwas. The compensation granted for the ‘outer belt’ (lands beyond five acres) was upheld.
The judgment also served as a reminder that the Collector’s rates, while providing a baseline, should not be the sole foundation for calculating compensation awards. The market value must be derived from objective evidence of comparable pre-acquisition sales.
