GUIDELINE VALUE MUST PREVAIL; HIGH COURT CANNOT ACT AS APPELLATE AUTHORITY UNDER ARTICLE 227
INTRODUCTION
In Nandi Infrastructure Corridor Enterprises Ltd. & Anr. v. B. Gurappa Naidu & Ors., 2026 INSC 434, decided on 30 April 2026, the Supreme Court of India, speaking through Justice Aravind Kumar, examined two critical issues: determination of compensation based on guideline value under a compromise decree and the limits of the High Court’s supervisory jurisdiction under Article 227 of the Constitution.
The Court held that the High Court exceeded its jurisdiction under Article 227 by reappreciating facts and substituting its own interpretation and further clarified that guideline value agreed in a compromise must be applied strictly as per the governing notification.
BRIEF FACTS
The dispute arose from a compromise between the parties concerning land allotted for the Bangalore–Mysore Infrastructure Corridor Project. Under the Memorandum of Settlement (2007), the Appellant (NICE) agreed to either provide alternate land or, in default, pay the guideline value of the acquired land.
When NICE failed to transfer alternate land, execution proceedings were initiated. The Executing Court determined compensation at ₹1,000 per sq. ft., based on the applicable government notification dated 17 April 2007. However, the High Court, in exercise of jurisdiction under Article 227, reduced the valuation to ₹500 per sq. ft., relying on a different interpretation of the same notification. This led to Appeals before the Supreme Court.
ISSUES OF LAW
The Supreme Court considered whether the High Court exceeded its jurisdiction under Article 227, whether it was justified in interfering with the Executing Court’s findings and what constituted the correct method for determining guideline value under the governing notification.
ANALYSIS OF THE JUDGMENT
The Supreme Court first addressed the scope of Article 227 and reiterated that supervisory jurisdiction is not appellate in nature. It emphasised that interference is permissible only in cases of patent perversity, jurisdictional error or manifest injustice and not merely because another view is possible. The Court found that the Executing Court had acted within its jurisdiction and had adopted a plausible and legally sustainable interpretation of the guideline value notification. Therefore, the High Court had no justification to substitute its own reasoning.
A significant criticism by the Court was directed at the High Court’s approach of impleading the State and seeking interpretative assistance on the notification. The Court held that the dispute arose purely between private parties under a compromise decree, and permitting the State to effectively interpret its own notification within such proceedings was impermissible. This, according to the Court, blurred the line between adjudication and executive clarification.
On the substantive issue of valuation, the Court upheld the approach of the Executing Court. It noted that the notification specifically prescribed a base guideline value of ₹800 per sq. ft. for lands within municipal limits. Applying the prescribed 25% increase for land abutting a State Highway, the value correctly worked out to ₹1,000 per sq. ft. The Court rejected the High Court’s reliance on a provision that reduced value to 50%, holding that such provision was only a residual clause applicable where no specific rate is prescribed. Since a specific rate existed in the notification, the reduction was inapplicable.
The Court also rejected the contention that the land should be valued as undeveloped or agricultural. It held that the land had been converted for industrial use, was situated within municipal limits, and possessed necessary attributes of urban property. More importantly, the parties themselves had agreed to compensation based on guideline value at the time of settlement, and could not subsequently resile from that position.
Another important aspect of the Judgment relates to interest on delayed payment. Although the compromise decree did not expressly provide for interest, the Court took note of prior proceedings where interest had been awarded at 6% per annum from the date of decree. It held that such determination would continue to bind the parties unless set aside in appropriate proceedings.
CONCLUSION
The Supreme Court set aside the High Court’s Judgment and restored the valuation determined by the Executing Court, holding that ₹1,000 per sq. ft. was the correct guideline value.
This Judgment reinforces two key principles: first, that courts must adhere strictly to statutory guideline values when contractually agreed, without importing extraneous considerations; and second, that the High Court’s power under Article 227 is supervisory and not appellate, and cannot be used to re-evaluate evidence or substitute plausible interpretations merely because another view is possible.
SARTHAK KALRA
Senior Legal Associate
The Indian Lawyer & Allied Services
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