SUPREME COURT RULES ON FAIR COMPENSATION FOR ACQUIRED AGRICULTURAL LAND IN LAND ACQUISITION CASE
The Judgment in the Case of Manilal Shamalbhai Patel (Deceased) Through His Legal Heirs & Ors. v. Officer on Special Duty (Land Acquisition) & Anr. CIVIL APPEAL NO. 14670 OF 2015 was delivered by a Division Bench of the Supreme Court of India comprising Hon’ble Justice Pankaj Mithal and Justice S.V.N. Bhatti on March 25, 2025. The case primarily concerns the determination of fair compensation for land acquired under the Land Acquisition Act, 1894. The Supreme Court assessed whether commercial land rates were a suitable benchmark, factoring in development costs, price escalation, and the lack of evidence for additional compensation for fruit-bearing trees.
Facts Of the Case
The Appellants owned land (Survey No. 179/3) in Ranoli, Vadodara, Gujarat, which was acquired by the Government of Gujarat for the Gujarat Industrial Development Corporation (GIDC). A Notification under Section 4 of the Land Acquisition Act, 1894, was published on 24th July 1989, followed by a final declaration under Section 6 on 18th July 1990. The Special Land Acquisition Officer (SLAO) awarded compensation at Rs. 11 per sq. mt. The Appellants challenged this amount before a Reference Court which enhanced the compensation to Rs. 30 per sq. mt. Dissatisfied, the Appellants appealed to the High Court, which dismissed their plea. They then approached the Supreme Court, seeking further enhancement to Rs. 450 per sq. mt.
Main Issues
- Whether the compensation awarded by the lower courts was adequate.
- Whether the land should be valued at Rs. 450 per sq. mt. based on a GIDC allotment for a petrol pump.
- Whether the Appellants should receive additional compensation for fruit-bearing trees on the land.
Appellants Contentions
The Appellants contended that the acquired land should be valued at Rs. 450 per sq. mt., relying on a nearby GIDC allotment (Plot No. 7/1) that was leased for a petrol pump in 1988. They argued that their land was freehold, making it more valuable than the leased comparison plot. Additionally, they claimed that the compensation awarded failed to account for the income generated from fruit-bearing trees, including lemon, mango, and guava, which were present on the land.
Respondents Contentions
On the other hand, the Respondents defended the valuation determined by the Special Land Acquisition Officer (SLAO), asserting that it was just and appropriate. They emphasized that the acquired land was agricultural and required significant development before it could be used for industrial purposes. Furthermore, they pointed out that the Reference Court had already provided a fair enhancement in compensation, and the High Court was correct in dismissing any further claims for an enhancement.
Supreme Court
In its judgment, the Supreme Court ruled that the comparison with the GIDC plot was not entirely appropriate, as that plot was designated for commercial use, whereas the acquired land was agricultural. However, the Court acknowledged that GIDC itself had valued industrial land at Rs. 180 per sq. mt. in 1988, warranting an upward revision. Considering an annual price escalation of 5% and applying a 50% deduction for development costs, the Court determined a fair market value of Rs. 95 per sq. mt. Additionally, the Court rejected the Appellants’ claim for additional compensation for fruit-bearing trees, citing the absence of concrete evidence regarding their yield and earnings.
CONCLUSION:
The Supreme Court set aside the High Court’s judgment and modified the compensation to Rs. 95 per sq. mt., inclusive of all statutory benefits and interest. The Appeal was partly allowed to this extent, while claims for additional tree compensation were denied.
Baddam Parichaya Reddy
Associate
The Indian Lawyer & Allied Services
Please find below the YouTube Link for “Civil Trials in India” (Episode 60: The Indian Lawyer Legal Tips)
https://www.youtube.com/watch?v=yVQy72-nzMU
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