Land compensation must reflect equity, justice and fairness: Supreme Court

Business Standard

07-05-2025

The Supreme Court on Wednesday said the compensation for land acquisition cannot be assessed in a mechanical manner but must be guided by considerations of equality, equity and justice.
A bench of Justices Surya Kant and Ujjal Bhuyan said a fundamental principle in land acquisition jurisprudence was that lands with similar locational and developmental potential must be compensated equitably unless clear, objective distinctions justify otherwise.
The bench said it must caution against an "excessively positivist" approach in matters of land acquisition.
"It is well understood that the very exercise of assessing compensation is antithetical to rigid formalism. Compensation cannot be assessed in a mechanical or formulaic manner but must be guided by considerations of equality, equity, and justice," it said.
The apex court's verdict came on a batch of cross-appeals filed by the Haryana State Industrial and Infrastructure Development Corporation and several landowners challenging the quantum of compensation awarded by the Punjab and Haryana High Court for the land situated in Fazalwas and Kukrola villages in Gurugram district.
The bench observed the acquisition proceedings commenced in April 2008 and the public purpose of the acquisition was to build Chaudhary Devi Lal Industrial Model Township.
The determination of compensation for compulsory acquisitions under the Land Acquisition Act, 1894, was fundamentally an exercise in equity, it added.
The bench said instead of being a "precise science", the law of compulsory acquisition in India strives to uphold the enduring principles of justice, equality and fairness.
"This ethos is reflected in the procedural framework of the 1894 Act and has been further refined by its successor-statute, i.e., the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013," it said.
The bench said the apex court has consistently held that the determination of market value and corresponding compensation must necessarily factor in the escalation of land prices over time.
"Given the inherently dynamic nature of real estate markets, any assessment of land value cannot remain static but must reflect prevailing economic conditions, infrastructural developments, and increasing demand," it said.
The bench partly allowed the appeals of the landowners from Kukrola Village and modified the high court's May 2022 verdict.
It upheld the high court order granting compensation for the "outer belt", that is, lands beyond 5 acre from NH-8, at Rs 62,14,121 per acre.
"The compensation granted for the 'inner belt', i.e., lands situated in Kukrola and abutting the NH-8 up to a depth of five acres are awarded parity with that of village Fazalwas, i.e., Rs 1,21,00,000 per acre," the bench said.
It noted the high court essentially categorised the lands acquired from these two villages into the "inner belt" and the "outer belt".
The apex court noted the "inner belt" referred to lands abutting NH-8 up to a depth of 5 acre whereas the "outer belt" comprises lands beyond that limit.