Supreme Court Enhances Compensation for Farmers After 30-Year Legal Battle | Rejects Averaging Method, Affirms Right to Highest Bona Fide Sale Exemplar in Land Acquisition Case
Kiran Raj
The Supreme Court of India Division Bench of Chief Justice B.R. Gavai and Justice Augustine George Masih set aside a High Court judgment dismissing claimants' appeals seeking enhanced compensation for land acquired by the State of Maharashtra. The Apex Court held that the Reference Court erred in excluding the highest exemplar sale deed dated 31st March 1990 and stated that the claimants were entitled to compensation on the basis of that transaction, subject to a 20% deduction. The Supreme Court directed an enhancement of compensation from Rs. 32,000/- per acre to Rs. 58,320/- per acre. It further ordered all consequential benefits, including solatium and interest, to be granted under the Land Acquisition Act, 1894.
The Court stated, "the claimants/Appellants deserve the benefit of the highest sale exemplar dated 31st March 1990", and held that the findings of the Reference Court and the High Court were unsustainable. The matter was not remitted back, considering that the land acquisition dated back to the early 1990s and the claimants were farmers. The Court invoked the principle that the highest bona fide exemplar should be preferred where no strong reasons justify a deviation.
The dispute originated from land acquisition proceedings in the 1990s under the Maharashtra Industrial Development Act, 1961 for the establishment of an Industrial Area near Jintur town in Parbhani District. The appellants, primarily farmers, were owners of land in Survey Nos. 103 and 104 at Village Pungala, measuring 16 Hectares and 79 Ares.
On 16 January 1992, a notice under Section 32(2) of the Act of 1961 was issued by the Land Acquisition Officer and Deputy Collector, Hingoli. The State took possession of the land on 6 December 1994 and awarded total compensation of Rs. 45,70,508/- for an acquired area of 89 Hectares and 44 Ares.
The appellants accepted the compensation under protest and filed a Reference under Section 18 of the Land Acquisition Act, 1894 in 1997. The Reference Court at Parbhani partly allowed their claim, awarding Rs. 46,26,013/- with future interest at 15% per annum on the additional market value of Rs. 16,43,224/-.
Dissatisfied, the appellants preferred First Appeals in the High Court, which were dismissed by a learned Single Judge on 21 April 2022. The present appeals arise from the Special Leave Petitions filed thereafter.
The appellants contended that the Reference Court erred in ignoring the highest exemplar sale deed dated 31st March 1990, which reflected a sale value of Rs. 72,900/- per acre. It was submitted that the sale was a bona fide transaction and that the land was situated in a prime location near the T-point of Nashik-Nirmal State Highway, with proximity to Jintur town and availability of water.
The appellants relied on decisions in State of Punjab v. Hans Raj, (1994) 5 SCC 734; Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432; Mohammad Yusuf v. State of Haryana, (2018) 16 SCC 105; and Anjani Molu Dessai v. State of Goa, (2010) 13 SCC 710.
The Respondents contended that the Land Acquisition Officer had appropriately considered comparable sale instances, and that the appellants' land was dry crop land. It was argued that the sale exemplars relied upon were of small plots and that the sale instance dated 31st March 1990 reflected an unusually high rate. The Respondents also cited decisions in Major General Kapil Mehra v. Union of India, (2015) 2 SCC 262; Shawal Singh v. Land Acquisition Collector, (2016) 12 SCC 619; and Nirmal Singh v. State of Haryana, (2015) 2 SCC 160.
The Reference Court, in its 7 June 2007 judgment, held that the land had non-agricultural potential, was located near Jintur town, and had access to water facilities. It considered ten sale instances, including the 31st March 1990 exemplar, but ultimately based its award on averaging of other sale deeds ranging around Rs. 40,000/- per acre, excluding the highest sale.
The High Court affirmed the Reference Court's approach, but inconsistently recorded that the Reference Court both did and did not consider the highest sale instance. The Supreme Court noted this contradiction and found it to be an error.
The Supreme Court recorded, "the Reference Court having taken note of the ten sale exemplars ought to have dealt with the sale instance at Serial No. 4, however, it did not."
It stated that the High Court erred in observing in one paragraph that the Reference Court ignored the sale instance dated 31st March 1990, and in the very next paragraph, that it considered the same. The Court held, "we have no difficulty in holding that the finding recorded by the learned Single Judge of the High Court in paragraph 50 of the impugned judgment and final order is erroneous."
The Bench referred to its previous judgements, observing in Anjani Molu Dessai, "even where there are several exemplars with reference to similar lands, usually the highest of the exemplars, which is a bona fide transaction, will be considered."
The Court reiterated the principle that, "when the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction."
In response to the State's argument that the highest exemplar was abnormally high and unsupported by evidence of bona fide, the Court noted, "though the Respondent-State denied the correctness of above documents, it did not lead any rebuttal evidence." It also observed, "the certified copy of a document can be accepted as evidence of transaction recorded in the said document" under Section 51A of the LA Act.
The Bench rejected the contention that averaging was appropriate, stating, "only where there are several sales of similar lands whose prices range in a narrow bandwidth, the average thereof can be taken, as representing the market price."
It found that the values ranged from Rs. 25,000/- to Rs. 72,900/- per acre and stated, "in such a case, the averaging thereof was clearly not permissible."
The Court further recorded, "we are of the considered opinion that no occasion arose for the Reference Court to deviate from the well-settled position of law and that the claimants/Appellants deserve the benefit of the highest sale exemplar dated 31st March 1990."
Acknowledging that the sale exemplars were of small plots, it upheld the Reference Court’s deduction of 20% from the highest exemplar value to account for the larger area being acquired. The Court stated, "we deem it appropriate to apply a deduction of 20% i.e., Rs. 14,580/- per Acre."
The Court concluded that the compensation awarded by the Reference Court at Rs. 32,000/- per acre was insufficient and required enhancement based on the highest sale exemplar.
The Supreme Court declared, "the impugned judgment and order dated 21st April, 2022, is not at all sustainable." It held the High Court had erred in affirming the Reference Court's exclusion of the highest exemplar.
Accordingly, it quashed the High Court’s decision and the Reference Court's judgment. The Court then directed, "that the compensation granted to the Appellants be enhanced from Rs. 32,000/- per Acre to Rs. 58,320/- per Acre."
In addition to the enhanced compensation, the Court ordered, "all other consequential benefits of solatium and interest on the enhanced compensation in terms of Section 23(1-A), 23(2) and 28 of the Land Acquisition Act, 1894, be granted to the Appellants."
The Court considered remanding the matter but refrained, observing, "taking into consideration the fact that the Appellants are farmers and that their land was acquired by the Respondent-State in the early 1990s, we are of the view that it would be appropriate that we ourselves consider the case of the Appellants."
The Court issued the following directions: "The present batch of appeals are allowed; The judgment and final order dated 21st April, 2022, passed by the learned Single Judge of the High Court is quashed and set aside;
The judgment and award dated 7th June, 2007 passed by the Reference Court is quashed and set aside; We direct that the compensation granted to the Appellants be enhanced from Rs. 32,000/- per Acre to Rs. 58,320/- per Acre;
We further direct that all other consequential benefits of solatium and interest on the enhanced compensation in terms of Section 23(1-A), 23(2) and 28 of the Land Acquisition Act, 1894, be granted to the Appellants."
Case Title: Manohar and Others v. State of Maharashtra and Others
Neutral Citation: 2025 INSC 900
Case Number: Civil Appeal arising out of SLP(C) Diary No. 26900 of 2023 and connected matters
Bench: Chief Justice Justice B.R. Gavai, Justice Augustine George Masih
