Land Acquired For Same Public Purpose Must Get Uniform Compensation: Supreme Court

The Supreme Court has held that when land in neighbouring villages is acquired under the same notification for the same public project, landowners should get fair and consistent compensation, without arbitrary differences in rates.

A Bench of Justices Dipankar Datta and Sheel Nagu made the observation while deciding 47 appeals filed by Surinder Ahuja and others against a common order of the Punjab and Haryana High Court, which had reduced or modified the compensation awarded by the reference court.

The case concerned land acquired in six villages in Fazilka, Punjab, for construction of the 18.42-km-long Aspal Extension Drain (Ditch Canal). The acquisition covered land in Karni Khera, Odian, Awa, Kotha, Alamshah and Salem Shah.

The Land Acquisition Collector, Fazilka, had announced the award on August 6, 2001, fixing uniform market rates for the project area. However, the landowners disputed the compensation, particularly on the ground that the drain had divided their holdings and left portions of the remaining land unusable.

Radial model for land compensation

The high court had adopted a radial, distance-based model under which the value of land was reduced depending on its distance from a particular point. The Supreme Court found this approach arbitrary because the lands had been acquired under the same notification for the same project and were part of a contiguous area.

The Bench noted that some of the acquired lands were not merely interior agricultural lands but prime highway-facing orchards with significant urban potential.

Court also pointed out the anomalies created by the radial model. For instance, Village Sabuana, 10 km away from the border, was assigned a rate of Rs 2,79,000 per acre, while Village Alam Shah, which was only 1.5 km from the border, was awarded Rs 3,19,000 per acre.

"This highlights the arbitrary nature of the radial model...we hold that the high court misdirected itself in modifying the market value of the acquired lands to graded radial rates ranging from Rs 2,99,000 to Rs 3,39,000 per acre," the Bench said.

The Supreme Court restored the reference court's determination of Rs 5,00,000 per acre. It held that the rate was supported by the project-wide contiguity of the lands, their suburban potentiality, the 9% urban stamp duty rate and the established 1996 Sultanpur benchmark.

Court thus affirmed the principle that compensation for contiguous lands acquired for the same project cannot be subjected to arbitrary differences merely on the basis of a mechanical distance-based formula.

What did the Supreme Court say about compensation for fruit-bearing trees?

Court then considered the compensation awarded for fruit-bearing trees. The reference court had awarded Rs 9 lakh for 946 trees.

However, the Supreme Court found that the reference petition had specifically claimed compensation for only 280 trees.

The Bench said a reference petition under Section 18 of the Land Acquisition Act functions like a plaint and defines the scope of the dispute. Therefore, a court cannot award compensation for a claim that was not pleaded.

"Courts cannot award compensation based on evidence led for heads of damage not explicitly pleaded in the petition, as evidence cannot be led beyond pleadings," the Bench said.

Since there was no formal amendment to the reference petition, Court held that compensation had to be restricted to the 280 trees actually pleaded.

Applying the "Nijjar Formula" rate of Rs 1,922.50 per tree, the Supreme Court upheld the high court's determination of Rs 5,38,300 as compensation for the trees.

How should severance compensation be calculated when acquisition divides the land?

Court next dealt with severance compensation. The landowners had argued that construction of the drain had physically divided their holdings and rendered portions of the remaining land inaccessible or unusable.

The Supreme Court held that severance compensation has to be calculated on the basis of the loss in value of the remaining unacquired land, and not on the value of the portion acquired.

"Where an acquisition physically bifurcates holdings and renders remaining tracts inaccessible, the damage constitutes a constructive total loss of utility for the unacquired land," the Bench said.

Court therefore set aside the high court's decision to limit severance compensation to 40% of the value of the acquired land.

It restored the reference court's award of 50% severance compensation, calculated on the market value of the remaining unacquired land.

Are solatium and additional interest payable on trees, tubewells and severance charges?

The Supreme Court also clarified the scope of statutory benefits under the Land Acquisition Act, 1894.

It held that solatium under Section 23(2) and additional interest under Section 23(1A) are payable only on the market value of the land determined under the first clause of Section 23(1).

Section 23(2) of the Land Acquisition Act provides that in addition to the market value of the land as above provided, the Court shall in every case award a sum of [thirty per centum] on such market value, in consideration of the compulsory nature of the acquisition.

"These benefits are strictly excluded for damages or expenses awarded under the second to sixth factors of Section 23(1), such as fruit-bearing trees, structures, and severance charges," the Bench said.

Court accordingly upheld the high court's decision to exclude statutory solatium and additional interest from compensation awarded for auxiliary assets such as fruit trees and tubewells.

Rs 50,000 compensation for tubewells

With regard to tubewells, Court upheld the high court's decision to standardise compensation at Rs 50,000 per tubewell.

The Bench said the flat rate appropriately balanced the competing claims of private landowners and government valuation and provided a realistic and uniform figure across the contiguous revenue estates.

Court also rejected private valuation reports submitted by the landowners because the experts who prepared them had not been examined as witnesses.

It held that merely marking or tendering a private valuation report as an exhibit does not prove the truth of its contents.

"The author of such a report must be examined as a witness to prove the document in accordance with law; failing which, the court cannot rely upon the valuation," the Bench said.

Court's directions

The Supreme Court directed that the additional compensation payable in accordance with its judgment be worked out and paid to the landowners within six months.

It further directed that if, after reworking the compensation, any amount was found recoverable from the landowners, written intimation must first be given to them. Recovery could be made within nine months after giving all concerned a sufficient opportunity of being heard.

Case Title: Surinder Ahuja & Anr Vs State of Punjab & Anr

Bench: Justices Dipankar Datta and Sheel Nagu

Date of Judgment: September 29, 2026