Land Acquisition Compensation Must Transcend Formalism, Ensure Equity: SC
The Supreme Court in its judgment dated May 7, 2025, ruled that the process of determining compensation inherently resists strict formalism and thus, should be informed by principles of equality, equity, and justice.
A Division Bench of Justice Surya Kant and Justice Ujjal Bhuyan, observed, “This 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.”
The appeal was partly allowed with the following directions;
1) The compensation granted for the ‘outer belt’, i.e. lands beyond 5 acres from NH-8 by the High Court at INR 62,14,121 per acre, is upheld;
2) The compensation granted for the ‘inner belt’ i.e. lands situated in Kukrola and abutting the NH-8 up to a depth of 5 acres are awarded parity with that of village Fazalwas, i.e. INR 1,21,00,000 per acre.
Court was hearing a batch of cross-appeals preferred by the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), with various landowners, challenging the quantum of compensation awarded by the High Court of Punjab and Haryana for land situated in villages of Fazalwas and Kukrola, Tehsil Manesar, District Gurgaon, Haryana.
The bench framed following two issues for their consideration;
• Whether the High Court erred in awarding differing compensation amounts for lands acquired in the villages of Kukrola and Fazalwas?
• Whether the quantum of compensation awarded is appropriate for both these villages; and if not, on what basis should the market value be assessed?
“In any case, we 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”, the bench added.
Brief Background
The acquisition proceedings commenced vide notice dated 25.04.2008 issued under Section 4 of the Land Acquisition Act, 1984, proposing acquisition of total 3510 acres 5 kanals and 1 marla of land, spread across 7 villages in District Gurgaon.
A declaration thereby came to be issued under Section 6 of the Act, on 09.03.2009 and the LAC award followed on 24.08.2009.
Award No. 20 pertained to village Fazalwas and Award No. 21 dealt with Kukrola – Both Awards uniformly determined the quantum of compensation at Rs. 30,00,000 per acre, based on then prevalent rates supplied by District Collector, Gurgaon. Additionally, solatium at the rate of 30% as well as an additional amount of 12% per annum formed part of the Awards. The Reference Court modified the said amount to Rs. 62,14,421 per acre, vide order dated 19.10.2013 and 15.11.2013. For Kukrola, Court also granted an escalation of 10% per annum over a sale exemplar presented by the landowners, noting high potentiality of the acquired lands, and their proximity to NH-8, with applying development cut of 30%.
Upon appeal before the High Court, the compensation amount was further modified to Rs. 87,34,885 per acre for village Kukrola and Rs. 12,10,000 per acre for village Fazalwas, with 10% escalation for the latter.
Case Title: Krishan Kumar v. State of Haryana