Market Value for Land Acquisition Cannot Be Determined Using a Single Sale Deed of Dissimilar Land Contrary to Section 26 of the 2013 Land Acquisition Act

Held: The Supreme Court held that determination of market value for land acquisition under Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 must strictly conform to the statutory methodology prescribed therein, and compensation cannot be determined on the basis of a single sale deed relating to a dissimilar category of land. The Court held that industrial land acquired for highway expansion could not be valued on the basis of a solitary sale exemplar concerning a small residential plot situated in a nearby village, as such lands were not of a “similar type” within the meaning of Section 26(1)(b) of the 2013 Act. The Court further held that the statutory framework under Section 26 contemplates reliance upon multiple sale transactions for determining average sale price and that reliance on a single sale deed contrary to the statutory mandate amounted to patent illegality liable to interference under Section 34(2A) of the Arbitration and Conciliation Act, 1996.

Summary: The dispute arose from acquisition of 1,394 square meters of land belonging to Alfa Remidis Ltd. for four-laning of National Highway No. 547-E under the National Highways Act, 1956. The competent authority initially treated the land as agricultural dry crop land and awarded compensation at INR 161.63 per square meter. In arbitration proceedings under Section 3G(5) of the National Highways Act, the landowner contended that the land was actually being used for industrial purposes as a paracetamol manufacturing unit and relied upon a sale deed dated 29 March 2017 relating to a residential plot in a nearby village valued at INR 3,588 per square meter. The Arbitrator accepted the contention and enhanced compensation accordingly. The District Judge subsequently set aside the arbitral award under Section 34 of the Arbitration Act for violating Section 26 of the 2013 Land Acquisition Act, but the Bombay High Court restored the arbitral award. The Supreme Court examined the statutory scheme under Section 26 of the 2013 Act, the Removal of Difficulties Order, 2015, and earlier precedents including NHAI v. P. Nagaraju and Madhya Pradesh Road Development Corporation v. Vincent Daniel. The Court held that Section 26 required adoption of the higher of the statutory stamp duty valuation or the average sale price of similar lands, determined through multiple comparable sale transactions, and not through a solitary residential sale deed concerning dissimilar land.

Decision: The Supreme Court allowed the appeal filed by NHAI and set aside the Bombay High Court’s judgment restoring the arbitral award. The Court held that compensation payable to Alfa Remidis Ltd. had to be determined under Section 26(1)(a) of the 2013 Land Acquisition Act on the basis of the Ready Reckoner rate applicable to lands situated on the highway in Zone 4, namely INR 2,020 per square meter, instead of INR 3,588 per square meter awarded by the Arbitrator. The respondent-landowner was held entitled to consequential statutory benefits under the 2013 Act on that basis. The Court also directed that the amount of INR 50,00,000 already withdrawn pursuant to interim orders be adjusted while disbursing the remaining compensation. Parties were directed to bear their own costs.