Supreme Court recalibrates compensation in land acquisition—deduction for development cut to 20%; electrical re-installation costs restored
Case Name: Sajan v. State of Maharashtra & Ors.
Citation: 2020 INSC 302
Date of Order: 17 March 2020
Bench: Justice R. Banumathi and Justice A.S. Bopanna
Held: The Supreme Court held that the acquired land, though partly agricultural on record, had proven non-agricultural potential linked to an existing khandsari (sugar) unit; market value at Rs. 6.90 per sq ft was therefore affirmed. However, the High Court’s 40% deduction towards development was excessive for an irrigation (dam) acquisition; a 20% deduction was held reasonable. The Court restored Rs. 3,86,867 allowed by the Reference Court for dismantling and re-installation of electrical works, affirmed Rs. 6,62,000 as depreciated value of machinery and mechanical installations, Rs. 4,26,890 towards civil work dismantling/transportation, and sustained Rs. 5,00,000 for loss of business, given concurrent findings that the mill was idle and profits were unproved.
Summary: Land in Gat No. 85, Village Mhasekota, Aurangabad (2.40 ha; including 0.80 ha N.A. for a sugar unit) was acquired for the Hiwra Medium Project. The S.L.A.O.’s 1986 award valued lands on a per-hectare basis and separately valued structures. On a Section 18 reference, the Reference Court fixed ₹6.90 per sq ft for the entire tract (treating it as having non-agricultural potential), made only a 10% development deduction, and granted amounts for dismantling/re-installation of plant and for limited business loss. On State appeal, the High Court reduced compensation, applying a 40% development deduction and cutting electrical re-installation to a depreciated figure. On further appeal, the Supreme Court accepted the exemplar sale deeds and the Rs. 6.90 rate, but noted that dam acquisitions do not entail the kind of layout development warranting one-third or higher deductions; hence 20% was apt. It reinstated the Reference Court’s figure for electrical dismantling/re-installation, finding the High Court’s depreciation approach misconceived for reinstatement expenses, while otherwise affirming the civil-work and machinery heads and the modest, evidence-aligned business-loss award.
Decision: Appeals partly allowed. The High Court’s award was modified: land value recalculated at Rs. 6.90 per sq ft with only 20% development deduction (Rs.14,42,707), electrical re-installation restored to Rs. 3,86,867, and other heads affirmed as per the Reference Court/High Court. The appellants are entitled to the balance compensation with statutory benefits.