07 May 2025 Land Acquistion >> Property & Real Estate  

In a significant ruling of Krishan Kumar Vs State of Haryana & Others dated May 7, 2025, the Supreme Court of India addressed cross-appeals filed by the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) and various landowners concerning compensation for land acquired in the villages of Fazalwas and Kukrola, Tehsil Manesar, District Gurgaon, Haryana. The decision, delivered by the Honourable Mr. Justice Surya Kant and the Honourable Mr. Justice Ujjal Bhuyan, aimed to ensure equitable compensation for landowners whose properties were acquired for the development of the Chaudhary Devi Lal Industrial Model Township.

Background of the Case:

Acquisition proceedings for approximately 3510 acres of land across several villages, including Fazalwas and Kukrola, commenced with a Notification issued on April 25, 2008, under Section 4 of the Land Acquisition Act, 1894 (1894 Act). The objective was to establish an integrated complex for industrial, commercial, and other public utilities. The District Revenue Officer-cum-Land Acquisition Collector (LAC) initially determined a uniform compensation of INR 30,00,000 per acre for both villages in Awards issued on August 24, 2009.

Dissatisfied, landowners filed Reference Petitions, leading the Reference Court to enhance compensation to INR 62,14,421 per acre for Kukrola on October 19, 2013, and subsequently for Fazalwas on November 15, 2013, citing proximity to NH-8 and the Kundli-Manesar-Palwal (KMP) Expressway, and applying a 30% development cut.

The High Court of Punjab and Haryana, in turn, partially allowed landowners' appeals by adopting a 'belting' method. It awarded differing compensation for lands abutting National Highway-8 (NH-8) up to a depth of 5 acres (inner belt) and sustained the Reference Court's compensation for lands beyond that depth (outer belt). Specifically, the High Court fixed compensation at INR 87,34,885 per acre for Kukrola's inner belt and INR 1,21,00,000 per acre for Fazalwas's inner belt. This disparity became a central point of contention in the appeals before the Supreme Court.

Supreme Court's Analysis and Decision:

The Supreme Court meticulously analyzed the contentions from landowners of both villages and the HSIIDC/State of Haryana. Two primary issues were deliberated: whether the High Court erred in awarding differing compensation amounts for Kukrola and Fazalwas, and whether the quantum of compensation awarded was appropriate.

1. Parity Between Villages: The Court found no justification for the disparity in compensation for lands in the 'inner belt' of Kukrola and Fazalwas. It emphasized that adjacent lands or villages with similar potential and advantages must be compensated equitably, unless substantial distinctions are clearly justified. The LAC and Reference Court had initially assessed the values uniformly, and no cogent evidence was presented to justify the High Court's artificial classification or the lower rate for Kukrola.

The Court stated that relying on an isolated transaction to justify such a disparity is erroneous without further evidence demonstrating genuine differences in market potential. Given that lands farther from the highway (outer belt) were treated uniformly, the disparate treatment of the more homogeneous inner belt lands was particularly problematic. Consequently, the Supreme Court held that the compensation for lands abutting NH-8 up to a depth of 5 acres in Kukrola should be enhanced to INR 1,21,00,000 per acre, bringing it on par with Fazalwas.

2. Application of Belting Method and Quantum of Compensation: The Supreme Court upheld the High Court's adoption of the 'belting method'. This method, which divides land into distinct zones based on proximity to key infrastructure like a National Highway, is recognized as suitable for large-scale acquisitions where development potential varies significantly. The Court noted that tracts of land acquired were sufficiently large, potential for development varied, and documentary evidence showed higher sale rates for lands closer to highways.

For the outer belt (lands beyond 5 acres from NH-8), the Supreme Court affirmed the High Court's maintained rate of INR 62,14,121 per acre. This figure was based on sale exemplar Ex. P-1, with a 10% annual escalation and a 30% development cut. The Court found Ex. P-1 to be the best available evidence, considering it pertained to the largest tract of land on record and extended into the interiors of Kukrola. The 30% development cut, though applied as a "thumb rule" by the High Court, was upheld due to the absence of specific evidence from landowners to support a higher true price for these lands, and considering the sizeable nature of the acquisition.

For the inner belt, the Court agreed with the High Court's reliance on Ex. P-2 (for Fazalwas), which reflected a sale price of INR 1,00,00,000 per acre for land abutting NH-8. The Court emphasized that a development cut was not warranted for the inner belt lands. These lands, due to their superior locational advantage and proximity to major infrastructure, inherently commanded a premium and were largely development-ready, making a development cut an unjustifiable reduction in compensation.

Conclusion:

The Supreme Court dismissed the appeals filed by the landowners of Fazalwas and the State of Haryana/HSIIDC on merits. The judgment ensures that compensation for similarly situated landowners is equitable, reinforces the appropriate application of the belting method, and streamlines the process of determining fair market value in land acquisition cases.

Section 4, LAND ACQUISITION ACT - 1894  

LAND ACQUISITION ACT, 1894