Supreme Court Enhances Land Compensation for Haryana Farmers in Industrial Development Project

The Supreme Court of India recently delivered a significant judgment in Besco Limited v. State of Haryana & Others, addressing compensation for landowners affected by the acquisition of land for an integrated industrial complex in Rewari, Haryana. The case revolved around the fair determination of market value for the acquired land and whether the compensation provided by the Land Acquisition Officer (LAO) and later by the High Court was just and reasonable.

Background of the Case

The dispute arose when the Haryana government issued a Notification on May 13, 2010, under Section 4(1) of the Land Acquisition Act, 1894, acquiring land for the development of an industrial estate managed by the Haryana State Industrial Development Corporation (HSIDC). The land was located in villages Malpura, Kapriwas, and Sidhrawali. The acquisition covered a total area of 1222 Kanals and 6 Marlas and was intended to support large-scale industrial growth.

The Land Acquisition Officer (LAO), in his award dated May 10, 2013, fixed compensation based on rates determined by the Divisional Level Land Rates Fixation Committee. The rates were as follows:

Chahi/GM Land: ₹40,00,000 per acre
Approach Road (up to 2½ acres): ₹48,00,000 per acre
NH-8 (up to 2½ acres depth): ₹50,00,000 per acre

Dissatisfied with the compensation, the landowners approached the Reference Court, which on November 21, 2018, enhanced the market value to ₹67,12,050 per acre. This increase was based on exemplar sale transactions from nearby lands.

Still aggrieved, the landowners challenged the award before the Punjab and Haryana High Court, which further revised the compensation to ₹1,21,33,320 per acre. The High Court relied on sale exemplars from the area to arrive at this valuation.

The State of Haryana and HSIDC, contesting the High Court’s valuation, appealed to the Supreme Court, seeking a downward revision of the compensation.

Key Legal Issues

Whether the compensation awarded by the High Court accurately reflected the market value of the acquired land.
What should be the appropriate deduction percentage for development expenses?
Whether the High Court correctly applied the principles for assessing compensation under the Land Acquisition Act, 1894.

Petitioner’s (Landowners) Arguments

The High Court correctly enhanced compensation considering the rapid industrial growth and high demand for land in the region.
The land was located in a prime industrial area along National Highway 8 (Delhi-Jaipur Highway), making it highly valuable.
The Reference Court’s 60% deduction for development purposes was excessive and unjustified.
Several large industrial units were operating nearby, indicating that the land had high commercial potential.

Respondent’s (State of Haryana & HSIDC) Arguments

The High Court’s enhancement was excessive and did not consider the actual market conditions.
The High Court failed to apply a proper deduction for development expenses, which typically ranges from 20% to 75%.
Industrial development in the area had just begun, and the land could not be treated as fully developed.
The original valuation by the LAO was based on expert recommendations and should not have been altered.

Supreme Court’s Judgment

The Supreme Court upheld the landowners’ right to higher compensation but found flaws in the High Court’s methodology. The key observations were:

Market Value Assessment: The Court found that the High Court had correctly identified sale exemplars but failed to apply a proper deduction factor.
Development Deduction: While the High Court rejected a 60% deduction as excessive, it did not specify an alternative deduction rate. The Supreme Court, considering the level of infrastructure development, fixed the appropriate deduction at 33%.
Comparable Sales: The Court relied on exemplar sales, particularly a transaction in February 2010, where land in the same village was sold at ₹2,23,72,463 per acre. Adjusting for development costs, the Court determined a final compensation of ₹1,49,14,975 per acre.

Directions Issued

The Supreme Court revised the compensation to ₹1,49,14,975 per acre.
The State of Haryana and HSIDC were directed to pay compensation with statutory benefits, including interest.
The ruling applied uniformly to all affected landowners.

Impact of the Judgment

This ruling has major implications for land acquisition cases in India:

Higher Compensation for Landowners: The judgment ensures that landowners are adequately compensated in large-scale acquisitions.
Balanced Approach in Development Deductions: The Court applied a fair deduction rate, setting a precedent for future compensation assessments.
Guidance for Future Land Acquisitions: The ruling serves as a benchmark for determining market value in industrial zones.

Conclusion

The Supreme Court’s decision in Besco Limited v. State of Haryana & Others is a landmark ruling in land acquisition jurisprudence. By ensuring that landowners receive fair compensation while accounting for development costs, the judgment upholds the principles of equity and justice. This case sets an important precedent for future land acquisition cases, particularly in rapidly industrializing areas.

Petitioner Name: Besco Limited.
Respondent Name: State of Haryana & Others.
Judgment By: Justice B.R. Gavai, Justice S.V.N. Bhatti.
Place Of Incident: Rewari, Haryana.
Judgment Date: 23-08-2023.

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