Supreme Court Reduces Land Compensation from ₹1.35 Crore to ₹44.64 Lakh per Acre in Telangana ORR Case

The Supreme Court of India recently delivered a landmark judgment in the case of Barla Ram Reddy vs. The State of Telangana, significantly reducing the compensation amount awarded for land acquired for Hyderabad’s Outer Ring Road (ORR) project. The judgment, dated April 22, 2025, was delivered by a bench comprising Justice Surya Kant and Justice Ujjal Bhuyan, setting aside the Telangana High Court’s order that had enhanced compensation to ₹1.35 crore per acre and restoring it to ₹44.64 lakh per acre.

The dispute centered around the assessment of market value for lands acquired in Narsingi and Poppalguda villages of Ranga Reddy District under the Land Acquisition Act, 1894. The High Court had substantially enhanced the compensation based on auction rates of the ‘Golden Mile’ project, which the Supreme Court found to be erroneous.

The Supreme Court observed: “Considering the above stated factors and the settled position of law, the auction sale of plots in a developed area on a date after the Section 4 notification ought to be disregarded at the outset. As such, we hold that the High Court erred in founding its determination on the Golden Mile project rates.” The Court emphasized that post-acquisition sale instances cannot reliably indicate pre-acquisition market value.

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The landowners, represented by Senior Counsel Mr. Neeraj Kishan Kaul and Mr. E. Ajay Reddy, had argued for higher compensation, contending that the Golden Mile auction represented the true market value. They submitted that “the entire area of Narsingi, Poppalguda, and Kokapet villages was rapidly developing” and that the acquired lands had high potentiality.

The State of Telangana and Hyderabad Metropolitan Development Authority (HMDA), represented by ASG Ms. Aishwarya Bhati, successfully argued that “the auction sale of plots in the Golden Mile project could not be relied upon to compute the market value of the acquired lands” as the ORR itself was the primary factor enhancing the project’s value.

The Supreme Court meticulously analyzed three categories of sale instances presented before it. Ultimately, it relied on pre-notification sale deeds from 2004 (Ex.A1 and Ex.A2) showing rates of ₹31 lakh per acre, applying a 20% annual escalation to arrive at ₹44.64 lakh per acre as the fair market value at the time of acquisition.

The Court also corrected the High Court’s error in calculating interest, ruling: “Interest ought to be granted at the rate of 9% per annum for the first year after taking of possession, and 15% per annum thereafter, till deposit of the amount, in accordance with Section 34 of the 1894 Act.”

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This judgment provides important clarity on principles of land valuation, particularly regarding:

1. The unreliability of post-notification sale instances
2. Limitations of using auction prices for compensation calculation
3. Proper application of time-based escalation rates
4. Correct computation of statutory benefits

The decision balances landowners’ rights with fiscal responsibility, ensuring fair compensation while preventing excessive burden on public funds.

Petitioner Name: Barla Ram Reddy and others.
Respondent Name: The State of Telangana and others.
Judgment By: Justice Surya Kant, Justice Ujjal Bhuyan.
Place Of Incident: Narsingi and Poppalguda villages, Ranga Reddy District, Telangana.
Judgment Date: 21-04-2025.
Result: partially allowed.

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