Land Acquisition Compensation: Supreme Court Modifies Specific Performance Decree

The case of Sukhbir vs. Ajit Singh revolves around a dispute concerning the execution of an agreement to sell a piece of land, which was later acquired by the government under the Land Acquisition Act. The Supreme Court was tasked with determining whether the plaintiff, who had sought specific performance of the sale agreement, was entitled to compensation from the land acquisition proceedings.

Background of the Case

On March 9, 2010, an agreement to sell was executed between the appellant, Sukhbir (defendant), and the respondent, Ajit Singh (plaintiff), for a land parcel. The agreed sale consideration was Rs. 32 lakhs, out of which the plaintiff had already paid Rs. 31,50,000. The sale deed was scheduled to be executed on July 8, 2010.

However, the defendant failed to execute the sale deed. The plaintiff served a legal notice on July 13, 2010, asking the defendant to appear before the Sub-Registrar on August 6, 2010, but the defendant refused on August 4, 2010. Consequently, the plaintiff filed a suit for specific performance or, alternatively, sought the refund of Rs. 31,50,000 with 24% interest.

Acquisition of the Land

Before the case could be resolved, the land in question was acquired by the government, and a notification under Section 6 of the Land Acquisition Act was issued on July 6, 2012. The plaintiff amended his plea, asserting his right to the compensation awarded for the land acquisition.

Trial Court Judgment

The Trial Court ruled in favor of the plaintiff, granting a decree for specific performance. The defendant was ordered to:

Execute the sale deed by accepting the remaining Rs. 50,000 as consideration.
Transfer possession of the land to the plaintiff.

The First Appellate Court upheld the decision.

High Court’s Decision

During the second appeal, the defendant argued that the land had already been acquired by the government, making the sale agreement unenforceable. The Punjab and Haryana High Court modified the Trial Court’s decree, holding that:

The plaintiff shall be deemed to have stepped into the shoes of the original landowner.
The plaintiff is entitled to receive the entire compensation awarded under the Land Acquisition Act, including solatium and interest.

Petitioner’s Arguments

The defendant, Sukhbir, challenged the High Court’s ruling, arguing that:

Since the land was acquired by the government, he no longer had any saleable interest in it.
The plaintiff should be entitled only to the refund of Rs. 31,50,000 with reasonable interest.
Under Section 21 of the Specific Relief Act, compensation should be explicitly claimed in the plaint, which was not done.
There was no agreement stating that the plaintiff would receive compensation in case of acquisition.

Respondent’s Arguments

The plaintiff, Ajit Singh, contended that:

He had fully performed his part of the agreement, paying Rs. 31,50,000 out of Rs. 32 lakhs.
The land acquisition was not his fault, and he was willing to execute the sale before acquisition.
As per the Supreme Court’s ruling in Jagdish Singh v. Natthu Singh (1992), the buyer is entitled to compensation in lieu of the land.
The court has the power under Section 21 of the Specific Relief Act to award compensation as an alternative relief.

Supreme Court’s Findings

The Supreme Court, comprising Justices Dr. D.Y. Chandrachud and M.R. Shah, analyzed the case and ruled as follows:

1. Plaintiff’s Right to Compensation

The Court ruled that since the plaintiff had substantially performed his obligations under the contract, he steps into the shoes of the original landowner and is entitled to the compensation awarded under the Land Acquisition Act.

2. Application of Jagdish Singh Precedent

The Court applied the ruling in Jagdish Singh v. Natthu Singh, where it was held that when land is acquired during litigation, the buyer can claim the compensation amount in place of specific performance.

3. Justification for Awarding Compensation

The Court observed:

“The compensation awarded under the Land Acquisition Act may safely be taken to be the measure of damages, subject to deductions for expenses incurred by the original landowner.”

The Court ruled that the plaintiff was entitled to the entire compensation minus a deduction of Rs. 3,00,000 (Rs. 2,50,000 for litigation costs and Rs. 50,000 for the balance consideration).

4. Section 21 of the Specific Relief Act

The Court held that even though the plaintiff did not explicitly claim compensation in his plaint, the courts have the power to modify the decree and award an alternative remedy in the interest of justice.

Judgment and Conclusion

The Supreme Court modified the High Court’s ruling:

The plaintiff is entitled to receive the full compensation awarded under the Land Acquisition Act, including solatium and interest.
The defendant is allowed to deduct Rs. 3,00,000 from the compensation.

The Court concluded:

“Ends of justice will be served if the plaintiff is awarded the entire amount of compensation determined under the Land Acquisition Act, together with interest and solatium, less Rs. 3,00,000.”

This judgment reinforces the principle that when land subject to an agreement to sell is acquired, the buyer is entitled to the compensation awarded in the acquisition proceedings.

Petitioner Name: Sukhbir.
Respondent Name: Ajit Singh.
Judgment By: Justice D.Y. Chandrachud, Justice M.R. Shah.
Place Of Incident: Haryana.
Judgment Date: 30-04-2021.

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