Sikkim HC declares Rs 565 crore defence land award unenforceable, sends rate dispute back to Government
Chief Justice A. Muhamed Mustaque held that the Union cannot seek certiorari against an award passed by its own Collector, but that a composite award combining the Section 23 valuation with Section 30 solatium forecloses the Section 36 revisional power and cannot be enforced. The Rs 150 per sq ft rate for 102 hectares in Lachen, Lachung and Chungthang must now be re-examined within six weeks.
The Ministry of Defence went to the Sikkim High Court to undo a land acquisition award of ₹564,96,79,834 that its own Collector had passed for 102 hectares of high-altitude land in Mangan district. On 29 October 2026 Chief Justice A. Muhamed Mustaque, sitting alone, gave the Union something narrower than it asked for but still decisive. A requiring body cannot have its own Collector’s award quashed by certiorari, the court held, because “one cannot challenge its own order or Award”. But the Collector had rolled the market value determination under Section 23 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 together with solatium under Section 30 into a single composite award, and in doing so shut out the Government’s power under Section 36 to examine the legality of the rate before the final award. That award, the court declared, is unenforceable as a final award. It survives only as a Section 23 valuation, and the Government must now hear all sides and decide on the Rs 150 per sq ft rate within six weeks.
A valley with no land market, and a rate that more than doubled in six months
The Indian Army proposed to acquire 102.1189 hectares across the revenue blocks of Lachen, Lachung and Chungthang, in the high Himalaya of Mangan district, to build Key Location Places near the international border. The area is a restricted and protected zone. The judgment records that these places would be commercially valuable for tourism but for the restrictions on land use, which have meant no sale transactions, so the ordinary method of fixing market value from sale deeds under Section 26(1) of the 2013 Act could not be applied. The Collector instead appeared to rely on Section 26(3), which permits an award based on the minimum price per unit fixed by the State Government.
The acquisition process began in 2016. On 19 March 2018 the Collector of Mangan district told the Defence Estate Officer that the tentative market value was ₹240,22,36,915, worked out at ₹58.98 per sq ft. On that basis the Army put up its proposal, obtained the President’s sanction, and the preliminary notification under Section 11(1) was published on 17 August 2021. By then the Collector had fixed the market value at ₹65 per sq ft, and the Union deposited ₹230,13,06,465. The judgment notes that the Union apparently had no objection to Rs 65.
On 2 August 2022 the Collector informed the Defence Estate Officer that he proposed to re-examine fair compensation. The trigger was a notification of the Energy and Power Department of the Government of Sikkim dated 4 December 2017, which had fixed a rate of ₹300 per sq ft. The landowners had meanwhile petitioned the Governor and the Chief Minister for a fair price. Taking account of those representations and the 2017 notification, the Collector negotiated with the landowners and settled on ₹150 per sq ft, which the State Government approved. The Collector then asked the Defence Estate Officer to deposit a further ₹3,34,83,73,369.
The court recorded that the State Government was actively involved. The Commissioner-cum-Secretary of the Land Revenue and Disaster Management Department fixed Rs 150 per sq ft in a note dated 25 May 2022, which the Minister concerned and the Chief Minister approved, but nothing was produced as a formal order of the Government.
Defence Estates kept objecting; the Collector answered with Article 371F
The Defence Estate Officer wrote to the Collector on 18 August 2022 asking him to reconsider and to furnish the circle rate or three years of sale and purchase data for the three blocks. He repeated the request on 7 September, 6 October and 2 November 2022. On 15 September 2022 the Principal Director, Defence Estates, Eastern Command, Kolkata, set out detailed objections. Government of Sikkim notification No. 260 of 7 May 2018 had fixed block rates for Chungthang Circle between Rs 51 and Rs 61 per sq ft. On those rates the District Magistrate had conveyed a land value of Rs 235,97,56,470, which the Defence Estate Officer at Siliguri had paid to the State. The revision to Rs 65 took the acquisition cost to Rs 258,04,40,102, and on the Principal Director’s arithmetic the estimated value payable to the landowners, reckoned on the total cost of acquisition, was about Rs 230 per sq ft, so the comparison with Power Grid’s Rs 300 was misplaced. At Rs 150, the total of Rs 600,46,50,925 for 102.7859 hectares would cost the department Rs 542.92 per sq ft, roughly eight times the notified rates.
The same letter said the State’s rate had no supporting analysis, that under the 2013 Act rates are for the Collector to fix after following Section 26 and fixation by the Government itself was arbitrary, that Power Grid is a commercial body while the defence department serves the nation, that the excess burden was about Rs 342 crore over the Collector’s own Rs 65 figure, and that since the land had been on hire to the defence department for the past 50 years the cost of immovable property should be excluded.
The Collector replied on 1 December 2022 with four justifications. The region is inhabited by Scheduled Tribes and protected under Notification No. 3069/O.S. of 24 March 1958, an old law read with Article 371F of the Constitution, which bars outsiders, including residents of other Sikkim districts, from acquiring land in North Sikkim, so sale transactions are very limited. Private land is scarce because most land is forest and much of the rest has already gone to projects such as PGCIL and Bharatmala, so landowners who are not properly compensated will be unable to buy land elsewhere in the State where prices are higher. The lands are ancestral, with socio-cultural and emotional ties. And the region sits close to the international border and is strategically important. On that basis, the letter said, the Government approved Rs 150 per sq ft.
On 17 January 2023 the Principal Director wrote to the Chief Secretary that the rate had been revised twice in the same year, from Rs 65 by letter of 7 February 2022 to Rs 150 within six months, escalating the cost to about Rs 600 crore, and that the Collector’s justification was not in consonance with Section 26. The next day, 18 January 2023, the Collector passed the award at Rs 150 per sq ft. The court found that the award did not advert to any of the objections raised in the defence correspondence.
Can the Union quash its own agent?
The Union of India, the Director General of Defence Estates, the Principal Director at Eastern Command, the Defence Estate Officer of Siliguri Circle and the Commandant of HQ 112 Mountain Brigade filed WP(C) No. 28 of 2023 under Articles 226 and 227, challenging the procedure the Collector adopted for revising the land cost. Mr S.D. Sanjay, Senior Advocate, appearing through video conference with Ms Sangita Pradhan, Deputy Solicitor General of India, Ms Sittal Balmiki and Mr Amit Kumar Sharma, argued for the Union. Mr Zangpo Sherpa, Additional Advocate General, with Mr S.K. Chettri, Government Advocate, Mr Sujan Sunwar, Assistant Government Advocate, and Mr Mohan Sharma appeared for the State, the Land Revenue Secretary, the District Collector and the Sub-Divisional Magistrate of Chungthang. Mr Sudesh Joshi, Senior Advocate, with Mr Sourav Singh and Mr Adarsh Gurung appeared for respondents 5 to 209, the landholders of Lachen, Lachung and Chungthang. The judgment records elaborate hearings on the issues but does not set out the rival submissions separately; it reasons instead from the record of correspondence and the statutory scheme.
The Chief Justice began with the status of the Collector. The officer who passed the award is specially designated by the appropriate Government, in this case the Union, to perform the Collector’s functions under the 2013 Act. He is the Government’s agent. An award is an offer of compensation to the interested persons, who may accept it or seek a reference under Section 64. The Collector is therefore not distinct from the appropriate Government, even though the requiring body may be, and sometimes the requiring body is the Government itself acquiring for its own use. The paramount question, as the court put it, was whether an award passed by the Collector as the Government’s agent can be questioned by that Government. No land acquisition enactment provides for such a challenge. Certiorari could not issue, because the petitioner would be asking the court to quash its own award. A declaratory writ to prevent enforcement might lie, and the delicate question was when.
The court then drew a line between two relationships inside the Act. Between the appropriate Government and the Collector, the Collector is a representative, but not one under plenary control: he has independent statutory powers, especially in determining compensation under Section 26 and applying the parameters in Sections 28 and 29. That inquiry is administrative in character, as the Supreme Court held in Surendra Kumar Bhatia v. Kanhaiya Lal, (2009) 12 SCC 184. Section 95(2) lets the local authority or requiring body adduce evidence to help the Collector, but its proviso denies them any right to demand a Section 64 reference. The Collector must consider the objections and material of the requiring body and the Government, though because the inquiry is administrative he need not record his reasons in the award itself. Between the Collector and the claimants, by contrast, the inquiry into objections is quasi-judicial. The Collector may change his mind on compensation after hearing them, but only by following a quasi-judicial procedure and passing a reasoned order accepting or rejecting the objections.
The 2013 Act splits the award in two, and Section 36 lives in the gap
The decisive step was a comparison with the Land Acquisition Act, 1894. Under the old Act the award under Section 11 was the final determination of compensation. Section 15A let the appropriate Government call for the Collector’s record and issue directions on legality or propriety, but only before the award; once the award was made, the Government could not ordinarily reopen it. The 2013 Act works differently. Section 23 is the first stage, at which the Collector determines the market value as on the date of the preliminary notification and the other relevant factors. The court treated this, for present purposes, as a preliminary award on the total value of the land, while acknowledging that the statute does not use that label. Section 30 is the second stage: the final award, which must provide solatium at 100 per cent of the compensation and, under Section 30(2), individual awards for each person entitled, in line with the First Schedule. Valuation and final award are distinct stages, each of which must comply with the Act.
That distinction matters because of Section 36, which the court quoted in full. The appropriate Government may, at any time before the award is made by the Collector under Section 30, call for the record of any proceedings to satisfy itself as to the legality or propriety of any finding or order or the regularity of the proceedings, and may pass such order or direction as it thinks fit, subject to a hearing for anyone prejudiced. Section 36, the court said, is the analogue of Section 15A of the 1894 Act. The Government’s power under it extends to any finding that results in a compensation determination under Section 23. Although Section 36 names no applicant, the court held that a party can invoke it as well as the Government acting suo motu, relying on Pune Municipal Corporation v. State of Maharashtra, (2007) 5 SCC 211, where the Supreme Court held that a suo motu revisional power under Section 34 of the Urban Land (Ceiling and Regulation) Act, 1976 could also be set in motion by an aggrieved party.
It followed, in the court’s view, that after determining compensation under Section 23 the Collector must wait a reasonable period so that Section 36 can be invoked. Otherwise Section 36 becomes otiose. A composite award forecloses the Government’s remedy, because the statute contemplates two phases, one under Section 23 and one under Section 30. The law does not expressly prohibit a composite award, the Chief Justice accepted, but reading Section 36 he found it inappropriate for the Collector to take that course. The Government’s inquiry, when it comes, must stay within the well-defined contours of revisional power and focus solely on the legality or propriety of the rate-fixation finding: whether the Collector followed the procedural framework in determining the rate.
Six letters, no Section 36 inquiry, and a glaring error
Applying that scheme, the court noted that the Ministry of Defence had written on 15 September 2022, 30 November 2022, 17 January 2023 and 18 January 2023, before the Section 23 determination, and again on 2 March 2023 and 4 May 2023, asking for reconsideration of the rate and questioning the legality and propriety of the procedure. In that situation the Government was expected to invoke Section 36, hear all concerned and decide whether the Collector’s rate conformed to the Act. It did not address these issues. The fact that the Collector had followed a rate the Government itself fixed after the Section 11 notification did not tie the Government’s hands, because the Section 36 inquiry is quasi-judicial and distinct from the administrative act of fixing a rate. The earlier rate fixation, being administrative, is no bar to reconsideration.
The award, insofar as it combined the Section 23 determination with Section 30 solatium, was therefore “legally unsustainable and unenforceable”, because it would foreclose the Union’s right to question the valuation. The Government was bound to examine the legality and propriety of the Collector’s determination.
On maintainability, the court held the petition lay not for certiorari but for a declaration that the award had been made in a manner that defeats the statutory scheme. It drew on Agra Development Authority v. Special Land Acquisition Officer, (2001) 2 SCC 646, where the Supreme Court, dealing with the local authority’s right to adduce evidence under Section 50 of the 1894 Act, the counterpart of Section 95(2) of the 2013 Act, held a writ petition maintainable to a limited extent for procedural violations. Where a Collector acts mala fide or in clear violation of statute, the court added, it cannot be said categorically that a requiring authority’s writ is barred. But the scope is limited to a declaratory writ that the award is unenforceable for statutory violation or mala fides. Article 226 cannot be invoked routinely by the requiring authority or the appropriate Government to attack a Collector’s award, since the Act reserves the right of reference to persons interested other than the local or requiring authority, as the proviso to Section 95(2) makes clear.
Here there was, in the court’s words, a “glaring error in passing the composite award”. The award could be treated only as a Section 23 determination of market value and nothing more. The Government must examine the legality and propriety of the rate after hearing all parties and pass a reasoned order on the objections. Because the date of the Section 11 preliminary notification is the relevant date for market value, the valuation must be assessed as on that date and in accordance with the statutory principles.
One point of drafting is worth recording for readers following the matter. The court identified the appropriate Government in this acquisition as the Union Government, yet the correspondence it relied on was addressed to the State and its Chief Secretary, and the operative directions speak simply of “the Government”. The judgment does not spell out which authority will conduct the Section 36 exercise.
Order
The court disposed of WP(C) No. 28 of 2023 with four directions. First, the Collector’s award shall for present purposes be treated only as a determination under Section 23 of the 2013 Act and not as a final award. Second, the Government shall consider the objections of the Union Government and the Defence Estate Office on the legality and propriety of the rate fixed for compensation under Section 23. Third, that exercise shall be completed within six weeks, and all concerned, including the landholders, shall be heard before the Government decides. Fourth, the Collector shall then pass the final award in accordance with the Government’s decision under Section 36 and the applicable provisions of the Act, including Sections 23 and 30.
I.A. No. 4 of 2026, filed on 26 May 2026 by the Defence Estate Officer to place the requisition on record, and the petitioners’ additional affidavit of 16 October 2026 placing on record a further award of the Collector dated 11 March 2025, were taken on record. All pending interlocutory applications were disposed of. The judgment was reserved on 15 October 2026, pronounced on 29 October 2026 and approved for reporting.