Supreme Court scraps radial land pricing, restores Rs 5 lakh an acre across six Fazilka villages

Justices Dipankar Datta and Sheel Nagu set aside the High Court's distance-based rates and its severance cap, restoring uniform compensation in 47 appeals over the Aspal Extension Drain.

Land taken for an 18.42-kilometre drain in Fazilka cannot be priced on a sliding scale that falls as the village moves away from a notional centre, the Supreme Court has held, restoring a uniform rate of Rs 5,00,000 per acre for six villages whose land was acquired under a single notification. Deciding 47 civil appeals, Justices Dipankar Datta and Sheel Nagu set aside two parts of a 2019 Punjab and Haryana High Court order — its graded market value and its decision to compute severance charges on the narrow strip acquired rather than on the holdings left behind — while affirming three others on trees, tubewells and statutory solatium. The judgment was authored by Justice Sheel Nagu.

A drain 264 feet wide, and the land it cut in two

The acquisition was for the Aspal Extension Drain, a ditch canal 18.42 kilometres long and between 264 and 340 feet wide, running through the villages of Karni Khera, Odian, Awa, Kotha, Alamshah and Salem Shah in Fazilka district, Punjab. Notifications under Section 4 of the Land Acquisition Act, 1894 issued on 14 and 24 November 2000, followed by a declaration under Section 6 on 2 March 2001.

The Land Acquisition Collector announced the award on 6 August 2001. Irrigated land across all six villages was valued at Rs 2,25,000 per acre, on the recommendation of a committee constituted by the Punjab Irrigation Department by a letter of 17 July 2001. Nothing was awarded for severance. That became the central grievance: a narrow strip taken lengthwise through a holding leaves the rest bifurcated, and the landowners said the fragments were unusable.

The Reference Courts, deciding through 2007 and January 2008, enhanced the rates — to Rs 5,00,000 per acre for Karni Khera, Odian and Alamshah, with severance at 50 per cent — while Awa and Kotha were awarded lower figures with severance at 10 per cent, and Salem Shah was left at the Collector's rate.

The areas were not large: 50.21 acres in Karni Khera, 51.01 in Odian, 33.14 in Awa, 15.76 in Kotha, 31.88 in Alamshah and 46.26 in Salem Shah. The figures for a single head, however, moved a long way at each stage. The lead claimants in Karni Khera, Surinder Ahuja and Vikramaditya, were allowed Rs 1,01,139.50 each by the Collector for damage to fruit-bearing trees; the Reference Court raised that to Rs 9,00,000 for 946 trees; the High Court brought it down to Rs 5,38,300 for the 280 trees pleaded.

On 29 March 2019 a Single Bench of the High Court, hearing 195 appeals and five cross-objections, recast the whole exercise. It fixed market value on a radial model, stepping the rate down by Rs 20,000 per acre for each village as it moved away from the centre, producing rates between Rs 2,99,000 and Rs 3,39,000 per acre. It set severance at a flat 40 per cent of the value of the acquired land, standardised tubewell compensation at Rs 50,000, and confined solatium to market value alone. Forty-seven of those matters reached the Supreme Court under Article 136, argued by Mr Ajay Tewari for the landowners and Mr Sanjay Hedge for the State.

Why distance from a centre could not fix the price

The Court found the radial model legally unsustainable. The High Court had set aside transaction-based local evidence in favour of an abstract mathematical reduction. Before the Reference Court, a registration clerk from the Fazilka tehsil office had proved the Deputy Commissioner's registration rates, which listed Karni Khera among the special villages and recorded that it fell within five kilometres of the municipal area of Fazilka, attracting stamp duty at the urban rate of 9 per cent.

Applying Krishan Kumar v. State of Haryana, the Court held that lands with similar locational and developmental potential must be compensated equitably unless clear, objective distinctions justify otherwise, and that boundaries drawn for administrative convenience cannot displace that principle. A mechanical fragmentation of one contiguous tract acquired under a single notification created exactly the arbitrary differentiation that rule forbids.

The model also produced results that contradicted its own logic. Village Sabuana, ten kilometres from the border, was given a depressed rate of Rs 2,79,000 per acre, while Village Alam Shah, directly on the border at 1.5 kilometres, was awarded Rs 3,19,000. Some of the acquired land was not interior agricultural land at all but highway-facing orchards. The High Court's reliance on General Manager, ONGC Ltd. v. Rameshbhai Jivanbhai Patel and Manoj Kumar v. State of Haryana was held to be misplaced. The uniform rate of Rs 5,00,000 per acre was restored across the villages in appeal, grounded in project-wide contiguity, suburban potential and a 1996 benchmark on the record.

Severance is measured on the land left behind

On severance the Court identified what it called a fundamental legal error. Section 23(1) Thirdly of the Act of 1894 requires compensation for the damage sustained by reason of severing the acquired land from the owner's other land. The High Court had shifted the baseline from the unacquired remainder to the acquired portion.

The lead claimant's holding illustrated the effect. In Karni Khera the State acquired 79 kanals and 2 marlas for the drain, and that narrow strip bifurcated the remaining 249 kanals and 17 marlas. Calculating 40 per cent on the strip rather than on the remainder left the owner uncompensated for the permanent loss of utility across the bulk of a fragmented estate. That, the Court held, is contrary to Tribeni Devi v. Collector of Ranchi, where a large portion left behind after a partial acquisition was recognised to suffer a severe diminution in value warranting separate compensation, and to Walchandnagar Industries Ltd. v. State of Maharashtra, on liability for the loss of utility of remaining infrastructure. Tehal Singh v. State of Punjab had been applied mechanically, without regard to the drain's physical barrier and the inaccessibility of the severed land. The Reference Courts' award of 50 per cent severance, calculated on the market value of the unacquired remainder, was restored across all the villages in challenge.

Where the landowners lost

Three findings went the State's way. On fruit-bearing trees, the Court upheld the High Court's restriction of compensation to the 280 trees pleaded — 246 Malta orange and 34 guava — at Rs 1,922.50 per tree on the Nijjar formula, totalling Rs 5,38,300. In a reference under Section 18, the reference petition is the plaint and defines the dispute. The petition instituted on 20 September 2002 pleaded damage to 280 standing trees. The claimants later led oral evidence that a further 482 Malta trees on unacquired land dried up in 2005 when a drip irrigation system was destroyed, but never amended the petition. Relying on Bachhaj Nahar v. Nilima Mandal, the Court held that evidence cannot travel beyond pleadings, and that the Reference Court's lump sum of Rs 9,00,000 for 946 trees was a grave error.

On statutory benefits, the Court affirmed the denial of solatium under Section 23(2) and the additional amount under Section 23(1A) on auxiliary heads. Following State of Punjab v. Amarjit Singh, both are payable only on the market value determined under the first clause of Section 23(1). Standing trees fall under the second factor, severance under the third, and tubewells and kothas under the fourth or fifth, so all are excluded. The Reference Court had relied on a High Court decision in Improvement Trust, Jind v. Narinder Kumar, which could not survive the later ruling of the Supreme Court.

On tubewells, the flat figure of Rs 50,000 was affirmed. The Reference Court had raised it to Rs 1,00,000 on private valuation reports whose author was never put in the witness box. Citing S. Sangeetha v. P. Ponni and LIC v. Ram Pal Singh Bisen, the Court reiterated that marking a document as an exhibit does not prove its contents. It also noted that motors, diesel engines and surface pumps are movable, survive the acquisition and can be shifted and re-used on the remaining holding.

The reach of Article 136

Because all 47 appeals invoked Article 136, the Court set out the limits of that jurisdiction before concluding. Reading Pritam Singh v. State, Dhakeshwari Cotton Mills Ltd. v. Commissioner of Income Tax, Delhi Judicial Services Association v. State of Gujarat and Kunhayammed v. State of Kerala together, it recorded that the remedy cannot be claimed as of right, is highly discretionary, and exists to eliminate miscarriage of justice rather than to do justice at large. The window for interference is extremely limited; in these facts, the Court said, it had attempted to remove injustice where it was found.

Order

All 47 civil appeals were disposed of on five terms. The High Court's radial step-down model was set aside and a uniform market value of Rs 5,00,000 per acre restored. Tree compensation stays restricted to the 280 pleaded trees at Rs 5,38,300. The cap on severance was set aside and the Reference Courts' 50 per cent on the market value of the unacquired remainder restored. The denial of Section 23(1A) and Section 23(2) benefits on auxiliary assets was upheld, with solatium at 30 per cent payable on market value alone. The flat Rs 50,000 per tubewell was affirmed across all six villages.

The official respondents must work out and pay the additional compensation within six months of communication of the order. Where re-working leaves an amount recoverable from a landowner, written intimation must be given and, after a sufficient opportunity to all concerned, recovery made within nine months. There was no order as to costs.