Landowners entitled to current market value of acquired land when compensation is delayed: Supreme Court

The Supreme Court on Thursday ruled that landowners are entitled to the current market value of acquired land when compensation payable by the government for acquisition of land is delayed [Bernanard Farncis Joseph Vaz and Others v. Government of Karnataka and Others]..The Court passed the ruling on a plea filed by various persons whose lands had been acquired by the State authorities in 2003 for the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP) under the Karnataka Industrial Areas Development Act. Despite the acquisition made 18-years ago, they had not received any compensation.Thus, it was contended they are entitled to a compensation amount based on the current market value of the land. .A Bench of Justices BR Gavai and KV Viswanathan said that if the compensation is paid as per the market value of the land in 2003, it will be a travesty of justice. Hence, it directed the land acquisition authorities in Karnataka to shift the dates for determination of market value of the lands in question."If the compensation to be awarded at the market value as of the year 2003 is permitted, it would amount to permitting a travesty of justice and making the constitutional provisions under Article 300A (right to property) a mockery," the Court said in its judgment. The Court also observed that in a welfare state, the right to property is a human right besides being a constitutional right under Article 300A..Right to Property ceased to be a Fundamental Right by the Constitution (Forty-Fourth Amendment) Act, 1978, however, it continues to be a human right in a welfare State, and a constitutional right under Article 300-A of the Constitution.Supreme Court.In 2005, the State acquired the lands in question from the private owners (appellants) without providing any compensation.Subsequently, in 2009-10, the landowners filed a petition before the Karnataka High Court seeking to quash the acquisition notifications issued by the State. Alternatively, the landowners requested the Court to order the relevant authorities to allocate residential plots of equivalent size.However, in June 2011, a Division Bench of the High Court dismissed the plea filed by the landowners and ruled that the acquisition notifications could not be quashed at such a late stage and that there cannot be any direction for allotment of alternative sites to the landowners.The landowners then filed a representation before the State government and other authorities seeking a rehabilitation scheme as mandatorily required under the agreement based on which the land had been acquired. The landowners also sought allotment of alternative sites along with benefits under the scheme at the earliest.However, upon the non-consideration of their representation, they moved the High Court. The High Court in March 2017 disposed of the plea filed by the landowners and directed the State and other authorities to consider the representation made by the landowners and expeditiously pass appropriate orders.Upon non-compliance with the High Court's directions, the landowners filed a contempt of court plea against the State authorities. Meanwhile, in April 2019, a Special Land Acquisition Officer (SLAO) passed an award for payment of compensation in respect of lands belonging to the landowners and decided to formulate the compensation amount by shifting the date of the State government's notification from 2003 to 2009. The same was decided by the SLAO based on the advice by the State's Advocate General. However, the State authorities challenged the April 2019 award. They argued that the delay in the acquisition process, which was not their fault, resulted in significantly higher compensation payments. They contended that compensation should be based on the market value of the land as it was on the date of the preliminary notification which was issued with regard to acquiring the lands and that this date could not be retroactively altered.The landowners, on the other hand, contented that the compensation should be determined as per the current market value of their acquired lands. However, in April 2022, a single-judge of the Karnataka High Court quashed the award passed by the SLAO and directed the concerned authorities to pass fresh awards after providing sufficient and reasonable hearing to the parties, within three months. The landowners then challenged the decision of the single-judge by filing a plea before the Division Bench of the High Court which was also dismissed.The landowners then moved the Supreme Court. .After considering the submissions before it, the Supreme Court noted that the landowners have been deprived of their legitimate dues for almost 22 years. Thus, it observed that it is utmost important that the determination of the award and disbursal of compensation in case of acquisition of land should be made with promptitude. It also noted that the value of money in 2003 is not the same as it is in 2025 since the purchasing power of money has declined since then due to inflation. "It can also not be controverted that money is what money buys. The value of money is based on the idea that money can be invested to earn a return, and that the purchasing power of money decreases over time due to inflation. What the appellants herein could have bought with the compensation in 2003 cannot do in 2025.".The Court thus, proceeded to direct the SLAO to determine the compensation to be awarded to the landowners based on the market value of their acquired lands as on April 22, 2019."We, therefore, in exercise of power of this Court under Article 142 of the Constitution of India, find it appropriate in the interest of justice that the SLAO be directed to determine the compensation to be awarded to the appellants herein on the basis of the market value prevailing as on 22nd April 2019. The appellants shall also be entitled to all the statutory benefits as are available to them under the 1894 LA Act," the Court said..Advocate R Chandrachud appeared for the landowners. Senior Advocate Atmaram NS Nadkarni represented Nandi Infrastructure Corridor and Nadni Economic Corridor Limited. Additional Advocate General Avishkar Singhvi appeared for the State of Karnataka.Advocate Purushottam Sharma Tripathi for other State respondents. .[Read Judgment]