Supreme Court Rules Courts Must Award Just Compensation Beyond Claimed Amounts in Land Acquisition Cases

Introduction — Supreme Court Reaffirms Duty to Ensure “Just Compensation”

The Supreme Court of India has reiterated that courts adjudicating land acquisition disputes must not restrict compensation merely to the amount claimed by landowners, if evidence and statutory parameters justify a higher market value.

A bench of Justices Prashant Kumar Mishra and Vipul M. Pancholi held that land acquisition proceedings are not strictly adversarial in nature and that courts have a statutory and equitable duty to determine and award compensation in accordance with law, rather than limiting relief to what the claimant has pleaded.

The Court clarified that once the correct market value of land is determined based on statutory factors, restricting compensation to a lower, claimed amount would defeat the mandate of the Land Acquisition Act.

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Case Background — Karnataka High Court Enhanced Value But Restricted Payable Compensation

The dispute arose from land acquired for the Hirehalla Left Bank Canal Project in Karnataka.

Key compensation stages:

• Land Acquisition Officer fixed market value: ₹1.37 lakh per acre
• Reference Court enhanced value: ₹5.00 lakh per acre
• Karnataka High Court determined market value: ₹16.94 lakh per acre

However, the High Court restricted actual compensation to ₹15.00 lakh per acre on the ground that claimants had sought compensation up to that amount only.

The landowners challenged this restriction before the Supreme Court.

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Supreme Court’s Finding — Courts Must Award Lawful Compensation, Not Claim-Bound Compensation

The Supreme Court held that once the High Court determined ₹16.94 lakh per acre as the correct market value, it could not subsequently confine compensation to ₹15.00 lakh merely because the claimants had restricted their prayer to that amount.

The Court observed that:

“It is the duty of the Court to assess the compensation for which the landholder is entitled and not the claims made by the landholders.”

The Court emphasised that compensation determination under land acquisition law:

• is guided by statutory principles
• is not controlled by pleadings alone
• must reflect market value and fairness

Restricting compensation based on the amount claimed was termed a serious legal error.

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Statutory Basis — Duty to Award Compensation Under the Land Acquisition Act

The Court relied on statutory provisions that impose a positive obligation on authorities to determine just compensation.

Relevant provision discussed:

Section 23 — Land Acquisition Act, 1894

The Collector must assess compensation based on:

• market value of the land
• nature and location
• potentiality and usability
• relevant surrounding circumstances

The Supreme Court held that this statutory duty applies equally to courts in appeal or reference proceedings.

The judgment clarified that compensation determination:

• cannot be diluted by procedural technicalities
• must reflect statutory valuation criteria
• must ensure fairness to landowners affected by compulsory acquisition

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Judicial Precedent Relied Upon — Gundabhat Case (2023)

The Court relied on its earlier decision:

Gundabhat & Anr. v. Assistant Commissioner / Land Acquisition Officer (2023)

Where it was held that:

• market value once judicially determined
• cannot be restricted due to lower compensation sought
• courts must not deny rightful compensation due to claim wording

The present case reaffirmed and strengthened this principle.

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Constitutional Perspective — Protection of Property & Fair Compensation

While the right to property is no longer a fundamental right, it remains a constitutional legal right under:

Article 300A — Constitution of India

“No person shall be deprived of his property save by authority of law.”

The Court’s reasoning aligns with:

• substantive fairness in compulsory acquisition
• protection of landowners against undervaluation
• ensuring just compensation as part of due process

The judgment reinforces that state acquisition of private land requires:

• lawful authority
• fair valuation
• equitable restitution

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Supreme Court’s Directions — Full Compensation with Consequential Benefits

Setting aside the High Court’s restriction, the Supreme Court directed:

• compensation payable at ₹16.94 lakh per acre
• along with all consequential statutory benefits

The Court also clarified that:

• the petitioner must pay differential court fee on the enhanced amount
• respondent authorities must release payment within three months

This approach ensures procedural compliance while protecting substantive rights.

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Significance of the Ruling — Strengthening Fair Compensation Jurisprudence

The ruling reinforces key legal principles in land acquisition law:

• courts are guardians of just compensation
• proceedings are welfare-oriented, not adversarial
• undervaluation cannot be justified by limited pleadings
• statutory duties override procedural constraints

The judgment strengthens safeguards for landowners impacted by state acquisition and reiterates that equitable relief must prevail over technical limitations.

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Conclusion — Courts Must Prioritise Justice Over Procedural Technicality

The Supreme Court’s ruling reaffirms that compensation in land acquisition cases:

• must reflect true market value
• must comply with statutory parameters
• must not be curtailed merely because the claimant sought a lower amount

The decision marks an important reaffirmation of fairness, equity and statutory duty in land acquisition adjudication.