Supreme Court Allows Enhancement of Land Acquisition Compensation, Directs Benefit of Highest Bona Fide Sale Exemplar With Deduction

A bench of Chief Justice B.R. Gavai and Justice Augustine George Masih heard appeals by landowners challenging the Bombay High Court, Aurangabad Bench order that dismissed first appeals against a Reference Court award in a land acquisition matter under the Maharashtra Industrial Development Act, 1961 and the Land Acquisition Act, 1894. The appeals concerned the quantum of compensation for agricultural land acquired in the early 1990s for an MIDC industrial area near Jintur, Parbhani District.

The Supreme Court allowed the appeals, quashed the High Court and Reference Court orders and directed enhancement of compensation. The Court found that the Reference Court had improperly overlooked a highest sale exemplar dated 31 March 1990 showing Rs. 72,900 per acre and that the claimants were entitled to the benefit of a bona fide highest comparable sale subject to a reasonable deduction. The Court held that the claimants, being farmers deprived of their land in the 1990s, “deserve the benefit of the highest sale exemplar.” The Court, in its reasoning, observed: “The position of law being thus and further on account of the fact that the lands acquired in the present case are in a prime location, we are of the considered opinion that no occasion arose for the Reference Court to deviate from the well-settled position of law and that the claimants/Appellants deserve the benefit of the highest sale exemplar dated 31st March 1990.” The judgment applied a 20% deduction to the highest exemplar (to account for differences in plot size and development costs) and directed enhancement of compensation from Rs. 32,000 per acre to Rs. 58,320 per acre, with statutory solatium and interest under Sections 23(1-A), 23(2) and 28 of the Land Acquisition Act, 1894.

Background The dispute arose after the State issued a notification under Section 32(2) of the Maharashtra Industrial Development Act in July 1990 and took possession of the appellants’ lands on 6 December 1994. The Land Acquisition Officer awarded compensation at a rate equivalent to Rs. 10,800 per acre (Rs. 27,000 per hectare). The appellants accepted the award under protest and filed a reference under Section 18 of the Land Acquisition Act in 1997. The Reference Court partly enhanced compensation to Rs. 32,000 per acre after considering several sale exemplars, but did not explain omission of the highest exemplar dated 31 March 1990. The High Court dismissed first appeals, upholding the Reference Court’s approach.

Before the Supreme Court, the appellants placed ten sale exemplars on record, including pre-notification and proximate examples from Jintur and nearby villages. The State and MIDC contested the correctness and bona fides of the highest exemplar and argued for either exclusion of the anomalous figure or averaging of proximate sales. Relying on precedents, the Supreme Court reviewed settled principles: where several comparable bona fide sales exist, the highest exemplar is ordinarily preferred unless there are strong reasons to exclude it; averaging is permissible only where prices lay in a narrow band. The Court found no rebuttal evidence by the State to displace the certified sale deed under Section 51A of the LA Act. Applying precedents and the factual finding that the lands had non‑agricultural potential and were in a prime location, the Court concluded the highest exemplar should be accepted with a 20% reduction and ordered consequential solatium and interest. The appeals were allowed; pending applications were disposed of.

Case No.: 2025 INSC 900 Case Title: Manohar and Others v. The State of Maharashtra and Others Appearances: For the Petitioner(s): Mr. Adith Satish Deshmukh (learned counsel), Mr. Bharat Thakorlal Manubarwala (learned counsel) For the Respondent(s): Ms. Rukhmini Bobde (learned counsel) for Respondent Nos.1 & 2; Ms. Shyamali Gadre (learned counsel) for Respondent No.3