Supreme Court directs compensation to be assessed under 2013 LARR Act but refuses release of land for lack of CLU

A bench of Justices B.R. Gavai, Prashant Kumar Mishra and K.V. Viswanathan heard an appeal against a Punjab and Haryana High Court order which had dismissed the writ petition of the owner challenging the State’s rejection dated 17.08.2010 of his representation seeking release of land from acquisition for development at Sultanpur, Sonipat.

The Court held that the appellant was not entitled to release of the land because he had not obtained a valid Change of Land Use (CLU), and that the plea of discrimination was not made out. The bench observed that "For establishing a factory or any other commercial development being valid, a CLU is a prerequisite; in the absence of which, running a factory on the said land cannot be validated so as to include his case within the sweep of the policy dated 26.06.1991 or 26.10.2007." The Court, however, exercised its power under Article 142 to grant relief in the form of enhanced compensation: it directed that the compensation payable to the appellant should be calculated under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, as on the date of commencement of that Act. The Court, in its reasoning, observed: "For the above stated reasons, we are not inclined to accept the appellant’s prayer for release of land on the ground of discrimination. However, since the appellant claims to be in continuous physical possession of the land wherein a factory is in operation and the department has not satisfactorily controverted this aspect of the matter, on the special facts of this case, in exercise of our power under Article 142, we deem it appropriate to direct that the compensation payable to the appellant should be calculated under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as on the date of commencement of the said Act. This order is made on the peculiar facts of the case and is not to be treated as a precedent to be relied upon in other cases."

Background

The appellant owned land and constructed area totaling 386 sq. yards and 3,078 sq. yards at Sultanpur, Sonipat, purchased by sale deed dated 04.08.1986. The State issued notifications under Section 4 (09.11.1992) and Section 6 (06.11.1993) of the Land Acquisition Act, 1894, for development including sector roads, and the Collector passed Award No.10 on 05.11.1995 noting possession taken by Rapat Rozanamcha No.229 dated 05.11.1995. The appellant contended that a factory existed on the land since 1970 and he relied on State policies dated 26.06.1991 and 26.10.2007 that allowed release of pre-existing factories. He alleged discriminatory treatment since other landowners in the village had obtained releases. The State responded that the appellant never obtained CLU, did not file objections under Section 5-A, sought only compensation in Section 9 proceedings, and that substantial public development expenditure (Rs. 2661.88 lakhs) and planning (sector roads, institutional plots, green belt) would be affected by release. The High Court dismissed the writ petition principally on the ground that deemed possession and continuing physical possession did not confer a right to release. The Supreme Court found no merit in the discrimination claim after examining factual distinctions (including differing CLU status of other owners) and held that release was not permissible without CLU. The Court declined to treat its direction on compensation as precedent, disposed of the appeal accordingly and ordered no costs.

Case No.: Civil Appeal No. 8968 of 2013 (2025 INSC 419) Case Title: Kishore Chhabra v. The State of Haryana & Ors. Appearances: For the Petitioner(s): Mr. Nidhesh Gupta, Senior Counsel For the Respondent(s): Mr. K.M. Nataraj, Additional Solicitor General