Supreme Court Sets Just Compensation Standard for Land Acquisition: Annual Increase at 8% with Cumulative Effect
In a significant ruling, the Supreme Court of India has established a crucial precedent for determining compensation in land acquisition cases. The judgment, delivered by Justice Vikram Nath on October 19, 2023, focuses on the rate of annual increase and its cumulativeness in compensation calculations under the Land Acquisition Act, 1894.
The verdict addressed a dispute over compensation rates between the Reference Court and the High Court. It revolved around the crucial question of what constitutes a fair and just compensation, balancing the rights of landowners and the fiscal responsibility of the state entity involved.
The Supreme Court’s decision set a clear standard by determining that an annual increase rate of 8% with cumulative effect is just and proper when there is a significant gap, in this case, 11 years, between the reference year and the acquisition year. This decision overturns the High Court’s application of a 15% cumulative annual increase rate.
In its observation, the Supreme Court emphasized the rationale behind this rate, stating, “For shorter periods of 3-5 years, it could have been 10% or 12%. But in no case 15% would be justified for a period of 11 years as awarded by the High Court in the impugned order.”
The judgment further directed the Land Acquisition Collector to recalculate the compensation based on the newly determined 8% annual increase rate with cumulative effect.
This landmark decision provides clarity and consistency in land acquisition cases, ensuring that landowners receive fair and reasonable compensation while avoiding an undue financial burden on the state entity. It sets a valuable precedent for future cases involving land acquisition disputes in India.
Date of Decision: 19 October 2023
THE CENTRAL WAREHOUSING vs THAKUR DWARA KALAN UL-MARUF BARAGLAN WALA (DEAD) & ORS.
