“Farmer’s Right to Fair Compensation Must Prevail Over Technicalities”: Supreme Court Enhances Land Compensation in Maharashtra MIDC Acquisition Case

“When land is compulsorily taken, the owner is entitled to the highest value fetched by a similar land in a bona fide transaction” – Supreme Court- In a judgment that reinforces the constitutional guarantee of just and fair compensation in cases of compulsory land acquisition, the Supreme Court of India, on July 28, 2025, in the case of Manohar and Others v. State of Maharashtra and Others, set aside the decisions of both the Bombay High Court and the Reference Court, holding that they had wrongly ignored the highest sale exemplar while determining compensation. The Court enhanced the compensation payable to farmers for land acquired in the early 1990s for the Jintur Industrial Area by the Maharashtra Industrial Development Corporation (MIDC).

The appellants, primarily farmers, owned agricultural lands measuring over 16 hectares in Village Pungala, District Parbhani, Maharashtra. In 1992, the government issued acquisition notices under the Maharashtra Industrial Development Act, 1961 for establishing an industrial area near Jintur town. Possession was taken in 1994, and an award was passed granting compensation at the rate of Rs. 10,800/- per acre.

Dissatisfied, the appellants filed a Section 18 reference under the Land Acquisition Act, 1894, leading to an award in 2007, where the Reference Court marginally enhanced the rate to Rs. 32,000/- per acre. However, the Reference Court disregarded a critical sale exemplar dated March 31, 1990, showing a value of Rs. 72,900/- per acre, which the claimants argued was the most appropriate comparator. Their first appeal was dismissed by the High Court in 2022, prompting them to approach the Supreme Court.

“It Is Only Fair That Highest Value Sale Is Considered for Compensation” – SC

The Supreme Court expressed serious concern over how both the Reference Court and High Court ignored the most relevant evidence, stating:

“The Reference Court, having taken note of the ten sale exemplars, ought to have dealt with the sale instance at Serial No. 4 [dated 31.03.1990], however, it did not.”

The Court emphasized that the highest bona fide sale transaction, if available and comparable, must be the basis for compensation, especially when the acquisition involves compulsory deprivation of land. Citing precedents like Anjani Molu Dessai v. State of Goa and Mehrawal Khewaji Trust v. State of Punjab, the Bench held:

“When land is being compulsorily taken away, the owner is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction.”

“Averaging Sale Prices with Wide Variations Is Impermissible”

The Court rejected the methodology adopted by the Reference Court of averaging other sale exemplars (which ranged from Rs. 25,000/- to Rs. 41,000/- per acre) while completely overlooking the exemplar that showed a significantly higher value of Rs. 72,900/- per acre. The Bench clarified:

“Where the values disclosed in respect of two sales are markedly different, averaging cannot be resorted to… The averaging of these sale instances was clearly not permissible.”

The Court also dismissed the State’s argument that the higher exemplar was abnormal:

 “The sale exemplar at Sr. No. 4, dated 31st March 1990, was proximate to the date of notification, located in the same area, and remains unchallenged. The Reference Court gave no reason to discard it.”

“Lands Near T-Point Highway, Water Tank, and Jintur Town – Prime Location Justifies Higher Valuation”

Both the Reference and High Courts had observed that the acquired lands were:

 “Situated near the T-point of Nashik–Nirmal State Highway, adjacent to Jintur town, and opposite a percolation tank with sufficient water.”

These observations, while acknowledged, were not factored adequately into compensation determination. The Supreme Court ruled that non-agricultural potential and infrastructural proximity made the land ideal for industrial use — precisely why MIDC selected it.

“The selection of the acquired lands for acquisition for establishment of MIDC indicates their prime location.”

Recognizing the delay of over three decades, the Supreme Court chose not to remand the matter but decided it finally in favor of the farmers. The Court enhanced compensation as follows:

 “We direct that the compensation granted to the Appellants be enhanced from Rs. 32,000/- per Acre to Rs. 58,320/- per Acre.”

A 20% deduction was applied to the highest exemplar to adjust for the larger area of acquired land vis-à-vis smaller plots in the exemplars.

 “All other consequential benefits of solatium and interest on the enhanced compensation in terms of Sections 23(1-A), 23(2) and 28 of the Land Acquisition Act, 1894, be granted to the Appellants.”

With this judgment, the Supreme Court reaffirmed a crucial constitutional principle: equity and fairness must prevail in acquisition cases, especially involving livelihood and sustenance of farmers. The ruling strongly discouraged mechanical or inconsistent valuation methods and laid down that “where bona fide higher-value exemplars exist, they must guide compensation”.

Date of Decision: July 28, 2025