Occupation Without Acquisition Is Not Governance – It Is Usurpation: Supreme Court Orders Nashik Municipal Corporation to Pay ₹20.20 Crores for Unlawful Land Possession

“State Cannot Sleep Over Acquisition While Taking Possession – Equity Demands Just Compensation” --In a significant pronouncement on State accountability and land acquisition law, the Supreme Court of India held that unauthorised possession of private land by the government without lawful acquisition is not only illegal but demands just, fair, and market-aligned compensation. The Court set aside the Bombay High Court’s judgment and restored the Reference Court’s award of ₹20.20 crores, ruling that the Nashik Municipal Corporation had no legal authority to retain possession for over four decades without initiating acquisition proceedings.

Rejecting the Corporation’s claim of exclusive possession or adverse occupation, the Bench of Justice B.R. Gavai and Justice Augustine George Masih observed:

“The property had not been in exclusive possession of the Corporation. Actual physical possession was with the Original Owner... Reservation may lapse, but possession cannot continue without consequence.”

“Compensation Must Reflect Market Reality – Ready Reckoner Cannot Override Statutory Mandate”: SC Upholds Reference Court’s ₹20.20 Cr Award

The Municipal Corporation had argued that compensation should be limited to ₹8.69 Crores, as awarded by the Special Land Acquisition Officer (SLAO), based on Ready Reckoner rates. But the Supreme Court upheld the Reference Court's approach in considering six comparable sale instances near the acquired land, and allowing a 10% annual increase up to the date of acquisition.

“The market rate came out to ₹26,814/- per square meter… this amount being in accordance with the statutory provisions of Section 26 of the 2013 Act could not have been interfered with by the High Court.”

The Court further emphasized that the 2013 Land Acquisition Act demands compensation based on actual transaction data, not administrative guidance. It held the High Court was in error for reversing a well-reasoned order that followed statutory guidelines.

“Owner Cannot Be Made to Wait Indefinitely While State Enjoys Possession Without Title”: SC Recognizes Equity Interest for Years of Post-Purchase Occupation

The land in question, Survey No. 8/1 (1.38 hectares), had been partially acquired in 1978 (1.01 hectares). However, the remaining 3700 sq. meters (37 ares) continued to be held and used by the Municipal Corporation without initiating acquisition, even though the reservation had lapsed in 1995. Despite the 1998 High Court ruling declaring the reservation lapsed, the Corporation remained in occupation.

The land was purchased by the appellant in July 2011, and acquisition proceedings were finally completed in 2017, only after contempt proceedings were filed in the Supreme Court. Recognizing this six-year delay during which the owner was deprived of lawful possession, the Court awarded interest at 8% per annum on ₹1.17 Crores (the consideration paid) for the interim period.

“The appellant was deprived of possession from 29.07.2011 to 08.05.2017 without lawful compensation. Mesne profits, in the form of interest, are thus warranted.”

“Possession Without Acquisition Violates Article 300-A – No Justification in Law or Fact”: SC Dismisses Municipal Corporation’s Defence

The Nashik Municipal Corporation sought to deny liability by arguing that the owner was never dispossessed and that possession remained with the original landholder. The Supreme Court categorically rejected this contention after reviewing mortgage deeds, eviction proceedings, and SARFAESI records showing continued possession until 2011.

“It is established that the Original Owner had not been deprived of the benefit of possession or usage of the property all through. Rental compensation prior to 2011 is therefore not due.”

However, the Court emphasized that once the new purchaser was dispossessed without acquisition, the constitutional mandate of Article 300-A (protection of property) was violated, entitling him to equitable redress under Section 28 of the 2013 Act.

“Section 28 Is Not Cosmetic – It Embodies the Spirit of Justice, Equity and Fairness”: Supreme Court Recognizes Broader Grounds for Compensation

The Court gave expansive interpretation to Section 28(1)(seventhly) of the 2013 Act, which allows for “any other ground which may be in the interest of equity, justice and beneficial to the affected families”. It clarified that this is not merely symbolic but an active tool for delivering fair compensation in extraordinary situations.

“Section 28 empowers the Collector to award such ancillary compensation as may be necessary to do justice, especially in cases where procedural delay results in deprivation.”

While declining the appellant’s claim for ₹238 crores as rent from 1972 onwards, the Court held that compensation for the period post-purchase was justified, as the purchaser had been illegally denied use of the land.

“Unwarranted Adverse Observations Against Litigants Cannot Stand – Bona Fide Action Deserves Protection”: SC Expunges High Court Remarks, Waives ₹10 Lakh Cost

The High Court had not only reduced the compensation but also imposed ₹10 Lakhs in costs on the appellant and made adverse personal remarks. The Supreme Court called this “completely unjustified”, stating:

“The appellant was merely prosecuting the statutory remedies available. There was no occasion for the High Court to impose such costs or make such observations.”

All adverse remarks were expunged, and the cost order was set aside.

Concluding that State occupation of land without acquisition or compensation is not only illegal but unconstitutional, the Court allowed the appeal, restored the Reference Court’s compensation of ₹20.20 Crores, and awarded interest on purchase cost from 2011 to 2017. The decision reaffirms that constitutional and statutory protections of property rights cannot be bypassed through administrative lethargy.

Date of Decision: October 15, 2025