RFCTLARR Act | Reference Lies Before LARR Authority & Not Civil Court Even If Acquisition Initiated Under MRTP Act Prior To 2013 Act: Bombay High Court

"The substantive right of remedy of reference is indeed retained in the Act of 2013 and only the forum changes to the LARR Authority. When the determination of compensation in the facts and circumstances of the present case, as per the statutory mandate under Section 26(1) of the Act of 2013 can only be under the provisions of the said Act of 2013, the exercise of examination of the correctness or otherwise thereof in a reference proceeding can only be under Section 64 of the Act of 2013." Bombay High Court, in a significant ruling pronounced on October 15, 2026, held that a reference for enhancement of compensation lies exclusively before the Land Acquisition, Rehabilitation and Resettlement (LARR) Authority under Section 64 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, even where the acquisition was initiated under the Maharashtra Regional and Town Planning Act, 1966 read with the Land Acquisition Act, 1894 prior to January 1, 2014, if the award came to be declared thereafter.

A Division Bench comprising Justice Manish Pitale and Justice Shreeram V. Shirsat observed that while the right to seek a reference is a vested substantive right inextricably linked to the right to receive compensation, a litigant has no vested right in a particular forum, as the change of forum from a Civil Court under Section 18 of the 1894 Act to the LARR Authority under Section 64 of the 2013 Act falls purely within the realm of procedure.

The dispute arose from the compulsory acquisition of 48,897.60 square meters of land situated across Ambivali and Oshiwara villages in Mumbai, reserved under the 1991 Development Plan for a garden, recreation ground, and a 27.45-meter wide DP road. Following purchase notices served by the claimant, S.N. Desai Hospitalities & Developers LLP, the State Government issued an acquisition notification on June 19, 2012 under Section 126(2) read with Section 126(4) of the MRTP Act, deemed as a declaration under Section 6 of the 1894 Act. While proceedings were pending, the 2013 Act came into force on January 1, 2014, and the Deputy Collector declared an award on May 3, 2017 granting Rs. 511.48 Crores, which was subsequently enhanced by the LARR Authority, Nagpur to over Rs. 2,101 Crores, prompting cross-appeals before the High Court by both the claimant developer and the acquiring body, Municipal Corporation of Greater Mumbai (MCGM).

The primary question before the court was whether a reference for enhancement was maintainable before the LARR Authority under Section 64 of the 2013 Act or whether it lay exclusively before the Civil Court under Section 18 of the 1894 Act in an acquisition initiated under the MRTP Act. The court was also called upon to determine whether the market value was to be assessed under the Ready Reckoner Method under Section 26(1)(a) or the Sale Instances Method under Section 26(1)(b) of the 2013 Act, and whether the residual land value technique, along with additions for TDR, Fungible FSI, and large plot size, could be legitimately applied.

No Vested Right In A Forum; Procedural Changes Do Not Prejudice Litigants

Addressing the jurisdictional challenge mounted by the MCGM, the High Court held that the LARR Authority acted well within its statutory jurisdiction and the reference was maintainable under Section 64 of the 2013 Act. The Bench reiterated that when an enactment is repealed and substituted by a new statute, a litigant’s substantive right to pursue a legal remedy is preserved, but there is no vested right in the forum itself.

Relying on the Supreme Court rulings in Maria Cristina De Souza Sodder v. Amria Zurana Pereira Pinto and Custodian of Evacuee Property v. Khan Saheb Abdul Shukoor, the Bench highlighted that the forum of remedy remains within the procedural realm. The court noted that since the 2013 Act provides a fully functional adjudicatory machinery through the LARR Authority possessing all the trappings of a court, followed by a statutory appeal to the High Court under Section 74, no prejudice was caused to either party.

"The forum of remedy was in the procedural realm and so long as the vested right in the remedy was protected in the new legislation, the party seeking a remedy could not insist upon the remedy under the repealed Act."

Section 18 Reference Under Repealed 1894 Act Is Unworkable For 2013 Act Awards

The court analyzed the Full Bench decision of the Bombay High Court in Pune Municipal Corporation v. Rajeev L. Sangtani to demonstrate the indivisibility of the right to receive compensation and the right to seek a reference. The Bench held that because Section 24(1)(a) of the 2013 Act read with Rule 19(3) of the Maharashtra Rules, 2014 mandates the Collector to determine compensation under Sections 26 to 30 of the 2013 Act, testing such an award under the old regime would be wholly unworkable.

The judges noted that while Section 18 of the repealed 1894 Act did not permit the Reference Court to sit in appeal over the award, Section 69(1) of the 2013 Act specifically enjoins the LARR Authority to examine whether the Collector duly complied with the statutory parameters set out under Sections 26 to 30. A Civil Court acting under Section 18 of the 1894 Act would lack the statutory mandate and jurisdiction to assess compliance with Sections 26 to 30 of the 2013 Act.

"The Court considering a reference under Section 18 of the LA Act, unlike the LARR Authority, would not have the jurisdiction to examine whether the Collector followed the parameters set out in Sections 26 to 30 of the Act of 2013."

Acquiring Body Has No Locus To Challenge Forum Of Reference

The Division Bench recorded strong disapproval of the MCGM questioning the maintainability of the reference, pointing out that an acquiring body has no independent right to initiate reference proceedings against an award passed by the Land Acquisition Officer. The court held that the remedy of reference is designed solely for the benefit of the claimant whose land has been expropriated and who is dissatisfied with the compensation offered.

The court noted that the acquiring body's only right is to participate in the reference proceedings to safeguard its financial interests. Having fully participated, led evidence, and cross-examined witnesses before the LARR Authority, the MCGM could not be permitted to turn around and claim that the award was a nullity for want of jurisdiction.

"The only aggrieved person in such a situation, is the claimant in reference proceedings in, both, the LA Act as well as the Act of 2013. The vested right of the remedy of reference is very much retained and it has been exercised as a matter of right, by the claimant, who has no grievance with the LARR Authority considering such a reference."

Shadow Of Reservation Cannot Depreciate Market Value In Compulsory Acquisition

Rejecting the MCGM's argument that the market value of the land was depressed because it was reserved for public amenities in the Development Plan, the High Court reaffirmed that the cloud of reservation is completely irrelevant while determining compensation under the land acquisition framework.

The Bench relied on the Supreme Court's decision in MCGM v. M/s. B. J. Development Corporation Pvt. Ltd. and the Bombay High Court's ruling in Special Land Acquisition Officer v. M/s. Govindram Brothers Pvt. Ltd., emphasizing that when the State compulsorily acquires reserved land, it must pay full market value on the touchstone of a willing buyer approaching a willing seller, without taking advantage of the handicap of reservation imposed by its own planning statutes.

"It cannot be heard from the mouth of the acquiring body that since the land has come under the shadow of reservation under the developmental plan... the fact that it is under such a handicap, if we may use the expression, cannot detract from the State and the requisition body has to pay the compensation as determined under the 1894 Act or the 2013 Act, as the case may."

Section 26(1)(a) & 26(1)(b) Are Mutually Exclusive; Sale Instances Cannot Discount Ready Reckoner Rates

The High Court clarified the statutory mechanics of Section 26 of the 2013 Act, holding that the Ready Reckoner Method under Section 26(1)(a) and the Sale Instances Method under Section 26(1)(b) are mutually exclusive. The statute requires the Collector to adopt whichever value is higher among the applicable criteria.

The Bench firmly rejected the MCGM’s attempt to use isolated sale deeds to pull down the valuation arrived at under the Ready Reckoner Method. The judges observed that the sale deeds produced by the MCGM were inadmissible and unreliable because one arose from an involuntary MPID auction sale, another involved an encumbered plot with 227 tenants, and the third pertained to an unproved transaction outside the preceding three-year statutory window.

"This Court is of the firm opinion that the two methods i.e. ready reckoner on the one hand and sale instances method on the other are mutually exclusive and compensation, whichever is higher, is ultimately payable to the claimant."

Residual Land Value Technique Inapplicable Without Multiple Comparable Schemes

Turning to the claimant developer’s reliance on the residual land value technique to demand astronomical enhancement based on flat sales in a nearby luxury project, 'Oberoi Springs', the High Court ruled that the claimant failed to satisfy the statutory threshold of Section 26(1)(b) read with Explanations 1 to 4.

Referring to the Supreme Court ruling in Madhya Pradesh Road Development Corporation v. Vincent Daniel, the Bench observed that while Explanations 1 and 2 require taking into account one-half of the highest sale transactions over three years, this statutory scheme presupposes the availability of multiple transactions across various schemes on comparable plots. The court held that an expert valuer cannot apply the residual technique under Section 26(1)(b) based on flat sales from a single isolated housing scheme in the vicinity, thereby affirming the LARR Authority’s refusal to adopt that approach.

"In order to ensure that the explanations operate in terms of the language of the statute, there ought to be sale instances from more number of schemes on comparable plots of land in the vicinity, so that the method specified in Explanations (1) to (3) appended to Section 26(1)(b) of the Act of 2013 operates in a logical sequence."

Determination Of Weighted Average Rate And Permissible Additions And Deductions

The High Court found that the LARR Authority erred in applying a blanket rate of Rs. 90,600 per square meter to the entire land parcel, ignoring that 47,002 square meters fell in Ambivali village (valued at Rs. 72,100 per sq. meter under Zone 47/231A) and only 1,895.60 square meters fell in Oshiwara village (Zone 50/240A at Rs. 90,600 per sq. meter). Applying the weighted average formula, the court determined the basic market rate at Rs. 72,817 per square meter, resulting in a base value of Rs. 356.05 Crores.

Addressing adjustments, the Bench permitted statutory deductions of 15% under DCR 35(1) and 5% for amenity space under DCR 27, while rejecting the MCGM’s plea for a duplicate 15% deduction under Ready Reckoner Guideline 17. The court granted additions of 40% towards TDR potential and 25.2% towards Fungible FSI in terms of municipal circulars and evidence on record.

Large Plot Size An Advantage In Urban Mumbai; Unevenness Deduction Denied

Departing from the traditional rule where large tracts suffer deductions as held in Viluben Jhalejar Contractor v. State of Gujarat and Vithal Rao v. SLAO, the High Court held that in a dense metropolis like Mumbai, a large parcel in Andheri (West) is an distinct advantage attracting deep-pocket developers for integrated luxury complexes. Applying the common sense test from Chimanlal Hargovinddas v. SLAO and the guesstimate doctrine from Trishala Jain v. State of Uttaranchal, the Bench approved a 25% addition for large size.

The court refused the MCGM's plea for a 10% deduction towards uneven terrain and hillocks, distinguishing Chandrashekhar v. Land Acquisition Officer on the ground that the claimant developer had carried out extensive levelling operations and compound wall construction with the prior clearance and at the behest of the MCGM itself before physical possession was handed over.

Final Computation And Directions

Modifying the award, the High Court recalculated the total market value at Rs. 608.07 Crores, added 100% solatium of Rs. 608.07 Crores under Section 30(1), and 12% additional interest component under Section 30(3) amounting to Rs. 355.85 Crores for 1,780 days, arriving at an aggregate compensation of Rs. 1,572,00,48,407.23.

After adjusting the initial award of Rs. 510.07 Crores already disbursed, the High Court fixed the net enhanced compensation at Rs. 1,061,92,48,897.23. The Bench directed the MCGM to pay the balance within 12 weeks, along with statutory interest at 9% per annum for the first year from the date of taking possession and 15% per annum thereafter until full realization, while adjusting the interim withdrawal of Rs. 250 Crores deposited by the corporation.

The Bombay High Court conclusively established that reference proceedings under Section 64 of the RFCTLARR Act, 2013 are maintainable before the LARR Authority for acquisitions initiated under the MRTP Act prior to 2014 where the award was declared post-commencement. In fixing the enhanced compensation at Rs. 1,061.92 Crores, the ruling provides vital doctrinal clarity on the mutually exclusive operation of valuation methods under Section 26, the impermissibility of discounting Ready Reckoner rates via sale deeds, and the legal treatment of large plot sizes and TDR potential in dense metropolitan acquisitions.

Date of Decision: 15th October, 2026