Rs. 57,000 Per Acre Award Inadequate for Fertile Commercial Land: AP High Court Enhances Compensation to Rs. 3.50 Lakh, Raises Tree Values

"A Reference Under Section 18 Is Not an Appeal Against the Award — The Referral Court Must Determine Market Value Afresh as an Original Proceeding", Andhra Pradesh High Court on March 16, 2026 partly allowed a batch of land acquisition appeals filed by claimants whose fertile agricultural land in West Godavari District was acquired for the Yerrakalava Reservoir Project under urgency provisions.

A Division Bench of Justice Battu Devanand and Justice A. Hari Haranadha Sarma confirmed the Referral Court's enhancement of land compensation from Rs. 57,000/- to Rs. 3,50,000/- per acre, and further enhanced compensation for coconut trees to Rs. 4,000/- per tree and palm oil trees to Rs. 3,500/- per tree. The State's appeals seeking reduction of compensation were dismissed entirely.

Background of the Case

Land admeasuring 105.79 cents in Vallampatla Village, T. Narasapuram Mandal, West Godavari District, was acquired for the foreshore submersion area of the Yerra Kalava Reservoir Project, invoking the urgency clause under Section 17(4) of the Land Acquisition Act, 1894, thereby dispensing with the Section 5-A enquiry. The Land Acquisition Officer passed Award No. 14 of 2005, fixing market value at Rs. 57,000/- per acre for land, Rs. 1,10,000/- per acre for bamboo garden, and Rs. 90,000/- per acre for Eucalyptus garden. The claimants, dissatisfied with the award, sought reference under Section 18 of the Act. The Referral Court — the I Additional District Judge, West Godavari, Eluru — enhanced compensation substantially by its common judgment dated March 29, 2018. Both the claimants and the State filed appeals before the High Court.

State's Bid to Introduce Additional Evidence Rejected

At the outset, the Court dismissed an application filed by the State in 2025 under Order XLI Rule 27 CPC seeking to produce six documents at the appellate stage, including the Section 4(1) notification, consent award, and letters from the Forest and Horticulture Departments.

The Court held that both the tests of due diligence and necessity were unsatisfied. The documents were in the custody of the State throughout the trial. The reference was of 2005, the LAOPs of 2012, and the appeals of 2018 — yet the application was filed only in 2025. No explanation was offered as to why these documents were not filed before the Referral Court.

Relying on Union of India v. Ibrahim Uddin (2012) 8 SCC 148 and the Privy Council decision in Parsotim Thakur v. Lal Mohar Thakur (AIR 1931 PC 143), the Court held that additional evidence at the appellate stage is permissible only to fill an inherent lacuna apparent from the existing record — and not to patch up a weak case. The Court found it was not handicapped to decide the matter without the proposed evidence and dismissed the application.

Referral Court's Role: Original Proceeding, Not Appeal

The Court reaffirmed the fundamental principle governing Section 18 references, drawing from the Supreme Court's landmark decision in Chimanlal Hargovinddas v. Special Land Acquisition Officer:

"A reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the court cannot take into account the material relied upon by the Land Acquisition Officer in his award unless the same material is produced and proved before the court. The award of the Land Acquisition Officer is merely an offer made by him and the material utilised by him cannot be utilised by the court unless produced and proved before it. The court has to treat the reference as an original proceeding and determine the market value afresh on the basis of the material produced before it."

Land Value and Garden Compensation Confirmed

The Court found that the Land Acquisition Officer had acted arbitrarily in fixing compensation. During cross-examination, the Referral Officer admitted that the lands were red cotton soil suitable for all commercial crops — including wet paddy, sugarcane, cashew, mango, coconut, bamboo, and oil palm gardens — yet he had not considered yield, longevity, or rental value while fixing rates.

The DFO's report had valued bamboo garden at Rs. 2,14,000/- per acre, but the Land Acquisition Officer had arbitrarily rejected it and awarded only Rs. 1,10,000/-. The Referral Court had enhanced bamboo garden compensation to Rs. 3,00,000/- per acre and Eucalyptus garden to Rs. 2,50,000/- per acre.

The State argued that compensation cannot be awarded on two counts — both for land and for the garden standing on it. The High Court rejected this contention, noting that the initial award itself had awarded compensation on both heads. Since the Land Acquisition Officer had himself awarded on both counts, there was no reason to disallow it at the appellate stage.

The Court confirmed the Referral Court's enhancement of land value to Rs. 3,50,000/- per acre and the garden compensation as awarded, finding the reasoning logical and the enhancement reasonable.

Tree Compensation: Further Enhancement Warranted

On the question of trees, the Court found that the evidence of PWs 9 and 10 — who deposed that AP Transco had paid Rs. 6,500/- per palm oil tree when cutting trees for high tension wire lines — was compelling, being supported by official documents and bank payment records. The Referral Court had enhanced palm oil tree compensation from Rs. 300/- to Rs. 3,000/- per tree. The High Court found this insufficient and enhanced it further to Rs. 3,500/- per tree.

Similarly, coconut tree compensation, which had been enhanced by the Referral Court from Rs. 1,415.83 to Rs. 3,000/- per tree, was further enhanced to Rs. 4,000/- per tree by the High Court, having regard to judicial precedents on fruit-yielding trees and the geographical conditions of the area.

Compensation for Eucalyptus trees, coco trees, bore wells, and other items was confirmed as fixed by the Referral Court. The Court directed that the tree count would be as per the Award and not as claimed by the claimants.The High Court dismissed all ten appeals filed by the State/Referral Officer and partly allowed ten appeals filed by the claimants, enhancing coconut tree compensation to Rs. 4,000/- per tree and palm oil tree compensation to Rs. 3,500/- per tree. In all other respects, the award and decree of the Referral Court dated March 29, 2018 were confirmed. No order as to costs was made.

Date of Decision: March 16, 2026