In a significant reaffirmation of the principle of just compensation, the Supreme Court has held that courts adjudicating land acquisition disputes are not bound by the amount of compensation claimed by landowners and may grant higher sums if the law so warrants. The ruling underscores the judiciary’s duty to ensure fairness in land acquisition proceedings and clarifies that compensation must be determined strictly in accordance with statutory principles, not constrained by the pleadings of affected landholders.

The judgment was delivered by a bench comprising Justices Prashant Kumar Mishra and Vipul M Pancholi while hearing an appeal against a Karnataka High Court decision. Although the High Court had reassessed the market value of acquired land and found it to be significantly higher than earlier estimates, it limited the final compensation payable to the amount claimed by the landowners. The Supreme Court found this approach legally untenable and set it aside.

Land acquisition and the question of “claims”

Land acquisition cases often arise from the state’s exercise of its power to acquire private property for public purposes such as infrastructure, irrigation projects, or urban development. While the power of acquisition is recognised under law, it is balanced by a statutory obligation to pay landowners compensation that reflects the true market value of the land, along with additional statutory benefits.

In practice, landowners often claim a specific amount when challenging compensation fixed by land acquisition authorities. These claims may be conservative, based on limited information, legal advice, or financial constraints such as court fees. The question before the Supreme Court was whether such claims should operate as a ceiling, preventing courts from awarding higher compensation even when evidence establishes that the land is worth more.

The apex court’s answer was a clear no.

The case from Karnataka

The dispute before the Supreme Court arose from the acquisition of land in Karnataka for the construction of the left bank canal of the Hirehalla Project. Initially, the land acquisition officer fixed the market value at ₹1.37 lakh per acre. Dissatisfied, the landowners sought a reference, and the reference court enhanced the compensation to ₹5 lakh per acre.

On further appeal, the Karnataka High Court undertook a detailed reassessment of the evidence, including comparable sale deeds and other valuation material. Based on this analysis, the High Court concluded that the correct market value of the land was ₹16.94 lakh per acre—more than three times the amount fixed by the reference court.

However, despite this finding, the High Court restricted the actual compensation payable to ₹15 lakh per acre, reasoning that this was the maximum amount claimed by the landowners in their pleadings. It was this restriction that the landowners challenged before the Supreme Court.

Supreme Court’s reasoning

The Supreme Court took a firm view that once a court determines the correct market value of acquired land in accordance with law, it cannot arbitrarily reduce the compensation on the ground that the landowner did not expressly seek that higher amount.

“It is the duty of the Court to assess the compensation for which the landholder is entitled and not the claims made by the landholders,” the bench observed. The judges emphasised that land acquisition proceedings are not adversarial in the traditional sense, where relief is strictly confined to what is pleaded. Instead, they involve the exercise of statutory powers that carry corresponding statutory obligations.

The court noted that under the Land Acquisition Act, the Collector is required to determine “the compensation which in his opinion should be allowed for the land” after considering the factors set out in Section 23 of the Act. These include the market value of the land at the time of acquisition, damages sustained by the landowner, and other relevant considerations. This statutory duty, the bench said, cannot be diluted or overridden by procedural technicalities such as the precise amount claimed in pleadings.

Reliance on precedent

In reinforcing its view, the Supreme Court referred to its earlier decision in Gundabhat & Anr vs Assistant Commissioner/Land Acquisition Officer (2023). In that case, too, the court had held that restricting compensation to the amount claimed by landowners, despite a judicial determination of a higher market value, amounted to a “serious error.”

The bench reiterated that once the correct market value is judicially determined, the court is bound to award compensation at that rate. Any other approach would defeat the purpose of statutory safeguards meant to protect landowners from undervaluation and arbitrary state action.

Equity and the role of courts

A key theme running through the judgment is the equitable role of courts in land acquisition matters. The Supreme Court highlighted that such cases require courts to balance the state’s power to acquire land for public purposes with the constitutional and statutory rights of individuals to receive fair compensation.

By rejecting a claim-based ceiling on compensation, the ruling strengthens the protective framework for landowners, particularly those who may lack the resources or legal sophistication to accurately quantify their losses at the outset of litigation. The court made it clear that justice in land acquisition cases cannot be reduced to a mechanical exercise tied to pleadings alone.

Relief granted

Allowing the appeal, the Supreme Court set aside the Karnataka High Court’s restrictive order and directed that the landowners were entitled to compensation at the full rate of ₹16.94 lakh per acre, as determined by the High Court itself. The bench ordered that all consequential statutory benefits attached to the award would also be payable.

At the same time, the court clarified that the landowners would be required to pay the differential court fee on the enhanced amount of compensation, in line with directions earlier issued by the High Court. The respondent authorities were directed to pay the enhanced compensation within three months.

Wider implications

The judgment has broader implications for land acquisition jurisprudence across the country. It sends a clear signal to courts that their primary obligation is to determine and award just compensation based on law and evidence, not to be constrained by the numerical limits of claims made by landowners.

For landowners, the ruling offers reassurance that undervaluation will not be perpetuated merely because of conservative or imperfect pleadings. For the state and acquiring authorities, it reinforces the message that compensation must reflect true market realities and statutory mandates.

In reaffirming these principles, the Supreme Court has once again emphasised that land acquisition is not merely a technical legal process but one that directly affects livelihoods, property rights, and public confidence in the rule of law.