1. Land acquisition compensation under 2013 Act — Reference Court applied 40% deduction on average sale price — Deduction challenged on appeal. (Para 2 , 3 , 4 )
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2025 Supreme(Online)(P&H) 18393
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Harkesh Manuja, J
Landowners – Appellant
Versus
HSIIDC – Respondent
Under Section 26 of the 2013 Act, market value based on average sale price does not attract automatic development deductions. Such reductions apply only if the Collector specifically opines that the sale prices are not indicative of the actual prevailing market value.
Headnote:(A) Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Section 26 - Determination of market value - Average sale price - The statutory provision for determining market value based on the average sale price of similar land does not explicitly mandate a deduction for development. The theory of deduction, commonly applied under the 1894 Act, does not apply under the 2013 Act unless the Collector expresses a specific opinion that the price paid is not indicative of the actual prevailing market value under Explanation 4 to Section 26(1). (Paras 9, 10, 11)
(B) Land Acquisition - Comparison between 1894 Act and 2013 Act - Precedents regarding development deductions established under the provisions of the 1894 Act are not applicable to acquisitions carried out under the 2013 Act due to the shift in the legislative mandate and the specific criteria laid down in Section 26. (Para 11)
Facts of the case:
Land was acquired for a public purpose involving transportation infrastructure. The market value was initially assessed by the Collector and later enhanced by the Reference Court, which applied a 40% deduction to the average sale price on the grounds that the sale exemplars were of small parcels. Aggrieved by this, both the landowners and the acquiring authority preferred appeals.
Findings of Court:
The Reference Court wrongly applied a 40% deduction as no evidence existed to show that the Collector had formed an opinion that the sale instances were not indicative of the market value. While the 2013 Act generally precludes such deductions, the court found a 10% deduction appropriate in these specific circumstances to account for the optimum utilization of land by the beneficiary.
Issues: Whether the "theory of deduction" for development costs, prevalent under the 1894 Act, should be applied to the average sale price for determining market value under Section 26 of the 2013 Act.
Ratio Decidendi: Section 26(1)(b) read with Explanation 2 of the 2013 Act requires the use of the average sale price of the highest sale exemplars and does not provide for automatic deductions. In the absence of a recorded opinion by the Collector that the prices are not indicative of the market value, no development deduction is permissible. The 2013 Act creates a distinct mechanism for compensation that differs from the earlier 1894 regime.
Result: Appeals filed at the instance of landowners are partly allowed, whereas, the cross-appeals filed at the instance of the acquiring authority are hereby dismissed.
Legal Category Hierarchy
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land acquisition
- compensation
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evidence
- sale exemplars (Para 6)
- collector's rate
- procedure
Table of Contents
2. Landowners argued no deduction permitted under Section 26, 2013 Act; respondent argued deduction justified under 1894 Act precedents. (Para 6 , 7 )
3. Section 26, 2013 Act does not mandate deduction; only discretionary if Collector deems price not indicative. Metro Rail acquisition requires no development deduction. (Para 9 , 10 , 11 , 12 )
4. Under Section 26, 2013 Act, no automatic deduction from average sale price; deduction only if Collector forms opinion under Explanation 4. (Para 9 , 10 , 11 )
5. Landowners' appeals partly allowed; cross-appeals dismissed. Market value recalculated with 10% deduction. (Para 13 , 14 )
6. Is deduction from average sale price permissible under Section 26 of the 2013 Act?
No, unless the Collector forms an opinion under Explanation 4 that the price is not indicative of actual prevailing market value. (Para 9 , 10 , 11 )
7. Are precedents under the 1894 Act regarding deductions applicable to the 2013 Act?
No, the 2013 Act has distinct provisions; deductions under the 1894 Act are not automatically applicable under the 2013 Act. (Para 11 )
8. Does the averaging of multiple highest sale deeds under Section 26(1)(b) account for smallness of parcels?
Yes, the averaging method already accounts for smallness, so no separate deduction for small parcel size is needed. (Para 12 )
landowners invoking Section 64 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabiliation and Resettlement Act, 2013 (for short, “2013 Act”), were partly allowed.
3. Brief facts of the case are that 132 kanal of land owned by the appellants-landowners, situated in the revenue estate of Village Mohammadpur Jharsa, Tehsil & District Gurugram, was sought to be acquired vide notifications dated 24.12.2013 and 18.12.2014, issued under Sections 4 & 6, respectively, of the Land Acquisition Act, 1894 (hereinafter referred to as “1894 Act), for the public purpose, namely, Metro Rail Track and its allied uses. The Land Acquisition Collector-cum-District Revenue Officer vide its award dated 13.01.2017, assessed the market value of the acquired land at the rate of Rs.1,90,00,000/- per acre.
4. Aggrieved of the same, the appellants-landowners invoked separate reference petition(s) under Section 64 of the 2013 Act, seeking enhancement of compensation. Upon consideration of the material available on record, the Reference Court vide its Award dated 11.04.2025, enhanced the market value to Rs.2,04,02,826/- per acre besides grant of all other statutory benefits.
5. Feeling dissatisfied with the aforesaid Award passed by the ld. Reference Court, the landowners as well as HSIIDC have preferred their appeals, details whereof are given at the bottom of the judgment.
6. Impugning the aforementioned award, learned counsel for the appellants-landowners submits that the award by the Land Acquisition Collector-cum-District Revenue Officer, Gurugram in the present case was passed in exercise of powers under Section 26 of the 2013 Act on
13.01.2017 and in such a situation, relying upon clause 1(b) to Section 26 read with explanation 2 thereof, the compensation was required to be assessed on the basis of average sale price for similar type of land situated in the same revenue estate or at best the nearest revenue estate by taking into account one-half of the total number of sale deeds in which the highest sale price was mentioned.
6.1 Learned counsel submits that though the ld. Reference Court took into account the 05 sale deeds pertaining to the same revenue estate of Village Mohammadpur Jharsa having the highest price/value and calculated the average sale price, however, wrongly applied deduction of 40% while observing that such sale instances were of small parcels. While relying upon the aforementioned statutory provisions i.e. Section 26 of the 2013 Act and the latest proposition of law made thereupon by the Hon’ble Apex Court in “ Madhya Pardesh Road Development Corporation vs. Vincent Daniel and Others , 2025 (7) SCC 798” , learned counsel submits that under the new Land Acquisition Act, no deduction was required to be applied on the average sale price. He thus, submits that the market value should have been assessed exclusively on the basis of the average sale price of the highest sale exemplars as tabulated in paragraph No. 47 of the impugned award and thus, the market value was required to be enhanced accordingly. No other argument has been addressed.
7. On the other hand, learned counsel appearing on behalf of respondent No.3 submits that in view of the settled proposition of law in terms of repeated decisions rendered by the Hon’ble Apex Court, the ld. Reference Court was fully justified in applying the deduction over the average sale price derived from the sale instances tabulated in paragraph No. 47 of the impugned award. In support, learned counsel places reliance upon the following decisions passed by the Hon’ble Apex Court:-
(i) Kasturi vs. State of Haryana , 2003(1) SCC 354. Relevant paras
14 to 17 are reproduced hereunder:-
“14 On facts and in the light of the legal position emerging from the various decisions referred to above, it is not possible for us to say that cut of 20% adopted by the learned Single Judge as affirmed by the Division Bench in the impugned judgment is wrong or unsustainable. It appears to u
