Supreme Court Fixes Compensation In NHAI Land Acquisition Dispute At Rs 2,020 Per Sq Metre

In Project Director, National Highways Authority of India versus Alfa Remidis Ltd. and others, the Supreme Court has ruled that compensation for industrial land acquired under the land acquisition law cannot be determined on the basis of a residential plot sale deed. The Court clarified that Section 26(1)(b) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 strictly requires comparison with land of a “similar type.”

A bench of Justice Sanjay Kumar and Justice K Vinod Chandran passed the judgement while hearing an appeal filed by the National Highways Authority of India against Alfa Remidis Ltd.

The dispute arose after the acquisition of 1,394 square metres of land in Nagpur for a highway expansion project under the National Highways Act, 1956. Initially, the Deputy Collector treated the land as agricultural or fallow land and fixed compensation at ₹161.63 per square metre by relying on agricultural sale deeds from the same village.

However, Alfa Remidis Ltd. argued that the land was being used for industrial purposes as a paracetamol manufacturing unit operated there. The company relied on a government Ready Reckoner rate of ₹2,020 per square metre and also produced a residential sale deed from a neighbouring village showing a rate of ₹3,588 per square metre.

The Arbitrator accepted the industrial use claim and adopted the higher residential sale deed rate for compensation. Although the District Judge later set aside the Award, the Bombay High Court restored it, leading the NHAI to approach the Supreme Court.

The Supreme Court held that the Arbitrator committed a clear legal error by relying on a residential plot transaction to determine the value of industrial land. The bench observed that residential land and industrial land could not be treated as “similar type” properties under Section 26(1)(b) of the 2013 Act.

The Court further criticised the reliance on a single sale deed for determining compensation. Referring to Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others, the bench noted that the statutory framework under Section 26 requires consideration of multiple sale deeds for calculating average sale prices, as a solitary transaction may not provide reliable valuation data.

According to the Court, the High Court and the Arbitrator ignored the mandatory statutory requirements while fixing compensation. The judgement stated that using a completely different category of land as a sale exemplar was contrary to the scheme of the 2013 land acquisition law.

Allowing the appeal, the Supreme Court fixed compensation at ₹2,020 per square metre based on the Ready Reckoner rate instead of ₹3,588 per square metre. The Court also directed that Alfa Remidis Ltd. would receive all consequential statutory benefits available under the 2013 Act.