URBAN IMPROVEMENT TRUST, BHILWARA AND ANR. vs GOPAL LAL RATHI

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HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR
S.B. Civil Miscellaneous Appeal No. 1135/2017
CNR: RJHC010250432017 | URN: CMA / 3286U / 2017
1. Urban Improvement Trust, Bhilwara Through Its
Secretary, Uit, Bhilwara.
2. The Land Acquisition Officer, Urban Improvement Trust,
Bhilwara.
----Appellants
Versus
Vimla Devi W/o Sh. Gopal Lal Rathi, Resident Of Shastri Nagar
Bhilwara Raj..
----Respondent
Connected With
S.B. Civil Miscellaneous Appeal No. 1134/2017
CNR: RJHC010249762017 | URN: CMA / 3284U / 2017
1. Urban Improvement Trust, Bhilwara Through Its
Secretary, Uit, Bhilwara.
2. The Land Acquisition Officer, Urban Improvement Trust,
Bhilwara.
----Appellants
Versus
Gopal Lal Rathi S/o Sh. Chandanmal Rathi, Resident Of Shastri
Nagar, Bhilwara.
----Respondent
For Appellant(s) : Mr. Abhimanyu Singh
For Respondent(s) : Mr. Sandeep Sarupariya
Mr. Nikhil Ajmera
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HON'BLE MR. JUSTICE FARJAND ALI
Order
REPORTABLE
DATE OF CONCLUSION OF ARGUMENTS : 14/08/2026
DATE ON WHICH ORDER IS RESERVED : 14/08/2026
FULL ORDER OR OPERATIVE PART : Full Order
DATE OF PRONOUNCEMENT : 30/10/2026
BY THE COURT:-
1. The present civil misc. appeals under Section 54 of the Land
Acquisition Act, 1894 have been preferred by the appellants
against the order dated 22.12.2016 passed by the learned
Additional District Judge No.1, Bhilwara in Civil Misc. Case No.
10/2022 and in civil Misc. Case No.02/2022 whereby he has
modified the award dated 31.01.2001.
2. The brief facts of the case are that the State Government
initiated land acquisition proceedings at the instance of the
appellant-Urban Improvement Trust, Bhilwara, for establishing a
residential colony known as ‘Rama Vihar’ at Bhilwara and Village
Jodhdas. Notifications under Sections 4 and 6 of the Land
Acquisition Act, 1894, were issued on 18.02.1998 and
01.02.1999, respectively, followed by determination of
compensation vide award dated 31.01.2001. Aggrieved by the
award, the respondent sought a reference before the learned
Additional District Judge No.1, Bhilwara. Vide order dated
22.12.2016, the learned reference court decided Issue No.3A in
favour of the respondent and held the respondent entitled to 25%
of the developed land in lieu of the acquired land, comprising 20%
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residential and 5% commercial land. Hence, the present appeal
has been preferred by the UIT assailing the aforesaid order.
3. Learned counsel for the appellants submitted that the
learned reference court has committed material illegality in
directing the allotment of 25% developed land to the respondent
in lieu of the acquired land, without properly appreciating the
material available on record. It was contended that the original
reference was confined to enhancement of compensation, and the
claim for allotment of developed land was introduced subsequently
by way of an amendment, which was time-barred. Learned
counsel further argued that the circular dated 21.09.1999,
applicable at the relevant time, provided for allotment of only 15%
developed land, whereas the subsequent circular dated
27.10.2005 could not be applied retrospectively. It was also
contended that the judgment relied upon by the learned reference
court was distinguishable on facts and that the respondent had
failed to produce any cogent evidence establishing entitlement to
25% developed land. Accordingly, it was prayed that the
impugned order be quashed and set aside.
4. Per contra, learned counsel for the respondents submitted
that the learned reference court has rightly awarded 25% of the
developed land in view of the substantial increase in land prices
and inflation, as well as the judgment passed by this Court in UIT,
Bhilwara v. Durgalal & Ors. It was contended that despite
acquisition of the land in the year 1999, the respondents have not
received compensation till date and that the Circular dated
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12.07.2024 provides for allotment of 25% developed land in such
cases. Learned counsel further pointed out that the appellants
themselves, vide letter dated 23.02.2026, sought the respondents’
options for allotment of developed land pursuant to the aforesaid
circular. Accordingly, it was prayed that the appeal be dismissed
and the impugned order be upheld.
5. Heard learned counsels appearing on behalf of the parties
and perused the material available on record.
6. This Court has bestowed its thoughtful consideration upon
the rival submissions advanced by learned counsel for the parties
and has carefully examined the material available on record,
including the impugned judgment passed by the Reference Court
as well as the award passed by the Land Acquisition Officer.
7. At the outset, it is necessary to appreciate the nature and
object of the acquisition in question. The Urban Improvement
Trust, Bhilwara, had initiated the acquisition proceedings for the
purpose of establishing a residential colony, namely, ‘Rama Vihar’,
in furtherance of planned urban development. The acquisition was,
therefore, undertaken for a public purpose and not as an ordinary
commercial transaction. The landowners, whose land came to be
acquired compulsorily, were undoubtedly entitled to receive just
and reasonable compensation in accordance with the applicable
statutory provisions, together with the admissible statutory
benefits. However, the question which arises for consideration is
whether such acquisition, by itself, conferred upon the landowners
an additional and independent right to claim 25% of the developed
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land, comprising 20% residential and 5% commercial land,
notwithstanding the policy applicable on the relevant date.
8. The distinction between compensation payable for
compulsory acquisition and allotment of developed land in lieu
thereof assumes considerable significance. The former is governed
by the statutory provisions regulating acquisition and
determination of compensation, whereas the latter can be claimed
only if such entitlement flows from an applicable policy, circular or
statutory provision. The subsequent utilisation of the acquired
land for development of a residential colony cannot, by itself,
create an independent proprietary right in favour of the erstwhile
landowners to claim a specified percentage of the developed land.
Such an entitlement cannot be presumed merely because the
acquiring authority has undertaken development of the acquired
land and has subsequently carved out residential and commercial
plots.
9. It is true that the beneficial provisions concerning persons
whose land is compulsorily acquired deserve a purposive and
liberal interpretation. The law must adequately protect the
interests of landowners who are deprived of their property against
their will for a larger public purpose. However, a liberal
interpretation cannot be stretched to an extent that it creates a
substantive right which is neither contemplated under the
applicable statutory framework nor recognised by the policy
governing the acquisition. The Court cannot, under the guise of
extending equitable relief, enlarge the scope of a statutory
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entitlement or impose an obligation upon the acquiring authority
which has no foundation in law.
10. Another significant aspect which requires consideration is the
nature and scope of the original reference preferred by the
respondent. The original reference was essentially directed
towards enhancement of the amount of compensation determined
by the Land Acquisition Officer. There was no specific claim therein
seeking allotment of additional developed residential or
commercial land in lieu of the acquired property. It was only
subsequently, on 03.04.2015, that an application under Order VI
Rule 17 CPC came to be preferred seeking amendment of the
reference proceedings, which was allowed by the learned
Reference Court vide order dated 07.10.2015, thereby introducing
the claim relating to allotment of developed land.
11. Although the procedural amendment was permitted by the
Reference Court, the mere incorporation of an additional relief by
way of amendment does not, by itself, establish the substantive
entitlement of the claimant to such relief. The permissibility of an
amendment and the legal sustainability of the relief introduced
thereby are two distinct questions. Even where an amendment is
allowed, the relief ultimately granted must independently satisfy
the requirements of the governing statute and the applicable
policy. The Reference Court was, therefore, required to examine
whether the respondent had any legally enforceable entitlement to
claim 25% developed land with reference to the date of acquisition
and the policy then in force.
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12. In this regard, the chronology of the circulars governing
allotment of developed land assumes decisive importance. The
circular dated 21.09.1999 provided for allotment of 15%
developed land in lieu of the land acquired. Subsequently, another
circular dated 27.10.2005 came to be issued, enhancing the
permissible percentage to 25%, comprising residential and
commercial land. Thus, the two circulars operated at different
points of time and contemplated different percentages of
developed land.
13. In the present case, the acquisition and the award passed by
the Land Acquisition Officer are governed by the circular dated
21.09.1999, which was the applicable policy at the relevant time.
The subsequent circular dated 27.10.2005 came into existence
much later and cannot automatically be applied to an acquisition
governed by the earlier policy. The enhancement from 15% to
25% represents a subsequent enlargement of the benefit and, in
the absence of an express provision or necessary intendment
conferring retrospective operation upon the subsequent circular,
such enhanced benefit cannot be extended to earlier acquisitions
as a matter of course.
14. The principle governing retrospective operation of executive
circulars and policy decisions is that, ordinarily, they operate
prospectively unless the language, object and scheme of the
instrument clearly indicate otherwise. A subsequent policy which
enhances the extent of benefit cannot be employed to reopen
concluded or earlier acquisition proceedings and create additional
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liabilities upon the acquiring authority, unless such retrospective
application is specifically authorised. Therefore, the respondent
could not claim the benefit of the circular dated 27.10.2005
merely on the ground that the developed colony was subsequently
established or that the Reference Court was adjudicating the
dispute after issuance of the said circular.
15. The learned Reference Court has placed reliance upon the
judgment passed by this Court in UIT, Bhilwara v. Durga Lal &
Ors. , reported in 2010 (2) WLC (Raj.) 543. However, the
applicability of the aforesaid decision was required to be examined
in the context of the factual and temporal circumstances in which
it was rendered. In the said matter, the award was passed on
18.03.2008, i.e., subsequent to the circular dated 27.10.2005.
Consequently, the policy providing for 25% developed land was
already in existence when the award in that matter came to be
passed.
16. The factual position in the present case stands on a
materially different footing. Here, the applicable circular at the
relevant time was the circular dated 21.09.1999, providing for
15% developed land. The subsequent circular dated 27.10.2005
came into existence after the relevant acquisition and award.
Therefore, the judgment in Durga Lal (supra) could not have been
mechanically applied without examining the distinction in the
dates of acquisition, the dates of the respective awards and the
circulars governing the two matters. A judicial precedent must be
applied having regard to the factual matrix and the legal
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framework under which the controversy therein arose. A decision
rendered with reference to a subsequent policy cannot
automatically be treated as authority for extending the benefit of
that policy retrospectively to an earlier acquisition.
17. This Court is also of the view that the absence of any specific
provision conferring retrospective operation upon the circular
dated 27.10.2005 cannot be overlooked. If the subsequent
enhancement is extended indiscriminately to all earlier
acquisitions, irrespective of the policy governing them at the
relevant time, it would result in unsettling the settled position and
imposing additional financial and proprietary liabilities upon the
acquiring authority. Such an interpretation may also give rise to
claims in numerous concluded acquisition proceedings, thereby
opening the floodgates of litigation. The Court cannot extend a
subsequent policy benefit merely on considerations of parity or
equity when the governing instrument does not support such
extension.
18. The Court must further bear in mind that compulsory
acquisition is fundamentally different from a consensual
transaction of sale and purchase. In an ordinary transaction, the
owner voluntarily transfers property for an agreed consideration.
In compulsory acquisition, however, the property is taken by
exercise of statutory power for a public purpose, irrespective of
the owner’s willingness. It is precisely for this reason that the
legislature has provided for determination of market value and
additional statutory benefits, including solatium and interest, so
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that the landowner receives fair and adequate recompense for the
deprivation of property. Nevertheless, the compulsory nature of
acquisition does not convert the landowner’s entitlement to
compensation into an unrestricted right to claim a portion of the
subsequently developed property. The statutory scheme provides
the mechanism for determining the market value of the acquired
land and the additional benefits payable on account of compulsory
acquisition. Once the landowner is compensated in accordance
with the applicable statutory provisions and the relevant policy, an
additional proprietary benefit in the form of developed land can be
granted only where the same is supported by an independent legal
entitlement.
19. To illustrate, when the Government acquires a person’s
property for a public purpose, the owner is entitled to the market
value of the property as determined in accordance with law,
together with the statutory additions intended to compensate for
the compulsory nature of acquisition and the consequential
deprivation. However, the fact that the acquiring authority
subsequently develops the acquired land and the value of the
developed plots increases cannot, by itself, confer upon the
erstwhile owner a right to claim a share in such development. The
acquisition of one parcel of land does not automatically create a
proprietary interest in the remaining or subsequently developed
land. Any such entitlement must flow from the applicable statutory
provisions or a binding policy.
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20. In the present case, the Land Acquisition Officer determined
compensation on the basis of the material and reports available
before him and granted compensation quantified at Rs.1,14,000/-,
together with the applicable statutory benefits, including the
amount described in the record as solatium and other admissible
components. The applicable policy also contemplated the benefit
of 15% developed land in lieu of the acquired land. The
respondent, therefore, could not claim the enhanced percentage of
25% merely by relying upon a subsequent circular which was not
in force at the relevant time.
21. It is further required to be observed that the determination
of compensation must always satisfy the test of fairness,
reasonableness and proportionality. The object of acquisition law is
to ensure that the landowner is not deprived of the legitimate
value of the acquired property. At the same time, the
compensation cannot be permitted to assume the character of an
exorbitant or unregulated benefit unsupported by the applicable
statutory scheme. The Court is required to strike a balance
between the legitimate proprietary rights of an individual and the
larger public interest for which the acquisition has been
undertaken.
22. The observation of the Reference Court regarding the
acquired land being situated in proximity to an already developed
area may be relevant while examining the market value and
potentiality of the acquired land. However, such considerations
cannot independently justify a direction for allotment of 25%
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developed land. The location and potentiality of the acquired land
are relevant factors in determining its market value; they cannot
be converted into an independent source of entitlement to a
higher percentage of developed residential and commercial plots.
The distinction between valuation of the acquired land and
allotment of a share in the developed colony cannot be lost sight
of.
23. Coming to the scope of adjudication by the Reference Court,
it is necessary to emphasise that a reference under the Land
Acquisition Act is not an occasion to grant relief dehors the
statutory framework or to devise an entirely different mechanism
of compensation merely on the basis of an equitable assessment.
The Reference Court is undoubtedly empowered to independently
examine the adequacy and correctness of the compensation
determined by the Land Acquisition Officer and, upon appreciation
of the evidence, determine the amount legally payable. However,
such jurisdiction must necessarily be exercised within the
parameters prescribed by the governing enactment.
24. The Reference Court is required to objectively examine
whether the Land Acquisition Officer has adopted the prescribed
methodology, whether the relevant market value has been
properly assessed, whether the applicable DLC rates and other
relevant material have been duly considered, and whether the
compensation awarded bears a reasonable relationship with the
nature, location and potentiality of the acquired land. The award
cannot be displaced merely because the Reference Court considers
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a different form of compensation to be more beneficial to the
landowner. The exercise of jurisdiction must remain anchored to
the statutory parameters and the evidence available on record.
25. In the present matter, the principal controversy before the
Reference Court, as originally raised, concerned enhancement of
compensation. However, the respondent subsequently introduced
the claim for allotment of 25% developed land. While considering
such additional relief, the Reference Court was required to
determine the applicability of the two circulars and the legal basis
for extending the subsequent enhanced benefit to the earlier
acquisition. Instead, the learned Reference Court proceeded to
grant the enhanced percentage without adequately appreciating
the material distinction between the circular dated 21.09.1999 and
the subsequent circular dated 27.10.2005.
26. This Court is of the considered opinion that the mere fact
that the land acquired was subsequently developed and utilised for
establishing the residential colony known as ‘Rama Vihar’ cannot,
by itself, furnish a ground to impose an additional obligation upon
the acquiring authority beyond what was envisaged under the
policy applicable on the relevant date. It is pertinent to note that
the subsequent development of the acquired land and its
transformation into a residential colony was neither an unforeseen
circumstance nor an event which occurred independent of the very
object of acquisition. Rather, the acquisition was undertaken with
the specific and conscious object of developing the land for
residential purposes. Therefore, the subsequent utilisation of the
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acquired land in furtherance of its intended purpose cannot be
treated as a subsequent change in the nature of the property so
as to create an additional or enlarged entitlement in favour of the
landowner. In other words, the land did not acquire a residential
character by way of any fortuitous or unforeseen development;
rather, it was acquired precisely for that very purpose. The
purpose underlying the acquisition, the subsequent development
undertaken by the acquiring authority and the value of the
developed plots are three distinct considerations, which cannot be
conflated to create an entitlement dehors the governing policy.
27. The findings recorded by the learned Reference Court on
Issue No.3A, therefore, suffer from an error in the appreciation of
the applicable circulars and the legal consequences flowing
therefrom. The enhanced entitlement of 25% developed land
could not have been granted by applying the circular dated
27.10.2005 retrospectively to an acquisition governed by the
circular dated 21.09.1999. The reliance placed upon the judgment
in Durga Lal & Ors. (supra) is also misplaced in view of the
material distinction in the dates of the respective awards and the
policies applicable thereto.
28. Consequently, this Court finds that the impugned judgment,
insofar as it directs allotment of 25% developed land, comprising
20% residential and 5% commercial land, cannot be sustained in
the eyes of law. The benefit granted by the Land Acquisition
Officer under the applicable policy and the statutory compensation
determined by him do not warrant substitution by the enhanced
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entitlement granted by the Reference Court in the absence of a
legally sustainable basis.
27. Accordingly, the instant civil miscellaneous appeals are
allowed. The impugned judgment dated 22.12.2016 passed by the
learned Reference Court, to the extent of granting 25% developed
land to the respondent, is hereby set aside. The award dated
31.01.2001 passed by the Land Acquisition Officer, Bhilwara, is
restored and upheld.
28. Stay petition and all pending applications, if any, stands
disposed of.
(FARJAND ALI),J
Crt_7 (1763) (1763)
S/214
Mamta Tak
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