12% additional compensation under 2013 land acquisition law applies only to land value, not buildings, Gujarat High Court rules

The petitioners challenged the award dated 8 September 2022 passed by the Special Land Acquisition Officer, but only to the extent that it did not grant 12% additional compensation under Section 30(3) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”) on the value of a G+3 building/superstructure situated on the acquired land.

The petitioners had received the compensation under the award on 24 March 2023 and had also filed a reference under Section 64 of the 2013 Act, which was pending before the Land Acquisition, Rehabilitation and Resettlement Authority.

Although the writ petition was filed after approximately four years without any explanation for the delay, the High Court examined the claim on merits.

Whether the expression “market value of the land” in Section 30(3) of the 2013 Act includes the value of buildings, superstructures and other assets attached to the land, so as to attract 12% additional compensation on such value.

Whether the definition of “land” in Section 3(p) can be applied to enlarge the specific reference to the market value determined under Section 26 in Section 30(3).

Whether the petitioners were entitled to relief against the award dated 8 September 2022 despite the availability of a pending statutory reference under Section 64 and the delay in approaching the High Court.

The Court applied Sections 3(p) and 3(u) of the 2013 Act, defining “land” and “market value,” respectively.

Section 26 prescribes the criteria for determining the market value of land, whereas Section 27 requires the Collector to calculate the total compensation by including all assets attached to the land.

Section 29 separately governs the valuation of buildings, other immovable property, trees, plants and standing crops attached to the land.

Section 30(3) mandates payment of 12% per annum “in addition to the market value of the land provided under section 26,” and the expression “such market value” refers specifically to the market value determined under Section 26.

The Court relied on Commissioner, Gadag Sub-Division v. Mathapathi Basavannewwa, (1995) 6 SCC 355, which held that the pari materia provision under Section 23(1A) of the Land Acquisition Act, 1894, was intended to offset inflation and the rise in the value of land between notification and award; that rationale does not extend to depreciable superstructures.

The Court declined to follow K. Kodeeswaran v. Special District Revenue Officer/LAO, W.P. No. 35385 of 2023 and connected matters, decided on 8 July 2024, as it considered that decision insufficiently attentive to the statutory scheme and legislative object.

The Court distinguished between the components of compensation under the 2013 Act.

Section 26 determines only the market value of the land through criteria such as stamp value and comparable sale transactions, and does not provide the mechanism for valuing superstructures.

The value of buildings and other assets is separately assessed under Section 29 and incorporated into the overall compensation under Sections 27 and 28.

However, Section 30(3) expressly links the 12% payment to the “market value of the land provided under Section 26” and not to the total compensation under Section 27 or the valuation of attached assets under Section 29.

The Court therefore held that the general definition of “land” in Section 3(p) could not override the specific statutory language of Section 30(3).

It further reasoned that the purpose of the 12% payment is to compensate for inflation and appreciation in land value during the acquisition process, a rationale that does not apply in the same manner to buildings or superstructures, which are depreciable assets.

Accordingly, the omission of 12% compensation on the value of the superstructure was not legally erroneous.

The petitioners’ interpretation based on Section 3(p) was rejected.

The writ petition was dismissed as devoid of merit, with no order as to costs.