Agricultural land compensation determined via neighbouring village exemplars must include 12% annual escalation to reflect market appreciation.

The State of Maharashtra acquired agricultural lands in Village Parhar (Khurd), Taluka Bhor, District Pune, for the Neera Deoghar Irrigation Project.

The Section 4 notification was published on October 9, 1997.

The Land Acquisition Officer (LAO) awarded compensation ranging from ₹40,000 to ₹46,000 per hectare for jirayat lands on May 17, 1999.

Dissatisfied, the claimants sought a reference under Section 18 of the Land Acquisition Act, 1894, claiming ₹3,68,000 per hectare.

The Reference Court enhanced the compensation to ₹2,54,000 per hectare by adopting the base rate from a neighboring village, Dabkeghar, but applied only a 6% annual escalation.

Both the claimants and the acquiring body (MKVDC) appealed to the High Court.

1. Whether Village Parhar (Khurd) is comparable to the neighboring village of Dabkeghar for the purpose of determining market value.

2. Whether the claimants are entitled to a 12% annual escalation instead of the 6% granted by the Reference Court.

3. Whether the Reference Court was correct in rejecting the objection regarding the limitation of the reference applications.

The Court applied Section 18 and Section 23 of the Land Acquisition Act, 1894, regarding the fresh determination of market value by the Court based on evidence.

It followed the precedent in Chimanlal Hargovinddas v. Special Land Acquisition Officer, which mandates evaluating a reference as an original proceeding.

The Court utilized the "Comparable Sales Method," emphasizing that the highest bona fide sale exemplar should normally be preferred unless there are reasons to average them (Mehrawal Khewaji Trust v. State of Punjab).

The principle of 12% annual escalation to account for the time gap between notifications was applied, as recognized in the methodology of the LAO and previous judicial determinations for the same project.

The Court found that Village Parhar (Khurd) and Dabkeghar share a common boundary and possess similar agricultural quality and terrain.

It rejected the acquiring body's argument that the villages were incomparable due to the Neera River, noting that the river was seasonal and connected by a bridge.

The Court critiqued the Reference Court’s reduction of the escalation rate to 6%, ruling that the absence of "commercial potential" did not justify a lower rate for agricultural land.

Since the LAO had utilized a 12% escalation in the original award and the High Court had previously accepted a 12% rate in the Dabkeghar appeals (FA 150/2009), the Court held that consistency required applying the same 12% rate to the base value of ₹2,05,000 per hectare.

The Court also dismissed the limitation plea, finding that applications filed within six weeks of the Section 12(2) notice were valid.

The High Court partly allowed the claimants' appeals, dismissed the acquiring body's appeals, and ordered the state/acquiring body to pay the enhanced amount with all statutory benefits, including 30% solatium (U/S 23(2)), 12% additional component (U/S 23(1A)), and interest (U/S 28) within twelve weeks.