An 8% annual cumulative escalation applies to compensation for comparable acquisitions separated by an 18-year notification gap.

The appellants’ agricultural lands situated at Village Pilol, Taluka and District Vadodara, were acquired for construction of an extension/branch canal under the Narmada Canal Project.

The Special Land Acquisition Officer, by award dated 24 December 2004 under Section 11 of the Land Acquisition Act, 1894, awarded compensation at ₹12.40 per sq. metre.

On a reference under Section 18, the Reference Court determined the total compensation at ₹42 per sq. metre, inclusive of the amount already awarded, and granted statutory interest and other benefits.

In appeal under Section 54 of the Act, the landowners sought compensation by comparison with lands acquired in the adjacent villages of Manjusar and Alindra.

The acquiring authority opposed reliance on Manjusar because it was a substantially developed industrial area, but accepted the similarity and adjacency of Alindra and Pilol.

Whether the market value of the acquired land in Pilol ought to be determined by relying on the compensation awarded for lands acquired in the developed industrial area of Manjusar?

Whether the compensation awarded for comparable lands in adjacent Village Alindra could be adopted as the base value for Pilol?

Whether the Alindra market value of ₹15 per sq. metre should be enhanced by applying cumulative escalation for the 18-year interval between the respective Section 4 notifications, and if so, at what rate?

The Court applied Sections 4, 11, 18 and 54 of the Land Acquisition Act, 1894, governing notification of acquisition, determination of compensation by the Land Acquisition Officer, reference to the civil court, and appeals to the High Court.

It relied on the principle that compensation must reflect the just and fair market value of the acquired land, and that a prior determination concerning similarly situated land in an adjoining village acquired for the same public purpose may serve as a relevant comparable instance.

The Court referred to Second Additional Special Land Acquisition Officer & Anr. v. Chunilal Gangaram & Ors., 1999 (2) GLR 1357, recognising reliance on an earlier judgment concerning land in an adjoining village acquired for a similar project.

It further applied Central Warehousing Corporation v. Thakur Dwara Kalan Ul-Maruf Baraglanwala (Dead) & Ors., (2024) 13 SCC 805, holding that an annual cumulative escalation of 8% may be appropriate where there is a substantial time gap, whereas 10%–12% may be considered for shorter gaps of approximately three to five years.

The Court distinguished Ramrao Shankar Tapase v. Maharashtra Industrial Development Corporation & Ors., (2022) 7 SCC 563, which concerned a shorter three-to-five-year interval.

The Court upheld the rejection of Manjusar as a comparable because Manjusar was a developed industrial area with GIDC and industrial activity, whereas Pilol consisted of rural agricultural land with substantially more limited development.

In contrast, Pilol and Alindra were adjacent, had abutting boundaries, similar rural character, comparable fertility and infrastructure, and the lands in both villages had been acquired for the Narmada Canal Project.

The Alindra acquisition, based on the Section 4 notification dated 8 March 1984, had resulted in compensation of ₹15 per sq. metre, and no adverse or modifying order had been shown.

Since the Pilol notification was issued on 10 January 2002, there was an 18-year gap.

Applying the 8% annual cumulative escalation considered appropriate for a long interval in Central Warehousing Corporation, the Court calculated the enhanced value as ₹15 × 1.08¹⁸ = ₹59.93 per sq. metre.

After deducting the ₹12.40 per sq. metre already awarded by the Special Land Acquisition Officer, the additional compensation payable was ₹47.53 per sq. metre.

The Court held that the claimants were entitled to total market-value compensation of ₹59.93 per sq. metre, together with statutory interest at 9% for the first year and 15% thereafter until realization, along with other statutory benefits.

After deducting the ₹12.40 per sq. metre already awarded, the claimants became entitled to ₹47.53 per sq. metre as additional compensation.

Since the Reference Court had awarded ₹42 per sq. metre, the award was enhanced by ₹5.53 per sq. metre, with applicable statutory interest and benefits.

The respondents were directed to deposit the enhanced amount within eight weeks, after which the Reference Court was to disburse it to the claimants subject to verification and deduction of court fees, if any.