Compensation for surreptitiously acquired land must be based on its original agricultural status and pre-2013 valuation.

A land scam unearthed in a Public Interest Litigation revealed that the Gujarat Industrial Development Corporation ("GIDC") transferred twenty fully developed industrial plots to the appellant in exchange for agricultural lands, without any acquisition proceedings

In 1980, GIDC conceived the Sarigam Industrial Estate and took over 34,743 sq. mtrs. of land, treating it as government land by virtue of vesting under the Gujarat Land Ceiling Act, 1960, pursuant to proceedings initiated against the original owner, Narhari Sukhanand Joshi

The vesting order dated 13.10.1970 was upheld by the Collector in 1973, but the Gujarat Revenue Tribunal remanded the matter; on fresh adjudication, the Ceiling Authorities held in favour of the original owner in 2014

The appellant, who allegedly participated in the ceiling proceedings on the owner's behalf, purchased the lands by sale deeds dated 24.06.2016 and 30.07.2016 for a little over Rs. 30 lakhs, with mutation effected vide Entry No. 9014

Relying on the 2014 order, the appellant claimed restitution or compensation under the Act of 2013, whereupon GIDC—citing two earlier instances—transferred 20 fully developed industrial plots (30,000 sq. mtrs.) to him by exchange deed dated 22.03.2022

The Gujarat High Court cancelled the allotment, holding it suffered from grave error of law and "smacks of malafides"

A three-Judge Bench of this Court, by order dated 05.08.2024, declined interference under Article 136 with the cancellation and confined notice to compensation

By order dated 20.08.2025, the Collector was directed to determine compensation; he assessed Rs. 5.85 crores under the Act of 1894 and Rs. 24.72 crores under the Act of 2013, treating the land as agricultural, which the appellant disputed

By order dated 28.04.2026, the Court ruled restitution was out of question and only reasonable compensation fell for fixation

On affidavit, valuation was stated as Rs. 1,17,16,090/- (Act of 1894, without interest), Rs. 3,30,03,071/- (Act of 2013), and Rs. 16,48,20,980/- (as on 05.12.2025, exchange-deed-date value)

1. Whether the appellant was entitled to compensation computed under the Act of 2013, or at the market value as on the date of the exchange deed, given that the land was agricultural when taken over and was developed entirely at GIDC's cost

2. Whether the appellant's surreptitious purchase in 2016, made with knowledge of the prior takeover and development, and his connivance in the malafide exchange, disentitled him from claiming compensation under the Act of 2013

3. Whether, and on what terms, interest and deductions (for plots already transferred to third parties) should govern the compensation payable

Land Acquisition Act, 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, under which compensation is ordinarily determined with reference to the nature and use of the land at the relevant time

Gujarat Land Ceiling Act, 1960

The equitable principle embodied in the doctrine of pari delicto—a party complicit in an illegal or malafide transaction cannot derive benefit from it

The valuation principle that accretion in land value attributable to development carried out by the acquiring authority, to which the claimant "has not expended a pie," cannot enure to the claimant's benefit; nor does a non-agricultural conversion effected in pursuance of the authority's own project inure to the claimant

The Court reasoned that the appellant had "actively connived in obtaining the purchase and the subsequent malafide exchange from the GIDC"

When the Estate project commenced in 1980, the ceiling proceedings stood remanded and the matter was in flux; ignoring the remand, GIDC took over lands then shown in revenue records as government-owned—lands which, before takeover, remained agricultural

Had the ceiling proceedings concluded before the takeover, compensation for the agricultural land would have been payable to the original owner alone; the appellant surfaced only in 2016 on the strength of the 2014 order dropping those proceedings

Even without accepting GIDC's "shadow-boxing" allegation, the Court found it indubitable that the appellant knew of the complete development when he purchased, and that the purchase and mutation were effected surreptitiously—thereby "disentitling him from raising claim for compensation under the Act of 2013"

The exchange-deed-date valuation was relevant only to show that the lands were developed by GIDC, not by the appellant, and that the non-agricultural conversion, being incidental to the industrial estate, conferred no benefit on him

Consequently, compensation was confined to the agricultural valuation under the Act of 1894 (Rs. 1,17,16,090/-), with interest at 9% fixed by the Court (rather than under the 1894 Act, which could have benefited only the original owner), since the appellant acquired possession only in 2016

The amount is to be disbursed after deducting the consideration the appellant received for Plot Nos. 3311, 3313 and 3117—already allotted by him to third parties in 2020 after remitting transfer fees to GIDC—which GIDC must verify; interest shall not run on the deductible amount

The appeals were disposed of, reaffirming the malafide nature of the GIDC transfer and the cancellation of the exchange deeds. GIDC is entitled to deal with the remaining seventeen industrial plots under the cancelled exchange deed and retains rights in the three third-party plots in accordance with the industrial-plot allotment scheme