Landowners are entitled to rental compensation for land possession taken prior to initiation of formal acquisition proceedings.

The Petitioner owned land in Village Wakad, Pune, which was reserved for an octroi post and a road in the draft development plans of 1997 and 2000

Respondent No. 3, Pimpri Chinchwad Municipal Corporation (PCMC), took actual possession of the land in August 2003, though a formal possession receipt (taba pavati) was only executed on February 24, 2006

Despite being dispossessed, the formal land acquisition award was not passed until January 22, 2015, following directions from the High Court in a previous writ petition

The Petitioner sought rental compensation for the period between dispossession (2003) and the payment of the award (2015) based on State Government Resolutions (GRs)

PCMC issued an order on October 10, 2016, granting a meager sum of ₹3,22,308, calculating rent only for the period from August 2003 to February 2006 based on a per-square-foot rate, rather than the policy-mandated percentage of the land value

The Petitioner challenged this order, seeking compensation at 8% per annum of the land value plus interest

1. Whether the Petitioner is entitled to rental compensation for the entire period from the date of actual possession (2003) until the final payment of the acquisition award (2015)

2. Whether the State’s policy for rental compensation is applicable to acquisitions for municipal purposes (octroi posts) or restricted only to irrigation projects

3. What is the appropriate legal basis and rate for calculating rental compensation given the shifting State policy manifested in various Government Resolutions

The court primarily relied on the executive policy of the State of Maharashtra manifested in Government Resolutions dated 01.12.1972, 02.04.1979, 17.04.2003, 17.10.2003, and 26.12.2003

It applied the principle from State of Maharashtra v. Maimuma Banu (2003) 7 SCC 448, which established that while rental compensation is not a statutory right under the Land Acquisition Act, 1894, it is an equitable entitlement based on executive orders to compensate landowners dispossessed prior to formal acquisition

The court further applied the doctrine of non-discrimination under Article 14 of the Constitution, as seen in Union of India v. Tarsem Singh (2019) 9 SCC 304, holding that the purpose of land use (e.g., irrigation vs. municipal) cannot justify differential compensation for the deprivation of land

Finally, it followed Bhagwat Nathu Patil v. State of Maharashtra (2009) 3 Mh.L.J. 413, which interpreted the 2003 GRs to mean that for possession taken after April 2003, rental compensation is payable at 8% p.a. on the value of "open land"

The Court first resolved the factual dispute regarding the date of possession, noting that PCMC’s own impugned order admitted possession was taken in August 2003, thereby overriding the later date mentioned in the formal possession receipt

Regarding the Respondents' argument that the GRs applied only to irrigation projects, the Court held that such a distinction would be discriminatory and violate Article 14; the critical factor is the landowner's deprivation of property, regardless of the ultimate public purpose

The Court analyzed the evolution of the GRs, noting that while the GR dated 17.04.2003 initially cancelled earlier policies, subsequent GRs in October and December 2003 reinstated the entitlement but modified the calculation base

It concluded that for possession taken after December 2003 (or where the 2003 policy applies), the compensation must be 8% p.a. of the value of "open land" rather than the total award value

The Court rejected the application of Ashok Masu Bansode v. State of Maharashtra, noting it dealt with the 2013 Act and private negotiations, which were distinct from the long-term dispossession without payment seen here

It held that the Petitioner is entitled to rental compensation from August 2003 until the date the award amount was actually paid in 2015

The Court directed PCMC to calculate this compensation at the rate of 8% p.a. based on the price/value of "open land" as per the GR dated 26.12.2003

Additionally, following Supreme Court precedent, the Court awarded interest at 6% p.a. on the delayed rental compensation

PCMC was ordered to complete the calculation and payment within four months, adjusting for the small amount already paid