Reduction of Development Deductions Without Cogent Reasons and Factual Basis Is Legally Impermissible

The Appellant (THDC) acquired 67.251 hectares of land in Village Salempur, Uttarakhand, for the rehabilitation of the Tehri Dam Project under a Section 4 notification dated 19.04.2004.

The Special Land Acquisition Officer (SLAO) determined the market value using an exemplar sale deed of a small plot and applied a 50% deduction for development charges, citing the Land Acquisition Manual.

The SLAO noted the land was undeveloped, uneven, and lacked road access.

The Respondents/claimants sought a reference under Section 18 of the Land Acquisition Act, claiming the deduction was excessive as the land had residential and industrial potential.

The Reference Court (District Judge, Haridwar) reduced the deduction from 50% to 30% without detailed reasoning.

1. Whether the Reference Court was justified in reducing the development deduction from 50% to 30% in the absence of specific evidence or reasoning?

Section 18 of the Land Acquisition Act, 1894, regarding the reference to court for compensation.

While determining the market value of large tracts of undeveloped land based on small exemplar plots, deductions for "developmental charges" (roads, civic amenities, and cost of leveling) typically range from 20% to 75% depending on the topography.

Shankarrao Bhagwantrao Patil v. State of Maharashtra (2022) 15 SCC 657, which established that the extent of deduction is a question of fact depending on the nature of the land.

Mala v. State of Punjab (2023) 9 SCC 315, which held that small plot sale instances cannot be used for large chunks without suitable deductions.

The High Court found that the Reference Court modified the deduction from 50% to 30% "without assigning any reasons" or "cogent evidence".

The Court observed that the subject land was "completely undeveloped," surrounded by rivers and forest, and lacked "Pakka road" access.

The Appellant provided undisputed evidence that they had spent over ₹8 crores—nearly equal to the initial acquisition cost—to make the land habitable by providing electricity, water, roads, and flood control.

Since the SLAO's 50% deduction was consistent with the high cost of development and the topography of the land, the Reference Court’s arbitrary reduction lacked a legal basis.

The High Court allowed the appeals, set aside the lower court’s orders dated 26.09.2014, and restored/upheld the SLAO’s award which applied a 50% deduction.

The court ordered the transmission of original records back to the concerned department.