Rental compensation for temporary acquisition under Section 35 of Land Acquisition Act limited to three years.

The Appellant (ONGC) challenged a common judgment and award dated 30.01.2008 passed by the Principal Senior Civil Judge, Gandhinagar in LAR Nos. 30 to 34 of 2007.

The case involved the temporary acquisition of land under Section 35 of the Land Acquisition Act, 1894.

The Special Land Acquisition Officer (SLAO) had initially awarded rental compensation at Rs. 1/- per sq. mtr. per year. The Reference Court enhanced this by an additional Rs. 4.50 per sq. mtr. (totaling Rs. 5.50) and awarded this compensation for the entire period ONGC remained in possession, which exceeded the statutory limit of three years.

1. Whether the Reference Court has the jurisdiction under Section 35 of the Land Acquisition Act to grant rental compensation for a period exceeding three years in cases of temporary acquisition.

2. Whether the Reference Court can adjudicate upon the legality of the possession or declare the acquiring body a "trespasser" in a reference limited to the sufficiency of compensation.

Section 35 of the Land Acquisition Act, 1894, which restricts the power to determine rental compensation for temporary occupation to a maximum period of three years from the date of taking possession.

Under Section 35(3), a Reference Court's jurisdiction is strictly limited to the "sufficiency of compensation" and it cannot declare acquisition proceedings null or award mesne profits as if the occupier were a trespasser.

Article 137 of the Limitation Act, 1963, noting that even where no time limit is prescribed for a reference, a reasonable period (typically three years) applies.

The Court reasoned that the Reference Court exceeded its statutory mandate by granting rental compensation beyond the three-year threshold prescribed for temporary acquisitions.

Citing Sankarji Hemaji, the Court emphasized that a Reference Court is a tribunal of limited jurisdiction; it must confine itself to the issues referred to it (adequacy of compensation) and cannot traverse into the validity of the acquisition or the status of the possession beyond the three-year mark.

The High Court found that while the quantum of Rs. 5.50 per sq. mtr. as determined by the Reference Court was acceptable, its application to a duration exceeding three years was a jurisdictional error.

For any period beyond three years, the remedy for the landowner lies in separate proceedings before an appropriate forum, not the Reference Court.

The High Court allowed the appeals and modified the impugned judgment. The award of 9% interest on the additional compensation was upheld. The court reserved the liberty for claimants to file appropriate proceedings for the period of occupation beyond three years, with the potential benefit of Section 14 of the Limitation Act for time spent bona fide litigating in the wrong forum.