Rural-area multiplier applies only to land value, not buildings or attached assets.

The respondent’s land bearing Survey No. 1008, admeasuring 3.060 hectares in Village Khamahariya, Tehsil Chitrangi, District Singrauli, was acquired in part for the Sidhi–Singrauli Railway Line, forming part of the Lalitpur–Singrauli Railway project.

An area of 0.027 hectare, along with attached assets, was acquired, and the Collector’s award was passed on 13 July 2020.

Dissatisfied with the compensation, the landowner sought a reference under Section 64 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“LARR Act”).

The Reference Court accepted the valuation of the land and house but enhanced compensation by applying a rural multiplication factor of 2.0 to both the land value of Rs. 2,97,000 and the house value of Rs. 59,55,603, relying on the Central Government notification dated 9 February 2016.

The Railways challenged that award under Section 74 of the LARR Act, contending that the State Government’s factor of 1.0 applied because the acquisition proceedings had been undertaken by the State Government.

Whether the Central Government’s rural multiplication factor of 2.0 applied to land acquired by the State Government for a Railway project, which is a project of the Union?

Whether the multiplication factor of 2.0 could be applied to the value of the house and other attached assets, in addition to the value of the acquired land?

The Court applied Section 3(e)(v) of the LARR Act, under which the Central Government is the “appropriate Government” in relation to acquisition of land for the purposes of the Union, as specified by notification.

Section 26(2) requires the market value of land determined under Section 26(1) to be multiplied by the factor specified in the First Schedule; the Central Government’s notification dated 9 February 2016, issued under Section 30(2) read with the First Schedule, prescribed a factor of 2.0 for rural areas.

Sections 27 and 29 distinguish the valuation of land from the valuation of buildings and other assets attached to or situated on the land, while Section 30 concerns solatium and the compensation package.

The Court relied on Deputy Chief Engineer (Construction) v. Sajruddin Ali, F.A. No. 1373/2023, and the Division Bench decision in Badrilal Dhakad v. Union of India, 2022 SCC OnLine MP 280, holding that the Central Government multiplier applies where land is acquired for a Union project, even if the acquisition is undertaken by the State Government.

The Court further followed the review decision in NHAI v. Badrilal, R.P. No. 665/2022, which held that the 14 December 2017 clarification could not dilute or supersede the gazetted notification prescribing the factor of 2.0.

The Court held that the decisive consideration was the purpose for which the land was acquired, not merely the identity of the authority conducting the acquisition proceedings.

Since the acquisition was for the Railways, a Central Government organisation and Union project, Section 3(e)(v) applied and the Central Government’s rural multiplier of 2.0 governed the land valuation.

However, the Court distinguished between the market value of land under Section 26 and the value of buildings or other assets under Sections 27 and 29.

The multiplication factor is intended to enhance the value of land, particularly because land value varies according to its rural or urban location and proximity to urban areas; it does not enhance the replacement or assessed value of a structure merely because the structure stands on rural land.

Accordingly, the factor of 2.0 could be applied to the land value of Rs. 2,97,000, but not to the separately assessed house value of Rs. 59,55,603.

It answered the second issue in favour of the Railways, holding that the multiplier was applicable only to the land component and not to the value of the house or other attached assets.

The appeal was therefore partly allowed.

The Reference Court’s award was modified so that the factor of 2.0 would apply only to the land value of Rs. 2,97,000 and not to the house value of Rs. 59,55,603; the appeal was disposed of accordingly.