Municipal Council's Financial Constraints No Ground To Deny Compensation For Land Used As DP Road: Bombay High Court

The Bombay High Court has held that the financial burden on a Municipal Council cannot be a ground to deny just compensation to a landowner whose property has been reserved and continuously used as a Development Plan (DP) Road without acquisition. The Court observed that constitutional entitlement to just compensation cannot be made contingent upon the magnitude of the financial liability that may fall upon the acquiring authority.

A Division Bench of Justice Vrushali V. Joshi and Justice Sandesh D. Patil was hearing a writ petition seeking directions to the authorities to acquire land reserved as a DP Road under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Although the Municipal Council had been using the land as a public road for decades, no acquisition proceedings had ever been initiated. The petitioner's predecessor repeatedly demanded compensation, initially by legal notices, then by proceedings under Section 330(3) of the Maharashtra Municipalities Act, 1965, and subsequently under Section 64 of the 2013 Act, before the present writ petition was filed.

The Municipal Council opposed the petition, contending that the petitioner's predecessor had already benefited by obtaining sanction of a residential layout and selling plots adjacent to the DP Road. It further argued that the claim was barred by delay and laches.

The Court rejected these contentions. It observed that once land is reserved under the Maharashtra Regional and Town Planning Act, 1966, the owner loses the right to use it for any purpose other than the one for which it is reserved. The Court held that reservation of land for a DP Road and sanction of a residential layout are distinct statutory exercises, and the benefit derived from development of the remaining land could not justify denial of compensation for the separately reserved property.

On the issue of delay, the Court found that the petitioner's predecessor had consistently pursued the claim for compensation from 2002 onwards before different forums. It held that the cause of action was continuous and that the petitioner had never abandoned the claim.

The Court also rejected the Municipal Council's submission that acquisition would impose a huge financial burden. It noted that the financial burden is the result of the unreasonable approach taken by the Municipal Council.

The Court observed that fiscal implications cannot override a landowner's substantive entitlement to compensation. It held that the constitutional guarantee of just compensation cannot be denied merely because compliance would entail significant financial liability for the public authority.

“There is no gainsaying that constitutional guarantee of just compensation cannot be rendered contingent upon the magnitude of the financial burden. Consequently, a mere escalation in the projected liability how significant, does not constitute, per se a valid ground for deny benefits to the landowners,” the Court observed.

Accordingly, the Court allowed the writ petition and directed the respondents to acquire the petitioner's land, in accordance with law.

Case Title: Zal Sam Cooper v. State of Maharashtra [Writ Petition No. 7707 of 2018]

Citation: 2026 LiveLaw (Bom) 314

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