Land Acquisition | Residential Plot Sale Deed Can't Be Used To Determine Compensation For Industrial Land : Supreme Court

The Supreme Court has held that a residential sale deed from an adjoining village cannot be used to determine compensation for industrial land acquired for highway expansion, ruling that the "similar type of land" requirement under Section 26(1)(b) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is mandatory and strictly enforceable for determining the land acquisition compensation.

“Applying the rigours of Section 26(1) of the 2013 LA Act to the case on hand, we find that the Arbitrator demonstrably erred in relying upon the sale deed dated 29.03.2017 relating to residential land in an adjoining village to determine the market value of respondent No. 1's land, which was being used for an industrial purpose. Clearly, the two lands were not of a 'similar type' for the purposes of Section 26(1)(b) of the 2013 LA Act and the price in the said sale deed could not have been adopted.”, a bench of Justice Sanjay Kumar and Justice K Vinod Chandran observed.

The dispute arose from the acquisition of 1,394 square metres of land in Nagpur for the four-laning of the National Highway. A notification under the National Highways Act, 1956, was issued on May 9, 2017.

The Deputy Collector, as the competent authority, classified the land as agricultural/fallow land and awarded compensation at ₹161.63 per square metre based on agricultural sale deeds in the same village.

Aggrieved, Alfa Remidis Ltd. approached the Arbitrator (Additional Commissioner), asserting that its land was being used for industrial purposes – a unit manufacturing paracetamol medicine. The landowner produced documentary evidence of industrial use and cited two alternative rates: the Ready Reckoner government rate of ₹2,020 per square metre for the levy of stamp duty on highway-abutting lands, and a registered sale deed dated March 29, 2017 pertaining to a residential plot of 195.09 square metres in adjoining Mouza Saoner, where the price was ₹3,588 per square metre.

By an Award dated November 22, 2021, the Arbitrator accepted that the land was in non-agricultural use and applied the residential sale deed rate of ₹3,588 per square metre. The District Judge under Section 34 of the Arbitration Act set aside this Award, but the Bombay High Court under Section 37 restored it. Aggrieved, NHAI approached the Supreme Court.

Setting aside the impugned orders, the judgment authored by Justice Sanjay Kumar observed that courts below erred in “completely ignored the directives of Section 26(1)(b) of the 2013 LA Act and the Explanations thereunder, by adopting a sale exemplar of a totally dissimilar type of land and, at that, a single sale exemplar, which was contrary to the statutory mandate.”

Further, the Court noted that courts below erred in relying on the single sale deed while determining the compensation, as it failed to consider the highest of the average sale prices.

“…the methodology for working out the 'average sale price' under Section 26(1)(b), as set out in Explanations 1 to 4 thereunder, does not permit placing reliance on a single sale deed for that purpose. Reference may be made to Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others, (2025) 7 SCC 798 wherein this Court considered the scheme of Section 26(1) of the 2013 LA Act and observed that the language used therein implied that there should be multiple deeds available for reference, as singular deals may not supply adequate and reliable data.”, the court observed.

In terms of the aforesaid, the appeal was allowed. Accordingly, the Court fixed compensation at ₹2,020 per square metre together with all consequential statutory benefits.

“Respondent No.1 would, therefore, be entitled to compensation for its acquired extent of 1394 square meters @ ₹2,020/- per square meter and not @ ₹3,588/- per square meter, as decided by the Arbitrator and confirmed by the High Court. Needless to state, respondent No. 1 would also be entitled to all consequential statutory benefits under the 2013 LA Act.”, the court ordered.

Cause Title: Project Director, National Highways Authority of India versus Alfa Remidis Ltd. and others

Citation : 2026 LiveLaw (SC) 494

Click here to download judgment

Appearance:

For Petitioner(s) : Mr. Preetesh Kapur, Sr. Adv. Mr. Sumit Gupta, Adv. Ms. Jaikriti S. Jadeja, AOR Mr. Akshay Kumar Tiwari, Adv. Ms. Tanya Shrotriya, Adv.

For Respondent(s) : Mr. Dhruv Mehta, Sr. Adv. Mr. Rajat Joseph, AOR Mr. Yashraj Kinkhede, Adv. Mr. Shrirang B. Varma, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR