No Discrimination Between Landowners Based On Purpose Of Acquisition; Rent Payable When Possession Taken Before Acquisition: Bombay HC

The Bombay High Court has held that no discrimination can be made between land owners based on the purpose for which their lands are acquired, particularly when they are deprived of possession prior to initiation of acquisition proceedings. The Court observed that the fact of deprivation of enjoyment of land is the relevant consideration and not the ultimate public purpose for which the land is utilised

A division bench of Justices Manish Pitale and Shreeram V. Shirsat was hearing a writ petition filed seeking payment of rental compensation for a land which was taken over by the Pimpri Chinchwad Municipal Corporation for the establishment of an octroi post and road. The petitioner contended that possession of the land was taken as early as August 2003 without initiating acquisition proceedings, and that despite repeated representations and earlier directions of the Court, rental compensation was not paid in accordance with the State policy reflected in various Government Resolutions.

The Court examined the scheme of various Government Resolutions from 1972 till 2003, and held that the concept of rental compensation is based on State policy applicable to cases where possession is taken prior to acquisition. It noted that although the Land Acquisition Act does not provide for such compensation, the entitlement flows from state policy and has been recognised in judicial precedents.

The Court rejected the contention that such a policy was applicable only to irrigation projects, holding that such a distinction would lead to unequal treatment of similarly situated landowners. It observed that the Supreme Court has held that for a land owner, deprivation of enjoyment of land is the relevant factor, and the purpose for which the land is used is not determinative.

“… there cannot be any discrimination between land owners on the basis of the purpose for which possession of their lands is taken over, even prior to initiation of land acquisition proceedings… respondents cannot escape liability of suitably compensating the petitioner, only on the basis of the purpose for which the land has been ultimately utilized,” the Court observed.

The Court further held that only the basis of calculation of rental compensation stood modified, not the entitlement itself. It observed that the respondent Municipal Corporation had itself recorded that possession of the land was taken in August 2003 and that the acquisition award was passed much later in January 2015.

The Court held that the petitioner was entitled to rental compensation for the entire period from the date of taking possession till compensation for acquisition of the land was actually paid to it under the land acquisition award.

Accordingly, the High Court allowed the writ petition, quashed the impugned order dated 10th October 2016, and directed the respondent Municipal Corporation to calculate and pay rental compensation from August 2003 till payment of compensation under the award, along with interest at the rate of 6% per annum, within four months.

Case Title: M/s. Devi Construction LLP vs. The State of Maharashtra & Ors. [Writ Petition No. 1397 of 2017]

Citation: 2026 LiveLaw (Bom) 174

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