Statutory Rationale Must Prevail Over Single Sale Exemplars in Land Compensation: SC

In a significant ruling, the Supreme Court has clarified that the determination of market value for land acquisition must strictly adhere to the hierarchical criteria and procedural safeguards mandated under Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Court emphasized that relying on a single sale deed of a dissimilar land type violates the statutory framework intended for fair compensation.

A bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran set aside a High Court judgment that had restored an inflated arbitral award. The controversy centered on the enhancement of compensation for land acquired for the four-laning of National Highway No. 547-E, where the Arbitrator had significantly increased the payout by relying on a residential plot sale deed for industrial land.

The Court, in its reasoning, observed: "The Arbitrator completely ignored the directives of Section 26(1)(b) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 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."

The Mandate of Section 26 and Applicability to National Highways

The Bench reiterated the legal position established in National Highways Authority of India vs. P. Nagaraju alias Cheluvaiah and another, noting that while acquisition happens under the National Highways Act, 1956, the determination of compensation must follow the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Court noted that Section 26(1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 requires the Collector to adopt the higher of three criteria: the market value specified in the Indian Stamp Act, 1899 (Ready Reckoner), the average sale price of similar lands, or consented amounts for PPP projects.

Rationale on Average Sale Price and Similar Land Type

Highlighting the importance of 'similar type' of land, the Court referred to Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others ( "(2025) 7 SCC 798": 2025 CaseBase(SC) 223) to establish that the methodology for calculating 'average sale price' implies the availability of multiple deeds. The Court observed that a singular deal does not supply adequate or reliable data, especially when the land use (industrial vs. residential) and location (different villages) differ fundamentally.

Background:

The dispute arose when the National Highways Authority of India (NHAI) challenged the enhancement of compensation for 1,394 square meters of land owned by Alfa Remidis Ltd. Initially, the competent authority classified the land as agricultural, awarding ₹161.63 per square meter. However, an Arbitrator under Section 3G(5) of the National Highways Act, 1956 enhanced this to ₹3,588/- per square meter by citing a sale deed for a small residential plot in a nearby village, despite the landowner claiming industrial use.

While the District Judge had set aside this award under Section 34 of the Arbitration and Conciliation Act, 1996 for violating Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, the High Court of Judicature at Bombay (Nagpur Bench) restored the Arbitrator's decision. The Supreme Court found that the Arbitrator had ignored the Ready Reckoner rate of ₹2,020/- per square meter (Section 26(1)(a)), which was the correct benchmark. The Court concluded that the arbitral award suffered from patent illegality under Section 34(2A) of the Arbitration and Conciliation Act, 1996. Consequently, the appeal was allowed, and the compensation was recalculated based on the Government Ready Reckoner rates.

Case Details:
Case No.: Civil Appeal No. _____________ of 2026 (@Special Leave Petition (C) No. 33773 of 2025)
Case Title: Project Director, National Highways Authority of India versus Alfa Remidis Ltd. and others

Source: 2026 CaseBase(SC) 407