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Bharat Sanchar Nigam Limited vs M/s Nemichand Damodardas & Anr.

Civil Appeal · 2022 INSC 697Decided 11 Jul 2022
Civil Appeal No. 3478 of 2022
M.R. Shah · B.V. Nagarathna

Background

BSNL's land requirement led the Maharashtra State Government to acquire land at Yavatmal belonging to the respondent landowners under the Land Acquisition Act. The Land Acquisition Officer initially fixed compensation at Rs.13.32 per sq. ft., which the Reference Court raised to Rs.21 per sq. ft. On further appeal by the landowners, the Bombay High Court (Nagpur Bench) enhanced this dramatically to Rs.174 per sq. ft., over 800% higher, relying mainly on the government's Ready Reckoner rates (used for stamp duty purposes) for the area. BSNL challenged this steep enhancement before the Supreme Court.

Decision Breakdown

The Supreme Court held that Ready Reckoner rates, being uniform rates fixed across an entire area purely for collecting stamp duty, cannot be the basis for determining "market value" compensation under the Land Acquisition Act. It relied on its own binding precedents (Jawajee Nagnatham and Krishi Utpadan Mandi Samiti) holding that such registers have no statutory foundation for valuation purposes and do not reflect true transaction prices: a point even conceded by the government's own witnesses at trial. The Court also reiterated the settled multi-factor approach to valuing acquired land (comparable sale instances, location, size, plus/minus factors) rather than one uniform area-wide rate. Consequently, it set aside the High Court's judgment and restored the Reference Court's figure of Rs.21 per sq. ft.

Lesson Learnt

Government "Ready Reckoner" or stamp-duty valuation rates are meant only for collecting stamp duty and cannot automatically be used to fix land acquisition compensation; courts must instead rely on genuine market evidence such as comparable sale transactions.

Official source (sci.gov.in)View Judgment (PDF)

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