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Reddy Veerana vs State of Uttar Pradesh and Others (with NOIDA vs Reddy Veerana)

Civil Appeal · 2022 INSC 520Decided 5 May 2022
Civil Appeal No. 3636 of 2022
Vineet Saran · J.K. Maheshwari

Background

Reddy Veerana purchased land in village Chhalera Bangar, Gautam Buddh Nagar in 1997, part of which the New Okhla Industrial Development Authority (NOIDA) later handed over to a private developer (DLF) in 2003-04 through a public auction without any formal land acquisition, despite a permanent injunction decree that had already become final in the landowner's favour. NOIDA only initiated formal acquisition proceedings afterward (2005), took possession in 2005-06, and passed a compensation award five years late, in 2011, at a low rate, while earlier High Court rulings (upheld by the Supreme Court) had already directed that compensation be fixed based on the applicable circle rate. The Allahabad High Court later fixed compensation at Rs. 1,10,000 per square metre (the notified circle rate) but allowed NOIDA a 50% deduction for "development charges," prompting cross-appeals to the Supreme Court by both the landowner (seeking a higher net amount) and NOIDA (resisting the compensation altogether).

Decision Breakdown

The Supreme Court held that the question of the landowner's title and the correct circle rate (Rs. 1,10,000 per sq. m., since the land was commercial/industrial and already fully developed with a mall built on it) had already attained finality in earlier rounds of litigation and could not be reopened. However, it found the High Court's blanket 50% deduction for development charges unjustified, since deduction percentages must be based on case-specific factors like the extent of existing development, not applied as a routine maximum, and here the land was already developed with no need for further work. The Court therefore set aside the 50% deduction entirely (no deduction to be applied), upheld 30% solatium and standard statutory interest (9% for the first year, 15% thereafter under Section 34 of the Land Acquisition Act, 1894), and additionally awarded 3% penal interest given NOIDA's prolonged and improper conduct, handing over the land to a developer years before formal acquisition, in violation of a standing injunction and Article 300-A's protection against being deprived of property without due legal process, describing this as a "constitutional tort." NOIDA's appeal was dismissed, and the landowner's appeal was allowed in part with the enhanced compensation to be paid within six weeks.

Lesson Learnt

A government authority cannot hand over private land to a developer ahead of, or without, proper acquisition proceedings; doing so can amount to a violation of the constitutional right to property under Article 300-A, and courts can order compensation with penal interest on top of standard statutory interest to remedy prolonged, unjust delay by the state.

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

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