The Supreme Court has held that compensation for acquired land under the National Highways Act, 1956 read with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 cannot be determined on the basis of a single sale deed relating to a dissimilar category of land.
The Bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran has observed that reliance upon one residential plot transaction to value industrial land was contrary to the statutory mandate under Section 26 of the 2013 Land Acquisition Act.
The landowner, Alfa Remidis Ltd., claimed ownership over 1,394 square meters of land situated in Mouza Pardi (Rithi), Nagpur District. A notification for acquisition was issued on 9 May 2017 under Section 3A(1) of the National Highways Act. Initially, the competent authority classified the land as agricultural/fallow land and awarded compensation at the rate of ₹161.63 per square meter based on agricultural land sale deeds.
Challenging the compensation, the company approached the Arbitrator under Section 3G(5) of the National Highways Act contending that the land was not agricultural in nature and was actually being used for industrial purposes. The company relied upon documents showing that a paracetamol manufacturing unit was operating on the land. It also referred to the Ready Reckoner rate of ₹2,020 per square meter applicable to lands abutting the highway and further cited a sale deed dated 29 March 2017 concerning a residential plot in a nearby village valued at ₹3,588 per square meter.
Accepting the company’s contention, the Arbitrator enhanced compensation and awarded ₹3,588 per square meter by adopting the rate reflected in the residential plot sale deed.
NHAI and the Union Government challenged the arbitral award before the District Judge under Section 34 of the Arbitration and Conciliation Act, 1996. The District Judge set aside the award holding that the Arbitrator had acted contrary to Section 26 of the 2013 Land Acquisition Act.
However, the Bombay High Court restored the arbitral award. The High Court observed that the acquired land was being used for industrial purposes and held that the Arbitrator had correctly relied upon the nearby sale transaction involving non-agricultural land. The High Court also noted that there was no challenge to the genuineness of the sale deed relied upon by the landowner.
The Supreme Court reversed the High Court’s decision and undertook a detailed examination of Section 26 of the 2013 Land Acquisition Act. The Court noted that the statutory provision requires determination of market value on the basis of either the stamp duty valuation, the average sale price of similar land in nearby areas, or consented compensation, whichever is higher.
The Court stressed that Section 26(1)(b) specifically contemplates determination of average sale price from multiple sale deeds concerning “similar type of land” situated in the nearest village or vicinity. It further observed that the statutory framework does not permit valuation based on a solitary sale transaction.
The Bench held that the Arbitrator committed a “demonstrable error” by relying on a residential land transaction for determining the value of industrial land. The Court observed that residential land and industrial land were not lands of “similar type” within the meaning of Section 26(1)(b). It further emphasized that the methodology prescribed under the Act requires reliance on multiple comparable sale deeds and not a single exemplar.
Referring to its earlier decisions in National Highways Authority of India vs. P. Nagaraju and Madhya Pradesh Road Development Corporation vs. Vincent Daniel, the Court reiterated that multiple sale transactions are necessary for reliable determination of market value and singular deals cannot furnish adequate data.
The Supreme Court further held that the appropriate benchmark in the present case should have been the Ready Reckoner rate of ₹2,020 per square meter applicable to highway lands in Zone 4, where Mouza Pardi (Rithi) was situated. According to the Court, Section 26(1)(a) dealing with stamp duty valuation was the correct statutory provision applicable in the facts of the case.
The Court modified the compensation and held that the landowner would be entitled to compensation at ₹2,020 per square meter instead of ₹3,588 per square meter as awarded by the Arbitrator and restored by the High Court. The Court also clarified that the company would continue to receive all consequential statutory benefits under the 2013 Act.
Case Details
Case Title: Project Director Versus Alfa Remidis Ltd.
Citation: JURISHOUR-1237-SC-2026
Case No.: Special Leave Petition (C) No. 33773 of 2025
Date: 112/05/2026
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