The Supreme Court held that compensation for acquired industrial land cannot be determined on the basis of a residential plot sale deed from an adjoining village, stressing that Section 26(1)(b) of the 2013 Land Acquisition Act requires comparison with land of a similar type.
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran ruled that the requirement of “similar type of land” under Section 26(1)(b) of the 2013 Land Acquisition Act is mandatory.
The Court said the Arbitrator wrongly relied on a sale deed dated March 29, 2017. That sale deed related to residential land in an adjoining village. However, the acquired land was being used for industrial purposes.
Land Acquired For Highway Expansion
The dispute arose from the acquisition of 1,394 square metres of land in Nagpur.
The authorities acquired the land for four-laning of the National Highway.
For this purpose, a notification under the National Highways Act, 1956 was issued on May 9, 2017.
The Deputy Collector acted as the competent authority. He classified the land as agricultural/fallow land.
On that basis, he awarded compensation at ₹161.63 per square metre.
The authority fixed the rate by relying on agricultural sale deeds from the same village.
Alfa Remidis Claimed Industrial Use
Alfa Remidis Ltd. challenged the compensation before the Arbitrator, who was the Additional Commissioner.
The company argued that it was using the land for industrial purposes.
It said the land formed part of a unit manufacturing paracetamol medicine.
To support its claim, the company produced documents showing industrial use.
It also relied on two alternative rates.
First, it referred to the Ready Reckoner government rate of ₹2,020 per square metre. This rate applied for stamp duty on lands abutting the highway.
Second, it relied on a registered sale deed dated March 29, 2017.
That sale deed concerned a residential plot measuring 195.09 square metres in adjoining Mouza Saoner.
The sale price in that transaction was ₹3,588 per square metre.
Arbitrator Relied On Residential Sale Deed
By an Award dated November 22, 2021, the Arbitrator accepted that the land had non-agricultural use.
However, he adopted the rate of ₹3,588 per square metre from the residential sale deed.
The District Judge later set aside the Award while exercising jurisdiction under Section 34 of the Arbitration Act.
Thereafter, the Bombay High Court restored the Award in proceedings under Section 37.
The National Highways Authority of India then approached the Supreme Court.
Supreme Court Finds Error In Method
The Supreme Court allowed the appeal.
Justice Sanjay Kumar authored the judgment.
The Court held that the courts below had ignored the mandate of Section 26(1)(b) of the 2013 Act.
It also found that they failed to apply the Explanations attached to the provision.
According to the Court, the sale exemplar relied on by the Arbitrator related to a completely different type of land.
Moreover, the Arbitrator relied on only one sale deed.
The Bench said this approach went against the statutory method for determining compensation.
It observed that Section 26(1)(b), read with Explanations 1 to 4, does not permit market value to be fixed on the basis of a single sale deed.
Court Relies On Vincent Daniel Decision
The Supreme Court also referred to Madhya Pradesh Road Development Corporation v. Vincent Daniel and others, (2025) 7 SCC 798.
In that case, the Court had examined the scheme of Section 26(1) of the 2013 Land Acquisition Act.
The Court had noted that the provision requires reliable market data.
Therefore, multiple sale deeds may be necessary.
A single transaction, the Court explained, may not provide a safe basis for fixing market value.
Compensation Fixed At Ready Reckoner Rate
The Supreme Court set aside the impugned orders.
It fixed compensation at ₹2,020 per square metre.
As a result, Alfa Remidis Ltd. will receive compensation for the acquired extent of 1,394 square metres at that rate.
The company will not receive compensation at ₹3,588 per square metre, which the Arbitrator had fixed and the Bombay High Court had confirmed.
The Court also clarified that Alfa Remidis Ltd. will receive all consequential statutory benefits under the 2013 Land Acquisition Act.
Case Details
Case Title: Project Director, National Highways Authority of India v. Alfa Remidis Ltd. and others
Court: Supreme Court of India
Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran
Judgment Authored By: Justice Sanjay Kumar
Citation: 2026 LiveLaw (SC) 494
Statutory Provisions: Section 26(1)(b), Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; National Highways Act, 1956; Sections 34 and 37, Arbitration Act
