The Bombay High Court has affirmed that compensation for open space adjacent to acquired land cannot be denied merely because it was not explicitly mentioned in the acquisition notification, if the space is integral to the utilisation of the property and proven to belong to the owner. This ruling reinforces constitutional protections under Article 300-A and validates judicial discretion to apply guesstimate in cases of inadequate documentary evidence.
Background & Facts
The Dispute
The appellant, Ashok S/o Gangadharrao Godhamgaonkar, owned a property at Vazirabad Chowk, Nanded, comprising a constructed portion of 72.83 sq.m. (783.65 sq.ft.) and an adjacent open space of 237.25 sq.ft. The property was acquired by the Nanded Municipal Corporation for expansion of the chowk under Section 126 of the Maharashtra Regional and Town Planning Act. While the constructed portion was formally notified under Section 6 of the Land Acquisition Act, 1894, the open space was not separately listed in any notification.
Procedural History
- 1977: Notification issued under Section 126 and Section 6 for acquisition of constructed portion only.
- 1988: Appellant filed Land Acquisition Reference (LAR No.13 of 1988) seeking enhanced compensation.
- 1989: Reference Court awarded Rs.200/- per sq.ft. for constructed portion.
- 2003: Division Bench remanded the matter for impleading the corporation as a party.
- 2014: Single Judge directed reconsideration of limitation issue.
- 2023: Reference Court dismissed the reference, fixing compensation at Rs.60/- per sq.ft. for constructed portion and denying any compensation for open space.
- 2024: First Appeal filed challenging the 2023 award.
Relief Sought
The appellant sought enhancement of compensation for the constructed portion to Rs.350/- per sq.ft. and payment of compensation for the open space at Rs.300/- per sq.ft., arguing that the open space was legally part of his property, used commercially, and essential for the acquisition’s purpose.
The Legal Issue
The central question was whether compensation for open space adjacent to acquired land can be denied solely because it was not explicitly notified under Section 6 of the Land Acquisition Act, 1894, and whether courts may apply guesstimate to determine fair compensation when documentary evidence is incomplete but credible.
Arguments Presented
For the Appellant
The appellant relied on sale deeds (Exhibits 33, 34, 71, 72) and lease agreements (Exhibits 35, 36) to prove ownership and commercial use of the open space. He argued that the open space was inseparable from the constructed portion, as its acquisition was necessary for road widening. He invoked Article 300-A of the Constitution, asserting that deprivation of property without compensation violates fundamental rights. He cited State of Kerala v. P.P. Hassan Koya and New Okhla Industrial Development Authority v. Harnand Singh to support the principle that compensation must reflect actual utility and market value.
For the Respondent
The State contended that since the open space was not included in the notification under Section 6, no legal obligation arose to pay compensation. It argued that the Reference Court’s fixation of Rs.60/- per sq.ft. for the constructed portion was reasonable and supported by precedent. It further claimed that the appellant failed to produce conclusive evidence to justify Rs.350/- per sq.ft. and that the open space’s existence and ownership were disputed.
The Court's Analysis
The Court examined the nature of the acquisition and the functional relationship between the constructed portion and the open space. It noted that the chowk expansion could not have been executed without acquiring the open space abutting the building, as confirmed by maps annexed to sale deeds. The Court held that mere omission from the notification does not extinguish ownership rights where the land is demonstrably part of the owner’s estate and integral to the project.
"The respondent-authorities are the record keepers and the acquisition process has been initiated at their behest. They are bound to explain as to why the compensation for open space has not been paid to the appellant. They cannot shirk the liability of paying compensation when it is evident that the constructed portion cannot be acquired unless open space is acquired."
The Court rejected the Rs.60/- per sq.ft. rate as manifestly inadequate, citing the property’s prime location, commercial potential, and prior award of Rs.200/- per sq.ft. in 1989. It applied the principle of guesstimate as permitted under Trishala Jain v. State of Uttaranchal and New Okhla v. Harnand Singh, emphasizing that courts may bridge evidentiary gaps to achieve justice under Sections 23 and 24 of the Land Acquisition Act, provided the estimate is grounded in available evidence.
The Court fixed Rs.175/- per sq.ft. for the constructed portion, acknowledging the appellant’s failure to conclusively prove Rs.350/-. For the open space, it applied the same guesstimate logic, fixing Rs.100/- per sq.ft. based on its commercial use as a pan stall site and potential for hoardings.
The Verdict
The appellant prevailed in part. The Court held that compensation must be paid for open space integral to the acquisition, even if unnotified, and that guesstimate is a valid tool to determine fair compensation where evidence is incomplete but credible. The compensation was enhanced to Rs.175/- per sq.ft. for the constructed portion and Rs.100/- per sq.ft. for the open space, with solatium, interest, and additional components as prescribed.
What This Means For Similar Cases
Open Space Is Not Exempt from Compensation
- Practitioners must now argue that any land functionally necessary for the acquisition’s purpose - even if unnotified - qualifies for compensation under Article 300-A.
- Evidence of ownership (sale deeds, maps, leases) and usage (rental agreements, commercial activity) is critical to establish entitlement.
- Authorities cannot rely on technical omissions in notifications to deny compensation where the land is demonstrably part of the owner’s estate.
Guesstimate Is a Legally Recognized Tool for Fair Compensation
- Courts may apply guesstimate where exact market data is unavailable, provided it is anchored in documentary or oral evidence.
- The estimate must be reasonable, not speculative, and must align with Sections 23 and 24 of the Land Acquisition Act.
- Practitioners should proactively compile comparable sales, rental records, and expert valuations to support guesstimate applications.
Delay Does Not Bar Substantive Relief
- Even after 45 years and multiple remands, the Court granted substantive relief, rejecting procedural delays as a reason to deny justice.
- Courts are now more willing to award compensation directly rather than remanding for fresh proceedings, especially where records are lost or impractical to reconstruct.
