Landowners Must Receive Fair Compensation Reflective of Market Value at the Time of Acquisition”: Supreme Court Clarifies Valuation Date under RFCTLARR Act

Summary of the Judgment

• Case Name: Sumitraben Singabhai Gamit vs. State of Gujarat & Ors.

• Date of Judgment: 21st April, 2025

• Court: Supreme Court of India

• Coram: Hon’ble Mr. Justice Dipankar Datta and Hon’ble Mr. Justice Manmohan

• Appeal: Civil Appeal No. 5095 of 2025 (Arising out of SLP (C) No. 23668 of 2024)

• Appellant Counsel: Ms. Aastha Mehta

• Respondents: State of Gujarat and others

• Relevant Legislation:

  • Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act, 2013)

  • Section 11 and Section 26(1) of RFCTLARR Act

• Key Citation: Smt. Sabita Sharma & Ors. vs. State of U.P. & Ors., Writ-C No.30088 of 2022 (Allahabad High Court)

Introduction

In a significant pronouncement reaffirming statutory sanctity and protection of landowners' rights, the Hon’ble Supreme Court of India on 21st April 2025 delivered its judgment in Sumitraben Singabhai Gamit vs. State of Gujarat & Ors. This case pivots on the correct date to be adopted for determining market value of land in pending acquisition cases under the RFCTLARR Act, 2013.

Background of the Dispute

The Appellant, Sumitraben Singabhai Gamit, owned agricultural land (Revenue Block No.119, later renumbered as 126) in the village of Moje Sarkuva, District Tapi, Gujarat. Originally, a portion of this land had been acquired lawfully for the construction of the Ukai High-Level Cantor Canal. However, a further parcel measuring He-0-11-41 sq. meters was utilised by the authorities for canal construction without acquisition proceedings or payment of compensation.

Despite admission from the State—through an affidavit filed by the Executive Engineer of Ukai Dam Division-1—that this segment had been used without legal sanction, the High Court of Gujarat ruled that the compensation for the yet-to-be-acquired land should be calculated based on market rates prevailing on 1st January 2014, the date of commencement of the RFCTLARR Act, 2013.

This prompted the appellant to seek redress before the Apex Court, contesting this arbitrary date and pleading that the statutory date for determining market value must be the one on which the acquisition notification under Section 11 of the RFCTLARR Act is issued.

Interpretation of Section 26(1): The Core Legal Issue

The heart of the legal contention lay in the interpretation of the proviso to Section 26(1) of the RFCTLARR Act, which reads:

“Provided that the date for determination of market value shall be the date on which the notification has been issued under Section 11.”

The use of the word “shall” is of particular significance. Hon’ble Justice Manmohan, who authored the judgment, astutely observed that:

"The use of the word ‘shall’ in Section 26(1) proviso is reflective of the legislative mandate that Section 11 Notification is the date for determination of the compensation."

This unequivocal statutory direction leaves no room for judicial discretion in selecting an arbitrary date such as the commencement date of the Act, especially in fresh acquisitions.

Why 1st January 2014 is Irrelevant

The Supreme Court decisively held that the date of 1st January 2014—while pivotal in transitional cases involving the earlier Land Acquisition Act, 1894—is inapplicable in cases where acquisition proceedings are yet to begin under the RFCTLARR framework.

The Bench categorically stated:

“The date of 01st January, 2014 has no relevance to fresh acquisition initiated under the statute.”

This clarifies a widespread misapplication of the RFCTLARR provisions where authorities or subordinate courts might lean on 2014 as a default benchmark, undermining the very principle of fair compensation based on prevailing market rates.

Recognition of State’s Procedural Lapses

In a noteworthy admission, the State of Gujarat conceded that it had not initiated acquisition due to a technical error in the PM Gati Shakti Portal. The Executive Engineer had not submitted the proposal for the land’s acquisition, yet the land had already been utilised.

The Apex Court took note of this procedural delay but refused to allow it to affect the compensation rights of the landowner. This reinforces the principle that State inefficiency cannot prejudice a citizen’s legal entitlements, especially in matters involving deprivation of property.

Precedential Value: Sabita Sharma Case

The appellant’s counsel rightly placed reliance on the Allahabad High Court’s ruling in Smt. Sabita Sharma & Ors. vs. State of U.P. & Ors., which adopted a similar interpretation of Section 26(1). The Supreme Court’s endorsement of this approach adds judicial weight and consistency across jurisdictions.

This judgment effectively seals the position that compensation must reflect the market value as on the date of Section 11 Notification, not a date that is convenient or retrospectively imposed.

Conclusion: Affirmation of Fairness and Legal Precision

By setting aside the Gujarat High Court’s decision and directing that market valuation shall be based on the issuance date of the Section 11 notification—whenever that may be—the Supreme Court has:

1. Reaffirmed statutory interpretation principles grounded in the text and structure of the RFCTLARR Act.

2. Shielded landowners from arbitrary undervaluation of their properties.

3. Placed accountability on the State to initiate due process of acquisition, irrespective of administrative hurdles.

4. Provided interpretative consistency by aligning with views expressed in other High Courts.

This judgment is a landmark clarification in India’s land acquisition jurisprudence and must be treated as binding precedent. It upholds the spirit of equity embedded in the RFCTLARR Act, which sought to rectify decades of state-led expropriation under colonial-era acquisition norms.