State Can't Treat All Land Owners Alike, As It Would Deny Poor Rural Land Owners Fair Compensation: Himachal Pradesh High Court Orders Compensation At Multiplier Of Two For Rural Land Acquisition

Himachal Pradesh High Court quashed a State Government notification that had fixed the compensation multiplier at one for rural land acquisitions. The Court held that multiplier factor is required to be two for land acquired in rural areas. It emphasized that the state can't treat all landowners the same, as doing so denies poor land owners in rural areas fair compensation, which defeats the main objective of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Justice Tarlok Singh Chauhan & Justice Sushil Kukreja: “State in issuing the Notification by restricting the multiplier factor to one is obviously trying to treat the land owners as one, which cannot be countenanced as this will deny the poor land owners of the remote villages, fair compensation and rehabilitation, which is the primary object behind the Act”.

Background Facts:

In 2021, the land of petitioners was acquired for construction of road as part of the Sunni Dam Hydro Electric Project, undertaken by the Satluj Jal Vidyut Nigam Limited. The land was acquired as per the provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Subsequently in 2022, the State Government issued a notification for compensating the petitioners and other interested persons whose land was acquired. Thereafter, in 2024 the Land Acquisition Collector passed an award stating that compensation would be based on multiplier of one of the market value, relying on the State Government notification dated 01.04.2015, which fixed the multiplier at one for rural areas.

Aggrieved by the State Government's decision the petitioners filed a writ petition challenging the 2015 notification and seeking direction to notify the multiplier factor as two for rural areas.

Findings:

The Court remarked that the Right to Fair Compensation Act, 2013 aims to provide a legal framework to protect the rights of farmers and their families whose livelihood depends on land being acquired. At the same time, it balances the need for development, industrialization, infrastructure, and urbanization by ensuring that land acquisition is carried out in a fair, timely, and transparent manner.

The Court noted that the 2015 notification of the state government, which fixed the compensation for affected families in multiplier of one of the value market, violated Section 107 of the Right to Fair Compensation Act, which clearly states that the State Legislature has power to enact any law, only if it is more beneficial to affected families.

It further stated that executive instructions are only valid when they deal with matters not already covered in the Act. It is well established that executive powers can't be used to override the statutory law. Authorities must act within the framework of the act and can't issue instructions that contradict it.

The Court noted that the State by issuing the notification restricted the multiplier to one and treated the land owners as one, which is not acceptable as this denies the poor land owners of the remote villages, fair compensation and rehabilitation, which is the primary object behind the Act.

Also, as per the first schedule of the Right to Fair Compensation Act which is titled as “Compensation for Land Owners” the deciding factor for deciding the multiplier factor in rural areas is based on how far the land is from an urban area. If the rural land is far from an urban area, the multiplier must be 2. As the land gets closer to the urban area, the multiplier decreases, dropping below 2 and going down to 1 when the land is nearest to the urban area.

The section 106 of the Right to Fair Compensation Act states that even the Central Government can't amend the Schedules to the Act in a way that reduces compensation or weakens the provisions related to rehabilitation and resettlement.

Thus, the Court upheld the writ petition, quashed the State Government's notification, and directed the State Government to set the multiplier at two, as per the provisions of the act, for rural areas.

Case Name: Keshav Ram & Others. v/s State of H.P. & Others, Karam Chand & Others. v/s State of H.P. & Others

Case No.: CWP No.149 of 2025, 14338 of 2024

Date of Decision: 22.05.2025

For the petitioners: Mr. C.N. Singh and Dr. Nidhi Singh, Advocates for the petitioners in both the petitions.

For the respondents: Mr. Anup Rattan, A.G with Mr.Ramakant Sharma, Addl. A.G., Navlesh Verma., Ms.Sharmila Patial, Addl. A.G., Mr.Sushant Keprate, Addl. A.G and Mr. Raj Negi, Dy.A.G for the respondent-State. Mr.Neeraj Sharma, Senior Advocate Thakur, with Mr.Hemant Advocate for respondents No.4 and 5 in CWP No.149 of 2025.

Mr. Virbahadur Verma, Advocate for respondents No.4 and 4 in CWP No.14338 of 2024.

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