Justices Augustine George Masih and C.R. Gavai on a judgement dated 15 October 2025, Nashik Municipal Corporation v. Landowner partly allowed the appeal challenging the High Court’s decision reducing compensation for land acquisition under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 reiterating that rental or mesne profits arise only upon unlawful occupation.
The dispute concerned 37 Ares of land in Nashik that had been reserved for public purposes under the MRTP Act, 1966, and partially acquired decades earlier. The remaining land was used by the Corporation without formal acquisition. After multiple rounds of litigation, the land was finally acquired in 2017, with the SLAO awarding ₹8.69 crore compensation, later enhanced by the Reference Court to ₹20.20 crore along with ₹238 crore as “rental compensation.” The High Court quashed the enhancement, restoring the SLAO’s award.
Before the Supreme Court, the appellant contended that the High Court erred in rejecting the comparable sale deeds relied on by the Reference Court and that the denial of rental compensation was unjust. The Court agreed partly, holding that under Section 26 of the 2013 Act, the Collector must determine market value based on average sale prices of similar lands and not on ready-reckoner rates. It found the Reference Court’s reliance on six sale instances sound and restored the higher compensation of ₹20.20 crore with 9% interest.
However, the claim of rental compensation was rejected. The Court observed that no evidence showed unlawful possession by the Corporation before the appellant’s purchase in 2011, and the original owner retained control over the property. Relying on R.L. Jain v. DDA (2004) 4 SCC 79, it held that rental or mesne profits arise only upon unlawful occupation. Nevertheless, invoking equitable jurisdiction under Section 28 (“seventhly”), the Court directed the Corporation to pay 8% interest on the purchase amount of ₹1.17 crore for the period between the sale deed and the award.
Accordingly, the appeal was partly allowed. The enhanced compensation was restored, but rental compensation was disallowed. The adverse observations and cost of ₹10 lakh imposed by the High Court were set aside.
