Establishing a Uniform Approach to Compensation Through De-Escalation: Ram Kishan (Deceased) v. State of Haryana

1. Introduction

The Supreme Court of India’s recent decision in Ram Kishan (Since Deceased) Through His LRs v. State of Haryana (2025 INSC 441) provides crucial guidance on how courts should assess land value in cases where multiple acquisitions occur over different time frames, yet within adjoining or proximate areas. The dispute centered on compensations awarded under various notifications issued by the State of Haryana for acquiring land in Dharuhera, Malpura, and Kapriwas villages. This commentary delves into the complex factual matrix, the judicial reasoning, and the ultimate principle of “reverse deduction” or de-escalation of values, which forms the new precedent for determining compensation in land acquisition matters where neighboring lands are acquired under separate notifications.

The appellants, represented by the legal heirs of Ram Kishan (now deceased), sought higher compensation for lands acquired under different notifications. A vital concern was whether and how courts should rely upon previous or subsequent awards that pertained to comparably situated lands, while factoring in “de-escalation” or “escalation” rates. The Supreme Court’s resolution of these issues sets a precedent for ensuring that landowners receive equitable treatment, regardless of the public purpose (industrial, institutional, or otherwise) for which their lands are acquired, so long as potential, location, and momentum in land values are analogous.

2. Summary of the Judgment

In its judgment, authored by Justice K.V. Viswanathan (with concurrence by Justice B.R. Gavai), the Court addresses two separate clusters of appeals:

Eleven matters that were already covered under prior Supreme Court decisions in Besco Ltd. v. State of Haryana and M/s Habitat Estates Pvt. Ltd. v. State of Haryana, where compensation had been enhanced from approximately Rs. 67 lakh per acre to Rs. 1.49 crore per acre.
Sixteen other matters involving village Dharuhera, prompted by a notification dated December 12, 2008. The High Court had affirmed a Reference Court’s award of about Rs. 55.71 lakh per acre, but the landowners appealed seeking parity with the higher amounts established in the Besco and Habitat cases.

The Supreme Court ultimately ruled:

The eleven matters are bound by the earlier decisions that raised compensation to Rs. 1.49 crore per acre (depending on the location and conditions). The Court clarified that interest would not be available for delays in filing or refiling the appeals.
Regarding the sixteen appeals for village Dharuhera, the Reference Court’s approach of using a “reverse deduction” from subsequent acquisitions was deemed correct in principle. However, the Supreme Court noted that de-escalation, land potential, position vis-à-vis highways, and change of land use (CLU) charges required more nuanced adjustments. The final compensation was recalculated at about Rs. 1.18 crore per acre (after deducting Rs. 5 lakh per acre to account for CLU expenses).

3. Analysis

A. Precedents Cited

The Court referenced multiple authorities to illustrate appropriate procedures for assessing compensation:

Besco Ltd. v. State of Haryana & Habitat Estates Pvt. Ltd. v. State of Haryana: These earlier Supreme Court decisions addressed lands in the same broader area (Malpura and Kapriwas villages) but under different notifications. They confirmed that where comparable land potential existed, consistently higher compensation could be set (i.e., around Rs. 1.49 crore per acre).
Manoj Kumar v. State of Haryana: The Court cautioned that prior awards, even from the same region, are not automatically binding. Instead, they must be relevant pieces of evidence, evaluated in light of the facts, distances, timing, and land potential.
Peerappa Hanmantha Harijan v. State of Karnataka and Chandrashekar v. Land Acquisition Officer: Both illustrate how courts may either add an “escalation” factor for older transactions or subtract a “de-escalation” factor from subsequent acquisitions, if suitably comparable, to calibrate the correct fair market value.
Nagpur Improvement Trust v. Vithal Rao: The seven-judge bench decision reaffirming that classification based on the “purpose” of the acquisition (e.g., industrial, institutional) generally should not result in different compensation calculations for equally situated land.

B. Legal Reasoning

Two interlocking principles inform the Court’s reasoning:

Comparability of Acquired Land: To use another award or sale exemplar as a reference, the acquired land must share characteristics such as adjacency, potential development prospects, and similar locational benefits. Mere labeling of the land for “industrial” or “institutional” public use does not justify wholly different compensation rates.
De-Escalation or Escalation: If the anchor or base compensation arises from a later acquisition (like in Besco), courts can apply a “reverse deduction,” effectively reducing the compensation by a percentage to account for the time gap if the subject land was acquired earlier. Conversely, if an older award or sale deed is used, courts might add an escalation rate (commonly 10%-12% per annum) if regional data shows market appreciation.

Final calculations by the Supreme Court recognized:

Base value for the appellants’ land should align with the updated rate in Besco (Rs. 1.49 crore per acre), minus a suitable “de-escalation” for the earlier acquisition date.
Deductions of Rs. 5 lakh per acre were subtracted to account for the change in land use (CLU) expenses that the appellants would have had to pay had their land not been acquired yet converted for commercial or industrial purpose.
Thus, compensation was set around Rs. 1.18 crore per acre (plus statutory benefits under Sections 23(1A), 23(2), and 28 of the Land Acquisition Act, 1894).

C. Impact

This judgment establishes a uniform methodology for adopting subsequent or prior awards in similar acquisitions when the lands are proximate and share comparable potential. By endorsing the “reverse deduction” or “de-escalation” approach, the Court reassures landowners that timing alone should not result in significantly lesser compensation for otherwise similarly situated lands. At the same time, the Court carefully balanced the State’s concerns regarding charges for land conversion, ensuring that such potential costs are recognized and deducted accordingly.

Looking forward, practitioners and litigants can rely on Ram Kishan to argue for or contest reliance on other awards in the same or neighboring revenue estates, particularly when there is short chronological lag or proven land potential. This decision also highlights the continued primacy of judicial fact-finding: courts must thoroughly examine site-specific factors, location sketches, and infrastructural developments rather than applying prior awards mechanically.

4. Complex Concepts Simplified

Below are brief clarifications of key legal and technical concepts referenced in the judgment:

Land Acquisition Act, 1894: The central legislation previously governing how the government could acquire private land for a “public purpose.” Compensation is determined by Section 23, including the land’s market value and various statutory benefits.
Reference Court: A civil court designated to hear land acquisition compensation disputes. If a landowner disagrees with the Collector’s award, they can seek a “reference” under Section 18 for enhanced compensation.
De-Escalation: A reduction technique used when a subsequent sale or award is used to determine an earlier land value. It compensates for the notional price difference caused by the passage of time and trend in real estate markets.
Change of Land Use (CLU): A permission or license granted by state authorities allowing the owner to convert agricultural land for non-agricultural, industrial, institutional, or commercial usage. The cost of such a conversion often affects how “market value” is computed.

5. Conclusion

The Supreme Court’s ruling in Ram Kishan (Deceased) Through His LRs v. State of Haryana profoundly clarifies how courts should handle analogous acquisitions occurring at different times in nearby locations. By affirming that future awards may guide the valuation of past acquisitions (with appropriate adjustments for market conditions and land-use changes), the Court ensures equitable treatment and harmonizes compensation across contiguous revenue estates.

In effect, the decision cements the principle that market-based fairness should override technicalities of timing and labeling, thereby supporting a balanced approach to awarding just compensation. This precedent is poised to guide future land acquisition disputes where multiple notifications and multiple revenue estates overlap in ways that demand a uniform formula for fair compensation.