Supreme Court’s Discretionary Award of 2013 Act Compensation in Pre-2013 Acquisitions: New Guidance from Kishore Chhabra v. State of Haryana

1. Introduction

The Supreme Court of India, in Kishore Chhabra v. The State of Haryana (2025 INSC 419), addressed a long-standing land acquisition dispute involving notification under the Land Acquisition Act, 1894 (“1894 Act”). The appellant, Shri Kishore Chhabra, claimed that his land—situated in Sultanpur, Sonipat, Haryana—had been acquired in a discriminatory manner and that the State of Haryana had unjustly refused to release his property.

The controversy primarily revolved around two key issues: (1) Whether the appellant’s land, purportedly hosting a running factory since 1970, could be released from acquisition under various State policies, particularly when the State had released other lands allegedly under similar circumstances; and (2) Whether the Court could exercise its extraordinary power to grant compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”), even though the original acquisition took place under the 1894 Act.

The decision has particular significance because it underscores the Supreme Court’s discretion under Article 142 of the Constitution of India to ensure complete justice. The Court ultimately refused to release the land from acquisition but awarded compensation under the 2013 Act, marking a rare departure from strict adherence to older statutory regimes in special circumstances.

2. Summary of the Judgment

• The appellant challenged an order of the High Court of Punjab and Haryana, which had dismissed his writ petition seeking release of his land or, alternatively, quashing the State’s rejection order dated 17.08.2010.
• The land was acquired via notifications under Sections 4 and 6 of the 1894 Act in 1992 and 1993 respectively, with an Award passed in 1995. The appellant argued that discrimination existed because other similarly placed lands in the same vicinity were released.
• He also argued that the land contained a running factory that predated the acquisition notification, thus entitling him to protection under certain State policies (released from acquisition if there was an existing factory).
• The State, in response, maintained that the appellant had never obtained the legally required Change of Land Use (CLU) certificate and that no release could be granted without it. The State also emphasized that substantial development and expenditure had already been undertaken in the area.
• The Supreme Court dismissed the plea for release of the land but granted compensation under the 2013 Act for the peculiar facts of the case, explicitly noting this relief should not be treated as a general precedent.

3. Analysis

A. Precedents Cited

The appellant relied on a number of Supreme Court decisions to highlight that land could be released if it housed operational factories prior to the issuance of the acquisition notification or if there was a discriminatory approach by the State. Among the precedents cited were:

• Sube Singh v. State of Haryana (2001) 7 SCC 545
• Hari Ram v. State Of Haryana (2010) 3 SCC 621
• Sham Lal v. State Of Punjab (2013) 14 SCC 393
• Haryana State Industrial Development Corporation v. Shakuntla (2010) 12 SCC 448
• And others, emphasizing the illegality of arbitrary actions that show favoritism.

While these precedents influenced the Court’s consideration of discrimination, the Supreme Court found that none of them conclusively mandated release of land if the landowner did not possess the mandatory CLU or if the issuance of CLU was never sought before the relevant notifications.

B. Legal Reasoning

1. Requirements of CLU and Development Policies: The Court noted that the appellant’s property fell within a “controlled area.” Under State law, setting up a factory requires a valid Change of Land Use certificate. Because the appellant had never obtained CLU, the Court distinguished his case from similarly placed landowners who did have the necessary permissions, thereby dispelling the discrimination claim.

2. State Policies on Release of Land: The relevant policies—particularly the Policy dated 26.06.1991 and the Policy dated 26.10.2007—did provide avenues for the release of land housing factories pre-dating the Section 4 notification. However, the Court emphasized that these policies presuppose the landowner’s compliance with statutory requirements such as CLU. Since the appellant failed to show legitimate CLU, the policies did not help his cause.

3. Exercise of Article 142 for Compensation Under the 2013 Act: Even while upholding the State’s stand on the non-release of the land, the Supreme Court took note of the appellant’s purported physical possession and the factory operations continuing on the acquired land for a considerable period, acknowledging that the matter presented special facts. In the interest of complete justice, the Court invoked Article 142 of the Constitution to direct that the appellant be granted compensation under the 2013 Act, based on the date of commencement of that Act, rather than the traditional 1894 Act compensation.

C. Impact on Future Cases

• Limited Precedential Value: The Court explicitly stated that this direction under Article 142 is not to be treated as a general precedent. Hence, future litigants cannot automatically claim the 2013 Act’s compensation for acquisitions made under the 1894 Act merely due to a delay in vesting.
• Heightened Scrutiny for Discrimination Claims: The judgment clarifies that landowners must demonstrate strict adherence to statutory requirements (like CLU) before claiming discriminatory treatment, thus reinforcing that factual similarity is a crucial determinant.
• Upholding Integrated Planning: Courts will remain cautious when requested to release land already integrated into a broader development plan, particularly where the State has invested significantly in essential infrastructure projects.

4. Complex Concepts Simplified

1. Change of Land Use (CLU): This is a permission or certificate required under local town planning laws when the intended land use differs from what is recorded in official zoning plans. Without CLU, an owner may not legally establish certain commercial or industrial activities.

2. Land Acquisition under the 1894 Act vs. the 2013 Act: The 1894 Act was the older law governing compulsory acquisition. The 2013 Act introduced a more equitable approach and substantially enhanced compensation provisions for landowners, along with social impact assessments and rehabilitation measures. This judgment is notable because it grants 2013 Act compensation even though the original proceedings were initiated under the 1894 Act, evidencing the Court’s equitable powers.

3. Article 142 of the Indian Constitution: Article 142 gives the Supreme Court extraordinary power to pass any order necessary to do complete justice in a matter. Orders passed under Article 142 can sometimes depart from strict statutory provisions, but they are used sparingly, in “exceptionally justifiable” circumstances.

5. Conclusion

The Kishore Chhabra v. The State of Haryana decision highlights the balance between private property rights and the State’s authority to acquire land for public purposes. While the Court denied the appellant’s plea for release of the land—due to the absence of required CLU and the State’s significant infrastructural investments—it recognized the unique facts of ongoing physical possession and factory operations. Thus, in a notable exercise of its Article 142 power, the Court ordered compensation under the 2013 Act, deviating from the less generous structure of the 1894 Act.

This judgment underscores that, although discrimination claims may be raised when some land is released and other parcels are not, each case will be examined on its own merits—including the critical requirement of statutory compliance. Moreover, the judgment demonstrates that the Court, in extraordinary matters, can tailor relief to ensure equitable treatment, while expressly signaling limitations on the precedential scope of such relief.

Overall, the key takeaway is that litigants wanting a release of land must strictly adhere to policy requirements and maintain valid permissions (like CLU). Simultaneously, the Supreme Court has reaffirmed its willingness to grant more contemporary compensation terms if justice so demands, without generally overruling the original statutory scheme or setting a blanket precedent.