Court’s Decision
The Kerala High Court allowed the writ appeals, quashed the Land Acquisition Collector’s notification fixing the multiplication factor as 1 for land acquisitions in Lakshadweep, and held that the appropriate factor should be 2 under Serial No. 2 of the First Schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act). The Court directed that the market value of the lands acquired from the appellants must be recalculated using the multiplication factor of 2, as applicable for rural areas.
Facts
Landowners in Lakshadweep challenged the Lakshadweep Administration’s notification fixing the multiplication factor as 1 for calculating compensation for their acquired lands under the 2013 Act, arguing it should be 2 as Lakshadweep is entirely rural with no notified urban areas. The Land Acquisition Collector had treated the islands as having urban characteristics due to population density and infrastructure, using this reasoning to apply a factor of 1. The landowners argued that the 2013 Act and its First Schedule required applying a higher factor for rural areas, and that the Union Government’s classifications and guidelines for similar acquisitions supported this.
Issues
Whether the Lakshadweep Administration was justified in fixing the multiplication factor as 1 under the First Schedule of the 2013 Act for land acquisition in Lakshadweep.
Whether the absence of a notified urban area in Lakshadweep required the application of a multiplication factor of 2 for determining compensation for acquired lands under the 2013 Act.
Whether the classification of Lakshadweep as rural for other government schemes should influence compensation under the 2013 Act.
Petitioner’s Arguments
The petitioners argued that Lakshadweep is classified as rural under various Union Government schemes, and no urban areas have been notified in the territory. They relied on government documents, the rural-urban classification for census purposes, and guidelines issued by the Ministry of Road Transport and Highways (MORTH) for land acquisitions under the National Highways Authority of India Act, which applied a multiplication factor of 2 for Union Territories excluding Puducherry. They contended that the 2013 Act clearly distinguishes between rural and urban areas, and the absence of a notified urban area in Lakshadweep meant that a factor of 2 should be applied for fair compensation.
Respondent’s Arguments
The Lakshadweep Administration argued that the 2013 Act allows the appropriate authority to fix any factor between 1 and 2 for rural areas based on proximity to urban areas, and that Lakshadweep had characteristics similar to urban areas due to population density, infrastructure, and connectivity, justifying the application of a factor of 1. The administration contended that the MORTH guidelines related only to highways and were inapplicable, and that the learned Single Judge had correctly upheld the notification.
Analysis of the Law
The Court analysed Sections 26(1) and (2) of the 2013 Act, which mandate multiplying the market value of acquired land by a factor specified in the First Schedule. Serial No. 2 of the First Schedule provides for a factor of 2 for rural areas, based on distance from notified urban areas, while Serial No. 3 provides for a factor of 1 for urban areas. The Court noted that the criteria under Serial No. 2 require a notified urban area to determine proximity and adjust the factor accordingly. Since no urban area is notified in Lakshadweep, the territory must be treated as entirely rural, requiring the application of a factor of 2.
Precedent Analysis
The Court considered:
- The statutory framework of the 2013 Act and its First Schedule, which prioritises notified classifications over functional characteristics.
- Notifications issued by the Union Government treating Lakshadweep as rural under other welfare schemes.
- MORTH guidelines applying a factor of 2 in Union Territories for compensation purposes under the NHAI Act, indicating consistent treatment of Lakshadweep as rural.
These references reinforced the need for consistent, lawful classification in applying multiplication factors under the 2013 Act.
Court’s Reasoning
The Court held that the use of a multiplication factor of 1 was impermissible because it relied on the assumption of urban characteristics without the existence of a notified urban area, contrary to the statutory framework. The absence of a notified urban area precluded measuring proximity, which is essential under Serial No. 2 for determining whether to use a lower factor within the 1–2 range. In the absence of such notification, the highest factor of 2 must apply. The Court also clarified that adopting guidelines and practices consistent with other central government schemes ensures uniformity and fairness.
The Court stated: “In the absence of a notified urban area, the acquisition area must be treated as rural and the factor under Serial No. 2 must be taken as 2.”
Conclusion
The High Court:
Quashed the Land Acquisition Collector’s notification fixing the multiplication factor as 1 for land acquisitions in Lakshadweep.
Declared that the appropriate multiplication factor for determining compensation under the 2013 Act for these acquisitions is 2.
Directed the authorities to recalculate and pay the petitioners the compensation with the revised factor promptly.
Implications
This judgment ensures that:
Landowners in Lakshadweep receive fair compensation under the 2013 Act.
Authorities adhere strictly to statutory provisions when calculating compensation for land acquisition.
The absence of a notified urban area in a region will mandate the application of the higher multiplication factor for rural areas.
Consistency and fairness are maintained in land acquisition compensation across Union Territories.
Short Notes on Referred Cases
The judgment did not refer to specific prior case law but relied on:
The statutory provisions of the 2013 Act and First Schedule.
Union Government notifications treating Lakshadweep as rural under other schemes.
MORTH guidelines under the NHAI Act using a factor of 2 for rural areas in Union Territories, demonstrating the administrative and statutory basis for adopting a factor of 2.
FAQs
1. What multiplication factor should apply for land acquisitions in Lakshadweep under the 2013 Act?
A factor of 2 must apply due to the absence of a notified urban area.
2. Can authorities fix a factor of 1 based on urban-like characteristics if the area is not notified as urban?
No, statutory requirements mandate using the rural factor of 2 in such cases.
3. How does this judgment protect landowners in Lakshadweep?
It ensures they receive fair compensation by enforcing the correct statutory factor for rural acquisitions.