Court Allows Amendment in Reference Application Under Section 18 of Land Acquisition Act, 1894, Upholds Compensation for Business Loss Arising from Acquired Land
In a significant judgment delivered on September 7, 2026, the Bombay High Court, presided over by Justice Abhay Ahuja, has allowed an appeal filed by Kashinath Dudhaji Gaikwad for enhanced compensation following the acquisition of his land in Village Lonad, Taluka Bhiwandi, District Thane. The Court ruled that compensation for acquired land under the Land Acquisition Act, 1894, extends to benefits arising out of the land, including loss of business, thereby granting compensation for the loss of the appellant’s milk business operated on the acquired land.
The appellant’s land was acquired by the State of Maharashtra through notifications under Sections 4 and 6 of the Land Acquisition Act in 1981 and 1983, respectively, with possession eventually taken in 2000. Although the appellant received initial compensation for his land and structures, he contended that this amount was insufficient, especially as it did not account for his milk business losses, which he operated from a stable situated on the acquired land.
The appellant sought enhancement of compensation via a reference application under Section 18 of the Act in 2001. He later filed an amendment application to include compensation for loss of milk business, supported by detailed account books showing income from milk sales between August 1986 and March 1989, alongside expenses for maintaining buffaloes. The appellant claimed a total compensation of approximately Rs. 6,54,690, including solatium and interest.
Initially, the District Judge at Thane partly allowed the reference, awarding additional compensation for the appellant’s house but rejecting the claim for loss of milk business. The judge reasoned that the milk business claim was a late addition and that there was no cogent evidence substantiating the business loss.
However, upon appeal, the Bombay High Court found these conclusions to be flawed. The Court observed that the appellant’s amendment did not change the nature of the objection, which remained focused on the enhancement of compensation. Citing the Supreme Court decision in Ambya Kalya Mhatre vs. State of Maharashtra (2011), the Court underscored that a landowner’s objection under Section 18 need not specify exact amounts or restrict claims to particular heads of compensation. The entire compensation issue is open before the Reference Court once an objection is raised.
The High Court further noted that the appellant’s evidence, including unchallenged account books and oral testimony, sufficiently linked the loss of milk business to the land acquisition. The Court emphasized that under Section 3(a) of the Land Acquisition Act, “land” includes benefits arising out of the land, which encompasses structures like stables and the business conducted therein.
Rejecting the District Judge’s reasoning that the buffaloes were not used for cultivation and thus the business loss was not compensable, the Court clarified that while buffaloes were not used for ploughing, they produced cow dung which fertilized crops, and more importantly, the milk business itself was a distinct and compensable benefit arising from the land.
Consequently, the Bombay High Court modified the earlier judgment, directing the Reference Court to determine the enhanced compensation payable, including the loss of milk business, interest, and statutory benefits under Sections 23(1-A), 23(2), and 28 of the Act. The State Government was ordered to deposit the enhanced compensation within three months of determination by the Reference Court.
This judgment reaffirms the principle that compensation in land acquisition cases is not limited to the physical land and structures alone but extends to ancillary benefits and businesses that are impacted due to acquisition. It also clarifies that amendments to enhance compensation claims are permissible without altering the fundamental nature of objections raised under Section 18, provided they relate to compensation and not to other categories like measurement or apportionment.
Bottom Line:
Land Acquisition Act - Compensation for acquired land includes benefits arising out of the land - Loss of milk business due to acquisition of land is compensable - Amendment in reference application under Section 18 for enhanced compensation permissible without changing the nature of objections.
Statutory provision(s): Land Acquisition Act, 1894 Sections 3(a), 18, 23(1-A), 23(2), 28
Kashinath Dudhaji Gaikwad v. State of Maharashtra, (Bombay) : Law Finder Doc Id # 2978875
