Discriminatory land release violates Article 14 but does not undo a valid acquisition notification.

A selective release of a small portion of acquired land under the Land Acquisition Act, 1894, lacking any rational basis and conferring a special benefit on chosen persons, was held arbitrary and violative of Article 14. That later discriminatory release did not invalidate the earlier acquisition notification, which continued to operate for the remaining acquired land, and the released land was restored to acquisition. On the special facts, delay in completing acquisition and taking possession, caused substantially by governmental action and stay orders, justified equitable compensation by way of interest at 7.5% per annum for two years on the value of the land.

---

---

Issues: (i) whether the selective release of a small portion of acquired land in favour of a favoured group was arbitrary and violative of Article 14 of the Constitution of India; (ii) whether such illegal release invalidated the entire acquisition notification under the Land Acquisition Act, 1894; and (iii) whether delay in completing acquisition and taking possession entitled the landowners to additional equitable compensation.

Issue (i): whether the selective release of a small portion of acquired land in favour of a favoured group was arbitrary and violative of Article 14 of the Constitution of India.

Analysis: The release under Section 48 of the Land Acquisition Act, 1894 was found to rest on a false and unsupported factual basis and to confer a special benefit on selected persons without any rational justification. The material placed showed that the alleged structures on the released land did not justify differential treatment, and the State was unable to support the release on any legally sustainable ground. Such preferential treatment amounted to favouritism and offended the constitutional requirement of equality.

Conclusion: The release of the Pandey families' land was held to be non est and violative of Article 14.

Issue (ii): whether such illegal release invalidated the entire acquisition notification under the Land Acquisition Act, 1894.

Analysis: The impugned release was a later and separate act, occurring years after the Section 4 notification and not part of the original acquisition scheme. The invalidity of the subsequent selective withdrawal did not destroy the earlier notification, which continued to operate for the entire acquired tract. The illegal release could not be used to nullify the acquisition as a whole.

Conclusion: The entire acquisition was not struck down, and the original notification remained valid except that the released land was restored to the acquisition.

Issue (iii): whether delay in completing acquisition and taking possession entitled the landowners to additional equitable compensation.

Analysis: The delay was not attributable to the landowners and was substantially caused by governmental action and stay orders during the pendency of proceedings. The landowners remained in possession during the intervening period and derived benefit from the land. In the special facts, equity warranted compensating them for the delay by awarding interest on the value of the land for the relevant period.

Conclusion: The landowners were held entitled to equitable compensation by way of interest at 7.5% per annum for two years on the value of their lands.

Final Conclusion: The challenge succeeded only to the extent that the selective release was invalidated, while the acquisition itself was maintained and an equitable monetary relief was granted for the delay in finalising possession and compensation.

Ratio Decidendi: A later discriminatory release of a portion of acquired land, unsupported by a rational basis, is void under Article 14, but it does not by itself invalidate an earlier valid acquisition notification; in appropriate cases, delay in acquisition may justify equitable interest as compensation.

---