Ask most landowners what they were paid for their acquired land and they will quote a single number: the per-square-metre rate multiplied by the area taken, dressed up with solatium and interest. Ask them whether that number reflects the well they can no longer reach, the depreciation of the strip of field the road cut off behind the alignment, the mango trees felled, or the standing crop ploughed under at possession, and you will usually be met with a blank look. The award said nothing about these things, so the owner assumed the law provided for nothing. That assumption is wrong, and it is expensive. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the 2013 Act” or “LARR Act”) does not compensate the acquired land alone. It compensates the injury the acquisition does to the owner — and that injury frequently extends well beyond the parcel physically taken. Section 28 directs the Collector, and on reference the Land Acquisition, Rehabilitation and Resettlement Authority, to take into account damage by severance, injurious affection to the owner’s other property or earnings, and the diminution of profits between declaration and possession. Section 29 requires the value of trees, wells, structures and other assets to be reckoned. These are not gratuities; they are statutory heads of compensation, and they are among the most routinely omitted from awards and the most routinely forgotten by claimants.

This article maps those forgotten heads, explains the special problem of the “partial taking that becomes a total loss”, and makes the practical point that decides whether the effort is worth it: these heads are, in the ordinary course, obtained only on a reference or enhancement — the owner who simply accepts the award forfeits them. In a borderline accept-versus-litigate decision, they can be the very weight that tips the scale.

This is the seventh spoke in a nine-part series on fair compensation in Indian land acquisition; see Fair Compensation in Indian Land Acquisition: LARR, Railways and National Highways — A Practitioner’s Map for the full map. These heads are obtained on a reference, not the award — the mechanism is examined in Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act (Spoke 3).

The statutory scheme: what Section 28 actually requires

Section 28 of the 2013 Act sets out the parameters the Collector must consider in determining compensation. Alongside the market value fixed under Section 26 — the higher of the jantri under s.26(1)(a) and the average of the top-fifty-per-cent sale deeds under s.26(1)(b), examined in Determining Market Value in Land Acquisition: The Evidentiary Battleground (Spoke 2) — s.28 requires the authority to take into account, among other things:

• the damage sustained by severance of the acquired land from the owner’s other land;
• the damage sustained by reason of the acquisition injuriously affecting the owner’s other property, movable or immovable, or his earnings;
• the damage to standing crops and trees on the acquired land; and
• the diminution of the profits of the land between the time of publication of the declaration under Section 19 and the time of taking possession.

These heads are not an invention of the 2013 Act. They descend directly from Section 23(1) of the Land Acquisition Act, 1894, which likewise required the court to have regard to damage by severance and to injurious affection of the claimant’s other property and earnings. That lineage matters: the concepts of severance and injurious affection are old, well-understood heads of compulsory-purchase compensation, and the settled understanding of what they mean carries into the 2013 Act’s re-enactment of them. What the 2013 Act adds is a far more generous market-value base beneath them, and a solatium of one hundred per cent under Section 30 computed on the aggregate.

The organising idea is simple. When the State takes part of a man’s holding, the loss it inflicts is not measured by the taken part in isolation. It is measured by the difference between the value of the whole holding before the acquisition and the value of what he is left with after it. Severance and injurious affection are the two heads that capture the shortfall the bare per-square-metre rate leaves out.

Head 1 — Damage by severance (Section 28)

Severance arises where the land acquired is only part of an owner’s holding and the taking physically cuts or divides the holding, so that the retained portion is worth less than it was as an undivided whole. The classic case is a linear acquisition — a highway, a canal, a transmission corridor, a railway line — slicing through the middle of a compact field.

Consider an owner with a single consolidated ten-bigha field. A road alignment takes a strip through its centre, leaving him with two smaller parcels, one on each side of the carriageway, no longer contiguous, each awkwardly shaped, one perhaps now landlocked or accessible only by a circuitous route. Even if he is paid the full market rate for the strip actually taken, he has suffered a further, distinct loss: the two residual parcels together are worth less than the undivided ten-bigha field was worth per bigha, because the acquisition has destroyed the unity, shape, size-advantage and access that gave the whole its value. That depreciation of the retained land is the damage by severance, and it is separately compensable under Section 28.

The measure of severance compensation is the depreciation in the market value of the land retained — the difference between what the residue was worth as part of the whole and what it is worth as a severed remnant. It is proved, in practice, by a valuer’s opinion comparing the “before” and “after” values of the retained land, supported by the layout showing how the acquisition has fragmented the holding. It is emphatically not subsumed in the rate paid for the acquired strip; it is an additional sum, and an award silent on severance where a holding has plainly been cut is an award that is incomplete on its face.

Head 2 — Injurious affection (Section 28)

Injurious affection is the broader and more frequently overlooked twin of severance. Where severance is about the cutting of the holding, injurious affection is about the harm the acquisition — or the use to which the acquired land is put — does to what the owner keeps, whether or not the holding is physically divided.

Two situations must be distinguished, because owners and even awards tend to blur them:

(a) Injurious affection by the acquisition itself. The taking of the acquired portion may, of itself, reduce the value or usability of the retained land — for instance, by stripping it of its road frontage, its access, its irrigation source, or the very feature that made it developable.

(b) Injurious affection by the use of the acquired land. This is the head owners most often forget. The value of the retained land may be depressed not merely because a neighbouring strip was taken, but because of what is now built and operated on it. Land acquired for a purpose that carries a nuisance, hazard or amenity-loss to the neighbour can drag down the value of the residue substantially. Familiar examples in the Gujarat acquisitions we see include:

• a substation erected on the acquired portion, with the noise, hazard perception and building restrictions that a switching yard brings to adjoining land;
• high-tension transmission lines strung over or beside the retained land, sterilising the corridor beneath them, imposing building and height restrictions, depressing the development and even the agricultural value of the land they overhang, and carrying a well-known market discount owing to safety and health perceptions;
• an embankment, a raised carriageway or a canal bund that impounds water, disrupts natural drainage, blocks access or casts the adjoining field into a hydrological shadow;
• effluent, dust, noise or vibration from the facility established on the acquired land, affecting cultivation or habitability of what remains.

Crucially, Section 28 extends injurious affection not only to the owner’s other immovable property but to his movable property and his earnings. Where the acquisition or the project impairs the owner’s ability to earn from the land he keeps — say, by cutting off the irrigation that made a two-crop field productive, reducing it to a single rain-fed crop — that loss of earning capacity is itself within the head. The enquiry is not confined to a notional resale value; it reaches the owner’s actual economic use of the residue.

Injurious affection is proved the same way as severance: a valuer’s reasoned “before-and-after” estimate of the retained land, this time factoring in the depressive effect of the project’s proximity and use, supported by evidence of the specific detriment — the line of towers, the setback the substation imposes, the drainage the embankment blocks. As with severance, it is an additional head, over and above the rate for the land taken.

Head 3 — Value of assets: trees, wells, structures, crops (Sections 29 and 28)

A field is rarely bare earth. It carries improvements — and each of them has a separate value that the acquisition extinguishes. Section 29 of the 2013 Act requires the value of things attached to or standing on the land to be determined, and Section 28 separately brings standing crops and trees into account. Between them, the following must each be separately valued, and an award that folds them silently into the land rate, or omits them, is deficient:

• Trees — fruit-bearing trees especially (mango, chikoo, coconut, custom orchards), valued not as timber but as income-yielding assets, typically on a capitalisation of their annual yield; and timber and fuel trees on their own footing;
• Wells, tube-wells and bore-wells — the cost and capitalised utility of the water source, a particularly valuable asset in the semi-arid tracts where much Gujarat acquisition occurs;
• Pump-houses, pump-sets, motors and pipelines — the irrigation infrastructure that makes the land productive;
• Farm structures — cattle sheds, storage, boundary walls, farmhouses, threshing floors and other constructions;
• Standing crops — the crop actually in the ground at possession, valued at its harvest worth.

The governing discipline is separate valuation. Each asset should be enumerated, measured and valued in its own right, with its own basis of computation, and claimed as a distinct line. The reason is practical: assets bundled invisibly into a per-square-metre land rate tend to disappear, whereas an itemised schedule of trees, wells and structures — each with a number and a value against it — is far harder for the acquiring authority or the reference court to ignore. Insist on the list; insist that each item is valued; insist that the valuation basis is stated.

Head 4 — Diminution of profits between declaration and possession (Section 28)

There is usually a gap — sometimes a long one — between the publication of the declaration under Section 19 and the actual taking of possession. During that interval the acquisition already casts its shadow: the owner may be unable, or unwilling, to invest in the land, to sow a full crop, to maintain the orchard, or to let the land productively, because he knows it is to be taken. The profits the land would have yielded in that window are correspondingly diminished.

Section 28 makes that diminution of profits, between the s.19 declaration and the taking of possession, a distinct head of compensation. It is a modest head compared with severance or injurious affection, but it is a real one, and it belongs on the claim — particularly where the interval has been protracted and the land is genuinely income-producing (an orchard mid-cycle, a leased field, a nursery). The evidence is the demonstrated earning history of the land and the period for which that earning was suppressed by the pendency of the acquisition.

The hard case — when a partial taking becomes a total loss

The most valuable argument in this whole area is reserved for the situation where a partial acquisition, on paper, inflicts a total loss, in substance. This is the “partial taking becomes total loss” problem, and every advocate acting for owners on linear projects should have it at the front of the mind.

The mechanism is usually statutory geometry. Development-control regulations, building bye-laws and highway rules impose margins, setbacks and building lines — a mandatory unbuilt distance from a highway, a substation, a high-tension line or a canal. When an acquisition takes a strip and simultaneously triggers a fresh setback measured from the new alignment, the residue left to the owner may be so shrunk, so narrowed, or so wholly swallowed by the mandatory margin that nothing usable remains. A thin ribbon of land behind a controlled-access highway, or the sterilised corridor beneath a transmission line, may be land the owner still nominally holds but can neither build on, access, nor cultivate to any worthwhile purpose. He has been left the shell of ownership and deprived of its substance.

Where that is so, the owner’s argument is that the residue should, in law and in the compensation, be treated as though it too had been acquired — a constructive or total taking. The proposition is that compensation must reflect economic reality, not the surveyor’s line: if the effect of the acquisition, read with the statutory margins it triggers, is that the retained portion is rendered unusable and valueless in the owner’s hands, then to pay only for the strip formally taken is to under-compensate the true loss, which is the whole holding. Section 28’s injurious-affection head is the doctrinal vehicle — the retained land has been injuriously affected to the point of extinction — pressed to its logical end: where injurious affection consumes the entire residual value, the compensation for injurious affection approaches the full value of the residue, which is functionally the same as compensating for its acquisition.

In practical terms the owner asks the reference authority either (a) to award injurious-affection compensation equal to the whole depreciated value of the sterilised residue, or (b) to treat the residue as acquired and compensate it at full market value, on the footing that a partial taking which destroys the utility of the whole is, in substance, a taking of the whole. The two routes converge on the same number. The evidence that carries the argument is the layout plan showing the residue against the mandatory setback, a valuer’s opinion that the residue has no viable use or market once the margin is applied, and, where possible, proof that the owner cannot even dispose of the remnant because no purchaser would take sterilised land.

This argument is not available to the owner who accepts the award. It is a reference argument, and a demanding one, but on the right facts — the landlocked triangle, the ribbon behind the highway, the plot wholly under the towers — it converts a modest strip-rate award into compensation for the entire holding. It is worth every hour of preparation it takes.

The catch: these heads live on the reference, not the award

Here is the point on which the whole article turns, and it is a point of strategy, not doctrine. In the ordinary run of acquisitions, severance, injurious affection, the diminution of profits and a properly itemised valuation of assets are not volunteered in the Collector’s award. The award tends to be a rate multiplied by an area, with solatium and interest bolted on. The forgotten heads are obtained, if at all, on a reference under Section 64 to the LARR Authority, which re-determines compensation afresh under Section 69 — the mechanism examined in Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act (Spoke 3).

The consequence is unforgiving. An owner who simply accepts the award forfeits these heads altogether. Acceptance closes the reference; there is no later opportunity to come back for the severance, the injurious affection or the trees that the award ignored. The heads are not lost because they were unmeritorious — they are lost because the door through which they are claimed was shut by the acceptance.

This is why these heads bear directly on the accept-versus-litigate decision that every acquired owner must make. Where the per-square-metre rate in the award is close to defensible, an owner may be tempted to accept and move on. But the rate is not the whole entitlement. If the holding has been cut (severance), if the residue sits under a line or beside a substation (injurious affection), if the field carried a tube-well and an orchard (assets), or if the setback has sterilised what remains (constructive total taking), then the true shortfall between the award and the full statutory entitlement may be very large — often larger than any quarrel about the rate itself. In a borderline case, these forgotten heads are frequently the decisive weight: they can convert a marginal, not-worth-the-trouble reference into a clearly worthwhile one. The owner and the advocate must value them before the decision to accept is taken, not after.

A caution to keep the analysis honest: the strength of a severance or injurious-affection claim is a question of evidence and valuation, and it turns on the same evidentiary discipline that governs market value itself — a reasoned, bona fide valuer’s opinion, not assertion. The valuation-evidence principles discussed in Determining Market Value in Land Acquisition: The Evidentiary Battleground (Spoke 2) — the comparable-sales method, the treatment of guideline value, the demand for genuine and proximate data — apply with equal force to proving the “before” and “after” values on which severance and injurious affection depend. A severance figure plucked from the air fares no better than a market value plucked from the air.

A documentation checklist

1. Photograph and map the retained land. Obtain a dated survey plan or sketch showing the whole holding, the acquired strip, and the shape and access of every residual parcel after the taking. Photograph the residue — its fragmentation, its landlocked corners, its relation to the new alignment, the towers, the substation, the embankment. Visual proof of how the acquisition has cut and affected the holding is the backbone of a severance and injurious-affection claim.
2. Obtain a valuer’s severance and injurious-affection estimate. Instruct a competent valuer to opine on the “before-and-after” market value of the retained land — its value as part of the whole against its value as a severed and injuriously affected remnant — and to quantify the depreciation. Where the residue is sterilised by a setback, have the valuer say expressly that it has no viable use or market.
3. List every tree, well and structure, and value each. Prepare an itemised schedule: each tree (species, age, yield), each well, tube-well and bore-well, each pump-house, motor and pipeline, each farm structure, with a stated basis of valuation for each. Do not allow assets to be folded silently into the land rate.
4. Record the standing crop at possession. At the time possession is taken, record — by photograph, panchnama, and if possible a contemporaneous note witnessed on the spot — the crop actually standing in the ground, its stage and its expected harvest value.
5. Preserve proof of earnings and of the declaration-to-possession interval. Keep evidence of the land’s income history (crop records, lease deeds, orchard yields) and note the dates of the s.19 declaration and of actual possession, to support both the diminution-of-profits head and the injurious-affection-to-earnings head.
6. Do all of this before deciding whether to accept the award. The purpose of the exercise is not only to prove the heads later; it is to value them now, so that the accept-versus-litigate decision is taken with the full entitlement in view.

Key takeaways

• The rate is not the entitlement. Beyond the per-square-metre market value, the 2013 Act compensates severance, injurious affection, the value of assets and the diminution of profits — heads awards routinely omit and owners routinely forget.
• Severance (s.28) compensates the depreciation of the retained land where the acquisition cuts a holding into fragments worth less than the undivided whole.
• Injurious affection (s.28) compensates the reduction in value or usability of the land the owner keeps — including harm from the use of the acquired land (substation, high-tension lines, embankment) and impairment of the owner’s earnings.
• Assets (ss.29 and 28) — trees, wells, tube-wells, pump-houses, farm structures and standing crops — must each be separately valued; insist on an itemised schedule.
• Diminution of profits (s.28) between the s.19 declaration and possession is a distinct, if modest, head.
• A partial taking can be a total loss. Where statutory setbacks sterilise the residue, the owner argues the retained land be treated as acquired, or compensated for injurious affection up to its full value — converting a strip-rate award into compensation for the whole holding.
• These heads live on the reference, not the award. An owner who accepts the award forfeits them. Because they can be very large, they often tip a borderline accept-versus-litigate decision — and must be valued before

Frequently asked questions

A highway has been built through the middle of my field and I was paid only for the strip under the road. The two halves left to me are now awkward and one has no proper access. Is that all I am entitled to?

No. The depreciation of the land you retain, caused by the acquisition cutting your holding in two, is damage by severance under Section 28 of the 2013 Act, and it is compensable in addition to the rate paid for the strip taken. The measure is the “before-and-after” fall in the market value of the residual parcels. This head is ordinarily obtained only on a reference under Section 64 — so if you have accepted the award, the opportunity may already be lost; if you have not, obtain a valuer’s severance estimate and pursue it.

A substation (or a line of high-tension towers) now stands on the land taken from me, and buyers say my remaining plot is worth much less because of it. Can I claim for that?

Yes. That is injurious affection under Section 28 — the reduction in the value or usability of the land you keep caused by the use to which the acquired land is put. Transmission lines and substations are recognised sources of such depreciation, through building restrictions, sterilisation of the corridor beneath the line, and market discount. It is a separate head from the rate for the land taken, and it too is claimed on the reference. You will need a valuer’s opinion quantifying the depressive effect on your retained land.

The setback rules mean I cannot build on or even use the sliver of land left to me after the acquisition. I still “own” it, but it is useless. What can I do?

This is the “partial taking that becomes a total loss”. You argue that, because the statutory margin triggered by the acquisition has rendered the residue unusable and unsaleable, it should in substance be treated as acquired — or, equivalently, that injurious affection has consumed its entire value, so compensation for that head approaches the full value of the residue. On the right facts this converts a strip-rate award into compensation for the whole holding. It is a reference argument, proved by a layout showing the residue against the setback and a valuer’s opinion that nothing usable remains.

The Collector’s rate looks roughly fair, so should I just accept the award and avoid litigation?

Weigh the forgotten heads first. The rate is only part of the entitlement. If your holding was cut, if the residue is affected by the project, if the field carried trees, wells or structures, or if a setback has sterilised what remains, the shortfall between the award and your full statutory entitlement may dwarf any quarrel about the rate. Because these heads are obtained only on a reference and are forfeited by acceptance, value them — with a valuer and a documented record — before you decide. In a borderline case they are often what makes the reference plainly worthwhile.

Sources & authorities

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 — Sections 19 (declaration), 26 (market value, including 26(1)(a) and 26(1)(b)), 28 (parameters — damage by severance, injurious affection to other property and earnings, damage to standing crops and trees, diminution of profits between declaration and possession), 29 (value of assets/trees/structures/wells), 30 (solatium), 64 (reference) and 69 (determination by the LARR Authority)
• Land Acquisition Act, 1894 — Section 23(1) (historical baseline for the severance and injurious-affection heads, now re-enacted in Section 28 of the 2013 Act)

The valuation-evidence authorities governing proof of “before-and-after” market value (the comparable-sales method and the treatment of guideline value) are collected in Determining Market Value in Land Acquisition: The Evidentiary Battleground (Spoke 2), and the reference and enhancement forums through which these heads are claimed are examined in Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act (Spoke 3); they are cross-referenced here rather than repeated.

All authorities independently verified on 20 July 2026.

This article is for general information only and does not constitute legal advice. Compensation for severance, injurious affection and assets turns on the governing statute, the layout and use of each holding, valuation evidence and applicable limitation periods, all of which differ from case to case. Readers should obtain advice specific to their matter before acting. Bhatt & Joshi Associates accepts no liability for reliance on this article without suc

The post Severance & Injurious Affection — Forgotten Heads in Land Acquisition appeared first on Bhatt & Joshi Associates.

After the Removal of Difficulties Order of 2015 and the harmonisation that followed, a landowner acquired under the National Highways Act, 1956 or the Railways Act, 1989 is, in principle, entitled to compensation on the same generous scale as one acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The quantum has been brought broadly into line. Land acquisition compensation enhancement — the route to more — has not.

This is the point most claimants miss, and it is the point that decides cases. Two landowners may be equally under-compensated — the same jantri-driven award, the same ignored sale deeds — and yet one can obtain a full re-determination of value while the other cannot get a rupee more, no matter how plainly the award is wrong on the merits. The difference lies entirely in which statute took the land, because each statute channels the dispute into a different forum, on a different trigger, subject to a very different standard of review.

This article sets the three forums side by side — the s.64 reference under the 2013 Act, the arbitration under s.3G of the National Highways Act, and the arbitration mechanism under Chapter IVA of the Railways Act — and draws out the one structural distinction that should govern strategy from day one: a LARR reference gives you a fresh determination on the merits; an arbitral award, once made, can only be set aside, never enhanced.

This is the third spoke in a nine-part series on fair compensation in Indian land acquisition; see Fair Compensation in Indian Land Acquisition: LARR, Railways and National Highways — A Practitioner’s Map for the full map. The market-value evidence you assemble is what you deploy once you know which of these forums applies to your acquisition — see Determining Market Value in Land Acquisition: The Evidentiary Battleground (Spoke 2).

The three architectures for enhancing land acquisition compensation

(A) RFCTLARR Act, 2013 — reference to the LARR Authority

The 2013 Act is built around a person who is dissatisfied but has not accepted. Once the Collector makes the award under s.23, a person interested who has not accepted it may apply to the Collector under s.64 to refer the dispute to the Land Acquisition, Rehabilitation and Resettlement Authority constituted under s.51. The matters that may be referred are broad: the measurement of the land, the amount of the compensation, the persons to whom it is payable, and the apportionment of the compensation among the persons interested.

The reference is not a mere appeal on the record. Under s.69, the Authority determines the compensation afresh — it holds its own enquiry and makes its own award, applying the market-value machinery of s.26 (the higher of jantri under s.26(1)(a) and the average of the top-50% sale deeds under s.26(1)(b)), the parameters in s.28, the value of assets under s.29, and the solatium and additional components in s.30. This is a full merits re-determination. From the Authority’s award, an appeal lies to the High Court under s.74.

Because the reference under s.69 turns on the same parameters in s.28, it is also the forum in which severance, injurious affection and other frequently-omitted heads must be affirmatively claimed — the subject of The Heads Owners Forget: Severance, Injurious Affection and Partial Taking (Spoke 7).

Two features deserve emphasis. First, there is no arbitration under the 2013 Act at all — the dispute-resolution architecture is Collector → LARR Authority → High Court, a judicial and quasi-judicial chain throughout. Second, the right to seek a reference is hedged by a strict limitation under s.64. A person who has received the award must apply within the period prescribed by s.64 — described qualitatively, a short outer window running from the award or from notice of it. A claimant who accepts the award, or who lets the s.64 period lapse, forfeits the reference altogether. The discipline of the clock is as important here as the merits.

(B) National Highways Act, 1956 — arbitration under s.3G(5)

The National Highways Act runs on a wholly different logic. Compensation is first determined by the Competent Authority under s.3G. If either party — the landowner or the acquiring authority — is dissatisfied with that determination, the dispute does not go to a court. It goes to an arbitrator appointed by the Central Government under s.3G(5), and by force of s.3G(6) the Arbitration and Conciliation Act, 1996 governs those proceedings.

That structural fact carries a criticism that a claimant should understand before entering the process: the arbitrator is appointed by the Central Government, which is, in substance, the party on the acquiring side. The neutrality that the Arbitration and Conciliation Act presumes sits uneasily with a mechanism in which one side names the tribunal. The 2015 harmonisation and the MoRTH guidelines of 28 December 2017 have raised the substantive compensation payable in NH acquisitions to First-Schedule levels; they have not altered who decides or how the decision is reviewed.

Review of the arbitral award lies under s.34 of the Arbitration and Conciliation Act, 1996 — the setting-aside jurisdiction, discussed in detail in The Limits of Challenging a National Highways Arbitral Award under Section 34 (Spoke 4). For present purposes the critical point is the ceiling on that jurisdiction, taken up below.

(C) Railways Act, 1989 — Chapter IVA and its arbitration

Land taken for a “special railway project” under Chapter IVA (ss.20A–20W) of the Railways Act, 1989 follows a parallel design. Notification is under s.20A, declaration and vesting under s.20E, and compensation is determined by the Competent Authority under s.20F, with an arbitration mechanism provided within the Chapter for a dissatisfied party. Structurally, this mirrors the National Highways route far more closely than the LARR route: an administrative determination followed by arbitration, rather than a reference to a judicial authority.

On quantum, the position was corrected by the RFCTLARR (Removal of Difficulties) Order, 2015 dated 28 August 2015, made under s.113(1) read with s.105(3) of the 2013 Act, which extended the compensation, R&R and infrastructure benefits of the First, Second and Third Schedules to the thirteen Fourth-Schedule enactments — the Railways Act among them — deemed effective 1 January 2015. So RFCTLARR-level compensation now applies to Railways Act acquisitions. As with the National Highways Act, the enhancement of quantum did not change the forum or the standard of review, which remains arbitral.

The distinction that decides cases: re-determination versus setting aside

Here is the fault line. Under the 2013 Act, the LARR Authority, on a s.64 reference, re-determines compensation under s.69. If the Collector’s award was too low — because it leaned on jantri and ignored genuine, proximate sale deeds — the Authority can simply fix the correct, higher figure. That is the ordinary function of the forum.

Under the National Highways Act and the Railways Act, the challenge forum is arbitration followed by s.34. And under s.34 a court has no power to modify or enhance the award. This is settled by Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1, which holds that under s.34 a court may set aside an arbitral award but cannot modify or enhance it, including compensation fixed under s.3G of the NH Act. The court’s grounds are narrow — the setting-aside grounds of s.34, including patent illegality under s.34(2A) for a domestic award, which as Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 explains reaches a finding based on no evidence or one ignoring vital evidence, but does not license a re-appreciation of evidence.

The practical consequence is stark. Suppose the identical error — a Competent Authority or Collector who valued land at guideline rates and disregarded the sale deeds, contrary to Jawajee Naganatham v. Revenue Divisional Officer and the line of authority on comparable sales (examined in full in Spoke 2). Under LARR, the claimant applies under s.64 and the Authority substitutes the correct market value. Under the NH or Railways route, the best the claimant can achieve under s.34 is to have the award set aside — and even then not always with a re-determination in hand, but potentially a remit that starts the arbitral clock afresh. The same under-valuation is far easier to correct under LARR than under the arbitral route, because only the LARR forum is empowered to give the claimant the higher number directly.

This asymmetry should shape expectations at the outset. Where the acquisition is under the 2013 Act, the objective is a merits re-determination and the effort goes into building the comparable-sales case for the Authority. Where the acquisition is under the NH Act or the Railways Act, the claimant’s leverage is at the arbitration stage — because once the arbitral award is made, s.34 offers a demolition tool, not a re-valuation tool.

Which forum, what it means for you

Limitation discipline across the forums

Each forum keeps its own clock, and each clock is unforgiving.

Under the 2013 Act, the right to a reference exists only if the claimant applies to the Collector within the period prescribed by s.64 and has not accepted the award. Miss the window or accept the award, and the reference is gone.

Under the National Highways Act and the Railways Act, once the arbitral award is made the challenge is governed by s.34(3) of the Arbitration and Conciliation Act, 1996 — three months from receipt of the signed copy of the award, extendable by a further thirty days on sufficient cause, “but not thereafter.” The Supreme Court has read those words strictly: Union of India v. Popular Construction Co., (2001) 8 SCC 470 holds that “but not thereafter” excludes s.5 of the Limitation Act; and State of Maharashtra v. ARK Builders Pvt. Ltd., (2011) 4 SCC 616 fixes the start of the clock at receipt of the signed copy of the award under s.31(5). The strictness of that s.34 clock is examined in The Limits of Challenging a National Highways Arbitral Award under Section 34 (Spoke 4); here it is enough to say that the arbitral route punishes delay far more mechanically than the LARR route, and that a claimant who wishes to preserve a challenge must diarise from the date of the signed copy, not from any later or informal intimation.

Key takeaways

• Quantum has converged; forum has not. After the 2015 Removal of Difficulties Order, NH and Railways acquisitions attract RFCTLARR-level compensation, but the machinery for enhancing land acquisition compensation differs fundamentally between the three statutes.
• LARR gives re-determination; NH and Railways give only setting aside. The LARR Authority re-fixes value on the merits under s.69; an NH or Railways arbitral award can only be set aside under s.34, never modified or enhanced (Project Director, NHAI v. M. Hakeem).
• No arbitration under the 2013 Act. The LARR chain is Collector → LARR Authority (s.51/s.64) → High Court (s.74); it is judicial and quasi-judicial throughout.
• The NH arbitrator is appointed by one side. Under s.3G(5) the Central Government — effectively the acquiring party — appoints the arbitrator, a structural feature claimants should weigh.
• The same under-valuation is easier to correct under LARR. Because only the LARR forum can hand the claimant the higher figure, an identical jantri-driven error is far more readily remedied under the 2013 Act than under the arbitral route.
• Every forum has its own unforgiving clock. The s.64 reference window and the s.34(3) challenge period are both strict; missing either is usually fatal.

Frequently asked questions

My land was taken for a National Highway and I think the award is far too low. Can a court simply increase it?

No. Enhancing your land acquisition compensation doesn’t work that way for NH acquisitions: a challenge to a National Highways arbitral award lies under s.34 of the Arbitration and Conciliation Act, 1996, and under Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1 a court may set the award aside but cannot modify or enhance it. Your leverage is therefore at the arbitration stage itself, before the arbitrator appointed under s.3G(5) — that is where the valuation must be won.

Is there any arbitration under the RFCTLARR Act, 2013?

No. The 2013 Act contains no arbitration mechanism. A dissatisfied claimant who has not accepted the s.23 award applies under s.64 for a reference to the LARR Authority (s.51), which determines compensation afresh under s.69, with an appeal to the High Court under s.74.

Why is it said that under-valuation is easier to correct under LARR than under the NH or Railways route?

Because the forums do different things. On a s.64 reference the LARR Authority re-determines value and can award the correct, higher figure directly — a genuine land acquisition compensation enhancement. Under the NH or Railways route the challenge is by arbitration and then s.34, where the court’s power is confined to setting aside on narrow grounds — it cannot substitute a higher figure. The same error thus yields a direct remedy in one forum and, at best, a fresh round in the other.

How much time do I have to challenge, and from when does it run?

For an NH or Railways arbitral award, s.34(3) allows three months from receipt of the signed copy of the award, extendable by thirty days on sufficient cause, “but not thereafter” — a limit the Supreme Court applies strictly (Popular Construction), with time running from the signed copy under ARK Builders. For a LARR reference, you must apply to the Collector within the period prescribed by s.64. In both cases, do not wait.

Sources & authorities

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 — ss.23, 26 (incl. 26(1)(a), 26(1)(b)), 28, 29, 30, 51, 64, 69, 74; s.105(3); s.113(1)
• National Highways Act, 1956 — ss.3G, 3G(5), 3G(6)
• Railways Act, 1989 — Chapter IVA, ss.20A, 20E, 20F, 20A–20W
• Arbitration and Conciliation Act, 1996 — ss.31(5), 34, 34(2A), 34(3)
• RFCTLARR (Removal of Difficulties) Order, 2015, dated 28 August 2015 (under s.113(1) r/w s.105(3)) — extending First, Second and Third Schedule benefits to the Fourth-Schedule enactments, deemed effective 1 January 2015
• MoRTH guidelines dated 28 December 2017
• Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1
• Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131
• Union of India v. Popular Construction Co., (2001) 8 SCC 470
• State of Maharashtra v. ARK Builders Pvt. Ltd., (2011) 4 SCC 616
• Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595

All authorities independently verified on 20 July 2026.

This article is for general information only and does not constitute legal advice. Land acquisition compensation turns on the governing statute, the facts of each acquisition and applicable limitation periods, all of which differ from case to case. Readers should obtain advice specific to their matter before acting. Bhatt & Joshi Associates accepts no liability for reliance on this article without such advice.

The post Three Forums for Land Acquisition Compensation Enhancement in India – s.64 Reference, NH Arbitration and the Railways Act appeared first on Bhatt & Joshi Associates.

When the State takes a person’s land, the Constitution and statute promise something in return: fair compensation. Understanding land acquisition compensation — what it covers, who decides it, and how to challenge a low offer — matters for a farmer whose ancestral field lies in the path of an expressway, or a family whose plot is swallowed by a railway line. What is the land “worth”? Who decides? And if the offered sum is too low, where does the owner go to fight?

For most of a century those answers depended entirely on which statute did the taking. Land acquired for a highway, a railway, or a general public purpose each travelled a different road, with different — and often much smaller — compensation. That patchwork has now been largely levelled. Since the RFCTLARR (Removal of Difficulties) Order, 2015 (dated 28 August 2015, deemed effective 1 January 2015) and the Supreme Court’s decision in Union of India v. Tarsem Singh, (2019) 9 SCC 304, the substance of fair compensation — market value, multiplier, solatium and interest — is broadly unified across the general and the special Acts.

But unification of the money is not unification of the map. The forum and the procedure for actually extracting fair compensation still differ sharply depending on whether the land was taken under the RFCTLARR Act, 2013, the National Highways Act, 1956, or the Railways Act, 1989. This article is the practitioner’s map to that terrain. It frames the whole series; each numbered spoke below drills into one region in depth.

The land acquisition compensation architecture: what “fair compensation” is made of

Under the RFCTLARR Act, 2013, compensation is not a single figure but a stack. The foundation is market value, determined under section 26 by the higher of the guideline (jantri/ready-reckoner) value under section 26(1)(a) or the average of the top fifty per cent of comparable sale deeds under section 26(1)(b). That base is then multiplied under the First Schedule — a factor of 1 for urban land and up to 2 for rural land — to correct for the historic under-valuation of agricultural holdings. To the multiplied market value are added the value of assets, trees, structures and wells under section 29, a 100% solatium under section 30, and interest under section 80 (9% per annum, rising to 15% after one year), with a further 12% per annum additional amount under section 30(3) for the period from notification to award.

This architecture matters because owners routinely settle for the “market value” line alone and forfeit the solatium, multiplier and interest that can double or treble the sum. The full anatomy is unpacked in The Compensation Architecture of the LARR Act, 2013.

How market value is fought over

Everything above rests on the base figure, and the base is where the real litigation happens. The evidentiary contest is between the acquiring body — which leans on the low guideline/jantri value — and the owner, who must prove a higher value through genuine, proximate, comparable sale instances (Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona, (1988) 3 SCC 751).

The courts have laid down clear rules of engagement: guideline/jantri and ready-reckoner rates are creatures of stamp duty and cannot by themselves fix compensation (Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595); the highest bona fide exemplar is ordinarily to be preferred over mechanical averaging (Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432); a single sale deed will not do to fix the average for dissimilar land (Project Director, NHAI v. Alfa Remidis Ltd., 2026 INSC 480); and a suitable deduction for development or largeness applies when a big tract is valued off small-plot sales (Lal Chand v. Union of India, (2009) 15 SCC 769). The tactics are set out in Determining Market Value: The Evidentiary Battleground.

The three forums for enhancement

If the awarded compensation is too low, the route to more depends entirely on the statute:

• Under the RFCTLARR Act, 2013, the owner seeks a reference under section 64 to the Land Acquisition, Rehabilitation and Resettlement Authority (section 51), which determines the enhanced amount under section 69, with an appeal to the High Court under section 74.
• Under the National Highways Act, 1956, there is no civil reference; the dissatisfied owner must go to arbitration under section 3G(5) before an arbitrator appointed by the Central Government, with the Arbitration and Conciliation Act, 1996 applying by force of section 3G(6).
• Under the Railways Act, 1989, Chapter IVA (sections 20A–20W) supplies its own competent authority (section 20F) and arbitration mechanism.

The three tracks — and why the choice of track drives strategy, limitation and cost — are compared in Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act.

The special problem: an NH arbitral award cannot be modified

The National Highways route carries a trap that surprises owners and counsel alike. Because section 3G compensation is fixed by an arbitrator, any challenge runs through section 34 of the Arbitration and Conciliation Act, 1996 — and under Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1, a court hearing a section 34 petition may set aside an award but cannot modify or enhance it. An owner who receives a miserly arbitral award cannot simply ask the court to raise the figure; at best the award is quashed and the matter begins again.

The section 34 window is also unforgiving: the three-months-plus-thirty-days limit is an outer wall that cannot be scaled (Union of India v. Popular Construction Co., (2001) 8 SCC 470), time running from receipt of the signed copy of the award (State of Maharashtra v. ARK Builders Pvt. Ltd., (2011) 4 SCC 616), and the grounds are confined to patent illegality that ignores vital evidence, not a re-appreciation of the merits (Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131). This narrow gateway is dissected in The Limits of Challenging a National Highways Arbitral Award under Section 34.

Harmonisation: the 2015 Order and Tarsem Singh

How did the special Acts come to pay LARR-grade compensation at all? Through two instruments. The RFCTLARR (Removal of Difficulties) Order, 2015 (issued under section 113(1) read with section 105(3)) extended the compensation, rehabilitation and infrastructure benefits of the First, Second and Third Schedules to the thirteen enactments in the Fourth Schedule — which include both the National Highways Act, 1956 and the Railways Act, 1989 — deemed effective 1 January 2015; the MoRTH guidelines of 28 December 2017 confirmed the First Schedule’s application to highways. Complementing the Order, Union of India v. Tarsem Singh, (2019) 9 SCC 304, struck down section 3J of the NH Act as violative of Article 14 insofar as it denied solatium and interest, importing those heads into NH acquisitions from the 1894-Act era. The harmonisation — and its temporal seams — is mapped in Harmonising Compensation across Special Acts: The 2015 Order and Tarsem Singh.

Section 24(2) lapse and the retrospective saga

A separate battleground is not how much but whether the acquisition survives at all. Section 24(2) of the 2013 Act deems certain old acquisitions to have lapsed where possession was not taken and compensation not paid. The scope of that reprieve was fought to a Constitution Bench in Indore Development Authority v. Manoharlal, (2020) 8 SCC 129, which read the “or” in section 24(2) as “nor” (conjunctive), held that mere non-payment does not cause a lapse where compensation was tendered, and overruled Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183. The long arc of that dispute is traced in Section 24(2) Lapse and the Retrospective Saga.

The heads owners forget

Fair compensation is not only about the land physically taken. Where only part of a holding is acquired, the residue can lose value or utility — the classic heads of severance, injurious affection and diminution of profits, recognised in the parameters of section 28 of the 2013 Act (and historically in section 23(1) of the 1894 Act). An owner whose farm is bisected by a highway, leaving a landlocked or awkward remnant, is entitled to be compensated for the damage to what is left, not merely for the strip taken. These frequently-omitted heads are recovered in The Heads Owners Forget: Severance, Injurious Affection and Partial Taking.

Taxation: keeping what you win

Winning enhanced compensation is hollow if the taxman takes a slice. Section 96 of the 2013 Act exempts compensation received under the Act from income tax (and stamp duty), a protection whose interaction with the interest component and with acquisitions under the special Acts is often misunderstood. The tax treatment of compensation and interest is examined in Taxation of Land Acquisition Compensation and Interest.

In this series

1. The Compensation Architecture of the LARR Act, 2013
2. Determining Market Value: The Evidentiary Battleground
3. Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act
4. The Limits of Challenging a National Highways Arbitral Award under Section 34
5. Harmonising Compensation across Special Acts: The 2015 Order and Tarsem Singh
6. Section 24(2) Lapse and the Retrospective Saga
7. The Heads Owners Forget: Severance, Injurious Affection and Partial Taking
8. Taxation of Land Acquisition Compensation and Interest

Key takeaways

• Since the 2015 Removal of Difficulties Order and Tarsem Singh, the substance of fair compensation — market value, multiplier, solatium and interest — is broadly unified across the LARR Act, the National Highways Act and the Railways Act.
• The forum and procedure are not unified: LARR uses a section 64 reference to the LARR Authority; the NH Act uses section 3G arbitration; the Railways Act uses its own Chapter IVA mechanism.
• Compensation is a stack — base market value, First-Schedule multiplier, section 30 solatium (100%), section 80 interest, and section 30(3) additional amount — not a single “market value” figure.
• Market value is won or lost on comparable sale deeds, not guideline/jantri rates; prefer the highest bona fide exemplar and resist single-deed and averaging shortcuts.
• The gravest trap on the NH route is Hakeem: a section 34 court can set aside but cannot enhance a lowball arbitral award, and the limitation window is unforgiving.
• Owners routinely forfeit money by ignoring solatium, interest, severance and injurious affection — and by overlooking the section 96 tax exemption.

Frequently asked questions

Is the compensation for a highway or railway acquisition really the same as under the LARR Act?

Broadly, yes, for the money. Land acquisition compensation under the National Highways Act and the Railways Act is now largely aligned with the LARR Act: the 2015 Removal of Difficulties Order extended the First, Second and Third Schedule benefits (compensation, R&R, infrastructure) to the Fourth-Schedule enactments including both statutes, and Tarsem Singh imported solatium and interest into NH acquisitions. But you claim it through a different forum and procedure under each statute.

My highway compensation is too low — can the court simply increase it?

Not directly. NH compensation is fixed by an arbitrator under section 3G, so any challenge is under section 34 of the Arbitration and Conciliation Act, 1996. Under M. Hakeem, (2021) 9 SCC 1, the court can set the award aside but cannot modify or enhance it, and the challenge must be filed within three months plus, at most, a further thirty days.

How is market value determined, and can they just use the jantri rate?

Market value under section 26 is the higher of the guideline value or the average of the top fifty per cent of comparable sale deeds, then multiplied under the First Schedule. Guideline/jantri and ready-reckoner rates are for stamp duty and cannot by themselves fix compensation (Jawajee Naganatham v. Revenue Divisional Officer); genuine comparable sales govern.

Only part of my land was taken — am I entitled to anything for the rest?

Potentially, yes. Section 28 of the 2013 Act recognises damage by severance, injurious affection and diminution of profits — that is, the loss in value or utility of the land you retain. These heads are frequently omitted from awards and must be affirmatively claimed.

Sources & authorities

• RFCTLARR Act, 2013 — ss. 26, 28, 29, 30, 30(3), 51, 64, 69, 74, 80, 96, 105(3), 113; First, Second, Third and Fourth Schedules
• RFCTLARR (Removal of Difficulties) Order, 2015 (dated 28 August 2015; effective 1 January 2015)
• MoRTH guidelines dated 28 December 2017
• National Highways Act, 1956 — s. 3G (incl. 3G(5), 3G(6)), s. 3J
• Railways Act, 1989 — Chapter IVA, ss. 20A–20W (incl. 20F)
• Land Acquisition Act, 1894 — s. 23(1)
• Arbitration and Conciliation Act, 1996 — ss. 31(5), 34, 34(2A), 34(3)
• Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona, (1988) 3 SCC 751
• Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595
• Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432
• Lal Chand v. Union of India, (2009) 15 SCC 769
• Project Director, NHAI v. Alfa Remidis Ltd., 2026 INSC 480
• Union of India v. Popular Construction Co., (2001) 8 SCC 470
• State of Maharashtra v. ARK Builders Pvt. Ltd., (2011) 4 SCC 616
• Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131
• Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1
• Union of India v. Tarsem Singh, (2019) 9 SCC 304
• Indore Development Authority v. Manoharlal, (2020) 8 SCC 129, overruling Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183

The post Fair Compensation in Indian Land Acquisition: LARR, Railways and National Highways — A Practitioner’s Map appeared first on Bhatt & Joshi Associates.