In three interconnected writ appeals filed before the Madras High Court against a common order dated 30-07-2025 by a Single Judge whereby an award dated 23-11-2020 was quashed to the limited extent that the appellants had applied a blanket 33.33% deduction towards ‘development charges’ from the market value determined for the respondents’ lands, a Division Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan confirmed the impugned order and directed the appellants to pay 33.33% of the compensation that was deducted.
The lands in question were acquired under the Tamil Nadu Highways Act, 2001 (Act) for the specific public project of forming a link road and constructing a bridge across the Buckingham Canal to connect Rajiv Gandhi Salai (OMR) at Neelankarai. The impugned order was challenged by asserting that while zero deduction was the rule for previously approved or fully developed layouts, the subject lands were unapproved and therefore, the development charges were liable to be deducted.
It was asserted that since the administrative circulars by the Commissioner of Land Administration were never challenged by the writ petitioners, the statutory deduction remained valid. The challenge was also based on the contention that because the present project involved building a new link road as well as bridge and not just widening or expansion of an existing roadway, the standard ‘linear acquisition exception’ would not apply.
The Court noted that the pivotal question in the present matter was whether the State was legally justified in enforcing 33.33% deduction towards development charges from the compensation determined for lands acquired specifically for a linear road and bridge project. It was stated that a value deduction (ranging from 20% to 50%) is applied to balance the scale between the value and finished plot value. However, it was noted that the Supreme Court has repeatedly drawn a distinction between spatial developments (like housing estates) from linear infrastructure developments (like railways and highways).
It was stated that when the State takes land to build or widen a road, it uses every square meter of that land for the road itself, and does not carve out plots to sell to the public or set aside land for community parks. It was stated that the road is the development, which is why deducting money from the amount awarded to fund the construction of the public project itself amounts to an impermissible double tax on the land loser. The Court said that whether a lane is widened or a brand-new link road is laid down over a canal, the nature of the project remains structurally linear, and the entire acquired path is consumed by the public infrastructure.
Referring to Madhya Pradesh Road Development Corporation v. Vincent Daniel & Ors. (2025) 7 SCC 798, the Court stated that if ordinary citizens must pay stamp duty based on the circle and guideline rates, the State cannot claim that those very rates are too high or require a one-third deduction when it is time to pay compensation. Further, it was said that the availability of an alternate remedy does not strip the court of its writ jurisdiction under Article 226 of the Constitution, particularly when the State authority has committed a patent error of law by making an unauthorised statutory deduction. It was said that relegating respondents to a reference court at this stage would be a miscarriage of justice.
The Court held that the impugned order warranted no intervention and that the one-third deduction towards development charges for a linear road and bridge project was unsustainable. Thus, the appeals were dismissed and the appellants were directed to pay 33.33% of the compensation that was deducted within four weeks.
