ISLAMABAD:
The Supreme Court has ruled that the State’s inherent power to compulsorily acquire private property for a public purpose is not absolute, declaring that courts have a constitutional duty to ensure that property owners receive fair compensation that reflects the true value of their property rather than arbitrary or outdated assessments.
In a detailed 20-page judgment written by Justice Muhammad Ali Mazhar, a division bench upheld the decision of the Peshawar High Court (PHC) to enhance compensation for privately acquired land in Swabi district. The ruling establishes broad legal principles governing compulsory land acquisition, emphasizing that constitutional guarantees protecting property rights must be balanced with the state’s power of expropriation.
The judgment also warned acquiring agencies not to delay acquisition procedures, noting that prolonged delays coupled with outdated valuation methods unfairly deprive landowners of fair compensation.
It ordered courts to take into account inflation, land price appreciation and the property’s future potential when determining compensation.
“The role of the Court is to ensure fair compensation in the acquisition of property as the guardian of constitutional rights. Although the doctrine of expropriation is the inherent power of the State to compulsorily acquire private property for a public purpose even against the will of the owner, this power is not absolute and is strictly regulated by the Constitution to prevent the despotic exercise of state authority while cautiously maintaining balance with the fundamental rights of citizens,” the ruling states.
The court further observed that one of the main responsibilities of the judiciary is to ensure that the compensation genuinely reflects the real value of the property acquired.
“The most recognizable work of fiction is structured around the metaphor ‘gold for gold,’ not copper for gold,’ which is predominantly used as a judicial principle to ensure fair and equitable compensation, so that the owner should not be left in a more pitiful financial crisis, but rather receives money that is no less than the loss imposed by the public interest or good.”
Explaining the concept of market value, the court said it represents the amount that a willing buyer would normally pay a willing seller.
“The dogma of potential value illustrates the future use of the land, which must also be considered by the courts in taking corrective measures. If the compensation is not completely rational, the courts may alter or increase the amount of compensation, even if the amount is found to be based on outdated valuation rates or if the award appears unreasonable or manipulated.”
The ruling also expressed concern about delays in acquisition procedures, saying authorities often prolong both compensation payments and land possession.
“The acquiring agency cannot remain asleep during the acquisition process. It is quite common to observe that the acquisition process and payment of compensation are delayed for an unlimited period of time and the land owners remain deprived of fair compensation for their acquired land.”
“Even the possession of the property is delayed due to the lackadaisical attitude of the land acquisition officials, which also creates complications. In fact, the period between the initial notification and the final allotment is an essential ingredient and a key factor in determining the price,” he observed.
The court added that when acquisition proceedings remain pending for years, compensation based solely on the value of the property at the time of notification cannot be considered fair.
“If the acquisition proceedings are delayed for years, including taking possession of the land, the market value it represents from the date of notification can no longer be construed as fair and equitable, but the Court must apply inflationary trends and the doctrine of potential value to account for the sharp rise in land prices and inflation that occurred due to the deep lethargy of the acquiring department.”
The judgment outlined several factors that courts should consider when determining the potential value of a property, including its proximity to roads, ring roads, industrial areas, transport links and civic amenities.
He also said that when a large tract of land is acquired for a single project, individual plots should not be undervalued, while agricultural land located in the middle of a commercial development should be evaluated in light of its actual development potential.
“Courts from time to time, sensitive to the doctrine of collective justice, strike a balance between public and private interests.”
The court noted: “On the face of it, the key finding in this case was the determination of fair compensation for the land acquired rather than acquiring it at an unlikely or disposable price.”
“No doubt, land acquisition in public interest is so sacrosanct but at the same time, payment of fair compensation is also inevitable and unavoidable to safeguard the fundamental right to possess and enjoy property rights,” he further stressed.
The Supreme Court also stressed the importance of appellate jurisdiction, holding that the right of appeal is a substantive legal right available to an aggrieved party.
“It is the solemn duty of the court to undo the injustice caused by patent errors. The appellate court acts as a curative forum to ensure that justice is not compromised by errors at the lower levels of the judiciary because the right of appeal is not merely a procedural step but a substantive right of a litigant which is considered in continuation of the original proceedings.”
The ruling also recognized property rights as a universally accepted fundamental human right.
“In accordance with the mandate of Article 23 of the Constitution of the Islamic Republic of Pakistan, 1973, (Constitution) every citizen has the right to acquire, possess and dispose of property in any part of Pakistan, subject to the Constitution and any reasonable restrictions imposed by law in public interest, while Article 24 emphasizes that no person shall be deprived of his property except in accordance with law and no property shall be compulsorily acquired or taken into possession except for a public purpose and except by the authority of law. which provides for compensation therefore and fixes the amount of compensation or specifies the principles and manner in which compensation is to be determined and awarded.”
