Rs 5,47,17,598 each: that is what the landowners and their tenant, M/s. Sadanand Garage, are entitled to out of Rs 10,94,35,196 in Siddhivinayak land acquisition compensation, the Bombay High Court has held, fixing the market value of a Prabhadevi plot taken for the temple trust at Rs 1,70,200 per square metre.
Mumbai: Turning down the claims of a developer and prospective flat purchasers, the Bombay High Court has apportioned land acquisition compensation of Rs 10,94,35,196 for a Prabhadevi plot acquired for Shree Siddhivinayak Ganapati Temple Trust in equal halves between the landowners and their tenant, M/s. Sadanand Garage [The Special Land Acquisition Officer v. Kapu A. Shetty & Anr.].
Justice Amit Borkar decided three connected Land Acquisition References by a common judgment pronounced on November 3, 2026, after reserving it on October 27.
Ready reckoner rates set aside
The Court rejected the Special Land Acquisition Officer’s reliance on ready reckoner rates, reiterating that such rates have no statutory foundation for fixing open-market value under Section 23 of the Land Acquisition Act, 1894. It instead relied on genuine registered sale transactions of comparable properties in the immediate vicinity and fixed the market value at Rs 1,70,200 per square metre as on September 19, 2002. A further Rs 3,85,300 was awarded for the structure and trees, payable to the owners.
The plot and the three references
The acquired property, Final Plot No. 901, T.P.S. IV, Mahim Division (C.S. No. 1/1209, Lower Parel Division), measured about 642.98 square metres on Kakasaheb Gadgil Marg in Prabhadevi and included the structure known as Sadanand Garage. It was acquired for a public purpose connected with the Siddhivinayak Trust, for a waiting hall and Bhakti Niwas for devotees.
LAR No. 7 of 2004 concerned the owners, LAR No. 4 of 2005 concerned Sadanand Garage, and LAR No. 5 of 2005 concerned M/s. Century Developers, several flat purchasers and M/s. Minal Finance Pvt. Ltd. In 2007 the Court directed common evidence in all three.
The owners challenged both the valuation and the way the award had been divided. The owners sought the entire compensation, while the garage, claiming continuous occupation since 1971, sought a 75 percent share.
Ownership subject to a tenancy
The Court found that the garage had proved a valid tenancy and business occupation, but not ownership or a perpetual lease over the entire open plot. At the same time, the owners’ interest was reduced by the tenancy.
“The owner cannot claim the value of the property as though the land was vacant and was available in his own possession when a tenant was occupying it.”
“The owners had substantial ownership rights, though those rights were subject to the established tenancy and occupation rights of the Garage.”
On the whole evidence, the Court held that an equal division was a fair and reasonable estimate.
Why the developer and flat purchasers lost
Century Developers’ claim for Rs 20,00,000 from the compensation was rejected. The flat purchasers’ claims also failed: their agreements related to flats yet to be built, the developer’s authority to bind the owners was disputed, the development agreement had been terminated and the developer’s specific performance suit dismissed. The Court said a contractual claim against a developer cannot become a share in statutory compensation, and clarified that their separate contractual rights and remedies are left open.
The directions
The owners and Sadanand Garage are each entitled to Rs 5,47,17,598. Statutory benefits and additional amounts will follow the same proportion, any amount already withdrawn will be adjusted, and the competent authority must calculate and release the amounts within eight weeks. There was no order as to costs.
Why the judgment matters
The judgment reaffirms that ready reckoner rates are not a lawful substitute for market value under Section 23 of the 1894 Act, and that comparable registered sales close to the acquired land remain the most reliable guide.
On apportionment, it applies the principle that an owner whose land is encumbered by a protected tenancy holds ownership minus possession. Compensation must therefore be divided to reflect both interests, and buyers holding only agreements with a developer must pursue the developer, not the acquisition award.
Case Title: The Special Land Acquisition Officer v. Kapu A. Shetty & Anr. [Land Acquisition Reference No. 7 of 2004 with LAR No. 4 of 2005 and LAR No. 5 of 2005], 2026:BHC-OS:23731
Bench: Justice Amit Borkar, Bombay High Court
Date of Judgment: November 3, 2026
Appearances: Advocate General Dr. Milind Sathe with GP Anjali Helekar, Additional GP Jyoti Chavan and AGP Prashant Kamble for the State; Senior Advocate Prasad Dhakephalkar with Vivek Walavalkar i/b Sameer Bhalekar for Claimant No. 5 in LAR 7/2004; Senior Advocate Pravin Samadani with Shashikant Surana and Madhur Surana for the Acquiring Body; Yatin R. Shah with Harsh Y. Shah and Tejashree Tawde for Claimant No. 3 in LAR 7/2004 and the claimant in LAR 4/2005; Siddharth Rajamohan i/b Punit B. Anand for Claimant No. 2 in LAR 5/2005