Madras High Court Directs Payment of ₹3.52 Crore Land Acquisition Compensation to Purchaser

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 14.09.2026

Madras High Court Directs Payment of ₹3.52 Crore Land Acquisition Compensation to Purchaser

The Madras High Court has allowed a writ petition filed by M/s RK Dhayu Real Estates LLP and directed the Tamil Nadu land acquisition authorities to release the compensation payable for land acquired out of a larger property purchased from the Sahara Group.

The petitioner had challenged the proceedings dated 1 August 2024 refusing to disburse the land acquisition compensation and sought payment of the amount assessed at ₹3,52,35,674, along with interest.

Property Purchased From Sahara Group Under Supreme Court Monitoring

• The dispute concerned property originally belonging to M/s Sahara City Homes, measuring a total extent of 69.5025 acres.
• The judgment records that, because the Sahara Group owed money to various investors and proceedings were pending before the Supreme Court, sale of Sahara properties was being undertaken under the supervision of the Apex Court, with sale proceeds required to be deposited into a specially designated account.
• RK Dhayu Real Estates LLP purchased the property through five registered sale deeds dated 6 January 2023, after obtaining concurrence in the context of the Supreme Court proceedings. The petitioner deposited nearly ₹45 crore into the special account, and a compliance affidavit was filed before the Supreme Court regarding the transaction.

2.5437 Acres Had Already Been Acquired by Highways Department

• Out of the total 69.5025 acres purchased by RK Dhayu, approximately 2.5437 acres had already been acquired by the Tamil Nadu State Highways Department.
• As a result, although the petitioner had paid consideration for the full extent of 69.5025 acres, it could not obtain possession and enjoyment of the acquired portion.
• The sale deed itself contained a clause enabling the petitioner to receive the compensation fixed in respect of the acquired land.

Sahara Group Assigned Compensation Rights to RK Dhayu

1. A significant factor before the High Court was a communication dated 7 July 2024 issued by a representative of the Sahara Group to the Special Land Acquisition Officer.
2. The communication recorded that the entire sale consideration had been received from RK Dhayu Real Estates LLP and deposited in the SEBI-Sahara Refund Account in accordance with the Supreme Court’s directions.
3. More importantly, Sahara expressly confirmed that it had assigned all rights, including the right to claim compensation in respect of the subject property, in favour of RK Dhayu Real Estates LLP.
4. The Sahara representative further stated that RK Dhayu was legally entitled to receive the compensation, that Sahara had no objection to such payment, and that Sahara would not itself make any claim for the compensation. The communication also contained an undertaking to indemnify the authorities against any loss arising from disbursement to RK Dhayu.

Land Acquisition Authorities Refused Payment

1. Despite the authorization and no-objection from Sahara, the Deputy Tahsildar issued proceedings dated 1 August 2024 refusing to release the compensation to RK Dhayu.
2. The State’s concern was that the petitioner was not the awardee in the original land acquisition proceedings and that the relevant revenue records continued to reflect names of several entities connected with the Sahara Group.
3. The authorities were also apprehensive because the broader Sahara matter remained under Supreme Court monitoring and involved claims of investors across India.
4. The respondents therefore feared that disbursing the compensation directly to RK Dhayu could expose them to future disputes and contemplated referring the matter for determination of apportionment.

High Court Finds Sale Was Properly Conducted Under Supreme Court Supervision

• Justice N. Anand Venkatesh rejected the apprehension of the authorities after examining the documents placed on record.
• The Court found that the entire sale transaction had taken place under the direct monitoring of the Supreme Court. It noted that the compliance affidavit filed before the Apex Court specifically referred to the sale in favour of RK Dhayu and confirmed that the entire consideration had been deposited into the designated special account.
• The High Court therefore held that there was no difficulty in concluding that the sale in favour of the petitioner had been validly completed with proper disclosure before the Supreme Court.

Purchaser Cannot Be Left Without Either Land or Compensation

• The Court also took note of the practical consequence of the acquisition.
• RK Dhayu had paid consideration for the entire 69.5025-acre property, but approximately 2.5437 acres were unavailable to it because they had already been acquired by the Highways Department.
• The Court therefore observed that the only meaningful way of compensating the purchaser for that portion was to permit it to receive the land acquisition compensation fixed by the Highways Department.

Sahara’s No-Objection Removed Any Real Risk to Authorities

• The High Court further relied on the Sahara Group’s express no-objection and assignment of compensation rights.
• The Court observed that the same representative who was involved when the sale deed was executed had issued the subsequent communication confirming that RK Dhayu could receive the entire compensation amount.
• In these circumstances, payment of the compensation to the petitioner would not, in the Court’s view, expose the respondents to any genuine hardship or future liability.
• The Court also noted that the sale deed itself contained a specific clause enabling the petitioner to receive the compensation and that the transaction had been disclosed in the compliance affidavit filed before the Supreme Court.

Authorities Directed to Pay Compensation Within Six Weeks

• The Madras High Court accordingly allowed the writ petition and directed the respondents to hand over the entire compensation amount to RK Dhayu Real Estates LLP within six weeks from receipt of a copy of the order.
• The petitioner’s Senior Counsel also filed a memo containing the bank account details into which the compensation was to be credited, and the Court directed the first respondent to make payment into that account.
• The Court clarified that if any dispute arose in the future concerning the compensation, the respondents would not be held responsible and such dispute would have to be handled by the petitioner.

Significance of the Judgment

The ruling is important in situations where land is acquired before or around the time of a subsequent property sale and the purchaser has expressly acquired the seller’s right to receive compensation.

The judgment demonstrates that land acquisition authorities cannot refuse payment merely because the purchaser was not the original awardee where the documentary record clearly establishes:

• a valid sale of the larger property,
• an express assignment of compensation rights,
• a no-objection from the original owner,
• payment of the full sale consideration, and
• judicial supervision of the underlying transaction.

The case is also notable because the property formed part of the Sahara Group’s assets under Supreme Court monitoring, yet the Madras High Court found that this circumstance did not prevent release of compensation where the sale and payment structure had been properly disclosed before the Apex Court.

Key Takeaway

The Madras High Court effectively held that where a purchaser has paid for the entire property, a portion of that property has already been acquired by the Government, and the original owner has expressly assigned its compensation rights and given a no-objection, the purchaser cannot be denied the corresponding land acquisition compensation merely because it was not the original awardee. Accordingly, RK Dhayu Real Estates LLP succeeded in the writ petition, and the State authorities were directed to release the entire compensation amount within six weeks.

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Source: Madras High Court

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