In Pari Delicto Bars Unjust Enrichment: Supreme Court Denies Developed Land Value in Land Scam Case

Case Snapshot

Case Name: Mohammadali Ansarahmad Khan v. The State of Gujarat & Ors.

Citation: 2026 INSC 750

Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran

Date of Judgment: July 24, 2026

Area of Law: Land Acquisition, Property Law, Compensation Law, Constitutional Law

Judgment in Brief

The Supreme Court disposed of the appeals arising from a land scam of significant magnitude, where the Gujarat Industrial Development Corporation (GIDC) had transferred twenty fully developed industrial plots in exchange for agricultural lands owned by the appellant. The High Court had cancelled the illegal allotments, holding that the exchange deed was mala fide and suffered from grave error of law.

The Supreme Court, while agreeing with the High Court's findings on the mala fide nature of the transfer, addressed the limited issue of compensation for the agricultural lands taken over by GIDC. The Court held that the appellant was not entitled to compensation based on the developed value of the land, as the lands were developed entirely by GIDC at public expense. The appellant, who had purchased the lands in 2016 after the ceiling proceedings were dropped, had not expended any amount on development.

The Court determined that the appellant was only entitled to compensation based on the valuation of the lands as agricultural lands under the Land Acquisition Act, 1894 (approximately Rs. 1.17 crore), with 9% simple interest from July 2016. This amount was subject to deduction of the consideration received by the appellant for three plots already sold to third parties.

Relevant Facts

The Land Scam: A Public Interest Litigation unearthed a land scam where GIDC transferred twenty fully developed industrial plots in exchange for agricultural lands owned by the appellant.

The Land: The land in question admeasured 34,743 sq. meters and was initially understood to belong to the government, having vested under the Gujarat Land Ceiling Act, 1960, initiated against the original owner, Narhari Sukhanand Joshi.

Ceiling Proceedings: The ceiling proceedings were challenged by the original owner and eventually remanded for fresh adjudication. The Agricultural Land Ceiling Authorities held in favour of the original owner in 2014.

The Appellant's Purchase: The appellant purchased the lands through sale deeds dated June 24, 2016, and July 30, 2016, for a consideration of a little more than Rs. 30 lakhs. The land was mutated in his favour.

The GIDC's Takeover: The GIDC had taken over the land in 1980 for establishing the 'Sarigam Industrial Estate.' The land was developed as an industrial estate, although it remained agricultural land before takeover.

The Exchange Deed: GIDC transferred twenty fully developed industrial plots (admeasuring approximately 30,000 sq. meters) to the appellant by way of an exchange deed dated March 22, 2022.

High Court's Order: The High Court cancelled the illegal allotments, holding that the exchange deed suffered from grave error of law and smacked of mala fides. However, it observed that the appellant's claim for compensation shall be dealt with strictly in accordance with law.

Supreme Court Proceedings: A three-judge Bench agreed with the High Court's findings on the mala fide action and cancellation of the exchange deed. Notice was issued co

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