State must pay full, fair, real compensation for acquired land, rules SC

ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 6th Jul, 2026) The Supreme Court (SC) of Pakistan on Monday ruled that while the State has the authority to acquire land for public purposes, it is constitutionally bound to pay affected landowners full, fair and real compensation.

According to a 20-page verdict authored by Justice Muhammad Ali Mazhar dismissed all civil appeals filed by the Government of Khyber Pakhtunkhwa in a case relating to compensation for land acquired for an irrigation canal project in Swabi. The Court upheld the decisions of both the Reference Court and the Peshawar High Court.

The judgment held that the value of acquired land could not be determined solely on the basis of official government rates. Instead, authorities must also consider the land's prevailing market value, its potential use and its future development prospects while assessing compensation.

The Court further observed that where there was an extraordinary delay in the land acquisition process, any increase in land prices and the impact of inflation during the intervening period must also be reflected in the compensation to ensure genuine financial justice for the affected landowners.

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Reaffirming a well-established principle, the Supreme Court stated that compensation for acquired land should be based on the concept of "gold for gold, not copper," meaning that landowners must receive compensation that fully indemnifies them for their loss.

The judgment emphasized that although land acquisition served a public purpose, achieving that objective could not come at the cost of causing unfair financial loss to citizens. It stressed that compensation must be determined by taking into account the land's actual market value, nature, future utility and all other relevant factors.

The case arose after landowners in Swabi challenged the compensation fixed by the government for land acquired for an irrigation canal project, arguing that it was inadequate. The Reference Court enhanced the compensation on the basis of evidence, a decision that was subsequently upheld by the Peshawar High Court.

The Khyber Pakhtunkhwa government challenged those rulings before the Supreme Court, but the apex court dismissed all appeals and maintained the judgments in favour of the landowners.