The Supreme Court of Pakistan has ruled that governments must compensate landowners based on the actual market value of land acquired for public projects, holding that official Deputy Commissioner (DC) rates alone cannot be used to determine compensation.

In a landmark judgment, the apex court dismissed all civil appeals filed by the Khyber Pakhtunkhwa government in the Swabi land acquisition case, upholding the decisions of the Reference Court and the Peshawar High Court in favor of the affected landowners.

The detailed verdict, authored by Justice Muhammad Ali Mazhar, held that compensation must reflect the land’s prevailing market value at the time of acquisition rather than relying solely on government-notified rates.

The court further ruled that authorities must also consider the land’s future development potential and likely use when assessing compensation. It added that where there are delays in the acquisition process, the impact of rising property prices and inflation should also be factored into the final amount.

The judgment reaffirmed that while the state has the legal authority to acquire private land for projects serving the public interest, it has a constitutional duty to ensure that affected landowners receive fair, just, and adequate compensation.

Emphasizing the principle of equitable compensation, the court observed that landowners are entitled to “gold for gold, not copper,” underscoring that they should not suffer financial loss when their property is acquired by the state.

The case concerned land acquired in Swabi for the construction of a canal. The landowners challenged the compensation awarded by the provincial government, arguing that it was significantly below market value. The Reference Court enhanced the compensation after examining market evidence, a decision later upheld by the Peshawar High Court and now affirmed by the Supreme Court.