NEW DELHIMaruti SuzukiBSE -0.29 % has pleaded inability to pay over Rs 1,200 crore by way of enhanced land acquisition dues for 600 acres it acquired for theManesar plant in 2002, and urged the Supreme Court to hear it before taking a call on the enhanced compensation amount for farmers.

Maruti had paid Rs 118.90 crore for 602.40 acres in 2008. The Punjab and Haryana High Court, in an order dated February 11, 2011, enhanced the compensation amount to Rs 37.40 lakh per acre from Rs 28.15 lakh per acre fixed by the reference court. The apexBSE 0.00 % court later fixed it at Rs 28.15 lakh in an interim order on August 10, 2011.

The cost of the 1994 acquisition was fixed at a uniform Rs 15 lakh per acre in an earlier high court judgement and later enhanced by the Supreme Court to Rs 20 lakh per hectare. In fixing Rs 37.40 lakh, the high court used a 12 per cent increase per annum formula from the 1994 acquisition.

The judgement entails an additional payment of Rs 1,200 crore by the company to Haryana State Industrial Development Corporation (HSIDC), which acquired the land and handed it over ‘raw’ to Maruti Suzuki.

Land was acquired in Manesar area in three phases. Land for Phase I was acquired in 1994. Phases II and III were acquired in 2002. Maruti’s case was first pleaded by senior counsel PS Patwalia and then Abhishek Manu Singhvi.

“It is a huge project, giving employment,” Patwalia said. “If Rs 1,000 crore has to be paid, some hard decisions will have to be taken,” he said. “There’s been violence and arson in the plant,” he said, hinting at the possibility of things becoming worse there.

The Manesar plant, which produces Maruti’s more popular models and their diesel variants, has been embroiled in a bitter labour unrest for some time now. Singhvi, intervening later, said the project exported a significant number of cars and “was an important project for Haryana”.

He contended that the project would become unviable as the costs would go awry. “Is it fair?” Patwalia argued that the cost of land acquired for the project was estimated at Rs 100 crore, now it was over Rs 1,000 crore.

Maruti, in its plea that the court agreed to hear, explained the delay in approaching the court by saying it had no cause to worry till April 2012 when HSIDC slapped a Rs 235-crore charge on it as additional compensation costs.

The company argued that 65 per cent should have been deducted towards development charges as the land was not developed at all, and the company had invested huge amounts to improve it and create infrastructure.

The high court, while enhancing the compensation, also did not take into account any contemporary evidence and instead banked on prior or subsequent evidence by way of sale deeds to arrive at the cost of the land, Maruti claimed.

It also claimed that the land acquired in Phase I was close to NH 8 and should be valued higher than Phase II and III and not the other way round.

A bench, comprising Justices GS Singhvi and KS Radhakrishnan, was initially reluctant to hear Maruti but later agreed, before taking a final call on the compensation to be paid to the farmers.

Justice Singhvi was very critical of Haryana for acquiring and divesting land on a no-profit basis. “If no profits are to be made, why should the state acquire it for private parties at all? A better way would be to earmark land for particular purposes in the master plan and allow private parties to negotiate directly with the landowners,” Justice Singhvi said.