2007 (12) TMI 480 - SC - Indian Laws

SC Adjusts Land Value to Rs. 1,08,000 per Acre, Emphasizes Land Potential and Conditions, Awards Additional Compensation.

The SC partially allowed the appeals, setting the market value of the acquired land at Rs. 1,08,000/- per acre after applying a 10% deduction instead of ... Determination of the “Market Value” of an immovable property based on “Proposed Land Use”- Enhancement on compensation for acquisition of the land - four sale deeds related to sale transactions - Prior to the issuance of notification u/s 4 of the Land Acquisition Act ('the Act') - land for construction of a cooperative sugar mill - land was situate as one compact unit in four villages and belonged to 17 families - deduction by way of allowance from the price exhibited by the exemplars of small plots which have been filed by the parties - HELD THAT:- The land has not been acquired for a Housing Colony or Government Office or an Institution. The land has been acquired for setting up a sugar factory. The factory would produce goods worth many crores in a year. A sugar factory apart from producing sugar also produces many by-product in the same process. One of the by-products is molasses, which is produced in huge quantity. Earlier, it had no utility and its disposal used to be a big problem. But now molasses is used for production of alcohol and ethanol which yield lot of revenue. Another by-product begasse is now used for generation of power and press mud is utilized in manure. Therefore, the profit from a sugar factory is substantial. Moreover, it is not confined to one year but will accrue every year so long as the factory runs. A housing board does not run on business lines. Once plots are carved out after acquisition of land and are sold to public, there is no scope for earning any money in future. An industry established on acquired land, if run efficiently, earns money or makes profit every year. The return from the land acquired for the purpose of Housing Colony, or Offices, or Institution cannot even remotely be compared with the land which has been acquired for the purpose of setting up a factory or industry. After all the factory cannot be set up without land and if such land is giving substantial return, there is no justification for making any deduction from the price exhibited by the exemplars even if they are of small plots. It is possible that a part of the acquired land might be used for construction of residential colony for the staff working in the factory. Nevertheless where the remaining part of the acquired land is contributing to production of goods yielding good profit, it would not be proper to make a deduction in the price of land shown by the exemplars of small plots as the reasons for doing so assigned in various decisions of this Court are not applicable in the case under consideration. Therefore, we are of the opinion that a deduction of 10% from the market value of the land, which has been arrived at by the High Court would meet the ends of justice. Therefore, the market value of the acquired land for the purpose of payment of compensation to the land owners has to be assessed at ₹ 1,08,000/- per acre. Thus, the appeals are partly allowed. The claimant- appellants will be entitled to compensation at the rate of ₹ 1,08,000/- per acre. Besides the above amount, they will also be entitled to the statutory sum in accordance with Section 23(1-A) and solatium at the rate of 30% on the market value of the land in accordance with Section 23(2) of the Act. They will also be entitled to interest as provided in Section 28 of the Act. The appellants will be entitled to their costs. Issues Involved:1. Determination of the market value of the acquired land.2. Consideration of potentiality and existing conditions of the land.3. Validity and applicability of exemplars (sale deeds) for determining market value.4. Deduction from market value due to acquisition of large areas.5. Entitlement to statutory sums and interest under the Land Acquisition Act.Detailed Analysis:1. Determination of the Market Value of the Acquired Land:The primary issue was to ascertain the market value of the land acquired for the construction of a cooperative sugar mill. The High Court determined the market value at Rs. 1,20,000/- per acre, considering the exemplars provided. However, a deduction of 33% was applied, reducing the market value to Rs. 80,000/- per acre. The Supreme Court reviewed the High Court's decision and found that the market value of Rs. 1,20,000/- per acre was appropriate but adjusted the deduction rate.2. Consideration of Potentiality and Existing Conditions of the Land:The potentiality of the land, meaning its capacity for future development, was a crucial factor. The land was adjacent to Shahabad and abutted the Shahabad-Ladwa Road, with existing amenities like rice shellers, cold storage, shops, godowns, a college, and houses. The Court emphasized that the potential for commercial, industrial, and residential use indicated a fair possibility of an increase in market value.3. Validity and Applicability of Exemplars for Determining Market Value:The exemplars (sale deeds) provided by the appellants were scrutinized. The High Court excluded Ex.P-8 due to its small size but accepted Exs.P-7, P-9, and P-10, averaging a little more than Rs. 1,20,000/- per acre. The Supreme Court agreed with this valuation, noting that no other documentary evidence was presented. The Court also dismissed the reliance on Ex.R-6 and R-7 as they were mutation orders and inadmissible in evidence.4. Deduction from Market Value Due to Acquisition of Large Areas:A contentious issue was the deduction applied due to the acquisition of a large area. The High Court applied a 33% deduction, but the Supreme Court found this excessive given the land's potential and existing development. The Supreme Court reduced the deduction to 10%, setting the market value at Rs. 1,08,000/- per acre. The Court referenced various precedents, noting that deductions should consider the land's potential and the purpose of acquisition, which in this case was for a profitable sugar factory.5. Entitlement to Statutory Sums and Interest Under the Land Acquisition Act:The appellants were entitled to statutory sums under Sections 23(1-A), 23(2), and 28 of the Land Acquisition Act. This included an additional amount under Section 23(1-A), solatium at 30% of the market value under Section 23(2), and interest as provided in Section 28. The Supreme Court affirmed these entitlements, ensuring the appellants received fair compensation.Conclusion:The Supreme Court partially allowed the appeals, setting the market value of the acquired land at Rs. 1,08,000/- per acre after a 10% deduction. The appellants were also entitled to statutory sums and interest under the Land Acquisition Act. The judgment emphasized the importance of considering potentiality and existing conditions in determining market value and provided a detailed analysis of applicable legal principles and precedents.