2009 (10) TMI 940 - SC - Indian Laws

Court excludes unreliable evidence, values property based on market rates, awards increased compensation and statutory benefits

Subh Ram & Ors. Versus Haryana State & Anr.

The court excluded Ex.R2 from consideration as it was deemed unreliable due to being grossly undervalued or a distress sale. The market value was ... Determination of Compensation for acquisition of land - HELD THAT:- Having regard to the large variance between the market value disclosed by the twelve sale deeds exhibited and relied upon by the claimants (average of which is ₹ 78/85) and the market value disclosed by Ex R2 (Rs.6/19 per sq.yd) relied upon by LAC and having regard to the fact that the value disclosed by Ex. R2 was even less than what was offered by the LAC, it has to be inferred that Ex R2 was either grossly undervalued or was a distress sale and has to be excluded from consideration, as being unreliable. To determine the value of large tract of acquired land, it is necessary to make an appropriate deduction therefrom towards development cost. Having regard to the fact that all the acquired lands adjoin a State Highway (Gurgaon Alwar Road) and the proximate availability of facilities which can be easily accessed for development, it would be appropriate to limit the deduction to 40% towards development cost, instead of the usual higher percentage of deduction ranging from 50% to 67%. Thus, the market value would work out to be ₹ 59/34 per sq.yd (Rs.98/90 minus 40%) or ₹ 2,87,200/- per acre. The percentage of deduction (development cost factor) will be applied fully where the acquired land has no development. But where the acquired land can be considered to be partly developed (say for example, having good road access or having the amenity of electricity, water etc.), then the development cost (that is percentage of deduction) will be modulated with reference to the extent of development of the acquired land as on the date of acquisition. But under no circumstances, the future use or purpose of acquisition will play a role in determining the percentage of deduction towards development cost. Therefore, we allow these appeals in part and increase the compensation for the acquired lands to ₹ 2,87,200/- per acre. The appellants will also be entitled to all statutory benefits, that is solatium at 30% u/s 23(2), additional amount at 12% from the date of preliminary notification to date of award u/s 23(1A), and interest on the total compensation less the amount awarded by the LAC, at 9% per annum for one year from the date of taking possession and 15% PA thereafter. Parties to bear respective costs. Issues Involved:1. Exclusion of Ex.R2 from consideration.2. Deduction of one-third of the market value towards development cost.Detailed Analysis:Re: First ContentionIssue: The appellants contended that Ex.R2 dated 27.11.1984 relied upon by the Land Acquisition Collector (LAC) should have been excluded from consideration while determining the market value.Judgment Analysis:- Ex. R.2 Overview: Ex. R.2 relates to the sale of one acre of land for Rs. 30,000/-, which is significantly lower than the compensation offered by the LAC.- Court's Finding: Given the large variance between the market value disclosed by the twelve sale deeds exhibited by the claimants (average of Rs. 78/85 per sq.yd) and the market value disclosed by Ex. R2 (Rs. 6.19 per sq.yd), and the fact that the value disclosed by Ex. R2 was even less than what was offered by the LAC, the court inferred that Ex. R2 was either grossly undervalued or was a distress sale and thus unreliable.- Conclusion: Ex. R2 was excluded from consideration. Consequently, the average of the prices disclosed by the twelve sale deeds relied upon by the claimants (Rs. 78/85 per sq.yd) would be indicative of the market value in 1981-82. Adding 12% per annum cumulatively for two years, the market value as on 22.11.1984 was determined to be Rs. 98/90 per sq.yd.Re: Second ContentionIssue: The appellants contended that the deduction of one-third of the market value of small plots towards development cost was erroneous and no deduction should have been made.Judgment Analysis:- Concept of Deduction: The court explained that when determining the market value of a large tract of undeveloped land with reference to the market value of small developed plots, it is necessary to deduct development costs. This deduction accounts for the non-saleable area (roads, parks, etc.) and the expenses involved in developing the land (levelling, laying roads, installing utilities, etc.).- Standard Deduction: The standard deduction for development costs is typically one-third for roads and another one-third for development expenses, totaling up to 67%. However, the percentage may vary between 20% to 75% depending on circumstances.- Court's Decision: Given the proximity of the acquired lands to a State Highway and the availability of facilities, the court limited the deduction to 40% towards development cost instead of the usual higher percentage. Thus, the market value was calculated to be Rs. 59/34 per sq.yd (Rs. 98/90 minus 40%) or Rs. 2,87,200/- per acre.Relevancy of Other Acquisitions in the Same Village:- Appellants' Argument: The appellants referred to two judgments of the Punjab & Haryana High Court relating to acquisitions in the same village, suggesting that the compensation should not be less than Rs. 68/- per sq.yd plus 25% for the two-year difference.- Court's Finding: The lands in the referenced cases were more advantageously situated, adjoining National Highway No.8 and well-developed areas, whereas the acquired lands in the present case were farther away. Thus, the referenced decisions were not applicable.Conclusion:The appeals were allowed in part, increasing the compensation for the acquired lands to Rs. 2,87,200/- per acre. The appellants were also entitled to statutory benefits, including solatium at 30%, additional amount at 12% from the date of preliminary notification to the date of the award, and interest on the total compensation less the amount awarded by the LAC at 9% per annum for one year from the date of possession and 15% per annum thereafter. Each party was to bear their respective costs.