1993 (10) TMI 369 - SC - Indian Laws

Supreme Court sets new valuation principle for acquired lands under Land Acquisition Act, 1894

The Supreme Court corrected the valuation principle for acquired lands, emphasizing market value at the date of the preliminary notification under Section ... - Issues Involved:1. Correct principle of valuation of land applied by the High Court.2. Determination of market-value using averaging method.3. Determination of market-value of each plot of the acquired lands.Detailed Analysis:Point 1: Correct Principle of Valuation of LandThe Supreme Court emphasized that the correct principle of valuation for acquired lands should consider the market value on the date of the preliminary notification under Section 4(1) of the Land Acquisition Act, 1894. The market value should reflect the price a willing purchaser would pay to a willing seller, considering the land's existing condition and potential possibilities. The Court referred to the 'Comparable Sales Method of Valuation,' which is preferred when there is evidence of sales or awards of similar lands. This method requires the land under comparable sales to be genuine, proximate in time to the notification, similar in nature, and located near the acquired land. The High Court erred by valuing different plots of acquired lands with varying salient factors at a uniform rate, ignoring the principle that plots with differing features should not be treated as a single unit for valuation.Point 2: Determination of Market-Value Using Averaging MethodThe Supreme Court criticized the High Court for averaging the prices fetched by several sale deeds and awards to determine the market value of the acquired lands. The Court stated that averaging prices from different types of lands could lead to unrealistic results. Instead, the market value should be based on the price fetched by the closest comparable sale or award. The High Court's method of averaging prices from five different instances, which varied significantly, was incorrect. The correct approach is to choose the sale or award that closely matches the acquired land in all its features and use that price as the basis for determining the market value.Point 3: Determination of Market-Value of Each Plot of the Acquired LandsThe Supreme Court decided to determine the market value of each plot of the acquired lands itself, considering the long duration of litigation (32 years). The Court grouped the acquired plots into three categories based on their features and location:1. Group 1: Rectangular plots facing Delhi-Mathura Grand Trunk Road.- 8 kanals 6 marlas of Mst. Saiyadan at Rs. 3,500 per kanal.- 9 kanals 2 marlas of M/s. Cold Storage & Food Products at Rs. 3,500 per kanal.2. Group 2: Triangular plot with only a corner facing Delhi-Mathura Grand Trunk Road.- 6 kanals 15 marlas of M/s. Cold Storage & Food Products at Rs. 2,625 per kanal.3. Group 3: Landlocked plots with no access to Delhi-Mathura Grand Trunk Road.- 73 kanals 2 marlas of Masjid of village Ranhera at Rs. 2,100 per kanal.- 1 kanal 19 marlas of Mst. Saiyadan at Rs. 2,100 per kanal.The Court relied on the comparable sale of 8 kanals of land sold by Nawal Singh to Jaswant Rai for Rs. 40,000, adjusting the value for the presence of a tube-well and electric connections. The market value was determined based on the adjusted price of Rs. 3,500 per kanal for Group 1 lands. For Group 2, a deduction was made due to its triangular shape and limited frontage, resulting in a value of Rs. 2,625 per kanal. For Group 3, the value was reduced further due to its landlocked nature and large extent, resulting in a value of Rs. 2,100 per kanal.Conclusion:The Supreme Court dismissed Civil Appeals Nos. 369-371 of 1976 and partly allowed Civil Appeals Nos. 946-948 of 1977. The market value of the acquired lands was enhanced as stated above, with solatium at 15% per annum on the enhanced market value and interest at 6% per annum from the date of possession until payment, minus any amounts already paid. No costs were awarded.