Land Acquired Is Never Used In The Form It Exists; 30% to 50% Deduction To Be Made From the Rate for Development: Supreme Court
|The appellants-owners approached the Supreme Court seeking enhancement in compensation for their land, which was acquired for the benefit of the Gujarat Industrial Development Corporation.
While modifying the compensation in a land acquisition matter, the Supreme Court has reaffirmed that the land acquired has to be first developed either for habitation or industrial purposes, and in such a situation, 30% to 50% deduction is to be made from the rate for such development.
The appellants-owners approached the Apex Court seeking enhancement in compensation for their land, which was acquired for the benefit of the Gujarat Industrial Development Corporation.
The Division Bench comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti observed, “It is an accepted principle that the land acquired is never used in the form it exists. It has to be first developed and made suitable either for habitation or for industrial purposes. In this connection, roads have to be carved out, some open area has to be left for green belts, water, sewerage and electricity lines have to be laid down and the plots have to be carved out into some regular sizes and shapes. In this way, the transferable/saleable area hardly remains to be 50% of the land acquired. In such a situation, the courts have repeatedly held that 30% to 50% deduction be made from the rate for the purposes of such development.”
AOR Anushree Prashit Kapadia represented the Appellant, while AOR Deepanwita Priyanka represented the Respondent.
Factual Background
The land of the appellants, situated in a village in District Vadodara, Gujarat was acquired by the State Government for a public purpose and for the benefit of Gujarat Industrial Development Corporation. The notification under Section 4 of the Land Acquisition Act was published and the Special Land Acquisition Officer vide award dated February 25, 1992, offered compensation @ Rs.11 per sq. mt. Not satisfied with such offer/award, the appellants preferred a Reference under Section 18 and the compensation was enhanced to Rs. 30 per sq. mt.
Still not satisfied, the appellants preferred First Appeal before the High Court but the same was dismissed. Aggrieved thereby, the appellants approached the Apex Court.
Reasoning
The Bench found that the land of the appellants, which may have had the potential of becoming a developed area, was, in reality, agricultural land. Referring to an allotment letter issued in 1988, the Bench observed that the same revealed that the land of Plot No. 7/1 having an area of 1900 sq. mt. was allotted to establish a petrol pump initially at a tentative rate of Rs.70/- per sq. mt. which was revised to Rs.180/- per sq. mt. The GIDC, for whose benefit the present land had been acquired, itself had fixed the rate of Rs.180/- per sq. mt. of the land of the Ranoli Industrial Estate.
“The rate of the aforesaid plot fixed by GIDC w.e.f. 25.03.1988 was in close proximity with the acquired land and as such there appears to be no harm in taking it to be the best suitable exemplar”, it said. Considering the fact that there was a gap of over a year between the acquisition of the present land and the allotment of land of the Plot for establishing a petrol pump, the Bench opined that the prices in this one year may have increased at least by 5% and increasing the rate of Rs. 180/- per sq. mt. by 5%, the revised rate would come out to Rs.189/- per sq. mt. rounded off to Rs.190/- per sq. mt.
It was further observed that the acquired land had to be developed before making it usable as an industrial site and at least 40% of the amount was to be deducted for the purposes of development. Some amount of deduction was also permissible on account of the largeness of the area. Thus, a deduction of at least 10% had to be applied to determine the rate of compensation. “The determination of the prevalent market value of the acquired land is not an algebraic formula and that cannot be determined in a precise or an accurate manner. Some amount of guesswork is always permissible”, it said.
As per the Bench, when the GIDC itself has fixed the premium price of a plot of land in Ranoli Industrial Estate at a rate of Rs.180/- per sq. mt., taking it to be the basis or as a best exemplar, the compensation for the acquired land could be determined by giving advantage of Rs.10/- per sq. mt. of enhancement on account of rising prices and then applying deduction of (40% + 10%) 50% on account of development and largeness in area. “Accordingly, the appellants are entitled to compensation of Rs.95/- per sq. mt. for their acquired land in place of Rs.30/- per sq. mt. awarded by the Reference Court”, it held.
On the issue of income derived from the fruit-bearing trees existing on the land, the Bench found that no evidence worth the purpose was produced by the appellants to show the yield of the fruits per year or the amount of sale consideration realised from the sale of such fruits. “The SLAO under his award has offered a sum of Rs.1,06,300/- as the price of the trees and we leave the compensation with respect to the trees or the income derived from the trees at that only”, it added.
Thus, allowing the appeal, the Bench modified the award of the SLAO and that of the Reference Court by fixing the compensation of the acquired land @ Rs.95/- per sq. mt. with all statutory benefits, including interest as permissible in law.
Cause Title: Manilal Shamalbhai Patel v. Officer on Special Duty (Land Acquisition) & Anr. (Neutral Citation: 2025 INSC 393)
Appearance:
Appellant: AOR Anushree Prashit Kapadia
Respondent: AOR Deepanwita Priyanka