A two-judge Bench of Justice MR Shah and Justice BV Nagarathna has in a land acquisition case held that it would be justified if a deduction of 40% is applied instead of 50% as applied by the High Court to assess the fair market value of the acquired lands.

The Court also noted that the deduction of 40% would meet the ends of justice and it could be said to be the FMV of the acquired lands.

In this case, a notification was issued under Section 4 of the Land Acquisition Act to acquire land for use by Defence Security Forces. Thereafter, a notification under Section 6 was also issued. The Land Acquisition Officer declared the award and assessed the market value of the acquired lands at Rs.6,87,837 per acre.

Following this, the Reference Court determined and enhanced the market value of the acquired lands at Rs.9,65,000 per acre. This was appealed before the High Court.

The High Court held that the Reference Court ought to have considered the sale transactions exhibit P­73 and P­74 and ought to have determined the market value of the lands acquired, after adopting some reasonable cut.

The Court after taking an average of both the sale deeds determined the average price of Rs.22,57,000 per acre. The Court gave a cut of 50% and determined the market value of the lands at Rs.11,28,580 per acre.

Aggrieved, with the order of the High Court, the original claimants preferred an appeal before the Supreme Court.

The Apex Court noted, "…it is required to be noted that the High Court has relied upon the sale instances exhibit P­73 and P­74 against which no appeals have been preferred by the Chandigarh Administration. Therefore, the findings recorded by the High Court that the sale instances i.e. exhibit P­73 and P­74 can be best exemplars and which can be considered for determining and assessing the market value of the lands acquired, has attained finality…"

The issue which was dealt with by the Court was –

Whether in the facts and circumstances of the case, the High Court is justified in applying a deduction of 50% while determining/assessing market price.

The Court noted that nothing was discussed by the High Court while applying a deduction of 50%.

Further, the Bench opined that in the normal course, the appeals are required to be remanded to the High Court for applying the proper cut. However, the Counsels appearing for both parties prayed to the Apex Court to make the appropriate percentage of deduction by this Court instead of remanding the matters to the High Court.

The Court added that a reasonable percentage of the deduction is required to be made while determining/assessing the market price.

In this context, the Bench opined –

"Looking to the location and the purpose for which the lands have been acquired, in the peculiar facts and circumstances of the case, we are of the opinion that if a deduction of 40 % is applied instead of 50% as applied by the High Court, it will meet the end of justice and it can be said to be a fair market value for the acquired lands. Therefore, if a deduction of 40% is applied, it will come to Rs.13,54,200/­ per acre."

Accordingly, the Court partly allowed the appeals with a direction that the landowners would be entitled to all the statutory benefits available under the Act on the enhanced amount of compensation.

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