A two-judge Bench of Justice MR Shah and Justice BV Nagarathna has held that as per the settled position of law generally the sale instances with respect to small plots/parcels of land are not comparable to a large extent of land for the purpose of determining compensation.

The Court while relying upon Viluben Jhalejar Contractor v. the State of Gujarat also held that in case of acquisition of larger tracts of land and the exemplars are of a small portion of land, there would be a suitable deduction towards development charges.

ASG Mr. KM Natraj appeared for the acquiring body while Senior Advocate Mr. Gopal Sankaranarayanan appeared for the original claimant before the Apex Court.

An appeal was preferred assailing the judgment of the Bombay High Court which had determined the compensation for the acquired land at the rate of Rs. 6/- per square foot subject to 1/3rd deduction. Aggrieved, both the acquiring body and the original claimant approached the Supreme Court.

The Apex Court noted that the Reference Court enhanced the compensation by determining the market price at Rs. 6 per square foot after making a deduction of 25% of the same towards development charges.

The Bench further noted that as per the settled position of law, small plots/parcels of land cannot offer the same market value as when a large tract of land is purchased in an open market by a willing and prudent purchaser.

Further, reliance was placed on the precedent Manoj Kumar v. State of Haryana, where the Apex Court had considered the deductions required to be made when considering transactions pertaining to small developed plots, for determining compensation of larger areas and it was held that when a large area is acquired, two kinds of deductions have to made – 1) for development, and 2) in case of exemplar is a small area, the deduction is required to be made to arrive at the value of large tract.

The Bench further observed that as a general rule the compensation shall not be determined on square foot basis. However, at the same time, in a given case, the Court may determine the compensation on square foot basis after making a reasonable deduction towards development charges, in case there are no sale instances available.

Additionally, the Court held that in this case, large parcel of land admeasuring 46 Hectares 89 R was acquired and it was a barren agricultural land that may have non-agricultural potentiality. In this context, the Bench opined –

"…considering the fact that the sale exemplars/sale deeds produced at Ex. 91 to 93 are in respect of very small plots of land and were non-agricultural developed plots and even the same were on the highway and having the access to the main road, we are of the opinion that there shall be at least 40% deduction towards development charges."

Accordingly, the Court partly allowed the appeal preferred by the Union of India and directed that the original claimant shall be entitled to compensation for the acquired land at the rate of Rs. 6/- per square foot, subject to 40% deduction towards development charges, with all statutory benefits, and dismissed the appeal preferred by the original landowner.

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