Usually highest exemplar to be considered for compensation in land acquisition cases: SC

A bench of Chief Justice of India B.R. Gavai and Justice Augustine George Masih stated that the land acquired must be valued not only with reference to its condition at the time of notification under Section 4 of the Land Acquisition Act, but its potential value must also be taken into account.

In this respect, the sale deeds of lands situated in the vicinity and the comparable benefits and advantages which they have, provide a ready method of computing the market value, court explained.

The court also emphasized that, even where there are several exemplars with reference to similar lands, the highest of the exemplars, which is a bona fide transaction, will usually be considered. Furthermore, only where there are several sales of similar lands whose prices range within a narrow bandwidth, the average thereof can be taken as representing the market price, it said.

The bench allowed an appeal filed by Manohar and others against the Bombay High Court's judgment by a single judge on April 21, 2022, and directed for payment of enhanced compensation from Rs 32,000 per Acre to Rs 58,320 per Acre for their land, situated at Village Pungala, Taluq and District Parbhani, Maharashtra.

"The land of the appellants was situated in a prime location and they deserve the benefit of the highest sale exemplar,'' court held.

The appellants were farmers and owners of land, who sought to be acquired in the 1990s under the provisions of the Maharashtra Industrial Development Act, 1961, for setting up an industrial area.

In 1994, the State took possession of the land and an award came to be passed. For 89 Hectares and 44 Acre, the total compensation awarded was Rs 45,70,508.

Being aggrieved, the land owners approached the reference court, which in 2007, directed for payment of Rs 46,26,013 along with future interest at the rate of 15% per annum from the date of award until the payment is made on the additional market value of Rs 16,43,224.

Still aggrieved, the appellants approached the High Court, which dismissed their first appeal.

In their appeal, the appellants submitted that they are farmers who lost their only source of sustenance and ever since are prosecuting their claim for fair, just, and reasonable compensation based on the highest exemplar of March 31, 1990. They said the Reference Court and High Court ought to have given the benefit of the highest exemplar sale deed to the appellants.

The respondents, however, contended that the compensation for acquired lands is fair and reasonable, as the Land Acquisition Officer had considered the sale instances of similar lands in the vicinity and arrived at a proper valuation.

They said the Reference Court was justified in not considering the highest exemplar sale deed of March 31, 1990, showing a market value of Rs 72,900 per Acre, as it reflected an unusually high rate.

In its judgment, the bench noted the Reference Court found that the claimants had placed on record certified copies of the sale deeds, which had presumptive value under Section 51A of the LA Act. Therefore, the transaction covered therein could be relied upon and acted upon to determine the market value of the land.

"Surprisingly... the highest exemplar sale deed showing market value of Rs 72,900 per Acre, and relied upon by the claimants as a bona-fide sale instance was completely overlooked by the Reference Court. It would, however, have been a different matter if the Reference Court, for reasons to be recorded by it, came to a finding that the sale instance was not a bona-fide one or a sham/bogus one which could not be relied upon,'' the bench said.

Coming to the High Court's decision, the bench said, though the High Court recorded that the Reference Court considered in all ten exemplars and that it did not consider the sale instance of March 31, 1990, which is from Jintur, in the immediate next paragraph, the High Court took a diametrically opposite view that the Reference Court had considered the sale instance since they were found nearby to the notification under the Act of 1961.

Therefore, the bench said, ''We have no difficulty in holding that the finding recorded by the Single Judge of the High Court in the impugned judgment and final order is erroneous".

Since the High Court recorded an incorrect finding by holding that the Reference Court took into consideration that particular sale instance, its judgment was not at all sustainable.

The bench pointed out that it is a settled position of law that when there are several exemplars with reference to similar land, usually the highest of the exemplars, which is a bona fide transaction, will be considered.

Court outrightly rejected a contention that the courts below rightly excluded the particular sale exemplar on account of it being of an abnormally high value.

"It is well-settled that the compensation payable to the owner of the land is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser. It is further settled law that the land acquired has to be valued not only with reference to its condition at the time of notification under Section 4 of the LA Act but its potential value must be taken into account. In this respect, the sale deeds of lands situated in the vicinity and the comparable benefits and advantages which they have, provide a ready method of computing the market value,'' the bench said.

Court rejected the contention that the particular sale instance was not a bona fide transaction, saying as per the provision contained in Section 51A of the LA Act, the certified copy of a document could be accepted as evidence of transaction recorded in the said document.

The bench opined that, in the case, no occasion arose for the Reference Court to deviate from the well-settled position of law and that the claimants/appellants deserved the benefit of the highest sale exemplar.

Court, however, agreed with a view of the Reference Court that the sale exemplars cited by claimants were of smaller plot being less than one hectare, a deduction of 20 per cent of Rs 14,580 per Acre can be made of sale exemplar of March 31, 1990, having market value of Rs 72,900 per Acre.