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Synopsis

The Supreme Court has said that the market value of land being acquired, is determined upon a number of factors but not upon sale instances made to inflate the rate.

A bench of Justices Bela M Trivedi and Dipankar Datta said that the guiding principles for determining the market value of the land at the date of the publication of the notification under Section 4(1) in view of Section 23(1) of the Land Acquisition Act, are well settled by this court in a catena of decisions. 

"Accordingly, the determination of market value is the process of predicting an economic event that is assuming a price a willing vendor would offer to a willing purchaser in normal market conditions, but not an event of anxious dealing at arm’s length nor a facade of sale nor fictitious sale brought about in quick succession or otherwise to inflate the market value," the bench said.

"The size and nature of the lands acquired and size and nature of the lands in respect of which sale instances are produced on record, also would be an important aspects in as much as normally the sale instances of small piece of land can not form reasonable basis to determine the market value of large chunk of land, unless suitable deductions are made in respect of development charges. How much deductions should be made would depend on the nature of land, its topography, special features and state of its development so as to make it suitable for the purpose for which it is acquired," the court said.

The apex court dismissed a batch of petitions filed by Mala and others against the Punjab and Haryana High Court's judgement which enhanced the market value of the acquired land at Hoshiarpur to Rs 2,000 per marla and granted all statutory benefits available under the Land Acquisition Act 1894. The High Court also granted the benefit of Rs 400 at 10% per marla to the assessed amount for two years.

It rejected a submission by senior counsel P S Patwalia for appellants that the High Court had failed to consider the sale instance of the shop executed in close proximity of the date on which the lands in question were acquired.

The bench said the High Court has duly considered all the sale instances in the light of other evidence on record and reasoned out as to why the other sale instances should not be relied upon.

With regard to deduction of development charges, the bench said, "Though, it is true that while determining the market value of large chunk of land, the value of smaller pieces of land could be taken into consideration, however, after making appropriate deduction in the value of lands or setting apart land required for carving out roads, leaving open spaces, plotting out smaller plots etc. The percentage of deduction or the extent of area required to be set apart has to be assessed by the courts having regard to the size, shape, situation, user etc of the lands acquired. It is essentially a kind of guess work the courts are expected to undertake."

The bench found the appeals as devoid of merits, saying the High Court has taken into consideration the relevant factors prescribed under the Act, as interpreted by this court, and the assessment of market value so determined does not warrant any interference of this court in the appeals under Article 136 of the Constitution of India.

Case Title: Mala Vs. State of Punjab & Ors.

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