Purpose For Which Land Has Been Acquired Is Relevant For Determining Market Value Of Land- SC While Enhancing Compensation

The Supreme Court while enhancing compensation in a land acquisition case has observed that the purpose for which the land is acquired is also a relevant factor for determining its market value.

The Bench of Justice MR Shah and Justice Krishna Murari while allowing the appeal in part of the original claimants/landowners observed thus-

"Identical question came to be considered by this Court in the case of Nelson Fernandes (supra) and after taking into consideration the earlier decision of this Court in the case of Basavva vs. Spl. Land Acquisition Officer, (1996) 9 SCC 640, in which this Court has held that the purpose for which acquisition is made is also a relevant factor for determining the market value and the purpose for which the land is acquired must also be taken into consideration..."

The Court further held that the original claimants shall be entitled to compensation for the lands acquired at Rs.1,23,000/- per acre with other statutory benefits which may be available under the provisions of the Land Acquisiton Act 1894.

The Bench observed, "The High Court has erred in deducting 1/3rd towards the developmental activities as the entire land is acquired on the basis of the estimates of the coal reserve identified and the entire land is to be mined and used and that no further developmental activity is required."

In this case, the Andhra Pradesh High Court awarded the compensation for the lands acquired by the State Government at Rs.80,000/- per acre and Rs.10,000/- per acre for sub-soil rights on account of the coal deposits. Not satisfied with the compensation awarded by the High Court, land owners preferred the Appeal before the Apex Court.

The issue dealt with by the Court was -

Whether the amount of compensation determined /awarded by the High Court is required to be enhanced in the appeals preferred by the original claimants/land owners.

Advocate Sridhar Potaraju appeared on behalf of the Appellant and submitted that the petitioners were the absolute owners of the land including the sub-soil minerals and were not merely tenure holders and while determining the amount of compensation for the land acquired, claim for sub-soil minerals rights was also required to be considered. It was also submitted that the entire land is to be mined and that there is no wastage of land on account of any developmental activities.

Senior Advocate A. Mariarputham appeared on behalf of the respondent and submitted that as per the settled position of law there shall be an appropriate deduction towards the development and therefore 1/3rd deduction can be said to be just and reasonable deduction towards the development.

The Court observed that the purpose for which land is acquired is a relevant factor for determining the market value and must also be taken into consideration while determining the compensation and here, the land has been acquired for the benefit of the mining company which is to be used for the purpose of excavation of coal and that the entire land is to be mined and there is no wastage of land on account of any developmental activities.

Accordingly, the Court allowed the appeal in part and held that the 1/3rd deduction towards the developmental activities was not required and thus claimants should be entitled to compensation for the lands acquired at Rs.1,23,000/- per acre with other statutory benefits.

Cause Title- S. Shankaraiah Thr. GPA Holder & Ors. v. The Land Acquisition Officer and Revenue Divisional Officer Peddapali Karimnagar Dist. & Ors

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