Case Note & Summary
The dispute arose from acquisition of 12.50 acres of land for extension of Thermal Power Station at Parali Vaidyanath Municipality. A notification under Section 4(1) of the Land Acquisition Act was published on 14 July 1977. The Land Acquisition Officer awarded Rs.3,000 per acre on 20 September 1978. On reference, the Additional District Judge enhanced compensation to Rs.5 per square foot by award dated 27 April 1987. The High Court confirmed the determination but deducted one-third towards development charges. The State of Maharashtra and the Electricity Board challenged the enhancement, while claimants challenged the deduction. The Supreme Court considered the sole question of just and adequate compensation. The Court found that the determination of compensation on square foot basis was an illegal principle. It noted that no reasonable prudent purchaser would purchase 12.50 acres of agricultural land on square foot basis. The lands were agricultural within municipal limits, converted for non-agricultural purpose but no development existed as on notification date. There were some illegal constructions and development only up to 3/4 km away. Therefore, no potential value as building site. The reference court had relied on sale deeds of small extents dated 14 January 1976. The Court held that for large land acquisition, sales of small pieces, though genuine, cannot be relied upon. Excluding those documents, there was no acceptable evidence to determine compensation on square yard or square metre basis. Considering that lands abutting Thermal Power Station and building extension possibility ruled out, the Court fixed compensation at Rs.40,000 per acre. It allowed the appeals of the State and Electricity Board and dismissed claimants' appeal. Claimants were entitled to solatium at 30% and interest at 9% for first year and 15% thereafter, but not additional amount under Section 23(1-A). No costs.
Headnote
A) Land Acquisition - Determination of Compensation - Square Foot Basis Illegal - Land Acquisition Act, 1894 - The reference court determined compensation on square foot basis for 12.50 acres of agricultural land, which the Supreme Court held to be an illegal principle; no reasonable prudent purchaser would purchase such large extent on square foot basis; Held that the premise on which reference court and High Court proceeded was obviously illegal. (Paras 1-2) B) Land Acquisition - Potential Value - Agricultural Land Without Development - Land Acquisition Act, 1894 - As on date of notification under Section 4(1), the lands were agricultural and no development existed in the area though some illegal constructions existed and development was up to 3/4 km away; Held that determination of compensation on basis of potential value was illegal because lands did not possess potential value as building site. (Paras 1-2) C) Land Acquisition - Sale Deeds of Small Extents - Evidentiary Value - Land Acquisition Act, 1894 - The reference court relied on sale deeds dated 14.1.1976, Exs.48, 49 and 50 of small extent of land sold on sq. ft basis; Held that when a large extent of land is acquired, sales of small pieces of land, though genuine, cannot be relied upon as basis; they were excluded. (Paras 1-2) D) Land Acquisition - Just and Adequate Compensation - Fixation Based on Facts - Land Acquisition Act, 1894 - With no acceptable evidence to determine compensation on square yard or square metre basis, and lands abutting Thermal Power Station with no building potential, the court fixed compensation at Rs.40,000 per acre; Held appeals of State and Electricity Board allowed and claimants' appeal dismissed. (Paras 1-2) E) Land Acquisition - Statutory Benefits - Solatium, Interest, Additional Amount - Land Acquisition Act, 1894 as amended by Act 68 of 1984, Section 23(1-A) - Claimants entitled to solatium at 30% on enhanced compensation and interest at 9% per annum for first year from date of taking possession and 15% thereafter till deposit; Held claimants not entitled to additional amount under Section 23(1-A). (Paras 1-2)
Issue of Consideration
What is the just and adequate compensation that the acquired lands are capable of fetching in the open market?
Final Decision
Appeals by State of Maharashtra and Electricity Board allowed; claimants' appeal dismissed; compensation for acquired lands fixed at Rs.40,000 per acre; claimants entitled to solatium at 30% on enhanced compensation and interest at 9% per annum for first year from date of taking possession and 15% per annum thereafter till date of deposit; not entitled to additional amount under Section 23(1-A) of the Land Acquisition Act; no order as to costs.
Law Points
- Determination of compensation on square foot basis illegal
- sales of small pieces of land cannot be relied upon for large acquisitions
- potential value cannot be considered when no development existed on date of notification
- compensation for agricultural land near thermal power station fixed at Rs.40
- 000 per acre
- claimants entitled to solatium at 30% and interest under Act 68 of 1984
- no additional amount under Section 23(1-A) of Land Acquisition Act
