Case Note & Summary
This case arose from acquisition of 33 acres 84 cents of land in village Srungavruksham, Bhimavaram Taluk, West Godavari District, Andhra Pradesh for construction of Food Corporation of India godowns. Notification under Section 4(1) of the Land Acquisition Act, 1894 was published on March 5, 1983. The Land Acquisition Officer, by award dated March 30, 1984 under Section 11, determined compensation at Rs.32,500 per acre for wet land and Rs.32,000 per acre for dry land. On reference under Section 18, the Subordinate Judge, Bhimavaram, by award and decree dated December 27, 1988 under Section 26, enhanced compensation to Rs.90,000 per acre relying on sale transactions. The State or FCI appealed to the High Court. The Division Bench of the Andhra Pradesh High Court, by order dated October 25, 1991 in A.S. Nos.1392, 1393 and 1394 of 1989, set aside the reference court award and confirmed the Land Acquisition Officer's award. The claimants then appealed to the Supreme Court by special leave. The Supreme Court observed that the claimants had relied on as many as 20 sale transactions, Ex.A-1 to A-20, but all except Ex.A-4 were post-notification sales and therefore not comparable. The only relevant pre-notification sale deed was Ex.A-4 dated June 17, 1982, covering 5 cents sold for Rs.7,500. The Court held that the reference court committed a gross error in using this small plot sale along with post-notification transactions to fix compensation at Rs.90,000 per acre for a large extent of 33 acres 84 cents. A willing prudent purchaser would not buy such large land at that rate based on a mere 5 cents sale. The question before the Court was the reasonable market value as on the date of notification. The Court noted that the acquired lands were agricultural fertile wet lands in West Godavari District, capable of double cropping. Evidence showed that a railway track passed near the land with easy access to a railway station, a cinema hall was situated nearby, and there were built-up areas and mango growth around the acquired land. These factors indicated that no prudent vendor would sell the land even at a depressed price for less than Rs.50,000 per acre. A prudent seller and prudent purchaser would transact at not less than Rs.50,000 per acre. Accordingly, the Court held the market value of the acquired lands to be Rs.50,000 per acre. On statutory benefits, the Court directed that the claimants were entitled to compensation at Rs.50,000 per acre with solatium at 30% on the enhanced compensation, interest at 9% from the date of taking possession for one year, and 15% on the enhanced compensation thereafter till deposit in court. The claimants were also entitled to 12% per annum additional amount from the date of notification till date of award under Section 11. The award of the reference court regarding value of trees was not interfered with by the High Court and remained intact. The appeals were allowed, the High Court order was set aside, and the reference court award was modified accordingly. No costs were awarded.
Headnote
A) Land Acquisition - Determination of Market Value - Comparable Sales Method - Land Acquisition Act, 1894, Sections 4(1), 11 and 26 - Post-notification sales cannot be regarded as comparable; only pre-notification sale deed Ex.A-4 for 5 cents was relevant; reference court erred in fixing Rs.90,000 per acre based on small plot for large acquisition - Held that such evidence was insufficient to support high market value (Paras Not mentioned). B) Land Acquisition - Market Value - Fertility and Development Potential - Land Acquisition Act, 1894, Section 23 - Acquired lands were fertile wet lands capable of double crop with railway access, cinema hall, built-up areas and mango growth; no prudent vendor would sell below Rs.50,000 per acre - Held market value fixed at Rs.50,000 per acre (Paras Not mentioned). C) Land Acquisition - Statutory Benefits - Solatium and Interest - Land Acquisition Act, 1894, Sections 4(1), 11 and 26 - Claimants entitled to compensation at Rs.50,000 per acre with solatium 30% on enhanced compensation, interest at 9% for first year and 15% thereafter, additional 12% per annum from notification to award under Section 11 - Held appeals allowed and High Court order set aside (Paras Not mentioned).
Issue of Consideration
What is the reasonable market value of acquired lands as on date of notification under Section 4(1) of Land Acquisition Act, 1894, and what statutory benefits are payable to claimants?
Final Decision
Appeals allowed; High Court order set aside; reference court award modified to fix market value at Rs.50,000 per acre; claimants entitled to compensation at Rs.50,000 per acre with solatium 30% on enhanced compensation, interest at 9% for first year from date of possession and 15% on enhanced compensation thereafter till deposit, and 12% per annum additional amount from notification to date of award under Section 11; no costs; trees award of reference court not interfered.
Law Points
- Post-notification sales cannot be considered comparable
- small plot sale is not a safe basis to determine market value of large tract
- market value of agricultural land should be determined considering fertility
- location
- access
- development potential and prudent buyer/seller
- statutory solatium and interest as per Land Acquisition Act
- 1894.
