The Hindu : National : Development potential key to fixing market value: court

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Sunday, Dec 16, 2007
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Development potential key to fixing market value: court

Legal Correspondent

New Delhi: For ascertaining the ‘market value’ of acquired land in arriving at just compensation to be awarded to its owners, its potentiality for development purposes should be taken into consideration, the Supreme Court has held.

“Potentiality means capacity or possibility for changing or developing into the state of actuality,” said a Bench consisting of Justices G.P. Mathur and D.K. Jain in a judgment.

“The question whether a [piece of] land has potential value or not, is primarily one of fact depending upon its condition, situation, the use to which it is put or is reasonably capable of being put to and proximity to residential, commercial or industrial areas or institutions. The existing amenities like water, electricity, possibility of their further extension, and whether the near-about town is developing or has prospect of development have to be taken into consideration.”

Writing the judgment, Justice Mathur said the main object of enquiry for payment of compensation was to determine the ‘market value’ of the land acquired.

The Bench said: “The market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in the most advantageous manner excluding any advantage due to the carrying out of the scheme for which the property is compulsorily acquired.”

In the instant case, the Haryana government acquired about 90 acres of land for construction of a cooperative sugar mill.

The Kurukshetra Collector assessed its value at Rs. 6,000- 35,000 an acre for different types of land.

A district court enhanced the compensation at a flat rate of Rs. 43,000 an acre. On appeal, the Punjab and Haryna High Court fixed the value at Rs. 80,000 an acre.

Though the State did not prefer an appeal, the land owners filed appeals seeking a higher compensation.

Fixing the value of the land at Rs. 1,02,000, the apex court Bench held that an industry established on the acquired land, if run efficiently, would earn money every year.

Return from the land

“The return from the land acquired for the purpose of a housing colony or offices or an institution cannot even remotely be compared with [that from] the land which has been acquired for setting up a factory or industry,” the Bench said and disposed of the appeals.

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