The Hindu : Front Page : Potential future value of land must be considered for compensation: Supreme Court

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Potential future value of land must be considered for compensation: Supreme Court

J. Venkatesan

NEW DELHI: In a judgment which will benefit a large number of people whose land is acquired for public purposes, the Supreme Court has held that not only the present market value but also future potential value, and the purpose for which the land is to be used, must be taken into account for arriving at just compensation.

A Bench of Justices Mukundakam Sharma and Anil R. Dave said: “The market value of the acquired land cannot only be its value with reference to the actual use to which it was put on the relevant date envisaged under the Land Acquisition Act, but ought to be its value with reference to the better use to which it is reasonably capable of being put in the immediate or near future.”

Quoting an earlier judgment, the Bench said: “The court fixing the compensation should eschew… feats of imagination but occupy the armchair of a prudent, willing, but not too anxious, purchaser and always ask the question, ‘what are the prevailing conditions and whether a willing purchaser would, as a prudent man in the normal market conditions, offer to purchase the acquired land at the rates mentioned in the sale deeds'.”

Writing the judgment, Justice Sharma said that while awarding compensation to landowners, the court must be realistic, and “the potentiality of the acquired land, in so far as it relates to the use to which it is reasonably capable of being put in the immediate or near future, must be given due consideration.”

For providing Adi Dravidas with house sites, the Tamil Nadu government acquired 3.90 acres at Palangudi in Tiruchi district in September 1992. The Land Acquisition Officer awarded Rs. 1.72 a square foot. At the instance of appellant A. Natesan Pillai, the reference court fixed the market value of the land at Rs.17 a square foot. On the State's appeal, the Madras High Court fixed the value at Rs.9. The present appeal by Mr. Pillai is directed against this judgment. Allowing the appeal, the Bench said: “It cannot not be disputed that the acquired land, being in the heart of the city and having excellent prospects of being used as residential site, definitely has an edge regarding potential value…

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