Property Plus
Coimbatore
Can undivided share of land be the basis to determine value?
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Location and free use of property are considered in comparative sales method of valuation, writes C.H. Gopinatha Rao
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Recently, a petition was filed by the lessee under section (9) of The Tamilnadu City Tenants Protection Act praying for an order that the lessor for the land occupied by the lessee be directed to sell the land to the lessee for a price to be fixed by the Court.
The trial court appointed a commissioner for fixing the market value of the property and on the basis of the evidence fixed the market value.
The total extent of the scheduled property is 16.87 cents.
The sale deeds submitted as comparative sale instances for valuation were not for the vacant land.
They included buildings and the land extent mentioned was the undivided share. Since no other sale deeds were available nor filed during the relevant period, the Court decided the market value of the suit scheduled property on the basis of the guideline value of the undivided share of the land and on the basis of similar location (Hindustan Petrolum Corporation Ltd vs Tayammal and others 2006 MLJ 249).
When the market value was fixed, the aggrieved party filed an appeal before the principal District Judge who confirmed the order of the trial court. Challenging the order the lessee approached the High Court.
The High Court took a stand that fraction of share of the property cannot be enjoyed fully and hence cannot be the basis for deciding the market value of the larger extent of the property.
The Supreme Court has given guidelines to determine the market value for the purpose of land acquisition.
It has spelt many factors that need to be adopted in the comparative sales method of valuation (Chimmanlalhar Govinddas vs Special L.A.O IR 1988 Sc 1652 (1988))
Genuine instances
The court suggests that only genuine instances that reflect market value reflected in the most comparable instance should be taken into consideration.
From these only the most comparable instance has to be identified on the following considerations which include
(i) proximity from the period or time of construction.
(ii) proximity from the location aspect.
The price as reflected in such genuine instances may be taken as the norm and the market value of the land can be determined.
While the point of similar location was accepted, the High Court ruled that undivided share cannot be the basis for determining the value of the property.
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Property Plus
Coimbatore
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