Landowners’ Compensation Increased: Supreme Court Revises Land Acquisition Award

The case revolves around landowners challenging the compensation awarded for their land acquired by the government for a rehabilitation center in Mudhol, Karnataka. The appeals were filed against the judgment of the High Court of Karnataka, which had increased the compensation but not to the extent the appellants had claimed.

The appellants, led by Vithal Rao and others, contested the land acquisition compensation determined by the Special Land Acquisition Officer. The lands, measuring approximately 30 acres, were acquired for the relocation of displaced persons under the Upper Krishna Project. Initially, the Special Land Acquisition Officer valued the lands at Rs. 96,164 per acre. Dissatisfied with the compensation, the landowners sought reference under Section 18(1) of the Land Acquisition Act, 1894, seeking a much higher rate based on the market potential and comparable sales in the vicinity.

High Court’s Determination of Compensation

The Karnataka High Court partially allowed the appeal and increased the compensation from Rs. 6,75,000 per acre to Rs. 13,93,920 per acre. The High Court relied on an exemplar sale deed (Ex.P-61), which reflected a rate of Rs. 64 per square foot, and applied a 50% deduction for development charges to arrive at a compensation figure. The appellants, however, argued that the court should have considered other sale deeds, including two that indicated a much higher value of Rs. 218 per square foot.

Arguments Presented by the Appellants

Senior Counsel Mr. Dhruv Mehta, representing the landowners, put forth five key arguments:

• The compensation awarded was inadequate and did not reflect the true market value of the land.
• The court should have considered all eleven sale deeds submitted, as they were executed prior to the acquisition notification and reflected the land’s true market value.
• The High Court erred in relying solely on Ex.P-61 and excluding three other relevant sale deeds.
• The 50% deduction for development charges was excessive and unjustified.
• The land, situated near the main district road and surrounded by developed colonies, had significant commercial and residential potential.

Counterarguments by the Respondents

Senior Counsel Mr. B.P.S. Patil, appearing for the respondent, defended the High Court’s decision, arguing that:

• The eleven sale deeds cited by the appellants involved much smaller plots, whereas the acquired land was a large tract of approximately 30 acres.
• The transactions in the sale deeds were questionable, and their bona fides were not entirely reliable.
• The High Court’s method of taking an exemplar sale deed and applying development deductions was reasonable.

Supreme Court’s Observations and Ruling

The Supreme Court, after hearing both parties and reviewing the evidence, found merit in some of the appellants’ arguments. The Court reiterated key principles laid down in Chimanlal Hargovinddas vs. Special Land Acquisition Officer, where it was held that the valuation must be based on comparable sales, development deductions, and land potential.

The Court observed that:

• The land was a large, undeveloped chunk, justifying a reasonable deduction for development.
• The land had high potential due to its location within municipal limits and proximity to developed areas.
• Instead of relying on a single sale deed, an average value of all eleven sale deeds should be taken.

Applying these principles, the Supreme Court recalculated the compensation. The average value of the sale deeds was determined to be Rs. 99 per square foot. After applying a 40% deduction for development, the final compensation was fixed at Rs. 60 per square foot.

Final Compensation and Court’s Directive

The Supreme Court modified the High Court’s judgment and directed that the compensation for the acquired land be set at Rs. 60 per square foot. The respondents were ordered to recalculate and disburse the enhanced compensation to the appellants within three months, along with all statutory benefits.

In conclusion, the judgment is significant as it reinforces the principles of fair market valuation, appropriate development deductions, and the necessity of considering multiple sale exemplars in land acquisition cases.

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Download Judgment: Vithal Rao & Anr. Et vs The Special Land Acq Supreme Court of India Judgment Dated 07-07-2017.pdf