[Land Acquisition] Reference To Market Value Of Small Plots Not Always Reliable, But May Be Referred In Absence Of Other Material: Jammu & Kashmir HC

The Jammu and Kashmir and Ladakh High Court has ruled that in determining the market value of a large piece of land proposed for acquisition, it may not be safe to rely solely on the rate at which small parcels of land adjacent to it are sold.

However, the court reiterated that this cannot be an absolute rule as in cases where there is no other material available, the court may compare prices paid for small plots of land to arrive at a fair market value and this approach should not be dismissed outright.

A single bench of Justice Sanjay Dhar observed,

"In a case where there is no other material available to assess the market value of acquired land at the relevant time, a cue can be taken by the adjudicating Court from the sale transactions of small parcels of land in the vicinity of the acquired land after making appropriate deductions while assessing the market value of the said land."

The Court was hearing an appeal preferred by Centre against the judgment of a District Court in a reference under Section 18 of the State Land Acquisition Act, 1990. Through the impugned judgment, compensation in respect of acquired land was enhanced.

Centre assailed the judgment on the ground that the District Judge relied upon the sale transactions pertaining to the years 1983, 1988 and 1991 in respect of small patches of land which is not permissible in law. The price of small developed piece of land is not determinative of the price of large chunk of land and this principle has been totally ignored by the District Judge, it was argued.

Adjudicating upon the matter, Justice Dhar noted that no sale transactions were reported in the area in last three years. Thus the question before it was whether sale transactions from the years 1983, 1988 and 1991 could be a determinative factor for assessing the market value of the acquired land.

Justice Dhar agreed that the rate at which small plots are sold cannot be said to be a safe criteria for determining the market value of a large chunk of land. Yet, the same cannot be an absolute proposition, it said, citing Supreme Court's decision in Atma Singh vs. State of Haryana.

"It has been held that, where there is no other material available on record, it may, in appropriate cases, be open to the adjudicating Court to make comparison of prices paid for small plots of land. However, in such cases, necessary deductions/adjustments have to be made while determining the prices", the bench underscored.

Deliberating on the law as to what what should be the measure of deduction that is required to be made while assessing the compensation of acquired land on the basis of sale price of small patches of land, Justice Dhar explained,

"The Court has to take into account the situation of the land, its advantages and potentialities, its proximity to residential, commercial, industrial or other institutions, the existing amenities , the possibility of their further extension, the prospects of development in near future and such like factors".

Applying the said position of law the court said that the sale deeds show that nearby land was sold at Rs. 48,000/-, Rs. 95,000/-, and Rs. 1,20,000/- per kanal in 1983, 1988, and 1991 respectively. The acquired land is near the Air Field and Railway Station and has potential for development and the District Judge also reasonably made deductions of 40% to 50% from the value of nearby land and assessed the market value, the bench remarked.

Thus it held the order passed by District Judge does not call for any interference by the Court. However, it reduced the interest payable in view of Section 28 of the Act. The appeal was thus partly allowed.

Case Title: Union Of India Vs Madan Lal & Ors.

Citation: 2023 LiveLaw (JKL) 118

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