Purpose Of Land Acquisition Also A Relevant Factor For Determining Market Value : Supreme Court

The Supreme Court reiterated that the purpose for which the land acquisition is made is also a relevant factor for determining the market value

A large extent of land in Adrial Village of Manthani Mandal, Karimnagar District of Andhra Pradesh was acquired by the State Government for the benefit of Singareni Collieries Company Limited. Not satisfied with the compensation awarded by the Land Acquisition Officer, the land owners sought references under Section 18 of the Land Acquisition Act, 1894. The Reference Court fixed the market value at Rs.30,000/­ per acre and Rs.50,000/­ per acre. The Reference Court also awarded the compensation @ Rs.15,000/­ per acre towards sub­soil mineral rights. Later, the High Court modified this award and fixed the compensation @ Rs.80,000/­ per acre considering the market value of the land Rs.1,23,000/­ per acre and thereafter deducting 1/3rd towards the developmental activities. The High Court has also in addition awarded Rs.10,000/­ per acre as part of the market value for sub­soil rights. Aggreived with this, the original claimants/land owners  preferred appea seeking enhancement of the amount of compensation.

The claimants/land owners contended that the lands in question have been acquired for the benefit of the mining company/ Singareni Collieries Company Ltd. which is to be used for excavation of coal. The coal is already existed in the lands acquired. Since the entire land is to be mined and the coal is to be excavated, there is no wastage of land on account of any developmental activities such as roads, sewage lines, parks etc. In that view of the matter, there is no development required and therefore 1/3rd deduction is not warranted at all, they contended.

"Identical question came to be considered by this Court in the case of Nelson Fernandes (supra) and after taking into consideration the earlier decision of this Court in the case of Basavva vs. Spl. Land Acquisition Officer, (1996) 9 SCC 640, in which this Court has held that the purpose for which acquisition is made is also a relevant factor for determining the market value", the court noted.

Applying this judgment to the facts of this case, the court observed thus while partly allowing the appeal:

"When the acquisition is solely for the purpose of excavation of coal and the entire land is acquired on the basis of the estimates of the coal reserve identified and the entire land is to be mined and used and no further developmental activity is required, we are of the opinion that in the facts and circumstances of the case, the High Court has erred in deducting 1/3rd towards the developmental activities."

Case details

S. Shankaraiah vs Land Acquisition Officer and Revenue Divisional Officer Peddapali Karimnagar Dist | 2022 LiveLaw (SC) 934 | CA 6821 OF 2022 | 9 Nov 2019 | Justices MR Shah and Krishna Murari

For Appellant(s) Mr. Sridhar Potaraju, AOR Mr. Y.V. Anil Kumar, Adv. Ms. Shiwani Tushir, Adv. Mr. Rajat Srivastav, Adv. Dr. Sushil Balwada, AOR

For Respondent(s) Mr. S. Udaya Kumar Sagar, AOR Mr. A. Mariarputham, Sr. Adv. Mr. P. Parmeswaran, AOR Mr. Anurag Dayal Mathur, Adv. Ms. Anuradha Arputham, Adv. Mr. P. Venkat Reddy, Adv. Mr. Prashant Kr. Tyagi, Adv. Mr. P. Srinivas Reddy, Adv. For M/s. Venkat Palwai Law Associates, AOR

Headnotes

Land Acquisition Act, 1894 - The purpose for which acquisition is made is also a relevant factor for determining the market value - Referred to Basavva vs. Spl. Land Acquisition Officer, (1996) 9 SCC 640 & Nelson Fernandes vs.  Special Land Acquisition Officer South Goa (2007) 9 SCC 447. (Para 6.2)

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