The Supreme Court has reaffirmed the legal principle that larger land areas do not attract the same price per square meter as smaller plots. The court upheld a 10% deduction in market rates due to the size of the acquired land in a land acquisition proceeding.
"It is a settled principle of law that large areas do not attract the same price as is offered for small plots of land. Therefore, some amount of deduction is also normally permissible on account of largeness in area. Thus, deduction of at least 10% has to be applied to determine the rate of compensation." – Supreme Court
Background of the Case
The case involved a dispute over compensation for land acquired by the Gujarat government for the Gujarat Industrial Development Corporation (GIDC). The land in question, located in Vadodara, Gujarat, measured 0.98 hectares. The Special Land Acquisition Officer (SLAO) initially awarded compensation at a rate of Rs. 11 per square meter. However, upon reference, the court increased the amount to Rs. 30 per square meter.
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Dissatisfied with the revised compensation, the appellants approached the Supreme Court, arguing for an enhancement to Rs. 450 per square meter based on the market value of comparable land and the income from fruit-bearing trees present on the land.
The Supreme Court bench, comprising Justices Pankaj Mithal and SVN Bhatti, rejected the claim for further enhancement, citing critical differences between the acquired land and the comparison plot used by the appellants.
- The appellants had relied on a commercial plot measuring 1,900 square meters to justify their claim for a higher compensation rate. However, the court pointed out that while the reference plot was a commercial site, the acquired land was agricultural in nature.
- The court justified the 10% deduction in market value, stating that smaller plots command higher prices due to higher demand, ease of transferability, and immediate usability. In contrast, larger plots require subdivision, development, and marketing, reducing their per-unit value.
"Accordingly, the judgment and order dated 14.08.2015 is set aside, and the award of the SLAO dated 25.02.1992 and that of the Reference Court dated 31.12.2011 is modified by fixing the compensation of the acquired land at Rs. 95 per sq. mt. (after applying a 50% cumulative deduction on Rs. 190 per sq. mt.), with all statutory benefits including interest as permissible in law." – Supreme Court
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The Supreme Court arrived at the final compensation amount by taking into consideration multiple factors:
Market Rate Determination: The court took the GIDC premium rate of Rs. 180 per square meter and adjusted it for inflation, revising it to Rs. 190 per square meter.
Development Cost Deduction: The court applied a 40% deduction for development costs such as roads, utilities, and essential infrastructure.
Largeness Deduction: An additional 10% deduction was applied due to the larger area size compared to smaller commercial plots.
After applying these deductions, the final compensation was fixed at Rs. 95 per square meter, upholding the principle that larger land parcels warrant deductions in market valuation due to their development requirements.
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The appellants also argued that the courts below had failed to consider the income generated from fruit-bearing trees on the acquired land. However, the Supreme Court noted that the appellants failed to provide substantive evidence regarding the revenue generated from these trees.
"In the absence of any documentary evidence showing the annual income earned from selling the fruits of the trees, we do not deem it proper to award anything further for the trees." – Supreme Court
The SLAO had previously awarded Rs. 1,06,300 as compensation for the trees, and the court chose to uphold this amount.
Case Title: MANILAL SHAMALBHAI PATEL (DECEASED) THROUGH HIS LEGAL HEIRS & ORS. VERSUS OFFICER ON SPECIAL DUTY (LAND ACQUISITION) & ANR.
Appearance:
For Appellant(s) Mr. Neeraj K. Kaul, Sr. Adv. (argued by) Ms. Anushree Prashit Kapadia, AOR Mr. Dhruv Sharma, Adv. Ms. Dhanya Setlur Krishnan, Adv. Mr. Harsh Panwar, Adv. Ms. Pritha Suri, Adv. Ms. Shivangi Chawla, Adv.
For Respondent(s) Ms. Deepanwita Priyanka, AOR (argued by) Mr. Deepak Singh, Adv.
