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TMI Blog2007 (12) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... molasses, which is produced in huge quantity. Earlier, it had no utility and its disposal used to be a big problem. But now molasses is used for production of alcohol and ethanol which yield lot of revenue. Another by-product begasse is now used for generation of power and press mud is utilized in manure. Therefore, the profit from a sugar factory is substantial. Moreover, it is not confined to one year but will accrue every year so long as the factory runs. A housing board does not run on business lines. Once plots are carved out after acquisition of land and are sold to public, there is no scope for earning any money in future. An industry established on acquired land, if run efficiently, earns money or makes profit every year. The return from the land acquired for the purpose of Housing Colony, or Offices, or Institution cannot even remotely be compared with the land which has been acquired for the purpose of setting up a factory or industry. After all the factory cannot be set up without land and if such land is giving substantial return, there is no justification for making any deduction from the price exhibited by the exemplars even if they are of small plots. It is possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The Collector gave award on the basis of quality of land, for which purpose he divided the acquired land in seven categories and the market value was assessed at ₹ 6,000/- to ₹ 35,000/- per acre for different types of lands. Feeling aggrieved by the award of the Collector, the appellants herein (landowners) sought reference to the Court under Section 18 of the Act. The learned Additional District Judge awarded compensation at a flat rate of ₹ 43,000/- per acre by placing reliance on Ex. R-6 and R-7, two instances of sale deeds of village Chhapra. After taking average of these sale transactions, an addition of 25% was made for fixing the market value of the land. Against the award made by the learned Additional District Judge, the claimant-appellants (landowners) preferred 17 appeals before the High Court. The High Court after appraisal of evidence on record held that the market value of the land acquired was ₹ 1,20,000/- per acre. It further held that the exemplars filed by the appellants were of small pieces of land and, therefore, a deduction of 33% had to be made and accordingly the market value of the land was assessed at ₹ 80,000/- pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistrator General of West Bengal v. Collector, Varanasi, AIR 1988 SC 943 and Periyar v. State of Kerala, AIR 1990 SC 2192. 5. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. It is well settled that market value of a property has to be determined having due regard to its existing condition with all its existing advantages and its potential possibility when led out in its most advantageous manner. The question whether a land has potential value or not, is primarily one of fact depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like, water, electricity, possibility of their further extension, whether near about Town is developing or has prospect of development have to be taken into consideration. See Collector Raigarh v. Hari Singh Thakur, AIR 1979 SC 472, Raghubans Narain v. State of U.P., AIR 1969 SC 465 and Administrator General, W. B. v. Collector Varanasi, AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land was ₹ 1,20,000/- per acre is perfectly correct and calls for no interference. 8. Shri Rakesh Dwivedi, learned senior counsel for the sugar mill has submitted that the exemplars filed by the appellants were of very small pieces of land and, therefore, they are not safe guide to determine the market value of the land. It may be mentioned here that while determining the market value, the potentiality of the land acquired has also to be taken into consideration. The appellants have led evidence to show that the acquired land had the potentiality to be used for commercial, industrial and residential purposes. PW.1 Rakesh Kumar had prepared a site plan which showed that the acquired land was adjacent to the abadi of Shahabad and abutted the Shahabad-Ladwa Road. The site plan also shows that there existed rice shellers, cold storage, shops, godowns, a college and houses etc. on both sides of Shahabad-Ladwa Road. PW.2 Baldev Singh was Patwari of village Chhapra in the year 1983. He deposed that all the four villages viz. Kankar Shahbad, Chhapra, Jandheri and Jhambara are adjacent to each other and the acquired land abutted the Shahabad- Ladwa Road. He further deposed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lands covered by the acquisition are located by the side of the National Highway and the Southern Railway Staff Quarters with the Town Planning Trust road on the north. The neighbouring areas are already developed ones and houses have been constructed, and the land has potential value for being used as building sites. Having found that the land is to be valued only as building sites and having stated the advantageous position in which the land in question lies though forming part of the larger area, the High Court should not have applied the principles of deduction. It is not in every case that such deduction is to be allowed. Therefore, the High Court erred in making a deduction of one third of the value of the comparable sale and thus reducing the fair market value of land from ₹ 10 per sq. yard to ₹ 6.50 per sq. yard." Shri Verma has also referred to Kasturi & Ors. v. State of Haryana (2003) 1 SCC 354, wherein it was observed that in cases of those land where there are certain advantages by virtue of the developed area around, it may help in reducing the percentage of cut to be applied, as the development charges required may be less on that account. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approx, between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards"." 12. Shri Dwivedi has also referred to Basant Kumar & Ors. v. Union of India & Ors. (1996) 11 SCC 542, K. Vasundara Devi v. Revenue Divisional Officer (LAO) (1995) 5 SCC 426, H.P. Housing Board v. Bharat S. Negi & Ors. (2004) 2 SCC 184. In the first cited case land was acquired for planned development of Delhi and in the other two cases for Housing Boards and a deduction of 33% was applied. 13. The reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory cannot be set up without land and if such land is giving substantial return, there is no justification for making any deduction from the price exhibited by the exemplars even if they are of small plots. It is possible that a part of the acquired land might be used for construction of residential colony for the staff working in the factory. Nevertheless where the remaining part of the acquired land is contributing to production of goods yielding good profit, it would not be proper to make a deduction in the price of land shown by the exemplars of small plots as the reasons for doing so assigned in various decisions of this Court are not applicable in the case under consideration. 15. Having regard to the entire facts and circumstances of the case, we are of the opinion that a deduction of 10% from the market value of the land, which has been arrived at by the High Court would meet the ends of justice. Therefore, the market value of the acquired land for the purpose of payment of compensation to the land owners has to be assessed at ₹ 1,08,000/- per acre. 16. In the result, the appeals are partly allowed. The claimant- appellants will be entitled to compensation at the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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