Supreme Court Enhances Land Compensation in Haryana Acquisition Case: Bijender & Ors. vs. State of Haryana & Anr. (27 October 2017)

Introduction

Date of the Judgment: 27 October 2017
Citation: Bijender & Ors. vs. State of Haryana & Anr. (2017) INSC 919
Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J. (authored the judgment).

Can a court use the “Belting System” to determine land value when acquiring large areas? The Supreme Court of India addressed this question in a recent case concerning land acquisition in Haryana. The court examined whether the High Court correctly assessed compensation for land acquired for development purposes. The bench comprised Justices R.K. Agrawal and Abhay Manohar Sapre, with Justice Sapre authoring the judgment.

Case Background

The case involves the acquisition of land in Safidon, District Jind, Haryana, for the development of residential and commercial sectors. The Haryana Urban Development Authority (HUDA) acquired approximately 300 acres of land through three notifications issued on August 23, 2007, under Section 4 of the Land Acquisition Act, 1894. The acquired land was intended for HUDA Sectors 7, 8, and 9.

The notifications were followed by declarations under Section 6 of the Act on August 21, 2008. The Land Acquisition Officer (Collector) conducted an inquiry and applied the Belting System to determine the market value of the land. The Collector classified the land into two categories: land within 2 acres of the Safidon-Jind Road and Safidon Bye-Pass Road, and land beyond this depth. The Collector awarded compensation at Rs. 33 lakhs per acre for the land within 2 acres and Rs. 18 lakhs per acre for the land beyond 2 acres. Landowners were also awarded 30% solatium and 12% additional amount per annum from the date of notification under Section 4 of the Act until the award.

Dissatisfied with the compensation, the landowners filed reference petitions under Section 18 of the Act, seeking higher compensation. The Additional District Judge dismissed these petitions, upholding the Collector’s awards. The landowners then appealed to the High Court of Punjab and Haryana, which partly allowed the appeals by enhancing the compensation for land beyond 2 acres to Rs. 24.75 lakhs per acre, while upholding the Rs. 33 lakhs per acre for land within 2 acres. The landowners then approached the Supreme Court.

Timeline

Course of Proceedings

The landowners, dissatisfied with the compensation awarded by the Land Acquisition Officer, filed reference petitions before the Additional District Judge, Jind, under Section 18 of the Land Acquisition Act, 1894. The Additional District Judge dismissed all 305 reference petitions, upholding the compensation determined by the Collector. Aggrieved by this decision, the landowners filed Regular First Appeals before the High Court of Punjab and Haryana. The High Court partly allowed the appeals, enhancing the compensation for land beyond 2 acres from Rs. 18 lakhs to Rs. 24.75 lakhs per acre. The High Court upheld the compensation of Rs. 33 lakhs per acre for land within 2 acres of the main roads. The landowners then filed appeals before the Supreme Court, challenging the High Court’s decision, seeking further enhancement of the compensation.

Legal Framework

The core legal framework of this case is the Land Acquisition Act, 1894, particularly Section 4, Section 5A, Section 6, Section 18 and Section 23.

• Section 4 of the Land Acquisition Act, 1894: This section deals with the publication of preliminary notification for the acquisition of land for public purposes.
• Section 5A of the Land Acquisition Act, 1894: This section allows landowners to file objections to the acquisition.
• Section 6 of the Land Acquisition Act, 1894: This section deals with the declaration of intended acquisition of land.
• Section 18 of the Land Acquisition Act, 1894: This section provides the procedure for reference to the court for determination of compensation.
• Section 23 of the Land Acquisition Act, 1894: This section outlines the matters to be considered in determining compensation. It includes market value of the land, damages sustained by the person interested, and other factors.

The Supreme Court also referred to various precedents to determine the market value of the land. The court noted that the determination of fair market value is a question of fact, and should be based on the principles of a willing buyer and a willing seller. The court also considered the concept of potential value of the land, and the Belting System for land valuation.

Arguments

Arguments by the Appellants (Landowners):

• The High Court erred in not properly determining the market value of the land, despite acknowledging its developed nature and potential.
• The appellants submitted 59 sale deeds of adjacent areas showing land sold at rates ranging from Rs. 200 to Rs. 4,500 per square yard, and the highest rate should have been the basis for determining the market value.
• The application of the Belting System by the Collector, Reference Court, and High Court was incorrect, as it unfairly classified the land into two parts with different rates.

Arguments by the Respondent (State):

• The High Court’s determination of market value was just and proper, and no further enhancement was needed.
• The 59 sale deeds relied upon by the appellants were not comparable because they pertained to very small pieces of land sold in square yards, unlike the large area of acquired land which was measured in acres.
• Some sales were not genuine, but were created to inflate the market value for compensation purposes.
• The Belting System was correctly applied considering the nature of the land and other relevant factors.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. Whether the Courts below were justified in applying the “Belting System” for determining the market rates of the acquired land?
2. Whether the highest rate of Rs.4500/- per square yard of the land of the nearby area out of 59 sale deeds should be made basis for determining the market rate of the acquired land?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court relied on the following authorities:

• Union of India & Ors. vs. Mangatu Ram & Ors. [1997 (6) SCC 59]*: The Court cited this case to support the application of the Belting System in land acquisition.
• Andhra Pradesh Industrial Infrastructure Corporation Limited vs. G. Mohan Reddy & Ors. [2010 (15) SCC 412]*: This case was also used to justify the use of the Belting System.
• Periyar and Pareekanni Rubbers Ltd. vs. State of Kerala [1991(4) SCC 195]*: The Court referred to this case to emphasize that the Land Acquisition Collector’s award is an offer, and it is the landowners’ responsibility to prove that the land is worth more.
• Atma Singh(Dead) Thr. L.Rs. & Ors. vs. State of Haryana & Anr. [2008 (2) SCC 568]*: The Court used this case to explain why the value of smaller plots is not usually considered for large land blocks.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Application of Belting System: The Court found the Belting System to be a valid method for determining the fair market value of the acquired land, given its large size and varying locations.
• Non-comparability of Sale Deeds: The Court rejected the appellants’ reliance on sale deeds of small plots, finding them not comparable to the large area of acquired land.
• Fair Market Value: The Court considered the location, surroundings, nature, and potentiality of the land to determine a fair market value.
• Development Costs: The Court acknowledged the need for deductions to account for development costs.

The Court emphasized the need to balance the interests of the landowners with the public purpose of the acquisition.

Fact:Law Ratio

Logical Reasoning

The Court’s reasoning was based on the principle of determining a fair market value for the acquired land, taking into account its unique characteristics and the need for a balanced approach between the rights of landowners and the public interest.

The Supreme Court stated:

• “One cannot dispute that the Belting System is a judicially accepted method for determining the fair market value of the acquired land.”
• “It is held that when the Courts are called upon to fix the market value of the land in compulsory acquisition, one of the types of evidence of the value of the property is the sale of the acquired land to which the claimant is a party and in its absence, the sale of the neighboring lands.”
• “It is held that the value of the smaller plots, which is always on the higher side, is usually not taken into consideration for determining the large block of the land.”

Key Takeaways

• The Belting System is a valid method for determining the fair market value of acquired land, especially for large areas with varying locations.
• Sale deeds of small plots are not comparable to large areas of acquired land and cannot be used as the sole basis for determining market value.
• Courts must consider various factors, such as location, surroundings, potential, and development costs, to determine a fair market value.
• Landowners must provide sufficient evidence to establish that the acquired land is capable of fetching a higher market value than the Collector’s offer.

Directions

The Supreme Court directed that the appellants are entitled to receive compensation at the rate of Rs. 45 lakhs per acre for land within 2 acres of the Safidon-Jind Road and Safidon Bye-Pass Road and Gair Mumkin land, and Rs. 35 lakhs per acre for Nehri Chahi land beyond 2 acres. The appellants are also entitled to statutory compensation as provided in the Land Acquisition Act, 1894.

Development of Law

The ratio decidendi of the case is that the Belting System is a judicially accepted method for determining the fair market value of large chunks of land with varying locations. The court also clarified that sale deeds of small plots cannot be the sole basis for determining the market value of large acquired lands. This case reinforces the principles of fair compensation and the importance of considering various factors in land acquisition cases. There is no change in the previous positions of law but a clarification of the application of the Belting System.

Conclusion

The Supreme Court partially allowed the appeals, enhancing the compensation for the acquired land. The Court upheld the application of the Belting System and rejected the appellants’ reliance on sale deeds of small plots. The judgment provides clarity on the principles for determining fair market value in land acquisition cases, emphasizing the need for a balanced approach that considers both the interests of landowners and the public purpose of the acquisition.