Annual Increase method in determining value may have pitfalls when gap exceeds 4-5 years: Supreme court

On an appeal regarding the method of calculation of market value, the court held that the annual increase method shall not be discarded but be exercised with caution. This judgment was passed in the case of Ved & Anr. vs. State of Karnataka [C.A.No.1158/2021], by a Triple Bench consisting of Hon’ble Justice Uday Umesh Lalit, Hon’ble Justice Indira Banerjee And  Hon’ble Justice K.M. Joseph.

The proceedings for acquisition of land were initiated vide the notification under section 4 read with section 17(2)(c) of the Land Acquisition Act, 1984 (the Act) for setting up phase V of the Industrial Model Township with industrial, commercial, recreational and other public facilities. The notification under section 4 was allowed vide declaration under section 6 of the Act. By an award passed by the Land Acquisition Collector, the land was assessed at Rs. 12.50 Lakhs per acre. The Reference Court assessed the compensation at the rate of Rs.50,43,315/- per acre in respect of the villages other than village Manesar. The acquiring body-HSIDC as well as some landholders aggrieved by the decision filed an appeal in the High Court. The High Court assessed the market value in respect of lands falling in two of the villages at Rs.48,46,000/- per acre, and of lands falling in other four villages the market value was assessed at Rs.43,61,400/- per acre. To assess the market value of the 15% cut was applied to the first two villages and a 10% cut for the other four villages. Being aggrieved by the same, the appeals were preferred by the landholders. The scope of the appeal was limited to the question of whether the landholders are eligible for the enhancement of compensation.

The supreme court after hearing both the parties concerned observed that in order to decide on the enhancement of compensation the Court will first have to look into whether the method of annual increase over the values determined in connection with the acquisition for phases II, III, and IV, any advantage could be conferred upon the landholders.

The Supreme Court observed that the process of determining the value by annual increase was considered as one of the alternatives in the case of Wazir and Another vs. State of Haryana. In the same case, three methods including one relating to the cumulative annual increase were considered and that method which led to the highest valuation was adopted. However, the law laid down in the ONGC Ltd. case was, in case one goes by the method of cumulative annual increase it would mean that cumulative increase over the valuation must displace the valuation based on Sale Deed, which is normally the safest method.

Thus the Supreme Court concluded by holding, “The decision of the High Court which is presently under appeal calls for no interference and these appeals are dismissed without any order as to costs.”

Click here to read the judgment.

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