Deduction for Development Potential Held Necessary While Determining Market Value Based on Small Non-Agricultural Plot Exemplars

The State acquired 1 Hectare 6 Are of land belonging to the claimants in village Baswantpur, Latur, for the construction of the Latur-Ambajogai to Latur-Miraj ring road via a Section 4 notification dated March 21, 1996

The Land Reference Court awarded compensation at ₹7,00,000 per Hectare on June 30, 2012

The State appealed for a reduction in compensation, alleging the award was based on guesswork

The claimants filed a cross-objection seeking enhanced compensation based on a sale exemplar (Exhibit-30) of a nearby plot in village Arvi sold for ₹205 per sq. ft. shortly before the notification

Possession was allegedly taken in 1993, prior to the formal notification

1. Whether the compensation awarded by the Reference Court was inadequate and should be enhanced based on the market value evidenced by the sale exemplar at Exhibit-30

2. Whether the claimants are entitled to rental compensation for the period possession was held prior to the Section 4 notification

3. Whether the interest awarded by the Reference Court was in accordance with statutory provisions

The Court applied the Land Acquisition Act, 1894, specifically regarding the determination of market value and statutory benefits.

Small-plot sale exemplars can be used to determine the value of large tracts of land provided appropriate deductions (e.g., 40%) are made for development charges and differences in potentiality

Rental compensation at 9% per annum is mandated when possession is taken before the Section 4 notification, as per Shankarrao Bhagwantrao Patil v. State of Maharashtra (2022) 15 SCC 657

Statutory interest is governed by Sections 28 and 34 of the Act, establishing 9% interest for the first year and 15% thereafter

The Court found that the acquired land possessed significant Non-Agricultural (N.A.) and commercial potential given its proximity (3km) to Latur city and nearby industrial/residential developments

The Court accepted the sale exemplar at Exhibit-30 (village Arvi) as a valid benchmark because Arvi is adjacent to Baswantpur

To reconcile the difference between the 2,000 sq. ft. N.A. plot in the exemplar and the 1 H 6 R agricultural tract acquired, the Court applied a 40% deduction for development and locational differences

The Court rejected the State's reliance on a different reference (LAR No. 403 of 1999) because it used an "aggregate method" deemed illegal

The market value was determined at ₹123 per sq. ft. (approx. ₹1,32,348 per Are) and compensation was enhanced accordingly

The Court ordered rental compensation at 9% per annum from the 1993 possession date to the 1996 notification date

Statutory interest was corrected to 9% for the first year after the award and 15% per annum thereafter until realization

The State was directed to deposit the enhanced amount within six months