Supreme Court Decrees Land Value by Future Potential

Aug 26, 2010
“The first farmer was the first man, and all his historic nobility rests on the possession and use of land.” – Ralph Waldo Emerson, US essayist and poet (1803-1882).
The Bible says that the meek shall inherit the earth. Many make fun of this edict. American oil billionaire, J Paul Getty, for instance, says: “The meek shall inherit the earth, but not its mineral rights.” Another American, Frank McKinney Hubbard says: “It’s going to be fun to watch and see how long the meek can keep the earth after they inherit it.”    An anonymous epigram says: “The meek may inherit the earth, but they‘ll cease being meek as soon as they come into their inheritance.” Our own Kallutti Bhoota says: Indu yenna Kallutti Bhutana Sattya: untinayan buddu pope, bagginayan guddudu pope (I will bypass the one stands up to me; and hammer the one who bends before  me).
So, it is for the farmers today. Those who meekly surrender their lands, get a pittance as compensation and those  who challenge the offer, go to court or mount violent protests get a bonanza. It happens all the time. Today, thousands of farmers from western UP have descended on Delhi to gherao (lay siege) Parliament. Their demand is stringent land acquisition law to deter private players to acquire land without adequate compensation. Incidentally, the Land Acquisition Bill seeking amendment to the Land Acquisition Act of 1894 was withdrawn in 2009 after severe opposition from Trinamool Congress leader Mamata Banerji. On August 24 Rahul Gandhi secured a promise from the Prime Minister that it would be reintroduced in the next session.
Coming back to the meek, The farmers, who are invading Delhi, from 115 villages, were required to surrender their lands for Yamuna Expressway, were offered Rs 449 per square metre. This was increased to Rs 570 after their August 14 violent agitation. They are demanding Rs. 880, as paid to farmers between Agra and Noida.
Now, a little background on the subject is in order. With the advancement of industrialization over the last two centuries, the agrarian and pastoral economy has taken a back seat. In the bargain, the land of the farmers has often been snatched away from them to put it to industrial use. This has happened, and is happening, in India in the context of setting up mega projects in the steel, cement, power, mining, oil extraction and refining as also chemicals, petrochemicals and fertilizers. The latest to grab lands of the farmers are scores of special economic zones. In earlier times, lands were taken away from farmers against no or a pittance of compensation. Generally farmers were illiterate and docile and could not think of challenging the government – which was considered as pissing in the sand, with nothing to show for result.
In recent years, farmers have become aware of their rights and also learnt to fight in concert. This has resulted in progressively higher compensation over the years. Yet, the basis of determining the compensation is the value put on the land on the date it was acquired. Quite often, after the land is acquired, a project comes on the site. People seeking work in the project want build houses close to the project or businesses  are set up to cater to the project personnel. Thus, demand for land near projects increases- and so also prices. The people who sold early regret their action and beat their breasts and say “If only I had waited…”. For such people, the Supreme Court of India has a redeeming idea. As reported in The Hindu (22-8-10) by its Legal Correspondent, the court says that the land’s potential future value must be considered for compensation.
In a judgment which will benefit a large number of people whose land is acquired for public purposes, the Supreme Court has held that not only the present market value but also future potential value, and purpose for which the land is to be used must be taken into account for arriving at just compensation.
A Bench of Justices Mukundakam Sharma and Anil R Dave said: “The market value of the acquired land cannot only be its value with reference to the actual use to which it was put on the relevant date envisaged under the Land Acquisition Act, but ought to be its value with reference to the better use to which it is reasonably capable of being put in the near future.” quoting an earlier judgment, the Bench said: “he court fixing the compensation should eschew… feats of imagination but occupy the armchair of a prudent, willing, but not too anxious, purchaser but always ask the question, ‘What are the prevailing conditions and whether a willing purchaser would, as a prudent man in the normal market conditions, offer to purchase the acquired land at the rates mentioned in the sale deeds.’”
Writing the judgment Justice Sharma said that while awarding compensation to landowners, the court must be realistic, and “the potentiality of the acquired and, in so far as it relates to the use to which it is reasonably  capable of being put in the immediate or near future, must be given due consideration.”
In the instant case, for providing Adi Dravidas with house sites, the Tamil Nadu government acquired 3.90 acres at Palangudi in Tiruchi district in September 1992. The Land Acquisition Officer awarded Rs.1.72 a square foot. At the instance of appellant A. Nateshan Pillai, the reference court fixed the market value of the land at Rs.17 a square foot. On the State’s appeal, the Madras High Court fixed the value at Rs.9. The present appeal by Pillai is directed against the judgment. Allowing the appeal the Bench said: “It cannot be disputed that the acquired land, being in the heart of the city and having excellent prospects of being used a residential site, definitely has an edge regarding potential value…The present acquired land has all the potentiality to be used as building sites, even in the immediate future, as it is located at a place in and around which building activity has already started. The acquired land is abutting the main road and is also surrounded by schools, panchayat union office, shops and residential buildings on all three sides.”
The Bench held that the appellant would be entitled to compensation at the rate of Rs.11 a square foot, “which we consider just and fair. Needless to say, the State shall also be liable to pay additional compensation and solatium on the amount enhanced and fixed in terms of this order, including payment of interest in terms of the rate of interest awarded by the reference court.”
This judgment introduces an innovative and highly rational element in deciding compensation against the current method based on 1894 law. Checking with conditions nearer home, in Dakshina Kannada, the initial lot of acquisition of land for the expansion of Bajpe airport and MRPL was done at the rate of Rs. 250 per cent. Today similar acquisition in the area is done at the rate of Rs. 80,000 to 100,000 per cent. The future potential method decreed by the Supreme Court is eminently rational and determinable by feeding data to the computer on the various factors like road-front and distance from the city dumping yard. It has lot of common sense. When we buy a calf, we think about the cow it will grow into and give milk. When we buy a plant from the nursery, we think about its future potential for fruits or flowers. It is to be hoped that the proposed amendment to the Land Acquisition Law will be recast on the basis of the Supreme Court’s innovative and common sense decree.
John B. Monteiro, author and journalist, is editor of his website (Interactive Cerebral Challenger).
By John B. Monteiro
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Comment on this article

  • Ashok Bhat, Mangalore

    Thu, Aug 26 2010

    It is excellent article, thanks to Mr.Monterio. I hope that Farmers like Mr.Gegerory Patro has now protection from Supreme Court. Agri land should not be allowed to convert Industrial purpose. I am representing 9 poor senior citizens appeal with KIADB and MRPL. These people houses are buldozed without giving compensation.

    The poor people like Mr.Subraya Achari, Mrs.Timmu,does not any money for daily expenses. In Kuthethoor Village S.No.175/2 these had houses. Govt has given Hakku Patra of the land. KIADB/MRAPL says that on the basis of Hakku compensation can not be given. Then what is value of Hakku Patra. I am expecting answer from any authority. Representing this case I have met KIDAB,MRPL, DC, Dr.S.R.Nayak,President of Karnataka Human right, district Incharge minister and raised this in two Jana Samparka Sabhe.

    Even today myself and Mr.Jayaram Siriyan Met MRPL MD Mr.BASU, GM- Ravindran and Mr.Laxminarayan. They assured that justice will be given to poor, senior citizes. In 1992 land is acqistion has done and till today it hanging. I am having complete document in this respect. On 31.08.2006, Udayavani published article "operation Buldozre" written by Dr.Ravindranath Shangogue, human right activist. All the displaced person taken loan from Karnatak Housing Board to construct House and they are sending notices to these poeple...! Where from these people can pay ? If any one want to helps in this please contact me - 9845700815.

  • Deepak Shenoy, Kirem Bahrain

    Thu, Aug 26 2010

    Thank you Mr.Monteiro...thats very useful information. Back home also land aquisition is taking place for widening roads/SEZ etc. and this a timely article to enlighten people.

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