They are also entitled to interest on solatium, additional market value

Farmers whose land is acquired for a public purpose are entitled to the highest market value as compensation, the Supreme Court held on Friday.

“When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition,” said a Bench of Justices P. Sathasivam and J. Chelameswar.

Writing the judgment, Justice Sathasivam said: “It seems to be only fair that where sale deeds pertaining to different transactions are relied upon on behalf of the government, the transaction representing the highest value should be preferred to the rest unless there are strong circumstances justifying a different course.”

The Bench held that bona fide sale transactions proximate to the point of acquisition of the land “are the real basis to determine the market value.” It was not desirable to take an average of [amounts entered in] various sale deeds placed before the authority/court for fixing fair compensation. “The person entitled to the compensation awarded is also entitled to get interest on solatium and additional market value.”

In the instant case, Colonel Harindar Singh, since deceased, was the former ruler of Faridkot. In 1979, the Punjab government acquired 259 Kanals and 16 Marlas (33 acres) of his land for extension of the existing grain market at Faridkot. The total compensation it awarded including solatium at 15 per cent was Rs.4, 85,202.86. The trial court enhanced it by fixing the value of land at Rs. 1 lakh per acre. The Mehrawal Khewaji Trust, Faridkot, and others were aggrieved over a judgment of the Punjab and Haryana High Court, which refused to interfere with the trial court order. Allowing their appeals, the Supreme Court said: “The materials placed before the Land Acquisition Collector and the Reference Court show that the land is of great potential value inasmuch as the same was strategically located at a commercial hub abutting main roads and surrounded by commercial buildings…” The Reference Court erroneously determined the market price of the appellants' land by averaging the prices of all the three exemplars and thereby awarded a compensation of Rs. 1 lakh per acre.”

The Bench said the appellants made out a case for enhancement of compensation. “Accordingly, the same is fixed at Rs.1, 45,000 per acre with all other statutory benefits including interest on solatium and additional market value.”

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