IMPORTANT POINT
While fixing market value it should be borne in mind that the land owners are losing their source of earning whereas the beneficiaries shall be able to recover the expenses incurred.

Judgment

1. Leave granted.

2. The Appellants are aggrieved by the judgment of the Division Bench of the Madras High Court whereby market value of the acquired land fixed by the Reference Court was reduced from ` 4,000/- to ` 3,100/- per cent by applying 53% cut towards development charges.

3. The appellants land was part of 935.52 hectares acquired by the State Government for construction of an industrial complex. Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short ’the Act’) was issued on 17-7-1998 and declaration under Section 6 was issued on 29-10-1998. The Land Acquisition Officer passed two awards dated 31-8-1999 and 25-1-2000 whereby the fixed market value of the acquired land at the rate of ` 350/- per cent.

4. The Reference Court considered the oral and documentary evidence produced by the parties and held that market value of the acquired land should be ` 6,764/- per cent. The Reference Court then applied 40% cut towards development charges and held that the land owners are entitled to compensation at the rate of ` 4,000/- per cent. Paragraph 19 of order dated 31-3-2006 passed by the Reference Court which contains reasons for fixing higher market value of the acquired land reads as under:

“19. Ex.C1 shows that the sale of the land was ` 70,243/- after paying deficit under 41-A of Indian Stamp Act for an extent of 0.10 cents, but there is no proof that deficit under 41-A of Indian Stamp Act was paid by the purchaser. Therefore, as per the document, the sale of the land is ` 69,053/- for 0.10 cents in the year 1996. As per Ex.C2, the sale of the land was ` 1,35,299/- for an extent of 8729 sq. feet wherein per cent is ` 6,764/- of the year 1997. Therefore, this Court considers Ex.C2 as fit and proper document to take into consideration in fixing the market value of the land. Considering, future developments and other essential upgrading works, this Court intends to deduct 40% of the above said value and is ` 4,058.40 rounding about ` 4,000/- per cent and for the above stated reasons, the market value of the acquired lands in these petitions are fixed at market value of ` 4,000/- per cent. The claimants are also entitled for the usual benefits of 30% solatium on the compensation amount, additional amount at the rate of 12% per annum from the date of 4(1) notification till the date of award of the referring officer, or taking possession of the land whichever is earlier, 9% interest for the first year from the date of taking possession of the land and 15% of interest for every subsequent year on the amount calculated on the market value of the land till the date of deposit, and answered this point accordingly.”

5. The appeals filed by the respondents under Section 54 of the Act were partly allowed by the High Court. While recording hits agreement with the Reference Court that market value of acquired land is ` 6,764/- the High Court applied 53% cut towards development charges and declared that the appellants are entitled to compensation at the rate of ` 3,100/- per cent with other statutory benefits.

6. We have heard Shri P.S. Mishra, learned Senior Counsel appearing for the appellants and the learned Attorney General appearing for the respondents.

7. The only point which arise for consideration in these appeals is whether the High Court was justified in applying the cut of 53% in lieu of the development charges.

8. In fixing market value of the acquired land, which is undeveloped or under-developed, the Courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made for implementation of the public purpose for which the land is acquired. In Kasturiv. State of Haryana (2003) 1 SCC 354, this Court Held:

“……..It is well settled that in respect of agricultural land or undeveloped land which has potential value for housing or commercial purposes, normally 1/3rd amount of compensation has to be deducted out of the amou