ROLE OF COLLECTOR/ LAO
Key Components of Compensation under
Land Acquisition Act, 1894:
- Market Value of the Land (Section 23(1) Firstly):
- This was the main component. The Collector determined
the market value as on the date of the preliminary notification (Section
4 notification).
- Basis for Market Value: Primarily based on:
- Sale instances of comparable
lands in the vicinity around the date of notification.
- Opinions of experts.
- Yield method (for
agricultural land).
- Supreme Court's role: The Court consistently emphasized that market value
should be the "fair market value" and not just the minimum.
They often looked at the "potentiality" of the land, meaning
its future development possibilities, even if it was agricultural land at
the time of acquisition. However, significant deductions for development
costs (often 30-50%) were common in urbanizable areas, assuming the
acquirer would undertake development. This was a point of contention and
often led to lower awards.
- Solatium (Section 23(2)):
- An additional amount for the compulsory nature of the
acquisition.
- Initially, it was 15% of the market value. However,
with the 1984 amendment, it was increased to 30% of the market
value. This was a significant enhancement, influenced by judicial
pronouncements on the inadequacy of compensation.
- Supreme Court's Importance: The Supreme Court affirmed the mandatory nature of
solatium, considering it an integral part of fair compensation for the
landowner's involuntary parting with their land.
- Additional Amount / Interest (Section 23(1A)):
- Inserted by the 1984 amendment. An amount calculated
at the rate of 12% per annum on the market value for the period
commencing from the date of publication of the Section 4 notification
till the date of the award or taking possession, whichever is earlier.
This was intended to compensate for the delay between the initial
notification and the award.
- Interest on Enhanced Compensation (Section 28 &
34):
- If the court enhanced the compensation on reference
(Section 18), interest was payable on the enhanced amount.
- Section 34:
Interest at 9% per annum for the first year from taking possession, and
15% per annum for any period beyond one year, if compensation wasn't paid
or deposited.
- Supreme Court's role: There was considerable litigation and Supreme Court
rulings on whether solatium and additional amount also attracted
interest. The general trend was to allow interest on the total amount,
including solatium and additional market value, to ensure complete
recompense.
- Rehabilitation and Resettlement (R&R) Benefits:
- None
as a statutory right under the LAA, 1894. Any R&R provided was
largely through ex-gratia schemes or administrative policies of
the acquiring body/government, which varied widely and were not
enforceable rights. This was a major lacuna of the old Act.
- Supreme Court's view: While the LAA, 1894, did not have statutory R&R,
the Supreme Court, in later years, started emphasizing the need for some
form of rehabilitation, especially for vulnerable sections, through
administrative directions or by interpreting "public purpose"
broadly to include consideration for displaced persons. However, this was
not a consistent statutory right.
Calculation Formula (Simplified
under LAA, 1894, post-1984 amendment):
Total Compensation = Market Value of
Land + Solatium (30% of Market Value) + Additional Amount (12% interest on
Market Value) + Value of Structures/Trees (if any) + Interest on enhanced
compensation (if awarded by court).
Example with the same scenario under
LAA, 1894:
Scenario (Same as before):
- Land Area:
2 acres (8094 sq. meters approx.)
- Location:
Rural area (but no multiplier factor applied under 1894 Act based on
rural/urban).
- Date of Section 4 Notification: January 1, 2023 (equivalent to SIA notification for
market value determination)
- Date of Collector's Award: January 1, 2025 (2 years later)
Data Gathering & Application of
(Limited) Supreme Court Principles:
- Determining Market Value:
- Under the 1894 Act, the Collector would primarily rely
on comparable sale instances around January 1, 2023.
- Let's assume the market value determined by the
Collector is ₹500 per sq. meter (as the Act didn't have the
"highest of the two" clause or multipliers based on
rural/urban).
- The Supreme Court's influence would primarily be on
ensuring that the comparable sales were genuinely reflective and that
potentiality was considered, even if deductions for development were
applied. For simplicity, we stick to ₹500/sq. meter.
- Market Value of Land: 8094 sq. meters * ₹500/sq. meter = ₹40,47,000
- Value of Assets Attached:
- Well and trees assessed at: ₹1,00,000. (This
component was generally similar).
Calculation:
- A. Market Value of Land: ₹40,47,000
- B. Value of Assets:
₹1,00,000
- C. Sub-total (A+B):
₹40,47,000 + ₹1,00,000 = ₹41,47,000
- D. Solatium (30% of Market Value, i.e., of A): ₹40,47,000 * 30% = ₹12,14,100
- E. Additional Amount (12% per annum on Market Value (A)
for 2 years):
- 12% of ₹40,47,000 = ₹4,85,640 per year
- For 2 years = ₹4,85,640 * 2 = ₹9,71,280
- F. Total Monetary Compensation (C + D + E): ₹41,47,000 + ₹12,14,100 + ₹9,71,280 = ₹63,32,380
G. Rehabilitation and Resettlement
(R&R) Benefits:
- None
as a statutory right. The family might receive some ex-gratia
payment or assistance if the acquiring body had a specific policy, but it
wasn't guaranteed by the Act.
Comparison and Key Differences:
|
Feature |
LARR Act, 2013 (New) |
LAA, 1894 (Old) |
|
Market Value Basis |
Higher of Stamp Duty Value,
Average Sale Price (last 3 yrs, 50% deeds), or Consented Value. Multiplier
for rural areas (1.0-2.0). |
Primarily Sale Instances. No
statutory multiplier. Deductions for development common. |
|
Multiplier Factor |
Yes (1.0-2.0 for rural, 1.0 for
urban) |
No |
|
Solatium Rate |
100% of the total compensation
(market value + assets + multiplier) |
30% of the market value (post-1984
amendment). |
|
Additional Amount |
12% on market value from SIA
notification to Award/Possession |
12% on market value from Section 4
notification to Award/Possession (post-1984 amendment). |
|
R&R Benefits |
Statutory right (housing,
livelihood, subsistence, etc.) |
No statutory right; largely discretionary
ex-gratia payments or policy-based. |
|
Transparency |
SIA, public hearings, R&R
plans, consent requirements |
Limited transparency, no mandatory
SIA or public hearings. |
|
Total Monetary Compensation in
Example |
₹1,37,33,168 |
₹63,32,380 |
Export to Sheets
Supreme Court's Influence on LAA,
1894:
Even under the LAA, 1894, the
Supreme Court, through a series of judgments, tried to make the compensation
more "just" within the confines of the Act:
- Potentiality:
Consistently held that the market value must include the
"potentiality" of the land, i.e., its future use and development
possibilities.
- True Market Value:
Emphasized that the market value should be the "true" market
value, often directing higher compensation than initially awarded by the
Collector if the evidence suggested undervaluation.
- Interest on Solatium:
After much debate, the Supreme Court clarified that interest was indeed
payable on the solatium component, ensuring that the full compensation
attracted interest for delays.
- Severance Damages, etc.: Upheld other claims like damages for severance,
injurious affection, etc., as provided under Section 23(1) of the Act.
Despite these judicial
interpretations, the inherent limitations of the LAA, 1894, particularly the
absence of statutory R&R and the lower solatium rate, made it inadequate
for truly fair compensation, which ultimately led to its repeal and replacement
by the LARR Act, 2013. The new Act fundamentally changed the landscape of land
acquisition by making R&R a statutory right and significantly enhancing
monetary compensation
ROLE OF THE COURT (CIVIL COURT) UNDER LAA, 1894
The "Court" under the LAA,
1894, played a crucial role in adjudicating disputes arising from the
Collector's award. It had the power to enhance compensation and resolve title/apportionment
disputes.
1.
Reference under Section 18 of LAA, 1894 (Objection to Award)
- When it arises:
Section 18 allowed any "person interested" who had not
accepted the Collector's award (often by receiving it "under
protest") to apply to the Collector to refer the matter to the Court.
The objections could be regarding:
- Measurement of the land.
- The amount of compensation.
- The persons to whom it was payable.
- The apportionment of the compensation.
- Court's Function:
The Court would then re-evaluate the compensation based on the evidence
presented by the landowner and the acquiring body. It was a de novo
(fresh) determination, not merely a review of the Collector's decision.
How the Court Calculated/Determined
Compensation on a Section 18 Reference:
The Court's primary objective was to
determine the "true market value" as on the date of the Section 4
notification and ensure fair compensation as per Section 23 of the LAA, 1894.
- Re-determination of Market Value (Section 23(1)
Firstly): This was the most frequent and
significant ground for enhancement. The Court would consider:
- Comparable Sale Instances: Landowners would present sale deeds of similar lands
in the vicinity that were sold around the date of the Section 4
notification, which were typically for higher values than what the
Collector had considered. The Court would meticulously analyze these
"sale exemplars" for their genuineness, proximity, size,
development potential, and comparability.
- Potentiality of the Land: The Supreme Court consistently held that the market
value should include the "potentiality" or "future
development prospects" of the land. Even if agricultural, if it was
situated near a developing urban area or a main road, its potential for
commercial or residential use would be factored in. This was a key area
where courts often enhanced compensation.
- Expert Evidence: Reports from government-approved valuers or other
expert witnesses would be considered.
- Deductions for Development: It was common practice for courts to apply deductions
for development costs (e.g., 30% to 50%) when valuing large tracts of
undeveloped land based on sales of small developed plots. This was to
account for the costs of roads, drainage, public amenities, etc., that
the acquiring authority would incur. The Supreme Court often refined how
these deductions should be applied to prevent arbitrary reduction of
compensation.
- Other Methods:
In the absence of direct sale exemplars, the Court could resort to other
methods like the yield method (for agricultural land) or the belting
method (valuing land in belts away from a main road).
- Supreme Court's Directives: The Courts were heavily guided by Supreme Court
judgments which emphasized:
- Highest Bona Fide Exemplar: The highest bona fide sale
exemplar was often considered as the benchmark, with suitable
adjustments.
- No Speculative Valuation: While potentiality was
considered, the valuation could not be purely speculative.
- Rejection of Basic Value
Register: The Supreme Court clarified
that stamp duty ready reckoner values (like the "Basic Value
Register") were for fiscal purposes and could not be the sole basis
for market value determination under the LAA, 1894.
- Damages (Section 23(1) Secondly to Sixthly): The Court would also assess and award damages for:
- Standing crops and trees: If the Collector undervalued or omitted these.
- Severance:
Damage sustained by the landowner by reason of severing the acquired land
from his other land.
- Injurious Affection: Damage caused to the landowner's other property by
reason of the acquisition or the use of the acquired land.
- Forced Change of Residence/Business: Reasonable expenses incurred due to a change of
residence or place of business.
- Loss of Earnings: Loss of profits or earnings during the interval
between notification and taking possession.
- Solatium (Section 23(2)): Once the "market value" (as re-determined by
the Court) and any other damages under Section 23(1) were finalized, the
Court would mandatorily add 30% solatium on this total. If the
basic compensation was enhanced, solatium automatically increased.
- Additional Amount / Interest (Section 23(1A)): The Court would re-calculate this at 12% per annum
on the enhanced market value from the date of the Section 4
notification until the date of the award or possession, whichever was
earlier.
- Interest on Enhanced Compensation (Section 28): This was a crucial aspect. If the Court enhanced the
compensation over the Collector's award, it would also award interest on
this enhanced amount.
- Rate: 9% per annum for the first year from
taking possession.
- Rate: 15% per annum for any period beyond one
year from taking possession, if the enhanced compensation wasn't paid.
- Supreme Court's Stance: The Supreme Court consistently clarified that this
interest was payable on the entire enhanced amount, including the
enhanced solatium and additional amount, to ensure full recompense for
the period the landowner was deprived of their property and the full
compensation.
Example of Court's Calculation
(Enhancement Scenario under LAA, 1894):
Let's use the same scenario and
assume the Collector's award was low.
- Collector's Award (as per previous LAA, 1894
calculation example):
- Market Value: ₹40,47,000 (based on ₹500/sq.m.)
- Value of Assets: ₹1,00,000
- Solatium (30% on MV): ₹12,14,100
- Additional Amount (12% on MV for 2 yrs): ₹9,71,280
- Total Monetary Compensation by Collector: ₹63,32,380
Now, the landowner seeks reference
to the Court under Section 18. They present strong evidence (recent sale deeds)
that comparable lands in the vicinity were genuinely selling for ₹650 per
sq. meter around the Section 4 notification date, and argue that the
Collector undervalued the land.
Court's Re-calculation:
- Re-determined Market Value (by Court): The Court, convinced by the evidence, determines the
market value should be ₹650 per sq. meter.
- Market Value of Land: 8094 sq. meters * ₹650/sq. meter
= ₹52,61,100
- Value of Assets:
Remains the same (₹1,00,000), as there was no dispute on this.
Court's Enhanced Compensation
Calculation:
- A. Market Value of Land: ₹52,61,100
- B. Value of Assets:
₹1,00,000
- C. Sub-total (A+B):
₹52,61,100 + ₹1,00,000 = ₹53,61,100
- D. Solatium (30% of Market Value, i.e., of A): ₹52,61,100 * 30% = ₹15,78,330
- E. Additional Amount (12% per annum on new
Market Value (A) for 2 years):
- 12% of ₹52,61,100 = ₹6,31,332 per year
- For 2 years = ₹6,31,332 * 2 = ₹12,62,664
- F. Total Monetary Compensation awarded by Court (C + D
+ E): ₹53,61,100 + ₹15,78,330 +
₹12,62,664 = ₹82,02,094
G. Interest on Enhanced Compensation
(Section 28): The Collector's award was
₹63,32,380. The Court enhanced it to ₹82,02,094. Enhanced Amount = ₹82,02,094 -
₹63,32,380 = ₹18,69,714 Interest would be payable on this ₹18,69,714
from the date of taking possession until payment, at 9% for the first year and
15% thereafter (as per Section 28 and 34).
Result: The Court has enhanced the compensation from ₹63,32,380
(Collector's Award) to ₹82,02,094, plus interest on the enhanced amount.
No Statutory R&R: Crucially, even the Court under the LAA, 1894, could not
award statutory R&R benefits because the Act did not provide for them.
Any R&R would remain ex-gratia or policy-based outside the scope of
the Act.
2.
Reference under Section 30 of LAA, 1894 (Dispute as to Apportionment or Title)
- When it arises:
Section 30 of the LAA, 1894, allowed the Collector to refer a matter to
the Court if there was a dispute regarding:
- The apportionment of the compensation amount
among various interested persons.
- The persons to whom the compensation (or any
part thereof) was payable (i.e., a title dispute).
- Court's Function:
The Court's role here was purely to determine the rights of the claimants
to the already fixed compensation amount. It would not re-determine or
enhance the total compensation amount. Its jurisdiction was limited to
deciding who gets what share of the money.
How the Court Calculated/Determined
on a Section 30 Reference:
- Adjudication of Title: The Court would examine all evidence related to
ownership, inheritance, purchase, or any other claim to title. This often
involved complex legal questions and the application of property law,
family law, etc.
- Apportionment:
Based on its determination of title, the Court would apportion the already
determined total compensation amount among the rightful claimants
according to their respective shares or interests.
- Depositing Compensation: Until the dispute was resolved, the Collector would
deposit the compensation amount in the Court, and the Court would hold it
pending its decision.
Example of Court's Calculation
(Apportionment Scenario under LAA, 1894):
Assume the Collector has awarded
₹63,32,380 for a piece of land. A dispute arises between two brothers (X and Y)
and their deceased sister's children (Z) over their shares in the compensation.
The Collector refers the matter under Section 30.
Court's Process:
- The Court will not change the ₹63,32,380 amount.
- It will hear all parties (X, Y, and Z). They will
present their claims, family tree, succession documents, or any other
relevant evidence.
- The Court will apply the relevant personal law (e.g.,
Hindu Succession Act, Muslim Personal Law) to determine the legal heirs
and their respective shares.
- Based on its findings, the Court will pass an order for
apportionment. For instance, if it finds X and Y have 1/3 share each, and
Z (representing their mother's share) has 1/3 share:
- Brother X: 1/3 of ₹63,32,380 = ₹21,10,793 (approx)
- Brother Y: 1/3 of ₹63,32,380 = ₹21,10,793 (approx)
- Children of Sister Z: 1/3 of ₹63,32,380 = ₹21,10,794
(approx)
Key Supreme Court Judgments
reflected:
- Market Value Principles: The numerous Supreme Court judgments on "market
value" under Section 23(1) of the LAA, 1894, heavily influenced how
Courts dealt with Section 18 references. Cases like Special Land
Acquisition Officer v. M.K. Rafiq Saheb, Mehrawal Khewaji Trust v.
State of Punjab, and Land Acquisition Officer v. Jasti Rohini
provided guidelines on comparable sales, potentiality, and deductions.
- Mandatory Solatium and Interest: The Supreme Court consistently upheld the mandatory
nature of solatium and the payment of interest on the enhanced
compensation (including solatium and additional amount) under Sections
23(2), 23(1A), 28, and 34.
- Scope of Reference:
The Supreme Court clarified that the Court's jurisdiction under Section 18
was limited to the objections raised in the reference application. It
couldn't widen the scope beyond what was referred by the Collector.
However, it had full power to redetermine the market value.
