Madhya Pradesh Road Development Corporation vs Vincent Daniel and Others

Held: The computation in the award passed by the Commissioner directing payment of compensation on the basis of the circle rate is upheld – In order to determine the compensation, the market value of the land must first be computed u/s.26, 2013 Act – In the present case, Cl.(b) of s.26(1) would have no application as there are no exemplars in the vicinity to draw a comparison and arrive at the average sale price in terms of Explanations 1 and 2 to s.26(1) – Further, as this acquisition does not involve private companies or public-private partnerships, cl.(c) of s.26(1) would also not apply – Therefore, the highest value would be the one determined under cl.(a), i.e., the market value specified under the Stamp Act – In the present case, this value would be the circle rate fixed for the year 2014-2015 under the Collector’s Guidelines framed under the Stamp Act – The Commissioner applied the Collector’s Guidelines by using the rate provided for non-converted agricultural land – The Commissioner further supplemented this amount by accounting for the assets attached to the land and adding the solatium payable – Compensation was calculated in accordance with the mandate of the 2013 Act – Thus, no reduction in the amount can be granted by applying the theory of deduction – It has been left to the Collector’s discretion to make adjustments to the market value determined through s.26(1), if deemed necessary in the opinion of the Collector – However, in the facts of the present case, there was no such formation of opinion by the Competent Authority or the Commissioner – Appellant-Corporation cannot complain about the circle rate fixed by the State Government – Argument of the appellant, that this circle rate is not the baseline or floor rate, and is too high not accepted – Concerned authorities should fix circle rates scientifically and in accordance with the law – It is their responsibility to ensure that circle rates are neither inflated nor disproportionately low – When the citizens are required to pay stamp duty on the notified circle rate, the public authorities, including state development corporations acquiring land from private individuals, must adhere to the same – If the circle rate is inflated or does not reflect the true market value, it is incumbent upon the State Government to take corrective steps – State Government or the development corporation under the State Government cannot complain that they have been compelled to acquire land at the circle rate fixed by the State – Appeals filed by the appellant are dismissed – Arbitration and Conciliation Act, 1996. [Paras 40-43] Circle Rates – Importance – Proper fixation of circle rates, advisory to State Governments:

Held: Fixing fair and accurate circle rates has a direct impact on each citizen – An inflated rate results in an unfair financial burden on purchasers – Conversely, an undervalued rate leads to inadequate stamp duty collection, adversely affecting the State’s revenue – Circle rates which reflect the market price ensure proper revenue collection for the State by preventing under-valuation of properties – Circle rates, when determined while accounting for factors that cause variations in the market price of land, can facilitate predictability in transactions and curtail litigation – The standardized circle rates should be fixed at the floor or baseline price, as it would be grossly unfair to ask the public to pay stamp duty on over-valued circle rates – It is advisable that the circle rates be fixed by expert committees, which not only have officers from the government but also other specialists who understand the market conditions – Methodically and scientifically fixed circle rates can contribute to strengthening the economy and boosting tax collections – While serving the interests of honest taxpayers, accurate circle rates would simultaneously deter non-compliant taxpayers by preventing under-valuation – Rational and fair circle rates reflect and are a prerequisite for good governance – Given the financial implications of fixation of circle rates on each member of the society, the data and details for computation of circle rates should be made public – Income Tax Act, 1961. [Paras 35, 37, 38] Land Acquisition Act, 1894 – Theory of deduction – Purpose: Held: The theory of deduction, though not statutorily prescribed, has been applied by courts to compute the compensation payable under the Acquisition Act, 1894 primarily for two reasons – First, consideration of the potential value of the land can result in arriving at an enhanced or increased value, especially for undeveloped lands – Secondly, in acquisitions of large underdeveloped lands, a significant portion of the land would have to be utilised for making minimum amenities like roads, drains, sewers, water and electrical lines available – Thus, making the land usable would involve a substantial expense for the buyer in the form of development charges. [Para 6]

Words and Phrases – The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – ss.23(b), 26(1), 27, 31 – “which in his (Collector’s) opinion should be allowed for the land” in s.23(b); “criteria”:

Held: s.27 relates to the determination of the amount of compensation – The Collector having determined the market value of the land u/s.26 has to calculate the amount of compensation to be paid to the land owner, as mandated in terms of s.23 – While s.26(1) uses the word “criteria” for computing the highest value under Clauses (a) to (c), and mandates that the exercise is undertaken applying the four Explanations, the final determination vests with the Collector u/s.27 – This is also evident from the language of s.26(1) as well as s.23(b), which use the expression “which in his (Collector’s) opinion should be allowed for the land”. [Para 31] The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – s.26(1) (a)-(c) – Market value u/s.26(1):

Held: The values computed in terms of Clauses (a), (b) and (c) of s.26(1) are not to be averaged – The highest of the values as determined by Clauses (a), (b) and (c), is to be treated as the market value u/s.26(1). [Para 21]

Words and Phrases – The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – Four Explanations to s.26(1), explained – Market value u/s.26(1) – Discretion while computing – Explanation 4 – “and” to be read as “or” – Interpretation – “Theory of deduction”; “Principle of belting”, discussed. [Paras 14, 19, 21-29]