Valuation of Land carried out by Govt. Agencies during interse Transfer do not become binding Precedent

 

The Gujarat High Court has held that private negotiations between the government agencies for transfer of land by itself cannot determine the true market value of the land.

The Division Bench comprising of Justice Sonia Gokani and Justice Hemant Prachchhak was dealing with an appeal seeking setting aside of the Arbitral Award.

Brief Facts of the Case 

The appeal was filed by Corporation specifically constituted for execution of the work of Dedicated Freight Corridor of the Indian Railways against the award in favour of the private landowners, whose lands were acquired.

The land was acquired under Railways Act, 1989 based on rates fixed by the Railway Administration for acquiring certain state government lands for a Freight Corridor, in a nearby village. 

The rate fixed was assessed at Rs.630/- per square meters. However, the arbitrator had awarded additional amount of compensation was fixed at Rs. 325 per square meter at 15% interest from the date of award till payment. Compensation was awarded in 2010 at ₹17.13 per sq ms but the landowners approached the Arbitrator for enhancement of the same. Consequently, the interim award was passed.

The private landowners/ Claimants have averred that the market value of the land in question was assessed at Rs. 630 per sq ms by the specially constituted Committee which was accepted by the Railway Administration for acquisition of government land and therefore they were entitled to compensation basis this assessment.

The railway administration strongly opposed this prayer contending that the assessment of the market value by the committee constituted for entirely different purpose cannot be automatically adopted in the present case and in any case, there is no occasion to pass an interim award. 

Subsequently, the Arbitrator awarded additional compensation at Rs. 325 per sq ms.

The Corporation has contended that awarding solatium at 60% was not permitted and interest at the rate of 15% was not recognised statutorily.

High Court's Observation 

The Court refrred to the relevant statues and noted that Section 20F of the Railways Amendment Act provides that compensation for acquisition of land would be determined by the competent authority and any dispute regarding the same would be referred for arbitration. It added that the provision also envisaged a solatium at the rate of 60% of the market value and Sec 20G of the Act provided for the determination of market value of the land.

Dealing with the interim award of arbitrator as per the limited scope of first appeal, the Court was of the opinion that it has to inquire on was it open for the arbitrator to be influenced if not fully guided by such assessment and whether he committed a serious error in awarding interim compensation on the basis of such assessment.

The Court evaluated the report and remarked that computation of the market value arrived cannot be brushed aside but the computation requires a closer scrutiny. 

"The request of the railways is to transfer the State Government land at a lower rate as is done in the State of Rajasthan or at no cost as is done by the State of Haryana. The private negotiations between the two government agencies for transfer of the land from one Government to another Government by itself cannot determine the true market value of the land in question. Even if therefore, there is a proposal for reducing the market value of the State Government land transferred to the railway administration, that by itself, would not determine the compensation payable to the private land owners."

It added that against the market value of the land in the opinion of the town planner being Rs.627/- per square meters on the date of the report, the Committee has assessed the value of the land at Rs.630/- per square meters which is a grey area requiring closer look.

"Any such assessment cannot in absence of a binding provisions on the railway administration be the sole consideration. The parameters laid down under the statute for ascertaining the market value would have to be applied in light of the evidences that may be brought on record. One of the considerations as noted which flows from sub-section (1) of section 20G is the minimum land value specified for calculation of stamp duty for registration of sale deed which is popularly known as jantri rates. The report of the committee dated 20.10.2014 records that the Government published jantri rates ranged from Rs.61 per square meters to Rs.310/- per square meters depending on the category of land. This is very significant." 

The Court was not clear as to how the adjustment is made from the rate of Rs.630/- of the committee to additional Rs.325/- awarded by the arbitrator.

"Being interim award in nature and looking to the far reaching effect such award may have in the process of computation and awarding compensation to the claimants, we would like to trade somewhat cautiously. Eventually if the final award in any manner is lower than the interim compensation awarded by the arbitrator, serious question of recovery of the Government monies would arise. Some adjustment would therefore be necessary."

In view of the above, the Court ordered the Western Dedicated Freight Corridor Corporation of India to deposit the entire amount of compensation awarded by the Arbitrator under interim awards with 60% solatium at an interest rate of 9%. The High Court further granted liberty to the Claimants to withdraw 50% of the compensation subject to the final award of the Arbitrator while the remaining 50% was to be invested in any nationalised bank in a Fixed Deposit of one year till passing of the final award. 

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(With input from news agency language)

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