AZAD GOVERNMENT OF THE STATE OF JAMMU AND KASHMIR, through Chief Secretary, Muzaffarabad vs ABDUL KAREEM

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AZAD GOVERNMENT OF THE STATE OF JAMMU AND KASHMIR, through Chief Secretary, Muzaffarabad VS ABDUL KAREEM. Ss. 4 & 23---Compensation, determination of---Factors---Commercial property, claim of---Market value of the land---Potential value of land---Scope---Acquiring agency (appellants) sought curtailment of the enhancement of the compensation made by the Reference Judge on the ground that the landowner failed to establish that the acquired land is of commercial nature, rather the same was hilly, slopy, and distant from the main road---Validity---Section 23 of the Land Acquisition Act, 1894, requires that while determining compensation for the land acquired, market value of the land must be considered and that market value means the value of similar land located in the vicinity and put to same use---Hence, the key factors for determining market value are land similarly situated and in similar use---Potential value has also to be factored where the land is put to different usage, so when a land is acquired for a public purpose, the provisions of Land Acquisition Act, 1894, require that along with the market value, potential value is also to be considered, which is important because market value per se is not a factor in the value that can be attributed based on the capacity or potentiality of the land, meaning the value based on the use it is reasonably capable of being put to in the future---Thus , the land must be valued as per its market value which is the price a willing buyer would give to a willing seller and must also include its potential value---Potential value means the value of the land based on the probability that considering its location and proximity to residential, commercial or industrial areas with amenities such as roads, water, gas, electricity, communication network and suitability, it has the potential to be developed, which will increase its value---The value of land must include the potentiality of the land because this is the value, which the landowners would benefit from if they were able to maintain their ownership over the land---For the determination of potential value, there is no mathematical formula, which is applied uniformly in every case---Each case is seen in the context of its own facts but potential value has to be factored along with the market value---The objective is to ensure that the landowner not only gets the actual value of the land at the time it is acquired but also gets the value based on any future prospects attached with the use of land---Consequently, factors such as entries in the revenue record and land classifications cannot form the basis of the compensation as it does not bring out the potential value of the land and it does not factor in future prospects of the land---The compensation cannot be solely based on past sales of similar land in the same vicinity because potentiality cannot be determined without examining future prospects---Hence, compensation is about the value of the land, being its market value plus its potential value, so as to ensure that the landowner is duly compensated---This is fundamental to the process of award of compensation---In the present case, it is an undisputed fact that the acquired land is located near Main (Srinagar) Road, with neighboring establishments such as City International School, LPG filling station, Punjab Science College and Al-Madina Super Mart---The amenities such as road, water, gas, electricity, communication network, easy approach to the Hospital as well as schools and public offices, are also available which increase the potential value of the land---After considering all said factors, the Reference Judge has justifiably enhanced the compensation---Argument put forth by the appellants( that the land is hilly, sloppy and unsuitable for commercial purposes) lacks merit, which claim is further contradicted by the fact that the land was acquired for the construction of a water tank, which would not have been feasible on a significantly hilly or sloppy terrain---The judgments concurrently recorded by the Courts below were consistent with the statutory provision as well as the principle of law---High Court committed no illegality while maintaining the judgment passed by the Reference Judge---Appeal, filed by acquiring agency, was dismissed, in circumstances.

AZAD GOVERNMENT OF THE STATE OF JAMMU AND KASHMIR, through Chief Secretary, Muzaffarabad vs ABDUL KAREEM — 2026 CLC 275 SUPREME-COURT-AZAD-KASHMIR

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