Land Acquisition under the NH Act 1956

Land acquisition means

Land acquisition is the process by which government forcibly acquires private property for public purpose without the consent of the unwilling land owner by providing compensation.

What is meant by market value?

Market value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller, after proper marketing and where the parties had each acted prudently and with proper information, but without any coercion or undue influence.

Market value & compensation under the NH Act

In fixation of market value and compensation for land acquisition under the National Highways Act, 1956 ( NH Act), the First Schedule of the Right to Fair Compensation in Land Acquisition, Rehabilitation and Resettlement Act 2013 (2013 Act) and its relevant sections are squarely applicable since 1-1-2015, based on a notification under Section 105 (3) of the 2013 Act.

Therefore, the land acquisition under the NH Act is being done as provided in the First Schedule and the relevant Sections such as 26, 29 and 30 of the 2013 Act.

Competent authority will decide compensation

In the case of N H Act, the Competent Authority under Section 3 G of the NH Act will determine the market value & compensation, as prescribed under the 2013 Act, for acquiring land for national highways.

The Competent Authority will publish the particulars of the land being acquired in the news papers and require all person interested in to appear in person, or by agent or by an advocate to state their claims and the nature of their interest.

The date of determination of Market Value is the date on which the notification under Section 3 A of the NH Act is published.

Aggrieved persons can make a claim before the Arbitrator

In case the amount determined by the Competent Authority is not acceptable to either of the parties, the party can make an application to the Arbitrator under Section 3 G (5) of the NH Act. The Collector, functioning as the Arbitrator under the act, will decide the amount.

In case of any dispute regarding apportionment of amount among the parties, it will be referred to the Principal Civil Court, for a decision, under Section 3 H (4) of the NH Act.

Components of compensation under the NH Act

Compensation for land owners include the following items: –

The market value of land, to be determined as provided under Section 26 of the 2013 Act
Factor by which the market value is to be multiplied. In urban areas, it is one and in rural areas, it is 1 to 2 depending on the distance from the urban area.
Value of assets to be determined as provided under Section 30 of the 2013 Act
Solatium is equivalent to 100 per cent of the market value of the multiplied by the Factor, specified against Serial Number 2 for rural areas, and Serial Number 3 for urban areas, provided under the Fist Schedule of the 2013 Act.

Calculation of compensation for land owners

In short, the final award of compensation is arrived at by first determine the Market Value of the land, then multiply it with the Multiplication Factor for the rural or urban area, then add the value of assets attached to the land, and then add the solatium of 100 per cent.

Calculation of Compensation: A Model
No	Items	Amount
1	Basic Market Value	40 lakh
2	Multiply with Multiplication Factor (1.25) = 40 x 1.25	50 lakh
3	Calculation of Assets	5 lakh
4	Solatium (100 per cent)	50 lakh
5	Calculate Amount of Interest	4 lakh
Total Compensation		114 lakh

Calculating market value under Section 26

The method of determination of market value of a land for acquisition provided under Section 26 of the 2013 Act, and the award of additional market value for structures under Section 30(3) of the 2013 Act, as discussed in the appeal in State of Kerala v V. J. Mathew S/o Varkey Joseph [2024 3 KHC 413].

The court found that the Referencing Authority erred by selectively using sale deeds to calculate average sale prices and emphasized that all relevant deeds within three years should be considered unless excluded for not reflecting true market value.

The court remanded the cases for reconsideration of land value determination while affirming the 12% additional market value for structures.

Determining market value u/s 26 of 2013 Act

The authorised officer shall decide the market value after considering the market value specified in the Stamp Act for registration of sale deed and average sale price for similar type of land in the nearest village or vicinity.

If there are multiple sale deeds, some indicating a standard average price, and other deeds showing substantial differences, opinion can be arrived at by the Collector to exclude such deeds showing substantial difference from consideration on the question of average sale price.

In the light of the principles of average sale price, if numerous deeds are present, it is an easy job for the authorised officer to exclude such deeds if there is substantial difference with average sale price in all other deeds.

The authorised officer must provide reasons for exclusion of such deeds and will have to reckon the value of the land shown in all other comparable deeds to discount such deeds from consideration. This is merely an enabling power to be exercised cautiously and carefully.

The average sale price referred to in clause 26 (b) of the 2013 Act shall be determined considering the sale deeds or the agreements to sell registered for similar type of area in the near village or near vicinity area during immediately preceding three years of the year in which such acquisition of land is proposed to be made.

Sale deed beyond three years can also be considered

The High Court says that the provision of considering three years is advantageous for claimants. If the authorised officer is allowed to rely upon any sale deeds beyond three years, in normal course it may adversely affect the claimant as the presumption is that the market value escalates every year.

As the act is a beneficial provision, it has to be construed as a provision not to restrict any advantage if available to the claimant based on a deed prior to three years, but not to adversely affect a claimant by placing reliance on a deed beyond three years.

If the provision is understood as above, there is no harm in placing reliance on a deed beyond three years if it is beneficial to the claimant. The Legislature, in fact, intended to adopt any criteria which is higher and beneficial to the claimant. Therefore, there is no embargo under the law in placing reliance on a deed beyond three years provided it is beneficial to the claimant.

The authorised officer can exclude any sale deed with reasoning

The authorised officer has the authority to exclude any sale deed if he is of the opinion that it is not indicative of actual prevailing market value. The fancy price normally does not reflect the market value.

The market value is determined by the factors of various market forces. It is primarily determined by the interplay of demand and supply between willing buyers and willing sellers. If there is a huge difference in market value among the sale deeds which is comparable from others, the Collector will have to find out whether it is indicative of the actual prevailing value or not.

Market price will be multiplied by Multiplication Factor

Then, the market value will be multiplied by the Multiplication Factor specified under Serial numbers 2 or 1 (for rural & urban areas) in the First Schedule of the 2013 Act.

The factor for the urban area is 1 whereas for the rural area it is a graded one ranging from 1 to 2 depending on the distance from the urban area.

Kerala State has fixed 1.2 as Multiplication Factor ( MF) up to 10 Kilometre, 1.4 up to 20 KM, 1,6 up to 30 KM, 1.8 up to 40 KM, and 2 for above 40 KM distance from the urban border.

Compensation for assets attached to the land

Then, the authorised officer will calculate the amount of compensation to be paid for all the assets attached to the land under Section 27 of the 2013 Act.

The services of a competent engineer or any other specialist will be used for the purpose, as provided under Section 29 of the 2013 Act.

Other parameters the authorised officer should consider

The damage sustained by reason of severing such land from other land
The damage sustained by the person on account of the acquisition injuriously affecting his other properties
The reasonable expenses for the person for changing his residence or business
The reduction of profits of the land between the Collector’s publication of declaration and taking possession of the land
And any other ground which may be beneficial to the affected family

Claimant would get 100 per cent solatium

The claimants would also be entitled for a solatium amount of 100 per cent of the compensation amount, determined by the authorised officer, under Section 30 of the 2013 Act.

Twelve per cent interest will also be allowed

In addition to the market value of the land provided under Section 26, the authorised officer shall, in every case, award an amount calculated at the rate of twelve per cent. per annum on such market value for the period commencing on and from the date of the publication of the notification in respect of such land, till the date of the award of the Collector or the date of taking possession of the land, whichever is earlier, under Section 30 (3) of the 2013 Act.

The amount would be payable as a stand-alone component and shall not be counted for the purpose of Multiplication Factor and the Solatium.

Purchase of land through Consent of Landowners

Land for NH projects can be procured through direct purchase with the consent of the land owners in accordance with the existing laws or policies of the concerned state governments.

But it should be done on the condition that the total amount of compensation so worked out will be no more than what is payable when the land is acquired under the NH Act, 1956, which is in conformity with compensation payable in accordance with the provisions of 2013 Act.

Dispute Resolution under NH Act

If the amount determined by the Competent Authority is not acceptable to the parties, the party aggrieved by the determination shall make an application to the Competent Authority to make a Reference to the Arbitrator.

Then, the Arbitrator (The Collector) will determine the amount based on the Reference. The arbitration will be governed by the provisions of the Arbitration and Conciliation Act, 1996.

In case of any dispute regarding apportionment of the amount, the Competent Authority shall refer the dispute to the decision of the Principle Civil Court, under Section 3 H (4) of the N H Act.

References

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