Land should be acquired at market value: SC | Land Portal

Apex court says colonial era laws need be do away with

Main photo: A general view of the Supreme Court of Pakistan in Islamabad, Pakistan April 4, 2022. PHOTO: REUTERS


The Supreme Court on Saturday observed there was an urgent need for legislation to resolve land acquisition disputes for public projects as it regretted that the existing laws were colonial and confiscatory in nature and easily deprived an individual of their property and all rights attached to it.

A detailed judgment authored by Justice Ayesha Malik ruled that forcibly obtaining lands from citizens without proper compensation for a project constituted a violation of fundamental rights.

The observation came as the top court arbitrated a 33-year-old land dispute over the expansion of the Pakistan Ordnance Factories (POF) – the largest defence-industrial complex in the public sector – and ordered that the aggrieved parties be compensated for their land at the market rate.

The court directed the land acquisition collector to pay the landowners the rate as per the market value of the land and stressed that while determining compensation for land acquired, the market value of the land must be considered.

The judgement said Land Acquisition Act 1894 was a colonial law, designed to facilitate the acquisition of private land for a public purpose, adding it was enacted with the objective of building infrastructure like railway lines, roads, bridges and communication networks essential for the benefit of the rulers of the time.

Its very objective was to acquire land at the least price possible, it added.

“Despite amendments in Section 23 of the Act with the requirements to calculate market value and potential value so as to compensate the landowner, the practice remains to calculate land value based on its classification. Hence, the colonial objective and understanding of the law continues as acquisition even today, for public purpose, is at the cost of an individual’s right to own property.”

“We understand that there is no exact formula to calculate potential value, and it must be seen in the context of the acquisition being made, however, we consider the objective of granting a lesser value for the land acquired, to be against the fundamental right to life, dignity and the right to own property,” the judgement ruled.

The apex court observed that the Constitution mandated that the landowner was compensated as per the Act and Section 23 of the Act ensures that the landowner gets the best market value keeping in consideration the future prospects of the use of the land.

It explained that compensation as a basic right meant that the landowner does not lose any financial advantage that they had on account of their property rights.

To evaluate the land acquisition collector must consider the location of the land under acquisition, and its physical attributes such as accessibility, attributes related to land use, which includes residential, commercial and industrial use; the availability of utilities such as water, gas, electricity, phone connectivity and the price of land in the vicinity.

Adding to this value of the land, factors such as the potential for economic growth, urbanization, and infrastructure development, adds value to the land, the ruling explained.

Where land is acquired for one project, the potential value of the entire area being acquired is relevant as the very purpose of the acquisition suggests that the land has future prospects.

“Ideally, there should be guidelines to calculate this value, however, since the efforts of the government have been to undervalue the land, no real effort has gone into devising a scheme to calculate potential value over the years. This is why there is so much litigation on just this issue.”

Under the circumstances, there is a dire need to legislate on the issue and to devise a methodology to calculate potential value and market value so that it is neither arbitrary nor left to the whims of the collector, it stressed.

“This should be a priority for the government as acquisition cannot be at the expense of the financial loss of a landowner,” it emphasised.

“Where there is acquisition for public purpose, the Act mandates that a fair value is prescribed based on the market value and the potential value of the land and the cases of this court give sufficient guidance on calculating market value and potential value, hence, there appears to be no justification to continue with archaic concepts whilst valuing the land,” it added.

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