Matters to be Considered in Determining the Quantum of Compensation

Matters to be considered in determining the quantum of compensation Article 13(2) of the Federal Constitution mentions that the ‘compensation’ has to be ‘adequate’. Under Section 12(1) of Land Acquisition Act 1960, the land administrator is needed to make complete enquiry into the assessment of the land obtained in order to ensure the quantum of the compensation accurately and justly for both parties. As per Pemungut Hasil Tanah, Daerah Barat Daya (Balik Pulau), Pulau Pinang v Kam Gin Paik[1], the obligation to enquiry lies on the Land Administrator as per stated under Section 12. The duty is breached if he intentionally disregards resources pertinent to the evaluation and the sum of compensation. The compensation evaluation is more in the character of an objective nature apart from a typically subjective approach. The text book ‘Compulsory Acquisition and Compensation’ states that the fundamental theory of the law of compensation is that the amount awarded must be able to restore the claimant in the equivalent financial situation as if his land is not compulsorily acquired by the State Authority. Even in the case DK Basu v State of West Bengal[2], the judge said that monetary or pecuniary compensation is a suitable and certainly an efficient and proper remedy in protecting the proprietors’ interest and sufferings. In the measurement of compensation, the importances have to be on the compensatory and not on penalizing aspect. The evaluation of compensation to be rewarded is made by liaising on the Principles involving on the Determination of Compensation in the First Schedule[3]. There are 3 principles for ensuring the sum of compensation to be rewarded; the market value of the land must be determined, matters to be considered in determining compensation, matters to be neglected in determining compensation and limitation on award. In further, Section 2 of the First Schedule to the Land Acquisition Act 1960 lists 6 elements which are put into consideration while compensation is ensured. Those elements are; market value, increase in value of other land of the person from whom land is acquired, damage caused by severance from any other land of the person from whom the land is acquired, injurious affection, incidental expenses incurred as a result of change of residence or place of business, and accommodation works. In measuring compensation, the acquiring authority may have look upon any raise in value of land the owner keeps that is neighboring to or bordering the land obtained by state authority. This is commonly called as “betterment”. Betterment is in result the contradictory of injurious affection. There may be possibilities where the method of the acquiring authority may boost the worth of owner’s retained land. In an intense case the landlord will get no compensation because the improvement in worth of the retained land is equivalent to or bigger than the damages for the land obtained. The slightest compensation land owner can obtain is nil. In no situations can the state authority anticipate the land owner to pay them. In this case, by right the nearby lands would get increase in the value because of the development made by government which is coming of the highway. But at the same time, it is depends on the type of the adjacent land whether it will get effected because of the development made or will it benefitted from that. For instance, if it is a residential area, then the land value will get increased. But since, Great Developer’s land is on agriculture, hence, the value of the land will decrease. Thus the betterment factor effects opposite to them. Land administrator has to consider this element in assessment of the compensation. Severance happens when the harm continues when the Land Administrator is taking control of the land on the ground of separating that particular land from the another land[4]. Paragraph 2(c) First Schedule LAAmentions that adequate compensation has to be given in situation where only particular part of land being acquired. For example the damage happens because of the size or shape of left over land makes it difficult to be developed or the remaining land turn out to be unattractive for investment because of the utilization of land obtained would be place after the land acquisition. This makes the diminution in the value of the left over land occurs by the disadvantage of the obtained severed part. In Great Developer’s case, the land was for agriculture use and the division of that particular agriculture land may cause harm to the remaining land in continue providing effective production. This is because highway construction consists of hard building works which may to disturb the land fertility and structure. Injurious affection is where the acquisition injuriously disturbing the possessions of individual involved. Let’s say the land acquisition is to construct building on a residential area, whichever that reduces the value such as the obstruction of view and sound pollution also seemed to be injurious affection. It is taken into consideration to calculate the compensation on the production and profits which would decline and ultimately becomes devaluation. The similar consequence will happen as abovementioned where the construction works brings more air pollution as well as the makes the surrounding temperature get higher. The agriculture work on the land beside may get harmed because of these effects. Incidental expenses incurred as a result of change of residence or place of business because of the land acquisition, and the rational costs linked to such adjustments are claimable[5]. Those costs includes such as transport, temporary loss of business, agent fees, fees for legal agreements and commercial costs to restart the business. When an owner is compelled to shift his residence or his business as an effect of the compulsory acquisition, he is permitted for compensation for his removal expenditures. In this case, the Great Developer may have to shift his one part of agriculture setting to another place which will carry some cost for the settlement at new place. So, for this, compensation is claimable after considering the reasonableness. Accommodation works are for the building of infrastructure, drains, walls, fences of other amenities, as long the responsibility is obvious and enforceable. This is carried out to decrease the compensation for severance, injurious affection or interruption. If the state authority in this case builds any additional facilities, then the compensation amount may be reduced for the accommodation provided to Great Developer for their adjacent land. In short, the land owners must be no bad off in economical terms subsequent to the acquisition than they were prior to that. Similarly they must not be any well off.

[1] [1983] 2 MLJ 390 [2] [1997] AIR 1997 [3] Land Acquisition Act 1960 [4] Raymond and Sunitha, “Compulsory Land Acquisition in Malaysia, Compensation and Disputes’, < > accessed on 4th August 2014 [5] Anuar Alias, Peng and Noor, “Land Acquisitions Problems in China – Adopting LAA 1960 of Malaysia as An Alternative Procedure”, < > accessed on 2nd August 2014

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