After a government notification is issued for acquiring Mr. Mehta’s farmland under the Land Acquisition Act, 1894, he notices that the income from his crops steadily decreases until the authorities finally take possession. He approaches the court claiming compensation for this reduction in profits. According to the Act, what type of loss is compensable in such a case?
Explanation & Strategy
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Under the Land Acquisition Act, Section 23(2) provides that the court shall award a solatium of 30% on the market value and also consider 'bona fide diminution of profits' during the acquisition process as a factor for additional compensation. Loss due to market fluctuation, cancelled tenancies, or third-party employment loss are not compensable under the Act.