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“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1743 OF 2006

Chandrashekar (D) by LRs. and Others …. Appellants

Versus

Land Acquisition Officer and Another …. Respondents

With

CIVIL APPEAL NOS. 8899-8901  OF 2011

Basappa (D) & by LRs. and Others …. Appellants

Versus

Special Land Acquisition Officer,  Gulbarga and Another etc. etc. …. Respondents

J U D G M E N T

JAGDISH SINGH KHEHAR, J.

1. Through this common order, we propose to dispose of Civil Appeal no.1743 of  

2006, as also, Civil Appeal nos.8899-8901 of 2011.  For convenience, the factual  

position, as has been depicted in Civil Appeal no.1743 of 2006, has been referred to.

2. Gulbarga Development Authority, consequent upon its desire to acquire land for  

raising a residential layout, issued a preliminary notification under section 15(1) of  

the City Improvement Trust Board Act, 1976 on 13.5.1982.  Through the aforesaid  

notification, it was proposed to acquire 144 acres of land falling in the revenue estate  

of villages Rajapur (71 acres) and Badepur (73 acres).  The matter in respect of the

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acquisition of land crystallized, when the final notification was issued on 14.12.1989.  

Thereby the land of the appellants, measuring 8 acres 4 guntas, situated in survey  

no.63 of the revenue estate of village Badepur, came to be acquired.  Insofar as Civil  

Appeal nos.8899-8901 of 2011 is concerned, the appellants’ land measuring 7 acres 7  

guntas,  falling  in  survey  no.14/2,  in  the  revenue  estate  of  village  Rajapur,  was  

acquired.

3. The  Land  Acquisition  Officer  announced  his  award  on  7.7.1990.   By  the  

aforesaid award, the market value of the land, falling in the revenue estate of village  

Badepur, was fixed at the rate of Rs.4,100/- per acre.  For the land falling in the  

revenue estate of village Rajapur, the Land Acquisition Officer, assessed the market  

value at Rs.13,500/- per acre.  The landowner, Chandrashekar (whose LRs. are the  

appellants  in Civil  Appeal no.1743 of 2006) filed Writ  Petition nos.15489-496 of  

1990 to assail  the acquisition proceedings initiated by the Gulbarga Development  

Authority, by finding fault with the procedure adopted.  The High Court of Karnataka  

(hereinafter referred to as the High Court), while issuing notice, passed an interim  

order staying dispossession for a period of 3 weeks.  By a motion bench order dated  

10.8.1990, the interim order passed on 23.7.1990 was continued, “till further orders”.  

Writ  Petition  nos.  15489-496 of  1990 came to  be  dismissed  on 12.8.1991.   The  

notification for acquisition of land as also the procedure adopted was held to be in  

consonance with law.

4. During the pendency of the writ petition referred to in the foregoing paragraph,  

the original landowner Chandrashekar, filed a protest petition assailing the quantum  

of compensation assessed by the Land Acquisition Officer.  In the aforesaid protest

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petition  dated  24.9.1990,  reference  was  also  sought,  for  enhancement  of  

compensation  awarded  to  the  appellant.   Since  the  protest  petition  filed  by  the  

landowner was not referred for adjudication, the landowner filed an application under  

section 18(3)(b) of the Land Acquisition Act, 1894.  The aforesaid application was  

allowed, and the claim raised by the landowner was registered for adjudication.

5. After adjudicating upon the matter, the Reference Court announced its award on  

19.6.1999.  The  compensation  determined  by  the  Land  Acquisition  Collector  at  

Rs.4,100/-  per  acre,  was  enhanced  to  Rs.1,46,000/-  per  acre.   The  Gulbarga  

Development Authority, as also, the Land Acquisition Officer preferred independent  

appeals before the High Court.  By an order dated 3.11.1999, the High Court allowed  

the appeals, and remitted the matter to the Reference Court for reconsideration, on the  

issue  of  deductions  to  be  made  from  the  market  value,  so  as  to  determine  

compensation  payable  to  the  land losers.   In  this  behalf,  it  would be  relevant  to  

mention,  that  while  determining  the  compensation  payable  to  the  appellant,  the  

Reference Court had based its assessment on a sale deed dated 30.12.1983.  From the  

market value of land assessed, on the basis of the aforesaid sale deed, the Reference  

Court had applied a deduction of 33 percent.  The High Court having concluded, that  

the  aforesaid  deduction  was  inappropriate,  had  remanded  the  matter  for  re-

determination.  It is the case of the appellants before this Court, that the only issue,  

which the Reference Court was called upon to settle, after the High Court by its order  

dated 3.11.1999 had remitted the matter to the Reference Court was, the percentage  

of  deductions  to  be  made  from the  market  value  determined on the  basis  of  the  

exemplar sale transaction, so as to determine the fair compensation payable to the  

landowners for acquisition of their land.

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6. By its  order dated 21.12.2002,  the Reference Court  re-determined the market  

value  of  the  acquired  land  at  Rs.1,45,000/-  per  acre.  This  determination  by  the  

Reference Court  was again assailed before  the  High Court.   Whilst  the Gulbarga  

Development Authority  and the Land Acquisition Officer filed appeals before the  

High  Court  for  reducing  the  quantum of  compensation  awarded,  the  landowners  

preferred  cross-objections  for  enhancement  thereof.   The  appeals  filed  by  the  

Gulbarga  Development  Authority  and  the  Land  Acquisition  Officer  were  partly  

allowed,  inasmuch as,  the  High Court  reduced the  compensation awarded by the  

Reference Court from Rs.1,45,000/- per acre to Rs.65,000/- per acre.  The instant  

order passed by the High Court dated 2.4.2004 has been assailed before this Court  

through Civil Appeal no. 1743 of 2006, as also, through the connected Civil Appeal  

nos. 8899-8901 of 2011.   

7. It would be relevant to mention, that while determining the controversy, the High  

Court was satisfied in deducting 55 percent of the market value assessed on the basis  

of the exemplar sale deed, towards developmental charges, 5 percent towards waiting  

period, and 10 percent towards de-escalation.  By virtue of the aforesaid deductions,  

the  High Court  determined the  market  value of  the  land at  Rs.67,954/-  per  acre.  

Having  done  so,  by  applying  the  rule  of  averages,  the  High  Court  held,  that  

compensation for the acquired land was payable at Rs.65,000/- per acre.

8. During the course of hearing, learned counsel for the appellants in both set of  

appeals contended, that the deduction of 55 percent towards developmental charges,  

was arbitrary, and without application of mind.  It was sought to be asserted, that the  

High  Court  did  not  record  any  reason(s)  for  applying  the  aforesaid  deduction.

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Likewise, it was contended, that deduction of 10 percent by way of de-escalation was  

also arbitrary.  In this behalf, it was sought to be contended, that the Reference Court  

had determined 3 percent as deduction on account of de-escalation, whereas, the High  

Court  had enhanced the aforesaid deduction to 10 percent,  without recording any  

reason(s).

9. For the determination of market value of the acquired land, it is apparent that  

primary reliance has been placed by the appellants, on the exemplar sale deed dated  

30.12.1983 (Exhibit P-18, before the Reference Court).  It would also be relevant to  

mention, that through the aforesaid sale deed, land measuring 2400 square feet (40’ x  

60’) falling in survey no.63/1, of the revenue estate of Badepur village, was sold for a  

total  consideration of Rs.12,500/-.   It  would also be relevant to mention, that the  

Reference Court on the basis of the aforesaid exemplar sale deed, assessed the value  

of the land at Rs.5.20 per square foot.  Having applied a deduction of 33 percent  

towards  developmental  charges,  the  Reference  Court  had  arrived  at  the  figure  of  

Rs.3.47 per square foot. At the aforesaid rate, the value of the acquired land was  

assessed at Rs.1,51,153.20 per acre.  The Reference Court also allowed de-escalation  

at the rate of 3 percent per annum, as the exemplar sale deed was executed after the  

issuance of the preliminary notification.  Consequent upon the aforesaid deduction,  

the Reference Court arrived at the figure of Rs.1,44,552.20 per acre, as compensation  

payable  for  the  acquired  land.   The  said  determination  was  rounded  of  to  

Rs.1,45,000/- per acre.   

10. According to the appellants before this Court, the determination rendered by the  

Reference  Court,  was  in  consonance  with  the  law laid  down by  this  Court,  and

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accordingly, the compensation determined by the Reference Court, should be restored  

to the land losers.

11. The issue which falls for our consideration in the present appeal falls in a narrow  

compass.  As already noticed hereinabove, through the impugned notifications, the  

Gulbarga Development Authority had sought acquisition of 144 acres of land, falling  

in the revenue estates of villages Rajapur (71 acres) and Badepur (73 acres).   As  

compared to the acquired land, the exemplar sale deed dated 30.12.1983 reflects sale  

of a small piece of land measuring 2400 square feet (40’ x 60’ = 2400 square feet).  

The aforesaid sale transaction (dated 29.12.1983) was executed 1 year 7 months and  

17 days after the date of the preliminary notification (dated 13.5.1982).   

12. Insofar as the nature of the acquired land of the appellant measuring 8 acres 4  

guntas,  in  survey  no.63  of  the  revenue  estate  of  village  Badepur  is  concerned,  

reference  may  be  made  to  the  statement  recorded  by  the  landowner  before  the  

Reference Court.  Chandrashekar recorded his statement before the Reference Court  

on 16.2.1998.  In his statement he asserted, that the acquired land was wet land and  

was being cultivated by him by taking water from a well situated in survey no.62.  It  

was acknowledged, that the well situated in survey no.62 belonged to his uncle.  In  

his cross-examination, he accepted that he used to grow “jawar” and “togri” in the  

land.   He  also  affirmed  that  vegetables  were  also  grown by  him on  the  land in  

question. He produced 8 bills pertaining to sale of crops grown on the land. In the  

pleadings  filed  before  this  Court,  it  was  sought  to  be  asserted,  that  the  Sedam  

Gulbarga Highway is located on the northern side of the acquired land.  It is also  

mentioned, that a ring road exists on the southern side of the acquired land.  It is also

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pointed out, that there are some approved residential layouts, in the close vicinity of  

the acquired land.  Based on the statement of the land loser, it is natural to infer, that  

the  appellants’  land was  undeveloped  agricultural  land at  time  of  its  acquisition.  

Furthermore, the appellants land did not have any independent irrigation facilities.  

Since it  is not the case of the appellants,  that any layout or road abuts  or passes   

through the appellants’ land, it is natural to conclude, that the appellants’ land was  

surrounded on all sides, by similar lands.   

13. During the course of hearing, learned counsel for the appellants did not invite our  

attention to any evidence on the basis of which we could ascertain the nature of the  

land,  which  was  the  subject  matter  of  the  sale  dated  30.12.1983.   From  the  

dimensions of land (40’ x 60’), it emerges that the same was a developed site meant  

for use for some urban purpose.  The High Court has recorded, that the exemplar sale  

is of a developed site.  The said factual position is not a subject matter of challenge at  

the hands of the appellants.  We shall therefore assume, that the exemplar sale deed  

was in respect of a developed site measuring 2400 square feet.   

14. From the afore-stated deliberations, the following inferences emerge:

Firstly, that the acquired land is a large chunk of land measuring 144 acres.

Secondly, the acquired land owned by the appellants was un-irrigated agricultural  

land,  surrounded  on  all  sides  by  similar  lands,  and  as  such,  unquestionably  

undeveloped land.  

Thirdly, the exemplar sale deed dated 30.12.1983, was in respect of a small piece of  

land measuring 2400 square feet (40’ x 60’ = 2400 square feet).   

Fourthly, the exemplar sale deed dated 30.12.1983, constituted sale of a developed

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site.

And fifthly, the exemplar sale deed dated 30.12.1983, was executed 1 year 7 months  

and 17 days, after the publication of the preliminary notification on 13.5.1982.   

15. The  present  controversy  calls  for  our  determination  on  the  quantum  of  the  

deductions to be applied, to the market value assessed on the basis of the exemplar  

sale transaction, so as to ascertain the fair compensation payable to the land loser.  

The only factual parameters to be kept in mind are, the factual inferences drawn in  

the  foregoing  paragraph.   On  the  issue  in  hand,  we  shall  endeavor  to  draw our  

conclusions from past precedent.  In the process of consideration hereinafter, we have  

referred to all the judgments relied upon by the learned counsel for the appellants, as  

well as, some recent judgments on the issue concerned:   

(i) In Brigadier Sahib Singh Kalha & Ors. v. Amritsar Improvement Trust & Ors.,  

(1982) 1 SCC 419, this Court opined, that where a large area of undeveloped land is  

acquired, provision has to be made for providing minimum amenities of town-life.  

Accordingly it was held, that a deduction of 20 percent of the total acquired land  

should be made for land over which infrastructure has to be raised (space for roads  

etc.).  Apart from the aforesaid, it was also held, that the cost of raising infrastructure  

itself (like roads, electricity, water, underground drainage, etc.) need also to be taken  

into consideration.  To cover the cost component, for raising infrastructure, the Court  

held, that the deduction to be applied would range between 20 percent to 33 percent.  

Commutatively viewed, it was held, that deductions would range between 40 and 53  

percent.                                        

(ii)  Noticing  the  determination  rendered  by  this  Court  in  Brigadier  Sahib  Singh  

Kalha’s  case  (supra),  this  Court  in  Administrator  General  of  West  Bengal  vs.

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Collector, Varanasi, (1988) 2 SCC 150, upheld deduction of 40 percent (from the  

acquired land) as had been applied by the High Court.  

(iii) In Chimanlal Hargovinddas vs. Special Land Acquisition Officer, Poona & Anr.,  

(1988)  3  SCC 751,  while  referring  to  the  factors  which  ought  to  be  taken  into  

consideration while determining the market value of acquired land, it was observed,  

that a smaller plot was within the reach of many, whereas for a larger block of land  

there was implicit disadvantages.  As a matter of illustration it was mentioned, that a  

large block of land would first have to be developed by preparing its lay out plan.  

Thereafter,  it  would  require  carving  out  roads,  leaving  open  spaces,  plotting  out  

smaller plots, waiting for purchasers (during which the invested money would remain  

blocked).  Likewise, it was pointed out, that there would be other known hazards of  

an entrepreneur. Based on the aforesaid likely disadvantages it was held, that these  

factors  could  be  discounted  by  making  deductions  by  way  of  allowance  at  an  

appropriate rate, ranging from 20 percent to 50 percent.  These deductions, according  

to  the  Court,  would  account  for  land  required  to  be  set  apart  for  developmental  

activities.  It was also sought to be clarified, that the applied deduction would depend  

on,  whether  the  acquired  land  was  rural  or  urban,  whether  building  activity  was  

picking up or  was stagnant,  whether  the  waiting  period  during  which  the  capital  

would remain locked would be short or long; and other like entrepreneurial hazards.

(iv)  In  Land  Acquisition  Officer  Revenue  Divisional  Officer,  Chottor  vs.  L.  

Kamalamma (Smt.) Dead by LRs. & Ors., (1998) 2 SCC 385, this Court arrived at the  

conclusion, that a deduction of 40 percent as developmental cost from the market  

value determined by the Reference Court would be just and proper for ascertaining  

the compensation payable to the landowner.

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(v) In Kasturi and others vs. State of Haryana, (2003) 1 SCC 354, this court opined,  

that in respect of agricultural land or undeveloped land which has potential value for  

housing or commercial purposes, normally 1/3rd amount of compensation should be  

deducted,  depending  upon  the  location,  extent  of  expenditure  involved  for  

development, the area required for roads and other civic amenities etc.  It was also  

opined, that appropriate deductions could be made for making plots for residential  

and commercial purposes.  It was sought to be explained, that the acquired land may  

be plain or uneven, the soil of the acquired land may be soft and hard, the acquired  

land may have a hillock or may be low lying or may have deep ditches. Accordingly,  

it was pointed out, that expenses involved for development would vary keeping in  

mind the facts and circumstances of each case. In Kasturi’s case (supra) it was held,   

that normal deductions on account of development would be 1/3rd of the amount of  

compensation. It was however clarified that in some cases the deduction could be  

more than 1/3rd and in other cases even less than 1/3rd.

(vi) Following the decision rendered by this Court in Brigadier Sahib Singh Kalha’s  

case,  this  Court  in  Land  Acquisition  Officer,  Kammarapally  Village,  Nizamabad  

District, A.P. vs. Nookala Rajamallu & Ors., (2003) 12 SCC 334, applied a deduction  

of 53 percent, to determine the compensation payable to the landowners.   

(vii)In  V.  Hanumantha  Reddy  (Dead)  by  LRs.  vs.  Land  Acquisition  Officer  &  

Mandal  R.  Officer,  (2003)  12  SCC  642,  this  Court  examined  the  propriety  of  

compensation  determined  as  payable  to  the  land  loser  by  the  High  Court.   The  

Reference Court had determined the market value of developed land at Rs.78 per sq.  

yard.  The Reference Court then applied a deduction of 1/4th to arrive at Rs.58 per sq.  

yard  as  the  compensation  payable.   The  High  Court  however  concluded,  that

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compensation  at  Rs.30  per  sq.  yard  would  be  appropriate  (this  would  mean  a  

deduction of approximately 37 percent, as against market value of developed land at  

Rs.78 per sq. yard).  This Court having made a reference to Kasturi’s case (supra) did  

not  find  any  infirmity  in  the  order  passed  by  the  High  Court.   In  other  words,  

deduction of 37 percent was approved by this Court.   

(viii) In para 21 of the judgment in Viluben Jhalejar Contractor (Dead) by LRs. vs.  

State of Gujarat, (2005) 4 SCC 789, it was held that for development, i.e., preparation  

of lay out plans, carving out roads, leaving open spaces, plotting out smaller plots,  

waiting  for  purchasers,  and  on  account  of  other  hazards  of  an  entrepreneur,  the  

deduction could range between 20 percent and 50 percent of the total market price of  

the exemplar land.   

(ix) In Atma Singh (Dead) through LRs & Ors. vs. State of Haryana and Anr., (2008)  

2 SCC 568, this Court after making a reference to a number of decisions on the point,   

and after taking into consideration the fact that the exemplar sale transaction was of a  

smaller piece of land concluded, that deductions of 20 percent onwards, depending on  

the facts and circumstances of each case could be made.   

(x) In Lal Chand vs. Union of India & Anr., (2009) 15 SCC 769, it was held that to  

determine the market value of a large tract of undeveloped agricultural land (with  

potential for development), with reference to sale price of  small developed plot(s),  

deductions varying between 20 percent to 75 percent of the price of such developed  

plot(s) could be made.

(xi) In Subh Ram & Ors. vs. State of Haryana & Anr., (2010) 1 SCC 444, this Court   

opined,  that  in  cases  where  the  valuation  of  a  large  area  of  agricultural  or  

undeveloped land was to be determined on the basis  of the sale price of  a small  

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developed plot, standard deductions ought to be 1/3rd towards infrastructure space  

(areas to be left out for roads etc.) and 1/3rd towards infrastructural developmental  

costs (costs for raising infrastructure), i.e., in all 2/3rd (or 67 percent).

(xii) In Andhra Pradesh Housing Board vs. K. Manohar Reddy & Ors., (2010) 12  

SCC 707, having examined the existing case law on the point it was concluded, that  

deductions on account of development could vary between 20 percent to 75 percent.  

In the peculiar facts of the case a deduction of 1/3rd towards development charges  

was made from the awarded amount to determine the compensation payable.

(xiii) In Special Land Acquisition Officer & Anr. vs. M.K. Rafiq Sahib, (2011) 7  

SCC 714, this Court after having concluded, that the land which was subject matter of  

acquisition was not agricultural  land for all  practical purposes and no agricultural  

activities  could  be  carried  out  on  it,  concluded  that  in  order  to  determine  fair  

compensation, based on a sale transaction of a small piece of developed land (though  

the acquired land was a large chunk), the deduction made by the High Court at 50  

percent, ought to be increased to 60 percent.

16. Based on the precedents on the issue referred to above it is seen, that as the legal  

proposition on the point crystallized, this Court divided the quantum of deductions (to  

be made from the market value determined on the basis of the developed exemplar  

transaction)  on  account  of  development  into  two  components.  Firstly,  space/area  

which would have to be left out, for providing indispensable amenities like formation  

of  roads  and  adjoining  pavements,  laying  of  sewers  and  rain/flood  water  drains,  

overhead water tanks and water lines, water and effluent treatment plants, electricity  

sub-stations, electricity lines and street lights, telecommunication towers etc.  Besides  

the  aforesaid,  land has  also to  be  kept  apart  for  parks,  gardens  and playgrounds.

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Additionally,  development  includes  provision  of  civic  amenities  like  educational  

institutions, dispensaries and hospitals, police stations, petrol pumps etc.  This “first  

component”,  may  conveniently  be  referred  to  as  deductions  for  keeping  aside  

area/space for providing developmental infrastructure.   

Secondly, deduction has to be made for the expenditure/expense which is likely to be  

incurred in providing and raising the infrastructure and civic amenities referred to  

above,  including  costs  for  levelling  hillocks  and  filling  up  low  lying  lands  and  

ditches,  plotting  out  smaller  plots  and  the  like.  This  “second  component”  may  

conveniently be referred to as deductions for developmental expenditure/expense.   

17. It is essential to earmark appropriate deductions, out of the market value of an  

exemplar land, for each of the two components referred to above.  This would be the  

first step towards balancing the differential factors.  This would pave the way for  

determining the market value of the undeveloped acquired land on the basis of market  

value of the developed exemplar land.  As far back as in 1982, this Court in Brigadier  

Sahib Singh Kalha’s case (supra) held, that the permissible deduction could be upto  

53 percent.  This deduction was divided by the Court into two components. For the  

“first component” referred to in the foregoing paragraph, it was held that a deduction  

of 20 percent should be made.  For the “second component”, it was held that the  

deduction could range between 20 to 33 percent.   It  is  therefore  apparent,  that  a  

deduction of upto 53 percent was the norm laid down by the Court as far back as in  

1982.  The aforesaid norm remained unchanged for a long duration of time, even  

though, keeping in mind the peculiar facts and circumstances emerging from case to  

case,  different  deductions  were  applied  by  this  Court  to  balance  the  differential  

factors between the exemplar land and the acquired land.  Recently however,  this

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Court has approved a higher component of deduction. In 2009 in Lal Chand’s case  

(supra) and in 2010 in Andhra Pradesh Housing Board’s case (supra), it has been  

held, that while applying the sale consideration of a small piece of developed land, to  

determine the market value of a large tract of undeveloped acquired land, deductions  

between 20 to 75 percent could be made.  But in 2009 in Subh Ram’s case (supra),   

this Court restricted deductions on account of the “first component” of development,  

as also, on account of the “second component” of development to 33-1/3 percent  

each.   The  aforesaid  deductions  would  roughly  amount  to  67  percent  of  the  

component of the sale consideration of the exemplar sale transaction(s).

18. Having given our thoughtful consideration to the analysis of the legal position  

referred  to  in  the  foregoing two paragraphs,  we are  of  the  view that  there  is  no  

discrepancy on the issue, in the recent judgments of this Court.  In our view, for the  

“first component” under the head of “development”, deduction of 33-1/3 percent can  

be made.  Likewise, for the “second component” under the head of “development” a  

further  deduction  of  33-1/3  percent  can  additionally  be  made.   The  facts  and  

circumstances of each case would determine the actual component of deduction, for  

each  of  the  two  components.  Yet  under  the  head  of  “development”,  the  applied  

deduction  should  not  exceed  67  percent.   That  should  be  treated  as  the  upper  

benchmark.  This would mean, that even if deduction under one or the other of the  

two  components  exceeds  33-1/3  percent,  the  two  components  under  the  head  of  

“development” put together, should not exceed the upper benchmark.

19. In  Lal  Chand’s  case  (supra)  and  in  Andhra  Pradesh  Housing  Board’s  case  

(supra), this Court expressed the upper limit of permissible deductions as 75 percent.

15

Deductions upto 67 percent can be made under the head of “development”.  Under  

what  head  then,  would  the  remaining  component  of  deductions  fall?   Further  

deductions  would  obviously  pertain  to  considerations  other  than  the  head  of  

“development”.  Illustratively a deduction could be made keeping in mind the waiting  

period  required  to  raise  infrastructure,  as  also,  the  waiting  period  for  sale  of  

developed plots and or built-up areas.  This nature of deduction may be placed under  

the  head “waiting  period”.  Illustratively  again,  deductions  could  also  be  made  in  

cases where the exemplar sale transaction, is of a date subsequent to the publication  

of the preliminary notification.  This nature of deduction may be placed under the  

head  “de-escalation”.   Likewise,  deductions  may  be  made  for  a  variety  of  other  

causes which may arise in different cases.  It is however necessary for us to conclude,   

in  the  backdrop  of  the  precedents  on  the  issue,  that  all  deductions  should  not  

cumulatively exceed the upper benchmark of 75 percent.  A deduction beyond 75  

percent would give the impression of being lopsided, or contextually unreal, since the  

land loser would seemingly get paid for only 25 percent of his land.  This impression  

is unjustified, because deductions are made out of the market value of developed  

land, whereas, the acquired land is undeveloped (or not fully developed).  Differences  

between  the  nature  of  the  exemplar  land  and  the  acquired  land,  it  should  be  

remembered,  is  the reason/cause for  applying deductions.   Another  aspect of  this  

matter must also be kept in mind.  Market value based on an exemplar sale, from  

which a deduction in excess of 75 percent has to be made, would not be a relevant  

sale transaction to be taken into consideration, for determining the compensation of  

the acquired land. In such a situation the exemplar land and the acquired land would  

be uncomparable, and therefore, there would be no question of applying the market

16

value of one (exemplar sale) to determine the compensation payable for the other  

(acquired land).  It  however needs to be clarified,  that even though on account of  

developmental  activities  (under  the  head  “development”),  we  have  specified  the  

upper benchmark of 67 percent, it would seem, that for the remaining deduction(s),  

the  permissible  range  would  be  upto  8  percent.  That  however  is  not  the  correct  

position.  The range of deductions, other than under the head “development”, would  

depend on the facts and circumstances of each case.  Such deductions, may even  

exceed 8 percent, but that would be so only, where deductions for developmental  

activities (under the head “development”) is less than 67 percent, i.e., as long as the  

cumulative deductions do not cross the upper benchmark of 75 percent.  We therefore  

hold, that the range for deductions, for issues other than developmental costs, would  

depend on the facts and circumstances of each case, they may be 8 percent, or even  

the double thereof, or even further more, as long as, cumulatively all deductions put  

together do not exceed the upper benchmark of 75 percent.   

20. Before applying deductions for ascertaining the market value of the undeveloped  

acquired land, it would be necessary to classify the nature of the exemplar land, as  

also,  the  acquired land.   This  would  constitute  the  second step in  the  process  of  

determination of the correct quantum of deductions. The lands under reference may  

be  totally  undeveloped,  partially  developed,  substantially  developed  or  fully  

developed.   In  arriving at  an appropriate  classification  of  the  nature  of  the  lands  

which are to be compared, reference may be made to the developmental activities  

referred  to  by  us  in  connection  with  the  “first  component”,  as  also,  the  “second  

component” (in paragraph 17 above).  The presence (or absence) of one or more of  

the components of development, would lead to an appropriate classification of the

17

exemplar land, and the acquired land.  Comparison of the classifications thus arrived,  

would depict the difference in terms of development, between the exemplar land and  

the acquired land.  This exercise would lead to the final step.  In the final step, the  

absence  and  presence  of  developmental  components,  based  on  such  comparison,  

would constitute the  basis  for  arriving at  an appropriate  percentage of  deduction,  

necessary  to  balance  the  differential  factors  between  the  exemplar  land  and  the  

acquired land.

21. We shall now apply the aforesaid parameters to determine the veracity of the  

deductions allowed by the High Court.  First and foremost, it has been the contention  

of the learned counsel for the appellants, that despite strenuous efforts having been  

made at the hands of the appellants, the respondents failed to divulge the expenses  

incurred towards developmental costs on the acquired land in question.  Insofar as the  

instant aspect of the matter is concerned, it is relevant to notice, that the appellant  

submitted  an  application  dated  4.11.1999  to  the  Commissioner,  Gulbarga  

Development Authority, requiring him to furnish to the appellant, interalia, certified  

copies of expenditure incurred in developing survey no.63 of the revenue estate of  

Badepur.  The appellant had specially sought, the expenditure incurred in developing  

8  acres  4  guntas  of  the  land,  acquired  from  the  appellant.   The  aforesaid  

communication  was  responded  to  vide  a  letter  dated  16.12.1999,  whereby,  the  

Commissioner, Gulbarga Development Authority declined to furnish the certificate  

sought by the appellant.  Based on the said denial at the hands of the respondents, it is  

sought to be inferred, that no developmental expenses came to be incurred on the  

acquired land.  As such, it was the vehement contention of the learned counsel for the  

appellants, that it was impermissible for the High Court to have made the deduction

18

of 55 percent from the market value determined on the basis of the exemplar sale  

deed  dated  30.12.1983  under  the  head  of  “development”.   In  fact,  based  on  the  

aforesaid inference, it was contended, that no deduction whatsoever was permissible  

under the head.  Alternatively it  was contended,  that  the deduction of 33 percent  

applied  by  the  Reference  Court,  would  have  been  appropriate  in  the  facts  and  

circumstances of the case.

22. We have given our thoughtful consideration to the contention advanced at the  

hands of the learned counsel for the appellants, as has been noticed in the foregoing  

paragraph.  The material sought by the appellant from the Commissioner, Gulbarga  

Development  Authority  was  irrelevant  for  the  determination  of  the  percentage  of  

deduction to be applied.  It is the overall developmental cost, incurred (or incurrable)  

on the entire acquired land which has to be apportioned amongst the landholders.  

Illustratively, in a given case, the developmental cost on a small piece of land, may be  

far  in  excess  of  the  cost  of  the  land.  That  would  however  not  mean,  that  the   

landowner in question, would not be entitled to compensation.  Illustratively again, if  

no  specific  developmental  activity  is  carried out  on a  particular  piece of  land,  it  

would be improper to conclude, that no deduction should be made while determining  

the  compensation payable to  such landowner,  even though the acquired land was  

undeveloped.  What the appellant ought to have ascertained, is the developmental  

cost (based on the components referred to hereinabove), on the entire acquired land.  

In such a situation, if the entire developmental activity had been completed, it would  

be permissible to proportionately apportion the same amongst land holders.  Such a  

situation may not arise in actuality. In most cases development is a continuous and  

ongoing process, which would be completed over a long stretch of time extending in

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some cases to a decade or even more.  We therefore find no merit in the instant   

contention advanced by the  learned counsel  for  the  appellants,  that  no  deduction  

should be made in this case under the head of “development” because no expense is  

shown  to  have  been  incurred  for  development  of  the  land  acquired  from  the  

appellants.   

23. In the absence of the actual expenditure incurred towards development, we shall  

now endeavor to determine whether the deduction of 55 percent  allowed by the High  

Court towards development of the land, out of the market value determined on the  

basis of the exemplar sale deed, was just and proper.  The determination in question,  

more  often  than  not,  has  to  be  in  the  absence  of  inputs  as  were  sought  by  the  

appellants  from the  Commissioner,  Gulbarga  Development  Authority.  Obviously,  

deductions can only be based on reasonable and logical norms. Comparison of the  

state of development of the exemplar land, as also, that of the acquired land can be   

the only legitimate basis,  for a reasonable and logical  determination on the issue.  

Based on the aforesaid foundation, an assessment has to be made by applying the  

parameters delineated above.   From the inferences drawn by us, on the basis of the  

statement  made  by  the  landowner  before  the  Reference  Court  in  paragraph  12  

hereinabove, it is natural to conclude, that the acquired land in question was totally  

undeveloped.  Likewise, even though the High Court had described the exemplar sale  

transaction as a developed site, the appellants have not disputed the same.  We shall  

therefore  proceed  on  the  assumption,  that  the  exemplar  sale  deed  was  a  fully  

developed site.  In such a situation, keeping in mind the parameters laid down by this  

Court, and the conclusions drawn by us, as also the facts of this case, a deduction of  

upto  67  percent  may  have  been  justified,  and  the  same  would  fall  within  the

20

parameters laid down by this Court because the exemplar land could be classified as  

fully developed, whereas, the acquired land was totally undeveloped land.  As against  

the aforesaid, the High Court limited deductions under the head of “development” to  

55  percent.   We  therefore  find  no  justifiable  reason  to  interfere  with  the  same,  

specially in an appeal preferred by the land loser, more so, because no justifiable  

basis for the same was brought to our notice.

24. The High Court while determining the compensation payable to the appellants on  

the basis of the sale deed dated 30.12.1983 applied a further deduction of 10 percent  

under  the  head of  “de-escalation”.   The contention advanced at  the  hands of  the  

learned  counsel  for  the  appellants  was,  that  the  Reference  Court  had  awarded  a  

deduction at the rate of 3 percent per annum, but the same was arbitrarily increased to  

10 percent by the High Court, without recording any reasons for the same.  It was  

submitted, that deduction at the rate of 10 percent on account of de-escalation was  

arbitrary, and was liable to be set aside.

25. Insofar as the contention advanced at the hands of the learned counsel for the  

appellants on the issue of deduction under the head of “de-escalation” is concerned,  

reference may be made to the decision rendered by this Court in Delhi Development  

Authority  Vs.  Bali  Ram Sharma,  (2004) 6 SCC 533,  wherein this  Court  found it  

appropriate to allow annual escalation, at the rate of 10 per cent, in order to determine  

the  market  value  of  the  acquired  land.   In  ONGC  Limited  Vs.  Rameshbhai  

Jeewanbhai Patel, (2008) 14 SCC 748, this Court held, that provision of 7.5 percent  

per annum towards escalation of land costs, was appropriate to arrive at the market  

value of the acquired land.   In  Valliyammal & Anr.  Vs.  Special  Tehsildar (Land

21

Acquisition) & Anr., (2011) 8 SCC 91, this Court was of the view that 10 percent per  

annum escalation in price, should be added to the specified price to determine the  

market value.  It is therefore apparent, that escalation in the market value has been  

determined by this Court at percentages ranging between 7.5 percent per annum to 10  

percent per annum.  Even though escalation of market price of land is a question of  

fact, which should ordinarily to be proved through cogent evidence. Yet, keeping in  

mind ground realities, and taking judicial notice thereof, we are of the view that land  

prices are on the rise throughout the country.  The outskirts of Gulbarga town are  

certainly not an exception to the rule.  The exemplar sale deed dated 30.12.1983 was  

executed exactly 1 year 7 months and 17 days after the publication of the preliminary  

notification on 13.5.1982.  Keeping in mind the judgments referred to hereinabove,  

we are of the view, that no fault can be found with the determination rendered by the  

High Court in making a deduction of 10 percent under the head of “de-escalation”,  

specially when the period in question exceeded one year (as for annual deductions),  

by 7 months and 17 days.   

26. The only other deduction allowed by the High Court was made towards “waiting  

period”.  Under this head the High Court allowed a deduction of 5 percent. During  

the course of hearing, learned counsel for the appellants did not assail the aforesaid  

deduction.  It is therefore not necessary for us to record any finding in respect of the  

deduction applied by the High Court under the head of “waiting period”.  Needless to  

mention, that “waiting period” has been held to be one of the relevant components for  

making  deductions  by  this  Court  in  Chimanlal  Hargovinddas  vs.  Special  Land  

Acquisition Officer,  Poona & Anr.,  (1988) 3 SCC 751,  Land Acquisition Officer  

Revenue Divisional Officer, Chittor vs. L. Kamalamma (Smt.) Dead by LRs. & Ors.,

22

(1998) 2 SCC 385, and Atma Singh (Dead) through LRs & Ors. Vs. State of Haryana  

and Anr., (2008) 2 SCC 568.  We therefore, also uphold the instant deduction of 5  

percent applied by the High Court.

27. Our conclusions in respect of the quantum of permissible deductions have been  

recorded in paragraphs 18 and 19 hereinabove.  While determining the validity of  

individual  deductions,  it  is  also  imperative  to  examine  whether  or  not  the  total  

deductions put together fall  within legal parameters.   We have upheld 55 percent  

deduction  accorded  by  the  High  Court  towards  “development”.   We  have  also  

individually upheld deduction of 10 percent on account of “de-escalation”, as also,  

the  deduction  of  5  percent  on  account  of  “waiting  period”.   Cumulatively  these  

deductions would amount to 70 percent (55+10+5=70).  The outer benchmark for  

deductions  laid  down  by  this  Court  in  Lal  Chand’s  case  (supra)  and  in  Andhra  

Pradesh Housing Board’s case (supra) is 75 percent.  Cumulatively also the deduction  

allowed by the High Court, fall well within the parameters laid down by this Court.   

We therefore find no infirmity in the quantum of accumulated deductions applied by  

the High Court during the course of making an assessment of the market value of the  

acquired land.   

28. Based on the aforesaid deductions, the High Court calculated the market value of  

the acquired land at Rs.67,954/- per acre.  Inspite of the above, the market value of  

the acquired land for disbursement of compensation to the land losers was fixed by  

the High Court at Rs.65,000/- per acre.  A perusal of the judgment rendered by the  

High Court reveals, that in allowing final compensation at the rate of Rs.65,000/- per  

acre to the land losers, the High Court had placed reliance on market value fixed by

23

the  High Court  itself  in  an  earlier  case.   In  this  behalf,  it  would  be  pertinent  to  

mention,  that  the  High Court  had  awarded Rs.65,000/-  per  acre  as  compensation  

payable to the land losers, in an earlier process of litigation pertaining to acquisition  

of land, out of the same notification (under which the appellants land was acquired).  

The aforesaid determination was rendered in respect of the land acquired from the  

revenue estate of Badepur village.  While recording its final determination the High  

Court expressed, that it was desirable to arrive at a uniform value, specially when the  

land in question came to be acquired out of the same process of acquisition, and had  

not been shown to be any different from the appellants land.  We affirm the aforesaid  

view expressed by the High Court.   This  sentiment expressed by the High Court  

should  never  be  breached.   Consistency  in  judicial  determination  is  of  utmost  

importance.  Since we are informed that the judgment relied upon by the High Court  

has attained finality, we are of the view, that the final compensation determined by  

the High Court at Rs.65,000/- per acre, was fully justified.  

29. The  conclusions  drawn  by  us  hereinabove,  apply  equally  to  Civil  Appeal  

nos.8899-8901 of 2011.  In this behalf it would also be pertinent to mention, that the  

conclusions drawn by us pertain to acquisition of land falling in the revenue estate of  

village Badepur.  In so far as the instant set of appeals are concerned, they pertain to  

land acquired form the revenue estate of village Rajapur.   The High Court,  while  

making a reference to the land acquired from village Rajapur, noticed that village  

Rajapur had a lower market value as it was farther from the nerve centre of Gulbarga  

town as compared to village Badepur.  As such, we are of the view that in the facts  

and circumstances of the present case, it would be just and appropriate to affirm the  

compensation determined by the High Court at Rs.65,000/- per acre, even for the land

24

acquired from the revenue estate of village Rajapur.

30. For  the  reasons  recorded  hereinabove,  we  find  no  cause  or  justification  to  

interfere in the impugned order passed by the High Court.

31. Dismissed.

          …………………………….J. (R.M. Lodha)

…………………………….J. (Jagdish Singh Khehar)

New Delhi; November 22, 2011.