Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8540 OF 2011 [Arising out of SLP [C] No.149/2009]

Goa Housing Board … Appellant

Vs.

Rameshchandra Govind Pawaskar & Anr. … Respondents

With

CA No. 8541 of 2011 (Arising out of SLP [C] No.9591/2009) and CA No. 8542 of 2011 (Arising out of SLP [C] No.3723/2009).

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted.

CA Nos. 8540 and 8541 of 2011 [@ SLP(c) Nos.149 and 9591 of 2009]

2. These two appeals arise out of the judgment dated 26.9.2008 in FA  

No.216/2003, the first by the Goa Housing Board and the second by the land  

owner. As the ranks of the parties differ, the Goa Housing Board (appellant  

in the first matter and second respondent in the second matter) for whose  

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benefit the acquisition was made will be referred to as the ‘Board’ or the  

appellant.  Rameshchandra  Govind Pawaskar  (first  respondent  in  the  first  

matter and appellant in the second matter) whose land was acquired will be  

referred  to  as  the  ‘respondent’.  The  Land  Acquisition  Officer  (second  

respondent in the first matter and first respondent in the second matter) will  

be referred to as ‘the LAO’.  

3. By an order dated 31.1.1977 passed by the Mamlatdar, Bardez, the  

respondent was declared as the tenant of Survey No.102/1, Colvale village,  

Bardez, Goa measuring 374,000 sq. mts.  under the Goa, Daman and Diu  

Agricultural Tenancy Act, 1964 (‘Tenancy Act’ for short). On payment of  

the purchase price of Rs.59,980 determined under sections 18C and 18D of  

the Tenancy Act, a purchase certificate dated 6.5.1993 was issued to him  

under section 18H of the Tenancy Act confirming that he was deemed to be  

the  purchaser  of  the  said  land under  the provisions  of  the Tenancy Act,  

subject to the condition that the said land shall not be transferred without the  

previous sanction of the Mamlatdar under section 18K of the Tenancy Act.  

An extent of 358730 sq.m. of land in the said Survey No.102/1 belonging to  

the respondent  was acquired in  pursuance  of  the preliminary  notification  

dated  9.6.1994  (gazetted  on  16.6.1994)  corrected  by  corrigendum  dated  

26.9.1994 (gazetted on 27.9.1994).

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4. The  LAO  made  an  award  dated  28.2.2003  determining  the  

compensation payable as Rs.18 per sq.m. The respondent sought reference to  

the civil court for claiming a higher compensation. The Reference court by  

its judgment and award dated 28.2.2003 declared the compensation awarded  

at Rs.18 per sq.m. to be proper and reasonable and affirmed the award of the  

LAO. Feeling aggrieved,  the  respondent  filed  an  appeal  before  the  High  

Court seeking increase in compensation.

5. Before the High Court, the Board contended that having regard to the  

provisions of the Goa Land Use (Regulation) Act, 1991 (‘Land Use Act’ for  

short), a tenant in whom the land had vested under the Tenancy Act could  

not use it or allow it to be used for any purpose other than agriculture; and  

therefore  the  valuation  of  such  land  could  not  be  with  reference  to  its  

potential for use for non-agricultural building purposes, but should be only  

as agricultural land. In support of its contention, the Board relied upon a  

decision of a division bench of the High Court in  Janaki N. Morajkar vs.   

Special  Land  Acquisition  Officer (First  Appeal  No.221/2003  decided  on  

9.2.2005). It was therefore submitted that the market value of agricultural  

land determined by the reference court at Rs.18/- per sq.m. affirming the  

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determination by the LAO was correct and there was no need to increase the  

compensation.  

6. The High Court found that in regard to the adjoining land (Survey  

No.102/1A of Colvale) acquired under the same notification, compensation  

was  awarded  at  the  rate  of  Rs.136.50  per  sq.m.  As  the  land  in  Survey  

No.102/1  belonging  to  the  landholder  was  much  larger,  the  High  Court  

deducted  Rs.36.50  per  sq.m.  and  awarded  Rs.100  per  sq.m.  as  the  

compensation. Though the High Court noticed the contention of the Board  

with reference to the prohibition under the Land Use Act, and the decision in  

Janaki N. Morajkar, it did not choose to follow the said decision. Nor did it  

hold  that  the  decision  in  Janaki  N.  Morajkar was  wrongly  decided  or  

inapplicable. The High Court avoided the issue by observing that it was not  

necessary to go into the larger controversy as to whether Janaki N.Morajkar  

was rightly decided. The High Court held that the Board cannot pick and  

choose only some of the acquired lands for applying the provisions of the  

Land Use Act; that the contention based on the Land Use Act was not taken  

in regard to other lands acquired under the same notification, was evident  

from the decision in  Goa Housing Board vs. Pandurang V.Sawant – (FA  

NO.204/2003 dated 16.4.2008); that compensation should be on the same  

lines in regard to all lands acquired under the same notification and therefore  

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it was not necessary to examine the contention based on Land Use Act, that  

the valuation should be only as the agricultural land.  

7. Feeling  aggrieved  the  Board  has  filed  an  appeal  contending  as  

follows:

(a) In view of the bar contained in the Land Use Act in regard to use of  

land vested in a tenant under the provisions of the Tenancy Act for  any  

purpose other than agriculture, compensation could not be determined with  

reference to the sales statistics relating to residential plots on the assumption  

that  the  agricultural  land  in  question  had  development  potential  for  

residential use.

(b) Having regard to clause 8 of section 24 of the Land Acquisition Act  

which provides that “the court shall not take into consideration any increase  

to  the value  of  the land on account  of  it  being put  to  any use  which is  

forbidden by any law or opposed to public policy” and the bar contained in  

the Land Use Act in regard to any use other than agriculture, the High Court  

could not have taken note of the development and building potential of the  

acquired land for the purpose of determining compensation.

(c) The  High  Court  ought  to  have  followed  the  decision  of  another  

division bench of the High Court in  Janaki N. Morajkar,  on an identical  

issue. If the High Court was not in agreement with the view in  Janaki N.   

Morajkar,  it  ought  to  have  either  referred  it  to  a  larger  bench,  or  

distinguished it or held that it was inapplicable. It could not have ignored the  

decision.  

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8. The respondent has also filed an appeal contending that compensation  

at Rs.110 per sq.m. was very low and claiming higher compensation. On the  

contentions urged, the following questions arise :  

(i) Having regard to section 2 of the Land Use Act, whether the acquired  land should be valued only as agricultural land or whether it could be  valued as land with development potential for being used as building  sites?

(ii) Whether the compensation awarded by the High Court is excessive as  contended by the Board or inadequate as contended by the respondent  and what should be the compensation?

9. At the outset we may notice two subsequent events. The first is that  

the special leave petition against the decision in  Janaki N. Morajkar was  

dismissed  by  this  Court  (Janaki  N.  Morajkar  v.  Spl.  LAO  -  SLP(C)  

No.13195/2003 decided on 19.7.2005). The second is that the appeal against  

the decision in Pandurang V.Sawant  was allowed by this Court. The market  

value of the acquired land, if it was not subject to any prohibition regarding  

use under the Land Use Act, is now settled by the decision of this court in  

regard  to  the  neighbouring  land,  in  Goa  Housing  Board  v.  Pandurang  

V.Sawant [CA Nos.1992-93/2010 decided on 19.2.2010). The said decision  

relates to the adjoining land (Sy. No.102/1A) which was the subject matter  

of First Appeal No.204/2003 before the High Court. In that case also the  

Land Acquisition Officer had awarded Rs.18 per sq.m. The reference court  

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had increased the compensation to Rs.150 per sq.m. and on appeal the High  

Court  by  judgment  dated  16.4.2008  had  reduced  it  to  Rs.136.50.  But  

subsequently  by  order  dated  29.1.2009  the  judgment  dated  16.4.2008  

reducing  the  compensation  to  Rs.136.50  was  corrected  and  the  

compensation was determined as Rs.147 per sq.m. This court reduced the  

compensation to Rs.110 per sq.m. instead of Rs.147 per sq.m.   Thus the  

market  value  of  freehold  land  which  is  not  subject  to  any  restriction  

regarding use or  otherwise as  on 16.6.1994 was Rs.110/-  per  sq.m.  This  

would mean that if the contention of the respondent is accepted and the Land  

Use  Act  is  found  to  be  inapplicable  the  compensation  will  have  to  be  

increased from Rs.100 to Rs.110 per sq.m. However if the contention of the  

Board that the prohibition in regard to the land use applied to the land in  

question having regard to the provisions of the Land Use Act is accepted,  

then  the  market  value  will  have  to  be  determined  taking  note  of  such  

provision.  

10. We may at this juncture refer to the provisions of the Goa Land Use  

Regulation Act, 1991. As it is a short Act and every provision thereof is  

relevant, we extract below the said Act in entirety :       “An Act  to  provide  for  regulation  of  use of  agricultural  land for  non- agricultural purposes.

Be it  enacted  by the Legislative  Assembly of Goa in the Forty-second  Year of the Republic of India as follows :-

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1. Short  title,  extent  and commencement.  – (1)  This Act may be called the Goa Land Use (Regulation) Act, 1991.  

(2) It extends to the whole of the State of Goa.

(3) It  shall  be  deemed  to  have  come into  force  with effect from the 2nd day of November, 1990.

2. Regulation of use of land. – Notwithstanding  anything  contained  in  the  Goa,  Daman  and  Diu  Town  and  Country  Planning Act,  1974 (Act  21 of  1975),  or  in  any plan or scheme made  thereunder, or in the Goa Land Revenue Code, 1968 (Act 9 of 1969), no  land which is vested in a tenant under the provisions of the Goa, Daman  and Diu Agricultural Tenancy Act, 1964 (Act 7 of 1964) shall be used or  allowed to be used for any purpose other than agriculture.

Explanation:- The expression “agriculture”, “land” and “tenant” shall have  the  same  meaning  assigned  to  them  under  the  Goa,  Daman  and  Diu  Agricultural Tenancy Act, 1964 (Act 7 of 1964).

3. Exemption. – The provisions of this Act shall  not  apply to  acquisition  of any land vested in  a tenant  under the Goa,  Daman and Diu Agricultural Tenancy Act, 1964 (Act 7 of 1964) by the  State  for a public  purpose under the provision of the Land Acquisition  Act, 1894 (Central Act 1 of 1894).”  

11. Having  regard  to  section  2  of  the  said  Act,  it  is  clear  that  

notwithstanding anything contained in the Town & Country Planning Act or  

any scheme thereunder or the Land Revenue Code, no land which is vested  

in a tenant under the provisions of the Tenancy Act shall be used or allowed  

to be used for any purpose other than agriculture. In this case it is not in  

dispute that the acquired land in question vested in the land owner who was  

the tenant under the provisions of the Tenancy Act. Therefore it cannot be  

disputed that the respondent could not have used the land for any purpose  

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other than agriculture or even allow anyone else to use the same for any  

purpose other than agriculture. The only manner in which the land use could  

be changed was by an acquisition for a public purpose. Thus the prohibition  

in regard to any use other than agriculture is not with reference to any person  

or holder with reference to the land itself. Any land which vested in a tenant  

under  the  provisions  of  the  Tenancy  Act  attracted  the  bar  contained  in  

section 2 of the Land Use Act and there was a permanent bar against the use  

of such land for purposes other than agriculture either by the tenant in whom  

the land is vested or any of his transferees or successors-in-interest.

12. The question is whether such prohibition will affect the market value  

of the land. The respondent submitted that this court had repeatedly held that  

all lands situated in the same area and acquired by the same notification,  

should be awarded the same compensation. He relied upon the judgment in  

K. Periasami v. Sub-Tehsildar (Land Acquisition) [1994 (4) SCC 180] and  

Delhi  Development  Authority  v.  Bali  Ram Sharma [2004  (6)  SCC 533].  

There can be no doubt that similarly situated land in the same area, having  

the same advantages  and acquired under the same notification should be  

awarded the same compensation.  But the question is when one land is a  

freehold  land  not  subject  to  any  restrictions  in  regard  to  user  and  the  

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adjoining land though similarly situated is subject to a permanent restriction  

regarding user  requiring it  to  be  used only for  agricultural  purposes,  the  

question is whether the two lands can be termed as comparable lands which  

should be subjected to the same compensation. We may give a few examples  

to illustrate the position:

(i) A person constructs two identical houses adjoining each other. He lets  

out one of them and keeps the other vacant. After some years he sells both  

the properties.  The house sold with vacant  possession will  fetch  a  better  

price than the adjoining premises which is in occupation of a tenant and  

therefore sold without possession. The fact that both properties are situated  

adjoining each other and have the same area of construction and face the  

same road will not mean that the price they will fetch will be the same.

(ii) There are two adjoining properties belonging to the same owner. One  

falls  under  area  earmarked as  commercial  and the other  falls  under  area  

earmarked as residential. Though they are similarly situated, the land which  

is capable of commercial use is likely to fetch a higher price than a land  

earmarked for residential use.

(iii) An agricultural land with no development potential sold to another  

agriculturalist for agricultural purposes will fetch a price which will be lower  

than the price fetched by an agricultural land with potential of development  

into residential or commercial plots sold for development into a layout of  

plots.

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(iv) A small plot measures 10’ x 20’ and is suitable for construction of a  

shop.  If it is to be sold, it will fetch a good price at par with prevailing  

market  value.  But  if  the  said  plot  is  subject  to  an  easementary  right  of  

passage in favour of the owner of the property to the rear of the said plot and  

also subject to easementary rights of light and air in favour of the owners of  

plots on either side, the plot cannot be used for construction at all and will  

have to be kept as a vacant plot. Necessarily its market value will be far less  

than the value of such a plot which is not subject to such easements.

13. In  Administrator  General  of  West  Bengal  vs.  Collector,  Varanasi  

[1988 (2) SCC 150], this court observed thus in regard to determination of  

market value :

“The market-value of a piece of property, for purposes of Section 23 of the  Act, is stated to be the price at which the property changes hands from a  willing seller to a willing, but not too anxious a buyer, dealing at arms  length.  The determination  of  market-value,  as  one author  put  it,  is  the  prediction of an economic event, viz, the price-outcome of a hypothetical  sale, expressed in terms of probabilities. Prices fetched for similar lands  with similar advantages and potentialities under bonafide transactions of  sale at or about the time of the preliminary notification are the usual; and  indeed the best, evidences of market-value. Other methods of valuation are  resorted to if the evidence of sale of similar lands is not available.”

14. In  Chimanlal  Hargovinddas  vs.  Special  Land  Acquisition  Officer,   

Poona [1988  (3)  SCC  751]  this  court  set  out  the  principle  regarding  

determination of market value. One of the principles mentioned is as under :

“The determination has to be made standing on the date line of valuation  (date of publication of notification under Section 4) as if the valuer is a  

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hypothetical purchaser willing to purchase land from the open market and  is  prepared to pay a reasonable price as on that  day.  It  has also to  be  assumed that the vendor is willing to sell the land at a reasonable price.”

Thereafter, this court stated that the exercise of determining the market value  

has to be taken in a commonsense manner as a prudent man in a business  

world would do and gave some illustrative facts which have a bearing on the  

value :

“Plus factors Minus factors   1. Smallness of size. 1. Largeness of area.  

2. Proximity to a road. 2.   

Situation in the interior at a distance

from the road.  

3. Frontage on a road. 3.   

Narrow strip of land with very small

frontage compared to depth  

4. Nearness to developed area. 4.   

Lower level requiring the depressed

portion to be filled up.  

5. Regular shape. 5.  Remoteness from developed locality.  

6. Level vis-a-vis land under acquisition      6. Some special disadvantageous factor        

which would deter a purchaser.  7. Special value for an owner of an  

adjoining property to whom it may  

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have some very special advantage.” (emphasis supplied)

15. In  Subh Ram vs.  State of  Haryana [2010 (1)  SCC 444],  this court  

observed :

“It is in this context, in some cases, to avoid the need to differentiate the  lands acquired under a common notification for a common purpose, and to  extend the benefit of a uniform compensation, courts have observed that  the purpose of acquisition is also a relevant factor. The said observation  may not apply in all cases and all circumstances as the general rule is that  the land owner is being compensated for what he has lost and not with  reference to the purpose of acquisition.

The purpose of acquisition can never be a factor to increase the market  value of the acquired land. We may give two examples. Where irrigated  land belonging to 'A' and dry land of 'B' and waste land of 'C' are acquired  for  purpose  of  submergence  in  a  dam project,  neither  'B'  nor  'C'  can  contend that they are entitled to the same higher compensation which was  awarded  for  the  irrigated  land,  on  the  ground  that  all  the  lands  were  acquired for the same purpose. Nor can the Land Acquisition Collector  hold that in case of acquisition for submergence in a dam project, irrigated  land should be awarded lesser compensation equal to the value of waste  land, on the ground that purpose of acquisition is the same in regard to  both. The principle is that the quality (class) of land, the situation of the  land, the access to the land are all relevant factors for determination of the  market value.”

16. While section 23 of the Land Acquisition Act enumerates the matters  

to be considered in determining compensation,  section 24 enumerates the  

matters to be neglected in determining compensation. It provides :  

“But the court shall not take into consideration— x x x x x  

fifthly, any increase to the value of the land acquired likely to accrue from  the use to which it till be put when acquired;  

x x x x  

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eighthly, any increase to the value of the land on account of its being put  to any use which is forbidden by law or opposed to public policy.”   

It is thus clear that if there is a prohibition regarding use of the land for  

purposes other than agriculture, the value of such land on account of the  

same being put to commercial, residential or industrial use cannot form the  

basis of determining the market value.   

17. Where an acquired land is subject to a statutory covenant that it can be  

used  only  for  agriculture  and  cannot  be  used  for  any  other  purpose  

necessarily  it  will  have to be sold as agricultural land as the land owner  

cannot sell it for any purpose other than agriculture and the purchaser cannot  

sell it for any purpose other than agriculture. As a consequence, the price  

fetched for such land will be low even if it is situated near any urban area.  

But if the same land is not subject to any prohibition or restrictive covenant  

regarding use and has the potential of being developed either as a residential  

layout or put to commercial  or industrial use, the land will fetch a much  

higher  price;  and the market  value of  such other  land with development  

potential  can  be  determined  with  reference  to  the  sale  price  of  nearby  

residential plots by making appropriate deduction for development. On the  

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other hand if the land is to be used only for agricultural purposes, it may not  

be possible to arrive at the market value thereof with reference to the market  

value of nearby residential plots. Therefore we are of the considered view  

that in regard to the land in question, in view of the permanent restriction  

regarding user, that is it should only be used for agricultural purposes, and  

the bar in regard to any non-agricultural use, it will have to be valued only as  

an agricultural land and cannot be valued with reference to sales statistics of  

other  nearby  lands  which  have  the  potential  of  being  used  for  urban  

development.  

18. We may also look at the matter from a slightly different perspective.  

A vacant land has a particular value. If such land is in the occupation of a  

long term lessee, and the owner wants to sell it without possession, he will  

only get a far lesser price that what he would get as price for the same land if  

vacant  possession  can  be  given  to  the  purchaser.  If  such  land  in  the  

occupation of a long term lessee is acquired, as the lessee’s rights are also  

taken over, the compensation awarded for the land will be the full value as  

awarded for any neighbouring property which is not subject to any tenancy.  

But the entire compensation will not be received by the land owner/landlord.  

The landlord will have to share the compensation with the long term lessee.  

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In other words, the landlord will not get the entire value as compensation but  

will only get a part of the market value and the tenant will get the balance. In  

that  sense  even  if  the  market  value  of  the  land  without  any  restrictive  

covenants is considered to be Rs.110 per sq.m., having regard to the fact that  

the land is incapable of being used for purposes other than agriculture and  

the price of Rs.110 is arrived at with reference to a land which can be used  

for all purposes, an appropriate percentage will have to be deducted from the  

value  of  Rs.110  per  sq.m.  to  arrive  at  the  land  subject  to  the  statutory  

restriction regarding use.  

19. On  the  facts  and  circumstances,  having  regard  to  the  prohibition  

regarding use of land for any purpose other than agriculture, the land will  

have to be treated and valued as agriculture land without any development  

potential for being used as residential/commercial/industrial plots. We are of  

the view that at least 50% will have to be deducted from the market value of  

freehold land with development potential to arrive at the market  value of  

such land which can be used only for  agricultural purposes.  As we have  

already  determined  the  market  value  of  neighbouring land (which is  not  

subject to the prohibition under Land Use Act) as Rs.110/- per sq.m. We are  

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of the view that an appropriate compensation for the acquired land should be  

50% thereof, that is Rs.55 per sq.m.

20. We  may  now  deal  with  contentions  of  the  respondent  that  the  

prohibition  under  section  2  of  the  Land  Use  Act  is  inapplicable  to  the  

acquired land.

21. The respondent relied on section 3 of the Land Use Act relating to  

exemption and provides that the provisions of the Land Use Act shall not  

apply to acquisition of any land vested in a tenant under the Tenancy Act, by  

the State for a public purpose under the provisions of the Land Acquisition  

Act,  1894.  He  contended  that  once  a  notification  is  issued  proposing  to  

acquire the land under the Land Acquisition Act, the provisions of the Land  

Use Act, in particular, the prohibition contained in section 2 will not apply  

and the acquired land will have to be valued as a freehold land without any  

restrictions.

22. Though the said argument appears to be attractive at first blush, on a  

careful reading of the section, we find it to be without merit. The object of  

the Land Use Act is to ensure that agricultural land which vested in a tenant  

as a deemed purchaser on account of special provisions of the Tenancy Act  

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subject to payment of a nominal price, (thereby denying the ownership and  

the market  value to the original owner)  is  not sold or used for  any non-

agricultural purpose. If the land was non-agricultural land, the tenant would  

not have got the title to the land as a deemed purchaser and the land would  

have continued under the ownership of the landlord. The tenant got the land  

under the statute,  because it  was agricultural  land and he was the tenant  

thereof, that too at a very nominal price, by virtue of the special provisions  

of  the Tenancy Act.  Therefore the object  of the Act is  that  no tenant in  

whom a land had vested under the provisions of the Tenancy Act shall use  

the land for any purpose other than agriculture. To see that he does not easily  

defeat the said bar by transferring the property, a prohibition was attached to  

the land itself by providing that no land which vested in a tenant under the  

Tenancy Act shall be used or allowed to be used for any purpose other than  

agriculture.  But  for  the  exemption  contained  in  section  3,  when  such  a  

property is acquired under the Land Acquisition Act for public purpose, the  

prohibition under section 2 in regard to use of the land for any purpose other  

than agriculture would have continued to apply. Therefore it was necessary  

to make an exemption in regard to the lands acquired for public purpose.  

That is, even though a land which vested in a tenant under the Tenancy Act  

was  subject  to  a  covenant  that  it  could  not  be  used  for  any agricultural  

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purpose in future, once it was acquired under the Land Acquisition Act for a  

public  purpose  and  vested  in  the  government,  the  prohibition  contained  

under section 2 would cease to operate,  and the state government  or  the  

beneficiary of acquisition could use it for any purpose. Section 3 is therefore  

a provision which entitles the State Government or beneficiary of acquisition  

to use it for any purpose other than agriculture. The said section will not  

enable the landowner to get the market value of the land as one with non-

agricultural  potential.  In  so  far  as  the  landowner  is  concerned,  the  

compensation to which he is entitled would be what he would have got if he  

had sold it in open market to a willing purchaser who could have used it  

only for agricultural purpose.   

23. The respondent referred to and relied upon the Preamble of the Act  

which provides that the object of the Act is to provide for regulation and use  

of agricultural land for non-agricultural purposes. He contended that if on  

the date when the Land Use Act came into force, the land in question had  

ceased to be agricultural land then the Land Use Act would be inapplicable.  

He submitted that by notification dated 9.11.1988 (gazetted on 24.11.1988)  

issued  under  section  13  of  the  Goa,  Daman  and  Diu  Town &  Country  

Planning  Act,  1974  (for  short  ‘Town Planning  Act’),  the  said  land  (Sy.  

No.102/1)  along  with  other  lands  in  Colvale  village  were  notified  for  

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proposed change of use from cultivable land to industrial land; and that by a  

notification dated 12.3.1990 (gazetted on 5.4.1990) issued under section 15  

read with section 17 of the Town Planning Act, the Chief Town Planner  

notified the amended regional plan for Goa as approved by the government  

which  showed  that  the  said  land  was  earmarked  for  industrial  use.  The  

respondent contended that on 5.4.1990, the land became an industrial land  

and consequently ceased to be agricultural land before the Land Use Act  

came into force with retrospective effect from 2.11.1990; and therefore the  

Land Use Act did not apply to the land in question (Sy. No.102/1).  

24. Merely  by  notifying the  regional  plan  showing  certain  agricultural  

lands as earmarked for industrial purpose, those lands will not cease to be  

agricultural lands. Section 15 notification is only an initial step in a long  

process under the Town Planning Act.  Section 18 provided for declaration  

of planning area. Section 29 relates to preparation of an outline development  

plan.  Section  31 provides  for  preparation  of  comprehensive  development  

plan.  Section  37  provides  when  the  development  plan  will  come  into  

operation.  Section  41  empowers  the  state  to  acquire  any  land  reserved,  

required, or designated in a development plan as a land needed for a public  

purpose. Section 42 provides that on and from the date on which a public  

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notice of the preparation of a development plan is published under section  

35(1), every land use covered by the development plan shall conform to the  

provisions  of  the  Act.  Publication  of  a  regional  plan  under  section  15  

therefore  only  means  that  on  and  from  the  date  of   publication  of  the  

regional  plan,  any  development  programme  or  development   work  

undertaken  should  conform  to  the  provisions  of  the  Regional  plan  and  

nothing more. As the land was not converted to non-agricultural industrial  

use under Sections 30 and 32 of the Goa, Daman and Diu Land Revenue  

Code,  1968  (‘Land  Revenue  Code’  for  short)  the  land  did  not become  

industrial land. Therefore the said contention based on section 15 of Town  

Planning  Act  has  no  merit.   Once  the  Land  Use  Act  came  into  force,  

notwithstanding anything contained in the Town Planning Act or in any plan  

or scheme made thereunder, a land vested in a tenant under the Tenancy Act  

could  not  be  used  or  allowed  to  be  used  for  any  purpose  other  than  

agriculture.   

25. Section 18A of the Tenancy Act provides that on the Tiller’s Day (that  

is, 8.10.1976, the date of introduction of Goa, Daman and Diu Agricultural  

Tenancy (Fifth Amendment) Act, 1976 in the Legislative Assembly), every  

tenant shall subject to the other provisions of the Act, be deemed to have  

purchased from his landlord the land held by him as a tenant and such land  

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shall  vest  in him free from such encumbrances on that  day.  Section 18E  

provides that on determination of the purchase price by the Mamlatdar under  

section 18C, the tenant shall deposit the purchase price with the Mamlatdar  

as  provided in section 18E. Section 18H provides that  on deposit  of  the  

purchase  price  the Mamlatdar  shall  issue  a  certificate  of  purchase  to  the  

tenant-purchaser in respect of the land; and the purchase will be in effective  

on tenant-purchaser’s failure to pay the purchase price. Section 18J provides  

that where purchase of any land by the tenant under section 18A becomes  

ineffective under section 18C or 18H or where the tenant fails to exercise the  

right to purchase the land held by him within the specified period under  

section 18B, the Mamlatdar  may direct  the land or  part  thereof,  shall  be  

disposed of in the manner provided therein.  Section 18K of the Tenancy Act  

provides  that  no  land  purchased  by  a  tenant  under  Chapter  IIA  of  the  

Tenancy Act shall be transferred by sale, gift, mortgage, lease or assignment,  

without the previous sanction of the Mamlatdar.  In this case,  in terms of  

section 18E, the Mamlatdar required the respondent to deposit the purchase  

price of Rs.59,840/- and on such deposit, a certificate of purchase was issued  

to the respondent under section 18H only on 6.5.1993.  It should be noted  

that until such a certificate was issued, there was a possibility of resumption  

and disposal under section 18J. By the time, the certificate of purchase in  

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regard to the land was issued on 6.5.1993, Goa Land Use (Regulations) Act,  

1991 had came into force on 2.11.1990.  Further, under section 30 of the  

Land Revenue Code, no land used for agriculture shall be used for any non-

agricultural  purpose  except  with  the  permission  of  the  Collector  under  

section 32 of the Code. Section 32 provides for the procedure for conversion  

of  use  of  land  from  agricultural  to  non-agricultural  use.  It  requires  an  

application to be made by the land holder to the Collector and a permission  

being granted by Collector for conversion, subject to payment of the fees  

prescribed therein. It is not the case of the respondent that the land has been  

converted  to  non-agricultural  use  under  sections  30  and  32  of  the  Land  

Revenue Code. In fact, before the issue of a purchase certificate on 6.5.1993,  

it may not be possible for a tenant-purchaser to apply for conversion to non-

agricultural use. It is, thus, clear that the land in question was agricultural  

land as on the date when the Land Use Act came into force and when the  

land was acquired under the Land Acquisition Act. Therefore, the contention  

that it was not agricultural land, is rejected.   

26. Consequently we allow the appeal filed by the Board and reduce the  

compensation awarded for land from Rs.100/- per sq.m. to Rs.55 per sq.m.  

The respondent will be entitled to all statutory benefits as awarded by the  

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High Court. As a consequence the appeal filed by the landowner for increase  

of compensation stands rejected.

CA No. 8542 2011 [@ SLP (C) No.3723/2009]

27. This appeal relates to acquisition of 9,153 sq.m. of land in the said Sy.  

No.102/1 of Colvale village under preliminary notification dated 26.9.1991  

belonging  to  the  respondent.  The  facts  are  the  same  as  in  the  first  two  

appeals  as this appeal  relates  to acquisition of the another portion of the  

same land belonging to the same respondent, the only difference being that  

this appeal relates to an acquisition initiated under preliminary notification  

dated 26.9.1991. In the other two appeals, we had relied upon the decision of  

this Court in Goa Housing Board vs. Panduranga V Samant [CA Nos.1992-

93  of  2010  decided  on  19.2.2010],  wherein  this  Court  had  determined  

compensation as Rs.110 per sq.m. in regard to acquisition of neighbouring  

land under preliminary notification gazetted on 16.6.1994. Determination of  

market  value  in  Pandurang  V..  Samant was  with  reference  to  a  sale  

transaction dated 23.3.1990. This Court had determined the market value as  

Rs.75 per sq.m. as on 23.3.1990 and increased it by Rs.35 to arrive at the  

value  as  Rs.110/-  after  four  years,  as  on  16.6.1994.  In  this  case,  as  the  

relevant  date  for  purpose of  determination  of  market  value  is  26.9.1991,  

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about one and half years after 23.3.1990 (the date of the relied upon sale  

transaction). By applying the same principle, the market value of the land as  

on 26.9.1991 will be Rs.90 per sq.m. The said value is with reference to land  

with  potential  for  development.  As  the  land  acquired  was  subject  to  a  

prohibition  under  the  Land  Use  Act,  for  reasons  stated  in  the  first  two  

appeals, a deduction of 50% is made for to arrive at the value of the land  

with  agricultural  potential  only.  Consequently,  the  market  value  of  the  

acquired land is determined as Rs.45/- per sq.m.  

28. We accordingly allow this appeal in part and reduce the compensation  

from Rs.140 per sq.m. to Rs.45 per sq.m. The respondent will be entitled to  

said compensation with all statutory benefits under section 23(1A), section  

23(2) and section 28 of the Land Acquisition Act 1894.  

………………………….J. (R V Raveendran)

………………………….J. (P. Sathasivam)

New Delhi; …………………………J. October 11, 2011. (A K Patnaik)

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