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REPORTABLE        

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.     4005     OF     2012   (Arising out of SLP (C) No. 26866 of 2009

Mehrawal Khewaji Trust (Regd.), Faridkot & Ors.                  .... Appellant (s)

Versus

State of Punjab & Ors.                          .... Respondent(s)

J     U     D     G     M     E     N     T      

P.     Sathasivam,     J.   

1) Leave granted.

2) This appeal is directed against the final judgment and  

order dated 06.01.2009 passed by the High Court of Punjab  

and Haryana at Chandigarh in R.F.A. No. 998 of 1988 (O&M)  

along with seven other appeals by which the High Court  

declined to interfere with the order dated 11.02.1988 of the  

Additional District Judge, Faridkot in L.R. No. 20 of 1984.   

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3) Brief facts:

(a) Colonel Sir Harindar Singh, since deceased, was the  

former ruler of the State of Faridkot.  In 1979, 259 Kanals and  

16 Marlas (33 acres) of land owned by him had been acquired  

by the Punjab Government for extension of existing Grain  

Market at Faridkot vide Notification No. 14(68)M-iv-78/17315  

dated 22.12.1979 under Section 4 of the Land Acquisition  

Act,1894 (hereinafter referred to as “the Act”) which was  

published in the Punjab Government Gazette.  Notification  

under Section 6 of the Act was issued on 19.02.1982.  The  

award by the Collector was announced on 02.10.1982 and  

possession of the land was also taken on that day.  The  

Collector awarded compensation at the rate of Rs.15,000/- per  

acre for Nehri land, Rs.10,000/- per acre for Barani land and  

Rs.25,000/- per acre for Banjar Kadim land and Ghair  

Mumkin land.  The total compensation awarded including  

solatium at 15% was Rs.4,85,202.86/-.

(b) Aggrieved by the award passed by the Collector, on  

27.10.1982, the appellants filed an application for reference  

under Section 18 of the Act.  The Additional District Judge,  

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Faridkot, by order dated 11.02.1988 in L.R. No. 20 of 1984  

disposed of the reference by enhancing the compensation to  

Rs.1,00,000/- per acre.   

(c) Against the aforesaid order, the appellants preferred  

R.F.A. No.998 of 1988 before the High Court.  The High Court,  

by the impugned common order and judgment dated  

06.01.2009, declined to interfere with the order passed by the  

Additional District Judge and did not enhance the  

compensation as claimed by the appellants.

(d) Aggrieved by the order passed by the High Court, the  

appellants have filed this appeal by way of special leave before  

this Court.

4) Heard Mr. Dhruv Mehta, learned senior counsel for the  

appellants, Mr. Vivek Goyal, learned Additional Advocate  

General for the State of Punjab and Mr. T.S. Doabia, learned  

senior counsel for respondent No.2.

5) The only point for consideration in this appeal is whether  

the appellants have made out a case for higher compensation  

as claimed.

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6) The materials placed before the Land Acquisition  

Collector and the Reference Court show that the land is of  

great potential value inasmuch as the same being strategically  

located at a commercial hub abutting main roads and  

surrounded by commercial building including that of Canal  

Colony, Godowns of Food Corporation of India, private and  

Government Residential Colonies, Red Cross Bhawan,  

Government Medical College, existing Grain Market and  

Godown of Warehousing Corporation.  It was also pointed out  

that one pocket of the land known as “Tikoni” is having main  

roads on three sides.  

7) In support of their claim for higher compensation, the  

appellants have relied upon various sale deeds in the reference  

under Section 18 of the Act.  It was further seen that the  

Reference Court discarded all the sale instances related to  

area less than one kanal and proceeded to consider other sale  

instances.  It was pointed out that the State of Punjab did not  

challenge the said criteria adopted by the Reference Court.  By  

pointing out the same, it was argued on the side of the  

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appellants that the exemplars for sale of one kanal or more are  

available to be relied upon.  

8) The Reference Court has taken into consideration three  

sale exemplars which are Ext.A-48, Ext. A-52 and Ext.A-61.  It  

is the grievance of the appellants that in the place of relying  

upon the highest exemplars, the Reference Court erroneously  

determined the market price of the appellants land by  

averaging the prices of all the three exemplars and thereby  

awarded a compensation of Rs. 1 lakh per acre.  The High  

Court upheld the said order of the Reference Court.  

9) The appellants are aggrieved on two aspects, firstly the  

highest exemplar, namely, Ext. A-61 should have been relied  

upon in the place of averaging the prices and secondly, the  

Reference Court did not grant interest on solatium.     

10) The Reference Court held the following three sale  

transactions relied upon by the appellants as relevant for  

determination of the market value of the land in dispute:

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_____________________________________________________________ Sale Deed Date Area Price

(K-M) (Rs.K-M) (Rs./acre) _____________________________________________________________

Ex. A-48 29.05.1979 3-4 31,000 77,500 Ex.A-52 20.03.1978 1-5.25 19,000 1,21,600 Ex.A-61 22.07.1977 1-3 20,000 1,39,130 _____________________________________________________________

Considering all these transactions including other references,  

the Reference Court disposed of the matter by a common order  

whereby the compensation was enhanced to Rs.1,00,000/- per  

acre.  

11) Since the measurements of the land under acquisition  

are in kanals and marlas in the State of Punjab, the  

conversion of these units in acres and square yards is being  

set out as under:

20 marlas  =  1 kanal 8 kanals =  1 acre 160 marlas =  1 acre 1 acre =  4840 sq. yds. 1 kanal =  605 sq. yds. 1 marla =  30.25 sq. yds.

12) As pointed out above, the Reference Court failed to take  

note of the highest exemplar, namely, the sale transaction  

under Ext.A-61 dated 22.07.1977.  In this regard, it is useful  

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to refer the decision of this Court in Sri Rani M.  

Vijayalakshmamma Rao Bahadur, Ranee of Vuyyur vs.  

Collector of Madras, (1969) 1 MLJ 45 (SC).  In this case, this  

Court has held thus:

“… where sale deeds pertaining to different transactions are  relied on behalf of the Government, that representing the  highest value should be preferred to the rest unless there are  strong circumstances justifying a different course.  In any  case we see no reason why an average of two sale deeds  should have been taken in this case.”

13) In State of Punjab and Another vs. Hansraj (Dead) by  

LRS. Sohan Singh and Others, (1994) 5 SCC 734, this Court  

has held that method of working out the ‘average price’  paid  

under different sale transactions is not proper and that one  

should not have, ordinarily recourse to such method.  This  

Court further held that the bona fide sale transactions  

proximate to the point of acquisition of the lands situated in  

the neighbourhood of the acquired lands are the real basis to  

determine the market value.  

14)  This Court in Anjani Molu Dessai vs. State of Goa  

and Another, (2010) 13 SCC 710, after relying upon the  

earlier decisions of this Court in M. Vijayalakshmamma Rao  

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Bahadur (supra) and Hansraj (supra) held in para 20 as  

under:

“20. The legal position is that even where there are several  exemplars with reference to similar lands, usually the  highest of the exemplars, which is a bona fide transaction,  will be considered.”  

Again, in para 23, it was held that “the averaging of the prices  

under the two sale deeds was not justified.”   

15) It is clear that when there are several exemplars with  

reference to similar lands, it is the general rule that the  

highest of the exemplars, if it is satisfied, that it is a bona fide  

transaction has to be considered and accepted.  When the  

land is being compulsorily taken away from a person, he is  

entitled to the highest value which similar land in the locality  

is shown to have fetched in a bona fide transaction entered  

into between a willing purchaser and a willing seller near  

about the time of the acquisition.  In our view, it seems to be  

only fair that where sale deeds pertaining to different  

transactions are relied on behalf of the Government, the  

transaction representing the highest value should be preferred  

to the rest unless there are strong circumstances justifying a  

different course.  It is not desirable to take an average of  

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various sale deeds placed before the authority/court for fixing  

fair compensation.   

16) Based on the above principles, the market value as per  

Ext.A-61 dated 22.07.1977 was Rs. 1,39,130.43 per acre  

(approx. Rs.1.40 lakhs per acre).  The said sale deed was two  

and a half years prior in time than Section 4(1) notification  

dated 22.12.1979.  There is no reason to eschew the above sale  

transaction.  It is also pointed out that the lands covered under  

Ext.A-61 are nearer to the lands of the appellants under  

acquisition.  This Court has time and again granted 10% to  

15% increase per annum. In Ranjit Singh vs. Union  

Territory of Chandigarh (1992) 3 SCC 659, this Court  

applied the rule of 10% yearly increase for award of higher  

compensation.  In Delhi Development Authority  vs. Bali  

Ram Sharma & Ors. (2004) 6 SCC 533, this Court considered  

a batch of appeals and applied the rule of annual increase for  

grant of higher compensation. In ONGC Ltd. vs. Rameshbhai  

Jivanbhai Patel (2008) 14 SCC 745, this Court held that  

where the acquired land is in urban/semi-urban areas,  

increase can be to the tune of 10% to 15% per annum and if  

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the acquired land is situated in rural areas, increase can be  

between 5% to 7.5% per annum.  In Union of India vs.  

Harpat Singh & Ors. (2009) 14 SCC 375, this Court applied  

the rule of 10% increase per annum.  Based on the above  

principle, we fix the annual increase at 12% per annum and  

with that rate of increase, the market value of the appellants’  

land would come to Rs.1,82,000 per acre as on the date of  

notification.

17) Though the Reference Court relied on the sale  

transaction covered under Ex. A-48 dated 29.05.1979 and  

fixed compensation @ Rs.1 lakh per acre inasmuch as under  

Ex. A-61 dated 22.07.1977, i.e., even two and a half years  

prior to notification under Section 4(1) of the Act, the adjacent  

lands have fetched higher price and in the light of the  

principles laid down in the above decisions, we are of the view  

that exemplar Ex.A-61 dated 22.07.1977 is quite reasonable  

and acceptable.  However, as rightly pointed out by the  

learned counsel for Respondent No.2 and considering the fact  

that the area of land under Ex. A-61 dated 22.07.1977 is a  

smaller one, it is but proper that appropriate deduction should  

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be made for the same.  In Trishala Jain & Anr. vs. State of  

Uttaranchal & Anr., 2011 (6) SCC 47, this Court has held  

that the value of sale of small pieces of land can be taken into  

consideration for determining the value of large tract of land  

but with a rider that the Court while taking such instances  

into consideration has to make a reasonable deduction  

keeping in view of other attendant circumstances.  Similar  

view has been expressed in State of Madhya Pradesh &  

Ors. vs. Kashiram (dead) by L.Rs. & Ors., 2010 (14) SCC  

506 and Prabhakar Raghunath Patil & Ors.  vs. State of  

Maharashtra, 2010 (13) SCC 107.  In view of the same, it  

would be just and reasonable to allow deduction @ 20%.   By  

applying the above method, the market value for the acquired  

land is fixed at Rs.1,82,000/- minus Rs.36,400/- (towards  

20% deduction) equivalent to Rs.1,45,600/- rounded at  

Rs.1,45,000/- per acre which is quite fair, reasonable and  

acceptable.  

18) The other grievance of the appellants is that interest on  

solatium and additional market value was not granted.  This  

aspect has been considered and answered by the Constitution  

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Bench in the case of Sunder vs. Union of India, (2001) 7 SCC  

211.  While considering various decisions of the High Courts  

and approving the decision of the Punjab and Haryana High  

Court rendered in State of Haryana vs. Kailashwati, AIR  

1980 P&H 117, this Court held that the interest awardable  

under Section 28 would include within its ambit both the  

market value and the statutory solatium.  In view of the same,  

it is clear that the person entitled to the compensation  

awarded is also entitled to get interest on the aggregate  

amount including solatium.  The above position has been  

further clarified by a subsequent Constitution Bench  

judgment in Gurpreet Singh vs. Union of India, (2006) 8  

SCC 457.  Based on the earlier Constitution Bench decision in  

Sunder (supra), the present Constitution Bench held that the  

claimants would be entitled for interest on solatium and  

additional market value if the award of the Reference Court or  

that of the appellate Court does not specifically refer to the  

question of interest on solatium and additional market value  

or where the claim had not been rejected either expressly or  

impliedly.  In view of the same, we hold that the appellants are  

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entitled to interest on solatium and additional market value as  

held in the above referred two Constitution Bench judgments.  

19) In the light of the above discussion, the appellants have  

made out a case for enhancement of compensation.  

Accordingly, the same is fixed at Rs.1,45,000/- per acre with  

all other statutory benefits including interest on solatium and  

additional market value.  The appeal is allowed to the extent  

mentioned above.  No order as to costs.          

...…………….…………………………J.            (P. SATHASIVAM)                                  

 .…....…………………………………J.    (J. CHELAMESWAR)  

NEW DELHI; APRIL 27, 2012.  

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