Page 1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3590 OF 2012

Sabhia Mohammed Yusuf Abdul Hamid Mulla (D) by  L.Rs. and others … Appellants

versus

Special Land Acquisition Officer and others … Respondents

with

CIVIL APPEAL NO.  3591 OF 2012

CIVIL APPEAL NO.  3670 OF 2012

CIVIL APPEAL NO. 3671 OF 2012

J U D G M E N T

G. S. Singhvi, J.

1. With a view to implement the New Bombay Project, the Government of  

Maharashtra acquired large tracts of land in different villages of the State. The  

appellants’  land  measuring  3,86,790  square  meters  in  Roadpali  (Kolekhar)  

Village,  Panvel  Taluka,  Raigad  District  was  also  acquired  for  the  project.  

Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short,  

‘the  Act’)  was  issued  on  3.2.1970  and  declaration  under  Section  6(1)  was  

1

Page 2

issued on 24.8.1972. The Special  Land Acquisition Officer  passed different  

awards for different parcels of land and fixed market value of the acquired land  

in the range of Rs.1.75 per square meter to Rs. 2.50 per square meter.  

2. The appellants did not file application under Section 18 of the Act for  

determination of compensation by the Court, but after amendment of the Act  

with effect from 24.9.1984 and disposal of the references made at the instance  

of  other  landowners,  they  filed  an  application  under  Section  28A(1)  for  

redetermination  of  market   value  of  the  acquired  land.   The  Special  Land  

Acquisition Officer held that the landowners are entitled to compensation at the  

rate of Rs.1.20 per square meter to Rs.2/- per square meter. The appellants then  

filed an application under Section 28A(3) for award of compensation at the rate  

of Rs.100/- per square meter.  They pleaded that the acquired land was very  

close to Sion-Panvel Highway and had tremendous non-agricultural potential,  

nearby  area  had  been  industrialized  and  District  Judge,  Raigad-Alibag  had  

awarded  higher  compensation  to  other  landowners  whose  lands  situated  at  

Village Ambetarkhar (Roadpali), Taluka Panvel had been acquired for the New  

Bombay Project.  The Special Land Acquisition Officer controverted the claim  

of the appellants and pleaded that on the date of Section 4(1) notification, i.e.,  

3.2.1970, the appellants’ land was undeveloped and was being used only for  

the purpose of agriculture, which depended on monsoon.  

2

Page 3

3. On the pleadings  of  the parties,  Civil  Judge,  Senior  Division,  Alibag  

(hereinafter described as ‘the Reference Court’) framed the following issues:

“1. Whether  the  claimants  prove  that  the  compensation  amount awarded by the opponent is insufficient and inadequate  in  view  of  the  situation,  location,  sale  statistics  and  N.A.  potentiality of the acquired land.

2. Whether  the  claimants  are  entitled  to  get  enhanced  compensation?  If yes, what quantum?

3. What order or award?”

4. In  support  of  their  claim,  the  appellants  examined Shri  Abdul  Majid  

Mulla (one of the landowners) and Shri Vikrant Manohar Vaidya,  who had  

prepared valuation report (Ext.24) and map (Ext.25).  They also relied upon  

certified  copies  of  the  judgment  of  the  High  Court  in  F.A.  No.544/90  –  

Chandar  Krishan  Gayakwad  v.  Special  Land  Acquisition  Officer,  Panvel  

(Ext.29), F.A. No.423/96 – State of Maharashtra v. Chandrakant Bhiva Patil  

(Ext.30),  F.A.  No.1074/89  –  State  of  Maharashtra  v.  Laxman  Bhiva  Patil  

(Ext.31),  F.A.  No.457/93 – State of  Maharashtra  v.  Ramachandra Damodar  

Koli and others (Ext.16) as also the awards passed by the Reference Court in  

L.A.R.  No.168/86  (Ext.13),  L.A.R.  No.172/86  (Ext.14)  and  L.A.R.  

No.1334/2000 (Ext.15).   On behalf of the Special Land Acquisition Officer, no  

evidence was produced in support of the assertion that the acquired land was  

undeveloped and it did not have non-agricultural potential.   

3

Page 4

5. The Reference Court considered the evidence produced by the appellants  

and held that  the acquired land had non-agricultural potential and the  

Special  Land  Acquisition  Officer  committed  grave  error  by  fixing  

market value on the premise that it was an undeveloped land and was  

being used for agricultural purposes only.  The detailed reasons recorded  

by the Reference Court for arriving at this conclusion are reproduced  

below:

“It  is  an  admitted  fact  that  civic  amenities  were  available  to  Panvel Town prior to 1970. Construction of Thane Creek bridge  brought various villages including village Roadpali (Kolhekhar)  close  to  Bombay.  The  proximity  of  National  Highway  No.4,  Panvel-Sion Highway,  Diva-Panvel-Apta  railway line,  vicinity  of Jawahar Industrial Estate, MI D.C. Industrial Estate Taloja,  Panvel Industrial Estate, shows that even in the year 1970 the  lands  under  reference  were  enjoying  transport  and  communication  facility.  Thus,  the  lands  under  reference  were  ready-made  for  N.A.  use  and  only  obstacle  was  absence  of  conversion.  Therefore,  though the  lands  under  reference  were  under paddy cultivation it’s non-agricultural potentiality cannot  be  disputed  and  the  lands  will  have  to  be  assessed  as  non- agricultural land. While dealing with the land Reference Appeal  No. 92 and 94 of 1985 in respect of the lands situated at Panvel  acquired on 3.2.1970 the Hon’ble High Court Bombay has taken  judicial  note  about  non-agricultural  potentiality  of  the  nearby  area  of  Bombay  city. In  the  case  of  Shashikant  Krishanji  (kandpile)  Mali  V/s.  SLAO Panvel,  Raigad,  reported  in  1993  B.C.J.  27  it  is  observed  by  the  Hon’ble  Division  Bench  of  Bombay High Court that-

“the aforementioned towns, are, what they are because of  their closeness to the Metropolitan centre of Bombay. It is  also evident that the scope for growth in the direction of  Pune and Nashik has been virtually exhausted, and that,  growth now lies in the direction of the districts of Raigad  and Ratnagir.  Judicial notice has to be taken of the fact  that almost all the areas in the proximity of Bombay have  

4

Page 5

been growing at a phenomenal rate and that Panvel is no  exception to this feature of rapid growth.”

In  a  case  of  Nama  Padu  Huddar  Vs.  State  of  Maharashtra,  reported in 1994 B.C.J.  316 the Hon’ble High Court Bombay  observed that-

“Judicial note can be taken of the fact that the industrial  growth in and around Bombay has started with rapid stride  from the  year  1965  onwards.  In  fact,  the  growth is  by  leaps and bounds in the magnitude of industries as well as  number of industries and virtually all the industry of the  country are represented on the industrial estates scattered  on this highway. It is also an admitted position that on this  highway  on  all  sides  the  facility  of  electric  supply  is  available as also of abundant water supply. In the area in  question it is also an admitted position that all the lands  have  suitable  access  roads  of  Zilla  Parishad  and  State  Highway including lands which are the farthest from the  highway.”

The Learned D.G.P. Shri P.S. Patil, for the Opponent argued that  the lands under endurance were paddy yielding land depending  upon mansoon, yielding once in a year, and therefore, the lands  under reference were not having N.A. potentiality on the date of  notification. However, in view of the observation of the Hon’ble  Bombay  High  Court  in  the  above  cited  ruling  argument  advanced by learned D.G.P. is devoid of substance. In view of  Section 56 of the Indian Evidence Act a fact judicially noticed  need not be proved. The effect of taking judicial note of any fact  means recognition of the fact without formal proof and no one  can  question  it.  Even  court  can’t  insist  of  formal  proof  by  evidence. Judicial note take place of proof. Nearness of Bombay  City which is economic capital of our country and magnitude of  industrial  development  around  the  lands  under  reference  is  sufficient  to  say  that  the  lands  under  reference  were  having  tremendous N.A. potentiality on the date of notification.”

(emphasis supplied)

6. The Reference Court referred to the judgments of District Judge, Raigad-

Alibag in LAR Nos.168/86 and 172/86 by which compensation at the  

rate of Rs.90/- per square meter was awarded for the land situated at  

5

Page 6

Ambetarkhar (Roadpali), Taluka Panvel, which was also acquired for the  

New  Bombay  Project,  but  held  that  the  same  are  of  no  help  to  the  

appellants because in those cases, this Court had issued a direction to the  

Special Land Acquisition Officer to pay compensation at the market rate  

prevailing as on 1.1.1977.   

7. The Reference Court then noticed the judgments of the High Court in  

Shashikant  Krishanji  v.  Special  Land  Acquisition  Officer,  Panvel,  

Raigad  (1993)  BCJ  27,  Nama  Padu  Huddar  v.  State  of  Maharashtra  

(1994) BCJ 316 and observed:

“The certified copy of the judgment in First Appeal No. 544/90  Chandrakant Gaikwad V/s. S.L.A.O. Panvel is at Exh. 29. After  its  perusal  it  transpires  that  the  Hon'ble  High  Court  Bombay  granted compensation @ Rs. 25/- per sq. mtr. to the land situated  at village Taloja acquired vide notification dt. 3.2.1970. It seems  from the  certified  copy  of  the  judgment  in  First  Appeal  No.  423/96 Chandrakant Bhiva Patil  Vs.  S.L.A.O. Panvel Exh. 30  that the Hon'ble High Court Bombay awarded compensation @  Rs.  25/-  per  sq.  mtr.  To  the  land  situated  at  village  Nawada  acquired on 3.2.1970.  Certified copy of the judgment in First  Appeal  No.  1074/89 state  of  Maharashtra  Vs.  Laxman Bhiva  Patil  Exh.  31  shows  that  the  Hon'ble  High  Court  Bombay  granted compensation @ Rs.  25/-  per  sq.  mtr.  To the land of  Village Pendhar,  Taluka Panvel,  acquired vide notification dt.  3.2.1970.

Thus, from the judgments on record it is quite obvious that the  Hon'ble High Court Bombay has awarded compensation @ Rs.  25/-  per  sq.  mtr.  In  respect  of  the  lands  of  village  Taloja,  Pendhar and Nawade acquired vide Notification dt. 3.2.1970. So  far as lands under reference are concerned, in a case reported in  1997(2)  Mh.  L.R.  325  State  of  Maharashtra  ..  Appellant  Vs.  

6

Page 7

Ramchand Damodar Koli and others.. Respondents, the Hon'ble  High Court Bombay has allowed the claimants' cross objection  and ordered that the claimants shall be entitled for compensation  @ Rs.  25/-  per  sq.  mtr.  On their  paying additional  court-fees  within two weeks.  The land involved in the abovecited ruling  belongs  to  Village Roadpali  (Ambetarkhar).  Ambetarkhar  and  Kolhekhar are the parts of Village Roadpali. The land involved  in the reference in hand and the land involved in the abovecited  ruling  acquired  for  the  same  purpose  i.e.  for  New  Bombay  Project,  vide  Notification  dt.  3.2.1970.  It  reveals  from  xerox  copy of from the letter No. Civil/Reg. No. 28.01.2002 dt.  3rd  July,  2003  addressed  to  the  Secretary,  Government  of  Maharashtra,  L  &  J  Department  Mantralya  Mumbai,  by  the  Asstt. Govt. Pleader, High Court, Mumbai, produced on record  with the list Exh. 33/1 by the Ld.D.G.P., that, in First Appeal  No.  560/91 arising out  of  LAR No. 350/89 the Hon'ble  High  Court Bombay awarded compensation @ Rs. 25/- per sq. mtr. To  the  land from village  Roadpali,  and the  Asstt.  Govt.  Pleader,  High  Court  Mumbai,  opined  that  the  said  case  is  not  fit  for  appeal. The land involved in the reference in hand and the land  involved  in  the  case  reported  in  1997(2)  Mh.  L.R.  325  are  virtually  identical  situated  in  the  same  area  bearing  similar  topographical and physical characteristics covered by the same  notification dt.3.2.1970. When the nearby land of the land under  reference fetch market value @ Rs. 25/- per sq. mtr.  On the date  of notification, certainly the land under reference fetch the same  market value.”

(as contained in the paper book)

8. The  State  Government  questioned  the  determination  made  by  the  

Reference Court by filing an appeal under Section 54 of the Act and prayed for  

reduction in the amount of compensation on the ground that the acquired land  

was undeveloped and was being used for agricultural purposes. Another plea  

taken by the State Government was that the Reference Court had erroneously  

overlooked the distance  criteria,  which was followed by the High Court  in  

other cases for determination of the amount of compensation. The appellants  

7

Page 8

also filed F.A. No.1118/2005 and prayed that the amount of compensation be  

enhanced keeping in view the judgment in LAR Nos. 168/86 and 172/86.  They  

pleaded that the Reference Court had not paid adequate attention to the fact that  

the  acquired  land was  in  the  vicinity  of  the  industrial  estates  developed at  

Taloja and Panvel and a number of highways.

9. The Division Bench of the High Court took cognizance of the earlier  

judgments  in  which the compensation  was determined keeping in  view the  

distance of the acquired land from Bombay-Pune Highway and held that the  

appellants are not entitled to compensation in excess of what was awarded to  

the  other  landowners.   The  Division  Bench  accepted  the  State’s  plea  for  

reduction in the amount of compensation and also held that 15% of market  

value is liable to be deducted towards development charges.  

10. The review petition filed by the appellants was partly allowed by the  

High Court vide order dated 7.6.2007 and it was held that those having land  

upto a distance of 500 meters from Bombay-Pune Highway shall be entitled to  

compensation at the rate of Rs. 20/- per square meter and those having land  

beyond 500 meters shall be entitled to compensation at the rate of Rs.18/- per  

square meter.

11. Shri Jayant Bhushan, learned senior counsel argued that the Reference  

Court  and  the  High  Court  committed  serious  error  by  not  awarding  

8

Page 9

compensation to the appellants at par with the other landowners whose claim  

for higher compensation was decided by District Judge, Raigad-Alibag in LAR  

Nos.168/86  and  172/86.  Learned  senior  counsel  emphasized  that  the  

appellants’ land and the land situated in Village Ambetarkhar was acquired for  

implementation of the New Bombay Project and argued that there could be no  

valid ground or justification to discriminate similarly situated landowners in  

the matter of award of compensation. He pointed out that the acquired land is  

in the vicinity of fully developed industrial area as also Sion-Panvel Highway,  

Mumabi-Goa Highway (NH-17)  apart  from Bombay-Pune Highway (NH-4)  

and  argued  that  the  compensation  awarded  to  the  appellants  should  be  

enhanced because the Reference Court and the High Court committed an error  

by not considering the geography of the land and its potential use for non-

agricultural purposes. Shri Bhushan submitted that while preparing valuation  

report (Ext.24), Shri Vikrant Manohar Vaidya had taken note of the fact that  

the acquired land was very close to the industrial estate developed at Panvel  

and Taloja and railway line had been laid, but the Reference Court and the  

High Court did not give due weightage to the expert report for the purpose of  

determination  of  the  amount  of  compensation  and  this  has  caused  serious  

injustice to the appellants. Learned senior counsel relied upon the judgment in  

Land  Acquisition  Officer,  Revenue  Divisional  Officer  v.  L.  Kamalamma  

(1998) 2 SCC 385 and argued that the distance from the highway cannot be  

made the sole benchmark for fixing market value of the acquired land which is  

9

Page 10

in the vicinity of fully developed area. Shri Bhushan also invited our attention  

to judgment dated 21.6.2009 of the Division Bench of the Bombay High Court  

whereby the appeals  filed  by the  State  of  Maharashtra  and the  landowners  

against the judgment of District Judge, Raigad in LAR No. 172 of 1986 were  

disposed  of  by  assessing  market  value  of  the  land  situated  at  Village  

Ambetarkhar at Rs.60/-  per square meter as on 1.1.1977.

12. Learned counsel for the respondents supported the impugned judgment  

and  order  and  argued  that  the  High  Court  did  not  commit  any  error  by  

determining the amount of compensation keeping in view the distance criteria,  

which  was  applied  in  all  other  cases  for  fixing  market  value  of  the  land  

acquired for the New Bombay Project.  Learned counsel also submitted that the  

judgment of the Division Bench in FA Nos. 219-220 of 1989 and FA Nos. 568-

569 of 1989 cannot be relied upon for awarding higher compensation to the  

appellants  because  in  respect  of  the  land  situated  in  Village  Ambetarkhar,  

Taluka Panvel, District Raigad, this Court had issued direction in the earlier  

round of litigation that the compensation be determined on the basis of market  

value prevailing on 1.1.1977.

13. We have considered the respective arguments and carefully perused the  

record.  It is settled law that while fixing market value of the acquired land, the  

Land Acquisition Collector is required to keep in mind the following factors:

(i) Existing geographical situation of the land.

1

Page 11

(ii) Existing use of the land.

(iii) Already available advantages, like proximity to National or State  

High Way or road and/or developed area.

(iv) Market  value  of  other  land  situated  in  the  same  

locality/village/area or adjacent or very near the acquired land.

14. In Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 577,  

this Court laid down the following principles for determination of market value  

of the acquired land:  

“Section  23  of  the  Act  specifies  the  matters  required  to  be  considered in determining the compensation; the principal among  which is the determination of the market value of the land on the  date of the publication of the notification under sub-section (1) of  Section 4. One  of  the  principles  for  determination  of  the  amount  of  compensation for acquisition of land would be the willingness of  an informed buyer to offer the price therefor. It is beyond any cavil  that  the  price  of  the  land  which  a  willing  and  informed  buyer  would offer would be different in the cases where the owner is in  possession and enjoyment of the property and in the cases where  he is not. Market value is ordinarily the price the property may fetch in the  open market if sold by a willing seller unaffected by the special  needs  of  a  particular  purchase.  Where  definite  material  is  not  forthcoming either  in  the  shape  of  sales  of  similar  lands in  the  neighbourhood at or about the date of notification under Section  4(1) or otherwise, other sale instances as well as other evidences  have to be considered. The  amount  of  compensation  cannot  be  ascertained  with  mathematical accuracy. A comparable instance has to be identified  having  regard  to  the  proximity  from  time  angle  as  well  as  proximity from situation angle. For determining the market value  of the land under acquisition, suitable adjustment has to be made  having regard to various positive and negative factors vis-à-vis the  

1

Page 12

land under  acquisition  by placing the two in juxtaposition.  The  positive and negative factors are as under:

Positive factors Negative factors

(i) smallness of size (i) largeness of area (ii) proximity to a road (ii) situation in the interior at a  

distance from the road (iii) frontage on a road (iii)  narrow strip  of  land  with  

very  small  frontage  compared  to depth

(iv) nearness to developed  area

(iv)  lower  level  requiring  the  depressed  portion  to  be  filled  up

(v) regular shape (v) remoteness from developed  locality

(vi) level vis-à-vis land under  acquisition

(vi)  some  special  disadvantageous  factors  which  would deter a purchaser

(vii)  special  value  for  an  owner of an adjoining property  to  whom  it  may  have  some  very special advantage

Whereas a smaller plot may be within the reach of many, a large  block of land will have to be developed preparing a layout plan,  carving out roads, leaving open spaces, plotting out smaller plots,  waiting for purchasers and the hazards of an entrepreneur. Such  development charges may range between 20% and 50% of the total  price.”

15. In Atma Singh v. State of Haryana (2008) 2 SCC 568, the Court held:

“In order to determine the compensation which the tenure-holders  are entitled to get for their land which has been acquired, the main  question to be considered is what is the market value of the land.  Section 23(1) of the Act lays down what the court has to take into  consideration while Section 24 lays down what the court shall not  take into consideration and have to be neglected. The main object  of the enquiry before the court is to determine the market value of  the  land  acquired.  The  expression  “market  value”  has  been  the  subject-matter of consideration by this Court in several cases. The  market value is the price that a willing purchaser would pay to a  

1

Page 13

willing  seller  for  the  property having due  regard  to  its  existing  condition  with  all  its  existing  advantages  and  its  potential  possibilities when led out in most advantageous manner excluding  any advantage due to carrying out of  the scheme for which the  property  is  compulsorily  acquired.  In  considering  market  value  disinclination of the vendor to part with his land and the urgent  necessity  of  the  purchaser  to  buy  should  be  disregarded.  The  guiding star would be the conduct of hypothetical willing vendor  who  would  offer  the  land  and  a  purchaser  in  normal  human  conduct  would  be  willing  to  buy  as  a  prudent  man  in  normal  market conditions but not an anxious dealing at arm's length nor  facade of sale nor fictitious sale brought about in quick succession  or  otherwise  to  inflate  the  market  value.  The  determination  of  market value is the prediction of an economic event viz. a price  outcome of hypothetical sale expressed in terms of probabilities.  See Kamta Prasad Singh v. State of Bihar, Prithvi Raj Taneja v.  State  of  M.P.,  Administrator  General  of  W.B.  v.  Collector,  Varanasi and Periyar Pareekanni Rubbers Ltd. v. State of Kerala.

For ascertaining the market value of the land, the potentiality of  the  acquired  land  should  also  be  taken  into  consideration.  Potentiality  means  capacity  or  possibility  for  changing  or  developing  into  state  of  actuality.  It  is  well  settled  that  market  value of a property has to be determined having due regard to its  existing condition with all its existing advantages and its potential  possibility  when  led  out  in  its  most  advantageous  manner.  The  question whether a land has potential value or not, is primarily one  of fact depending upon its condition, situation, user to which it is  put  or  is  reasonably  capable  of  being  put  and  proximity  to  residential,  commercial  or  industrial  areas  or  institutions.  The  existing amenities like water, electricity, possibility of their further  extension, whether near about town is developing or has prospect  of development have to be taken into consideration. See Collector  v. Dr. Harisingh Thakur, Raghubans Narain Singh v. U.P. Govt.  and Administrator General, W.B. v. Collector Varanasi. It has been  held  in  Kausalya  Devi  Bogra  v.  Land  Acquisition  Officer  and  Suresh Kumar v. Town Improvement Trust that failing to consider  potential value of the acquired land is an error of principle.”

16. In fixing market value of the acquired land, which is undeveloped or  

under-developed, the Courts have generally approved deduction of 1/3rd of the  

market  value  towards  development  cost  except  when  no  development  is  

1

Page 14

required to be made for implementation of the public purpose for which land is  

acquired.  In Kasturi v. State of Haryana (2003) 1 SCC 354, the Court held:

“............It  is  well  settled  that  in  respect  of  agricultural  land  or  undeveloped  land  which  has  potential  value  for  housing  or  commercial purposes, normally 1/3rd amount of compensation has  to be deducted out of the amount of compensation payable on the  acquired land subject to certain variations depending on its nature,  location, extent of expenditure involved for development and the  area required for roads and other civic amenities to develop the  land  so  as  to  make  the  plots  for  residential  or  commercial  purposes. A land may be plain or uneven, the soil of the land may  be  soft  or  hard  bearing  on  the  foundation  for  the  purpose  of  making construction; may be the land is situated in the midst of a  developed area all around but that land may have a hillock or may  be low-lying or  may be having deep ditches.  So the amount of  expenses that may be incurred in developing the area also varies. A  claimant who claims that his land is fully developed and nothing  more  is  required  to  be  done  for  developmental  purposes,  must  show on the basis of evidence that it is such a land and it is so  located. In the absence of such evidence, merely saying that the  area  adjoining  his  land  is  a  developed  area,  is  not  enough  particularly when the extent of the acquired land is large and even  if  a  small  portion  of  the  land  is  abutting  the  main  road in  the  developed area, does not give the land the character of a developed  area. In 84 acres of land acquired even if one portion on one side  abuts  the  main  road,  the  remaining  large  area  where  planned  development is required, needs laying of internal roads, drainage,  sewer,  water,  electricity  lines,  providing  civic  amenities,  etc.  However, in cases of some land where there are certain advantages  by virtue of the developed area around, it may help in reducing the  percentage  of  cut  to  be  applied,  as  the  developmental  charges  required may be less on that account. There may be various factual  factors  which  may  have  to  be  taken  into  consideration  while  applying  the  cut  in  payment  of  compensation  towards  developmental charges, may be in some cases it is more than 1/3rd  and in  some cases  less  than 1/3rd.  It  must  be remembered that  there is difference between a developed area and an area having  potential value, which is yet to be developed. The fact that an area  is developed or adjacent to a developed area will not ipso facto  make every land situated in the area also developed to be valued as  

1

Page 15

a building site or plot, particularly when vast tracts are acquired, as  in this case, for development purpose.”

(emphasis supplied)

17. The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v. State  

of  U.P.  (2003)  10  SCC  525,  V.  Hanumantha  Reddy  v.  Land  Acquisition  

Officer & Mandal Revenue Officer (2003) 12 SCC 642, H.P. Housing Board v.  

Bharat  S.  Negi  (2004)  2  SCC  184  and  Kiran  Tandon  v.  Allahabad  

Development Authority (2004) 10 SCC 745.  In Lal Chand v. Union of India  

(2009)  15  SCC  769,  the  Court  indicated  that  percentage  of  deduction  for  

development  to  be  made  for  arriving  at  market  value  of  large  tracts  of  

undeveloped agricultural land with potential for development can vary between  

20 and 75 per cent of the price of developed plots and observed:  

“The ‘deduction for development’ consists of two components. The  first  is  with  reference  to  the  area  required  to  be  utilised  for  developmental works and the second is the cost of the development  works. …

Therefore the deduction for the ‘development factor’ to be made with  reference to the price of a small plot in a developed layout, to arrive  at the cost of undeveloped land, will be for more than the deduction  with reference to the price of a small plot in an unauthorised private  layout  or  an  industrial  layout.  It  is  also  well  known  that  the  development cost incurred by statutory agencies is much higher than  the  cost  incurred  by  private  developers,  having  regard  to  higher  overheads and expenditure.”

18. In A.P. Housing Board v. K. Manohar Reddy (2010) 12 SCC 707, the  

rule  of  1/3rd deduction  towards  development  cost  was  invoked  while  

1

Page 16

determining market  value  of  the  acquired  land.  In  Subh Ram v.  State  of  

Haryana (2010) 1 SCC 444, this Court held as under:  

“Deduction of “development cost” is the concept used to derive the  “wholesale price” of a large undeveloped land with reference to  the “retail price” of a small developed plot. The difference between  the  value  of  a  small  developed  plot  and  the  value  of  a  large  undeveloped land is the “development cost”. Two factors have a  bearing on the quantum (or percentage) of deduction in the “retail  price” as development cost. Firstly, the percentage of deduction is  decided with reference to the extent and nature of development of  the  area/layout  in  which  the  small  developed  plot  is  situated.  Secondly,  the  condition  of  the  acquired  land  as  on  the  date  of  preliminary  notification,  whether  it  was  undeveloped,  or  partly  developed, is considered and appropriate adjustment is made in the  percentage of deduction to take note of the developed status of the  acquired land.

The  percentage  of  deduction  (development  cost  factor)  will  be  applied  fully  where the acquired land has  no development.  But  where the acquired land can be considered to be partly developed  (say for example, having good road access or having the amenity  of  electricity,  water,  etc.)  then  the  development  cost  (that  is,  percentage of deduction) will be modulated with reference to the  extent  of  development  of  the  acquired  land  as  on  the  date  of  acquisition.  But  under  no  circumstances,  will  the  future  use  or  purpose of acquisition play a role in determining the percentage of  deduction towards development cost.”

(emphasis supplied)

19. In  Land  Acquisition  Officer,  Revenue  Divisional  Officer  v.  L.  

Kamalamma (supra), this Court held as under:

“When  a  land  is  acquired  which  has  the  potentiality  of  being  developed into an urban land, merely because some portion of it  abuts the main road, higher rate of compensation should be paid  while in respect of the lands on the interior side it should be at  lower rate may not stand to reason because when sites are formed  those abutting the main road may have its advantages as well as  disadvantages. Many a discerning customer may prefer to stay in  the interior and far away from the main road and may be willing to  pay a reasonably higher price for that site. One cannot rely on the  

1

Page 17

mere  possibility  so  as  to  indulge  in  a  meticulous  exercise  of  classification  of  the  land as  was  done by the  Land Acquisition  Officer  when  the  entire  land  was  acquired  in  one  block  and  therefore classification of the same into different categories does  not stand to reason.”

20. In  these  appeals,  we  find  that  while  determining  the  amount  of  

compensation at the rate of Rs.25/- per square meter , the Reference Court had  

taken notice of the fact that  the acquired land was in the proximity of National  

Highway No.4,  Panvel-Sion Highway and the  construction of  Thane Creek  

Bridge which brought various villages including village Roadpali (Kolhekhar)  

close to Bombay.  The Reference Court also noted that civic amenities were  

available  to  Panvel  town  prior  to  1970  and  industrial  estates  had  been  

developed  at  Taloja  and  Panvel  and  concluded  that  the  acquired  land  was  

available for non-agricultural use and the only obstruction was the absence of  

conversion.  The  High  Court  did  not  advert  to  the  factors  noted  by  the  

Reference Court  and reduced the amount  of  compensation by mechanically  

applying the distance criteria, i.e., distance of the acquired land from Bombay-

Pune Highway adopted  in  the  earlier  judgments.   Therefore,  the  impugned  

judgment and order cannot be sustained.

21. Although, the appeals filed by the State Government and the landowner  

against the judgment of District Judge, Raigad in LAR No.172/86 were decided  

after six months of the impugned judgment, we find that compensation for the  

land situated at Village Ambetarkhar had been awarded at the rate of Rs.60/-  

1

Page 18

per square meter primarily on the ground that in the earlier round of litigation,  

this Court had issued a direction to the Special Land Acquisition Officer to  

determine market value as on 1.1.1977.

22. In the light of the subsequent judgment, we may have remitted the case  

to the High Court for fresh adjudication of the appeals, but keeping in view the  

fact that a period of 42 years has elapsed, we do not consider it proper to adopt  

that course and feel that ends of justice will be adequately met by restoring the  

determination of compensation made by the Reference Court.

23. In the result, the appeals are allowed.  The impugned judgment and order  

are  set  aside  and  the  one  passed  by  the  Reference  Court  for  payment  of  

compensation  to  the  appellants  at  the  rate  of  Rs.25/-  per  square  meter  is  

restored.   The  respondents  are  directed  to  pay  the  balance  amount  to  the  

appellants  with all  other  statutory benefits  and interest  within three months  

from today.

24. With  a  view  to  ensure  that  the  landowners  are  not  fleeced  by  the  

middleman, we deem it proper to issue the following further directions:

(i) Within  one  month  from today,  the  Special  Land  Acquisition  Officer  

shall depute an officer subordinate to him not below the rank of Naib  

Tehsildar  or  an equivalent  rank,  to  get  in  touch with the landowners  

1

Page 19

and/or their legal representatives and inform them about their entitlement  

to receive the balance amount of compensation.

(ii) The concerned officers shall instruct the landowners and/or their legal  

representatives  to  open  savings  bank  account  in  a  nationalized  or  

scheduled bank, in case they already do not have such account.

(iii) The  account  numbers  of  the  landowners  and/or  their  legal  

representatives should be furnished by the concerned officer to the Land  

Acquisition Officer within a period of one month.

(iv) Within  next  one  month,  the  Special  Land  Acquisition  Officer  shall  

deposit the amount of compensation along with other statutory benefits  

in the bank accounts of the landowners and/or their legal representatives  

in the form of account payee cheques.

……………….………………….…J.      [G.S. Singhvi]

……..……..…..…..………………..J.      [Sudhansu Jyoti Mukhopadhaya]

New Delhi; July 02, 2012.

1