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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.6414     OF      2012   

Salaha Begaum, ETC.          …Appellants

versus

Special Land Acquisition Officer …Respondent

J     U     D     G     M     E     N     T   

G.     S.     Singhvi,     J.   

1. Dissatisfied with the enhancement granted by the Karnataka High  

Court in the amount of compensation determined by the Reference Court,  

the appellants have preferred this appeal.   

2. The appellants’  land comprised in Survey No.39/MF (3 acres 6  

guntas), Survey No.39/E (1 acre 23 guntas) and Survey No.39/MJI (9  

acres 15 guntas) situated in Srirampuram village, Mysore Taluk was  

acquired by the State Government for construction of Varuna Nalla.  For  

this purpose, notification under Section 4(1) of the Land Acquisition Act,  

1894 (for short, ‘the Act’) was issued on 9.3.1995.  After finalization of  

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the acquisition proceedings, the Special Land Acquisition Officer passed  

award dated 28.11.1995 and fixed market value of the acquired land at  

the rate of Rs.65,000/-  per acre. On a reference made by the Collector  

under Section 18 of the Act, the Reference Court determined the amount  

of compensation at the rate of Rs.1,00,000/- per acre.  

3. The appellants filed appeals under Section 54 of the Act and  

pleaded that they were entitled to compensation at the rate of  

Rs.2,20,000/- per acre. The Division Bench of the High Court partly  

allowed the appeals and enhanced the amount of compensation from  

Rs.1,00,000/- to Rs.1,70,000/- per acre.

4. Learned senior counsel for the appellants relied upon judgment  

dated 15.9.2003 of another Division Bench of the High Court in MFA  

No.2435/2000 Sri Ugregowda v. Special Land Acquisition Officer,  

registered sale deed dated 7.1.1993 (Exhibit P-12) and argued that the  

High Court committed serious error by not awarding compensation to the  

appellants at the rate of Rs.2,20,000/- per acre with benefit of escalation  

in the price of land. Learned senior counsel pointed out that the land of  

Sri Ugregowda was situated in the same village and was acquired for the  

same purpose i.e. construction of Varuna Nalla and argued that once the  

High Court accepted his claim for higher compensation, there could be no  

justification to deny similar treatment to the appellants. He further  

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pointed out that the land belonging to Shri Ugregowda was acquired vide  

notification dated 20.1.1993 and that of the appellants’ was acquired vide  

notification dated 9.3.1995 and argued that his clients are entitled to the  

benefit of 12% increase per annum.       

5. Learned counsel for the respondents supported the impugned  

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

fixing market value of the appellants’ land at the rate of Rs.1,70,000/- per  

acre.

6. We have considered the respective arguments. Although, the lands  

belonging to the appellants and Sri Ugregowda were acquired by two  

different notifications, the purpose of acquisition was the same, i.e.,  

construction of Varuna Nalla. It is not in dispute that in the appeal filed  

by Sri Ugregowda under Section 54 of the Act, the High Court relied  

upon sale deed dated 7.1.1993 and held that he was entitled to  

compensation at the rate of Rs.2,20,000/- per acre. However, as Sri  

Ugregowda had confined his claim for compensation to Rs.2,00,000/- per  

acre, the High Court did not award compensation at the rate of  

Rs.2,20,000/- per acre.

7. A careful reading of the impugned judgment shows that the  

Division Bench of the High Court did take notice of sale deed dated  

7.1.1993 but treated the sale consideration for three acres land as  

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Rs.5,10,000/- by deducting Rs.1,50,000/- towards value of farmhouse and  

electric connection.  By doing so, the High Court committed serious error  

because in the case of Sri Ugregowda no such deduction was made and  

sale deed dated 7.1.1993 was relied upon for holding that he was entitled  

to compensation at the rate of Rs.2,20,000/- per acre. In our view, once  

the High Court accepted sale deed dated 7.1.1993 as the touchstone for  

determination of the compensation payable for identically situated land,  

there could be no justification for awarding less compensation to the  

appellants.

8. Another error committed by the High Court is that it has not given  

the benefit of principle of escalation of price to the appellants. This Court  

has repeatedly held that the exercise undertaken for fixing market value  

and  determination  of  compensation  payable  to  the  landowner  should  

necessarily  involve consideration  of  escalation  in  land prices  –  Ranjit  

Singh v. UT of Chandigarh (1992) 4 SCC 659, Krishi Utpadan Mandi  

Samiti v. Bipin Kumar (2004) 2 SCC 283, Land Acquisition Officer v.  

Ramanjulu (2005) 9 SCC 594,  Sardar Jogendra Singh v. State of U.P.  

(2008) 17 SCC 133 and Revenue Divisional Officer-cum-LAO v. Sk.  

Azam Saheb (2009) 4 SCC 395.

9. In ONGC Ltd. v. Rameshbhai Jivanbhai Patel (2008) 14 SCC 745,  

the Court held as under:

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“Primarily, the increase in land prices depends on four factors:  situation of  the land,  nature of  development in surrounding  area, availability of land for development in the area, and the  demand for land in the area. In rural areas, unless there is any  prospect  of  development  in  the  vicinity,  increase  in  prices  would be slow, steady and gradual, without any sudden spurts  or jumps. On the other hand, in urban or semi-urban areas,  where the development is faster, where the demand for land is  high and where there is construction activity all around, the  escalation in market price is at a much higher rate, as com- pared to rural areas. In some pockets in big cities, due to rapid  development  and  high  demand  for  land,  the  escalations  in  prices have touched even 30% to 50% or more per year, dur- ing the nineties.

On the other extreme, in remote rural areas where there was  no  chance  of  any  development  and  hardly  any  buyers,  the  prices stagnated for years or rose marginally at a nominal rate  of 1% or 2% per annum. There is thus a significant difference  in  increases  in  market  value  of  lands  in  urban/semi-urban  areas and increases in market value of lands in the rural areas.  Therefore, if the increase in market value in urban/semi-urban  areas is about 10% to 15% per annum, the corresponding in- creases in rural areas would at best be only around half of it,  that  is,  about  5% to  7.5% per  annum.  This  rule  of  thumb  refers to the general trend in the nineties, to be adopted in the  absence of clear and specific evidence relating to increase in  prices. Where there are special reasons for applying a higher  rate of increase, or any specific evidence relating to the actual  increase in prices, then the increase to be applied would de- pend upon the same.

Normally, recourse is taken to the mode of determining the  market  value  by  providing  appropriate  escalation  over  the  proved market  value  of  nearby lands  in  previous  years  (as  evidenced by sale transactions or acquisitions), where there is  no evidence of any contemporaneous sale transactions or ac- quisitions of comparable lands in the neighbourhood. The said  method is reasonably safe where the relied-on sale transac- tions/acquisitions  precede  the  subject  acquisition  by only  a  few years, that is, up to four to five years. Beyond that it may  be unsafe, even if it relates to a neighbouring land. What may  be a reliable standard if the gap is of only a few years, may  

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become unsafe and unreliable standard where the gap is lar- ger. For example, for determining the market value of a land  acquired in 1992, adopting the annual increase method with  reference to a sale or acquisition in 1970 or 1980 may have  many pitfalls. This is because, over the course of years, the  ‘rate’  of  annual  increase  may itself  undergo drastic  change  apart from the likelihood of occurrence of varying periods of  stagnation in prices or sudden spurts in prices affecting the  very standard of increase.”

10. In view of the above discussion, we hold that the appellants are  

entitled to compensation at the rate of Rs.2,20,000/-  per acre with benefit  

of 10% increase for the time gap of two years between the notification  

issued for the  acquisition of Shri Ugregowda’ s land and the notification  

issued for the acquisition of their land.    

11. In the result, the appeal is allowed, the impugned judgment is set  

aside and it is declared that the appellants are entitled to compensation at  

the rate of Rs.2,64,000/- per acre. The competent authority is directed to  

pay to the appellants the enhanced compensation together with other  

statutory benefits.  

12. With a view to ensure that the appellants are not fleeced by the  

middlemen, we direct the respondent to depute an officer of the rank of  

Tahsildar who shall contact the appellants and ask them to open bank  

accounts, if they already do not have such accounts.  This shall be done  

within a period of 8 weeks from today.  Thereafter, the concerned official  

shall inform the respondent about the bank account nos. of the appellants.  

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Within next 8 weeks, the respondent shall deposit the amount in the bank  

account of the appellants in the form of a demand draft got prepared from  

a nationalized bank.

…..……….....……..….………………….…J.       [G.S. SINGHVI]

…………..………..….………………….…J.     [SUDHANSU JYOTI MUKHOPADHAYA]

New Delhi, December 03, 2012.

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