REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 6986­6987  OF 2018 (Arising out of S.L.P.(C) No.10358­10359 of 2015)

Union of India                       ….Appellant(s)

VERSUS

Dyagala Devamma & Ors.             ….Respondent(s)

                 J U D G M E N T

Abhay Manohar Sapre, J.

1) Leave granted.

2) These appeals are filed against the final

judgment and  order  dated  08.08.2014  passed  by

the High Court of Judicature at Hyderabad for the

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State of Telangana and the State of Andhra Pradesh

in LAAS No.762 of 2010 and CO(SR) No.373 of 2011

whereby the High Court dismissed the appeal filed

by the appellant herein and partly allowed the cross

objections filed by the respondents herein and

enhanced the compensation as mentioned in detail

infra.

3) We herein set out the facts, in brief, to

appreciate the issues involved in these appeals.

4) 0n 12.11.2003,   the State of Andhra Pradesh

issued a notification under Section 4 of the Land

Acquisition Act, 1894 (hereinafter referred to as “the

Act”) and acquired the land measuring about 101­

00 acres (SY No.398/3 and other connected survey

numbers) situated at Jagitial Municipality,  District

Karimnagar (AP). The acquisition of land was for a

public  purpose,  namely, "laying new broad gauge

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single railway line from Karimnagar to Jagitial Phase

–II by the appellant­Railways". This was followed by

issuance of notification under Section 6 of the Act

and then possession on 02.12.2003.

5) The Land Acquisition Officer (LAO) started

proceedings under Section 11 of the Act for

determination of the compensation payable  to the

landowners for their  lands. By award No.26/2006

dated 14.07.2006, the LAO determined the market

value of the acquired land at the rate of

"Rs.1,30,000/­ per acre for wet lands" and

"Rs.1,24,000/­ per acre for dry lands". The LAO also

awarded compensation for structures, wells etc. to

some landowners.  

6) The claimants (landowners) felt aggrieved and

sought reference under Section 18 of the Act to the

Civil Court in OP No.27/2007. By award dated

23.07.2010, the Civil Court (Sr. Civil Judge,

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Jagitial) re­determined the market value of the land

in question. The  Reference  Court determined the

market value of the acquired land at Rs.21,29,600/­

per acre uniformly.   However, having regard to the

totality of facts of the case, the  Reference  Court

considered it just and proper to deduct 50%

towards developmental charges and accordingly

worked out the market value of the land at

"Rs.10,64,800/­ per acre" for being paid to the

landowners.  

7) The appellant­Railways felt aggrieved and filed

appeal before the  High  Court of  Andhra  Pradesh

whereas the landowners also felt aggrieved and filed

cross objections claiming enhancement of the

market value determined by the Reference Court.

8) By impugned judgment, the High Court

dismissed the appeal filed by the appellant­Railways

and partly allowed the cross objections filed by the

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landowners and enhanced the compensation to

Rs.15,97,200/­  per  acre.  The  High  Court,  upheld

the market value determined by the Reference Court

i.e. Rs.21,29,600/­ per acre but reduced the

deduction towards developmental charges from 50%

to 25% and accordingly worked out the

compensation “at the rate of Rs.15,97,200/­ per

acre”. It is against this judgment, the appellant­

Railways felt aggrieved and filed the present appeals

by way of special leave before this Court.

9) Heard Mr. Vikramjit Banerjee, learned

Additional  Solicitor  General for the  appellant­UOI

and Mr. B. Adinarayana Rao, learned senior counsel

for the respondents.

10) Mr. Vikramjit Banerjee, learned Additional

Solicitor General appearing for the appellant while

assailing the legality and correctness of the

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impugned judgment essentially made two

submissions.  

11) In the first place, learned ASG contended that

the High Court erred in further enhancing the

compensation at Rs.15,97,200/­  per acre.  

12) According to him the compensation

determined by the Reference Court payable at the

rate of Rs.10,64,800/­ per acre was just, legal and

proper and, therefore, it did not call for any further

enhancement.

13) In the second place,  learned ASG urged that

having placed reliance on exemplar Sale Deed (Ex­

P­18) for determining the market value, the

Reference Court rightly deducted 50% towards

development charges, whereas the High Court erred

in deducting 25% towards developmental charges.  

14) According to learned ASG, the High Court

ought to have appreciated that there were three

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distinguishing factors appearing from the exemplar

sale  deed (Ex.P­18).  Due to these three factors,

deduction  of 50%  towards  developmental charges

from the market value was called for.  These factors

are, First, Sale Deed (Ex.P­18) was for a very small

piece of land  (19 Guntas=1/2 acre);  Second, the

land which was the subject matter of Ex­P­18 had a

peculiar site because it was situated facing two

roads ­ one on the east side and other on the north

side; and Third,  it was a developed land.  

15) It was, therefore, urged that so far as the land

in  question is concerned, the same  did  not  have

these factors and, therefore, the  Reference  Court

rightly considered it proper to deduct 50% towards

developmental charges from the market value which

was worked out on the basis of Sale Deed (Ex.P­18).

It was urged that the High Court without assigning

any reasons  much less cogent reasons erred in

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reducing developmental charges from 50% to 25%

from  the  market value.   Learned  ASG, therefore,

prayed for restoration of the award of the Reference

Court  in place of  impugned judgment of  the High

Court.

16) Per contra, learned senior counsel for the

respondents (landowners) supported the impugned

judgment  and contended that it  does  not  call for

any interference and hence the appeals deserve to

be dismissed.

17) The question arises for consideration in these

appeals is whether the High Court was justified in

deducting 25% towards developmental charges from

the  market  value  of the land  in  question against

50% deduction made by  the Reference Court.   In

other words, having regard to the facts and

circumstances  of the  case,  whether the  Reference

Court was justified in deducting 50% from the

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market value of the land or whether the High Court

was justified in deducting 25%.

18) Before  we examine the facts  of this  case, it is

necessary to take note of general principles of law on

the subject in question which are laid down by this

Court in several cases and some of which were also

cited at the Bar by the learned counsel for the parties.

Indeed,  if  we may say so,  law on the several  issues

urged herein by the learned counsel for the parties is

already settled by this Court and what has varied in

its application depends on the facts of each case.

19) In  Chimanlal Hargovinddas vs Special Land

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

this Court dealt with the question as to how the Court

should determine the valuation of the lands  under

acquisition and what broad principle of law relating to

acquisition of  land under the Act should be kept  in

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consideration to determine the proper market value of

the acquired land.  

20) In Para 4 of the judgment, this Court laid down

as many as 17 principles, which are reproduced below

for perusal:

“(1) to (4)…………………………………. (5) The market value of land under

acquisition has to be determined as on the crucial date  of publication  of the  notification under Section 4 of the Land  Acquisition  Act (dates of notifications under Sections 6 and 9 are irrelevant).

(6) 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 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.

(7) In doing so by the instances method, the court has to correlate the  market value reflected in the most comparable instance which provides the index of market value.

(8) Only  genuine instances  have to  be taken into  account. (Sometimes instances  are rigged up in anticipation of acquisition of land.)

(9) Even post­notification instances can be taken into account (1) if they are very proximate, (2)  genuine and  (3)  the  acquisition itself has not motivated the purchaser to pay a

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higher price on account of the resultant improvement in development prospects.

(10) The most comparable instances out of the genuine instances have to be identified on the following considerations:

(i) proximity from time angle, (ii) proximity from situation angle. (11) Having identified the instances

which  provide the index  of  market  value the price reflected therein  may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis­ à­vis land under acquisition by placing the two in juxtaposition.

(12) A  balance­sheet of  plus and  minus factors may be drawn for this purpose and the relevant  factors may be evaluated  in terms of price variation as a prudent purchaser would do.

(13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as  norm  for  plus factors  and unloading it for minus factors.

(14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:

     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

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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 vis­à­vis 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  have some very special  advantage

(15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and  most reliable guide.  For instance, take  the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10,000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a  lay out,  carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested  money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately  between 20 per  cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area,  whether building activity is picking  up,

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and  whether  waiting  period during  which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.

(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the judge must place himself.

(17) These are general guidelines to be applied with understanding informed with common sense.”

21) These principles are invariably kept in mind by

the Courts while determining the market value of the

acquired lands (also see  Union of India vs. Raj

Kumar Baghal Singh (Dead) Through Legal

Representatives & Ors., (2014) 10 SCC 422).

22) In addition to these principles,   this  Court in

several cases have laid down that while determining

the true market value of the acquired land especially

when the acquired land is a large chunk of

undeveloped land, it  is just and reasonable to make

appropriate deduction towards expenses for

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development of acquired land. It has also been

consistently held that at what percentage the

deduction should be made varies from 10% to  86%

and, therefore, the deduction should be made keeping

in mind the nature of the land, area under acquisition,

whether the land  is  developed or  not  and, if so, to

what extent, the purpose of acquisition,  etc.   It  has

also been held that while determining the  market

value of the large chunk of land, the value of smaller

pieces of land can be taken  into consideration after

making proper deduction in the value of lands

especially when sale deeds of larger parcel of land are

not available.  This Court has also laid down that the

Court should also take into consideration the

potentiality of the acquired land apart from other

relevant considerations. This Court has also

recognized that the Courts can always apply

reasonable amount of guesswork to balance the

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equities in order to fix a just and fair market value in

terms of parameters specified under Section 23 of the

Act. (See  Trishala Jain & Anr. Vs. State of

Uttaranchal & Anr., (2011) 6 SCC 47 and Vithal Rao

& Anr. Vs. Special Land Acquisition Officer, (2017)

8 SCC 558)  

23) Keeping  in mind the aforementioned principles,

when we take note of the facts of the case at hand, we

find that firstly, the land  acquired in  question is  a

large chunk of land (101 acres approx.); Secondly, it is

not fully developed; Thirdly, the   respondents

(landowners)  have  not filed  any exemplar sale  deed

relating to large pieces of land sold in acres to prove

the market value of the acquired land; Fourthly,

exemplar relied on by the respondents, especially

Ex.P­18 pertains to very small pieces of land (19

guntas); Fifthly, the three distinguishing features

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noticed in the land in sale deed (Ex.P­18) are not

present in the acquired land.   

24) It  was for the aforementioned reasons, in our

opinion, the Reference Court was justified in making

deduction of 50% towards developmental charges from

the market value.  The High Court, in our opinion, did

not assign any good reason as to why and on what

basis, it considered proper to make deduction towards

developmental charges at the rate of 25% in place of

50%.   

25) This Court has held in  Trishala Jain’s case

(supra) that it depends upon the facts of each case to

decide for  determination of the  market  value  of the

land as to  what percentage should be adopted for

deduction.   In our opinion, the reasons  mentioned

above were rightly made basis by the Reference Court

to support the deduction of 50%.   

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26) So far as the determination of market value made

by the Reference Court is concerned, i.e.,

Rs.21,29,600/­ per acre, the same having been upheld

by the High Court, we do not find any justification to

examine this issue again.   Even the learned ASG did

not challenge this finding and confined his

submissions only relating to the issue of percentage of

the deduction only.

27) Learned counsel for the respondents was not able

to point out any fact/evidence which could persuade

us to uphold the reasoning and conclusion arrived at

by the High Court in the impugned judgment.  

28) In view of the foregoing discussion, we are

inclined to uphold the reasoning and the conclusion

arrived at by the Reference Court instead of the High

Court.

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29) As a consequence of the foregoing discussion, the

appeals succeed and are accordingly allowed.

Impugned judgment is set aside and that of the

Reference Court (Civil Court) dated 23.07.2010 in OP

No.27/2007 is restored.

      ……........................……........J. [ABHAY MANOHAR SAPRE]

………...................................J  [UDAY UMESH LALIT]    

New Delhi; July 25, 2018   

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