HIMMAT SINGH Vs STATE OF M.P.
Bench: G.S. SINGHVI,SHIVA KIRTI SINGH,C. NAGAPPAN
Case number: C.A. No.-001247-001247 / 2007
Diary number: 9581 / 2006
Advocates: LAW ASSOCIATES Vs
D. S. MAHRA
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1247 OF 2007
Himmat Singh and others ....Appellants
versus
State of M.P. and another ....Respondents
J U D G M E N T
G.S. SINGHVI, J.
1. Feeling dissatisfied with the meagre enhancement granted by the learned
Single Judge of the Madhya Pradesh High Court in the amount of compensation
determined by II Additional District Judge, Shivpuri (hereinafter described as, ‘the
Reference Court’), the appellants have filed this appeal.
2. By notification dated 28.5.1987 issued under Section 4(1) of the Land
Acquisition Act, 1894 (for short, ‘the Act’), which was published on 12.6.1987,
the Government of Madhya Pradesh acquired the appellants’ land measuring 3.627
hectares comprised in Survey Nos.2, 10, 20, 22, 46, 48 and 166 of Village
Jagatpur, Tehsil Kolaras, District Shivpuri for construction of Broad Gauge Rail
Line by the Central Railway. Another parcel of land measuring 0.951 hectares
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comprised in Survey No.18, of which the appellants were the occupancy tenants,
was also acquired by the same notification. The possession of the acquired land
was taken on 30.11.1987. The Land Acquisition Officer passed an award dated
26.8.1989 and held that for the land measuring 3.627 hectares, the appellants are
entitled to total compensation of Rs.16,419 with solatium of Rs.4,926 and interest
amounting to Rs.985. For the land comprised in Survey No.18, no compensation
was awarded to the appellants. Instead, compensation was paid to respondent
Nos.3 and 4, namely, Jagdish Narayan s/o Mool Chand and Chandra Mohan s/o
Ram Dayal, whose names were recorded in the revenue records.
3. The appellants did not feel satisfied and filed applications under Section 18
of the Act for determination of the amount of compensation by the Court. They
also filed an application under Section 30 of the Act and pleaded that respondent
Nos.3 and 4 are not entitled to receive any compensation. Thereupon, the
Collector made a reference to District Judge, Shivpuri. The latter assigned the
cases to the Reference Court. The reference applications filed by the appellants
were registered as Civil Miscellaneous Case No.3/1991 and 13/1998 respectively
and the application filed under Section 30 was registered as Civil Miscellaneous
Suit No.12/1998.
4. In Civil Miscellaneous Case No.3/1991, the appellants prayed for award of
compensation at the rate of Rs.5 per square yard. They pleaded that the acquired
land has good development potential and the Land Acquisition Officer committed
serious error by treating the same as agricultural land. The appellants also claimed
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compensation of Rs.18 lacs by alleging that due to laying of railway line, their
lands were bifurcated and its value was considerably diminished. They further
alleged that the authorities of Central Railway had illegally taken possession of
their land and the earth was dug out from an area measuring 6 hectares rendering
the entire land unfit for cultivation.
5. The respondents contested the claim petition and pleaded that the Land
Acquisition Officer did not commit any illegality by fixing market value of the
acquired land by relying upon the sale deeds relating to agricultural lands.
6. On the pleadings of the parties, the Reference Court framed the following
issues:
“(i) Whether compensation determined by the Land Acquisition Officer is insufficient and improper and contrary to the provisions of Section 23 of the Land Acquisition Act?
(ii) Whether the petitioners are entitled to higher compensation? If yes, to what extent?
(iii) Relief and costs.”
7. In support of the claim, appellant No.1 - Himmat Singh examined himself as
PW-1 and produced a number of documents including sale deeds marked as
Exhibits P1 to P12. He stated that on the date of acquisition, the land was fully
developed for agricultural purposes; that there were several Government offices /
establishments and residential premises near the acquired land. PW-1 further stated
that there are metalled roads of the PWD on the North and South of the acquired
land and that 90% of the Government offices of Kolaras Sub-Division are situated
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at Jagatpur, which was on Agra-Mumbai National Highway. Still further, PW-1
stated that he and his brothers have a farmhouse known as ‘Sant Farm’ at Jagatpur.
In the cross-examination, PW-1 admitted that the acquired land does not fall within
Kolaras Municipality and that he had never sold his land prior to the disputed
acquisition. PW-1 denied the suggestion that in the application filed by him, value
of the land was shown as Rs.50,000 per hectare. The second witness examined by
the appellants, namely, Rajender Kumar Srivastava stated that distance between
the Dak Bungalow and the railway station is about one kilometer and Agra-
Bombay Road is at a distance of about one furlong from the Dak Bungalow. He
also stated that water, electricity and scavenging facilities have been provided by
Municipal Committee, Jagatpur. In cross-examination, Shri Srivastava admitted
that Jagatpur has been divided into two parts, one of which comes under the
Municipal Committee and the other is in the village and that the Municipal
Committee does not provide any facility to the area falling outside its jurisdiction.
Another witness examined by the appellants was Damodar Prasad. In cross-
examination, he admitted that large number of Government offices of Kolaras come
under the jurisdiction of the Municipal Committee and that a specific notification
had been issued for inclusion of Sant Farm within the jurisdiction of the Municipal
Committee. Rishabh Chand (PW-5) stated that he had sold land measuring 825 sq.
ft. for Rs.9,000 and market value of that land is Rs.6,600 per hectare. In cross-
examination, PW-5 gave out that his land was not fit for agricultural purposes and
that the same can be utilised for building construction.
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8. On behalf of the respondents, seven witnesses were examined. Ram Niwas
Sharma (DW-1) stated that Kolaras, Gayatri Colony and Sant Farm come within
the jurisdiction of Kolaras Municipal Committee. In cross- examination, DW-1
admitted that large number of Government offices of Kolaras are situated in
Village Jagatpur. Gaya Prasad (DW-3) stated that Jagatpur and Kolaras are
abutting each other; that there were several Government offices, Court buildings
and Advocates’ offices and that there were metalled roads on the North and South
of the acquired land and a private colony has been constructed in the vicinity.
Dharmender (DW-7) made general statement about the nature of the acquired land.
9. After analysing the evidence produced before it, the Reference Court
decided the matter vide judgment dated 23.12.1999 and held that the Land
Acquisition Officer committed an error by fixing market value on the assumption
that the acquired land could be used only for agricultural purposes. In the opinion
of the Reference Court, the determination made by the Land Acquisition Officer
was unfair, arbitrary and contrary to the provisions of Section 23(1) of the Land
Acquisition Act. The Reference Court then referred to the judgments of this Court
in Chiman Lal v. Special Execution Officer, Poona AIR 1988 SC 1652, M/s.
Printer House Pvt. Ltd. v. Siyedan AIR 1995 SC 1160, Shivamma v. Assistant
Commissioner and Land Acquisition Officer AIR 1996 SC 2886 and held that only
three sale deeds marked as Exhibits P7 to P9 can be taken into consideration for
the purpose of determination of compensation. The Reference Court held that value
of the acquired land cannot be less than Rs.3 per sq. ft. The Reference Court made
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25% deduction towards development charges and 25% towards cost of
development. In this manner, the rate of compensation was reduced from Rs.3 to
Rs.1.5 per sq. ft. The Reference Court made further deduction of 50% on the
ground that the sale instances relied upon by the appellants were in respect of very
small parcels of land as compared to the acquired land and held that the appellants
are entitled to Rs.3,08,295 as market value for 3.627 hectares land, an additional
amount at the rate of 12% per annum from 12.6.1987 to 30.11.1987, i.e., the date
on which possession was taken along with interest at the rate of 9% for a period of
one year from 1.12.1987 and thereafter at the rate of 15% per annum. The
Reference Court also determined the shares of the private respondents.
10. By another judgment dated 11.8.2000, the Reference Court disposed of Civil
Miscellaneous Suit No.12/1998, registered on the basis of application filed by the
appellants under Section 30 of the Act and Civil Miscellaneous Suit No.13/1998
registered on the basis of application filed under Section 18 of the Act in respect of
land measuring 0.951 hectare comprised in Survey No.18.
11. After considering the pleadings of the parties, the Reference Court framed
the following issues:
“(i) Whether compensation determined by the Land Acquisition Of- ficer, Shivpuri, is insufficient and improper and contrary to the provi- sions of Section 23 of the Land Acquisition Act? (ii) Whether the petitioners are entitled to higher compensation? If yes, to what extent? (iii) Whether the application for reference made by the petitioners is within limitation?
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(iv) Relief and Costs.
Additional Issue:
(v) Whether petitioners are in cultivatory possession of the acquired lands and hence the owners of the lands under law and therefore en- titled to receive amount of compensation?”
The Reference Court took cognizance of the oral and documentary evidence
produced by the parties and held that being legal heirs of Sant Singh and farmers in
occupation the appellants are owners of the lands. The Reference Court noted that
at the time of entering his name in Panch Sala Khasra (Exhibit P4), Chandra
Mohan (respondent No.4 therein) was only 5 years old and held that he could not
be treated as farmer in occupation for the purpose of being treated as a person
entitled to receive the amount of compensation. The Reference Court then
considered the question whether the compensation awarded by the Land
Acquisition Officer was insufficient and answered the same in affirmative. For
arriving at this conclusion, the Reference Court assigned the following reasons:
“Now what is to be seen is ‘Whether future potentiality of construction of buildings existed in the lands acquired?’ Petitioners have examined Himmat Singh (P.W.1) who has stated that the date on which the lands were acquired, it was fully developed for agricultural purposes and there were several government offices e.g. Tehsil, S.D.O. Office, B.D.O. Office, Forest Department, Residence of Civil Judge, Sub-Jail, Silk Industry Center, Rest House, Hospitals etc., near the acquired lands and all of the above are residential houses wherein Doctors and Advocates are also living. Apart from this, there is a metalled road of P.W.D. on the south of the lands towards Village Rai and on the north there is a metalled road of P.W.D. going towards Village Mohara. On the south there is an ancient temple on which a huge fair is celebrated every year. More than 90% of the Government Offices of the Kolaras Sub Division are situated in Jagatpur and Jagatpur is situated near the Agra-Mumbai National Highway and a metalled road goes upto Sant
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Farm from this Agra-Mumbai National Highway. These statements of the witness have not been challenged during his cross examination.
Apart from him, another witness of the petitioner namely Rishabh Chand (P.W.2) in his statement has stated that he is an Ex-M.L.A. and Chairman of Kolaras. The entire development of Kolaras is presently towards Jagatpur side. Sant Farm is only 1/2 Km. from the A.B. Road and there are Quarters of Jail employees, Indira Colony and Residence of the Judge, Quarters and houses of the Railway employees near the farm. The entire development activities of Jagatpur is taking place to- wards Sant Farm. Patwari has also stated that Jagatpur and Kolaras are abutting each other. There are several government offices, Advocates' offices, Court buildings in Jagatpur. Residence of the Judge is adjoin- ing Sant Farm. College too is very near to it and there is a large habita- tion around Sant Farm. There is a road and habitation on the north of Sant Farm and on the south there is a temple and several persons of Kolaras are visiting this temple. On the south is a metalled road of P.W.D. going towards village Rai and on the east of the Sant Farm there are several government houses. A Private colony has been con- structed on Survey nos. 161 and 163. Hence it is clear from the above that the acquired lands are close to the residential lands and bore po- tential of construction of buildings at the time of acquisition. In the cir- cumstances it is clear that the determination of compensation of these lands by treating them as agricultural lands is unfair, arbitrary and in- sufficient and also contrary to the provisions of Section 23[1] of the Land Acquisition Act. Resultantly, Issue no.l is hereby decided in af- firmative i.e. Yes.”
The Reference Court relied upon sale deeds Exhibits P7 to P9 and concluded that
market value of the acquired land is Rs.3 per sq. ft. The Reference Court then
applied various deductions and held that the appellants are entitled to
compensation of Rs.80,240/- for land measuring 1,69,805 sq. ft. and by adding
12% per annum from 12.6.1987 up to the date of taking lawful possession, i.e.,
30.11.1987, the appellants are entitled to Rs.4,493. The Reference Court also
awarded solatium at the rate of 30% of the market value in terms of Section 23(2)
of the Act and declared that the appellants are entitled to total compensation of
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Rs.1,08,904 with interest at the rate of 9% per annum for the first year and 15%
per annum for the remaining period till the date of actual payment. However, Civil
Miscellaneous Suit No.13/1998 registered on the basis of reference made by the
Collector under Section 18 was held to be barred by time.
12. The appellants and Union of India challenged the judgments of the
Reference Court by filing appeals under Section 54 of the Act. The learned Single
Judge referred to the oral and documentary evidence produced by the parties and
held that the Reference Court did not commit any error by holding that market
value of the acquired land cannot be more than Rs.6 per sq. ft. The learned Judge
made various deductions and held that market value of the acquired land would be
Re.1 per sq.ft. The appeals were accordingly disposed of by declaring that the
appellants are entitled to compensation for the land acquired vide notification dated
28.5.1987 at the rate of Re.1 per sq. ft with other statutory benefits like solatium
and interest.
13. Shri U. U. Lalit, learned senior counsel for the appellants argued that the
Reference Court and the High Court committed serious error by excluding various
sale instances only on the ground that the contents thereof were not proved by
examining the buyer and the seller. Shri Lalit invited the Court’s attention to
Section 51-A of the Act and the judgments in Land Acquisition Officer and Mandal
Revenue Officer v. V. Narasaiah (2001) 3 SCC 530, Cement Corporation of India
v. Purya (2004) 8 SCC 270 and Deputy Collector, Land Acquisition, Gujarat and
another v. Madhubai Gobarbhai and another (2009) 15 SCC 125 and argued that
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the view expressed by the Reference Court and approved by the learned Single
Judge of the High Court on the admissibility and relevance of the copies of the
registered sale deeds is liable to be overturned. Shri Lalit further argued that the
Reference Court and the High Court committed serious error by not taking into
consideration the highest value reflected in the sale deeds Exhibits P4 and P5 for
the purpose of determination of compensation. In support of this argument, Shri
Lalit relied upon the judgments in Rao Bahadur, Collector of Madras 1969 1 MLJ
45, State of Punjab v. Hansraj (1994) 5 SCC 734, Anjani Molu Dessai v. State of
Goa (2010) 13 SCC 710, Mehrawal Khewaji Trust (Registered), Faridkot and
others v. State of Punjab and others (2012) 5 SCC 432. Shri Lalit then argued that
the deductions made by the Reference Court and approved by the High Court are
clearly impermissible because the land had been acquired for construction of Broad
Gauge Rail Line and not for carving out a lay out for residential, industrial or
commercial purpose which necessarily involves construction of road and providing
of basic amenities like electricity, water and sewerage and large area is required to
be left out as open spaces. Shri Lalit also referred to documents produced by the
appellants showing damage to their land and argued that the Reference Court and
the High Court committed serious error by not awarding compensation for
severance caused due to construction of railway line and damage caused due to
digging. In the end, Shri Lalit relied upon the judgments of this Court in Sunder v.
Union of India (2001) 7 SCC 211 and R. Saragapani v. Special Tahsildar, Karur –
Dindigul Broadguage Line (2011) 14 SCC 177 and argued that the appellants are
entitled to interest on solatium.
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14. Shri R. K. Khanna, learned Additional Solicitor General appearing for the
Union of India supported the impugned judgment and argued that the appellants are
not entitled to further enhancement in the compensation determined by the High
Court. Shri Khanna argued that the sale instances produced by the appellants were
in respect of very small parcels of land and the same could not supply basis for
fixing market value of big chunks of land measuring 3.627 hectares and 0.951
hectare. He further argued that the deductions made by the Reference Court and
the High Court in lieu of the cost of development and other charges are legally
correct and the High Court did not commit any error by fixing market value of the
acquired land for the purpose of determination of the compensation payable to the
appellants.
15. In support of his arguments, Shri Khanna relied upon the judgments in Land
Acquiring Body, Ahmedabad v. Ramprasad H. Maharaj (2007) 15 SCC 593,
Mahesh Dattatray Thirthkar v. State of Maharashtra (2009) 11 SCC 141, Sabhia
Mohammad Yusuf Abdul Hamid Mulla (dead) by Lrs. and others v. Special Land
Acquisition Officer and others (2012) 7 SCC 595, Bhagwathula Samanna and
others v. Special Tahsildar and Land Acquisition Officer, Visakhapatnam
Municipality, Visakhapatnam (1991) 4 SCC 506, V. Hanumantha Reddy (dead)
by Lrs. v. Land Acquisition officer and Mandal R. Officer (2003) 12 SCC 642,
Valliyammal and another v. Special Tahsildar (Land Acquisition) and another
(2011) 8 SCC 91 and K. S. Shivdevamma v. Assistant Collector AIR 1996 SC
2886.
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16. Before considering the respective arguments, we may notice the principles
laid down by this Court for determination of market value of the acquired land. In
Shaji Kuriakose v. Indian Oil Corpn. Ltd. (2001) 7 SCC 650, this Court held:
“It is no doubt true that courts adopt comparable sales method of valu- ation of land while fixing the market value of the acquired land. While fixing the market value of the acquired land, comparable sales method of valuation is preferred than other methods of valuation of land such as capitalisation of net income method or expert opinion method. Com- parable sales method of valuation is preferred because it furnishes the evidence for determination of the market value of the acquired land at which a willing purchaser would pay for the acquired land if it had been sold in the open market at the time of issue of notification under Section 4 of the Act. However, comparable sales method of valuation of land for fixing the market value of the acquired land is not always conclusive. There are certain factors which are required to be fulfilled and on fulfilment of those factors the compensation can be awarded, according to the value of the land reflected in the sales. The factors laid down inter alia are: (1) the sale must be a genuine transaction, (2) that the sale deed must have been executed at the time proximate to the date of issue of notification under Section 4 of the Act, (3) that the land covered by the sale must be in the vicinity of the acquired land, (4) that the land covered by the sales must be similar to the acquired land, and (5) that the size of plot of the land covered by the sales be comparable to the land acquired. If all these factors are satisfied, then there is no reason why the sale value of the land covered by the sales be not given for the acquired land. However, if there is a dissimilarity in regard to locality, shape, site or nature of land between land covered by sales and land acquired, it is open to the court to proportionately reduce the compensation for acquired land than what is reflected in the sales de- pending upon the disadvantages attached with the acquired land.”
17. In Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 789, this
Court elaborately considered the matter and culled out the following principles:
“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
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the cases where the owner is in possession and enjoyment of the prop- erty 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 in- stances 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 negat- ive factors vis-à-vis the 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 (vi) some special disadvantageous ac- quisition 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
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roads, leaving open spaces, plotting out smaller plots, waiting for pur- chasers and the hazards of an entrepreneur. Such development charges may range between 20% and 50% of the total price.”
18. 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 consider- ation 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 ex- pression ‘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 willing seller for the property having due re- gard to its existing condition with all its existing advantages and its po- tential possibilities when led out in most advantageous manner exclud- ing any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value disin- clination 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 determ- ination 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 (1976) 3 SCC 772, Prithvi Raj Taneja v. State of M.P. (1977) 1 SCC 684, Administrator General of W.B. v. Collector (1988) 2 SCC 150 and Periyar Pareekanni Rub- bers Ltd. v. State of Kerala (1991) 4 SCC 195.
For ascertaining the market value of the land, the potentiality of the ac- quired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actual- ity. It is well settled that market value of a property has to be determ- ined having due regard to its existing condition with all its existing ad- vantages and its potential possibility when led out in its most advant- ageous 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
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amenities like water, electricity, possibility of their further extension, whether near about a town is developing or has prospect of develop- ment have to be taken into consideration. See Collector v. Dr. Har- isingh Thakur (1979) 1 SCC 236, Raghubans Narain Singh v. U.P. Govt. AIR 1967 SC 465 and Administrator General of W.B. v. Col- lector (1988) 2 SCC 150. It has been held in Kausalya Devi Bogra v. Land Acquisition Officer (1984) 2 SCC 324 and Suresh Kumar v. Town Improvement Trust (1989) 2 SCC 329 that failing to consider potential value of the acquired land is an error of principle.”
19. We shall now deal with the question whether the Reference Court was leg-
ally entitled to discard the sale deeds Exhibits P1 to P6 and P10 to P12 and
whether the market value could have been determined only on the basis of Exhibits
P7 to P9 and also whether the learned Single Judge of the High Court was right in
relying upon Exhibits P1 and P7 to P9 for recording a finding that the Reference
Court had correctly treated market value of the acquired land as Rs.6 per sq. ft. for
the purpose of determining the amount of compensation.
20. Admittedly, the appellants had produced as many as 12 sale deeds, the de-
tails of which (as contained in the written note filed by learned counsel for the ap-
pellants on 27.11.2013) are given below:
“Exhibit No.
Date Area Total consideration
Rate
P1 10.07.1986 2000 Sqft 6000/- Rs.3.00/- P2 13.10.1992 1168 Sqft 47,000/- Rs.40.02/- P3 25.02.1986 600 Sqft 5000/- Rs.8.33/- P4 10.02.1984 112 Sqft 2000/- Rs.17.86/- P5 24.08.1984 112 Sqft 2000/- Rs. 17.86/- P6 19.01.1987 1200 Sqft 9600/- Rs.8.00/- P7 08.07.1986 1980 Sqft 16,000/- Rs.8.08/- P8 13.08.1986 1980 Sqft 16,000/- Rs.8.08/- P9 08.08.1986 825 Sqft 6,600/- Rs.8.00/-
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P10 17.02.1992 900 Sqft 49,500/- Rs.55.00/- P11 19.01.1987 1200 Sqft 9600/- Rs.8.00/- P12 25.02.1986 53928 Sqft 0.51 hectares Re.0.09
(Being an example rural agricultural land beyond Jagatpur cited as a contrast example)”
21. Since all the sale deeds produced by the appellants were registered docu-
ments and authenticity thereof had not been questioned by the respondents, the
Reference Court and the High Court could not have ignored the provisions of Sec-
tion 51-A and discarded majority of the sale deeds. This issue is no longer res in-
tegra and must be answered in favour of the appellants in view of the judgments in
Land Acquisition Officer and Mandal Revenue Officer v. V. Narasaiah (supra),
Cement Corporation of India v. Purya (supra) and Deputy Collector, Land Acquisi-
tion, Gujarat and another v. Madhubai Gobarbhai and another (supra).
22. Notwithstanding the above conclusion, we are of the view that Exhibits P2
and P10 cannot be relied upon for determination of the amount of compensation
because the same were executed after the issue of notification under Section 4.
The remaining sale deeds show that different parcels of land were sold between
10.2.1984 and 19.1.1987. The highest value for which the land was sold was
Rs.17.86 per sq. ft and the lowest was Rs.3 per sq. ft. In Anjani Molu Dessai v.
State of Goa (supra), a two Judge Bench considered the methodology which should
be followed for fixing market value of the acquired land where large number of
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sale instances are produced by the parties, referred to the earlier judgments in M.
Vijayalakshmamma Rao Bahadur v. Collector (1969) 1 MLJ 45, State of Punjab v.
Hans Raj (1994) 5 SCC 734 and held:
“The legal position is that even where there are several exemplars with reference to similar lands, usually the highest of the exem- plars, which is a bona fide transaction, will be considered. Where however there are several sales of similar lands whose prices range in a narrow bandwidth, the average thereof can be taken, as representing the market price. But where the values disclosed in respect of two sales are markedly different, it can only lead to an inference that they are with reference to dissimilar lands or that the lower value sale is on account of undervaluation or other price depressing reasons. Consequently, averaging cannot be resorted to.”
23. In Mehrawal Khewaji Trust (Registered), Faridkot and others v. State of
Punjab and others (supra), another two Judge Bench re-stated the law in the fol-
lowing words:
“It is clear that when there are several exemplars with reference to similar lands, it is the general rule that the highest of the ex- emplars, if it is satisfied that it is a bona fide transaction, has to be considered and accepted. When the land is being compulsor- ily 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 differ- ent course. It is not desirable to take an average of various sale deeds placed before the authority/court for fixing fair compensa- tion.”
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24. The same view was reiterated in Chindha Fakira Patil v. The Special Land
Acquisition officer, Jalgaon 2011 (12) SCALE 321.
25. It was neither the pleaded case of the respondents nor any evidence was pro-
duced by them before the Reference Court to prove that the sale transactions Ex-
hibits P4 and P5 were not genuine or that the vendor and vendee had colluded to
inflate value of the land with oblique motive. It is also not the case of the respon-
dents that the lands specified in other exhibits was sold at the rate of Rs.8.33,
Rs.8.08 or Rs.8 per sq. ft. with ulterior motive to get higher compensation in the
subsequent acquisitions. Therefore, we can safely rely upon Exhibits P4 and P5
for determining the amount of compensation. Even if those sale deeds are kept
aside, one can rely upon Exhibits P3, P7 and P8 for recording a finding that market
value of the acquired land cannot be less than anything between Rs.8 and Rs.8.33
per sq. ft. If the rule of averaging is applied, then market value of the acquired land
would be anything between Rs.9 and Rs.10 per sq. ft.
26. The next issue which merits consideration is whether the Reference Court
and the High Court had correctly made deductions in the name of development
charges/cost of development. The Reference Court made three-tier deduction. In
the first place, 25% was deducted in the name of leaving out portions of the ac-
quired land for the purpose of laying roads, drains, sewer line, parks, electricity
line etc. Thereafter, 25% deduction was made towards expenses for development
work. Finally, 50% deduction was made because of smallness of the plots sold
vide Exhibits P1 to P12. The learned Single Judge of the High Court approved the
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deduction and determined market value of the acquired land at the rate of Re.1 per
sq. ft.
27. The approach adopted by the Reference Court and the High Court in making
deductions towards the cost of development / development charges from the mar-
ket value determined on the basis of the sale deeds produced by the appellants was
clearly wrong. The respondents had not even suggested that the development en-
visaged by the Reference Court, i.e., laying of roads, drains, sewer lines, parks,
electricity lines etc. or any other development work was required to be undertaken
for laying the Railway line. Therefore, 25% deduction made by the Reference
Court and approved by the High Court under two different heads is legally unsus-
tainable.
28. In Nelson Fernandes and others v. Special Land Acquisition Officer, South
Goa and others (2007) 9 SCC 447, this Court considered the question whether any
deduction could be made towards development cost where the land is acquired for
laying railway line and answered the same in negative. In that case, the appellant
had challenged the judgments of the Reference Court and the Division Bench of the
High Court fixing market value of the acquired land and contended that no deduc-
tion could be made because the land had been acquired for laying railway line.
This Court reversed the judgments of the Reference Court and the High Court and
observed:
“29. Both the Special Land Acquisition Officer, the District Judge and of the High Court have failed to notice that the purpose of acquisi-
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tion is for Railways and that the purpose is a relevant factor to be taken into consideration for fixing the compensation. In this context, we may usefully refer the judgment of this Court in Viluben Jhalejar Contractor v. State of Gujarat. This Court held that the purpose for which the land is acquired must also be taken into consideration in fixing the market value and the deduction of development charges. In the above case, the lands were acquired because they were submerged under water of a dam. Owners claimed compensation of Rs 40 per sq ft. LAO awarded compensation ranging from Rs 35 to Rs 60 per sq m. Reference Court fixed the market value of the land at Rs 200 per sq m and after deduc- tion of development charges, determined the compensation @ Rs 134 per sq m. In arriving at the compensation, Reference Court placed reli- ance on the comparative sale of a piece of land measuring 46.30 sq m @ Rs 270 per sq m. On appeal, the High Court awarded compensation of Rs 180 per sq m in respect of large plots and Rs 200 per sq m in re- spect of smaller plots. On further appeal, this Court held that since the lands were acquired for being submerged in water of dam and had no potential value and the sale instance relied was a small plot measuring 46.30 sq m whereas the acquisition in the present case was in respect of large area, interest of justice would be subserved by awarding com- pensation of Rs 160 per sq m in respect of larger plots and Rs 175 per sq m for smaller plots. In Basavva v. Spl. Land Acquisition Officer this Court held that the purpose for which acquisition is made is also a rel- evant factor for determining the market value.
30. We are not, however, oblivious of the fact that normally 1/3rd deduction of further amount of compensation has been directed in some cases. However, the purpose for which the land is acquired must also be taken into consideration. In the instant case, the land was acquired for the construction of new BG line for the Konkan Railways. This Court in Hasanali Khanbhai & Sons v. State of Gujarat and Land Ac- quisition Officer v. Nookala Rajamallu had noticed that where lands are acquired for specific purposes, deduction by way of development charges is permissible. In the instant case, acquisition is for laying a railway line. Therefore, the question of development thereof would not arise. Therefore, the order passed by the High Court is liable to be set aside and in view of the availability of basic civic amenities such as school, bank, police station, water supply, electricity, highway, trans- port, post, petrol pump, industry, telecommunication and other busi- nesses, the claim of compensation should reasonably be fixed @ Rs 250 per sq m with the deduction of 20%. The appellant shall be entitled to all other statutory benefits such as solatium, interest, etc. etc. The appellants also will be entitled to compensation for the trees standing
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on the said land in a sum of Rs.59,192 as fixed. IA No. 1 of 2006 for substitution is ordered as prayed for.”
29. In C.R. Nagaraja Shetty v. Special Land Acquisition Officer and Estate Offi-
cer and another (2009) 11 SCC 75, the Court referred to the judgment in Nelson
Fernandes and others v. Special Land Acquisition Officer, South Goa and others
(supra) and observed:
“15. The learned counsel appearing on behalf of the respondents was also unable to point out any such evidence regarding the proposed de- velopment. We cannot ignore the fact that the land is acquired only for the widening of the national highway. There would, therefore, be no question of any such development or any costs therefor.
16. In Nelson Fernandes v. Land Acquisition Officer this Court has dis- cussed the question of development charges. That was a case where the acquisition was for laying a railway line. This Court found that the land under acquisition was situated in an area which was adjacent to the land already acquired for the same purpose i.e. for laying a railway line. In para 29, the Court observed that the Land Acquisition Officer, the District Judge and the High Court had failed to notice that the pur- pose of acquisition was for the Railways and that the purpose is a rel- evant factor to be taken into consideration for fixing the compensation.
17. The Court in Nelson Fernandes relied on Viluben Jhalejar Con- tractor v. State of Gujarat where it was held that:
“29. … the purpose for which the land is acquired must also be taken into consideration in fixing the market value and the de- duction of development charges.”
Further, in para 30, the Court specifically referred to the deduction for the development charges and observed:
“30. We are not, however, oblivious of the fact that normally 1/3rd deduction of further amount of compensation has been dir- ected in some cases. However, the purpose for which the land is acquired must also be taken into consideration. In the instant case, the land was acquired for the construction of new BG line
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for the Konkan Railways. … In the instant case, acquisition is for laying a railway line. Therefore, the question of development thereof would not arise.”
The Court made a reference to two other cases viz. Hasanali Khanbhai & Sons v. State of Gujarat and Land Acquisition Officer v. Nookala Rajamallu where the deduction by way of development charges was held permissible.
18. The situation is no different in the present case. All that the acquir- ing body has to achieve is to widen the national highway. There is no further question of any development. We again, even at the cost of re- petition, reiterate that no evidence was shown before us in support of the plea of the proposed development. We, therefore, hold that the High Court has erred in directing the deduction on account of the de- velopmental charges at the rate of Rs 25 per square foot out of the ordered compensation at the rate of Rs 75 per square foot. We set aside the judgment to that extent.”
30. However, keeping in view the smallness of the plots which were sold by Ex-
hibits P1, P3 to P8, P11 and P12, we would approve the deduction of 50% for the
purpose of determining compensation payable for 3.627 hectares comprised in Sur-
vey Nos.2, 10, 20, 22, 46, 48 and 106 and 0.951 hectare comprised in Survey
No.18.
31. The issue which remains to be considered relates to the amount of compen-
sation payable to the appellants. For this purpose, we shall make calculation by
adopting the following modes:
i) If sale deeds Exhibits P4 and P5 are relied upon and 50% deduction is
made on account of smallness of the land sold by these exhibits, the
amount of compensation would come to Rs.8.93 per sq. ft., and
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ii) If sale deeds Exhibits P3, P6 to P9 and P11 are taken into considera-
tion and 50% deduction is made due to smallness of the plots, the ap-
pellants would be entitled to compensation at the rate of Rs.4.04 per
sq. ft.
32. However, keeping in view the proposition laid down in M. Vijayalaksh-
mamma Rao Bahadur v. Collector (supra), State of Punjab v. Hans Raj (supra),
Anjani Molu Dessai v. State of Goa (supra) and Mehrawal Khewaji Trust (Regis-
tered), Faridkot and others v. State of Punjab and others (supra), we would adopt
the first mode and hold that the appellants are entitled to compensation at the rate
of Rs.8.93 per sq. ft.
33. We may have ordained payment of compensation to the appellants at the rate
of 8.93 per sq. ft. (rounded off to Rs.9 per sq. ft.), but having regard to the fact that
in the claim filed before the Reference Court, they had limited their claim to Rs.5
per sq. ft. and no application was filed either before the High Court or this Court
for payment of higher compensation, we would restrict the enhancement to Rs.5
per sq.ft.
34. We agree with Shri Lalit that in view of the law laid down in Sunder v.
Union of India (2001) 7 SCC 211, Chimanlal Kuberdas Modi v. Gujarat Industrial
Development Corporation (2010) 10 SCC 635, Nadirsha Shapurji Patel v. Collec-
tor and LAO (2010) 13 SCC 234, R. Saragapani v. Special Tahsildar, Karur –
Dindigul Broadguage Line (2011) 14 SCC 177 and Bharat Heavy Electricals Lim-
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ited v. R.S. Avtar Singh and Company (2013) 1 SCC 243, the appellants are enti-
tled to interest on solatium.
35. So far as the appellants’ plea for award of damages caused on account of re-
moval of fencing of Sant Farm, loss of earning due to damage to crops/farming op-
eration and destruction of well existing on the land is concerned, we do not con-
sider it necessary to deal with the same because the issue is being dealt with in
C.A. No.1248 of 2007.
36. In the result, the appeal is allowed, the impugned judgment and the award of
the Reference Court are set aside and it is declared that the appellants are entitled
to compensation at the rate of Rs.5 per sq.ft. with other statutory benefits. They
shall also be entitled to interest on the element of solatium.
37. The respondents are directed to pay the amount of enhanced compensation
and other statutory benefits including solatium and interest to the appellants within
a period of six months from today.
............................................... J.
(G.S. SINGHVI)
...............................................J. (SHIVA KIRTI SINGH)
...............................................J. (C. NAGAPPAN)
New Delhi;
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November 29, 2013.
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