Page 1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1248 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 letter dated 27.12.1988, Collector, Shivpuri proposed the acquisition of  

4.421 hectares land for construction of link road near Guna-Shivpuri Rail Line.  

However, even before issue of the notification under Section 4(1) of the Land  

Acquisition Act, 1894 (for short, ‘the Act’), possession of the land was taken by  

the officers of the Central Railway and link road was constructed.  

1

Page 2

3. On 16.1.1989, the notification issued under Section 4(1) of the Act was  

published. However, the same was cancelled on account of discrepancies in the  

area of the land proposed to be acquired. After about four months, the Collector  

proposed the acquisition of 4.788 hectares land of which possession had already  

been taken.  

4. Thereupon, the Government of Madhya Pradesh issued notification dated  

23.5.1991  under  Section  4(1),  which  was  published  on  27.12.1991  for  the  

acquisition  of  land  measuring  4.788  hectares.  The  Land  Acquisition  Officer  

passed award dated 30.1.1993 whereby he held that the landowners are entitled to  

compensation of Rs.2,61,351.

5. On an application filed by the appellants under Section 18 of the Act, the  

Collector  made  reference  to  the  concerned  Court  for  determination  of  the  

compensation payable to the appellants.

6. On the pleadings of the parties, the Reference Court framed the following  

issues:

“1. Whether  compensation  determined  by  the  Land  Acquisition  Officer, Shivpuri, is insufficient and improper and contrary to  the provisions of Section 23 of the Land Acquisition Act?  

2. Whether the petitioners are entitled to higher compensation? If  yes, to what extent?  

3. Whether the application for reference made by the petitioners is  within limitation?

4. Relief and costs.”

2

Page 3

7. In support of their claim, the appellants produced oral and documentary  

evidence including sale deeds marked Exhibits P3 to P26, the details of which (as  

given in the written note filed on behalf of the appellants on 27.11.2013) are as  

under:

Exhibit Date AREA (Sq Ft) Total RATE No. & Khasra No. (Rs)

P3 20.03.1989 660 [Kh No. 161/3] 5900/- 8.94 P4 05.04.1989 660 [Kh No. 161/3] 6600/- 10.00 P5 13.09.1989 1386 [Kh No. 161/3] 13900/- 10.03 P6 20.09.1989 330 [Kh No. 161/3] 3300/- 10 P7 26.09.1989 792 [Kh No. 161/1] 8000/- 10.23 P8 19.12.1989 840 10.12 P9 19.12.1989 840 10.12 P10 19.03.1991 700 [Kh No. 161/1] 13.71 P11 04.09.1990 1500 60,000/- 40.00 P12 22.10.1990 300 7500/- 25.00 P13 22.10.1990 800 20,000 25.00 P14 13.02.1991 1000 15,000/- 15.00 P15 19.04.1991 1000 15,000/- 15.00 P16 25.04.1991 1200 18,000/- 15 P17 30.09.1991 2400 [Kh No. 161/1] 36000/-* 15* P18 13.11.1991 675 30.37 P19 16.01.1992 700 [Kh No. 161/2] 14,000/- 20.00 P20 P21 04.08.1992 974 40,000/- 41.07 P22 31.07.1992 420 8400/- 20.00 P23 13.10.1992 1188 47,000/- 40.52 P24 21.10.1992 1272 — 63.68 P25 16.11.1992 4000 [Kh No. 161/1] 72000/- 18 P26 31.07.1992 420 20

8. The Reference Court discarded most of the sale deeds on the ground that  

contents thereof have not been proved by examining the buyer and the seller and  

3

Page 4

held that market value of the acquired land is Rs.7 per sq. ft. The Reference Court  

then  made  50%  deduction  for  development  of  the  acquired  land,  i.e.,  for  

construction of  roads,  drains,  sewerage  lines,  parks,  electricity  lines,  etc.,  and  

arranging other  amenities  and arrived at  the  figure  of  Rs.3.50  per  sq.  ft.  The  

Reference Court made further deduction to the tune of 50% on the ground that the  

land  which  was  subject  matter  of  sale  deeds  was  very  small  and  held  that  

maximum cost of land cannot be more than Rs.1.75 per sq. ft. and awarded total  

compensation  of  Rs.8,87,485.55  to  the  appellants.  The  Reference  Court  also  

determined separate shares of the appellants. While dealing with the appellants’  

claim for award of compensation in lieu of the damage caused due to removal of  

fencing  of  Sant  Farm,  segregation  of  land  due  to  laying  of  rail  line  and  

construction  of  road,  loss  of  earning  due  to  damage  of  crops/farming  and  

destruction  of  well,  the  Reference  Court  did  refer  to  the  statement  of  PW-1  

Himmat Singh, certified copy of report Exhibit P32 prepared by Sub-Divisional  

Officer of the Water Resources Department as also the statement of Gaya Prasad  

Niranjan (DW1) but, without analyzing the same and without assigning cogent  

reasons, recorded the following conclusion:  

“In the aforesaid  circumstances no amount on above counts can be  determined on the basis of surmises and conjectures alone. Moreover,  it must also be kept in mind that this irrigation arrangement would  have otherwise also become abrupt if the lands would have been used  for building construction purposes and the buyer would have to make  his own arrangements for stopping them. In the circumstances there is  no  justification  for  determining  any  separate  compensation  on  this  count.”

4

Page 5

9. The appellants challenged the judgment of the  Reference Court by filing  

appeal under Section 54 of the Act.  The learned Single Judge disposed of the  

appeal  along  with  other  appeals  filed  in  relation  to  the  land  acquired  for  

construction of Broad Gauge Rail Line and held:

“As regards acquisition of land in the year 1991 is concerned, which  is covered by second notification, the rate of land can be held to be  Rs.8/- per sq. ft and after deduction I hold that they are entitled to Rs.  1.33/- per sq. ft. i.e. after reduction of 50% towards development of  roads,  drainage  etc.  and  33.33%  towards  the  expenses  for  development. Considering this fact, I allow these appeals in part and  hold that land which was required in the year 1987, the appellants are  entitled to get compensation at the rate of Rs. 1/- per sq. ft and for the  land,  which  was  required  in  the  year  1991,  they  are  entitled  to  Rs.1.33/- per sq. ft.”

10. The  learned  Single  Judge  of  the  High  Court  did  not  deal  with  the  

appellants’ claim for award of compensation in lieu of the loss caused due to  

removal of fencing of Sant Farm, segregation of land due to construction of road  

through the farm land and laying of rail line and loss of earning due to damage to  

crops  and  farming  potential  as  also  destruction  of  the  well  existing  on  the  

acquired land.

11. We have heard learned counsel  for the parties and carefully perused the  

record.  

12. By a separate judgment passed today in C.A. No.1247 of 2007, this Court  

has  held  that  for  the  land  acquired  vide  notification  dated  28.5.1987  for  

5

Page 6

construction  of  Broad  Guage  Rail  Line,  the  appellants  are  entitled  to  

compensation at the rate of Rs.5 per sq.ft. with all statutory benefits and interest  

on solatium.

13. Since the land which is subject  matter of this appeal  was acquired vide  

notification dated 27.12.1991 for construction of road from Kolaras Town to the  

Railway Station, we have no hesitation to hold that the appellants are entitled to  

the benefit  of  escalation in  land prices.  In  Ranjit  Singh v.  UT of  Chandigarh  

(1992) 4 SCC 659,  Land Acquisition Officer v.  Ramanjulu (2005) 9 SCC 594,  

Krishi Utpadan Mandi Samiti v. Bipin Kumar (2004) 2 SCC 283, Sardar Jogendra  

Singh v. State of U.P. (2008) 17 SCC 133, Revenue Divisional Officer-cum-LAO  

v. Sk. Azam Saheb (2009) 4 SCC 395 and ONGC Ltd. v. Rameshbhai Jivanbhai  

Pate  (2008)  14  SCC  745,  this  Court  has  repeatedly  held  that  the  exercise  

undertaken  for  fixing  market  value  and  determination  of  the  compensation  

payable to the landowner should necessarily involve consideration of escalation in  

land  prices.   In  the  last  mentioned  judgment,  the  Court  noticed  the  earlier  

precedents and observed as under:  

“12. We have examined the facts of the three decisions relied on by  the respondents. They all related to acquisition of lands in urban or  semi-urban areas. Ranjit Singh related to acquisition for development  of Sector 41 of Chandigarh.  Ramanjulu related to acquisition of the  third phase of an existing and established industrial estate in an urban  area.  Bipin  Kumar related  to  an  acquisition  of  lands  adjoining  Badaun-Delhi Highway in a semi-urban area where building construc- tion activity was going on all around the acquired lands.

6

Page 7

13. Primarily, the increase in land prices depends on four factors: situ- ation of the land, nature of development in surrounding area, availab- ility 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 compared 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, during the nineties.

14. On the other extreme, in remote rural areas where there was no  chance of any development and hardly any buyers, the prices stag- nated 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 increases 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 in- crease to be applied would depend upon the same.

15. 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 transac- tions or acquisitions), where there is no evidence of any contemporan- eous  sale  transactions  or  acquisitions  of  comparable  lands  in  the  neighbourhood.  The  said  method  is  reasonably  safe  where  the  re- lied-on sale transactions/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 become un- safe and unreliable standard where the gap is larger. 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  

7

Page 8

apart from the likelihood of occurrence of varying periods of stagna- tion in prices or sudden spurts in prices affecting the very standard of  increase.”

14. In view of the propositions laid down in the aforementioned judgments, we  

hold  that  the  appellants  will  be  entitled  to  10%  annual  escalation  in  the  

compensation  determined  for  the  acquisition  made  vide  notification  dated  

28.5.1987, which was published on 12.6.1987.

15. The  appellants’  prayer  for  award  of  compensation  on  account  of  loss  

caused due to removal of fencing of Sant Farm, severance of land due to laying of  

rail line and construction of road, loss caused due to destruction of crop/farming  

activity etc. was rejected by the Reference Court without assigning cogent reasons  

and the learned Single Judge of the High Court did not even deal with the issue.  

It  is,  therefore, apposite that  the matter is  remitted to the Reference Court for  

deciding this issue afresh keeping in view the evidence produced by the parties in  

the references made by the Collector for determination of compensation of the  

land acquired vide notifications dated 28.5.1987 and 27.12.1991.  

16. In  the  result,  the  appeal  is  partly  allowed  and  it  is  declared  that  the  

appellants shall be entitled to compensation at the rate of Rs.5 per sq. ft. with  

benefit  of  escalation  at  the  rate  of  10%  per  annum  for  the  period  between  

28.5.1987 and 27.12.1991.  The appellants shall also be entitled to get interest on  

solatium.  The respondents are directed to pay the enhanced compensation with  

interest etc. to the appellants within a period of six months from today.

8

Page 9

17. The issue relating to award of compensation in lieu of the loss caused due  

to removal of fencing of Sant Farm, segregation of land on account of laying of  

rail line and construction of road from Kolaras Town to Railway Station and loss  

caused due to damage to the crop and farming activity is remitted to the Reference  

Court for fresh adjudication in the light of the evidence produced by the parties in  

the references made by the Collector under Section 18 of the Act.

...............................................J. (G.S. SINGHVI)

...............................................J. (SHIVA KIRTI SINGH)

...............................................J. (C. NAGAPPAN)

New Delhi; November 29, 2013.  

9