REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 873-874 OF 2018 (Arising out of SLP(C) Nos.30923-30924 of 2016)

MAYA DEVI (D) THROUGH LRs & ORS.          …Appellants

Versus

STATE OF HARYANA & ANR.                          ...Respondents

J U D G M E N T

R. BANUMATHI, J.

Leave granted

2. These appeals arise out of the judgment of the High Court of

Punjab and Haryana at Chandigarh in and by which the High Court

enhanced  the  compensation  to  Rs.2,19,413/-  per  acre  and  also

dismissed the review holding that the subsequent evidence sought to

be brought is not relevant as it is based upon post notification.

3. Respondent  No.2-Haryana  State  Ware  Housing  Corporation

had acquired 40 kanal and 8 marlas land at Rania for construction of

warehouse/godown vide Notification dated 12.02.1988 issued under

Section 4(1) of the Land Acquisition Act, 1894 (for short 'the Act'); out

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of which 40 kanal 8 marlas land, 21 kanal 6 marlas land was of the

present appellants; Notification dated 21.02.1989 was issued under

Section 6 of the Act.  Vide award No.9 dated 19.05.1990, the Land

Acquisition Officer awarded compensation of  Rs.75,000/-  per acre.

Being  aggrieved  by  the  award  dated  19.05.1990,  the

appellants/claimants filed a reference petition under Section 18 of the

Act  before  Additional  District  Judge,  Sirsa  for  enhancement  of

compensation,  which  came  to  be  dismissed  by  judgment  dated

15.02.1993.  Being  aggrieved  by  the  dismissal  of  the  claim  for

enhancement, the appellants/claimants filed appeal before the High

Court in R.F.A.No.1519 of 1993.  The High Court relied upon the sale

deed dated 26.05.1983 wherein small extent of land of 9 marlas was

sold for Rs.25,500/- as an exemplar. The High Court gave escalation

at 10% for the time gap of 56 months and calculated the value at

Rs.6,64,887/- per acre and made the deduction at the rate of 67.5%

for  development  charges  and  calculated  the  compensation  to  be

awarded at Rs.2,19,413/- per acre.

4. Being  aggrieved,  the  land  owners  filed  Special  Leave

Petition(C) No.27989 of 2013 before this Court which was withdrawn

by order dated 01.08.2014 with liberty to file review before the High

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Court.  In the review petition, the appellants/claimants relied upon:- (i)

sale  deed  dated  27.12.1988;  and  (ii)  subsequent  acquisition  of

nearby  land  vide notification  dated  27.03.1989  in  which  the  High

Court  by its  judgment  dated 15.09.2006 in R.F.A.  No.866 of  1996

awarded compensation of  Rs.7,26,000/-  per  acre.  The High Court

dismissed the  review,  inter  alia,  holding  that  the  sale  deed dated

27.12.1988 is a post notification sale and also the acquisition  vide

notification dated 27.03.1989 was subsequent one and the same is

not relevant for determining the market value of the lands acquired

vide notification dated 12.02.1988.  Moreover, the High Court found

no  valid  ground  for  review  under  Order  XLVII  C.P.C.   Being

aggrieved, the appellants/land owners have filed these appeals.   

5. Contention of the appellants/claimants are mainly three-fold:- (i)

there was only ten months difference between the notification dated

12.02.1988 and the sale deed dated 27.12.1988 while so, the High

Court was not justified in not considering the said sale deed dated

27.12.1988 as an exemplar on the ground that the same is a post

notification;  (ii)  considering  that  the  land  acquired  falls  within

municipal limits and had immense potential for use for commercial

and residential  purpose,  applying the maximum cut  at  the  rate  of

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67.5% was not  justified;  and (iii)  for  acquisition of  the land of  the

adjoining khasra by notification dated 27.03.1989, compensation was

awarded at the rate of Rs.7,26,000/- per acre by the High Court which

is more than three times higher than the compensation awarded in

the present case.

6. So far as the first contention is concerned, the sale deed relied

upon  by  the  appellants/claimants  dated  27.12.1988  is  post

notification.  Sub-section (1) of Section 23 of the Act provides that the

compensation to be awarded shall be determined by the reference

court, based upon the market value of the acquired land at the date

of the publication of the notification under Section 4(1). In  Kolkata

Metropolitan Development Authority v. Gobinda Chandra Makal

and Anr. (2011) 9 SCC 207, it  was held that the relevant date for

determining  the  compensation  is  the  date  of  publication  of  the

notification under Section 4(1) of the Act in the Gazette.  In para (34),

it was held as under:-

"34. One of the principles in regard to determination of the market value under Section 23(1) is that the rise in market value after the publication of the notification under Section 4(1) of the Act should not  be  taken  into  account  for  the  purpose  of  determination  of market  value.  If  the  deeming  definition  of  “publication  of  the notification”  in  the  amended  Section  4(1)  is  imported  as  the meaning of the said words in the first clause of Section 23(1), it will lead to anomalous results. The owners of the lands which are the

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subject-matter of the notification and neighbouring lands will come to know about the proposed acquisition, on the date of publication in the Gazette or in the newspapers. If the giving of public notice of the substance of the notification is delayed by two or three months, there may be several sale transactions in regard to nearby lands in that  period,  showing  a  spurt  or  hike  in  value  in  view  of  the development contemplated on account of the acquisition itself."

Applying the ratio of the above decision, we are of the view that the

post  notification  instances  cannot  be  taken  into  consideration  for

determining the compensation of the acquired land.   

7. So  far  as  the  contention  regarding  deduction  at  the  rate  of

67.5% for  development  charges is  concerned,  the exemplar  relied

upon by the High Court dated 26.05.1983 was for a small extent of

land of 9 marlas which was sold for Rs.25,500/-.   The transaction

relates to the period which is about 56 months prior to the notification

under Section 4 of the Act and the High Court adopted the rate of

escalation  at  10%  and  calculated  the  value  at  Rs.6,64,887/-.

Considering the fact that the acquired land required for development

and that the property covered under the exemplar was for a small

extent  of  9  marlas  of  land,  the  High  Court  applied  maximum

deduction at 67.5% and calculated the compensation to be paid at

Rs.2,19,413/- per acre.

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8. In  Haryana  State  Agricultural  Market  Board  and  Anr.  v.

Krishan Kumar and Ors. (2011) 15 SCC 297, this Court has held

that  "if  the  value  of  small  developed  plots  should  be  the  basis,

appropriate deductions will have to be made therefrom towards the

area to be used for roads, drains, and common facilities like park,

open space, etc. Thereafter, further deduction will have to be made

towards the cost of development, that is, the cost of leveling the land,

cost of laying roads and drains, and the cost of drawing electrical,

water and sewer lines."  

9. Observing  that  the  development  charges  for  development  of

particular plot of land could range from 20% to 75%, in Lal Chand v.

Union of India and Another (2009) 15 SCC 769, in paras (13), (14)

and (20), this Court held as under:

“13. The percentage of ‘deduction for development’ to be made to arrive at the market value of large tracts of undeveloped agricultural land (with  potential  for  development),  with  reference to  the  sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated.

14. 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. .…..... 20. 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

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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."

The  same  principle  was  reiterated  in  Andhra  Pradesh  Housing

Board v. K. Manohar Reddy and Ors. (2010) 12 SCC 707.

10. In a catena of judgments, this Court has taken the view to apply

one-third deduction towards the development charges. After referring

to various case laws on the question of deduction for development, in

Major General Kapil Mehra and Ors. v. Union of India and Anr.

(2015) 2 SCC 262, this Court held as under:  "35. Reiterating  the  rule  of  one-third  deduction  towards development,  in  Sabhia Mohammed Yusuf Abdul  Hamid Mulla v. Land Acquisition Officer (2012) 7 SCC 595, this Court in para 19 held as under: (SCC pp. 606-07)

“19. In fixing the market value of the acquired land, which is  undeveloped  or  underdeveloped,  the  courts  have generally  approved  deduction  of  1/3rd  of  the  market value  towards  development  cost  except  when  no development is 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: (SCC pp. 359-60, para 7)

‘7.  …  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 road 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

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soft or hard bearing on the foundation for the purpose  of  making  construction;  maybe  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  incurredin  developing  the  area  also varies.....................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, maybe 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 a building site or plot, particularly when vast tracts are acquired, as in this case, for development purpose.’

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  (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.”(emphasis in original)

36. While  determining  the  market  value  of  the  acquired  land, normally  one-third  deduction  i.e.  33  1/3%  towards  development charges is allowed. One-third deduction towards development was allowed in  Tehsildar (LA) v. A. Mangala Gowri  (1991) 4 SCC 218, Gulzara  Singh v.  State  of  Punjab  (1993)  4  SCC  245,  Santosh Kumari v.  State  of  Haryana  (1996)  10  SCC 631,  Revenue Divl. Officer  and  LAO v.  Sk.  Azam  Saheb  (2009)  4  SCC  395,  A.P. Housing Board v. K. Manohar Reddy (2010) 12 SCC 707, Ashrafi v. State of Haryana (2013) 5 SCC 527 and Kashmir Singh v. State of Haryana (2014) 2 SCC 165.

37. Depending on the nature and location  of  the  acquired  land, extent of land required to be set apart and expenses involved for development,  30% to  50% deduction  towards  development  was allowed  in  Haryana  State  Agricultural  Market  Board v.  Krishan Kumar  (2011)  15  SCC  297,  Director,  Land  Acquisition v.  Malla Atchinaidu  (2006)  12  SCC  87,  Mummidi  Apparao v.  Nagarjuna

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Fertilizers & Chemicals Ltd. (2009) 4 SCC 402 and  Lal Chand v. Union of India (2009) 15 SCC 769.

38. In few other cases, deduction of more than 50% was upheld. In the  facts  and  circumstances  of  the  case  in  Basavva v.  Land Acquisition  Officer  (1996)  9  SCC  640,  this  Court  upheld  the deduction of 65%. In Kanta Devi v. State of Haryana (2008) 15 SCC 201, deduction of 60% towards development charges was held to be legal. This Court in Subh Ram v. State of Haryana (2010) 1 SCC 444,  held  that  deduction  of  67%  amount  was  not  improper. Similarly, in  Chandrashekar v.  Land Acquisition  Officer  (2012)  1 SCC 390, deduction of 70% was upheld."

11. In Subh Ram and Others v. State of Haryana and Anr. (2010)

1 SCC 444, the deduction of 67% was held to be not improper.  In the

case in hand, the High Court applied deduction at 67.5% which in our

considered view is on the higher side. In the facts and circumstances

of  the  present  case  and  considering  that  the  exemplar  dated

26.05.1983 was for a small extent of land and that the acquired land

has  to  be  developed  for  construction  of  warehouse,  we  deem  it

appropriate to apply one-third deduction and deducting one-third that

is Rs.2,21,629/- from Rs.6,64,887/-, the compensation to be awarded

is arrived at Rs.4,43,258/- per acre.

12. The  impugned  judgment  is  modified  and  the

appellants/claimants are entitled to get  enhanced compensation of

Rs.4,43,258/-  payable  with  all  statutory  benefits.  The  appeals  are

partly allowed. It is made clear that the appellants/claimants shall not

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be entitled to claim interest for the period of delay in preferring the

appeals from the review.  

…….…………...………J.        [RANJAN GOGOI]

…………….……………J.        [R. BANUMATHI]

New Delhi; January 25, 2018

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