REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.7496-7497 OF 2005

Trishala Jain & Anr.         ….Appellants

Versus

State of Uttaranchal & Anr.       …Respondents

With

CIVIL APPEAL Nos.7498-7499 OF 2005

State of Uttaranchal & Anr.  ….Appellants

Versus

Trishala Jain & Anr.          …Respondents

With

CIVIL APPEAL No.1122 OF 2011

State of Uttaranchal & Anr.  ….Appellants

Versus

Jitendra Kumar etc.          …Respondents

With

CIVIL APPEAL No.3613 OF 2008

Smt. Krishna Devi and Others  ….Appellants

Versus

State of Uttaranchal & Anr.  …Respondents

JUDGMENT

Swatanter Kumar, J.

1.  By this common judgment, we propose to dispose of  

the afore-noticed six Civil Appeals as they arise from  

different judgments of the High Court of Uttaranchal  

but are result of a common Notification issued under  

Section 4(1) of the Land Acquisition Act, 1894 (in short  

the ‘Act’) and thus are based upon similar facts and  

documentary and oral evidence.

FACTS:

C. A. Nos.7496-7497 of 2005 and  7498-7499 of 2005

2. On  30th January,  1992,  the  Government  of  Uttar  

Pradesh  (now  the  State  of  Uttaranchal)  issued  a  

Notification under Section 4(1) of the Act for acquiring  

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some  land  for  a  public  purpose,  namely  the  

construction  of  Government  Polytechnic  Institute  in  

the District of Dehradun.  This Notification came to be  

published  in  the  Official  Gazette  on  22nd February,  

1992.  On 18th April 1992, declaration under Section  

6(1) of the Act was issued which was published in the  

Official Gazette on 12th May, 1992 identifying the land  

admeasuring 12.85 acres for acquisition for the said  

purpose  in  village  Sewala  Kalan,  Pargana  Kendriya  

Doon,  District  Dehradun,  out  of  which  lands  

admeasuring 4.58 acres and 3.031 acres belonged to  

the  first  and  the  second  claimant  respectively.   In  

furtherance  to  this  Notification,  possession  of  the  

acquired land was taken on 7th July, 1992. The Special  

Land  Acquisition  Officer  (in  short  the  ‘SLAO’)  

pronounced  his  award  on  8th June,  1993.  While  

determining compensation,  the  SLAO applied belting  

system to the acquired land and assessed the market  

value of the first belt admeasuring 0.56 acres at the  

rate  of  `  9,78,223.40  per  acre,  second  belt  

admeasuring 1.38 acres at the rate of  ` 6,52,482.27  

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per  acre  and  for  the  third  belt  admeasuring  10.91  

acres at the rate of  ` 4,39,362.70 per acre.  However,  

the claimants, being dissatisfied with the award of the  

SLAO, filed applications under Section 18 of the Act  

which  in  turn  came  to  be  referred  to  the  Court  of  

competent jurisdiction (hereinafter referred to as the  

‘Reference Court’).   

3. The  Reference  Court,  in  LA  Case  No.  386  of  1993,  

considered the list of 140 sale instances attached with  

the award of the SLAO.  It noticed that the SLAO had  

relied on sale instance at serial no. 43 related to land  

admeasuring 0.094 acre for a total consideration of  `  

92,000  and  assessed  the  market  value  of  acquired  

land at the rate of ` 9,78,723 per acre before applying  

the belting system.  This sale deed was executed on  

10th June, 1991 and the land was from the revenue  

estate of the same village but at some distance from  

the acquired land.  The Reference Court also noticed  

the evidence of DW 1, Ram Singh, who had stated that  

ITBP quarters are located to the north of the acquired  

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land; and to the east of ITBP Colony, is a 20 feet wide  

passage  which  ends  on  the  acquired  land.   A  high  

tension line of 1100 K.V. also runs near the acquired  

land.  This witness admitted that the land in question  

was full of residential potentialities. Reliance was also  

placed upon the statements of PW7 and PW8 in regard  

to the urbanization of the surrounding areas and the  

potential  of  the  land  in  question  for  building  

construction and residential purposes.

4.  Out  of  those  140  sale  instances,  sale  instance  at  

serial Nos. 109 and 110 are stated to be the sale deeds  

executed on 26th November, 1991 and 27th November,  

1991, which were heavily relied upon by the Reference  

Court.   The Reference Court vide its judgment-cum-

award dated 12th May, 1995 held application of belting  

system improper as entire land was acquired for one  

purpose, i.e.  construction of Government Polytechnic  

Institute. It determined the market value of the land at  

the rate of ` 6,40,000 per bigha and after applying 20%  

deduction,  enhanced  compensation  to  flat  rate  of  `  

5,12,000 per bigha along with other statutory benefits.

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5. The  State,  aggrieved  by  the  enhancement  of  

compensation  awarded  to  the  claimants  by  the  

Reference Court, preferred appeals being First Appeal  

Nos.  920-921  of  2001,  before  the  concerned  High  

Court.  The High Court vide its judgment dated 20th  

July,  2005,  primarily  accepted the findings recorded  

by the Reference Court  on merits and merely raised  

the deduction from 20% to 33.33% thus awarding the  

compensation at the rate of ` 4,26,667 per bigha.  The  

High  Court  recorded  a  definite  finding  that  the  

Reference Court was fully justified in setting aside the  

order  of  the  SLAO  applying  belting  system  for  

determination  of  compensation  in  relation  to  the  

acquired land.  It also did not consider it appropriate  

to rely upon the sale instances placed on record by the  

State  and  practically  affirmed  the  findings  of  the  

Reference  Court  including  finding  based  upon  sale  

instances at serial Nos. 109 and 110 for determining  

the market value of the acquired land.  The High Court  

modified  the  order  of  the  Reference  Court  only  by  

raising  the  deduction  on  account  of  development  

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charges and fixing of the final amount of compensation  

as afore-indicated.

6. Against the above judgment of the High Court,  Civil  

Appeal Nos.7498-7499 of 2005 have been preferred by  

the State of Uttaranchal while Civil Appeal Nos. 7496-

7497 of 2005 have been preferred by the claimants.

C.A. No. 1122 OF 2011

7. Civil Appeal No. 1122 of 2011 has been preferred by  

the State of Uttaranchal against the judgment of the  

Uttaranchal High Court dated 9th March, 2006 passed  

in First Appeal Nos. 918 and 919 of 2001.  Vide that  

order  the  Court  had  primarily  relied  upon  another  

judgment of the Division Bench of that Court passed  

in First Appeal Nos. 920-921 of 2001 (in the case of  

State  of  U.P.  through  Collector,  Dehradun v.  Smt.  

Trishla Jain) and awarded compensation at the rate of  

`  4,26,667 per  bigha reducing the compensation of  `  

5,12,000  per  bigha as  awarded  by  the  Reference  

Court.   The  High Court  in  this  case  had echoed in  

entirety the reasoning and compensation awarded by  

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the other Bench in the case of  Trishala Jain (supra).  

This judgment of  the High Court,  impugned in Civil  

Appeal No. 1122 of 2011, therefore has to be treated at  

parity for all intents and purposes with the impugned  

judgment in Civil Appeal Nos. 7496-7497 of 2005 and  

Civil Appeal Nos. 7498-7499 of 2005.

C.A. No. 3613 of 2008

8.  Civil  Appeal  No.  3613 of  2008 is  directed  against  the  

judgment  of  the  Uttaranchal  High Court  dated  11th May,  

2006  passed  in  First  Appeal  Nos.  60-63  of  2001.   It  is  

necessary for us to notice the facts giving rise to this appeal  

separately because there are certain distinguishing features  

with  regard to  factual  matrix  as  well  as  evidence  of  this  

case.  The land in question in this case also forms part of  

the land admeasuring 12.85 acres sought to be acquired by  

the  Notification  dated  30th January,  1992  issued  under  

Section 4(1) of the Act and is covered by the common award  

passed  by  the  SLAO  on  8th June,  1993  awarding  the  

compensation at the same rate as in other cases.   

The  claimants  herein  made  a  separate  reference  

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under Section 18 of the Act and the Reference Court, in LA  

Case No. 121 of 1994, awarded compensation at the rate of  

`  12,50,000  per  acre  (i.e.  ` 2,38,095.24  per  bigha  

approximately)  in  addition  to  granting  other  statutory  

benefits and interests. It needs to be noticed that the two  

sale instances at serial Nos. 109 and 110, which were the  

foundation of  the judgment pronounced by the Reference  

Court in other cases, i.e. sale deeds dated 26th November,  

1991, and 27th November,1991, had been rejected on the  

ground that they were not admissible in evidence as neither  

the vendor nor the vendee had been produced to prove the  

sale instances in Court.  The Reference Court also noticed  

the contention raised on behalf of the State, i.e. these sale  

instances were collusive.   It  will  be useful  to refer to the  

relevant part of the judgment of the Reference Court which  

reads as under:

“The  respondent  No.2  have  (sic)  taken  a  special  stand  in  his  written  statement that the sale deed executed by  Sri Viresh Jain was forged and fictitious  and  collusive  and  no  reliance  can  be  placed  on  such  a  sale  deed.   He  has  further argued that the judgment passed  in L.A. Case No. 386 of 1993 Smt. Trishla  Jain  vs.  Collector  and  another  in  such  

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circumstances cannot be made the basis  for awarding compensation in the present  case.  The rtno.  2 has filed voluminous  documents in support of their case that  the sale deed executed by Sri Viresh Jain  were  collusive  and  were  made  only  to  create  evidence  of  hither  compensation.  He has further filed various documents,  which  supports  the  contention  of  the  respondent  no.  2  that  Sri  Dinesh  Jain  and  Sri  Viresh  Jain  themselves  offered  their  100  bigha  of  land  in  village  phoolsani for the purpose of Government  polytechnic.  He has also filed documents  and the copy of the Selection Committee  in  which  Sri  Manoj  Kumar  Jain,  Upkhand  Adhikari,  U.S.E.B.  was  a  member,  Sri  Manoj  Kumar  Jain  was  examined as a witness.  He was admitted  that he is the brother in law of Sri Dinesh  Jain and Sri  Viresh Jain.   He has also  admitted  that  he  was  member  of  the  selection committee which was to select  the  land  for  Government  polytechnic.  Various other documents were also filed  by the respondent no. 2 vide which the  signatures  of  Jinendra  Kumar Jain and  Smt.  Veena  Kumar  Jain  were  identified  by  Sri  Dinesh  Jain.   His  sole  concentration  was  that  the  sale  deed  executed by Sri Viresh Jain was collusive  and since Sri Manoj Kumar Jain was one  of the member of the selection committee  appointed for the acquisition of land for  Government Polytechnic, the information  was  leaked  to  Sri  Viresh  Jain  and,  therefore,  they  manipulated  these  two  sale  deeds  by  transferring  the  land  to  their near relations say the sister and the  son  of  his  BUA  without  passing  valid  consideration.  The  learned  counsel  for  

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the respondent no. 2 has placed reliance  on  the  law  laid  down  by  the  Hon’ble  Supreme Court in AIR 1951 page (sic) 16  Yashvant  Deoro  vs.  Jai  Chand  Ram  Chand.  It is correct that the fraudulent  motive or design is not capable of direct  proof  in  most  of  the  cases.   Such  intention  could  only  be  inferred.   It  is  worthy  to  point  out  that  the  two  sale  deeds  relied  upon  by  the  claimants  executed by Sri Viresh Jain in favour of  Sri Jinendra Kumar Jain and Smt. Veena  Kumar  Jain  have  not  been  proved  in  accordance with law as laid down by the  Hon’ble  Supreme  Court  in  as  much  as  vendee or vendor of these sale deeds or  any  attesting  witnesses  have  not  been  produced  in  evidence.   Therefore,  they  cannot be made the basis of awarding of  compensation in the present case.   The  judgment in L.A.  Case No.  386 of  1993  Smt.  Trishala  Jain  v.  Collector  and  another  is  under  appeal  and  the  entire  matter with regard to the alleged collusive  sale  deed  is  yet  to  be  thrashed  out.  Therefore,  it  is not fair  and justified for  this  court  to  comment  upon  these  sale  deeds.  For the purpose of decision of this  case it is only sufficient, if these two sale  deeds are discarded and if  they are not  considered  and  not  made  the  basis  for  awarding  compensation  in  these  cases.  Therefore,  it  is held that these two sale  deeds cannot be made basis for awarding  any  compensation,  in  the  present  case  and the argument of the claimants fails  in this respect.”

Having held thus, the Reference Court relied upon  

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the  sale  instance  at  serial  No.  108,  out  of  140  sale  

instances, of the list produced and proved by the SLAO.  As  

per the sale instance at serial No. 108, a land admeasuring  

0.90 acre was sold at the rate of `12,55,550.50 per acre on  

29th November, 1991.  Examining this document with other  

evidence  on  record,  particularly  statement  of  DW2,  the  

Reference Court finally awarded compensation at the rate of  

`12,50,000 per acre without applying any deduction.

The claimants, aggrieved by the above judgment of  

the Reference Court dated 6th February, 2001, preferred an  

appeal before the Uttaranchal High Court.  The High Court,  

vide its judgment dated 11th May, 2006, while referring to  

the different judgments of this Court as well as of different  

High Courts, opined that the Reference Court had fallen in  

error of law in not applying, to a  certain extent, deduction  

from  the  market  value  determined  by  that  court  in  

accordance with law.  The High Court did not interfere with  

the determination of the market value of the acquired land  

but applied a deduction of 33.33% on such value and finally  

awarded  compensation  to  the  claimants  at  the  rate  of  

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`8,33,334  per  acre  with  other  statutory  benefits  and  

interests thereupon.  Dissatisfied with this judgment of the  

High  Court  reducing  the  compensation  awarded  by  the  

Reference  Court,  the  claimants-Krishna  Devi  and  others  

have filed the present appeal before this Court.  

Questions of Fact and Law that fall for Determination:

9. On  examination  of  the  present  appeals,  the  

following common questions arise for consideration of this  

Court:

I. Whether or not the belting system ought to have been  

applied for determination of fair market value of the  

acquired land?

II.  What should be the just and fair market value of the  

acquired land on the date of issuance of notification  

under Section 4 of the Act?

III.  Whether in the facts and circumstances of the present  

case there ought to be any deduction after determining  

the fair market value of the land?

IV. What  compensation  and  benefits  are  the  claimants  

entitled to?

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Question No. 1.

10. As  already  noticed,  the  SLAO,  in  all  cases,  while  

giving  its  award  had  applied  the  belting  system  and  

categorizing  the  land  into  three  different  categories  had  

awarded  the  compensation  accordingly.  However,  the  

Reference  Court  had held  that  the  land as  a  whole  was  

similarly  placed  and was  surrounded  by  developed  areas  

and it was to be used for one purpose, i.e. construction of  

Government  Polytechnic  Institute,  thus  there  was  no  

question of applying the belting system.  Keeping in view  

the documentary and oral evidence on record, the Reference  

Court  set  aside  the  belting  system and awarded uniform  

compensation  to  all  the  claimants.   This  finding  of  the  

Reference  Court  was  upheld  by  the  High  Court  in  the  

impugned judgments.  The correctness of this concurrent  

view has also not been questioned by any of the parties in  

the  present  appeals  before  us.   Therefore,  concurrent  

finding  recorded  by  the  Courts  below  which  remained  

unchallenged before this  Court  need not  be disturbed by  

this Court.

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Question No. II

11. Now,  we  have  to  examine  the  most  important  

question arising in the present appeal as to how this Court  

should determine the fair market value of the acquired land  

in the given facts and circumstances. First of all, we need to  

refer to the evidence that was produced by the parties in  

support  of  their  respective  claims.  The principal  evidence  

relied upon by the claimants in all these cases are the two  

sale instances shown at serial Nos. 109 and 110.  These  

were  executed by Shri  Viresh Jain,  in  favour  of  Jitendra  

Kumar and Smt. Veena Kumari,  on 26th November, 1991  

and  27th November,  1991  respectively.   These  lands  are  

situated in Khasra No. 39/2, a part of which was acquired  

under the same Notification. Under these sale deeds areas  

of 440.8 sq. yards and 283.3 sq. yards were sold at the rate  

of ` 32,72,603.49 and ` 34,87,648.30 per acre respectively.  

The  claimants  in  different  cases  examined  themselves  to  

prove these sale instances as a whole, as they are the main  

witnesses  and  the  sale  instances  were  also  executed  

between themselves.  It needs to be noticed that one of the  

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purchasers and the seller are the claimants in the present  

appeals  and  the  other  purchaser  is  their  close  relative.  

According  to  the  claimants,  they  were  entitled  to  

compensation on the basis of these two sale instances. The  

claimants  have  also  brought  on  record  documents,  viz.,  

Exh.11  and  Exh.12,  which  are  the  agreements  signed  

between  Trishala  Jain  and  one  Vikram  Singh  Bangari,  

executed on 23rd April, 1991 for the purpose of leveling of  

the land in question.  Shri Bangari was examined as PW 6  

who submitted that he had completed the leveling work on  

or  before  3rd February,  1992.   Further,  the  testimony  of  

PW7, according to the claimants, clearly shows that there  

was urbanization all over the periphery of municipal limits  

and  building  activities  were  increased  even  beyond  the  

municipal  limits.   Claimants  have  also  relied  upon other  

evidence  including  the  cross  examination  of  DW 1,  Ram  

Singh, who admitted that these sale deeds were unlikely to  

have been executed at higher rate for enhancing the rate of  

compensation  of  the  acquired  land.   As  we  have already  

noticed, this witness also gave the statement that towards  

the North of the acquired land, there were several quarters  

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of ITBP and there was 20 feet wide passage which ended on  

the acquired land.  He further stated that some shops are  

located in the South of the acquired land across the road  

and facilities of  schools and post office are also available  

near  the  acquired  land.   On the  backdrop  of  this  entire  

evidence,  the  claimants  contended  that  the  deduction  

applied by the High Court is not justified and their claim for  

compensation in line with the two sale instances proved by  

them on record is to be upheld.  According to them, the sale  

instances produced by the SLAO were far  away from the  

acquired  land  and  were  not  relevant  or  comparable  

instances.

12. On the other hand,  the SLAO, in his award,  had  

considered  details  of  140  sale  instances  executed  over  a  

period from the Revenue Estate of the same Village.  Most of  

these sale instances were found to be not relevant by the  

Reference Court. The SLAO had relied upon the sale deed at  

Serial  No.43 in  which the land admeasuring 0.094 acres  

had been sold by a registered sale deed on 10th June, 1991  

for a sum of `92,000 giving the value of the land at the rate  

of  `9,78,732.40 per acre, and determined the market value  

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of the land acquired at that rate. When the matter came up  

before  the  Reference Court  for  consideration,  in all  other  

references  except  Reference  No.  121  of  1994  titled  as  

Chamel  Singh v.  Collector,  Dehradun,  the Reference Court  

had  relied  upon the  two  sale  instances  produced  by  the  

claimants  and  awarded  compensation  at  the  rate  of  `  

5,12,000 per  bigha which was later  reduced by the High  

Court to ` 4,26,667 per bigha.  In the case of Chamel Singh  

(supra),  the  Reference  Court  rejected  these  two  sale  

instances at serial Nos. 109 and 110 as vendor or vendee  

had not been examined.  It also noticed the allegation of the  

State that those sale deeds were not bona fide and have  

been executed only with the intention to enhance the value  

of the acquired land and as such declined to rely on them in  

its  judgment.   The  Reference  Court  in  that  case  also  

rejected  the  reliance  placed  by  SLAO upon  sale  deed  at  

serial No. 43 for determining the market value of acquired  

land and instead relied upon the sale instance at serial No.  

108 where the land admeasuring about 0.90 acres was sold  

on 29th November, 1991 at the rate of  `  12,55,550.50 per  

acre.   After  discussing  the  evidence  at  some  detail,  the  

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Reference  Court  awarded  the  compensation  to  the  

claimants at the rate of `12,50,000 per acre without making  

any deduction from such market value.  In appeal the High  

Court,  however,  applied  a  deduction  of  33.33%  and  

awarded  compensation  to  the  claimants  at  the  rate  of  `  

8,33,334 per acre.  From the above factual matrix the first  

question  that  requires  consideration  of  this  Court  is  

whether  the  Reference  Court  was  justified  in  law  with  

reference to the facts on record in declining to consider the  

two sale instances produced by the claimants at serial Nos.  

109 and 110.  In other words, was it justified on part of the  

Reference  Court  to  keep  them  outside  the  zone  of  

consideration  while  determining  the  market  value  of  the  

acquired land?

13. Firstly,  it  cannot be disputed that both the seller  

and the purchaser in sale instances at serial Nos. 109 and  

110  are  either  claimants  in  different  claim  petitions  or  

belong to the same family.  The sale  deed is  stated to be  

executed by Sh. Viresh Jain in favour of  Jitender Kumar  

Jain  and  Smt.  Veena  Kumari  Jain  (sister  of  Sh.  Viresh  

Jain).  

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Veena Kumari Jain has described herself as wife of  

M. Kumar who appears to be Sh. Manoj Kumar Jain, who  

was  examined  as  a  witness  as  he  was  a  Member  of  the  

Selection Committee dealing with the acquisition of the land  

for the purpose of construction of Government Polytechnic  

Institute.  In  his  examination  he  admitted  that  he  was  

brother-in-law of  Sh.  Viresh  Jain.   As  a  member  of  that  

Committee he had a definite role to play in selection of the  

land for that purpose.  In other words, the claimants had  

full  knowledge  of  acquisition  of  land  and  as  well  as  the  

purpose for which the said land was sought to be acquired.  

With respect we reiterate the view expressed by this Court  

in  the  case  of  Yeshwant Deorao  Deshmukh  v.  Walchand  

Ramchand  Kothari [(1950)  1  SCR 852]  that  a  fraudulent  

move or design is not capable of direct proof in most cases;  

it  can only be inferred.   Under such circumstances,  the  

Court has to take a general view keeping in mind the facts  

and circumstances of the case with particular reference to  

the intent of parties, their action in furtherance thereto and  

the object sought to be achieved by them.

14. It is not in dispute that these sale deeds have been  

20

executed in favour of the family members or persons known  

to the  claimants.   These are  circumstances and evidence  

which clearly indicate that the sale instances relied upon by  

the claimants are result of collusion between these parties.  

There  was clear  attempt  on the  part  of  the  claimants  to  

execute sale deeds for the purpose of hiking up land price  

just  before  acquisition to  get  more  compensation.   These  

two sale instances which have been executed just about two  

months  prior  to  the  issuance  of  the  notification  under  

Section  4(1)  stand  out  as  transactions  which  are  sham,  

collusive, lack  bona fide and have been executed with the  

intention to raise the price of the land in question with the  

pretence of it being actual market value.  We are unable to  

find any infirmity in this view of the Reference Court in LA  

Case No. 121 of 1994 which has rightly been upheld by the  

High Court.

15. It will be appropriate at this stage to notice that in  

C.A. Nos. 7498-99 of 2005 a specific ground has been taken  

by the State that the High Court erred in not considering  

the application of State filed  under Order XLI Rule 27 of  

the Code of Civil Procedure, 1908 during pendency of First  

21

Appeal  Nos.  920  and  921  of  2000  to  lead  additional  

evidence  to  show that  the  sale  deeds relied upon by the  

Reference Court in LA Case No. 386 of 1993 and accepted  

by  the  High  Court  were  collusive  and the  claimants  had  

prior knowledge of the impending acquisition proceedings.  

This  additional  evidence  is  basically  related  to  the  facts  

which have already been mentioned by us while discussing  

the facts of C.A No. 3613 of 2008.  In that application, it  

was specifically stated that Smt. Veena Kumari is sister of  

one  of  the  claimants,  i.e.  Viresh Jain  and she  is  wife  of  

Manoj  Kumar  Jain,  who  was  member  of  the  Selection  

Committee  aforereferred  and  these  facts  had  duly  been  

verified from the local police station vide letter dated 11th  

September,  1996.   However,  this  application  appears  to  

have been rejected by the High Court without recording any  

appropriate  reasons  in  support  thereof.   In  view  of  the  

peculiar fact that the Reference Court, in its award in L.A.  

Case No. 121 of 1994 which is subject matter before us in  

C.A. No. 3613 of 2008, has noticed this entire evidence in  

great detail, it can hardly be contended that the application  

has rightly been rejected by the High Court.  In our opinion,  

22

the  High  Court  should  have  allowed  this  application  

particularly when the entire evidence sought to be produced  

by way of additional evidence challenged the very basis of  

the judgment of the High Court.  In view of these peculiar  

facts we need not discuss this issue at any greater length  

and according to us the facts stated in that application can  

be examined by this Court as they are already part of the  

judicial record in C.A. No. 3613 of 2008, which has been  

listed  for  hearing  along  with  other  appeals  and all  these  

appeals have been heard together.

16. Corollary to the discussion under this head is the  

question that whether the Reference Court, in LA Case No.  

121  of  1994,  was  right  in  law  in  rejecting  the  two  sale  

instances for the reason that vendor or vendee had not been  

examined  to  prove  them  in  Court  and  thus  these  sale  

instances were inadmissible in evidence.  While recording  

such  a  finding  the  Reference  Court  had  relied  upon  the  

judgment  of  this  Court  in  the  case  of  A.P. State  Road  

Transport Corporation, Hyderabad v. P. Venkaiah, [(1997) 10  

SCC 128]. This issue need not detain us any further as it is  

no longer res integra that  the judgment of this Court in the  

23

above case has been overruled by a Constitution Bench of  

this  Court  in  the  case  of  Cement  Corporation  of  India  v.  

Purya, [(2004) 8 SCC 270].  Thus, in our view, these two  

sale instances cannot be rejected on that ground after the  

dictum  of  the  Constitution  Bench  in  the  above  case.  

Though,  this  observation  is  subject  to  the  other  findings  

recorded by us in this judgment.

17. A  Bench  of  this  Court  in  the  case  of  Chimanlal   

Hargovinddas  (supra) stated that the Court while tackling  

the  problem  of  valuation  of  the  land  under  acquisition  

should  necessarily  make  some  general  observations.  

Explaining the factors, which must be etched on the mental  

screen  while  performing  such  exercise,  this  Court  

specifically held, “only genuine instances have to be taken  

into  consideration  (sometimes instances  are  rigged  up in  

anticipation of acquisition of land)”.  Further, this Court in  

the case of  State  of Haryana  v. Ram Singh [(2001) 6 SCC  

254], has reiterated this principle and held, “It is open to  

the  Court  to  accept  the  certified  copy  as  the  reliable  

evidence and without examining parties to the documents.  

This does not however,  preclude the Court from rejecting  

24

the transaction itself  as being malafide or sham provided  

such a challenge is already before the Court”.

Question No. III  

18. The  law with  regard  to  applying  the  principle  of  

deduction to the determined market value of the acquired  

land is quite consistent,  though, of course, the extent of  

deduction has varied very widely depending on the facts  

and circumstances of a given case.  In other words, it is not  

possible to state precisely the exact deduction which could  

be made uniformly applicable to all  the cases.  Normally  

the rule stated by this Court consistently, in its different  

judgments, is that deduction is to be applied on account of  

carrying out development activities like providing roads or  

civic amenities such as electricity, water etc. when the land  

has  been  acquired  for  construction  of  residential,  

commercial  or  institutional  projects.   It  shall  also  be  

applied  where  the  sale  instances  (exemplars)  relate  to  

smaller pieces of land and in comparison the acquisition  

relates  to  a  large  tract  of  land.   In  addition  thereto,  

deduction can also  be  applied  on account  of  wastage  of  

land.  This Court in the case of  Land Acquisition Officer,  

25

Kammarapally Village v. Nookala Rajamallu [(2003) 12 SCC  

334], had also observed that it is advisable to apply some  

deduction on account of exemplars of plots of smaller size  

relied upon by way of evidence by the parties. This is the  

normal  rule  stated  by  the  Court  but  is  not  free  of  

exceptions.  

19. Similarly, it is neither possible nor appropriate to  

stricto sensu define a class of cases where the Court would  

not apply any deduction.  This again would be dependant  

upon the  facts  and circumstances  of  a  given case.   The  

cases where the acquired land itself is fully developed and  

has  all  essential  amenities,  before  acquisition,  for  the  

purpose  for which it  is acquired requiring no additional  

expenditure for its development, falls under the purview of  

cases of ‘no deduction’.   Furthermore, where the evidence  

led  by  the  parties  is  of  such  instances  where  the  

compensation paid is comparable, i.e. exemplar lands have  

all the features comparable to the proposed acquired land,  

including that of size, is another category of cases where  

principle of ‘no deduction’ may be applied. These may be  

the  cases  where  least  or  no  deduction  could  be  made.  

26

Such cases  are  exceptional  and/or  rare  as normally  the  

lands which are proposed to be acquired for development  

purposes  would  be  agricultural  lands  and/or  semi  or  

haphazardly  developed  lands  at  the  time  of  issuance  of  

notification  under  Section  4(1)  of  the  Act,  which  is  the  

relevant  time  to  be  taken  into  consideration  for  all  

purposes and intents for determining the market value of  

the land in question.

20. This Court in the case of Bhagwathula Samanna &  

Ors v. Special Tahsildar  & Land Acquisition Officer, [(1991)  

4  SCC  506],  stated  that  it  is  permissible  to  take  into  

account  of  exemplars  of  even  small  developed  plots  for  

determining value of a large tract of land acquired, if the  

latter is also fully developed with all facilities requiring little  

or no further development.  In the facts and circumstances  

of that case the Court felt that it was not appropriate to  

resort to deduction of 1/3rd value of the comparable sale  

instances as development  charges.   The Court  reiterated  

the general rule that if market value of a large property is  

to be fixed on the basis of a sale transaction for smaller  

property,  a  deduction  is  to  be  made  taking  into  

27

consideration  the  expenses  required  for  development  of  

that larger tract and make smaller plots within that area  

and held as under :

“8. In  awarding  compensation  in  acquisition  proceedings,  the  Court  has  necessarily to determine the market value  of the land as on the date of the relevant  Notification.  It  is  useful  to  consider  the  value paid for similar land at the material  time  under  genuine  transactions.  The  market value envisages the price which a  willing  purchaser  may  pay  under  bona  fide transfer to a willing seller. The land  value  can  differ  depending  upon  the  extent and nature of the land sold. A fully  developed  small  plot  in  an  important  locality may fetch a higher value than a  larger  area in an undeveloped condition  and  situated  in  a  remote  locality.  By  comparing  the  price  shown  in  the  transactions  all  variables  have  to  be  taken into consideration. The transaction  in  regard  to  smaller  property  cannot,  therefore,  be  taken  as  a  real  basis  for  fixing the compensation for larger tracts  of property. In fixing the market value of  a  large  property  on  the  basis  of  a  sale  transaction  for  smaller  property,  generally a deduction is given taking into  consideration  the  expenses  required  for  development of the larger tract  to make  smaller plots within that area in order to  compare with the small  plots dealt with  under the sale transaction. This principle  has been stated by this Court in Tribeni  Devi's case (supra).

11. The principle of deduction in the land  

28

value covered by the comparable sale is  thus  adopted  in  order  to  arrive  at  the  market  value  of  the  acquired  land.  In  applying the principle  it  is  necessary to  consider  all  relevant  facts.  It  is  not  the  extent  of  the  area  covered  under  the  acquisition, the only relevant factor. Even  in the vast area there may be land which  is  fully  developed  having  all  amenities  and  situated  in  an  advantageous  position. If smaller area within the large  tract is already developed and suitable for  building purposes and have in its vicinity  roads,  drainage,  electricity,  communications etc. then the principle of  deduction simply for the reason that it is  part of the large tract acquired, may not  be justified.

13. The  proposition  that  large  area  of  land cannot possibly fetch a price at the  same rate at which small plots are sold is  not  absolute  proposition  and  in  given  circumstances it would be permissible to  take into account the price fetched by the  small plots of land. If the larger tract of  land because of advantageous position is  capable of being used for the purpose for  which the smaller plots are used and is  also  situated  in  a  developed  area  with  little  or  no  requirement  of  further  development, the principle of deduction of  the  value  for  purpose  of  comparison  is  not warranted.”

It is thus evident from the above enunciated principle  

that the acquired land has to be more or less  developed  

land as its developed surrounding areas, with all amenities  

29

and facilities and is fit to be used for the purpose for which  

it is acquired without any further expenditure, before such  

land could be considered for no deduction.  Similarly the  

sale instances even of smaller plots could be considered for  

determining the market value of a larger chunk of land with  

some  deduction  unless,  there  was  comparability  in  

potential,  utilisation,  amenities  and  infrastructure  with  

hardly any distinction.  On such principles each case would  

have to be considered on its own merits.

21. This  Court,  depending  on  the  facts  and  

circumstances of each given case, has taken the view that  

deduction  on  account  of  expenses  of  development  of  the  

sites  could  vary  from  10% to  86.33% depending  on  the  

nature of the land, its situation, the purpose and stage of  

development.  Reference can be made to the cases of  K.S.  

Shivadevamma  v. Assistant  Commissioner  and  Land  

Acqusition  Officer  [(1996)  2  SCC  62],  Ram  Piari  v. Land  

Acquisition  Collector,  Solan  [(1996) 8 SCC 338],  Chimanlal   

Hargovinddas  v. Special  Land  Acquisition  Officer,  Poona  

[(1988) 3 SCC 751],  Hasanali  Walimchand (Dead) by L` v.  

30

State of Maharashtra [(1998) 2 SCC 388].  

In  K.S. Shivadevamma  (supra),  this Court held as  

under:

“10. It is then contended that 53% is not  automatic but depends upon the nature  of  the  development  and  the  stage  of  development.  We  are  inclined  to  agree  with the learned counsel that the extent  of deduction depends upon development  need  in  each  case.  Under  the  Building  Rules 53% of land is required to be left  out. This Court has laid as a general rule  that  for  laying  the  roads  and  other  amenities  33-1/3%  is  required  to  be  deducted.  Where  the  development  has  already  taken  place,  appropriate  deduction needs to be made. In this case,  we  do  not  find  any  development  had  taken place as on that date. When we are  determining compensation under Section  23(1), as on the date of notification under  Section  4(1),  we  have  to  consider  the  situation  of  the  land  development,  if  already made, and other relevant facts as  on  that  date.  No  doubt,  the  land  possessed  potential  value,  but  no  development had taken place as on the  date, In view of the obligation on the part  of the owner to hand over the land to the  City Improvement Trust for roads and for  other  amenities  and  his  requirement  to  expend money for laying the roads, water  supply  mains,  electricity  etc.,  the  deduction of 53% and further deduction  towards  development  charges  @  33- 1/3%,  ordered  by  the  High  Court,  was  

31

not illegal.”

Thus, a deduction of 53% was given on account of  

Building  Rules  and  a  further  deduction  of  33.33%  on  

account of development charges on the fact  of that case,  

amounting to a total of 86.33% deduction.  The above view  

was reiterated in the case of Nookala Rajamallu (supra).

22. On  similar  lines,  this  Court  in  the  case  of  V.  

Hanumantha  Reddy  (Deceased)  by  L` v. Land  Acquisition  

Officer  &  Mandal  R.  Officer [(2003)  12  SCC  642],  while  

considering  that  the  acquired  land  was  adjacent  to  

developed land, held that neither its high potentiality nor its  

proximity  to  a  developed  land  can  be  a  ground  for  not  

deducting the development charges and that normally 1/3rd  

deduction could be allowed.

23. Though  in  the  case  of  Bhagwathula  Samanna  

(supra) referring to the peculiar facts of the case, this Court  

observed that it was not necessary to make any deduction,  

the  consistent  view taken by  this  Court  is  that  normally  

deduction has to be made. In the cases above mentioned  

32

this  Court  has  directed  to  make  deduction  ranging  from  

20% to 86.33%.   

24. The learned Counsel for the claimants relied upon  

the judgment of  this  Court  in the  case of  Atma Singh  v.  

State of Haryana [(2008) 2 SCC 568], to contend that even if  

exemplars  of  small  plots  are  tendered  in  evidence,  the  

deduction cannot be more than 10%.  He contended that  

the Reference Court as well  as the High Court both have  

fallen in error of law in applying the deduction of 20% and  

33.33% respectively.  In this judgment, this Court clearly  

observed that the price fetched for small plots cannot form  

safe basis for valuation of large tracts of land as substantial  

area is used for development of sites by providing various  

facilities  for  which  expenses  are  also  incurred;  such  

amount,  which  normally  would  vary  from  20%  onwards  

depending upon the facts of each case, should be deducted.  

However, in that case the land had been acquired for setting  

up a sugar factory which, for its efficient running, may also  

require  part  of  the  land  to  be  used  for  construction  of  

residential colonies for the staff working in the factory.  The  

sugar  factory  that  was  sought  to  be  constructed  on  the  

33

acquired land was to carry on its business to make profits.  

The Court noticed that earlier the by-products of a sugar  

factory like molasses were treated as waste and its disposal  

itself was a problem.  However, with the passage of time and  

scientific developments, such by- products are being used  

for production of Alcohol and Ethanol which added to the  

profits.  It was in these circumstances that Court was of the  

view  that  it  was  not  a  case  for  higher  deduction  and  

discounted only 10% from the determined market value of  

the acquired land.  Thus the claimants cannot derive any  

advantage  to  contend  that  there  should  not  be  any  

deduction in this case.   Reliance by them was also placed  

upon the judgment of this Court in the case of Charan Dass  

v.  Himachal  Pradesh Housing  &  Urban  Development  

Authority [(2010) 13 SCC 398].  In that case the Court was  

concerned  with  the  question  that   whether  deduction  of  

40% from the market value determined by the High Court  

towards  development  charges  was  justified  or  not.  This  

Court held that where the acquired land falls in the amidst  

of  an  already  developed  land  with  amenities  of  roads,  

electricity  etc.,  deduction  on  this  account  may  not  be  

34

warranted.  At the same time it also held that where all civic  

and other amenities are yet to be provided to make the land  

suitable  for  building  purposes  or  when  under  the  local  

building regulations setting apart some portion of the lands  

for  sanctioning  common  facilities  is  mandatory,  an  

appropriate  deduction may be  justified.   Referring  to  the  

facts of that case, this Court permitted deduction of 30% as  

development charges from the market value of the land.   

25. In the present case, there is evidence on record to  

show  that  plotting  has  been  done  only  on  part  of  the  

acquired land and the land is surrounded by colonies like  

ITBP  etc.  but,  there  is  no  evidence  to  show  that  the  

acquired  land  itself  is  developed  and  is  having  all  the  

required facilities and amenities.   It may be a case where  

less deduction may be applied but certainly it is not a case  

of ‘no deduction’.  It also cannot be believed, in the absence  

of  specific  documentary  evidence,  that  no  further  

development  is  required  on  the  acquired  land.   The  

claimants, on whom the onus lies to prove inadequacy of  

compensation have not even stated that  whether under the  

relevant laws they are expected to leave any part of their  

35

land open when they are permitted to raise construction on  

the land in question.  Under these circumstances, we are  

unable to find any infirmity  in the  approach of  the  High  

Court in applying the principle of deduction.  In our opinion  

a deduction of 10% from the market value on account of  

development charges and other possible expenditures would  

be justifiable and called for in the facts and circumstances  

of the present case.

Question No. IV:  

Determination of Compensation

Application of principle of guesstimate for determining  the amount of compensation to be awarded for the land  acquired under the Act

26. Acquisition of land is an act falling in the purview of  

eminent domain of the State.  It essentially relates to the  

concept of compulsory acquisition as opposed to voluntary  

sale.   It  is  trite  that  no  person  can  be  deprived  of  his  

property save by authority of law in terms of Article 300A of  

the Constitution of India.  The provisions of the Act provide  

a  complete  mechanism  for  ‘deprivation  of  property  in  

accordance  with  the  law’  as  stated  under  the  Act.  

36

Justifiability and fairness of such compensation is subject  

to judicial review within the confines of the four corners of  

the Act.  Once the lands are acquired under the Act, the  

persons interested therein are entitled to compensation as  

per the provisions of the Act.   Thus, in the present case the  

land in question has been acquired under the provisions of  

a law which specifically provide that acquisition can only be  

for a public purpose and upon payment of compensation to  

the  claimants  in accordance  with law.  The  compensation  

payable to the claimants has to be computed in terms of  

Sections 23 and 24 of the Act.  The market value of the land  

has to be determined at the date of the publication of the  

notification under Section 4(1) of the Act, after taking into  

consideration what is stated under Sections 23(1), 23(1A),  

23(2) and excluding the considerations stated under Section  

24 of the Act.  More often than not, it is not possible to fix  

the compensation with exactitude or arithmetic  accuracy.  

Depending on the facts and circumstances of the case, the  

Court may have to take recourse to some guesswork while  

determining  the  fair  market  value  of  the  land  and  the  

consequential amount of compensation that is required to  

37

be paid to the persons interested in the acquired land.

27. ‘Guess’ as understood in its common parlance is an  

estimate  without  any  specific  information  while  

‘calculations’  are  always  made  with  reference  to  specific  

data.   ‘Guesstimate’ is an estimate based on a mixture of  

guesswork and calculations and it is a process in itself.  At  

the  same  time  ‘guess’  cannot  be  treated  synonymous  to  

‘conjecture’.  ‘Guess’ by itself may be a statement or result  

based on unknown factors while ‘conjecture’ is made with a  

very slight amount of knowledge, which is just sufficient to  

incline the scale of probability.  ‘Guesstimate’ is with higher  

certainty than mere ‘guess’ or a ‘conjecture’ per se.

28. The  concept  of  ‘guesswork’  is  not  unknown  to  

various fields of law.  It has been applied in cases relating to  

insurance,  taxation,  compensation  under  the  Motor  

Vehicles Act as well as under the Labour Laws.   All that is  

required from a Court  is  that  such guesswork has to be  

used  with  greater  element  of  caution  and  within  the  

determinants of law declared by the Legislature or by the  

Courts  from  time  to  time.   In  the  case  of  Charan  Dass  

(supra)  this Court on the use of guesswork for determining  

38

29. Even  in  the  case  of  Thakur  Kamta  Prasad  Singh  

(Dead) through LRs v. State of Bihar [(1976) 3 SCC 772], this  

Court  had  held  that  there  is  an  element  of  guesswork  

inherent  in  most  cases  involving  determination  of  the  

market value of the acquired land and observed as under:

“6. Section 23 of the Act provides that  in  determining  the  amount  of  compensation  to  be  awarded  for  land  acquisition under the Act the court shall  inter  alia  take  into  consideration  the  market  value of  the land at the date  of  the publication of the notification under  Section 4 of the Act. Market value means  the price that a willing purchaser would  pay  to  a  willing  seller  for  the  property  having  due  regard  to  its  existing  condition with all its existing advantages  and  its  potential  possibilities  when  laid  out  in  the  most  advantageous  manner  excluding  any  advantages  due  to  the  carrying out of the scheme for which the  property  is  compulsorily  acquired.  In  considering  market  value  the  disinclination of the vendor to part with  his land and the urgent necessity of the  purchaser to buy should be disregarded.  There  is  an  element  of  guesswork  inherent  in  most  cases  involving  determination of the market value of the  acquired land, but this in the very nature  of things cannot be helped. The essential  thing  is  to  keep  in  view  the  relevant  factors  prescribed  by  the  Act.  If  the  judgment of the High Court reveals that it  has taken into consideration the relevant  factors, its assessment of the fair market  value of the acquired land should not be  disturbed.  No  such  infirmity  has  been  brought to our notice as might induce us  

41

to disturb the finding of the High Court.  The  appeal  consequently  fails  and  is  dismissed  but  in  the  circumstances  without costs.”

30. Similar  view was taken by another  Bench of  this  

Court  in  the  case  of  Special  Land  Acquisition  Officer   v.  

Karigowda [(2010) 5 SCC 708] where this Court held, “the  

Court  is  entitled  to  apply  some  amount  of  reasonable  

guesswork to balance the equities and fix a just and fair  

market  value  in  terms of  the  parameters  specified under  

Section 23 of the Act.”

31. The  observations  made  by  this  Court  in  a  case  

under  the  Central  Excise  Valuation Rules,  1975 titled as  

Commissioner  of  Central  Excise,  Jaipur   v.   Rajasthan  

Spinning and Weaving Mills Ltd. [2007 (12) SCR 703], can be  

aptly referred to at this stage wherein this Court had held  

that valuation is not an exact science and some amount of  

guesswork  exists  in  valuation.   Different  methods  for  

valuation are prescribed by Valuation Rules which may be  

applied  by  the  Department  but  it  has  to  be  ultimately  

ascertained  by  applying  the  rule  of  convergence,  the  

estimated ad valorem value of which would constitute the  

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base of the assessable value.   

32. Under the Act, as settled by various judgments of  

this Court,  there are different methods of computation of  

compensation payable to the claimants, for example it can  

be  based  upon  comparable  sale  instances,  awards  and  

judgments  relating  to  the  similar  or  comparable  lands,  

method  of  averages,  yearly  yields  with  reference  to  the  

revenue  earned  by  the  land  etc.   Whatever  method  of  

determining the compensation is applied by the court, its  

result should always be  reasonable, just and fair as that is  

the purpose sought to be achieved under the scheme of the  

Act.   For  attaining  that  purpose,  application  of  some  

guesswork may be necessary but this principle would have  

hardly any application in a case of no evidence.  In other  

words, where the parties have not brought on record any  

evidence, then the court will not be in a position to award  

compensation  merely  on  the  basis  of  imagination,  

conjecture etc.

33. These  precedents  clearly  demonstrate  that  the  

Court may apply some guesswork before it could arrive at a  

final  determination,  which  is  in  consonance  with  the  

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statutory law as well as the principles stated in the judicial  

pronouncements.  As already noticed, the guesswork has to  

be  used  for  determination  of  compensation  with  greater  

element of caution and the principle of guesstimation will  

have  no  application  to  the  case  of  ‘no  evidence’.   This  

principle  is  only  intended to  bridge  the  gap  between the  

calculated compensation and the actual compensation that  

the claimants may be entitled to receive as per the facts of a  

given case to meet the ends of justice.  It will be appropriate  

for us to state certain principles controlling the application  

of ‘guesstimate:

(a)  Wherever the evidence produced by the parties is not  

sufficient  to  determine  the  compensation  with  

exactitude, this principle can be resorted to.

(b)Discretion of the court in applying guesswork to the  

facts of a given case is not unfettered but has to be  

reasonable and should have a connection to the data  

on record produced by the parties by way of evidence.  

Further,  this  entire  exercise  has  to  be  within  the  

limitations specified under Sections 23 and 24 of the  

Act and cannot be made in detriment thereto.

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34. Applying these principles to the facts of the present  

case,  we  have  to  take  recourse  to  the  ‘principle  of  

guesstimation’  inasmuch as it is essential for fixation of fair  

market  value  of  the  land  which  shall  be  the  basis  for  

determining  the  compensation  payable  to  the  claimants.  

Now, we will discuss the evidence led by the parties in that  

behalf.

35. All  the  claimants  in  the  present  appeals  have  

primarily  relied  upon  the  sale  instances  shown  at  serial  

Nos.  109 and 110.   These sale instances were not relied  

upon by the SLAO while making the award and were also  

rejected by the Reference Court in LA Case No.121 of 1994.  

This view of the Reference Court was upheld by the High  

Court vide its judgment in First Appeal Nos. 60-63 of 2001  

which is subject matter of the appeal before this Court in  

C.A. No. 3613 of 2008.  We have already noticed that as per  

these sale instances the value of the land comes to a rate of  

`  32,72,603 and  ` 34,87,648 per acre respectively.  While  

accepting the concurrent view of the Reference Court and  

the High Court subject matter of CA No. 3613 of 2008, we  

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have already held that these sale instances are liable to be  

ignored and have rightly been ignored by the Courts below.  

Besides the fact that these sale deeds are executed between  

the  members  of  the  family,  the  claimants  had  full  

knowledge of the Government’s intention to acquire these  

lands, for the purpose specified, even prior to issuance of  

notification under Section 4(1) of the Act through Mr. M.K.  

Jain. These are reasons enough to doubt the consideration  

paid in these sale deeds.

36. The SLAO, in his Award, has taken note of 140 sale  

instances  immediately  preceding  the  issuance  of  

Notification under Section 4(1) of the Act.  The Reference  

Court,  in  LA Case No.  121 of  1994,  specifically  recorded  

that the highest value reflected in these 140 sale instances  

is  ` 12,55,550.50 per acre, except in sale instances at serial  

Nos.  109  and  110  produced  by  the  claimants.   It  is  

interesting to note that the claimants did not produce any  

other evidence except these two sale instances which had  

been  executed  between  the  members  of  the  family  and  

contained unreasonably  high price  of  the land.  There is  

tremendous gap between the prices of the land fetched in all  

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other  sale  deeds  on  one  hand,  the  highest  being  `  

12,55,550.50  per acre and that in sale deeds  executed by  

the claimants between themselves on the other hand which  

is ` 34,87,648 per acre, for sales effected within a span of 2-

3 days for similarly situated lands in the same village. It  

certainly arouses suspicion in the mind of the Court as to  

the intention behind execution of these sale deeds.  Ex facie  

they appear to have been executed to hike up the price of  

the  land  just  before  the  issuance  of  Notification  under  

Section 4(1) of the Act.    If considered from the point of view  

of  a  reasonable  man,  all  these  circumstances  clearly  fall  

beyond the ambit of coincidence and appear to have been  

‘managed’  to  achieve  the  end  of  receiving  higher  

compensation.   In  light  of  these  facts  and  the  reasons  

already recorded, we have no hesitation in holding that the  

sale instances at serial Nos. 109 and 110 produced by the  

claimants  are  liable  to  be  ignored  for  the  purposes  of  

fixation  of  market  value  of  the  acquired  land  as  these  

transactions are sham and lack bona fide.

37. The  SLAO,  in  his  award  had  relied  upon  sale  

instance  shown  at  serial  No.  43  and  had  therefore  

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determined the market  value of  the land at  the rate  of  `  

9,78,723.40  per  acre  (i.e.  ` 1,86,423.50  per  bigha  

approximately).  The compensation awarded on the basis of  

the above market value and by applying belting system was  

not accepted by the Reference Court. The Reference Court  

in LA Case No. 121 of 1994, instead relied upon sale deed at  

serial  No.  108  where  the  land  was  sold  at  the  rate  of  `  

12,55,550.50 per  acre  on 29th November,  1991,  i.e.  even  

subsequent  to  the  sale  instances  relied  upon  by  the  

claimants.   The  Reference  Court  had  therefore  awarded  

compensation at the rate of ` 12,50,000 per acre which was  

reduced by the High Court to  `8 ,33,334 after applying a  

deduction of 33.33%.

38. The Reference Court, in LA Case Nos. 386 of 1993,  

had determined the market value of the land at a rate of  `  

6,40,000 per bigha (i.e. ` 33,60,000 per acre approximately)  

and  after  applying  a  deduction  of  20%  awarded  

compensation at the rate of ` 5,12,000 per bigha.  This was  

reduced  further  by  the  High  Court  by  increasing  the  

deduction from 20% to 33.33% and therefore awarding a  

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sum of ` 4,26,667 per bigha (i.e.  ` 22,40,001.80 per acre) as  

compensation. The two exhibits produced by the claimants  

were  the  sole  basis  for  awarding  compensation  to  the  

claimants in this line of cases.  These exhibits offend the  

very essence of the parameters stated under Section 23 of  

the Act as defined by this Court in the case of  Ram Singh  

(supra).  Thus, the view taken by the Reference Court and  

the High Court, which is subject matter of C.A. No. 3613 of  

2008,  rejecting  these  instances  as  collusive  and sham is  

liable to be sustained.

39. The judgment of the Reference Court and that of the  

High  Court  in  these  cases,  accepting  the  sale  instances  

under serial Nos. 109 and 110, cannot be sustained in law  

and is liable to be set aside.  However, as it appears from  

the record the earlier judgments of the Division Benches of  

the High Court in First Appeal Nos. 920-921 of 2001, dated  

20th July, 2005, and in First Appeal Nos. 918-919 of 2001,  

dated 09th March, 2006 were not brought to the notice of  

the Division Bench of the High Court which pronounced the  

judgments in First Appeal Nos. 60-63 of 2001, dated 11th  

May, 2006.  

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40. Now, after  we have rejected the  sale  instances  at  

serial  Nos.  109  and  110,  we  have  to  consider  what  

compensation  the  claimants  are  entitled  to  receive  in  

accordance with other evidence on record. The sale instance  

shown at serial No. 108 is certainly an exemplar which can  

be taken into consideration.  This is a sale deed executed on  

29th November, 1991 where a land admeasuring 0.90 acres  

has been sold at a rate of ` 12,55,550.50  per acre.  As far  

as the location and potential of this land is concerned, we  

may refer straightaway to the award of the Reference Court,  

in  LA  Case  No.  121  of  1994,  where  it  referred  to  the  

statement of PW1, Sh. Gyan Swarup, stating that the land  

which was subject matter of this sale deed is situated at a  

distance  of  1½ furlong of  the acquired land in the same  

village.  It is the case of the claimants in all these appeals  

that  the acquired land is  surrounded by developed areas  

like ITBP Colony on the North and there was a 20 feet wide  

passage  ending  on  the  acquired  land.   Facilities  of  post  

office,  electricity,  hospital,  schools  etc.  were  available  in  

those colonies which are very close to the acquired land.  

The Reference Courts, in their respective awards, have also  

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noticed  that  heavy  construction  activity  was  going  on  

nearby  Shimla  Road  and  the  value  of  this  land  is  

continuously rising.

41. Another relevant piece of evidence with reference to  

potential and location of the land is the statement of PW-4  

Girdhari Lal Arora, noticed in the judgment of the Reference  

Court in L.A. Case No. 386 if 1993, who is an Architect by  

profession.   He claims to have visited the  site  and made  

plans to divide the land in question into plots after making  

provision for  civic  amenities,  children park etc.   In these  

circumstances,  it  is  difficult  to  doubt  that  the  land  in  

question has substantial potential and is located adjacent  

to developed areas. He further stated, “In the year 1992 the  

value of the land around,  the acquired land was  ` six to  

6.50 lacs per bigha and thereafter there had been a slump  

in the prices of the land”.  Statement of this witness has to  

be given its due value as nothing controversial appears to  

have come in evidence in his cross-examination.  According  

to this witness,  there has been a decreasing trend in the  

value  of  the  land  in  that  area.   The  declaration  under  

Section 6 was issued in April, 1992 itself at a time when the  

51

prices had started falling.   

42. The cumulative effect of the documentary and oral  

evidence on record is that it is a case of acquisition of land  

which is situated on a reasonably good location surrounded  

by developed areas having civic amenities and facilities and  

further development activity was going on in nearby areas.  

It  was also submitted by the  claimants that  plotting  has  

already been done on the acquired land and some plots of  

land have been sold immediately prior to the issuance of the  

Notification under Section 4(1) of the Act.  It is evident that  

the land acquired had the potential of being developed for  

residential or institutional purposes and as already noticed,  

the same was acquired for  construction of  a Government  

Polytechnic  Institute.   Therefore,  it  is  a  case  where  the  

Court should apply minimal deduction which will meet the  

ends of justice and would help in determining just and fair  

compensation  for  the  land  in  question.   We  are  of  the  

considered view that 10% deduction from the market value  

of the acquired land would meet the ends of justice.

43. It is not in dispute before us that sale instance at  

serial  No.  108  falls  in  the  Revenue  Estate  of  the  same  

52

Village and as recorded by the Reference Court, in LA Case  

No. 121 of 1994, it is situated at a distance of 1½ furlong  

from the acquired land.  The acquired land belonging to the  

claimants forms part of Khasra No.39/2 while, in the same  

Reveue Estate, the sale instance at serial No. 108 is part of  

Khasra No. 410. Thus a sale deed related to a land in such  

proximity  of  time  and  distance  cannot  be  said  to  be  

incomparable  sale  instance,  i.e.  it  has  to  be  taken  as  a  

comparable sale instance. Though it relates to the sale of a  

smaller plot  of land but is certainly bigger than the land  

sold by the claimants between themselves.  Its location and  

potential,  if  not  identical  in  absolute  terms,  is  certainly  

comparable for the purposes of determining market value of  

the land in question.  It is a well established principle that  

the value of sale of small pieces of land can be taken into  

consideration for determining even the value of a large tract  

of land but with a rider that the Court while taking such  

instances into consideration has to make some deduction  

keeping in view other attendant circumstances and facts of  

that particular case.  We have already held that keeping in  

view  the  surrounding  developed  areas  and  location  and  

53

potential of the land it will meet the ends of justice if 10%  

deduction is made from the estimated market value of the  

acquired land.   

44. The comparable sale instance under serial No. 108  

depicted the fair value of land in that area at the time of  

issuance of Notification under Section 4(1) of the Act which  

is  ` 12,55,550.50 per acre. The time gap between this sale  

instance  and  issuance  of  said  Notification  is  merely  two  

months which would hardly call for any increase in the said  

value but to balance the equities  between the parties we  

would  round  off  the  figure  to  ` 13,00,000  per  acre.  By  

applying the principle of guesstimate,  thus, we determine  

the market value of the acquired land at  ` 13,00,000 per  

acre as on the date of the issuance of the Notification under  

Section 4(1) of the Act.  Deducting 10% therefrom, it would  

come  to  ` 11,70,000  per  acre  which  will  be  the  

compensation  payable  to  the  claimants  with  statutory  

benefits and interests thereupon in accordance with law.

45. Ergo,  for  the  reasons  aforerecorded,  we  pass  the  

54

following  orders  in  the  appeals,  subject  matter  of  the  

present judgment :

(i) The  Civil  Appeal  No.  3613  of  2008,  the  appeal  

preferred  by  the  claimants  Krishna  Devi  and  Others,  is  

partially  accepted  and  the  judgment  of  the  High  Court  

impugned in this appeal is modified to the extent that the  

claimants would be entitled to receive compensation at the  

rate  of  `  11,70,000  per  acre  with  interests  and  other  

statutory benefits permissible under the law.

(ii) Civil Appeal Nos. 7498-7499 of 2005 preferred  by  

the  State  of  Uttaranchal  are  partially  accepted  and  the  

compensation payable to the claimants is  reduced from  `  

22,40,001.80  per  acre  to  ` 11,70,000  per  acre.   The  

claimants  would  be  entitled  to  interest  and  all  statutory  

benefits permissible under the law.

(iii) Civil Appeal No. 1122 of 2011 preferred by the State  

of Uttaranchal is partially accepted and the compensation  

55

payable to the claimants is reduced from ` 22,40,001.80 per  

acre  to  ` 11,70,000  per  acre.   The  claimants  would  be  

entitled  to  interest  and  all  statutory  benefits  permissible  

under the law.

(iv) Civil  appeal Nos. 7496-7497 of  2005 preferred by  

the other claimants are dismissed without any order as to  

costs.

…….………….............................J.  (Asok Kumar Ganguly)

...….………….............................J.                      (Swatanter Kumar) New Delhi May 5, 2011

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