REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.1645-1647 OF 2016

Vithal Rao & Anr. Etc.            ….Appellant(s)

VERSUS

The Special Land Acquisition Officer     .…Respondent(s)

WITH

CIVIL APPEAL No.1648 OF 2016

Annappa since dead by His Lrs. & Ors.                ….Appellant(s)

VERSUS

The Special Land Acquisition Officer     .…Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1) These appeals are filed by the land owners against the

final  judgment  and  order  dated  07.07.2014  passed  by  the

High Court of Karnataka, Circuit Bench at Dharwad in M.F.A.

No.  25301,  25302,  25303 and 25304 of  2012 whereby the

High  Court  allowed  the  appeals  in  part  and  modified  the

Award dated 24.08.2012 passed in LAC Nos. 107, 106, 108

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and 109 of 2004 by the Court of Senior Civil Judge, Mudhol

and  re-determined  the  compensation  at  Rs.13,93,920/-  per

acre  as  against  Rs.6,75,000/-  per  acre  with  all  statutory

benefits as envisaged under Section 23 of the Land Acquisition

Act,  1894 (hereinafter referred to as “the Act”) .

2) We herein set out the facts,  in brief,  to appreciate  the

issues involved in these appeals.

3) The respondent, by Notification dated 25.01.2003 issued

under  Section  4(1)  of  the  Act  followed  by  final  Notification

dated  26.03.2003  issued  under  Section  6(1)  of  the  Act,

acquired the lands belonging to the appellants in Survey No.

554/1  measuring  16  acres  27  guntas,  Survey  No.  554/2

measuring 15 guntas, Survey No. 555/2 measuring 3 acres 34

guntas and Survey No. 553/A/1 measuring 9 acres 14 guntas

(total  30.8  guntas  approx.)  situated  at  Mudhol  village  and

Taluk for the purpose of construction of Rehabilitation Centre

in  favour  of  the  displaced  persons  of  Gudadinni  Village  of

Bilagi Taluk, whose properties came to be submerged under

Upper Krishna project.   

4) By  awards  dated  22.07.2003,  the  Special  Land

Acquisition  Officer  determined  the  market  value  of  the

acquired lands at the rate of Rs.96,164/- per acre.

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5) Being  aggrieved  by  the  awards  made  by  the  Land

Acquisition  Officer,  the  appellants  (land  owners)  sought

reference  to  the  Senior  Civil  Judge,  Mudhol  under  Section

18(1)  of  the  Act  and  claimed  compensation  at  the  rate  of

Rs.300/- to Rs.350/- per sq. ft. for the acquired lands  inter

alia on the ground of building potentiality and comparable sale

deeds of the several plots in the vicinity of the acquired lands.

Their applications were registered as LAC Nos. 107, 106, 108

and  109  of  2004.     The  Reference  Court  clubbed  them

together  and  recorded  common  evidence  in  LAC  No.

107/2004.

6) By common judgment and Award dated 24.08.2012, the

Reference Court,  by relying upon its earlier judgment dated

18.12.2009 passed in LAC No. 1659/2000 wherein the market

value was determined at the rate of Rs.5,00,000/- per acre,

fixed the market value of the acquired lands of the appellants

at  the  rate  of  Rs.5,00,000/-  per  acre  and  awarded  the

compensation  of  Rs.6,75,000/-  per  acre  inclusive  of

Rs.1,75,000/- per acre towards escalation price at the rate of

5%  per  annum  from  21.08.1996,  the  date  on  which  the

Notification under Section 4(1) was issued in LAC No. 1659 of

2000 till 25.01.2003, the date on which the Notification under

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Section 4(1) was issued in the cases at hand.

7) Aggrieved  by  the  compensation  determined  by  the

Reference Court, the land owners filed appeals being M.F.A.

Nos. 25301, 25302, 25303 and 25304 of 2012 before the High

Court.  

8) By  impugned  judgment  dated  07.07.2014,  the  High

Court allowed the appeals in part and while setting aside the

award  of  the  reference  Court  and  disagreeing  with  its

reasoning re-determined the compensation at Rs.13,93,920/-

per  acre  as against  Rs.6,75,000/- per  acre  awarded by the

Reference Court with all statutory benefits as envisaged under

Section 23 of the Act.  

9) The High Court,  inter alia,  held by relying on the price

(Rs. 64/- per sq. ft.) value of one exemplar sale deed (Ex.P-61)

out of 11 sale deeds filed by the appellants and deducting 50%

towards development  charges  from its  price  determined the

market value at Rs.13,93,920/- per acre (Rs. 32/- per sq. ft.).

10) Against  the  said  judgment,  the  appellants  have  filed

these appeals before this Court seeking further enhancement

in the compensation awarded by the High Court.

11) Heard Mr. Dhruv Mehta, learned senior counsel for the

appellants  and  Mr.  Basava  Prabhu  S.  Patil,  learned  senior

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counsel for the respondent.

12) Mr. Dhruv Mehta, learned senior counsel appearing for

the  appellants(land-owners)  while  assailing  the  legality  and

correctness  of  the  impugned  order  mainly  raised  five

submissions.

13) In the first  place, learned counsel urged that the High

Court  having  rightly  held  that  the  appellants  were  not

awarded  adequate  compensation  by  the  Land  Acquisition

Officer  and  the  reference  Court  commensurate  with  the

market  value  of  the  acquired  land  erred  in  awarding

compensation only at the rate of Rs.13,93,920/- per acre., i.e.,

at the rate of Rs. 32/- per sq. ft.  

14) According to learned counsel,  firstly,  the compensation

awarded  by  the  High  Court  is  wholly  inadequate  and  not

commensurate with the market value of the acquired land and

secondly, it is against the evidence adduced by the appellants

and hence unsustainable in law.

15) In  the  second  place,  learned  counsel  urged  that  the

appellants  have  filed  in  evidence  11  sale  deeds  of  the

exemplar’s land to prove the market rate of the acquired land.

Learned counsel pointed out that out of 11 sale deeds, some

sale  deeds  were  part  of  the  acquired  land  whereas  the

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remaining pertained to the land adjacent to the acquired land.

16) It was urged that since these 11 sale deeds were executed

much  prior  in  point  of  time  from  the  date  of  issuance  of

Notification under Section 4,  therefore,  such sale  deeds are

the  best  piece  of  evidence  as  they  represent  the  correct

price/value of the acquired land for proving the market value

of the acquired land.  

17) Learned counsel urged that out of 11 sale deeds, two sale

deeds,  which represent the highest  value should have been

made  the  basis  for  determining  the  market  value  of  the

acquired land.

18) In the third place, learned counsel urged that out of 11

sale deeds, the High Court having rightly held the four sale

deeds (Ex- 55,56,59 and 61) to be of relevance for proving the

market value of the acquired land erred in excluding the three

sale deeds out of the four while determining the market value

of the acquired land and confined its reliance only on one sale

deed,  namely,  Ex-61(which was for  Rs.  64/- per sq.  ft.)  for

determining the market value without any justification. It was

also  his  submission  that  the  High  Court  erred  in  making

deduction of 50% out of the price of Ex.P-61 sale deed without

there being any justification and reduced its price to Rs. 32/-

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per sq. ft.  This finding, according to learned counsel, is legally

unsustainable and hence deserves to be set aside.

19) In the fourth place, learned counsel urged that out of 11

sale deeds, 2 sale deeds, viz., Exs. 55 and 56 represented the

land to have been sold at Rs. 218/- per sq. ft. and, therefore,

Rs.218/-  per  sq.  ft.  rate  should  have  been  held  to  be  the

market rate of the acquired land that being the highest price

of  the  land  out  of  11  sale  deeds  and,  accordingly,  the

compensation  should  have  been  determined  at  the  rate  of

Rs.218/-  per sq ft., if not more.  

20) In the fifth place, learned counsel urged that it being an

admitted  fact  that  the  acquired  land  is  abutting  the  main

district  road  (MDR)  in  the  city  and  further  surrounded  by

developed colonies and several institutions/organisations etc.

in its near proximity and being non-agricultural land situated

within the limits of municipality has potentiality to undertake

any  housing  project  over  the  land  and,  therefore,  the  rate

claimed by the appellants is well justified having regard to the

totality of the circumstances.

21)    It is essentially these submissions learned counsel for

the appellants(land owners) elaborated in his arguments with

the  aid  of  evidence  adduced  and  decided  case  law  of  this

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Court.

22) In  reply,  Mr.  B.P.S.  Patil,  learned  senior  counsel

appearing for the respondent supported the impugned order

and contended that the submissions urged by the appellants’

counsel has no merit. Learned counsel contented that 11 sale

deeds  relied  on  by  the  appellants  relate  to  very  small

area/plots whereas the acquired area is quite large (30 acres)

and, therefore, the price shown in such sale deeds is of no

relevance  and  nor  can  these  sale  deeds  be  relied  on  to

determine the true market value of the acquired land.  

23) Learned counsel also doubted the  bona fides of the sale

deeds  and  contented  that  the  manner  in  which  the

transactions were made pursuant to these sale deeds, clearly

show that the transactions made therein are not genuine. In

substance,  the  submission  of  learned  counsel  for  the

respondent was that the appeals have no merit.

24) Having heard the learned counsel for the parties and on

perusal of the record of the case, we find force in some of the

submissions of learned counsel for the appellants.

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

to take note of general principle of law on the subject which is

laid down by this Court in several cases some of which were

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also cited at the bar by the learned counsel for the parties.

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

herein  by  the  learned  counsel  for  the  parties  is  fairly  well

settled and what has varied is its application to the facts of

each case.

26) In  Chimanlal  Hargovinddas  vs  Special  Land

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

Court  dealt  with  the  question  as  to  how the  Court  should

determine the  valuation of  the lands under acquisition and

what  broad  principle  of  law  relating  to  acquisition  of  land

under the Act should be kept in consideration to determine

the proper market value of the acquired land.  

27) In Para 4 of the judgment, this Court laid down as many

as 17 principles, which are reproduced below for perusal:

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

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

(6) The determination has to be made standing on  the  date  line  of  valuation  (date  of  publication  of notification  under  Section  4)  as  if  the  valuer  is  a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price.

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

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

(9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and  (3)  the  acquisition  itself  has  not  motivated  the purchaser  to  pay  a  higher  price  on  account  of  the resultant improvement in development prospects.

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

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

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

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

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

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

     Plus factors       Minus factors 1.    smallness of size 1.   largeness of area 2.    proximity to a road 2. situation in the interior at a

distance from the road 3.    frontage on a road 3.   narrow  strip  of  land  with

very    small  frontage compared to depth

4.   nearness to developed area 4. lower  level  requiring  the depressed  portion  to  be filled up

5.   regular shape 5. remoteness from developed locality

6.  level  vis-à-vis  land  under acquisition

6. some  special disadvantageous  factor which  would  deter  a purchaser

7.     special value for an owner of        an adjoining  

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property to whom it may  have some very special  advantage

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

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

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

28) These  principles  are  invariably  kept  in  mind  by  the

Courts  while  determining  the  market  value  of  the  acquired

lands (see also Union of India vs. Raj Kumar Baghal Singh

(Dead) Through Legal Representatives & Ors. (2014) 10 SCC

422).

29) In  addition  to  these  principles,   this  Court  in  several

cases  have  also  laid  down that  while  determining  the  true

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market  value  of  the  acquired land and especially  when the

acquired land is a large chunk of undeveloped land, it is just

and  reasonable  to  make  appropriate  deduction  towards

expenses for development of acquired land. It has also been

consistently  held  that  at  what  percentage  the  deduction

should be  made vary from 10% to 86% and,  therefore,  the

deduction should be made keeping in mind the nature of the

land, area under acquisition, whether the land is developed or

not and, if so, to what extent, the purpose of acquisition, etc.

It has also been held that while determining the market value

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

can be taken into consideration after making proper deduction

in the value of lands and when sale deeds of larger parcel of

land are not available. This Court has also laid down that the

Court should also take into consideration the potentiality of

the  acquired land apart  from other  relevant  considerations.

This  Court  has also recognized that  the  Courts  can always

apply reasonable amount of guesswork to balance the equities

in  order  to  fix  a  just  and  fair  market  value  in  terms  of

parameters  specified  under  Section  23  of  the  Act.  (See

Trishala Jain & Anr. Vs. State of Uttaranchal & Anr., (2011)

6 SCC 47)  

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30) Keeping the aforementioned principles in mind when we

take note of the facts of the case at hand, we find that firstly,

the land acquired in question is  a large chunk of  land (30

acres  approx.);  Secondly,  the  purpose  of  acquisition  is

“Establishment of Rehabilitation Centre"; Thirdly, it is situated

within the municipal limits; Fourthly, its one side is abutting

the main district road (MDR); Fifthly, it is not fully developed;

Sixthly, some buildings have come up in its near proximity;

Seventhly,  the  appellants(land  owners)  have  not  filed  any

exemplar’s sale deeds relating to large piece of  land sold in

acres to prove the market value of the acquired land; Eighthly,

all sale deeds relied on by the appellants pertain to very small

piece of land such as,  25x55ft., 40x20ft., 40x40ft., 12x45ft,

30x40ft., 12x45ft.,  60x60ft., 10x65ft., 50x65ft., 40x65ft. and

29x49ft. whereas the land acquired, as mentioned above, is

quite large (30 acres) and the price at which these small plots

were sold is Rs.85/- per sq. ft., Rs.70/- per sq. ft., Rs.80/- per

sq. ft., Rs 69/- per sq. ft., Rs. 55/- per sq. ft., Rs. 64/- per sq.

ft., Rs. 65 per sq. ft., Rs. 100/- per sq. ft., and Rs.218/- per

sq. ft.,; Ninthly, these eleven plots were sold prior to the date

of acquisition (2000, 2001 and 2002) whereas the acquisition

was in the year 2003; Tenthly, the small parcel of lands sold

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under these sale deeds are situated in near proximity of the

acquired  land  and  some  were  part  of  the  acquired  land;

Eleventhly, all the eleven sale deeds are held  bona fide and

proper and lastly, these sale deeds, therefore, can be relied on

for determining the proper market value of the acquired land.  

31) Taking into account the factual scenario of the acquired

land and having regard to the totality of  the circumstances

taken note  of  supra,  we  are  of  the  considered  view that  it

would be just, fair and proper to take out the average value of

these plots. Since the acquired land is not fully developed and

it requires for construction of rehabilitation centre, it would be

just,  fair  and proper to deduct 40% of  the amount towards

development  charges  out  of  the  average  price  worked  out.

Such  deduction  is  permissible  in  law  (Land  Acquisition

Officer  Revenue  Divisional  Officer,  Chittor  vs.  L.

Kamalamma (Smt.) Dead by LRs. & Ors. Etc.(1998) 2 SCC

385.  

32) The average value of the land in this way is worked out to

Rs.99/-   per  sq.  ft.  and  after  deducting  40%  towards

development  charges,  we  get  a  rate  of  Rs.60/- per  sq.  ft.

(rounded off).

33) In our considered opinion, the market value of Rs.60/-

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per sq. ft.  which we have worked out, is just, fair and proper

market value of the acquired land having regard to the totality

of the circumstances taken note of above and on applying the

aforementioned principle of law laid down by this Court.  It is

this value which, in our opinion, should have been awarded to

the appellants for the acquired land.

34) We  are  unable  to  accept  the  submission  of  learned

counsel for the appellants when he urged that the appellants

are entitled to claim compensation at the rate of Rs.218/- per

sq. ft. or even more that being the highest rate of the land out

of total sale deeds.

35)  As held supra, firstly, all  the sale deeds relate to very

small piece of land; secondly, except two parcels of land sold

for Rs.100/- and Rs.218/-, remaining plots were sold in the

range of Rs.55/- to Rs.85/- and lastly, the appellants did not

file any sale deed in relation to large chunk of land to prove

the price in acres. For these reasons, in our view, it is not safe

to rely on one or two isolated sale deeds of high value of very

small  plots.  We  have,  therefore,  preferred  to  work  out  the

average of these sale deeds for determining the market value

of the acquired land.   

36) In the light of foregoing discussion, the appeals succeed

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and are accordingly allowed in part. The impugned order is

modified to the extent that the appellants are held entitled to

claim  compensation  for  the  acquired  land  at  the  rate  of

Rs.60/- per sq ft. As a consequence, the appellants are held

entitled to claim all statutory compensation accordingly.  

37) Let  the  compensation  now  awarded  by  this  Court  by

enhanced  rate  be  re-worked  and  after  making  proper

calculation and verification of the land, the same be paid to

the appellants (respective land owners) within 3 months from

the date of this order.  

                                                            ……..................................J.

        [ABHAY MANOHAR SAPRE]

………...................................J. [SANJAY KISHAN KAUL]

New Delhi; July 07, 2017  

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