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Tuesday, December 3, 2013

Land Acquisition act -10% escalation of price- the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years (as evidenced by sale transactions or acquisitions), where there is no evidence of any contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood. The said method is reasonably safe where the relied-on sale transactions/acquisitions precede the subject acquisition by only a few years, that is, up to four to five years. Beyond that it may be unsafe, even if it relates to a neighbouring land. = Apex court enhanced the compensation and in respect of damages remanded the case to trail court for fresh disposal after recording evidence = Himmat Singh and others ....Appellants versus State of M.P. and another ....Respondents = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=41039

      Land Acquisition act    -10% escalation of price-  the mode of determining the  market
      value by providing appropriate escalation over the proved market value
      of nearby lands in previous years (as evidenced by  sale  transactions
      or acquisitions), where there is no evidence  of  any  contemporaneous
      sale  transactions  or  acquisitions  of  comparable  lands   in   the
      neighbourhood. The said method is reasonably safe where the  relied-on
      sale transactions/acquisitions precede the subject acquisition by only
      a few years, that is, up to four to five years. Beyond that it may  be
      unsafe, even if it relates to a  neighbouring  land. =  Apex court enhanced the compensation and in respect of damages remanded the case to trail court for fresh disposal after recording evidence = 
     Normally, recourse is taken to the mode of determining the  market
      value by providing appropriate escalation over the proved market value
      of nearby lands in previous years (as evidenced by  sale  transactions
      or acquisitions), where there is no evidence  of  any  contemporaneous
      sale  transactions  or  acquisitions  of  comparable  lands   in   the
      neighbourhood. The said method is reasonably safe where the  relied-on
      sale transactions/acquisitions precede the subject acquisition by only
      a few years, that is, up to four to five years. Beyond that it may  be
      unsafe, even if it relates to a  neighbouring  land.  What  may  be  a
      reliable standard if the gap is of only a few years, may become unsafe
      and unreliable standard where the gap  is  larger.  For  example,  for
      determining the market value of a land acquired in 1992, adopting  the
      annual increase method with reference to a sale or acquisition in 1970
      or 1980 may have many pitfalls. This is because, over  the  course  of
      years, the ‘rate’ of annual increase may itself undergo drastic change
      apart  from  the  likelihood  of  occurrence  of  varying  periods  of
      stagnation in prices or sudden spurts in  prices  affecting  the  very
      standard of increase.”           

 In  view  of  the  propositions  laid  down  in  the   aforementioned
judgments, we hold that the  appellants  will  be  entitled  to  10%  annual
escalation in the compensation determined  for  the  acquisition  made  vide
notification dated 28.5.1987, which was published on 12.6.1987.

15.   The appellants’ prayer for award of compensation on  account  of  loss
caused due to removal of fencing of Sant Farm,  severance  of  land  due  to
laying  of  rail  line  and  construction  of  road,  loss  caused  due   to
destruction of crop/farming activity etc.  was  rejected  by  the  Reference
Court without assigning cogent reasons and the learned Single Judge  of  the
High Court did not even deal with the issue.   It  is,  therefore,  apposite
that the matter is remitted to the Reference Court for deciding  this  issue
afresh keeping  in  view  the  evidence  produced  by  the  parties  in  the
references made by the Collector for determination of  compensation  of  the
land acquired vide notifications dated 28.5.1987 and 27.12.1991.

16.   In the result, the appeal is partly allowed and it  is  declared  that
the appellants shall be entitled to compensation at the  rate  of  Rs.5  per
sq. ft. with benefit of escalation at the rate of  10%  per  annum  for  the
period between 28.5.1987 and  27.12.1991.   The  appellants  shall  also  be
entitled to get interest on solatium.  The respondents are directed  to  pay
the enhanced compensation with interest etc.  to  the  appellants  within  a
period of six months from today.

17.   The issue relating to award  of  compensation  in  lieu  of  the  loss
caused due to removal of fencing  of  Sant  Farm,  segregation  of  land  on
account of laying of rail line and construction of road  from  Kolaras  Town
to Railway Station and loss caused due to damage to  the  crop  and  farming
activity is remitted to the Reference Court for fresh  adjudication  in  the
light of the evidence produced by the parties in the references made by  the
Collector under Section 18 of the Act.

     

                 NON-REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL NO. 1248 OF 2007


Himmat Singh and others
....Appellants

                                   versus

State of M.P. and another
....Respondents



                               J U D G M E N T

G.S. SINGHVI, J.


1.    Feeling dissatisfied  with  the  meagre  enhancement  granted  by  the
learned Single Judge of the Madhya Pradesh  High  Court  in  the  amount  of
compensation  determined  by  II   Additional   District   Judge,   Shivpuri
(hereinafter described as,  ‘the  Reference  Court’),  the  appellants  have
filed this appeal.

2.     By  letter  dated  27.12.1988,  Collector,  Shivpuri   proposed   the
acquisition of 4.421 hectares land for construction of link road near  Guna-
Shivpuri Rail Line. However, even before issue  of  the  notification  under
Section 4(1) of the Land Acquisition  Act,  1894  (for  short,  ‘the  Act’),
possession of the land was taken by the officers of the Central Railway  and
link road was constructed.

3.    On 16.1.1989, the notification issued under Section 4(1)  of  the  Act
was published. However, the same was cancelled on account  of  discrepancies
in the area of the land proposed to be acquired. After  about  four  months,
the Collector proposed the acquisition  of  4.788  hectares  land  of  which
possession had already been taken.

4.    Thereupon, the Government of Madhya Pradesh issued notification  dated
23.5.1991 under Section 4(1), which was  published  on  27.12.1991  for  the
acquisition of land measuring 4.788 hectares. The Land  Acquisition  Officer
passed award dated  30.1.1993  whereby  he  held  that  the  landowners  are
entitled to compensation of Rs.2,61,351.

5.    On an application filed by the appellants  under  Section  18  of  the
Act, the Collector made reference to the concerned Court  for  determination
of the compensation payable to the appellants.

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

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

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

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

      4.    Relief and costs.”




7.     In  support  of  their  claim,  the  appellants  produced  oral   and
documentary evidence including sale deeds marked Exhibits  P3  to  P26,  the
details of which (as given in the  written  note  filed  on  behalf  of  the
appellants on 27.11.2013) are as under:

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


8.    The Reference Court discarded most of the sale  deeds  on  the  ground
that contents thereof have not been proved by examining the  buyer  and  the
seller and held that market value of the acquired land is Rs.7 per  sq.  ft.
The Reference Court then made 50% deduction for development of the  acquired
land, i.e., for  construction  of  roads,  drains,  sewerage  lines,  parks,
electricity lines, etc., and arranging other amenities and  arrived  at  the
figure of Rs.3.50 per sq. ft. The Reference Court made further deduction  to
the tune of 50% on the ground that the land  which  was  subject  matter  of
sale deeds was very small and held that maximum cost of land cannot be  more
than Rs.1.75 per sq. ft. and awarded total  compensation  of  Rs.8,87,485.55
to the appellants. The Reference Court also determined  separate  shares  of
the appellants. While dealing  with  the  appellants’  claim  for  award  of
compensation in lieu of the damage caused due to removal of fencing of  Sant
Farm, segregation of land due to laying of rail  line  and  construction  of
road, loss of earning due to damage  of  crops/farming  and  destruction  of
well, the Reference Court did refer to the statement of PW-1  Himmat  Singh,
certified copy of report Exhibit P32 prepared by Sub-Divisional  Officer  of
the Water  Resources  Department  as  also  the  statement  of  Gaya  Prasad
Niranjan (DW1) but, without analyzing the same and without assigning  cogent
reasons, recorded the following conclusion:

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



9.    The appellants challenged the  judgment  of  the  Reference  Court  by
filing appeal under Section  54  of  the  Act.   The  learned  Single  Judge
disposed of the appeal along with other appeals filed  in  relation  to  the
land acquired for construction of Broad Gauge Rail Line and held:

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



10.   The learned Single Judge of the High  Court  did  not  deal  with  the
appellants’ claim for award of compensation in lieu of the loss  caused  due
to removal of fencing of Sant Farm, segregation of land due to  construction
of road through the farm land and laying of rail line and  loss  of  earning
due to damage to crops and farming potential  as  also  destruction  of  the
well existing on the acquired land.

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

12.   By a separate judgment passed today in  C.A.  No.1247  of  2007,  this
Court has held that for the land acquired vide notification dated  28.5.1987
for construction of Broad Guage Rail Line, the appellants  are  entitled  to
compensation at the rate of Rs.5 per sq.ft. with all statutory benefits  and
interest on solatium.

13.   Since the land which is subject matter of  this  appeal  was  acquired
vide notification dated 27.12.1991 for construction  of  road  from  Kolaras
Town to the Railway  Station,  we  have  no  hesitation  to  hold  that  the
appellants are entitled to the benefit of  escalation  in  land  prices.  In
Ranjit Singh v. UT of Chandigarh (1992) 4 SCC 659, Land Acquisition  Officer
v. Ramanjulu (2005) 9 SCC 594, Krishi Utpadan Mandi Samiti  v.  Bipin  Kumar
(2004) 2 SCC 283, Sardar Jogendra Singh v. State of U.P. (2008) 17 SCC  133,
Revenue Divisional Officer-cum-LAO v. Sk. Azam Saheb (2009) 4  SCC  395  and
ONGC Ltd. v. Rameshbhai Jivanbhai Pate (2008) 14 SCC  745,  this  Court  has
repeatedly held that the exercise undertaken for  fixing  market  value  and
determination  of  the  compensation  payable  to   the   landowner   should
necessarily involve consideration of escalation  in  land  prices.   In  the
last mentioned judgment,  the  Court  noticed  the  earlier  precedents  and
observed as under:

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


      13. Primarily, the increase in land prices depends  on  four  factors:
      situation of the land, nature  of  development  in  surrounding  area,
      availability of land for development in the area, and the  demand  for
      land in the area. In rural areas, unless  there  is  any  prospect  of
      development in the vicinity, increase in prices would be slow,  steady
      and gradual, without any sudden spurts or jumps. On the other hand, in
      urban or semi-urban areas, where the development is faster, where  the
      demand for land is high and where there is construction  activity  all
      around, the escalation in market price is at a much  higher  rate,  as
      compared to rural areas. In some pockets in big cities, due  to  rapid
      development and high demand for land, the escalations in  prices  have
      touched even 30% to 50% or more per year, during the nineties.


      14. On the other extreme, in remote rural areas  where  there  was  no
      chance of any development and hardly any buyers, the prices  stagnated
      for years or rose marginally at a nominal rate of 1% or 2% per  annum.
      There is thus a significant difference in increases in market value of
      lands in urban/semi-urban areas and increases in market value of lands
      in the rural areas. Therefore, if the  increase  in  market  value  in
      urban/semi-urban  areas  is  about  10%  to   15%   per   annum,   the
      corresponding increases in rural areas would at best  be  only  around
      half of it, that is, about 5% to 7.5% per annum. This  rule  of  thumb
      refers to the general trend in the nineties,  to  be  adopted  in  the
      absence of clear and specific evidence relating to increase in prices.
      Where there  are  special  reasons  for  applying  a  higher  rate  of
      increase, or any specific evidence relating to the actual increase  in
      prices, then the increase to be applied would depend upon the same.


      15. Normally, recourse is taken to the mode of determining the  market
      value by providing appropriate escalation over the proved market value
      of nearby lands in previous years (as evidenced by  sale  transactions
      or acquisitions), where there is no evidence  of  any  contemporaneous
      sale  transactions  or  acquisitions  of  comparable  lands   in   the
      neighbourhood. The said method is reasonably safe where the  relied-on
      sale transactions/acquisitions precede the subject acquisition by only
      a few years, that is, up to four to five years. Beyond that it may  be
      unsafe, even if it relates to a  neighbouring  land.  What  may  be  a
      reliable standard if the gap is of only a few years, may become unsafe
      and unreliable standard where the gap  is  larger.  For  example,  for
      determining the market value of a land acquired in 1992, adopting  the
      annual increase method with reference to a sale or acquisition in 1970
      or 1980 may have many pitfalls. This is because, over  the  course  of
      years, the ‘rate’ of annual increase may itself undergo drastic change
      apart  from  the  likelihood  of  occurrence  of  varying  periods  of
      stagnation in prices or sudden spurts in  prices  affecting  the  very
      standard of increase.”



14.    In  view  of  the  propositions  laid  down  in  the   aforementioned
judgments, we hold that the  appellants  will  be  entitled  to  10%  annual
escalation in the compensation determined  for  the  acquisition  made  vide
notification dated 28.5.1987, which was published on 12.6.1987.

15.   The appellants’ prayer for award of compensation on  account  of  loss
caused due to removal of fencing of Sant Farm,  severance  of  land  due  to
laying  of  rail  line  and  construction  of  road,  loss  caused  due   to
destruction of crop/farming activity etc.  was  rejected  by  the  Reference
Court without assigning cogent reasons and the learned Single Judge  of  the
High Court did not even deal with the issue.   It  is,  therefore,  apposite
that the matter is remitted to the Reference Court for deciding  this  issue
afresh keeping  in  view  the  evidence  produced  by  the  parties  in  the
references made by the Collector for determination of  compensation  of  the
land acquired vide notifications dated 28.5.1987 and 27.12.1991.

16.   In the result, the appeal is partly allowed and it  is  declared  that
the appellants shall be entitled to compensation at the  rate  of  Rs.5  per
sq. ft. with benefit of escalation at the rate of  10%  per  annum  for  the
period between 28.5.1987 and  27.12.1991.   The  appellants  shall  also  be
entitled to get interest on solatium.  The respondents are directed  to  pay
the enhanced compensation with interest etc.  to  the  appellants  within  a
period of six months from today.

17.   The issue relating to award  of  compensation  in  lieu  of  the  loss
caused due to removal of fencing  of  Sant  Farm,  segregation  of  land  on
account of laying of rail line and construction of road  from  Kolaras  Town
to Railway Station and loss caused due to damage to  the  crop  and  farming
activity is remitted to the Reference Court for fresh  adjudication  in  the
light of the evidence produced by the parties in the references made by  the
Collector under Section 18 of the Act.




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



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



                           ...............................................J.
                                             (C. NAGAPPAN)
New Delhi;
November 29, 2013.
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