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Monday, January 5, 2015

CIVIL APPEAL NOS. 2545-2546/2012 MAJ. GEN. KAPIL MEHRA & ORS. ..Appellants Versus UNION OF INDIA & ANR. ..Respondents

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


                      CIVIL APPEAL NOS. 2545-2546/2012


MAJ. GEN. KAPIL MEHRA & ORS.                 ..Appellants
                                   Versus
UNION OF INDIA & ANR.                          ..Respondents

                              J  U D G M E N T

R. BANUMATHI, J.

            These appeals are directed against  the  impugned  Orders  dated
24.12.2010 and 13.10.2011 passed by         Delhi High Court in L.A.  Appeal
No.149/2007 and C.M. No.735/2011 in L.A. Appeal No.149/2007 respectively  by
which High Court awarded compensation at the rate  of  Rs.14,974/-  per  sq.
yard for appellants’ land acquired by the Delhi Development Authority  (DDA)
for  development  of  Vasant  Kunj  Residential  Scheme,  Delhi  along  with
interest and proportionate costs.
2.          Shorn of details of the previous notification in  1983  and  the
earlier rounds  of  litigation,  background  facts  in  a  nutshell  are  as
follows: On 19.2.1997, a fresh notification  was  issued  by  the  Land  and
Building Department, Govt. of NCT of Delhi under Sections 4 and  17  of  the
Land Acquisition Act, 1894 (the Act) proposing to acquire the  land  of  the
appellants measuring 12 Bigha (12096 sq. yards) for  development  of  Vasant
Kunj under the planned  development  scheme  of  Delhi.   Land   Acquisition
Collector  (LAC) by award No. 2/98-99 dated 18.9.1998  assessed  the  market
value of the land           @ Rs.2,05,642.07 paise  per  bigha  (Rs.205/-per
sq.yard), adding  additional interest @ 12% per annum on the  market   value
of  land and  the  solatium @ 30% on  the  market  value  of  land  and  the
compensation was fixed @ Rs.37,21,180.05 paise per bigha.
3.          Aggrieved by the award, the appellants filed Reference  Petition
under Section 18 of the Act before  the  Additional  District  Judge  (LAC),
Delhi.  In the reference court, the appellants produced four  documents  Exs
A7 to             A10-perpetual lease deeds of residential plots  in  Vasant
Kunj, executed between September 1995 to December 1996 at the rates  ranging
from Rs.28,719/- to Rs.47,542/- per sq. yard. The reference court held  that
the lease deeds of auction of a developed plot by  a  public  authority  are
not a proper guide for determining the fair market  value  of  the  acquired
lands and reference court discarded the  exemplars-  Exs  A7  to  A10  lease
deeds  and  rejected  the  claim  of  the  appellants  for  enhancement   of
compensation.
4.          Aggrieved by the decision of  the  reference  court,  appellants
filed Land Acquisition Appeal No.149/2007 before High Court of  Delhi.   The
High Court had taken average of the exemplars- Exs A7 to  A10  and  deducted
40% from the average  price  towards  smallness  of  the  area  and  further
deducted one third towards development of land and fixed  the  market  value
of the land  at  Rs.14,974/-  per  sq.  yard.   High  Court  held  that  the
appellants  shall be entitled to 30% solatium on the above market  value  of
the land under Section 23(2) of the Act and 12%  of  the  additional  amount
under Section 23(1-A) of the Act.  The  High  Court   further  ordered  that
in terms of Section 28  of  the  Act  on  the  enhanced  market  value,  the
appellants shall be paid interest @ 9% per annum from  19.2.1997  i.e.  date
of notification under Section 4 of the Act till 18.2.1998 and  thereafter  @
15% per annum till the date of deposit of compensation.  It  was  also  held
that interest shall also be paid on  solatium  and  additional  amount.  The
appellants filed application C.M. No.735/2011  in  L.A.  Appeal  No.149/2007
before the High Court under Sections 152  and  153  read  with  Section  151
C.P.C. to award Rs.48 lakhs which was paid as court  fees  and  also  prayed
for award of interest under Section 34 for the  enhanced  compensation.  The
application  was  allowed  in  part  by  order  dated  13.10.2011,  granting
proportionate costs to the appellants over and above Rs.20,000/- as  awarded
in High Court’s judgment dated 24.12.2010.  Being aggrieved by  the  quantum
of compensation and award of proportionate cost, the appellants  are  before
us.
5.          First  appellant-  Maj.  Gen.  Kapil  Mehra,  party  in  person,
contended that correct reckoning of market value is  the  highest  price  in
any sale deed of comparable instance and the High Court  was  not  justified
in averaging the sale prices of the four perpetual lease deeds,  Exs  A7  to
A10 and the approach of the High Court  in  averaging  the  sale  prices  of
exemplars is erroneous. He further contended that the exemplars  Exs  A7  to
A10 relied upon by the appellants are perpetual lease deeds  of  residential
plots in Vasant Kunj and  what  was  acquired  was  freehold  lands  of  the
appellants and the price difference  between the ‘leasehold’ and  ‘freehold’
 was not kept in view by  the  High  Court   for  ascertaining  the  correct
market value. It was submitted that deductions made for development  at  one
third i.e. 331/3% and  40%  for  the  smallness  of  area  of  exemplars  as
compared to the largeness of the acquired lands are very much on the  higher
side.
6.          The judgment of the High Court was challenged by DDA in  Special
Leave Petition (Civil) No.15272/2011 and  the  same  was  dismissed  by  the
Order dated 12.5.2011.              Mr.  Amarendra  Sharan,  learned  Senior
Counsel appearing for the respondents submitted that in  the  Special  Leave
Petition (Civil) No.15272/2011, Maj. Gen. Kapil  Mehra  appeared  in  person
and the said special leave petition was dismissed by a  speaking  order  and
the said order merges with the High Court order  and  the  same  is  binding
upon the appellant and in separate appeals, the appellants cannot  challenge
the  adequacy  of  the  compensation  and  the  present  appeals   are   not
maintainable.  Reliance was placed  upon  the  judgment  of  this  Court  in
Kunhayammed and Ors. vs. State of Kerala and Anr. (2000) 6 SCC  359  and  S.
Gangadhara Palo vs. Revenue Divisional Officer and Anr., (2011) 4 SCC 602.
7.           Without  prejudice  to  the  above  contention,             Mr.
Amarendra Sharan, learned  Senior  Counsel  appearing  for  the  respondents
submitted that the land acquired is 12  bigha  which  is  almost  12096  sq.
yards  which is thousand times more than the area of the  plots  in  Exs  A7
to A10,  that too,  in  fully developed commercial  area and the sale  price
of such a small area cannot  be taken as the value  for   arriving  at   the
market value of  large  extent of area.  It was submitted  that  it  is  not
safe to rely upon  the  allotment  rates/auction  rates  in  regard  to  the
commercial plots formed by DDA in a  developed  layout  in  determining  the
market value of the adjoining large extent  of  undeveloped  land.   It  was
further submitted that  in  case  of  Delhi  Development  Authority  or  any
statutory authority, 40% of the land area is to be  deducted  for  formation
of  roads, drains, parks and common  amenities  and  further  35%  deduction
ought  to  have  been   made  towards  the  cost  of   leveling  the   land,
construction of sewerages, laying  electricity  lines  etc.  Learned  Senior
Counsel submitted that deduction for development ought to have been made  at
70-75% and the High Court was not justified in making nominal  deduction  of
331/3% of the area.
8.          We have given our thoughtful consideration  to  the  submissions
and perused the materials on record.
9.          Before we proceed to consider the merits of the matter,  let  us
first examine the preliminary objections raised by  the  respondents  as  to
the maintainability of these appeals.  Of  course,  Special  Leave  Petition
(Civil) No.15272/2011 filed by DDA was dismissed on 12.5.2011 by a  speaking
order.  It is well settled that when a special leave petition  is  dismissed
with reasons, there is a merger of the judgment of the  High  Court  in  the
order of the Supreme Court.  Dismissal of special leave  petition  filed  by
DDA only means that this Court felt that the  quantum  of  Rs.14,974/-   per
sq. yard  fixed by the High Court  need  not  be  further  reduced.  In  the
special leave petition, though first appellant  appeared  and  resisted  the
same, the first appellant could not  have  advanced  his  arguments  seeking
enhancement of compensation. Dismissal of special leave petition has  become
final as against DDA.  When SLP filed by DDA was heard and  disposed  of  by
this Court (vide Order  dated  12.05.2011),  the  appellants  were  pursuing
their review petition before the High Court which came to  be  dismissed  on
13.10.2011.  So far as the appellants are concerned, the order was then  res
subjudice.  Order of  this  Court  dismissing  the  special  leave  petition
preferred by DDA, in our view, is not an impediment  to  the  appellants  to
pursue their appeals  and  we  proceed  to  consider  merits  of  the  rival
contentions.
10.   Market Value:  First question  that  emerges  is  what  would  be  the
reasonable market value which the acquired lands are  capable  of  fetching.
While fixing the market value of the acquired  land,  the  Land  Acquisition
Officer is required to keep in mind the  following  factors:-  (i)  existing
geographical  situation of the land; (ii) existing use of  the  land;  (iii)
already available advantages, like proximity to National  or  State  Highway
or road and/or developed area and (iv) market value of other  land  situated
in the same locality/village/area or adjacent or very near to  the  acquired
land.
11.         The standard method of determination of the market value of  any
acquired land is by the valuer evaluating the land on the date of  valuation
publication of notification under Section 4(1)  of  the  Act,  acting  as  a
hypothetical purchaser willing to purchase the land in open  market  at  the
prevailing price on that day, from a seller willing to sell such land  at  a
reasonable price. Thus, the market value is  determined  with  reference  to
the open market sale of comparable land in the neighbourhood, by  a  willing
seller  to  a  willing  buyer,  on  or  before  the  date   of   preliminary
notification, as that would give a fair indication of the market value.
12.         In Viluben Jhalejar Contractor v. State of Gujarat (2005) 4  SCC
789, this Court laid down the  following  principles  for  determination  of
market value of the acquired land: (SCC pp.796-97, paras 17-20)

“17. Section 23 of the Act specifies the matters required to  be  considered
in  determining  the  compensation;  the  principal  among  which   is   the
determination  of  the  market  value  of  the  land  on  the  date  of  the
publication of the notification under sub-section (1) of Section 4.

18.   One of the principles for determination of the amount of  compensation
for acquisition of land would be the willingness of an  informed  buyer   to
offer the price therefor.  It is beyond any cavil  that  the  price  of  the
land which a willing and informed buyer would offer would  be  different  in
the cases where the owner is in possession and  enjoyment  of  the  property
and in the cases where he is not.

19.   Market value is ordinarily the price the property  may  fetch  in  the
open market if sold by a willing seller unaffected by the special  needs  of
a particular purchase.  Where definite material  is not  forthcoming  either
in the shape of   sales  of similar lands in the neighbourhood at  or  about
the date of  notification  under  Section  4(1)  or  otherwise,  other  sale
instances as well as other evidences have to be considered.

20.   The amount of compensation cannot  be  ascertained  with  mathematical
accuracy. A comparable instance has to be identified having  regard  to  the
proximity from time angle as well as proximity  from  situation  angle.  For
determining the  market  value  of  the  land  under  acquisition,  suitable
adjustment has to be made having regard to  various  positive  and  negative
factors  vis-à-vis  the  land  under  acquisition  by  placing  the  two  in
juxtaposition.…..”


13.         The courts adopt comparable sales method for valuation  of  land
while fixing the market value of the acquired land. Comparable sales  method
of valuation is preferred rather than methods of valuation of land  such  as
capitalization of net income method or expert  opinion  method,  because  it
furnishes the  evidence  for  determination  of  the  market  value  of  the
acquired land at which the willing purchaser  would  pay  for  the  acquired
land if it had been sold in the open market  at  the  time  of  issuance  of
notification under Section 4 of the Act.
14.          While taking comparable sales method of valuation of  land  for
fixing the market value of the acquired  land,  there  are  certain  factors
which are required  to  be  satisfied  and  only  on  fulfillment  of  those
factors, the compensation can be awarded according to the value of the  land
stated in the sale deeds.  In Karnataka  Urban  Water  Supply  and  Drainage
Board and Ors. v. K.S. Gangadharappa & Anr.,  (2009)  11  SCC  164,  factors
which merit consideration as comparable sales are, interalia, laid  down  as
under:-
“It can be broadly stated that the element  of speculation   is  reduced  to
minimum if the underlying principles  of  fixation  of  market   value  with
reference  to comparable sales are made:

(i)   when sale is within a reasonable  time  of the  date  of  notification
under Section 4(1);
(ii)  It should be a bona fide transaction;
It should be  of the land acquired or of the  land  adjacent   to  the  land
acquired; and
It should possess similar advantages.

It is only when these factors are present, it can merit a  consideration  as
a comparable case (See Special  Land Acquisition Officer  v.  T.  Adinarayan
Setty (AIR 1959 SC 429) These aspects  have  been  highlighted  in  Ravinder
Narain  v. Union of India  (2003) 4 SCC 481.”

15.         Appellants have produced Exs  A7  to  A10-four  perpetual  lease
deeds of  residential  plots  in  Pocket  C  of  Vasant  Kunj  Area  between
September 1995 to December 1996, the details of which are as under:
|Exh.  |Sale Date|Plot |Size     |Sale Price   |Rate     |
|      |         |No.  |(Sq.Mtr.)|(Rs.)        |(Rs. per |
|      |         |     |         |             |sq.yd.)  |
|A-7   |22.09.95 |59C  |218      |5,75,05,000/-|28,719/- |
|A-8   |02.02.96 |5C   |220      |96,55,000/-  |36,695/- |
|A-9   |02.02.96 |8C   |231      |1,01,61,000/-|36,779/- |
|A-10  |10.12.96 |13C  |242      |1,37,60,000/-|47,542/- |

16.         Exs A7 to A10 are lease deeds of small plots  executed  by  DDA.
Plots in the above lease deeds are in the  same  vicinity  of  the  acquired
land and High Court had taken the same as comparable  sales.   The  size  of
the  plots  covered  in  the  exemplars  are  smaller.   If   there   is   a
dissimilarity in regard to the area, it is open to the court to make  proper
deduction towards smallness of area.  We find no error in  the  approach  of
the High Court taking Exs A7 to A10 as  comparable  sales  for  fixation  of
market value.
17.         The High Court has taken average of sale price of Exs A7 to  A10
and deducted 40%  towards  smallness  of  the  plot  taken  for  comparison,
further deducted one third  towards  development.   Though  we  may  finally
affirm the rate fixed by the High Court, for the  reasons  stated  infra  we
fix the market value in accordance with the  well  settled  principles  laid
down by this Court.
18.   Determination of Market Value on  the  basis  of  average  price  paid
under sale transactions: For ascertaining  the  fair  market  value  of  the
acquired land, High Court adopted the  ‘average  method’  by  averaging  the
sale price of Exs A-7 to A-10 and calculated the rate at Rs.37,433.75  paise
per sq. yard. The appellants contend that when land  is  being  compulsorily
taken away, the landholder is entitled to  claim  the  highest  value  which
similar land in the  locality  is  shown  to  have  fetched  in  a  bonafide
transaction and High Court was not justified in averaging  the  sale  prices
of  four  perpetual  lease  deeds.   Appellants  placed  reliance  upon  the
judgments of this Court in M. Vijayalakshmamma  Rao  Bahadur  vs.  Collector
(1969) 1 MLJ SC 45 and State of Punjab and Anr. vs. Hans  Raj  (D)  by  Lrs.
And Ors., (1994) 5 SCC 734. In Hans Raj case (supra) it was held as under:
“4.   Having  given   our   anxious    consideration   to   the   respective
contentions, we  are of the considered view that  the learned  Single  Judge
 of the High Court committed a grave error in  working  out  average   price
paid under the sale transactions to determine   the  market  value   of  the
acquired land on that basis.  As the method of averaging the prices  fetched
by sales of different lands of  different  kinds  at  different  times,  for
fixing the market value of the  acquired  land,  if  followed,  could  bring
about a figure of price which may not at all be regarded as the price to  be
fetched by sale of acquired land.  One should not have, ordinarily  recourse
to such method.  It  is  well  settled  that  genuine  and  bona  fide  sale
transactions in respect of the land under  acquisition  or  in  its  absence
the bona fide sale transactions proximate to the point   of  acquisition  of
the lands situated in  the neighbourhood of the  acquired  lands  possessing
similar value or utility taken  place  between  a  willing  vendee  and  the
willing vendor which could be   expected  to  reflect  the  true  value,  as
agreed between reasonable  prudent  persons  acting  in  the  normal  market
conditions are the real  basis to determine the market value.”

19.         Referring to Hans Raj’s case in Anjani Molu  Dessai   vs.  State
of Goa And Anr., (2010) 13 SCC 710,  this Court held as under:-
“20.  The legal position is that even  where  there  are  several  exemplars
with reference to similar lands,  usually  the  highest  of  the  exemplars,
which  is a  bonafide transaction, will be considered.  Where however  there
are  several  sales  of  similar  lands  whose  prices  range  in  a  narrow
bandwidth, the average  thereof can be taken, as  representing   the  market
price.  But where the values disclosed in respect of two sales are  markedly
different, it can only lead to an inference that they are with reference  to
dissimilar  lands  or  that  the  lower  value  sales  is  on   account   of
undervaluation or other price depressing reasons.   Consequently,  averaging
cannot be resorted to. We may refer to two decisions of this Court  in  this
behalf.”

20.         Where the lands acquired are of  different  type  and  different
locations, averaging is not  permissible.   But  where   there  are  several
sales of similar lands, more or less, at the same time,  whose  prices  have
marginal variation, averaging thereof is permissible.  For  the  purpose  of
fixation  of  fair  and  reasonable  market  value  of  any  type  of  land,
abnormally high value or abnormally low  value  sales  should  be  carefully
discarded.  If the number of sale deeds of the same locality  and  the  same
period with  short  intervals  are  available,  the  average  price  of  the
available number of sale deeds shall be considered as a fair and  reasonable
market price.   Ultimately, it is in the interest of justice  for  the  land
losers to be awarded fair compensation.  All attempts  should  be  taken  to
award fair compensation to  the  extent  possible  on  the  basis  of  their
accessibility to  different  kinds  of  roads,  locational  advantages  etc.
Four perpetual lease deeds A-7 to A-10 relied upon by the appellants are  of
the same locality – Vasant Kunj Residential Scheme and relate to the  period
ranging from September 1995 to December 1996, but they  are  just  prior  to
   Section 4(1) notification.  In our view, the High Court was justified  in
taking the average of the said four exemplars and approach  adopted  by  the
High Court in averaging the sale prices of Exs A7 to A10 cannot be  said  to
be perverse.
21.   Freehold  vis-a-vis  Leasehold  Price - Market  Value:  Contention  of
the appellants is  that  Exs  A7  to  A10  relate  to  long  term  perpetual
leasehold deeds and what was acquired was appellants’ freehold property  and
freehold property has higher value than  the  leasehold  plot  and  suitable
addition should have been made.  The  appellant  contends  that   the  terms
stipulated in perpetual  leasehold  are  extremely  stringent  and  in  such
cases, no sale is permitted without the permission  of  DDA  and  there  are
many other  uncomfortable  clauses  in the  terms  of  the  perpetual  lease
deeds and  all  these  ‘stringent  conditions’   increase  the  gap  between
‘freehold’ price and ‘leasehold’ price.  It is submitted that  market  value
of  ‘freehold  property’  is  much  higher  than  the  value  of  ‘leasehold
property’ and this was not taken into consideration by the High Court.
22.         In M.B. Gopala Krishna & Ors.  vs.  Special  Deputy   Collector,
Land Acquisition, (1996) 3 SCC 594, as relied upon  by  the  appellants,  it
was  held as under:-

“It is further contended by Shri Mudgal that value of the land does not  get
 pegged down   on account of the land being  in occupation  of a tenant  and
the circumstances in this behalf  taken into account by the High  Court,  is
irrelevant.  We find no force in the contention.  A freehold  land  and  one
burdened with encumbrances  do   make   a  big   difference   in  attracting
willing buyers.  A  freehold  land  normally  commands  higher  compensation
while the land burdened with encumbrances secures lesser  price.   The  fact
of a tenant in occupation would be an encumbrance and no  willing  purchaser
would willingly offer the same price as would  be  offered  for  a  freehold
land.  Under those circumstances, the High  Court  would  be  right  in  its
conclusion that the land burdened  with  encumbrances   takes  lesser  price
than  the freehold land. The  encumbrances  would  operate  as  a  disabling
factor to peg  down the price when we compare the same with freehold land.”

The above observations were made in the aforesaid decision  while  upholding
the compensation that was payable to the landlord without reference  to  the
tenant’s rights.  The above principle  will  apply  only  where  a  property
subject to encumbrances is to be sold to a private purchaser or is  acquired
subject to the tenancy.
23.          ‘Freehold  land’  and   ‘leasehold   land’   are   conceptually
different.  If a property subject to a lease and  in  the  possession  of  a
lessee is  offered  for  sale  by  the  owner  to  a  prospective    private
purchaser, the purchaser being aware that  on  purchase  he  will  get  only
title and not possession and that the sale in his favour will be subject  to
encumbrance namely, the lease, he will offer a  price  taking  note  of  the
encumbrances.  Naturally, such a price would be less than  the  price  of  a
property without any encumbrance.  But when a land  is  acquired  free  from
encumbrances, the market value of the same will certainly be higher.
24.         Exs A7 to A10 are the perpetual  lease  deeds  relating  to  the
period from September 1995 to December 1996 and to  get the perpetual  lease
deeds converted as freehold, the holder of perpetual leasehold  has  to  pay
further amount to DDA.   Having regard to the period of Exs A7 to  A10   and
the  date of issuance of Section 4  notification  dated  19.2.1997,  in  our
view, addition  of 20%  is to  be  added  for   arriving  at  the  value  of
‘freehold’ property.  Adding 20% to Rs.37,433.75 per sq.  yard  which  comes
to Rs.7,486.75, the value is calculated at Rs.44,920.50 rounded off  to  Rs.
44,921/- per sq. yard.
25.   Deduction Towards Competitive Bidding:  Exs A7 to  A10  exemplars  are
perpetual lease deeds of commercial plots auctioned  in  Vasant  Kunj  area.
Learned senior counsel for the respondents contended  that  this   auctioned
commercial site can never  be equated to  the  value  of  large  extent   of
agricultural  land like the land acquired in  the  present  case  and  those
plots auctioned are developed plots on which  the  Government  had  spent  a
considerable amount.  It is contended that the auction prices of  commercial
plots in exemplars are not true index  of a fair market value  of  the  land
at  the  relevant  time  because  elements  of   speculation   and    unfair
competition  in such auctions and suitable deduction  ought   to  have  been
made  for competitive bidding.
26.         While considering the competition involved in auction  sales  of
commercial/residential plots and observing that the element  of  competition
in auction sales  make them unsafe guides for determining the  market  value
of the acquired lands, in Executive Engineer,  Karnataka  Housing  Board  v.
Land Acquisition Officer, Gadag And Ors., (2011) 2 SCC  246  paras  6  &  7,
this Court held as under:-

“6. But auction-sales stand on a different footing.  When  purchasers  start
bidding for a property in an auction,  an  element   of  competition  enters
into the auction.  Human ego, and desire to do better and excel  over  other
competitors, leads to competitive  bidding,  each  trying    to  outbid  the
others.  Thus in a well advertised open auction-sale, where a  large  number
of bidders participate, there is always a tendency  for  the  price  of  the
auctioned property to go up considerably.  On  the  other  hand,  where  the
auction-sale is  by  banks   or  financial   institutions,  courts  etc.  to
recover dues, there is an element  of distress,  a  cloud  regarding  title,
and a chance  of  litigation,  which  have  the  effect   of  dampening  the
enthusiasm of bidders and  making  them  cautious,  thereby  depressing  the
price.  There is therefore  every likelihood of auction price being   either
higher  or lower than the real market price, depending  upon the nature   of
sale.   As  a  result,   courts  are  wary   of  relying  upon  auction-sale
transactions when other regular traditional sale transactions are  available
while determining the market value of the acquired land.  This Court in  Raj
Kumar v. Haryana State (2007)  7  SCC  609  observed  that  the  element  of
competition in auction-sales makes them unsafe guides  for  determining  the
market value.

7.     But  where  an  open   auction-sale  is  the  only  comparable   sale
transaction available (on account of proximity  in situation  and  proximity
in time to the acquired land),  the court  may have to, with  caution,  rely
upon   the  price   disclosed  by  such  auction-sales,  by  providing    an
appropriate  deduction or cut to offset the competitive  hike in value.   In
this case, the Reference Court and the High Court, after referring   to  the
evidence  relating   to  other  sale  transactions,   found   them   to   be
inapplicable as they related to far away properties.  Therefore we are  left
with only the auction-sale transactions. On the facts and circumstances,  we
are of the view  that a deduction  or  cut  of  20%  in  the  auction  price
disclosed by the relied upon  auction  transaction  towards  the  factor  of
“competitive price hike” would enable  us  to  arrive  at  the  fair  market
price.” (Underlining added)

27.         The above principle was reiterated in  Raj  Kumar  And  Ors.  v.
Haryana State And Ors., (2007) 7 SCC 609 where in para 16,  this  Court  has
held as under:-
“16. All the relevant aspects have been taken into consideration and  we  do
not find any error in principle committed by the High Court justifying   our
interference  in appeal.  An argument was raised that the  prices  of  lands
fetched in auction had been ignored on the  basis  that  prices  fetched  in
auction-sales cannot form the basis.  It was submitted  that  there  was  no
general rule that  such  prices  cannot  be  adopted.   On  considering  the
relevant facts disclosed,  it  cannot  be  said  that  the  High  Court  has
committed any error in discarding those auction-sales while determining  the
compensation payable.  The element of competition in auction-sales does  not
make them safe guides.  Similarly, the argument that when  a  compact  piece
of land is  acquired  there cannot be adoption of separate rates, cannot  be
accepted in the light  of the decision of this Court in Union of India   vs.
Mangatu Ram (1997) 6 SCC 59. That case related to acquisition  of  lands  in
the vicinity of the present properties.  The ratio  of  that  decision  also
supports the distinction made by the Awarding Officer and the High Court  in
the matter of fixing  the land value for  the  lands  in  Satrod  Khurd  and
Satrod Khas.”


28.         The general rule that the sale prices of  the  comparable  sales
should be relied upon for calculating the market value will not apply   when
the sale  transactions  relied upon are auction sales. As per  the  decision
in Karnataka Housing Board’s case  (2011)  2  SCC  246,  in  our  view,  20%
deduction is to  be  made  for  competitive  bidding.   Deducting  20%  i.e.
Rs.8,984/- from Rs.44,921/-, balance arrived at Rs.35,937/-  per  sq.   yard
is fixed as the value for the acquired land.
29.   Deduction  Towards  the  Development: The High Court has deducted  40%
from the average price to equalize the factor  of  the  market  value  of  a
small plot of land as compared to  large  area  of  land  acquired  and  the
figure works out to Rs.22,460.25.  High Court has also  deducted  one  third
towards development cost and determined the market  value  of  the  acquired
land at Rs.14,974/- per sq. yard.
 30.        Appellants contend that the rate of deduction as applied by  the
High Court was highly excessive as the acquired lands are  situated  in  the
area already developed and  have  all  potential  for  development.   It  is
submitted that the Court repeatedly held that in assessing the  compensation
payable in  respect  of  lands  which  had  the  potential  for  housing  or
commercial purposes, normally 20% of the  assessed  value  of  the  land  is
deducted, depending on the nature of the  land,   its  location,  extent  of
expenditure involved for development and the land  required  for  roads  and
other civic amenities etc.  and while so,  thumb  rule  of   331/3%  or  one
third cut on development cost cannot be used in a situation when  the  exact
development cost has been established   through  evidence.   The  appellants
rely upon the documents issued  by  Executive  Engineer  (Annexure  P-5)  to
contend that the cost of development of Vasant Kunj  is  only  Rs.330/-  per
Sq. Yard.
31.         Mr. Amarendra Sharan, learned Senior Counsel appearing  for  the
respondents contended that  in  forming  a  lay  out  by  Delhi  Development
Authority or any statutory  authority,  40%  of  the  land  area  is  to  be
deducted for formation of roads, drains, parks  and  other  civic  amenities
and further 35% is to be deducted towards development cost for  forming  the
lay out, levelling the  road,  construction  of  drainage  and  erection  of
electricity lines etc. It was submitted that deduction  for  development  on
both the components worked  out  to  70-75%  and  the  High  Court  was  not
justified in making  standard  deduction  of  one  third.   It  was  further
submitted that if a suitable deduction is made, the compensation awarded  by
the High Court seems to be excessive and prayer for  suitable  reduction  of
the award is made.
32.         While making one third deduction towards development  cost,  the
learned single Judge did not keep in view the two  essential  components  of
deduction  for  development.  Deduction  for  development  consists  of  two
components:- firstly, appropriate deduction to be made   towards   the  area
required to be utilized for roads, drains  and common facilities like  parks
etc.;  secondly,  further  deduction  to  be  made  towards  the   cost   of
development, that is cost of levelling  the land,  cost  of   laying   roads
and  drains,  erection  of   electrical  poles  and  water  lines  etc.  For
deduction of development towards land and development  charges,  the  nature
of development, conditions and nature of the land, the land required  to  be
set apart under  the   Building  Rules  for  roads,  sewerage,  electricity,
parks, water supply etc.  and  other  relevant  circumstances  involved  are
required to be  considered.
33.          In  Haryana  State  Agricultural  Market  Board  And  Anr.  vs.
Krishan Kumar And Ors., (2011) 15 SCC 297,  it was held as under:
“10.  It is now well settled that if  the  value of  small  developed  plots
should be the basis, appropriate deductions will have to be  made  therefrom
towards the area to be  used for roads, drains, and common  facilities  like
park, open space, etc.   Thereafter, further  deduction   will  have  to  be
made  towards the cost of development, that is, the  cost  of  leveling  the
land, cost  of laying roads and drains, and the cost of drawing  electrical,
water and sewer lines.”
34.           Consistent  view  taken  by  this  Court  is  that  one  third
deduction is made towards the area to be used for roads, drains,  and  other
facilities,  subject  to  certain  variations  depending  upon  its  nature,
location, extent and development  around  the  area.   Further,  appropriate
deduction needs to be made for development cost, laying roads,  erection  of
electricity lines depending upon the location of the acquired land  and  the
development that has taken place around the area.
35.          Reiterating  the  rule   of   one   third   deduction   towards
development, in Sabhia Mohammed Yusuf Abdul Hamid Mulla (Dead) by  Lrs.  and
Ors. vs. Special Land Acquisition Officer  and  Ors.,   (2012)  7  SCC  595,
this Court in paragraph 19  held as under:-
“19.   In  fixing  the  market  value   of  the  acquired  land,  which   is
undeveloped  or  underdeveloped,  the  courts   have   generally    approved
deduction of 1/3rd   of the market  value towards development   cost  except
when no development  is required to  be  made  for  implementation   of  the
public purpose for which  land  in  acquired.   In   Kasturi  vs.  State  of
Haryana (2003) 1 SCC 354)  the Court held: (SCC pp. 359-60, para 7)

“7…  It  is  well   settled  that  in  respect  of  agricultural   land   or
undeveloped  land which has potential   value  for  housing   or  commercial
purposes, normally 1/3rd  amount  of compensation has to  be   deducted  out
of the amount  of compensation  payable  on the  acquired  land subject   to
certain  variations  depending   on  its   nature,   location,   extent   of
expenditure involved for development  and the area required   for  road  and
other civic amenities to develop the land so  as  to   make  the  plots  for
residential or commercial  purposes.  A land may be  plain  or  uneven,  the
soil of the land may be soft  or hard bearing  on  the  foundation  for  the
purpose of making  construction; may be the land is situated  in  the  midst
of  a developed area  all around  but that land may have  a hillock  or  may
be low-lying  or may be having  deep ditches.  So the  amount   of  expenses
that may be incurred in developing  the area also varies.  A  claimant   who
claims that his land is fully developed and nothing more is required  to  be
done for developmental  purposes, must show  on the basis of  evidence  that
it is  such a land  and  it  is  so  located.    In  the  absence   of  such
evidence, merely saying  that the area adjoining  his land  is  a  developed
area, is not enough, particularly when the extent of the  acquired  land  is
large and even if  a small portion of the land is abutting the main road  in
the developed area, does not give the land the  character   or  a  developed
area.  In 84 acres of land acquired  even  if   one  portion  on  one  sides
abuts the main road, the remaining large area  where planned development  is
required,  needs  laying  of  internal  roads,   drainage,   sewer,   water,
electricity lines, providing civic amenities, etc.   However,  in  cases  of
some land where  there are certain advantages  by virtue  of  the  developed
area around, it  may   help  in  reducing   the  percentage  of  cut  to  be
applied, as  the  developmental  charges   required  may  be  less  on  that
account.  There may be various factual factors which may have  to  be  taken
into consideration while  applying   the  cut  in  payment  of  compensation
towards developmental charges, may be in some  cases it is more than   1/3rd
 and in some cases less than 1/3rd.  It must be  remembered  that  there  is
difference between a developed area and  an  area  having  potential  value,
which is yet to be developed.   The  fact  that  an  area  is  developed  or
adjacent to a developed  area  will not ipso facto make every land  situated
in the area  also developed to  be  valued  as  a  building  site  or  plot,
particularly  when  vast  tracts  are  acquired,  as  in  this   case,   for
development purpose.” (emphasis supplied)

The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v.  State  of
U.P. ((2003)10 SCC 525, V. Hanumantha  Reddy v. Land  Acquisition   Officer,
(2003)  12 SCC 642, H.P. Housing  Board v.  Bharat S. Negi (2004) 2 SCC  184
and Kiran Tandon v. Allahabad Development Authority. (2004)10 SCC 745”


36.         While  determining  the  market  value  of  the  acquired  land,
normally one third deduction i.e.  331/3%  towards  development  charges  is
allowed. One third deduction towards  development  was  allowed  in  Special
Tehsildar, L.A. Vishakapatnam vs. Smt.A. Mangala Gowri, (1991)  4  SCC  218;
Gulzara Singh & Ors. vs. State of  Punjab & Ors., (1993) 4 SCC 245;  Santosh
Kumari & Ors. vs. State of Haryana, (1996) 10 SCC  631;  Revenue  Divisional
Officer-cum-LAO vs. Shaik Azam Saheb etc., (2009) 4 SCC  395;  A.P.  Housing
Board vs. K. Manohar Reddy, (2010)12 SCC 707; Ashrafi  & Ors. vs.  State  of
Haryana & Ors., (2013) 5 SCC 527 and Kashmir Singh vs. State  of  Haryana  &
Ors., (2014) 2 SCC 165.
37.         Depending on nature and location of the acquired   land,  extent
of land required to be set apart and expenses involved for development,  30%
to  50%  deduction  towards  development  was  allowed  in   Haryana   State
Agricultural Market Board and Anr. vs. Krishan Kumar and Ors. (2011) 15  SCC
297; Deputy Director Land Acquisition vs. Malla  Atchinaidua  And  Ors.  AIR
2007 SC 740; Mummidi Apparao  (Dead  by  LR)  vs.  Nagarjuna  Fertilizers  &
Chemical Ltd., AIR 2009 SC 1506; and Lal Chand vs. Union of India  and  Anr.
(2009) 15 SCC 769.
38.         In few other cases, deduction of more than 50% was  upheld.   In
the facts and circumstances of the case in Basavva (Smt.) And Ors.  v.  Spl.
Land  Acquisition Officer And Ors.,            (1996) 9 SCC 640, this  Court
upheld the deduction of 65%.  In Kanta Devi &  Ors.  vs.  State  of  Haryana
And Anr., (2008) 15 SCC 201, deduction  of 60% towards  development  charges
was held to be legal.  This Court in Subh Ram & Ors. vs. State of Haryana  &
Anr., (2010) 1  SCC  444,  held  that  deduction  of   67%  amount  was  not
improper. Similarly, in Chandrasekhar (dead) by L.Rs. and  Ors.  vs.  LAO  &
Anr., (2012) 1 SCC 390, deduction of 70% was upheld.
39.          We  have  referred  to  various  decisions  of  this  Court  on
deduction towards development  to  stress  upon  the  point  that  deduction
towards development depends upon the nature and  location  of  the  acquired
land. The deduction includes components of land required  to  be  set  apart
under the building rules for roads, sewage,  electricity,  parks  and  other
common facilities  and  also  deduction  towards  development  charges  like
laying   of   roads,   construction   of   sewerage.                     40.
Rule of one third deduction towards development appears to  be  the  general
rule.  But so far as Delhi Development Authority is  concerned,  or  similar
statutory authorities, where well planned layouts are put in place,   larger
land area may be utilized   for  forming  layout,  roads,  parks  and  other
common amenities. Percentage of deduction for  development  of  land  to  be
made in DDA or similar  statutory  authorities  with  reference  to  various
types of layout was succinctly considered by this Court  in  Lal  Chand  vs.
Union of India & Anr. (2009) 15 SCC 769 and  observing  that  the  deduction
towards the development range from 20% to 75% of the price of the plots,  in
paras 13 to 22, this Court held as under:-
“13. The percentage of  “deduction for development” to  be  made  to  arrive
at the market  value of  large  tracts  of  undeveloped  agricultural   land
(with potential  for development), with reference to  the  sale   price   of
small developed plots, varies between 20%  to  75%  of  the  price  of  such
developed plots, the percentage  depending upon the  nature  of  development
of the layout in which the exemplar plots are situated.

14.   The “deduction for  development”  consists  of  two  components.   The
first is  with  reference   to  the  area  required  to   be  utilized   for
developmental works and the second is the cost of  the  development   works.
For example, if a residential layout is formed by DDA or  similar  statutory
authority, it may utilize around 40% of the land area  in  the  layout,  for
roads,  drains,  parks,   playgrounds   and   civic   amenities   (community
facilities), etc.
15.   The development authority will  also  incur  considerable  expenditure
for development of undeveloped land into a developed layout, which  includes
the cost  of  leveling  the  land,  cost  of  providing  roads,  underground
drainage and sewage facilities, laying water lines,  electricity  lines  and
developing parks ands civil amenities, which  would  be  about  35%  of  the
value of the developed plot.  The two factors taken together  would  be  the
“deduction for development” and can account for as much as 75% of  the  cost
of the developed plot.

16.   On the other hand, if the  residential  plot  is  in  an  unauthorized
private residential layout, the percentage of  “deduction  for  development”
may be far less.  This is because in  an  unauthorized  layout,  usually  no
land will be  set apart  for parks, playgrounds  and  community  facilities.
Even if any land is set apart, it is likely to be minimal.   The  roads  and
drains  will also  be narrower,  just adequate  for movement   of  vehicles.
The amount spent on development work would also be  comparatively  less  and
minimal.  Thus the deduction on account of the two  factors  in  respect  of
plots in unauthorized layouts, would be only about 20% plus 20% in  all  40%
as against 75% in regard to DDA plots.

17.   The “deduction for development” with reference to prices of  plots  in
authorized  private  residential  layouts  may  range  between  50%  to  65%
depending upon the standards and quality of the layout.

18.   The position with reference to industrial layouts will  be  different.
As the industrial plots will be large (say of the size of one or  two  acres
or more as contrasted  with the size of residential plots measuring 100  sq.
m to 200 sq m), and as there will be very limited civic  amenities   and  no
playgrounds, the area to be set apart for development   (for  roads,  parks,
playgrounds and civic amenities) will be far  less;  and  the  cost   to  be
incurred for development  will also be marginally less, with the result  the
deduction to be made from the cost of an  industrial  plot  may  range  only
between 45% to 55%  as contrasted  from  65% to 75% for residential plots.
19.   If the acquired land is in a semi-developed urban  area,  and  not  an
undeveloped rural area, then the deduction for development  may be  as  much
less, that is, as  little  as 25% to 40%, as some basic infrastructure  will
already be available. (Note: The percentages mentioned above  are  tentative
standards and subject to proof to the contrary.

20.   Therefore the deduction for the “development factor” to be  made  with
reference  to the price of a small plot in a  developed  layout,  to  arrive
at the cost of undeveloped land, will be far more than  the  deduction  with
reference to the price of a small plot in an  unauthorized   private  layout
or an industrial  layout.  It is also well known that the  development  cost
incurred by statutory agencies is much higher  than  the  cost  incurred  by
private developers, having regard to higher  overheads and expenditure.

21.   Even among  the  layouts  formed  by  DDA,  the  percentage   of  land
utilized for roads, civic amenities, parks and  playgrounds  may  vary  with
reference to the nature of layout-whether  it is residential ,  residential-
cum-commercial  or industrial; and  even  among   residential  layouts,  the
percentage will differ having regard to  the size of  the  plots,  width  of
the roads, extent of community facilities, parks and playgrounds provided.

22.   Some of the layouts formed by the  statutory  development  authorities
may have  large areas earmarked for water/sewage  treatment   plants,  water
tanks,  electrical  substations,  etc.  in  addition  to  the  usual   areas
earmarked  for  roads,  drains,  parks   playgrounds   and   community/civic
amenities.   The purpose  of the aforesaid examples is  only  to  show  that
the  “deduction for development” factor is a  variable  percentage  and  the
range of percentage itself being  very wide from 20% to 75%.”


Lal Chand’s case deals with acquisition of lands by  DDA  under  the  Rohini
Residential Housing Scheme where 40% deduction was  made  towards  the  land
area to be  utilized  for  laying  down  of  roads,  drains  etc.    Further
deduction of 35% of  the  value  of  the  developed  plot  towards  cost  of
levelling the land, cost of providing roads,  underground  drainage,  laying
down water lines, electricity lines was made.
41.         In the instant case, having regard to the  extent  of  the  land
acquired and the development in and around Vasant Kunj area,  in  our  view,
it is appropriate to make 35% deduction  towards  utilization  of  the  land
area  in  the  layout  for  roads,  drains,  parks,  playgrounds  and  civic
amenities.  So far as the expenditure for development of  the  large  extent
of    land  into  a  developed  area  by  construction  of   proper   roads,
underground drainage, sewerage and erection  of  electricity  lines,  it  is
appropriate to make further deduction of 25%, though 35% of  the  value  was
deducted in Lal  Chand  case  (supra)  towards  development  charges.    Two
components taken together, the total deduction to  be  made  would  be  60%.
   60% of Rs.35,937/- works out to Rs.21,562/- and deducting  the same,  the
value of the land would be Rs.14,375/- per sq. yard.  What  was  awarded  by
the High  Court  was  Rs.14,974/-  per  sq.  yard.  Since  the  SLP  (Civil)
No.15272/2011 filed by DDA was dismissed by this Court on 12.5.2011 and  the
sale has become final as against the appellants,  we  are  not  inclined  to
further reduce the value of the acquired land from Rs.14,974/- per sq.  yard
as determined by the High Court and the compensation  awarded  by  the  High
Court at Rs.14974/- per sq. yard is maintained.
42.   INTEREST:  Contention of  the  appellants  is  that  on  the  enhanced
compensation, the mandatory interest under Section 34 of  the  Act  has  not
been awarded to them.   Placing reliance upon Commissioner  of  Income  Tax,
Faridabad vs. Ghanshyam (HUF), (2009) 8 SCC 412, it is  contended  that  the
impugned judgment is silent on granting statutory interest under Section  34
of the Land Acquisition Act and the appellants pray for  award  of  interest
on the enhanced compensation.  The appellants filed C.M. No.735/2011  before
the High Court seeking review for payment of  interest  which  according  to
the appellants was omitted to be  included  and  the  said  application  was
dismissed by the High Court.
43.         Land Acquisition Act, 1894, provides for payment of interest  to
the claimants either under Section 34  or  under  Section  28  of  the  Act.
Section 34 of the Act fastens liability on the Collector to pay interest  on
the amount of compensation to be worked out in  accordance  with  provisions
of Section 23(1) and the sub-section thereof, at the rate of  9%  per  annum
from the date of taking possession until the amount is  paid  or  deposited.
As per proviso to Section  34,  if  the  compensation  amount  or  any  part
thereof is not paid or deposited within a period of one year from  the  date
of taking over possession, interest shall be payable at the rate of 15%  per
annum from the date of expiry of the said period of one year on  the  amount
of compensation or part thereof which has not been paid or deposited  before
the date of such expiry.
44.          Section 28  empowers  the  courts,  if  it  was  enhancing  the
compensation awarded by the Collector, to  award  interest  on  the  sum  in
excess of what the Collector had awarded as compensation.  Both in terms  of
Section 34 and Section 28, interest at 9%  per  annum  is  payable  for  the
first year of taking possession and 15% per annum thereafter, if the  amount
of compensation was not paid or deposited within a period  of  one  year  or
deposited thereafter.
45.         Award of interest under Section 34 is mandatory in as  much  the
word used in the Section is ‘shall’.  The scheme of the Act and the  express
provisions thereof establish that the interest payable under Section  34  is
statutory.  The claim for interest under Section 28 of the Act  proceeds  on
the basis that due compensation not having been paid,  the  claimant  should
be allowed interest on the  enhanced  compensation  amount.   The  award  of
interest under Section 28 is discretionary power vested in the Court and  it
has to be exercised in a judicious manner and not arbitrarily.  The  use  of
the word “may” in Section 28 does not confer  any  arbitrary  discretion  on
the Court to disallow interest for no valid or  proper  reasons.   Normally,
Court awards interest if it enhances  the  compensation  in  excess  of  the
amount  awarded   by   the   Collector,   unless   there   are   exceptional
circumstances.
46.         A Constitution Bench of this Court in Gurpreet Singh  vs.  Union
of India,  (2006) 8 SCC  457,  considering  the  scope  of  Section  34  and
Section 28 of the Act, has held as under:-
      “44. Section 34 of the Act fastens liability on the Collector  to  pay
interest on the amount of compensation determined under Section  23(1)  with
interest from the date of taking possession till date of payment or  deposit
into the court to which  reference  under  Section  18  would  be  made.  On
determination of the excess amount of compensation, Section 28 empowers  the
court, if it was enhancing the compensation awarded  by  the  Collector,  to
award interest on the sum in excess of what the  Collector  had  awarded  as
compensation. The award of the court may also direct the  Collector  to  pay
interest on such excess or part thereof from  the  date  on  which  he  took
possession of the land to the date of payment of such excess into  court  at
the rates specified thereunder. The  Court  stated:  [Prem  Nath  Kapur  vs.
National Fertilizers Corporation of India Ltd., (1996) 2 SCC 71, SCC p.  77,
para 10]
“In other words, Sections 34 and 28 fasten the liability  on  the  State  to
pay interest on the amount of compensation or on excess  compensation  under
Section 28 from the date of the award and decree but the  liability  to  pay
interest on the excess  amount  of  compensation  determined  by  the  Court
relates back to the date of taking possession of the land  to  the  date  of
the payment of such excess ‘into the court’.”
45. The Court concluded: (Prem Nath Kapur case,  SCC       p. 78, para 12)
“12. It is clear from the scheme of the Act and the  express  language  used
in Sections 23(1) and (2), 34 and 28 and now  Section  23(1-A)  of  the  Act
that each component is a distinct and separate  one.  When  compensation  is
determined  under  Section  23(1),  its  quantification,  though   made   at
different levels, the liability to pay  interest  thereon  arises  from  the
date on which the quantification was so made  but,  as  stated  earlier,  it
relates back to the date of taking possession of the land till the  date  of
deposit of interest on such  excess  compensation  into  the  court.  …  The
liability to pay interest is only on the excess amount of  [pic]compensation
determined under Section 23(1) and not on the amount already  determined  by
the Land Acquisition Officer under Section 11  and  paid  to  the  party  or
deposited into the court or determined under Section 26 or  Section  54  and
deposited into the court or on solatium under Section 23(2)  and  additional
amount under Section 23(1-A).”


47.         In the scheme of the Act, considering the  different  stages  at
which interest is payable on the compensation amount/enhanced  compensation,
the Constitution Bench of this Court in Gurpreet Singh’s case  further  held
as under:-
“32.  In the scheme of the Act, it is seen that the  award  of  compensation
is at different stages.  The first stage occurs when the  award  is  passed.
Obviously, the award takes  in  all  the  amounts  contemplated  by  Section
23(1), Section 23(1-A), Section  23(2)  and  the  interest  contemplated  by
Section 34 of the Act.  The whole of that amount is  paid  or  deposited  by
the Collector in terms of  Section  31  of  the  Act.   At  this  stage,  no
shortfall in deposit is contemplated, since the  Collector  has  to  pay  or
deposit the amount awarded by him.  If a shortfall is pointed  out,  it  may
have to be made up at that stage and  the  principle  of  appropriation  may
apply, though it is difficult to  contemplate  a  partial  deposit  at  that
stage.  On the deposit by the Collector under Section 31  of  the  Act,  the
first stage comes to an end subject to the right of the claimant  to  notice
of the deposit and withdrawal or acceptance of the amount  with  or  without
protest.

33.   The second stage occurs on a reference under Section 18  of  the  Act.
When the Reference Court awards enhanced compensation,  it  has  necessarily
to take note of the enhanced amounts payable under  Section  23(1),  Section
23(1-A), Section 23(2) and interest on the enhanced amount  as  provided  in
Section 28 of the Act and costs in terms of Section 27.  The  Collector  has
the duty to deposit  these  amounts  pursuant  to  the  deemed  decree  thus
passed.  This has nothing to do with the earlier deposit made or to be  made
under and after the  award.   If  the  deposit  made,  falls  short  of  the
enhancement decreed, there can arise the question of appropriation  at  that
stage, in relation to the amount enhanced on the reference.

34.   The third stage occurs, when in appeal, the High  Court  enhances  the
compensation as indicated already.  That enhanced  compensation  would  also
bear interest on the enhanced portion of the compensation, when  Section  28
is applied.  The enhanced amount thus calculated will have to  be  deposited
in addition to the amount awarded by the  Reference  Court  if  it  had  not
already been deposited.

35.    The  fourth  stage  may  be  when  the  Supreme  Court  enhances  the
compensation and at that stage too, the same rule would apply.”


48.         By going through the judgment of reference court as well as  the
High Court, we find that the appellants were awarded interest  in  terms  of
Section 34 and Section 28  of  the  Act.    Section  4(1)  notification  was
issued  on  19.02.1997.   The  reference  court   has   not   enhanced   the
compensation amount;  but  has  only  confirmed  the  award  passed  by  the
Collector.  However, while dismissing the reference,  reference  court  held
that the appellant shall be entitled  to  get  interest   in  terms  of  the
provisions of the Act for the  period  from  19.02.1997  till  the  date  of
payment, meaning thereby that the statutory interest in terms of Section  34
of the Act is payable.
49.          When the High Court enhanced the compensation, the  High  Court
held that the appellants shall be paid interest in terms of  Section  28  of
the Act. On  the  enhanced  compensation,  High  Court  ordered  payment  of
interest at the rate of 9%  from 19.02.1997 to 18.2.1998 and  thereafter  at
the rate of 15% per annum till the date of payment.   The  relevant  portion
of the judgment of the High Court reads as under:-

“On the enhanced market value, the appellant shall be  paid  interest  under
Section 28 of the Act @ 9% per annum from 19.02.1997, the date  of  issuance
of Section 4 notification for  the  first  year  ending  on  18.02.1998  and
thereafter, @ 15% per  annum  till  the  date  of  tender  of  compensation.
Interest shall also be paid on the solatium and  the  additional  amount  in
view of the judgment of the Supreme Court in the  case  of  Sunder  Vs.  UOI
reported as 93(2001) DLT 569 (SC).”

Since the statutory interest under Section  34  and  also  the  interest  in
terms of Section 28 of Act had been awarded to the appellants,  we  find  no
merit in the grievance of the appellants as to the payment of interest.
50.   COSTS:     By its judgment dated 24.12.2010, the High  Court  enhanced
the compensation at the rate of Rs.14,974/-  per  sq.  yard,  but  the  High
Court  had  then   awarded   only                  costs   of   Rs.20,000/-.
Thereafter,  the  appellants  filed  C.M.       No.   735/2011,   interalia,
contending that they ought to have been awarded entire costs at the rate  of
Rs.  50,000/-  per  sq.  yard,  enhanced  compensation  as  claimed  by  the
claimants. Appellants also claimed that  the  entire  court  fees  of  Rs.48
lakhs affixed on the memo of appeal be included in the  costs.   High  Court
rejected the plea of the appellants for inclusion of the entire  court  fees
and costs at the rate of enhanced compensation  for  the  acquired  land  at
Rs.50,000/- per sq. yard as claimed by the appellants. But  the  High  Court
modified its  order  by  awarding  proportionate  costs  in  favour  of  the
appellants over and above the sum of Rs.20,000/-.
51.         The appellant, party-in-person, contended that  they  have  paid
court fees of Rs.48 lakhs and High Court ignored  the  mandatory  provisions
of law in awarding costs and that court fees is an integral part  of  costs.
It was submitted that the impugned order dated  13.10.2011  awarding  “grant
of proportionate costs” is not in accordance with well settled principle  of
law. Appellants further contended that being partly  successful  before  the
High Court, they cannot be deprived of their claim of entire court fees  and
the costs.
52.         The learned Senior Counsel for  respondents  submitted  that  as
per the well settled principle, the High  Court  has  awarded  proportionate
costs  and  there  is  no  improper  exercise   of   discretion   warranting
interference by this Court.
53.         Section 27 of the Act deals with costs.   Section  27  reads  as
under:
“27.  Costs:- (1)      Every such award  shall  also  state  the  amount  of
costs incurred in the proceedings under this Part, and by what  persons  and
in what proportions they are to be paid.
(2)   When the award of  the  Collector  is  not  upheld,  the  costs  shall
ordinarily be paid by the Collector, unless the court shall  be  of  opinion
that the claim of the applicant  was  so  extravagant  or  that  he  was  so
negligent in putting his case before the Collector that some deduction  from
his costs should be made or that he should pay a  part  of  the  Collector’s
costs.”

54.         The language of Section 27(1) is clear  and  very  wide  and  it
gives power to the courts to order costs to be paid by what persons  and  in
what proportions they are to be paid.   In  making  order  for  costs  under
Section 27(1), the court may have regard to the  provisions  of  Section  35
C.P.C.  Analysing sub-section (2) of Section 27, it appears  to  consist  of
three parts, viz., (i) When the award of the Collector is  not  upheld,  the
costs shall ordinarily be paid by the collector as directed  by  the  Court;
(ii) the court is not bound to do so in every  case.   If  the  court  forms
opinion that the claim of the claimant is extravagant  or  that  he  was  so
negligent in putting his case before the Collector, then the court may  make
a different order as regards costs and (iii) the court  may  in  such  cases
direct, that some deduction be made from the costs of the claimant  or  that
he should pay a part of the Collector’s costs.
55.         Ordinarily, when a litigant succeeds in part and fails in  part,
the equitable order made is that  he  should  receive  proportionate  costs.
When considering the appellants’ claim in C.M. No. 735 of 2011, in  exercise
of its discretion, the High Court rightly awarded  proportionate  costs  and
accordingly directed payment of such proportionate costs of over  and  above
Rs.20,000/- as originally ordered. Merely  because  the  appellants  claimed
compensation at the rate of Rs.50,000/- per sq.yard, the respondents  cannot
be saddled with the liability of paying the entire costs and the court  fees
paid by the appellants.  There is no improper exercise of discretion by  the
High Court in awarding proportionate costs and  we  find  no  merit  in  the
claim of the appellants claiming full costs.
56.         We may incidentally refer to the  statement  of  learned  Senior
Counsel for the respondents that compensation amount of about  Rs.40  crores
has already been paid to the appellants.
57.         We, therefore, do not find any merit in these  appeals  and  the
appeals are dismissed accordingly.  Parties are  to  bear  their  respective
costs.

                                                               …………………………..J
                                                               (T.S. Thakur)



                                                               …………………………..J
                                                              (R. Banumathi)
New Delhi;
October 17, 2014

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