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Thursday, July 26, 2018

deduction of 50% towards developmental charges from the market value.= we find that firstly, the land acquired in question is a large chunk of land (101 acres approx.); Secondly, it is not fully developed; Thirdly, the respondents (landowners) have not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; Fourthly, exemplar relied on by the respondents, especially Ex.P­18 pertains to very small pieces of land (19 guntas); Fifthly, the three distinguishing features 15 noticed in the land in sale deed (Ex.P­18) are not present in the acquired land. 24) It was for the aforementioned reasons, in our opinion, the Reference Court was justified in making deduction of 50% towards developmental charges from the market value. = So far as the determination of market value made by the Reference Court is concerned, i.e., Rs.21,29,600/­ per acre, the same having been upheld by the High Court, we do not find any justification to examine this issue again. Even the learned ASG did not challenge this finding and confined his submissions only relating to the issue of percentage of the deduction only.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 6986­6987  OF 2018
(Arising out of S.L.P.(C) No.10358­10359 of 2015)
Union of India                       ….Appellant(s)
VERSUS
Dyagala Devamma & Ors.             ….Respondent(s)
               
J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) These   appeals   are   filed   against   the   final
judgment and order dated 08.08.2014 passed by
the High Court of Judicature at Hyderabad for the
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State of Telangana and the State of Andhra Pradesh
in LAAS No.762 of 2010 and CO(SR) No.373 of 2011
whereby the High Court dismissed the appeal filed
by the appellant herein and partly allowed the cross
objections   filed   by   the   respondents   herein   and
enhanced the compensation as mentioned in detail
infra.
3) We   herein   set   out   the   facts,   in   brief,   to
appreciate   the   issues   involved   in   these   appeals.
4) 0n 12.11.2003,  the State of Andhra Pradesh
issued a notification under Section 4 of the Land
Acquisition Act, 1894 (hereinafter referred to as “the
Act”) and acquired the land measuring about 101­
00 acres (SY No.398/3 and other connected survey
numbers) situated at Jagitial Municipality,  District
Karimnagar (AP). The acquisition of land was for a
public purpose, namely, "laying new broad gauge
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single railway line from Karimnagar to Jagitial Phase
–II by the appellant­Railways". This was followed by
issuance of notification under Section 6 of the Act
and then possession on 02.12.2003.
5) The   Land   Acquisition   Officer   (LAO)   started
proceedings   under   Section   11   of   the   Act   for
determination of the compensation payable to the
landowners for their lands. By award No.26/2006
dated 14.07.2006, the LAO determined the market
value   of   the   acquired   land   at   the   rate   of
"Rs.1,30,000/­   per   acre   for   wet   lands"   and
"Rs.1,24,000/­ per acre for dry lands". The LAO also
awarded compensation for structures, wells etc. to
some landowners.
6) The claimants (landowners) felt aggrieved and
sought reference under Section 18 of the Act to the
Civil   Court   in   OP   No.27/2007.   By   award   dated
23.07.2010,   the   Civil   Court   (Sr.   Civil   Judge,
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Jagitial) re­determined the market value of the land
in  question. The Reference Court determined the
market value of the acquired land at Rs.21,29,600/­
per acre uniformly.  However, having regard to the
totality of facts of the case, the  Reference Court
considered   it   just   and   proper   to   deduct   50%
towards   developmental   charges   and   accordingly
worked   out   the   market   value   of   the   land   at
"Rs.10,64,800/­   per   acre"   for   being   paid   to   the
landowners.
7) The appellant­Railways felt aggrieved and filed
appeal before the High Court of Andhra Pradesh
whereas the landowners also felt aggrieved and filed
cross   objections   claiming   enhancement   of   the
market value determined by the Reference Court.
8) By   impugned   judgment,   the   High   Court
dismissed the appeal filed by the appellant­Railways
and partly allowed the cross objections filed by the
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landowners   and   enhanced   the   compensation   to
Rs.15,97,200/­ per acre. The High Court, upheld
the market value determined by the Reference Court
i.e.   Rs.21,29,600/­   per   acre   but   reduced   the
deduction towards developmental charges from 50%
to   25%   and   accordingly   worked   out   the
compensation   “at   the   rate   of   Rs.15,97,200/­   per
acre”. It  is  against this  judgment,  the  appellantRailways
felt aggrieved and filed the present appeals
by way of special leave before this Court.
9) Heard   Mr.   Vikramjit   Banerjee,   learned
Additional Solicitor General for the appellant­UOI
and Mr. B. Adinarayana Rao, learned senior counsel
for the respondents.
10) Mr.   Vikramjit   Banerjee,   learned   Additional
Solicitor General appearing for the appellant while
assailing   the   legality   and   correctness   of   the
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impugned   judgment   essentially   made   two
submissions.
11) In the first place, learned ASG contended that
the   High   Court   erred   in   further   enhancing   the
compensation at Rs.15,97,200/­  per acre.
12) According   to   him   the   compensation
determined by the Reference Court payable at the
rate of Rs.10,64,800/­ per acre was just, legal and
proper and, therefore, it did not call for any further
enhancement.
13) In the second place, learned ASG urged that
having placed reliance on exemplar Sale Deed (ExP­18)
  for   determining   the   market   value,   the
Reference   Court   rightly   deducted   50%   towards
development charges, whereas the High Court erred
in deducting 25% towards developmental charges.
14) According   to   learned   ASG,   the   High   Court
ought   to   have   appreciated   that   there   were   three
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distinguishing factors appearing from the exemplar
sale deed (Ex.P­18).   Due to these three factors,
deduction of 50% towards developmental charges
from the market value was called for.  These factors
are, First, Sale Deed (Ex.P­18) was for a very small
piece of land (19 Guntas=1/2 acre);   Second, the
land which was the subject matter of Ex­P­18 had a
peculiar   site   because   it   was   situated   facing   two
roads ­ one on the east side and other on the north
side; and Third,  it was a developed land.
15) It was, therefore, urged that so far as the land
in question is concerned, the same did not have
these  factors and, therefore, the  Reference Court
rightly considered it proper to deduct 50% towards
developmental charges from the market value which
was worked out on the basis of Sale Deed (Ex.P­18).
It was urged that the High Court without assigning
any   reasons   much   less   cogent   reasons   erred   in
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reducing developmental charges from 50% to 25%
from the market value.   Learned ASG, therefore,
prayed for restoration of the award of the Reference
Court in place of impugned judgment of the High
Court.
16) Per   contra,   learned   senior   counsel   for   the
respondents (landowners) supported the impugned
judgment and contended that it does not call for
any interference and hence the appeals deserve to
be dismissed.
17) The question arises for consideration in these
appeals is whether the High Court was justified in
deducting 25% towards developmental charges from
the market value of the land in question against
50% deduction made by the Reference Court.   In
other   words,   having   regard   to   the   facts   and
circumstances of the case, whether the Reference
Court   was   justified   in   deducting   50%   from   the
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market value of the land or whether the High Court
was justified in deducting 25%.
18) Before we examine the facts of this case, it is
necessary to take note of general principles of law on
the subject in question which are laid down by this
Court in several cases and some of which were 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
already settled by this Court and what has varied in
its application depends on the facts of each case.
19) 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
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consideration to determine the proper market value of
the acquired land.
20) 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.
(8) Only   genuine   instances   have   to   be
taken   into   account.   (Sometimes   instances   are
rigged up in anticipation of acquisition of land.)
(9) Even post­notification 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
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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 visà­vis
land under acquisition by placing the two
in juxtaposition.
(12) A   balance­sheet   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
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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   vis­à­vis   land   under
acquisition
6. some   special
disadvantageous factor which
would deter a purchaser
7.     special value for an owner
of        an adjoining
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,
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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.”
21) These principles are invariably kept in mind by
the Courts while determining the market value of the
acquired   lands   (also   see  Union   of   India   vs.   Raj
Kumar   Baghal   Singh   (Dead)   Through   Legal
Representatives & Ors., (2014) 10 SCC 422).
22) In addition to these principles,   this Court in
several cases have laid down that while determining
the true market value of the acquired land especially
when   the   acquired   land   is   a   large   chunk   of
undeveloped land, it is just and reasonable to make
appropriate   deduction   towards   expenses   for
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development   of   acquired   land.   It   has   also   been
consistently   held   that   at   what   percentage   the
deduction should be made varies 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
pieces of land can be taken into consideration after
making   proper   deduction   in   the   value   of   lands
especially 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
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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 and Vithal Rao
& Anr. Vs. Special Land Acquisition Officer,  (2017)
8 SCC 558)
23) Keeping in mind the aforementioned principles,
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 (101 acres approx.); Secondly, it is
not   fully   developed;   Thirdly,   the     respondents
(landowners) have not filed any exemplar sale deed
relating to large pieces of land sold in acres to prove
the   market   value   of   the   acquired   land;   Fourthly,
exemplar   relied   on   by   the   respondents,   especially
Ex.P­18   pertains   to   very   small   pieces   of   land   (19
guntas);   Fifthly,   the   three   distinguishing   features
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noticed   in   the   land   in   sale   deed   (Ex.P­18)   are   not
present in the acquired land.  
24) It  was   for  the   aforementioned  reasons,   in  our
opinion, the Reference Court was justified in making
deduction of 50% towards developmental charges from
the market value.  The High Court, in our opinion, did
not assign any good reason as to why and on what
basis, it considered proper to make deduction towards
developmental charges at the rate of 25% in place of
50%. 
25) This   Court   has   held   in  Trishala   Jain’s   case
(supra) that it depends upon the facts of each case to
decide for determination of the market value of the
land   as   to   what   percentage   should   be   adopted   for
deduction.     In   our   opinion,   the   reasons   mentioned
above were rightly made basis by the Reference Court
to support the deduction of 50%. 
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26) So far as the determination of market value made
by   the   Reference   Court   is   concerned,   i.e.,
Rs.21,29,600/­ per acre, the same having been upheld
by the High Court, we do not find any justification to
examine this issue again.  Even the learned ASG did
not   challenge   this   finding   and   confined   his
submissions only relating to the issue of percentage of
the deduction only.
27) Learned counsel for the respondents was not able
to point out any fact/evidence which could persuade
us to uphold the reasoning and conclusion arrived at
by the High Court in the impugned judgment.
28) In   view   of   the   foregoing   discussion,   we   are
inclined to uphold the reasoning and the conclusion
arrived at by the Reference Court instead of the High
Court.
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29) As a consequence of the foregoing discussion, the
appeals   succeed   and   are   accordingly   allowed.
Impugned   judgment   is   set   aside   and   that   of   the
Reference Court (Civil Court) dated 23.07.2010 in OP
No.27/2007 is restored.

……........................……........J.
[ABHAY MANOHAR SAPRE]
………...................................J
[UDAY UMESH LALIT] 
New Delhi;
July 25, 2018
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