INCOME TAX = order of block assessment = Therefore, the income assessable in block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under Section 132 or requisition under Section 132-A of the Act.The power of survey has been provided under Section 133A of the IT Act. Therefore, any material or evidence found/collected in a Survey which has been simultaneously made at the premises of a connected person can be utilized while making the Block Assessment in respect of an assessee under Section 158BB read with Section 158 BH of the IT Act. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in Section158 BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or 11 found during the survey or any other method while making the Block Assessment.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10164 of 2010
 Commissioner of Income Tax, Chennai ….Appellant(s)
 Versus
S. Ajit Kumar
 …. Respondent(s)
WITH
CIVIL APEAL NO. 10917 OF 2013
CIVIL APPEAL NO. 4449 OF 2015
CIVIL APEAL NO. 5255 OF 2015
CIVIL APPEAL NO. 10165 OF 2010
J U D G M E N T
R.K. Agrawal, J.
1) This appeal has been filed against the impugned
judgment and order dated 22.11.2006 passed by the High
Court of Judicature at Madras in Tax Case (Appeal) No. 2620
of 2006 whereby the Division Bench dismissed the appeal filed
by the appellant herein while upholding the decision passed
1
by the Income Tax Appellate Tribunal (for short “the Tribunal”)
dated 28.04.2006. Along with this appeal, other appeals are
also tagged. Since the moot question in all these appeals is
same, all these appeals would stand disposed off through this
common judgment.
Brief facts:-
Civil Appeal No. 10164 of 2010
2) In order to appreciate the facts of the present case in the
appropriate manner, purpose would be served if we mention
the facts in a summarized way which is as under:-
a) The appellant herein is the Revenue whereas the
respondent is the assessee.
b) A search was conducted by the officers of the Income
Tax Department in the premises of the assessee on
17.07.2002 which was concluded on 21.08.2002. On the same
date, there was a survey in the premises of Elegant
Constructions and Interiors Ltd. (hereinafter referred to as
‘M/s. ECIL’) - the builder and interior decorator who
constructed and decorated the house of the assessee at
Valmiki Nagar.
2
c) Pursuant to the same, the fact that the assessee having
engaged the above contractor for construction of the house
came out. At the same time, from the survey in the builder’s
premises, the fact of the assessee having paid Rs 95,16,000/-
to M/s ECIL in cash was revealed which was not accounted
for.
d) The Assessing Officer, vide order dated 31.08.2004, after
having regard to the facts and circumstances of the case,
completed the block assessment and, inter alia, held that the
said amount is liable to tax as undisclosed income of the block
period.
e) Being aggrieved with the order dated 31.08.2004, the
assessee filed an appeal before the Commissioner of Income
Tax (Appeals). Learned CIT (Appeals), vide order dated
15.02.2005, held that it was due to the search action that the
Department had found that the assessee had engaged the
services of M/s. ECIL. Hence, the order of block assessment
was upheld.
f) Being dissatisfied, the assessee brought the matter before
the Tribunal by way of an appeal. The Tribunal, vide order
3
dated 28.04.2006, set aside the decisions of the Assessing
Officer and learned CIT (Appeals) and allowed the appeal.
g) Being aggrieved, the Revenue filed an appeal before the
High Court. The High Court, vide order dated 22.11.2006,
dismissed the appeal.
3) Consequently, the Revenue has filed this instant appeal
before this Court.
4) Heard the arguments advanced by learned senior counsel
for the parties and perused the relevant records of the case
placed before us.
Point(s) for consideration:-
5) The short point for consideration which arises in this appeal
is as to whether in the light of present facts and
circumstances of the instant case, the material found in the
course of survey in the premises of the builder could be used
in Block Assessment of the assessee?
Rival contentions:
6) At the outset, learned senior counsel for the Revenue
contended that the High Court failed to consider that the
information gathered as a result of search is not the details of
4
appointment of interior decorator rather it is information
regarding the cash payments made over and above the
cheques payments and not accounted by the assessee.
Further, it was also contended that it is the standard practice
in the Department that when a search takes place in the case
of an assessee, many related business premises are
simultaneously covered under survey. Learned senior counsel
further contended that though it is called a survey, it is very
much part of the search process and the inquiry and
investigation is one process. This is to be distinguished from
the surveys which are stand-alone surveys, totally
unconnected to any search. In order to substantiate his claim,
learned senior counsel has referred to a decision of this Court
in Assistant Commissioner of Income Tax and Another vs.
Hotel Blue Moon (2010) 3 SCC 259 and contended that the
impugned decision of the High Court is liable to be set aside.
7) Per contra, it is submitted by learned senior counsel for
the assessee that the High Court rightly dismissed the appeal
of the appellant after placing reliance on the decision of the
Madras High Court in Commissioner of Income Tax vs. G.K.
5
Senniappan 284 ITR 220. It was also submitted that the fact
of cash payment found in survey conducted at the premises of
M/s ECIL does not fall within the ambit of Block Assessment.
Learned senior Counsel has relied upon the following
decisions, viz., Commissioner of Income Tax vs. S. Ajit
Kumar (2008) 300 ITR 152 (Mad.), Commissioner of Income
Tax vs. N.K. Laminates Pvt. Ltd. (2014) 365 ITR 211 (All.),
Commissioner of Income Tax vs. Bimal Auto Agency (2009)
314 ITR 191 (Gauhati), Commissioner of Income Tax vs.
Khushlal Chand Nirmal Kumar (2003) 263 ITR 77 (MP),
Commissioner of Income Tax vs. Dr. Rattan Kumar Singh
(2013) 357 ITR 35 (All.), Commissioner of Income Tax,
Chennai vs. S. V. Sreenivasan (2017) SCC Online 17211
(Mad.), Commissioner of Income Tax vs. Pinaki Misra
(2017) 392 ITR 347 (Delhi), Commissioner of Income Tax vs.
R.M.L. Mehrotra (2010) 320 ITR 403 (All.), Sree Meenakshi
Mills Ltd. vs. Commissioner of Income Tax, Madras (1957)
21 ITR 28 (S.C.), Commissioner of Income Tax vs. P.V.
Kalyanasundaram (2007) 294 ITR 49 (S.C.), Commissioner
of Income Tax vs. Smt. Anita Chouhan (2008) 296 ITR 691
6
(M.P.) and Commissioner of Income Tax, Punjab vs. Indian
Wollen Textiles Mills (1964) 51 ITR 291. Learned senior
counsel finally submitted that in view of the above decisions,
this appeal deserves to be dismissed at the threshold.
Discussion:-
8) In the present case, the period for Block Assessment is
01.04.1996 to 17.07.2002. Section 153A of the Income Tax
Act, 1961 (for brevity “the IT Act”) provides the procedure for
completion of assessment where a search is initiated under
Section 132 of the IT Act or books of account or other
documents or any asset are requisitioned under Section 132A
of the IT Act.
9) It is a cardinal principle of law that in order to add any
income in the block assessment, evidence of such must be
found in the course of the search under Section 132 of the IT
Act or in any proceedings simultaneously conducted in the
premises of the assessee, relatives and/or persons who are
connected with the assessee and are having
transaction/dealings with such assessee. In the present case,
the moot question is whether the fact of cash payment of Rs
7
95.16 lakhs can be added under the head of the undisclosed
income of the assessee in block assessment.
10) In the instant case, the office and residential premises of
the assessee searched on 17.07.2002 and finally concluded on
21.08.2002. During the course of search, certain evidence
were found which showed that the assessee had indulged in
understatement of his real income relating to the block period
from 01.04.1996 to 17.07.2002. Consequently, a notice dated
25.02.2003, under Section 158BC of the IT Act, was issued to
the assessee and he was asked to file block assessment. In
reply to such notice, the assessee filed return on 11.08.2003,
admitting the undisclosed income as “NIL”.
11) In the present case, it is admitted position that the cost
of investment was disclosed to the Revenue in the course of
return filed by the assessee. The assessee also disclosed the
detail of transaction between the assessee and M/s ECIL in
the assessment year 2001-2002. However, he had not
disclosed the payment of Rs. 95,16,000/- in cash made to
M/s. ECIL.
8
12) The method of calculating the undisclosed income of the
block period is provided under Section 158BB of the IT Act. It
would be appropriate to re-produce the relevant part of
Sections 158BB and 158 BH of the IT Act which is as follows:
“158BB. Computation of undisclosed income of the
block period.-(1) The undisclosed income of the block
period shall be the aggregate of the total income of the
previous year failing within the block period computed,
in accordance with the provisions of this Act, on the
basis of evidence found as a result of search or
requisition of books of account or other documents
and such other materials or information as are
available with the Assessing Officer and relatable
to such evidence, as reduced by the aggregate of the
total income , or, as the case may be, as increased by
the aggregate of the losses of such previous year
determined……

158BH. Application of other provisions of this Act –
Save as otherwise provided in this Chapter, all other
provisions of this Act shall apply to assessment made
under this Chapter.”
(Emphasis supplied by us)
13) On a perusal of the above provision, it is evident that for
the purpose of calculating the undisclosed income of the block
period, it can be calculated only on the basis of evidence found
as a result of search or requisition of books of accounts or
other documents and such other materials or information as
are available with the Assessing Officer and relatable to such
9
evidence. Section 158BB has prescribed the boundary which
has to be followed. No departure from this provision is allowed
otherwise it may cause prejudice to the assessee. Needless to
say that it is the cannon of tax law that it should be
interpreted strictly.
14) However, Section 158BH of the IT Act has made all other
provisions of the IT Act applicable to assessments made under
Chapter XIVB except otherwise provided under this Chapter.
Chapter XIV B of the IT Act, which relates to Block
Assessment, came up for consideration before this Court in
Hotel Blue Moon (supra) wherein it has been held as under:
“18. Chapter XIV-B provides for an assessment of the
undisclosed income unearthed as a result of search without
affecting the regular assessment made or to be made. Search
is the sine qua non for the block assessment. The special
provisions are devised to operate in the distinct field of
undisclosed income and are clearly in addition to the regular
assessments covering the previous years falling in the block
period. The special procedure of Chapter XIV-B is intended
to provide a mode of assessment of undisclosed income,
which has been detected as a result of search. It is not
intended to be a substitute for regular assessment. Its scope
and ambit is limited in that sense to materials unearthed
during search. It is in addition to the regular assessment
already done or to be done. The assessment for the block
period can only be done on the basis of evidence found as a
result of search or requisition of books of accounts or
documents and such other materials or information as are
available with the assessing officer. Therefore, the income
assessable in block assessment under Chapter XIV-B is the
income not disclosed but found and determined as the result
10
of search under Section 132 or requisition under Section
132-A of the Act.
28. Section 158-BH provides for application of the other
provisions of the Act. It reads:
“158-BH. Application of other provisions of this Act.-
Save as otherwise provided in this Chapter, all other
provisions of this Act shall apply to assessment
made under this Chapter.”
This is an enabling provision, which makes all the
provisions of the Act, save as otherwise provided, applicable
for proceedings for block assessment. The provisions which
are specifically included are those which are available in
Chapter XIV-B of the Act, which includes Section 142 and
sub-sections (2) and (3) of Section 143.”

15) The power of survey has been provided under Section
133A of the IT Act. Therefore, any material or evidence
found/collected in a Survey which has been simultaneously
made at the premises of a connected person can be utilized
while making the Block Assessment in respect of an assessee
under Section 158BB read with Section 158 BH of the IT Act.
The same would fall under the words “and such other
materials or information as are available with the Assessing
Officer and relatable to such evidence” occurring in
Section158 BB of the Act. In the present case, the Assessing
Officer was justified in taking the adverse material collected or
11
found during the survey or any other method while making the
Block Assessment.
16) In view of the foregoing discussions, we are of the
considered opinion that the decisions relied upon by learned
senior counsel for the assessee do not lay down the correct
law.
17) In the result, all the appeals succeed and are allowed.
The impugned orders are set aside and the orders passed by
the Assessing Officer making the Block Assessment are
restored. However, the parties shall bear their own cost.
…….....…………………………………J.
 (R.K. AGRAWAL)
 …….…………….………………………J.
 (ABHAY MANOHAR SAPRE)
NEW DELHI;
MAY 2, 2018.
12

It is only for schools seeking CBSE affiliation that it is prescribed that the number of students should not be less than 300. We do not see how, if the number of students is less than 300, it will detract from the quality of education imparted to the students. In other words, the requirement of a minimum strength of 300 students is a completely arbitrary figure arrived at by Kerala and which has no rational nexus with quality education or the CBSE Affiliation Bye-laws. In the absence of any material on record justifying the fixation of a minimum of 300 students in a school seeking an NOC for affiliation to the CBSE, we must hold the requirement as arbitrary and we do so.

SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 1 of 13
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (C) NOS. 18475-18476 OF 2013
State of Kerala & Anr. …..Petitioners
Vs.
Mythri Vidya Bhavan English M. Sch. & Ors. …..Respondents
WITH
SLP(C) Nos. 4531-4532/2014, SLP(C) No.
4530/2014, SLP(C) Nos. 23142-23146/2013, SLP(C)
Nos.23138-23140/2013, SLP(C) Nos. 29655-
29658/2013, SLP(C) Nos. 29781-29783/2013,
SLP(C) Nos. 29560-29561/2013, SLP(C) Nos.
33438-33439/2013, SLP(C) Nos. 29660-29662/2013,
SLP(C) Nos. 83-86/2014, SLP(C) Nos. 31934-
31936/2013, SLP(C) Nos. 79-80/2014, SLP(C) No.
39339/2013, SLP(C) No. 37208/2013, SLP(C) Nos.
76-77/2014, SLP(C) No. 81/2014, SLP(C) No.
82/2014, SLP(C) Nos. 4534-4536/2014
JUDGMENT
Madan B. Lokur, J.
1. The fundamental right to free and compulsory education to all
children between the age of 6 and 14 years postulates good quality
education and not just education for the sake of providing education.
Regulation of such education is permissible by law and not by
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 2 of 13
executive fiat. Unfortunately, in this batch of petitions, the State of
Kerala seeks to impose its authority over schools that provide
apparently quality education, which is perceived to be a threat to the
public education system in the State.
2. The challenge by the State of Kerala in this batch of petitions is
to the judgment and order dated 14th September, 2012 passed by a
Division Bench of the High Court of Kerala. In our opinion, all these
petitions deserve to be dismissed.
Brief background
3. Without going into any great detail into the history (which is
replete with litigation – as if schools have nothing better to do) leading
up to these petitions, it needs to be said that the affiliation of schools by
the Central Board of Secondary Education (CBSE) is governed by its
Affiliation Bye-laws. Clause 3(i) of the Bye-laws mandates formal
prior recognition by the State/Union Territory Government.
Additionally, the application for affiliation should be forwarded by the
State Government or there should be a No Objection Certificate (NOC)
to the effect that the State Government has no objection to the
affiliation of the school with the CBSE.
4. Apparently with this in mind, the State of Kerala issued certain
guidelines on 13th June, 2007 limiting consideration of applications for
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 3 of 13
grant of an NOC to 5 northern districts in the State. The Government
Order (G.O.) was challenged by the management of some schools and
it was set aside by the High Court.
5. Against the decision rendered by the High Court, petitions for
special leave to appeal were filed by Kerala which were taken up for
consideration on 18th July, 2011. By that time, Kerala had come out
with a new policy dated 10th June, 2011 which made the petitions
infructuous. The relevant extract of the order passed by this Court on
18th July, 2011 reads as follows:
“Delay condoned.
The State Government has filed these SLPs challenging the
order of the High Court directing consideration of the
applications filed by the respondents for grant of ‘no objection
certificate’ for seeking affiliation with Central Board of
Secondary Education (for short ‘CBSE’) for a new
institution/existing institutions. The State Government had
earlier rejected the request with reference to the Policy of the
State Government then in force.
When the matter came up today, both sides submitted
that the State Government has now made a new Policy
contained in G.O.(MS) No.137/2011/G. Edn. dated 10.6.2011
which reads as under:
“Government are pleased to accord sanction for issuing
No Objection Certificate for getting CBSE/ICSE
affiliation to schools, which totally fulfils the norms and
conditions prescribed by CBSE/ICSE and having own
land and basic facilities.
Further guidelines will be issued by the Department in
due course.”
In view of the said Policy, it is submitted that these
SLPs by the State Government have become infructuous as the
State Government will have to consider the applications of the
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 4 of 13
respondents with reference to the said new Policy dated
10.6.2011 and pass appropriate orders within three months
from today.
It is needless to say that if the respondents-applicants
are aggrieved by any order passed on such consideration, they
will be entitled to challenge the same in accordance with law.
 …………….”
6. It is significant to note that the last line of the G.O. dated 10th
June, 2011 stated that further guidelines would be issued by the
concerned department in due course.
7. These further guidelines as postulated by the G.O. dated 10th
June, 2011 came to be issued on 7th October, 2011. These (new)
guidelines were not supplementary but a completely extra set of
guidelines that prescribed norms for the grant of an NOC to new
schools for affiliation to CBSE and for existing schools for renewal of
affiliation under the CBSE Affiliation Bye-laws. According to learned
counsel for the schools, this was quite unexpected and unnecessary
8. Be that as it may, the management of several schools objected to
some of the guidelines. The objections were to the following
guidelines:
“iv. The institution should have minimum 3 acres of land, out
of which at least 2 acres shall be in the actual location where
the school is functioning in a contiguous manner. It should
have adequate playground also. There should be a library and
adequate number of laboratories.
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 5 of 13
vi. The medium of instruction must be English. However
Malayalam will be compulsorily taught as a paper with a
prescribed text book and a proper academic evaluation as
instructed by State Government from time to time.
viii. The school shall appoint only qualified and eligible staff
and must pay the salary and allowances and other benefits to
the employees of the school. Employees in the CBSE/ICSE
school shall be offered the same pay scales as in Government
Schools for equivalent categories. The pay shall start at the
minimum of the scale and employees shall be eligible for DA
and increments as is allowed in Government Schools from time
to time.
xiv. The school should have been in existence for a period of
five years as on the date of application for NOC and should
have at least 300 students in its rolls. The UIID enrolment
should be completed and UIID numbers of the students
enrolled in the school shall be furnished.”
9. These guidelines were challenged by some schools by way of
writ petitions in the High Court. A learned Single Judge of the High
Court heard the writ petitions challenging the G.O. of 7th October, 2011
and by an interim order passed on 20th April, 2012 stayed the operation
of guidelines (iv) and (xiv).
10. Kerala filed a writ appeal challenging the order of the learned
Single Judge and upon hearing learned counsel, the Division Bench
was of the view that the decision in the writ appeal would render all the
pending writ petitions before the learned Single Judge infructuous.
Therefore, with the consent of all the parties to the litigation, it was
decided that all the writ petitions and the writ appeal should be heard
by the Division Bench so that there is some finality to the dispute.
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 6 of 13
11. By the impugned judgment and order dated 14th September,
2012, the High Court struck down clause (iv) and (xiv) of the
guidelines dated 7th October, 2011 and it is under these circumstances
that the present petitions have been filed by Kerala and taken up for
consideration.
12. At the outset, we may note that although initially four guidelines
were under challenge before the learned Single Judge but before us it
was stated by learned counsel for school managements that they do not
press the challenge to guidelines (vi) and (viii). We are, therefore,
concerned only with guidelines (iv) and (xiv) pertaining to a school
seeking affiliation requiring minimum 3 acres of land and a minimum
300 enrolled students.
Requirement of minimum 3 acres of land
13. According to Kerala, a school seeking an NOC for affiliation to
the CBSE must have 3 acres of land out of which 2 acres should be
contiguous and in the actual location of the school. We have not been
shown any basis for this mandate, applicable to all schools across the
board.
14. On the other hand, the CBSE appears to have done its homework
in framing the Affiliation Bye-laws and making a realistic assessment
of the requirements of schools depending on their location.
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 7 of 13
15. In Chapter IV of the Kerala Education Rules, 1959 (for short
‘KER’), we have been informed by learned counsel for Kerala that it is
provided that Upper Primary Schools with or without Lower Primary
Section (that is up to and including Standard V and VI), the land
requirement (as informed) is 1.2 to 2 hectares (3 to 5 acres); for
Secondary Schools the land requirement is 1.2 to 2 hectares (3 to 5
acres) and for Higher Secondary Schools the land requirement is 1.2
hectares (3 acres). Hence the minimum requirement is of 3 acres of
land. However, the KER provides that every school should normally
have a minimum site area as indicated above.
16. Contrast this with the CBSE Affiliation Bye-laws. Under these
Bye-laws, the minimum land requirement varies from location to
location. The requirement generally for an educational institution to
apply to the CBSE for affiliation is that the school must have 2 acres of
land but there are certain exceptions. For example, in cities with a
population exceeding 25 lakhs the land should not be less than 1 acre
with adequate building and arrangement with other
institution/organization for imparting physical and health education and
for conducting games to the satisfaction of the CBSE. In hilly areas, the
land should not be less than 1 acre and the norms as prescribed by the
Planning Commission would be applicable for determining hilly areas.
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 8 of 13
17. Similarly, in schools located within the Municipal limit of the
capital cities, islands, North Eastern States and Jammu & Kashmir the
minimum land requirement shall be 1 acre. In other words, the CBSE
has introduced a degree of flexibility depending upon the location of
the school. Unfortunately, Kerala has not even thought of providing
any such flexibility. It appears to us that the rigid requirement of
Kerala indicates that it is imposed upon the schools that seek affiliation
with the CBSE only with a view to unnecessarily burden them with an
onerous and arbitrary condition, since Kerala believes it has the
authority to do so.
18. Keeping all this in mind, we had required Kerala by an order dated
6
th December, 2016 to inform us the number of schools run by the State
Government or aided by the State Government or affiliated with the State
Board that do not comply with the guidelines of 7th October, 2011. In
response, Kerala filed an evasive affidavit to the effect that since the
guidelines do not apply to such schools, there is no compulsion on such
schools to comply with them. This is remarkable – guidelines are framed
by Kerala for application by schools other than those run by the State
Government or aided by the State Government or affiliated with the State
Board. There is no reason given for this distinction drawn by Kerala
which appears to be completely arbitrary.
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 9 of 13
19. It was submitted on behalf of Kerala that nevertheless the State
Government was well within its rights and authority to provide for a
minimum of 3 acres of land for the grant of an NOC. While this may be
so, the requirement must have some rational basis but we are unable to
find any such rational basis. Even in the counter affidavit filed before
the learned Single Judge it is stated by Kerala that restrictions have
been placed on CBSE schools to prevent their mushrooming growth
which would affect the public education system in the State. No details
have been given for arriving at this conclusion. But the very fact that
there is a mushroom growth of CBSE schools is an indication that the
public education system in Kerala as managed by the State Government
leaves something to be desired in terms of the quality of the education.
How does the restriction imposed by Kerala benefit the children of the
State?
20. As mentioned above, the CBSE has done its homework well and
has taken a pragmatic view of the requirement of land. We can take
judicial notice of the fact that in metropolitan and capital cities as well
as in hilly areas, it would be difficult to get 3 acres of land or even 2
acres of land. Similarly, due to the terrain it would perhaps be difficult
to get adequate land in the North Eastern region of the country as well
as in Jammu & Kashmir. This realism deserves to be contrasted with
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 10 of 13
non-realistic inflexibility of Kerala which too has some hilly areas
where perhaps it might be difficult to find 3 acres of land. It is this lack
of pragmatism and arbitrary rigidity that has weighed with the High
Court as well as with us in coming to the conclusion that guideline (iv)
requiring a minimum of 3 acres of land for obtaining an NOC for
getting affiliation in accordance with the Affiliation Bye-laws of the
CBSE is arbitrary and was deservedly struck down by the High Court.
Minimum enrolment of 300 students
21. The second challenge is with reference to the minimum strength
of students being 300 in a school that seeks affiliation with the CBSE in
terms of guideline (xiv).
22. At this stage, it may be mentioned that in Queen Mary Public
School v. State of Kerala1
the High Court held that the requirement of
500 students on the rolls for affiliation of the school from Standard I to
Standard X is contrary of the CBSE Affiliation Bye-laws and is not
rational or sustainable. Notwithstanding this, Kerala has insisted on the
number of students on the rolls being at least 300 for the issuance of an
NOC. Since there is no such requirement under the CBSE Affiliation
Bye-laws - this is merely an unwarranted imposition by Kerala on
school managements.

1
(2007) 4 KLT 706
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 11 of 13
23. The question of affiliation with the CBSE would arise only when
the school reaches at least Standard VI. In this regard, clause 15.1(a) of
Chapter III of the Affiliation Bye-laws is relevant and this provides as
follows:
“15.1.(a) The schools fulfilling the norms of Affiliation given
in Chapter-II may apply ‘On-line’ to the Board for approval of
Middle Class Syllabus/provisional affiliation for secondary/
upgradation of Senior Secondary Classes on the prescribed
from alongwith prescribed fee given in Appendix II before 30th
June of the Year preceding the year in which Class VI/IX/XI as
the case may be is proposed to be started. Application Forms,
procedural details and Affiliation Bye-Laws for submission of
applications ‘on line’ are available on the Boards website
www.cbse.nic.in. Application submitted by post or by any
other means will not be processed.
All the applications which are received by CBSE on or before
30th June every year may be processed together within a period
of six months thereof. The order of granting or refusing the
affiliation shall be communicated to the applicants on or before
31st December of that year.”
24. The High Court took the view that progressive stages of
affiliation has a rational basis while the prescription of having a
minimum of 300 students for obtaining an NOC does not have any such
basis. Again, we do not find any reason for this requirement in the
counter affidavit filed by Kerala in the High Court except that it has the
authority to make such a prescription.
25. The illustration given by the High Court in this regard is
apposite. The Right of Children to Free and Compulsory Education
Act, 2009 (the RTE Act) requires a student-teacher ratio of 30:1. A
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 12 of 13
school having 30 children in one class and having one division will
have only 180 students upto and including Standard VI. Such a school
cannot, therefore, obtain provisional affiliation for secondary or senior
secondary classes. Actually, such a school would not be eligible for
affiliation till Standard X when it has 300 students – and it can never
reach that stage since Standard IX and X can be started only if the
school has CBSE affiliation. Kerala is, therefore, expecting an
impossibility from such schools that strictly conform to the provisions
of the RTE Act.
26. On the other hand, under the KER the minimum effective
strength per standard in Lower Primary/Upper Primary and High
Schools is 25 students (it would now have increased to 30 students). It
is only for schools seeking CBSE affiliation that it is prescribed that the
number of students should not be less than 300. We do not see how, if
the number of students is less than 300, it will detract from the quality
of education imparted to the students. In other words, the requirement
of a minimum strength of 300 students is a completely arbitrary figure
arrived at by Kerala and which has no rational nexus with quality
education or the CBSE Affiliation Bye-laws.
27. According to learned counsel for Kerala, if a school does not
have a minimum of 300 students, it would be difficult for that school to
SLP (Civil) Nos. 18475-18476 of 2013 etc. etc. Page 13 of 13
pay the required wages of the staff and the teachers except by charging
exorbitant fees. There is no material on record to substantiate such a
conclusion and it is based merely on the ipse dixit of the State. In the
absence of any material on record justifying the fixation of a minimum
of 300 students in a school seeking an NOC for affiliation to the CBSE,
we must hold the requirement as arbitrary and we do so.
28. Another issue raised by the management of schools is with
regard to the compulsory unique identification (UID) for enrolment of
students. We leave this issue open, as suggested by learned counsel, to
await the decision of Constitution Bench of this Court which is
presently seized of the requirement of UID.
29. For the aforesaid reasons, we find no merit in these petitions
which are accordingly dismissed. The interim applications stand
disposed of.
..………………………J
(Madan B. Lokur)
 New Delhi .……………………J
May 2, 2018 ( Deepak Gupta )

not under sec. 300 but under sec. 304 IPC = the ingredients of murder as explained in Section 300 of the IPC are missing in this case. The intention of Tularam was to cause bodily injury to Bhadri Lodhi and piercing the chest of Bhadri Lodhi with a spear was such an injury that could possibly cause his death. This knowledge must be attributed to Tularam. 15. Under the circumstances, the conviction of Tularam of an offence punishable under Section 302 of the IPC is set aside but he is convicted of an offence punishable under the second part of Section 304 of the IPC. The appellant has been behind bars for almost 14 years. His sentence is altered to the period of incarceration he has already undergone. He be released forthwith.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.663 OF 2018
(ARISING OUT OF S.L.P. (CRIMINAL) NO.7483 OF 2017)
Tularam …..Appellant
versus
The State of Madhya Pradesh …..Respondent
JUDGMENT
Madan B. Lokur, J.
1. Leave granted.
2. The appellant Tularam was accused and convicted of having
committed the murder of Bhadri Lodhi during an altercation that took
place on 9th June, 2002.
3. On that date, a quarrel took place between Ramnath and Raju at
about 6 p.m. in the flourmill of Ramnath. The details of this quarrel are
not available on record but it appears that subsequently at about 7.30 p.m.
after Ramnath closed his flourmill and was returning home, he was
accosted by Raju. A quarrel again ensued between the two and in the
midst of that quarrel, they were joined by Bipatlal Lodhi, the grandfather
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 1 of 6
of Raju who came with a lathi, Santu, the nephew of Ramnath and Bhadri
Lodhi, brother of Ramnath. The quarrel escalated into the altercation and
these persons were joined by Tularam, uncle of Raju who came with a
ballam (this is a wooden or bamboo stick with a spear attached at the
end). Another person Sakharam (also an accused but not before us)
joined the fray carrying a lathi. During the course of the altercation
which turned violent, Tularam pierced Bhadri Lodhi with the ballam on
the left side of his chest and he fell down. Bhadri Lodhi was thereafter
taken home where he was declared dead.
4. Some other persons involved in the altercation sustained injuries
including Sakharam who was accused of having dealt a lathi blows on
Santu.
5. During the trial that took place as a result of the altercation and the
death of Bhadri Lodhi, the prosecution examined several eye witnesses
including Ramnath (PW1), Maltibai (PW-3), Mahasingh (PW-5), Shanta
Bai (PW-7), Singh Singh Gond (PW-8) Jogi Lodhi PW-10) and Hori Lal
(PW-11). Each of these witnesses confirmed the altercation and the fact
that Tularam had pierced Bhadri Lodhi on the left side of the chest with a
ballam. The injuries were confirmed after an autopsy by Dr. S.N.
Bhaskar (PW17) and the post mortem report is Exh.P.32. This shows one
penetrating wound having a size of 3” x ½” x ¼” on the left 5th intercostal
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 2 of 6
space, medial to left nipple.
6. On these broad facts of which there is no dispute, Tularam was
convicted of an offence punishable under Section 302 of the Indian Penal
Code for having murdered Bhadri Lodhi.
7. We have gone through the record of the Trial Court as well as of
the High Court and the only limited issue before us is whether Tularam
had the intention of causing the death of Bhadri Lodhi.
8. Section 299 of the IPC explains culpable homicide as causing
death by doing an act with the intention of causing death, or with the
intention of causing such bodily injury as is likely to cause death, or with
the knowledge that the act complained of is likely to cause death. The
first two categories require the intention to cause death or the likelihood
of causing death while the third category confines itself to the knowledge
that the act complained of is likely to cause death. On the facts of this
case, the offence of culpable homicide is clearly made out.
9. Section 300 of the IPC explains what is murder and it provides that
culpable homicide is murder if the act by which the death is caused is
done with the intention of causing death or the act complained of is so
imminently dangerous that it must in all probability cause death or “such
bodily injury as is likely to cause death.” There are some exceptions
when culpable homicide is not murder and we are concerned with
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 3 of 6
Exception 4 which reads:
“Exception 4. - Culpable homicide is not murder if it is
committed without premeditation in a sudden fight in the heat of
passion upon a sudden quarrel and without the offender having
taken undue advantage or acted in a cruel or unusual manner.”
Explanation. - It is immaterial in such cases which party offers
the provocation or commits the first assault.
10. Recently in Surain Singh v. State of Punjab1
it was observed that:
“The help of Exception 4 can be invoked if death is caused (a)
without premeditation, (b) in a sudden fight, (c) without the
offenders having taken undue advantage or acted in a cruel or
unusual manner, and (d) the fight must have been with the person
killed. To bring a case within Exception 4 all the ingredients
mentioned in it must be found. It is to be noted that the “fight”
occurring in Exception 4 to Section 300 IPC is not defined in
IPC……… A fight is a combat between two and more persons
whether with or without weapons. It is not possible to enunciate
any general rule as to what shall be deemed to be a sudden
quarrel. It is a question of fact and whether a quarrel is sudden or
not must necessarily depend upon the proved facts of each case.
For the application of Exception 4, it is not sufficient to show that
there was a sudden quarrel and there was no premeditation. It
must further be shown that the offender has not taken undue
advantage or acted in a cruel or unusual manner. The expression
“undue advantage” as used in the provision means “unfair
advantage”.
11. The facts of the present case indicate that all the ingredients of
Exception 4 to Section 300 of the IPC are present. The fight was sudden
and not premeditated (this is the finding of both the courts) and Tularam
is not found to have taken undue advantage of his carrying a ballam in the
sense of inflicting any other serious injury, except a contusion to
Ramnath. That being the position, it cannot be held that Tularam had the
intention to murder Bhadri Lodhi or to cause him such bodily injury as is
1 (2017) 5 SCC 796
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 4 of 6
likely to cause death.
12. Section 304 of the IPC provides the punishment for culpable
homicide not amounting to murder. Part I of this Section provides that if
the act by which death is caused is done with the intention of causing
death or causing such bodily injury as is likely to cause death then the
punishment may extend up to imprisonment for life. On the other hand,
Part II of Section 304 provides that if the offending act is done with the
knowledge that it is likely to cause death but without any intention to
cause death or to cause such bodily injury as is likely to cause death then
the punishment may extend to imprisonment for 10 years.
13. The intention to cause death must not be readily inferred. We are
afraid that both the Trial Court as well as the High Court have, on the
basis of the mere fact that Tularam pierced the chest of Bhadri Lodhi with
a ballam, assumed that he intended to cause the death of Bhadri Lodhi.
There is nothing on the record to suggest such an intention and none of
the witnesses have given any indication of Tularam’s intention to cause
the death of Bhadri Lodhi. It is quite clear that during the altercation
Tularam did pierce the chest of Bhadri Lodhi but the intention to kill him
is not apparent. However, Tularam must be attributed with the
knowledge that piercing the left side of the chest with a spear would
result in a bodily injury that is likely to cause death.
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 5 of 6
14. In view of the evidence on record, we are satisfied that the
ingredients of murder as explained in Section 300 of the IPC are missing
in this case. The intention of Tularam was to cause bodily injury to
Bhadri Lodhi and piercing the chest of Bhadri Lodhi with a spear was
such an injury that could possibly cause his death. This knowledge must
be attributed to Tularam.
15. Under the circumstances, the conviction of Tularam of an offence
punishable under Section 302 of the IPC is set aside but he is convicted
of an offence punishable under the second part of Section 304 of the IPC.
The appellant has been behind bars for almost 14 years. His sentence is
altered to the period of incarceration he has already undergone. He be
released forthwith.
16. The appeal is allowed in the aforesaid terms.
……………………J
 ( Madan B. Lokur )
New Delhi; ………………………J
May 2, 2018 ( Deepak Gupta )
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 6 of 6

The parties are bound by the terms and conditions agreed under the policy and the arbitration clause contained in it. It is not a case where mere allegation of fraud is leaned upon to avoid the arbitration. It is not a situation where a stand is taken that certain claims pertain to excepted matters and are, hence, not arbitrable. The language used in the second part is absolutely categorical and unequivocal inasmuch as it stipulates that it is clearly agreed and understood that no difference or disputes shall be referable to arbitration if the company has disputed or not accepted the liability. The High Court has fallen into grave error by expressing the opinion that there is incongruity between Part II and Part III. The said analysis runs counter to the principles laid down in the three-Judge Bench decision in The Vulcan Insurance Co. Ltd (supra). Therefore, the only remedy which the respondent can take recourse to is to institute a civil suit for mitigation of the grievances. If a civil suit is filed within two months hence, the benefit of Section 14 of the Limitation Act, 1963 will enure to its benefit.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2268 OF 2018
(@ S.L.P. (C) No. 33621 of 2017)
Oriental Insurance Company Limited Appellant (s)
VERSUS
M/s Narbheram Power and Steel Pvt. Ltd. Respondent(s)
J U D G M E N T
Dipak Misra, CJI.
The respondent – M/s Narbheram Power and Steel Pvt.
Ltd. – had entered into a Fire Industrial all Risk Policy No.
31150/11/2014/65 in respect of the factory situated on plot
Nos. 11 and 13, Gundichapada Industrial Estate, District –
Dhenkanal, Odisha. In October 2013, there was a cyclone
2
named as “Phailin” which affected large parts of the State of
Odisha. Because of the said cyclone, the respondent suffered
damages which it estimated at Rs. 3,93,36,224.00. An
intimation was given to the appellant-insurer and it appointed
one Ashok Chopra & Company as surveyor which visited the
factory premises on 20th and 21st November, 2013. A series of
correspondences were exchanged between the respondent and
the insurer. On 22.12.2014, the respondent commented on the
surveyor‟s report and requested the appellant to settle its
claim. As ultimately the claim was not settled, the respondent
sent a communication dated 21.01.2017 intimating the
appellant that it had invoked the arbitration agreement and
requested it to concur with the name of the arbitrator whom it
had nominated.
2. The appellant replied to the said letter repudiating the
claim made by the respondent and declined to refer the
disputes to arbitration between the parties. As the insurer
declined to accede to the request made by the respondent, it
filed an application under Section 11(6) of the Arbitration and
Conciliation Act, 1996 (for brevity, „the 1996 Act‟) for
appointment of an arbitrator so that he could, along with the
3
arbitrator nominated by the respondent, proceed to appoint a
presiding arbitrator to adjudicate the disputes and differences
that had arisen between the parties.
3. The said application was contested by the insurer and the
High Court, considering the language employed in Clause 13 of
the policy and the reasons advanced while repudiating the
claim of the claimant, appointed a retired Judge of the High
Court as arbitrator. The said order is under assail by way of
special leave in this appeal.
4. We have heard Mr. P.K. Seth, learned counsel for the
appellant and Mr. Sachin Datta, learned senior counsel for the
respondent.
5. Placing reliance on Clause 13 of the policy, it is urged by
the learned counsel for the appellant that once the claim was
repudiated and the insurer had disputed or not accepted the
liability under or in respect of the policy, no difference or
dispute could have been referred to arbitration. It is his
further submission that the High Court has adopted an
erroneous approach in the interpretation of the said Clause by
expressing the view that it suffers from ambiguity and it needs
to be purposively read failing which the arbitration clause
4
becomes meaningless. Reliance has been placed on the
decisions in General Assurance Society Ltd. v. Chandumull
Jain and another 1 , Oriental Insurance Co. Ltd. v.
Samayanallur Primary Agricultural Co-op. Bank 2 and
United India Insurance Co. Ltd. v. Harchand Rai Chandan
Lal3.
6. Learned senior counsel for the respondent, per contra,
would contend that the order passed by the High Court is
absolutely impregnable and in the obtaining factual matrix, the
view expressed by the High Court cannot be found fault with.
He would further urge that the letter of repudiation, when
appositely understood, does not relate to disputation and
non-acceptance of the liability under or in respect of the policy
but, in fact, amounts to denial of the claim that basically
pertains to the quantum. Learned counsel has drawn a
distinction between liability and refusal of the claim not having
been substantiated. To bolster the submissions, he has placed
reliance on The Vulcan Insurance Co. Ltd v. Maharaj Singh

1
AIR 1966 SC 1644
2
AIR 2000 SC 10
3
(2004) 8 SCC 644
5
and another 4 , Chloro Controls India Private Limited v.
Severn Trent Water Purification Inc. and others 5 , A.
Ayyasamy v. A. Paramasivam and others 6 , M/s. Jumbo
Bags Ltd v. M/s. The New India Assurance Co. Ltd7 and
Essar Steel India Limited v. The New India Assurance Co.
Ltd8.
7. To appreciate the rival submissions, it is necessary to
scan and scrutinize the arbitration clause, that is, Clause 13 of
the policy. The said Clause reads as follows:-
“13. If any dispute or difference shall arise as to
the quantum to be paid under this policy
(liability being otherwise admitted) such
difference shall independently of all questions
be referred to the decision of a sole arbitrator to
be appointed in writing by the parties to or if
they cannot agree upon a single arbitrator
within 30 days of any party invoking
arbitration, the same shall be referred to a
panel of three arbitrator, comprising of two
arbitrators, one to be appointed by each of the
parties to the dispute/difference and the third
arbitrator to be appointed by such two
arbitrators and arbitration shall be conducted
under and in accordance with the provisions of
the Arbitration and Conciliation Act, 1996.

4
(1976) 1 SCC 943
5
(2013) 1 SCC 641
6
(2016) 10 SCC 386
7
2016-2-L.W.769
8 MANU/MH/0542/2013
6
It is clearly agreed and understood that no
difference or dispute shall be referable to
arbitration as hereinbefore provided, if the
Company has disputed or not accepted liability
under or in respect of this policy.
It is hereby expressly stipulated and declared
that it shall be a condition precedent to any
right of action or suit upon this policy that the
award by such arbitrator/arbitrators of the
amount of the loss or damage shall be first
obtained.”
(Emphasis supplied)
8. When we carefully read the aforequoted Clause, it is quite
limpid that once the insurer disputes the liability under or in
respect of the policy, there can be no reference to the
arbitrator. It is contained in the second part of the Clause. The
third part of the Clause stipulates that before any right of
action or suit upon the policy is taken recourse to, prior award
of the arbitrator/arbitrators with regard to the amount of loss
or damage is a condition precedent. The High Court, as the
impugned order would show, has laid emphasis on the second
part and, on that basis, opined that the second part and third
part do not have harmony and, in fact, sound a discordant
note, for the scheme cannot be split into two parts, one to be
decided by the arbitration and the other in the suit.
7
9. Before we address the factum of repudiation and its
impact on the Clause, we think it appropriate to discuss the
authorities cited by the learned counsel for the parties. In
General Assurance Society Ltd. (supra), the Constitution
Bench, while dealing with the contract of insurance, has
opined that such a contract is entered into on the basis of
commercial transactions and while interpreting the documents
relating to a contract of insurance, the duty of the court is to
interpret the words in which the contract is expressed by the
parties because it is not for the court to make a new contract,
howsoever reasonable.
10. In Oriental Insurance Co. Ltd. (supra), a two-Judge
Bench has opined that insurance policy has to be construed
having reference only to the stipulations contained in it and no
artificial far-fetched meaning could be given to the words
appearing in it.
11. In United India Insurance Co. Ltd. (supra), the Court
has ruled that the terms of the policy shall govern the contract
between the parties and they are bound to abide by the
definitions given therein. That apart, the expression appearing
in the policy should be given interpretation with reference to
8
the terms of the policy and not with reference to the definitions
given in any other law because the parties have entered into
the contract with eyes wide open.
12. The aforesaid principles are in the realm of settled
position of law. The natural corollary of the said propositions
is that the parties are bound by the clauses enumerated in the
policy and the court does not transplant any equity to the same
by rewriting a clause. The Court can interpret such
stipulations in the agreement. It is because they relate to
commercial transactions and the principle of unconscionability
of the terms and conditions because of the lack of bargaining
power does not arise. The said principle comes into play in a
different sphere.
13. In this context, reference to the authority in Deep
Trading Company v. Indian Oil Corporation and others9,
would be instructive. A three-Judge Bench was dealing with
the right of the respondent No. 1 therein to appoint the
arbitrator after expiry of the time period. The Court referred to
Clause 29 of the agreement that provided for procedure for
appointment of the arbitrator. After referring to the authorities

9
(2013) 4 SCC 35
9
in Datar Switchgears Ltd. v. Tata Finance Ltd. and
another10 and Punj Lloyd Ltd. v. Petronet MHB Ltd.11, the
Court held:-
“19. If we apply the legal position exposited by this
Court in Datar Switchgears to the admitted facts, it
will be seen that the Corporation has forfeited its
right to appoint the arbitrator. It is so for the reason
that on 9-8-2004, the dealer called upon the
Corporation to appoint the arbitrator in accordance
with the terms of Clause 29 of the agreement but
that was not done till the dealer had made
application under Section 11(6) to the Chief Justice
of the Allahabad High Court for appointment of the
arbitrator. The appointment was made by the
Corporation only during the pendency of the
proceedings under Section 11(6). Such appointment
by the Corporation after forfeiture of its right is of no
consequence and has not disentitled the dealer to
seek appointment of the arbitrator by the Chief
Justice under Section 11(6). We answer the above
questions accordingly.”
14. In this regard, a reference to the authority in Newton
Engineering and Chemicals Limited v. Indian Oil
Corporation Limited and others12 is fruitful. In the said case,
there was an express, clear and unequivocal arbitration clause
between the parties which provided that disputes shall be
referred to the sole arbitration of the Executive Director

10 (2000) 8 SCC 151
11 (2006) 2 SCC 638
12 (2013) 4 SCC 44
10
(Northern Region) of the respondent Corporation and if the said
authority was unable or unwilling to act as the sole arbitrator,
the matters shall be referred to the person designated by such
ED (NR) in his place who is willing to act as the sole arbitrator.
The arbitration clause further provided that if none of them is
able to act as an arbitrator, no other person should act as a
sole arbitrator and if the office of the said authority ceases to
exist in the Corporation and the parties are unable to arrive at
any agreed solution, the arbitration clause would not survive
and has to be treated having worked its course. The Court,
interpreting the clause, expressed the view that in such a
situation, the Court has no power to appoint an arbitrator for
resolution of the disputes.
15. In The Vulcan Insurance Co. Ltd (supra), a three-Judge
Bench was interpreting Clauses 13, 18 and 19 of the policy
involved therein. For proper appreciation, we think it
appropriate to refer to the Clauses of the policy that arose for
consideration in the said authority. They read as follows:-
“13. If the claim be in any respect fraudulent, or if
any false declaration be made or used in support
thereof, or if any fraudulent means or devices are
used by the insured or anyone acting on his behalf
to obtain any benefit under this Policy; or, if the loss
11
or damage be occasioned by the wilful act, or with
the connivance of the insured; or, if the claim be
made and rejected and an action or suit be not
commenced within three months after such
rejection, or (in case of an arbitration taking place
in pursuance of the 18th condition of this Policy)
within three months after the Arbitrator or
Arbitrators or Umpire shall have made their award,
all benefit under this Policy shall be forfeited.
x x x
18. If any difference arises as to the amount of any
loss or damage such difference shall independently
of all other questions be referred to the decision of
an Arbitrator, to be appointed in writing by the
parties in difference, or, if they cannot agree upon a
single Arbitrator to the decision of two disinterested
persons as Arbitrators ....
* * *
And it is hereby expressly stipulated and declared
that it shall be a condition precedent to any right of
action or suit upon this policy that the award by
such Arbitrator, Arbitrators or Umpire of the
amount of the loss or damage if disputed shall be
first obtained.
19. In no case whatever shall the company be liable
for any loss or damage after the expiration of twelve
months from the happening of the loss or damage
unless the claim is the subject of pending action or
arbitration.”
In the said case, the company repudiated its liability to
pay any amount of loss or damage as claimed by the claimant.
The Court opined that the dispute raised by the company
appertained to its liability to pay any amount of damage
whatsoever and, therefore, the dispute raised by the appellant
12
company was not covered by the arbitration clause. The Court
scanned the anatomy of Clauses 13 and 18 and then referred
to the decision in Scott v. Avery13 naming the clause to be
Scott v. Avery clause and quoted a passage from Russel on
Arbitration which is to the following effect:-
“Even a clause of this type, however, is not absolute
in effect: where the court orders that the arbitration
agreement cease to have effect in relation to a
particular dispute, it has a discretion to order
further that the Scott v. Avery clause cease to have
effect too. (Vide pp. 57, 58 of Russel on Arbitration,
Eighteenth Edn.).
In the said case, reliance was placed on Viney v.
Bignold14 wherein it had been held that the determination of
the amount by arbitration was a condition precedent to the
right to recover on the policy and if any action was brought
without an award obtained in arbitration, it was not
maintainable. The other decision that was pressed into service
was Caledonian Insurance Company v. Andrew Gilmour15.
The Court commented that the said decision was dealing with a
case that contained a comprehensive arbitration clause and

13 (1856) 25 LJ Ex 308 : 5 HLC 811 : 4 WR 746
14 (1888) 20 QBD 171,172
15 1893 AC 85 : 9 TLR 146 : 57 JP 228
13
justified the applicability of Scott v. Avery as a bar to the
maintainability of action without an award.
16. The three-Judge Bench noted that in O’connor v.
Norwich Union Fire and Life Insurance Society 16 , the
decision in Viney v. Bignold (supra) was distinguished and
went on to reproduce a passage from Holmes, J.:-
“Now, if it was a term of the contract that a
difference of this kind was to be settled by
arbitration, I should not hesitate to stay the action
....
* * *
But there is no provision in the plaintiff‟s policy that
such a controversy as has arisen is to be referred to
arbitration. There is a carefully drawn clause, by
which it is agreed that the amount to be paid, as
distinguished from liablity to pay anything, is to be
settled by arbitrators, and that no action can be
commenced until they shall have determined such
amount. One result of this clause may be to render
two proceedings necessary where there is a dispute
as to the amount of the loss as well as a denial of all
liability; but this ought not to be a ground of
complaint to either of the parties who have made it
a term of the contract;”
After reproducing the said passage, the Court concurred
with the said view.

16 (1894) 2 Irish LR 723 : 28 Irish LT 95
14
17. Reliance was placed upon a few paragraphs of the Fifth
Edition of MacGillivray on Insurance Law by the learned
counsel for the respondent. The said passage reads thus:-
“There is a rule of law that parties cannot by their
private contract oust the jurisdiction of the court;
but it has been held that parties to a contract may
nevertheless agree that no cause of action shall
arise upon it until any matter in dispute between
them shall have been determined by arbitration and
then only upon the arbitrators‟ award.”
On behalf of the respondent, the following passage was
taken aid of:-
“As a rule, where the amount of the loss or damage
is the only matter which the parties refer to
arbitration, then if the insurers repudiate any
liability on the policy there is no obligation on the
assured to arbitrate as to the amount before
commencing an action on the policy.”
18. It is apt to mention here that the Bombay High Court in
Eagle Star and British Dominions Insurance Company v.
Dinanath and Hemraj17 had interpreted identical Clause 13.
The High Court had eventually ruled:-
“But in clause 13 there are various contingencies
set out which if established entitle the insured to
bring an action without an award having been made
by arbitrators. One of these contingencies is „if the
claim be made and rejected‟ which if established

17 ILR 47 Bom 509 : AIR 1923 249 : 25 Bom LR 164
15
gives a right of action, the period of limitation
provided for the suit being fixed at three months
from the date of the rejection. While it is also
provided that where arbitration takes place in
pursuance of Condition 18 of the policy, three
months‟ time should be allowed for a suit to be
brought after the award has been made. Therefore it
is quite obvious that a right of action accrued after
the company rejected the claim. Naturally that
question would have first to be decided by suit as
under clause 18 that question could never have
been referred to arbitration.”
This Court in The Vulcan Insurance Co. Ltd (supra)
approved the view of the Bombay High Court.
19. At this stage, we may state, in brief, the factual score in
The Vulcan Insurance Co. Ltd. case. In the said case, the
respondent therein had filed an application under Section 20 of
the Arbitration Act, 1940 in the Court at Muzaffarnagar in
Uttar Pradesh. As objection was taken to the jurisdiction of
that Court, the respondent re-filed it in the Delhi Court. The
trial court at Delhi dismissed the application holding that the
dispute arising out of the repudiation of the liability under
Clause 13 by the insurance company was within the scope of
the arbitration agreement contained in Clause 18 and a
reference to arbitration could be made, but, as per Cause 19,
the petition was barred by limitation. On an appeal being
16
preferred, the Delhi High Court reversed the judgment by
opining that Clause 18 was restricted to differences as to the
amount of loss or damage; that reference to arbitration was not
ousted and the arbitration clause covered the dispute even if
the insurance company had repudiated the claim in toto; that
the Arbitration Clause 18 was inoperative unless the conditions
contained in Clause 19 were satisfied; that the condition
mentioned therein was satisfied because the Respondent No. 1
had commenced the arbitration on the date when he issued the
notice dated October 1, 1963; and that his claim was the
subject of a pending arbitration within the meaning of
Clause 19. Being of this view, the High Court had allowed the
appeal. Dislodging the judgment of the High Court, this Court
ultimately held:-
“24. But in this case on a careful consideration of
the matter we have come to the definite conclusion
that the difference which arose between the parties
on the company‟s repudiation of the claim made by
Respondent 1 was not one to which the arbitration
clause applied and hence the arbitration agreement
could not be filed and no arbitrator could be
appointed under Section 20 of the Act. Respondent
1 was ill-advised to commence an action under
Section 20 instead of instituting a suit within three
months of the date of repudiation to establish the
company‟s liability.”
17
It is our obligation to mention here that though the
respondent has placed reliance upon the said authority, yet the
same does not assist him. On the contrary, it dispels the
perception of ambiguity in Part II and Part III of the arbitration
clause as perceived by the High Court. That apart, it throws
light on the issue of repudiation.
20. We may presently refer to the decision of the Madras High
Court in M/s. Jumbo Bags Ltd. (supra). In the said case,
learned Chief Justice was interpreting Clause 13 of the policy
conditions. Referring to The Vulcan Insurance Co. Ltd.
(supra), he has held thus:-
“The dispute which is not referable to arbitration,
being not covered by the clause cannot be over the
subject matter of arbitration, and the remedy of the
insured in this case is only to institute a suit.”
And again :-
“I am of the view that the remedy of arbitration is
not available to the petitioner herein in view of the
arbitration clause specifically excluding the mode of
adjudication of disputes by arbitration, where a
claim is repudiated in toto. The remedy would thus
only be of a civil suit in accordance with law.”
 We concur with the said view.
18
21. In Essar Steel India Limited (supra), the learned Single
Judge of the Bombay High Court was dealing with a situation
where the insurer had taken the stand that the policy was void
ab initio. Repelling the said stand, the learned Single Judge
held that the disputes could be referred to arbitration since the
plea advanced by the owner could be decided by the arbitrator.
We do not intend to dwell upon the correctness of the said
decision as the issue involved in the present case is quite
different.
22. In A. Ayyasamy (supra), a two-Judge Bench was
concerned with the issue as to whether the plea of fraud can be
adequately taken care of by the arbitrator. Sikri. J., analyzing
the facts, opined:-
“28. We, therefore, are of the opinion that the
allegations of purported fraud were not so serious
which cannot be taken care of by the arbitrator. The
courts below, therefore, fell in error in rejecting the
application of the appellant under Section 8 of the
Act. Reversing these judgments, we allow these
appeals and as a consequence, application filed by
the appellant under Section 8 in the suit is allowed
thereby relegating the parties to the arbitration.”
Chandrachud J., in his concurring opinion, after referring
to many an authority and literature in the field of arbitration,
came to hold:-
19
“53. The Arbitration and Conciliation Act, 1996,
should in my view be interpreted so as to bring in
line the principles underlying its interpretation in a
manner that is consistent with prevailing
approaches in the common law world.
Jurisprudence in India must evolve towards
strengthening the institutional efficacy of
arbitration. Deference to a forum chosen by parties
as a complete remedy for resolving all their claims is
but part of that evolution. Minimising the
intervention of courts is again a recognition of the
same principle.”
He has further held that the mere allegation of fraud in
the factual scenario was not sufficient to detract the parties
from the obligation to submit their disputes to arbitration
keeping in view the letter and spirit of the 1996 Act. The
decision, in our considered view, is not applicable to the case at
hand.
23. Though the learned counsel for the respondent has
referred to the case of Chloro Controls India Private Limited
(supra), yet the same need not be analyzed as it is not an
authority remotely relevant for deciding the lis in the present
case.
24. It does not need special emphasis that an arbitration
clause is required to be strictly construed. Any expression in
the clause must unequivocally express the intent of arbitration.
20
It can also lay the postulate in which situations the arbitration
clause cannot be given effect to. If a clause stipulates that
under certain circumstances there can be no arbitration, and
they are demonstrably clear then the controversy pertaining to
the appointment of arbitrator has to be put to rest.
25. In the instant case, Clause 13 categorically lays the
postulate that if the insurer has disputed or not accepted the
liability, no difference or dispute shall be referred to
arbitration. The thrust of the matter is whether the insurer has
disputed or not accepted the liability under or in respect of the
policy. The rejection of the claim of the respondent made vide
letter dated 26.12.2014 ascribes the following reasons:-
“1. Alleged loss of imported coal is clearly an
inventory shortage.
2. There was no actual loss of stock in process.
3. The damage to the sponge iron is due to inherent
vice.
4. The loss towards building/sheds etc. are
exaggerated to cover insured maintenance.
5. As there is no material damage thus business
interruption loss does not triggered.”
21
26. The aforesaid communication, submits the learned senior
counsel for the respondent, does not amount to denial of
liability under or in respect of the policy. On a reading of the
communication, we think, the disputation squarely comes
within Part II of Clause 13. The said Part of the Clause clearly
spells out that the parties have agreed and understood that no
differences and disputes shall be referable to arbitration if the
company has disputed or not accepted the liability. The
communication ascribes reasons for not accepting the claim at
all. It is nothing else but denial of liability by the insurer in
toto. It is not a disputation pertaining to quantum. In the
present case, we are not concerned with regard to whether the
policy was void or not as the same was not raised by the
insurer. The insurance-company has, on facts, repudiated the
claim by denying to accept the liability on the basis of the
aforesaid reasons. No inference can be drawn that there is
some kind of dispute with regard to quantification. It is a denial
to indemnify the loss as claimed by the respondent. Such a
situation, according to us, falls on all fours within the concept
of denial of disputes and non-acceptance of liability. It is not
one of the arbitration clauses which can be interpreted in a
22
way that denial of a claim would itself amount to dispute and,
therefore, it has to be referred to arbitration. The parties are
bound by the terms and conditions agreed under the policy and
the arbitration clause contained in it. It is not a case where
mere allegation of fraud is leaned upon to avoid the arbitration.
It is not a situation where a stand is taken that certain claims
pertain to excepted matters and are, hence, not arbitrable. The
language used in the second part is absolutely categorical and
unequivocal inasmuch as it stipulates that it is clearly agreed
and understood that no difference or disputes shall be referable
to arbitration if the company has disputed or not accepted the
liability. The High Court has fallen into grave error by
expressing the opinion that there is incongruity between Part II
and Part III. The said analysis runs counter to the principles
laid down in the three-Judge Bench decision in The Vulcan
Insurance Co. Ltd (supra). Therefore, the only remedy which
the respondent can take recourse to is to institute a civil suit
for mitigation of the grievances. If a civil suit is filed within two
months hence, the benefit of Section 14 of the Limitation Act,
1963 will enure to its benefit. 
23
27. In view of the aforesaid premised reasons, the appeal is
allowed and the order passed by the High Court is set aside. In
the facts and circumstances of the case, there shall be no order
as to costs.
 …………………………....CJI.
(Dipak Misra)
………………………….….J.
 (A.M. Khanwilkar)
……………………………..J.
(Dr. D.Y. Chandrachud)
New Delhi;
May 02, 2018

land compensation can be fixed basing on Potential of the land - Even though the valuation of the acquired land cannot be fixed as stated in those sale deeds, it could be fixed to its potential at the rate of Rs. 2,500/- per cent as compensation to the claimants.= Manimegalai .- Versus - The Special Tahsildar

1
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL NOs. 2294-2295 OF 2011
Manimegalai .... Appellant(s)
Versus
The Special Tahsildar
(Land Acquisition Officer)
Adi Dravidar Welfare .... Respondent(s)
 J U D G M E N T
R.K. Agrawal, J.
1) The above appeals have been filed against the judgment
and order dated 06.11.2009 passed by the High Court of
Judicature at Madras in A.S. Nos. 88 and 601 of 2001 and
Cross Objection No. 27 of 2007 whereby learned single Judge
of the High Court allowed the appeal filed by the respondent
while dismissing the cross objection filed by the appellant
herein.
2
2) Brief facts:
(a) On 15.09.1993, the Government of Tamil Nadu, issued a
Notification under Section 4(1) of the Land Acquisition Act,
1894 (in short ‘the LA Act’) for acquisition of dry lands for the
purpose of providing house sites to 250 landless poor Adi
Dravidars in Acharapakkam Village, Madurandagam Taluk,
Chengai, MGR District, Madras, having an extent of 4.30.0
hectares or 10.62 acres.
(b) The lands belonging to the appellant herein in Survey
Nos. 300/2A2, 300/3, 302/1A, 302/4, 317/1B2, 302/2B2B
and 320/2C2 were part of the said acquisition. The Land
Acquisition Officer, after complying with the formalities
required in connection with the acquisition of land under the
LA Act, passed an Award dated 22.03.1995, determining a
sum of Rs. 400/- per cent as compensation to the appellant
herein.
(c) Being aggrieved by the meager compensation, a
Reference under Section 18 of the LA Act was sought, seeking
market value for the acquired lands at the rate of Rs. 20,000/-
3
per cent before the Subordinate Court, Madurantagam which
was filed as L.A.O.P. No. 120 of 1998. Learned subordinate
Judge, vide judgment and order dated 27.03.2000, granted
compensation at the rate of Rs. 2,500/- per cent together with
30% solatium and 12% additional amount from the date of
issue of Notification dated 15.09.1993.
(d) Respondent herein, being aggrieved by the judgment and
order dated 27.03.2000, filed A.S. No. 88 of 2001 before the
High Court. Learned single Judge of the High Court, vide
judgment and order dated 06.11.2009 allowed the appeal filed
by the respondent herein by reducing the amount of
compensation granted by learned subordinate Judge from Rs.
2,500/- to Rs. 1,670/- with solatium and other statutory
benefits.
(e) Aggrieved by the judgment and order dated 06.11.2009,
the appellant has filed these appeals by way of special leave
before this Court.
3) Heard Mr. V. Prabhakar, learned counsel for the
appellant. None appeared from the side of the respondent and
perused the records.
4
Point for consideration:-
4) Whether in the present facts and circumstances of the
case the decision of the High Court is just and reasonable in
reducing the compensation?
Rival submissions:-
5) Learned counsel for the appellant contended that the
compensation awarded for the acquired lands was grossly
inadequate and abnormally low and does not reflect the
correct market value of the said lands. He further contended
that the market value of the acquired lands at the relevant
time was not less than Rs. 20,000/- per cent. The potential
value of the acquired lands and rise in price were not
considered by the Land Acquisition Officer. Learned counsel
finally contended that the High Court also erred in law while
computing the market value of the lands in question and
interference by this Court is sought for in this regard.
6) It was the stand of the respondent before the courts
below that the entire land belonging to the claimant was not
acquired but a portion of it alone was acquired. The
5
remaining portion could be used by the claimant. Further, the
respondent is not entitled to pay compensation for the
unacquired land. It was further the stand of the respondent
that the compensation awarded to the claimant is already on
the higher side as compared to the compensation awarded to
the lands in vicinity and no interference is sought for by this
Court in this regard.
Discussion:-
7) The Government of Tamil Nadu issued a Notification for
the acquisition of dry lands, also known as punja lands, for
the purpose of providing house sites to the people. Certain
punja lands belonged to the appellant herein in Survey Nos.
300/2A2, 300/3, 302/1A, 302/4, 317/1B2, 302/2B2B and
320/2C2 were also part of the said acquisition. In the
proceedings before the Special Tahsildar, a notice inviting
objections was published in the village on 18.10.1993.
Subsequently, in the enquiry under Section 5A of the LA Act,
the appellant herein submitted her objections to the proposed
acquisition and contended inter-alia that her total holdings
were 6.11 acres and out of the same, an extent of 4.63 acres
6
had been acquired, thereby, leaving a balance of 1.48 acres
and the same would be rendered useless. Hence, she prayed
that even the said extent also be acquired. However, the
respondent herein affirmed the acquisition only in respect of
4.63 acres of land.
8) An Award enquiry was undertaken by the respondent
wherein appellant herein claimed compensation at the rate of
Rs. 20,000/- per cent for the land acquired. The respondent
herein, on the basis of a sale deed dated 15.04.1993, wherein
an extent of 0.26 acres had been sold in Survey No.
294/A/1-B 16, proceeded to determine the value of the land at
Rs. 400/- per cent. In pursuance of the same, the land
measuring 4.63 acres was awarded a sum of Rs. 1,85,200/-
along with 30% solatium to the tune of Rs. 55,560/- and 12%
additional market value to the tune of Rs. 33,540/- thus
totaling to Rs. 2,74,309/-. However, it was held that no
severance compensation would be payable.
9) Aggrieved by the Award, the appellant sought for a
Reference under Section 18 of the LA Act. The appellant thus
made a Reference to the Court of Additional Subordinate
7
Judge, Chengalpattu which was numbered as LAOP No. 54 of
1995. The appellant herein submitted her claim statement on
the file of LAOP No. 54 of 1995 contending that the
compensation awarded by the respondent was grossly
inadequate and abnormally low and did not reflect the correct
market value of the lands and that the correct market value of
the lands acquired was not less than Rs. 20,000/- per cent on
the date of the Notification and that the acquired lands were
situated in the midst of developed areas and is connecting the
major big areas in the vicinity. LAOP No. 54 of 1995, which
was pending on the file of learned Additional Subordinate
Judge, Chengalpattu was transferred to the file of learned
subordinate Judge, Madurantagam and re-numbered as LAOP
No. 120 of 1998. Vide judgment and order dated 27.03.2000,
learned subordinate Judge, granted compensation to the
appellant herein at the rate of Rs. 2,500/- per cent together
with 30% solatium, 12% additional amount from the date of
Notification which was reduced to Rs. 1,670/- per cent with
solatium and other statutory benefits by learned single Judge
8
of the High Court in appeal vide judgment and order dated
06.11.2009.
10) Since the acquired lands are situated in different survey
numbers, different quantum of compensation has been
awarded for the lands so acquired. The general principles
which have been followed in assessing the compensation
payable in all these matters are the location of the lands
sought to be acquired, their potential for development, their
proximity to areas which are already developed and the
exorbitant rise in the value of the lands over the years. In
some of the cases, the authorities have taken recourse to the
comparison method in regard to the sale transactions effected
in respect of similar land in the area under the notifications
close to the date of notification by which the lands of the
appellant were acquired. The courts have also taken recourse
to assessing the value of the lands for the purposes of
compensation on a uniform rate in respect of the lands
acquired, making a special concession in respect of the lands
which are close to the roads and national highways where a
certain amount of development had already taken place.
9
Therefore, value which has to be assessed is the value to the
owner who parts with his property and not the value to the
new owner who takes it over. Fair and reasonable
compensation means the price of a willing buyer which is to be
paid to the willing seller. Though the Act does not provide for
“just terms” or “just compensation”, but the market value is to
be assessed taking into consideration the use to which it is
being put on acquisition and whether the land has unusual or
unique features or potentialities.
11) Similarly, public purpose is not capable of precise
definition. Each case has to be considered in the light of the
purpose for which acquisition is sought for. It is to serve the
general interest of the community as opposed to the particular
interest of the individual. Public purpose broadly speaking
would include the purpose in which the general interest of the
society as opposed to the particular interest of the individual
is directly and vitally concerned. Generally the executive would
be the best judge to determine whether or not the impugned
purpose is a public purpose. Yet it is not beyond the purview
of judicial scrutiny. The interest of a section of the society may
10
be public purpose when it is benefited by the acquisition. The
acquisition in question must indicate that it was towards the
welfare of the people and not to benefit a private individual or
group of individuals joined collectively. Therefore, acquisition
for anything which is not for a public purpose cannot be done
compulsorily.
12) In the case at hand, it is a matter of record that the said
land is fit for using the same for house sites and situated
adjacent to the National highway and is also near to the busy
area with various facilities. During the course of proceeding,
various sale deeds of adjacent lands were brought to our
knowledge. It is also undisputed fact that the entire land
belonging to the appellant herein was not acquired but a
portion of it alone had been acquired. It is the grievance of the
appellant that the acquisition of land to the extent of 4.63
acres out of total holding of 6.11 acres, rendering the balance
land to be an uneconomical holding for the purpose of
continuing agriculture operations. There is no doubt that the
land owners have to suffer when their lands acquired under
11
the LA Act. Hence, they must be compensated properly in lieu
of their lands to do proper justice.
13) Since the point of consideration before this Court is
related to the amount of compensation, we confine ourselves
to that point only. Learned subordinate Judge, vide judgment
and order dated 27.03.2000 rightly held as under:-
“….There is a railway track in between the data land and
acquired land. Therefore, while considering on the said
angle, the nature of the acquired land and the data land are
not similar. On considering the plan marked on behalf of
the claimant and on behalf of the respondent i.e. Exh. B-2, it
is evident that acquired lands are situated in between the
national highway and railway track. The acquired lands are
nearer to the National highway. The respondent has
admitted in the cross examination that the acquired lands
are acquired for housing purpose, as it is fit for using as
housing plots. As the acquired lands are fit for housing
purpose, the claimants have relied on sale transactions that
are sold nearer to the acquired land, i.e. Exh. A-1, a sale
deed dated 20.11.1992 relating to land in S.No. 323, under
which 9374 sq ft. of land has been sold for Rs. 1,03,200/- at
the rate of Rs. 4,919/- per cent. Similarly, under the sale
deed dated 22.03.1993, an extent of 8 cents have been sold
for Rs. 39,150/- at the rate of Rs. 4,893/- per cent. Under
Exh. B-3 sale deed dated 09.07.1993 an extent of 3 ½ cents
in S.No. 326/1W2 and 325/1A4A have been sold for Rs.
22,900/- at the rate of Rs. 6,545/- per cent.
14) Learned subordinate Judge, further held as under:-
13) In Exh.B-4, an extent of 2 cents of land in S. No. 123 has
been sold for Rs. 4,752/-. The above sale transactions took
place prior to the notification issued under Section 4(1) but
the said transactions have been considered and rejected by
the respondents. The reason for rejecting Exh. B-3 is that
the land is a house site situated adjacent to the national
12
highway. While considering the reason for rejection is
acceptable or not, the respondents themselves have admitted
that the acquired lands are fit to be converted as house sites.
As the acquisition of land is for house sites, the non
acceptance of value of the house site and acceptance of the
value of agricultural land in S.No. 294, is not acceptable.
The sale deeds Exh.A-1 to A-4 submitted on behalf of the
claimant are relating to the lands in S.No. 323, 325 and 326,
situate adjacent to National Highway and the value of those
lands are more than Rs. 4,000/- per cent which has been
accepted by the government itself, as market value while
registering the document. As the government has accepted
Rs. 4,000/- per cent as market value, the valuation for the
acquired land at the rate of Rs. 400/- per cent is very low.
The acquired lands are situated 2 or 3 survey numbers away
from the lands relating to the survey numbers in Exh. A-1 to
A-4. Even though the valuation of the acquired land cannot
be fixed as stated in those sale deeds, it could be fixed to its
potential at the rate of Rs. 2,500/- per cent as compensation
to the claimants.”
15) An assessment of the compensation payable for land
acquired must take into account several factors, including the
nature of the land, its present use and its capacity for a higher
potential, its precise location in relation to adjoining land, the
use to which neighbouring land has been put to use, the
impact of such use on the land acquired, and so on. In the
case at hand, the respondent determined the value of the suit
land based on the sale deed dated 15.04.1993 under which 26
cents in S.No. 294/A/1-B16 had been sold at the rate of Rs.
400/- per cent which has happened five months prior to the
date of acquisition of the suit land and that land has been
13
taken as data land. Learned subordinate Judge very correctly
appreciated the fact that there is a railway track between the
data land and the acquired land and in that view of the
matter, both the lands cannot be considered as similar. It is
also evident that the acquired lands are in the midst of a
railway track and national highway having capacity for higher
potential. An extent of land in S.No. 323 which was adjacent
to the suit land was sold at the rate of Rs. 4,919/- per cent on
20.11.1992. Similarly, under the sale deed dated 22.03.1993,
an extent of 8 cents has been sold at the rate of Rs. 4,893/-
per cent. There is no doubt that the lands which are situated
adjacent to the main road will fetch good market value than
the lands which are situated beyond the road. Though learned
single Judge of the High Court was of the opinion that there
was no basis of granting Rs. 2,500/- per cent for the suit
lands, we are of the considered opinion that on the basis of the
alleged sale deeds which were done in the proximity within a
very short time amply prove its value in relation to the
adjoining lands. Learned subordinate Judge was right in
holding the potential value of the suit lands.
14
Conclusion:-
16) In view of the above discussion, we do not find any merit
in the order passed by learned single Judge of the High Court.
We set aside the order passed by the High Court dated
06.11.2009 and restore the order passed by the Reference
Court dated 27.03.2000. Consequently, Civil Appeal No. 2294
of 2011 arising out of A.S. No. 88 of 2001 before the High
Court is allowed and Civil Appeal No. 2295 of 2011 arising out
of Cross Objection No. 27 of 2007 before the High Court is
dismissed with no order as to costs.
...…………………………………J.
 (R.K. AGRAWAL)
…………….………………………J.
 (ABHAY MANOHAR SAPRE)
NEW DELHI;
APRIL 16, 2018.