Land Acquisition - enhancement of compensation - Compensation can be granted on bit sales on boundary lands - deduction should be given reasonably basing on locality and amenities etc., - High court enhanced compensation from 6 lakhs and odd to 9 lakhs but discarded the neighboring boundary bit sales though having high market value than the granted - Apex court by giving 60% deduction for the bit sales granted 12 lakhs per acre along with statutory benefits =
All these R.F.A.s
were disposed of in terms of Judgment and award of
even date passed in R.F.A. No. 4538 of 2006, whereby
the High Court enhanced the compensation in respect
of the acquired lands to Rs.9,00,000/- per acre from
Rs.6,60,000/- per acre as was determined by the
Reference Court.=
The High Court has erroneously
held that the compensation cannot be awarded for a
large scale of land on the basis of sale instances
of small pieces of land. =
the High Court, despite
appreciating that the land pertaining to the sale
deeds produced by the land owners are located just
outside the boundary of the acquired land, has
failed to determine the correct market value of the
acquired land based on the sale instances which are
substantive evidence produced in justification of
the claim.=
i. What should be the appropriate rate of
compensation and extent of deductions towards
developmental charges for the acquired land in
question?
ii. Whether the sale-consideration mentioned in the
sale deeds of small pieces of land, which are
situated close to the acquired land can be
considered for determination of the compensation
in favour of land owners?=
2014 - Sept.Month - http://judis.nic.in/supremecourt/imgs1.aspx?filename=41972
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 3982-3987 of 2011
NIRMAL SINGH Etc. Etc. ………APPELLANTS
Vs.
STATE OF HARYANA THROUGH COLLECTOR ………RESPONDENT
WITH
C.A. Nos.7916-7918 of 2011,
C.A. No. 10207 of 2011,
C.A. Nos. 7547-7549 of 2013,
AND
C.A. Nos. 7707-7709 of 2013
J U D G M E N T
V. GOPALA GOWDA, J.
These groups of appeals have been filed against
the impugned Judgment and order dated 10.12.2010
passed by the High Court of Punjab and Haryana at
Chandigarh. Since the grievance and prayer of all
the appellant-land owners are similar, namely, for
enhancement of compensation in respect of their
acquired land in question, for the sake of
convenience and brevity, we shall refer to the facts
of C.A. No(s). 3982-3989 of 2011 which have been
filed against the Judgment and award passed in
NON REPORTABLEPage 2
2
R.F.A. Nos. 69 of 2007, 70 of 2007, 71 of 2007, 72
of 2007, 288 of 2008, 289 of 2008. All these R.F.A.s
were disposed of in terms of Judgment and award of
even date passed in R.F.A. No. 4538 of 2006, whereby
the High Court enhanced the compensation in respect
of the acquired lands to Rs.9,00,000/- per acre from
Rs.6,60,000/- per acre as was determined by the
Reference Court.
2. The State of Haryana issued a notification dated
22.08.2001 under Section 4 of the Land Acquisition
Act, 1894 (in short ‘the Act’) for acquisition of
45.3 acres of land owned by the appellants situated
at Pehowa, District Kurukshetra, for the public
purpose, namely for construction of road,
development and utilization of land for residential
and commercial purposes. At the time of proposed
acquisition, the nature of the land was agricultural
and mostly vacant. Declaration that the land is
required for a public purpose was made vide
notification under Section 6 of the Act on
25.01.2002. The Land Acquisition Collector (for
short ‘the Collector’) vide award dated 19.11.2003Page 3
3
assessed the market value of the acquired land at
the rate of Rs.6,00,000/- per acre.
3. Being unsatisfied with the award of the
Collector, the appellant-land owners filed
objections claiming a market value of their land at
Rs.60,00,000/- per acre. The Collector made a
reference to the Addl. District Judge, Kurukshetra
which is the Reference Court under Section 18 of the
Act for determination of the correct market value of
the acquired land. The learned Addl. District Judge
vide his order dated 28.08.2006, on the basis of
material evidence on record assessed the value at
Rs.6,60,000/- per acre besides other statutory
benefits under Sections 23(1A), 23(2) and 28 of the
Act.
4. Regular First Appeals were filed by the
appellant-land owners as they were dissatisfied with
the compensation awarded by the Reference Court and
sought for further enhancement of compensation for
the acquired land, whereas the State filed the
appeals praying for reduction of the compensation
before the High Court of Punjab and Haryana atPage 4
4
Chandigarh.
5. After hearing the parties and going through the
evidence on record, the High Court found that there
was significant variation in the sale instances of
lands located close to the acquired land as depicted
in the sale deeds produced by the State as well as
by the land owners. The High Court, vide its
impugned Judgment and award dated 10.12.2010, by
applying a thumb rule, determined and enhanced the
amount of compensation at Rs.9,00,000/- per acre.
Hence, these appeals are filed by the land owners
with prayer for further enhancement of compensation
in respect of their acquired land by determining the
correct market value.
6. The learned counsel for the appellants contended
that the market value of the acquired land has not
been determined by the High Court based on the sale
instances duly produced and exhibited before the
Addl. District Judge. The High Court has erroneously
held that the compensation cannot be awarded for a
large scale of land on the basis of sale instances
of small pieces of land. The learned counsel hasPage 5
5
further contended that the High Court, despite
appreciating that the land pertaining to the sale
deeds produced by the land owners are located just
outside the boundary of the acquired land, has
failed to determine the correct market value of the
acquired land based on the sale instances which are
substantive evidence produced in justification of
the claim. The learned counsel for the appellants
relied on the case of Haridwar Development
Authority. v. Raghubir Singh1 to support their
contention, wherein this Court has held thus:-
“7. The acquisition with which we
are concerned relates to a
comparatively small extent of village
land measuring about 38 bighas of
compact contiguous land. The High
Court was of the view that the size
and situation did not warrant any
belting and all lands deserved the
same rate of compensation. The
Authority has not placed any material
to show that any area was less
advantageously situated. Therefore
the view of the High Court that
compensation should be awarded at a
uniform rate does not call for
interference.
9. The claimants do not dispute the
appropriateness of the said sale
transaction taken as the basis for
determination of compensation. Their
1
(2010) 11 SCC 581Page 6
6
grievance is that no deduction or cut
should have been effected in the
price disclosed by the sale deed, for
arriving at the market value, in view
of the following factors: (i) that
the acquired lands were near to the
main Bye-pass Road and had road
access on two sides; (ii) that many
residential houses had already come
up in the surrounding areas, and the
entire area was already fast
developing; and (iii) that the
acquired land had the potential to be
used an urban residential area.”
7. On the other hand, the learned counsel for the
State contended that the High Court after
considering evidence and all relevant materials on
record has already enhanced the amount of
compensation payable to the land owners more than
the actual value of land. The High Court
categorically observed that there is a lot of
variation in the consideration paid, as is depicted
in the sale deeds produced by the State as well as
by the land owners, though they are located close to
the acquired land. The High Court observed that when
on facts it is found that the land owners have not
been adequately compensated, the courts have to
apply a principle thumb rule. Thus, by applying the
above principle the High Court has already enhanced
the compensation from Rs.6,60,000/- to Rs.9,00,000/-
per acre and hence, the same does not warrant any
further enhancement. It is further contended by the
learned counsel that the High Court did not make
deductions towards developmental charges, but
rightly ignored the sale instances of very small
pieces of land, upon which reliance was placed by
the land owners as it had no co-relation with the
market value of the agricultural land in that area.
8. With reference to the above rival legal
contentions, the following points would arise for
consideration of this Court:
i. What should be the appropriate rate of
compensation and extent of deductions towards
developmental charges for the acquired land in
question?
ii. Whether the sale-consideration mentioned in the
sale deeds of small pieces of land, which are
situated close to the acquired land can be
considered for determination of the compensation
in favour of land owners?
iii. What award?
Since all the questions are interrelated, we arePage 8
8
answering all of them simultaneously.
9. We have carefully considered the respective
arguments of the learned counsel for both the
parties with reference to the material evidence on
record with a view to examine as to whether the land
owners are entitled for enhanced compensation on the
basis of sale instances placed by the appellants on
record in relation to the small bits of land
situated near the acquired land. It has been proved
on record that the acquired land is surrounded by
hafed go-downs, marriage places, grain market and
rice shelters. Undoubtedly, the acquired land is
advantageously located in a prime locale, as it is
close to commercial and residential establishments.
Therefore, the acquired land has attained non
agricultural potentiality. The said land also falls
within the municipal limits of Pehowa, besides being
bound by the river Saraswati.
10. Further, it is on record that the land has been
acquired by the State Government for the purpose of
developing commercial, residential and urban estate,
Pehowa. Since the acquired land is situated withinPage 9
9
the developed area of the municipal limits of
Pehowa, there is no doubt that it has acquired
potential value to be utilised for both residential
and commercial purposes in the future.
11. With respect to the general principles that are
to be followed for determining just and reasonable
compensation to land owners for acquisition of their
land, we refer to the case of Smt. Tribeni Devi and
Ors. v. Collector of Ranchi2; in support of the
same, wherein this Court held that:-
“4. The general principles for
determining compensation have been
set out in Sections 23 and 24 of
the Act. The compensation payable
to the owner of the land is the
market value which is determined by
reference to the price which a
seller might reasonably expect to
obtain from a willing purchaser,
but as this may not be possible to
ascertain with any amount of
precision, the authority charged
with the duty to award is bound to
make an estimate judged by an
objective standard. The land
acquired has, therefore, to be
valued not only with reference to
its condition at the time of the
declaration under Section 4 of the
Act but its potential value also
must be taken into account. The
2
(1972)1 SCC 480Page 10
10
sale-deeds of the lands situated in
the vicinity and the comparable
benefits and advantages which they
have, furnish a rough and ready
method of computing the market
value. This, however, is not the
only method. The rent which an
owner was actually receiving at the
relevant point of time or the rent
which the neighbouring lands of
similar nature are fetching can be
taken into account by capitalising
the rent which according to the
present prevailing rate of interest
is 20 times the annual rent. But
this also is not a conclusive
method. This Court had in Special
Land Acquisition Officer, Bangalore
v. T. Adinarayan Setty (1959) Supp.
1 S.C.R. 404, indicated at page 412
the methods of valuation to be
adopted in ascertaining the market
value of the land on the date of
the notification under Section
4(1) which are : (i) opinion of
experts, (ii) the price paid within
a reasonable time in bona fide
transactions of purchase of the
lands acquired or the lands
adjacent to the lands acquired and
possessing similar advantages; and
(iii) a number of years purchase of
the actual or immediately
prospective profits of the lands
acquired. These methods, however,
do not preclude the Court from
taking any other special
circumstances into consideration,
the requirement being always to
arrive as near as possible an
estimate of the market value. In
arriving to a reasonably correct
market value, it may be necessary
to take even two or all of thosePage 11
11
methods into account inasmuch as
the exact valuation is not always
possible as no two lands may be the
same either in respect of the
situation or the extent or the
potentially nor is it possible in
all cases to have reliable material
from which that valuation can be
accurately determined.”
12. A perusal of the record shows that there is
significant variation in the consideration paid in
the array of sale instances submitted by the
parties. Moreover the consideration paid for the
sale instances produced by the appellants are in
relation to small pieces of land which are near the
acquired land. To consider these small pieces of
land as the basis for determining just compensation
to be paid to the appellants for the acquired land
as urged by the learned counsel for the appellants,
we refer to the legal principles laid down by this
Court after examining the relevant provisions of the
Act in catena of cases. In Special Land Acquisition
Officer and Anr. v. M.K. Rafiq Saheb 3 this Court
held as under:-
3
(2011)7 SCC 714
12
“24. It may also be noticed that in
the normal course of events, it is
hardly possible for a claimant to
produce sale instances of large
tracks of land. The sale of land
containing large tracks are
generally very far and few.
Normally, the sale instances would
relate to small pieces of land.
This limitation of sale transaction
cannot operate to the disadvantage
of the claimants. Thus, the Court
should look into sale instances of
smaller pieces of land while
applying reasonable element of
deduction.”
To determine the rate of compensation to be paid for
the acquired land when the same is made on the basis
of sale deeds with respect to smaller pieces of
land, we have to make deductions in order to keep
provision for the developmental expenses that the
acquirer has to incur. The principle of deductions
in the determination of the compensation based on
the sale instances of smaller pieces of land was
established in Smt. Basavva and Ors. v. Special Land
Acquisition4, wherein this Court held thus:-
“3. ….On the principle of deductions
in the determination of the
compensation, this Court in K.
Vasundara Devi v. Revenue Divisional
Officer, LAO AIR 1995 SC 2481 has
4
(1996)9 SCC 640
considered the entire case law and
has held that the Court, in the first
instance, has to consider whether
sales relating to smaller pieces of
lands are genuine and reliable and
whether they are in respect of
comparable lands. In the event the
Court finds that such sales are
genuine and reliable and the lands
have comparable features, sufficient
deduction should be made to arrive at
the just and fair market value of
large tracks of land. The time lag
for real development and the waiting
period for development are also
relevant consideration for
determination of just and adequate
compensation. Each case depends upon
its own facts. For deduction of
development charges, the nature of
the development, conditions and
nature of the land, the land required
to be set apart under the building
rules for roads, sewerage,
electricity, parks, water etc, and
all other relevant circumstances
involved are to be considered.”
(Emphasis laid by this Court)
A similar opinion was held in Bhagwathula Samanna
and others v. Special Tahsildar and Land
Acquisition Officer, Visakhapatnam Municipality 5,
wherein this Court held as under:-
“7. …. In fixing the market value of
a large property on the basis of a
sale transaction for smaller
property, generally a deduction is
given taking into consideration the
5
(1991)4 SCC 506Page 14
14
expenses required for development of
the larger tract to make smaller
plots within that area in order to
compare with the small plots dealt
with under the sale transaction.
13. The proposition that large area
of land cannot possibly fetch a price
at the same rate at which small plots
are sold is not absolute proposition
and in given circumstances it would
be permissible to take into account
the price fetched by the small plots
of land…..”
(Emphasis laid by this Court)
13. Further, this Court has discussed the basis on
which deductions on the market value should be made
for the development of land, keeping in mind various
factors that influence it. In the case of Viluben
Jhalejar Contractor v. State of Gujarat6, wherein
this Court held thus:-
“20. The amount of compensation
cannot be ascertained with
mathematical accuracy. A comparable
instance has to be identified having
regard to the proximity from time
angle as well as proximity from
situation angle. For determining the
market value of the land under
acquisition, suitable adjustment has
to be made having regard to various
positive and negative factors vis-à-
vis the land under acquisition by
placing the two in juxtaposition. The
positive and negative factors are as
under:
6
(2005)4 SCC 789
15
Positive factors Negative factors
1. smallness of size largeness of area
2. proximity to a road situation in the interior
at a distance from the
road
3. frontage on a road narrow strip of land with
very small frontage
compared to depth
4. nearness to developed area lower level requiring the
depressed portion to be
filled up
5. regular shape remoteness from developed
locality
6. level vis-à-vis land under
acquisition
some special
disadvantageous factors
which would deter a
purchaser
7. special value for an owner
of an adjoining property to
whom it may have some very
special advantage
16
21. Whereas a smaller plot may be
within the reach of many, a large
block of land will have to be
developed preparing a layout plan,
carving out roads, leaving open
spaces, plotting out smaller plots,
waiting for purchasers and the hazards
of an entrepreneur. Such development
charges may range between 20% and 50%
of the total price.”
Thus, when it comes to deductions for development of
land, it can sway back and forth and can only be
determined after carefully considering factors such
as size of land, nearness to developed area, etc. as
discussed in the above case.
14. Keeping in mind the guidelines laid down by
this Court in the catena of cases referred to supra,
we are of the opinion to determine just and
reasonable compensation for the acquired land on the
basis of the sale instances as submitted by the
appellants by taking the average of the sale
considerations mentioned therein that are relevant
to the date of issue of Notification under Section 4
of the Act. However, the same is to be determined
keeping in mind that developmental costs are higher
for larger areas of land as compared to small
portions of land. The rate of compensation must be
subject to deductions towards developmental purpose
All these R.F.A.s
were disposed of in terms of Judgment and award of
even date passed in R.F.A. No. 4538 of 2006, whereby
the High Court enhanced the compensation in respect
of the acquired lands to Rs.9,00,000/- per acre from
Rs.6,60,000/- per acre as was determined by the
Reference Court.=
The High Court has erroneously
held that the compensation cannot be awarded for a
large scale of land on the basis of sale instances
of small pieces of land. =
the High Court, despite
appreciating that the land pertaining to the sale
deeds produced by the land owners are located just
outside the boundary of the acquired land, has
failed to determine the correct market value of the
acquired land based on the sale instances which are
substantive evidence produced in justification of
the claim.=
i. What should be the appropriate rate of
compensation and extent of deductions towards
developmental charges for the acquired land in
question?
ii. Whether the sale-consideration mentioned in the
sale deeds of small pieces of land, which are
situated close to the acquired land can be
considered for determination of the compensation
in favour of land owners?=
Sale instances in relation to small pieces of
land situated near the acquired land can be
considered, subject to (i) reasonable deductions for
developmental costs that will be incurred in the
future as per the cases referred to supra and (ii)
the evidence that these lands can be compared to the
acquired land in terms of its vicinity and the
comparable benefits and advantages.
Before we determine the extent of deductions
to be allowed on the market value of the acquired
land, we must take note of the following details;
firstly, the acquired land is mostly agricultural in
nature and vacant at the moment; secondly, the
determination of the market value of the acquired
land based on the sale instances in relation to
small pieces of land situated near the acquired land
as produced by the land owners; thirdly, the well
settled principle by this Court in a catena of cases
that larger portions of land incur higher
developmental costs compared to smaller portions of
land. Therefore, we are of the opinion based on the
facts and circumstances of the cases on hand and
keeping in mind the legal principles laid down in
the cases referred to supra, to allow 60% deduction
on the market value of the acquired land towards
developmental expenses.
The following table depicts the relevant sale
deeds as per the date of notification under Section
4 of the Act that are produced as evidence by the
land owners, followed by the deduction towards
developmental expenses and the value per acre of the
acquired land:
Ex. Date Area sold Value Per
acre(Rs.)
P4 17.5.2001 200 sq. yards 48,40,000
P12 20.6.2001 95 sq. yards 33,88,000
P13 11.1.2001 5.37 marlas 24,13,407
P14 11.1.2001 80 sq. yards 24,20,000
Average market value per acre 32,65,351
Deductions for developmental
expenses
60%
VALUE PER ACRE
13,06,140
16. However, having regard the fact that the
acquired land have got non-agricultural potentiality
as the same being in close proximity to the already
developed commercial and residential areas, within
the municipal limits of Pehowa & and the significant
variation in the sale considerations of small pieces
of land situated in the proximity of the acquired
land, we are of the view to award a just and
reasonable compensation in respect of the acquired
land at Rs.12,00,000/- per acre. It is the
contention of the appellants that the lands
described in Ex. P4, P12, P13 and P14 are comparable
to the acquired land with respect to their
potentiality, location and conditions, but on
perusal of the evidence on record, we are of the
view that the said contention may be correct to some
extent, but the exact location of the small pieces
of land covered in the sale instances is not
forthcoming.
Therefore, the market value of the
acquired land cannot be entirely based at
Rs.13,06,140/- per acre as per the sale instances
mentioned in table above.
However, having regard to
the location, potentiality of the acquired land and
other relevant factors and circumstances of the
cases we are of the opinion that the appellant-land
owners are entitled for enhancement of compensation.
17. Hence, in view of the foregoing reasons, the
appellant-land owners will be entitled to just and
reasonable compensation at the rate of
Rs.12,00,000/- per acre.
Besides the above amount,
they will also be entitled to the statutory benefits
in accordance with Sections 23(1A) and 23(2) on the
compensation awarded.
The appellant-land owners are
also entitled to get interest on the compensation at
the rate of 15% p.a. under the proviso to Section 28
of the Act.
18. All the appeals are allowed accordingly in the
above terms. Since the land of the appellants were
acquired in the year 2002, the respondents are
directed to pay the compensation awarded in favour
Page 21
21
of the appellants by way of demand draft after
proper calculation made within eight weeks from the
receipt of copy of this Judgment and Award. There
shall be no order as to costs.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 3982-3987 of 2011
NIRMAL SINGH Etc. Etc. ………APPELLANTS
Vs.
STATE OF HARYANA THROUGH COLLECTOR ………RESPONDENT
WITH
C.A. Nos.7916-7918 of 2011,
C.A. No. 10207 of 2011,
C.A. Nos. 7547-7549 of 2013,
AND
C.A. Nos. 7707-7709 of 2013
J U D G M E N T
V. GOPALA GOWDA, J.
These groups of appeals have been filed against
the impugned Judgment and order dated 10.12.2010
passed by the High Court of Punjab and Haryana at
Chandigarh. Since the grievance and prayer of all
the appellant-land owners are similar, namely, for
enhancement of compensation in respect of their
acquired land in question, for the sake of
convenience and brevity, we shall refer to the facts
of C.A. No(s). 3982-3989 of 2011 which have been
filed against the Judgment and award passed in
NON REPORTABLEPage 2
2
R.F.A. Nos. 69 of 2007, 70 of 2007, 71 of 2007, 72
of 2007, 288 of 2008, 289 of 2008. All these R.F.A.s
were disposed of in terms of Judgment and award of
even date passed in R.F.A. No. 4538 of 2006, whereby
the High Court enhanced the compensation in respect
of the acquired lands to Rs.9,00,000/- per acre from
Rs.6,60,000/- per acre as was determined by the
Reference Court.
2. The State of Haryana issued a notification dated
22.08.2001 under Section 4 of the Land Acquisition
Act, 1894 (in short ‘the Act’) for acquisition of
45.3 acres of land owned by the appellants situated
at Pehowa, District Kurukshetra, for the public
purpose, namely for construction of road,
development and utilization of land for residential
and commercial purposes. At the time of proposed
acquisition, the nature of the land was agricultural
and mostly vacant. Declaration that the land is
required for a public purpose was made vide
notification under Section 6 of the Act on
25.01.2002. The Land Acquisition Collector (for
short ‘the Collector’) vide award dated 19.11.2003Page 3
3
assessed the market value of the acquired land at
the rate of Rs.6,00,000/- per acre.
3. Being unsatisfied with the award of the
Collector, the appellant-land owners filed
objections claiming a market value of their land at
Rs.60,00,000/- per acre. The Collector made a
reference to the Addl. District Judge, Kurukshetra
which is the Reference Court under Section 18 of the
Act for determination of the correct market value of
the acquired land. The learned Addl. District Judge
vide his order dated 28.08.2006, on the basis of
material evidence on record assessed the value at
Rs.6,60,000/- per acre besides other statutory
benefits under Sections 23(1A), 23(2) and 28 of the
Act.
4. Regular First Appeals were filed by the
appellant-land owners as they were dissatisfied with
the compensation awarded by the Reference Court and
sought for further enhancement of compensation for
the acquired land, whereas the State filed the
appeals praying for reduction of the compensation
before the High Court of Punjab and Haryana atPage 4
4
Chandigarh.
5. After hearing the parties and going through the
evidence on record, the High Court found that there
was significant variation in the sale instances of
lands located close to the acquired land as depicted
in the sale deeds produced by the State as well as
by the land owners. The High Court, vide its
impugned Judgment and award dated 10.12.2010, by
applying a thumb rule, determined and enhanced the
amount of compensation at Rs.9,00,000/- per acre.
Hence, these appeals are filed by the land owners
with prayer for further enhancement of compensation
in respect of their acquired land by determining the
correct market value.
6. The learned counsel for the appellants contended
that the market value of the acquired land has not
been determined by the High Court based on the sale
instances duly produced and exhibited before the
Addl. District Judge. The High Court has erroneously
held that the compensation cannot be awarded for a
large scale of land on the basis of sale instances
of small pieces of land. The learned counsel hasPage 5
5
further contended that the High Court, despite
appreciating that the land pertaining to the sale
deeds produced by the land owners are located just
outside the boundary of the acquired land, has
failed to determine the correct market value of the
acquired land based on the sale instances which are
substantive evidence produced in justification of
the claim. The learned counsel for the appellants
relied on the case of Haridwar Development
Authority. v. Raghubir Singh1 to support their
contention, wherein this Court has held thus:-
“7. The acquisition with which we
are concerned relates to a
comparatively small extent of village
land measuring about 38 bighas of
compact contiguous land. The High
Court was of the view that the size
and situation did not warrant any
belting and all lands deserved the
same rate of compensation. The
Authority has not placed any material
to show that any area was less
advantageously situated. Therefore
the view of the High Court that
compensation should be awarded at a
uniform rate does not call for
interference.
9. The claimants do not dispute the
appropriateness of the said sale
transaction taken as the basis for
determination of compensation. Their
1
(2010) 11 SCC 581Page 6
6
grievance is that no deduction or cut
should have been effected in the
price disclosed by the sale deed, for
arriving at the market value, in view
of the following factors: (i) that
the acquired lands were near to the
main Bye-pass Road and had road
access on two sides; (ii) that many
residential houses had already come
up in the surrounding areas, and the
entire area was already fast
developing; and (iii) that the
acquired land had the potential to be
used an urban residential area.”
7. On the other hand, the learned counsel for the
State contended that the High Court after
considering evidence and all relevant materials on
record has already enhanced the amount of
compensation payable to the land owners more than
the actual value of land. The High Court
categorically observed that there is a lot of
variation in the consideration paid, as is depicted
in the sale deeds produced by the State as well as
by the land owners, though they are located close to
the acquired land. The High Court observed that when
on facts it is found that the land owners have not
been adequately compensated, the courts have to
apply a principle thumb rule. Thus, by applying the
above principle the High Court has already enhanced
the compensation from Rs.6,60,000/- to Rs.9,00,000/-
per acre and hence, the same does not warrant any
further enhancement. It is further contended by the
learned counsel that the High Court did not make
deductions towards developmental charges, but
rightly ignored the sale instances of very small
pieces of land, upon which reliance was placed by
the land owners as it had no co-relation with the
market value of the agricultural land in that area.
8. With reference to the above rival legal
contentions, the following points would arise for
consideration of this Court:
i. What should be the appropriate rate of
compensation and extent of deductions towards
developmental charges for the acquired land in
question?
ii. Whether the sale-consideration mentioned in the
sale deeds of small pieces of land, which are
situated close to the acquired land can be
considered for determination of the compensation
in favour of land owners?
iii. What award?
Since all the questions are interrelated, we arePage 8
8
answering all of them simultaneously.
9. We have carefully considered the respective
arguments of the learned counsel for both the
parties with reference to the material evidence on
record with a view to examine as to whether the land
owners are entitled for enhanced compensation on the
basis of sale instances placed by the appellants on
record in relation to the small bits of land
situated near the acquired land. It has been proved
on record that the acquired land is surrounded by
hafed go-downs, marriage places, grain market and
rice shelters. Undoubtedly, the acquired land is
advantageously located in a prime locale, as it is
close to commercial and residential establishments.
Therefore, the acquired land has attained non
agricultural potentiality. The said land also falls
within the municipal limits of Pehowa, besides being
bound by the river Saraswati.
10. Further, it is on record that the land has been
acquired by the State Government for the purpose of
developing commercial, residential and urban estate,
Pehowa. Since the acquired land is situated withinPage 9
9
the developed area of the municipal limits of
Pehowa, there is no doubt that it has acquired
potential value to be utilised for both residential
and commercial purposes in the future.
11. With respect to the general principles that are
to be followed for determining just and reasonable
compensation to land owners for acquisition of their
land, we refer to the case of Smt. Tribeni Devi and
Ors. v. Collector of Ranchi2; in support of the
same, wherein this Court held that:-
“4. The general principles for
determining compensation have been
set out in Sections 23 and 24 of
the Act. The compensation payable
to the owner of the land is the
market value which is determined by
reference to the price which a
seller might reasonably expect to
obtain from a willing purchaser,
but as this may not be possible to
ascertain with any amount of
precision, the authority charged
with the duty to award is bound to
make an estimate judged by an
objective standard. The land
acquired has, therefore, to be
valued not only with reference to
its condition at the time of the
declaration under Section 4 of the
Act but its potential value also
must be taken into account. The
2
(1972)1 SCC 480Page 10
10
sale-deeds of the lands situated in
the vicinity and the comparable
benefits and advantages which they
have, furnish a rough and ready
method of computing the market
value. This, however, is not the
only method. The rent which an
owner was actually receiving at the
relevant point of time or the rent
which the neighbouring lands of
similar nature are fetching can be
taken into account by capitalising
the rent which according to the
present prevailing rate of interest
is 20 times the annual rent. But
this also is not a conclusive
method. This Court had in Special
Land Acquisition Officer, Bangalore
v. T. Adinarayan Setty (1959) Supp.
1 S.C.R. 404, indicated at page 412
the methods of valuation to be
adopted in ascertaining the market
value of the land on the date of
the notification under Section
4(1) which are : (i) opinion of
experts, (ii) the price paid within
a reasonable time in bona fide
transactions of purchase of the
lands acquired or the lands
adjacent to the lands acquired and
possessing similar advantages; and
(iii) a number of years purchase of
the actual or immediately
prospective profits of the lands
acquired. These methods, however,
do not preclude the Court from
taking any other special
circumstances into consideration,
the requirement being always to
arrive as near as possible an
estimate of the market value. In
arriving to a reasonably correct
market value, it may be necessary
to take even two or all of thosePage 11
11
methods into account inasmuch as
the exact valuation is not always
possible as no two lands may be the
same either in respect of the
situation or the extent or the
potentially nor is it possible in
all cases to have reliable material
from which that valuation can be
accurately determined.”
12. A perusal of the record shows that there is
significant variation in the consideration paid in
the array of sale instances submitted by the
parties. Moreover the consideration paid for the
sale instances produced by the appellants are in
relation to small pieces of land which are near the
acquired land. To consider these small pieces of
land as the basis for determining just compensation
to be paid to the appellants for the acquired land
as urged by the learned counsel for the appellants,
we refer to the legal principles laid down by this
Court after examining the relevant provisions of the
Act in catena of cases. In Special Land Acquisition
Officer and Anr. v. M.K. Rafiq Saheb 3 this Court
held as under:-
3
(2011)7 SCC 714
12
“24. It may also be noticed that in
the normal course of events, it is
hardly possible for a claimant to
produce sale instances of large
tracks of land. The sale of land
containing large tracks are
generally very far and few.
Normally, the sale instances would
relate to small pieces of land.
This limitation of sale transaction
cannot operate to the disadvantage
of the claimants. Thus, the Court
should look into sale instances of
smaller pieces of land while
applying reasonable element of
deduction.”
To determine the rate of compensation to be paid for
the acquired land when the same is made on the basis
of sale deeds with respect to smaller pieces of
land, we have to make deductions in order to keep
provision for the developmental expenses that the
acquirer has to incur. The principle of deductions
in the determination of the compensation based on
the sale instances of smaller pieces of land was
established in Smt. Basavva and Ors. v. Special Land
Acquisition4, wherein this Court held thus:-
“3. ….On the principle of deductions
in the determination of the
compensation, this Court in K.
Vasundara Devi v. Revenue Divisional
Officer, LAO AIR 1995 SC 2481 has
4
(1996)9 SCC 640
considered the entire case law and
has held that the Court, in the first
instance, has to consider whether
sales relating to smaller pieces of
lands are genuine and reliable and
whether they are in respect of
comparable lands. In the event the
Court finds that such sales are
genuine and reliable and the lands
have comparable features, sufficient
deduction should be made to arrive at
the just and fair market value of
large tracks of land. The time lag
for real development and the waiting
period for development are also
relevant consideration for
determination of just and adequate
compensation. Each case depends upon
its own facts. For deduction of
development charges, the nature of
the development, conditions and
nature of the land, the land required
to be set apart under the building
rules for roads, sewerage,
electricity, parks, water etc, and
all other relevant circumstances
involved are to be considered.”
(Emphasis laid by this Court)
A similar opinion was held in Bhagwathula Samanna
and others v. Special Tahsildar and Land
Acquisition Officer, Visakhapatnam Municipality 5,
wherein this Court held as under:-
“7. …. In fixing the market value of
a large property on the basis of a
sale transaction for smaller
property, generally a deduction is
given taking into consideration the
5
(1991)4 SCC 506Page 14
14
expenses required for development of
the larger tract to make smaller
plots within that area in order to
compare with the small plots dealt
with under the sale transaction.
13. The proposition that large area
of land cannot possibly fetch a price
at the same rate at which small plots
are sold is not absolute proposition
and in given circumstances it would
be permissible to take into account
the price fetched by the small plots
of land…..”
(Emphasis laid by this Court)
13. Further, this Court has discussed the basis on
which deductions on the market value should be made
for the development of land, keeping in mind various
factors that influence it. In the case of Viluben
Jhalejar Contractor v. State of Gujarat6, wherein
this Court held thus:-
“20. The amount of compensation
cannot be ascertained with
mathematical accuracy. A comparable
instance has to be identified having
regard to the proximity from time
angle as well as proximity from
situation angle. For determining the
market value of the land under
acquisition, suitable adjustment has
to be made having regard to various
positive and negative factors vis-à-
vis the land under acquisition by
placing the two in juxtaposition. The
positive and negative factors are as
under:
6
(2005)4 SCC 789
15
Positive factors Negative factors
1. smallness of size largeness of area
2. proximity to a road situation in the interior
at a distance from the
road
3. frontage on a road narrow strip of land with
very small frontage
compared to depth
4. nearness to developed area lower level requiring the
depressed portion to be
filled up
5. regular shape remoteness from developed
locality
6. level vis-à-vis land under
acquisition
some special
disadvantageous factors
which would deter a
purchaser
7. special value for an owner
of an adjoining property to
whom it may have some very
special advantage
16
21. Whereas a smaller plot may be
within the reach of many, a large
block of land will have to be
developed preparing a layout plan,
carving out roads, leaving open
spaces, plotting out smaller plots,
waiting for purchasers and the hazards
of an entrepreneur. Such development
charges may range between 20% and 50%
of the total price.”
Thus, when it comes to deductions for development of
land, it can sway back and forth and can only be
determined after carefully considering factors such
as size of land, nearness to developed area, etc. as
discussed in the above case.
14. Keeping in mind the guidelines laid down by
this Court in the catena of cases referred to supra,
we are of the opinion to determine just and
reasonable compensation for the acquired land on the
basis of the sale instances as submitted by the
appellants by taking the average of the sale
considerations mentioned therein that are relevant
to the date of issue of Notification under Section 4
of the Act. However, the same is to be determined
keeping in mind that developmental costs are higher
for larger areas of land as compared to small
portions of land. The rate of compensation must be
subject to deductions towards developmental purpose
that will have to be incurred by the respondent state.
15. Sale instances in relation to small pieces of
land situated near the acquired land can be
considered, subject to (i) reasonable deductions for
developmental costs that will be incurred in the
future as per the cases referred to supra and (ii)
the evidence that these lands can be compared to the
acquired land in terms of its vicinity and the
comparable benefits and advantages.
Before we determine the extent of deductions
to be allowed on the market value of the acquired
land, we must take note of the following details;
firstly, the acquired land is mostly agricultural in
nature and vacant at the moment; secondly, the
determination of the market value of the acquired
land based on the sale instances in relation to
small pieces of land situated near the acquired land
as produced by the land owners; thirdly, the well
settled principle by this Court in a catena of cases
that larger portions of land incur higher
developmental costs compared to smaller portions of
land. Therefore, we are of the opinion based on the
facts and circumstances of the cases on hand and
keeping in mind the legal principles laid down in
the cases referred to supra, to allow 60% deduction
on the market value of the acquired land towards
developmental expenses.
The following table depicts the relevant sale
deeds as per the date of notification under Section
4 of the Act that are produced as evidence by the
land owners, followed by the deduction towards
developmental expenses and the value per acre of the
acquired land:
Ex. Date Area sold Value Per
acre(Rs.)
P4 17.5.2001 200 sq. yards 48,40,000
P12 20.6.2001 95 sq. yards 33,88,000
P13 11.1.2001 5.37 marlas 24,13,407
P14 11.1.2001 80 sq. yards 24,20,000
Average market value per acre 32,65,351
Deductions for developmental
expenses
60%
VALUE PER ACRE
13,06,140
16. However, having regard the fact that the
acquired land have got non-agricultural potentiality
as the same being in close proximity to the already
developed commercial and residential areas, within
the municipal limits of Pehowa & and the significant
variation in the sale considerations of small pieces
of land situated in the proximity of the acquired
land, we are of the view to award a just and
reasonable compensation in respect of the acquired
land at Rs.12,00,000/- per acre. It is the
contention of the appellants that the lands
described in Ex. P4, P12, P13 and P14 are comparable
to the acquired land with respect to their
potentiality, location and conditions, but on
perusal of the evidence on record, we are of the
view that the said contention may be correct to some
extent, but the exact location of the small pieces
of land covered in the sale instances is not
forthcoming. Therefore, the market value of the
acquired land cannot be entirely based at
Rs.13,06,140/- per acre as per the sale instances
mentioned in table above. However, having regard to
the location, potentiality of the acquired land and
other relevant factors and circumstances of the
cases we are of the opinion that the appellant-land
owners are entitled for enhancement of compensation.
17. Hence, in view of the foregoing reasons, the
appellant-land owners will be entitled to just and
reasonable compensation at the rate of
Rs.12,00,000/- per acre. Besides the above amount,
they will also be entitled to the statutory benefits
in accordance with Sections 23(1A) and 23(2) on the
compensation awarded. The appellant-land owners are
also entitled to get interest on the compensation at
the rate of 15% p.a. under the proviso to Section 28
of the Act.
18. All the appeals are allowed accordingly in the
above terms. Since the land of the appellants were
acquired in the year 2002, the respondents are
directed to pay the compensation awarded in favourPage 21
21
of the appellants by way of demand draft after
proper calculation made within eight weeks from the
receipt of copy of this Judgment and Award. There
shall be no order as to costs.
………………………………………………………J.
[V.GOPALA GOWDA]
………………………………………………………J.
[ADARSH KUMAR GOEL]
New Delhi,
September 26, 2014
