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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.6127-6128 OF 2011
(Arising out of Special Leave Petition (Civil) Nos.22086-22087 of 2009)
Valliyammal and another etc. ... Appellants
Versus
Special Tahsildar (Land Acquisition) and another etc. ... Respondents
With
CIVIL APPEAL NOS.6132-6133 OF 2011
(Arising out of SLP(C) Nos. 25581-25582 of 2009)
CIVIL APPEAL NOS.6135-6138 OF 2011
(Arising out of SLP(C) Nos. 25587-25590 of 2009)
CIVIL APPEAL NO.6134 OF 2011
(Arising out of SLP(C) Nos. 25591 of 2009)
CIVIL
APPEAL NOS. 6139-6140 O
F 2011
(Arising out of SLP(C) Nos. 25596-25597 of 2009)
CIVIL APPEAL NOS.6141-6146 OF 2011
(Arising out of SLP(C) Nos. 33777-33782 of 2009)
CIVIL APPEAL NO.6147 OF 2011
(Arising out of SLP(C) No. 33808 of 2009)
CIVIL APPEAL NOS. 6148-6154 OF 2011
(Arising out of SLP(C) Nos. 2194-2200 of 2010)
CIVIL APPEAL NO.6155 OF 2011
(Arising out of SLP(C) No. 12581 of 2010)
2
CIVIL APPEAL NO.6156 OF 2011
(Arising out of SLP(C) No. 22831 of 2010)
CIVIL APPEAL NO.6157 OF 2011
(Arising out of SLP(C) No. 23654 of 2010)
CIVIL APPEAL NO. 6158 OF 2011
(Arising out of SLP(C) No. 23655 of 2010)
CIVIL APPEAL NO.6159 OF 2011
(Arising out of SLP(C) No. 23656 of 2010)
CIVIL APPEAL NO. 6160 OF 2011
(Arising out of SLP(C) No. 23657 of 2010)
CIVIL APPEAL NO.6161 OF 2011
(Arising out of SLP(C) No. 23658 of 2010)
CIVIL APPEAL NO.6162 OF 2011
(Arising out of SLP(C) No. 23659 of 2010)
CIVIL APPEAL NO.6163 OF 2011
(Arising out of SLP(C) No. 23666 of 2010)
CIVIL APPEAL NO. 6164 OF 2011
(Arising out of SLP(C) No. 23669 of 2010)
CIVIL APPEAL NO. 6165 OF 2011
(Arising out of SLP(C) No. 23641 of 2010)
CIVIL APPEAL NO.6166 OF 2011
(Arising out of SLP(C) No. 23643 of 2010)
CIVIL APPEAL NO.6170 OF 2011
(Arising out of SLP(C) No. 1147 of 2011)
CIVIL APPEAL NO. 6168 OF 2011
(Arising out of SLP(C) No. 1961 of 2011)
CIVIL APPEAL NO.6169 OF 2011
(Arising out of SLP(C) No. 2187 of 2011)
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CIVIL APPEAL NO. 6171 OF 2011
(Arising out of SLP(C) No. 3520 of 2011)
CIVIL APPEAL NO. 6167 OF 2011
(Arising out of SLP(C) No. 26825 of 2011)
J U D G M E N T
G.S. Singhvi, J.
1. Delay in filing Special Leave Petition (Civil) Nos.33777-
33782/2009, 22831/2010, 23641/2010, 23643/2010 and 1961/2011 is
condoned.
2. Leave granted.
3. These appeals filed against the judgments/orders passed by
different Division Benches of the Madras High Court substantially
reducing the amount of compensation determined by Additional District
Judge, Erode and Principal Subordinate Judge, Erode (hereinafter
referred to as, "the Reference Court") are illustrative of the plight of the
owners of small parcels of land, who are deprived of the only source of
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livelihood and who have to spend substantial amount in litigation and
wait for years together to get just and reasonable compensation in lieu of
the compulsory acquisition of their land by the State.
4. For the sake of convenience, we shall first advert to the factual
matrix of the appeals arising out of SLP (C) Nos.25581-82 of 2009 -
Jaganatha Gounder v. Special Tahsildar (Land Acquisition), Erode and
another because learned counsel for the parties made submissions
keeping in view the factual matrix of those cases.
5. In exercise of the powers vested in it under Section 4(1) of the
Land Acquisition Act, 1894 (for short, "the Act"), the Government of
Tamil Nadu issued notification dated 17.1.1997 for the acquisition of
55.89 acres land comprised in different survey numbers of village Erode
for construction of houses by the Tamil Nadu Housing Board (for short,
"the Board").
6. By an award dated 3.3.2000, the Land Acquisition Officer fixed
market value of the acquired land at the rate of Rs.50,000/- per acre.
This did not satisfy the appellants who filed applications under Section
18(1) of the Act and claimed compensation at the rate of Rs.50/- per
square yard by asserting that the acquired land is situated near Erode-
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Perundurai and Sennimalai Road junction and residential colonies like
Anna Nagar, Sri Nagar, Bharthi Nagar, Rail Nagar, Jeeva Nagar,
Subramania Nagar, Kalaigner Karunanidhi Nagar, Arts College,
Women's College, Kongu Higher Secondary School, St. Joseph Clinic,
Hospitals etc. and was having potential for being used for housing and
business purposes. Thereupon, the Collector made reference to the Court
for the determination of the compensation payable to the appellants. The
Reference Court considered the pleadings of the parties and evidence
produced by them and concluded that the appellants are entitled to
compensation at the rate of Rs.28/- per square feet.
7. Both, the appellants and the respondents challenged the judgment
of the Reference Court by filing appeals under Section 54 of the Act.
They also filed applications under Order XLI Rule 27 of the Code of
Civil Procedure for permission to adduce additional evidence. The High
Court allowed the applications and directed the Reference Court to give
opportunity to the parties to adduce additional evidence and make fresh
determination of the compensation payable to the appellants and remit its
findings along with the documents.
8. In compliance of the direction given by the High Court, the
Reference Court considered the additional evidence produced by the
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parties and opined that the appellants are entitled to compensation at the
rate of Rs.19.28 per square feet.
9. After receiving the report of the Reference Court, the High Court
considered the evidence produced by the parties and held that valuation
of the land, which was made basis by the Land Acquisition Officer for
fixing market value cannot be relied upon because that land was situated
far away from the acquired land. The High Court noted that there was a
steady increase of property value in the area because of repeated
acquisitions made on behalf of the Board, referred to the topo-sketch and
sale deed Exhibit C.8 dated 8.2.1991 and observed:
".............The said property is in a housing colony by name
K.K.Nagar and the area is considered to be a developed area.
Therefore we are of the opinion that the valuation as found
mentioned in Ex.C.8 could be taken as Bench Mark for the
purpose of fixing the market rate. In fact we have taken a
document of the year 1989 showing the market rate at Rs.20/-
per sq.ft. for arriving at the market rate in respect of the
property acquired as per the notification issued in the year
1991.
Even though as per Ex.C.8 dated 8.2.1991 the property was
sold at the rate of Rs.30/- per sq.ft., the said transaction relates
to a smaller extent. However as per the subject notification
larger extent of property was acquired and as such the value as
shown in Ex.C.8 cannot be taken in its entirety for arriving at
the market rate. The Housing Board has to develop the property
for housing purposes. It is in evidence that the acquired
property was only an agricultural property and it has no
potential as a housing site. No evidence was placed on the side
of the claimants to show that they have been getting substantial
income from the property or it has got high potential as a
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house-site. Therefore we are of the view that necessary
deduction has to be made towards development charges."
The High Court then adverted to the principles laid down by this
Court in State of Uttar Pradesh v. Ram Kumari Devi (1996) 8 SCC
577, Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC
789, Atma Singh v. State of Haryana (2008) 2 SCC 568, The General
Manager, Oil and Natural Gas Corporation Ltd. v. Rameshbhai
Jivanbhai Patel (2008) 14 SCC 745, Revenue Divisional Officer-cum-
L.A.O. v. Shaik Azam Saheb etc. (2009) 4 SCC 395, Faridabad Gas
Power Project, NTPC v. Om Prakash (2009) 4 SCC 719 for
determination of market value of the acquired land as also the rule of
deduction towards development cost and held:
"The acquired property is a manwari land and even according
to the claimants it was not a house-site developed by them. The
acquisition was only for construction of residential houses and
therefore necessarily the Housing Board has to spend
considerable amount for development and to make it fit for
construction of residential units. On the other hand, the
property in Ex.C.8 is a developed site and the same was sold
only as a house-site. Therefore considering the advantages,
development and potential of the property in Ex.C.8 vis-a-vis
the disadvantages, undeveloped state and lack of potential of
the acquired property, we are of the view that deduction at the
rate of 40% has to be given towards development charges."
The High Court also took cognizance of the fact that the sale
instance Exhibit C.8 relied upon for fixing market value was in respect of
a small piece of land and held:
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"While fixing the market rate, very often, documents of smaller
extent would be taken as the basis. The normal rule in fixing
compensation for large extent of land with reference to the
value shown in the sale document of lesser extent is that there
must be suitable deduction. It is common knowledge that larger
extent of property invariably fetch less when compared to
smaller extent. No prudent buyer would buy large extent of land
by quoting the price prevailing in the market for a small piece
of land.
The document in Ex.C.8 is in respect of a property having only
1200 sq.ft. However as per the present notification, large extent
of property was acquired. Therefore we are of the considered
opinion that necessary deduction on account of small size of the
property retained for fixing the market value has to be given.
On an overall consideration of the matter, we fix the deduction
on account of small size of the plot taken as the basic document
at 20%.
Taking an overall view of the matter we are of the opinion that
40% deduction should be made towards development costs and
20% on account of small size of the plot taken as the basis to
arrive at the market value. Accordingly, while retaining Ex.C.8
dated 8.2.1991 (Rate Rs.30/- per sq.ft.) as the basic document
for arriving at the market rate, we deduct 40% by way of
development charges and 20% by way of small size of the plot
and arrive at the market rate at Rs.5,22,720/- per acre."
10. The facts of the other appeals have been incorporated in a
statement, which is marked as Schedule `A' and shall be treated as part of
this judgment. A perusal of the statement shows that various parcels of
land were acquired by the State Government vide notifications dated
9.10.1990, 15.4.1991, 16.4.1991, 22.5.1991, 27.5.1991, 8.4.1992,
15.3.1995, 17.1.1997, 12.2.1997 and 19.3.1997 and the High Court
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reduced the market value fixed by the Reference Court from Rs.19.28 to
Rs.12/- and from Rs.20/- to Rs.8/- per square feet.
11. Shri V. Giri, learned senior counsel appearing for the appellants in
some of the cases criticized the impugned judgments/orders primarily on
the ground that while reducing market value fixed by the Reference
Court, the High Court completely ignored the settled rule that the
landowner is entitled to the benefit of escalation in land prices. Learned
senior counsel then argued that the High Court was not at all justified in
making 40% deduction towards the cost of development and 20% further
deduction on account of smallness of the size of plot, which was taken as
basis for arriving at the market value ignoring that the appellants had
suffered huge monetary loss on account of non-payment of compensation
for years together. The other learned counsel appearing for the appellants
adopted the arguments of Shri Giri.
12. Shri Gurukrishna Kumar, Additional Advocate General, Tamil
Nadu fairly stated that the appellants are entitled to the benefit of
escalation in land prices but argued that the deduction of 40% towards
development cost and 20% due to smallness of the size of the plots sold
vide Exhibit C.8 cannot be termed as excessive.
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13. We have considered the respective arguments and carefully
perused the record. At the threshold, it will be useful to notice some of
the judgments in which the Court has laid down guiding principles for
determination of market value of the acquired land.
14. In Shaji Kuriakose v. Indian Oil Corporation Limited (2001) 7
SCC 650, this Court held:
"It is no doubt true that courts adopt comparable sales
method of valuation of land while fixing the market value of
the acquired land. While fixing the market value of the
acquired land, comparable sales method of valuation is
preferred than other methods of valuation of land such as
capitalisation of net income method or expert opinion
method. Comparable sales method of valuation is preferred
because it furnishes the evidence for determination of the
market value of the acquired land at which a willing
purchaser would pay for the acquired land if it had been sold
in the open market at the time of issue of notification under
Section 4 of the Act. However, comparable sales method of
valuation of land for fixing the market value of the acquired
land is not always conclusive. There are certain factors
which are required to be fulfilled and on fulfilment of those
factors the compensation can be awarded, according to the
value of the land reflected in the sales. The factors laid down
inter alia are: (1) the sale must be a genuine transaction, (2)
that the sale deed must have been executed at the time
proximate to the date of issue of notification under Section 4
of the Act, (3) that the land covered by the sale must be in
the vicinity of the acquired land, (4) that the land covered by
the sales must be similar to the acquired land, and (5) that
the size of plot of the land covered by the sales be
comparable to the land acquired. If all these factors are
satisfied, then there is no reason why the sale value of the
land covered by the sales be not given for the acquired land.
However, if there is a dissimilarity in regard to locality,
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shape, site or nature of land between land covered by sales
and land acquired, it is open to the court to proportionately
reduce the compensation for acquired land than what is
reflected in the sales depending upon the disadvantages
attached with the acquired land."
(emphasis supplied)
15. In Viluben Jhalejar Contractor v. State of Gujarat (supra), this
Court laid down the following principles for determination of market
value of the acquired land:
"Section 23 of the Act specifies the matters required to be
considered in determining the compensation; the principal
among which is the determination of the market value of the
land on the date of the publication of the notification under sub-
section (1) of Section 4.
One of the principles for determination of the amount of
compensation for acquisition of land would be the willingness
of an informed buyer to offer the price therefor. It is beyond
any cavil that the price of the land which a willing and
informed buyer would offer would be different in the cases
where the owner is in possession and enjoyment of the property
and in the cases where he is not.
Market value is ordinarily the price the property may fetch in
the open market if sold by a willing seller unaffected by the
special needs of a particular purchase. Where definite material
is not forthcoming either in the shape of sales of similar lands
in the neighbourhood at or about the date of notification under
Section 4(1) or otherwise, other sale instances as well as other
evidences have to be considered.
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
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factors vis-`-vis the land under acquisition by placing the two
in juxtaposition. The positive and negative factors are as under:
Positive factors Negative factors
(i) smallness of size (i) largeness of area
(ii) proximity to a road (ii) situation in the interior at a
distance from the road
(iii) frontage on a road (iii) narrow strip of land with
very small frontage compared
to depth
(iv) nearness to developed (iv) lower level requiring the
area depressed portion to be filled
up
(v) regular shape (v) remoteness from developed
locality
(vi) level vis-`-vis land (vi) some special
under acquisition disadvantageous factors which
would deter a purchaser
(vii) special value for an
owner of an adjoining
property to whom it may
have some very special
advantage
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."
16. In Atma Singh v. State of Haryana (supra), the Court held:
"In order to determine the compensation which the tenure-
holders are entitled to get for their land which has been
acquired, the main question to be considered is what is the
market value of the land. Section 23(1) of the Act lays down
what the court has to take into consideration while Section 24
lays down what the court shall not take into consideration and
have to be neglected. The main object of the enquiry before the
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court is to determine the market value of the land acquired. The
expression "market value" has been the subject-matter of
consideration by this Court in several cases. The market value
is the price that a willing purchaser would pay to a willing
seller for the property having due regard to its existing
condition with all its existing advantages and its potential
possibilities when led out in most advantageous manner
excluding any advantage due to carrying out of the scheme for
which the property is compulsorily acquired. In considering
market value disinclination of the vendor to part with his land
and the urgent necessity of the purchaser to buy should be
disregarded. The guiding star would be the conduct of
hypothetical willing vendor who would offer the land and a
purchaser in normal human conduct would be willing to buy as
a prudent man in normal market conditions but not an anxious
dealing at arm's length nor facade of sale nor fictitious sale
brought about in quick succession or otherwise to inflate the
market value. The determination of market value is the
prediction of an economic event viz. a price outcome of
hypothetical sale expressed in terms of probabilities. See Kamta
Prasad Singh v. State of Bihar, Prithvi Raj Taneja v. State of
M.P., Administrator General of W.B. v. Collector, Varanasi and
Periyar Pareekanni Rubbers Ltd. v. State of Kerala.
For ascertaining the market value of the land, the potentiality of
the acquired land should also be taken into consideration.
Potentiality means capacity or possibility for changing or
developing into state of actuality. It is well settled that market
value of a property has to be determined having due regard to
its existing condition with all its existing advantages and its
potential possibility when led out in its most advantageous
manner. The question whether a land has potential value or not,
is primarily one of fact depending upon its condition, situation,
user to which it is put or is reasonably capable of being put and
proximity to residential, commercial or industrial areas or
institutions. The existing amenities like water, electricity,
possibility of their further extension, whether near about town
is developing or has prospect of development have to be taken
into consideration. See Collector v. Dr. Harisingh Thakur,
Raghubans Narain Singh v. U.P. Govt. and Administrator
General, W.B. v. Collector Varanasi. It has been held in
Kausalya Devi Bogra v. Land Acquisition Officer and Suresh
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Kumar v. Town Improvement Trust that failing to consider
potential value of the acquired land is an error of principle."
17. In fixing market value of the acquired land, which is undeveloped
or under-developed, the Courts have generally approved deduction of
1/3rd of the market value towards development cost except when no
development is required to be made for implementation of the public
purpose for which land is acquired. In Kasturi v. State of Haryana
(2003) 1 SCC 354, the Court held:
"............It is well settled that in respect of agricultural land or
undeveloped land which has potential value for housing or
commercial purposes, normally 1/3rd amount of compensation
has to be deducted out of the amount of compensation payable
on the acquired land subject to certain variations depending on
its nature, location, extent of expenditure involved for
development and the area required for roads and other civic
amenities to develop the land so as to make the plots for
residential or commercial purposes. A land may be plain or
uneven, the soil of the land may be soft or hard bearing on the
foundation for the purpose of making construction; may be the
land is situated in the midst of a developed area all around but
that land may have a hillock or may be low-lying or may be
having deep ditches. So the amount of expenses that may be
incurred in developing the area also varies. A claimant who
claims that his land is fully developed and nothing more is
required to be done for developmental purposes, must show on
the basis of evidence that it is such a land and it is so located. In
the absence of such evidence, merely saying that the area
adjoining his land is a developed area, is not enough
particularly when the extent of the acquired land is large and
even if a small portion of the land is abutting the main road in
the developed area, does not give the land the character of a
developed area. In 84 acres of land acquired even if one portion
on one side abuts the main road, the remaining large area where
planned development is required, needs laying of internal roads,
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drainage, sewer, water, electricity lines, providing civic
amenities, etc. However, in cases of some land where there are
certain advantages by virtue of the developed area around, it
may help in reducing the percentage of cut to be applied, as the
developmental charges required may be less on that account.
There may be various factual factors which may have to be
taken into consideration while applying the cut in payment of
compensation towards developmental charges, may be in some
cases it is more than 1/3rd and in some cases less than 1/3rd. It
must be remembered that there is difference between a
developed area and an area having potential value, which is yet
to be developed. The fact that an area is developed or adjacent
to a developed area will not ipso facto make every land situated
in the area also developed to be valued as a building site or plot,
particularly when vast tracts are acquired, as in this case, for
development purpose."
(emphasis supplied)
18. The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v.
State of U.P. (2003) 10 SCC 525, V. Hanumantha Reddy v. Land
Acquisition Officer & Mandal Revenue Officer (2003) 12 SCC 642,
H.P. Housing Board v. Bharat S. Negi (2004) 2 SCC 184 and Kiran
Tandon v. Allahabad Development Authority (2004) 10 SCC 745. In
Lal Chand v. Union of India (2009) 15 SCC 769, the Court indicated
that percentage of deduction for development to be made for arriving at
market value of large tracts of undeveloped agricultural land with
potential for development can vary between 20 and 75 per cent of the
price of developed plots and observed:
"The `deduction for development' consists of two components.
The first is with reference to the area required to be utilised for
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developmental works and the second is the cost of the
development works. ...
Therefore the deduction for the `development factor' to be
made with reference to the price of a small plot in a developed
layout, to arrive at the cost of undeveloped land, will be for
more than the deduction with reference to the price of a small
plot in an unauthorised private layout or an industrial layout. It
is also well known that the development cost incurred by
statutory agencies is much higher than the cost incurred by
private developers, having regard to higher overheads and
expenditure."
19. In A.P. Housing Board v. K. Manohar Reddy (2010) 12 SCC
707, the rule of 1/3rd deduction towards development cost was invoked
while determining market value of the acquired land. In Subh Ram v.
State of Haryana (2010) 1 SCC 444, this Court held as under:
"Deduction of "development cost" is the concept used to derive
the "wholesale price" of a large undeveloped land with
reference to the "retail price" of a small developed plot. The
difference between the value of a small developed plot and the
value of a large undeveloped land is the "development cost".
Two factors have a bearing on the quantum (or percentage) of
deduction in the "retail price" as development cost. Firstly, the
percentage of deduction is decided with reference to the extent
and nature of development of the area/layout in which the small
developed plot is situated. Secondly, the condition of the
acquired land as on the date of preliminary notification,
whether it was undeveloped, or partly developed, is considered
and appropriate adjustment is made in the percentage of
deduction to take note of the developed status of the acquired
land.
The percentage of deduction (development cost factor) will
be applied fully where the acquired land has no
development. But where the acquired land can be considered
to be partly developed (say for example, having good road
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access or having the amenity of electricity, water, etc.) then
the development cost (that is, percentage of deduction) will
be modulated with reference to the extent of development of
the acquired land as on the date of acquisition. But under no
circumstances, will the future use or purpose of acquisition
play a role in determining the percentage of deduction
towards development cost."
(emphasis supplied)
20. If the impugned judgment is considered in the light of the
principles laid down in the aforesaid cases, there is no escape from the
conclusion that the same suffer from multiple errors and call for
interference by this Court.
21. The first error committed by the High Court relates to deduction of
40% towards development charges. While doing so, the High Court
ignored its own finding that the acquired land was situated in the vicinity
of the residential colonies developed by the Board and other
establishments as also the fact that the respondents had not produced any
evidence to show that they will have to start the development work from
scratch. Therefore, the High Court could have, at best, applied 1/3rd
deduction towards development cost.
22. The second error committed by the High Court is that while fixing
market value, it did not take into account the escalation in land prices. In
Ranjit Singh v. U.T. of Chandigarh (1992) 4 SCC 659, Land
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Acquisition Officer and Revenue Divisional Officer v. Ramanjulu
(2005) 9 SCC 594, Krishi Utpadan Mandi Samiti v. Bipin Kumar
(2004) 2 SCC 283, Sardar Jogendra Singh v. State of U.P. (2008) 17
SCC 133, Revenue Divisional Officer-cum-L.A.O. v. Shaik Azam
Saheb (supra) and Oil and Natural Gas Corporation Ltd. v.
Rameshbhai Jivanbhai Patel (supra), this Court has repeatedly held that
the exercise undertaken for fixing market value and determination of the
compensation payable to the landowner should necessarily involve
consideration of escalation in land prices. In the last mentioned judgment,
the Court noticed the earlier precedents and observed as under:
"We have examined the facts of the three decisions relied on by
the respondents. They all related to acquisition of lands in urban
or semi-urban areas. Ranjit Singh related to acquisition for
development of Sector 41 of Chandigarh. Ramanjulu related to
acquisition of the third phase of an existing and established
industrial estate in an urban area. Bipin Kumar related to an
acquisition of lands adjoining Badaun-Delhi Highway in a
semi-urban area where building construction activity was going
on all around the acquired lands.
Primarily, the increase in land prices depends on four factors:
situation of the land, nature of development in surrounding
area, availability of land for development in the area, and the
demand for land in the area. In rural areas, unless there is any
prospect of development in the vicinity, increase in prices
would be slow, steady and gradual, without any sudden spurts
or jumps. On the other hand, in urban or semi-urban areas,
where the development is faster, where the demand for land is
high and where there is construction activity all around, the
escalation in market price is at a much higher rate, as compared
to rural areas. In some pockets in big cities, due to rapid
development and high demand for land, the escalations in
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prices have touched even 30% to 50% or more per year, during
the nineties.
On the other extreme, in remote rural areas where there was no
chance of any development and hardly any buyers, the prices
stagnated for years or rose marginally at a nominal rate of 1%
or 2% per annum. There is thus a significant difference in
increases in market value of lands in urban/semi-urban areas
and increases in market value of lands in the rural areas.
Therefore, if the increase in market value in urban/semi-urban
areas is about 10% to 15% per annum, the corresponding
increases in rural areas would at best be only around half of it,
that is, about 5% to 7.5% per annum. This rule of thumb refers
to the general trend in the nineties, to be adopted in the absence
of clear and specific evidence relating to increase in prices.
Where there are special reasons for applying a higher rate of
increase, or any specific evidence relating to the actual increase
in prices, then the increase to be applied would depend upon the
same.
Normally, recourse is taken to the mode of determining the
market value by providing appropriate escalation over the
proved market value of nearby lands in previous years (as
evidenced by sale transactions or acquisitions), where there is
no evidence of any contemporaneous sale transactions or
acquisitions of comparable lands in the neighbourhood. The
said method is reasonably safe where the relied-on sale
transactions/acquisitions precede the subject acquisition by only
a few years, that is, up to four to five years. Beyond that it may
be unsafe, even if it relates to a neighbouring land. What may
be a reliable standard if the gap is of only a few years, may
become unsafe and unreliable standard where the gap is larger.
For example, for determining the market value of a land
acquired in 1992, adopting the annual increase method with
reference to a sale or acquisition in 1970 or 1980 may have
many pitfalls. This is because, over the course of years, the
"rate" of annual increase may itself undergo drastic change
apart from the likelihood of occurrence of varying periods of
stagnation in prices or sudden spurts in prices affecting the very
standard of increase."
2
23. Though it may appear repetitive, we deem it necessary to mention
that the acquired land is situated in the close vicinity of various
residential colonies, educational institutions, hospitals etc. and is on the
junction of two important roads. Therefore, it can safely be concluded
that the land is semi-urban and has huge potential for being developed as
housing sites and the High Court should have added 10% per annum
escalation in the price specified in the sale deeds relied upon for fixing
market value of the acquired land.
24. The third error committed by the High Court is that in fixing
market value of the land acquired vide notifications issued in 1991, 1992
and 1995 with reference to sale deed dated 4.9.1990 vide which a piece
of land was sold at the rate of Rs.20/- per square feet, the High Court did
not add 10% escalation per annum in the land prices.
25. We may have sustained 20% deduction keeping in view the
smallness of the plots which were sold vide sale deeds dated 4.9.1990
and 8.2.1991, but, in the peculiar facts of the case, we think that it will be
wholly unjust to allow such deduction. Majority of the appellants have
been deprived of their entire landholding and they have waited for 14 to
20 years for getting the compensation. It appears that in compliance of
the interim orders passed by the Court, some of the appellants did get
2
25% and one of them get 35% of the compensation, but majority of them
have not received a single penny towards compensation and at this
distant point of time, it will be wholly unjust to deprive them of their
legitimate right by approving the 20% deduction made by the High
Court. In such matters, the Court cannot be oblivious of the fact that the
landowners have been deprived of the only source of livelihood, the cost
of living has gone up manifold and the purchasing power of rupee has
substantially declined.
26. In the result, the appeals are allowed and market value of the
acquired land is fixed as under:
(i) For the acquisition made vide notification dated 9.10.1990,
the base document will be sale deed dated 4.9.1990 vide which
land was sold at the rate of Rs.20/- per square feet. One-third of
Rs.20/- comes to Rs.6.6 per square feet. After deducting Rs.6.6
from Rs.20/-, market value of the acquired land will be Rs.13.4 per
square feet which is rounded off to Rs.14/- per square feet.
(ii) For the acquisitions made by the notifications issued on
15.4.1991, 16.4.1991 and 27.5.1991, the base document will be
sale deed dated 8.2.1991 vide which land was sold at the rate of
Rs.30/- per square feet. One-third of Rs.30/- is equal to Rs.10/- per
2
square feet. After deducting Rs.10/- from Rs.30/-, market value
will be Rs.20/- per square feet.
(iii) For the acquisition made vide notification dated 08.4.1992,
the base document will be sale deed dated 8.2.1991 vide which
land was sold at the rate of Rs.30/- per square feet. By adding
10% per annum in lieu of escalation in the land prices and
deducting 1/3rd towards development cost, market value of the
acquired land will be Rs.29.2 per square feet which is rounded off
to Rs.30/- per square feet.
(iv) For the acquisition made vide notification dated 15.3.1995,
the base document will be sale deed dated 8.2.1991 vide which
land was sold at the rate of Rs.30/- per square feet. By adding
10% per annum in lieu of escalation in the land prices and
deducting 1/3rd towards development cost, market value of the
acquired land will be Rs.29.2 per square feet which is rounded off
to Rs.30/- per square feet.
(v) For the acquisitions made by the notifications issued on
17.1.1997 and 19.3.1997, the base document will be sale deed
dated 8.2.1991 vide which land was sold at the rate of Rs.30/- per
2
square feet. If 10% per annum is added in lieu of escalation in the
land prices and 1/3rd is deducted towards development charges,
market value of the acquired land will be Rs.35.3 per square feet
which is rounded off toRs.36/- per square feet.
The appellants shall get solatium, interest and other statutory
benefits in accordance with the provisions of the Act.
27. With a view to ensure that the landowners are not fleeced by the
middleman, we deem it proper to issue the following further directions:
(i) Within one month from the date of receipt of copy of this
judgment, the Land Acquisition Officer shall depute an officer
subordinate to him not below the rank of Naib Tehsildar or an
equivalent rank, who shall get in touch with the landowners and/or
their legal representatives and inform them about their entitlement
to receive enhanced compensation.
(ii) The concerned officers shall instruct the landowners and/or
their legal representatives to open savings bank account in a
nationalized or scheduled bank, in case they already do not have
such account.
2
(iii) The account numbers of the landowners and/or their legal
representatives should be furnished by the concerned officer to the
Land Acquisition Officer within a period of two months.
(iv) Within next one month, the Land Acquisition Officer shall
deposit the amount of compensation along with other statutory
benefits in the bank accounts of the landowners and/or their legal
representatives by way of cheques.
.............................J.
[G.S. Singhvi]
.........................
.....J.
[H.L. Dattu]
New Delhi;
August 01, 2011.
2
SCHEDULE `A'
S. SLP(C) Nos. & Name of Date of Date of Date of Date of High Court
No. Parties Section 4(1) award by Reference Judgment in Appeal
Notification LAO and Court order Suit Nos. and rate
compensat- and Amount fixed
ion fixed.
1. 22086-22087/2009 - 19.3.1997 21.6.2000 & 4.7.2003 and 28.4.2009 in A.S.
Valliyammal and another Rs.50,000/- Rs.28/- per Nos.200 & 201/2009
v. Special Tahsildar per acre square feet and Rs.12/- per square
(Land Acquisition), feet.
Erode and another
2. 25591/2009 - 17.1.1997 3.3.2000 & 24.3.2005 and 2.3.2009 in A.S. No.
Thangamuthu Gounder v. Rs.50,000/- Rs.30/- per 706/2006 and Rs.12/-
Special Tahsildar (Land per acre square feet per square feet
Acquisition), Erode and
another
3. 25587-90/2009 - Mohan 15.4.1991 10.06.1994 & 27.11.2002 2.3.2009 in A.S. Nos.
and others etc v. Rs.37,500/- and Rs.20/- 813, 820, 821 and
Special Tahsildar (Land per acre per square 822/2003 and Rs.8/- per
Acquisition), Erode and feet square feet
another (Rs.3,48,480/- per acre)
4. 25596-97/2009 - 9.10.1990/ 28.9.1994, 30.03.2001 2.3.2009 in A.S. Nos.
K.R.Palaniappan v. 16.4.1991 10.6.1994 & and Rs.16/- 170/2003 and 871/2006
Special Tahsildar (Land Rs.37,500/- per square and Rs.8/- per square
Acquisition), Erode and per acre feet feet
another
5. 33777-82/2009 - 15.4.1991 10.6.1994 & 16.4.1999 and 2.3.2009 in A.S.
Ramayammal and others Rs.37.500/- Rs.2,18,500/- Nos.759 to 764/1999
v. Special Tahsildar per acre per acre and Rs.8/- per square
(Land Acquisition), feet (Rs.3,48,480/- per
Erode and another acre)
6. 33808/2009 - 27.5.1991 03.7.1994 & 27.11.2006 2.3.2009 in A.S. Nos.
Vishwanatha Gounder v. Rs.37,500/- and Rs.20/- 721/2003 and Rs.8/- per
Special Tahsildar (Land per acre per square square feet
Acquisition) Erode feet (Rs.3,48,480/- per acre)
7. 2194-2200/2010 - 19.2.1997 31.6.2000 & 29.11.2002 2.3.2009 in A.S. Nos.
Veerasamy and others v. Rs.50,000/- and Rs.28/- 727, 729, 730, 731,
Special Tahsildar (Land per acre per square 732, 733 and 734/2003
Acquisition), Erode and feet and Rs.12/- per square
another feet
8. 12581/2010 - N. 12.2.1997 3.3.2000 & 2.3.2006 and 8.7.2009 in A.S. No.
Pazhanisamy Gounder v. Rs.50,000/- Rs.30/- per 854/2006 and Rs.12/-
Special Tahsildar (Land per acre square feet per square feet
Acquisition), Erode and (Rs.1.15 per (Rs.5,22,720/- per acre)
another square feet)
2
9. 22831/2010 - Arumugha 15.4.1991 10.6.1994 & 25.10.1999 2.3.2009 in A.S. No.
Gounder and another v. Rs.37,500/- and Rs.17/- 325/2000 and Rs.8/- per
Special Tahsildar (Land per acre per square square feet
Acquisition), Erode and feet (Rs.3,48,480/- per acre)
another
10. 23654/2010 - 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.
Kulanthaiswamy and Rs.37,500/- Rs.20/- per 428/2008 and Rs.8/- per
another v. Special per acre square feet square feet
Tahsildar (Land
Acquisition) Erode and
another
11. 23655/2010 - K.B. 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.
Dakhinamoorthy and Rs.37,500/- Rs.20/- per 543/2008 and Rs.8/- per
others v. Special per acre square feet square feet
Tahsildar (Land
Acquisition) Erode and
another
12. 23656/2010 - P. 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.
Chandrasekar and others Rs.37,500/- Rs.20/- per 610/2008 and Rs.8/-
v. Special Tahsildar per acre square feet per square feet
(Land Acquisition) Erode
and another
13. 23657/2010 - 15.4.1991 10.6.1994 & 4.1.2006 and 11.12.2009 in A.S. No.
Pavayammal and others Rs.37,500/- Rs.20/- per 1002/2007 and Rs.8/-
v. Special Tahsildar per acre square feet per square feet
(Land Acquisition) Erode
and another
14. 23658/2010 - Lakshmi & 15.3.1995 25.3.1998 & 6.2.2006 and 11.12.2009 in A.S. No.
Anr. v. Special Tahsildar Rs.39,220/- Rs.22/- per 356/2007 and Rs.8/- per
(Land Acquisition) Erode per acre square feet square feet
and another
15. 23659/2010 - 15.4.1991 10.6.1994 & 29.11.2005 11.12.2009 in A.S. No.
Kannammal and others v. Rs.37,500/- and Rs.20/- 748/2008 and Rs.8/- per
Special Tahsildar (Land per acre per square square feet
Acquisition) Erode and feet
another
16. 23666/2010-Kannammal 15.3.1995 25.3.1998 & 29.11.2002 11.12.2009 in A.S. No.
@Rajeshwari & another Rs.50,000/- and Rs.28/- 770/2004 and Rs.8/- per
v. Special Tahsildar per acre per square square feet
(Land Acquisition) Erode feet
& another
17. 23669/2010 - 27.5.1991 10.6.1994 & 29.11.2005 11.12.2009 in A.S. No.
Kannammal and others v. Rs.37,500/- and Rs.20/- 760/2008 and Rs.8/- per
Special Tahsildar (Land per acre per square square feet
Acquisition) Erode and feet
another
18. 23641/2010 - 27.5.1991 3.7.1994 & 23.3.2001 and 2.3.2009 in A.S. No.
Chinnasamy and others Rs.37,500/- Rs.17/- per 618/2003 and Rs.8/- per
v. Special Tahsildar per acre square feet square feet
2
(Land Acquisition) Erode
and another
19. 23643/2010 -K.N. 09.10.1990 28.9.1994 & 17.01.2005 2.3.2009 in A.S. No.
Arumugham v. Special Rs.37,500/- and 756/2008 and Rs.8/- per
Tahsildar (Land per acre Rs.75,000/- square feet
Acquisition) Erode and per acre (Rs.3,48,480/- per acre)
another
20. 26825/2010 - 27.5.1991 03.08.1994 & 27.3.2008 and 19.12.2009 in A.S. No.
Thambusamy (Dead by Rs.37,500/- Rs.9/- per 835/2008 and Rs.8/- per
LRs.) v. Special per acre square feet square feet
Tahsildar (Land
Acquisition) Erode and
another
21. 1961/2011 -Nachimuthu 19.2.1997 31.6.2000 & 31.3.2004 and 2.3.2009 in A.S. No.
v. Special Tahsildar Rs.50,000/- Rs.28/- per 544/2005 and Rs.12/-
(Land Acquisition) Erode per acre square feet per square feet
and another (Rs.5,22,720/- per acre)
22. 2187/2011- Kannaki & 19.3.1997 21.06.2000 & 29.2.2005 and 8.7.2009 in A.S.
another v. Special Rs.50,000/- Rs.30/- per No.141/2006 and
Tahsildar (Land per acre square feet Rs.12/- per square feet
Acquisition) Erode and (Rs.5,22,720/- per acre)
another
23. 1147/2011 -Jayalakshmi 19.3.1997 21.6.2000 & 4.4.2006 and 8.7.2009 in A.S. No.
and others v. Special Rs.50,000/- Rs.25/- per 181/2007 and Rs.12/-
Tahsildar (Land per acre square feet per square feet
Acquisition) Erode and (Rs.5,22,720/- per acre)
another
24. 3520/2011-P.Subbarayan 22.5.1991 10.8.1994 & 21.11.2005 8.7.2009 in A.S. No.
and others v. Special Rs. 37,500/- and Rs.17/- 392/2007 and Rs.8/- per
Tahsildar (Land per acre (Rs. per square square feet
Acquisition) Erode and 0.86 per sq. feet (Rs.3,48,480/- per acre)
another ft.)
advocatemmmohan
just another law knowledge bank
For the acquisitions made by the notifications issued on 17.1.1997 and 19.3.1997, the base document will be sale deed dated 8.2.1991 vide which land was sold at the rate of Rs.30/- per 2 square feet. If 10% per annum is added in lieu of escalation in the land prices and 1/3rd is deducted towards development charges, market value of the acquired land will be Rs.35.3 per square feet which is rounded off toRs.36/- per square feet. The appellants shall get solatium, interest and other statutory benefits in accordance with the provisions of the Act.
advocatemmmohan 
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