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LAND ACQUISITION CASE = the market value of the land acquired in the present case has to be determined on the basis of its potentiality for urban development and not on the basis of the revenue or agricultural classification of the land as done by the Collector because the land acquired in the present case had a great potential value for urban purposes, i.e. commercial, industrial and residential.

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3033 OF 2008
National Fertilizers Ltd. … Appellant

Versus

Jagga Singh (Deceased) through L.Rs. & Anr. …

Respondents

WITH
CIVIL APPEAL Nos. 3095 OF 2008, 3114 OF 2008,

3105 OF 2008, 3102 OF 2008, 3101 OF 2008,

3099 OF 2008, 3112 OF 2008, 3097 OF 2008,

3100 OF 2008, 3109 OF 2008, 3094 OF 2008,

3093 OF 2008, 3110 OF 2008, 3098 OF 2008,

3103 OF 2008, 3096 OF 2008, 3111 OF 2008,

3107 OF 2008, 3115 OF 2008, 3113 OF 2008,

3117 OF 2008, 3108 OF 2008, 3104 OF 2008

AND 3116 OF 2008
J U D G M E N T
A. K. PATNAIK, J.
These are the appeals by way of special leave against

the judgment and order dated 13.07.2005 of the Division

Bench of the Punjab and Haryana High Court, Chandigarh,

in Letters Patent Appeals determining the market value of
2
acquired land @ Rs.120/- per square yard (for short `the

impugned judgment’).

2. The facts relevant for deciding these appeals briefly are

that the National Fertilizers Limited (for short `the NFL‘) is a

Government of India Undertaking engaged in the business

of manufacturing fertilizers and has a plant in Bhatinda in

the State of Punjab. To meet the requirement of dwelling

houses for the employees of NFL, the State of Punjab

acquired 29.68 acres of land in village Bhatinda by

notification dated 24.01.1983 issued under Section 4 of the

Land Acquisition Act, 1894 (for short `the Act’). The District

Collector sent the market rates to the Land Acquisition

Collector for different classes of agricultural or revenue land

and these were for Nehri – Rs.56,000/- per acre, for Barani

– Rs. 23,000/- per acre and for Gair Mumkin – Rs.23,000/-

per acre. The Land Acquisition Collector determined the

compensation at 50% above the rates sent by the District

Collector for each of the aforesaid classes of land in his

award dated 19.03.1986. Not satisfied with the award, the

landowners made a reference under Section 18 of the Act to

the civil court. Besides the State, NFL was impleaded as a
3
defendant in the reference. By order dated 29.04.1991, the

learned Additional District Judge determined the

compensation for all the three classes of land at a uniform

rate of Rs.32.50 per square yard after considering two

unregistered sale agreements (Exhibits A-X and A-Y) and

the order of the High Court in Sadhu Singh’s case

determining the compensation for land acquired for

extension of the military cantonment in the year 1976. The

land owners challenged the order of the Additional District

Judge before the High Court in Regular First Appeals. The

State of Punjab and NFL also challenged the order of the

learned Additional District Judge before the High Court in

Regular First Appeals. The learned Single Judge of the High

Court, who heard the appeals, sustained the determination

of compensation made by the learned Additional District

Judge and dismissed the appeals by a common order dated

09.09.1994.

3. Aggrieved, the land owners as well as NFL challenged

the order dated 09.09.1994 of the learned Single Judge

before the Division Bench of the High Court in Letters

Patent Appeals. In the impugned judgment, the Division
4
Bench of the High Court held that as Exhibits A-X and A-Y

were unregistered and did not bear any date, these

documents could not be considered for determination of

compensation. The Division Bench also found from the site

plan that the military cantonment for which Sadhu Singh’s

land was acquired was far away from the land acquired in

the present case. The Division Bench also found that the

land of Sadhu Singh was acquired for the military

cantonment in the year 1976 whereas the lands acquired in

the present case were included in the municipal limits of

Bhatinda city in 1977 and around the land acquired in the

present case, various colonies had come up in the

municipal limits of Bhatinda. The Division Bench further

found from the site plan that the land of Karam Singh which

had been acquired for a municipal park was much nearer to

the land of the land owners acquired in the present case.

The Division Bench, therefore, took the view in the

impugned judgment that the order passed by the High

Court in the case of Sadhu Singh for the land acquired for

military cantonment could not be preferred over the order of

the High Court passed in the case of Karam Singh for land
5
acquired for municipal park in the year 1983 for making the

assessment of market value of the land acquired in the

present case and determined Rs.120/- per square yard as

just and reasonable market value for the land acquired in

the present case and adopted the reasoning given in the

order dated 08.11.1989 of the High Court (Exhibit A-15) in

the case of Karam Singh (RFA No.906 of 1988).

4. Learned counsel appearing for the appellant submitted

that the Division Bench of the High Court was not correct in

coming to the conclusion that the assessment of

compensation in Karam Singh’s case was more comparable

and relevant for making assessment of market value of the

land acquired in the present case. He submitted that in

Karam Singh’s case a very small area of land measuring

1058 sq. yards was acquired whereas in the present case a

much bigger area of acre 29.68 was acquired. He submitted

that in Karam Singh’s case the land was a developed land

located in the heart of the Bhatinda town, but in the present

case the acquired land was water-logged and used for

agricultural purpose and was away from the city. He

referred to the order of the High Court passed in Karam
6
Singh’s case to show that the land acquired in that case had

a great potential value for being used for commercial and

residential purposes. He submitted that the land acquired

in Karam Singh’s case was at a distance of about 200

karmas from the scheme of Improvement Trust on the

Amrik Singh Road. He submitted that at a short distance

from the land acquired in Karam Singh’s case, towards the

city, there were shops of jewellers, iron furniture factory,

cinema hall as well as Sepal Hotel. He argued that these

facts made a big difference to the value of the land that was

acquired in Karam Singh’s case and that the assessment of

compensation in Karam Singh’s case was not at all relevant

to the assessment of compensation for the land acquired in

the present case.

5. Learned counsel for the appellant submitted that the

learned Additional District Judge and the learned Single

Judge have therefore rightly taken the view that the value of

the land acquired in the case of Karam Singh could not be

the basis for determining the compensation for the land

acquired in the present case. He submitted that the learned

Additional District Judge and the learned Single
7
Judge of the High Court have in the present case taken the

average price of two sale transactions in Exhibits A-X and

A-Y as well as the market value of the land acquired in the

year 1976 in the case of Sadhu Singh and after adding an

increase of 12% per annum arrived at the value of the land

acquired in the present case in 1983 at Rs.32.50 per sq.

yard, which was just and reasonable.

6. Learned counsel for the appellant cited Chimanlal

Hargovinddas v. Special Land Acquisition Officer, Poona and

Another [(1988) 3 SCC 751] in which this Court has listed

the plus factors and minus factors which have to be taken

into consideration for determining the market value of land

in land acquisition cases. He submitted that in this

decision this Court has mentioned largeness of area of land

in the list of minus factors for determination of the market

value of the land. He also relied on Hasanali Khanbhai &

Sons and Others v. State of Gujarat [(1995) 5 SCC 422] in

which deduction to the extent of 60% of the value of land on

account of the large size of the land adopted by the High

Court was found to be justified. He also relied on K.

Vasundara Devi v. Revenue Divisional Officer (LAO) [(1995) 5
8
SCC 426] in which it was held that sufficient deduction

should be made to arrive at the just and fair market value of

large tracts of land, which were not developed. He also

relied on Kanta Devi and Others v. State of Haryana and

Another [(2008) 15 SCC 201] in which this Court made

deduction of 60% for meeting the expenditure towards

development charges.

7. Learned counsel for the respondent-land owners, on

the other hand, submitted that all the witnesses produced

by the land owners before the Additional District Judge

have testified to the fact that the acquired land is situated

on the National Highway leading from Bhatinda to

Ferozepur via Goniana and was within the municipal limits

of Bhatinda and was situated by the side of a metal road.

He submitted that the witnesses have also testified that the

acquired land was surrounded by many industrial concerns

and residential colonies, such as thermal plant, the plant of

NFL as well as colony of the employees of the two plants and

Sucha Singh Colony, Amar Singh Colony, Kheta Singh

Colony, Mandir Colony etc. He submitted that the

witnesses have also stated that the abadi of Bhatinda town
9
has extended towards the land acquired in the present case

and three sides of the acquired land are already occupied

and on the fourth side is the metal road. He submitted that

the learned Additional District Judge has taken note of all

such evidence or the witnesses and has held that the land

acquired in the present case has the potentiality of urban

land and not of agricultural land.

8. Learned counsel for the respondent-landowners

submitted that the land acquired in the present case may be

at some distance from the land acquired in Karam Singh’s

case but this cannot be a ground for not treating the

acquired land in the present case as comparable with the

land acquired in Karam Singh’s case for the purpose of

determination of compensation. In support of his

submission he relied on Thakarsibhai Devjibhai and Others

v. Executive Engineer, Gujarat and Another [(2001) 9 SCC

584] in which this Court has held that if the quality,

including potentiality, of two areas of land is similar then

distance between the two would not by itself lead to a

change in their respective market values. He submitted

that it is not correct as has been submitted on behalf of the
10
appellant that the acquired land was a low waterlogged

agricultural land and as per the evidence of RW-1, the

Patwari, Land Acquisition, Industries Department,

Government of Punjab, the level of the acquired land was

the same as that of the existing land of township of the NFL.

He submitted that the quality of the acquired land and the

quality of the land acquired in the case of Karam Singh were

therefore one and the same and the Division Bench of the

High Court has rightly held that the compensation

determined for the land acquired in the case of Karam Singh

should be the basis for determination of compensation of

the acquired land in the present case. He submitted that in

any case the value of the acquired land in Karam Singh’s

case was determined by the High Court under Ext.A-15 at

Rs.176/- per square yard and the Division Bench in the

impugned order has applied a cut and determined the

compensation for the land acquired in the present case at a

reduced rate of Rs.120/- per square yard and this was a

just and reasonable compensation awarded for the land

acquired in the present case.
11
9. Learned counsel for the respondent-landowners next

submitted that the determination of compensation by the

learned Single Judge of the High Court in the present case

on the basis of land acquired in Sadhu Singh’s case was not

at all correct because the land acquired in the case of

Sadhu Singh was located in the cantonment area and the

acquisition was in 1976, whereas the Municipal Council of

Bhatinda was constituted only in 1977 and the land in the

present case was acquired in 1983 when the land was

within the municipal limits. He submitted that the

acquisition in Sadhu Singh’s case was made in 1976 more

than seven years before the acquisition in the present case

and therefore the value of land as determined in Sadhu

Singh’s case cannot be the basis for determination of

compensation in the present case. He cited General

Manager, Oil and Natural Gas Corporation Limited v.

Rameshbhai Jivanbhai Patel and Another [(2008) 14 SCC

745] in which this Court has held that sale transactions

which precede the subject acquisition by only a few years,

i.e. upto four to five years, can be relied upon but relying on

sale transactions beyond that would be unsafe, even if it
12
relates to a neighbouring land. He submitted that in the

absence of any appropriate sale transaction of the year 1983

in respect of land in an around the acquired land in the

present case, the Division Bench rightly relied on the

judicial precedent in the case of Karam Singh and

determined the compensation at the rate of Rs.120/- per

square yard. He relied on Pal Singh and Others v. Union

Territory of Chandigarh [(1992) 4 SCC 400] wherein this

Court has observed that a judgment of a court in a land

acquisition case determining the market value of a land in

the vicinity of the acquired lands, even though not inter

partes, is admissible in evidence either as an instance or

one from which the market value of the acquired land could

be deduced or inferred. He submitted that Ext.A-15 which

was the order of the High Court in the case of Karam Singh

has therefore been rightly relied upon by the Division Bench

of the High Court in determining the compensation of

Rs.120/- per square yard for the land acquired in the

present case.

10. We have considered the submissions of the learned

counsel for the parties and we find that while the case of the
13
appellant is that the learned Additional District Judge and

the learned Single Judge correctly determined the

compensation payable to the landowners for the land

acquired in the present case at the rate of Rs.32.50 per sq.

yard, the case of the respondent-landowners is that the

Division Bench of the High Court has correctly determined

the compensation in the impugned judgment at the rate of

Rs.120/- per sq. yard. Therefore, the question that we

have to decide in these appeals is whether the

compensation for the lands acquired as determined by the

Additional District Judge and as upheld by the order of the

learned Single Judge is a correct assessment of the market

value of the acquired land or the compensation as

determined by the Division Bench of the High Court in the

impugned judgment is a more accurate assessment of the

market value of the land acquired in present case.

11. We may first deal with the determination of the

compensation by the Additional District Judge as affirmed

by the learned Single Judge of the High Court in the Regular

First Appeals. The Additional District Judge has taken into

consideration two sale agreements (Exts. A-X and A-Y).
14
Exhibit A-X is executed by one Satish Gupta agreeing to

transfer his plot of land measuring 400 sq. yards for

Rs.17,300/- to one Sham Singh and Exhibit A-Y is executed

by one Balram Shukla agreeing to transfer his plot of 400

sq. yards for Rs.17,000/- to Satnam Singh. The average

sale price in these two sale agreements comes to Rs.42.87

per sq. yard. The sale agreements are between the

employees of NFL, who were members of the NFL Employees

Co-operative Society. The Division Bench of the High Court

has held in the impugned judgment that these sale

agreements, which have no details with regard to the date of

execution and were not really sale deeds, could not have

been taken into consideration for determining the market

value of the acquired land. We have perused a copy of the

sale agreement between Balram Shukla and Satnam Singh,

which has been annexed in Civil Appeal No.3033 of 2008 as

Annexure P-13 and we find that the sale agreement does not

mention the date on which the agreement has been entered

into. In the absence of any date of the sale agreement, the

sale agreement could not have constituted the basis for

determination of the market value of land in 1983 when the
15
land was acquired in the present case. The Division Bench

of the High Court, therefore, was right in taking the view

that Exhibits A-X and A-Y cannot constitute the basis for

determination of the market value of the acquired land in

the present case.

12. The learned Additional District Judge has also relied

on the order of the High Court determining compensation of

land acquired in the case of Sadhu Singh (RFA No.1207 of

1984). The land in the case of Sadhu Singh was acquired

within the revenue village of Bhatinda for extension of the

military cantonment by notification dated 29.10.1976 and

the High Court determined a rate of compensation of

Rs.17/- per sq. yard. The Additional District Judge has

given an increase of 12% per annum on this rate of Rs.17/-

per sq. yard from 29.10.1976 to 24.01.1983 to arrive at the

market value of the land as on 24.01.1983, i.e. the date of

notification under Section 4 of the Act in the present case.

The learned Single Judge of the High Court while sustaining

the order of the learned Additional Judge, has held that

although the exact location of the land is not given in Sadhu

Singh’s case, yet the same can be made the basis for
16
determining the market value of the acquired land in the

present case as the land acquired in the Sadhu Singh’s case

was within municipal limits of Bhatinda. In our considered

opinion, the reliance on order of the High Court passed in

Sadhu Singh’s case by the learned Additional District Judge

and the learned Single Judge was not correct because from

the site plan it appears that the land in Sadhu Singh’s case

which was acquired for military cantonment was far away

from the land acquired in the present case which was

located adjacent to the colony of NFL and other colonies.

From the site plan, we also find that compared to the land

acquired in Sadhu Singh’s case, the land acquired in Karam

Singh’s case was much more nearer to the land acquired in

the present case.

13. The Division Bench of the High Court has thus relied

upon its order in the case of Karam Singh (RFA No.906 of

1988) passed on 08.11.1989 which was marked in the

reference proceedings as Ext. A-15. The land in the case of

Karam Singh was acquired for a municipal park by

notification issued under Section 4 of the Land Acquisition

Act on 30.08.1983 and is located within the municipal
17
limits. In Karam Singh’s case there was evidence of three

transactions of sale of the same date i.e., 29.06.1973,

showing that some land in the area had been sold at the

rate of Rs.100/- per sq. yard, some land in the area had

been sold at Rs.70.30 paise per sq. yard and some land in

the area had been sold at the rate of Rs.62.50 per sq. yard

and the Court took the average rate of the three sale

transactions which worked out to Rs.80/- per sq. yard. The

Court then added an increase of 12% per annum for ten

years to arrive at the value of the land in the year 1983

when the land was acquired and the figure worked out at

Rs.176/- per sq. yard. For finding out the market value of

the land acquired in the present case, the Division Bench of

the High Court applied a cut to this rate of Rs.176/- per sq.

yard and determined the rate of Rs.120/- per sq. yard as

just and reasonable value of the land acquired in the

present case considering the location and potentiality of the

acquired land. The Division Bench has, therefore, taken

into consideration the fact that the land in Karam Singh’s

case was located in the heart of the Bhatinda town, whereas

the land acquired in the present case was slightly away from
18
the heart of the town and was located adjacent to the

existing colony of the NFL and other colonies, namely, the

residential colonies of the thermal plant, Sucha Singh

Colony, Amar Singh Colony, Kheta Singh Colony, Mandir

Colony, etc. and reduced the market value of the land

acquired in the present case.

14. We may now consider whether any further cut to the

rate of Rs.120/- per sq. yard as determined by the Division

Bench of the High Court in the impugned judgment was

called for, considering the size and quality of the land

acquired in the present case. Regarding the size of the land,

the argument of learned counsel for the appellant is that the

size of the land acquired in the case of Karam Singh was .04

acres (1058 sq. yards), whereas the size of the land acquired

in the present case is acre 29.68 (143651 sq. yards). But on

a reading of the order dated 08.11.1989 of the High Court in

the case of Karam Singh (RFA No.906 of 1988) marked as

Annexure Ext.A-15, we find that the High Court has taken

into consideration three sale deeds of the same date to work

out the average rate of the land at Rs.80/- per sq. yard in

1973 and applied an increase of 12% per annum to arrive at
19
the figure of Rs.176/- per sq. yard, but has not mentioned

the size of the lands which were sold under the three sale

deeds. In the absence of the size of the plots of land which

were sold under the sale deeds, which were taken into

consideration by the High Court while determining the

market rate of the land in Karam Singh’s case, it is difficult

to accept the contention of the learned counsel for the

appellant that the determination of market value of the land

in Karam Singh’s case was in respect of land which was sold

was much smaller in size as compared to the land which

was acquired in the present case. Regarding quality of the

land acquired in the present case, learned counsel for the

appellant submitted that the land in Karam Singh’s case

was developed urban land meant for residential and

commercial purpose, whereas the land acquired in the

present case was low, water-logged agricultural land. We,

however, find from the evidence of Basant Singh Patwari,

Land Acquisition, Industries Department Punjab,

Chandigarh, examined as RW-1, that the level of the land,

which was acquired in the present case, was that of the

existing land of the township of NFL. The learned
20
Additional District Judge in his order dated 29.04.1991 has

in fact held, after considering all the oral and documentary

evidence adduced by the parties, that the market value of

the land acquired in the present case has to be determined

on the basis of its potentiality for urban development and

not on the basis of the revenue or agricultural classification

of the land as done by the Collector because the land

acquired in the present case had a great potential value for

urban purposes, i.e. commercial, industrial and residential.

We, therefore, do not find any merit in the submission of

learned counsel for the appellant that a cut of 60% should

have been applied to the rate as determined in Karam

Singh’s case considering the larger size and lower quality of

the land acquired in the present case. In our opinion, the

cut applied by the Division Bench of the High Court in the

impugned judgment so as to reduce the value from

Rs.176/- per sq. yard to Rs.120/- per sq. yard was just and

reasonable in the facts of the present case.

15. In the result, we do not find any merit in these

appeals and we dismiss the same and award a cost of
21
Rs.10,000/- in favour of the respondents in each of the

appeals.
………………………..J.

(Cyriac Joseph)

………………………..J.

(A. K. Patnaik)

New Delhi,

November 15, 2011.

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