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Land Acquisition act = apex court confirmed the high court order in deducting 55 percent of the market value assessed on the basis of the exemplar sale deed, towards developmental charges, 5 percent towards waiting period, and 10 percent towards de-escalation.

Great Mosque in Gulbarga Fort.

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“REPORTABLE”
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1743 OF 2006
Chandrashekar (D) by LRs. and Others …. Appellants
Versus
Land Acquisition Officer and Another …. Respondents
With
CIVIL APPEAL NOS. 8899-8901 OF 2011
Basappa (D) & by LRs. and Others …. Appellants
Versus
Special Land Acquisition Officer,

Gulbarga and Another etc. etc. …. Respondents
J U D G M E N T
JAGDISH SINGH KHEHAR, J.
1. Through this common order, we propose to dispose of Civil Appeal no.1743 of
2006, as also, Civil Appeal nos.8899-8901 of 2011. For convenience, the factual
position, as has been depicted in Civil Appeal no.1743 of 2006, has been referred to.
2. Gulbarga Development Authority, consequent upon its desire to acquire land for
raising a residential layout, issued a preliminary notification under section 15(1) of
the City Improvement Trust Board Act, 1976 on 13.5.1982. Through the aforesaid
notification, it was proposed to acquire 144 acres of land falling in the revenue estate
of villages Rajapur (71 acres) and Badepur (73 acres). The matter in respect of the
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acquisition of land crystallized, when the final notification was issued on 14.12.1989.
Thereby the land of the appellants, measuring 8 acres 4 guntas, situated in survey
no.63 of the revenue estate of village Badepur, came to be acquired. Insofar as Civil
Appeal nos.8899-8901 of 2011 is concerned, the appellants’ land measuring 7 acres 7
guntas, falling in survey no.14/2, in the revenue estate of village Rajapur, was
acquired.
3. The Land Acquisition Officer announced his award on 7.7.1990. By the
aforesaid award, the market value of the land, falling in the revenue estate of village
Badepur, was fixed at the rate of Rs.4,100/- per acre. For the land falling in the
revenue estate of village Rajapur, the Land Acquisition Officer, assessed the market
value at Rs.13,500/- per acre. The landowner, Chandrashekar (whose LRs. are the
appellants in Civil Appeal no.1743 of 2006) filed Writ Petition nos.15489-496 of
1990 to assail the acquisition proceedings initiated by the Gulbarga Development
Authority, by finding fault with the procedure adopted. The High Court of Karnataka
(hereinafter referred to as the High Court), while issuing notice, passed an interim
order staying dispossession for a period of 3 weeks. By a motion bench order dated
10.8.1990, the interim order passed on 23.7.1990 was continued, “till further orders”.
Writ Petition nos. 15489-496 of 1990 came to be dismissed on 12.8.1991. The
notification for acquisition of land as also the procedure adopted was held to be in
consonance with law.
4. During the pendency of the writ petition referred to in the foregoing paragraph,
the original landowner Chandrashekar, filed a protest petition assailing the quantum
of compensation assessed by the Land Acquisition Officer. In the aforesaid protest
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petition dated 24.9.1990, reference was also sought, for enhancement of
compensation awarded to the appellant. Since the protest petition filed by the
landowner was not referred for adjudication, the landowner filed an application under
section 18(3)(b) of the Land Acquisition Act, 1894. The aforesaid application was
allowed, and the claim raised by the landowner was registered for adjudication.
5. After adjudicating upon the matter, the Reference Court announced its award on
19.6.1999. The compensation determined by the Land Acquisition Collector at
Rs.4,100/- per acre, was enhanced to Rs.1,46,000/- per acre. The Gulbarga
Development Authority, as also, the Land Acquisition Officer preferred independent
appeals before the High Court. By an order dated 3.11.1999, the High Court allowed
the appeals, and remitted the matter to the Reference Court for reconsideration, on the
issue of deductions to be made from the market value, so as to determine
compensation payable to the land losers. In this behalf, it would be relevant to
mention, that while determining the compensation payable to the appellant, the
Reference Court had based its assessment on a sale deed dated 30.12.1983. From the
market value of land assessed, on the basis of the aforesaid sale deed, the Reference
Court had applied a deduction of 33 percent. The High Court having concluded, that
the aforesaid deduction was inappropriate, had remanded the matter for re-
determination. It is the case of the appellants before this Court, that the only issue,
which the Reference Court was called upon to settle, after the High Court by its order
dated 3.11.1999 had remitted the matter to the Reference Court was, the percentage
of deductions to be made from the market value determined on the basis of the
exemplar sale transaction, so as to determine the fair compensation payable to the
landowners for acquisition of their land.
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6. By its order dated 21.12.2002, the Reference Court re-determined the market
value of the acquired land at Rs.1,45,000/- per acre. This determination by the
Reference Court was again assailed before the High Court. Whilst the Gulbarga
Development Authority and the Land Acquisition Officer filed appeals before the
High Court for reducing the quantum of compensation awarded, the landowners
preferred cross-objections for enhancement thereof. The appeals filed by the
Gulbarga Development Authority and the Land Acquisition Officer were partly
allowed, inasmuch as, the High Court reduced the compensation awarded by the
Reference Court from Rs.1,45,000/- per acre to Rs.65,000/- per acre. The instant
order passed by the High Court dated 2.4.2004 has been assailed before this Court
through Civil Appeal no. 1743 of 2006, as also, through the connected Civil Appeal
nos. 8899-8901 of 2011.
7. It would be relevant to mention, that while determining the controversy, the High
Court was satisfied in deducting 55 percent of the market value assessed on the basis
of the exemplar sale deed, towards developmental charges, 5 percent towards waiting
period, and 10 percent towards de-escalation. By virtue of the aforesaid deductions,
the High Court determined the market value of the land at Rs.67,954/- per acre.
Having done so, by applying the rule of averages, the High Court held, that
compensation for the acquired land was payable at Rs.65,000/- per acre.
8. During the course of hearing, learned counsel for the appellants in both set of
appeals contended, that the deduction of 55 percent towards developmental charges,
was arbitrary, and without application of mind. It was sought to be asserted, that the
High Court did not record any reason(s) for applying the aforesaid deduction.
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Likewise, it was contended, that deduction of 10 percent by way of de-escalation was
also arbitrary. In this behalf, it was sought to be contended, that the Reference Court
had determined 3 percent as deduction on account of de-escalation, whereas, the High
Court had enhanced the aforesaid deduction to 10 percent, without recording any
reason(s).
9. For the determination of market value of the acquired land, it is apparent that
primary reliance has been placed by the appellants, on the exemplar sale deed dated
30.12.1983 (Exhibit P-18, before the Reference Court). It would also be relevant to
mention, that through the aforesaid sale deed, land measuring 2400 square feet (40′ x
60′) falling in survey no.63/1, of the revenue estate of Badepur village, was sold for a
total consideration of Rs.12,500/-. It would also be relevant to mention, that the
Reference Court on the basis of the aforesaid exemplar sale deed, assessed the value
of the land at Rs.5.20 per square foot. Having applied a deduction of 33 percent
towards developmental charges, the Reference Court had arrived at the figure of
Rs.3.47 per square foot. At the aforesaid rate, the value of the acquired land was
assessed at Rs.1,51,153.20 per acre. The Reference Court also allowed de-escalation
at the rate of 3 percent per annum, as the exemplar sale deed was executed after the
issuance of the preliminary notification. Consequent upon the aforesaid deduction,
the Reference Court arrived at the figure of Rs.1,44,552.20 per acre, as compensation
payable for the acquired land. The said determination was rounded of to
Rs.1,45,000/- per acre.
10. According to the appellants before this Court, the determination rendered by the
Reference Court, was in consonance with the law laid down by this Court, and
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accordingly, the compensation determined by the Reference Court, should be restored
to the land losers.
11. The issue which falls for our consideration in the present appeal falls in a narrow
compass. As already noticed hereinabove, through the impugned notifications, the
Gulbarga Development Authority had sought acquisition of 144 acres of land, falling
in the revenue estates of villages Rajapur (71 acres) and Badepur (73 acres). As
compared to the acquired land, the exemplar sale deed dated 30.12.1983 reflects sale
of a small piece of land measuring 2400 square feet (40′ x 60′ = 2400 square feet).
The aforesaid sale transaction (dated 29.12.1983) was executed 1 year 7 months and
17 days after the date of the preliminary notification (dated 13.5.1982).
12. Insofar as the nature of the acquired land of the appellant measuring 8 acres 4
guntas, in survey no.63 of the revenue estate of village Badepur is concerned,
reference may be made to the statement recorded by the landowner before the
Reference Court. Chandrashekar recorded his statement before the Reference Court
on 16.2.1998. In his statement he asserted, that the acquired land was wet land and
was being cultivated by him by taking water from a well situated in survey no.62. It
was acknowledged, that the well situated in survey no.62 belonged to his uncle. In
his cross-examination, he accepted that he used to grow “jawar” and “togri” in the
land. He also affirmed that vegetables were also grown by him on the land in
question. He produced 8 bills pertaining to sale of crops grown on the land. In the
pleadings filed before this Court, it was sought to be asserted, that the Sedam
Gulbarga Highway is located on the northern side of the acquired land. It is also
mentioned, that a ring road exists on the southern side of the acquired land. It is also
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pointed out, that there are some approved residential layouts, in the close vicinity of
the acquired land. Based on the statement of the land loser, it is natural to infer, that
the appellants’ land was undeveloped agricultural land at time of its acquisition.
Furthermore, the appellants land did not have any independent irrigation facilities.
Since it is not the case of the appellants, that any layout or road abuts or passes
through the appellants’ land, it is natural to conclude, that the appellants’ land was
surrounded on all sides, by similar lands.
13. During the course of hearing, learned counsel for the appellants did not invite our
attention to any evidence on the basis of which we could ascertain the nature of the
land, which was the subject matter of the sale dated 30.12.1983. From the
dimensions of land (40′ x 60′), it emerges that the same was a developed site meant
for use for some urban purpose. The High Court has recorded, that the exemplar sale
is of a developed site. The said factual position is not a subject matter of challenge at
the hands of the appellants. We shall therefore assume, that the exemplar sale deed
was in respect of a developed site measuring 2400 square feet.
14. From the afore-stated deliberations, the following inferences emerge:
Firstly, that the acquired land is a large chunk of land measuring 144 acres.
Secondly, the acquired land owned by the appellants was un-irrigated agricultural
land, surrounded on all sides by similar lands, and as such, unquestionably
undeveloped land.
Thirdly, the exemplar sale deed dated 30.12.1983, was in respect of a small piece of
land measuring 2400 square feet (40′ x 60′ = 2400 square feet).
Fourthly, the exemplar sale deed dated 30.12.1983, constituted sale of a developed
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site.
And fifthly, the exemplar sale deed dated 30.12.1983, was executed 1 year 7 months
and 17 days, after the publication of the preliminary notification on 13.5.1982.
15. The present controversy calls for our determination on the quantum of the
deductions to be applied, to the market value assessed on the basis of the exemplar
sale transaction, so as to ascertain the fair compensation payable to the land loser.
The only factual parameters to be kept in mind are, the factual inferences drawn in
the foregoing paragraph. On the issue in hand, we shall endeavor to draw our
conclusions from past precedent. In the process of consideration hereinafter, we have
referred to all the judgments relied upon by the learned counsel for the appellants, as
well as, some recent judgments on the issue concerned:
(i) In Brigadier Sahib Singh Kalha & Ors. v. Amritsar Improvement Trust & Ors.,
(1982) 1 SCC 419, this Court opined, that where a large area of undeveloped land is
acquired, provision has to be made for providing minimum amenities of town-life.
Accordingly it was held, that a deduction of 20 percent of the total acquired land
should be made for land over which infrastructure has to be raised (space for roads
etc.). Apart from the aforesaid, it was also held, that the cost of raising infrastructure
itself (like roads, electricity, water, underground drainage, etc.) need also to be taken
into consideration. To cover the cost component, for raising infrastructure, the Court
held, that the deduction to be applied would range between 20 percent to 33 percent.
Commutatively viewed, it was held, that deductions would range between 40 and 53
percent.
(ii) Noticing the determination rendered by this Court in Brigadier Sahib Singh
Kalha’s case (supra), this Court in Administrator General of West Bengal vs.
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Collector, Varanasi, (1988) 2 SCC 150, upheld deduction of 40 percent (from the
acquired land) as had been applied by the High Court.
(iii) In Chimanlal Hargovinddas vs. Special Land Acquisition Officer, Poona & Anr.,
(1988) 3 SCC 751, while referring to the factors which ought to be taken into
consideration while determining the market value of acquired land, it was observed,
that a smaller plot was within the reach of many, whereas for a larger block of land
there was implicit disadvantages. As a matter of illustration it was mentioned, that a
large block of land would first have to be developed by preparing its lay out plan.
Thereafter, it would require carving out roads, leaving open spaces, plotting out
smaller plots, waiting for purchasers (during which the invested money would remain
blocked). Likewise, it was pointed out, that there would be other known hazards of
an entrepreneur. Based on the aforesaid likely disadvantages it was held, that these
factors could be discounted by making deductions by way of allowance at an
appropriate rate, ranging from 20 percent to 50 percent. These deductions, according
to the Court, would account for land required to be set apart for developmental
activities. It was also sought to be clarified, that the applied deduction would depend
on, whether the acquired land was rural or urban, whether building activity was
picking up or was stagnant, whether the waiting period during which the capital
would remain locked would be short or long; and other like entrepreneurial hazards.
(iv) In Land Acquisition Officer Revenue Divisional Officer, Chottor vs. L.
Kamalamma (Smt.) Dead by LRs. & Ors., (1998) 2 SCC 385, this Court arrived at the
conclusion, that a deduction of 40 percent as developmental cost from the market
value determined by the Reference Court would be just and proper for ascertaining
the compensation payable to the landowner.
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(v) In Kasturi and others vs. State of Haryana, (2003) 1 SCC 354, this court opined,
that in respect of agricultural land or undeveloped land which has potential value for
housing or commercial purposes, normally 1/3rd amount of compensation should be
deducted, depending upon the location, extent of expenditure involved for
development, the area required for roads and other civic amenities etc. It was also
opined, that appropriate deductions could be made for making plots for residential
and commercial purposes. It was sought to be explained, that the acquired land may
be plain or uneven, the soil of the acquired land may be soft and hard, the acquired
land may have a hillock or may be low lying or may have deep ditches. Accordingly,
it was pointed out, that expenses involved for development would vary keeping in
mind the facts and circumstances of each case. In Kasturi’s case (supra) it was held,
that normal deductions on account of development would be 1/3rd of the amount of
compensation. It was however clarified that in some cases the deduction could be
more than 1/3rd and in other cases even less than 1/3rd.
(vi) Following the decision rendered by this Court in Brigadier Sahib Singh Kalha’s
case, this Court in Land Acquisition Officer, Kammarapally Village, Nizamabad
District, A.P. vs. Nookala Rajamallu & Ors., (2003) 12 SCC 334, applied a deduction
of 53 percent, to determine the compensation payable to the landowners.
(vii) In V. Hanumantha Reddy (Dead) by LRs. vs. Land Acquisition Officer &
Mandal R. Officer, (2003) 12 SCC 642, this Court examined the propriety of
compensation determined as payable to the land loser by the High Court. The
Reference Court had determined the market value of developed land at Rs.78 per sq.
yard. The Reference Court then applied a deduction of 1/4th to arrive at Rs.58 per sq.
yard as the compensation payable. The High Court however concluded, that
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compensation at Rs.30 per sq. yard would be appropriate (this would mean a
deduction of approximately 37 percent, as against market value of developed land at
Rs.78 per sq. yard). This Court having made a reference to Kasturi’s case (supra) did
not find any infirmity in the order passed by the High Court. In other words,
deduction of 37 percent was approved by this Court.
(viii) In para 21 of the judgment in Viluben Jhalejar Contractor (Dead) by LRs. vs.
State of Gujarat, (2005) 4 SCC 789, it was held that for development, i.e., preparation
of lay out plans, carving out roads, leaving open spaces, plotting out smaller plots,
waiting for purchasers, and on account of other hazards of an entrepreneur, the
deduction could range between 20 percent and 50 percent of the total market price of
the exemplar land.
(ix) In Atma Singh (Dead) through LRs & Ors. vs. State of Haryana and Anr., (2008)
2 SCC 568, this Court after making a reference to a number of decisions on the point,
and after taking into consideration the fact that the exemplar sale transaction was of a
smaller piece of land concluded, that deductions of 20 percent onwards, depending on
the facts and circumstances of each case could be made.
(x) In Lal Chand vs. Union of India & Anr., (2009) 15 SCC 769, it was held that to
determine the market value of a large tract of undeveloped agricultural land (with
potential for development), with reference to sale price of small developed plot(s),
deductions varying between 20 percent to 75 percent of the price of such developed
plot(s) could be made.
(xi) In Subh Ram & Ors. vs. State of Haryana & Anr., (2010) 1 SCC 444, this Court
opined, that in cases where the valuation of a large area of agricultural or
undeveloped land was to be determined on the basis of the sale price of a small
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developed plot, standard deductions ought to be 1/3rd towards infrastructure space
(areas to be left out for roads etc.) and 1/3rd towards infrastructural developmental
costs (costs for raising infrastructure), i.e., in all 2/3rd (or 67 percent).
(xii) In Andhra Pradesh Housing Board vs. K. Manohar Reddy & Ors., (2010) 12
SCC 707, having examined the existing case law on the point it was concluded, that
deductions on account of development could vary between 20 percent to 75 percent.
In the peculiar facts of the case a deduction of 1/3rd towards development charges
was made from the awarded amount to determine the compensation payable.
(xiii) In Special Land Acquisition Officer & Anr. vs. M.K. Rafiq Sahib, (2011) 7
SCC 714, this Court after having concluded, that the land which was subject matter of
acquisition was not agricultural land for all practical purposes and no agricultural
activities could be carried out on it, concluded that in order to determine fair
compensation, based on a sale transaction of a small piece of developed land (though
the acquired land was a large chunk), the deduction made by the High Court at 50
percent, ought to be increased to 60 percent.
16. Based on the precedents on the issue referred to above it is seen, that as the legal
proposition on the point crystallized, this Court divided the quantum of deductions (to
be made from the market value determined on the basis of the developed exemplar
transaction) on account of development into two components. Firstly, space/area
which would have to be left out, for providing indispensable amenities like formation
of roads and adjoining pavements, laying of sewers and rain/flood water drains,
overhead water tanks and water lines, water and effluent treatment plants, electricity
sub-stations, electricity lines and street lights, telecommunication towers etc. Besides
the aforesaid, land has also to be kept apart for parks, gardens and playgrounds.
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Additionally, development includes provision of civic amenities like educational
institutions, dispensaries and hospitals, police stations, petrol pumps etc. This “first
component”, may conveniently be referred to as deductions for keeping aside
area/space for providing developmental infrastructure.
Secondly, deduction has to be made for the expenditure/expense which is likely to be
incurred in providing and raising the infrastructure and civic amenities referred to
above, including costs for levelling hillocks and filling up low lying lands and
ditches, plotting out smaller plots and the like. This “second component” may
conveniently be referred to as deductions for developmental expenditure/expense.
17. It is essential to earmark appropriate deductions, out of the market value of an
exemplar land, for each of the two components referred to above. This would be the
first step towards balancing the differential factors. This would pave the way for
determining the market value of the undeveloped acquired land on the basis of market
value of the developed exemplar land. As far back as in 1982, this Court in Brigadier
Sahib Singh Kalha’s case (supra) held, that the permissible deduction could be upto
53 percent. This deduction was divided by the Court into two components. For the
“first component” referred to in the foregoing paragraph, it was held that a deduction
of 20 percent should be made. For the “second component”, it was held that the
deduction could range between 20 to 33 percent. It is therefore apparent, that a
deduction of upto 53 percent was the norm laid down by the Court as far back as in
1982. The aforesaid norm remained unchanged for a long duration of time, even
though, keeping in mind the peculiar facts and circumstances emerging from case to
case, different deductions were applied by this Court to balance the differential
factors between the exemplar land and the acquired land. Recently however, this
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Court has approved a higher component of deduction. In 2009 in Lal Chand’s case
(supra) and in 2010 in Andhra Pradesh Housing Board’s case (supra), it has been
held, that while applying the sale consideration of a small piece of developed land, to
determine the market value of a large tract of undeveloped acquired land, deductions
between 20 to 75 percent could be made. But in 2009 in Subh Ram’s case (supra),
this Court restricted deductions on account of the “first component” of development,
as also, on account of the “second component” of development to 33-1/3 percent
each. The aforesaid deductions would roughly amount to 67 percent of the
component of the sale consideration of the exemplar sale transaction(s).
18. Having given our thoughtful consideration to the analysis of the legal position
referred to in the foregoing two paragraphs, we are of the view that there is no
discrepancy on the issue, in the recent judgments of this Court. In our view, for the
“first component” under the head of “development”, deduction of 33-1/3 percent can
be made. Likewise, for the “second component” under the head of “development” a
further deduction of 33-1/3 percent can additionally be made. The facts and
circumstances of each case would determine the actual component of deduction, for
each of the two components. Yet under the head of “development”, the applied
deduction should not exceed 67 percent. That should be treated as the upper
benchmark. This would mean, that even if deduction under one or the other of the
two components exceeds 33-1/3 percent, the two components under the head of
“development” put together, should not exceed the upper benchmark.
19. In Lal Chand’s case (supra) and in Andhra Pradesh Housing Board’s case
(supra), this Court expressed the upper limit of permissible deductions as 75 percent.
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Deductions upto 67 percent can be made under the head of “development”. Under
what head then, would the remaining component of deductions fall? Further
deductions would obviously pertain to considerations other than the head of
“development”. Illustratively a deduction could be made keeping in mind the waiting
period required to raise infrastructure, as also, the waiting period for sale of
developed plots and or built-up areas. This nature of deduction may be placed under
the head “waiting period”. Illustratively again, deductions could also be made in
cases where the exemplar sale transaction, is of a date subsequent to the publication
of the preliminary notification. This nature of deduction may be placed under the
head “de-escalation”. Likewise, deductions may be made for a variety of other
causes which may arise in different cases. It is however necessary for us to conclude,
in the backdrop of the precedents on the issue, that all deductions should not
cumulatively exceed the upper benchmark of 75 percent. A deduction beyond 75
percent would give the impression of being lopsided, or contextually unreal, since the
land loser would seemingly get paid for only 25 percent of his land. This impression
is unjustified, because deductions are made out of the market value of developed
land, whereas, the acquired land is undeveloped (or not fully developed). Differences
between the nature of the exemplar land and the acquired land, it should be
remembered, is the reason/cause for applying deductions. Another aspect of this
matter must also be kept in mind. Market value based on an exemplar sale, from
which a deduction in excess of 75 percent has to be made, would not be a relevant
sale transaction to be taken into consideration, for determining the compensation of
the acquired land. In such a situation the exemplar land and the acquired land would
be uncomparable, and therefore, there would be no question of applying the market
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value of one (exemplar sale) to determine the compensation payable for the other
(acquired land). It however needs to be clarified, that even though on account of
developmental activities (under the head “development”), we have specified the
upper benchmark of 67 percent, it would seem, that for the remaining deduction(s),
the permissible range would be upto 8 percent. That however is not the correct
position. The range of deductions, other than under the head “development”, would
depend on the facts and circumstances of each case. Such deductions, may even
exceed 8 percent, but that would be so only, where deductions for developmental
activities (under the head “development”) is less than 67 percent, i.e., as long as the
cumulative deductions do not cross the upper benchmark of 75 percent. We therefore
hold, that the range for deductions, for issues other than developmental costs, would
depend on the facts and circumstances of each case, they may be 8 percent, or even
the double thereof, or even further more, as long as, cumulatively all deductions put
together do not exceed the upper benchmark of 75 percent.
20. Before applying deductions for ascertaining the market value of the undeveloped
acquired land, it would be necessary to classify the nature of the exemplar land, as
also, the acquired land. This would constitute the second step in the process of
determination of the correct quantum of deductions. The lands under reference may
be totally undeveloped, partially developed, substantially developed or fully
developed. In arriving at an appropriate classification of the nature of the lands
which are to be compared, reference may be made to the developmental activities
referred to by us in connection with the “first component”, as also, the “second
component” (in paragraph 17 above). The presence (or absence) of one or more of
the components of development, would lead to an appropriate classification of the
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exemplar land, and the acquired land. Comparison of the classifications thus arrived,
would depict the difference in terms of development, between the exemplar land and
the acquired land. This exercise would lead to the final step. In the final step, the
absence and presence of developmental components, based on such comparison,
would constitute the basis for arriving at an appropriate percentage of deduction,
necessary to balance the differential factors between the exemplar land and the
acquired land.
21. We shall now apply the aforesaid parameters to determine the veracity of the
deductions allowed by the High Court. First and foremost, it has been the contention
of the learned counsel for the appellants, that despite strenuous efforts having been
made at the hands of the appellants, the respondents failed to divulge the expenses
incurred towards developmental costs on the acquired land in question. Insofar as the
instant aspect of the matter is concerned, it is relevant to notice, that the appellant
submitted an application dated 4.11.1999 to the Commissioner, Gulbarga
Development Authority, requiring him to furnish to the appellant, interalia, certified
copies of expenditure incurred in developing survey no.63 of the revenue estate of
Badepur. The appellant had specially sought, the expenditure incurred in developing
8 acres 4 guntas of the land, acquired from the appellant. The aforesaid
communication was responded to vide a letter dated 16.12.1999, whereby, the
Commissioner, Gulbarga Development Authority declined to furnish the certificate
sought by the appellant. Based on the said denial at the hands of the respondents, it is
sought to be inferred, that no developmental expenses came to be incurred on the
acquired land. As such, it was the vehement contention of the learned counsel for the
appellants, that it was impermissible for the High Court to have made the deduction
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of 55 percent from the market value determined on the basis of the exemplar sale
deed dated 30.12.1983 under the head of “development”. In fact, based on the
aforesaid inference, it was contended, that no deduction whatsoever was permissible
under the head. Alternatively it was contended, that the deduction of 33 percent
applied by the Reference Court, would have been appropriate in the facts and
circumstances of the case.
22. We have given our thoughtful consideration to the contention advanced at the
hands of the learned counsel for the appellants, as has been noticed in the foregoing
paragraph. The material sought by the appellant from the Commissioner, Gulbarga
Development Authority was irrelevant for the determination of the percentage of
deduction to be applied. It is the overall developmental cost, incurred (or incurrable)
on the entire acquired land which has to be apportioned amongst the landholders.
Illustratively, in a given case, the developmental cost on a small piece of land, may be
far in excess of the cost of the land. That would however not mean, that the
landowner in question, would not be entitled to compensation. Illustratively again, if
no specific developmental activity is carried out on a particular piece of land, it
would be improper to conclude, that no deduction should be made while determining
the compensation payable to such landowner, even though the acquired land was
undeveloped. What the appellant ought to have ascertained, is the developmental
cost (based on the components referred to hereinabove), on the entire acquired land.
In such a situation, if the entire developmental activity had been completed, it would
be permissible to proportionately apportion the same amongst land holders. Such a
situation may not arise in actuality. In most cases development is a continuous and
ongoing process, which would be completed over a long stretch of time extending in
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some cases to a decade or even more. We therefore find no merit in the instant
contention advanced by the learned counsel for the appellants, that no deduction
should be made in this case under the head of “development” because no expense is
shown to have been incurred for development of the land acquired from the
appellants.
23. In the absence of the actual expenditure incurred towards development, we shall
now endeavor to determine whether the deduction of 55 percent allowed by the High
Court towards development of the land, out of the market value determined on the
basis of the exemplar sale deed, was just and proper. The determination in question,
more often than not, has to be in the absence of inputs as were sought by the
appellants from the Commissioner, Gulbarga Development Authority. Obviously,
deductions can only be based on reasonable and logical norms. Comparison of the
state of development of the exemplar land, as also, that of the acquired land can be
the only legitimate basis, for a reasonable and logical determination on the issue.
Based on the aforesaid foundation, an assessment has to be made by applying the
parameters delineated above. From the inferences drawn by us, on the basis of the
statement made by the landowner before the Reference Court in paragraph 12
hereinabove, it is natural to conclude, that the acquired land in question was totally
undeveloped. Likewise, even though the High Court had described the exemplar sale
transaction as a developed site, the appellants have not disputed the same. We shall
therefore proceed on the assumption, that the exemplar sale deed was a fully
developed site. In such a situation, keeping in mind the parameters laid down by this
Court, and the conclusions drawn by us, as also the facts of this case, a deduction of
upto 67 percent may have been justified, and the same would fall within the
20

parameters laid down by this Court because the exemplar land could be classified as
fully developed, whereas, the acquired land was totally undeveloped land. As against
the aforesaid, the High Court limited deductions under the head of “development” to
55 percent. We therefore find no justifiable reason to interfere with the same,
specially in an appeal preferred by the land loser, more so, because no justifiable
basis for the same was brought to our notice.
24. The High Court while determining the compensation payable to the appellants on
the basis of the sale deed dated 30.12.1983 applied a further deduction of 10 percent
under the head of “de-escalation”. The contention advanced at the hands of the
learned counsel for the appellants was, that the Reference Court had awarded a
deduction at the rate of 3 percent per annum, but the same was arbitrarily increased to
10 percent by the High Court, without recording any reasons for the same. It was
submitted, that deduction at the rate of 10 percent on account of de-escalation was
arbitrary, and was liable to be set aside.
25. Insofar as the contention advanced at the hands of the learned counsel for the
appellants on the issue of deduction under the head of “de-escalation” is concerned,
reference may be made to the decision rendered by this Court in Delhi Development
Authority Vs. Bali Ram Sharma, (2004) 6 SCC 533, wherein this Court found it
appropriate to allow annual escalation, at the rate of 10 per cent, in order to determine
the market value of the acquired land. In ONGC Limited Vs. Rameshbhai
Jeewanbhai Patel, (2008) 14 SCC 748, this Court held, that provision of 7.5 percent
per annum towards escalation of land costs, was appropriate to arrive at the market
value of the acquired land. In Valliyammal & Anr. Vs. Special Tehsildar (Land
21

Acquisition) & Anr., (2011) 8 SCC 91, this Court was of the view that 10 percent per
annum escalation in price, should be added to the specified price to determine the
market value. It is therefore apparent, that escalation in the market value has been
determined by this Court at percentages ranging between 7.5 percent per annum to 10
percent per annum. Even though escalation of market price of land is a question of
fact, which should ordinarily to be proved through cogent evidence. Yet, keeping in
mind ground realities, and taking judicial notice thereof, we are of the view that land
prices are on the rise throughout the country. The outskirts of Gulbarga town are
certainly not an exception to the rule. The exemplar sale deed dated 30.12.1983 was
executed exactly 1 year 7 months and 17 days after the publication of the preliminary
notification on 13.5.1982. Keeping in mind the judgments referred to hereinabove,
we are of the view, that no fault can be found with the determination rendered by the
High Court in making a deduction of 10 percent under the head of “de-escalation”,
specially when the period in question exceeded one year (as for annual deductions),
by 7 months and 17 days.
26. The only other deduction allowed by the High Court was made towards “waiting
period”. Under this head the High Court allowed a deduction of 5 percent. During
the course of hearing, learned counsel for the appellants did not assail the aforesaid
deduction. It is therefore not necessary for us to record any finding in respect of the
deduction applied by the High Court under the head of “waiting period”. Needless to
mention, that “waiting period” has been held to be one of the relevant components for
making deductions by this Court in Chimanlal Hargovinddas vs. Special Land
Acquisition Officer, Poona & Anr., (1988) 3 SCC 751, Land Acquisition Officer
Revenue Divisional Officer, Chittor vs. L. Kamalamma (Smt.) Dead by LRs. & Ors.,
22

(1998) 2 SCC 385, and Atma Singh (Dead) through LRs & Ors. Vs. State of Haryana
and Anr., (2008) 2 SCC 568. We therefore, also uphold the instant deduction of 5
percent applied by the High Court.
27. Our conclusions in respect of the quantum of permissible deductions have been
recorded in paragraphs 18 and 19 hereinabove. While determining the validity of
individual deductions, it is also imperative to examine whether or not the total
deductions put together fall within legal parameters. We have upheld 55 percent
deduction accorded by the High Court towards “development”. We have also
individually upheld deduction of 10 percent on account of “de-escalation”, as also,
the deduction of 5 percent on account of “waiting period”. Cumulatively these
deductions would amount to 70 percent (55+10+5=70). The outer benchmark for
deductions laid down by this Court in Lal Chand’s case (supra) and in Andhra
Pradesh Housing Board’s case (supra) is 75 percent. Cumulatively also the deduction
allowed by the High Court, fall well within the parameters laid down by this Court.
We therefore find no infirmity in the quantum of accumulated deductions applied by
the High Court during the course of making an assessment of the market value of the
acquired land.
28. Based on the aforesaid deductions, the High Court calculated the market value of
the acquired land at Rs.67,954/- per acre. Inspite of the above, the market value of
the acquired land for disbursement of compensation to the land losers was fixed by
the High Court at Rs.65,000/- per acre. A perusal of the judgment rendered by the
High Court reveals, that in allowing final compensation at the rate of Rs.65,000/- per
acre to the land losers, the High Court had placed reliance on market value fixed by
23

the High Court itself in an earlier case. In this behalf, it would be pertinent to
mention, that the High Court had awarded Rs.65,000/- per acre as compensation
payable to the land losers, in an earlier process of litigation pertaining to acquisition
of land, out of the same notification (under which the appellants land was acquired).
The aforesaid determination was rendered in respect of the land acquired from the
revenue estate of Badepur village. While recording its final determination the High
Court expressed, that it was desirable to arrive at a uniform value, specially when the
land in question came to be acquired out of the same process of acquisition, and had
not been shown to be any different from the appellants land. We affirm the aforesaid
view expressed by the High Court. This sentiment expressed by the High Court
should never be breached. Consistency in judicial determination is of utmost
importance. Since we are informed that the judgment relied upon by the High Court
has attained finality, we are of the view, that the final compensation determined by
the High Court at Rs.65,000/- per acre, was fully justified.
29. The conclusions drawn by us hereinabove, apply equally to Civil Appeal
nos.8899-8901 of 2011. In this behalf it would also be pertinent to mention, that the
conclusions drawn by us pertain to acquisition of land falling in the revenue estate of
village Badepur. In so far as the instant set of appeals are concerned, they pertain to
land acquired form the revenue estate of village Rajapur. The High Court, while
making a reference to the land acquired from village Rajapur, noticed that village
Rajapur had a lower market value as it was farther from the nerve centre of Gulbarga
town as compared to village Badepur. As such, we are of the view that in the facts
and circumstances of the present case, it would be just and appropriate to affirm the
compensation determined by the High Court at Rs.65,000/- per acre, even for the land
24

acquired from the revenue estate of village Rajapur.
30. For the reasons recorded hereinabove, we find no cause or justification to
interfere in the impugned order passed by the High Court.
31. Dismissed.
…………………………….J.

(R.M. Lodha)

…………………………….J.

(Jagdish Singh Khehar)

New Delhi;

November 22, 2011.

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