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Land Acquisition act -10% escalation of price- 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. = Apex court enhanced the compensation and in respect of damages remanded the case to trail court for fresh disposal after recording evidence = Himmat Singh and others ….Appellants versus State of M.P. and another ….Respondents = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=41039

Land Acquisition act    -10% escalation of price  the mode of determining the  market

 

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

 

      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. =  Apex court enhanced the compensation and in respect of damages remanded the case to trail court for fresh disposal after recording evidence = 

 

 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.”           

 

 

 

 In  view  of  the  propositions  laid  down  in  the   aforementioned

 

judgments, we hold that the  appellants  will  be  entitled  to  10%  annual

 

escalation in the compensation determined  for  the  acquisition  made  vide

 

notification dated 28.5.1987, which was published on 12.6.1987.

 

 

 

15.   The appellants’ prayer for award of compensation on  account  of  loss

 

caused due to removal of fencing of Sant Farm,  severance  of  land  due  to

 

laying  of  rail  line  and  construction  of  road,  loss  caused  due   to

 

destruction of crop/farming activity etc.  was  rejected  by  the  Reference

 

Court without assigning cogent reasons and the learned Single Judge  of  the

 

High Court did not even deal with the issue.   It  is,  therefore,  apposite

 

that the matter is remitted to the Reference Court for deciding  this  issue

 

afresh keeping  in  view  the  evidence  produced  by  the  parties  in  the

 

references made by the Collector for determination of  compensation  of  the

 

land acquired vide notifications dated 28.5.1987 and 27.12.1991.

 

 

 

16.   In the result, the appeal is partly allowed and it  is  declared  that

 

the appellants shall be entitled to compensation at the  rate  of  Rs.5  per

 

sq. ft. with benefit of escalation at the rate of  10%  per  annum  for  the

 

period between 28.5.1987 and  27.12.1991.   The  appellants  shall  also  be

 

entitled to get interest on solatium.  The respondents are directed  to  pay

 

the enhanced compensation with interest etc.  to  the  appellants  within  a

 

period of six months from today.

 

 

 

17.   The issue relating to award  of  compensation  in  lieu  of  the  loss

 

caused due to removal of fencing  of  Sant  Farm,  segregation  of  land  on

 

account of laying of rail line and construction of road  from  Kolaras  Town

 

to Railway Station and loss caused due to damage to  the  crop  and  farming

 

activity is remitted to the Reference Court for fresh  adjudication  in  the

 

light of the evidence produced by the parties in the references made by  the

 

Collector under Section 18 of the Act.

 

 

 

NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1248 OF 2007

 
Himmat Singh and others
….Appellants

 

versus

 

State of M.P. and another
….Respondents

 

 

 

J U D G M E N T

 

G.S. SINGHVI, J.

 
1. Feeling dissatisfied with the meagre enhancement granted by the
learned Single Judge of the Madhya Pradesh High Court in the amount of
compensation determined by II Additional District Judge, Shivpuri
(hereinafter described as, ‘the Reference Court’), the appellants have
filed this appeal.

 

2. By letter dated 27.12.1988, Collector, Shivpuri proposed the
acquisition of 4.421 hectares land for construction of link road near Guna-
Shivpuri Rail Line. However, even before issue of the notification under
Section 4(1) of the Land Acquisition Act, 1894 (for short, ‘the Act’),
possession of the land was taken by the officers of the Central Railway and
link road was constructed.

 

3. On 16.1.1989, the notification issued under Section 4(1) of the Act
was published. However, the same was cancelled on account of discrepancies
in the area of the land proposed to be acquired. After about four months,
the Collector proposed the acquisition of 4.788 hectares land of which
possession had already been taken.

 

4. Thereupon, the Government of Madhya Pradesh issued notification dated
23.5.1991 under Section 4(1), which was published on 27.12.1991 for the
acquisition of land measuring 4.788 hectares. The Land Acquisition Officer
passed award dated 30.1.1993 whereby he held that the landowners are
entitled to compensation of Rs.2,61,351.

 

5. On an application filed by the appellants under Section 18 of the
Act, the Collector made reference to the concerned Court for determination
of the compensation payable to the appellants.

 

6. On the pleadings of the parties, the Reference Court framed the
following issues:

 

“1. Whether compensation determined by the Land Acquisition Officer,
Shivpuri, is insufficient and improper and contrary to the
provisions of Section 23 of the Land Acquisition Act?

 

2. Whether the petitioners are entitled to higher compensation? If
yes, to what extent?

 

3. Whether the application for reference made by the petitioners is
within limitation?

 

4. Relief and costs.”

 

 

 
7. In support of their claim, the appellants produced oral and
documentary evidence including sale deeds marked Exhibits P3 to P26, the
details of which (as given in the written note filed on behalf of the
appellants on 27.11.2013) are as under:

 

|Exhibit|Date |AREA (Sq Ft) |Total |RATE |
|No. | |& Khasra No. | |(Rs) |
|P3 |20.03.1989 |660 [Kh No. 161/3] |5900/- |8.94 |
|P4 |05.04.1989 |660 [Kh No. 161/3] |6600/- |10.00 |
|P5 |13.09.1989 |1386 [Kh No. 161/3] |13900/- |10.03 |
|P6 |20.09.1989 |330 [Kh No. 161/3] |3300/- |10 |
|P7 |26.09.1989 |792 [Kh No. 161/1] |8000/- |10.23 |
|P8 |19.12.1989 |840 | |10.12 |
|P9 |19.12.1989 |840 | |10.12 |
|P10 |19.03.1991 |700 [Kh No. 161/1] | |13.71 |
|P11 |04.09.1990 |1500 |60,000/- |40.00 |
|P12 |22.10.1990 |300 |7500/- |25.00 |
|P13 |22.10.1990 |800 |20,000 |25.00 |
|P14 |13.02.1991 |1000 |15,000/- |15.00 |
|P15 |19.04.1991 |1000 |15,000/- |15.00 |
|P16 |25.04.1991 |1200 |18,000/- |15 |
|P17 |30.09.1991 |2400 [Kh No. 161/1] |36000/-* |15* |
|P18 |13.11.1991 |675 | |30.37 |
|P19 |16.01.1992 |700 [Kh No. 161/2] |14,000/- |20.00 |
|P20 | | | | |
|P21 |04.08.1992 |974 |40,000/- |41.07 |
|P22 |31.07.1992 |420 |8400/- |20.00 |
|P23 |13.10.1992 |1188 |47,000/- |40.52 |
|P24 |21.10.1992 |1272 |— |63.68 |
|P25 |16.11.1992 |4000 [Kh No. 161/1] |72000/- |18 |
|P26 |31.07.1992 |420 | |20 |

 
8. The Reference Court discarded most of the sale deeds on the ground
that contents thereof have not been proved by examining the buyer and the
seller and held that market value of the acquired land is Rs.7 per sq. ft.
The Reference Court then made 50% deduction for development of the acquired
land, i.e., for construction of roads, drains, sewerage lines, parks,
electricity lines, etc., and arranging other amenities and arrived at the
figure of Rs.3.50 per sq. ft. The Reference Court made further deduction to
the tune of 50% on the ground that the land which was subject matter of
sale deeds was very small and held that maximum cost of land cannot be more
than Rs.1.75 per sq. ft. and awarded total compensation of Rs.8,87,485.55
to the appellants. The Reference Court also determined separate shares of
the appellants. While dealing with the appellants’ claim for award of
compensation in lieu of the damage caused due to removal of fencing of Sant
Farm, segregation of land due to laying of rail line and construction of
road, loss of earning due to damage of crops/farming and destruction of
well, the Reference Court did refer to the statement of PW-1 Himmat Singh,
certified copy of report Exhibit P32 prepared by Sub-Divisional Officer of
the Water Resources Department as also the statement of Gaya Prasad
Niranjan (DW1) but, without analyzing the same and without assigning cogent
reasons, recorded the following conclusion:

 

“In the aforesaid circumstances no amount on above counts can be
determined on the basis of surmises and conjectures alone. Moreover,
it must also be kept in mind that this irrigation arrangement would
have otherwise also become abrupt if the lands would have been used
for building construction purposes and the buyer would have to make
his own arrangements for stopping them. In the circumstances there is
no justification for determining any separate compensation on this
count.”

 

 

 

9. The appellants challenged the judgment of the Reference Court by
filing appeal under Section 54 of the Act. The learned Single Judge
disposed of the appeal along with other appeals filed in relation to the
land acquired for construction of Broad Gauge Rail Line and held:

 

“As regards acquisition of land in the year 1991 is concerned, which
is covered by second notification, the rate of land can be held to be
Rs.8/- per sq. ft and after deduction I hold that they are entitled to
Rs. 1.33/- per sq. ft. i.e. after reduction of 50% towards development
of roads, drainage etc. and 33.33% towards the expenses for
development. Considering this fact, I allow these appeals in part and
hold that land which was required in the year 1987, the appellants are
entitled to get compensation at the rate of Rs. 1/- per sq. ft and for
the land, which was required in the year 1991, they are entitled to
Rs.1.33/- per sq. ft.”

 

 

 

10. The learned Single Judge of the High Court did not deal with the
appellants’ claim for award of compensation in lieu of the loss caused due
to removal of fencing of Sant Farm, segregation of land due to construction
of road through the farm land and laying of rail line and loss of earning
due to damage to crops and farming potential as also destruction of the
well existing on the acquired land.

 

11. We have heard learned counsel for the parties and carefully perused
the record.

 

12. By a separate judgment passed today in C.A. No.1247 of 2007, this
Court has held that for the land acquired vide notification dated 28.5.1987
for construction of Broad Guage Rail Line, the appellants are entitled to
compensation at the rate of Rs.5 per sq.ft. with all statutory benefits and
interest on solatium.

 

13. Since the land which is subject matter of this appeal was acquired
vide notification dated 27.12.1991 for construction of road from Kolaras
Town to the Railway Station, we have no hesitation to hold that the
appellants are entitled to the benefit of escalation in land prices. In
Ranjit Singh v. UT of Chandigarh (1992) 4 SCC 659, Land Acquisition 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-LAO v. Sk. Azam Saheb (2009) 4 SCC 395 and
ONGC Ltd. v. Rameshbhai Jivanbhai Pate (2008) 14 SCC 745, 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:

 

“12. 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.

 
13. 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 prices have
touched even 30% to 50% or more per year, during the nineties.

 
14. 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.

 
15. 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.”

 

 

 

14. In view of the propositions laid down in the aforementioned
judgments, we hold that the appellants will be entitled to 10% annual
escalation in the compensation determined for the acquisition made vide
notification dated 28.5.1987, which was published on 12.6.1987.

 

15. The appellants’ prayer for award of compensation on account of loss
caused due to removal of fencing of Sant Farm, severance of land due to
laying of rail line and construction of road, loss caused due to
destruction of crop/farming activity etc. was rejected by the Reference
Court without assigning cogent reasons and the learned Single Judge of the
High Court did not even deal with the issue. It is, therefore, apposite
that the matter is remitted to the Reference Court for deciding this issue
afresh keeping in view the evidence produced by the parties in the
references made by the Collector for determination of compensation of the
land acquired vide notifications dated 28.5.1987 and 27.12.1991.

 

16. In the result, the appeal is partly allowed and it is declared that
the appellants shall be entitled to compensation at the rate of Rs.5 per
sq. ft. with benefit of escalation at the rate of 10% per annum for the
period between 28.5.1987 and 27.12.1991. The appellants shall also be
entitled to get interest on solatium. The respondents are directed to pay
the enhanced compensation with interest etc. to the appellants within a
period of six months from today.

 

17. The issue relating to award of compensation in lieu of the loss
caused due to removal of fencing of Sant Farm, segregation of land on
account of laying of rail line and construction of road from Kolaras Town
to Railway Station and loss caused due to damage to the crop and farming
activity is remitted to the Reference Court for fresh adjudication in the
light of the evidence produced by the parties in the references made by the
Collector under Section 18 of the Act.

 

 

 
………………………………………..J.
(G.S. SINGHVI)

 

 

 

………………………………………..J.
(SHIVA KIRTI SINGH)

 

 

 

………………………………………..J.
(C. NAGAPPAN)
New Delhi;
November 29, 2013.
———————–
9

 

 

 

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