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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7258 OF 2011
[Arising out of S.L.P.(C)No.1578 of 2007]
Chakas ....Appellant
Versus
State of Punjab & Ors. ....Respondents
W I T H
C.A.No.7259/2011[Arising out of SLP(C) No.659 of 2007];
C.A.No.7260/2011[Arising out of SLP(C) No.5447 of 2007];
C.A.No.7261/2011[Arising out of SLP(C) No.3319 of 2007];
C.A.No.7262/2011[Arising out of SLP(C) No.4982 of 2007];
C.A.No.7263/2011[Arising out of SLP(C) No.8073 of 2007];
C.A.No.7264/2011[Arising out of SLP(C) No.8649 of 2007];
C.A.No.7265/2011[Arising out of SLP(C) No.8653 of 2007];
C.A.No.7266/2011[Arising out of SLP(C) No.9210 of 2007];
C.A.No.7267/2011[Arising out of SLP(C) No.12156 of 2007];
C.A.No.7268/2011[Arising out of SLP(C) No.12765 of 2007];
C.A.No.7269/2011[Arising out of SLP(C) No.14818 of 2007];
C.A.No.7270/2011[Arising out of SLP(C) No.7253 of 2007];
C.A.No.7272/2011[Arising out of SLP(C) No.14422 of 2007];
C.A.No.7271/2011[Arising out of SLP(C) No.14424 of 2007];
C.A.No.7273-7304/2011 [Arising out of SLP(C) No.1798-1829
of 2008];
C.A.No.7305/2011[Arising out of SLP(C) No.11844 of 2008];
C.A.No.7306-7315/2011 [Arising out of SLP(C) No.9426-9435
of 2008];
C.A.No.7316/2011[Arising out of SLP(C) No.21198 of 2008];
C.A.No.7317/2011[Arising out of SLP(C) No.5427 of 2009];
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A N D
C.A.No.7318-7322/2011 [Arising out of SLP(C) No.10838-10842
of 2010];
J U D G M E N T
Deepak Verma, J.
1. Leave granted.
2. Question as to what would be proper, adequate, just
and reasonable compensation to be awarded to the
appellant for the land acquired by the respondent
State, has once again cropped up for our
consideration in this and the connected appeals.
3. In this appeal, the land owner, whose land has been
acquired by the State of Punjab is before us for
enhancement of compensation awarded to him by the
High Court and the beneficiary respondent No. 3 M/s.
Nahar Industries Infrastructure Corporation Ltd.
(hereinafter shall be referred to as ‘the
Corporation’) has preferred separate appeals for
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reduction of the compensation awarded to the
appellant by the High Court. Since both set of
appeals arise out of the common judgment and order
pronounced by the learned Single Judge in Regular
First Appeal No. 1072 of 1999 in the High Court of
Punjab and Haryana at Chandigarh on 03.05.2006, they
have been heard analogously and are being disposed
of by this common judgment and order.
4. It may be noted that for the sake of brevity and
convenience, facts of appeal arising out of SLP(C)
No.1578 of 2007 have been taken into account.
5. Short facts, shorn of unnecessary details are
mentioned hereinbelow:
Respondent No. 1 – State of Punjab, for the
purposes of setting up of an Industrial Focal Point in
Tehsil Rajpura District Patiala issued a notification
on 13.11.1992 under Section 4 of the Land Acquisition
Act (hereinafter shall be referred to as ‘the Act’)
for acquiring 550.03 acres in villages Lalru,
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Jalalpur, Lehli, and Hassanpur of the aforesaid Tehsil
and District. The public purpose mentioned in the
same was for Industrial Focal Point. Subsequently, by
issuance of another notification under Section 6 of
the Act, on 08.04.1993, the aforesaid land was
declared to have been acquired. Thereafter, the Land
Acquisition Collector started the process of computing
the amount of compensation to be awarded to the land
owners. The Land Acquisition Officer pronounced his
award on 12.9.1994 fixing different rates per acre for
the lands of four villages. The appellant and other
land owners feeling highly dissatisfied with the
amount of compensation so assessed by the Land
Acquisition Officer, preferred references under
Section 18 of the Act to the Civil Court at Patiala.
6. The matter was accordingly referred to the
Additional District Judge, Patiala for working out the
amount of compensation to be awarded to the appellant
and other such similarly situated appellants. Both
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the parties led evidence before the Reference Court.
On the basis of the evidence so adduced by the
parties, the Reference Court was pleased to assess the
value of the entire acquired land in four villages at
a uniform rate and consequently held that the land
owners were entitled to receive compensation of Rs.
1.5 lakh per acre, besides the individual claims made
by land owners with regard to super structure, trees
and other facilities available in their respective
lands were also taken into consideration. The land
owners were also held entitled for the statutory
benefits as per the amended provisions of the Act.
7. Still not being satisfied with the amount of
compensation so awarded to them, the land owners
preferred appeals before the High Court under Section
54 of the Act, whereas the beneficiary respondent No.
3 herein the Corporation also preferred appeals
purportedly, for reduction of the compensation awarded
to the appellant. The Learned Single Judge heard the
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matters together and disposed of by the common
judgment and order, which is being impugned, once
again by both sides on a variety of grounds.
8. We have accordingly heard Mr. L. Nageswara Rao,
Senior Advocate ably assisted by M/s Navin Chawla,
Gaurav Kaushik, Tushar Singh praying for further
enhancement of compensation and Mr. Anil Grover, AAG,
Punjab with Mr. Kuldip Singh and Mr. Neeraj Kumar
Jain, Senior Advocate with Mr. Sanjay Singh Advocate
for the respondent Corporation at length and perused
the records.
9. Certain dates material for deciding the said
appeal are mentioned hereinbelow:
1 Notification under Section 4 of the Issued on 13.11.1992 For acquisition of 550.03 acres
Act of land
2 Notification under Section 6 of the Issued on 08.04.1993
Act
3 Award of Land Acquisition Passed on 12.09.1994
Officer
4 Award of the Reference Court Dated 07.12.1998 Amount of compensation at
Rs.1.50 lakhs per acre
5 Judgment and order of the High Pronounced on 03.05.2006 Fixing the rate of compensation
Court at Rs.2.75 lakhs per acre.
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10. Shri L. Nageswara Rao, Senior Advocate appearing
for the appellant contended before us that the High
Court committed a grave error in computation of the
base price on the strength of the average price worked
out from the sale deeds Exh. P.1, P.2, P.3, P.8, and
P.15 and further committed another grave error in
deducting amounts from the same. According to him, in
the process, the amount of compensation awarded is
much lower than what should have been awarded. On the
other hand, learned counsel for respondent Mr. Anil
Grover, AAG, Punjab and Mr. Neeraj Kumar Jain, Senior
Advocate appearing for respondent No.3 submitted that
the appellant has only been able to prove the market
value of the land from the sale deed at Rs. 2.85 lacs
per acre. He further contended that there was no
mistake committed by the Court in taking out the
average price for working out the amount of
compensation to be awarded to the appellant.
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11. Learned counsel for respondent No. 3 Mr. Neeraj
Kumar Jain strongly contended before us that the
Corporation has preferred appeals for deduction of the
amount, primarily on the ground that more deductions
should have been made than what was allowed by the
High Court and in any event no case has been made out
for further enhancement of amount of compensation,
which is already exorbitant and higher.
12. First of all, we would like to deal with the
location and potentiality of the acquired land. From
the evidence of P.W 31 Charanjit Singh, Patwari of
Halqa of all the four villages, it is clearly made
out that all these villages are adjoining each other
and form a compact block. He has further admitted
that more than 80 to 85 industries near and adjoining
the acquired land are already running and doing their
business since long. The area acquired has been
reserved for industrial purposes. He has further
deposed that if the land had not been acquired, many
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factories would have sprung up in the acquired land.
The details of the industries which are already
running in vicinity have been given vividly by him.
It is also not in dispute that the said land is
situated on the Ambala-Chandigarh Highway.
13. The evidence of other government officials, who
had appeared before the Reference Court, reflects that
the land acquired have great Industrial potential as
more than 80-85 big industries have already set up
their factories in the close vicinity to the acquired
land. They have admitted that the acquired land is
situated on the main Ambala-Chandigarh Highway. From
the evidence adduced by respondent Nos. 1 and 2, it
cannot be disputed that it was a valuable land for the
land owners and it had great potential. Obviously, in
1992, the market value of the same, at the time of
issuance of notification under Section 4 of the Act,
would be much more than what has been awarded to them
vide the impugned judgment.
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14. However, the question which still remains for
consideration is, on what basis, should the amount of
compensation is to be worked out. The appellant to
prove his case with regard to market value of the land
had produced many sale deeds but only relevant
following five sale deeds are taken into
consideration:
Exhibit No. Dated of sale deed Price paid Price per acre
P.1 16.08.1990 1,20,000 3,02,157
P.2 16.08.1990 1,50,000 3,51,219
P.3 16.08.1990 1,50,000 3,51,219
P.8 20.04.1993 17,34,000 4,08,000
P.15 04.06.1990 9,75,000 2,99,041
15. The appellant had also examined the vendors of
the aforesaid sale deeds to show the genuineness and
correctness of the same. The most appropriate sale
deed touching the issuance of notification under
Section 4 is Exh. P.8. The base price of the land per
acre according to this comes to Rs. 4,08,000/-. The
total area of the land so purchased was 20 Bighas and
8 biswas. Before execution of the sale deed, an
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Agreement to Sell dated 30.10.1992 (Exh. P.45) was
executed between the vendor and vendee. As required
under the law, permission was sought from the Income
Tax Department which granted a Clearance Certificate
Exh. P.44.
16. It is also pertinent to mention here that the land
so sold covered under (Exh.P.8) sale deed neither
belonged to any of the land owners nor they had any
interest whatsoever in the said deed. Thus, it can
safely be assumed that it was a genuine and bona-fide
transaction between two parties, who had nothing to do
with the acquisition of land of the appellant. It was
not executed for the purposes of creating evidence as
Agreement to sell (Exh. P.45) is dated 30.11.1992,
before the issuance of Notification under Section 4 of
the Act. On the said date, it could not have been
imagined that the adjoining land is going to be
acquired shortly. The said land is almost abutting
the acquired land. It is also manifest that the
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Agreement dated 13.10.1992 is very close to the
notification issued on 13.11.1992 under Section 4 of
Act. The whole transaction executed under the Sale
deed Exh. P.8 fully proves and establishes the case of
the appellant. As per this sale deed, the base price
of the land would come to Rs. 4,08,000/- per acre.
According to us, the correct base price would be Rs.
4,08,000/- per acre.
17. It is profitable to refer to the following
judgment of this Court on this issue. (1969) 1 MLJ
(SC) 45 Shri Rani M. Vijayalakshmamma Rao Bahadur Vs.
Collector of Madras. Relevant para 2 is reproduced
hereinbelow:
“It seems to us that there is substance in
the first contention of Mr. Ram Reddy.
After all when land is being compulsorily
taken away from a person he is entitled to
say that he should be given the highest
value which similar land in the locality
is shown to have fetched in a bona fide
transaction entered into between a willing
purchaser and a willing seller near about
the time of the acquisition. It is not
disputed that the transaction represented
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by Ex Rule 19 was a few months prior to
the notification under Section 4, that it
was a bona fide transaction and that it
was entered into between a willing
purchaser and a willing seller. The land
comprised in the sale deed is 11 grounds
and was sold at Rs. 1951 per ground. The
land covered by Rule 27 was also sold
before the notification but after the land
comprised in Ex. Rule 19 was sold. It is
true that this land was sold at Rs. 1096
per ground. This, however, is apparently
because of two circumstances. One is that
betterment levy at Rs.500/- per ground had
to be paid by the vendee and the other
that the land comprised in it is very much
more extensive, that is about 93 grounds
or so. Whatever that may be, it seems to
us to be only fair that where sale deeds
pertaining to different transactions are
relied on behalf of the Government, that
representing the highest value should be
preferred to the rest unless there are
strong circumstances justifying a
different course. In any case we see no
reason why an average of two sale deeds
should have been taken in this case.”
18. The said judgment has been considered by this
Court reported in (2008) 14 SCC 745 General Manager,
Oil and Natural Gas Corporation Ltd. Vs. Rameshbhai
Jivanbhai Patel and Anr. wherein the Division Bench
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has considered this aspect of the matter succinctly in
para 13, 14 and 15 reproduced hereinbelow:
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
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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 thump 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
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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.”
19. The Reference Court committed a grave error in
deducting 50% of the value assessed by him, towards
development charges and further reduced the said
amount for the reasons not assigned by him. The
learned Single Judge vide the impugned judgment has
enhanced the amount of compensation but committed an
error in fixing the base price as 2,75,000/- per acre
for the acquired land, applying the doctrine of
reasonable cut to the average price worked out by him
at Rs.3,42,527/- per acre. We do not approve of the
reasonings adopted either by the reference Court or by
the High Court. How much amount is to be deducted
from the base price would depend on various factors.
20. As mentioned hereinabove, in the case in hand the
bulk of the land that is almost 525 acres has been
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given to respondent No.3, the Corporation for setting
up its own industry and other infrastructure thereon.
Thus, the lands likely to be used towards roads,
sewage and other such facilities would be minimum as
most of the vacant land would be utilised by
respondent No. 3 for its own benefits.
21. Needless to say, once the industry is set up, it
would be for the financial benefit and gain of
respondent No.3 year after year. Thus, looking to the
matter from all angles, respondent No. 3 – Corporation
would be a great beneficiary at the cost of depriving
the appellant – land owner of his sole livelihood of
agriculture.
22. Therefore, it is neither desirable nor proper to
deduct more than 10% of the amount in the base price
fixed by us at Rs. 4,08,000/-. We accordingly do so.
23. The question with regard to the deduction to be
made also stands settled by this Court in
Atma Singh (dead) through Lrs. and Ors. Vs. State of
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Haryana and Another. (2008) 2 SCC 568. The relevant
portion thereof are reproduced herein below:
“14) The reasons given for the principle
that price fetched for small pots cannot
form safe basis for valuation of large
tracts of land, according to cases
referred to above, are that substantial
area is used for development of sites like
laying out roads, drains, sewers, water
and electricity lines and other civic
amenities. Expenses are also incurred in
providing these basic amenities. That
apart it takes considerable period in
carving out the roads making sewers and
drains and waiting for the purchasers.
Meanwhile the invested money is blocked up
and the return on the investment flows
after a considerable period of time. In
order to make up for the area of land
which is used in providing civic amenities
and the waiting period during which the
capital of the entrepreneur gets locked up
a deduction from 20% onward, depending
upon the facts of each case, is made.
15) The question to be considered is
whether in the present case those factors
exist which warrant a deduction by way of
allowance from the price exhibited by the
exemplars of small plots which have been
filed by the parties. The land has not
been acquired for a housing colony or
government office or an institution. The
land has been acquired for setting up a
sugar factory. The factory would produce
goods worth many crores in a year. A
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sugar factory apart from producing sugar
also produces many by-products in the same
process. One of the by-products is
molasses, which is produced in huge
quantity. Earlier, it had no utility and
its disposal used to be a big problem.
But now molasses is used for production of
alcohol and ethanol which yield lot of
revenue. Another by-product begasse is
now use for generation of power and press
mud is utilized in manure. Therefore,
the profit from a sugar factory is
substantial. Moreover, it is not confined
to one year but will accrue every year so
long as the factory runs. A housing
board does not run on business lines.
Once plots are carved out after
acquisition of land and are sold to
public, there is no scope or earning any
money in future. An industry established
on acquired land, if run efficiently,
earns money or makes profit every year.
The return from the land acquired for the
purpose of housing colony, or offices, or
institution cannot even remotely be
compared with the land which has been
acquired for the purpose of setting up a
factory or industry. After all the
factory cannot be set up without land and
if such land is giving substantial return,
there is no justification for making any
deduction from the price exhibited by the
exemplars even if they are of small plots.
It is possible that a part of the acquired
land might be used for construction of
residential colony for the staff working
in the factory. Nevertheless, where the
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remaining part of the acquired land is
contributing to production of goods
yielding good profit, it would not be
proper to make a deduction in the price of
land shown by the exemplars of small plots
as the reasons for doing so assigned in
various decisions of this court are not
applicable in the case under
consideration.”
24. In the light of the aforesaid contention and
taking cue from the settled position of law decided by
this Court in the aforesaid matters, we are of the
firm opinion that the base price has to be fixed @ Rs.
4,08,000/- per acre. Keeping in mind that more than
525 acres has been given to respondent No. 3 –
Corporation, which in turn has set up its factory, a
deduction of 10% on the aforesaid amount would be
reasonable. Needless to say on the aforesaid amount,
the appellant would be entitled for statutory benefits
as mandated under the amended provisions of the Act.
This appeal and the connected appeals filed by land
owners are hereby allowed and the appeals filed by
respondent No.3 are dismissed.
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25. The Reference Court is hereby directed to
recalculate the amount of compensation to be awarded
to the appellants and all such other land owners whose
lands have been acquired in the light of the direction
as contained hereinabove and to pay them the remainder
amount within a period of 2 months from the date of
communication of this order.
26. For the foregoing reasons, this and the connected
appeals preferred by land owners are hereby allowed
and those filed by the Corporation are dismissed with
costs throughout. Counsel’s fee quantified at Rs.
10,000/- in each Appeal.
…………………….J.
[DALVEER BHANDARI]
…………………….J.
[DEEPAK VERMA]
New Delhi
August 24, 2011
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