REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2213 OF 2001
CHARAN DASS (DEAD) BY L.Rs. ... APPELLANT (S)
VERSUS
HIMACHAL PRADESH HOUSING
AND URBAN DEVELOPMENT
AUTHORITY & ORS. ... RESPONDENT (S)
WITH
CIVIL APPEAL NO. 2214 OF 2001
KISHAN SINGH ... APPELLANT
VERSUS
HIMACHAL PRADESH HOUSING
BOARD & ORS. ... RESPONDENTS
CIVIL APPEAL NO. 2215 OF 2001
BASTI RAM ... APPELLANT
VERSUS
HIMACHAL PRADESH HOUSING
BOARD & ORS. ... RESPONDENTS
CIVIL APPEAL NOs. 2216-2220 OF 2001
DEVKI NAND ... APPELLANT
HIMACHAL PRADESH HOUSING
BOARD & ORS. ... RESPONDENTS
2
CIVIL APPEAL NOs. 2221-2227 OF 2001
JAI KISHAN & ORS. ... APPELLANTS
VERSUS
HIMACHAL PRADESH HOUSING
AND URBAN DEVELOPMENT
AUTHORITY & ORS. ... RESPONDENTS
CIVIL APPEAL NO. 2228 OF 2001
HARPAL & ORS. ... APPELLANTS
VERSUS
HIMACHAL PRADESH HOUSING
BOARD & ORS. ... RESPONDENTS
CIVIL APPEAL NOs. 2090-2101 OF 2004
SHONKIA (DEAD) BY L.Rs. ... APPELLANTS
VERSUS
STATE OF HIMACHAL PRADESH
& ORS. ... RESPONDENTS
JUDGMENT
D.K. JAIN, J.
This batch of appeals arises from the final judgment and
order dated 7th June, 1999 rendered by the High Court of Himachal
Pradesh at Shimla in twenty Regular First Appeals as also final
judgment and order dated 14th August, 2003 delivered by the said
3
High Court in twelve cognate Regular First Appeals wherein the
former order has been relied upon. By the impugned order, while
allowing the appeal preferred by the Himachal Pradesh Housing
Board (hereinafter referred to as “the Housing Board”), the High
Court has reduced the amount of compensation awarded by the
District Judge in Reference under Section 18 of the Land
Acquisition Act, 1894 (for short “the Act”).
2. Material facts common to all the appeals and relevant for the
purpose of disposal of these appeals, are as follows:
The State of Himachal Pradesh, respondent No.2 in Civil
Appeal No.2213 of 2001, intended to acquire land of the appellants
at Shoghi, about 12 K.M. from the capital of the State at Shimla,
for construction of a Housing Board Colony. Accordingly, a
Notification under Section 4 of the Act was issued and published in
the Himachal Pradesh Gazette on 6th November, 1990. The quality
of the lands involved in the acquisition fell in different categories.
The Land Acquisition Collector, respondent No.3 herein, by his
Award dated 3rd August, 1994 assessed the market value of the
acquired land and announced his Award by which compensation at
the rate of Rs.32,073/- per Bigha in respect of Bakhal Awal,
Rs.24,288/- per Bigha for Bakhal Doem and Rs.7,785/- per Bigha
4
for Ghasani Banjar Kadeem was awarded to the appellants-
landowners.
3. Not being satisfied, the appellants filed Reference
Applications before the District Judge under Section 18 of
the Act claiming compensation at Rs.22,00,000/- per Bigha,
inter alia, on the ground that the market value of the acquired
land was much more than what was awarded by respondent
No.3. Vide his order dated 22nd June, 1996, the District
Judge found the evidence adduced by the appellants (Exts.
PW2/B and PW2/A) to be reliable. However, he found the
exemplars filed by the Housing Board (RW3/A and RX), to
be irrelevant for ascertaining the market value of the lands.
Accordingly, he determined the market value of the acquired
land at Rs.2 lakh per Bigha for all kinds of lands irrespective
of their quality and classification. In addition thereto, the
District Judge awarded Statutory interest and solatium to the
appellants. Similarly, vide his order dated 22nd March, 1997,
the District Judge again found the evidence adduced by the
appellants in the form of two sale deeds to be reliable.
Accordingly, relying on his earlier order dated 22nd June,
5
1996 (Ex.PZ), he awarded the same compensation to the
appellants.
4. Being aggrieved with the amount of compensation
determined by the District Judge, the Housing Board
preferred Regular First Appeals to the High Court under
Section 54 of the Act, praying for setting aside the judgments
of the District Judge dated 22nd June, 1996 and 22nd March,
1997. The challenge to the said judgments was on diverse
grounds, including that the two sale deeds relied upon by the
District Judge pertained to two very small pieces of land
having a double storied shop; one sale instance was in
respect of one biswa of land sold four months after
Notification under Section 4 in the present case; the
evidence of Gursaran, one of the claimants, who had
appeared to prove the sale deed in respect of the land with a
double storied shop lacked truthfulness and in some
references the compensation awarded was in excess of the
land owned by the claimants.
5. Vide order dated 7th June, 1999, the High Court accepted the
appeals filed by the Housing Board. Relying on the decisions
of this Court in Special Tehsildar Land Acquisition,
6
Vishakapatnam Vs. A. Mangala Gowri (Smt.)1, Special
Deputy Collector & Anr. Vs. Kurra Sambasiva Rao &
Ors.2 and Manipur Tea Co. Pvt. Ltd. Vs. Collector of
Hailakandi3, wherein broad parameters, to be kept in view
while determining the market value of the land acquired for
public purpose have been laid down, the High Court
concluded that as compared to the sale instances relied
upon by the appellants viz., Ext. PW2/B and Ext. PW2/A, the
sale deeds filed by the Housing Board viz., RW3A (again
marked as RW5A), RW4A and RX were relevant exemplars
for ascertaining the market value of the land in question.
The High Court observed as follows:
“…we find on record in these cases that there are
only three relevant sale deeds which are marked
Exhibits PW2/A, PW2/B, RX and RY. Sale deed
Ex.PW2/B is dated 22.1.1990 in respect of which vendee
PW-Gursaran (RW5) has been examined by both the
parties who is also one of the claimants in the claim
petitions. He purchased 2 biswas of land from Piara
Singh on 22.1.1990 for a consideration of Rs.99,500/-.
On this land there was a double storeyed shop. This
witness also purchased another piece of 0-1 biswas of
land through sale deed Ex.PW2/A, for a consideration of
Rs.30,000/- from Satish Balooni and the value of this
land comes to Rs.6 lacs per bigha. The second sale
deed was executed after notification issued on
6.11.1990 and, therefore, the market value of that sale
deed cannot be taken into consideration for
1
(1991) 4 SCC 218 : AIR 1992 SC 666
2
(1997) 6 SCC 41
3
(1997) 9 SCC 673
7
determination of the acquired land. The three sale
deeds relied upon by the appellant-Board are marked
RX, RW3/A, again marked RW5/A and RY (RW4/A)
pertaining to the year 1988-89 in respect of sale and
purchase of the land in Shoghi Bazar by the vendors and
vendees. To prove sale deed Ex.RW3/A (RW5/A) RW-
Gursaran was examined (who appeared as his own
witness in the claim petition), the vendee purchased 1-0
bigha of land in the year 1988-89 for a consideration of
Rs.11,000/- from one Ranjit Lal. One Shiv Ram sold 0-
12 biswas of land to PW-Sanjiv Goel and his brother
Ajay Kumar in the year 1988-89 for a consideration of
Rs.48,000/- and the said land was purchased by vendee
for the purpose of setting up of steel industries. PW-
Prem Kumar purchased two biswas of land from Vishwa
Nath for a consideration of Rs.48,000/-, copy of which
was marked Ext. RX and again RW4/A. From the
perusal of these sale deeds it is clear that they pertain to
1-1/2 or 2 years prior to the issue of notification under
Section 4 of the Act. The duty of the court is to keep at
the back of its mind that the object of assessment is to
arrive at reasonable and adequate market value of the
land and in that process, though some guesswork is
involved, and mechanical assessment of the evidence
should be avoided.”
6. Inter-alia, observing that there is sufficient oral and
documentary evidence on record to determine the fair,
reasonable and adequate market value of the acquired land,
the High Court finally determined the market value of the
land as under:
“The value of the land purchased by the three
vendees, namely, Prem Kumar, Gursaran and Sanjiv
Goel who are also claimants in some of the claim
petitions and the prices of the lands purchased by them
about 1-1/2 or 2 years prior to the acquisition of the land
involved in the present cases after calculation and
8
divided by three would come to Rs.1,03,667/- per bigha.
Applying the guesswork of the escalation of the price
between the year 1988-89 on 6.11.1990, we determine
the market value of the acquired lands on the basis of
these sale deeds at Rs.1,50,000 per bigha.”
Thus, according to the High Court, the market value of the
acquired lands as on the date of issue of Notification under Section
4 of the Act was Rs.1,50,000/- per Bigha. Having so determined
the market value of the acquired land, the Court noted the
evidence of Mr. A.K. Gupta, Assistant Architect (RW4) wherein he
had deposed that only 41.4% of the total area was being used for
construction and the remaining area was to be used for services
like roads, pathways, green spaces etc. On the basis of the said
evidence, the High Court made a deduction of 40% from the
market value of the land determined by it at Rs.1,50,000/- per
Bigha. Thus, the compensation payable to the land owners for the
land acquired was determined at Rs.90,000/- per Bigha. The
compensation awarded by the District Judge was accordingly
modified to that extent, maintaining solatium and Statutory interest
awarded by him. The High Court also noticed certain
discrepancies in the judgment of the Reference Court in granting
compensation for lands in excess of what were actually owned by
9
the claimants. Aggrieved by the said judgments, the appellants-
landowners are before us in these appeals.
7. Learned counsel appearing on behalf of the appellants, led
by Mr. Atul Sharma, challenged the finding of the High Court
that the exemplars/sale instances filed by the appellants and
relied upon by the District Judge were not relevant for
ascertaining the market value of the subject lands. It was
argued that since Ext. RX, adduced by way of evidence by
the Housing Board, was not proved, the High Court
committed a patent illegality in relying on the same. Placing
reliance on the decisions of this Court in Smt. Tribeni
Devi & Ors. Vs. Collector of Ranchi & Vice Versa4 and
Bhagwathula Samanna & Ors. Vs. Special Tahsildar &
Land Acquisition Officer, Visakhapatnam Municipality,
Visakhapatnam5, learned counsel contended that the High
Court failed to apply correct principles for reducing the
market value of the land by 40% on account of non-
availability of the land for construction of houses. It was
asserted that the basis of deduction being the end use of the
land and not the nature of the land or the comparable land,
4
(1972) 1 SCC 480
5
(1991) 4 SCC 506
10
there should have been no deduction from the market value
of the land determined by the High Court.
8. Per contra, learned counsel appearing on behalf of the
Housing Board, supported the view taken by the High Court.
Controverting the stand of the appellants that sale deed (RX)
could not be relied upon as the same had not been proved
by the Housing Board, learned counsel submitted that in the
light of Section 51A of the Act, a certified copy of the sale
deed (RX), registered under the Registration Act, 1908 could
be accepted as evidence of the transaction recorded therein
and, therefore, the High Court did not commit any illegality in
placing reliance on it. Learned counsel also contended that
the High Court was justified in making deduction at the rate
of 40% by applying the principles of law laid down by this
Court in Viluben Jhalejar Contractor (Dead) by LRs. Vs.
State of Gujarat6, Atma Singh (Dead) through LRs. &
Ors. Vs. State of Haryana & Anr.7 and Shimla
Development Authority & Ors. Vs. Santosh Sharma
(Smt) & Anr.8.
6
(2005) 4 SCC 789
7
(2008) 2 SCC 568
8
(1997) 2 SCC 637
11
9. Before we enter into the merits of the rival contentions, we
may notice a few broad principles to be kept in view while
ascertaining the market value of the land for the purpose of
determining the amount of compensation payable on
acquisition of land for a public purpose.
10. Section 15 of the Act mandates that in determining the
amount of compensation, the Collector shall be guided by
the provisions contained in Sections 23 and 24 of the Act.
Section 23 provides that in determining the amount of
compensation to be awarded for the land acquired under the
Act, the Court shall, inter alia, take into consideration the
market value of the land at the date of the publication of the
Notification under Section 4 of the Act. The Section contains
the list of positive factors and Section 24 has a list of
negatives, vis-a-vis the land under acquisition, to be taken
into consideration while determining the amount of
compensation. As already noted, the first step being the
determination of the market value of the land on the date of
publication of Notification under sub-Section (1) of Section 4
of the Act. One of the principles for determination of the
market value of the acquired land would be the price that a
12
willing purchaser would be willing to pay if it is sold in the
open market at the time of issue of Notification under Section
4 of the Act. But finding direct evidence in this behalf is not
an easy task and, therefore, the Court has to take recourse
to other known methods for arriving at the market value of
the land acquired. One of the preferred and well accepted
methods adopted for ascertaining the market value of the
land in acquisition cases is the sale transactions on or about
the date of issue of Notification under Section 4 of the Act.
But here again finding a transaction of sale on or a few days
before the said Notification is not an easy exercise. In the
absence of such evidence contemporaneous transactions in
respect of the lands, which have similar advantages and
disadvantages is considered as a good piece of evidence for
determining the market value of the acquired land. It needs
little emphasis that the contemporaneous transactions or the
comparable sales have to be in respect of lands which are
contiguous to the acquired land and are similar in nature and
potentiality. Again, in the absence of sale deeds, the
judgments and awards passed in respect of acquisition of
lands, made in the same village and/or neighbouring villages
can be accepted as valid piece of evidence and provide a
13
sound basis to work out the market value of the land after
suitable adjustments with regard to positive and negative
factors enumerated in Sections 23 and 24 of the Act.
Undoubtedly, an element of some guess work is involved in
the entire exercise, yet the authority charged with the duty to
award compensation is bound to make an estimate judged
by an objective standard.
11. In Shaji Kuriakose & Anr. Vs. Indian Oil Corporation Ltd.
& Ors.9, this Court has observed as under:
“It is no doubt true that courts adopt comparable sales
method of valuation of land while fixing the market value
of the acquired land. While fixing the market value of the
acquired land, comparable sales method of valuation is
preferred than other methods of valuation of land such as
capitalisation of net income method or expert opinion
method. Comparable sales method of valuation is
preferred because it furnishes the evidence for
determination of the market value of the acquired land at
which a willing purchaser would pay for the acquired land
if it had been sold in the open market at the time of issue
of notification under Section 4 of the Act. However,
comparable sales method of valuation of land for fixing
the market value of the acquired land is not always
conclusive. There are certain factors which are required
to be fulfilled and on fulfilment of those factors the
compensation can be awarded, according to the value of
the land reflected in the sales. The factors laid down inter
alia are: (1) the sale must be a genuine transaction, (2)
that the sale deed must have been executed at the time
proximate to the date of issue of notification under
Section 4 of the Act, (3) that the land covered by the sale
must be in the vicinity of the acquired land, (4) that the
9
(2001) 7 SCC 650
14
land covered by the sales must be similar to the acquired
land and (5) that the size of plot of the land covered by
the sales be comparable to the land acquired. If all these
factors are satisfied, then there is no reason why the sale
value of the land covered by the sales be not given for
the acquired land. However, if there is dissimilarity in
regard to locality, shape, site or nature of land between
land covered by sales and land acquired, it is open to the
court to proportionately reduce the compensation for
acquired land than what is reflected in the sales
depending upon the disadvantages attached with the
acquired land”.
12. Yet again in Viluben Jhalejar Contractor (supra), making
reference to a number of cases on the point, it was observed
as follows:
“18. One of the principles for determination of the amount
of compensation for acquisition of land would be the
willingness of an informed buyer to offer the price therefor.
It is beyond any cavil that the price of the land which a
willing and informed buyer would offer would be different
in the cases where the owner is in possession and
enjoyment of the property and in the cases where he is
not.
19. Market value is ordinarily the price the property may
fetch in the open market if sold by a willing seller
unaffected by the special needs of a particular purchase.
Where definite material is not forthcoming either in the
shape of sales of similar lands in the neighbourhood at or
about the date of notification under Section 4(1) or
otherwise, other sale instances as well as other evidences
have to be considered.
20. The amount of compensation cannot be ascertained
with mathematical accuracy. A comparable instance has to
be identified having regard to the proximity from time angle
as well as proximity from situation angle. For determining
the market value of the land under acquisition, suitable
15
adjustment has to be made having regard to various
positive and negative factors vis-`-vis the land under
acquisition by placing the two in juxtaposition. The positive
and negative factors are as under:
—————————————————————————–
Positive factors Negative Factors
—————————————————————————–
(i) smallness of size (i) largeness of area
(ii) proximity to a road (ii) situation in the interior
at a distance from the
road
(iii) frontage on a road (iii) narrow strip of land
with very small
frontage compared to
depth
(iv) nearness to developed (v) lower level requiring
area the depressed portion
to be filled up
(v) regular shape (v) remoteness from
developed locality
(vi) level vis-a-vis land under (vi) some special
acquisition disadvantageous
factors which would
deter a purchaser
(vii) special value for an owner
of an adjoining property to
whom it may have some
very special advantage”.
13. Thus, comparable sales instances of similar lands in the
neighbourhood at or about the date of Notification under
Section 4(1) of the Act are considered to be the best
evidence for determining the market value of the acquired
16
land to arrive at a fair estimate of the amount of
compensation payable to a land owner. Nevertheless, while
ascertaining compensation, it is the duty of the Court to see
that the compensation so determined is just and fair not only
to the individual whose property has been acquired but also
to the public which is to pay for it.
14. Before examining the correctness of the cases at hand, in
the light of the legal principles enumerated above, it would
also be appropriate to keep in view the scope of interference
by this Court in an award granting compensation. It is trite
that the scope of interference in such matters is very limited
and it is only in cases where it is found that the authorities
below, including the High Court, have either applied wrong
principles or have omitted to take into consideration the
relevant factors affecting valuation, that this Court would
interfere.
15. The scope of interference by this Court was delineated by
this Court in Thakur Kamta Prasad Singh (Dead) by LRs.
Vs. State of Bihar10 wherein it was held that there is an
element of guesswork inherent in most cases involving
10
(1976) 3 SCC 772
17
determination of the market value of the acquired land. If the
judgment of the High Court reveals that it has taken into
consideration the relevant factors prescribed by the Act, in
appeal under Article 133 of the Constitution of India, its
assessment of the fair market value of the acquired land
should not be disturbed.
16. The following observations of this Court in Food
Corporation of India through its District Manager,
Faridkot, Punjab & Ors. Vs. Makhan Singh & Anr.11 are
quite apposite:
“This Court as the last Court of appeal, will ordinarily not
interfere in an award granting compensation unless there
is something to show not merely that on the balance of
evidence it is possible to reach a different conclusion, but
that the judgment cannot be supported by reason of a
wrong application of principle or because some important
point affecting valuation has been overlooked or
misapplied. Besides, generally speaking, the appellate
court interferes not when the judgment under appeal is not
right but only when it is shown to be wrong.”
17. Bearing these principles in mind, we may now advert to the
facts of the present case. As noted earlier, in the instant
cases the Reference Court had relied on Exh. PW2/A and
PW2/B to determine the market value of the land. Being the
Court of First Appeal, the High Court re-evaluated the entire
11
(1992) 3 SCC 67
18
evidence and found that Exh. RW4/A, RW3/A and sale deed
marked RX in respect of pieces of the land purchased by
Prem Kumar, Gursaran Singh, Sanjiv Goel who were also
claimants in some of the cases, were the best pieces of
evidence to ascertain the market value of the acquired lands.
Accordingly, taking the same as the base and applying the
formula of averages, the High Court enhanced the said
average amount on account of escalation of the prices
between the year 1980-89 as on 6th November, 1990, and
determined the market value of the acquired land at
Rs.1,50,000/- per Bigha. During the course of hearing we
required counsel for the Housing Board to place before us
the site plan showing the actual location of the subject lands
and the location of the plots, in respect whereof, the sale-
deeds were filed by the Housing Board as well as the land
owners. Having bestowed our anxious consideration to the
lay out plan vis-`-vis the land in question and bearing in mind
the location of the land, subject-matter of the said sale-
deeds, we find it difficult to hold that the exemplars relied
upon by the High Court are irrelevant for determining the
market value of the acquired lands. We are in agreement
with the High Court that the location and the date of sale in
19
the cases, relied upon by the High Court, were relevant for
determining the market value of the acquired land. Having
carefully examined the relevant evidence, we are convinced
that there is no legal or factual infirmity in the approach of the
High Court in ascertaining the market value of the lands as
might induce us to interfere with finding of the High Court on
that account. As noted above, unless some glaring infirmity
is shown in the assessment of evidence by the High Court,
this Court would ordinarily be slow in interfering with the
approach of the High Court in that behalf.
18. The next question which now survives for consideration is
whether the deduction of 40% from the market value
determined by the High Court towards development charges
for laying roads etc., is justified?
19. It is well settled that it is not in every case that deduction
towards development charges has to be made when a big
chunk of land is acquired for housing colonies etc. Where
the acquired land falls in the midst of an already developed
land with amenities of roads, electricity etc. deduction on this
account may not be warranted. At the same time, where all
civic and other amenities are to be provided to make it
20
suitable for building purposes or under the local building
regulations setting apart of some portion of the lands for
providing common facilities is mandatory, an appropriate
deduction may be justified.
20. In Special Tehsildar Land Acquisition, Vishakapatnam
(supra), following Tribeni Devi’s case (supra), this Court
had observed as under:
“It is to be noted that in building regulations, setting apart
the lands for development of roads, drainage and other
amenities like electricity etc. are condition precedent to
approve layout for building colonies. Therefore, based
upon the situation of the land and the need for
development the deduction shall be made. Where
acquired land is in the midst of already developed land
with amenities of roads, drainage, electricity etc. then
deduction of 1/3 would not be justified. In the rural areas
housing schemes relating to weaker sections deduction of
1/4 may be justified.”
21. In the light of the afore-noted parameters, we are of the view
that in the instant case having regard to the relevant facts
and circumstances of the case, including the location of the
acquired land, a deduction of 30% towards development
charges from the market value of land as arrived by the High
Court, would meet the ends of justice. Accordingly, we hold
that the market value of the land for the purpose of payment
21
of compensation to the land owners in all these appeals is to
be assessed at Rs.1,05,000/- per Bigha.
22. In the result, the appeals are partly allowed. The appellants
shall be entitled to compensation at Rs.1,05,000/- per Bigha.
Besides, they will also be entitled to Statutory amounts in
terms of Section 23(1A) of the Act; solatium at 30% on the
market value of the land in accordance with Section 23(2) of
the Act and interest as stipulated in Section 28 of the Act.
23. There will, however, be no order as to costs.
…………………………………J.
(D.K. JAIN)
………………………………….J.
(ASOK KUMAR GANGULY)
NEW DELHI
SEPTEMBER 7, 2009.