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Spl.Land Acquisition Officer & … vs M.K.Rafiq Saheb on 5 July, 2011

Supreme Court of India
Spl.Land Acquisition Officer & … vs M.K.Rafiq Saheb on 5 July, 2011
Author: …………………J.
Bench: Asok Kumar Ganguly, Swatanter Kumar



               CIVIL APPEAL NO.1086 OF 2006

Special Land Acquisition Officer & Anr.             ..Appellant(s)

                          - Versus -

M.K. Rafiq Saheb                                    ..Respondent(s)

                      J U D G M E N T


1. The issue involved in the present case is

whether the quantum of compensation awarded by the

High Court in a land acquisition dispute is

excessive or not.

2. A notification was published under section 4(1)

of the Land Acquisition Act, 1894 (hereinafter


referred to as `the Act’) on 17.7.1994 for the

acquisition of the respondents land measuring 34

guntas in Sy. No. 6/2 of Binnamangala Mahavartha

Kaval, K.R. Puram, Bangalore South Taluk.

3. The Special Land Acquisition Officer

(hereinafter referred to as `SLAO’) passed an award

on 26.9.1995 granting compensation at Rs.1,30,000/-

per acre along with statutory benefits. The SLAO

concluded that the lands were agricultural and no

sale transactions relating to the same were

available. Sale transactions were available in

respect of non-agricultural lands but they could

not be adopted for determining the valuation of

agricultural land. Therefore, the SLAO chose to

rely on acquisition proceedings in respect of lands

in the vicinity for determining land value.

Accordingly, it was found that in the neighbouring

villages of Benniganahalli, B. Narayanapura and

Kaggadasapura villages, land had been acquired in

favour of DRDO complex where the government had


approved awards fixing land value at Rs.1,30,000/-.

The said valuation was thus adopted by the SLAO in

the instant case.

4. Possession of the land was taken on 11.4.1996.

5. Dissatisfied by the award of the SLAO, the

respondent filed a reference under section 18 of

the Act for enhancement of compensation.

6. The Reference Court, vide judgment dated

28.5.1999, enhanced compensation to Rs.4,00,000/-

per acre and also awarded statutory benefits. The

Reference Court concluded that based on the

evidence on record, it could not be said that the

land in question was agricultural land for all

practical purposes since it was situated by the

side of a residential locality and was in the midst

of a highly developed industrial locality. Thus, it

held that though the land remained agricultural

land on the records, it was not an agricultural


land for all practical purposes and no agricultural

activities could be carried out on it. The Court

did not rely upon sale deeds Exhibit P3, P4, P5,

P6, P7 and P8. Exhibit P7 and P8 were not relied

upon as the parties to the transaction had not been

examined. Ex. P3 and P4 were corner sites, were not

within vicinity of the acquired land and were sold

in a public auction, and thus also held not

reliable. The respondent had also produced Ex. P9,

which was a gazette notification dated 20.1.1997

issued by the Revenue Secretariat, fixing the

market value of the immovable property coming under

the jurisdiction of several Sub-Registrar’s office

situated in Bangalore, for the purpose of

collecting stamp duty. The Reference Court

discarded the same on the reasoning that the Court

did not know what was the basis of determination of

market value for the purpose of collecting stamp

duty in respect of immovable properties by the Sub



7. Instead, the Reference Court proceeded to

determine the market value of land on the basis of

compensation awarded in the judgment and award

dated 13.8.1998 made by the Reference Court in

respect of land in the neighbouring villages of

Kaggadasapura and Mahadevapura, pursuant to the

preliminary notification dated 28.7.1988. In the

said villages, about 110 acres of land had been

acquired and market value was fixed at

Rs.2,48,000/- per acre. The difference between

dates of preliminary notifications in the abovesaid

villages and in the instant case was 5 years and 15

days. Accordingly, the Reference Court gave a 10%

enhancement for each year in respect of lands

acquired in and around Bangalore city, relying on

the judgment in J.

v. Land Acquisition

Officer, (1980) 2 KLJ 441, by which land value came

to Rs.3,73,000/- per acre. However, the Reference

Court found that the land had more potentiality and

was situated in the midst of a heavy industrial

area and in the immediate vicinity of an already


developed residential locality. It was also in the

vicinity of a road known as Old Madras road as well

as the road leading to the airport. Hence, the

Reference Court was of the opinion that the

respondent was entitled to a higher market value

than Rs.3,73,000/- per acre. Thus, the Reference

Court held that Rs.4,00,000/- per acre would be

reasonable and fair market value in the instant


8. The respondent, still dissatisfied with the

compensation awarded, filed an appeal before the

High Court of Karnataka. The appellant also filed

cross-objections under Order 41, Rule 22 of CPC.

9. The High Court, by way of impugned judgment

dated 17.6.2004, enhanced the compensation to

Rs.35,17,470/- per acre and also awarded all other

statutory benefits.


10. The High Court accepted the finding of the

Reference Court that the land in question was fit

to be utilized as a non-agricultural site as it was

fully supported by evidence on record. The High

Court agreed with the Reference Court that the land

had ceased to be agricultural land and was fit to

be used as a housing site or an industrial site.

11. The High Court then went onto determination of

quantum of compensation. It concurred with the

Reference Court in rejecting Ex. P7, P8 and P9,

stating that they could not be relied upon as they

related to transactions which had happened after

the issuance of the preliminary notification. Since

other sale transactions were available, which had

taken place within reasonable time prior to the

issuance of the section 4(1) notification, post-

dated sale transactions could not be considered.

The High Court also concurred in rejecting Ex. P3

and P4 on ground that these sale transactions

related to corner sites sold at a public auction.


Corner sites fetched much more than other sites and

when sold at a public auction, the price depended

upon the whims and fancies of the bidders. Thus,

Ex. P3 and P4 could not be relied upon to determine

market value. Ex. P6 related to the sale of a site

with a building and thus it was not accepted. The

High Court was of the opinion that Ex. P5 could be

used to determine market value. Ex. P5 was a sale

deed dated 23.4.1993 of the market value of a site

measuring around 30′ X 40′ fixed at Rs.2,50,000/-,

which worked out to Rs.182/- per square feet. The

High Court also deducted 50% of the market value

shown in Ex. P5 towards developmental charges, and

market value of the acquired land was computed at

Rs.95/- per sq. ft.

12. Being aggrieved by the enhancement in

compensation granted by the High Court, the

appellant approached this court by filing this



13. The point that arises for consideration before

us is whether High Court has correctly enhanced

compensation? Two related questions have to be

answered to determine the same.

a. Whether the land is agricultural land or has

it ceased to be so?

b. Whether Ex. P5, which relates to sale instance

of a small piece of non-agricultural land, can

be used to determine the market value of land?

14. The appellant has challenged the finding of the

High Court that the land ceased to be agricultural

land. It contended that the land was agricultural

land, as was clearly seen from the records and no

conversion charges were paid to convert it into

non-agricultural land.

15. We reject this contention of the appellant.

That the land has ceased to be agricultural land

and is capable of being used as a residential or


industrial site is a concurrent finding of fact by

both the Courts below and is amply supported by the

evidence on record. We uphold the same. The

appellant did not file any appeal impugning the

finding of the Reference Court that the land could

not be treated as agricultural land. Not having

done so, it is not open to the appellant to

question the finding of the High Court that the

land is not agricultural land.

16. Otherwise also, we are of the opinion that in

light of the fact that the land was situated by the

side of a residential locality and was in the midst

of a highly developed industrial locality, the

acquired land was capable of being used for non-

agricultural purposes and should be considered as

non-agricultural land in determination of

compensation. We find support in this reasoning

from the judgment of this court in Anjani Molu

Dessai v. State of Goa and Anr. reported in (2010)


13 SCC 710. The relevant portion of the said

judgment is set out below:

“5. The High Court has also referred to

the situation of the property and has

noted that the acquired lands are in a

village where all basic amenities like

primary health centre, high school, post

office were available within a distance of

500 meters. It can therefore be safely

concluded that the acquired lands are not

undeveloped rural land, but can be

urbanisable land situated near a developed

semi-urban village with access to all

infrastructure facilities.”

17. We find that the High Court relied on Ex. P5 to

determine the market value of compensation. It

appears that the said sale instance relates to a

small residential site measuring 30′ X 43′ (125.309

sq. mts). The acquired land in question measures 34

guntas. The Reference Court rejected Ex. P5 in

determining market value of land since it found

that the land covered by Ex. P5 was at a distance

of 2 kms from the acquired land. We are of the

opinion that the Reference Court erred in rejecting


Ex. P-5 in determining compensation for the

acquired land.

18. The judgment of the High Court is well reasoned

and well considered. We find no perversity in its

reasoning. The only issue is that Ex. P-5, which

was relied upon by the High Court, relates to a

small piece of land, whereas the acquisition is of

a larger piece of land. It is not an absolute rule

that when the acquired land is a large tract of

land, sale instances relating to smaller pieces of

land cannot be considered. There are certain

circumstances when sale deeds of small pieces of

land can be used to determine the value of acquired

land which is comparatively large in area, as can

be seen from the judicial pronouncements mentioned


19. It has been held in the case of Land

Acquisition Officer, Kammarapally Village,

Nizamabad District, Andhra Pradesh


v. Nookala Rajamallu and Ors. reported in (2003) 12

SCC 334 that:

“6. Where large area is the subject-matter

of acquisition, rate at which small plots

are sold cannot be said to be a safe

criterion. Reference in this context may

be made to few decisions of this Court in

Collector of Lakhimour v. Bhuban Chandra

Dutta: AIR 1971 SC 2015, Prithvi Raj

Taneja v. State of M.P. AIR 1977 SC 1560

and Kausalya Devi Bogra v. Land

Acquisition Officer AIR 1984 SC 892.

7. It cannot, however, be laid down as an

absolute proposition that the rates fixed

for the small plots cannot be the basis

for fixation of the rate. For example,

where there is no other material, it may

in appropriate cases be open to the

adjudicating Court to make comparison of

the prices paid for small plots of land.

However, in such cases necessary

deductions/adjustments have to be made

while determining the prices.”

20. In the case of Bhagwathula Samanna and Ors. v.

Special Tahsildar and Land Acquisition Officer,

reported in (1991) 4 SCC 506, it was held:

“13. The proposition that large area of

land cannot possibly fetch a price at the


same rate at which small plots are sold is

not absolute proposition and in given

circumstances it would be permissible to

take into account the price fetched by the

small plots of land. If the larger tract

of land because of advantageous position

is capable of being used for the purpose

for which the smaller plots are used and

is also situated in a developed area with

little or no requirement of further

development, the principle of deduction of

the value for purpose of comparison is not


21. In Land Acquisition Officer, Revenue Divisional

Officer, Chittoor v. Smt. L. Kamalamma (dead) by

Lrs. and others, AIR 1998 SC 781, this Court held

as under:-

“…when no sales of comparable land was

available where large chunks of land had

been sold, even land transactions in

respect of smaller extent of land could

be taken note of as indicating the price

that it may fetch in respect of large

tracts of land by making appropriate

deductions such as for development of the

land by providing enough space for roads,

sewers, drains, expenses involved in

formation of a lay out, lump sum payment

as also the waiting period required for

selling the sites that would be formed.”


22. Further, it has also been held in the case of

Smt. Basavva and Ors. v. Special Land Acquisition

and Ors,

reported in AIR 1996 SC 3168, that

the court has to consider whether sales relating to

smaller pieces of land are genuine and reliable and

whether they are in respect of comparable lands. In

case the said requirements are met, sufficient

deduction should be made to arrive at a just and

fair market value of large tracks of land. Further,

the court stated that the time lag for real

development and the waiting period for development

were also relevant factors to be considered in

determining compensation. The court added that each

case depended upon its own facts. In the said case,

based on the particular facts and circumstances,

this court made a total deduction of 65% in

determination of compensation.

23. It may also be noticed that in the normal

course of events, it is hardly possible for a

claimant to produce sale instances of large tracks


of land. The sale of land containing large tracks

are generally very far and few. Normally, the sale

instances would relate to small pieces of land.

This limitation of sale transaction cannot operate

to the disadvantage of the claimants. Thus, the

Court should look into sale instances of smaller

pieces of land while applying reasonable element of


24. In the present case, the land acquired is 34

guntas and the notification under section 4 of the

Act was issued on 17.7.1994. We have already held

that for the purposes of determining compensation,

the acquired land should be considered to be non-

agricultural land. Ex. P-5 is a sale deed for sale

of a non-agricultural land dated 23.4.1993. The

land covered by the sale deed is about 2 kms. away

from the acquired land.

25. In contrast, the Reference Court relied upon

the compensation awarded for acquisition of land in


the neighbouring villages, which had occurred 5

years prior to the present acquisition. We are of

the opinion that market value of the land acquired

in the present case is much better reflected by

exemplar Ex. P-5, which relates to sale of land

just 2 kms. away from the acquired land and is just

a little over a year before the issuance of the

section 4 notification in the present case. All

other sale deeds presented before this Court could

be relied upon and were rightly rejected by both

the Reference Court and the High Court for the

reasons given above.

26. Thus, we are of the opinion that the sale deed

Ex. P-5 was rightly relied upon by the High Court

in determining compensation.

27. The High Court made a 50% deduction since the

sale instance Ex. P-5 related to a smaller piece of

land. We are of the considered view that the said


deduction should be increased to 60%, which we find

fair, just and reasonable in the circumstances.

28. Hence, the judgment of the High Court is

modified to the extent of the abovementioned

deduction. All other findings of the High Court are


29. The appeal is thus dismissed with the aforesaid


30. No order as to costs.




New Delhi                          (SWATANTER KUMAR)

July 05, 2011


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