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CASE NO.:

Appeal (civil) 2485 of 2001

PETITIONER:

Viluben Jhalejar Contractor (D) By LRs.

RESPONDENT:

State of Gujarat

DATE OF JUDGMENT: 13/04/2005

BENCH:

B.P. Singh & S.B. Sinha

JUDGMENT:

JUDGMENT

W I T H

CIVIL APPEAL NO. 2486-2487 OF 2001

S.B. SINHA, J :

The Government of Gujarat issued a notification under Section 4(1) of

the Land Acquisition Act (the Act) for acquisition of lands situated in the

town Santrampur which would have come under submergence of water

released from Kadana Jalagar Yojna due to water logging at Kadana Dam.

A declaration in terms of Section 6 was made on 13th October, 1980. In

response to the notification issued to the claimants under Section 9 of the

Act, compensation at the rate of Rs. 40/- per square feet for the acquired

lands was claimed. Compensation ranging from Rs. 35/- to Rs. 60/- per

square meter was offered by the Land Acquisition Officer in terms of an

award dated 16th March, 1982 under Section 11 of the Act. An application

for reference was filed by the claimants under Section 18 of the Act

requiring the Land Acquisition Officer to refer the matter relating to

determination of the market value of the acquired lands to the Civil Court.

Before the Reference Court, the claimants initially claimed compensation at

the rate of Rs. 200 per square meter which was subsequently enhanced to Rs.

250/- per square meter. By a judgment and order dated 16th April, 1996, the

learned District Judge allowed the reference application filed by the

claimants determining the market value at the rate of Rs. 225/- per square

meter. The State of Gujarat preferred an appeal thereagainst in the High

Court of Gujarat which was marked as First Appeal No. 5041/96. A

Division Bench of the High Court by a judgment and order dated 11th May,

1999 allowed the said appeal and remitted the matter to the Reference Court

on the premise that the deed of sale whereupon the claimants relied upon had

not been proved in accordance with law. Before the District Court, upon

remand parties adduced evidence.

The Reference Court relying on or on the basis of a deed of sale dated

15th December, 1978 (Ex. 145), whereunder a piece of land measuring 46.30

square meters situated at Godhra Bhagal was sold and other evidences

brought on records came to the conclusion that the lands under acquisition

would have fetched at least Rs. 200/- per square meter. The Reference Court

was further of the opinion that the claimants were furthermore to incur

development charges which would have varied between 33% to 53% and on

the basis thereof determined the market value at the rate of Rs. 134 per

square meter.

Furthermore, the Reference Court extended the statutory benefits of

solatium in terms of Section 23(2) of the Act as well as interest thereon in

terms of Section 28 thereof. Both the parties preferred appeals thereagainst

before the High Court of Gujarat.

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A Division Bench of the High Court was of the view that the acquired

lands were fully developed. The records of the case also indicated that after

the acquired lands were submerged in the water of Kadana dam, the

development of the area of Pratappura had shifted to the locality known as

Godhra Bhagal. The basis for awarding compensation was the deed of sale

dated 15th December, 1978 (Ex. 145), whereby approximately 46.30 square

meters had been transferred at a consideration of Rs. 270/- per square meter,

and upon making a deduction of 33% for the larger area and 25% for the

smaller area, the claimants were held to be entitled to receive compensation

at the rate of Rs. 180/- per square meter having large area and Rs. 200/- per

square meter for the lands having small area.

The High Court, however, having regard to the decision of this Court

in Prem Nath Kapur and Another Vs. National Fertilizers Corporation of

India Limited and Others [(1996) 2 SCC 71] was of the opinion that the

claimants were not entitled to interest on the amount of solatium. Aggrieved

thereby, both the parties are before us.

Ms. Hemantika Wahi, learned counsel appearing on behalf of the

State of Gujarat would contend that the High Court committed a manifest

error in passing the impugned judgment relying on or on the basis of the

deed of sale of Survey No. 1177 which measured only 46.30 square meters

and situated in a different locality whereas the area under acquisition was

approximately 30,000 square meters belonging to one family.

The learned counsel would contend that the High Court ought to have

deducted 50% from the value of the land in Survey No. 1177, not only

keeping in view of the fact the acquired lands have large area but also on the

ground of future developments which were required to be made. It was

submitted that keeping in view the fact that the claimants would be getting

the amount of compensation in lump sum, the High Court erred in passing

the impugned judgment. In support of the said proposition, strong reliance

has been placed on Bhagwathula Samanna and Others Vs. Special Tahsildar

and Land Acquisition Officer, Visakhapatnam Municipality, Visakhapatnam

[(1991) 4 SCC 506], Land Acquisition Officer Revenue Divisional Officer,

Chittor Vs. L. Kamalamma (Smt.) Dead by LRs and Others [(1998) 2 SCC

385] and Ravinder Narain and Another Vs. Union of India [(2003) 4 SCC

481].

Mr. Ranjit Kumar, learned senior counsel appearing on behalf of the

Claimants-Appellants, on the other hand, would contend that the High Court

failed to take into consideration the fact that the lands situated in village

Pratappura were fully developed whereas lands situated in Godhra Bhagal

were not so developed and in that view of the matter it was not a case where

the amount of compensation should have been determined upon deduction to

the extent of 33% and 25% respectively for the large and small area. It was

further contended that deduction both for the largeness of the area as well as

the development is not permissible. Reliance in this connection has been

placed The Registrar, University of Agricultural Sciences, Dharwad Vs.

Balanagouda (Dead) By LRs. & Ors. [Civil Appeal Nos. 62-65 of 2000

disposed of on 10th December, 2003].

It was further contended that the High Court committed a manifest

error in refusing to grant interest on solatium relying on or on the basis of

the decision of this Court in Prem Nath Kapur (supra) which stands

overruled by a Constitution Bench of this Court in Sunder Vs. Union of

India [(2001) 7 SCC 211].

The land under acquisition consisted of 16 plots. Out of them two

plots measured 18528 square meters and 10993 square meters respectively.

The area of the small plots which are 14 in number are as under:

"S.No. C.T.S. No. Area acquired (in sq.m)

1. 833 130.00

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2. 838 46.20

3. 839 35.28

4. 834 365.56

5. 857 234.00

6. 858 47.77

7. 859 47.97

8. 860 47.97

9. 861 46.60

10. 862 63.18

11. 840 54.60

12. 841 42.00

13. 842 26.40

14. 843 28.38

Total 1215.91"

The learned Land Acquisition Collector in his award noticed that the

population of Santrampur town was 12000. The acquired lands were

situated near an area known as Main market. It was held:

"Pucca residential houses, quarters of Government

employees, rest house and open lands are there

very near to the acquired lands. Acquired lands

are of regular square shape having even level and

is located in downwards about 4 feet from road

level, surrounding lands are generally used for

purpose other than agriculture purpose. These

lands are more useful for residential purpose i.e. all

lands are having N.A. potentialiaties. S.No. 25 is

"Wada" land and this land is situated towards

Godhra Lunawada road. Lunawada and on

Northern side of road going towards Santrampur

and near Chikhota river Santrampur is reserved for

recreation place in implemented development map,

whereas presently well and Bungalow of His

Highness Maharaja Shri Krushnakumar Sinh is

situated in the said land."

The High Court as regard the question as to whether the area is a

developed one or not noticed the deposition of Barjorbhai Jalejar Contractor

who alleged:

"The acquired lands were having facilities of

electricity, water and roads. It is borne out from

his evidence that the claimants' ancestors were

carrying on business of distillery till 1949 and

thereafter they had started business of pulse and

rice mills on the acquired lands. It is an admitted

fact that the acquired lands were converted into

non-agricultural use since many years prior to the

acquisition."

Before us, Ms. Wahi did not raise any contention that the sale instance

relied upon by the Reference Court as also the High Court was improper.

She, however, drew our attention to the following observations made by the

Reference Court:

"However, the fact remain that the lands under

acquisition are situated in the area called as

Pratappura in Santrampura town, whereas the sale

deed, ex. 145, pertains to a property situated in

Godhra Bhagol area The sale deed is not about the

property situated in Pratappura area. Furthermore,

though the amount of consideration of the entire

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land is Rs. 20,000/-, but there is no just and proper

data about the valuation of the built up portion of

the said plot. The L.A. Officer in his award dtd.

16.3.82 fixed the valuation of the built-up portion

at Rs. 7,500/- but in the sale deed, ex. 145, nothing

specific is mentioned about the separate valuation

of the built-up portion in the land. The witness

Giriraj Pandit, in his deposition, stated that when

the property was purchased, at that time,

construction work in the plot was only upto plinth

level. However, in this connection, perusing the

sale deed, ex. 145, it is, specifically, stated that in

the land, a house was situated and even

Santrampur Municipality issued a house no. 3484,

to this house. Therefore, this part of the deposition

of witness Giriraj Pandit, appears to be contrary to

the averments made in the sale deed, ex. 145."

Pratappura appears to be a small town. There is nothing on record to

show that the area was fully urbanized. However, in the area, a distillery, a

Rice Mill, a Pulse Mill and even an Ice Factory had been running.

Although, the Land Acquisition Collector referred to certain sale instances in

his award, as indicated hereinbefore, we may assume that the sale deed dated

15th December, 1978 (Ex. 145) should be the basis for determination of

compensation despite the fact that it relates to a very small piece of land.

While determining the amount of compensation, certain factors must be

taken into consideration. When the amount of compensation is determined

on yardage basis, at least one-third of the land acquired should be deducted

towards development purposes, viz., providing roads, electricity, drainage

facility and other betterment developments. Such development charges may

be in between 33% to 53%.

The Reference Court was of the view that although the area was

developed, there is nothing on record to show that there had been facilities

of internal roads drainage and other facilities. The learned Reference Court,

however, arrived at a finding of fact that nothing was brought on record to

show that on the date on which the possession had been taken, a distillery,

rice mill, pulse mill and ice factory had been functioning.

The Reference Court, as noticed hereinbefore, was of the opinion that

keeping in view of the fact that the area of the land covered by Ex. 145 was

a small piece of land, the market price for the acquired land should be

determined at Rs. 200/- per square meters wherefrom 33% should be

deducted towards development charges. The High Court, however, was of

the opinion that 33% should be deducted from the total amount of

consideration covered by Ex. 145 for the large area and 25% for the small

area.

Section 23 of the Act specifies the matters required to be considered

in determining the compensation; the principal among which is the

determination of the market value of the land on the date of the publication

of the notification under Sub-section (1) of Section 4.

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.

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.

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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

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 area

(v) lower level requiring the

depressed portion to be filled up

(v) regular shape

(v) remoteness from developed

locality

(vi) level vis-`-vis land under

acquisition

(vi) some special 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.

Whereas a smaller plot may be within the reach of many, a large block

of land will have to be developed preparing a layout plan, carving out roads,

leaving open spaces, plotting out smaller plots, waiting for purchasers and

the hazards of an entrepreneur. Such development charges may range

between 20% and 50% of the total price.

Certain peculiar features of this case may, at this juncture, be noticed.

Due to construction of Kadana Dam and due to water logging causing

submergence, the development of Pratappura even according to the

Claimants had practically stopped. Development shifted to the area known

as Godhra Bhagal. The finding of the Reference Court to the effect that the

acquired lands had potentiality for more development is, thus, not correct.

A river known as Suki intervened between the Santrampur town and

Godhra Bhagal. In a case of this nature, it is difficult to evolve a principle

which would apply to all situations. Some amount of rational guess work, in

our opinion, is inevitable.

The purpose for which acquisition is made is also a relevant factor for

determining the market value. In Basavva (Smt.) and Others Vs. Spl. Land

Acquisition Officer and Others [(1996) 9 SCC 640], deduction to the extent

of 65% was made towards development charges.

In Bhagwathula Samanna (supra), it has been held:

"11. The principle of deduction in the land value

covered by the comparable sale is thus adopted in

order to arrive at the market value of the acquired

land. In applying the principle it is necessary to

consider all relevant facts. It is not the extent of the

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area covered under the acquisition which is the

only relevant factor. Even in the vast area there

may be land which is fully developed having all

amenities and situated in an advantageous position.

If smaller area within the large tract is already

developed and suitable for building purposes and

have in its vicinity roads, drainage, electricity,

communications etc. then the principle of

deduction simply for the reason that it is part of the

large tract acquired, may not be justified.

In L. Kamalamma (supra), this Court held:

"\005Ext. B-30 is a sale deed dated 9-8-1976, the

transaction having taken place prior to eight

months from the issue of the preliminary

notification for acquisition of land in the present

case. Having found that the piece of land referred

in Ext. B-30 is situated very close to the lands that

are acquired under the notification in question the

reference court and the High Court relied upon the

said document and, in our view, rightly. Further

when no sales of comparable land were 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 layout, lump sum payment as

also the waiting period required for selling the sites

that would be formed.

In Administrator General of West Bengal Vs. Collector, Varanasi

[(1988) 2 SCC 150], deduction to the extent of 53% was allowed.

In K.S. Shivadevamma and Others Vs. Assistant Commissioner and

Land Acquisition Officer and Another [(1996) 2 SCC 62], it was held:

"10. It is then contended that 53% is not automatic

but depends upon the nature of the development

and the stage of development. We are inclined to

agree with the learned counsel that the extent of

deduction depends upon development need in each

case. Under the Building Rules 53% of land is

required to be left out. This Court has laid as a

general rule that for laying the roads and other

amenities 33-1/3% is required to be deducted.

Where the development has already taken place,

appropriate deduction needs to be made. In this

case, we do not find any development had taken

place as on that date. When we are determining

compensation under Section 23(1), as on the date

of notification under Section 4(1), we have to

consider the situation of the land development, if

already made, and other relevant facts as on that

date. No doubt, the land possessed potential value,

but no development had taken place as on the date.

In view of the obligation on the part of the owner

to hand over the land to the City Improvement

Trust for roads and for other amenities and his

requirement to expend money for laying the roads,

water supply mains, electricity etc., the deduction

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of 53% and further deduction towards

development charges @ 33-1/3%, as ordered by

the High Court, was not illegal.

In Hasanali Khanbhai & Sons & Ors. Vs. State of Gujarat, (1995) 2

SCC 422 and L.A.O. Vs. Nookala Rajamallu, (2003) 10 SCALE 307, it has

been noticed that where lands are acquired for specific purposes deduction

by way of development charges is permissible.

We are not, however, oblivious of the fact that normally one-third

deduction of further amount of compensation has been directed in some

cases. [See Kasturi and Others Vs. State of Haryana, (2003) 1 SCC 354,

Tejumal Bhojwani (Dead) Through LRS. And Others Vs. State of U.P.,

(2003) 10 SCC 525, V. Hanumantha Reddy (Dead) BY LRS. Vs. Land

Acquisition Officer & Mandal R. Officer, (2003) 12 SCC 642, H.P. Housing

Board Vs. Bharat S. Negi and Others, (2004) 2 SCC 184 and Kiran Tandon

Vs. Allahabad Development Authority and Another, (2004) 10 SCC 745].

In The Registrar, University of Agricultural Sciences, Dharwad

(supra), whereupon Mr. Ranjit Kumar placed strong reliance, the Court

noticed that if the acquisition is made for agricultural purpose, question of

development thereof would not arise; but if the sale instance was in respect

of small piece of land whereas the acquisition is for a large piece of land,

although development cost may not be deducted, there has to be deduction

for largeness of the land and also for the fact that these are agricultural lands.

In that view of the matter, deduction at the rate of 33% made by the High

Court was upheld. It may not, therefore, be correct to contend, as has been

submitted by Mr. Ranjit Kumar, that there cannot be different deductions,

one for the largeness of the land and another for development costs.

We have noticed hereinbefore that the purpose for which the land is

acquired must also be taken into consideration. In the instant case, the lands

were acquired because they were to be submerged under water. The land

would not have any potential value. The development of area where the

land was situated had stopped. On the other hand, the development began

on the other side of the river Suki. The parties were aware of the

consequences of the project undertaken by the Government of Gujarat. The

sale instances, for comparison, having regard to the nature and area of the

land carves out a distinction, inasmuchas the area sold under Ex. 145 is

46.30 square meters while two plots under acquisition measured 18528

square meters and 10993 square meters respectively. We, therefore, are of

the opinion, having regard to the entire facts and circumstances of this case

that interest of justice would be subserved if compensation is determined at

the rate of Rs. 160/- per square meter for the large plots and Rs. 175/- per

square meter for the small plots.

The claimants \026 Appellants, however, would be entitled to interest on

solatium as the said question is no longer res integra.

In Sunder (supra), this Court overruled Prem Nath Kapur (supra). The

Constitution Bench held:

"24. The proviso to Section 34 of the Act makes

the position further clear. The proviso says that "if

such compensation" is not paid within one year

from the date of taking possession of the land,

interest shall stand escalated to 15% per annum

from the date of expiry of the said period of one

year "on the amount of compensation or part

thereof which has not been paid or deposited

before the date of such expiry". It is inconceivable

that the solatium amount would attract only the

escalated rate of interest from the expiry of one

year and that there would be no interest on

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solatium during the preceding period. What the

legislature intended was to make the aggregate

amount under Section 23 of the Act to reach the

hands of the person as and when the award is

passed, at any rate as soon as he is deprived of the

possession of his land. Any delay in making

payment of the said sum should enable the party to

have interest on the said sum until he receives the

payment. Splitting up the compensation into

different components for the purpose of payment

of interest under Section 34 was not in the

contemplation of the legislature when that section

was framed or enacted.

These Appeals are disposed of with the aforementioned directions.

There shall be no order as to costs.