Nirmal Singh & Etc.Etc vs State Of Haryana Tr.Collector

NIRMAL SINGH Etc. Etc. ………APPELLANTS Vs. STATE OF HARYANA THROUGH COLLECTOR ………RESPONDENT WITH C.A. Nos.7916-7918 of 2011, C.A. No. 10207 of 2011, C.A. Nos. 7547-7549 of 2013, AND C.A. Nos. 7707-7709 of 2013

J U D G M E N T

V. GOPALA GOWDA, J.

These groups of appeals have been filed against

the impugned Judgment and order dated 10.12.2010

passed by the High Court of Punjab and Haryana at

Chandigarh. Since the grievance and prayer of all

the appellant-land owners are similar, namely, for

enhancement of compensation in respect of their

acquired land in question, for the sake of

convenience and brevity, we shall refer to the facts

of C.A. No(s). 3982-3989 of 2011 which have been

filed against the Judgment and award passed in

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R.F.A. Nos. 69 of 2007, 70 of 2007, 71 of 2007, 72

of 2007, 288 of 2008, 289 of 2008. All these R.F.A.s

were disposed of in terms of Judgment and award of

even date passed in R.F.A. No. 4538 of 2006, whereby

the High Court enhanced the compensation in respect

of the acquired lands to Rs.9,00,000/- per acre from

Rs.6,60,000/- per acre as was determined by the

Reference Court.

2. The State of Haryana issued a notification dated

22.08.2001 under Section 4 of the Land Acquisition

Act, 1894 (in short ‘the Act’) for acquisition of

45.3 acres of land owned by the appellants situated

at Pehowa, District Kurukshetra, for the public

purpose, namely for construction of road,

development and utilization of land for residential

and commercial purposes. At the time of proposed

acquisition, the nature of the land was agricultural

and mostly vacant. Declaration that the land is

required for a public purpose was made vide

notification under Section 6 of the Act on

25.01.2002. The Land Acquisition Collector (for

short ‘the Collector’) vide award dated 19.11.2003

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assessed the market value of the acquired land at

the rate of Rs.6,00,000/- per acre.

3. Being unsatisfied with the award of the

Collector, the appellant-land owners filed

objections claiming a market value of their land at

Rs.60,00,000/- per acre. The Collector made a

reference to the Addl. District Judge, Kurukshetra

which is the Reference Court under Section 18 of the

Act for determination of the correct market value of

the acquired land. The learned Addl. District Judge

vide his order dated 28.08.2006, on the basis of

material evidence on record assessed the value at

Rs.6,60,000/- per acre besides other statutory

benefits under Sections 23(1A), 23(2) and 28 of the

Act.

4. Regular First Appeals were filed by the

appellant-land owners as they were dissatisfied with

the compensation awarded by the Reference Court and

sought for further enhancement of compensation for

the acquired land, whereas the State filed the

appeals praying for reduction of the compensation

before the High Court of Punjab and Haryana at

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Chandigarh.

5. After hearing the parties and going through the

evidence on record, the High Court found that there

was significant variation in the sale instances of

lands located close to the acquired land as depicted

in the sale deeds produced by the State as well as

by the land owners. The High Court, vide its

impugned Judgment and award dated 10.12.2010, by

applying a thumb rule, determined and enhanced the

amount of compensation at Rs.9,00,000/- per acre.

Hence, these appeals are filed by the land owners

with prayer for further enhancement of compensation

in respect of their acquired land by determining the

correct market value.

6. The learned counsel for the appellants contended

that the market value of the acquired land has not

been determined by the High Court based on the sale

instances duly produced and exhibited before the

Addl. District Judge. The High Court has erroneously

held that the compensation cannot be awarded for a

large scale of land on the basis of sale instances

of small pieces of land. The learned counsel has

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further contended that the High Court, despite

appreciating that the land pertaining to the sale

deeds produced by the land owners are located just

outside the boundary of the acquired land, has

failed to determine the correct market value of the

acquired land based on the sale instances which are

substantive evidence produced in justification of

the claim. The learned counsel for the appellants

relied on the case of Haridwar Development

Authority. v. Raghubir Singh1 to support their

contention, wherein this Court has held thus:-

“7. The acquisition with which we are concerned relates to a comparatively small extent of village land measuring about 38 bighas of compact contiguous land. The High Court was of the view that the size and situation did not warrant any belting and all lands deserved the same rate of compensation. The Authority has not placed any material to show that any area was less advantageously situated. Therefore the view of the High Court that compensation should be awarded at a uniform rate does not call for interference.

9. The claimants do not dispute the appropriateness of the said sale transaction taken as the basis for determination of compensation. Their

1 (2010) 11 SCC 581

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grievance is that no deduction or cut should have been effected in the price disclosed by the sale deed, for arriving at the market value, in view of the following factors: (i) that the acquired lands were near to the main Bye-pass Road and had road access on two sides; (ii) that many residential houses had already come up in the surrounding areas, and the entire area was already fast developing; and (iii) that the acquired land had the potential to be used an urban residential area.”

7. On the other hand, the learned counsel for the

State contended that the High Court after

considering evidence and all relevant materials on

record has already enhanced the amount of

compensation payable to the land owners more than

the actual value of land. The High Court

categorically observed that there is a lot of

variation in the consideration paid, as is depicted

in the sale deeds produced by the State as well as

by the land owners, though they are located close to

the acquired land. The High Court observed that when

on facts it is found that the land owners have not

been adequately compensated, the courts have to

apply a principle thumb rule. Thus, by applying the

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above principle the High Court has already enhanced

the compensation from Rs.6,60,000/- to Rs.9,00,000/-

per acre and hence, the same does not warrant any

further enhancement. It is further contended by the

learned counsel that the High Court did not make

deductions towards developmental charges, but

rightly ignored the sale instances of very small

pieces of land, upon which reliance was placed by

the land owners as it had no co-relation with the

market value of the agricultural land in that area.

8. With reference to the above rival legal

contentions, the following points would arise for

consideration of this Court:

i. What should be the appropriate rate of

compensation and extent of deductions towards

developmental charges for the acquired land in

question?

ii. Whether the sale-consideration mentioned in the

sale deeds of small pieces of land, which are

situated close to the acquired land can be

considered for determination of the compensation

in favour of land owners?

iii. What award?

Since all the questions are interrelated, we are

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answering all of them simultaneously.

9. We have carefully considered the respective

arguments of the learned counsel for both the

parties with reference to the material evidence on

record with a view to examine as to whether the land

owners are entitled for enhanced compensation on the

basis of sale instances placed by the appellants on

record in relation to the small bits of land

situated near the acquired land. It has been proved

on record that the acquired land is surrounded by

hafed go-downs, marriage places, grain market and

rice shelters. Undoubtedly, the acquired land is

advantageously located in a prime locale, as it is

close to commercial and residential establishments.

Therefore, the acquired land has attained non

agricultural potentiality. The said land also falls

within the municipal limits of Pehowa, besides being

bound by the river Saraswati.

10. Further, it is on record that the land has been

acquired by the State Government for the purpose of

developing commercial, residential and urban estate,

Pehowa. Since the acquired land is situated within

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the developed area of the municipal limits of

Pehowa, there is no doubt that it has acquired

potential value to be utilised for both residential

and commercial purposes in the future.

11. With respect to the general principles that are

to be followed for determining just and reasonable

compensation to land owners for acquisition of their

land, we refer to the case of Smt. Tribeni Devi and

Ors. v. Collector of Ranchi2; in support of the

same, wherein this Court held that:-

“4. The general principles for determining compensation have been set out in Sections 23 and 24 of the Act. The compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser, but as this may not be possible to ascertain with any amount of precision, the authority charged with the duty to award is bound to make an estimate judged by an objective standard. The land acquired has, therefore, to be valued not only with reference to its condition at the time of the declaration under Section 4 of the Act but its potential value also must be taken into account. The

2 (1972)1 SCC 480

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sale-deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of computing the market value. This, however, is not the only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalising the rent which according to the present prevailing rate of interest is 20 times the annual rent. But this also is not a conclusive method. This Court had in Special Land Acquisition Officer, Bangalore v. T. Adinarayan Setty (1959) Supp.

1 S.C.R. 404, indicated at page 412 the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under Section 4(1) which are : (i) opinion of experts, (ii) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and

(iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible an estimate of the market value. In arriving to a reasonably correct market value, it may be necessary to take even two or all of those

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methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentially nor is it possible in all cases to have reliable material from which that valuation can be accurately determined.”

12. A perusal of the record shows that there is

significant variation in the consideration paid in

the array of sale instances submitted by the

parties. Moreover the consideration paid for the

sale instances produced by the appellants are in

relation to small pieces of land which are near the

acquired land. To consider these small pieces of

land as the basis for determining just compensation

to be paid to the appellants for the acquired land

as urged by the learned counsel for the appellants,

we refer to the legal principles laid down by this

Court after examining the relevant provisions of the

Act in catena of cases. In Special Land Acquisition 3 Officer and Anr. v. M.K. Rafiq Saheb this Court

held as under:-

3

(2011)7 SCC 714

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“24. 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 deduction.” To determine the rate of compensation to be paid for

the acquired land when the same is made on the basis

of sale deeds with respect to smaller pieces of

land, we have to make deductions in order to keep

provision for the developmental expenses that the

acquirer has to incur. The principle of deductions

in the determination of the compensation based on

the sale instances of smaller pieces of land was

established in Smt. Basavva and Ors. v. Special Land

Acquisition4, wherein this Court held thus:-

“3. ….On the principle of deductions in the determination of the compensation, this Court in K. Vasundara Devi v. Revenue Divisional Officer, LAO AIR 1995 SC 2481 has

4 (1996)9 SCC 640

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considered the entire case law and has held that the Court, in the first instance, has to consider whether sales relating to smaller pieces of lands are genuine and reliable and whether they are in respect of comparable lands. In the event the Court finds that such sales are genuine and reliable and the lands have comparable features, sufficient deduction should be made to arrive at the just and fair market value of large tracks of land. The time lag for real development and the waiting period for development are also relevant consideration for determination of just and adequate compensation. Each case depends upon its own facts. For deduction of development charges, the nature of the development, conditions and nature of the land, the land required to be set apart under the building rules for roads, sewerage, electricity, parks, water etc, and all other relevant circumstances involved are to be considered.” (Emphasis laid by this Court) A similar opinion was held in Bhagwathula Samanna

and others v. Special Tahsildar and Land 5 Acquisition Officer, Visakhapatnam Municipality ,

wherein this Court held as under:-

“7. …. In fixing the market value of a large property on the basis of a sale transaction for smaller property, generally a deduction is given taking into consideration the

5 (1991)4 SCC 506

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expenses required for development of the larger tract to make smaller plots within that area in order to compare with the small plots dealt with under the sale transaction.

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…..” (Emphasis laid by this Court)

13. Further, this Court has discussed the basis on

which deductions on the market value should be made

for the development of land, keeping in mind various

factors that influence it. In the case of Viluben

Jhalejar Contractor v. State of Gujarat6, wherein

this Court held thus:-

“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 adjustment has to be made having regard to various positive and negative factors vis-à- vis the land under acquisition by placing the two in juxtaposition. The positive and negative factors are as under:

6 (2005)4 SCC 789

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Positive factors Negative factors

1. smallness of size largeness of area

2. proximity to a road situation in the interior at a distance from the road

3. frontage on a road narrow strip of land with very small frontage compared to depth

4. nearness to developed area lower level requiring the depressed portion to be filled up

5. regular shape remoteness from developed locality

6. level vis-à-vis land under some special acquisition disadvantageous factors which would deter a purchaser

7. special value for an owner of an adjoining property to whom it may have some very special advantage

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21. 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.”

Thus, when it comes to deductions for development of

land, it can sway back and forth and can only be

determined after carefully considering factors such

as size of land, nearness to developed area, etc. as

discussed in the above case.

14. Keeping in mind the guidelines laid down by

this Court in the catena of cases referred to supra,

we are of the opinion to determine just and

reasonable compensation for the acquired land on the

basis of the sale instances as submitted by the

appellants by taking the average of the sale

considerations mentioned therein that are relevant

to the date of issue of Notification under Section 4

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of the Act. However, the same is to be determined

keeping in mind that developmental costs are higher

for larger areas of land as compared to small

portions of land. The rate of compensation must be

subject to deductions towards developmental purpose

that will have to be incurred by the respondent-

State.

15. Sale instances in relation to small pieces of

land situated near the acquired land can be

considered, subject to (i) reasonable deductions for

developmental costs that will be incurred in the

future as per the cases referred to supra and (ii)

the evidence that these lands can be compared to the

acquired land in terms of its vicinity and the

comparable benefits and advantages.

Before we determine the extent of deductions

to be allowed on the market value of the acquired

land, we must take note of the following details;

firstly, the acquired land is mostly agricultural in

nature and vacant at the moment; secondly, the

determination of the market value of the acquired

land based on the sale instances in relation to

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small pieces of land situated near the acquired land

as produced by the land owners; thirdly, the well

settled principle by this Court in a catena of cases

that larger portions of land incur higher

developmental costs compared to smaller portions of

land. Therefore, we are of the opinion based on the

facts and circumstances of the cases on hand and

keeping in mind the legal principles laid down in

the cases referred to supra, to allow 60% deduction

on the market value of the acquired land towards

developmental expenses.

The following table depicts the relevant sale

deeds as per the date of notification under Section

4 of the Act that are produced as evidence by the

land owners, followed by the deduction towards

developmental expenses and the value per acre of the

acquired land:

Ex. Date Area sold Value Per acre(Rs.) P4 17.5.2001 200 sq. yards 48,40,000

P12 20.6.2001 95 sq. yards 33,88,000

P13 11.1.2001 5.37 marlas 24,13,407

P14 11.1.2001 80 sq. yards 24,20,000

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Average market value per acre 32,65,351

Deductions for developmental 60% expenses 13,06,140 VALUE PER ACRE

16. However, having regard the fact that the

acquired land have got non-agricultural potentiality

as the same being in close proximity to the already

developed commercial and residential areas, within

the municipal limits of Pehowa & and the significant

variation in the sale considerations of small pieces

of land situated in the proximity of the acquired

land, we are of the view to award a just and

reasonable compensation in respect of the acquired

land at Rs.12,00,000/- per acre. It is the

contention of the appellants that the lands

described in Ex. P4, P12, P13 and P14 are comparable

to the acquired land with respect to their

potentiality, location and conditions, but on

perusal of the evidence on record, we are of the

view that the said contention may be correct to some

extent, but the exact location of the small pieces

of land covered in the sale instances is not

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forthcoming. Therefore, the market value of the

acquired land cannot be entirely based at

Rs.13,06,140/- per acre as per the sale instances

mentioned in table above. However, having regard to

the location, potentiality of the acquired land and

other relevant factors and circumstances of the

cases we are of the opinion that the appellant-land

owners are entitled for enhancement of compensation.

17. Hence, in view of the foregoing reasons, the

appellant-land owners will be entitled to just and

reasonable compensation at the rate of

Rs.12,00,000/- per acre. Besides the above amount,

they will also be entitled to the statutory benefits

in accordance with Sections 23(1A) and 23(2) on the

compensation awarded. The appellant-land owners are

also entitled to get interest on the compensation at

the rate of 15% p.a. under the proviso to Section 28

of the Act.

18. All the appeals are allowed accordingly in the

above terms. Since the land of the appellants were

acquired in the year 2002, the respondents are

directed to pay the compensation awarded in favour

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of the appellants by way of demand draft after

proper calculation made within eight weeks from the

receipt of copy of this Judgment and Award. There

shall be no order as to costs.

………………………………………………………J. [V.GOPALA GOWDA]

………………………………………………………J. [ADARSH KUMAR GOEL]

New Delhi, September 26, 2014

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ITEM NO.1A-For Judgment COURT NO.13 SECTION IV

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s). 3982-3987/2011

NIRMAL SINGH & ETC.ETC. Appellant(s)

VERSUS STATE OF HARYANA TR.COLLECTOR Respondent(s) WITH C.A. No. 7916-7918/2011 C.A. No. 10207/2011 C.A. No. 7547-7549/2013 C.A. No. 7707-7709/2013

Date : 26/09/2014 These appeals were called on for JUDGMENT today.

For Appellant(s) Ms. Jaspreet Gogia,Adv.

Mr. Vipin Gogia, Adv.

Mr. Brijendra Singh, Adv.

Mr. Sanjay Bansal, Adv.

Mr. Ajay Choudhary,Adv.

Mr. Sachin Jain, Adv.

Dr. Kailash Chand,Adv.

Mr. Dinesh Verma, Adv.

Mr. Rajat Sharma, Adv.

Mr. Subhasish Bhowmick,Adv.

For Respondent(s) Ms. Anubha Agrawal,Adv.

Hon'ble Mr. Justice V.Gopala Gowda pronounced the

judgment of the Bench comprising His Lordship and Hon'ble Mr.

Justice Adarsh Kumar Goel.

The appeals are allowed in terms of the signed order.

(VINOD KUMAR) (MALA KUMARI SHARMA) COURT MASTER COURT MASTER

(Signed Non-Reportable judgment is placed on the file)

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