Valliyammal & Anr vs Spl.Tahsildar(Laq) & Anr

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.6127-6128 OF 2011

(Arising out of Special Leave Petition (Civil) Nos.22086-22087 of 2009)

Valliyammal and another etc. ... Appellants

Versus

Special Tahsildar (Land Acquisition) and another etc. ... Respondents

With

CIVIL APPEAL NOS.6132-6133 OF 2011

(Arising out of SLP(C) Nos. 25581-25582 of 2009)

CIVIL APPEAL NOS.6135-6138 OF 2011

(Arising out of SLP(C) Nos. 25587-25590 of 2009)

CIVIL APPEAL NO.6134 OF 2011

(Arising out of SLP(C) Nos. 25591 of 2009)

CIVIL APPEAL NOS. 6139-6140 O F 2011

(Arising out of SLP(C) Nos. 25596-25597 of 2009)

CIVIL APPEAL NOS.6141-6146 OF 2011

(Arising out of SLP(C) Nos. 33777-33782 of 2009)

CIVIL APPEAL NO.6147 OF 2011

(Arising out of SLP(C) No. 33808 of 2009)

CIVIL APPEAL NOS. 6148-6154 OF 2011

(Arising out of SLP(C) Nos. 2194-2200 of 2010)

CIVIL APPEAL NO.6155 OF 2011

(Arising out of SLP(C) No. 12581 of 2010)

2

CIVIL APPEAL NO.6156 OF 2011

(Arising out of SLP(C) No. 22831 of 2010)

CIVIL APPEAL NO.6157 OF 2011

(Arising out of SLP(C) No. 23654 of 2010)

CIVIL APPEAL NO. 6158 OF 2011

(Arising out of SLP(C) No. 23655 of 2010)

CIVIL APPEAL NO.6159 OF 2011

(Arising out of SLP(C) No. 23656 of 2010)

CIVIL APPEAL NO. 6160 OF 2011

(Arising out of SLP(C) No. 23657 of 2010)

CIVIL APPEAL NO.6161 OF 2011

(Arising out of SLP(C) No. 23658 of 2010)

CIVIL APPEAL NO.6162 OF 2011

(Arising out of SLP(C) No. 23659 of 2010)

CIVIL APPEAL NO.6163 OF 2011

(Arising out of SLP(C) No. 23666 of 2010)

CIVIL APPEAL NO. 6164 OF 2011

(Arising out of SLP(C) No. 23669 of 2010)

CIVIL APPEAL NO. 6165 OF 2011

(Arising out of SLP(C) No. 23641 of 2010)

CIVIL APPEAL NO.6166 OF 2011

(Arising out of SLP(C) No. 23643 of 2010)

CIVIL APPEAL NO.6170 OF 2011

(Arising out of SLP(C) No. 1147 of 2011)

CIVIL APPEAL NO. 6168 OF 2011

(Arising out of SLP(C) No. 1961 of 2011)

CIVIL APPEAL NO.6169 OF 2011

(Arising out of SLP(C) No. 2187 of 2011)

3

CIVIL APPEAL NO. 6171 OF 2011

(Arising out of SLP(C) No. 3520 of 2011)

CIVIL APPEAL NO. 6167 OF 2011

(Arising out of SLP(C) No. 26825 of 2011)

J U D G M E N T

G.S. Singhvi, J.

1. Delay in filing Special Leave Petition (Civil) Nos.33777-

33782/2009, 22831/2010, 23641/2010, 23643/2010 and 1961/2011 is

condoned.

2. Leave granted.

3. These appeals filed against the judgments/orders passed by

different Division Benches of the Madras High Court substantially

reducing the amount of compensation determined by Additional District

Judge, Erode and Principal Subordinate Judge, Erode (hereinafter

referred to as, "the Reference Court") are illustrative of the plight of the

owners of small parcels of land, who are deprived of the only source of

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livelihood and who have to spend substantial amount in litigation and

wait for years together to get just and reasonable compensation in lieu of

the compulsory acquisition of their land by the State.

4. For the sake of convenience, we shall first advert to the factual

matrix of the appeals arising out of SLP (C) Nos.25581-82 of 2009 -

Jaganatha Gounder v. Special Tahsildar (Land Acquisition), Erode and

another because learned counsel for the parties made submissions

keeping in view the factual matrix of those cases.

5. In exercise of the powers vested in it under Section 4(1) of the

Land Acquisition Act, 1894 (for short, "the Act"), the Government of

Tamil Nadu issued notification dated 17.1.1997 for the acquisition of

55.89 acres land comprised in different survey numbers of village Erode

for construction of houses by the Tamil Nadu Housing Board (for short,

"the Board").

6. By an award dated 3.3.2000, the Land Acquisition Officer fixed

market value of the acquired land at the rate of Rs.50,000/- per acre.

This did not satisfy the appellants who filed applications under Section

18(1) of the Act and claimed compensation at the rate of Rs.50/- per

square yard by asserting that the acquired land is situated near Erode-

5 Perundurai and Sennimalai Road junction and residential colonies like

Anna Nagar, Sri Nagar, Bharthi Nagar, Rail Nagar, Jeeva Nagar,

Subramania Nagar, Kalaigner Karunanidhi Nagar, Arts College,

Women's College, Kongu Higher Secondary School, St. Joseph Clinic,

Hospitals etc. and was having potential for being used for housing and

business purposes. Thereupon, the Collector made reference to the Court

for the determination of the compensation payable to the appellants. The

Reference Court considered the pleadings of the parties and evidence

produced by them and concluded that the appellants are entitled to

compensation at the rate of Rs.28/- per square feet.

7. Both, the appellants and the respondents challenged the judgment

of the Reference Court by filing appeals under Section 54 of the Act.

They also filed applications under Order XLI Rule 27 of the Code of

Civil Procedure for permission to adduce additional evidence. The High

Court allowed the applications and directed the Reference Court to give

opportunity to the parties to adduce additional evidence and make fresh

determination of the compensation payable to the appellants and remit its

findings along with the documents.

8. In compliance of the direction given by the High Court, the

Reference Court considered the additional evidence produced by the

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parties and opined that the appellants are entitled to compensation at the

rate of Rs.19.28 per square feet.

9. After receiving the report of the Reference Court, the High Court

considered the evidence produced by the parties and held that valuation

of the land, which was made basis by the Land Acquisition Officer for

fixing market value cannot be relied upon because that land was situated

far away from the acquired land. The High Court noted that there was a

steady increase of property value in the area because of repeated

acquisitions made on behalf of the Board, referred to the topo-sketch and

sale deed Exhibit C.8 dated 8.2.1991 and observed:

".............The said property is in a housing colony by name

K.K.Nagar and the area is considered to be a developed area.

Therefore we are of the opinion that the valuation as found

mentioned in Ex.C.8 could be taken as Bench Mark for the

purpose of fixing the market rate. In fact we have taken a

document of the year 1989 showing the market rate at Rs.20/-

per sq.ft. for arriving at the market rate in respect of the

property acquired as per the notification issued in the year

1991.

Even though as per Ex.C.8 dated 8.2.1991 the property was

sold at the rate of Rs.30/- per sq.ft., the said transaction relates

to a smaller extent. However as per the subject notification

larger extent of property was acquired and as such the value as

shown in Ex.C.8 cannot be taken in its entirety for arriving at

the market rate. The Housing Board has to develop the property

for housing purposes. It is in evidence that the acquired

property was only an agricultural property and it has no

potential as a housing site. No evidence was placed on the side

of the claimants to show that they have been getting substantial

income from the property or it has got high potential as a

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house-site. Therefore we are of the view that necessary

deduction has to be made towards development charges."

The High Court then adverted to the principles laid down by this

Court in State of Uttar Pradesh v. Ram Kumari Devi (1996) 8 SCC

577, Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC

789, Atma Singh v. State of Haryana (2008) 2 SCC 568, The General

Manager, Oil and Natural Gas Corporation Ltd. v. Rameshbhai

Jivanbhai Patel (2008) 14 SCC 745, Revenue Divisional Officer-cum-

L.A.O. v. Shaik Azam Saheb etc. (2009) 4 SCC 395, Faridabad Gas

Power Project, NTPC v. Om Prakash (2009) 4 SCC 719 for

determination of market value of the acquired land as also the rule of

deduction towards development cost and held:

"The acquired property is a manwari land and even according

to the claimants it was not a house-site developed by them. The

acquisition was only for construction of residential houses and

therefore necessarily the Housing Board has to spend

considerable amount for development and to make it fit for

construction of residential units. On the other hand, the

property in Ex.C.8 is a developed site and the same was sold

only as a house-site. Therefore considering the advantages,

development and potential of the property in Ex.C.8 vis-a-vis

the disadvantages, undeveloped state and lack of potential of

the acquired property, we are of the view that deduction at the

rate of 40% has to be given towards development charges."

The High Court also took cognizance of the fact that the sale

instance Exhibit C.8 relied upon for fixing market value was in respect of

a small piece of land and held:

8 "While fixing the market rate, very often, documents of smaller

extent would be taken as the basis. The normal rule in fixing

compensation for large extent of land with reference to the

value shown in the sale document of lesser extent is that there

must be suitable deduction. It is common knowledge that larger

extent of property invariably fetch less when compared to

smaller extent. No prudent buyer would buy large extent of land

by quoting the price prevailing in the market for a small piece

of land.

The document in Ex.C.8 is in respect of a property having only

1200 sq.ft. However as per the present notification, large extent

of property was acquired. Therefore we are of the considered

opinion that necessary deduction on account of small size of the

property retained for fixing the market value has to be given.

On an overall consideration of the matter, we fix the deduction

on account of small size of the plot taken as the basic document

at 20%.

Taking an overall view of the matter we are of the opinion that

40% deduction should be made towards development costs and

20% on account of small size of the plot taken as the basis to

arrive at the market value. Accordingly, while retaining Ex.C.8

dated 8.2.1991 (Rate Rs.30/- per sq.ft.) as the basic document

for arriving at the market rate, we deduct 40% by way of

development charges and 20% by way of small size of the plot

and arrive at the market rate at Rs.5,22,720/- per acre."

10. The facts of the other appeals have been incorporated in a

statement, which is marked as Schedule `A' and shall be treated as part of

this judgment. A perusal of the statement shows that various parcels of

land were acquired by the State Government vide notifications dated

9.10.1990, 15.4.1991, 16.4.1991, 22.5.1991, 27.5.1991, 8.4.1992,

15.3.1995, 17.1.1997, 12.2.1997 and 19.3.1997 and the High Court

9

reduced the market value fixed by the Reference Court from Rs.19.28 to

Rs.12/- and from Rs.20/- to Rs.8/- per square feet.

11. Shri V. Giri, learned senior counsel appearing for the appellants in

some of the cases criticized the impugned judgments/orders primarily on

the ground that while reducing market value fixed by the Reference

Court, the High Court completely ignored the settled rule that the

landowner is entitled to the benefit of escalation in land prices. Learned

senior counsel then argued that the High Court was not at all justified in

making 40% deduction towards the cost of development and 20% further

deduction on account of smallness of the size of plot, which was taken as

basis for arriving at the market value ignoring that the appellants had

suffered huge monetary loss on account of non-payment of compensation

for years together. The other learned counsel appearing for the appellants

adopted the arguments of Shri Giri.

12. Shri Gurukrishna Kumar, Additional Advocate General, Tamil

Nadu fairly stated that the appellants are entitled to the benefit of

escalation in land prices but argued that the deduction of 40% towards

development cost and 20% due to smallness of the size of the plots sold

vide Exhibit C.8 cannot be termed as excessive.

1 13. We have considered the respective arguments and carefully

perused the record. At the threshold, it will be useful to notice some of

the judgments in which the Court has laid down guiding principles for

determination of market value of the acquired land.

14. In Shaji Kuriakose v. Indian Oil Corporation Limited (2001) 7

SCC 650, this Court held:

"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 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 a dissimilarity in regard to locality,

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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."

(emphasis supplied)

15. In Viluben Jhalejar Contractor v. State of Gujarat (supra), this

Court laid down the following principles for determination of market

value of the acquired land:

"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.

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

1

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 (iv) lower level requiring the

area depressed portion to be filled

up

(v) regular shape (v) remoteness from developed

locality

(vi) level vis-`-vis land (vi) some special

under 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

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."

16. In Atma Singh v. State of Haryana (supra), the Court held:

"In order to determine the compensation which the tenure-

holders are entitled to get for their land which has been

acquired, the main question to be considered is what is the

market value of the land. Section 23(1) of the Act lays down

what the court has to take into consideration while Section 24

lays down what the court shall not take into consideration and

have to be neglected. The main object of the enquiry before the

1

court is to determine the market value of the land acquired. The

expression "market value" has been the subject-matter of

consideration by this Court in several cases. The market value

is the price that a willing purchaser would pay to a willing

seller for the property having due regard to its existing

condition with all its existing advantages and its potential

possibilities when led out in most advantageous manner

excluding any advantage due to carrying out of the scheme for

which the property is compulsorily acquired. In considering

market value disinclination of the vendor to part with his land

and the urgent necessity of the purchaser to buy should be

disregarded. The guiding star would be the conduct of

hypothetical willing vendor who would offer the land and a

purchaser in normal human conduct would be willing to buy as

a prudent man in normal market conditions but not an anxious

dealing at arm's length nor facade of sale nor fictitious sale

brought about in quick succession or otherwise to inflate the

market value. The determination of market value is the

prediction of an economic event viz. a price outcome of

hypothetical sale expressed in terms of probabilities. See Kamta

Prasad Singh v. State of Bihar, Prithvi Raj Taneja v. State of

M.P., Administrator General of W.B. v. Collector, Varanasi and

Periyar Pareekanni Rubbers Ltd. v. State of Kerala.

For ascertaining the market value of the land, the potentiality of

the acquired land should also be taken into consideration.

Potentiality means capacity or possibility for changing or

developing into state of actuality. It is well settled that market

value of a property has to be determined having due regard to

its existing condition with all its existing advantages and its

potential possibility when led out in its most advantageous

manner. The question whether a land has potential value or not,

is primarily one of fact depending upon its condition, situation,

user to which it is put or is reasonably capable of being put and

proximity to residential, commercial or industrial areas or

institutions. The existing amenities like water, electricity,

possibility of their further extension, whether near about town

is developing or has prospect of development have to be taken

into consideration. See Collector v. Dr. Harisingh Thakur,

Raghubans Narain Singh v. U.P. Govt. and Administrator

General, W.B. v. Collector Varanasi. It has been held in

Kausalya Devi Bogra v. Land Acquisition Officer and Suresh

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Kumar v. Town Improvement Trust that failing to consider

potential value of the acquired land is an error of principle."

17. In fixing market value of the acquired land, which is undeveloped

or under-developed, the Courts have generally approved deduction of

1/3rd of the market value towards development cost except when no

development is required to be made for implementation of the public

purpose for which land is acquired. In Kasturi v. State of Haryana

(2003) 1 SCC 354, the Court held:

"............It is well settled that in respect of agricultural land or

undeveloped land which has potential value for housing or

commercial purposes, normally 1/3rd amount of compensation

has to be deducted out of the amount of compensation payable

on the acquired land subject to certain variations depending on

its nature, location, extent of expenditure involved for

development and the area required for roads and other civic

amenities to develop the land so as to make the plots for

residential or commercial purposes. A land may be plain or

uneven, the soil of the land may be soft or hard bearing on the

foundation for the purpose of making construction; may be the

land is situated in the midst of a developed area all around but

that land may have a hillock or may be low-lying or may be

having deep ditches. So the amount of expenses that may be

incurred in developing the area also varies. A claimant who

claims that his land is fully developed and nothing more is

required to be done for developmental purposes, must show on

the basis of evidence that it is such a land and it is so located. In

the absence of such evidence, merely saying that the area

adjoining his land is a developed area, is not enough

particularly when the extent of the acquired land is large and

even if a small portion of the land is abutting the main road in

the developed area, does not give the land the character of a

developed area. In 84 acres of land acquired even if one portion

on one side abuts the main road, the remaining large area where

planned development is required, needs laying of internal roads,

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drainage, sewer, water, electricity lines, providing civic

amenities, etc. However, in cases of some land where there are

certain advantages by virtue of the developed area around, it

may help in reducing the percentage of cut to be applied, as the

developmental charges required may be less on that account.

There may be various factual factors which may have to be

taken into consideration while applying the cut in payment of

compensation towards developmental charges, may be in some

cases it is more than 1/3rd and in some cases less than 1/3rd. It

must be remembered that there is difference between a

developed area and an area having potential value, which is yet

to be developed. The fact that an area is developed or adjacent

to a developed area will not ipso facto make every land situated

in the area also developed to be valued as a building site or plot,

particularly when vast tracts are acquired, as in this case, for

development purpose."

(emphasis supplied)

18. The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v.

State of U.P. (2003) 10 SCC 525, V. Hanumantha Reddy v. Land

Acquisition Officer & Mandal Revenue Officer (2003) 12 SCC 642,

H.P. Housing Board v. Bharat S. Negi (2004) 2 SCC 184 and Kiran

Tandon v. Allahabad Development Authority (2004) 10 SCC 745. In

Lal Chand v. Union of India (2009) 15 SCC 769, the Court indicated

that percentage of deduction for development to be made for arriving at

market value of large tracts of undeveloped agricultural land with

potential for development can vary between 20 and 75 per cent of the

price of developed plots and observed:

"The `deduction for development' consists of two components.

The first is with reference to the area required to be utilised for

1

developmental works and the second is the cost of the

development works. ...

Therefore the deduction for the `development factor' to be

made with reference to the price of a small plot in a developed

layout, to arrive at the cost of undeveloped land, will be for

more than the deduction with reference to the price of a small

plot in an unauthorised private layout or an industrial layout. It

is also well known that the development cost incurred by

statutory agencies is much higher than the cost incurred by

private developers, having regard to higher overheads and

expenditure."

19. In A.P. Housing Board v. K. Manohar Reddy (2010) 12 SCC

707, the rule of 1/3rd deduction towards development cost was invoked

while determining market value of the acquired land. In Subh Ram v.

State of Haryana (2010) 1 SCC 444, this Court held as under:

"Deduction of "development cost" is the concept used to derive

the "wholesale price" of a large undeveloped land with

reference to the "retail price" of a small developed plot. The

difference between the value of a small developed plot and the

value of a large undeveloped land is the "development cost".

Two factors have a bearing on the quantum (or percentage) of

deduction in the "retail price" as development cost. Firstly, the

percentage of deduction is decided with reference to the extent

and nature of development of the area/layout in which the small

developed plot is situated. Secondly, the condition of the

acquired land as on the date of preliminary notification,

whether it was undeveloped, or partly developed, is considered

and appropriate adjustment is made in the percentage of

deduction to take note of the developed status of the acquired

land.

The percentage of deduction (development cost factor) will

be applied fully where the acquired land has no

development. But where the acquired land can be considered

to be partly developed (say for example, having good road

1

access or having the amenity of electricity, water, etc.) then

the development cost (that is, percentage of deduction) will

be modulated with reference to the extent of development of

the acquired land as on the date of acquisition. But under no

circumstances, will the future use or purpose of acquisition

play a role in determining the percentage of deduction

towards development cost."

(emphasis supplied)

20. If the impugned judgment is considered in the light of the

principles laid down in the aforesaid cases, there is no escape from the

conclusion that the same suffer from multiple errors and call for

interference by this Court.

21. The first error committed by the High Court relates to deduction of

40% towards development charges. While doing so, the High Court

ignored its own finding that the acquired land was situated in the vicinity

of the residential colonies developed by the Board and other

establishments as also the fact that the respondents had not produced any

evidence to show that they will have to start the development work from

scratch. Therefore, the High Court could have, at best, applied 1/3rd

deduction towards development cost.

22. The second error committed by the High Court is that while fixing

market value, it did not take into account the escalation in land prices. In

Ranjit Singh v. U.T. of Chandigarh (1992) 4 SCC 659, Land

1

Acquisition Officer and Revenue Divisional Officer v. Ramanjulu

(2005) 9 SCC 594, Krishi Utpadan Mandi Samiti v. Bipin Kumar

(2004) 2 SCC 283, Sardar Jogendra Singh v. State of U.P. (2008) 17

SCC 133, Revenue Divisional Officer-cum-L.A.O. v. Shaik Azam

Saheb (supra) and Oil and Natural Gas Corporation Ltd. v.

Rameshbhai Jivanbhai Patel (supra), this Court has repeatedly held that

the exercise undertaken for fixing market value and determination of the

compensation payable to the landowner should necessarily involve

consideration of escalation in land prices. In the last mentioned judgment,

the Court noticed the earlier precedents and observed as under:

"We have examined the facts of the three decisions relied on by

the respondents. They all related to acquisition of lands in urban

or semi-urban areas. Ranjit Singh related to acquisition for

development of Sector 41 of Chandigarh. Ramanjulu related to

acquisition of the third phase of an existing and established

industrial estate in an urban area. Bipin Kumar related to an

acquisition of lands adjoining Badaun-Delhi Highway in a

semi-urban area where building construction activity was going

on all around the acquired lands.

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

1

prices have touched even 30% to 50% or more per year, during

the nineties.

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 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 thumb 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.

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 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."

2

23. Though it may appear repetitive, we deem it necessary to mention

that the acquired land is situated in the close vicinity of various

residential colonies, educational institutions, hospitals etc. and is on the

junction of two important roads. Therefore, it can safely be concluded

that the land is semi-urban and has huge potential for being developed as

housing sites and the High Court should have added 10% per annum

escalation in the price specified in the sale deeds relied upon for fixing

market value of the acquired land.

24. The third error committed by the High Court is that in fixing

market value of the land acquired vide notifications issued in 1991, 1992

and 1995 with reference to sale deed dated 4.9.1990 vide which a piece

of land was sold at the rate of Rs.20/- per square feet, the High Court did

not add 10% escalation per annum in the land prices.

25. We may have sustained 20% deduction keeping in view the

smallness of the plots which were sold vide sale deeds dated 4.9.1990

and 8.2.1991, but, in the peculiar facts of the case, we think that it will be

wholly unjust to allow such deduction. Majority of the appellants have

been deprived of their entire landholding and they have waited for 14 to

20 years for getting the compensation. It appears that in compliance of

the interim orders passed by the Court, some of the appellants did get

2

25% and one of them get 35% of the compensation, but majority of them

have not received a single penny towards compensation and at this

distant point of time, it will be wholly unjust to deprive them of their

legitimate right by approving the 20% deduction made by the High

Court. In such matters, the Court cannot be oblivious of the fact that the

landowners have been deprived of the only source of livelihood, the cost

of living has gone up manifold and the purchasing power of rupee has

substantially declined.

26. In the result, the appeals are allowed and market value of the

acquired land is fixed as under:

(i) For the acquisition made vide notification dated 9.10.1990,

the base document will be sale deed dated 4.9.1990 vide which

land was sold at the rate of Rs.20/- per square feet. One-third of

Rs.20/- comes to Rs.6.6 per square feet. After deducting Rs.6.6

from Rs.20/-, market value of the acquired land will be Rs.13.4 per

square feet which is rounded off to Rs.14/- per square feet.

(ii) For the acquisitions made by the notifications issued on

15.4.1991, 16.4.1991 and 27.5.1991, the base document will be

sale deed dated 8.2.1991 vide which land was sold at the rate of

Rs.30/- per square feet. One-third of Rs.30/- is equal to Rs.10/- per

2

square feet. After deducting Rs.10/- from Rs.30/-, market value

will be Rs.20/- per square feet.

(iii) For the acquisition made vide notification dated 08.4.1992,

the base document will be sale deed dated 8.2.1991 vide which

land was sold at the rate of Rs.30/- per square feet. By adding

10% per annum in lieu of escalation in the land prices and

deducting 1/3rd towards development cost, market value of the

acquired land will be Rs.29.2 per square feet which is rounded off

to Rs.30/- per square feet.

(iv) For the acquisition made vide notification dated 15.3.1995,

the base document will be sale deed dated 8.2.1991 vide which

land was sold at the rate of Rs.30/- per square feet. By adding

10% per annum in lieu of escalation in the land prices and

deducting 1/3rd towards development cost, market value of the

acquired land will be Rs.29.2 per square feet which is rounded off

to Rs.30/- per square feet.

(v) For the acquisitions made by the notifications issued on

17.1.1997 and 19.3.1997, the base document will be sale deed

dated 8.2.1991 vide which land was sold at the rate of Rs.30/- per

2

square feet. If 10% per annum is added in lieu of escalation in the

land prices and 1/3rd is deducted towards development charges,

market value of the acquired land will be Rs.35.3 per square feet

which is rounded off toRs.36/- per square feet.

The appellants shall get solatium, interest and other statutory

benefits in accordance with the provisions of the Act.

27. With a view to ensure that the landowners are not fleeced by the

middleman, we deem it proper to issue the following further directions:

(i) Within one month from the date of receipt of copy of this

judgment, the Land Acquisition Officer shall depute an officer

subordinate to him not below the rank of Naib Tehsildar or an

equivalent rank, who shall get in touch with the landowners and/or

their legal representatives and inform them about their entitlement

to receive enhanced compensation.

(ii) The concerned officers shall instruct the landowners and/or

their legal representatives to open savings bank account in a

nationalized or scheduled bank, in case they already do not have

such account.

2

(iii) The account numbers of the landowners and/or their legal

representatives should be furnished by the concerned officer to the

Land Acquisition Officer within a period of two months.

(iv) Within next one month, the Land Acquisition Officer shall

deposit the amount of compensation along with other statutory

benefits in the bank accounts of the landowners and/or their legal

representatives by way of cheques.

.............................J.

[G.S. Singhvi]

.........................

.....J.

[H.L. Dattu]

New Delhi;

August 01, 2011.

2

SCHEDULE `A'

S. SLP(C) Nos. & Name of Date of Date of Date of Date of High Court

No. Parties Section 4(1) award by Reference Judgment in Appeal

Notification LAO and Court order Suit Nos. and rate

compensat- and Amount fixed

ion fixed.

1. 22086-22087/2009 - 19.3.1997 21.6.2000 & 4.7.2003 and 28.4.2009 in A.S.

Valliyammal and another Rs.50,000/- Rs.28/- per Nos.200 & 201/2009

v. Special Tahsildar per acre square feet and Rs.12/- per square

(Land Acquisition), feet.

Erode and another

2. 25591/2009 - 17.1.1997 3.3.2000 & 24.3.2005 and 2.3.2009 in A.S. No.

Thangamuthu Gounder v. Rs.50,000/- Rs.30/- per 706/2006 and Rs.12/-

Special Tahsildar (Land per acre square feet per square feet

Acquisition), Erode and

another

3. 25587-90/2009 - Mohan 15.4.1991 10.06.1994 & 27.11.2002 2.3.2009 in A.S. Nos.

and others etc v. Rs.37,500/- and Rs.20/- 813, 820, 821 and

Special Tahsildar (Land per acre per square 822/2003 and Rs.8/- per

Acquisition), Erode and feet square feet

another (Rs.3,48,480/- per acre)

4. 25596-97/2009 - 9.10.1990/ 28.9.1994, 30.03.2001 2.3.2009 in A.S. Nos.

K.R.Palaniappan v. 16.4.1991 10.6.1994 & and Rs.16/- 170/2003 and 871/2006

Special Tahsildar (Land Rs.37,500/- per square and Rs.8/- per square

Acquisition), Erode and per acre feet feet

another

5. 33777-82/2009 - 15.4.1991 10.6.1994 & 16.4.1999 and 2.3.2009 in A.S.

Ramayammal and others Rs.37.500/- Rs.2,18,500/- Nos.759 to 764/1999

v. Special Tahsildar per acre per acre and Rs.8/- per square

(Land Acquisition), feet (Rs.3,48,480/- per

Erode and another acre)

6. 33808/2009 - 27.5.1991 03.7.1994 & 27.11.2006 2.3.2009 in A.S. Nos.

Vishwanatha Gounder v. Rs.37,500/- and Rs.20/- 721/2003 and Rs.8/- per

Special Tahsildar (Land per acre per square square feet

Acquisition) Erode feet (Rs.3,48,480/- per acre)

7. 2194-2200/2010 - 19.2.1997 31.6.2000 & 29.11.2002 2.3.2009 in A.S. Nos.

Veerasamy and others v. Rs.50,000/- and Rs.28/- 727, 729, 730, 731,

Special Tahsildar (Land per acre per square 732, 733 and 734/2003

Acquisition), Erode and feet and Rs.12/- per square

another feet

8. 12581/2010 - N. 12.2.1997 3.3.2000 & 2.3.2006 and 8.7.2009 in A.S. No.

Pazhanisamy Gounder v. Rs.50,000/- Rs.30/- per 854/2006 and Rs.12/-

Special Tahsildar (Land per acre square feet per square feet

Acquisition), Erode and (Rs.1.15 per (Rs.5,22,720/- per acre)

another square feet)

2

9. 22831/2010 - Arumugha 15.4.1991 10.6.1994 & 25.10.1999 2.3.2009 in A.S. No.

Gounder and another v. Rs.37,500/- and Rs.17/- 325/2000 and Rs.8/- per

Special Tahsildar (Land per acre per square square feet

Acquisition), Erode and feet (Rs.3,48,480/- per acre)

another

10. 23654/2010 - 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.

Kulanthaiswamy and Rs.37,500/- Rs.20/- per 428/2008 and Rs.8/- per

another v. Special per acre square feet square feet

Tahsildar (Land

Acquisition) Erode and

another

11. 23655/2010 - K.B. 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.

Dakhinamoorthy and Rs.37,500/- Rs.20/- per 543/2008 and Rs.8/- per

others v. Special per acre square feet square feet

Tahsildar (Land

Acquisition) Erode and

another

12. 23656/2010 - P. 08.4.1992 22.5.1995 & 26.3.2007 and 11.12.2009 in A.S. No.

Chandrasekar and others Rs.37,500/- Rs.20/- per 610/2008 and Rs.8/-

v. Special Tahsildar per acre square feet per square feet

(Land Acquisition) Erode

and another

13. 23657/2010 - 15.4.1991 10.6.1994 & 4.1.2006 and 11.12.2009 in A.S. No.

Pavayammal and others Rs.37,500/- Rs.20/- per 1002/2007 and Rs.8/-

v. Special Tahsildar per acre square feet per square feet

(Land Acquisition) Erode

and another

14. 23658/2010 - Lakshmi & 15.3.1995 25.3.1998 & 6.2.2006 and 11.12.2009 in A.S. No.

Anr. v. Special Tahsildar Rs.39,220/- Rs.22/- per 356/2007 and Rs.8/- per

(Land Acquisition) Erode per acre square feet square feet

and another

15. 23659/2010 - 15.4.1991 10.6.1994 & 29.11.2005 11.12.2009 in A.S. No.

Kannammal and others v. Rs.37,500/- and Rs.20/- 748/2008 and Rs.8/- per

Special Tahsildar (Land per acre per square square feet

Acquisition) Erode and feet

another

16. 23666/2010-Kannammal 15.3.1995 25.3.1998 & 29.11.2002 11.12.2009 in A.S. No.

@Rajeshwari & another Rs.50,000/- and Rs.28/- 770/2004 and Rs.8/- per

v. Special Tahsildar per acre per square square feet

(Land Acquisition) Erode feet

& another

17. 23669/2010 - 27.5.1991 10.6.1994 & 29.11.2005 11.12.2009 in A.S. No.

Kannammal and others v. Rs.37,500/- and Rs.20/- 760/2008 and Rs.8/- per

Special Tahsildar (Land per acre per square square feet

Acquisition) Erode and feet

another

18. 23641/2010 - 27.5.1991 3.7.1994 & 23.3.2001 and 2.3.2009 in A.S. No.

Chinnasamy and others Rs.37,500/- Rs.17/- per 618/2003 and Rs.8/- per

v. Special Tahsildar per acre square feet square feet

2

(Land Acquisition) Erode

and another

19. 23643/2010 -K.N. 09.10.1990 28.9.1994 & 17.01.2005 2.3.2009 in A.S. No.

Arumugham v. Special Rs.37,500/- and 756/2008 and Rs.8/- per

Tahsildar (Land per acre Rs.75,000/- square feet

Acquisition) Erode and per acre (Rs.3,48,480/- per acre)

another

20. 26825/2010 - 27.5.1991 03.08.1994 & 27.3.2008 and 19.12.2009 in A.S. No.

Thambusamy (Dead by Rs.37,500/- Rs.9/- per 835/2008 and Rs.8/- per

LRs.) v. Special per acre square feet square feet

Tahsildar (Land

Acquisition) Erode and

another

21. 1961/2011 -Nachimuthu 19.2.1997 31.6.2000 & 31.3.2004 and 2.3.2009 in A.S. No.

v. Special Tahsildar Rs.50,000/- Rs.28/- per 544/2005 and Rs.12/-

(Land Acquisition) Erode per acre square feet per square feet

and another (Rs.5,22,720/- per acre)

22. 2187/2011- Kannaki & 19.3.1997 21.06.2000 & 29.2.2005 and 8.7.2009 in A.S.

another v. Special Rs.50,000/- Rs.30/- per No.141/2006 and

Tahsildar (Land per acre square feet Rs.12/- per square feet

Acquisition) Erode and (Rs.5,22,720/- per acre)

another

23. 1147/2011 -Jayalakshmi 19.3.1997 21.6.2000 & 4.4.2006 and 8.7.2009 in A.S. No.

and others v. Special Rs.50,000/- Rs.25/- per 181/2007 and Rs.12/-

Tahsildar (Land per acre square feet per square feet

Acquisition) Erode and (Rs.5,22,720/- per acre)

another

24. 3520/2011-P.Subbarayan 22.5.1991 10.8.1994 & 21.11.2005 8.7.2009 in A.S. No.

and others v. Special Rs. 37,500/- and Rs.17/- 392/2007 and Rs.8/- per

Tahsildar (Land per acre (Rs. per square square feet

Acquisition) Erode and 0.86 per sq. feet (Rs.3,48,480/- per acre)

another ft.)