Jhalejar Contractor Vs. State of Gujarat  Insc 243 (13
Singh & S.B. Sinha
W I T
H CIVIL APPEAL NO. 2486-2487 OF 2001 S.B. SINHA, J :
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.
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.
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.
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.
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.
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
High Court, however, having regard to the decision of this Court 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.
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
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 and Land Acquisition Officer, Visakhapatnam Municipality, Visakhapatnam [(1991) 4 SCC 506], Land Acquisition
Officer Revenue Divisional Officer, 481].
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 Balanagouda (Dead) By LRs.
& Ors. [Civil Appeal Nos. 62-65 of 2000 disposed of on 10th December, 2003].
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 India [(2001) 7 SCC 211].
land under acquisition consisted of 16 plots. Out of them two plots measured
18528 square meters and 10993 square meters respectively.
of the small plots which are 14 in number are as under:
C.T.S. No. Area acquired (in sq.m)
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:
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:
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.
however, drew our attention to the following observations made by the Reference Court:
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 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.
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.
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.
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.
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.
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.
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.
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:
factors Negative Factors
of size (i) largeness of area
to a road (ii) situation in the interior at a distance from the road
on a road (iii) narrow strip of land with very small frontage compared to depth
to developed area
level requiring the depressed portion to be filled up (v) regular shape (v)
remoteness from developed locality
vis-`-vis land under acquisition (vi) some special disadvantageous factors
which would deter a purchaser
value for an owner of an adjoining property to whom it may have some very
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
peculiar features of this case may, at this juncture, be noticed.
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.
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
purpose for which acquisition is made is also a relevant factor for Acquisition
Officer and Others [(1996) 9 SCC 640], deduction to the extent of 65% was made
towards development charges.
Samanna (supra), it has been held:
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 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.
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:
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.
2 SCC 150], deduction to the extent of 53% was allowed.
Acquisition Officer and Another [(1996) 2 SCC 62], it was held:
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.
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.
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 of 53% and further deduction towards development charges @ 33-1/3%,
as ordered by the High Court, was not illegal. been noticed that where lands
are acquired for specific purposes deduction by way of development charges is
not, however, oblivious of the fact that normally one-third deduction of
further amount of compensation has been directed in some Acquisition Officer
& Mandal R. Officer, (2003) 12 SCC 642, H.P. Housing 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.
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.
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.
claimants Appellants, however, would be entitled to interest on solatium as
the said question is no longer res integra.
Sunder (supra), this Court overruled Prem Nath Kapur (supra). The Constitution
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 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.
Appeals are disposed of with the aforementioned directions.
shall be no order as to costs.