Dadu Yogendrenath Singh & Ors Vs.
The Collector, Seoni  INSC 28 (25 January 1977)
SARKARIA, RANJIT SINGH SARKARIA, RANJIT SINGH
KHANNA, HANS RAJ SINGH, JASWANT
CITATION: 1977 AIR 1128 1977 SCR (2) 757 1977
SCC (2) 1
The Land Acquisition Act, 1894, S.
23(1)--Considerations for determination of compensation, scope of.
Responding to a notice under s. 9 of the Land
Acquisition Act, 1894, the appellants filed a claim for Rs.1500/per acre at
which rate the adjoining lands were sold. The Collector awarded compensation at
the rate of Rs.450/per acre. At the instance of the appellants under s. 18 of
the Act, the matter was referred to the District Judge who enhanced the
compensation to Rs.11,000/per acre. An appeal by the Collector was allowed by
the High Court on the ground that the District Judge had acted contrary to the
mandate contained in s. 25(1) of the Act, by awarding compensation in excess of
the amount claimed. The appellants contended that their land had building
potentiality and its value was substantially more than Rs.500/per acre, which
had been paid by them to the Government as diversion charges for permission to
use the adjoining land for building houses.
Allowing the appeal by certificate, the
HELD: The circumstance that the appellants
had voluntarily paid Rs.500/per acre as diversion charges, for laying out the
adjoining land into plots as building sites, taken in conjunction with the
other facts, namely, that the land in question is within the municipal limits
and is located just on the edge of an inhabited locality of the town, having. Other
buildings in the immediate vicinity, show that its potential value as building
sites is much more than the rate of Rs.450/per acre, awarded by the Collector
and the High Court. [760 C-D, 761 A-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 2128 of 1969.
From the Judgment and Order dated 4th May,
1968 of the Madhya Pradesh High Court in First Appeal No. 88/67.
M.S. Gupta for the Appellants..
Ram Panjwani and H.S. Parihar for Respondent.
The Judgment of the Court was delivered by
SARKARIA, J. This appeal on certificate is directed against a judgment, dated
May 4, 1968, of the High Court of Madhya Pradesh. It arises out of these facts:
The appellants were owners of 7.35 acres of
land being a part of Khasra No. 47/1 in the area of village Manglipeth District
Seoni, Madhya Pradesh. On November 4, 1963, a notification under s. 4 read with
Sub-s. (1) of s. 17 of the Land Acquisition Act, 1894 (to be hereinafter referred
to as the Act) was published in the Government Gazette stating that this land
was needed by the State Government for implementation of Seoni Water Supply
Scheme. The declaration under s. 6 of the Act was published on December 18,
1963, and notices under s. 9 of the Act were issued by the Collector on
December 28, 1963. In response to that notice, the appellants filed a claim 758
that they were willing to accept compensation in respect of this land at the
rate of Rs.1500/per acre, "as the lands adjoining this land and situated
in a lesser advantageous position are sold at this rate". The Collector
made his award on August 17, 1964, whereby he awarded compensation for this
land at the rate of Rs.450/per acre. The total amount awarded for this piece of
land after adding solatium at the rate of 15%, was Rs.2,904/-. He also awarded
interest at the rate of 4% from September 19, 1964, on which date, the
Collector had taken over possession of the land.
Dissatisfied with the Collector's award, the
appellants made an application under s. 18 of the Act for reference to the
District Court for enhancement of the compensation. The Collector accordingly
made a reference. The Additional District Judge, Seoni, who heard the
reference, enhanced the compensation to Rs.11,000/per acre. In this way, after
adding solatium, he awarded to the appellants, herein, a total amount of
Rs.80,850/together with interest at the rate of 6%.
Against that judgment, dated May 2, 1967, of
the Additional District Judge, an appeal was preferred by the Collector, to the
High Court. The High Court accepted the appeal, set aside the award of the
Additional District Judge and restored that of the Collector. The High Court
however, granted a certificate under Art; 133 of the Constitution.
The first contention of Shri M.S. Gupta,
appearing for the appellants, is that the appeal flied in the High Court
against the award of the Additional District Judge was not an appeal in the eye
of law inasmuch as the Collector, who filed it, was not competent to do so. It
is stressed that no appeal was filed by the State as such, and consequently,
the incompetent appeal fired by the Collector should have been dismissed
summarily on this preliminary ground without entering upon the merits.
This objection was raised before the High
The High Court fully considered it against
the background of this case, and found no substance in it. In the interests of
justice we are not disposed to interfere with that finding.
On merits, we find, in agreement with the
High Court, that the District Judge was palpably wrong inasmuch as he awarded
compensation at a rate far higher than what had been claimed by the appellants
themselves, pursuant to the notice under s. 9 of the Act. The learned
Additional District Judge acted contrary to the legislative mandate contained
in s. 25 (1) of the Act, according to which, the Court "shall not
award" compensation to an applicant in excess of the amount claimed by him
pursuant to any notice under s. 9.
The only question that remains for our
decision is, whether the High Court was right in scaling down the compensation
to Rs.450/per acre? 759 Mr. Gupta contends that the High Court was not right in
holding that there was no evidence to show that the land in question had
potential value as building sites. It is submitted that the High Court has
simply ignored that evidence. In this connection Counsel has referred to the
evidence on record showing that the appellants had before the acquisition, paid
diversion charges to the Government, at the rate of Rs.500/per acre in respect
of the adjoining land, for bringing it into use as building sites. Counsel has
further referred to the evidence showing that the land in question is close to
a built up quarter of the town, and is within the Municipal limits.
Shri Ram Panjwani, appearing for the
Respondent, submits that this evidence was much too insufficient to establish
the potential value of the land as building sites, because the existing
buildings in the vicinity of this land are old buildings, and the deposit of
Rs.500/as diversion charges for the adjacent land made by the appellants, was
only a speculative investment with an eye on the distant future In support of
his contention, Shri Panjwani has referred to the decision of this Court in
R.N. Singh v.U.P. Government(1).
In our opinion, there is evidence on the
record which unmistakably shows that from the view-point of a willing
purchaser, at the relevant time, this land had potential value as building
sites. Firstly, it was admitted even by Gokul Prasad who was examined by the
Respondents as their Witness No. 1, that in front of the land in question there
are buildings which are being used as the office of the Range Officer and as
residential quarters for the employees of that Department. Adjoining the Range
Office is the house of Dewan Najaf Ali in which the Additional District Judge
was residing. The witness further admitted that the land in dispute abutts on
Dadu Yogendra Nath Singh, appellant, testified
in the witnessstand that apart from the office and the quarters of the Forest
Department, there were other buildings also, near this land. At a short
distance was the bungalow of Shri Bhargava, Barrister. The Municipal Octroi
Post was adjacent to this land. The land in question is within the Municipal
limits of Seoni. The appellant further stated that he intended to parcel out
this land into plots and sell the same as building sites and that was why for
the adjacent land, he had obtained for that purpose, the permission of the
Government by depositing diversion charges at the rate of Rs.500/per acre. He
added that negotiations for the sale of two plots had already been completed at
the rate of 12 annas per foot. He also cited other instances of sales of land
in the vicinity at rates ranging from 4 annas per foot to 6 annas per foot.
The oral evidence of Dadu Yogendra Nath Singh
with regard to the fact that the adjoining land had been laid out into plots
for building purposes, receives full corroboration from unimpeachable
documentary evidence on record, which shows that the appellants had (1) 1
760 before this acquisition, in 1963, made an
application to the Sub-Divisional Officer, Seoni, for permission to bring 6.16
acres of agricultural land out of Kh. No. 47/1, "in nonagricultural use
viz., for construction of houses". The order of the officer concerned was
that such permission. was granted to him on depositing diversion charges in
respect of that area at the rate of Rs.500/per acre. It is significant to note
that this piece of 6.16 acres was also a part of Khasra No. 47/1, out of which
Khasra, the land, admeasuring 7.35 acres, is in question. This circumstance
unerringly indicates that the land in question was suitable for being used as
building sites, and had for that purpose, a potential value substantially in
excess of Rs.500/per acre. The High Court has not at all discussed this evidence.
It is difficult to accept the argument
advanced on behalf of the respondent that the appellant had paid Rs.500/per
acre as diversion charges for the adjacent land, merely as speculative business
in the hope of making money in the remote future. No prudent person would make
such an investment if there was no reasonable chance of a good return over that
investment in the present, or immediate future. In our opinion this
circumstance coupled with the other facts, namely, that the land-in question is
within the Municipal limits and is located just on the edge of an inhabited locality
of the town, having other buildings in the immediate vicinity, was sufficient
to establish its potential value as building sites.
The observations made by this Court in R.N.
Singh v. U.P. Government (supra) do not advance the case of the respondent. In
that case, Shelat J. quoted these observations from an earlier decision, in
N.B. Jeejabhoy v. The District Collector, Thana (C.A. Nos. 313 to 315 of 1965
decided on August 30, 1965):
"A vendor willing to sell his land at
the market value will take into consideration a particular potentiality or
special adaptability of the land in fixing the price. It is not the fancy or
the obsession of the vendor that enters the market value, but the objective
factor namely, whether the said potentiality can be turned to account within a
reasonably near future. The question therefore turns upon the facts of each
case. In the context of building potentiality many questions will have to be
asked and answered, whether there is pressure on the land for building activity,
whether the acquired land is suitable for building purposes, whether the
extension of the said activity is towards the land acquired, what is the pace
of the progress and how far they said activity has extended and within what
time, whether buildings have been put up on lands purchased for building
purposes, what is the distance between the built-in-land and the land acquired
and similar other questions will have to be answered. It is the over-all
picture drawn on the said relevant circumstances that affords the
solution." What has been extracted above are broad guidelines and not
immutable absolutes. The essence of the whole thing is in the sentence which
has been underlined. It shows that in the ultimate 761 analysis, the question,
whether or not a land has potential value as building site, is primarily one of
fact. in the present case, the circumstance that the appellants had voluntarily
paid Rs.500/per acre as diversion charges, for laying out the adjoining land
into plots as building sites, was of a clinching character, and taken in
conjunction with the other facts, noticed above, conclusively showed that its
potential value as building sites was much more than the rate of Rs.450/per
acre awarded by the Collector and the High Court.
In their application dated 17-10-1964, under
s. 18 of the Act, the appellants stated that similar land in the immediate
vicinity had been sold at the rate of Rs.1,250/per acre and another plot at the
rate of Rs.1,350/per acre. These lands are close to the area for which they had
paid the diversion charges at the rate of Rs.500/per acre.
They filed a map also, showing the location
of those lands.
On an over-all view, after taking into
account the potential value of the land, we think it will be reasonable to
award compensation to the appellants at the rate of Rs.1,250/per acre with
interest at 6% per annum till payment, from the date on which the possession
was taken over by the Collector. The appellants shall also be entitled to
solatium at 15% on the compensation amount awarded for the land.
Accordingly, we allow the appeal with
proportionate costs and modify the decree of the High Court to the extent
M.R. Appeal allowed.