Mahabir
Prasad Santuka & Ors Vs. Collector, Cuttack & Ors [1987] INSC 42 (11 February 1987)
Singh,
K.N. (J) Singh, K.N. (J) Sen, A.P. (J)
CITATION:
1987 AIR 720 1987 SCR (2) 289 1987 SCC (1) 587 JT 1987 (1) 401 1987 SCALE
(1)301
CITATOR
INFO : F 1989 SC1222 (10)
ACT:
Land
Acquisition Act, 1894--S.23-Compensation--Market value--Determination of--Offer
of land to industrialists on concessional rate-Whether indicates 'market value'
of land.
HEAD NOTE:
Certain
plots of land owned by the appellants were acquired by the Government for the
purpose of construction of Aviation Research Centre. The Collector awarded
compensation at the rate of Rs.2,000 per acre. On a reference, the Subordinate
Judge enhanced the compensation and awarded at the rate of Rs. 15,000 per acre.
On appeal by the respondents, the High Court reduced the compensation holding
that since the State Government had been offering land situate in the adjacent
Industrial Area to the industrialists at the rate of Rs.7,500 per acre, the
appellants were entitled compensation at that rate and that the appellants had
purchased the land at the rate of Rs. 100 per acre in the year 1956, they were
not entitled to compensation more than Rs.7,500 per acre.
In the
appeal to this Court, on behalf of the appellants it was contended that the
High Court was not justified in reducing the compensation as there was ample
evidence or record to show that the market value of the land was much more than
determined by the High Court and developmental activities had taken place near
the land as a result of which the value of the land had appreciated
tremendously and that for adjacent land acquired by the same Notification was
determined by the High Court itself at the rate of Rs. 15,000 per acre.
Allowing
the appeal,
HELD:
1. The judgment and the order of the High Court is set aside and R is directed
that the appellant shall be paid compensation at the rate of Rs. 15,000 per
acre. [294E]
2.
Section 23 of the Land Acquisition Act, 1894 lays down principles for
determining compensation according to which the owner is entitled to receive
the market value for the land. [291H] 290
3.
Market value means what a willing purchaser would pay to a willing seller for
the property having regard to the advantages available to the land and the
development activities which may be going on in the vicinity and the
potentiality of the land. [292A-B]
4. An
offer of sale of land to industrialists on concessional rates with a view of
induce them to set up their industries in a particular area does not reflect
the prevailing market value of the land. The industrialists who were offered
the land at concessional rates were not the willing purchasers. [292F]
5. The
High Court committed error in proceeding on the assumption that the concessional
rate offered by the Government to the industrialists indicated the market value
of similar land. [292F-G]
6. In
the instant case, on the evidence on record it is apparent that the land in
question is adjacent to the industrial area where a large number of factories
are situate.
Even
though the land was being used for agricultural purposes but it was fit for
non-agricultural purposes and it had potentiality for future use as factory or
building site. [292B-C]
7.
There is no valid reason to award compensation to the appellants at a reduced
rates specially so when the respondents have failed to point out any material
difference in the situation, topography, lay out of the appellants' land in
respect of which compensation has been awarded at the rate of Rs. 15,000 per
acre. [293F]
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 696 of 1973.
From
the Judgment and Order dated 14.7.1972 of the Orissa High Court in First Appeal
No. 117 of 1971.
B.P.
Singh and Ranjit Kutnar for the Appellants.
Vijay Mohanty,
P.N. Misra S.K. Jaina for the Respondents.
The
Judgment of the Court was delivered by, SINGH, J. This appeal on certificate
under Art. 133(1)(a) of the Constitution is directed against the Judgment and
Order of the High Court of Orissa at Cuttack setting aside the order of the
Subordi291 nate Judge, Cuttack and reducing the amount of compensation awarded
to the appellants.
The
appellants are owners of plots in dispute which include Plot Nos. 177/16,
177/16-A, 177/17 and 177/17-A and situate in village Jagbhairab having an area
of about 12 acres. A notification under sec.4 of the Land Acquisition Act, 1894
was'issued on 2.2.67 and in pursuance thereof the appellants' land along with
other land was acquired by the Government for the purpose of construction of Aviation
Research Centre at Charbatiya. The Collector award compensation to the
appellants at the rate of Rs.2,000 per acre. On a reference made at the
instance of the appellants the Subordinate Judge, Cuttack awarded compensation at the rate of
Rs.15,000 per acre. On appeal by the respondents, the High Court modified the
order of the Subordinate Judge and directed that the appellants be paid
compensation at the rate of Rs.7,500 per acre. Aggrieved, the appellants have
preferred this appeal after obtaining certificate from the High Court.
Learned
counsel for the appellants urged that the High Court was not justified in
reducing the compensation awarded by the Subordinate Judge, as there was ample
evidence on record to show that the market value of the land was much more than
determined by the High Court and developmental activities had taken near the
land as result of which the value of the land had appreciated tremendously. The
learned counsel brought to our notice a number of judgments of the High Court where
compensation for adjacent land acquired by the same Notification was determined
at the rate of Rs. 15,000 per acre. In those cases Advocate General appearing
on behalf of the respondents before the High Court had conceded that the
claimants were entitled to compensation at the rate of Rs.15,000 per acre in
the area in question.
Learned
Counsel further urged that the appellants' land as well as the land of other
claimants who have been awarded compensation at the rate of Rs. 15,000 per acre
by the High Court are adjacent and there was no valid ground to award
compensation to the appellants at a reduced rate.
We
have been taken through the judgment under appeal and other judgments of the
High Court and the evidence on record. After hearing counsel for the parties
and having perused the records we find merit in the appellants' submission. It
is well settled that the owner of the acquired land is entitled to compensation
on the basis of its market value. Section 23 of the Act lays down principles
for determining compensation according to which the owner is entitled to
receive 292 market value of the land. Market value means what a willing
purchaser would pay to a willing seller for the property having regard to the
advantages available to the land and the development activities which may be
going on in the vicinity and the potentiality of the land. On the evidence on
record it is apparent that the land in dispute is adjacent to the Industrial
area of Charbatiya where a large number of factories including Orissa Textile
Mills, Kalinga Tubes Ltd., a number of other factories are situate. The
evidence on record further indicates that even though the land was being used
for agriculture purposes but it was fit for non-agricultural purposes and it
had potentiality for future use as factory or building site. The learned
Subordinate Judge on perusal of the oral and documentary evidence on record
determined the market value of the land at the rate of Rs. 15,000 per acre. The
High Court held that since the State Government had been offering land situate
in the adjacent Industrial Area to the industrialists at the rate of Rs.7,500
per acre, the appellants were entitled to compensation at that rate. In our
opinion the High Court committed error in taking that approach, as it had
itself observed that the State Government had offered land to the
industrialists to enable them to set up industries and the price of the land
was offered to them at a concessional value with a view to induce them to set
up factory. After making that observation High Court was not justified in
determining the market value of the land at Rs.7,500 per acre, as the offer of
land to Industrial enterprenuers at concession rate could not reflect the
market value of the land.
Market
value means, the prince which a purchaser is willing to pay of the similar land
to a willing-seller. An offer of sale of land to industrialists on concessional
rate with a view to induce them to set up their industries in a particular area
do not reflect the prevailing market value of the land. The industrialists who
were offered the land at concessional rates are not the willing purchasers. The
High Court committed error in proceeding on the assumption that the concessional
rate offered by the Govt. to the Industrialists indicated the market value of
similar land.
The
High Court further held that since the appellants had purchased the land at the
rate of Rs. 100 per acre in the year 1956, they were not entitled, in any
event, to compensation more than Rs.7,500 per acre, this view is untenable.
There is evidence on record to show that the land which was purchased in the
year 1956 had no potentiality at that stage, as Industrial acre had not
developed near the land. After the setting up industrial area of Charbatiya the
price of the land 293 situate in its vicinity had increased tremendously. It is
a matter of common knowledge that price of land near the vicinity of industrial
area is bound to rise. Admittedly the appellants' land is situate near the
industrial area, therefore its value had increased and the High Court committed
error in ignoring this aspect by determining the compensation. Plot No. 177 is
a big plot having various sub-plots which are owned by different persons. The
appellants are owners of Plots Nos. 177/16, 177/16-A, 177/17 and 177/17-A.
The
land contained in other sub-plot Nos. 177/19, 177/10 and 177/7 was also
acquired and the compensation in respect thereof was determined by High Court uniformally
at the rate of Rs. 15,000 per acre. There are five judgments of the High Court
on record in respect of various sub-plots of Plot No. 177. On a perusal of
those judgments, it is evident the High Court has awarded compensation at the
rate of Rs. 15,000 per acre for the land which is quite adjacent to the
appellants land. The High Court has observed in its Judgment in First Appeal
No. 173 of 1971 connected with First Appeal No. 174 of 1971, Collector, Cuttack
v. Karunakar Mahanty, decided on October 21, 1975, that the Advocate General
appearing on behalf of the State conceded that in view of the decision of the
High Court in respect of the similar land in the vicinity it was not possible
on his part to question the valuation of the acquired land as fixed by the
Subordinate Judge at the rate of Rs. 15,000 per acre. In that case plot no.
177/13 was the subject matter of the acquisition. We have also perused a copy
of the map which is on record. We find that the appellant's land is quite
adjacent to those plots which were the subject matter of the decision in the
appeals decided by tile High Court where compensation has been awarded at the
rate of Rs. 15,000 per acre. In the circumstances there is no valid reason to
award compensation to the appellant at a reduced rate specially so when the
respondents have failed to point out any material difference in the situation,
topography, lay out of the appellants' land with that of the adjacent land in
respect of which compensation has been awarded at the rate of Rs. 15,000 per
acre. If the impunged order of the High Court under appeal is upheld an
anomalous position would arise inasmuch as the appellants will be denied that
amount of compensation which has been awarded to other claimants in respect of
similar adjacent land. We are therefore of the opinion that the High Court
committed error in interferring with the order of the Subordinate Judge and in
determining the compensation at the rate of Rs.7,500 per acre. We hold that the
appellants are entitled to compensation at the rate of Rs. 15,000 per acre as
determined by the learned Subordinate Judge.
The
High Court has awarded solatium at the rate of 15% in 294 consideration of
compulsory nature of acquisition and it has further awarded interest at the
rate of 6% per annum from the date of taking over the possession till the date
of deposite of amount of compensation Learned counsel for the appellants urged
that in view of the amendment made in Section 23 and 28, of the Act by the
Amending Act of 1984 appellants were entitled to solatium at the rate of 30% of
the compensation and they are further entitled to interest at the rate of 9%
per annum. He placed reliance on the decision of this Court in Bhag Singh v.
Union Territory, Chandigarh, [1985] Suppl. 2 115 where it was held that in view
of Sec. 30(2) of the Amending Act the amended Sec. 23(2) which provided for
solatium at the rate of 30% is applicable to all pending proceedings whether
they may be pending before the Collector, Court, High Court or the Supreme
Court. We are informed that this question has been referred to a larger Bench
and a Constitution Bench has heard argument and the judgment is reserved. In
this view we refrain from expressing any opinion on the question, if and when
judgment is delivered in the matter and if the appellants are found entitled to
the increased amount of solatium and interest they would also be entitled to
receive the same in accordance with law.
We
accordingly allow the appeal, set aside the judgment and order of the High
Court and direct that the appellants shall be paid compensation at the rate of Rs.
15,000 per acre. The appellants are entitled to their costs. The respondents
are directed to pay the costs of the appeal to the appellants which we quantify
Rs.5000.
A.P. S
Appeal allowed.
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