Full Judgment Text
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos. 10172-10175 OF 2014
(Arising out of SLP (C) Nos.25507-25510 of 2007)
Indian Council of Medical Research Appellant(s)
Versus
Shri T.N. Sanikop & Other Respondent(s)
With
CIVIL APPEAL Nos. 10176-10179 OF 2014
(Arising out of SLP(C) Nos.24220-24223 of 2008)
J U D G M E N T
Abhay Manohar Sapre, J.
1. Leave granted.
2. These appeals arise out of judgment dated 23.03.2007 passed by
the High Court of Karnataka at Bangalore in MFA Nos. 5723/2005,
5722/2005, 6332/2005 and 6868/2005 which arise out of award
dated 31.03.2005 passed by the III Addl. Civil Judge (Sr. Dn.),
Belgaum in L.A.C. Nos. 11/1999, 12/1999, 13/1999 and 14/1999.
Signature Not Verified
Digitally signed by
Suman Wadhwa
Date: 2014.11.13
16:18:24 IST
Reason:
3. By the impugned judgment/decree, the Division Bench of the
High Court partly allowed the first appeals filed by the respondents
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herein (land owners) and while modifying the award of the Addl. Civil
Judge, Belgaum in respondents’ favour enhanced the quantum of
compensation payable to the respondents for their lands which were
acquired by the State under the Land Acquisition Act, 1894
(hereinafter referred to as “the Act”). Feeling aggrieved by the
judgment passed by the High Court, the appellant (Central
Government Organization) for whose benefit the lands in question are
acquired has filed these appeals by way of special leave.
4. The question that arises for consideration in these appeals is
whether the High Court was justified in partly allowing the
respondents’ appeals by enhancing the rate/quantum of
compensation payable to the respondents (land owners) for their
acquired lands under the Act?
5. In order to appreciate the controversy involved in these appeals,
it is necessary to state the relevant facts infra.
6. The respondents are the owners of the land bearing R.S. Nos.
1323 CTS No. 5435-1B, R.S. No. 1323-1B-2 CTS No. 5435-1B-2, R.S.
No. 1323-B1 CTS No. 5435-B and R.S. No. 1323-1B-3 CTS No.
5435-B-3 measuring total 40 guntas situated near Nehru Medical
College, Belgaum. In exercise of the powers conferred under Section 4
of the Act, the State Government issued a notification on 19.12.1994
and acquired a large chunk of land measuring 40 guntas for
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establishment of Indian Medical Research Centre. This acquisition of
land was for the benefit of Indian Council of Medical Research (in
short "the ICMR") - an Institute wholly owned and controlled by the
Central Government, who were desirous of setting up one Medical
Center in Belgaum town, for the benefit of public at large. It was
followed by the declaration published on 30.11.1995 under Section 6
of the Act. The respondents’ lands in question were acquired
pursuant to the aforementioned Notification under Section 4 of the
Act. This led to initiation of proceedings for determination of
compensation payable to each land owner including that of the
respondents herein by the Land Acquisition Officer (in short called
“the LAO”). Notices were accordingly issued to the respondents as per
Section 9 of the Act calling upon them to participate in the land
acquisition proceedings to enable the LAO to determine the fair market
value of the land on the date of acquisition as provided under Section
23 of the Act so that the compensation is paid to the land owners at
such determined rate. The LAO held an enquiry and after affording an
opportunity to the respondents passed an award on 06.03.1998.
7. The LAO fixed the compensation at the rate of Rs.1050/- per
gunta = Rs. 42,000/- per acre, payable to the respondents for their
lands in question as in his opinion, the respondents were entitled to
claim compensation for their lands at the rate of, Rs. 1050/- per gunta
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being the fair market value of the acquired lands in question.
8. Feeling aggrieved by the said award, the respondents sought
reference to the Civil Court for re-determination of the compensation
made by the LAO. The reference Court, on the basis of the evidence,
partly answered the respondents’ reference in their favour and by
judgment dated 31.03.2005 enhanced the rate of compensation from
Rs.1050/- per gunta to Rs.7,000/- = Rs.2,80,000/- per acre. In other
words, the reference Court held that the respondents were entitled to
get compensation for their lands at the rate of Rs.7000/- per gunta =
Rs.2,80,000/- per acre being the fair market value of their lands from
the date of the preliminary notification, i.e., 19.12.1994.
9. Dissatisfied with the determination made by the reference Court,
the respondents filed appeals under Section 54 of the Act before the
High Court challenging the legality and correctness of the award of the
reference Court out of which these appeals arise.
10. The Division Bench of the High Court by impugned
judgment/decree partly allowed the respondents’ appeals and
enhanced the compensation from Rs.7000/- per gunta to Rs.99,000/-
per gunta. The High Court held that fair market value/rate of the
acquired lands on the date of acquisition was Rs.99,000/- per gunta
and hence, the respondents were entitled to get the compensation at
the rate of Rs.99,000/- per gunta along with the other statutory
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benefits payable under the Act. It is against this judgment/decree, the
ICMR, for whose benefit the lands are acquired, has filed these
appeals by way of special leave before this Court.
11. Heard learned counsel for the parties.
12. Shri Raju Ramchandran, learned Senior counsel, placing reliance
on the principles laid down in the decision of this Court in
Chandrashekar (Dead) by L.Rs. and Others v. Land Acquisition
Officer and Another , (2012) 1 SCC 390, contended that the High
Court erred in enhancing the rate of land from Rs.7000/- per gunta to
Rs.99,000/- per gunta. According to him, there was neither any
evidence nor any basis for enhancing the rate from Rs.7000/- per
gunta to Rs.99,000/- per gunta. Learned senior counsel urged that
when admittedly the acquired land was a large area of undeveloped
land, which needed a lot of expenditure for its development requiring
deductions between the range of 40 % to 75 %, the High Court should
not have relied upon the solitary sale deed (Ex-P-10) because
admittedly Ex-P-10 pertained to sale of very small piece of developed
land, i.e., 4 guntas which in no case could be compared with the real
market value of the acquired lands in question. In other words, the
submission was that the lands in question being large and
undeveloped could not have been placed at par with the land (4
guntas) sold by Ex-P-10 for Rs.6,60,000/- as the latter was small in
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size and developed one. Learned senior counsel further urged that it
is not appropriate to compare such lands for determining their rates
as has been held by this Court in the case relied upon by him.
Learned senior counsel further contended that there being no other
evidence except Ex-P-10 to decide the comparative sales effected in the
adjacent area of the acquired lands, the entire basis of the High Court
while determining the rate by giving phenomenal rise does not appear
to be legally justified and hence, respondents’ appeals should have
been dismissed by the High Court by upholding the award of the
reference court or in any event, the rate could have been enhanced by
giving reasonable rise after keeping in view the law laid down.
13. Mrs. Kiran Suri, learned senior counsel for the respondents
supported the impugned judgment and contended on the basis of
cross objections filed in these appeals that the respondents are
entitled for more compensation than what has been awarded by the
High Court. According to her, the High Court should have awarded
more compensation to the respondents because the market value of
the lands on the date of acquisition was more than what is determined
by the High Court and this, according to the respondents, can be
proved on the basis of the evidence on record.
14. Having heard the learned counsel for the parties and on perusal
of the record of the case, we find force in the submissions urged by the
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learned senior counsel for the appellant and hence we are inclined to
allow these appeals in part and accordingly modify the impugned
award to the extent indicated below by reducing the rate of acquired
lands and in consequence, the compensation determined by the High
Court.
15. Law on the question as to how the Court is required to determine
the fair market value of the acquired land is fairly well settled and
remains no more res integra by several decisions of this Court.
16. It is apposite to take note of some decisions summarized in the
case of Chandrashekar (supra) which are as follows:
“In Brig. Sahib Singh Kalha v. Amritsar Improvement Trust,
(1982) 1 SCC 419, this Court opined, that where a large
area of undeveloped land is acquired, provision has to be
made for providing minimum amenities of town life.
Accordingly it was held, that a deduction of 20% of the
total acquired land should be made for land over which
infrastructure has to be raised (space for roads, etc.). Apart
from the aforesaid, it was also held, that the cost of raising
infrastructure itself (like roads, electricity, water,
underground drainage, etc.) needs also to be taken into
consideration. To cover the cost component, for raising
infrastructure, the Court held, that the deduction to be
applied would range between 20% to 33%. Commutatively
viewed, it was held, that deductions would range between
40% and 53%.
…..In Chimanlal Hargovinddas v. Land Acquisition Officer,
(1988) 3 SCC 751 while referring to the factors which ought
to be taken into consideration while determining the
market value of the acquired land, it was observed that a
smaller plot was within the reach of many, whereas for a
larger block of land there were implicit disadvantages. As a
matter of illustration it was mentioned that a large block of
land would first have to be developed by preparing its
layout plan. Thereafter, it would require carving out roads,
leaving open spaces, plotting out smaller plots, waiting for
purchasers (during which the invested money would remain
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blocked). Likewise, it was pointed out, that there would be
other known hazards of an
entrepreneur. Based on the
aforesaid likely disadvantages it was held, that these
factors could be discounted by making deductions by way of
allowance at an appropriate rate, ranging from 20% to 50%.
These deductions, according to the Court, would account
for land required to be set apart for developmental
activities. It was also sought to be clarified that the applied
deduction would depend on, whether the acquired land was
rural or urban, whether building activity was picking up or
was stagnant, whether the waiting period during which the
capital would remain locked would be short or long; and
other like entrepreneurial hazards.
…….In Kasturi v. State of Haryana, (2003) 1 SCC 354, this
Court opined, that in respect of agricultural land or
undeveloped land which has potential value for housing or
commercial purposes, normally 1/3rd amount of
compensation should be deducted, depending upon the
location, extent of expenditure involved for development,
the area required for roads and other civic amenities, etc. It
was also opined, that appropriate deductions could be made
for making plots for residential and commercial purposes. It
was sought to be explained, that the acquired land may be
plain or uneven, the soil of the acquired land may be soft or
hard, the acquired land may have a hillock or may be
low-lying or may have deep ditches. Accordingly, it was
pointed out, that expenses involved for development would
vary keeping in mind the facts and circumstances of each
case. In Kasturi case it was held, that normal deductions on
account of development would be 1/3rd of the amount of
compensation. It was however clarified that in some cases
the deduction could be more than 1/3rd and in other cases
even less than 1/3rd.
……In Lal Chand v. Union of India, (2009) 15 SCC 679, it
was held that to determine the market value of a large tract
of undeveloped agricultural land (with potential for
development), with reference to sale price of small
developed plot(s), deductions varying between 20% to 75%
of the price of such developed plot(s) could be made.
……In A.P. Housing Board v. K. Manohar Reddy, (2010) 12
SCC 707, having examined the existing case law on the
point it was concluded, that deductions on account of
development could vary between 20% to 75%. In the
peculiar facts of the case a deduction of 1/3rd towards
development charges was made from the awarded amount
to determine the compensation payable.
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…..In Land Acquisition Officer v. M.K. Rafiq Saheb, (2011) 3
SCC (Civ) 950, this Court after having concluded, that the
land which was the subject-matter of acquisition was not
agricultural land for all practical purposes and no
agricultural activities could be carried out on it, concluded
that in order
to determine fair compensation, based on a
sale transaction of a small piece of developed land (though
the acquired land was a large chunk), the deduction made
by the High Court at 50%, ought to be increased to 60%.”
After taking note of the aforesaid cases and placing reliance upon the
principles laid down therein, this Court in Chandrashekar and
Others (supra) observed as under:
“It is essential to earmark appropriate deductions out of
the market value of an exemplar land, for each of the two
components referred to above. This would be the first step
towards balancing the differential factors. This would pave
the way for determining the market value of the
undeveloped acquired land on the basis of market value of
the developed exemplar land.
As far back as in 1982, this Court in Brig. Sahib Singh
Kalha case held, that the permissible deduction could be up
to 53%. This deduction was divided by the Court into two
components. For the “first component” referred to in the
foregoing paragraph, it was held that a deduction of 20%
should be made. For the “second component”, it was held
that the deduction could range between 20% to 33%. It is
therefore apparent that a deduction of up to 53% was the
norm laid down by the Court as far back as in 1982. The
aforesaid norm remained unchanged for a long duration of
time, even though, keeping in mind the peculiar facts and
circumstances emerging from case to case, different
deductions were applied by this Court to balance the
differential factors between the exemplar land and the
acquired land. Recently however, this Court has approved a
higher component of deduction.
In 2009 in Lal Chand case and in 2010 in A.P. Housing
Board case it has been held that while applying the sale
consideration of a small piece of developed land, to
determine the market value of a large tract of undeveloped
acquired land, deductions between 20% to 75% could be
made. But in 2009 in Subh Ram case, this Court restricted
deductions on account of the “first component” of
development, as also, on account of the “second
component” of development to 33?% each. The aforesaid
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deductions would roughly amount to 67% of the component
of the sale consideration of the exemplar sale
transaction(s).”
17. Keeping the aforesaid principles in mind, we have perused the
evidence. It is not in dispute that total acquired land is around 40
guntas. It is also not in dispute that the respondents (land owners)
filed only one sale deed (Ex-P-10) in support of their case to prove the
market rate of lands in question for claiming more compensation. It is
also not in dispute that evidence other than Ex-P-10 is of no
relevance. It was also not relied upon by the reference Court or/and
the High Court while determining the fair market value of the acquired
lands.
18. We have seen the evidence and are of the view that Ex-P-10 alone
can be looked into to some extent. Though, it pertains to 4 guntas
and sold for Rs.6,60,000/- on 23.03.1994, it is situated near the
acquired land.
19. The finding of the High Court on the issue in question is
contained in Paras 8 to 11. It is reproduced infra in verbatim:
“8. We are now left with the question of determining the
market value of the lands in question. The sale-deed at
Exhibit-P10 is dated 23rd July, 1994. It shows that the
total sale consideration of Rs. 6,60,000/- (Rupees six lakhs
sixty thousand only) is paid for an extent measuring four
guntas. That it is a genuine sale transaction; that the
property covered under Exhibit-P10 and the lands in
question fall within the limits of Belgaum Urban
Agglomeration are not in dispute at all. Further the
purchaser of the property at Exhibit-P10 is also examined
as PW2. He has deposed that the area in question is the
commercial area and that the plots therein are not readily
available on sale. His further evidence is that the value of
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the acquired lands is higher than that of the properties
situated on the Club road.
9. PW l (Appellant No. 1) has given the evidence that in
the vicinity of the acquired lands, a KPTCL office, Dental
College, Polytechnic School, High Schools and Colleges are
situated. He erected a building and started his business
venture of vehicle showroom and an auto garage. It is his
further evidence that the water supply and electrical
connection were given to the building erected on the land
of PW.1. Plant and machinery was installed in the building.
On account of the compulsory acquisition of the land, the
appellant had to close down his business and pay a
compensation of Rs. l,00,000/- (Rs. One lakh only) to his
workmen. Totally he claims to have incurred loss of Rs.
2,00,000/- on account of dislocation of his business
activities.
10. In our considered view, the sale-deed Exhibit-P10
forms the reliable basis for the determination of the market
value of the lands in question. However, the price of Rs.
1,65,000/- given for one gunta of land cannot be straight
away made applicable for the acquired lands. Because, as
revealed by the respondent- Land Acquisition Officer’s
award at Exhibit-D1, the lands in question were agricultural
lands as on the date of the issue of the preliminary
notification. They were not converted into non-agricultural
lands. As held by the Hon’ble Supreme Court in a catena of
cases, there is difference between a developed area and an
area having potential value which is yet to be developed.
That the lands if adjacent to developed area will not ipso
facto make every land situated in the area also developed
so as to be valued as a building site or plot. The acquired
land is just abutting National Highway-4. In the vicinity of
the acquired lands a number of commercial establishments,
Government offices and educational institutions were
already in existence at the time of the issuance of the
Preliminary Notification in 1994. Under these
circumstances, we have no doubt that the lands in question
had acquired high potential value; but that by itself does
not enable the lands in question to be treated as developed
lands. Lot of development activities are to be undertaken
like laying of roads and creating facilities and amenities,
viz. electricity and water supply, culverts, sewerage, parks,
etc. We also give our anxious consideration to the
submissions made on behalf of the Government that there
was not even the preliminary earthwork and that the lands
continue to retain their agrarian character for all practical
purpose. Thus the appellants are required to incur
enormous amount of expenditure towards conversion
earthwork, formation of layout, etc.
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11. Now, we have to provide for deduction of certain
percentage towards the cost of development, taking the
value of the developed plot at Rs. 1,65,000/- per gunta.
There has been a serious contest at the bar regarding the
percentage of deduction towards the cost of development of
land; it can vary from 20% to 53%. The facts of the instant
case are entirely different from the facts of the case of
SMT. BASAVVA (supra). None can have any dispute over the
well considered position laid down by the Hon’ble Supreme
Court that the time-long for real developmental and the
waiting period for development are also relevant
considerations for determination of just and
adequate compensation. In the instant case, one of the
acquired lands was already being used for non-agricultural,
i.e. commercial purpose. Therefore we are afraid the said
reported decision does not come to the rescue of the
Government in any way. There is no hard and rigid formula
of yardstick for providing the percentage towards the cost
of development. It depends on the facts of each case. In our
considered view, as the acquired lands have attained high
potentiality value and they were acquired for the purpose of
setting up a Medical Research Centre, not too many
internal roads are required to be formed; hence there is also
the likelyhood of utilising more space. We therefore feel it
safe, reasonable and just to hold that 40% of Rs.l,65,000/-
per gunta has to be earmarked for developmental activities.
40% of Rs. 1,65,000/- comes to Rs. 99,000/- (Rupees
ninety nine thousand only). We therefore enhance the
market value of the lands in question from Rs. 7,000/- per
gunta to Rs. 99,000/- per gunta. Needless to observe that
the appellants are entitled to proportionate increase in the
solatium and additional market value besides the interest
thereon.”
20. We have given our anxious consideration to the whole issue
keeping in view the peculiar facts, evidence adduced and the law
quoted above. In our considered view, having regard to the total
scenario emerging from the record of the case, such as the location of
land, its potentiality, surroundings, the rate at which the developed
small piece of land (4 guntas) in the adjoining area to the acquired
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lands was sold few months prior to the date of acquisition (Ex-P-10),
the condition of the acquired undeveloped lands, the expenditure
required to develop the acquired land to start the construction for the
project for which it was acquired, percentage of deduction to be made,
its proximity to various places in the town, the fair market value of
the respondents’ land can reasonably be worked out at Rs. 70,000/-
per gunta in place of Rs. 99,000/- per gunta which was determined by
the High Court. In other words, in our considered opinion, the High
Court was not right in determining the fair market rate of acquired
land at Rs. 99,000/- per gunta but instead it should have determined
at the rate of Rs. 70,000/- per gunta.
21. We have arrived at the figure of Rs.70,000/- per gunta after
applying all relevant factors laid down by this case, which we have
mentioned above. In our view, the rate determined by this Court is
just, reasonable and represents fair market value of the land in
question on the date of acquisition. Indeed in such cases, one can
never come to any exact figure of price of lands because in the very
nature of things, the prices are bound to vary from land to land and
further depending upon the individual buyer-to-buyer, seller-to-seller,
reasons behind the sale and purchase etc. etc. However, Courts in
such cases always exercise their discretion within the permissible
parameters after appreciating the evidence on record and applying
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relevant legal principles. We have kept these factors in mind.
22. We have also taken note of other arguments of learned senior
counsel for the parties on various issues relating to grant of
compensation. However, we do not think that in the light of our
findings determining the rate at Rs.70,000/- per gunta, any more
discussion or/and separate finding is necessary. Even otherwise, we
do not find any merit in any of the submissions urged by the learned
counsel in support of their stand and hence, we concur with all other
findings of fact recorded by the High Court on the issues, which, in
our view, are based on proper appreciation of evidence calling no
interference in our jurisdiction under Article 136.
23. In the light of foregoing discussion, once we reduce the rate of
compensation determined by the High Court partly in appellant's
favour then in such circumstances, the question of considering grant
of further enhancement in compensation to the respondents does not
arise. It is for this reason, the cross objections filed by the
respondents become insignificant and deserve to be dismissed as
having rendered infructuous. It is accordingly dismissed.
24. We, therefore, decline to examine the legal issue raised by the
learned senior counsel for the appellant by way of his preliminary
objection that cross objections filed by the respondents under Order
41 Rule 22 of Code of Civil Procedure Code are not maintainable and
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leave this legal question open for its decision in any other appropriate
case provided it is not yet decided by this Court.
25. In view of foregoing discussion, the appeals filed by the ICMR
succeed and are accordingly allowed in part. The impugned judgment
and decree is modified to the extent indicated above.
26. The concerned LAO is directed to calculate the compensation
payable to the respondents (land owners) for their lands at the rate of
Rs.70,000/- per gunta and accordingly calculate all statutory
compensation such as solatium, interest etc. payable under the Act to
every land owner whose land is acquired by the State under the Act.
27. Let this calculation be made, as directed above, by the concerned
LAO and the amount so calculated be paid to the respondents (land
owners) after making proper verification within three (3) months from
the date of receipt of this judgment. No costs.
……………………………………………………J.
[FAKKIR MOHAMED IBRAHIM KALIFULLA]
.….…...............................J.
[ABHAY MANOHAR SAPRE]
New Delhi,
November 12, 2014.
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ITEM NO.1A(For Jt.) COURT NO.10 SECTION IVA
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). 10172-10175/2014 @ SLP(C)Nos.
25507-25510/2007
INDIAN COUNCIL OF MEDICAL RESEARCH Appellant(s)
VERSUS
T.N.SANIKOP & ANR. ETC. ETC. Respondent(s)
WITH
C.A. No. 10176-10179/2014 @ SLP(C)NOs. 24220-24223/2008
Date : 12/11/2014 These appeals were called on for judgment today.
For Appellant(s)
Ms. Madhu Sikri,Adv.
Ms. Anitha Shenoy,Adv.
For Respondent(s)
Mr. Rameshwar Prasad Goyal,Adv.
Dr. (Mrs. ) Vipin Gupta,Adv.
Hon'ble Mr. Justice Abhay Manohar Sapre pronounced the
judgment of the Court comprising of Hon'ble Mr. Justice Fakkir
Mohamed Ibrahim Kalifulla and His Lordship.
Leave granted.
The appeals filed by the ICMR succeed and are accordingly
allowed in part. The impugned judgment and decree is modified to
the extent indicated above.
The concerned LAO is directed to calculate the
compensation payable to the respondents (land owners) for their
lands at the rate of Rs.70,000/- per gunta and accordingly
calculate all statutory compensation such as solatium, interest
etc. payable under the Act to every land owner whose land is
acquired by the State under the Act.
Let this calculation be made, as directed above, by the
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concerned LAO and the amount so calculated be paid to the
respondents (land owners) after making proper verification within
three (3) months from the date of receipt of this judgment. No
costs.
(SUMAN WADHWA)
AR-cum-PS
(INDU POKHRIYAL)
COURT MASTER
(SIGNED REPORTABLE JUDGMENT IS PLACED ON THE FILE)