RAMESH KUMAR vs. BHATINDA INTEGARATED COOPERATIVE COTTON SPINNING MILL

Case Type: Civil Appeal

Date of Judgment: 13-09-2021

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1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICITON CIVIL APPEAL NOS. 3875­3876 OF 2009 Ramesh Kumar   .. Appellant(s) Versus Bhatinda Integrated Cooperative  Cotton Spinning Mill and Ors.        .. Respondent(s) With CIVIL APPEAL NO. 5669 OF 2021 (Arising out of Special Leave Petition (C) No.9470 of 2010) Bant Singh and Ors. .. Appellant(s) Versus The State of Punjab & Ors.       .. Respondent(s) With CIVIL APPEAL NO. 5670  OF 2021 (Arising out of Special Leave Petition (C)No.15117 of 2010) Gurbachan Singh (D) By LRs and Anr.    ..Appellant(s) Versus Signature Not Verified Digitally signed by R Natarajan Date: 2021.09.13 16:48:24 IST Reason: The State of Punjab and Ors. ..Respondent(s) With 2 CIVIL APPEAL NOS.9185­9196 of 2017 Gurjant Singh & Anr. etc. etc. ..Appellant(s) Versus The State of Punjab through Chief Secretary, Department of Cooperation and Ors. ..Respondent(s) J U D G M E N T M. R. Shah, J. Civil Appeal Nos. 3875­3876 OF 2009 1. Arising out of the impugned common judgment and order dated 19.09.2008 passed by the High Court in RFA No.3476 of 1999 filed by the original claimants for enhancement and RFA No.1507 of 1999 filed by the Bhatinda Integrated Co­operative Cotton Spinning & Ginning Mills Ltd. Special Leave Petition No.9470 of 2010 Leave granted. Arising out of RFAs No.2648 of 1999 (Bant Singh and Ors. vs. State of Punjab and Ors.), the appeal which was filed 3 by   the   original   claimants   for   enhancement   of   the compensation.   However, it is required to be noted that RFA No.1505 of 1999 filed by the Bhatinda Integrated Co­Operative Cotton   Spinning   &   Ginning   Mills   Ltd.   vs.   Bant   Singh   and others is not under challenge. Special Leave Petition No.15117 of 2010 Leave granted. Arising out of RFA No.2645 of 1999 which was filed by the   original   claimants   Gurbachan   Singh   and   others   for enhancement of compensation. It is required to be noted that no   appeal   has   been   preferred   by   the   original   claimants (Gurbachan Singh and others) challenging the order passed in RFA   No.1505   of   2019   which   was   filed   by   the   Bhatinda Integrated Co­Operative Cotton Spinning & Ginning Mills Ltd. which has been allowed by the High Court and the amount of compensation has been reduced. 4 CIVIL APPEAL NOS.9185­9196 of 2017 Civil Appeal Nos.9895­9897 of 2017 arising out of RFA Nos.2642, 2643, 2644, 2645, 2646, 2648 of 1999 and RFA Nos. 1505, 1508, 1509, 1510, 1515 and 1516 of 1999. 2. As common question of law and facts arise in this group of   appeals,   all   these   appeals   are   decided   and   disposed   of together by this common Judgment and Order. 2.1 Vide notification dated 06.06.1988 issued under Section 4 of the Land Acquisition Act, 1894 (for short, ‘the Act’), the lands   owned   by   the   original   claimants   admeasuring   297 Kanals and 1 Marla situated in the revenue estate of Jassi Pau Wali, Distt. Bhatinda, Punjab came to be acquired for public purpose,   namely,   establishment   of   Bhatinda   Integrated Cooperative Cotton Spinning and Ginning Mills Ltd. (for short, ‘the Spinning Mill’).  The same was followed by a notification under   Section   6   of   the   Act   on   08.06.1988.     The   Land Acquisition Officer vide Award dated 05.10.1989 determined the value of the land at Rs.25,000/­ per acre and awarded the compensation accordingly.  At the instance of the land owners 5 the   references   were   made   to   the   Reference   Court.     Vide common   Judgment   and   Award   dated   27.02.1999,   the Reference Court determined the market value of the land at Rs.1,12,000/­ per acre.  Before the Reference Court it was the case on behalf of the land owners that the acquired land is situated just on the main Bhatinda Mansa Road and has a very   potential   value   of   being   used   for   commercial   and residential purposes as well as the industrial purposes.  Before the Reference Court the land owners heavily relied upon the registered Sale Deeds Ex.A.W.6/C to Ex. A.W.6/H executed on or about 24.05.1979 at the rate of Rs.50,000/­ per acre.  The Reference   Court   took   into   account   the   aforesaid   sale   deed Ex.A.W.6/C   to   determine   the   market   value   of   the   lands acquired   and   considering   the   time   gap   of   about   9   years between the date of the execution of the aforesaid sale deeds and Section 4 Notification thereby granted the increase of 12% in the price of the land per year and applied the cut of 25% and finally determined the value of the land at Rs.1,12,000/­ 6 per acre and accordingly enhanced the award of compensation by common Judgment and Order dated 27.02.1999. 2.2 Feeling   aggrieved   and   dissatisfied   with   the   common Judgment and Award passed by the Learned Reference Court whereby it enhanced the amount of compensation considering the market value of the land at Rs.1,12,000/­ per acre, both, the original claimants as well as the Spinning Mill preferred the appeals before the High Court.  The land owners preferred the   appeals   for   enhancement   of   the   compensation.   By impugned common Judgment and Order the High Court has allowed the appeals preferred by the Spinning Mill reducing the   amount   of   compensation   and   determining   the   value  of acquired land at Rs.88,400/­ per acre.   The High Court also considered the Sale Deed Ex.AW6/C as a base for determining the value of the acquired land and also added 12% annual increase.   However, the High Court imposed the cut of 15% instead of 25% as adopted by Learned Reference Court.  Thus, the appeals preferred by the Spinning Mill came to be partly allowed.  Consequently, the appeals preferred by the original 7 land   owners   which   were   filed   for   the   enhancement   of   the compensation came to be dismissed by the High Court. 2.3 Feeling   aggrieved   and   dissatisfied   with   the   common impugned Judgment passed by the High Court partly allowing the appeals preferred by the Spinning Mill and dismissing the appeals   preferred   by   the   land   owners   for   enhancement   of compensation and determining the value of the acquired land at Rs.88,400/­ per acre, the land owners have preferred the present appeals. 3. Shri Vinay Mathew, Shri Yadav Narender Singh and Shri Sridhar Potaraju, Learned Advocates appearing on behalf of the appellants – original land owners and Shri Puneet Kansal, Learned Advocate appearing on behalf of the Respondent – Spinning Mill.  At this stage, it is required to be noted that so far as the Bhatinda Integrated Co­operative Cotton Spinning & Ginning Mills Ltd. is concerned, it has been ordered to be wound up and the Liquidator has been appointed and Shri Puneet Kansal, Learned Advocate has appeared on behalf of Liquidator of the Spinning Mill. 8 4. Learned Counsel appearing on behalf of the land owners have made the following submissions: (i) that both, the Learned Reference Court as well as the High Court have failed to consider the exemplar being the sale deed dated 04.05.1981 by which the land   admeasuring   70   meters   away   from   the acquired land was sold at Rs.1,17,600/­ per acre. It is submitted that as held by this Court in the case of   Mehrawal Khewaji Trust, Faridkot and Ors. Vs.   State of Punjab and Ors.,   (2012) 5 SCC 432 the highest of the exemplars which is a bona fide transaction has to  be considered.  It is submitted that the said sale deed was executed in the year 1981 and considering the time given of 7 years the annual increase of 7 years was required to be taken; (ii) that   the   High   Court   has   erred   in   taking   annual increase at the rate of 12% at the flat rate which would   lead   to   anomalous   results   as   opposed   to cumulative rate; 9 (iii) it is submitted that exemplar sale deed that was accepted by the courts below is dated 24.05.1979 which is more than 9 years before the notification of acquisition   was   made   and   thus   9   years   of cumulative increase has to be applied to the value of the land at Rs.50,000/­ per acre.  Heavy reliance is placed on the decision of this Court in  ONGC Ltd. , (2008) vs. Rameshbhai Jivanbhai Patel & Anr. 14 SCC 745. In the aforesaid decision, it is categorically held by this   Court   that   it   is   logical,   practical   and appropriate to apply cumulative rate as opposed to flat rate.  It is submitted that aforesaid decision has been subsequently followed and/or applied in the case   of   Ashok   Kumar   and   Ors.   vs.   State   of Haryana and Ors.,  (2015) 15 SCC 200; (iv) that Reference Court as well as the High Court both have erred in adopting cut of 25%/15% of the value towards development. It is submitted that while the 10 Reference   Court   has   adopted   cut   of   25%   of   the market price, the High Court deducted 15%.   It is submitted that considering the location and nature of the land that was acquired as well as the purpose for which it was acquired (for commercial purpose for   spinning   mill)   no   cut   from   the   market   price should have been made and the land owners were entitled to the market price without any cut.  It is further submitted that the acquired land is only 30 acres and the nature of the land is semi urban and the   same   was   adjoining   the   municipal   limits   of Bhatinda and it was further found that the area surrounding   the   acquired   land   consisted   of factories,   go­downs,   residential   houses   and   the cantonment areas thus no deduction on account of any development charges should have been made; (v) that   the   land   was   acquired   for   setting   up   profit making   enterprise   i.e.   cotton   spinning   mill   and therefore, also no deduction should have been made 11 in the price of the exemplar.  Reliance is placed on the   decision   of   this   Court   in   the   case   of   Atma vs. (2008) 2 SCC 568. Singh   State of Haryana,  4.1 Making the above submissions and further relying the decisions of this Court in the cases of  Anjani Molu Dessai vs. State of Goa and Anr. , (2010) 13 SCC 710 and   Trishala , (2011) 6 Jain and Anr.  Vs.  State of Uttaranchal and Anr. SCC 47, it is prayed to allow the present appeals and enhance the amount of compensation considering the value of the land of Rs.1,50,000/­ per acre. 5. All   the   appeals   are   opposed   by   Learned   Counsel appearing on behalf of the Liquidator of Spinning Mill.   It is submitted on behalf of the Learned Counsel for Liquidator ­ Spinning Mill that the mill was a Co­operative Society and became operational only in 1992.   The mill went into huge losses because of various factors which resulted in complete erosion   of   the   capital   on   account   of   which   the   mill   was brought into winding up vide orders dated 09.05.2003.  All the 12 land owners have been paid in full as per the High Court Judgment. 5.1 Now so far as reliance placed upon the decision in the case   of   (Supra)   by   the   land Rameshbhai  Jivanbhai  Patel   owners to apply the rate of 12% increase cumulatively; it is submitted that the said decision is distinguishable on facts.  It is submitted that in the subsequent decision in the case of  Lal Chand  vs.  Union of India , (2009) 15 SCC 769, this Court has held   that   the   Court   should,   before   adopting   a   standard escalation,   satisfy   itself   that   there   were   no   adverse circumstances.   It is submitted in the present case that the State of Punjab was engulfed in militancy from 1979 onwards till 1992.  There was large scale exodus of families belonging to one particular community from the State on account of which there were practically no buyers for the land.  It is submitted that as such on account of militancy prices had crashed to around Rs.25,000/­ per acre.   13 5.2 It   is   submitted   that   therefore,   even   the   compensation granted to the land owners is already on the higher side.  It is submitted therefore in the facts and circumstances of the case the submission on behalf of the land owners that there should not be any deduction at all may not be accepted. 5.3 Now so far as the reliance placed upon the Sale Deed dated 04.05.1981, it is submitted that the sale deed was for small portion of land being 1 Kanal 14 Marlas against 297 Kanal 1 Marla of land and therefore, the same has not been rightly accepted by the Reference Court as well as the High Court. 5.4 It is further submitted that even otherwise the cut of 15% towards   development   charges   does   not   require   any interference as the land was agricultural (soft soil) acquired for industrial purpose. 5.5 It is submitted that therefore, considering the oral facts and circumstances of the case no interference of this Court is 14 called   for.     Therefore,   it   is   prayed   to   dismiss   the   present appeals. 6. Heard   Learned   Counsel   for   the   parties   respectively   at length. 6.1 In the present case the Notification under Section 4 of the Act has been issued on 06.06.1988.  The land in question was acquired for the public purpose for establishing Bhatinda Integrated Cooperative Cotton Spinning and Ginning Mills Ltd. The   Land   Acquisition   Officer,   Bhatinda   awarded   the compensation considering the value of the land at the rate of Rs.25,000/­ per acre.  The Reference Court relying upon the sale deed dated 24.05.1979 as Ex. AW6/C by which the land admeasuring 43 kanals 13 marlas out of the acquired land was purchased by Shri Sudarshan Kumar and Mrs. Surinder Anand   at   the   rate   of   Rs.50,000/­   per   acre   and   thereafter adding 12% per acre and thereafter adopting the cut of 25% determined   the   compensation   at   Rs.1,12,000/­   per   acre. Thereafter   the   High   Court   by   the   impugned   common Judgment and Order has allowed the appeals preferred by the 15 spinning mills and dismissed the appeals preferred by the land owners, by determining the value at Rs.88,400/­ per acre after adopting cut of 15%. 6.2 Having   heard   the   Learned   Counsel   for   the   respective parties the questions which are posed for consideration of this Court are:  (i) Whether in the facts and circumstances of the case   the   Courts   below   have   erred   in   taking annual increase at the rate of 12% at the flat rate and not applying the cumulative rate? (ii) Whether in the facts and circumstances of the case the High Court has erred in adopting the cut/deduction of 15%, while determining the value of the land acquired? 6.3 Now   so   far   as   the   submission   on   behalf   of   the   land owners that while considering the annual increase at the rate of 12%, the High Court ought to have applied the cumulative rate and reliance placed upon the decision of this Court in Rameshbhai   Jivanbhai   Patel   (Supra)   and   in   the   case   of 16 Ashok Kumar  (Supra)  are concerned, it is true that as held by this Court in aforesaid two decisions increase in the market value should be at a cumulative rate and not at a flat rate.  In the   case   of   (Supra)   in Rameshbhai   Jivanbhai   Patel   paragraph 18, it is specifically observed and held that when market value is sought to be ascertained with reference to transactions which took place before the acquisition, the law adopted is to collect the year to year increase.   It is further observed and held that as the percentage of increase is always with   reference   to   the   previous   year’s   market   value,   the appropriate method is to adopt the increase cumulatively and not applying a flat rate.  However, at the same time it is also observed and held in the said decision that it is reasonably safe to determine the market value by providing appropriate escalation over the approved market value of nearby lands in the   previous   years,   when   relied   on   sale transactions/acquisitions precede the subject acquisition by only a few years, i.e., upto 4­5 years.  It is further observed in the said decision in para 15 that beyond that it may be unsafe, 17 even if it relates to a neighbouring land.   In para 15 it is observed and held as under:
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 acquisition),
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 relied­on­sale
transactions/acquisitions precedes the subject
acquisition by only a few years, that is upto 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 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.
In the present case both, the Reference Court as well as the   High   Court,   have   determined   the   value   of   the   land considering the Sale Deed dated 24.05.1979 which is more than   9   years   before   the   notification   of   the   acquisition. Therefore, considering the observations made by this Court in 18 para 15 in the case of  Rameshbhai Jivanbhai Patel  (Supra) reproduced hereinabove and considering the fact that time gap between the sale deed relied upon and the date of notification of acquisition is more than 9 years, the courts below ought to have been very cautious in relying upon the Sale Deed dated 24.05.1979.  Be that it may and assuming that the Sale Deed dated 24.05.1979 was the best evidence available to determine the value of land acquired in that case also taking annual increase at the rate of 12% is not justified.   We are of the opinion that, in the facts and circumstances of the case the annual increase/escalation ought to have been at the rate of 10% maximum.  Even otherwise, it is required to be noted that State of Punjab suffered due to militancy from 1979 onwards till 1992 and because of that the prices would have crashed. Therefore, to grant the escalation/price rise at the rate of 12% would not be justified at all.   After considering the case of (Supra),  it is observed and held Rameshbhai Jivanbhai Patel  by this Court in the case of  Lal Chand  (Supra) that even if the transaction is 2 to 3 years prior to the acquisition, the Court 19 should,   before   adopting   a   standard   escalation   satisfy   itself that   there   were   no   adverse   circumstances.     It   is   further observed and held that the question is therefore, necessary before   increasing   the   price   with   reference   to   the   old transactions.     Therefore,   assuming   that   the   appellants   are right in submitting that the increase in land value should have been adopted on cumulative basis, in the peculiar facts and circumstances   of   the   case   noted   hereinabove,   we   see   no reason to  interfere with the  impugned  judgment  and order passed by the High Court. 6.4 Now so far as the submission on behalf of the appellants of not taking  into consideration the  other  sale deeds, it is required to be noted that those sale deeds are with respect to small portions of land and thereafter rightly discarded. 6.5 Now so far as the deduction at the rate of 15% towards the   development   charges,   it   also   does   not   call   for   any interference of this Court considering the fact that the land in question   at   the   relevant   time   was   an   agricultural   land. However,   taking   into   consideration   the   fact   that   the   sale 20 instance dated 24.07.1979 relied upon was a quite big chunk of land and the location of the acquired land and the land was acquired for spinning mill, the High Court has rightly adopted 15% cut, which in the facts and circumstances of the case is not required to be interfered with.  7. At this stage, it is also required to be noted that though the land was acquired in the year 1988, the same was made operational only in the year 1992 and therefore, has gone into liquidation   in   the   year   2003.     The   entire   amount   of compensation as determined by the High Court has been paid. We see no reason to interfere with the common Judgment and Order passed by the High Court.  In view of the reasons stated hereinabove all these appeals fail and deserve to be dismissed.  The appeals are dismissed accordingly. However, no order as to costs. …………………………………J.               (M. R. SHAH) …………………………………J. New Delhi,        (ANIRUDDHA BOSE) September 13, 2021 21