land acquisition Act – one-third deduction – small extent of land for development – In Subh Ram and Others v. State of Haryana and Anr. (2010) 1 SCC 444, the deduction of 67% was held to be not improper. In the case in hand, the High Court applied deduction at 67.5% which in our considered view is on the higher side. In the facts and circumstances of the present case and considering that the exemplar dated 26.05.1983 was for a small extent of land and that the acquired land has to be developed for construction of warehouse, we deem it appropriate to apply one-third deduction and deducting one-third that is Rs.2,21,629/- from Rs.6,64,887/-, the compensation to be awarded is arrived at Rs.4,43,258/- per acre.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 873-874 OF 2018
(Arising out of SLP(C) Nos.30923-30924 of 2016)
MAYA DEVI (D) THROUGH LRs & ORS. …Appellants
Versus
STATE OF HARYANA & ANR. …Respondents
J U D G M E N T
R. BANUMATHI, J.
Leave granted
2. These appeals arise out of the judgment of the High Court of
Punjab and Haryana at Chandigarh in and by which the High Court
enhanced the compensation to Rs.2,19,413/- per acre and also
dismissed the review holding that the subsequent evidence sought to
be brought is not relevant as it is based upon post notification.
3. Respondent No.2-Haryana State Ware Housing Corporation
had acquired 40 kanal and 8 marlas land at Rania for construction of
warehouse/godown vide Notification dated 12.02.1988 issued under
Section 4(1) of the Land Acquisition Act, 1894 (for short ‘the Act’); out
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of which 40 kanal 8 marlas land, 21 kanal 6 marlas land was of the
present appellants; Notification dated 21.02.1989 was issued under
Section 6 of the Act. Vide award No.9 dated 19.05.1990, the Land
Acquisition Officer awarded compensation of Rs.75,000/- per acre.
Being aggrieved by the award dated 19.05.1990, the
appellants/claimants filed a reference petition under Section 18 of the
Act before Additional District Judge, Sirsa for enhancement of
compensation, which came to be dismissed by judgment dated
15.02.1993. Being aggrieved by the dismissal of the claim for
enhancement, the appellants/claimants filed appeal before the High
Court in R.F.A.No.1519 of 1993. The High Court relied upon the sale
deed dated 26.05.1983 wherein small extent of land of 9 marlas was
sold for Rs.25,500/- as an exemplar. The High Court gave escalation
at 10% for the time gap of 56 months and calculated the value at
Rs.6,64,887/- per acre and made the deduction at the rate of 67.5%
for development charges and calculated the compensation to be
awarded at Rs.2,19,413/- per acre.
4. Being aggrieved, the land owners filed Special Leave
Petition(C) No.27989 of 2013 before this Court which was withdrawn
by order dated 01.08.2014 with liberty to file review before the High
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Court. In the review petition, the appellants/claimants relied upon:- (i)
sale deed dated 27.12.1988; and (ii) subsequent acquisition of
nearby land vide notification dated 27.03.1989 in which the High
Court by its judgment dated 15.09.2006 in R.F.A. No.866 of 1996
awarded compensation of Rs.7,26,000/- per acre. The High Court
dismissed the review, inter alia, holding that the sale deed dated
27.12.1988 is a post notification sale and also the acquisition vide
notification dated 27.03.1989 was subsequent one and the same is
not relevant for determining the market value of the lands acquired
vide notification dated 12.02.1988. Moreover, the High Court found
no valid ground for review under Order XLVII C.P.C. Being
aggrieved, the appellants/land owners have filed these appeals.
5. Contention of the appellants/claimants are mainly three-fold:- (i)
there was only ten months difference between the notification dated
12.02.1988 and the sale deed dated 27.12.1988 while so, the High
Court was not justified in not considering the said sale deed dated
27.12.1988 as an exemplar on the ground that the same is a post
notification; (ii) considering that the land acquired falls within
municipal limits and had immense potential for use for commercial
and residential purpose, applying the maximum cut at the rate of
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67.5% was not justified; and (iii) for acquisition of the land of the
adjoining khasra by notification dated 27.03.1989, compensation was
awarded at the rate of Rs.7,26,000/- per acre by the High Court which
is more than three times higher than the compensation awarded in
the present case.
6. So far as the first contention is concerned, the sale deed relied
upon by the appellants/claimants dated 27.12.1988 is post
notification. Sub-section (1) of Section 23 of the Act provides that the
compensation to be awarded shall be determined by the reference
court, based upon the market value of the acquired land at the date
of the publication of the notification under Section 4(1). In Kolkata
Metropolitan Development Authority v. Gobinda Chandra Makal
and Anr. (2011) 9 SCC 207, it was held that the relevant date for
determining the compensation is the date of publication of the
notification under Section 4(1) of the Act in the Gazette. In para (34),
it was held as under:-
“34. One of the principles in regard to determination of the market
value under Section 23(1) is that the rise in market value after the
publication of the notification under Section 4(1) of the Act should
not be taken into account for the purpose of determination of
market value. If the deeming definition of “publication of the
notification” in the amended Section 4(1) is imported as the
meaning of the said words in the first clause of Section 23(1), it will
lead to anomalous results. The owners of the lands which are the
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subject-matter of the notification and neighbouring lands will come
to know about the proposed acquisition, on the date of publication
in the Gazette or in the newspapers. If the giving of public notice of
the substance of the notification is delayed by two or three months,
there may be several sale transactions in regard to nearby lands in
that period, showing a spurt or hike in value in view of the
development contemplated on account of the acquisition itself.”
Applying the ratio of the above decision, we are of the view that the
post notification instances cannot be taken into consideration for
determining the compensation of the acquired land.
7. So far as the contention regarding deduction at the rate of
67.5% for development charges is concerned, the exemplar relied
upon by the High Court dated 26.05.1983 was for a small extent of
land of 9 marlas which was sold for Rs.25,500/-. The transaction
relates to the period which is about 56 months prior to the notification
under Section 4 of the Act and the High Court adopted the rate of
escalation at 10% and calculated the value at Rs.6,64,887/-.
Considering the fact that the acquired land required for development
and that the property covered under the exemplar was for a small
extent of 9 marlas of land, the High Court applied maximum
deduction at 67.5% and calculated the compensation to be paid at
Rs.2,19,413/- per acre.
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8. In Haryana State Agricultural Market Board and Anr. v.
Krishan Kumar and Ors. (2011) 15 SCC 297, this Court has held
that “if the value of small developed plots should be the basis,
appropriate deductions will have to be made therefrom towards the
area to be used for roads, drains, and common facilities like park,
open space, etc. Thereafter, further deduction will have to be made
towards the cost of development, that is, the cost of leveling the land,
cost of laying roads and drains, and the cost of drawing electrical,
water and sewer lines.”
9. Observing that the development charges for development of
particular plot of land could range from 20% to 75%, in Lal Chand v.
Union of India and Another (2009) 15 SCC 769, in paras (13), (14)
and (20), this Court held as under:
“13. The percentage of ‘deduction for development’ to be made to
arrive at the market value of large tracts of undeveloped agricultural
land (with potential for development), with reference to the sale
price of small developed plots, varies between 20% to 75% of the
price of such developed plots, the percentage depending upon the
nature of development of the layout in which the exemplar plots are
situated.
14. The ‘deduction for development’ consists of two components.
The first is with reference to the area required to be utilised for
developmental works and the second is the cost of the
development works.
.……..
20. Therefore the deduction for the ‘development factor’ to be made
with reference to the price of a small plot in a developed layout, to
arrive at the cost of undeveloped land, will be for more than the
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deduction with reference to the price of a small plot in an
unauthorised private layout or an industrial layout. It is also well
known that the development cost incurred by statutory agencies is
much higher than the cost incurred by private developers, having
regard to higher overheads and expenditure.”
The same principle was reiterated in Andhra Pradesh Housing
Board v. K. Manohar Reddy and Ors. (2010) 12 SCC 707.
10. In a catena of judgments, this Court has taken the view to apply
one-third deduction towards the development charges. After referring
to various case laws on the question of deduction for development, in
Major General Kapil Mehra and Ors. v. Union of India and Anr.
(2015) 2 SCC 262, this Court held as under:
“35. Reiterating the rule of one-third deduction towards
development, in Sabhia Mohammed Yusuf Abdul Hamid Mulla v.
Land Acquisition Officer (2012) 7 SCC 595, this Court in para 19
held as under: (SCC pp. 606-07)
“19. In fixing the market value of the acquired land, which
is undeveloped or underdeveloped, the courts have
generally approved deduction of 1/3rd of the market
value towards development cost except when no
development is required to be made for implementation
of the public purpose for which land is acquired. In
Kasturi v. State of Haryana (2003) 1 SCC 354 the Court
held: (SCC pp. 359-60, para 7)
‘7. … It is well settled that in respect of
agricultural land or undeveloped land which
has potential value for housing or commercial
purposes, normally 1/3rd amount of
compensation has to be deducted out of the
amount of compensation payable on the
acquired land subject to certain variations
depending on its nature, location, extent of
expenditure involved for development and the
area required for road and other civic amenities
to develop the land so as to make the plots for
residential or commercial purposes. A land may
be plain or uneven, the soil of the land may be
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soft or hard bearing on the foundation for the
purpose of making construction; maybe the
land is situated in the midst of a developed
area all around but that land may have a hillock
or may be low-lying or may be having deep
ditches. So the amount of expenses that may
be incurredin developing the area also
varies…………………There may be various
factual factors which may have to be taken into
consideration while applying the cut in
payment of compensation towards
developmental charges, maybe in some cases
it is more than 1/3rd and in some cases less
than 1/3rd. It must be remembered that there is
difference between a developed area and an
area having potential value, which is yet to be
developed. The fact that an area is developed
or adjacent to a developed area will not ipso
facto make every land situated in the area also
developed to be valued as a building site or
plot, particularly when vast tracts are acquired,
as in this case, for development purpose.’
The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v.
State of U.P. (2003) 10 SCC 525, V. Hanumantha Reddy v. Land
Acquisition Officer (2003) 12 SCC 642, H.P. Housing Board v.
Bharat S. Negi (2004) 2 SCC 184 and Kiran Tandon v. Allahabad
Development Authority (2004) 10 SCC 745.”(emphasis in original)
36. While determining the market value of the acquired land,
normally one-third deduction i.e. 33 1/3% towards development
charges is allowed. One-third deduction towards development was
allowed in Tehsildar (LA) v. A. Mangala Gowri (1991) 4 SCC 218,
Gulzara Singh v. State of Punjab (1993) 4 SCC 245, Santosh
Kumari v. State of Haryana (1996) 10 SCC 631, Revenue Divl.
Officer and LAO v. Sk. Azam Saheb (2009) 4 SCC 395, A.P.
Housing Board v. K. Manohar Reddy (2010) 12 SCC 707, Ashrafi v.
State of Haryana (2013) 5 SCC 527 and Kashmir Singh v. State of
Haryana (2014) 2 SCC 165.
37. Depending on the nature and location of the acquired land,
extent of land required to be set apart and expenses involved for
development, 30% to 50% deduction towards development was
allowed in Haryana State Agricultural Market Board v. Krishan
Kumar (2011) 15 SCC 297, Director, Land Acquisition v. Malla
Atchinaidu (2006) 12 SCC 87, Mummidi Apparao v. Nagarjuna
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Fertilizers & Chemicals Ltd. (2009) 4 SCC 402 and Lal Chand v.
Union of India (2009) 15 SCC 769.
38. In few other cases, deduction of more than 50% was upheld. In
the facts and circumstances of the case in Basavva v. Land
Acquisition Officer (1996) 9 SCC 640, this Court upheld the
deduction of 65%. In Kanta Devi v. State of Haryana (2008) 15 SCC
201, deduction of 60% towards development charges was held to
be legal. This Court in Subh Ram v. State of Haryana (2010) 1 SCC
444, held that deduction of 67% amount was not improper.
Similarly, in Chandrashekar v. Land Acquisition Officer (2012) 1
SCC 390, deduction of 70% was upheld.”
11. In Subh Ram and Others v. State of Haryana and Anr. (2010)
1 SCC 444, the deduction of 67% was held to be not improper. In the
case in hand, the High Court applied deduction at 67.5% which in our
considered view is on the higher side. In the facts and circumstances
of the present case and considering that the exemplar dated
26.05.1983 was for a small extent of land and that the acquired land
has to be developed for construction of warehouse, we deem it
appropriate to apply one-third deduction and deducting one-third that
is Rs.2,21,629/- from Rs.6,64,887/-, the compensation to be awarded
is arrived at Rs.4,43,258/- per acre.
12. The impugned judgment is modified and the
appellants/claimants are entitled to get enhanced compensation of
Rs.4,43,258/- payable with all statutory benefits. The appeals are
partly allowed. It is made clear that the appellants/claimants shall not
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be entitled to claim interest for the period of delay in preferring the
appeals from the review.
…….……………………J.
[RANJAN GOGOI]
…………….……………J.
[R. BANUMATHI]
New Delhi;
January 25, 2018
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