deduction of 50% towards developmental charges from the market value.= we find that firstly, the land acquired in question is a large chunk of land (101 acres approx.); Secondly, it is not fully developed; Thirdly, the respondents (landowners) have not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; Fourthly, exemplar relied on by the respondents, especially Ex.P­18 pertains to very small pieces of land (19 guntas); Fifthly, the three distinguishing features 15 noticed in the land in sale deed (Ex.P­18) are not present in the acquired land. 24) It was for the aforementioned reasons, in our opinion, the Reference Court was justified in making deduction of 50% towards developmental charges from the market value. = So far as the determination of market value made by the Reference Court is concerned, i.e., Rs.21,29,600/­ per acre, the same having been upheld by the High Court, we do not find any justification to examine this issue again. Even the learned ASG did not challenge this finding and confined his submissions only relating to the issue of percentage of the deduction only.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 6986­6987  OF 2018

(Arising out of S.L.P.(C) No.10358­10359 of 2015)

Union of India                       ….Appellant(s)

VERSUS

Dyagala Devamma & Ors.             ….Respondent(s)

 

J U D G M E N T

Abhay Manohar Sapre, J.

1) Leave granted.

2) These   appeals   are   filed   against   the   final

judgment and order dated 08.08.2014 passed by

the High Court of Judicature at Hyderabad for the

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State of Telangana and the State of Andhra Pradesh

in LAAS No.762 of 2010 and CO(SR) No.373 of 2011

whereby the High Court dismissed the appeal filed

by the appellant herein and partly allowed the cross

objections   filed   by   the   respondents   herein   and

enhanced the compensation as mentioned in detail

infra.

3) We   herein   set   out   the   facts,   in   brief,   to

appreciate   the   issues   involved   in   these   appeals.

4) 0n 12.11.2003,  the State of Andhra Pradesh

issued a notification under Section 4 of the Land

Acquisition Act, 1894 (hereinafter referred to as “the

Act”) and acquired the land measuring about 101­

00 acres (SY No.398/3 and other connected survey

numbers) situated at Jagitial Municipality,  District

Karimnagar (AP). The acquisition of land was for a

public purpose, namely, “laying new broad gauge

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single railway line from Karimnagar to Jagitial Phase

–II by the appellant­Railways”. This was followed by

issuance of notification under Section 6 of the Act

and then possession on 02.12.2003.

5) The   Land   Acquisition   Officer   (LAO)   started

proceedings   under   Section   11   of   the   Act   for

determination of the compensation payable to the

landowners for their lands. By award No.26/2006

dated 14.07.2006, the LAO determined the market

value   of   the   acquired   land   at   the   rate   of

“Rs.1,30,000/­   per   acre   for   wet   lands”   and

“Rs.1,24,000/­ per acre for dry lands”. The LAO also

awarded compensation for structures, wells etc. to

some landowners.

6) The claimants (landowners) felt aggrieved and

sought reference under Section 18 of the Act to the

Civil   Court   in   OP   No.27/2007.   By   award   dated

23.07.2010,   the   Civil   Court   (Sr.   Civil   Judge,

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Jagitial) re­determined the market value of the land

in  question. The Reference Court determined the

market value of the acquired land at Rs.21,29,600/­

per acre uniformly.  However, having regard to the

totality of facts of the case, the  Reference Court

considered   it   just   and   proper   to   deduct   50%

towards   developmental   charges   and   accordingly

worked   out   the   market   value   of   the   land   at

“Rs.10,64,800/­   per   acre”   for   being   paid   to   the

landowners.

7) The appellant­Railways felt aggrieved and filed

appeal before the High Court of Andhra Pradesh

whereas the landowners also felt aggrieved and filed

cross   objections   claiming   enhancement   of   the

market value determined by the Reference Court.

8) By   impugned   judgment,   the   High   Court

dismissed the appeal filed by the appellant­Railways

and partly allowed the cross objections filed by the

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landowners   and   enhanced   the   compensation   to

Rs.15,97,200/­ per acre. The High Court, upheld

the market value determined by the Reference Court

i.e.   Rs.21,29,600/­   per   acre   but   reduced   the

deduction towards developmental charges from 50%

to   25%   and   accordingly   worked   out   the

compensation   “at   the   rate   of   Rs.15,97,200/­   per

acre”. It  is  against this  judgment,  the  appellantRailways

felt aggrieved and filed the present appeals

by way of special leave before this Court.

9) Heard   Mr.   Vikramjit   Banerjee,   learned

Additional Solicitor General for the appellant­UOI

and Mr. B. Adinarayana Rao, learned senior counsel

for the respondents.

10) Mr.   Vikramjit   Banerjee,   learned   Additional

Solicitor General appearing for the appellant while

assailing   the   legality   and   correctness   of   the

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impugned   judgment   essentially   made   two

submissions.

11) In the first place, learned ASG contended that

the   High   Court   erred   in   further   enhancing   the

compensation at Rs.15,97,200/­  per acre.

12) According   to   him   the   compensation

determined by the Reference Court payable at the

rate of Rs.10,64,800/­ per acre was just, legal and

proper and, therefore, it did not call for any further

enhancement.

13) In the second place, learned ASG urged that

having placed reliance on exemplar Sale Deed (ExP­18)

for   determining   the   market   value,   the

Reference   Court   rightly   deducted   50%   towards

development charges, whereas the High Court erred

in deducting 25% towards developmental charges.

14) According   to   learned   ASG,   the   High   Court

ought   to   have   appreciated   that   there   were   three

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distinguishing factors appearing from the exemplar

sale deed (Ex.P­18).   Due to these three factors,

deduction of 50% towards developmental charges

from the market value was called for.  These factors

are, First, Sale Deed (Ex.P­18) was for a very small

piece of land (19 Guntas=1/2 acre);   Second, the

land which was the subject matter of Ex­P­18 had a

peculiar   site   because   it   was   situated   facing   two

roads ­ one on the east side and other on the north

side; and Third,  it was a developed land.

15) It was, therefore, urged that so far as the land

in question is concerned, the same did not have

these  factors and, therefore, the  Reference Court

rightly considered it proper to deduct 50% towards

developmental charges from the market value which

was worked out on the basis of Sale Deed (Ex.P­18).

It was urged that the High Court without assigning

any   reasons   much   less   cogent   reasons   erred   in

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reducing developmental charges from 50% to 25%

from the market value.   Learned ASG, therefore,

prayed for restoration of the award of the Reference

Court in place of impugned judgment of the High

Court.

16) Per   contra,   learned   senior   counsel   for   the

respondents (landowners) supported the impugned

judgment and contended that it does not call for

any interference and hence the appeals deserve to

be dismissed.

17) The question arises for consideration in these

appeals is whether the High Court was justified in

deducting 25% towards developmental charges from

the market value of the land in question against

50% deduction made by the Reference Court.   In

other   words,   having   regard   to   the   facts   and

circumstances of the case, whether the Reference

Court   was   justified   in   deducting   50%   from   the

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market value of the land or whether the High Court

was justified in deducting 25%.

18) Before we examine the facts of this case, it is

necessary to take note of general principles of law on

the subject in question which are laid down by this

Court in several cases and some of which were also

cited at the Bar by the learned counsel for the parties.

Indeed, if we may say so, law on the several issues

urged herein by the learned counsel for the parties is

already settled by this Court and what has varied in

its application depends on the facts of each case.

19) In  Chimanlal   Hargovinddas   vs   Special   Land

Acquisition Officer, Poona & Anr. (1988) 3 SCC 751,

this Court dealt with the question as to how the Court

should  determine   the  valuation   of   the  lands  under

acquisition and what broad principle of law relating to

acquisition of land under the Act should be kept in

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consideration to determine the proper market value of

the acquired land.

20) In Para 4 of the judgment, this Court laid down

as many as 17 principles, which are reproduced below

for perusal:

“(1) to (4)………………………………….

(5) The   market   value   of   land   under

acquisition   has   to   be   determined   as   on   the

crucial   date   of   publication   of   the   notification

under   Section   4   of   the   Land   Acquisition   Act

(dates  of  notifications  under  Sections  6  and  9

are irrelevant).

(6) The   determination   has   to   be  made

standing  on  the  date   line  of  valuation   (date  of

publication of notification under Section 4) as if

the valuer is a hypothetical purchaser willing to

purchase   land   from   the   open   market   and   is

prepared   to  pay   a   reasonable  price   as  on   that

day. It has also to be assumed that the vendor is

willing to sell the land at a reasonable price.

(7) In doing so by the instances method,

the   court   has   to   correlate   the   market   value

reflected   in   the   most   comparable   instance

which provides the index of market value.

(8) Only   genuine   instances   have   to   be

taken   into   account.   (Sometimes   instances   are

rigged up in anticipation of acquisition of land.)

(9) Even post­notification instances can

be   taken   into   account   (1)   if   they   are   very

proximate,   (2)   genuine   and   (3)   the   acquisition

itself has not motivated the purchaser to pay a

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higher   price   on   account   of   the   resultant

improvement in development prospects.

(10) The  most  comparable   instances  out

of  the  genuine   instances  have  to  be   identified

on the following considerations:

(i) proximity from time angle,

(ii) proximity from situation angle.

(11) Having   identified   the   instances

which   provide   the   index   of  market   value   the

price   reflected   therein   may   be   taken   as   the

norm   and   the  market  value  of   the   land  under

acquisition may be deduced by making suitable

adjustments for the plus and minus factors visà­vis

land under acquisition by placing the two

in juxtaposition.

(12) A   balance­sheet   of   plus   and  minus

factors may be  drawn  for this  purpose  and the

relevant   factors  may  be   evaluated   in   terms   of

price variation as a prudent purchaser would do.

(13) The market value of the land under

acquisition   has   thereafter   to   be   deduced   by

loading the price reflected in the instance taken

as   norm   for   plus   factors   and   unloading   it   for

minus factors.

(14) The   exercise   indicated   in   clauses

(11) to (13) has to be undertaken in a common

sense manner as a prudent man of the world of

business would do. We may illustrate some such

illustrative (not exhaustive) factors:

Plus factors       Minus factors

1.    smallness of size 1.   largeness of area

2.    proximity to a road 2. situation in the interior at a

distance from the road

3.    frontage on a road 3.  narrow strip of land with very

small   frontage   compared   to

depth

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4.   nearness to developed area 4. lower   level   requiring   the

depressed portion to be filled

up

5.   regular shape 5. remoteness   from   developed

locality

6.   level   vis­à­vis   land   under

acquisition

6. some   special

disadvantageous factor which

would deter a purchaser

7.     special value for an owner

of        an adjoining

property to whom it may

have some very special

advantage

(15) The   evaluation   of   these   factors   of

course depends on the facts of each case. There

cannot   be   any   hard   and   fast   or   rigid   rule.

Common   sense   is   the   best   and   most   reliable

guide.   For   instance,   take   the   factor   regarding

the size. A building plot of land say 500 to 1000

sq. yds. cannot be compared with a large tract

or block of land of say 10,000 sq. yds. or more.

Firstly while a smaller plot is within the reach

of  many,  a   large  block  of   land  will  have  to  be

developed   by   preparing   a   lay   out,   carving   out

roads,  leaving  open  space, plotting  out smaller

plots,   waiting   for   purchasers   (meanwhile   the

invested   money   will   be   blocked   up)   and   the

hazards  of  an  entrepreneur.  The   factor  can  be

discounted by making a deduction by way of an

allowance   at   an   appropriate   rate   ranging

approximately   between   20   per   cent   to   50   per

cent to account for land required to be set apart

for   carving   out   lands   and   plotting   out   small

plots. The discounting will to some extent also

depend  on  whether   it   is   a   rural  area  or  urban

area,   whether   building   activity   is   picking   up,

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and   whether   waiting   period   during   which   the

capital of the entrepreneur would be locked up,

will   be   longer   or   shorter   and   the   attendant

hazards.

(16) Every case must be dealt with on its

own   fact   pattern   bearing   in   mind   all   these

factors as a prudent purchaser of land in which

position the judge must place himself.

(17) These   are   general   guidelines   to   be

applied   with   understanding   informed   with

common sense.”

21) These principles are invariably kept in mind by

the Courts while determining the market value of the

acquired   lands   (also   see  Union   of   India   vs.   Raj

Kumar   Baghal   Singh   (Dead)   Through   Legal

Representatives & Ors., (2014) 10 SCC 422).

22) In addition to these principles,   this Court in

several cases have laid down that while determining

the true market value of the acquired land especially

when   the   acquired   land   is   a   large   chunk   of

undeveloped land, it is just and reasonable to make

appropriate   deduction   towards   expenses   for

13

development   of   acquired   land.   It   has   also   been

consistently   held   that   at   what   percentage   the

deduction should be made varies from 10% to 86%

and, therefore, the deduction should be made keeping

in mind the nature of the land, area under acquisition,

whether the land is developed or not and, if so, to

what extent, the purpose of acquisition, etc.   It has

also   been   held   that   while   determining   the   market

value of the large chunk of land, the value of smaller

pieces of land can be taken into consideration after

making   proper   deduction   in   the   value   of   lands

especially when sale deeds of larger parcel of land are

not available.  This Court has also laid down that the

Court   should   also   take   into   consideration   the

potentiality   of   the   acquired   land   apart   from   other

relevant   considerations.   This   Court   has   also

recognized   that   the   Courts   can   always   apply

reasonable   amount   of   guesswork   to   balance   the

14

equities in order to fix a just and fair market value in

terms of parameters specified under Section 23 of the

Act.   (See  Trishala   Jain   &   Anr.   Vs.   State   of

Uttaranchal & Anr., (2011) 6 SCC 47 and Vithal Rao

& Anr. Vs. Special Land Acquisition Officer,  (2017)

8 SCC 558)

23) Keeping in mind the aforementioned principles,

when we take note of the facts of the case at hand, we

find that firstly, the land acquired in question is a

large chunk of land (101 acres approx.); Secondly, it is

not   fully   developed;   Thirdly,   the     respondents

(landowners) have not filed any exemplar sale deed

relating to large pieces of land sold in acres to prove

the   market   value   of   the   acquired   land;   Fourthly,

exemplar   relied   on   by   the   respondents,   especially

Ex.P­18   pertains   to   very   small   pieces   of   land   (19

guntas);   Fifthly,   the   three   distinguishing   features

15

noticed   in   the   land   in   sale   deed   (Ex.P­18)   are   not

present in the acquired land.  

24) It  was   for  the   aforementioned  reasons,   in  our

opinion, the Reference Court was justified in making

deduction of 50% towards developmental charges from

the market value.  The High Court, in our opinion, did

not assign any good reason as to why and on what

basis, it considered proper to make deduction towards

developmental charges at the rate of 25% in place of

50%.

25) This   Court   has   held   in  Trishala   Jain’s   case

(supra) that it depends upon the facts of each case to

decide for determination of the market value of the

land   as   to   what   percentage   should   be   adopted   for

deduction.     In   our   opinion,   the   reasons   mentioned

above were rightly made basis by the Reference Court

to support the deduction of 50%.

16

26) So far as the determination of market value made

by   the   Reference   Court   is   concerned,   i.e.,

Rs.21,29,600/­ per acre, the same having been upheld

by the High Court, we do not find any justification to

examine this issue again.  Even the learned ASG did

not   challenge   this   finding   and   confined   his

submissions only relating to the issue of percentage of

the deduction only.

27) Learned counsel for the respondents was not able

to point out any fact/evidence which could persuade

us to uphold the reasoning and conclusion arrived at

by the High Court in the impugned judgment.

28) In   view   of   the   foregoing   discussion,   we   are

inclined to uphold the reasoning and the conclusion

arrived at by the Reference Court instead of the High

Court.

17

29) As a consequence of the foregoing discussion, the

appeals   succeed   and   are   accordingly   allowed.

Impugned   judgment   is   set   aside   and   that   of   the

Reference Court (Civil Court) dated 23.07.2010 in OP

No.27/2007 is restored.

……………………………………..J.

[ABHAY MANOHAR SAPRE]

……………………………………..J

[UDAY UMESH LALIT]

New Delhi;

July 25, 2018

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