Ramesh Kumar vs Bhatinda Integarated … on 13 September, 2021


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Supreme Court of India

Ramesh Kumar vs Bhatinda Integarated … on 13 September, 2021

Author: M.R. Shah

Bench: M.R. Shah, A.S. Bopanna

                                                         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)

Signature Not Verified                                Versus
Digitally signed by R
Natarajan
Date: 2021.09.13

                         The State of Punjab and Ors.                   ..Respondent(s)
16:48:24 IST
Reason:



                                                        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)

                       JUDGMENT

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
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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.

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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
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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/­
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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
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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.

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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;

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(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.

vs. Rameshbhai Jivanbhai Patel & Anr., (2008)

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
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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
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in the price of the exemplar. Reliance is placed on

the decision of this Court in the case of Atma

Singh vs. State of Haryana, (2008) 2 SCC 568.

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

Jain and Anr. Vs. State of Uttaranchal and Anr., (2011) 6

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
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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 Rameshbhai Jivanbhai Patel (Supra) by the land

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.

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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
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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
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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
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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 Rameshbhai Jivanbhai Patel (Supra) in

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,
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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
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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

Rameshbhai Jivanbhai Patel (Supra), it is observed and held

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
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