Sajan vs The State Of Maharashtra on 17 March, 2020


Supreme Court of India

Sajan vs The State Of Maharashtra on 17 March, 2020

Author: R. Banumathi

Bench: R. Banumathi, A.S. Bopanna

                                                                           REPORTABLE

                                       IN THE SUPREME COURT OF INDIA
                                        CIVIL APPELLATE JURISDICTION


                                  CIVIL APPEAL NOS.      2170-2171    OF 2020
                                  (Arising out of SLP(C) Nos.16945-46 of 2018)

                         SAJAN                                            …..Appellant
                                                     VERSUS
                         STATE OF MAHARASHTRA
                         AND OTHERS                                      …..Respondents
                                                       WITH

                                    CIVIL APPEAL NOS. 2172-2173 OF 2020
                                  (Arising out of SLP(C) Nos.6393-6394 of 2020
                                        @ SLP(C) Diary No.24459 of 2019)
                                                 JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. These appeals have been filed by the appellants assailing the

impugned judgment and final order dated 21.08.2017 passed by the

High Court of Judicature at Bombay Bench at Aurangabad in First

Appeal No.601 of 1997 along with Cross Objection St. No.22145 of

1997 in the First Appeal in and by which the High Court partly

allowed the appeal and inter-alia reduced the compensation for the

Signature Not Verified
land by giving 40% deduction towards development cost.
Digitally signed by
MADHU BALA
Date: 2020.03.17
15:35:21 IST
Reason:

3. The facts giving rise to these appeals are that land in Gat

No.85 at village Mhasekota, Tehsil Soyegaon, District Aurangabad
1
admeasuring 6 acres (2.40 hectares) owned by the partnership firm

of the appellant and respondents No.2 and 3 was proposed for

acquisition for the purpose of construction of Hiwra Dam project by

the office of the Executive Engineer, Jalgaon Medium Project

Division. Accordingly, on 29.03.1982, the Special Land Acquisition

Officer issued notification under Section 4 of the Land Acquisition

Act, 1984 (for short, “Land Acquisition Act”) and on 03.11.1983,

notification under Section 6 was published. Out of this acquired

land, land admeasuring 0.80 hectares was non-agricultural land

used for running the Sugar Mill by the partnership firm and the

remaining was cultivable land.

4. The Special Land Acquisition Officer, Aurangabad passed an

award dated 01.09.1986 under Section 11 of the Land Acquisition

Act awarding compensation considering valuation of land @

Rs.29,712/- (Rs.20,000/- per hectare for 0.80 hectares non-

agricultural land, Rs.9500/- per hectare in respect of 1.44 hectare

cultivable land and Rs.200 per hectare in respect of 0.16 hectare

Potkharaba land). Apart from the costs of the land, the S.L.A.O.

has also fixed the valuation of structure under three heads i.e. (i)

Civil part/Building valuation Rs.3,67,100/-; (ii) Electrical installation

(now to be demolished) Rs.1,06,000/-; and (iii) Mechanical

2
machinery (dismantling and transportation) Rs.1,05,000/-, total

Rs.5,78,100/-. To this compensation amount, statutory entitlement

of 30% solatium and 12% enhancement of compensation value

w.e.f. notification under Section 4 was added. The net amount

payable was calculated at Rs.36,00,385.50/-.

5. Aggrieved, the appellant and also respondents No.2 and 3

filed reference application (Land Acquisition Reference No.299/94)

under Section 18 of Land Acquisition Act on the ground that market

value has not been properly determined. The appellant and

respondents No.2 and 3 further claimed damages and loss of

business @ Rs.5,00,000/- per year since 1981 till 1986

to the tune of Rs.30,00,000/-. The appellants claimed market value

@ Rs.10 per sq.ft and claimed total compensation at

Rs.1,69,45,111/- along with other statutory benefits.

6. The Reference Court-Civil Judge, Senior Division,

Aurangabad, vide judgment and award dated 24.04.1996 awarded

compensation at the enhanced rate of Rs.6/- per sq. ft. for the entire

acquired land by treating the entire land as land meant for

non-agricultural use and deducted 10% towards development costs,

Rs.3,86,867/- towards demolishing and dismantling charges of

electrical, mechanical and machinery installation, Rs.5,00,000/- was

3
awarded for loss of earning for the period from 1981 to 1986,

Rs.91,000/- towards damages and dismantling charges and

Rs.15,000/- towards transportation, loading and unloading along

with the statutory benefits. Thus, total additional claim of the

appellant to the extent of Rs.23,73,011/- was allowed.

7. Respondent-State filed First Appeal No.601 of 1997 assailing

the aforesaid order and the appellant and respondents No.2 and 3

also filed Cross Objection bearing St. No.22145 of 1997. Initially this

cross-objection was dismissed by the High Court for non-removal of

objections. Restoration application was also dismissed on account

of inordinate delay and the appeal filed by the respondents was

partly allowed. Against this dismissal, the appellant and respondents

No.2 and 3 filed appeal No.2432 of 2005 before the Supreme Court

which was allowed vide judgment dated 20.04.2011 and the matter

was remitted back to the High Court for fresh disposal taking into

consideration the law laid down by this court in recent judgments.

8. Thereafter, by impugned Judgment dated 21.08.2017, the

High Court partly allowed the appeal as well as cross-objections

and passed the following award:-

 i.    Cost of the land @              ….          Rs.9,40,896/-
       Rs.6/-     per     sq.ft.
       (Deduction at 10%)
 ii.   Dismantling and damage          ….          Rs.4,26,890/-

                                                                      4
       of Civil work costs
iii.   Replacement                of       ….          Rs.2,39,000/-
       electrical installation
 iv.   Depreciated value          of       ….          Rs.6,62,000/-
       machineries
 v.    Loss of business                    ….          Rs.5,00,000/-

                  Total                    ….          Rs.21,60,974/-


9. Mr. Gopal Balwant Sathe, learned counsel for the appellant

assailed the impugned judgment contending that the High Court

failed to consider the valuation certificate (Exh.-21) duly proved by

PW-2-Mukund Dharashivkar-Empanelled Government Valuer

whose evidence remained unrebutted by the State Government.

Further, it has been submitted that Exh.-21 proves that the civil work

comes to the tune of Rs.9,55,000/-, electrical installation

Rs.3,21,000/- and mechanical installation Rs.10,69,000/- which

totally comes to Rs.23,45,000/- and the depreciation value comes to

Rs.14,28,000/-. Totally, the valuation of the civil, mechanical and

electrical structure comes to Rs.63,80,000/- and the valuation done

by PW-21-Valuer has not been considered by the High Court. It was

further submitted that the High Court has completely ignored the

fact that the respondents had not adduced any documentary

evidence to show that the valuation certificate (Exh.-21) issued by

PW-2 is not proper and lacks precision. It was further submitted that

computation of loss of business @ Rs.1,00,000/- per year is

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completely erroneous. It was submitted that the High Court erred in

not taking into consideration that the appellant had to close the

sugar factory and face financial crisis suffering decree of civil court

for recovery of loan amount as the appellant had raised loan from

the bank. It was further submitted that the High Court erred in

making deduction of 40% though the lands were acquired for

irrigation project which does not require development charges like

providing basic amenities like roads, water etc. and the Reference

Court rightly made deduction of 10% which is a reasonable

deduction and the High Court erred in reducing the compensation

amount.

10. On the other hand, Mr. Aaditya A. Pande, learned counsel

appearing for the State of Maharashtra has submitted that the

Reference Court has committed an error by considering the market

value of fully developed plot and comparing the same with

undeveloped land. It was submitted that village Mhasekota is a very

small village having a population of one thousand, situated in a

remote area without any development potentials and there was no

potential value of the acquired land as non-agricultural land. It was

further contended that no purchaser will come forward to purchase

the large area of land admeasuring 1.44 hectares on square feet

6
basis and without considering this aspect, the Reference Court had

enhanced the compensation @ Rs. 6.90 per sq.ft. Drawing our

attention to the evidence of the State witness Dilip Gudwe,

Sub-Divisional Officer, it was submitted that SDO had visited the

site and factory premises and submitted a report (Exh.-54)

mentioning that the factory was not in operation and the machinery

was lying idle and considering the same, the High Court has

recorded a finding that the claimants had closed the sugar factory.

The learned counsel urged that the High Court rightly reduced the

compensation awarded by the First Appellate Court and there is no

ground warranting interference with the impugned judgment.

11. We have heard Mr. Shirish K. Deshpande and Mr. Sagar N.

Pahune Patil, learned counsel appearing on behalf of the appellants

and Mr. Rahul Chitnis, learned counsel appearing on behalf of the

respondent-State. We have carefully considered the contentions

and perused the impugned judgment and materials on record.

12. The land Gat No.85 admeasuring 6 acres, situated at

Mhasekota in Soygaon Tahsil of Aurangabad district, owned by the

appellants-claimants came to be acquired by the Government for

construction of Hiwra medium project. The land Gat No.85

admeasuring 2 hectares 40 R came to be acquired including 0.16

7
hectare Potkharaba land. Out of this area, land admeasuring 0.80

hectare has been converted into non-agriculture (N.A) purpose for

installation of Khandsari factory (sugar factory). Rest of the area

admeasuring 1.44 hectare is appellants claim that they have been

using for non-agricultural purpose. Though the claimants had asked

for non-agricultural permission for the land admeasuing 1.44

hectare out of the land Gat No.85, the same was not granted by the

concerned authority. The S.L.A.O. on 29.03.1982 has published the

notification under Section 4 of the Land Acquisition Act and on

01.09.1986 awarded the compensation for the acquired land

admeasuring 0.80 R, since converted into the non-agriculture land,

at the rate of Rs.2.00 per sq. meter i.e. Rs.20,000/- per hectare. The

S.L.A.O. has awarded the compensation to the agricultural land

admeasuring 1.44 R at the rate of Rs.9500/- per hectare. So far as

Potkharaba land, which is 0.16 hectare is concerned, the S.L.A.O.

has awarded the compensation at the rate of Rs.200/- per hectare.

The S.L.A.O. has awarded total compensation at Rs.29,712/- as the

costs of the land, as stated above.

13. So far as the use of the entire land for non-agricultural

purpose is concerned, the High Court found that the Reference

Court is justified in treating the entire land having the potential for

8
non-agricultural purpose of the remaining area – 1.44 hectare.

Referring to the Project report – Exh.42 – scheme of the factory

approved by the Small Scale industries, Aurangabad, the High

Court found that the main raw material required for the sugar factory

is sugarcane and part of the building is used for keeping the raw

materials. The High Court further found that besides flow sheet,

certain part of the land would be utilised for office building,

workshop, staff quarters, etc. and also used for parking and various

other purposes. The High Court also pointed out that the State has

not adduced any evidence to the effect that the land admeasuring 1

hectare 44 R out of the acquired land was mainly used for

agricultural purpose and not for the non-agricultural purpose. In

view of the concurrent findings by the Reference Court and by the

High Court that apart from 0.80 hectare, the land measuring 1

hectare 44 R be taken as having the potential for non-agricultural

purpose, we do not find any reason to take a different view.

Market value and deduction for development

14. The High Court has taken Exh.23 dated 03.06.1976 as

exemplar which is the sale deed for plot admeasuring 30×32 ft.

9
(960 sq.ft.) for Rs.3,000/- i.e. at the rate of Rs.3.12 per sq.ft. The

appellants have also placed further reliance on the sale deed dated

03.02.1982 Exh.35 wherein, the plot of admeasuring 5023 sq.ft.

was sold for Rs.35,000/- i.e. Rs.6.90 per sq.ft. The High Court has

taken Exh.23 sale deed dated 03.06.1976 and had taken 10%

increase for every year and arrived at the value at Rs.6 per sq.ft.

Even going by Exh.35 sale deed (03.02.1982) under which Rs.5023

sq.ft. was sold for Rs.35,000/- i.e. Rs.6.90 per sq.ft., Exh.35 sale

deed (03.02.1982) is after possession of the land was taken by the

State Government (21.11.1981) and Section 4 Notification dated

10.02.1982. Since Exh.35 sale deed dated 03.02.1982 is between

two dates – date of taking possession of the land and the date of

Section 4 Notification, it is necessary to adopt a reasonable

valuation. Considering Exh.23 and Exh.35, the value adopted by the

Reference Court at Rs.6.90 per sq.ft., in our view, fixation of

valuation at Rs.6.90 per sq.ft., the value adopted is fair and

reasonable and the same is affirmed.

15. Taking the value at Rs.6.90 per sq.ft, the High Court deducted

40% towards the development cost and calculated the value of the

land at Rs.2,61,300 sq.ft. at Rs.9,40,896.00. While determining the

market value of the acquired land, normally one-third deduction i.e.

33 1/3% towards development charges is allowed. After referring to

10
number of judgments, in Major General Kapil Mehra and Others vs.

Union of India and Another (2015) 2 SCC 262, the Supreme Court

held as under:-

“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
Atchinaid
(2006) 12 SCC 87, Mummidi Apparao v. Nagarjuna
Fertilizers & Chemicals Ltd
. (2009) 4 SCC 402 and Lal Chand v.
Union of India
(2009) 15 SCC 769.”

16. Rule of one-third deduction towards development is the

general rule. But depending upon the purpose of acquisition and

taking note of well planned layouts, if any, the deduction for

development cost may vary from 20% to 75%. Observing that

deduction towards development can range from 20% to 75% of the

price of the plot, in Lal Chand vs. Union of India and Another (2009)

15 SCC 769, the Supreme Court held as under:-

“19. If the acquired land is in a semi-developed urban area, and not
an undeveloped rural area, then the deduction for development
may be as much less, that is, as little as 25% to 40%, as some
basic infrastructure will already be available. (Note: The

11
percentages mentioned above are tentative standards and subject
to proof to the contrary.)
…….

22. Some of the layouts formed by the statutory development
authorities may have large areas earmarked for water/sewage
treatment plants, water tanks, electrical substations, etc. in addition
to the usual areas earmarked for roads, drains, parks, playgrounds
and community/civic amenities. The purpose of the aforesaid
examples is only to show that the “deduction for development”
factor is a variable percentage and the range of percentage itself
being very wide from 20% to 75%.”

17. In the present case, since the land was acquired for the

construction of Hiwra Dam project, much of the development like in

the case of a layout for housing colony is not required. In our view,

40% deduction made by the High Court appears to be on the higher

side. Considering the purpose of the acquisition and the facts and

circumstances of the case, 20% deduction for development cost

would be reasonable. Taking the entire land 2,61,300 sq.ft. as

non-agricultural and making 20% deduction for the development

cost, the value of the land is calculated at Rs.12,54,530/- as under:-

Value of the land
2,61,360 x 6.90 …. Rs.18,03,384.00
20% deduction …. Rs.3,60,67.68
Rounded to …. Rs.3,60,677/-

Total …. Rs.14,42,707/-

Valuation of the construction/civil works

18. PW-2-Mukund Dharashivkar in his valuation report Exh.21 has

considered the valuation of the civil work and foundation under four

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heads:- (i) reproduction costs; (ii) market value as on today;

(iii) dismantling costs and damages; and (iv) transportation costs of

good materials. The reproduction costs has been shown as

Rs.9,55,020/- whereas, the market value as on the date of report

has been shown at Rs.5,26,575/- and Rs.4,09,565/- has been

shown under the head of dismantling costs and damages and

further Rs.17,325/- has been shown as transportation costs of good

materials. PW-2-Mukund Dharashivkar has deposed that the

valuation of the civil work is Rs.5,26,575/- and that it includes the

valuation of foundation embedded in the earth. As referred to by the

High Court in its judgment in Para (28), PW-2-Mukund Dharashivkar

has considered the civil work and foundation with regard to power

house, office and workshop, staff quarter, water storage tank and

other infrastructure/constructions with size, specifications and the

number of items. Per contra, witness No.3 for the State,

Sub-Divisional Engineer, Mr. Dilip Gudwe has assessed the

valuation of civil work amounting to Rs.3,67,100/-. After extracting

the relevant portion of the judgment of the Reference Court as to

the valuation of the civil work, the evidence of PW-2 and witness

No.3 for the State- Sub-Divisional Engineer, the High Court

has assessed the valuation of the dismantling costs and damages

of civil work and foundation to the tune of Rs.4,09,565/- and

13
Rs.17,325/- for transportation costs of good materials and arrived at

the total amounting to Rs.4,26,890/-. We do not find any reason to

take a different view and we affirm the amount of Rs.4,26,890/-

towards damages of civil work and foundation and transportation of

good materials.

Electrical installation and re-installation

19. As against the amount of Rs.3,86,867/- awarded by the

Reference Court, the High Court has awarded Rs.2,39,000/-

towards depreciated market value of the electrical installation. As

per the project report that was initially prepared for the year 1976,

cost of factory installation was given at Rs.6,93,677/- and as per

award, it has been given Rs.5,78,100/-. Referring to Exh.21 report

and evidence of PW-2-Mukund Dharashivkar, the Reference Court

has awarded Rs.3,86,867/- towards dismantling charges in respect

of electrical, mechanical and re-installation. During the course of

dismantling and re-installation, there is every possibility of the

electrical installation being damaged. Considering the findings of the

Reference Court, in our view, the High Court was not justified in

reducing the amount of Rs.3,86,867/- to Rs.2,39,000/- on the

ground of depreciated market value of electrical installation.

Therefore, the amount of Rs.3,86,867/- awarded by the Reference

14
Court is affirmed. For the dismantling of the electrical installation

and re-installation of the same, the amount of Rs.2,39,000/-

awarded by the High Court is enhanced to Rs.3,86,867/- as

awarded by the Reference Court.

Replacement cost of machinery and mechanical installation

20. Based on the report Exh.21 and the evidence of PW-2, the

High Court has awarded depreciated market value of the machinery

and mechanical installation to the tune of Rs.6,62,000/- and the

same is affirmed.

Loss of business

21. A perusal of the evidence of PW-2-Mukund Dharashivkar

examined on behalf of the appellants shows that in the year 1978-

79, when the witness has visited the factory of the appellants, he

noticed that the production of the sugar was stopped. As pointed out

by the Reference Court as well as by the High Court, as regards

income, no statement of income had been produced. During the

period 1981 till 1986, the sugar mill was idle. The balance sheet for

the years 1975-76 as per Exh.33 shows that the factory was

running in loss initially during the year 1975-76. Though the

appellants have claimed that they were making profit of

Rs.2,00,000/- per year, as pointed out by the courts below, no

15
statement had been filed to show that the sugar factory was making

profit of Rs.2,00,000/-. The courts below have recorded the

concurrent findings for awarding the compensation of Rs.5,00,000/-

for loss of business from the year 1981, the time of taking

possession of the property and compensation paid in the year 1986.

The compensation amount of Rs.5,00,000/- paid towards the loss of

business is also affirmed.

22. The compensation awarded to the appellants under various

heads is modified as under:-

      Sr.    Description           of   By the High     By the Supreme
      No.    Items                      Court           Court
        i.   Land value                 Rs.9,40,896/-   Rs.14,42,707/-
       ii.   Civil work                 Rs.4,26,890/-   Amount confirmed
       iii   Replacement           of   Rs.2,39,000/-   Rs.3,86,867/-   as
             electrical installation                    awarded by the
                                                        Reference Court
       iv    Depreciated value of Rs.6,62,000/-         Amount confirmed
             the machinery and
             mechanical
             installation
      V      Loss of business Rs.5,00,000/-             Amount confirmed
             from the year 1981
             to 1986

In the counter affidavit filed by the respondent-State, it is stated that

the office of the Executive Engineer, Jalgaon Medium Project

Division-1 has deposited the decreetal amount of Rs.72,02,224/- by

way of a cheque deposited in the Civil court. Further the amount of

Rs.10,00,000/- has been paid to the appellant on 21.09.2018 by

way of cheque bearing No.000081 vide receipt No.0114362 and the
16
amount of Rs.5,00,000/- has been paid to the appellants on

02.11.2018 by way of the cheque bearing No.000094

(receipt No.0114663). It is stated that the appellant has also

executed the receipt of the above said amount and has also

executed an acknowledgement to the effect that, his entire claim

has been settled. As per the modified amount of compensation, the

appellants are entitled to the balance amount.

23. In the result, the impugned judgment and final order dated

21.08.2017 passed by the High Court of Judicature at Bombay

Bench at Aurangabad in First Appeal No.601 of 1997 along with

Cross Objection St. No.22145 of 1997 in the First Appeal, is

modified as stated above in Para (22) and these appeals are partly

allowed. The balance amount as per the modified amount of

compensation be paid to the appellants/claimants with all statutory

benefits as awarded by the Reference Court.

..…………………….J.

[R. BANUMATHI]

..…………………….J.

[A.S. BOPANNA]

New Delhi;

March 17, 2020.

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