Shankarrao Bhagwantrao Patil … vs The State Of Maharashtra Through … on 20 September, 2021


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Supreme Court of India

Shankarrao Bhagwantrao Patil … vs The State Of Maharashtra Through … on 20 September, 2021

Author: Hemant Gupta

Bench: Hemant Gupta, V. Ramasubramanian

                                                                                  REPORTABLE


                                          IN THE SUPREME COURT OF INDIA

                                            CIVIL APPELLATE JURISDICTION


                                      CIVIL APPEAL NOS. 5712-5713 OF 2021
                              (ARISING OUT OF SLP (CIVIL) NOS. 33471-33472 OF 2016)


                         SHANKARRAO BHAGWANTRAO PATIL ETC.                      .....APPELLANT(S)

                                                            VERSUS

                         THE STATE OF MAHARASHTRA                            .....RESPONDENT(S)



                                                        WITH


                                      CIVIL APPEAL NOS. 5714-5715 OF 2021
                              (ARISING OUT OF SLP (CIVIL) NOS. 33876-33877 OF 2016)




                                                  JUDGMENT

HEMANT GUPTA, J.

1. The present appeals are directed against the order dated

22.03.2016 passed by the High Court of Judicature at Bombay,

Aurangabad in the First Appeals filed by the land owners and the

State determining the compensation of the land acquired at the

rate of Rs.317/- per square meter (29 per square feet) apart from
Signature Not Verified

the statutory benefits, thus reducing the compensation awarded by
Digitally signed by
Jayant Kumar Arora
Date: 2021.09.21
14:29:27 IST
Reason:

the learned Reference Court on 13.08.2003 at the rate of Rs. 70

per square feet.

1

2. The land of the appellants measuring 40R (1R = 100 square

meters or 1089 square feet) comprising of a land survey no.

220/4/b was taken into possession by the State through private

negotiations on 14.09.1984. The market price payable to the

landowners was to be settled by negotiations but, since the price

could not be decided, therefore the land comprising land survey

no. 220/4/b admeasuring 40R was intended to be acquired vide

notification dated 04.02.1999 under Section 4 of The Land

Acquisition Act, 18941 published in the Maharashtra Government

Gazette. Such land is the subject matter of Civil Appeals arising out

of SLP (Civil) Nos. 33471-33472 of 2016. The State also intended

to acquire land admeasuring 30R and 20R comprising of Survey

Number 212/b and 220/4 vide the above said notification as well.

The possession of such land was taken on 21.10.1992. Such land is

the subject matter of Civil Appeals arising out of SLP (Civil)

Nos.33876-33877 of 2016. The other statutory requirements were

completed and two separate awards were announced. The learned

Special Land Acquisition Collector determined market value

considering the two sale instances both dated 24.04.1997 forming

a part of the land comprising of Survey No. 220 of an area of 92

square meters sold for a sum of Rs. 3500/-. The first award was

announced on 26.03.2002 in respect of the land admeasuring 40R.

The learned Special Land Acquisition Collector awarded a sum of

Rs.232/- per square meter. The second award was announced by

1 For short the ‘Act’

2
the Land Acquisition Collector on 6.4.2002 awarding a

compensation of Rs.217/- per square meter for 1390 square meters

of land out of Survey No. 220/4 and Rs.168/- per square meters

comprising of Survey No. 212/1/b, whereas in respect of the land

admeasuring 100 square meters out of Survey No. 212/1/b, a

compensation of Rs. 179/- per square meter was granted.

3. The land owners dissatisfied with the amount of compensation,

sought reference under Section 18 of the Act claiming

compensation at the rate of Rs. 150/- per square feet for the entire

land measuring 90R. It has also come on record that the land,

subject matter of the appeals, is similarly situated and forms a part

of Bhoom Municipal Council. The population of Bhoom Municipal

Council is 17510 and the land is described in the revenue record as

barren land. PW 1 – Shankarrao had admitted that the land was

rocky and moorum (powdered rock) soil.

4. The land owners relied upon two sale deeds, i.e. Exhibit 30 dated

05.04.1995 whereby the land falling under Survey No. 220 was

sold for a sum of Rs. 3,00,051/- in pursuance of an agreement to

sell dated 02.11.1994. A sum of Rs. 1,00,000/- was to be paid

before 1.11.1995. The Reference Court calculated the rate of the

sale price, it was recorded to be Rs. 137.76 per square feet. The

rate has not been disputed before the High Court or even before

this Court. The land owners relied upon another sale deed i.e.

Exhibit 31 dated 04.09.1996 whereby the land measuring 49.5 x

16.5 feet (816. 75 square feet) was sold for a sum of Rs.1,90,000/-

3
that is Rs. 232.50 per square feet. Such property is described as

Municipal Council New Property Number 1480 and 1480/1. The

learned Reference Court arrived at the compensation of Rs.70/- per

square feet of the land acquired after deducting 20% of the price

mentioned in Exhibit 30 and 31 on account of development

charges.

5. However, the High Court in further appeals filed by the State and

the land owners dismissed the appeal of the land owners for

enhancement but reduced the compensation to Rs.317/- square

meter (29 per square feet). The High Court found that the sale

instances are in respect of the land but in fact the houses were

constructed thereon therefore, the sale deed includes the cost of

construction of the house, such cost has to be reduced. The High

Court also held that since the acquisition is of a large area of 9000

square meters, therefore, the suitable development charges are

required to be deducted as the sale instances pertain to the

smaller area. After discussing the evidence, the High Court

redetermined the compensation as mentioned above.

6. Before this Court, Mr. Jayant Bhushan, learned Senior Advocate on

behalf of the land owners argued that as per Exhibit 30, a plot

measuring 66 x 33 feet (2178 square feet/ 202 square meter) was

sold at the rate of Rs.137.76 per square feet. Another sale instance

Exhibit 31, a plot measuring 815.75 square feet was sold at the

rate of Rs.232.62 per square feet. The land, subject matter of the

sale instance Exhibit 30 and 31 are close to the acquired land inas-

4
much as the land in Exhibit 31 is just 150 feet from the acquired

land. It is argued that the sale instances are of an open land.

Therefore, the finding of the High Court that the land had houses is

not supported by evidence as the permission for construction was

granted only in the year 1997 after the acquisition of sale deed

dated 1996. The learned counsel further argued that in view of the

judgment of this Court in Meharawal Khewaji Trust v. State of

Punjab2, the highest rates from the sale exemplar is to be taken,

therefore, Exhibit 31 is a more suitable exemplar which is required

to be made the basis for determination of compensation.

7. The learned counsel for the appellant also relied upon the judg-

ment of this Court reported as Maya Devi (Dead) Thr. Lrs v.

State of Haryana and Anr.3 that 33% deduction could be made

for large lands being acquired when the exemplar is for a smaller

area. Thus, with Exhibit 31 having the sale price of Rs.232/- per

square feet and 33% deduction is made, the rate would come out

to be Rs.160 per square feet. Therefore, the amount claimed by

the land owners i.e. at the rate of Rs.150/- per square feet should

have been awarded.

8. It is also argued that since the possession was taken in the year

1984/ 1992 though the notification under Section 4 of the Act was

published in the year 1999, therefore, an interest on the amount of

compensation awarded from the date of possession should have

been granted. The reliance is placed upon judgments of this Court

2( 2012) 5 SCC 432
3 (2018) 2 SCC 474

5
reported as R.L. Jain v. DDA & Ors.4, Madishetti Bala Ramul v.

Land Acquisition Officer5, Tahera Khotoon & Ors. v. Revenue

Divisional Officer/Land Acquisition Officer & Ors 6., Balwan

Singh & Ors. v. Land Acquisition Collector & Anr.7. It is thus

argued that the order of the High Court to remit the matter to the

Collector for determination of the compensation from the date of

possession till the date of notification is clearly erroneous and the

land owners would remain further deprived of the value of the ac-

quisition of land.

9. On the other hand, Mr. Sachin Patil, learned counsel for the State

argued that houses were constructed on the land in question which

is evident from the Tax Assessment Register for the period 1983-84

till 1.1.97 (Annexure A-3) filed by the appellant with additional doc-

uments showing the assignment of House property number. In fact,

the sale deed itself is of Municipal Council Property No. 1186/1

(New No. 1481/1). Still further, the permission to construct relied

upon by the appellant is dated 28.1.1997 which was granted to the

vendor, though the land stood sold to the appellant on 4.9.1996.

Thus, the entire story of the land being an open land is not true. It

is argued that the land, subject to the sale exemplar is a very small

area as against the large track of acquired land measuring almost

2 acres. The sale exemplars relied upon by the appellants are of

the smaller area. Therefore, the deduction of at least 50% is re-

4 (2004) 4 SCC 79
5 (2007) 9 SCC 650
6 (2014) 13 SCC 613
7 (2016) 13 SCC 412

6
quired to be made towards the land required for development

works apart from the deduction on account of the value of the

house constructed. It is argued that the sale exemplars Exhibit 30

and 31 respectively are not relevant since they are not a part of

the land which is the subject matter of the acquisition. In fact, the

sale exemplars referred to the Reference Court are in respect of

the land acquired. Therefore, the said sale instances become the

most relevant exemplars.

10. We have heard the learned counsel for the parties. We find that the

Exemplar Exhibit 30 is in respect of Survey No. 220 of a sale deed

executed on 05.04.1995. Exemplar 31 is not a part of Survey No.

220 but has been assigned Municipal Council New Property No.

1480 and 1481/1, because the land is situated close to the ac-

quired land. The argument that the construction was raised in pur-

suance of the permission granted on 28.01.1997, therefore, the

finding of the High Court that the house was already constructed is

not tenable. We find that the reliance of the appellant on the Exem-

plar Exhibit 31 is absolutely untenable and based on a false repre-

sentation. A perusal of the permission dated 28.01.1997 shows

that it was granted to Govind Rajaram Bhagwat for the construc-

tion of a house on Plot No. 1480/1, vendor. Such property had al-

ready been sold on 04.09.1996. Still further, the house tax assess-

ment register produced by the appellant shows that the property

was assessed to house tax in the name of Govind Rajaram Bhag-

wat from the year 1983-1984 till 01.01.1997. Therefore, such land

7
had a house constructed thereon, which was assessed to House

Tax as well. The commencement certificate is not reliable since it is

granted to the vendor of the purchaser. Therefore, Exhibit 31 is ex-

cluded from consideration.

11. Thus, the judgment of this Court in Mehrawal Khewaji Trust is of

no help to the appellant inasmuch as the best exemplar Exhibit 31

referred to by the appellant has been found to be a non-bonafide

transaction. In the absence of such an exemplar, only Exhibit 30

remains to be examined in which, the plot of land, of the same

survey number was sold at the rate of Rs. 137.76 per square feet.

12. The question of deductions on account of an exemplar of a smaller

plot as compared to a larger area under acquisition has come up

for consideration before this Court in Chimanlal Hargovinddas v.

Special Land Acquisition Officer, Poona and Anr.8. This Court

held as under:

“8. …….The first two grounds are devoid of merit. It is
common knowledge that when a large block of land is required
to be valued, appropriate deduction has to be made for setting
aside land for carving out roads, leaving open spaces, and
plotting out smaller plots suitable for construction of buildings.
The extent of the area required to be set apart in this
connection has to be assessed by the court having regard to
the shape, size and situation of the concerned block of land
etc. There cannot be any hard and fast rule as to how much
deduction should be made to account for this factor. It is
essentially a question of fact depending on the facts and
circumstances of each case. It does not involve drawing upon
any principle of law.

xxx xxx xxx

12. In the result appellant must be awarded compensation
at Rs 7000 per acre subject to deduction or allowance of 25

8 (1988) 3 SCC 751

8
per cent to account for land required to be set apart for roads,
open spaces etc. In other words appellant will be entitled to be
paid compensation for 13 acres 7 gunthas comprised in Survey
No. 85 at Rs 5250 per acre (Rs 7000 less 25 per cent i.e. less
1750 = Rs 5250) in place of the lesser sum awarded by the
High Court. Appeal must be partly allowed to this extent
accordingly.”

13. In the aforesaid case, reliance of the landowners was on an

exemplar which reflected the sale price of Rs. 20,000/- per acre

which was situated on the Ganeshkhand Road as against Rs.

7,000/- per acre assessed by the High Court. The Court noticed that

the unloading was Rs. 13,000/- per acre which works out at 65%.

14. In the judgment reported as Lal Chand v. Union of India and

Anr.9, this Court held that deduction for development is to be made

to arrive at the market value of large tracts of undeveloped

agricultural land (with potential for development) the deduction

varies from 20% to 75% of the price of such developed plots. 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. For example, if a residential layout
is formed by DDA or similar statutory authority, it may utilise
around 40% of the land area in the layout, for roads, drains,
parks, playgrounds and civic amenities (community facilities),

9 (2009) 15 SCC 769

9
etc.

15. The development authority will also incur considerable
expenditure for development of undeveloped land into a
developed layout, which includes the cost of levelling the land,
cost of providing roads, underground drainage and sewage
facilities, laying water lines, electricity lines and developing
parks and civil amenities, which would be about 35% of the
value of the developed plot. The two factors taken together
would be the “deduction for development” and can account for
as much as 75% of the cost of the developed plot.

xxx xxx xxx

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%.”

15. This Court in the judgment reported as Kasturi and Ors. v. State

of Haryana10, held that 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. This Court held as under:

“7 …….. However, in cases of some land where there are
certain advantages by virtue of the developed area around,
it may help in reducing the percentage of cut to be applied,
as the developmental charges required may be less on that
account. 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

10 (2003) 1 SCC 354

10
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.”

16. Exhibit 30 is part of the same survey number whereby land was

sold at the rate of Rs.137.76 square feet. In the present case, there

is no evidence that the sale exemplar Exhibit 30 was a part of any

developed layout but is an isolated instance of sale. Such sale of a

small area as compared to the acquisition of 9000 square meters

can be taken into consideration after a suitable deduction is made

on account of the development cost. The land in question was

rocky and had a moorum soil. Such land is not cultivable. Still

further, the State has taken possession of a part of the land in

1984 and another part in 1992 as is apparent from the reading of

the two awards of the Special Land Acquisition Officer. The Bhoom

town has a small population of 17150. The possession of the land

was taken for construction of government quarters and a road.

Since the use of the land for a government quarter was known,

therefore, the smaller area was sold keeping in view the intended

use of the land acquired for the residential purposes. The

deduction of 50% is proper as the sale deed was executed after 11

years of possession of rocky land and moorum soil was taken.

Therefore, we find that deduction towards the development cost at

the rate of 50% is warranted in the facts of the present case. Thus,

the compensation to be awarded is (137.76/2= 69 rounded off to

Rs.70 per square feet) which was the market value assessed by the

11
Reference Court as well.

17. We find that the order of the learned Reference Court is justified in

law whereas the High Court has reduced the compensation drasti-

cally without any reasonable basis. Therefore, we find that the ap-

pellant is entitled to a compensation at the rate of Rs.70/- per

square feet from the date of award by the Land Acquisition Collec-

tor. Apart from statutory benefits, such compensation has been ar-

rived at keeping in view the development activity that has already

taken place by the virtue of possession of the acquired land deliv-

ered to the State.

18. The possession of the land acquired was taken in the year 1984/

1992. The land owners have claimed interest from 1984/1992 when

the possession was taken, whereas the acquisition is in the year

1999. In respect of the argument for determination of amount of

compensation from the date possession was taken by the State till

the date of notification under Section 4 of the Act, judgments relied

upon by the appellant have been referred to in para 8 above. A pe-

rusal of the said judgments shows that grant of payment of interest

for the pre-acquisition period is in the nature of an order passed un-

der Article 142 of the Constitution to do substantial justice. Keeping

in view the aforesaid judgments, we find that instead of remitting

the matter to the Land Acquisition Collector for determination of

the compensation for use and occupation by the State, we deem it

appropriate to decide this issue in the present appeal itself.

12

19. There is no evidence that such land was being put to use by the

landowners even prior to the taking of possession by the State. But

the fact remains that the possession has been taken without pay-

ment of compensation depriving the landowners of the right to use

land. Therefore, the land owners would be entitled to interest on

the amount of compensation awarded at the rate of 9% per annum

from the date of possession which was taken in the year

1984/1992 till the date of notification under Section 4 of the Act on

the amount awarded after acquisition that is the sum of Rs.70/- per

square feet. The appellant shall be entitled to others statutory ben-

efits on the compensation amount of Rs.70/- per square feet from

the date of award till realization. With the above said directions,

the appeals are disposed of.

………………………………………J.

(HEMANT GUPTA)

………………………………………J.

(V. RAMASUBRAMANIAN)

NEW DELHI;

SEPTEMBER 20, 2021

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