Sunday 8 December 2013

Land acquisition Act- determination of market value of land by court-rules to be followed


Therefore, it is clear that mere reliance made by 
a Court on sale deeds of smaller residential area for 
determination   of   market   value   of   larger   agricultural 
area,     the   same   will   not  render   the   determination 
illegal   until   and   unless   it   is   shown   that   the 
determination was not proper.1
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
REPORTABLE
CIVIL APPEAL NO.5311 OF 2012
(arising out of SLP(C)No.34284 of 2011)
AHSANUL HODA 
  
... APPELLANT
Versus
STATE OF BIHAR
    ... RESPONDENT
Citation;AIR 2013 SC3463

SUDHANSU JYOTI MUKHOPADHAYA, J.
This   appeal   has   been   filed   by   the   claimant­
appellant against the judgment and order of the Patna 
High   Court   dated   10.2.2011   by   which   the   High   Court 
reduced   the   compensation   awarded   to   the   claimant,   by 
fixing   the  lower   market  rate   of   the  land   in  question 
and   set   aside   the   part   of   the   order   passed   by   the 
Reference Court granting Rs.10,000/­ towards damages of 
standing crops. 
2.
  Certain lands in  Mauja Mothabari, Thana Katoria, 
Pargana   Sarohi,   District   Bhagalpur   (now   Banka)   were 
acquired   for   the   construction   of   the   Orni­reservoir. 
Land   measuring   3.54   acres   of   Khata   No.111,   Khasra 
No.2925 of same village belonging to the appellant was 
also   acquired.   The   Collector   by   an   award   order   dated 
16.10.1984 fixed the compensation of Rs.6513.60 for the 

entire land based on market rate at Rs.16 per decimal. 
No   amount   was   awarded   towards   damages   of   standing 
crops.
3.
The  Reference   Court  to   which   the   claims   of   the 
land   owners   for   higher   compensation   were   referred, 
determined   the   market   value   as   Rs.   250/­   per   decimal 
i.e. Rs. 25,000/­ per acre.  The Reference Court based 
its decision on two sale transactions submitted by the 
claimant   dated   25.11.1980   and   16.10.1975   (Ext.1   and 
Ext.1/b) relating to sale of plots in the neighbouring 
area.     Considering   the  fact   that   the  sale   deeds  were 
related to small extent of land of nearby village and 
the   acquisition  was   related   to  a   larger  extent,     the 
Reference   Court     was   of   the   view   that   certain 
percentage   could   be   deducted   while   determining   the 
value of the land in question. However, as sale deeds 
were   of   the   earlier   period,     after   such   deduction, 
appropriate increase in the value of the land from the 
date of the sale deed to the date of the Notification 
under   Section   4     of   the   Land   Acquisition   Act,   1894 
(hereinafter referred to as ‘the Act’) was made.
4.
The respondent preferred an appeal before the High 
Court.    The High Court disposed of the said appeal by 
impugned   judgment   dated   10.2.2011.   The     High   Court 

modified   the   judgment   of   the   Reference   Court   with 
regard to the market value by reducing the market rate 
from Rs.250/­ per decimal to Rs.100/­ per decimal and 
set   aside   the   part   of     the   order   whereby   sum   of 
Rs.10,000/­ was granted by the Tribunal as damages of 
standing crops.
5.
During the pendency of the appeal before the High 
Court   and   after   23   years   of   the   acquisition,   the 
appellant received a sum of Rs. 5,69,531/­ on  4.7.2007 
as per determination of  the Reference Court and paid a 
sum   of   Rs   56,953/­   towards   tax.       The   effect   of 
impugned judgment passed by the High Court is that the 
claimant has to refund part of the amount received by 
the claimant as compensation. 
6.
The   questions   that   arise   for   our   consideration 
are:
(i)  Whether   the   market   value   as   fixed   by   the 
Tribunal   is   excessive   as   contended   by   the 
State of Bihar;
(ii) 
Whether  the Tribunal  rightly  compensated 
the claimant for damages of standing crops.
7.
The   High   Court   by   its   impugned   judgment   modified 
the compensation and set aside the part of the   order 

relating to compensation   for standing crops on three 
counts,   namely;     (a)   The   sale   deeds   dated   25.11.1980 
(Ext.1)   and   16.10.1975   (Ext.1/b)     related   to   smaller 
area of  25 and  6 1⁄2 decimals of land respectively; (b) 
Aforesaid sale deeds do not relate to agricultural land 
but   homestead land as   in the boundary of one of the 
sale­deed ‘Masjid’ and ‘road’   is shown; (c)   OP­W­1, 
Shri Ratneshwar Pd. Singh has stated that there was no 
crop   standing   on   the     land   at   the   time   of   the 
possession. 
8.
Learned   counsel   for   the   appellant   assailed   the 
judgment   passed   by   the     High   Court   on   the   following 
grounds:
(i) In   the   absence   of   any   other   evidence   except 
the   sale   deeds   (Ext.1   and   Ext.1/b),     the 
determination of market value is not based on any 
evidence but on mere presumption and surmises.  
(ii) The   High   Court   wrongly   relied   on   the 
statement of OP­W­1, Ratneshwar   Pd. Singh,   who 
was posted elsewhere at the time of   acquisition 
of   the   land.     On   the   other   hand,     the   Reference 
Court   decided   the   quantum   of   payment   towards 
damages of standing crops on the basis of evidence 
on record.  

9.
Learned counsel for the State justified the order 
passed by the High Court.   It was contended that the 
compensation   with   regard   to   larger   area   cannot   be 
determined   on   the   basis   of   sale   deeds   related   to 
smaller area.   As the sale deeds at Ext.1 and Ext.1/b 
related   to   homestead   land   having   shown   ‘road’   or 
‘masjid’   in  the   boundary,    no   comparison  can   be  made 
with the agricultural land acquired for other purpose. 
10. Before the Reference Court claimant produced seven 
witnesses,   AW­1   to   AW­7   and   three   sale   deeds,   Ext.1, 
Ext.1/a   and   Ext.1/b.     On   behalf   of   the   State,   one 
witness OP­W­1, Ratneshwar Pd. Singh, an assistant to 
the   Land   Acquisition   Officer,   Medium   Irrigation 
Project,   Bhagalpur   and   the   two   valuation   Khatiyans, 
Ext. A and A/1 were produced. 
11. AW­6,   the   claimant,   himself   in   his   deposition 
stated that 3.54 acres of his land acquired is ‘three 
fasla’   (produced   three   crops   in   an   area)   and   was 
irrigated  from the Orni river.  At the time of taking 
possession by State,  potato, wheat and sugar­cane were 
standing crops which were damaged causing a loss of Rs. 
10,000/­ to Rs.12,000/­.   The market value of the land 
at the time of acquisition was between Rs. 50,000/­ to 
Rs. 60,000/­ per acre.  Similar statements were made by 

other witnesses i.e. AW­1 to AW­5.  They supported the 
claim of the claimant.  
12. Kanhaiya   Lall   Ghosh,   A.W.7,   a   deed   writer   proved 
sale   deeds   Ext.   1   dated   25.11.1980,   Ext.   1/a     dated 
6.10.1980   and   Ext.1/b     dated   16.10.1975.     He   stated 
that he was the deed writer of Exts.1, 1/a and 1/b.  By 
Ext.1/a,   Bibi   Rahana   Sultana   and   others   sold   70 
decimals   of   land   for   consideration   of   Rs.7,000/­   on 
6.10.1980.  By Ext.1/b  dated 16.10.1975, Seikh Janual 
and others sold 6 1⁄2  decimals of land for consideration 
of Rs. 1500/­ .
13. Ratneshwar   Pd.   Singh,   OP­W­1   deposed   before   the 
Reference   that   the   land   of   the   appellant   measuring 
3.54 acres had   been acquired by the State vide   L.A. 
Case   No.   76/81­82   and     department   paid   Rs.   5664/­ 
towards   value   of   the   land   and   Rs.   849.60     as 
additional compensation; a sum of Rs. 6513.60 in total 
was paid as compensation.  He specifically stated that 
he   was   not   posted   at   the   time   of   acquisition   and 
whatever he stated is based on the official record.    
14. Ext. A and Ext. A/1,  valuation Khatiayan  mainly 
contains Khata No.,   Khesra No., area   acquired, rate 
per   acre,   value   of   the   land   determined   and     other 
statutory benefits provided to one or other claimant. 

Those Exts. A and A/1   do not show anything about the 
market value of any land of the village or the nearby 
village. 
15. The   Reference   Court,     based   on   the   sale   deeds 
Ext.1   and   Ext.1/b   and   considering     the   evidence   on 
record,     determined   the   market   value   at   Rs.250/­   per 
decimal and allowed a sum of Rs.10,000/­ towards damage 
of standing crops.  
16. This  Court in number of cases has taken judicial 
notice of the fact that there is a steady increase in 
the market value of the  land and has also adopted the 
procedure   for   determining   the   increased   market   value 
and relied upon   the transaction at   a given rate per 
year.
17. In
 General   Manager,   Oil   and   Natural   Gas  
Corporation Limited vs. Rameshbhai Jilvanbhai Patel and  
Another  reported   in  (2008)   14   SCC   745,      this   Court 
observed   that   in   the   absence   of   other   acceptable 
evidence, a cumulative increase of   10 to 15 per cent 
is permissible with reference to acquisitions in  1990. 
In the decades preceding 1990s, the quantum of increase 
was considered to be less than 10 per cent per annum.  
18. This Court in  Sardar Joginder Singh vs. State of  
Uttar Pradesh and Another (2008) 17 SCC 133,   noticed 

that the said case related to acquisition in  the year 
1979   and   relying     upon     the     award   related   to   an 
acquisition of  1969 observed that the general increase 
between 1969­79 can be taken to be around 8­10 per cent 
per   annum.  
  If   this   increase   is   calculated 
cumulatively, the total increase in 10 years would be 
around 100 per cent.  
19.   The   question   relating   to   the   value   of   larger 
extent   of   agricultural   land,   if   required   to   be 
determined   with   reference   to   price   fixed   for   small 
residential   plot,   came   for   consideration   before   this 
Court   in  Haridwar   Development   Authority   Vs.   Raghubir  
singh and Others (2010)11 SCC 581.   In the said case, 
this Court held as follows:
“When the value of a large extent of agricultural  
land  has  to  be  determined  with  reference  to  the  
price   fetched   by   sale   of   a   small   residential  
plot,   it   is   necessary   to     make   an   appropriate  
deduction towards the development cost, to arrive  
at  the  value  of  the  large    tract  of  land.    The  
deduction towards development cost may vary from  
20% to 75% depending upon various factors.   Even  
if   the   acquired   lands   have   situational  
advantages,     the   minimum   deduction   from   the  
market   value   of   a   small   residential   plot,   to  
arrive   at   the   market   value   of   a   larger  
agricultural land,  in the  usual course, will be  
in the range of 20% to 25%.   In this case,   the  
Collector   has   himself   adopted   a   25%   deduction  
which   has   been   affirmed   by   the   Reference   Court  
and   the   High   Court.     We,     therefore,   do   not  
propose to alter it.”

Therefore, it is clear that mere reliance made by 
a Court on sale deeds of smaller residential area for 
determination   of   market   value   of   larger   agricultural 
area,     the   same   will   not  render   the   determination 
illegal   until   and   unless   it   is   shown   that   the 
determination was not proper.
20. In   the   instant   case,   the   average   value   of   the 
sale­deeds   relied   upon   by   the   Reference   Court   (Ext.1 
and Ext.1/b) was Rs. 401/­ at the time of acquisition. 
Therefore,   as   the   sale­deeds   were   in   relation   to 
smaller plots,   the deduction of 37% was made by the 
Reference   Court   and  
  thereafter,   by   allowing 
appropriate 10% increase in the value of the land from 
the   date   of   the   sale   deeds   upto   the   date   of 
Notification under Section 4 of the Act,  the Reference 
Court   arrived     at   a   figure   of   Rs.250/­   per   decimal. 
The   High  Court   while  arriving   at   figure  of   Rs.  100/­ 
per   decimal   considered   only   the   fact   that   the   sale 
deeds relied upon were in relation to smaller plots and 
those   sale   deeds(Ext.1   and   Ext.1/b)   were   related   to 
homestead land and hence fixed Rs. 10,000/­ per acre as 
compensation.       It   completely   failed   to   consider   the 
increase in price of land and the deduction made by the 

High   Court   is   nearly   75%   which   is   not   in   accordance 
with law.
As Ext.1 and Ext.1/b which were related to smaller 
area,     were   the   only   sale   deeds   available   for 
comparison, the same were relied upon by the Reference 
Court,   but   the   High   Court   erred   completely   in 
disregarding the said sale­deeds and thus arrived at a 
finding   of   Rs.100/­   per   decimal   as     market   value   on 
mere presumption and surmises.   There was no evidence 
on record to arrive at this value and, even if it was a 
case of deduction, the High Court has not   given   any 
reason in support of the same. 
21. The   High   Court   also   committed   error     in   holding 
that   the   sale   deeds   (Ext.1   and   Ext.1/b)   relate   to 
homestead   land,   on   the   ground   that   a   ‘road’   and   a 
‘masjid’  has been shown in the boundary  of one of the 
exhibits.   From   the   copies   of   Ext.1   and   Ext.   1/b   on 
record   (Annexure   P­12   Colly),   we   find   no   citation   in 
Ext.1 showing the land as homestead land.  On the other 
hand   Ext.1/b   specifically   cites   that   the   land   is   an 
agricultural land for which the annual revenue rent of 
Rs.25 is payable. 
22. The High Court disregarded the evidence adduced by 
the   claimants   in   its   entirety   without   any   reason; 

however,   it   relied   on   evidence   of   an   officer   of   the 
State (OP­W­1) Ratneshwar Pd. Singh and set aside the 
compensation   in   relation   to   the   standing   crops.     The 
Reference Court has clearly recorded in its order that 
the said State Officer was not posted in that area at 
the time of acquisition and his knowledge was limited 
to the official record.     The record was silent as to 
the   standing  crops.       The  Khatiyans   (Ext.A   and  Ext.­
A/1)   were   also   not   relating   to   standing   crops.     The 
fact   that   the   Collector   had   not   allowed   any   amount 
towards   damage   of   standing   crops   and   that   no   such 
amount is mentioned in the Khatiyan  does not mean that 
no   standing   crop   was   there   at   the   time   of   taking 
possession   of   the   land.     On   the   contrary,     the 
witnesses   AW­1   to   AW­5   appeared   and   supported   the 
statement   of   claimant   that   at   the   time   of   the 
possession,   standing   crops   were   there   which   were 
damaged causing loss to the extent of Rs.10,000 to Rs. 
12,000/­.  
  During   their   cross   examination   the 
respondents   could   not   extract   any   other   material 
evidence against the claimants.
23. In view of the finding as recorded above, we have 
no other alternative but to set aside the order passed 
by the High Court and restore the award passed by the 

Reference   Court.   The   impugned   judgment   passed   by   the 
High Court is accordingly set aside and the appeal is 
allowed.     The   respondents   are   directed   to   pay   the 
appellant the compensation in terms of the award passed 
by   the   Reference     Court     after   adjusting   the   amount 
already   paid  within   three  months.     There  shall   be  no 
separate order as to costs.  
................................................................J.
                       (G.S. SINGHVI )
................................................................J.
                       (SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
JULY 1 , 2013.


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