RAMESH KUMAR V. BHATINDA INTEGRATED COOPERATIVE COTTON SPINNING MILL AND ORS. versus BHATINDA INTEGRATED COOPERATIVE COTTON SPINNING MILL AND ORS. on 13 September 2021

[2021] 7 S.C.R. 787

RAMESH KUMAR

v.

BHATINDA INTEGRATED COOPERATIVECOTTON SPINNING MILL AND ORS.

(Civil Appeal Nos. 3875 – 3876 of 2009)

SEPTEMBER 13, 2021

[M. R. SHAH AND ANIRUDDHA BOSE, JJ.]

Land Acquisition Act, 1894 – ss. 4 and 23 – Compensation –Enhancement of – A Notification u/s.4 was issued on 06.06.1988and the land in question was acquired for public purposes forestablishing Cotton Spinning and Ginning Mills – The LandAcqusition Officer awarded compensation considering the value ofthe land at the rate of Rs.25,000/- per acre – The Reference Courtrelying upon the sale deed dated 24.05.1979 as Ex. AW6/C by whichthe land admeasuring 43 kanals 13 marlas out of the acquired atthe rate of Rs.50,000/- per acre and thereafter granted the increaseof 12% per acre and thereafter adopting the cut of 25% determinedthe compensation at Rs.1,12,000/- per acre – However, the HighCourt determined the value at Rs.88,400/- per acre after adoptingcut of 15% – On appeal, held: In the present case both, the ReferenceCourt as well as the High Court, have determined the value of theland considering the sale deed dated 24.05.1979 which is morethan 9 years before the notification of the acquisition – Consideringthe observations made by the Supreme Court in the case ofRameshbhai Jivanbhai Patel that it is reasonably safe to determinethe market value by providing appropriate escalation over theapproved market value of nearby lands in the previous years, whenrelied on sale transactions/acquisitions precede the subjectacquisition by only a few years, i.e., upto 4-5 years and beyondthat it may be unsafe – The fact that time gap between the sale deedrelied upon and the date of notification of acquisition is more than9 years in the instant case, the courts below ought to have beenvery cautious in relying upon the sale deed dated 24.05.1979 – Bethat it may and assuming that the sale deed dated 24.05.1979 wasthe best evidence available to determine the value of land acquired,in that case also taking annual increase at the rate of 12% is notjustified – In the instant case, in the facts and circumstances of the

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Acase the annual increase/escalation ought to have been at the rateof 10% maximum – The High Court rightly adopted the cut of 15%,which in the facts and circumstances of the case is not required tobe interfered with – Therefore, there is no reason to interfere withthe impugned judgment of the High Court.BDismissing the Appeals, the Court HELD: 1. The questions which are posed for considerationof this Court are :

(i) Whether in the facts and circumstances of the case theCourts below have erred in taking annual increase at the rate ofC12% at the flat rate and not applying the cumulative rate?

(ii) Whether in the facts and circumstances of the case theHigh Court has erred in adopting the cut/deduction of 15%, whiledetermining the value of the land acquired?

Conclusion

2. In the case of Rameshbhai Jivanbhai Patel, it isDspecifically observed and held that when market value is soughtto be ascertained with reference to transactions which took placebefore the acquisition, the law adopted is to collect the year toyear increase. It is further observed and held that as thepercentage of increase is always with reference to the previousEyear’s market value, the appropriate method is to adopt theincrease cumulatively and not applying a flat rate. However, atthe same time it is also observed and held in the said decisionthat it is reasonably safe to determine the market value byproviding appropriate escalation over the approved market valueFof nearby lands in the previous years, when relied on saletransactions/acquisitions precede the subject acquisition by onlya few years, i.e., upto 4-5 years. It is further observed in the saiddecision that beyond that it may be unsafe, even if it relates to aneighbouring land. In the present case both, the Reference Courtas well as the High Court, have determined the value of the landGconsidering the Sale Deed dated 24.05.1979 which is more than9 years before the notification of the acquisition. Therefore,considering the observations made by this Court in the case ofRameshbhai Jivanbhai Patel and considering the fact that timegap between the sale deed relied upon and the date of notificationof acquisition is more than 9 years, the courts below ought toH

have been very cautious in relying upon the Sale Deed dated24.05.1979. Be that it may and assuming that the Sale Deed dated24.05.1979 was the best evidence available to determine the valueof land acquired in that case also taking annual increase at therate of 12% is not justified. This Court is of the opinion that, inthe facts and circumstances of the case the annual increase/escalation ought to have been at the rate of 10% maximum. Evenotherwise, it is required to be noted that State of Punjab suffereddue to militancy from 1979 onwards till 1992 and because of thatthe prices would have crashed. Therefore, to grant the escalation/price rise at the rate of 12% would not be justified at all. Afterconsidering the case of Rameshbhai Jivanbhai Patel, it is observedand held by this Court in the case of Lal Chand that even if thetransaction is 2 to 3 years prior to the acquisition, the Courtshould, before adopting a standard escalation satisfy itself thatthere were no adverse circumstances. It is further observed andheld that the question is therefore, necessary before increasingthe price with reference to the old transactions. Therefore,assuming that the appellants are right in submitting that theincrease in land value should have been adopted on cumulativebasis, in the peculiar facts and circumstances of the case notedhereinabove, there is no reason to interfere with the impugnedjudgment and order passed by the High Court. [Para 6.3][796-H;797-A-C; 797-G-H; 798-A-E]

3. Now so far as the deduction at the rate of 15% towardsthe development charges, it also does not call for any interferenceof this Court considering the fact that the land in question at therelevant time was an agricultural land. However, taking intoconsideration the fact that the sale instance dated 24.07.1979relied upon was a quite big chunk of land and the location of theacquired land and the land was acquired for spinning mill, theHigh Court has rightly adopted 15% cut, which in the facts andcircumstances of the case is not required to be interfered with.[Para 6.5][798-F-G]

ONGC Ltd. v. Rameshbhai Jivanbhai Patel & Anr. (2008)14 SCC 745 : [2008] 11 SCR 927 – relied on.

Mehrawal Khewaji Trust, Faridkot and Ors. v. State ofPunjab and Ors. (2012) 5 SCC 432 : [2012] 4 SCR

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A24; Ashok Kumar and Ors. v. State of Haryana andOrs. (2015) 15 SCC 200; Atma Singh v. State of Haryana(2008) 2 SCC 568 : [2007] 12 SCR 1120; Anjani MoluDessai v. State of Goa and Anr. (2010) 13 SCC 710 :[2010] 14 SCR 997; Trishala Jain and Anr. v. State ofUttaranchal and Anr. (2011) 6 SCC 47 : [2011] 8 SCRB520; Lal Chand v. Union of India (2009) 15 SCC 769 :[2009] 13 SCR 622 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.3875-3876 of 2009.

EFrom the Judgment and Order dated 19.09.2008 of the High Courtof Punjab and Haryana at Chandigarh in RFA Nos.1507 and 3476 of1999.

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FCivil Appeal Nos. 5669, 5670 of 2021 and Civil Appeal Nos.9185-9196 of 2017.

Nikhil Goel, Naveen Goel, Vinay Mathew, Yadav Narender Singh,Vijay Kumar Sharma, Jagdish Prashad, Rameshwar Prasad Goyal,Sridhar Potaraju, Ms. Shiwani Tushir, Aayush Kumar, Advs. for theAppellant.G

Ms. Kumud Lata Das, Puneet Kansal, Ms. Anita Pandey,Ms. Indu Kaul, Advs. for the Respondents.

RAMESH KUMAR v. BHATINDA INTEGRATED COOPERATIVECOTTON SPINNING MILL AND ORS.

The Judgment of the Court was delivered by A

M. R. SHAH, J.

Civil Appeal Nos. 3875-3876 OF 2009

1. Arising out of the impugned common judgment and order dated19.09.2008 passed by the High Court in RFA No.3476 of 1999 filed byBthe original claimants for enhancement and RFA No.1507 of 1999 filedby the Bhatinda Integrated Co-operative Cotton Spinning & Ginning MillsLtd.

Special Leave Petition No.9470 of 2010

Leave granted.

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Arising out of RFAs No.2648 of 1999 (Bant Singh and Ors. vs.State of Punjab and Ors.), the appeal which was filed by the originalclaimants for enhancement of the compensation. However, it is requiredto be noted that RFA No.1505 of 1999 filed by the Bhatinda IntegratedCo-Operative Cotton Spinning & Ginning Mills Ltd. vs. Bant Singh andothers is not under challenge.

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Special Leave Petition No.15117 of 2010

Leave granted.

Arising out of RFA No.2645 of 1999 which was filed by the originalclaimants Gurbachan Singh and others for enhancement of compensation.It is required to be noted that no appeal has been preferred by the originalclaimants (Gurbachan Singh and others) challenging the order passed inRFA No.1505 of 2019 which was filed by the Bhatinda IntegratedCo-Operative Cotton Spinning & Ginning Mills Ltd. which has beenallowed by the High Court and the amount of compensation has beenreduced.

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CIVIL APPEAL NOS.9185-9196 of 2017

Civil Appeal Nos.9895-9897 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.

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2. As common question of law and facts arise in this group ofappeals, all these appeals are decided and disposed of together by thiscommon Judgment and Order.

2.1 Vide notification dated 06.06.1988 issued under Section 4 ofthe Land Acquisition Act, 1894 (for short, ‘the Act’), the lands owned by H

Athe original claimants admeasuring 297 Kanals and 1 Marla situated inthe revenue estate of Jassi Pau Wali, Distt. Bhatinda, Punjab came to beacquired for public purpose, namely, establishment of Bhatinda IntegratedCooperative Cotton Spinning and Ginning Mills Ltd. (for short, ‘theSpinning Mill’). The same was followed by a notification under Section6 of the Act on 08.06.1988. The Land Acquisition Officer vide AwardBdated 05.10.1989 determined the value of the land at Rs.25,000/- peracre and awarded the compensation accordingly. At the instance of theland owners the references were made to the Reference Court. Videcommon Judgment and Award dated 27.02.1999, the Reference Courtdetermined the market value of the land at Rs.1,12,000/- per acre. BeforeCthe Reference Court it was the case on behalf of the land owners thatthe acquired land is situated just on the main Bhatinda Mansa Road andhas a very potential value of being used for commercial and residentialpurposes as well as the industrial purposes. Before the Reference Courtthe 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 ofDRs.50,000/- per acre. The Reference Court took into account the aforesaidsale deed Ex.A.W.6/C to determine the market value of the lands acquiredand considering the time gap of about 9 years between the date of theexecution of the aforesaid sale deeds and Section 4 Notification therebygranted the increase of 12% in the price of the land per year and appliedEthe cut of 25% and finally determined the value of the land atRs.1,12,000/-per acre and accordingly enhanced the award ofcompensation by common Judgment and Order dated 27.02.1999.

2.2 Feeling aggrieved and dissatisfied with the common Judgmentand Award passed by the Learned Reference Court whereby it enhancedFthe amount of compensation considering the market value of the land atRs.1,12,000/- per acre, both, the original claimants as well as the SpinningMill preferred the appeals before the High Court. The land ownerspreferred the appeals for enhancement of the compensation. By impugnedcommon Judgment and Order the High Court has allowed the appealspreferred by the Spinning Mill reducing the amount of compensation andGdetermining the value of acquired land at Rs.88,400/- per acre. TheHigh Court also considered the Sale Deed Ex.AW6/C as a base fordetermining the value of the acquired land and also added 12% annualincrease. However, the High Court imposed the cut of 15% instead of25% as adopted by Learned Reference Court. Thus, the appealsHpreferred by the Spinning Mill came to be partly allowed. Consequently, the appeals preferred by the original land owners which were filed forthe enhancement of the compensation came to be dismissed by the HighCourt.

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2.3 Feeling aggrieved and dissatisfied with the common impugnedJudgment passed by the High Court partly allowing the appeals preferredby the Spinning Mill and dismissing the appeals preferred by the landowners for enhancement of compensation and determining the value ofthe acquired land at Rs.88,400/- per acre, the land owners have preferredthe present appeals.

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3. Shri Vinay Mathew, Shri Yadav Narender Singh and Shri SridharPotaraju, Learned Advocates appearing on behalf of the appellants –original land owners and Shri Puneet Kansal, Learned Advocate appearingon behalf of the Respondent – Spinning Mill. At this stage, it is requiredto be noted that so far as the Bhatinda Integrated Co-operative CottonSpinning & Ginning Mills Ltd. is concerned, it has been ordered to bewound up and the Liquidator has been appointed and Shri Puneet Kansal,Learned Advocate has appeared on behalf of Liquidator of the SpinningMill.

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4. Learned Counsel appearing on behalf of the land owners havemade the following submissions:

(i) that both, the Learned Reference Court as well as the HighCourt have failed to consider the exemplar being the saledeed dated 04.05.1981 by which the land admeasuring 70meters away from the acquired land was sold atRs.1,17,600/- per acre. It is submitted that as held by thisCourt in the case of Mehrawal Khewaji Trust, Faridkotand Ors. Vs. State of Punjab and Ors., (2012) 5 SCC 432the highest of the exemplars which is a bona fide transactionhas to be considered. It is submitted that the said sale deedwas executed in the year 1981 and considering the timegiven of 7 years the annual increase of 7 years was requiredto be taken; E

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(ii) that the High Court has erred in taking annual increase atthe rate of 12% at the flat rate which would lead toanomalous results as opposed to cumulative rate;

(iii) it is submitted that exemplar sale deed that was acceptedby the courts below is dated 24.05.1979 which is more thanH

9 years before the notification of acquisition was made andthus 9 years of cumulative increase has to be applied to thevalue of the land at Rs.50,000/- per acre. Heavy reliance isplaced on the decision of this Court in ONGC Ltd. vs.Rameshbhai Jivanbhai Patel & Anr., (2008) 14 SCC 745.

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In the aforesaid decision, it is categorically held by this Courtthat it is logical, practical and appropriate to apply cumulativerate as opposed to flat rate. It is submitted that aforesaiddecision has been subsequently followed and/or applied inthe case of Ashok Kumar and Ors. vs. State of Haryanaand Ors., (2015) 15 SCC 200; B

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(iv) that Reference Court as well as the High Court both haveerred in adopting cut of 25%/15% of the value towardsdevelopment. It is submitted that while the Reference Courthas adopted cut of 25% of the market price, the High Courtdeducted 15%. It is submitted that considering the locationDand nature of the land that was acquired as well as thepurpose for which it was acquired (for commercial purposefor spinning mill) no cut from the market price should havebeen made and the land owners were entitled to the marketprice without any cut. It is further submitted that the acquiredEland is only 30 acres and the nature of the land is semiurban and the same was adjoining the municipal limits ofBhatinda and it was further found that the area surroundingthe acquired land consisted of factories, go-downs,residential houses and the cantonment areas thus nodeduction on account of any development charges shouldFhave been made;

(v) that the land was acquired for setting up profit makingenterprise i.e. cotton spinning mill and therefore, also nodeduction should have been made in the price of theexemplar. Reliance is placed on the decision of this CourtGin the case of Atma Singh vs. State of Haryana, (2008) 2SCC 568.

4.1 Making the above submissions and further relying the decisionsof this Court in the cases of Anjani Molu Dessai vs. State of Goa andAnr., (2010) 13 SCC 710 and Trishala Jain and Anr. Vs. State of H

Uttaranchal and Anr., (2011) 6 SCC 47, it is prayed to allow the presentappeals and enhance the amount of compensation considering the valueof the land of Rs.1,50,000/- per acre.

5. All the appeals are opposed by Learned Counsel appearing onbehalf of the Liquidator of Spinning Mill. It is submitted on behalf of theLearned Counsel for Liquidator - Spinning Mill that the mill was a Co-operative Society and became operational only in 1992. The mill wentinto huge losses because of various factors which resulted in completeerosion of the capital on account of which the mill was brought intowinding up vide orders dated 09.05.2003. All the land owners havebeen paid in full as per the High Court Judgment.

5.1 Now so far as reliance placed upon the decision in the case ofRameshbhai Jivanbhai Patel (Supra) by the land owners to apply therate of 12% increase cumulatively; it is submitted that the said decisionis distinguishable on facts. It is submitted that in the subsequent decisionin the case of Lal Chand vs. Union of India, (2009) 15 SCC 769, thisCourt has held that the Court should, before adopting a standard escalation,satisfy itself that there were no adverse circumstances. It is submittedin the present case that the State of Punjab was engulfed in militancyfrom 1979 onwards till 1992. There was large scale exodus of familiesbelonging to one particular community from the State on account ofwhich there were practically no buyers for the land. It is submitted thatas such on account of militancy prices had crashed to aroundRs.25,000/- per acre.

5.2 It is submitted that therefore, even the compensation grantedto the land owners is already on the higher side. It is submitted thereforein the facts and circumstances of the case the submission on behalf ofthe land owners that there should not be any deduction at all may not beaccepted.

5.3 Now so far as the reliance placed upon the Sale Deed dated04.05.1981, it is submitted that the sale deed was for small portion ofland being 1 Kanal 14 Marlas against 297 Kanal 1 Marla of land andtherefore, the same has not been rightly accepted by the ReferenceCourt 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 theland was agricultural (soft soil) acquired for industrial purpose.

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A5.5 It is submitted that therefore, considering the oral facts andcircumstances of the case no interference of this Court is 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 ActBhas been issued on 06.06.1988. The land in question was acquired forthe public purpose for establishing Bhatinda Integrated CooperativeCotton Spinning and Ginning Mills Ltd. The Land Acquisition Officer,Bhatinda awarded the compensation considering the value of the land atthe rate of Rs.25,000/- per acre. The Reference Court relying upon theCsale deed dated 24.05.1979 as Ex. AW6/C by which the land admeasuring43 kanals 13 marlas out of the acquired land was purchased by ShriSudarshan Kumar and Mrs. Surinder Anand at the rate of Rs.50,000/-per acre and thereafter adding 12% per acre and thereafter adoptingthe cut of 25% determined the compensation at Rs.1,12,000/- per acre.Thereafter the High Court by the impugned common Judgment and OrderDhas allowed the appeals preferred by the spinning mills and dismissedthe appeals preferred by the land owners, by determining the value atRs.88,400/- per acre after adopting cut of 15%.

6.2 Having heard the Learned Counsel for the respective partiesthe questions which are posed for consideration of this Court are:

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(i) Whether in the facts and circumstances of the case the Courtsbelow 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 HighFCourt has erred in adopting the cut/deduction of 15%, whiledetermining the value of the land acquired?

6.3 Now so far as the submission on behalf of the land ownersthat while considering the annual increase at the rate of 12%, the HighCourt ought to have applied the cumulative rate and reliance placedupon the decision of this Court in Rameshbhai Jivanbhai Patel (Supra)Gand in the case of Ashok Kumar (Supra) are concerned, it is true thatas held by this Court in aforesaid two decisions increase in the marketvalue should be at a cumulative rate and not at a flat rate. In the case ofRameshbhai Jivanbhai Patel (Supra) in paragraph 18, it is specificallyobserved and held that when market value is sought to be ascertainedHwith reference to transactions which took place before the acquisition, the law adopted is to collect the year to year increase. It is furtherobserved and held that as the percentage of increase is always withreference to the previous year’s market value, the appropriate methodis 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 decisionthat it is reasonably safe to determine the market value by providingappropriate escalation over the approved market value of nearby landsin the previous years, when relied on sale transactions/acquisitionsprecede the subject acquisition by only a few years, i.e., upto 4-5 years.It is further observed in the said decision in para 15 that beyond that itmay be unsafe, even if it relates to a neighbouring land. In para 15 it isobserved and held as under:

“Normally, recourse is taken to the mode of determining the marketvalue by providing appropriate escalation over the proved marketvalue of nearby lands in previous years (as evidenced by saletransactions or acquisition), where there is no evidence of anycontemporaneous sale transactions or acquisitions of comparablelands in the neighbourhood. The said method is reasonably safewhere the relied-on-sale transactions/acquisitions precedes thesubject acquisition by only a few years, that is upto four to fiveyears. Beyond that it may be unsafe, even if it relates to aneighbouring land. What may be a reliable standard if the gap isonly a few years, may become unsafe and unreliable standardwhere the gap is larger. For example, for determining the marketvalue of a land acquired in 1992, adopting the annual increasemethod with reference to a sale or acquisition in 1970 or 1980may have many pitfalls. This is because, over the course of years,the `rate’ of annual increase may itself undergo drastic changeapart from the likelihood of occurrence of varying periods ofstagnation in prices or sudden spurts in prices affecting the verystandard of increase.

In the present case both, the Reference Court as well as the HighCourt, have determined the value of the land considering the Sale Deeddated 24.05.1979 which is more than 9 years before the notification ofthe acquisition. Therefore, considering the observations made by thisCourt in para 15 in the case of Rameshbhai Jivanbhai Patel (Supra)reproduced hereinabove and considering the fact that time gap betweenthe sale deed relied upon and the date of notification of acquisition is A

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Amore than 9 years, the courts below ought to have been very cautious inrelying upon the Sale Deed dated 24.05.1979. Be that it may andassuming that the Sale Deed dated 24.05.1979 was the best evidenceavailable to determine the value of land acquired in that case also takingannual increase at the rate of 12% is not justified. We are of the opinionthat, in the facts and circumstances of the case the annual increase/Bescalation ought to have been at the rate of 10% maximum. Evenotherwise, it is required to be noted that State of Punjab suffered due tomilitancy from 1979 onwards till 1992 and because of that the priceswould have crashed. Therefore, to grant the escalation/price rise at therate of 12% would not be justified at all. After considering the case ofCRameshbhai Jivanbhai Patel (Supra), it is observed and held by thisCourt in the case of Lal Chand (Supra) that even if the transaction is 2to 3 years prior to the acquisition, the Court should, before adopting astandard escalation satisfy itself that there were no adversecircumstances. It is further observed and held that the question istherefore, necessary before increasing the price with reference to theDold transactions. Therefore, assuming that the appellants are right insubmitting that the increase in land value should have been adopted oncumulative basis, in the peculiar facts and circumstances of the casenoted hereinabove, we see no reason to interfere with the impugnedjudgment and order passed by the High Court.E6.4 Now so far as the submission on behalf of the appellants ofnot taking into consideration the other sale deeds, it is required to benoted that those sale deeds are with respect to small portions of land andthereafter rightly discarded.

6.5 Now so far as the deduction at the rate of 15% towards theFdevelopment charges, it also does not call for any interference of thisCourt considering the fact that the land in question at the relevant timewas an agricultural land. However, taking into consideration the factthat the sale instance dated 24.07.1979 relied upon was a quite big chunkof land and the location of the acquired land and the land was acquiredGfor spinning mill, the High Court has rightly adopted 15% cut, which inthe facts and circumstances of the case is not required to be interferedwith.

7. At this stage, it is also required to be noted that though the landwas acquired in the year 1988, the same was made operational only inHthe year 1992 and therefore, has gone into liquidation in the year 2003.

RAMESH KUMAR v. BHATINDA INTEGRATED COOPERATIVECOTTON SPINNING MILL AND ORS. [M. R. SHAH, J.]

The entire amount of compensation as determined by the High Courthas been paid.

We see no reason to interfere with the common Judgment andOrder passed by the High Court. In view of the reasons statedhereinabove all these appeals fail and deserve to be dismissed. Theappeals are dismissed accordingly.

However, no order as to costs.

Ankit Gyan

Appeals dismissed.

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