U.P. AWAS EVAM VIKASH PARISHAD versus ASHA RAM (D) THR. LRS & ORS. on 23 March 2021

[2021] 3 S.C.R. 751

U.P. AWAS EVAM VIKASH PARISHAD

v.

ASHA RAM (D) THR. LRS & ORS.

(Civil Appeal No. 337 of 2021)

MARCH 23, 2021

[HEMANT GUPTA AND S. RAVINDRA BHAT, JJ.]

Land Acquisition: Comparable sale – Land acquired unders.28 of Uttar Pradesh Awas Evam Vikas Parishad Adhiniyam, 1965– Market value should be based on the sale instances, which areproximate to both the date of notification under s.28 of the Act andto the land sought to be acquired – Sale instances four years laterthan the publication of s.28 – Cannot be taken into considerationin terms of s.24 of Land Acquisition Act – Uttar Pradesh Awas EvamVikas Parishad Adhiniyam, 1965 – s.28 – Land Acquisition Act,1894 – s.24.

Land Acquisition: Market value of land – Determination of –Held: Potentiality of the acquired land is one of the primary factorsto be taken into consideration to determine market value of land –The question whether a land has potential value or not primarilydepends upon its condition, situation, use to which it is put or itsreasonable capability of being put and also its proximity toresidential, commercial or industrial areas/institutions – The existingamenities like water, electricity as well as the possibility of theirfurther extension, for instance whether near about town isdeveloping or has prospects of development have to be taken intoconsideration – It also depends upon the connectivity and the overalldevelopment of the area – Uttar Pradesh Awas Evam Vikas ParishadAdhiniyam, 1965 – s.28.

Allowing the appeals, the Court

HELD: 1. The land forming the subject matter of thepresent appeals was acquired in pursuance of notification underSection 28 of the Act published on 26.6.1982. Therefore, firstly,the attempt to determine the market value should be based onthe sale instances, which are proximate to both the date ofnotification under Section 28 of the Act and to the land sought to

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Abe acquired. The land owners have relied upon seven saleinstances in respect of villages of which the land was acquired.Out of such seven sale instances, two are almost four years laterthan the publication of notification under Section 28 of the Act,and thus cannot be taken into consideration in terms of the Section24 of the LA Act. [Para 28][768-G; 769-A-B]B

2. The potentiality of the acquired land is one of the primaryfactors to be taken into consideration to determine the marketvalue of the land. Potentiality refers to the capacity or possibilityfor changing or developing into the state of actuality. The marketvalue of a property has to be determined while having due regardCto its existing conditions with all the existing advantages and itspotential possibility when led out in its most advantageousmanner. The question whether a land has potential value or notprimarily depends upon its condition, situation, use to which it isput or its reasonable capability of being put and also its proximityDto residential, commercial or industrial areas/institutions. Theexisting amenities like water, electricity as well as the possibilityof their further extension, for instance whether near about townis developing or has prospects of development have to be takeninto consideration. It also depends upon the connectivity and theoverall development of the area. The record in the present matterEdoes not suggest that there were large scale developmentactivities. The evidence is rather of sale of small areas. There isnothing on record as to when the industrial units were set up andwhat was the cost of land. Furthermore, there are no saleinstances of land situated in Village Makanpur prior to date ofFnotification i.e. 26.6.1982. The sale instances produced by theland owners pertain to Village Sahibabad and Jhandapur whichare at a distance of about 3.5 kms from Delhi border.[Paras 29, 30][769-C-F]

3. The sale instances of a smaller area have to beGconsidered while keeping in view the principle that where a largearea is the subject matter of acquisition, suitable deduction isrequired to be made as no prudent purchaser would purchaselarge extent of land on the basis of sale of a small extent in theopen market. The Court thus has to consider whether the willingvendee would offer the rate at which the trial court proposes toH

determine the compensation. This Court has even provided for50% deduction for development charges on the price mentionedin the sale deed. [Para 31][770-B-C]

Jagdish Chandra & Ors. v. New Okhla IndustrialDevelopment Authority, NOIDA & Anr. First Appeal No.744 of 2001 decided on 14.12.2007 – referred to.

4. In Pradeep Kumar, after remand, the High Court awardedRs.297/- per square yard as the compensation in pursuance ofnotification dated 15.3.1988 of the land situated in VillageMakanpur (Sr. No. 2 in the above table) for the benefit of Noida.This Court in Narendra awarded compensation of Rs.297/- persquare yard for the land acquired in Village Makanpur in pursuanceof the notification under Section 4 of the LA Act published on12.9.1986 (Sr. No. 2 in the above table). Such land is in the areaof Noida on the southern side of the National Highway.[Para 38][773-G-H]

5. The other villages, subject matter of acquisition i.e.Arthla, Jhandapur, Prahladgarhi, Mahiuddin-Re-Kanawani andSahibabad are farther away from the National Highway than theland situated in Village Makanpur. Since the Special LandAcquisition Collector as well as the Reference Court hasdetermined uniform compensation for the entire land acquired,therefore, the compensation awarded of land situated in VillageMakanpur on the basis of notification 4-5 years later is not areasonable yardstick for determining compensation of over 1100acres of land in the other villages. There is no judicial precedentin respect of land situated in other five villages which are subjectmatter of the acquisition in the present group of appeals. Theorders passed by this Court relied upon are either subsequentto the notification in question and/or for the acquisition for thepurpose of planned development of Noida. [Para 39][774-A-C]

6. A compensation of Rs. 297/- per square yard was awardedfor land acquired for the purpose of GDA vide notification dated28.2.1987 and 16.8.1988 (Sr. No. 4 & 5 in the above table). Thesaid acquisition was five years after the acquisition in question.The development activity initiated vide notification dated A

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A26.6.1982 would be relevant to determine the market value onaccount of acquisition by virtue of the subsequent notification,but time gap of more than five years will not entail the sameamount of compensation in respect of the land acquired five yearsearlier. [Para 40][774-D-E]

B7. In respect of land situated on northern side of NationalHighway, the land was acquired vide notifications dated 28.2.1987and 12.9.1986 in the case of Narendra and Kashi;and on 16.8.1988in the case of Jai Prakash. Whereas, on the southern side ofNational Highway for the benefit of Noida, the land of VillageMakanpur became subject matter of acquisition vide notificationCdated 10.3.1988 in the case of Pradeep Kumar and on 15.3.1988in the case of Charan Kaur. [Para 42][774-G-H]

8. For the land situated on the northern side of the NationalHighway for the benefit of the Parishad, the acquisition hasattained finality with the dismissal of SLP (Civil) No. 4636 of 2016Don 28.3.2016. The compensation assessed in the otheraforementioned cases is subsequent to the date of notification,therefore, none of the orders are determinative of the amount ofcompensation. Hence, the market value as determined by theHigh Court cannot be sustained either on the basis of the saledeeds, or on the strength of judicial orders. There is noEjustification of enhancement of compensation awarded bythe Reference Court i.e. Rs.120/- per square yard. [Para 43][775-A-B]

U.P. Avas Evam Vikash Parishad v. Jawahar Lal & Ors.First Appeal No. 56 of 2005 decided on 21.7.2015;FAsha Ram & Anr. v. U.P. Awas Evam Vikash First AppealNo. 827 of 2000 decided on 28.10.2015; Asha Ram &Anr. v. U.P. Awas Evam LKVikas Parishad & Anr. FirstAppeal No. 552 of 2001 decided on 16.12.2015; AshaRam & Anr. v. U.P. Awas Evam VikasParishad & Anr.First Appeal No. 412 of 2001 decided on 1.3.2016;GNarendra & Ors. v. State of Uttar Pradesh & Ors. CivilAppeal Nos. 10429-10430 of 2017 decided on11.09.2017; Pradeep Kumar v. State of U.P. (2016) 6SCC 308; Smt. Tribeni Devi & Ors. v. Collector ofRanchi and Vice Versa (1972) 1 SCC 480 : [1972] 3HSCR 208; Gujarat Industrial Development Corpn. v.

U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D)THR. LRS & ORS

Narottambhai Morarbhai & Anr., (1996) 11 SCC 159 :[1996] 5 Suppl. SCR 199; Land Acquisition Officer v.B. Vijender Reddy & Ors., (2001) 10 SCC 669; VilubenJhalejar Contractor (Dead) by LRs. v. State of Gujarat,(2005) 4 SCC 789 : [2005] 3 SCR 542; GeneralManager, Oil and Natural Gas Corporation Limited v.Rameshbhai Jivanbhai Patel & Anr. (2008) 14 SCC 745: [2008] 11 SCR 927; Atma Singh (Dead) through LRs& Ors. v. State of Haryana & Anr., (2008) 2 SCC 568 :[2007] 12 SCR 1120; Revenue Divisional Officer-cum-Land Acquisition Officer v. Shaik Azam Saheb & Ors.,(2009) 4 SCC 395 : [2009] 1 SCR 289; MohammadRaofuddin v. Land Acquisition Officer (2009) 14 SCC367 : [2009] 5 SCR 864l; Himmat Singh & Ors. v. Stateof Madhya Pradesh & Anr. (2013) 16 SCC 392 –referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 337of 2021.

From the Judgment and Order dated 19.07.2019 of the High Courtof Judicature at Allahabad in First Appeal No. 827 of 2000.

With

Civil Appeal Nos. 360, 340, 338, 361, 362, 348, 343, 382, 363, 381,339, 349, 383, 350, 351, 352, 384, 341, 364, 353, 354, 385, 357, 365, 355, A

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A366, 347, 342, 367, 358, 368, 356, 369, 344, 370, 371, 372, 373, 374, 345,386, 346, 375, 376, 377, 387, 359, 378, 379 and 380 of 2021.

Y. D. Sharma, P.N. Mishra, Ms.Meenakshi Arora, Pradeep Kant,Sukumar Patjoshi, Sr.Advs., R.K. Bali, Ms. Megha Bali, Amit Korpal,Atul Dewan, Ms.Deepkaran Dalal, Mohd. Parvez Dabas, Syed MehdiBImam, Uzmi Jameel Husain, Syed Mansoor Ali Rizvi, Rajnish KumarJha, Ms. Pushpa Kumari Mishra, Ms. Deepika Sharma, Kumar Gaurav,Ms. Mehrunnisa, Mohd. Ashraff, Uday Gupta, Ms. Shivani M. Lal, KripaShankar, M. K. Tripathi, Chand Qureshi, Ram Dutt Sharma, RajeevKumar Gupta, Hiren Dasan, Vishwajit Singh, Pankaj Singh, Ms. RidhimaSingh, Ms. Vijaya Singh, Sushmit Chauhan, Ms. Akansha Singh, PranavCRaj Singh, Aneesh Mittal, Ms.Reeta Chaudhary, Divyanshu Sahay, SunilKumar Jain, Anil Kaushik, Mrs. Shashi Sharma, Ms. Arunima Dwivedi,K. S. Rana, Ahilesh Kalra, Divyanshu Sahay, Rohit Kumar Singh, R.Venkat Raman, Ms. Aswathi M.K., Ravindra Kumar, Pradeep KumarMathur, Shailesh Upadhyaya, Chiranjeev Johri, K. S. Rana, HaraprasadDSahu, Kamlesh Kumar Mishra, Pranaya Kumar Mohapatra, Advs. forthe appearing parties.

The Judgment of the Court was delivered by HEMANT GUPTA, J.

E1. The present appeals arise out of an order passed by the DivisionBench of the High Court of Judicature at Allahabad on 19.07.2019whereby a compensation of Rs. 297/- per square yard was awarded forthe land acquired in six villages apart from the statutory benefits. In thepresent set of 51 appeals, 38 appeals pertain to land situated at VillagePrahlad Garhi; 2 appeals pertain to land situated at Village Jhandapur; 3Fappeals pertain to land situated at Village Sahibabad; 2 appeals pertainto land situated at Village Jhandapur/ Sahibabad; 1 appeal pertains toland situated at Village Arthala and 5 appeals pertain to land situated atVillage Makanpur.

2. The appellant – U.P. Awas Evam Vikas Parishad[1] has beenGconstituted under the Uttar Pradesh Awas Evam Vikas ParishadAdhiniyam, 1965[2]. A notification was published on 26.06.1982 by theParishad under Section 28 of the Act intending to acquire 1229.914 acresof land. Subsequently, a notification under Section 32 of the Act was 1 For Short, the ‘Parishad’H2 For short the ‘Act’

published on 28.02.1987. Sections 28 and 32 of the Act are equivalent toSections 4 and 6 of the Land Acquisition Act, 1894[3].

3. The Special Land Acquisition Officer announced an award on27.02.1989 awarding compensation of Rs. 50/- per square yard in respectof land of all the six villages and compensation of Rs. 35/- per squareyard was awarded in respect of land owners owning more than 8 acres.The area of the land for which the compensation was awarded in the sixvillages is as under:

The remaining area measuring 72.019 acres was the land of theGram Panchayat or the State Government, for which no compensationwas awarded by Special Land Acquisition Officer.

4. The land owners being aggrieved of the compensation awardedby the Special Land Acquisition Officer sought a Reference fordetermining the market value. The Learned Additional District Judgewhile deciding the Reference awarded Rs. 120/- per square yard as thecompensation apart from the statutory benefits vide award dated23.05.2000.

5. The landowners as well as the Parishad filed appeals againstthe decision of the Reference Court. Such appeals were decidedseparately by the High Court in respect of land acquired by the abovestated notification under Section 28 of the Act. The first appeal in U.P.Avas Evam Vikash Parishad v. Jawahar Lal & Ors.[4 ]filed by theParishad in respect of land situated in Village Prahladgarhi was dismissedon 21.07.2015. The land owners have relied upon the following threesale deeds in appeal before the High Court to claim higher compensation:

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B6. The High Court considering the three sale deeds held as under:

“28. Considering the aforesaid facts and circumstances as alsothe factum that the court below has already applied deduction of25%, we do not find any fault on the part of Reference Court inCdetermining market value of acquired land at Rs. 120/- per sq.yard. It can neither be said to be excessive or unreasonable, nor itcan be said that appropriate principles in determining market valuehave not been considered by court below. The two judgmentscited by appellant do not help it in any manner since the principleslaid down therein have already been noticed by court below. InDthese facts and circumstances, in our view, the aforesaid point fordetermination formulated above is answered in favour ofrespondents and against appellant.”

7. The compensation awarded @ Rs.120/- per square yard videorder dated 21.7.2015 attained finality when the Special Leave PetitionE(Civil) No. 4636 of 2016 (U.P. Avas Evam Vikas Parishad v. JawaharLal (D) through LRs & Ors.) filed by the Parishad was dismissed on28.03.2016.

8. Another appeal Asha Ram & Anr. v. U.P. Awas Evam VikashParishad & Anr.[5] arising against the award of the Reference Courtdated 23.5.2000 filed by the land owners in respect of land situated inFVillage Jhandapur was initially dismissed by the High Court on 16.12.2015.The land owners in the appeal relied upon the following sale deeds insupport of their contention for determining the market value:

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H5 First Appeal No. 827 of 2000 decided on 28.10.2015

9. The sale deeds dated 13.1.1986 and 15.1.1986 were not reliedupon by the High Court for the reason that such sale instances were ofmore than 3½ years after the publication of notification intending to acquireland. The High Court found that if the compensation has to be awardedon the basis of sale deeds dated 5.5.1982 and 8.6.1982, the compensationwould be lower than what has been awarded by the Reference Court.The Court in its order dated 28.10.2015 held as under:

“13. We find that reliance placed by appellants on the aforesaidsale deeds would not help claimants in any manner. In our viewthe court below has already been considerate enough indetermining market value at Rs. 120/- per square yard else theaforesaid two sale deeds, if relied, would have cause in a lowermarket value. Before elaborating our aforesaid observation wefind it appropriate to remind ourselves with principles laid down inlast several decades on the question how market value of landacquired forcibly under provisions of Act, 1894 should bedetermined.”

10. In Asha Ram & Anr. v. U.P. Awas Evam Vikas Parishad &Anr.[6], the above order of the High Court was taken as the basis todetermine the market value of land acquired in the said appeal. Anotherappeal by the land owners Asha Ram & Anr. v. U.P. Awas EvamVikas Parishad & Anr.[7] was decided on 01.03.2016, relying upon theearlier two orders.

11. The aforesaid orders dated 28.10.2015; 16.12.2015 and1.3.2016 were set aside by this Court on 9.11.2017 and the matterswere remanded to the High Court vide the following order- “Leave granted.

Learned counsel for the parties have filed certain documents alongwith the Special Leave Petitions. The said documents are takenon record, particularly the decision of this Court in SLP(C)Nos.1506-1517/2016, titled as Pradeep Kapoor vs. State ofU.P. documents were not on record before the High Court. Theyare taken on record. These appeals are remitted back to the HighCourt for deciding afresh. A prayer is made for consideration ofthe aforesaid documents. It is open to the parties if they so desire

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Ato adduce additional evidence, in that event, the High Court mayask Reference Court to record additional evidence and to recordfinding and then High Court may decide the appeals afresh.

The judgment of the High Court is set aside and the appeals areremitted to the High Court for being decided afresh in accordanceBwith law.

The appeals are disposed of accordingly.”

12. The IA to produce additional documents as mentioned in theabove order has been placed along with the written submissions by theland owners before this Court. Apart from the award by the SpecialCLand Acquisition Officer and the order of the Reference Court, variousother judgments pertaining to different acquisitions were produced.

13. The High Court thereafter decided the 53 appeals on19.07.2019, awarding a sum of Rs. 297/- per square yard as compensationfor acquiring the land of the six villages as mentioned in the notification.D51 appeals were preferred in respect of acquisition of land by the Parishadand the others are in respect of the acquisition by Ghaziabad DevelopmentAuthority[8]. The High Court proceeded as if the notification for theacquisition for the Parishad and GDA is the same and for the sameacquisition proceedings. The land acquired by the Parishad vide notificationEdated 26.06.1982 is the subject matter of the present appeals. It is pertinentto note that the said land is not for the benefit of the GDA. The HighCourt in the impugned judgment held as under:

“Accordingly, we find that all the appellants in both the sets offirst appeals are entitled to compensation at the rate of Rs. 297/-Fper square yard. We have mentioned in detail regarding the othersimilar cases where compensation has been awarded at the rateof Rs. 297/- per square yard even though there were gaps betweenthe different notifications, but the villages are same. As discussedabove, Narendra (supra) lays emphasis on fair compensation andon parity of compensation in respect of similarly situated land. AGcareful analysis of the said judgment clearly shows that gaps of afew years in the notifications have been ignored by the SupremeCourt and this Court also in the subsequent judgment in First AppealNo. 522 of 2009, Pradeep Kumar v. State of U.P., which hasbeen affirmed by the Supreme Court. We do not find any reason H8 For short, ‘GDA’

for not awarding compensation at the same rate. Accordingly, theorders of the Reference Court dated 13[th] April, 1998, 18[th] February,2000, 23[rd] May, 2000, 29[th] March, 2001 and 02[nd] April, 2002, whichare under challenge in the respective appeals, are set aside. Theappellants are entitled to compensation of the land at the rate ofRs. 297/- per square yard along with other statutory benefits underthe law which shall be calculated and paid to them expeditiouslywithin six months from today.”

14. The High Court referred to the judgment of this Court inNarendra & Ors. v. State of Uttar Pradesh & Ors.[9] whereincompensation of Rs. 297/- per square yard was provided in respect ofacquisition by the State vide notification dated 12.9.1986 for the landsituated in Village Makanpur for planned development of Vaishali. TheHigh Court, in a judgment under appeal, had restricted the amount ofcompensation to the amount on which Court fees was affixed. ThisCourt held as under:

“16) Simply because the appellants had paid court fee on the claimat the rate of Rs.115/- square yards could not be the reason todeny the compensation at a higher rate. This could be taken careof by directing the appellants to pay the difference in court feeafter calculating the same at the rate of Rs.297/- per square yards.”

15. In another matter referred by the High Court, Pradeep Kumarv. State of U.P.[10], this Court had remanded the appeals to the HighCourt on 16.2.2016 as it awarded Rs.135/- per square yard ascompensation vide its order dated 15.4.2015. The appeals arose out of anotification under Section 4 of the LA Act published on 15.03.1988 foracquisition of land in Village Makanpur for planned industrial developmentat New Okhla Industrial Development Authority[11] constituted under “TheUttar Pradesh Industrial Area Development Act, 1976”. After remandby this Court, the High Court on 21.04.2016 awarded Rs. 297/- persquare yard as the compensation for the land acquired.

16. Mr. Mishra, learned senior counsel appearing for the Parishad,argued that the High Court has ignored the date of notification i.e.26.6.1982 by which the land in the present matter was acquired. In thematter of Pradeep Kumar, the notification was dated 15.03.1988 in 9 Civil Appeal Nos. 10429-10430 of 2017 decided on 11.09.201710 (2016) 6 SCC 308

11 For short, ‘Noida’

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Arespect of land located in village Makanpur at Noida. However, in thepresent matter, more than 1000 acres of land situated in five other villagesis to be acquired. The land in district Ghaziabad sought to be acquired bythe Parishad is on the northern side of the National Highway-24 whichpasses through Village Makanpur, whereas the land on the southern sideof National Highway is a part of Noida, District Gautam Budh Nagar.BNoida is a well-developed town as compared to the developing town ofGhaziabad situated on the other side of the National Highway.

17. Mr. Gupta, on the other hand, vehemently argued on behalf ofthe land owners that the land situated in Village Makanpur was the subjectmatter of acquisition for Noida as well as GDA apart from the Parishad.CIt was contended that the purpose for which the land is acquired or theauthority which acquired the land is inconsequential as the land ownersare entitled to compensation irrespective of any such factors. In thewritten submissions, reference has been made to the statement of InderrajSingh (PW-1) to submit that at the time of acquisition, there wereDindustrial units as well as residential colonies of Vaishali and Kaushambi.Reliance was placed upon finding of the Reference Court which is tothe following effect:

“10. From the above averments it is proved that the position andstatus of disputed acquired land is of high quality and these landsEare of good potential with a view to productivity and other usagesand is fit for residential and commercial capacity.”

18. In the written submissions filed on behalf of the land owners,two maps have also been referred. First map is of Ghaziabad which ison the northern side of National Highway-24 and the second map isFstated to be of an area now covered within the jurisdiction of Noida, i.e.in respect of Chalera Banger, Bhangel Begampur, Nagla Charandas,Tilpatabad, Kakrana Khawaspur. Such map submitted with the writtensubmissions is not legible. It is submitted that the Village Makanpur isclose to Delhi as compared to the above said villages which are nowparts of Noida. It has been stated that a compensation of Rs.297/- perGsquare yard has been awarded under the notification dated 19.12.1980for the land situated in Village Makanpur, hence, the present land ownersare also entitled to the same amount of compensation. As per the argumentof Mr. Gupta, the land acquired is better located than the land which isthe subject matter of acquisition for Noida. The distances of the villagesHpresently under the jurisdiction of Noida and Ghaziabad from the borders of Delhi have also been submitted before us. Though, such distancesare not part of the pleadings or evidence before the Reference Court orthe High Court, the said table has been reproduced hereunder:

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“There is no dispute that landowners of village across NH-24,examples of which were cited before this Court during the courseof hearing have all been awarded compensation @ Rs.297/- perBsquare yard. The approximate distance to Delhi from the villagesinvolved in the present case and those across NH-24 is as under:

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The above table would show that for villages which are at adistance of 13-14 km from Delhi, have been awardedcompensation @ Rs.297/- per square yard and therefore therespondents in the present case deserve compensation at least @Rs.297/- per square yard, if not more.”

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19. In the written submissions submitted on behalf of Shri RohitKumar Singh, learned counsel for the land owners, it is asserted that theState Government has decided that 731 acres of land would be carvedout from the total land acquired in 1982 and handed over to the GDA. Itis also submitted that a notification was issued under Section 4 of the LAAct on 28.2.1987 in respect of 731 acres of land. In the present set ofappeals, we are not dealing with the acquisition of land intended to beacquired by way of a notification under Section 4 of the LA Act dated28.2.1987. Mr. Singh in the written submissions has submitted that thepossession was taken over by the GDA on 14.6.1988 and 29.6.1988which was based upon development work taken place from 1982onwards. We do not find such facts emanate from the orders passed bythe Special Land Acquisition Officer, the Reference Court and the orderof the High Court. The land acquired by the GDA is not part ofdetermination of the compensation in the present set of appeals.

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A20. The principles of determining the market value are delineatedunder Sections 23 and 24 of the LA Act and are well-settled by theplethora of judgments on the said subject matter. The provisions of theLA Act and some of the judgments are referred hereinafter- “23. Matters to be considered in determining compensation. – (1)BIn determining the amount of compensation to be awarded forland acquired under this Act, the Court shall take into consideration- first, the market value of the land at the date of the publication ofthe notification under Section 4, sub-section (1); xx xx xxC

24. Matters to be neglected in determining compensation. –

xx xx xx fifthly, any increase to the value of the land acquired likely toaccrue from the use to which it will be put when acquired;Dsixthly, any increase to the value of the other land of the personinterested likely to accrue from the use to which the land acquiredwill be put;”

21. A three Judge Bench of this Court[12] indicated methods ofvaluation to be adopted to ascertain the market value of land on the dateEof the notification under Section 4(1) as: (i) opinion of experts, (ii) theprice paid within a reasonable time in bona fide transactions of purchaseof the lands acquired or the lands adjacent to the lands acquired andpossessing similar advantages; and (iii) a number of years’ purchase ofthe actual or immediately prospective profits of the lands acquired.F22. This Court[13] held that the acid test which the court shouldalways adopt in determining the market value in matters of compulsoryacquisition is to eschew feats of imagination and sit in the armchair of aprudent willing purchaser. It was held as under:

“6. No prudent purchaser would purchase large extent of land onGthe basis of sale of a small extent of land in the open market. Theacid test the court should always adopt in determining marketvalue in the matter of compulsory acquisition would be to eschew 12 Smt. Tribeni Devi & Ors. v. Collector of Ranchi and Vice Versa, (1972) 1 SCC 48013 Gujarat Industrial Development Corpn. v. Narottambhai Morarbhai & Anr., (1996)H11 SCC 159

feats of imagination, sit in the armchair of a prudent willingpurchaser, it should consider whether the willing vendee wouldoffer the rate at which the trial court proposes to determine thecompensation. Taking these facts into consideration, we are ofthe view that the reasonable and adequate compensation for thelands would be at a net rate of Rs 22 per sq. mtr., after givingdeduction of 1/3rd of the amount towards developmental charges.Therefore, the claimants would be entitled to the compensation@ Rs 22 per sq. mtr. They are also entitled to the statutory benefitson the enhanced compensation.”

23. This Court[14] has also held that in fixation of rate ofcompensation under the Land Acquisition Act, there is always someelement of guesswork but that has to spring from the totality of evidence,the pattern of rate, the pattern of escalation and escalation of price inthe years preceding and succeeding the notification under Section 4 ofthe LA Act. The Court has held that:

“13. The first question we proceed to consider is, whether theHigh Court was right to enhance the rate from the rate recordedin Exhibits A-1 and A-2 by Rs 10,000 per acre per year for threeyears. It is true, in the fixation of rate of compensation under theLand Acquisition Act, there is always some element of guesswork.But that has to be based on some foundation. It must spring fromthe totality of evidence, the pattern of rate, the pattern of escalationand escalation of price in the years preceding and succeedingSection 4 notification etc. In other words, the guesswork couldreasonably be inferable from it. It is always possible to assess therate within this realm. In the present case, we find there are threeexemplars i.e. Exhibits A-1 and A-2 which are three yearspreceding the date of notification and Exhibit A-3 which is of thesame point of time when Section 4 notification was issued.”

24. Further, this Court[15] has held that for determining the marketvalue of the land under acquisition, suitable adjustments have to be madewhile considering the various positive and negative factors. The followingobservations have been made- “18. One of the principles for determination of the amount ofcompensation for acquisition of land would be the willingness of 14 Land Acquisition Officer v. B. Vijender Reddy & Ors., (2001) 10 SCC 669

15 Viluben Jhalejar Contractor (Dead) by LRs. v. State of Gujarat, (2005) 4 SCC 789

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an informed buyer to offer the price therefor. It is beyond anycavil that the price of the land which a willing and informed buyerwould offer would be different in the cases where the owner is inpossession and enjoyment of the property and in the cases wherehe is not.

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B19. Market value is ordinarily the price the property may fetch inthe open market if sold by a willing seller unaffected by the specialneeds of a particular purchase. Where definite material is notforthcoming either in the shape of sales of similar lands in theneighbourhood at or about the date of notification under Section4(1) or otherwise, other sale instances as well as other evidencesChave to be considered.

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21. Whereas a smaller plot may be within the reach of many, alarge block of land will have to be developed preparing a layoutplan, carving out roads, leaving open spaces, plotting out smallerDplots, waiting for purchasers and the hazards of an entrepreneur.Such development charges may range between 20% and 50% ofthe total price.”

25. This Court[16] has delineated the following factors responsiblefor increase in land prices such as situation of the land, nature ofEdevelopment in surrounding area, availability of land for development inthe area, and demand for the land in the area. It was held:

“16. Much more unsafe is the recent trend to determine themarket value of acquired lands with reference to future saletransactions or acquisitions. To illustrate, if the market value of aFland acquired in 1992 has to be determined and if there are nosale transactions/acquisitions of 1991 or 1992 (prior to the date ofpreliminary notification), the statistics relating to sales/acquisitionsin future, say of the years 1994-1995 or 1995-1996 are taken asthe base price and the market value in 1992 is worked back byGmaking deductions at the rate of 10% to 15% per annum. Howfar is this safe? One of the fundamental principles of valuation isthat the transactions subsequent to the acquisition should be ignoredfor determining the market value of acquired lands, as the very 16 General Manager, Oil and Natural Gas Corporation Limited v. Rameshbhai JivanbhaiHPatel & Anr., (2008) 14 SCC 745

acquisition and the consequential development would acceleratethe overall development of the surrounding areas resulting in asudden or steep spurt in the prices. Let us illustrate. Let us assumethere was no development activity in a particular area. Theappreciation in market price in such area would be slow andminimal. But if some lands in that area are acquired for a residential/commercial/industrial layout, there will be all round developmentand improvement in the infrastructure/amenities/facilities in thenext one or two years, as a result of which the surrounding landswill become more valuable. Even if there is no actual improvementin infrastructure, the potential and possibility of improvement onaccount of the proposed residential/commercial/industrial layoutwill result in a higher rate of escalation in prices. As a result, if theannual increase in market value was around 10% per annum beforethe acquisition, the annual increase of market value of lands in theareas neighbouring the acquired land, will become much more,say 20% to 30%, or even more on account of the development/proposed development. Therefore, if the percentage to be addedwith reference to previous acquisitions/sale transactions is 10%per annum, the percentage to be deducted to arrive at a marketvalue with reference to future acquisitions/sale transactions shouldnot be 10% per annum, but much more. The percentage of standardincrease becomes unreliable. Courts should, therefore, avoiddetermination of market value with reference to subsequent/futuretransactions. Even if it becomes inevitable, there should be greatercaution in applying the prices fetched for transactions in future.Be that as it may.”

26. The relationship between the market value of land and itspotentiality has also been discussed by this Court[17] wherein it wasobserved that- “4. … The market value is the price that a willing purchaser wouldpay to a willing seller for the property having due regard to itsexisting condition with all its existing advantages and its potentialpossibilities when led out in most advantageous manner excludingany advantage due to carrying out of the scheme for which theproperty is compulsorily acquired. In considering market valuedisinclination of the vendor to part with his land and the urgent 17 Atma Singh (Dead) through LRs & Ors. v. State of Haryana & Anr., (2008) 2 SCC 568

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Anecessity of the purchaser to buy should be disregarded. Theguiding star would be the conduct of hypothetical willing vendorwho would offer the land and a purchaser in normal human conductwould be willing to buy as a prudent man in normal marketconditions but not an anxious dealing at arm’s length nor facadeof sale nor fictitious sale brought about in quick succession orBotherwise to inflate the market value. The determination of marketvalue is the prediction of an economic event viz. a price outcomeof hypothetical sale expressed in terms of probabilities….

5. For ascertaining the market value of the land, the potentiality ofthe acquired land should also be taken into consideration.CPotentiality means capacity or possibility for changing or developinginto state of actuality. It is well settled that market value of aproperty has to be determined having due regard to its existingcondition with all its existing advantages and its potential possibilitywhen led out in its most advantageous manner. The questionDwhether a land has potential value or not, is primarily one of factdepending upon its condition, situation, user to which it is put or isreasonably capable of being put and proximity to residential,commercial or industrial areas or institutions. The existing amenitieslike water, electricity, possibility of their further extension, whethernear about town is developing or has prospect of developmentEhave to be taken into consideration…”27. In another three Judge Bench of this Court[18], the Court heldas under:

“13. One other important factor which also should be borne inFmind is that it may not be safe to rely only on an award involvinga neighbouring area irrespective of the nature and quality of theland. For determination of market value again, the positive andnegative factors germane therefor should be taken intoconsideration as laid down by this Court in Viluben JhalejarContractor v. State of Gujarat [(2005) 4 SCC 789] , namely:G(SCC p. 797, para 20)…”

28. The land forming the subject matter of the present appealswas acquired in pursuance of notification under Section 28 of the Act 18 Revenue Divisional Officer-cum-Land Acquisition Officer v. Shaik Azam Saheb &HOrs., (2009) 4 SCC 395

published on 26.6.1982. Therefore, firstly, the attempt to determine themarket value should be based on the sale instances, which are proximateto both the date of notification under Section 28 of the Act and to theland sought to be acquired. The land owners have relied upon seven saleinstances in respect of villages of which the land was acquired. Out ofsuch seven sale instances, two are almost four years later than thepublication of notification under Section 28 of the Act, and thus cannotbe taken into consideration in terms of the Section 24 of the LA Act.

29. The potentiality of the acquired land is one of the primaryfactors to be taken into consideration to determine the market value ofthe land. Potentiality refers to the capacity or possibility for changing ordeveloping into the state of actuality. The market value of a property hasto be determined while having due regard to its existing conditions withall the existing advantages and its potential possibility when led out in itsmost advantageous manner. The question whether a land has potentialvalue or not primarily depends upon its condition, situation, use to whichit is put or its reasonable capability of being put and also its proximity toresidential, commercial or industrial areas/institutions. The existingamenities like water, electricity as well as the possibility of their furtherextension, for instance whether near about town is developing or hasprospects of development have to be taken into consideration. It alsodepends upon the connectivity and the overall development of the area.

30. The record in the present matter does not suggest that therewere large scale development activities. The evidence is rather of saleof small areas. There is nothing on record as to when the industrial unitswere set up and what was the cost of land. Furthermore, there are nosale instances of land situated in Village Makanpur prior to date ofnotification i.e. 26.6.1982. The sale instances produced by the landowners pertain to Village Sahibabad and Jhandapur which are at adistance of about 3.5 kms from Delhi border. This Court[19] while dealingwith comparable sale instances has held that-

“14. Thus, comparable sale instances of similar lands in theneighbourhood at or about the date of notification under Section4(1) of the Act are the best guide for determination of the marketvalue of the land to arrive at a fair estimate of the amount ofcompensation payable to a landowner. Nevertheless, whileascertaining compensation, it is the duty of the Court to see that 19 Mohammad Raofuddin v. Land Acquisition Officer, (2009) 14 SCC 367

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Athe compensation so determined is just and fair not merely to theindividual whose property has been acquired but also to the publicwhich is to pay for it.”

31. The sale instances of a smaller area have to be consideredwhile keeping in view the principle that where a large area is the subjectBmatter of acquisition, suitable deduction is required to be made as noprudent purchaser would purchase large extent of land on the basis ofsale of a small extent in the open market. The Court thus has to considerwhether the willing vendee would offer the rate at which the trial courtproposes to determine the compensation. This Court has even providedfor 50% deduction for development charges on the price mentioned inCthe sale deed.[20]

32. The land owners have not produced any other sale deed oraward of compensation on account of acquisition of land in the northernside of National Highway-24 prior to notification in question. It couldthus lead to an inference that there were not many sale transactionsDprior to the notification in question. Some industries might have set uptheir units keeping in view the proximity to Delhi but details regardingwhen such units were set up and at what price, these units purchasedthe land have not been brought on record. As mentioned earlier, themarket value has to be determined on the basis of what a purchaser isEwilling to pay on the date of notification. It cannot be as per any rule ofthumb without any reference to the prevalent market value on the dateof acquisition on record.

33. The Reference Court had applied 1/3[rd] deduction in respectof land situated in Village Sahibabad on the sale price of Rs.180/- persquare meters of land measuring 130 square meters vide sale deed datedF26.12.1980 whereas the deduction of 40% deduction in respect of landsituated in Village Jhandapur on the sale price of Rs.200/- per squaremeters of land measuring 50 square yards vide sale deed dated 5.5.1982in view of the fact that the area sold was very small. The High Courthas affirmed such deduction. Thus, we are of the view that the same isGreasonable and adequate deduction. Therefore, the market valuedetermined at Rs.120/- per square yard is the appropriate market valueon the basis of comparable sale instances.

34. The other method to determine the market value is the judicialprecedents which are proximate to the time of the acquisition andH20 Himmat Singh & Ors. v. State of Madhya Pradesh & Anr., (2013) 16 SCC 392

proximate to the subject matter of land acquired. A table of judicialAprecedents with the dates of publication of notification under Section 28of the Act and Section 4 of the LA Act; the village where the land issituated and the authority for which the land was acquired to arrive atthe market value is produced below. Such table includes the judgmentsreferred to by Mr. Gupta that a sum of Rs.297/- per square yard is theBmarket value of the land acquired.

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772SUPREME COURT REPORTS[2021] 3 S.C.R.ABCDEFGH

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772SUPREME COURT REPORTS[2021] 3 S.C.R.ABCDEFGH

35. The order passed by this Court on 9.11.2017 for freshdetermination on the basis of additional documents was based on thejudgments pertaining to above-mentioned acquisitions. In terms of theorder passed by this Court, no additional evidence was produced beforethe High Court and the submissions were confined to the material alreadyon record. Such judgments, as discussed above, are later in time exceptthe land situated in Chhalera Khadar, now forming part of Noida, forwhich notification was published on 19.12.1980. It is pertinent to notethat the proximity from Delhi border would not be the determining factorbut the distance between the two villages inter se would be relevant asNoida spread over a large area, has different access roads from Delhiand Ghaziabad. However, such distance has not been disclosed.

36. The High Court in Jagdish Chandra & Ors. v. New OkhlaIndustrial Development Authority, NOIDA & Anr.[21 ]had determinedRs. 297/- as the market value of the land situated in Chhalera Bangar,now forming part of Noida, intended to be acquired vide notificationpublished under Section 4 of the LA Act on 27.2.1988. The High Courthad noted the advantageous location of Noida when it held that:

“…Valuation of the landed property is enormously rising day byday. The location of the land, as stated, is nearer to developedarea of NOIDA. The land is acquired for the purpose of makingpark. Neither it is required for commercial purpose nor forresidential purpose. No question of largeness of the land isavailable. Therefore, we are not aware what is the basis ofdeduction.”

37. The first notification for acquisition of land in Village Makanpur,the village which is located on both sides of National Highway-24, waspublished on 26.6.1982, for the land situated on the northern side of theNational Highway, that is the notification in question.

38. In Pradeep Kumar, after remand, the High Court awardedRs.297/- per square yard as the compensation in pursuance of notificationdated 15.3.1988 of the land situated in Village Makanpur (Sr. No. 2 inthe above table) for the benefit of Noida. This Court in Narendraawarded compensation of Rs.297/- per square yard for the land acquiredin Village Makanpur in pursuance of the notification under Section 4 ofthe LA Act published on 12.9.1986 (Sr. No. 2 in the above table). Suchland is in the area of Noida on the southern side of the National Highway.

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A39. The other villages, subject matter of acquisition i.e. Arthla,Jhandapur, Prahladgarhi, Mahiuddin-Re-Kanawani and Sahibabad arefarther away from the National Highway than the land situated in VillageMakanpur. Since the Special Land Acquisition Collector as well as theReference Court has determined uniform compensation for the entireland acquired, therefore, we do not find that the compensation awardedBof land situated in Village Makanpur on the basis of notification 4-5years later is a reasonable yardstick for determining compensation ofover 1100 acres of land in the other villages. There is no judicial precedentin respect of land situated in other five villages which are subject matterof the acquisition in the present group of appeals. The orders passed byCthis Court relied upon are either subsequent to the notification in questionand/or for the acquisition for the purpose of planned development ofNoida.

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40. A compensation of Rs. 297/- per square yard was awardedfor land acquired for the purpose of GDA vide notification dated 28.2.1987Dand 16.8.1988 (Sr. No. 4 & 5 in the above table). The said acquisitionwas five years after the acquisition in question. The development activityinitiated vide notification dated 26.6.1982 would be relevant to determinethe market value on account of acquisition by virtue of the subsequentnotification, but time gap of more than five years will not entail the sameamount of compensation in respect of the land acquired five years earlier.E

41. The compensation determined on the basis of a notificationfive years later cannot be a yardstick for determining compensation ofthe land which is subject matter of present acquisition years earlier. Stillfurther, the High Court was not justified in observing that gaps of fewyears in the notification have been ignored by this Court. In fact, on theFcontrary, the High Court has failed to note that the date of notificationfor the acquisition of land for the benefit of Parishad is five years earlierthan those in the judgments relied upon by the High Court.

42. In respect of land situated on northern side of National Highway,the land was acquired vide notifications dated 28.2.1987 and 12.9.1986Gin the case of Narendra and Kashi;and on 16.8.1988 in the case of JaiPrakash. Whereas, on the southern side of National Highway for thebenefit of Noida, the land of Village Makanpur became subject matterof acquisition vide notification dated 10.3.1988 in the case of PradeepKumar and on 15.3.1988 in the case of Charan Kaur.H

43. For the land situated on the northern side of the NationalHighway for the benefit of the Parishad, the acquisition has attainedfinality with the dismissal of SLP (Civil) No. 4636 of 2016 on 28.3.2016.The compensation assessed in the other aforementioned cases issubsequent to the date of notification, therefore, none of the orders aredeterminative of the amount of compensation. Hence, the market valueas determined by the High Court cannot be sustained either on the basisof the sale deeds, or on the strength of judicial orders. There is nojustification of enhancement of compensation awarded by the ReferenceCourt i.e. Rs.120/- per square yard.

44. Consequently, the present appeals are hereby allowed. Theorder passed by the High Court in the appeals preferred by the landowners is set aside and the compensation awarded by the ReferenceCourt @ Rs.120/- per square yard apart from statutory benefits isrestored.

Devika Gujral

Appeals allowed.

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