UNION OF INDIA versus RAMCHANDRA & ORS. on 11 August 2022

UNION OF INDIA

v.

RAMCHANDRA & ORS.

(Civil Appeal Nos. 5006- 5010 of 2022)

AUGUST 11, 2022

[HEMANT GUPTA AND VIKRAM NATH, JJ.]

Land Acquisition Act, 1894– ss.23(1-A), 23(2) – Land ownedby company was acquired for Railway line–Land AcquisitionCollector awarded compensation @ Rs.5/- per square feet as themarket value of the land acquired, alongwith additionalcompensation for expenditure incurred on construction of pillars–apart from statutory benefitsReference Court considering the ratesof residential plots awarded compensation of Rs.40/- per squarefeet for the land acquired and also for the entire land of the companyon the ground that the unacquired land cannot be utilized for the–purpose intended to be used by the Company High Court affirmedthe said finding but, reduced the amount of compensation to Rs.19per square feet – On appeal, held: Compensation for the entireland owned by the Company is wholly unwarranted, illegal andunduly advantageous to the Company–Process of determiningcompensation by the Reference Court is wholly fallacious – Thus,the appeal of the Company claiming enhancement of thecompensation @ Rs. 40/- per square feet is untenable – Even thecompensation determined by the High Court is questionable but noreason found to interfere in the present appeal –Land ownersincluding the Company entitled to compensation of their land situatedwithin 30 meters from the middle of the railway track on both sides@ Rs.19 per square feet–Company also entitled to compensation ofRs. 14,34,300/- on account of pillars raised –In respect of remainingland after the extent of 30 meters on the eastern side of the railwaytrack, the Company is entitled to compensation @ Rs. 9.5 per squarefeet but without any benefits u/s.23(1-A) and s.23(2).

Disposing of the appeals, the Court

HELD: 1.1 The brochure issued by the DevelopmentAuthority of fully developed plots cannot form basis for award ofcompensation for acquisition of undeveloped lands. The entire

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Aprocess of determination of the market value by the ReferenceCourt is contrary to the established principles of determinationof the market value of the acquired land as the sale of developedland for the purpose of residential plots cannot be made basis foracquisition of undeveloped agricultural land. Still further, theacquired land can be said to be 41,771.32 square feet but theBcompensation has been awarded for the entire land of theCompany as against the small area which was acquired for therailway line, though the balance land is owned and is in possessionof the Company. The market value of Rs.25/- per square feet bythe High Court has been arrived at on the basis of statements ofCsome of the witnesses. No sale instance of the acquired land hasbeen produced, not even the sale deed by which the Companyhas purchased the land almost 3 years prior to the acquisition.Such sale instance would have been the best yardstick to arriveat the market value of the acquired land. The High Court awardedRs.19/- per square feet as the compensation of the entire landDacquired. Though we are unable to agree with the reasoning, butin the absence of any other alternative to determine marketvalue, we do not wish to interfere with the market value assessedby the High Court. One cannot understand that how such largechunk of land can be said to be unsuitable for any industry or any Eevidence suggesting that industry could not be set up in suchlarge piece of land abutting road. The Company has not producedany drawings to say that their factory cannot be put up in theremaining compact land measuring more than 130000 squarefeet. Therefore, compensation for the entire land owned by theCompany is wholly unwarranted, illegal and unduly advantageousFto the Company.[Paras 16-19][272-D; 273-C-G]Lal Chand v. Union of India & Anr (2009) 15 SCC 769– relied on.

1.2 Even in respect of land on the eastern side of the railwayGline, it is not that such land cannot be utilized for any purpose.There is land of the other land owners on the other side, therefore,the same can be used for different purposes, may not be forindustry. Therefore, the compensation of Rs.19/- per square feetawarded for such land is not sustainable on any principle of law.The compensation of land on the western side of the railway trackH

is to be awarded only as the agricultural land. Section 23 of theAct specifies the factors to determine the amount of compensationto be awarded for the land acquired. Clause thirdly is fordetermining damages sustained by the person interested at thetime of the Collector’s taking possession of the land by reason ofsevering such land from other land. Such provision has to beread along with Section 49 of the Act. There was an option withthe appropriate Government to acquire the entire land withoutpublication of any fresh notification if the appropriate Governmentwas of the opinion that the claim of compensation on account ofsevering of the land is unreasonable or excessive. The Unionhas not exercised such option. Therefore, the compensation hasto be determined keeping in view of the fact that the land iscontinued to be owned by the Company but its effective use standsdiminished to large extent. the land situated on the western sideis 139163 square feet (1.29 Hectare), which is not a small areafrom any angle, therefore, the appropriate Government wasjustified in not acquiring the said land and for the reason that theclaim of compensation of such land is unreasonable or excessive.In fact, the Company had no claim in respect of the land situatedon the western plank of the railway line. In respect of the landsituated on the eastern side, the first impression is that the landis severed but if the plan produced by the Company is examined,there is land of other land owners as well. Therefore, it is not theentire land which has become unapproachable or land locked.Because of the railway line, may be the Company has to take adetour to approach such land but not that the substantial portionof the land cannot be used for any of the ancillary works of theCompany. On account of the fact that the Company can approachthe land on the eastern side by taking a detour, the Company willincur an additional cost, therefore, the Company is entitled tosuch additional cost. [Paras 20, 21, 23-25][274-A-C; 278-D-H]

Walchandnagar Industries Limited v. State ofMaharashtra & Anr(2022) 5 SCC 71 – relied on.

1.3 Compensation on account of severance is not entitledto the benefit of Section 23(1-A) and Section 23(2) of the Act, asthe market value is determined in terms of Section 23(1) firstly, ABC

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Awhereas the compensation on account of severance of land isdetermined under Section 23(1) thirdly. The process ofdetermining compensation by the Reference Court is whollyfallacious. Thus, the appeal of the Company claiming enhancementof the compensation @ Rs.40/- per square feet is untenable. Even the compensation determined by the High Court is questionableBbut we do not find any reason to interfere in the present appealunder Article 136 of the Constitution. Furthermore, the Companyshall be entitled to Rs.9.5 per square feet in respect of landsituated on the eastern side after leaving 30 meters of the bufferzone but without any benefits under Section 23(1-A) and SectionC23(2) of the Act. [Paras 28, 29][279-G; 280-E-F]

State of Punjab v. Amarjit Singh & Anr.(2011) 4 SCC734 – relied on.

1.4 The land owners including the Company shall be entitledto compensation of their land situated within 30 meters from the Dmiddle of the railway track on both sides @ Rs.19 per squarefeet. The Company shall be entitled to compensation on accountof pillars raised amounting to Rs. 14,34,300/- as well. The landowners including the Company shall be entitled to statutorybenefits under Section 23(1-A) and Section 23(2) of the Act on such land. In respect of land after the extent of 30 meters on theEwestern side of the railway track and abutting the road from Maksito Ujjain, no compensation would be payable. In respect ofremaining land after the extent of 30 meters on the eastern sideof the railway track, the Company shall be entitled tocompensation on account of severance of land @Rs.9.5 per squareFfeet but such compensation shall be without any benefits underSection 23(1-A) and Section 23(2) of the Act.[Para 30][280-G-H;281-A-C]

Tehal Singh & Ors. v. The State of Punjab through theCollector, Land Acquisition, Drainage Circle, PatialaG& Ors. 1987 SCC OnLine P&H 269 – approved.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.5006-5010 of 2022.

With

Civil Appeal no. 5031 of 2022.

Ms. V. Mohana, Sr. Adv., Ms. Alka Agrawal, Sanjay Kumar Tyagi,Bharat Singh, Amrish Kumar, Puneet Jain, Ms. Christi Jain, UmangMehta, Yogit Kamat, Mann Arora, Ms. Shruti Singh, Ms. Pratibha Jain,Advs. for the appearing parties.

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

1. These appeals arising out of judgment dated 29.6.2017 are beingtaken up for decision together. Civil Appeal Nos. 5006-5010 of 2022 arefiled by the Union of India to reduce the amount of compensation fromRs.19 per square feet and also challenging the grant of compensationfor the entire land owned by the Company - Sagar Maize Products Ltd.[1],who is owner of 2.038hectares in Village Maksi. Civil Appeal No. 5031of 2022is preferredby the Company claiming enhancement ofcompensation of the acquired land to Rs.40/- per square feet.

2. The Company purchased an area of 0.361 hectares of SurveyNos.1927/2, 1928/2 and an area of 1.317 hectares of Survey No. 1929on Ujjain Road in Village Maksi in the year 1986-87. After purchase ofthe land, the Company got permission to convert the agricultural land touse for industrial purposes and has also started civil work for installationof the factory for which certain pillars were raised.

3. A notification under Section 4 of the Land Acquisition Act,1894[2 ]was published on 9.3.1990 forthe purpose of acquisition of 6.500hectares of land situated in Village Maksi and 0.700 hectares of landsituated in Village Jhokar, total 7.200 hectares of land for Dewas-MaksiRailway Line. The notification under Section 6 of the Act was publishedon 8.6.1990.

4. The land measuring 0.244 hectares of land owned by theCompany was actually acquired for the railway line comprising in SurveyNo. 1929.The Company has laid the claim before the Land AcquisitionCollector as under:

1 For short, the ‘Company’

2 For short, the ‘Act’

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5. The Land Acquisition Collector passed an award on 2.6.1992awarding a compensation of Rs.30,000/- per hectare i.e., @Rs.5/- persquare feet as the market value of the land acquired. In addition thereto,the land owner was awarded a compensation of Rs.72,320/- on accountof expenditure incurred on construction of 40 pillars, 19 situated within aCperiphery of 30 meters from the proposed railway line andother 21 lyingoutside the 30 meters periphery, apart from the statutory benefits.

6. Aggrieved by the determination of the market value of the landacquired, the land owners including the Company sought reference underSection 18 of the Act. The Reference Court awarded a compensationDof Rs.40/- per square feet for the land acquired and also for the entireland of the Company admeasuring 2.038 hectares on the ground that theunacquired land cannot be utilized for the purpose intended tobe used bythe Company.

7. Such compensation was arrived at by the Reference Court onEthe basis of statement of PW 11 Pawan Damade, Manager workingwith Madhya Pradesh Housing Development Board. He deposed thatan advertisement (Ex.P/23) for the sale of residential plots @Rs.45/-per square feet was issued by the Board in the year 1984.He also statedthat the value of commercial plots was Rs. 50/- per square feet. TheFReference Court held that the sale price of the residential plot [REDACTED]/- per square feet in the year 1984, but the sale price of theresidential plot included some other charges, therefore, the ReferenceCourt determined Rs.40/- per square feet as the market value.

8. In respect of 26,325 square feet land for laying of the railwayGline, the Reference Court awarded compensation of Rs.10,53,000/-. Forthe remaining land of 1,93,077 square feet, the Reference Court heldthat it is not possible to establish the industry as the railway line passesthrough Survey Nos. 1928 and 1929. It was held that the distance of 30meters is required from the railway line for development work, hence asno construction work could be carried out, therefore, the entire landH

cannot be utilized for any purpose. Thus, compensation @Rs.40/- persquare feet was awarded for the entire land purchased by the Company,apart from the statutory benefits awarded to the Company and to theother land owners.

9. The Company as well as the Union assailed the order ofReference Court by way of separate appeals before the High Court.The High Court affirmed the finding of the Reference Court that theentire land cannot be utilized by the Company, but reduced the amountof compensation to Rs.19/- per square feet. The High Court also referredto the statement of Pawan Damade (PW-11). Further, reliance wasplaced upon the statement of Rajesh Rathi (PW-1) representing theCompany who deposed that he has spent Rs.14,29,800/- for setting upthe industry over an area in question. The land owners also producedAwdhesh Sharma (PW-2), Naib Tehsildar who deposed that marketvalue of the land acquired was Rs.25-30/- per square feet. R.C. Dhakad(PW-3), District Registrar, Shajapur deposed that Ex.15 is sale deeddated 7.11.1991 and the market value was Rs.250/- per square meter.Similarly, some of the land owners have appeared who have deposedthat the market value of the land was Rs.15-20 per square feet. TheHigh Court assessed the market value of the land in question as Rs.25/- per square feet, but in view of large track of agricultural land acquired,deduction of 25% was applied and the market value was assessed asRs.19/- per square feet.

10. We have heard learned counsel for the parties and find theentire process of determination of the market value is based upon surmisesand conjectures.

11. As per the map produced by the Company, on the left side ofthe railway line (East), the land measures42940 + 10497 = 53437 squarefeet, whereas the remaining land measures 58892 + 80271 = 139163square feet on the right side of the railway line (west). This is a compactpiece of land abutting the roadfrom Maksi to Ujjain.The first questionwhich is required to be determined is as to what extent, land on bothsides of the railway line would be part of acquisition.As per the Company,the land of 30 meters on both sides of railway line is the land required bythe railways as a part of the acquisition after leaving 15 feet area onboth sides of railway track. Such argument is based upon acommunicationdated 19.12.1991 from the Urban & Rural Investment Department,Madhya Pradesh that it is necessary to leave a minimum distance of 30

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Ameters as regard to any other development works from demarcation ofrailway line. Learned counsel for the Company relies upon Para 3718 ofthe Indian Railways Way and Works Manual wherein the fencing is tobe provided on 30 meters of actual busy station yards on either side. Asper the Company, the demarcation of railway line is after 15 meters ofthe railway line, meaning thereby 45 meters from the railway track.B

12. The stand of the Union is that 30 meters from the railwaytrack is restricted area where construction will be permissible but withthe consent of the railway and in the manner prescribed in the Circulardated 8.9.1988 and 25.6.2015. The reliance is placed upon IndianRailways Way and Works Manual, Para 827, which reads as under:C“827. Construction of Government and private buildings nearRailway land

a) 1. While it may be realised that Railways have a prior right ofacquisition and utilisation of land adjacent to Railway boundaries,the Railway Administration can only insist on previous intimationDbeing given by the revenue authorities or the local Govt. whensuch lands are assigned for specific purposes. For the preventionof encroachments on railway land such as by the erection ofbuildings and platforms and the gradual accrual of easements suchas right of way and a right to discharge sullage or storm waterover Railway land, it is desirable that sufficient open space beEprovided between the railway boundary and the nearest face ofany structure erected on adjoining land.

2. The interest of the Railways will be suitably safeguarded byproviding for:

i) an open space of approximately 30m being left between theFrailway boundary and the nearest edge of a building constructedon adjacent land, the exact space to be left being governed bylocal conditions; and

ii) intimation regarding proposed construction on lands adjacent tothe railway boundary being given to the railway authorities at leastG90 days before the commencement of erection work.”

13. The relevant extract from the Circular dated 8.9.1988 isreproduced as under:

“Railway Board under their letter No. 5456-W dated 24.4.96addressed to all Provincial Government Local Administrations had H

stipulated that an open space of 100 ft. (30m) approximately onboth side of the Railway land should be left and the exact spaceshould be governed by local conditions. This has been acceptedby all the State Governments.

2. In the cities and towns where the land is valuable and the costis high it may not be possible for the owners to leave a largespace (30m) between the Railway boundary and the nearest edgeof the building. At the same time it is necessary that the Railway’sinterests are adequately safe-guarded.

3. There has been a case in the past when a building which wasclass to the Railway boundary collapsed and caused obstructionto Railway traffic. Therefore in order to safe guard Railway’sinterest and also in view of the Tambe Committee’s report(Committee appointed by Govt. of Maharashtra) followingguidelines are issued for consideration of issue of ‘No objectioncertificate’ to the owners for construction of their buildings/structure in the vicinity of Railway land within 30m (100 ft.) fromthe existing boundary:- xx xxxx

(iii) The height of the building should be restricted so that a clearspace equal to half the height of the building is available betweenthe nearest edge of the building and the Railway boundary.”

14. A perusal of the Indian Railways Way and Works Manual(para 827) and also the Circular dated 8.9.1988 shows that 30 meters ofland on both sides of railway line can be said to be restricted area but itdoes not mean that the land cannot be utilized for any purpose. Thecommunication dated 19.12.1991 on behalf of the Urban and RuralDepartment of the State is to the effect that distance of 30 meters ofland is to be kept. Firstly, the distance norms are of the Railways and notof the State. Still further, the distance of 30 meters from the railwaytrack can be left unoccupied but not 15 + 30 meters.However, since theland was purchased by the Company for the purpose of setting up of anindustrial unit, therefore land to the extent of 30 meters on both sidescannot be put to effective use by the Company. Therefore, we deem itappropriate to grant compensation to the Company for the land on bothsides of railway track to the extent of 30 meters from middle of therailway track.

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A15. As per the plan produced by the Company, land measuring26400 square feet that is 49.3 square meters on both sides of railwaytrack has actually been utilized for the purpose of railway track. Thus,additional 15 meters on both sides of the railway track would be subjectto award of compensation @ Rs. 19 per square feet. Thus, land uptoextent of 30 meters from the center of railway track is the land acquiredBfor the railway track.

16. In respect of amount of compensation, the statement of PawanDamade (PW-11) is in respect of residential plots sold in the year 1984.The sale price of residential plots @ 45/- per square feet is after carryingthe development activity such as laying of roads, electricity, and provisionCof sewerage disposal, therefore, Rs.45/- could not be in any case themarket value of the agricultural land. However, the Reference Court,without any basis, arrived at Rs.50/- per square feet,as the land forcommercial purpose would be more expensive.The said process ofreasoning led theReference Court to determine the market value at Rs.40/- per square feet. The judgment of this Court reported as Lal ChandDv. Union of India & Anr.[3] held that the brochure issued by theDevelopment Authority of fully developed plots cannot form basis foraward of compensation for acquisition of undeveloped lands. This Courtheld as under:

“12. On careful consideration, we are of the view that suchEallotment rates of plots adopted by development authorities likeDDA cannot form the basis for award of compensation foracquisition of undeveloped lands for several reasons. Firstly,market value has to be determined with reference to large tractsof undeveloped agricultural lands in a rural area, whereas theFallotment rates of development authorities are with reference tosmall plots in a developed layout falling within urbanarea. Secondly, DDA and other statutory authorities adoptdifferent rates for plots in the same area with reference to theeconomic capacity of the buyer, making it difficult to ascertainthe real market value, whereas market value determination forGacquisitions is uniform and does not depend upon the economicstatus of the land loser. Thirdly, we are concerned with marketvalue of freehold land, whereas the allotment “rates” in the DDAbrochure refer to the initial premium payable on allotment of plotson leasehold basis. We may elaborate on these three factors.

H3 (2009) 15 SCC 769

13. The percentage of “deduction for development” to be madeto arrive at the market value of large tracts of undevelopedagricultural land (with potential for development), with referenceto the sale price of small developed plots, varies between 20% to75% of the price of such developed plots, the percentage dependingupon the nature of development of the layout in which the exemplarplots are situated.”

17. Thus, the entire process of determination of the market valueby the Reference Court is contrary to the established principles ofdetermination of the market value of the acquired land as the sale ofdeveloped land for the purpose of residential plots cannot be made basisfor acquisition of undeveloped agricultural land. Still further, the acquiredland can be said to be 41,771.32square feet but the compensation hasbeen awarded for the entire land of the Company as against the smallarea which was acquired for the railway line, though the balance land isowned and is in possession of the Company.

18. The market value of Rs.25/- per square feet by the HighCourt has been arrived at on the basis of statements of some of thewitnesses. No sale instance of the acquired land has been produced, noteven the sale deed by which the Company has purchased the land almost3 years prior to the acquisition. Such sale instance would have been thebest yardstick to arrive at the market value of the acquired land. TheHigh Court awarded Rs.19/- per square feet as the compensation of theentire land acquired. Though we are unable to agree with the reasoning,but in the absence of any other alternativeto determine market value,we do not wish to interfere with the market value assessed by the HighCourt.

19. One cannot understand that how such large chunk of land canbe said to be unsuitable for any industry or anyevidence suggesting thatindustry could not be set up in such large piece of land abutting road.The Company has not produced any drawings to say that their factorycannot be put up in the remaining compact land measuring more than130000 square feet. Therefore, compensation for the entire land ownedby the Company is wholly unwarranted, illegal and unduly advantageousto the Company.

20. Even in respect of land on the eastern side of the railway line,it is not that such land cannot be utilized for any purpose. There is land A

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Aof the other land owners on the other side, therefore, the same can beused for different purposes, may not be for industry. Therefore, thecompensation of Rs.19/- per square feet awarded for such land is notsustainable on any principle of law. The compensation of land on thewestern side of the railway track is to be awarded only as the agricultural land.B

21. Now we shall deal with the amount of compensation fortheland situated on the eastern side of the railway track on account ofseverance of the same from the rest of the land. Section 23 of the Actspecifies the factors to determine the amount of compensation to beawarded for the land acquired. Clause thirdly is for determining damagesCsustained by the person interested at the time of the Collector’s takingpossession of the land by reason of severing such land from other land.Such provision has to be read along with Section 49 of the Act. Therelevant provisions read thus:

“23. Matters to be considered in determiningDcompensation.—(1) In determining the amount of compensationto be awarded for land acquired under this Act, the Court shalltake into consideration—

first,the market-value of the land at the date of thepublication of the notification under Section 4, sub-Esection (1); secondly,the damage sustained by the person interested, byreason of the taking of any standing crops or treeswhich may be on the land at the time of theCollector’s taking possession thereof; Fthirdly,the damage (if any) sustained by the person interested,at the time of the Collector’s taking possession ofthe land, by reason of severing such land from hisother land; fourthly,the damage (if any) sustained by the person interested,at the time of the Collector’s taking possession ofthe land, by reason of the acquisition injuriouslyaffecting his other property, movable or immovable,in any other manner, or his earnings; G

fifthly,if, in consequence of the acquisition of the land byHthe Collector, the person interested is compelled to change his residence or place of business, thereasonable expenses (if any) incidental to suchchange; and sixthly,the damage (if any) bona fide resulting fromdiminution of the profits of the land between the timeof the publication of the declaration under Section 6and the time of the Collector’s taking possession ofthe land.

In addition to the market-value of the land, as above provided, theCourt shall in every case award an amount calculated at the rateof twelve per centum per annum of such market-value for theperiod commencing on and from the date of the publication of thenotification under Section 4, sub-section (1), in respect of suchland to the date of the award of the Collector or the date of takingpossession of the land, whichever is earlier.

Explanation.—In computing the period referred to in this sub-section, any period or periods during which the proceedings forthe acquisition of the land were held up on account of any stay orinjunction by the order of any court shall be excluded.

(2) In addition to the market-value of the land, as above provided,the Court shall in every case award a sum of thirty per centumonsuch market-value, in consideration of the compulsory nature ofthe acquisition.

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49. Acquisition of part of house or building.—(1) Theprovisions of this Act shall not be put in force for the purpose ofacquiring a part only of any house, manufactory or other building,if the owner desires that the whole of such house, manufactory orbuilding shall be so acquired:

Provided that the owner may, at any time before theCollector has made his award under Section 11, by notice in writing,withdraw or modify his expressed desire that the whole of suchhouse, manufactory or building shall be so acquired:

Provided also that, if any question shall arise as towhether any land proposed to be taken under this Act does ordoes not form part of a house, manufactory or building within the A

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meaning of this section, the Collector shall refer the determinationof such question to the Court and shall not take possession ofsuch land until after the question has been determined.

In deciding on such a reference the Court shall haveregard to the question whether the land proposed to be taken isBreasonably required for the full and unimpaired use of the house,manufactory or building.

(2) If, in the case of any claim under Section 23, sub-section (1),thirdly, by a person interested, on account of the serving of theland to be acquired from his other land, the appropriate GovernmentCis of opinion that the claim is unreasonable or excessive, it may, atany time before the Collector has made his award, order theacquisition of the whole of the land of which the land first soughtto be acquired forms a part.

(3) In the case last hereinbefore provided for, no fresh declarationDor other proceedings under Sections 6 to 10, both inclusive, shallbe necessary; but the Collector shall without delay furnish a copyof the order of the appropriate Government to the personinterested, and shall thereafter proceed to make his award underSection 11.”

E22. Such provision has been examined recently by this Court in ajudgment reported as Walchandnagar Industries Limited v. State ofMaharashtra & Anr.[4] wherein, this Court held as under:

“35. It may be noted that clause thirdly of Section 23(1) relatesonly to land, as it speaks only about the severance of the acquiredFland from the unacquired land and the damage sustained as aconsequence. In contrast, clause fourthly of Section 23(1) dealswith the damage sustained by the person interested, due to theinjurious affection, (i) of his other movable property; (ii) of hisother immovable property; and (iii) of his earnings. In other wordswhat is injuriously affected at the time of Collector’s takingGpossession of the land, may either be the unacquired portion ofthe immovable property or other movable property or even theearnings of the person interested.

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37. Coming to Section 49, it deals with two contingencies. Theyare,

(i) cases where what is sought to be acquired is only a part of anyhouse, manufactory or other building; and

(ii) cases where a claim for compensation under the head“severance” under clause thirdly of Section 23(1) arises.

37.1. Insofar as the first contingency is concerned there is a barunder sub-section (1) of Section 49 for the acquisition of a partonly of any house, manufactory or other building, if the ownerdesires that the whole of such house, manufactory or buildingshall be so acquired.

37.2. Insofar as the second contingency is concerned, there is achoice given to the appropriate Government to order the acquisitionof the whole of the land, if the appropriate Government is of theopinion that the claim for severance compensation is unreasonableor excessive.

38. The distinction between the scope of sub-section (1) and thescope of sub-section (2) of Section 49 was brought out by thisCourt in Harsook Das Bal Kishan Das v. LAO [Harsook DasBal Kishan Das v. LAO, (1975) 2 SCC 256] as follows : (SCCpp. 259-60, para 12)

“12. The object of Section 49(1) of the Act is to give to theowner the option whether he would like part to be acquired.The Government cannot take the other part under Section 49(1)of the Act unless the owner says so. Section 49(2) of the Acthas nothing to do with Section 49(1) of the Act. Section 49(2)of the Act gives the option to the Government only where theclaim under the third clause of Section 23(1) of the Act isexcessive. Reference to the third clause of Section 23(1) ofthe Act makes it clear that the claim under the third clause ofSection 23(1) is for severance. The Government in such a caseof acquisition of the remaining portion of the land under Section49(2) of the Act saves the public exchequer money whichotherwise will be the subject-matter of a claim for severance.”

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40. Section 49(2) also may not have any application for the reasonthat the appropriate Government did not think fit to seek acquisitionof the whole of the land on which the remaining portion of the A

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trolley line existed, on the ground that the claim for severancecompensation was unreasonable or excessive. Therefore, it isenough for us to go back to clauses thirdly and fourthly of Section23(1) without the constraints of sub-sections (1) or (2) of Section49.

B41. As we have indicated earlier, clause thirdly relates to thedamage sustained by the person interested, by reason of severanceof the acquired land from the unacquired land, at the time ofCollector’s taking possession of the land. In contrast,clause fourthly of Section 23(1) deals with the damage sustainedby reason of the acquisition injuriously affecting, (i) the otherCmovable property; (ii) the other immovable property; and/or (iii)the earnings of the person interested.”

23. A reading of the abovesaid judgment shows that there was anoption with the appropriate Government to acquire the entire land withoutpublication of any fresh notification if the appropriate Government wasDof the opinion that the claim of compensation on account of severing ofthe land is unreasonable or excessive. The Union has not exercisedsuch option. Therefore, the compensation has to be determined keepingin view of the fact that the land is continued to be owned by the Companybut its effective use stands diminished to large extent.

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24. As discussed above, we have found that the land situated onthe western side is 139163 square feet (1.29 Hectare), which is not asmall area from any angle, therefore, the appropriate Government wasjustified in not acquiring the said land and for the reason that the claim ofcompensation of such land is unreasonable or excessive. In fact, theFCompany had no claim in respect of the land situated on the westernplank of the railway line.

25. In respect of the land situated on the eastern side, the firstimpression is that the land is severed but if the plan produced by theCompany is examined, there is land of other land owners as well.Therefore, it is not the entire land which has become unapproachable orGland locked. Because of the railway line, may be the Company has totake a detour to approach such land but not that the substantial portionof the land cannot be used for any of the ancillary works of the Company.On account of the fact that the Company can approach the land on theeastern side by taking a detour, the Company will incur an additionalHcost, therefore, the Company is entitled to such additional cost.

26. The Punjab and Haryana High Court in Tehal Singh & Ors.v. The State of Punjab through the Collector, Land Acquisition,Drainage Circle, Patiala & Ors.[5]granted additional compensation onaccount of severance of land in the case of water channels and thatstatutory benefits are not payable on such compensation on account ofseverance. It was held as under:

“11. Taking all the above factors into account. I consider thefollowing compensation to be appropriate for severance of landto the concerned land-owners:—

(1) Where the S.Y.L. Canal intervenes between the land servedand the village abadi and it is two acres or less in area,compensation for severance shall be 60% of the market value ofthe land so acquired.

(2) Where the severed land is no the abadi side of the village andS.Y.L. Canal is being constructed beyond it and it is two acres orless in area, compensation for severance shall be 40% of themarket value of the land so acquired.

(3) Where the severed land is more than two acres in area but isless than 5 acres, and is located on either side of the S.Y.L. Canal,compensation at the rate of 10%- of the market value for itsseverance shall be payable.

12. The land-owners shall, however, be not entitled to soletiumunder Section 23(2) and the amount under Section 23(1-A) of theAct on the amount of compensation on account of severance, butthey shall be entitled to interest as indicated in the followingparagraph.”

27. We find that in respect to the land on the eastern side, afterleaving land up to the extent of 30 meters from the center of railwaytrack, the Company shall be entitled to Rs.9.5 per square feet,i.e., 50%of the compensation acquired for the railway track.

28. Still further, in terms of the judgment of this Court in State ofPunjab v. Amarjit Singh & Anr.[6], compensation on account of severanceis not entitled to the benefit of Section 23(1-A) and Section 23(2) of theAct, as the market value is determined in terms of Section 23(1) firstly, 5 1987 SCC OnLine P&H 269 : 1987 RRR 495

6 (2011) 4 SCC 734

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Awhereas the compensation on account of severance of land is determinedunder Section 23(1) thirdly. This Court held as under:

“11. Sub-section (1-A) of Section 23, inserted by Act 68 of 1984provides that in addition to the market value of the land, as providedunder Section 23(1), the court shall, in every case, award an amountBcalculated at the rate of 12% per annum on such market value forthe period commencing on or from the date of publication of thenotification under Section 4(1) in respect of such land to the dateof award of the Collector or the date of taking possession of theland, whichever is earlier. The additional amount under Section23(1-A) and solatium under Section 23(2) are both payable onlyCon the market value determined under Section 23(1) of the Actand not on any other amount. Solatium under Section 23(2) is notpayable on the additional amount nor is additional amount underSection 23(1-A) payable on solatium. Solatium and additionalamount are also not payable on the damages/expenses that mayDbe awarded under the second to sixth factors under Section 23(1)of the Act.”

29. The process of determining compensation by the ReferenceCourt is wholly fallacious. Thus, the appeal of the Company claimingenhancement of the compensation @Rs.40/- per square feet is untenable.EEven the compensation determined by the High Court is questionablebut we do not find any reason to interfere in the present appeal underArticle 136 of the Constitution. Furthermore, the Company shall be entitledto Rs.9.5 per square feet in respect of land situated on the eastern sideafter leaving 30 meters of the buffer zone but without any benefits underSection 23(1-A) and Section 23(2) of the Act.F

30. The reference court determined compensation on account ofconstruction in the shape of pillars raised now forming part of unacquiredland situated on the western side of railway track as Rs. 14,34,300/- isnot in dispute. Thus, the said amount is maintained.Consequently, CivilAppeal No. 5031 of 2022 filed by the Company is dismissed whereasGCivil Appeal Nos. 5006-5010 of 2022 filed by the Union are allowed inthe following manner:

(i) The land owners including the Company shall be entitled tocompensation of their land situated within 30 meters fromthe middle of the railway track on both sides @Rs.19 perHsquare feet. The Company shall be entitled to compensation on account of pillars raised amounting to Rs. 14,34,300/- aswell. The land owners including the Company shall beentitled to statutory benefits under Section 23(1-A) andSection 23(2) of the Act on such land.

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(ii) In respect of land after the extent of 30 meters on the westernside of the railway track and abutting the road from MaksiBto Ujjain, no compensation would be payable.

(iii) In respect of remaining land after the extent of 30 meterson the eastern side of the railway track, the Company shallbe entitled to compensation on account of severance ofland @Rs.9.5 per square feet but such compensation shallCbe without any benefits under Section 23(1-A) and Section23(2) of the Act.

Divya Pandey and Anurag Bhaskar(Assisted by : Bodhi Ramteke, LCRA)

Appeals disposed of.

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