Important point
The purpose for which acquisition is made is also a relevant factor for determining the market value of the land for determining the compensation claim.

Headnote:Land Acquisition Act, 1894—Sections 4(1), 6 and 23—Compensation claim—Principles for determination of the amount—Purpose for which land is acquired must also be taken into consideration—Government of Gujarat issued a notification under Section 4(1) for acquisition of lands which would have come under submergence of water released from Kadana Jalagar Yojna due to water logging at Kadana Dam—Compensation ranging from Rs. 35/- to Rs. 60/- per sq.m. was offered by Land Acquisition Officer—Reference by claimants allowed awarding Rs. 225/- per sq. metre—Appeal—High Court awarded Rs. 180/- per sq. meter for claimants having larger area and Rs. 200/- per sq. meter for the lands having small area—Basis for awarding compensation was deed of sale whereby approximately 46.30 sq. meters had been transferred at a consideration of Rs. 270/- per sq. meter—Lands under acquisition consisted of 16 plots, 2 large plots and 14 small plots—There is nothing on record to show that the area was fully urbanized—Interest of justice would be subserved if compensation is determined at the rate of Rs. 160/- per sq. metre for the large plots and Rs. 175/- per sq. metres for the small plots—Claimants held entitled to interest on solatium.
       Held : Section 23 of the Act specifies the matters required to be considered in determining the compensation; the principal among which is the determination of the market value of the land on the date of the publication of the notification under Sub-section (1) of Section 4. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefor. It is beyond any cavil that the price of the land which a willing and informed buyer would offer would be different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered. The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-a-vis the land under acquisition by placing the two in juxtaposition. (Paras 17 to 20)
       Whereas a smaller plot may be within the reach of many, a large block of land will have to be developed preparing a layout plan, carving out roads, leaving open spaces, plotting out smaller plots, waiting for purchasers and the hazards of an entrepreneur. Such development charges may range between 20 and 50 of the total price. Certain peculiar features of this case may, at this juncture, be noticed. Due to construction of Kadana Dam and due to water logging causing submergence, the development of Pratappura even according to the Claimants had practically stopped. Development shifted to the area known as Godhra Bhagal. The finding of the Reference Court to the effect that the acquired lands had potentiality for more development is, thus, not correct. (Paras 21 and 22)
       We have noticed hereinbefore that the purpose for which the land is acquired must also be taken into consideration. In the instant case, the lands were acquired because they were to be submerged under water. The land would not have any potential value. The development of area where the land was situated had stopped. On the other hand, the development began on the other side of the river Suki. The parties were aware of the consequences of the project undertaken by the Government of Gujarat. The sale instances, for comparison, having regard to the nature and area of the land carves out a distinction, inasmuch as the area sold under Ex. 145 is 46.30 square meters while two plots under acquisition measured 18528 square meters and 10993 square meters respectively. We, therefore, are of the opinion, having regard to the entire facts and circumstances of this case that interest of justice would be subserved if compensation is determined at the rate of Rs. 160/- per square meter for the large plots and Rs. 175/- per square meter for the small plots. The claimants - Appellants, however, would be entitled to interest on solatium as the said question is no longer res integra. (Paras 31 and 32)

Judgment

S.B. Sinha, J.—The Government of Gujarat issued a notification under Section 4(1) of the Land Acquisition Act (the Act) for acquisition of lands situated in the town Santrampur which would have come under submergence of water released from Kadana Jalagar Yojna due to water logging at Kadana Dam. A declaration in terms of Section 6 was made on 13th October, 1980. In response to the notification issued to the claimants under Section 9 of the Act, compensation at the rate of Rs. 40/- per square feet for the acquired lands was claimed. Compensation ranging from Rs.35/- to Rs. 60/- per square meter was offered by the Land Acquisition Officer in terms of an award dated 16th March, 1982 under Section 11 of the Act. An application for reference was filed by the claimants under Section 18 of the Act requiring the Land Acquisition Officer to refer the matter relating to determination of the market value of the acquired lands to the Civil Court. Before the Reference Court, the claimants initially claimed compensation at the rate of Rs. 200 per square meter which was subsequently enhanced to Rs. 250/- per square meter. By a judgment and order dated 16th April, 1996, the learned District Judge allowed the reference application filed by the claimants determining the market value at the rate of Rs.225/- per square meter. The State of Gujarat preferred an appeal thereagainst in the High Court of Gujarat which was marked as First Appeal No. 5041/96. A Division Bench of the High Court by a judgment and order dated 11th May, 1999 allowed the said appeal and remitted the matter to the Reference Court on the premise that the deed of sale whereupon the claimants relied upon had not been proved in accordance with law. Before the District Court, upon remand parties adduced evidence.

2. The Reference Court relying on or on the basis of a deed of sale dated 15th December, 1978 (Ex.145), whereunder a piece of land measuring 46.30 square meters situated at Godhra Bhagal was sold and other evidences brought on records came to the conclusion that the lands under acquisition would have fetched at least Rs. 200/- per square meter. The Reference Court was further of the opinion that the claimants were furthermore to incur development charges which would have varied between 33 to 53 and on the basis thereof determined the market value at the rate of Rs.134 per square meter.

3. Furthermore, the Reference Court extended the statutory benefits of solatium in terms of Section 23(2) of the Act as well as interest thereon in terms of Section 28 thereof. Both the parties preferred appeals thereagainst before the High Court of Gujarat.

4. A Division Bench of the High Court was of the view that the acquired lands were fully developed. The records of the case also indicated that after the acquired lands were submerged in the water of Kadana dam the development of the area of Pratappura had shifted to the locality known as Godhra Bhagal. The basis for awarding compensation was the deed of sale dated 15th December, 1978 (Ex.145), whereby approximately 46.30 square meters had been transferred at a consideration of Rs.270/- per square meter, and upon making a deduction of 33 for the larger area and 25 for the smaller area, the claimants were held to be entitled to receive compensation at the rate of Rs. 180/- per square meter having large area and Rs.200/- per square meter for the lands having small area.

5. The High Court, however, having regard to the decision of this Court in Prem Nath Kapur and Another Vs. National Fertilizers Corporation of India Limited and Others [(1996) 2 SCC 71] was of the opinion that the claimants were not entitled to interest on the amount of solatium. Aggrieved thereby, both the parties are before us.

6. Ms. Hemantika Wahi, learned counsel appearing on behalf of the State of Gujarat would contend that the High Court committed a manifest error in passing the impugned judgment relying on or on the basis of the deed of sale of Survey No.

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2005 Supreme(SC) 636

Important pointThe purpose for which acquisition is made is also a relevant factor for determining the market value of the land for determining the compensation claim.

Cases Referred (14)

Important point
The purpose for which acquisition is made is also a relevant factor for determining the market value of the land for determining the compensation claim.