Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1985 Supreme(SC) 13

SUPREME COURT OF INDIA
O Chhinnappa Reddy, R B Mishra
SPECIAL LAND ACQUISITION OFFICER BANGALORE, APPELLANT
Versus
B. M. KRISHNAMURTHY, RESPONDENT.
(CIVIL APPEAL NO. 992 OF 1971)
WITH
B. M. NARAYANASWAMI, APPELLANT
Versus
SPECIAL LAND ACQUISITION OFFICER, RESPONDENT.
(CIVIL APPEAL NO. 1127 OF 1974)
WITH
B. M. RAMASWAMY (DEAD) BY LRS, PETITIONERS
Versus
SPECIAL LAND ACQUISITION OFFICER, RESPONDENT.
(PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NO. 3450 OF 1974).
Civil Appeals Nos. 992 of 1971 (On appeal by certificate from the Judgment and Decree dated April 6, 1971 of the Mysore High Court in M.F.A. No. 5 of 1971) with 1127 of 1974 (From the Judgment and Order dated October 18, 1973 of the Mysore High Court in M.F.A. No. 408 of 1971) and Petition for Special Leave to Appeal (Civil) No. 3450 of 1974, decided on January 22, 1985.

Advocates:
ASHOK SHARMA, K.J.JOHN, K.RAJENDRA CHAUDHARY, M.C.BHANDARE, M.VIRAPPA, N.SRINIVASAN, R.B.DATAR, S.S.JAVALI

Headnote:
Land Acquisition Act - Section 4(1) – Acquisition of land - Unconverted agricultural land – Claim of compensation - Out of total extent of land so acquired except a parcel of acres and guntas and another parcel of acre and guntas which are respectively subject matter of Civil Appeal and SLP rest of lands were agricultural lands - These two parcels of land had been permitted by appropriate authorities to be converted for non-agricultural use - Land Acquisition Officer awarded compensation at rate of amount an acre in respect of dry lands an acre in respect of wet and garden lands and an acre in respect of Kharab lands - References were made to civil court under Section 18 of Land Acquisition Act - Civil Judge awarded compensation at rate of per square yard in respect of unconverted agricultural land - Held, This circumstance is established by evidence and so far as acquired land was concerned it was what we may call a sellers market - In evidence it was also brought out that between years that is between of acquisition which was subject matter of Civil Appeal and of acquisition which is subject matter of Civil Appeal price of land fit for industrial use had almost doubled which may perhaps be a slight exaggeration - But having regard to special features of land to which court referred and admitted fast and steady rise of price of land for industrial use - Court may perhaps be justified in awarding compensation for this bit of land roughly about two and half times compensation awarded for land which was subject matter of Civil Appeal - Court are therefore of view that compensation at rate of per square yard may justly be awarded for this land in peculiar circumstance of case that it was only land available in area for industrial expansion – Order Accordingly

Judgement Key Points

Key Points: - (!) The case concerns Land Acquisition compensation for lands acquired under Section 4(1) of the Land Acquisition Act for industrial expansion (NGEF) and for lands converted for non-agricultural use. - (!) The High Court reduced compensation for agricultural lands to Rs. 15,000 per acre and for converted non-agricultural use lands to Rs. 22,000 per acre, considering conversion fines and a 20% price rise. - (!) The Supreme Court affirmed the High Court’s approach and dismissed Civil Appeal 1127 of 1974 and SLP 3450 of 1974 without costs. - (!) In Civil Appeal 992 of 1971, the Court reduced compensation from Rs. 20 per square yard to Rs. 12.50 per square yard for land that was the only land available in the area for industrial expansion, noting a "sellers market" and rising land prices for industrial use between 1962–1964. - (!) The acquired land’s location outside Bangalore Corporation limits and lack of direct comparables were considered in determining the appropriate compensation, with special value attributed to being the only available land for industrial expansion. - (!) The judgment discusses evidence regarding land values, including prior judgments (Domlur land) and prior sales (Exhibits P-2, P-3, P-4, P-15), and the relevance of location and land use status in fixing compensation. - (!) The Court did not address any amendments to the Land Acquisition Act beyond noting that no argument was advanced on recent amendments. - (!) The decision distinguishes between agricultural land and land converted for non-agricultural use in calculating compensation. - (!) The appellate outcome includes reduction of compensation for the Bangalore land (Civil Appeal 992 of 1971) and dismissal of related appeals for the other cases. - (!) The judgment emphasizes a "sellers market" effect for land suitable for industrial use and the rapid rise in prices during the relevant period.

What is the legality of awarding compensation at different rates for converted and unconverted agricultural land under Land Acquisition Act Section 23?

JUDGMENT

CHINNAPPA REDDY, J. - All the three cases before us arise out of land acquisition proceedings. The result of SLP 3450 of 1974 is entirely dependent on the result of Civil Appeal 1127 of 1974 while the result of Civil Appeal 992 of 1971 is partly dependent on the result of Civil Appeal 1127 of 1974. We therefore, consider it desirable to deal with Civil Appeal 1127 of 1974 first.

2. Pursuant to a notification dated May 2, 1962 under Section 4(1) of the Land Acquisition Act, lands in the village of Byappanahalli were acquired for the purpose of construction of a marshalling yard for the Railway. Out of the total extent of land so acquired except a parcel of 4 acres and 20 guntas and another parcel of 1 acre and 13 guntas which are respectively the subject matter of Civil Appeal 1127 of 1974 and SLP 3450 of 1974, the rest of the lands were agricultural lands. These two parcels of land had been permitted by the appropriate authorities to be converted for non-agricultural use. The Land Acquisition Officer awarded compensation at the rate of Rs. 5000 an acre in respect of dry lands, Rs. 10,000 an acre in respect of wet and garden lands and Rs. 750 an acre in respect of Kharab lands. References were made to the civil court under Section 18 of the Land Acquisition Act. The Civil Judge awarded compensation at the rate of Rs. 6 per square yard in respect of unconverted agricultural land. He valued the land which had been permitted to be converted for use as non-agricultural land at the rate of Rs. 18 per square yard. The State of Karnataka preferred appeals to the High Court of Karnataka and by their judgment dated October 18, 1973 a Division Bench consisting of Govinda Bhat, C.J. and Srinivasa Iyengar, J. after noticing the indifferent attitude displayed by the Land Acquisition Officer at the trial of the references and the manner in which the cases were conducted by the Government Pleader on behalf of the Government, examined the question in great detail and reduced the compensation to Rs. 15,000 per acre in the case of agricultural lands and Rs. 22,000 per acre in the case of lands whose use for non-agricultural purposes was sanctioned. In a few of the cases the fine required to be paid for converting agricultural land for non-agricultural use had not been paid by the owners of the land and in such cases the compensation stood reduced by sum of Rs. 3000 per acre (the amount of fine required to be paid by the owners).

3. The owners of the lands whose use for non-agricultural purpose had been permitted by the authorities have filed the present Civil Appeal 1127 of 1974 and SLP 3450 of 1974.

4. Though the compensation awarded for agricultural lands is not directly in issue in Civil Appeal 1127 of 1974 and SLP 3450 of 1974, it is necessary to consider the same in determining the compensation to be awarded for lands whose use for non-agricultural purposes has been sanctioned. In considering the compensation to be awarded for agricultural lands the High Court took notice of the circumstance that the lands had great potential value for building purposes on account of their excellent location. Even so the High Court was struck by the outstanding circumstance that most of the owners of lands claimed compensation at the rate of no more than Rs. 15,000 per acre for unconverted land. The High Court was impressed by the evidence of one of the claimants, CW 5 who was the Patel of the village and could therefore be credited with full knowledge of the potential value of the land in the village and who, besides, had himself sold as many as 86 plots of land as house sites in survey No. 118 of Byappanahalli village. This gentleman who had himself sold small plots of lands in the same area a few months earlier for a higher price and who could therefore, be expected to know the value of land when sold in small plots or in large tracts, claimed only Rs. 15,000 per acre for the land acquired from him in these proceedings. The High Court was theref

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