2022 Supreme(SC) 429

SUPREME COURT OF INDIA
VINEET SARAN, J.K. MAHESHWARI, JJ.
Reddy Veerana - Appellant
Versus
State of Uttar Pradesh and others - Respondents
Civil Appeal No.3636 of 2022 [Arising Out of Special Leave Petition (C) No.19035 of 2021]
With
New Okhla Industrial Development Authority - Appellant
Versus
Reddy Veerana and Others - Respondents
Civil Appeal No.3637 of 2022 [Arising Out of Special Leave Petition (C) No.5500 of 2022]
Decided On : 05-05-2022

Headnote:

LAND ACQUISITION - Compensation - Determination - Circle rate - Deduction of development charges - Interest - Constitutional tort - Article 300-A of the Constitution of India.

Fact of the Case:

Appellant purchased land in 1997. Part of the land was acquired by the State in 1979-1980. NOIDA floated a tender for development of a large piece of land including the remaining piece of land of the appellant. The tender was won by respondent No. 7. A preliminary notification under Section 4(1) read with Section 17(1) of the Land Acquisition Act, 1894 (1894 Act) was issued by NOIDA, followed by a notification under Section 6 of the 1894 Act, to acquire the remaining piece of land. The appellant challenged the notifications before the High Court, which disposed of the matter and held that the compensation be determined according to the judgment rendered in the case of 'Bhopendra Singh and Others Vs. Awas Evam Vikas Parishad and Others, 2005 (2) Uttaranchal Decision, 295; MANU/UC/0270/2005'. NOIDA challenged the judgment before the Supreme Court, which stayed the operation of the impugned judgment. After a delay of 5 years, an award was passed by the Additional District Magistrate (Land Acquisition), NOIDA, under Section 11 of the 1894 Act. The appellant filed a writ petition before the High Court, which held that the appellant was the sole owner of the property in dispute and that the schedule land was a commercial property and the compensation shall be determined accordingly. The High Court directed the respondents to determine the compensation as per the circle rate of Rs. 1,10,000/- per square meter for the land in question and thereupon to make deduction towards the development charges. The High Court also directed that the amount of compensation would be payable with interest @ 9% per annum for one year from the date of possession i.e. February, 2005 and thereupon 15% per annum as per the Proviso to Section 34 of the Act of 1894. The appellant and NOIDA filed separate appeals, which were heard analogously.

Finding of the Court:

The Supreme Court held that: 1. The determination of compensation has to be made by taking into consideration the circle rate which has been determined as per the market value. 2. The market value of a property is the price that a willing purchaser would pay to a willing seller for it, taking into account its current condition, all existing advantages, and potential possibilities when led out in the most advantageous manner, while excluding any benefit resulting from the implementation of the scheme for which the property is compulsorily acquired. 3. The deduction of development charge in the instant case should have been made while considering the factors such as the nature of land to be acquired, the extent of area to be acquired, the extent of development in the adjoining land as well as land proposed to be acquired, the commercial potentiality and so on. 4. In the peculiar facts of this case, the civil right of appellant Reddy Veerana is violated in breach of Article 300-A of the Constitution of India. Such action of the NOIDA clearly amounts to constitutional tort. 5. In addition to the statutorily paid interest, the additional amount of penal interest must be paid in place of shifting the date for determination of the amount of compensation or to determine the compensation as per 2013 Act, as demanded by the appellant Reddy Veerana.

Issues: 1. Whether the determination of compensation has to be made by taking into consideration the circle rate which has been determined as per the market value? 2. Whether the market value of a property is the price that a willing purchaser would pay to a willing seller for it, taking into account its current condition, all existing advantages, and potential possibilities when led out in the most advantageous manner, while excluding any benefit resulting from the implementation of the scheme for which the property is compulsorily acquired? 3. Whether the deduction of development charge in the instant case should have been made while considering the factors such as the nature of land to be acquired, the extent of area to be acquired, the extent of development in the adjoining land as well as land proposed to be acquired, the commercial potentiality and so on? 4. Whether in the peculiar facts of this case, the civil right of appellant Reddy Veerana is violated in breach of Article 300-A of the Constitution of India? 5. Whether in addition to the statutorily paid interest, the additional amount of penal interest must be paid in place of shifting the date for determination of the amount of compensation or to determine the compensation as per 2013 Act, as demanded by the appellant Reddy Veerana?

Ratio Decidendi: 1. The determination of compensation has to be made by taking into consideration the circle rate which has been determined as per the market value. 2. The market value of a property is the price that a willing purchaser would pay to a willing seller for it, taking into account its current condition, all existing advantages, and potential possibilities when led out in the most advantageous manner, while excluding any benefit resulting from the implementation of the scheme for which the property is compulsorily acquired. 3. The deduction of development charge in the instant case should have been made while considering the factors such as the nature of land to be acquired, the extent of area to be acquired, the extent of development in the adjoining land as well as land proposed to be acquired, the commercial potentiality and so on. 4. In the peculiar facts of this case, the civil right of appellant Reddy Veerana is violated in breach of Article 300-A of the Constitution of India. Such action of the NOIDA clearly amounts to constitutional tort. 5. In addition to the statutorily paid interest, the additional amount of penal interest must be paid in place of shifting the date for determination of the amount of compensation or to determine the compensation as per 2013 Act, as demanded by the appellant Reddy Veerana.

Final Decision: The Supreme Court allowed the appeal filed by the appellant Reddy Veerana in part and dismissed the appeal filed by NOIDA. The Supreme Court directed the respondents to compute the amount of compensation by taking the circle rate of Sector-18, i.e., Rs. 1,10,000/- per square meter. The Supreme Court also directed that the judgment of the High Court directing 50% deduction towards development charge stands set-aside. The Supreme Court further directed that the amount of solatium of 30% in terms of Section 23(2) of 1894 Act is also payable. The Supreme Court also directed that the statutory interest on the amount of compensation shall be payable @ 9% from the date of taking over of possession, i.e., February, 2005 for a period of one year. Thereafter, @ 15% p.a. be paid as per the proviso of Section 34 of 1894 Act. The Supreme Court also directed that in addition to the said statutory interest, 3% penal interest is further directed to be paid in the peculiar facts of this case. The Supreme Court also directed that the amount so deposited in the year 2017 would also earn the interest at the same rate, as directed in para 4 above till the date of realization. The Supreme Court also directed that since, the acquisition of the land in question was made by NOIDA which was purchased by respondent No. 7 in public auction, therefore, the liability to pay the amount of compensation would be of NOIDA. The Supreme Court also directed that the entire amount shall be paid within a period of six weeks from the date of this judgment.