1. Land acquisition compensation — Enhancement of award by High Court based on Ready Reckoner rates — Appeal against the enhancement. (Para 1 , 2 )
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2022 Supreme(SC) 608
SUPREME COURT OF INDIA
M.R. SHAH, B.V. NAGARATHNA, JJ.
Bharat Sanchar Nigam Limited – Appellant
Versus
M/s. Nemichand Damodardas and Another – Respondents
Civil Appeal No. 3478 of 2022
Decided On : 11-07-2022
Important Points
Ready Reckoner rates used for stamp duty cannot be the basis for determining compensation under the Land Acquisition Act. Market value must be determined via expert opinions, bona fide sale transactions of similar lands, or prospective profits, as uniform rates fail to account for specific land characteristics.
Subject
Land Acquisition - Compensation Determination
Act Referred
Headnote
Land Acquisition - Compensation - Ready Reckoner rates - [LAND ACQUISITION] - [Land Acquisition Act, Section 4(1), Section 23] - The court discussed the use of Ready Reckoner rates for determining compensation under the Land Acquisition Act. It held that the Ready Reckoner rates, which are for the purpose of collecting stamp duty and are uniform for all lands in the area, cannot be the basis for determining compensation. The court also emphasized the need to consider various factors such as location, area, and development status of the land when determining compensation.
Fact of the Case:
The lands owned by the respondents were acquired by the State Government for BSNL. The Land Acquisition Officer awarded compensation, which was later enhanced by the Reference Court. The High Court further increased the compensation based on Ready Reckoner rates, leading to an 800% increase from the original award.
Finding of the Court:
The High Court erred in relying solely on Ready Reckoner rates to enhance compensation, contrary to the binding decisions of the Supreme Court. The court emphasized that the market value of different lands varies and cannot be uniformly determined based on Ready Reckoner rates.
Issues: The main issue was whether the Ready Reckoner rates could be used as the basis for determining compensation under the Land Acquisition Act.
Ratio Decidendi: The court held that Ready Reckoner rates, which are uniform for all lands in an area and used for collecting stamp duty, cannot be the sole basis for determining compensation. It emphasized the need to consider various factors such as location, area, and development status of the land when determining compensation.
Final Decision: The High Court's judgment was quashed, and the compensation determined by the Reference Court was restored. The appeal was allowed with no order as to costs.
Legal Category Hierarchy
Advocates:
Advocate Appeared:
For the Appellant : Mr. R. D. Agrawala, Sr. Adv. Mr. Pradeep Kumar Mathur, AOR Mr. Chiranjeev Johri, Adv.
For the Respondent: Mr. Satyajit Desai, Adv. Mr. Satyakam, Adv. Mr. Siddarth, Adv. Mr. Sajid V., Adv. Ms. Deb Deepa, Adv. Ms. Anagha S. Desai, AOR Mr. Sachin Patil, AOR Mr. Rahul Chitnis, Adv. Mr. Aaditya A. Pande, Adv. Mr. Geo Joseph, Adv. Ms. Shewtal Shepal, Adv.
Advocate Appeared:
For the Appellant : Mr. R. D. Agrawala, Sr. Adv. Mr. Pradeep Kumar Mathur, AOR Mr. Chiranjeev Johri, Adv.
For the Respondent: Mr. Satyajit Desai, Adv. Mr. Satyakam, Adv. Mr. Siddarth, Adv. Mr. Sajid V., Adv. Ms. Deb Deepa, Adv. Ms. Anagha S. Desai, AOR Mr. Sachin Patil, AOR Mr. Rahul Chitnis, Adv. Mr. Aaditya A. Pande, Adv. Mr. Geo Joseph, Adv. Ms. Shewtal Shepal, Adv.
Table of Contents
2. Whether Ready Reckoner rates, intended for stamp duty collection, can be the basis for determining market value for compensation under the Land Acquisition Act. (Para 3 , 4 , 5 )
3. Ready Reckoner rates are uniform and intended for stamp duty, failing to account for specific land characteristics essential for determining actual market value. (Para 7 , 10 , 11 , 12 )
4. Rates in the Ready Reckoner or Basic Valuation Register for stamp duty purposes cannot form the basis for determining market value under the Land Acquisition Act. (Para 8 , 9 )
5. Appeal allowed — High Court judgment quashed — Reference Court's compensation award restored. (Para 13 , 14 )
6. Can Ready Reckoner rates be used to determine market value for land acquisition compensation?
No. Ready Reckoner rates are prepared for collecting stamp duty and registration charges. They lack a statutory base for determining market value under Section 23 of the Land Acquisition Act. (Para 8 , 9 )
7. What are the recognized methods for determining market value under the Land Acquisition Act?
Market value is determined using: (1) opinion of experts; (2) price paid in bona fide transactions of the acquired or adjacent lands; or (3) a number of years purchase of actual or prospective profits. (Para 8 )
8. Why are uniform Ready Reckoner rates considered unsuitable for determining specific land compensation?
Market value depends on specific factors like location, size, road proximity, and shape. Uniform rates for an entire area cannot account for these individual plus and minus factors necessary for a prudent purchase. (Para 10 , 11 , 12 )
9. What is the effect of Supreme Court decisions on High Courts regarding land valuation principles?
Under Article 141 of the Constitution of India, decisions of the Supreme Court are binding on all courts in the country, and High Courts must follow these precedents when determining legal principles. (Para 7 )
10. Does a Government Resolution mandating the use of Ready Reckoner rates override judicial precedents on market value?
No. A Government Resolution cannot override the law laid down by the Supreme Court, particularly when the resolution's basis—uniform Ready Reckoner rates—is contrary to the requirement of determining specific market value. (Para 12 )
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Bombay at Nagpur Bench in First Appeal No. 1302 of 2009 by which the High Court has partly allowed the said appeal preferred by the original owners/original claimants and has enhanced the amount of compensation for the lands acquired mainly relying upon the prevailing Ready Reckoner rates of the land, the Bharat Sanchar Nigam Limited (BSNL) has preferred the present appeal.
2. That the lands owned by the respondents herein-original landowners situated at Yavatmal, Maharashtra were acquired by the State Government under the provisions of the Land Acquisition Act for BSNL. The Land Acquisition Officer declared the award determining the total compensation @ Rs. 14,33,703/- (at Rs. 13.32 per sq. ft.). At the instance of the landowners, a reference was made to the Reference Court. The Reference Court enhanced the amount of compensation to Rs. 21/- per sq. ft.
2.1 In a further appeal to the High Court at the instance of the original claimants, by the impugned judgment and order, the High Court has enhanced the amount of compensation to Rs. 174/- per sq. ft. (more than 800% of the Reference Court compensation and about 1300% of the compensation awarded by the Land Acquisition Officer).
2.2 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court enhancing the amount of compensation to Rs. 174/- per sq. ft. BSNL has preferred the present appeal.
3. Shri R.D. Agrawala, learned Senior Advocate appearing on behalf of BSNL has vehemently submitted that the High Court has seriously erred in enhancing the amount of compensation solely relying upon the prevailing Ready Reckoner rates. It is submitted that the sole basis for more than 800% increase by the High Court is the prevailing Ready Reckoner rates of land, which as such is not permissible as held by this Court in the case of Jawajee Nagnatham vs. Revenue Divisional Officer, Adilabad, A.P. and Others, (1994) 4 SCC 595 and Krishi Utpadan Mandi Samiti, Sahaswan vs. Bipin Kumar, (2004) 2 SCC 283.
3.1 Learned Senior Advocate appearing on behalf of the appellant-BSNL has further submitted that in the facts and circumstances of the case, no reliance could have been placed on the Ready Reckoner as PW-3 a Government Officer specifically admitted that the actual rates of transaction of sales in market are different from the rates mentioned in the Ready Reckoner and that the correct market price is not reflected from the Ready Reckoner. It is submitted that PW3 further specifically admitted that the Ready Reckoner was prepared only for collecting stamp duty. It is submitted that therefore, the High Court has seriously erred in enhancing the amount of compensation solely relying upon the Ready Reckoner prices of the area in question.
3.2 It is further submitted by the learned Senior Advocate appearing on behalf of the appellant-BSNL that in the present case, the High Court has relied upon and/or considered the Full Bench decision of the Bombay High Court in the case of Shalini Vaman Godbole vs. Special Land Acquisition Officer, Special Unit, Solapur and Others, (2009) 5 Mah. L.J. 884 rather than not following the decisions of this Hon’ble Court in the case of Jawajee Nagnatham (supra) and Krishi Utpadan Mandi Samiti, Sahaswan (supra), which are binding on all Courts of the country under Article 141 of the Constitution of India.
3.3 Making above submissions and relying upon the above decisions, it is prayed to allow the present appeal.
4. Shri Sachin Patil, learned counsel appearing on behalf of the State has adopted the submissions made by the learned Senior Advocate appearing on behalf of the appellant-BSNL and submitted that the High Court has committed a serious error in awarding such an exorbitant compensation.
5. Present appeal is vehemently opposed by Mrs. Kiran Suri, learned Senior Advocate appearing on behalf of original
