Case: Union of India and Others Vs. Premlata and Others

undeveloped agricultural land (with potential for development), with reference to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated. The decision in the case of Lal Chand (supra) has been subsequently followed by this Court in the case of Maya Devi (Dead) through Lrs. V. State of Haryana, reported in (2018) 2 SCC 474 as well as in the case of Andhra Pradesh Housing Board v. K. Manohar Reddy, reported in (2010) 12 SCC 707 . 6.2 In the case of Dyagala Devamma (supra), while quashing and setting aside the judgment and order of the High Court making deduction towards development charges at 25% in place of 50% as was deducted by the Reference Court, in paragraphs 19 & 20, it is observed and held as under: 19. In addition to these principles, this Court in several cases have laid down that while determining the true market value of the acquired land especially when the acquired land is a large chunk of undeveloped land, it is just and reasonable to make appropriate deduction towards expenses for development of acquired land. It has also been consistently held that at what percentage the deduction should be made varies from 10% to 86% and, therefore, the deduction should be made keeping in mind the nature of the land, area under acquisition, whether the land is developed or not and, if so, to what extent, the purpose of acquisition, etc. It has also been held that while determining the market value of the large chunk of land, the value of smaller pieces of land can be taken into consideration after making proper deduction in the value of lands especially when sale deeds of larger parcel of land are not available. This Court has also laid down that the court should also take into consideration the potentiality of the acquired land apart from other relevant considerations. This Court has also recognised that the courts can always apply reasonable amount of guesswork to balance the equities in order to fix a just and fair market value in terms of parameters specified under Section 23 of the Act. (See Trishala Jain v. State of Uttaranchal [Trishala Jain v. State of Uttaranchal, (2011) 6 SCC 47 : (2011) 3 SCC (Civ) 178] and Vithal Rao v. LAO [Vithal Rao v. LAO, (2017) 8 SCC 558 : (2017) 4 SCC (Civ) 155] .) 20. Keeping in mind the aforementioned principles, when we take note of the facts of the case at hand, we find that firstly, the land acquired in question is a large chunk of land (101 ac. approx.); secondly, it is not fully developed; thirdly, the respondents (landowners) have not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; fourthly, exemplar relied on by the respondents, especially Ext. P-18 pertains to very small pieces of land (19 guntas); fifthly, the three distinguishing features noticed in the land in sale deed (Ext. P-18) are not present in the acquired land. 7. Applying the law laid down by this Court on the deduction to be made towards development charges while determining the compensation to the facts of the case on hand, it is required to be noted that in the present case a large parcel of land admeasuring 46 Hectares 89 R has been acquired. The sale instances at Ex. 91 to 93 in respect of plots out of land bearing Survey No. 42 are with respect to small pieces of land admeasuring 1200 sq. ft. which were non-agricultural developed plots and even the market price mentioned in the said sale deeds were on square foot basis. In the present case, the acquired land is a barren agricultural land which may have a nonagricultural potentiality. Therefore, considering the fact that the sale exemplars/sale deeds produced at Ex. 91 to 93 are in respect of very small plots of land and were non-agricultural developed plots and even the same were on the highway and having the access to the main road, we are of the opinion that there shall be at least 40% deduction towards development charges. As such, the High Court has not assigned any good reason as to why and on what basis, it considered proper to make deduction towards development charges at the rate of 33.33% (1/3rd deduction). The High Court has not at all considered the relevant factors while making an appropriate deduction towards development charges. Therefore, considering the relevant factors on the appropriate deduction towards development charges as per the law laid down by this Court in the aforesaid decisions, and when we take note of the facts of the case on hand, we find that firstly, the land acquired in question is a large extent of land (45 Hectares 89 R); secondly, it was an agricultural land not fully developed; thirdly, the landowner having not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; and fourthly, exemplars relied upon by the landowner, especially Ex. 91 to 93 pertain to very small plots/parcels of land and that too, in respect of small plots which were developed and converted to non-agricultural use and the distinguishing features noticed in the land in sale deeds, Ex. 91 to 93 are not present in the acquired land, we are of the firm view that the deduction towards development charges at 1/3rd as deduced by the High Court can be said to be on a lower side. Considering the aforesaid facts and circumstances and the relevant factors, we are of the opinion that if 40% deduction is ordered to be made towards development charges, it can be said to be an appropriate deduction towards development charges in the facts and circumstances of the case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]At the outset, it is required to be noted that the Reference Court enhanced the amount of compensation determining the market price at Rs. 6/- per square foot after making deduction of 25% of the same towards development charges, relying upon and considering the sale deeds in respect of plots of land bearing survey No. 42 of village Borkhedi, vide Ex. 91 to 93. It is also noted that before the Reference Court, the landowner relied upon other sale instances at Ex. 50, 51 & 27. Having considered the fact that all the sale instances were in respect of small plots, the Reference Court discarded the same. Even the High Court has also agreed with the findings recorded by the Reference Court with respect to sale instances produced as Ex. 50, 51 & 27. We are in complete agreement with the view taken by the Reference Court as well as the High Court regarding the sale instances produced as Ex. 50, 51 & 27. All the sale instances are with respect to small plots and even the same instances were of the year 1987. In the present case, notification under Section 4 of the 1894 Act has been issued in the year 1992. As per the settled position of law, small plots/parcels of land cannot offer the same market value as when a large tract of land is purchased in an open market by a willing and prudent purchaser. As per the settled position of law, generally the sale instances with respect to small plots/parcels of land are not comparable to a large extent of land for the purpose of determining the compensation. In the case of Mahanti Devi v. Jaiprakash Associates Ltd., reported in (2019) 5 SCC 163,  after following the decision of this Court in the case of Viluben Jhalejar Contractor v. State of Gujarat, reported in (2005) 4 SCC 789,  it is held that in case of acquisition of large tracts of land and the exemplars are of small portion of land, there shall be a suitable deduction towards development costs.5.1 In the present case, the sale instance at Ex. 50 was with respect to plot admeasuring 135 Square Meters. Similarly, the sale instance at Ex. 51 was with respect to plot admeasuring 135 Square Meters. Even the sale instance at Ex. 27 was with respect to 1500 sq. ft. It is also to be noted that even in respect of sale instance at Ex. 50 dated 5.6.1987, the price determined was Rs.10.34/- per square foot and so far as the sale instance at Ex. 51 dated 10.09.1987 is concerned, the price determined was at Rs. 3/- per square foot. In the present case, the land acquired is a large area, i.e., 45 Hectares 89 R. Therefore, as rightly observed and held by the Reference Court as well as the High Court, the sale instances produced at Ex. 50, 51 & 27 are not comparable at all. We are in complete agreement with the view taken by the Reference Court as well as the High Court discarding Ex. 50, 51 & 27.As per the sale deeds, Ex. 91 to 93, the plots were sold at Rs.7/- per square foot. However, considering the fact that survey No. 42 was having direct access to main road and was closer to Chandrapur – Nagpur N.H. 7 than the acquired land, the Reference Court determined the market price at Rs. 6/- per square foot and determined the compensation after deducting 25% towards development charges. The High Court has enhanced the deduction from 25 % to 1/3rd, i.e., 33.33%.Thus, both, the Reference Court as well as the High Court have heavily relied upon Ex. 91 to 93 with respect to plots out of land bearing Survey No. 42 and determined the market price. It is true that as a general rule, the compensation shall not be determined on square foot basis (see Pitambar Hemlal Badgujar (d) by Lrs. (supra)). However, at the same time, in a given case, the Court may determine the compensation on square foot basis after making a reasonable deduction towards development charges, in case there are no other sale instances available.6.1 What should be reasonable deduction towards development charges has been considered by this Court in the cases of Lal Chand (supra) and Dyagala Devamma (supra).As held by this Court in the case of Lal Chand (supra), the percentage of deduction for development to be made to arrive at the market value of large tracts of undeveloped agricultural land (with potential for development), with reference to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated. The decision in the case of Lal Chand (supra) has been subsequently followed by this Court in the case of Maya Devi (Dead) through Lrs. V. State of Haryana, reported in (2018) 2 SCC 474  as well as in the case of Andhra Pradesh Housing Board v. K. Manohar Reddy, reported in (2010) 12 SCC 707 .6.2 In the case of Dyagala Devamma (supra), while quashing and setting aside the judgment and order of the High Court making deduction towards development charges at 25% in place of 50% as was deducted by the Reference Court, in paragraphs 19 & 20, it is observed and held as under:19. In addition to these principles, this Court in several cases have laid down that while determining the true market value of the acquired land especially when the acquired land is a large chunk of undeveloped land, it is just and reasonable to make appropriate deduction towards expenses for development of acquired land. It has also been consistently held that at what percentage the deduction should be made varies from 10% to 86% and, therefore, the deduction should be made keeping in mind the nature of the land, area under acquisition, whether the land is developed or not and, if so, to what extent, the purpose of acquisition, etc. It has also been held that while determining the market value of the large chunk of land, the value of smaller pieces of land can be taken into consideration after making proper deduction in the value of lands especially when sale deeds of larger parcel of land are not available. This Court has also laid down that the court should also take into consideration the potentiality of the acquired land apart from other relevant considerations. This Court has also recognised that the courts can always apply reasonable amount of guesswork to balance the equities in order to fix a just and fair market value in terms of parameters specified under Section 23 of the Act. (See Trishala Jain v. State of Uttaranchal [Trishala Jain v. State of Uttaranchal, (2011) 6 SCC 47  : (2011) 3 SCC (Civ) 178] and Vithal Rao v. LAO [Vithal Rao v. LAO, (2017) 8 SCC 558  : (2017) 4 SCC (Civ) 155] .)20. Keeping in mind the aforementioned principles, when we take note of the facts of the case at hand, we find that firstly, the land acquired in question is a large chunk of land (101 ac. approx.); secondly, it is not fully developed; thirdly, the respondents (landowners) have not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; fourthly, exemplar relied on by the respondents, especially Ext. P-18 pertains to very small pieces of land (19 guntas); fifthly, the three distinguishing features noticed in the land in sale deed (Ext. P-18) are not present in the acquired land.7. Applying the law laid down by this Court on the deduction to be made towards development charges while determining the compensation to the facts of the case on hand, it is required to be noted that in the present case a large parcel of land admeasuring 46 Hectares 89 R has been acquired. The sale instances at Ex. 91 to 93 in respect of plots out of land bearing Survey No. 42 are with respect to small pieces of land admeasuring 1200 sq. ft. which were non-agricultural developed plots and even the market price mentioned in the said sale deeds were on square foot basis. In the present case, the acquired land is a barren agricultural land which may have a nonagricultural potentiality. Therefore, considering the fact that the sale exemplars/sale deeds produced at Ex. 91 to 93 are in respect of very small plots of land and were non-agricultural developed plots and even the same were on the highway and having the access to the main road, we are of the opinion that there shall be at least 40% deduction towards development charges. As such, the High Court has not assigned any good reason as to why and on what basis, it considered proper to make deduction towards development charges at the rate of 33.33% (1/3rd deduction). The High Court has not at all considered the relevant factors while making an appropriate deduction towards development charges. Therefore, considering the relevant factors on the appropriate deduction towards development charges as per the law laid down by this Court in the aforesaid decisions, and when we take note of the facts of the case on hand, we find that firstly, the land acquired in question is a large extent of land (45 Hectares 89 R); secondly, it was an agricultural land not fully developed; thirdly, the landowner having not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; and fourthly, exemplars relied upon by the landowner, especially Ex. 91 to 93 pertain to very small plots/parcels of land and that too, in respect of small plots which were developed and converted to non-agricultural use and the distinguishing features noticed in the land in sale deeds, Ex. 91 to 93 are not present in the acquired land, we are of the firm view that the deduction towards development charges at 1/3rd as deduced by the High Court can be said to be on a lower side. Considering the aforesaid facts and circumstances and the relevant factors, we are of the opinion that if 40% deduction is ordered to be made towards development charges, it can be said to be an appropriate deduction towards development charges in the facts and circumstances of the case.