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Thakarsibhai Devjibhai And Others v. Executive Engineer, Gujarat And Another
Factual and Procedural Background
The case concerns the acquisition of approximately 20 hectares of land situated near Viramgam town. A notification under Section 4 of the Land Acquisition Act, 1894 was issued on 1-8-1991. The Land Acquisition Officer valued the land at Rs 4.50 per square metre, while the claimants sought Rs 60 per square metre. In a reference under Section 18, the Reference Court relied on a prior award (Exhibit 16) and fixed compensation at Rs 58 per square metre. The State appealed, and on 5-11-1999 the High Court reduced the rate to Rs 48 per square metre, citing the larger area and a five-kilometre distance between the present land and the land in Exhibit 16. Two sets of appeals were filed in the Supreme Court: (i) Civil Appeals Nos. 506-14 of 2001 by the claimants challenging the reduction, and (ii) Civil Appeals Nos. 515-23 of 2001 by the State seeking a still lower valuation.
Legal Issues Presented
- Whether the High Court was justified in further reducing the market value of the land by Rs 10 per square metre on the facts and circumstances of the case.
- Whether the High Court erred in relying upon Exhibit 16 instead of Exhibit 46 and, if so, whether the compensation ought to have been further reduced.
Arguments of the Parties
Claimants’ Arguments
- Exhibit 16 pertains to land in the same village, situated at an equal distance from Viramgam town, and its acquisition pre-dated the present one; therefore it provides the appropriate benchmark of Rs 64 per square metre, making the Reference Court’s figure of Rs 58 reasonable.
- The High Court’s 25% reduction was unjustified because the acquisition was not large for each individual landholder; it appeared large only when all individual holdings were aggregated.
- The difference of one kilometre in distance from Viramgam town between the present land (3 km) and the land in Exhibit 16 (2 km) was insignificant and did not warrant a reduction.
State’s Arguments
- Relying on a map (Annexure P-3), the State contended that the land in Exhibit 16 lay five kilometres away from the present acquisition and concerned only two hectares, whereas the current acquisition covered roughly twenty hectares; thus a discount was necessary.
- Exhibit 46, an award for land in the same village through a July 1987 notification valuing land at Rs 16 per square metre, should have been the governing comparator. Even with a 10% annual increment, the rate would be approximately Rs 23 per square metre.
- The State alternatively urged assessment on the yield method.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Special Land Acquisition Officer v. P. Veerabhadarappa, (1984) 2 SCC 120; AIR 1984 SC 774 | The “yield method” for valuation may be employed only when no reliable evidence of sale transactions or expert opinion is available. | The Court endorsed the High Court’s view that, because Exhibit 16 provided adequate comparable-sale evidence, the yield method advocated by the State was inapplicable. |
Court's Reasoning and Analysis
The Supreme Court accepted the High Court’s threshold finding that Exhibit 16 was the appropriate foundation for valuation, observing that the earlier award had become final and the lands were similar in quality and potentiality. However, it held that the High Court erred in deducting 25% (Rs 10 per square metre) for two reasons:
- Size of acquisition: The supposed “largeness” existed only when aggregating all owners’ parcels; each individual holding was modest, undermining any bulk-purchase discount.
- Distance justification: A one-kilometre difference in distance from Viramgam town (3 km versus 2 km) was not a material factor absent evidence of inferior quality or potentiality. No such evidence was offered.
Furthermore, the Court noted that Exhibit 16 itself covered about two hectares—hardly a “small” tract—and that the State failed to show any disadvantage in the acquired land relative to Exhibit 16. The reliance on Exhibit 46 and the yield method had already been rightly rejected by the courts below.
Holding and Implications
Holding: The claimants’ appeals are allowed; the High Court’s deduction of Rs 10 per square metre is set aside, thereby restoring the Reference Court’s award of Rs 58 per square metre. The State’s appeals are dismissed. The interim order is discharged, and the State is directed to pay compensation accordingly.
Implications: The decision reinstates the higher compensation for the claimants and affirms that modest differences in parcel size or minimal distance variations do not justify substantial deductions when comparable-sale evidence shows similarity in quality and potentiality. No new legal principle is announced, but the judgment reinforces established standards for evaluating comparable sales under the Land Acquisition Act.
Order
1. Leave granted.
2. We find two sets of appeals, one Civil Appeals Nos. 506-14 of 2001 filed by the claimants and the other, Civil Appeals Nos. 515-23 of 2001 filed by the State, challenging the quantum of compensation. These appeals are directed against the judgment and order of the High Court dated 5-11-1999, partly allowing the State appeal by further reducing the compensation by Rs 10 per sq m from the rate of compensation determined at Rs 58 by the Reference Court by its judgment and award dated 14-10-1998. The question raised in these appeals filed by the claimants is:
“Whether the High Court was justified in further reducing the market value of the land in question by Rs 10 on the facts and circumstances of this case?”
3. The question raised in the State appeals is to the following effect:
“Whether the High Court was right in relying upon Ext. 16 instead of placing reliance on Ext. 46; if it erred, was it not committing an error in not further reducing the rate of compensation to be one fixed by it?”
4. As both these two sets of appeals raise the questions which are interlinked, hence are being disposed of by means of this common order.
5. Two main reasons on which the High Court has reduced the rate of compensation are, one, that the distance between the land covered by Ext. 16 and the land in the present case is five kilometres, secondly, the area of land under Ext. 16 is small viz. about 2 hectares while the area covered in the instant case is large viz. 20 hectares approximately.
6. In the present case, notification under Section 4 of the Land Acquisition Act was issued on 1-8-1991 with nine claimants of land which is near Viramgam town. The Land Acquisition Officer fixed the market value of the land at Rs 4.50 per sq m against the claim for Rs 60 per sq m. It is not in dispute and is also recorded by the Land Acquisition Officer that neighbouring villages in that area are directly connected with Viramgam town for business, education, industries, etc. and there are ginning and pressing factories, nationalised banks, godowns of Food Corporation, offices of Indian Oil Corporation, etc. He further records that the area has potentiality for further development.
7. The claimants aggrieved by the said fixation filed reference under Section 18 of the Act. The submission made therein is also the submission before us. The submission is, the lands sought to be acquired are situate within 2 km from the town of Viramgam which adjoin the railway line in the north. Further, both the land under acquisition and the land under Ext. 16 are situated at an equal distance from the said Viramgam town. The acquisition of land under Ext. 16 is under Section 4 through notification dated 3-1-1991 while acquisition in the present case is later, through notification dated 1-8-1991. The rate of land under Ext. 16 which became final is Rs 64 per sq m. The Reference Court, after considering Ext. 16 and taking it into consideration fixed the rate of compensation at Rs 58 per sq m. Aggrieved by this the State filed appeals before the High Court. The High Court, as aforesaid, reduced the rate of compensation by Rs 10 per sq m thus fixed the compensation at the rate of Rs 48 per sq m. Aggrieved by this the claimants preferred the present aforesaid appeals, while the State preferred the appeals for further reduction.
8. Heard learned counsel for the parties. As against reduction, learned counsel for the claimants strongly relied on Ext.16 as the land covered under it is of the same village, similarly situated and the acquisition of which was prior than the present acquisition, hence there is no justification for the High Court to reduce the quantum of compensation from Rs 58 per sq m to Rs 48 per sq m. The submission is, this reduction by 25% is also not sustainable as the High Court reduced it by treating the present acquisition as being for a large chunk of land in contrast to the land which is covered under Ext. 16. The submission is, it is not large qua each landholder, it becomes large only if all the land of all the landholders are clubbed together, hence the reduction on this count is not justified.
9. On the other hand, learned counsel appearing for the State relies on the map filed before the High Court which is Annexure P-3 to the State appeal. The submission with reference to the map is, Ext. 16 is at a distance of 5 km from the present acquired land and Ext. 16 is for a small piece of land i.e 2 hectares (approx.) while the present acquisition is for 20 hectares (approx.). Reliance is also placed on Ext. 46 which is also an acquisition in the same village through notification under Section 4 issued in July 1987, wherein the amount of compensation fixed was Rs 16 per sq m. The submission is, if increment of 10% per year is computed the approximate rate of compensation would come to Rs 23 per sq m. It is not necessary to dwell on this, as we find the reliance on Ext. 46, has been rejected both by the Reference Court and also by the High Court based on good reasoning. The submission on behalf of the State was also for fixation of market value based on yield method which was also rejected by both the said courts. The High Court for this relied on Special Land Acquisition Officer v. P. Veerabhadarappa (1984) 2 SCC 120, AIR 1984 SC 774 to hold that yield method can be referred only when there is no other evidence in the form of sale transaction or opinion of experts available. In the present case, the claimants had adduced sufficient evidence describing the nature and situation of the acquired lands to be similar to other acquired lands of the same village, with special reference to Ext. 16.
10. Next, in the present case, we find the High Court rightly relied on Ext. 16 which is the foundation of the submission on behalf of the claimants. The High Court, with reference to this records:
“As observed earlier, it was neither brought to the notice of the Reference Court nor is it brought to the notice of this Court that the previous award Ext. 16 of the Reference Court was in any manner modified by the appellate court. Therefore, in our opinion, award Ext. 16 had become final between the parties. The respondents had led sufficient evidence to show that the acquired lands of award Ext. 16 and the acquired lands in the present case were in all respects similar lands. It was never brought to the notice of the Court that the lands acquired in the present case have certain disadvantages in comparison to the agricultural lands of award Ext. 16 which were previously acquired. Under the circumstances, we are of the opinion that the Reference Court was justified in placing reliance on the previous award Ext. 16 of the Reference Court.”
11. After accepting this award Ext. 16 as the foundation, while fixing the compensation, it fell into error when it reduced the compensation by 25%. The reason for so doing this by the High Court is reproduced below:
“Therefore, if award Ext. 16 is to be taken as basis for the purpose of determination of the market value of the acquired lands in the present case, some deduction will have to be made. At the same time, because of distance between the village site and the acquired lands, which was more than the distance between the village site and acquired lands of award Ext. 16, some deduction shall also have to be made. In our opinion, if the deduction of large area and small area coupled with further deduction for distance is made in the present case, then it would be reasonable to deduct 25% from the market price arrived at in respect of the acquired lands of award Ext. 16.”
12. As we have said above the High Court fell into error by reducing the quantum of compensation on this basis. The reduction has been made for two reasons, one, that the present acquisition is of larger area and second, the distance between the land under acquisition and in Ext. 16 is about 5 km. With reference to question of acquisition being of a larger area, the error is, when we scan we find for the acquisition of each landowner, it could not be said that the acquisition is of a large area. Largeness is merely when each landholder's land is clubbed together then the area becomes large. Each landowner's holdings are of small area. Even otherwise, visioning in line with the submission for the State we find Ext. 16 is about two hectares of land which cannot be said to be of a small piece of land. So far as the other question of distance between the two classes of lands is concerned, that by itself cannot derogate the claim of the claimant unless there are some such other materials to show that quality and potentiality of such land is inferior. However, distance between the land under Ext. 16 and the present land, even if they are 5 km apart, would not be relevant, the relevancy could be, their distances from Viramgam town. We find, as per the map produced by the State, the present acquired land is about 3 km away from it, while the land under Ext. 16 is about 2 km away from it. This difference is not such as to lead to reduce the rate of compensation, specially on the facts of this case. In the present case, as we have recorded above, it has been found that the quality including potentiality of land between Ext. 16 and the present one are similar. No evidence has been led on behalf of the State to find any difference between the two. In view of this, the inference drawn by the High Court for reducing the compensation by Rs 10 per sq m cannot be sustained.
13. For the aforesaid reason, we find, so far the appeals by the claimants have merit. The judgment and order of the High Court to the extent it reduced the compensation rate by Rs 10 per sq m is set aside and the findings recorded by the Reference Court are upheld. On the other hand, in view of the findings recorded hereinbefore for the same reasons, the appeals filed by the State have no merit and are hereby dismissed. Costs on the parties.
14. The interim order is hereby discharged. The State will now proceed to pay the compensation to the claimants expeditiously in terms of this order.
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