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Revenue Divisional Officer-Cum-Land Acquisition Officer v. Shaik Azam Saheb And Others
Factual and Procedural Background
The State of Andhra Pradesh issued a notification under Section 4(1) of the Land Acquisition Act, 1894 proposing to acquire 87 acres 96 cents of land in Pasupula and B. Thandrapadu villages for establishing a post-graduate centre of Sri Krishna Devaraya University. The Land Acquisition Officer’s award dated 20-12-1995 fixed compensation at Rs 15,000 per acre for lands in B. Thandrapadu and Rs 16,000 per acre for lands in Pasupula.
Dissatisfied owners (the present respondents) sought a reference under Section 18. On 28-03-2001, the Principal Senior Civil Judge, Kurnool enhanced compensation to Rs 90,000 and Rs 1,00,000 respectively. Appeals and cross-objections followed. The Andhra Pradesh High Court, by judgments dated 18-03-2002 and 28-03-2003, further raised the rate uniformly to Rs 1,90,000 per acre. The State and acquiring authority obtained special leave; the Supreme Court heard all connected appeals together and rendered the present judgment.
Legal Issues Presented
- Whether the Andhra Pradesh High Court erred in fixing uniform market value of Rs 1,90,000 per acre for both villages when determining compensation under the Land Acquisition Act.
- What is the appropriate method (exemplar sales, escalation rates, development deductions, location factors) for valuing large tracts of agricultural land abutting National Highway 18 near Kurnool town.
Arguments of the Parties
Appellant’s Arguments
- The High Court relied on A.S. No. 1095/1996, but this precedent was altered by the Supreme Court in A.P. Industrial Infrastructure Corpn. Ltd. v. G. Mohan Reddy, which fixed lower rates (Rs 1,35,000, 90,000 and 70,000) after emphasising distance from the National Highway.
- Exhibit B-3 (sale of only four cents in 1987) is an unreliable exemplar for valuing 87-acre acquisitions; small-extent, homestead sales cannot govern bulk agricultural acquisitions.
Respondents’ Arguments
- Small-extent exemplars like Exhibit B-3 can legitimately be considered; its capitalised value (about Rs 2,50,000 per acre) even after 50 % deduction and 10 % annual escalation for seven years would justify Rs 2,12,500 per acre.
- The Mohan Reddy case involved a 1992 notification and land eight kilometres from the highway, unlike the present 1994 notification for land only four kilometres away; therefore that decision should not control the present valuation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.P. Industrial Infrastructure Corpn. Ltd. v. G. Mohan Reddy (Civil Appeals 5206-28/1997) | Market value varies with distance from National Highway; different survey numbers may merit different rates. | Supreme Court agreed with this principle and used it to justify distinct valuations for the two villages based on their proximity to NH-18. |
| Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 789 | Lists positive/negative factors for valuation; notes common practice of one-third deduction for development. | Relied on for the framework of factors and the appropriateness of deducting one-third development charges. |
| A.S. Krishna & Co. (P) Ltd. v. Land Acquisition Officer (1992) 1 SCC 141 | Deduction of 20 % towards development upheld. | Cited to show variability in permissible development deductions. |
| Mummidi Apparao v. Nagarjuna Fertilizers & Chemicals Ltd. (2009) 4 SCC 402 | High deduction (50 %) for development affirmed. | Used to illustrate judicial precedent for even higher deductions, supporting discretion in fixing one-third here. |
| Hasanali Khanbhai & Sons v. State of Gujarat (1995) 5 SCC 422 | Deduction permissible when land acquired for specific purposes. | Referenced while discussing legitimacy of development deductions. |
| Land Acquisition Officer v. Nookala Rajamallu (2003) 12 SCC 334 | Same principle as above on development deductions. | Reinforced the court’s view that deductions are context-dependent. |
| Kasturi v. State of Haryana (2003) 1 SCC 354 | One-third deduction treated as normal. | Cited collectively to justify choosing one-third deduction. |
| Tejumal Bhojwani v. State of U.P. (2003) 10 SCC 525 | One-third deduction norm. | Same collective reliance. |
| V. Hanumantha Reddy v. Land Acquisition Officer (2003) 12 SCC 642 | One-third deduction norm. | Same collective reliance. |
| H.P. Housing Board v. Bharat S. Negi (2004) 2 SCC 184 | One-third deduction norm. | Same collective reliance. |
| Kiran Tandon v. Allahabad Development Authority (2004) 10 SCC 745 | One-third deduction norm. | Same collective reliance. |
Court's Reasoning and Analysis
The Court began by reiterating that valuation depends on land quality, irrigation, location, proximity to roads, and surrounding development. It accepted that the acquired parcels, though agricultural, enjoyed high potential owing to their position four kilometres from Kurnool town and abutting NH-18 amid numerous educational institutions.
Assessing the evidence, the Court treated Exhibit B-3 (1987 sale of four cents) as a valid starting point but recognised the need for adjustments because (i) the exemplar concerned homestead, not agricultural, land and (ii) the present acquisition covered a very large tract. Valuing Exhibit B-3 at about Rs 1,25,000 per acre (after initial adjustments), the Court then:
- Applied a one-third deduction to account for development costs, consistent with prevailing Supreme Court jurisprudence.
- Added 10 % annual escalation recognising the two-year gap between the 1992 exemplar decision and the 1994 notification.
- Differentiated between the two villages by subtracting a further 10 % for B. Thandrapadu because it lies farther from NH-18.
This methodology mirrors that used by the Reference Judge but corrects the High Court’s omission of locational variance and excessive reliance on Exhibit B-6 without considering the later Supreme Court ruling in Mohan Reddy.
Holding and Implications
Appeals allowed in part. The Supreme Court fixed compensation at:
- Rs 1,41,666.66 per acre for lands in Pasupula Village.
- Rs 1,27,499.99 per acre for lands in B. Thandrapadu Village.
These figures replace the High Court’s uniform rate of Rs 1,90,000 and restore differential valuation based on proximity to NH-18. The decision provides immediate monetary adjustment for the parties but does not establish a novel legal principle; it applies existing valuation standards to the specific facts.
S.B Sinha, J.— Leave granted in Special Leave Petitions (Civil) Nos. 4463-70 of 2004, 12200-05 of 2007, 12215 of 2007 and 12206-13 of 2007. These appeals by special leave involving common questions of law and fact were taken up for hearing together and are being disposed of by this common judgment.
2. The basic fact of the matter is not in dispute.
3. A notification under Section 4(1) of the Land Acquisition Act, 1894 was issued (hereinafter referred to for the sake of brevity as “the said Act”) expressing the intention of the State to acquire land to the extent of 87 acres 96 cents situated in Pasupula and B. Thandrapadu Villages for the purpose of establishing a Postgraduation Centre of Sri Krishna Devaraya University. Out of the said 87 acres 96 cents of land, we are concerned only with 25 acres of land of which the respondents were owners. The Land Acquisition Officer made an award on or about 20-12-1995 fixing the market value of the lands at the rate of Rs 15,000 per acre for the lands situated in B. Thandrapadu Village and Rs 16,000 per acre for the lands situated in Pasupula Village.
4. Dissatisfied with the quantum of compensation awarded by the Land Acquisition Officer, the respondents sought for reference from the Collector before the civil court in terms of Section 18 of the said Act. The learned Principal Senior Civil Judge, Kurnool by a judgment and award dated 28-3-2001 enhanced the market value thereof from Rs 15,000 to Rs 90,000 per acre for the lands situated in B. Thandrapadu Village and from Rs 16,000 to Rs 1,00,000 per acre for the lands situated in Pasupula Village. Appeals and cross-objections were filed thereagainst by the parties hereto.
5. By reason of judgments and orders dated 18-3-2002 and 28-3-2003, a Division Bench of the Andhra Pradesh High Court enhanced the market value of the land to Rs 1,90,000 per acre uniformly for the lands situated in both the villages.
6. Parties thereto are, thus, before us.
7. The High Court in support of its judgment, inter alia, relied upon a registered deed of sale dated 12-11-1987, which was marked as Exhibit B-3 whereby and whereunder four cents of land was sold for a sum of Rs 10,000. On that premise, it was contended that the value of the land per acre would be Rs 2,50,000. The High Court furthermore relied on its earlier judgment and order passed in AS No. 1095 of 1996 (Exhibit B-6) wherein market value of the lands acquired therein was fixed at the rate of Rs 2,70,000 per acre.
8. In respect of the land covered by Exhibit B-6, a Notification under Section 4(1) of the Act was issued on 30-6-1992 for the purpose of establishing Bharat Gas Power Station. It was noticed that the lands which were acquired for the said Bharat Gas Power Station being situated at a distance of about 8 kilometres from Kurnool Town whereas the acquired lands were situated about 4-5 kilometres away from Kurnool Town. It was stated:
“As can be seen from Ext. B-6, this Court has fixed the rate of compensation at Rs 2,70,000 and the Notification was issued in June 1992 whereas in the present cases Notification was issued in May 1995. In such an event, if escalation is given at 10% on the value fixed by this Court, it would be around Rs 3,24,000 per acre. Let us test the value from the other angle. Ext. B-3 is a small extent of 4 cents and the purchase took place in the year 1997. The Reference Court correctly observed that as the purchase was made about 7 years earlier to the notification, the purchase was not made with a view to have an undue advantage of higher compensation. As per Ext. B-3 the value per acre is Rs 4,00,000 if 10% escalation is given for 7 years, the same comes to Rs 6,80,000 and even if we take 60% of the amount by keeping in view the small extent sold under Ext. B-3 and also giving discount for developmental activities, it would be Rs 2,72,000 per acre. Therefore, we follow the safest method for arriving at the compensation with reference to Ext. B-6 which is in an extent of 27 and the area covered by the batch of appeals is also almost same, and the notification was issued for 87.96 acres, granting of escalation by deducting 40% of the amount and fixing the compensation at Rs 1,90,000 would be just and reasonable. Therefore, we have taken the course of resorting to 40% of the amount as the land acquired was for the university buildings, wherein internal roads have to be laid and other open spaces have to be left out. Thus, keeping in view the above facts, we feel that granting compensation at Rs 1,90,000 is just and reasonable.”
9. Mr R. Sundaravardan, learned Senior Counsel appearing on behalf of the appellant would contend:
(i) As this Court in Civil Appeals Nos. 5206-28 of 1997 (A.P Industrial Infrastructure Corpn. Ltd. v. G. Mohan Reddy) interfered with the judgment and order passed in AS No. 1095 of 1996 and batch to hold that the market value of the land in question should be fixed at Rs 1,35,000, Rs 90,000 and Rs 70,000 per acre for different survey numbers on the premise that the situation of the land keeping in view their distance from the National Highway play a vital role as the land which is near the highway would definitely get a higher price than the land which is away therefrom, the impugned judgment cannot be sustained.
(ii) Exhibit B-3 being the registered sale deed dated 12-11-1987 could not have been relied upon as only 4 cents of land was the subject- matter of transfer in terms thereof whereas the notification had been issued for acquisition of land measuring 87 acres 96 cents.
10. Ms K. Amareswari, learned Senior Counsel appearing on behalf of the respondents, on the other hand, would contend:
(i) It is not correct to contend that an exemplar in terms whereof only a small portion of land had been transferred can never be taken into consideration.
(ii) Keeping in view the fact that the market rate in terms of Exhibit B-3 would come to Rs 2,50,000 per acre, even if 50% is deducted therefrom, the market value may be determined at Rs 1,25,000 to which increase therein at the rate of 10% per year should be added and as the lands in question were acquired on 5-5-1994, that is, 7 years after the said deed of sale was executed, the market value thereof would come to Rs 2,12,500 per acre.
(iii) So far as the judgment of this Court passed in Civil Appeals Nos. 5206-28 of 1997 (A.P Industrial Infrastructure Corpn. Ltd. v. G. Mohan Reddy) is concerned, the Notification therein having been issued on or about 30-6-1992 whereas the Notification in the instant case having been published on 5-5-1994, no reliance can be placed thereupon as admittedly the lands were situated 8 kilometres away from the National Highway whereas the lands in question are situated only 4 kilometres away from the highway.
11. Determination of market value of a land acquired in terms of the provisions of the said Act depends upon a large number of factors; the first being the nature and quality of the land i.e whether agricultural land or homestead land. Apart from nature and quality of the land in the event the agricultural lands are acquired the other factors relevant therefor are also required to be considered, namely, as to whether they are irrigated or non-irrigated, extent of facilities available for irrigation, location of the land, closeness thereof from any road or highway, the evenness of land, its position in different seasons particularly in the rainy season, existence of any building or structure as also the development in and around the area. A host of other factors will also have a bearing on determining the valuation of land.
12. The mode and manner in which determination of such valuation is to be carried out would also depend upon the facts and circumstances of each case, namely, whether any deed of sale executed in respect of similarly situated land nearabout the date of issuance of notification under Section 4 (1) of the Act is available, or in the absence of any such exemplars whether the claim can be determined on yield basis or in case of an orchard on the basis of the number of fruit-bearing trees and the yield therefrom.
13. One other important factor which also should be borne in mind is that it may not be safe to rely only on an award involving a neighbouring area irrespective of the nature and quality of the land. For determination of market value again, the positive and negative factors germane therefor should be taken into consideration as laid down by this Court in Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 789, namely:
“Positive factors Negative factors (i) smallness of size (i) largeness of area (ii) proximity to a road (ii) situation in the interior at a distance from the road (iii) frontage on a road (iii) narrow strip of land with very small frontage compared to depth (iv) nearness to developed area (iv) lower level requiring the depressed portion to be filled up (v) regular shape (v) remoteness from developed locality (vi) level vis-à-vis land under acquisition (vi) some special disadvantageous factors which would deter a purchaser (vii) special value for an owner of an adjoining property to whom it may have some very special advantage.”
14. Before determination of the market value of the land, we may notice that the town of Kurnool is the District Headquarters of Kurnool District. The acquired lands are situated about 4 kilometres away from the said town abutting National Highway 18. The lands in question have been held to have the requisite potential value as building site as also for constructing industrial complexes.
15. The learned Reference Judge noticed that there are educational institutions like Pulla Reddy Engineering College, Don Bosco School, St. Mary's Residential School, etc. surrounding the acquired lands. G. Pulla Reddy Engineering College is said to be situated just on the other side of the road of the lands acquired. As on the date of acquisition, it was found that the vicinity surrounding the land was well developed.
16. Indisputably, a big chunk of land, namely, 87 acres 96 cents was acquired for the purpose of establishing an institution known as Sri Krishna Devaraya University. The award of the Land Acquisition Collector was accepted by most of the persons. Only the respondents before us objected thereto.
17. The lands are situated in two different villages. The plan showing the location of the land vis-à-vis National Highway 18 had not been placed before us. From the award of the learned Reference Judge, it appears that the lands situated in Pasupula Village are better placed than the lands situated in B. Thandrapadu Village. Such a distinction had also been kept in mind not only by the Land Acquisition Collector but also by the Reference Court.
18. We agree with the judgment of this Court in Civil Appeals Nos. 5206-28 of 1997 (A.P Industrial Infrastructure Corpn. Ltd. v. G. Mohan Reddy) that the market value of the land would also depend upon the situation thereof.
19. Applying the said formula, if we rely on Exhibit B-3, the market value of the land in question would come to about Rs 1,25,000 per acre. It is, however, not possible to agree with the submissions of Ms Amareswari that we should determine the market value only on that basis upon addition of 10% enhancement of the market value each year. It must be borne in mind that the lands in question were agricultural lands whereas the lands which were the subject-matter of the said deed of sale was a homestead land, thus, some amount, therefore, will have to be deducted towards the development cost.
20. Indisputably while comparing the market value of developed lands with that of undeveloped lands, the court has to make suitable deductions towards the cost of development. We, however, may notice that this Court, at different times, has spoken in different voices.
21. In A.S Krishna and Co. (P) Ltd. v. Land Acquisition Officer (1992) 1 SCC 141, (1991) 2 Scale 1186 this Court refused to interfere with the judgment of the High Court which had given a deduction of 20% towards development charges.
22. Recently, a Division Bench of this Court in Mummidi Apparao v. Nagarjuna Fertilizers and Chemicals Ltd. (2009) 4 SCC 402, (2008) 16 Scale 226 did not interfere with the decision of the High Court which had given a direction for deduction of 50% as development charges. However, we are not oblivious of the fact that this Court had observed in Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 789:
“29. In Hasanali Khanbhai & Sons v. State of Gujarat (1995) 5 SCC 422 and Land Acquisition Officer v. Nookala Rajamallu (2003) 12 SCC 334, (2003) 10 Scale 307 it has been noticed that where lands are acquired for specific purposes deduction by way of development charges is permissible.
30. We are not, however, oblivious of the fact that normally one-third deduction of further amount of compensation has been directed in some cases. (See Kasturi v. State of Haryana (2003) 1 SCC 354, Tejumal Bhojwani v. State of U.P (2003) 10 SCC 525, V. Hanumantha Reddy v. Land Acquisition Officer (2003) 12 SCC 642, H.P Housing Board v. Bharat S. Negi (2004) 2 SCC 184 and Kiran Tandon v. Allahabad Development Authority (2004) 10 SCC 745.)”
23. In the facts and circumstances of the present case, one-third deduction, in our opinion, should be made towards development costs for the lands situated both in Pasupula Village as also B. Thandrapadu Village. Keeping in view the fact that the lands are abutting the National Highway and near the district town, where a large number of educational institutions have come up, 10% escalation per year has to be added. Thus, Rs 1,41,666.66 per acre may be fixed for the lands in Pasupula Village.
24. The lands in another Village B. Thandrapadu Village being situated away from NH 18, another 10% from the amount fixed for the lands in Pasupula Village must be deducted. Thus, Rs 1,27,499.99 per acre may be fixed for the lands in B. Thandrapadu Village.
25. We have adopted the same method which had been adopted by the Reference Judge inasmuch as the Reference Judge had fixed market value for the lands situated in Pasupula Village at Rs 1,00,000 per acre and Rs 90,000 per acre in respect of B. Thandrapadu Village.
26. The appeals are allowed to the aforementioned extent. No costs.
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