# U.P. State Electricity Board v. Smt. Sushila Devi & Ors

- **Citation:** (2016) 4 ILRA 609
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2015-11-02
- **Bench:** Sudhir Agarwal, Rakesh Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-p-state-electricity-board-v-smt-sushila-devi-ors-43458
- **Pages:** 30

## Headnote

Land Acquisition Act, 1894 - Ss. 23, 24, 54 - Determination of market value - Comparable sale
instances - Averaging of exemplars - Deduction towards development - Potentiality of land - Developed
area - Market value fixed at Rs.115/- per sq. yard - Validity.
610 INDIAN LAW REPORTS ALLAHABAD SERIES
Land Acquisition Act, 1894 - Ss. 4, 18, 54 - Appeal by acquiring body - Challenge confined to quantum of
market value - Earlier awards in respect of adjoining land - Relevance - No arbitrariness in adopting same
rate.

Land Acquisition Act, 1894 - S. 23 - Solatium and interest - Award of Reference Court affirmed.

(A) That the sole question for consideration in this appeal is "whether market value determined by Reference
Court at the rate of Rs.115/- per sq. yard, is in accordance with law." Para 13.

(B) That acquired land was already in a developed area and has potential for future development, and there
was no allegation or suggestion that two exemplars cited by claimants were inflated or unreliable. Para 85.

(C) That even if, 20% more deduction is applied, the rate determined by Reference Court on the basis of
aforesaid two exemplar would be more than Rs.115/- per square yard. Para 85.

(D) That looking to totality of facts and circumstances, determination of market value at the rate of Rs.115/-
per square yard, cannot be said to be excessive or arbitrary. Para 85.

(E) That counsel for appellant despite repeated query could not show, as to why Court below ought not to
have followed earlier awards wherein rate of Rs.115/- per square yard was already determined. Para 86

HELD:(Paras 87,88) Looking to totality of facts and circumstances, we find that determination of market
value at the rate of Rs.115/- per square yard, can not be said to be excessive or arbitrary.

Moreover, counsel for appellant despite repeated query could not show, as to why Court below ought not to
have followed earlier awards wherein rate of Rs.115/- per sq. yard was already determined.In the
circumstnces, we answer the question in favour of respondent and against the appellant.The appeal lacks
merit and dismissed with cost.

Case Law discussed:

Krishna Yachendra Bahadurvaru v. Special Land Acquisition Officer, AIR 1979 SC 869 -Para10.

Kausalya Devi Bogra and others v. Land Acquisition Officer, (1984) 2 SCC 324 - Para 23.

Bhagwathula Samnna and others v. Special Tehsildar, (1991) 4 SCC 506 - Paras 24-25.

Tribeni Devi v. Collector, Ranchi, AIR 1972 SC 1417 - Para 24.

V.M. Salgaocar & Brother Ltd. v. Union of India, (1995) 2 SCC 302 - Para 29.

Shakuntalabai (Smt.) and others v. State of Maharashtra, (1996) 2 SCC 152 - Para 30.

Gafar v. Moradabad Development Authority, (2007) 7 SCC 614 - Para 32.

Satish v. State of U.P., (2009) 14 SCC 758 - Para 33.

Viluben Jhalenjar Contractor (Dead) v. State of Gujarat, (2005) 4 SCC 789 - Para 33.

Basavva (Smt.) and others v. Special Land Acquisition Officer, - Paras 35-37.
4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

611

D. Vasundara Devi v. Revenue Divisional Officer, (1995) 5 SCC 426 - Para 37.

Lal Chand v. Union of India, (2009) 15 SCC 769 - Paras 52-53.

Udho Dass v. State of Haryana, (2010) 12 SCC 51 - Paras 39-41.

Major General Kapil Mehra v. Union of India, (2015) 2 SCC 262 - Paras 72-75.

## Text

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4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

609
17. The next contention of the counsel for the Insurance Company with respect to the
notional income which has been taken to be Rs.6,000/- per month by the Tribunal.

18. From the perusal of the award, it clearly reveals that the claimant has filed admission
form of I.I.M.T. Group of Colleges, which goes to indicate that the deceased was a student of
B.C.A. Drawing guidance from the proposition laid down by the Apex Court in V. Mekala Vs.
M.Malathi and another reported in 2014(3) AWC3242 (SC), the Tribunal has fixed the notional
income to be Rs.6,000/- per month, whereas in the case cited (supra) in special circumstance, the
Apex Court in the case of a student of class XI, who had sustained 70% disability, the notional
income was fixed to be Rs.10,000/- per month and accordingly the Apex Court had enhanced the
compensation.

19. In the instant case, the deceased was a student of B.C.A and died consequent upon the
accident, we are of the considered opinion that in the case in hand, the learned Tribunal has not
committed any mistake in fixing the notional income of the deceased to be Rs.6,000/- per month.
Thus, the Tribunal has not erred in awarding the compensation to a tune of Rs.8,94,000/-.

20. After carefully scrutiny, we are of the opinion that the findings recorded by the
Tribunal are reasoned one and are 8 just and proper, we don't find any justification to interfere with
the award. The First Appeal From Order is bereft of merit and is, accordingly, dismissed.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.11.2015

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE RAKESH SRIVASTAVA, J.

First Appeal No.- 367 Of 1998

U.P. State Electricity Board ... Appellant
Versus
Smt. Sushila Devi & Ors. ...Respondents

Counsel for the Appellant:
Sri S.C. Srivastava

Counsel for the Respondents:
V.D. Ojha

Land Acquisition Act, 1894 - Ss. 23, 24, 54 - Determination of market value - Comparable sale
instances - Averaging of exemplars - Deduction towards development - Potentiality of land - Developed
area - Market value fixed at Rs.115/- per sq. yard - Validity.
610 INDIAN LAW REPORTS ALLAHABAD SERIES
Land Acquisition Act, 1894 - Ss. 4, 18, 54 - Appeal by acquiring body - Challenge confined to quantum of
market value - Earlier awards in respect of adjoining land - Relevance - No arbitrariness in adopting same
rate.

Land Acquisition Act, 1894 - S. 23 - Solatium and interest - Award of Reference Court affirmed.

(A) That the sole question for consideration in this appeal is "whether market value determined by Reference
Court at the rate of Rs.115/- per sq. yard, is in accordance with law." Para 13.

(B) That acquired land was already in a developed area and has potential for future development, and there
was no allegation or suggestion that two exemplars cited by claimants were inflated or unreliable. Para 85.

(C) That even if, 20% more deduction is applied, the rate determined by Reference Court on the basis of
aforesaid two exemplar would be more than Rs.115/- per square yard. Para 85.

(D) That looking to totality of facts and circumstances, determination of market value at the rate of Rs.115/-
per square yard, cannot be said to be excessive or arbitrary. Para 85.

(E) That counsel for appellant despite repeated query could not show, as to why Court below ought not to
have followed earlier awards wherein rate of Rs.115/- per square yard was already determined. Para 86

HELD:(Paras 87,88) Looking to totality of facts and circumstances, we find that determination of market
value at the rate of Rs.115/- per square yard, can not be said to be excessive or arbitrary.

Moreover, counsel for appellant despite repeated query could not show, as to why Court below ought not to
have followed earlier awards wherein rate of Rs.115/- per sq. yard was already determined.In the
circumstnces, we answer the question in favour of respondent and against the appellant.The appeal lacks
merit and dismissed with cost.

Case Law discussed:

Krishna Yachendra Bahadurvaru v. Special Land Acquisition Officer, AIR 1979 SC 869 -Para10.

Kausalya Devi Bogra and others v. Land Acquisition Officer, (1984) 2 SCC 324 - Para 23.

Bhagwathula Samnna and others v. Special Tehsildar, (1991) 4 SCC 506 - Paras 24-25.

Tribeni Devi v. Collector, Ranchi, AIR 1972 SC 1417 - Para 24.

V.M. Salgaocar & Brother Ltd. v. Union of India, (1995) 2 SCC 302 - Para 29.

Shakuntalabai (Smt.) and others v. State of Maharashtra, (1996) 2 SCC 152 - Para 30.

Gafar v. Moradabad Development Authority, (2007) 7 SCC 614 - Para 32.

Satish v. State of U.P., (2009) 14 SCC 758 - Para 33.

Viluben Jhalenjar Contractor (Dead) v. State of Gujarat, (2005) 4 SCC 789 - Para 33.

Basavva (Smt.) and others v. Special Land Acquisition Officer, - Paras 35-37.
4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

611

D. Vasundara Devi v. Revenue Divisional Officer, (1995) 5 SCC 426 - Para 37.

Lal Chand v. Union of India, (2009) 15 SCC 769 - Paras 52-53.

Udho Dass v. State of Haryana, (2010) 12 SCC 51 - Paras 39-41.

Major General Kapil Mehra v. Union of India, (2015) 2 SCC 262 - Paras 72-75.

(Delivered by Hon'ble Sudhir Agarwal, J.
&
Hon'ble Rakesh Srivastava, J.)

1. This appeal under Section 54 of the Land Acquisition Act, (hereinafter referred as "Act,
1984") has arisen from award dated 16.04.1998 passed by Sri Yogendra Kumar Singhal, Additional
District Judge (IV), Agra, adjudicating three Land Acquisition References (hereinafter referred to
as "LAR") including L.A.R. No. 41/88, determining market value of acquired land at the rate of
Rs.115/- per square yard and also 30% solatium under Section 23 along with interest for different
periods as per the provisions of Act 1984. It has also determined compensation in respect of
existing construction, including boundary wall and room existing on the land at the time of
acquisition.

2. Sri S.C. Srivastava, learned counsel for appellant has confined his challenge to the award
only to the extent that market value of acquired land has been determined at a very high rate. He
has contended that Special Land Acquisition Officer (hereinafter referred to as "S.L.A.O.")
determined market value at the rate of Rs.45/- per square yard, but the same has been enhanced
unreasonably at the rate of Rs.115/- per square yard.

3. The facts giving rise to the present dispute are as under:-

4. State Government issued notification under Section 4 (1) of Act, 1894, published on
24.03/17.04.1982. Notification under Section 6 (1) of Act, 1984, was published on
25.03/17.04.1982. Possession of acquired land was taken on 21.07.1982. S.L.A.O. made award
dated 24.06.1986, determining market value of acquired land at the rate of Rs.45/- per square yard.
Being dis-satisfied, landowners made application before Collector, Agra under Section 18 of Act,
1984 for making reference to District Judge, Agra for determination of market value of acquired
land. Pursuant thereof, impugned award dated 16.04.1998 has been made.

5. Disputed land situate at Village Gailana, District Agra. Total area under acquisition is
12.359 acres (59824 square yard). However, dispute in this appeal pertains to the land of
respondents tenureholders, area whereof is 2 Bigha, 12 Biswa (7865 square yard).

6. Land owners claimed compensation at the rate of Rs.200/- per square yard on the ground
that disputed land is situated just near Swadeshi Beema Nagar and there also exist residential,
612 INDIAN LAW REPORTS ALLAHABAD SERIES
commercial and industial buildings and establishments, besides hotels, schools and several other
institutions. It is near mental hospital of District Agra and tourist places like Sikandara. It is also
submitted that acquired land is Abadi and, therefore, compensation ought to have been awarded at
the rate applicable to urban area.

7. Reference Court formulated following five issues:-

1. क्या ववशेष भूमम अध्याजप्ि अगधकािी द्वािा यार्ीगण को दिलाया गया मुआवजा कम है यदि हां िो ककस वास्िववक
मुआवजे की धििामश को पािे के वे अगधकािी हैं?

1. Whether the compensation awarded to the petitioners by the Special Land Acquisition
Officer is insufficient? If so, then what actual amount they are entitled to get.

2.अनुिोष?

2. Any Relief?

3. क्या याचीगण 30 प्रतिशि की दि से सोलेतशयम पाने केअतिकािी हैं?

3. Whether the petitioners are entitled to get solatium at the rate of 30 percent?
क्या याचीगण संशोतिि भूतम अध्याति अतितनयम के प्रातविानों केिहि मुआवजे की िनिातश पि ब्याज पाने के अतिकािी हैं?

4. Whether the petitioners are entitled to get interest at the compensation amount under
the provisions of the amended Special Land Acquisition Act?

5. क्या याची को तववातदि भूतम पि मौजूद चाि दीवािी एवं कमिे केतनमायण की कोई मुआवजे की िनिातश अदा नहीं की गई यतद हा िो
इस तवेषय में तकिना मुआवजाा पाने का अतिकािी हैं?

5. Whether the petitioner was not paid any compensation amount for construction of the
bounday wall and the room on the disputed land? If so, then what compensation amount on this
count he is entitled to get?"

 (English Translation by Court)

8. In respect to issue 1, we find that claimant owners have relied on three sale deeds dated
25.06.1981, 21.04.1982 and 19.06.1981.

9. Sale deed dated 25.06.1982 was executed by Sri Ram Chandra transferring, by sale, 192 sq.
yard land for consideration of Rs.25,000/- (i.e. Rs.182/- per sq. yard). Another sale deed dated
19.06.1981 relates to transfer of land by sale executed by Babu Lal, transfering 447 square yard
land for consideration of Rs.64,700/- (i.e. Rs.144.74 per sq. yard). The third sale deed dated
4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

613
20.06.1981 was cited by defendant-appellants wherein land in Khasra No.420, Village Gailana was
transferred by sale at the rate of Rs.60/- per sq. yard.

10. Trial Court observed, when there are different exemplars, the highest one should be
followed. But then relying on Apex Court's decision in AIR (1979) SC 869 Krishna Yachendra
Bahadurvaru Vs. The Special Land Acquisition Officer, City Improvement Trust Board,
Bangalore and others it has held that market value can be determined by taking average of various
exemplars and in that way average of above three exemplars comes to Rs.114/- per sq. yard.
However, in LAR No.281 of 1987 and 278 of 1987 his predecesors have already determined
market value at Rs.115/- and Rs.110/- per sq. yard respectively. In LAR No. 278 of 1987, land
acquired was in Khasra No. 347 Village Gailana. Part of land acquired vide notification dated
17.03/17.04.1982 was subject matter of LAR No.47 of 1988 and 48 of 1988 decided by impugned
award dated 16.04.1998, also falls in Khasra no.347, village Gailana. In these circumstnces, Court
below has determined market value at Rs.115/- per sq. yard.

11. Counsel for appellant contended that there was no justifiction for taking average of three
exemplars. Instead, Reference Court ought to have followed sale deed dated 20.06.1981, whereby
land in Khasra No.420 village Gailana was sold at the rate of Rs.60/- per sq. yard. It is submitted
that Court below has awarded excessive, unjust and unreasonable inflated rate for purpose of
compensation, and therefore, impugned award is liable to be set-aside.

12. Counsel for respondents, on the contrary submitted that Reference Court in fact, instead of
taking average, ought to have followed exemplar providing highest rate, but it has taken a lenient,
considerate and favourable view in favour of defendant-appellants. Hence no interference is called
for.

13. The sole question up for consideration in this appeal is "whether market value determined
by Reference Court at the rate of Rs.115/- per sp. yard, is in accordance with law."

14. The aforesaid question is to be examined in the light of admitted facts, that four exemplars
(three cited by claimant land owners and one by appellant) have been found reliable by Reference
Court. Exemplar cited by appellant is dated 20.06.1981 i.e. about ten months before the date of
notification under section 4 (1) of Act, 1894. Two exemplars cited by claimant land owners are
dated 21st April, 1982 and 25th June, 1981 i.e. almost immediately after notification under section 4
(1) of Act, 1894 was issued. Rates whereupon land was transferred under the aforesaid three
exemplars shows a large variance. Exemplar dated 20.06.1981 shows rate at Rs.60/- per sq. yard,
while exemplar cited by claimant dated 25.06.1982 showed rate at Rs.182/- per sq. yard as
exemplar dated 21.04.1982 showed before Reference Court.

15. Evidence, documentary and oral was adduced by the parties. On behalf of claimants, oral
evidence constituted deposition of Ashok Kumar and Ram Chandra Gupta, while appellant
examined Bhagwan Singh Lekhpal as DW-1. Documentary evidence adduced on behalf of
claimantrespondents included sale-deeds executed by Ram Chandra and Babu Lal, which were
614 INDIAN LAW REPORTS ALLAHABAD SERIES
filed in all three L.A.Rs. including L.A.R. No.41 of 1988. All documents were common but marked
as paper no.24-C and 25-C in L.A.R. No.41 of 1988, with which we are concerned, while some
documents were marked as paper No. 14-C, 15-C, 17-C and 18-C in L.A.R. No.47 of 1988 and
L.A.R. No. 48 of 1988.

16. For the present purposes, we are confining to documents marked in L.A.R. No. 41 of 1988,
since we are concerned with this matter alone.

17. Besides, copy of awards in L.A.R. Nos.269 of 1987, 271 of 1987 and 278 of 1987 were
also filed.

18. On behalf of appellant, sale-deed executed by one Ram Murti was filed and it was
informed to Reference Court that against awards in L.A.R. No. 271 of 1987 and 278 of 1987
appeals have been filed under section 54 of Act, 1894 which are pending in this Court.

19. The original claimants Ram Kishan died on 05.03.1987 and thereafter his legal heirs were
brought on record and same are now claimant-respondents before this Court.

20. Land was acquired by appellant for the purpose of establishing a 400 K.V. Sub-station and
construction of staff quarters. With regard to development conditions in the vicinity of acquired
land and other relevant factors, it has been noticed by Reference Court that acquired land is about
two furlong from old Abadi of Sarai Bega and there also existed residential colony Bhagya Nagar
and Dev Nagar, besides commercial and industrial establishments like Amar Ujala Press,
International Kiran Hotel, Udyog Nagar and Post Office. All these were existing prior to 1982. All
amenities like electricity, telephone etc. were also available all around the acquired land within 1
Km. radious of acquired land. There also exists English Medium School Saint Canraid, Transport
Nagar, residential colony Kailashpuri, Krishna Kunj Colony, Halwai Ki Bagichi, Mental Hospital,
Grave of Akbar at Sikandara, market etc. Abadi was also just about 3 to 4 furlong from acquired
land. Eighty feet road, left in master plan, also passes through acquired land. The land was plain
and about two and half feet above the road. It was suitable for constructing residential buildings,
industrial establishment or commercial units. These facts are not seriously disputed except the
distance. According to appellant, factories, School and Sikandara market etc. was about 3 Km.
from acquired land. Appellant also contended that it was being used for agricultural purposes and
did not dispute that it had potential for industrial, residential or commercial purposes.

21. Now, before coming to the findings recorded by Court below, we find it appropriate to
have a perusal of principles laid down in judicial precedents in the last several decades, which are
relevant and ought to be considered for determination of market value including factors stated
under section 23 of Act, 1894.

22. The basic principle which has to be followed by Reference Court for determining market
value of land, as if, the valuer i.e. Court, is a hypothetical purchaser, willing to purchase land from
open market and is prepared to pay a reasonable price, as on the crucial day, i.e., date of publication
4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

615
of notification under section 4 of the Act, 1894. The willingness of vendor to sell land on
reasonable price shall be presumed. Court, therefore, would corelate market value reflected in the
most comparable instance which provides the index of market value. Only genuine instances would
be taken into account. Sometimes even postnotification instances may be taken into account if they
are very proximate, genuine and acquisition itself has not motivated purchaser to pay a higher price
on account of the resultant improvement in development prospects. Proximity from time angle and
from situation angle would be relevant considerations to find out most comparable instances out of
the genuine instances. From identified instances which would provide index of market value, price
reflected therein may be taken as norm and thereafter to arrive at the true market value of land
under acquisition, suitable adjustment by plus and minus factors has to be made. In other words, a
balance sheet of plus and minus factors may be drawn and the relevant factors may be valued in
terms of price variation as a prudent purchaser would do. The market value of land under
acquisition has to be deduced by loading the price reflected in the instances taken for plus factors
and unloading for minus factors.

23. In Kausalya Devi Bogra and others v. Land Acquisition Officer, Aurangabad and
another, (1984) 2 SCC 324, about 150 acres of land was acquired. Owners of acquired land were in
two groups, i.e. Kaushalya Devi Bogra and Syed Yusufuddin Syed Ziauddin. First group, i.e.
Kaushalya Devi Bogra owned 74 acres, while Yusuffuddin owned about 15 acres of land. In these
facts of case where almost 60% of total acquired land was owned by two sets of owners and
exemplar of smaller property was relied, Court said that "when large tracts are acquired, the
transaction in respect of small properties do not offer a proper guideline. In certain other cases, for
determining market value of a large property on the basis of a sale transaction for smaller property,
a deduction should be given.

24. In Bhagwathula Samnna and others v. Special Tehsildar and Land Acquisition Officer,
Visakhapatnam Municipality (1991) 4 SCC 506, High Court applied deduction of 33.3%
observing, when large extent of land was acquired under housing scheme and exemplar is of small
land, reasonable deduction can be made. Following the decision in Tribeni Devi v. Collector,
Ranchi, AIR 1972 SC 1417, it was argued before Apex Court that High Court wrongly applied
deduction. Acquired land was fully developed and eminently suitable for being used as house sites
and, therefore, there was no justification for making any deduction. The land was acquired for
formation of road, High Court applied deduction on the ground that expenses have to be incurred
for development, which was not justified. Aforesaid submission was considered by Supreme Court
in the light of facts of that case. In para 7 and 11 Court said: -

"7. In awarding compensation in acquisition proceedings, the Court has necessarily to
determine the market value of the land as on the date of the relevant notification. It is useful to
consider the value paid for similar land at the material time under genuine transactions. The
market value envisages the price which a willing purchaser may pay under bona fide transfer to a
willing seller. The land value can differ depending upon the extent and nature of the land sold. A
fully developed small plot in an important locality may fetch a higher value than a larger area in
an undeveloped condition and situated in a remote locality. By comparing the price shown in the
616 INDIAN LAW REPORTS ALLAHABAD SERIES
transactions all variables have to be taken into consideration. The transaction in regard to
smaller property cannot, therefore, be taken as a real basis for fixing the compensation for
larger tracts of property. In fixing the market value of a large property on the basis of a sale
transaction for smaller property, generally a deduction is given taking into consideration the
expenses required for development of the larger tract to make smaller plots within that area in
order to compare with the small plots dealt with under the sale transaction.

11. The principle of deduction in the land value covered by the comparable sale is thus
adopted in order to arrive at the market value of the acquired land. In applying the principle it is
necessary to consider all relevant facts. It is not the extent of the area covered under the
acquisition, the only relevant factor. Even in the vast area there may be land which is fully
developed having all amenities and situated in an advantageous position. If smaller area within the
large tract is already and suitable for building purposes and have in its vicinity roads, drainage,
electricity, communications etc. then the principle of deduction simply for the reasons that it is part
of the large tract acquired, may not be justified."

25. Court further held that proposition that large area of land cannot possibly fetch a price at
the same rate at which small plots are sold is not absolute proposition and in given circumstances it
would be permissible to take into account price fetched by small plots of land. If larger tract of
land, because of advantageous position, is capable of being used for the purpose for which smaller
plots are used and is also situated in a developed area with little or no requirement of further
development, the principle of deduction of value for the purposes of comparison is not warranted.
Having said so, Court in para 13 held as under: -

"13. With regard to the nature of the plots involved in these two cases, it has been
satisfactorily shown on the evidence on record that the land has facilities of road and other
amenities and is adjacent to a developed colony and in such circumstances it is possible to utilize
the entire area in question as house sites. In respect of the land acquired for the road, the same
advantages are available and it did not require any further development. We are, therefore, of the
view that the High Court has erred in applying the principle of deduction and reducing the fair
market value of land from Rs.10/- pr square yard to Rs.6.50 paise pr square yard. In our opinion,
no such deduction is justified in the facts and circumstances of these cases."

26. The size of land would constitute an important factor to determine market value. It cannot
be doubted that small size plot may attract a large number of persons being within their reach
which will not be possible in respect of large block of land wherein incumbent will have to incur
extra liability in preparing a lay out and carving out roads, leaving open space, plotting out smaller
plots, waiting for purchasers etc. Courts have said that in such matters, factors can be discounted by
making deduction by way of an allowance at an appropriate rate ranging between 20% to 50%, to
account for land, required to be set apart for carving out road etc. and for plotting out small plots.

27. The concept of smaller and larger plots should be looked into not only from the angle as to
what area has been acquired, but also the number of land holders and size of their plots.
4 All. U.P. State Electricity Board Vs Smt. Sushila Devi & Ors.

617

28. When we talk of concept of prudent seller and prudent buyer, we cannot ignore the fact
that in the category of prudent seller, the individual land holder will come. It is the area of his
holding which will be relevant for him and not that of actual, total and collective large area, which
is sought to be acquired.

29. In V.M. Salgoacar & brother Ltd. vs. Union of India (1995) 2 S.C.C. 302, land
acquired by notification dated 06.07.1970 in village Chicalim near Goa Airport belonged to a
single owner. Court observed, when land is sold out in smaller plots, there may be a rising trend in
the market, of fetching higher price in comparison to the plot which are much higher in size.
Having said so Court further said " though the small plots ipso facto may not form the basis per se
to determine the compensation, they would provide foundation for determining the market value.
On its basis, giving proper deduction, the market value ought to be determined".

30. Again in Shakuntalabai (Smt.) and others vs. State of Maharashtra, 1996 (2) S.C.C
152, 20 acres of land in Akola town was sought to be acquired by notification published on
11.08.1965 under section 4(1) of Act, 1894 which was also owned by a single person. It is in this
context, Court said, "the Reference Court committed manifest error in determining compensation
on the basis of sq. ft. When land of an extent of 20 acres is offered for sale in an open market, no
willing and prudent purchaser would come forward to purchase that vast extent of land on sq. ft.
basis. Therefore, the Reference Court has to consider valuation sitting on the armchair of a willing
prudent hypothetical vendee and to put a question to itself whether in given circumstances, he
would agree to purchase the land on sq. ft. basis. No feat of imagination is necessary to reach the
conclusion. The answer is obviously "no".

31. In order to determine market value when exemplars are adduced, normally it is found that
exemplars of small land, and that too, in developed area after plotting and development are relied.
Sometimes a single exemplar is available and sometimes more than that. It is not the number of
exemplars which is important and would determine the question whether burden has been
discharged by claimants that offer of compensation made by Collector is inadequate and he is
entitled to higher compensation but it is the genuity, authenticity and creditworthiness of the
documents. If the document is found most suitable and appropriate for determining compensation
in respect of acquired land even a single instance/exemplar cited by landowner may be relied and it
can be said that claimant-landowner has succeeded in discharging his burden.

32. In Gafar vs. Moradabad Development Authority, 2007 (7) SCC 614, the Court
observed that burden is on the claimants to establish that amount awarded to them by Collector is
inadequate. That burden has to be discharged by claimants and only if initial burden in that behalf
is discharged, the burden would shift to State to justify the compensation offered by SLAO.

33. Further, when there are more than one exemplar, one, which provides highest rate, has to
be followed. In Satish Vs. State of U.P., 2009 (14) SCC 758, Court after relying on its earlier
decision in Viluben Jhalenjar Contractor (Dead) by Lrs. Vs. State of Gujarat, 2005 (4) SCC
789, said :
618 INDIAN LAW REPORTS ALLAHABAD SERIES

"...when comparable exemplars are brought on record, the one carrying the highest
market value amongst them may be followed."

Deductions:

34. Whenever the area of acquired land is larger than the area of land which is subject matter
of the exemplar and smaller in size, Courts have held the same admissible subject to appropriate
deduction.

35. In Basavva (Smt.) & Others Vs. Special Land Acquisition Officer and others (supra),
notification under Section 4(1) of Act, 1894 proposing to acquire 194 acres of land for industrial
development near Dharwad was published on 30.10.1981. Collector made award dated 22.8.1985
offering compensation at the rate between Rs. 8,000/- to Rs.8,080/-, which was enhanced by
Reference Court vide award dated 11.10.1988 to Rs.1.72/- per square fit (Rs.74,953/- per acre). On
appeal High Court reduced compensation to Rs.56,000/- per acre. The appeal preferred by State
Government against High Court's judgment was dismissed.

36. In the appeals preferred by landowners, it was contended on behalf of landowners that
deduction towards development upto 53% was reasonable but High Court in applying 65%
deduction has erred in law. Court observed, while determining compensation, at first instance, it
has to be seen whether sales relating to smaller pieces of land are genuine and reliable; and,
whether they are in respect of comparable land. If it is found that sales are genuine and reliable and
lands have comparable features, sufficient deduction should be made to arrive at a just and fair
market value of large tracts of land. The time lag for real development and waiting period for
development are also relevant for determination of just and comparable compensation. For
deduction of development charges, nature of development, conditions and nature of land, the land
required to be set apart under building rules for roads, sewerage, electricity, parks, water etc. and
all other relevant circumstances involved are to be considered.

37. The above principles were also laid down in D. Vasundara Devi Vs. Revenue Divisional
Officer, (1995) 5 SCC 426 which was relied by Court in Basavva (Smt.) & Others Vs. Special
Land Acquisition Officer and others (supra). It then found that exemplar sale deed was
dependable but in respect of a small plot of land situated at a distance of more than 1 k.m. It also
found that the land in area is not developed and there is no development towards that area. It was
also noticed that it would take years for development in those lands though lands was capable of
user for nonagricultural purpose. It is in this background, Court applied 53% deduction for
development. It further held that since a long time would take for development and for that purpose
additional 12% deduction was allowed making total as 65% deduction.

38. In Land Acquisition Officer, Kammarapally Village Vs. Nookala Rajamallu and
others, AIR 2004 SC 1031 and said as under :
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"It has been held that the deduction can be made where the land is acquired for
residential and commercial purpose with regard to roads and civic amenities, expenses of
development of the sites by laying out roads, drains, sewers, water and electricity lines, and the
interest on the outlays for the period of deferment of the realization of the price, the profits on the
venture etc. So far as this Court is concerned, it has discarded the deduction policy on various
grounds. One of the grounds is that if the State or its authority acquires the land for the purpose of
selling it to the ultimate purchasers upon making available facilities, they normally recover the
price inclusive of common facilities, therefore, a Government or its authority cannot be doubly
benefited either by deductions from the payment of compensation in one hand and by collections of
price of such development from the ultimate purchasers on the other hand. It also to be seen that no
law prescribes deduction in paying compensation. It is to be remembered that deduction is an
exception not the rule."

39. In Udho Dass Vs. State of Haryana and Ors. 2010 (12) SCC 51, by notification dated
17.5.1990, 162.5 acres of land in village Patti Musalmanan was sought to be acquired for the
purposes of housing project in Sonepat (Haryana). Collector determined compensation at the rate of
Rs.Two Lacs per acre, but it was enhanced by Additional District Judge on reference under Section
18 of Act, 1894 to Rs.125/- per square yard for the land behind E.C.E. Factory, situated away, and
on the left side of the Sonepat Bahalgarh road, and Rs.150/- per square yard on the right side
abutting the road. Reference Court held that land on the left side did not abut the road and it had
therefore less potential value vis-a-vis land on the right side, which touched the road. In appeal
High Court enhanced compensation from Rs.125/- to Rs.135/- and from Rs.150/- to Rs.160/-. Land
owner came in appeal before Supreme Court claiming compensation at Rs.200/- per square yard.
Court, as a matter of fact, found in that case that even compensation, which was determined by
Collector or Reference Court was not paid to land owners immediately, but payment spread over
for two decades. Court said if compensation payment continued over a period of almost 20 years,
potential of land acquired from land owners must also be adjudged keeping in view development in
the area, spread over the period of 20 years if evidence so permits and cannot be limited to near
future alone. Court observed that this broad principle would be applicable where possession of land
has been taken pursuant to proceedings under an acquiring Act and not to those cases where land is
already in possession of Government and is subsequently acquired.

40. The Court also observed that in case where compensation is based exclusively on sale
instances, it creates some time a disadvantageous position to land owners, whose land is forcibly
acquired. There is wide spread tendency to undervalue sale prices. Circle rates determined by
Collector only marginally corrected anomaly, as these rates are also abnormally low and do not
reflect true value. These things cause serious disadvantage to land owners, since they have no
control over price on which some other land owners sell their property, which is often the basis for
compensation payable to land owners, whose land are forcibly acquired. Court also held that there
cannot be application of belting system in that case. Normally, land along side the road has more
value vis-Ã -vis the land away from, but that would have been the case where agricultural land,
which have no potential for urbanization or commercialization had been acquired and in such a
case, belting system is permissible.
620 INDIAN LAW REPORTS ALLAHABAD SERIES

41. In Udho Dass (supra) Court held that land was acquired in 1990. It had great potential and
had been completely urbanized as huge residential complexes, industrial area and estates, huge
education city have come up in the last 10 or 15 years. It further held as under: -

"Moreover, insofar as land which is to be used for residential purposes is concerned, a
plot away from the main road is often of more value as the noise and the air pollution alongside the
arterial roads is almost unbearable. It also significant that the land of Jamalpur Kalan was
touching the rear side of the ECE factory and the High Court had granted compensation of
Rs.250/- per square yard for the acquisition of the year 1992. We have also seen the site plan to
satisfy ourselves and find that the land acquired from Jamalpur Kalan and the present land share a
common boundary behind the ECE factory. The belting system in the facts of the present case
would thus not be permissible."

42. In Anjani Molu Desai v. State of Goa and another, (2010) 13 SCC 710, a very large tract
comprising 3,65,375 square meter of land in Balli village, Quepem Taulak, Goa was acquired for
the purposes of Konkan Railway for laying down broad gauge line. Acquisition notification was
issued on 30.7.1991. Appellant Anjani Molu Desai owned 60,343 square meter of land in Survey
No.45/1, 45/5, 45/6, 51/1 and 51/2. Collector awarded compensation at the rate of Rs.12/- per
square meter for orchard lands and Rs.6/- per square meter for paddy lands. Reference Court and
High Court affirmed said valuation by rejecting reference and appeal. Collector determined market
value relying upon two exemplars and taking an average thereof. First exemplar sale deed dated
30.8.1989 relates to 2055 square meters of land situated at the distance of 200 meter away from
acquired land and sold at the rate of Rs.43.80 per square meter. Collector deducted 45% from sale
price towards "development cost" i.e. for providing approach road and open spaces, expenses
relating to development work, conversion charge etc. This reduced price from Rs.24/- per square
meter. Since sale deed was of August, 1989 and acquisition commenced in 1991, thus there being
gap of 20 months, Collector provided an increase at the rate of 14.5% per annum and thus, arrived
at Rs.32.24 per square meter. Exemplar sale deed dated 30.1.1990 relates sale of 7600 square
meters of land at the distance of one kilometer from acquired land sale at Rs.3/per square meter.
Here also, gap was of 18 months, thus 14.5% increase was allowed, which made sale price at
Rs.3.82 per square meter. Collector then averaged two rates derived from two sale deeds and
determined Rs.18/- per square meter (Rs.32.24 + Rs.3.82/2). This method adopted by Collector was
not approved by Supreme Court. It was held, where there are more than one exemplar, which could
be considered for determining market value, the one providing higher rate should be accepted and
followed. It is only in exceptional cases where there are several sales of similar land, whose prices
range in a narrow bandwidth, the average can be taken as representing market value. But where
values disclosed in respect of two sales are markedly different, it can only lead to an inference that
they are with reference to dissimilar land or that lower value sale is on account of under valuation
or other price depressing reasons. In respect of orchard land, therefore, Court followed exemplar
sale deed dated 30.8.1989 providing sale price at Rs.43.80 per square meter and applying
appreciation of 14.5% and odd per annum, Court determined market value at Rs.57.50 and to that
extent claim of appellant Anjani Molu Dessai was upheld. Here also proposition laid down by
Apex Court is not exceptional but depends on the facts of individual cases.
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43. In Nelson Fernandes and others v. Special Land Acquisition Officer, South Goa and
others, AIR 2007 SC 1414, land was acquired for new broad gauge line of Konkan Railway.
Acquisition notification under Section 4 Act, 1894 was issued in August, 1994. SLAO made award
of Rs.4/- per square meter. In reference, District and Sessions Judge relying on two sale deeds
dated 13.12.1993 enhanced compensation at the rate of Rs.192/- per square meter. Sale price in
exemplar sale deed was Rs.449/- per square meter. Land owners as well as acquiring body both
preferred appeals. Land owner's appeal was rejected while acquiring body's appeal was allowed to
the extent that market value was reduced to Rs.38/- per square meter. Supreme Court found that
compensation awarded by High Court by rejecting valuer report is not based on cogent material and
not supported by cogent reasons. The injury, which land owner, was likely to sustain due to loss of
his future earning from selling land as also damage already suffered due to diminution of profit of
land between time of publication of notice and time taken by Collector in possession was not
considered. Since land was acquired for the purposes of laying down railway line, no development
was to be done. There existed civil amenities like, school, police station, water supply, bank,
electricity, highway, transport, petrol pump, industries, telecommunication and other business.
Hence it determined compensation at the rate of Rs.250/- per square meter, but then applied 20%
deduction, which brings rate at Rs.200/- per square meter.

44. In Special Land Acquisition Office v. Karigowdo and others, 2010 (5) SCC 708, total
acquired land was 146 acres and 7 guntas. It was owned by 419 claimants owners, whose area vary
from 2 to 48 guntas. Acquired land was situated in village Sanaba, Chinakavali Hobli,
Pandavapura.