# LAL CHAND v. UNION OF INDIA & ANOTHER

- **Citation:** [2009] 13 S.C.R. 622
- **Court:** Supreme Court of India
- **Decided:** 2009-08-12
- **Case number:** Civil Appeal No. 4945 of 2006
- **Bench:** R.V. ffAVEENDRAN, B. Sudershan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lal-chand-v-union-of-india-another-25146
- **Pages:** 42

## Headnote

Land Acquisition Act, 1894:
't
c
Sections 4(1 ), 23, 25 - Acquisition of lands in Rithala
village on the outskirts of Delhi -
Compensation -
Determination of - ODA plots in the acquired lands - Rates
of allotment shown by DOA in its Brochure for the Scheme in
that area - Cannot form the basis - Criteria for compensation
...
D and acceptance of sale deeds therefore - Discussed -
Compensation enhanced - Evidence Act, 1872 - Stamp Act,
\_
S.47A.
Sections 51, 51 A - Scope of - Discussed.
E
The appeals relate to determination of market value
in regard to lands situated at village Rithala on the
outskirts of Delhi acquired for different purposes under
four different Notifications.
F
The awards of the Reference Court were. challenged
before the High Court and it awarded Rs.67,536/- per
bigha in regard to the first three acquisitions and Rs.73,
584/- per bigha in respect of the last acquisition, relying
upon the allotment rates of Delhi Development Authority
G
for plots shown in its Brochure issued in respect of
Rohini Residential Scheme (Phase-I) formed by acquiring
part of Rithala village and surrounding villages.
f-
..
On appeal by the claimants as also the Union of
India, the Court set aside the judgment of the High Court
H
622
LAL CHAND v. UNION OF INDIA & ANR.
623
and remanded the matter back to it for determination of A
the market value afresh. It was observed that the lease
premium in respect of fully developed plots (which was
given in the DOA Brochure) could not be the basis for
determining the freehold market value of undeveloped
land, that the sale deeds pertaining to the acquired lands
B
or nearby lands would be the most relevant piece of
evidence, and that the claim of the land owners that the
~
value should be determined on the basis of acquisition
of the year 1961 in the same village by increasing the
award price of Rs.7000/- per bigha at the rate of 12% p.a. c
for 20 years was unacceptable.
The High Court after hearing the parties and
accepting two documents of sale for Rs.19,000/- and
Rs.35,000/- per bigha, taking an average, determined the
value at Rs.27,000/- in respect of the land covered by the
D
last Notification and at Rs.25,000/- in respect of the lands
covered by the first three _Notifications, on the ground that
the acquisitions were made about 10 to 11 months prior
to the last Notification. Hence the appeals.
Partly allowing the appeals of the claimants for
increase and dismissing the appeals filed by DOA for
reduction in compensation, the Court
E
HELD: 1. The allotment rates of plots adopted by
Development Authorities like DOA cannot form the basis
F
for award of compensation for acquisition of
undeveloped lands for several reasons. Firstly market
value has to be determined with reference to large tracts
of undeveloped agricultural lands in a rural area, whereas
the allotment rates of development authorities are with
G
reference to small plots in a developed lay out falling
within Urban areas. Secondly, DOA and other statutory
authorities adopt different rates for plots in the same area
with reference to the economic capacity of the buyer,
H
624 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A making it difficult to ascertain the real market value,
·~
whereas market value determination for acquisitions is
uniform and does not depend upon the economic status
I
of the land loser. Thirdly_, the Court is concerned with
market value of freehold land, whereas the allotment
8 "rates" in the ODA Brochure refer to the initial premium
payable on allotment of plots on leasehold basis. [Para
7] [639-A-D]
Ranvir Singh v. Union of India 2005 (12) SCC 59 and
c Cement Corporation of India Ltd. V. Purya 2004 (8) SCC 270,
referred to.
2.1. As contrasted from the assessment of market
value contained in non-statutory Basic Value Registers,
the position may be different, where the guideline market
~!
D values are determined by Expert Committees constituted
under the State Stamp Law, by following the detailed
*
procedure laid

## Text

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[2009] 13 (ADDL.) S.C.R. 622
A
LAL CHAND
v.
UNION OF INDIA & ANOTHER
(Civil Appeal No. 4945 of 2006)
B
AUGUST 12, 2009
[R.V. ffAVEENDRAN AND B. SUDERSHAN REDDY, JJ.]
Land Acquisition Act, 1894:
't
c
Sections 4(1 ), 23, 25 - Acquisition of lands in Rithala
village on the outskirts of Delhi -
Compensation -
Determination of - ODA plots in the acquired lands - Rates
of allotment shown by DOA in its Brochure for the Scheme in
that area - Cannot form the basis - Criteria for compensation
...
D and acceptance of sale deeds therefore - Discussed -
Compensation enhanced - Evidence Act, 1872 - Stamp Act,
\_
S.47A.
Sections 51, 51 A - Scope of - Discussed.
E
The appeals relate to determination of market value
in regard to lands situated at village Rithala on the
outskirts of Delhi acquired for different purposes under
four different Notifications.
F
The awards of the Reference Court were. challenged
before the High Court and it awarded Rs.67,536/- per
bigha in regard to the first three acquisitions and Rs.73,
584/- per bigha in respect of the last acquisition, relying
upon the allotment rates of Delhi Development Authority
G
for plots shown in its Brochure issued in respect of
Rohini Residential Scheme (Phase-I) formed by acquiring
part of Rithala village and surrounding villages.
f-
..
On appeal by the claimants as also the Union of
India, the Court set aside the judgment of the High Court
H
622
LAL CHAND v. UNION OF INDIA & ANR.
623
and remanded the matter back to it for determination of A
the market value afresh. It was observed that the lease
premium in respect of fully developed plots (which was
given in the DOA Brochure) could not be the basis for
determining the freehold market value of undeveloped
land, that the sale deeds pertaining to the acquired lands
B
or nearby lands would be the most relevant piece of
evidence, and that the claim of the land owners that the
~
value should be determined on the basis of acquisition
of the year 1961 in the same village by increasing the
award price of Rs.7000/- per bigha at the rate of 12% p.a. c
for 20 years was unacceptable.
The High Court after hearing the parties and
accepting two documents of sale for Rs.19,000/- and
Rs.35,000/- per bigha, taking an average, determined the
value at Rs.27,000/- in respect of the land covered by the
D
last Notification and at Rs.25,000/- in respect of the lands
covered by the first three _Notifications, on the ground that
the acquisitions were made about 10 to 11 months prior
to the last Notification. Hence the appeals.
Partly allowing the appeals of the claimants for
increase and dismissing the appeals filed by DOA for
reduction in compensation, the Court
E
HELD: 1. The allotment rates of plots adopted by
Development Authorities like DOA cannot form the basis
F
for award of compensation for acquisition of
undeveloped lands for several reasons. Firstly market
value has to be determined with reference to large tracts
of undeveloped agricultural lands in a rural area, whereas
the allotment rates of development authorities are with
G
reference to small plots in a developed lay out falling
within Urban areas. Secondly, DOA and other statutory
authorities adopt different rates for plots in the same area
with reference to the economic capacity of the buyer,
H
624 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A making it difficult to ascertain the real market value,
·~
whereas market value determination for acquisitions is
uniform and does not depend upon the economic status
I
of the land loser. Thirdly_, the Court is concerned with
market value of freehold land, whereas the allotment
8 "rates" in the ODA Brochure refer to the initial premium
payable on allotment of plots on leasehold basis. [Para
7] [639-A-D]
Ranvir Singh v. Union of India 2005 (12) SCC 59 and
c Cement Corporation of India Ltd. V. Purya 2004 (8) SCC 270,
referred to.
2.1. As contrasted from the assessment of market
value contained in non-statutory Basic Value Registers,
the position may be different, where the guideline market
~!
D values are determined by Expert Committees constituted
under the State Stamp Law, by following the detailed
*
procedure laid down under the relevant rules, and are
published in the State Gazette. Such state stamp Acts
and the Rules thereunder, provide for scientific and
E methodical assessment of market value in different areas
by Expert Committees. These statute_s provide that such
committees will be constituted with officers from the
Department of Revenue, Public Works, Survey &
Settlement, Local Authority and an expert in the field of
~
F valuation of properties, with the sub-registrar of the subregistration district as the member secretary. They also
provide for different methods of valuation for lands, plots,
houses and other buildings. They require determination
of the market value of agricultural lands by classifying
G them with reference to soil, rate of revenue assessment,
value of lands in the vicinity and locality, nature of crop
yield for specified number of years, and situation (with
;I.
...
reference to roads, markets etc.). The rates assessed by
the committee are required to be published inviting
H
LAL CHAND v. UNION OF INDIA & ANR.
625
objections/suggestions from the members of public. A
After considering such objections/suggestions, the final
rates are published in the Gazette. Such published rates
are revised and updated periodically. When the guideline
market values, that is, minimum rates for registration of
properties, are so evaluated and determined by expert B
committees as per statutory procedure, there is no
reason why such rates should not be a relevant piece of
-J
evidence for determination of market value. One of the
recognised methods for determination of market value is
with reference to opinion of experts. The estimation of c
market value by such statutorily constituted expert
committees, as expert evidence can therefore form the
basis for determining the market value in land acquisition
cases, as a relevant piece of evidence. It will be however
...
open to either party to place evidence to dislodge the D
-J
presumption that may flow from such guideline market
value. The guideline market value can be a relevant piece
of evidence only if they are assessed by statutorily
appointed Expert Committees, in accordance with the
prescribed assessment procedure (either street-wise, or E
road-wise, or area-wise, or village-wise) and finalised after
inviting objections and published in the Gazette. [Para 16]
[646-C-H; 647-A-D]
2.2. In the instant case, there is nothing to show the
circle rates have been determined by any statutorily F
appointed committee by adopting scientific basis. Hence,
the principle in Jawajee Naganatham will apply and they
will not be of any assistance for determining the market
value. Further, they do not purport to be the market value
for lands in rural areas on the outskirts of Delhi, nor the G
-I
market values relating to Rithala village. The circle rates
~
relate to urban/city areas in Delhi and are wholly
irrelevant. [Para 17] [647 -E-G]
H
626
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A
Jawajee Nagnatham v. Revenue Divisional Officer 1994
(4) SCC 595; Land Acquisition Officer, E/uru vs. Jasti Rohini
-~
1995 (1) SCC 717; U.P.Jal Nigam, Lucknow through its
Chairman vs Mis. Katra Properties (P) Ltd. Lucknow 1996 (3)
SCC 124; Krishi Utpadan Mandi Samiti Sahaswan v .. Bipin
B Kumar 2004 (2) SCC 283; Ramesh Chand Bansal v. District
Magistrate/Collector, Ghaziabad 1999 (5) SCC 62 and R. Sai
Bharathi v. J. Jaya/alitha 2004 (2) SCC 9, referred to.
3. Even if the relied upon transaction is only two to
~
c three years prior to the acquisition, court should, before
adopting a standard escalation, satisfy that there were no
adverse circumstances. For example, if the acquisition is
of the year 2009, it may not be possible to determine the
market value, based on the 2007 or 2008 prices, by
D
providing an increase of 12% or 15% per year, as the·
~
newspaper reports show that the price of immovable
properties in most areas of the country came down by
~
more than 40% to 50% from the 2007 rates. Caution is
therefore necessary before increasing the price with
reference to the old transactions. The award made in
E
regard to a 1961 acquisition will not be of any use for
determining the market value for a 1981 acquisition. [Para
19] [649-A-C]
General Manager, Oil & Natural Gas Corporation Ltd. v.
~·
F
Rameshbhai Jivanbhai Patel 2008 (11) SCALE 637, referred
to.
· 4. The reasons assigned by the High Court for
:
rejecting Ex. A2, 3, A 10 to A 13 and Ex R3 to R7 are not
G
sound. All ·the sale deeds related to Rithala village and
were of the year of acquisition, namely 1981. They were
prior to the acquisition under notification dated
\--
31.12.1981, which is the largest of the four acquisitions.
...
..
The difficulty arises because of the marked difference in
value, disclosed by the sale deeds exhibited by the
H
LAL CHAND v. UNION OF INDIA & ANR.
627
respondents (Ex.R3 to R7) and the sale deeds exhibited A
•
by the appellants (Ex.A1 to A3 and A10 to A13). The sale
deeds produced by the respondents (Ex. R3 to R7) which
are of the period between 9.2.1981 to 28.11.1981 disclose
a value of Rs.9028 to Rs.10791 per bigha, that is an
average of Rs.10000 per bigha. On the other hand the sale
B
deeds, produced by the appellant (Ex. A1 to A3 and A10
to A13) which are the period 9.4.1981 to 1.12.1981 show
market values of Rs.35000/-, Rs.49000/- and Rs.68371/- per
'""'
bigha, the average being Rs.50790/- per bigha7 The
variation between the sale deeds relied upon by the c
respondents and appellants is as much as 400%. [Para
24] [652-F-H; 653-A-B]
5.1. Courts may accept and act upon certified copies
(
of sale deeds exhibited without examining the vendor or
D
vendee. They may not be relied upon if there is other
-#
acceptable evidence which throw a doubt about the
correctness of the sale price shown therein. [Para 26]
(655-G]
5.2. The evidence to reject an exemplar sale deed as
E
not relevant, may be either extrinsic or intrinsic. The
statement of a witness describing the advantageous or
disadvantageous features of the land which is the
subject matter of such document will be extrinsic
evidence. An absurdly low or high freakish value when
F
compared to the prevailing price disclosed by other
.,
contemporaneous transactions may also be an extrinsic
evidence. Where the sale deed recites the financial
difficulties of the vendor and the urgent need to find
~
money as reasons for the sale, that will be an intrinsic
"'"""-..
evidence of a distress sale. Therefore, though a certified G
<
copy of a sale deed may be received in evidence and
.
~
exhibited even without examining the vendor and
vendee, and accepted as proof of the transaction to
which it relates, the courts have the discretion to rely
H
628
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A upon it or reject it as unreliable or unacceptable for
reasons to be recorded. [Para 27] [655-H; 656-A-C]
J.
5.3. What Narsaiah and Cement Corporation of India
clarified was that a certified copy of a sale deed could be
B marked as an exhibit and its contents may be relied upon
as evidence of the sale transaction, even without
examining either the vendor or the vendee, in view of the
enabling provision in Section 5~ of the LA Act. If the
acquisition is in regard to a large area of agricultural
~
c lands in a village, and the exemplar sale deed is also in
respect of an agricultural land in the same village, it may
be possible to rely upon the sate deed as prima facie
evidence of the prevailing market value, even if such land
is at the other end of the village at a distance of one or
D
two kilometres. But the same may not be the position
where the acquisition relates to plots in a town or city
~
where every locality or road has a different value. [Para "
28] [656-0-F]
5.4. There would be lesser likelihood of rejection of
E a sale deed exhibited to prove the market value, if some
witness speaks about the property which is the subject
matter of the exemplar sale deed and explains its
situation, potential, as also about the similarities or
dissimilarities with the acquired land. The distance
F between the two properties, the nature and situation of
the property, proximity to the village or a road and several
other factors may all be relevant in determining the market
I
value. Mere production of some exemplar deeds without
t
'connecting' the subject matter of the instrument, to the
G acquired lands will be of little assistance in determining
.
..
the market·value. Section 51A of the LA Act only exempts
_....,.,
the production of the original sale deed and examination
of the vendor or vendee. [Para 29] [657 -C-E]
}.-
~
Cement Corporation of India v. Purya 2004 (8) SCC 270
H and Land Acquisition Officer and Manda/ Revenue Officer vs.
LAL CHAND v. UNION OF INDIA & ANR.
629
Narasaiah 2001 (3) SCC 530, relied on.
A
6.1 When the respondents rely upon certain sale
deeds ~justify the value determined by the Land
Acquisition Collector or to show that the market value
was less than what is claimed by the claimants, and if the
8
claimants produce satisfactory evidence (which may be
either with referenc" to contemporaneous sale deeds or
awards made in respect of acquisition of comparable
land or by other acceptable evidence) to show that the
market value was much higher, the sale deed relied upon
C
by the respondents showing a lesser value may be
inferred to be undervalued; or not showing the true value.
Such deeds have to be excluded from consideration as
being unreliable evidence. A document which is found to
be undervalued cannot be used as evidence. [Para 30]
[657-F-H]
D
-
~
6.2. In some recent cases, where a court accepts the
sale deed exhibited by the claimants as the basis for
ascertaining the market value. There has been a
disturbing trend of courts accepting a contention of the
E
claimants that the general tendency of members of public
is not to show the real value, but show a lesser value to
avoid tax/stamp duty and therefore the sale deeds
produced and relied on by them, should be assumed to
+
be under valued. On such assumption, some courts have
F
been adding some fancied percentage to the value
shown by the sale deeds to arrive at what they consider
to be 'realistic market value'. The addition so made may
vary from 10% to 100% depending upon the whims,
fancies, and the perception of the Judge as to what is the G
general extent of suppression of the price in sale deeds.
Such increase, in the market value disclosed by the sale
deeds, on the assumption that all sale deeds show a
'depressed' market value instead of the real value, is
impermissible. The Court can either accept the document
H
630
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
•
A as showing the prevailing market value, in which event
it has to be acted upon. Or the Court may find a
document to be undervalued in which it should be
rejected straightaway as not reliable. There is no third way
of accepting a document, by adding to the market value
B disclosed by the document, some percentage to off-set
the under-valuation. There is no legal basis to proceed
on a general assumption that parties, without exception,
fail to reflect the true consideration in the sale deeds, that
there is always underval.uation or suppression of the true
c price and that consequently, all sale deeds reflect a
depressed value and not the real market value a.nd
therefore, some percentage should be added to arrive at
the real value. Such a course also amounts to branding
all vendors and purchasers as dishonest persons
D without any evidence and without hearing them. It
I
ignore,s the fact that government has fixed minimum
guideline values and whenever a registering authority is
,\_~
'
of the view that a sale deed is undervalued, proceedings
\
are initiated for determination of the true market value. It
..
E also ignores the fact that a large number of sale deeds
are accepted by the registering authorities as disclosing
the current market value. [Para 31] [658-A-H; 659-A]
7.1. The existence of several other sale deeds
showing a much higher value and the fact that the Land
t
F Acquisition Collector chose to award a higher rate in
regard to some of the acquired lands, leads to an
inevitable inference that Ex.R3 to R7 were either
undervalued or were distress sales. Whatever be the
reason, they are liable to be excluded from consideration.
G The sale transactions under Ex. A1 to A3 and A10 to A13
relate to plots used for residential or other nonagricultural purposes. Though these sale deeds describe
the lands sold as agricultural lands, having regard to the
prevailing land reforms laws, the size of the plots show
H
LAL CHAND v. UNION OF INDIA & ANR.
631
that they were not used for agricultural purposes. It is A
"
evident the plots which were the subject matter of these
I
sale deeds were sold as semi-urban land for residential
'
or other non-residential purposes. There is no evidence
•
or material to show that they were nominal or sham
documents intended to create evidence of a higher 8
market value. The variation in price between Rs.35000 to
Rs.68571 may possibly be on account of several factors.
It is possible that some plots were nearer while others
were far away from roads or developed areas. In the
absence of the evidence of vendors/vendees of these c
documents, it is proposed to take average of these
transactions, which is approximately Rs.50,790/- per
bigha, as the market value of small plots sold for
residential or non-agricultural purposes. [Paras 32 and
33] [659-8-H; 660-A]
D
'i
7 .2. The evidence shows that the acquired lands
were at the relevant time (1981) in a rural area on the
"-
outskirts of Delhi, with access to roads and services
-.
nearby. In fact the Municipal Corporation of Delhi, within
a few months after the acquisition, issued a notification E
dated 23/4/1982, under section 507(a) of Delhi Municipal
Corporation Act, 1957 declaring that Rithala in the
northern zone of Delhi shall cease to be a rural area. The
t
appellants have also let in evidence to show that the
acquired lands were situated in an area having a potential F
for development for residential use. The policy resolution
dated 27.12.1980 of Delhi Development Authority in
regard to development of Zones H7 and HS (Rohini
Scheme) in North-West Delhi shows that the area was
earmarked for fast urban development. Some facilities like G
roads, water, electricity had reached the area in a limited
""::
~
manner. Therefore, the appropriate deduction towards
development, needs to be only 40% instead of the higher
standard percentage of 60% to 70%. [Para 34] [660-8-E]
H
632
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A
7.3. On deduction of 40% from Rs.50790/- per bigha
which the market value of small plots, the market value
for the large tracts of lands acquired in December, 1981
would be Rs.30,474/- (rounded off to Rs.30500/-) per
bigha. As the earlier three acquisitions were of the same
B year, but were in February and March (that is on
13.2.1981, 20.2.1981 and 13.3.1981) which are about 10 to
11 months earlier, the compensation in regard to the
three earlier acquisitions is determined as Rs.28000/- per
bigha. To this extent, the award of the High Court
c requires to be modified. [Para 35] [660-F-G]
8.1. It is now well settled that sale transactions or
awards relating to neighbouring village will not be relied
on
when
acceptable
evidence
by
way
of
contemporaneous sale transactions or awards are
D available in regard to the very village where the
acquisition took place. Where
there are
no
contemporaneous sale deeds or awards relating to the
same village, then the sale transactions or awards of the
same period relating to the neighbouring village can be
E
considered provided there is evidence to show that the
acquired lands and the lands covered by the exemplar
deeds of the neighbouring· village are similarly situated.
[Para .36] [661-G-H; 662-A]
F
8.2. In the absence of any evidence, this Court
cannot assume that acquired lands in Rithala and lands
acquired in Poothkalan were similarly situated. [Para 36]
(662·0]
8.3. Ram Phoo/ was not a posmve determination of
G market value of Poothkalan lands, but the rejection of a
determination of a higher value by High Court for want
of acceptable evidence. [Para 36] [662-F-G]
H
.I\_
.... -
LAL CHAND v. UNION OF INDIA & ANR.
633
;..
Union of India vs. Ram Phoo/ 2003 (10) SCC 167, A
referred to.
9. Accordingly, the compensation in regard to
acquisition dated 31.12.1981 is increased from Rs.27000/
- to Rs.30,500/- per bigha. The compensation in regard to B
the acquisition dated 13.2.1981, 20.2.1981 and 13.3.1981
is also increased from Rs.25,000/- to Rs.28,000/- per
bigha. The statutory benefits and interest awarded are not
disturbed. [Para 37] [662-H; 663-A]
Case Law Reference:
c
~
2005 (12) sec 59
referred to
Para 3
2004 (8) sec 210
referred to
Para 3
1994 (4) sec 595
referred to
Para 13
D
1995 (1) sec 111
referred to
Para13
-
1996 (3) sec 124
referred to
Para13
2004 (2) sec 283
referred to
Para 13
E
1999 (5) sec 62
referred to
Para 14
2004 (2) sec 9
referred to
Para 15
2008 (11) SCALE 637
referred to
Para 19
2001 (3) sec 530
relied on
Para 26
F
2003 (10) sec 167
referred to
Para 36
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4945 of 2005.
G
..
_.
From the Judgment & Order dtaed 27.4.2006 of the High
Court of Delhi at New Delhi in R.F.A. No. 265 of 1998.
WITH
H
.
'\.
634
SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.
A
CA Nos.4946, 4947, 4948, 4949, 4950, 4951, 4952, 4953,
4954,4955,4956,4957,4958,4959,4960,4961,4962,4963,
4964,4965,4966,4967,4968,4969,4970,4971,4972,4973,
4974, 4976, 4977, 5134, 5135, 5136, 5351, and 5890 of 2006.
B
WITH
CA Nos.23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36,
37,38, 39,40,41,42,465,603, 886,887,888,889,890,891,
1228, 1229, 1230, 1231, 1232, 1233, 1295, 1300, 1301, 1302,
1303, 1304, 1305, 1307, 1308, 1309, 1310, 1311, 1976, 1977,
c 1979, 1980, 1982, 1984,2461,2679,2721, 2722,2723,3990,
and 4693 of 2007
~
R. Venkataramani, Basava Prabhu S. Patil, Avtar Singh,
. Aljo K. Joseph, Raj Singh Rana, K.S. Rana, Santosh Kumar,
D
Dr. Kailash Chand, Naresh Kaushik, Sanjeev K. Bhardwaj,
Rupesh Kaushik, Lalita Kaushik, Rana Ranjit Singh, Prem
~
Malhotra, Ambrish Kumar, Balraj Dewan, Chander Shekhar
Ashri, Vishnu B. Saharya, (for Saharya & Co.), Rekha Pandey,
/ -
Sadhna Sandhu, Anil Katiyar, D.S. Mahra and Jitendra Mohan
E
Sharma for the appearing parties.
The Judgment of the Court was delivered by
R. V. RAVEENDRAN, J. 1. This batch of appeals arise
out a common judgment dated 27.4.2006 of the High Court of
F
Delhi in RFA No.751/1994 (Jas Rath vs. Union of India) and
other connected cases. They relate to determination of market
value in regard to lands situated at village Rithala on the
outskirts· of Delhi, acquired for (i) construction of a
supplementary drain; (ii) construction of sewage treatment plant;
·-
G (iii) re-modelling of Nangloi drain; and (iv) planned development
of Delhi. The said four acquisitions were initiated under
.
notifications dated 13.2.1981, 20.2.1981 13.3.1981 and
;_ ..
31.12.1981 issued under section 4(1) of the Land Acquisition
Act, 1894 ("LA Act' for short). The extent of lands acquired and
H
LAL CHAND v. UNION OF INDIA & ANR.
[R.V. RAVEENDRAN, J.]
635
compensation awarded are as under:
Rate awarded per Bigha (Unit of 1008 sq. yds.)
Date of
Extent
By LAO
By Reference
By High Court
notification notified
Court
(impugned
under
Big hasjudgment)
Sec.4(1)
Biswas
(In Rupees)
(In Rupees)
(In Rupees)
13.2.1981
829 - 00
2600 (Block B)
20,000
25,000
3800 (Block A)
20.2.1981
883 - 08
2600 (Block B)
20,000
25,000
3800 (Block A)
13.3.1981
78 - 16
6500
10,800
25000
31.12.1981 5947 - 00 7000 (Block C)
21,000
27,000
9000 (Block B)
10840 (Block A)
2. The awards of the reference court were challenged by
A
B
c
D
the landowners. The appeals were decided by the Delhi High
Court by judgment dated 4.9.2001 awarding Rs.67000 per E
bigha in regard to lands covered by notifications dated
13.2.1981, 20.2.1981 and 13.3.1981 and Rs.73,584 per bigha
in regard to lands covered by notification dated 31.12.1981.
r
For arriving at the said market value, the High Court relied upon
the allotment rates of Delhi Development Authority for plots
F
shown in its Brochure issued on 9.2.1981 in respect of Rohini
Residential Scheme (Phase-I), formed by acquiring part of
Rithala village and surrounding villages. The provisional rates
of allotment given in the said brochure were Rs.100, Rs.125,
Rs.150, and Rs.200 per sq. m. respectively for plots of the size G
of 26,32,48,60 and 90 sq. m. The High Court took the average
-4
of those allotment rates as Rs.150 per sq. m. Having regard
to the fact that the said rate was the premium for allotment on
leasehold basis, the High Court inferred that the freehold market
value of the said plots would be at least double, that is Rs.300 H
636
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A
per sq. m. Taking note of the fact that considerable expenditure
"
would have been involved for developing the plots,. the High
Court took the wholesale price of freehold plots as Rs.200 per
sq. m. and after deducting 60% towards the cost of
development and area required for roads etc., determined the
B market price at Rs.80 per sq. m. (or Rs.67/- per sq. yd.). The
said rate was awarded as compensation for the first three·
acquisitions. In regard to land acquired under the last
)--
notification (dated 31.12.1981) it provided an increase of 12%
per annum and arrived at the market value as Rs. 73 per sq.
c yd. This worked out to Rs.67,536 per bigha in regard to the first
three acquisitions and Rs.73,584 per bigha in regard to the last
acquisition.
3. Feeling aggrieved the claimants as well as the Union of
D
India filed appeals before this Court. This court by a common
judgment dated 7.9.2005 (reported in Ranvir Singh v. Union
..
of India - 2005 (12) SCC 59) allowed the appeals, set aside
the judgment of the High Court and remanded the matter to the
High Court for determination of the market value afresh. This
Court held:
E
(a) The lease premium in respect of fully developed plots
(which was given in the ODA brochure) could not be the
basis for determining the freehold market value of
undeveloped land, though the undeveloped land may be
F
situated adjacent to the developed plots. Therefore the
'"
DPA brochure rates were not of assistance.
(b) The sale deeds pertaining to the acquired lands or
nearby lands would be the most relevant pieces of
evidence and the High Court ought not to have ignored the
G
sale deeds exhibited by the parties on the ground that
neither the vendors nor the purchasers relating to the said
/.
,._
deeds were examined as witnesses, having regard to the
decision of the Constitution Bench of this Court in Cement
Corporation of India Ltd. V. Purya [2004 (8) SCC 270].
H
LAL CHAND v. UNION OF INDIA & ANR.
637
[R.V. RAVEENDRAN, J.]
(c) The claim of the land owners that the market value of A
J...
the acquired lands s.hould be determined on the basis of
acquisition of the year 1961 in ·the same village, by
increasing the award price of Rs. 7,000 per bigha at the
rate of 12% per annum for 20 years, was una.cceptable.
4. After remand, parties let in further evidence. The High
B.
Court examin.ed various pieces of evidence placed before it. It
-.,J.,
rejected the· entire documentary evidence placed by both
parties, except two documents· for determining the
compensation. The first is a sale deed (Ex. PW-1/1) dated 41 c
11.4.1980 under which land was sold. in Rithala village for
Rs.19,000/- per bigha. The second is an.other sale deed (Ex.
A1) dated 9.4.1981 under which .. one bigha of land was sold
for Rs.35,000/-. The average of the said two sale. deeds, namely
_.....
Rs.27,000/- per bigha was determined as the market value in
D
"
regard to the lands acquired under notifications dated
~
31.12.1981. 1.n regard to the lands that were acquired under
notifications dated 13'.2.1981, 20.2.1981and13'.3.1981, having
regard to the fact that the said acquisitions were about 11 to
10 months prior to the acquisition of 31.12.1981, it determined
the market value as Rs.25,000/- per bigha.
E
5. Not being satisfied with the amount awarded the
appellants have filed these appeals. According to them, the
compensation awarded is low and it ought to have been higher.
They contend thatthe High court was not Justified in rejecting
F
the following documents from consideration :
(i) Ex. X-1 {DOA brochure relating to Rohini Residential
Scheme) issued in 1981 showing an average premium of
Rs.150/-: per sq. m. in respect of ODA plots for allotment.
G
(ii) The circle rates dated 21.1.1989 issued by the Land
--
..\
Division of Government of India showing a market value
of Rs.400/- per square yard for residential plots (and
Rs.800/- per sq. yd. for commercial plots).
I
H
A
B
638
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
(iii) Award relating to the acquisition of land at Rithala
under notification dated 24.10.1961 at Rs.7,000 per Bigha
which when increased at a compound rate of 12% per
annum for twenty years, would give a market value of
Rs.67,525/- per bigha in 1981.
(iv) Sale deeds marked as A-2, A-3, A-10 to A-13 all of
the year 1981, showing a market value ranging from
Rs.35000/~ per bigha to Rs.68570/- per bigha.
The appellants contend that by taking those documents into
C account, the High Court ought to have determined the market
value as at least Rs.49000/- per Bigha. The DOA has filed
cross-objections in several appeals for reducing the
compensation to what was awarded by the reference court.
0 Whether DOA brochure is relevant evidence?
6. The DOA brochure (Ex.X1) dated 9.2.1981 is an
invitation seeking applications from members of public for
allotment of plots on lease basis under Rohini Residential
Housing Scheme. The Brochure stated that the plots were in a
E layout formed/to be formed in Rithala and the surrounding
villages. The brochure gives the following provisional rates for
allotment of plots on leasehold basis :
S.No. Plot size
Category
Rate (Per Sq.m.)
F 1. 26 sqm Economically weaker sections(EWS) Rs. 100/-
2. 32 sqm Low Income Group(LIG)
3. 48 sqm Low Income Group (LIG)
G 4. 60 sqm Middle Income Group (MIG)
5. 90 sqm Middle Income Group (MIG)
Rs. 125/-
Rs. 150/-
Rs. 200/-
Rs. 200/-
The appellants contend that Rs.150/- per sq. m. which is the
H average of the said provisional rates, should be taken as
A
-
LAL CHAND v. UNION OF INDIA & ANR.
[R.V. RAVEENDRAN, J.]
• indicative of the ruling market price.
639
A
7. On careful consideration, we are of the view that such
allotment rates of plots adopted by Development Authorities like
ODA cannot form the basis for award of compensation for
acquisition of undeveloped lands for several reasons. Firstly 8
market value has to be determined with reference to large tracts
of undeveloped agricultural lands in a rural area, whereas the
-.... allotment rates of development authorities are with reference
to small plots in a developed lay out falling within Urban area.
Secondly ODA and other statutory authorities adopt different
rates tot plots in the same area with reference to the economic C
capacity of the buyer, making it difficult to ascertain the real
market value, whereas market value determination for
acquisitions is uniform and does not depend upon the
economic status of the land loser. Thirdly we are concerned
-..: with market value of freehold land, whereas the allotment "rates" D
in the ODA Brochure refer to the initial premium payable on
allotment of plots on leasehold basis. We may elaborate on
these three factors.
8. First factor: The percentage of 'deduction for E
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
F
nature of development of the lay out in which the exemplar plots
are situated. The 'deduction for development' consists of two
components. The first is with reference to the area required to
be utilised for developmental works and the second is the cost
of the development works. For example if a residential layout G
~is formed by DOA or similar statutory authority, it may utilise
around 40% of the land area in the layout, for roads, drains,
parks, play grounds and civic amenities (community facilities)
etc. The Development Authority will also incur considerable
expenditure for development of undeveloped land into a
H
640
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A developed layout, which includes the cost of leve1Hng the land,
cost of providing roads, underground drainage and sewage
, ..
facilities, laying waterlines, electricity lines and developing parks
and civil amenities, which would be about 35% of the value of
the developed plot. The two factors taken together would be
B the 'deduction for development' and can account for as much
as 75% of the cost of the developed plot. On the other hand, if
the residential plot is in an unauthorised private residential
layout, the percentage of 'deduction for development' may be
)---
far less. This is because in an un-authorized lay outs, usually
c no land will be set apart for parks, play grounds and community
facilities. Even if any land is set apart, it is likely to be minimal.
The roads and drains will also be narrower, just adequate for
movement of vehicles. The amount spent on development work
would also be comparatively less and minimal. Thus the
D deduction on account of the two factors in respect of plots in
'-ffunauthorised layouts, would be only about 20% plus 20% in all
40% as against 75% in regard to DOA plots. The 'deduction x
for development' with references to prices of plots in authorised
private residential layouts may range between 50% to 65%
E
depending upon the standards and quality of the layout. The
position with reference to industrial layouts will be different. As
the industrial plots will be large (say of the size of one or two
acres or more as contrasted with the size of residential plots
measuring100 sq.m. to 200 sq.m.), and as there will be very
limited civic amenities and no playgrounds, the area to be set
~
F
apart for development (for roads, parks, playgrounds and civic
amenities) will be far less; and the cost to be incurred for
development will also be marginally less, with the result the
deduction to be made from the cost of a industrial plot may
range only between 45% to 55% as contrasted from 65 to 75%
G for residential plots. If the acquired land is in a semi-developed
urban area, and not an undeveloped rural area, then the
deduction for development may be as much less, that is, as little l ..
as 25% to 40%, as some basic infrastructure will already be
available. (Note: The percentages mentioned above are
H tentative standards and subject to proof to the contrary).
LAL CHAND v. UNION OF INDIA & ANR.
641
[R.V. RAVEENDRAN, J.]
"··
9. Therefore the deduction for the 'development factor' to A
be made with reference to the price of a small plot in a
developed lay out, to arrive at the cost of undeveloped land,
will be for more than the deduction with reference to the price
of a small plot in an unauthorized private lay out or an industrial
layout. It is also well known that the development cost incurred B
by statutory agencies is much higher than the cost incurred by
private developers, having regard to higher overheads and
,___. expenditure. Even among the layouts formed by DDA, the
percentage of land utilized for roads, civic amenities, parks and
play grounds may vary with reference to the nature of layout -
c
whether it is residential, residential-cum-commercial or
industrial; and even among residential layouts, the percentage
will differ having regard to the size of the plots, width of the
)o-L
roads, extent of community facilities, parks and play grounds
provided. Some of the layouts formed by statutory Development D
...
Authorities may have large areas earmarked for water/sewage
'.,;
treatment plants, water tanks, electrical sub-stations etc. in
addition to the usual areas earmarked for roads, drains, parks,
playgrounds and community/civic amenities. The purpose of the
aforesaid examples is only to show that the 'deduction for E
development' factor is a variable percentage and the range of
percentage itself being very wide from 20% to 75%.
~.
10. Second factor: DOA and other statutory development
· ~ authorities adopt different rates for allotment, plots in the same
layout, depending upon the economic status of the allottees, F
classifying them as high income group, middle income group,
low income group, and economically weaker sections. As a
consequence, in the same layout, plots-may be earmarked for
persons belonging to economically weaker section at a price/
premium of Rs. 100/- sq.m, whereas the price/premium G
charged may be Rs.150/- per sq.m for members of low income
"
~ group, Rs.200/- per sq.m for persons belonging to middle
income group and Rs. 250/- per sq. m. for persons belonging
I.
to High income groups. The ratio of sites in a layout reserved
for HIG, MIG, LIG and EWS may also vary. All these varying
H
=rt
642
SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A
factors reflect in the rates for allotment. It will be illogical to take
B
the average of the allotment rates, as the 'market value' of those .~·
plots, does not depend upon the cost incurred by ODA statutory
authority, but upon the paying ·capacity of the applicants for
allotment.
11. Third factor: Some development authorities allot plots
on freehold basis, that is by way of absolute sale. Some
development authorities like DOA allot plots on leasehold basis.
Some have premium which is almost equal to sale price, with >-r
C
a nominal annual rent, whereas others have lesser premium,
and more substantial annual rent. There are standard methods
for determining the annual rental value with reference to the
value of a freehold property. There are also standard methods
for determining the value of freehold (ownership) rights with
reference to the annual rental income in regular leases. But it
D
is very difficult to arrive at the market value of a freehold
property with reference to the premium for a leasehold plot .. ~
allotted by DOA. As the period of lease is long, the rent is very
nominal, some times there is ·a tendency among public to
equate the lease premium rate (allotment price) charged by
E
ODA, as being equal to the mark~t value of the property.
However, in view of the difficulties referred to above, it is not
safe or advisable to rely upon the allotment rates/auction rates
in regard to the plots formed by ODA in a developed layout, in
determining the market value. of the adjoining undeveloped 4
,~
F
freehold lands. The DOA brochure price has therefore to be
excluded as being not relevant.
Whether the circle rates/guideline value rates can be
relied upon to determine the market value?
G
12. The appellant relied upon the notification dated
21.1.1981 issued by the Land Division of Government of India,
Ministry of Works and Housing, notifying the Schedule of Market
Rates of land in different parts of Delhi and various outlying
areas - showing the minimum rates Rs.400/- per sq. yard for
H~ residential and Rs.800/- sq. yard for non-residential plots. The
...
LAL CHAND v. UNION OF INDIA & ANR.
643
[R.V. RAVEENDRAN, J.]
~.
question is whether the same could be relied upon for A
..
determination of market value in regard to land acquisition .
When the matter came up before this Court in the earlier round,
the counsel for the appellant had conceded that such rates could
not form the basis for determining the market value of the
acquired lands.