# TRIBENI DEVI AND ORS v. COLLECTOR OF RANCm - **Citation:** [1972] 3 S.C.R. 208 - **Court:** Supreme Court of India - **Decided:** 1972-01-25 - **Case number:** C.A. Nos. 661, 1380, 1885 & 1886 of 1967 - **Bench:** K. s. HEGDE, P. Jaganmohan Reddy, K; K. Mathew - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tribeni-devi-and-ors-v-collector-of-rancm-5522 - **Pages:** 7 ## Headnote Land Acquisition Act (1 of 1894)-Compensation-Principles for determing. According to the general principles set out in sections 23 and 24 of the Land Acquision Act, 1894, for determining compensaticm, the com· pensation payable to the owner of the land is the market value which is detennined by reference to the price which a seller might reasonably expect to obtain from a willing· purchaser; but since it _may not be possible to ascertain this with any amount of precision the authority charged wtth the duty to award compensation is bound to make an estimate judged by an objective standard. The land acquired, has, therefore, to be valued not only wtth reference to its condition at the time of the declaraticm under s. 4 of the Act, but its potential value also must be .taken into account. This Court has laid down the methods of valuation to be adopted in ascertain· ing the market value of the land on the date of the notification under s. 4, which are: (i) opinion of experts (ii) the price paid within a reasonable time in bona fide transactions of the purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advanfages and (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstance into consideration, the requirement being always to arrive as near as possible an estimate of the market vaJue. In arriving at a reasonable correct market value it may be necessary to take even two ·or all these methods into account in as much as the exact valuation is not always possible as no two lands may be sarne either in respect of the situation or the extent or the potentiality, nor is it possible in alt cases to have reliable material from which that valuation can be accurately determined. f211 HJ Special Land Acquisition Officer Bengal"re v. T. Adinarayan Setty. (1959\ Supp, 1 S.C.R. 404, referred to. In the present case, the High Court was not justified in adopting the sale-deed in respect of a land which was farther away not only from the land acquired, but from the town. The annual rental value of the land acquired, based on the rent fixed in 1944 when that land was not of such gI;."eat value as it had acquired at the time when section 4 notification was issued, woiild also not furnish a proper method of computation. The High Court was not justified in giv;ng 10 per cent towards potential value, be. ca11'Se, that element was inherent in the fixation of market value of the land and could not be assessed separately .. The High Court was also not justi· lied in disallowing 5 per cent awarded by the Judicial Commi~ as compensation for severance merely because there was an entrance to the land. When a portion of the land is acquired and a large portion left out there would be diminution in the value of land that is left out for which so:ne compensation has to be allowed. [214 Bl ## Text 208 TRIBENI DEVI AND ORS. v. COLLECTOR OF RANCm January 25, 1972 [K. s. HEGDE, P. JAGANMOHAN REDDY AND K; K. MATHEW, JJ.] Land Acquisition Act (1 of 1894)-Compensation-Principles for determing. According to the general principles set out in sections 23 and 24 of the Land Acquision Act, 1894, for determining compensaticm, the com· pensation payable to the owner of the land is the market value which is detennined by reference to the price which a seller might reasonably expect to obtain from a willing· purchaser; but since it _may not be possible to ascertain this with any amount of precision the authority charged wtth the duty to award compensation is bound to make an estimate judged by an objective standard. The land acquired, has, therefore, to be valued not only wtth reference to its condition at the time of the declaraticm under s. 4 of the Act, but its potential value also must be .taken into account. This Court has laid down the methods of valuation to be adopted in ascertain· ing the market value of the land on the date of the notification under s. 4, which are: (i) opinion of experts (ii) the price paid within a reasonable time in bona fide transactions of the purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advanfages and (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstance into consideration, the requirement being always to arrive as near as possible an estimate of the market vaJue. In arriving at a reasonable correct market value it may be necessary to take even two ·or all these methods into account in as much as the exact valuation is not always possible as no two lands may be sarne either in respect of the situation or the extent or the potentiality, nor is it possible in alt cases to have reliable material from which that valuation can be accurately determined. f211 HJ Special Land Acquisition Officer Bengal"re v. T. Adinarayan Setty. (1959\ Supp, 1 S.C.R. 404, referred to. In the present case, the High Court was not justified in adopting the sale-deed in respect of a land which was farther away not only from the land acquired, but from the town. The annual rental value of the land acquired, based on the rent fixed in 1944 when that land was not of such gI;."eat value as it had acquired at the time when section 4 notification was issued, woiild also not furnish a proper method of computation. The High Court was not justified in giv;ng 10 per cent towards potential value, be. ca11'Se, that element was inherent in the fixation of market value of the land and could not be assessed separately .. The High Court was also not justi· lied in disallowing 5 per cent awarded by the Judicial Commi~ as compensation for severance merely because there was an entrance to the land. When a portion of the land is acquired and a large portion left out there would be diminution in the value of land that is left out for which so:ne compensation has to be allowed. [214 Bl CIVIL APPELLATE JURISDICTION: C.A. Nos. 661, 1380, 1885 & 1886 of 1967. B c D E F G H B c D E F G H TRIBENI DEVI v. COLLECTOR RANCHI (!aga11moha11 Reddy, /.),209· Appeal from the judgment and order dated February 25, 1965 of the Patna High Court in First Appeals Nos. 437 and 438 of 1959. S. V. Gupte. B. P. Rajgarhia and U. P. Singh, for the appellants .. (in C.A. Nos. 661 a:nd 1380 of 1967) and for respondent No. 1 (in C.A. Nos. 1885 and 1886 of 1967). D. Gcburdhm1, for the respondent (in C.A. Nos. 661 and 1380 of 1967 and for the appellant (in C.A. Nos. 1885 and 1886 of 1967). The Judgment of the Court was delivered by P. Jaganmoltan Reddy, J. These appeals arc by certificate against the judgment of tile Patna High Court in land acquisition appea]s. Two notifications dated 7-7-1954 under section 4 of the Land Acquisition Act 1894 (Act l of 1894) (hereinafter called 'the Act'), were issued one in respect of a portion of Plot Nos. 178 and 1784 admeasuring 2.65 acres and the other in respect of the whole of the plot No. 1783 admeasuring 2 acres situated in Ward No. 3 of Ranchi Municipality. Section 6 notification in respect of these lands was published on 7-9-1954 MJd poswsion was taken on 23-9-1954 under section 17(1) after making a declaration under section 17 ( 4) tha•t !he provisions of section SA shall not apply. The Col!ector awarded compensation of Rs. 1.20,419-6-11 in respect of the first acquisition and Rs. 47,648-13-6 in respect of the second. Thereafter, at the instance of 'the claimant, a reference under section 18 of the Act was made to the Judicial Commissioner of Chhota Nagpur, Ranchi who. while maintaining the market value of the land, awarded by the Collector, gave further compensation for severance at the rate of 5% and .10% in respect of potential value of the land. The Judicial Commissioner. however, did not grant the 15% sclatium under section 23(2) of the Act. Being dissatisfied, the claimants preferred appeals to the High Court. The Hi.e;h Court revised the compensation and awarded Rs. 90,000/- per acre and 15% as solatium on the market value under section 23(2) of the Act bui did not ·g.rant them •the 5% '.owards sever· ancc. Interest at 6% per annum on the amount of enhanced compensation from 23-9-1954 together with costs was also decreed. Against 'the judgment and decree, the claimants have filed Civil Appeals 661 & 1380/67 while the State has filed Civit Appeals 1885-86/67. The lands in question which have been acquil"..d were earlier leased on 22-9-1944 to the Military authorities on a rem of Rs'. 600/- per montli for a period of 6 months under a registered deed with option 'to renew for a maximum period of 10 yeari<. ,210 SUPREME COURT REPORTS [1972] 3 S.C.L which period expired on 21-9-1954. One of ·!he conditions of the lease was that on the termination of the lease, the lessor would exercise the option given under the lease to purchase all buildings, structures, gardens and any other strudtures constructed by the lessee during their occupation of the leased property, at 75 per cent of the valuation that would be determined b)< the Superintending Engineer, Chhota Nagpur Circle; and in case the lessors refused to purchase, the lessee was entitled to dismantle and take away the materials. Towards the end of !he lease period, the Government of Bihar decided to acquire the property for the State Soldiers, Sailors and Airmen's Board and initiated proceedings as aforesaid. In these appeals the only question ithat has !o be determined is : What. is the market value of the property as on the date of . section 4 nQtification? In the yaluation report given by the Land Acquisition Officer, Ranchi, Ex-1, the principle of capitalisajion on the basis of 20 times the annual rental of Rs. 7,200/- at the B c rate of Rs. 600/- p.m. was adopted as the price of the lands. In D that report it was also pointed out thart the sale price of 1.085 acres out of the premises of the Ranchi Club as per registered sale-deed, Ex. C-1 dated 1-4-1953, was Rs. 41,470/- per actt, which was not fair. Apart from these 25 other sale transactions · in respect of portions of Plot No. 1789 between 1952 and 1953 were also referred in that report. Some of those lands were g situated opposite to the Ranchi Club and ·the sale price came .to 'Rs. 1092/- per katha, which is about Rs .. 60,000/- per acre. I! was further pQinted out that some,other lands a little further away from rthe main road but belonltiog to the same Plot No. P89 were sold at !he rates between Rs. 250/- to Rs. 800/- per ka .. tha. This report formed the basis of the award.made by the Coll~tor. 1 ,. The High Court took judicial notice, and in our view !ightly,,1io, that after .the termination of the Second World War in 1945 <;here was a rise in land values due to the increased demand of hOmestead lands for building purposes. It also considered various sale-deeds produced and proved O!l behalf of the .claimants along with the oral evidence to determine the market value of the land. The o)>jections from ·both the appellant .and the respondent were G ·taken into account in respect of each oJ these and most 'of - were considered as not fumishin11; a proper or adequate valu~ljoli -either havin.e; regard. to the distance of .the lands· wl)ich were ~ subject-matter of the sale or the inadequacy of ~··infonilallan ·pertaining thereto. The Hildi Court, however, adopted ~-price in the sale deedEic.C-1 executed on 6;5·1953 by .thelbJlcbi.Oub tl Ltd., in favour of ~ Presideni of: India in riSpec~ :.Of LOSS lcrllf 3 bighas 5 kathM 10 chhataks in Plot No •. l·:n 1 for Rs .. 4f 111tJ/:. as the basis for .amving at the market v~ue of the acquired tat A TRIBENI DEVI v. COLLECTOR RANCHI (laganmohan.Reddy, J:) 21 )J Though the land in question was situated on the main RanchiChaibasa Road, a strong objection was taken against adopting the price as a basis because it was not only t mile away from the land under acquisition but what was sold was only the leasehold right in the land. These objections were rejected on the ground that for all practical purposes the interest that was held or sold B . by the Ranchi Club under Ex.C-1 was not inferior to an. absolute title. The area of the land, the subject matter of the sale, was considered .to be fairly large being more than 1 acre and the situation was also the same as the land under acquisition except that it was farther away from it. In these circumstances, the High Court thouii;ht, after a proper allowance is made for the difference c D ·E G ii in distance, the transaction yields a more acceptable guide for determining the market value of the land under acquisition and accordingly, it adopted twice the price as charged for the land in Ext.C-1 as indicating a fair market value of the land in question. The Hi.gh Court further added Rs. 7060/- per acre as the difference between tenure rights and lease-hold rights that were held by the. President of India and awarded Rs. 90,000/- per acre. This, it did notwithstanding the fact that it was conscious that there was no definit!l data for the two additions that have been made, because in its view, in cases of this nature a certain amount of estimate has to be made which may even be arbitrary. Accordingly, it awarded compensation for the 4.65 acres of land which was acquired by the Government at Rs. 90,000/ per acre together with 1 S % solatium payable under clause ( 2) of section 23 of the Act. 5% compensation for severance of land fro1;11. the claimants' other portion of. the land tltat remained with them after acquisition, ~ch wQ awarded. by the Judicial Commis~ioncr, Chhota Na~yr, was disallowed on the ground (hat there wu an entrance to the back portion of the •land which was left with the t>wners and also because there was no evidence to show that in fact there had been any depreciation in he value of the remaining area anciif sc>, to What ex~nt: On the othet'hand, it l!laintained the 10% on the lharket, value of the land awlirded by the Land Accririsitiori· Court on· aecou,nt of' the' inerease in the). l!Otentialities of !Ile land. Tue basis adopted by the Jligh Court iS challen~ on the ground that they ·are ,contrary to the well established principles appliciible for determining the value of landS acquired under the Act. · The 11eneral principles for determining compensation have been set out in sections .. 23 & 24 of. the Act. The compensation payable to :the ·owner of the ·landr is. the market value which is determined by ~f.erence to the price ·which a seller might reasonab)'y expect to_obtain from a·willin1!;"purclwer, bat as this may not' be possible to ascertain with any .amount 1lf ~on, the Dllthoritv charged with the duty to award compensaion is bound to 212 SUPREME COURT REPORTS (1972] 3 S.C.R .make an estimate judged by an objective standard. The land A .acquired has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act but its potential value also must be taken into account. The sale-deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of compnting the market value. This, however, is ·i!Ot the B only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands' of similar nature are fetchlng can be taken into a,ccount by capi- .talising the rent which according to the present prevailinl!l rate of interest is 20 times the annual rent. But this also is not a conclusive method. This Court had in Special Land Acquisition c Officer, Bang!J.lore v. T. Adinarayan Setty('), indicated at page 412 the methods of valuwtion to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) which are: (i) opinion of experts, (ii) the price paid within a reasonable time in bona fide transactions of purchase .of 'the )ands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years' D purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstances into consideration, ~he requirement bein111 always to arrive as near as possible an estimate of the market value. In arriving to a reasonably correct market value, it may be necessary to take even two or all E of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in Tespect of the situation or the extent or the potentially nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. Bearin1t 'these principles in. mind, we do not think that the High Court was justified in adopting the registered sale-deed, Ex.C-1 executed by ihe Ranchi Club, in favour of 1J.e President F of India, bec