# UNION OF INDIA v. SHIU RAM MEHAR & ANR

- **Citation:** [1973] 2 S.C.R. 720
- **Court:** Supreme Court of India
- **Decided:** 1972-10-26
- **Bench:** A. N. Grover. K. K. Mathew, A. K. Mukherjea
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-shiu-ram-mehar-anr-5893
- **Pages:** 8

## Headnote

Lant/ Acquisition (Amendment and Validation) Act 1967-S. 4(3)-
Wh11her interest n'a.t payable on the 1narket value of the land acquired,
und t1U·o 011 rhc• c11110111u of 15 t'/b payable on such marktt 1·alue under Sub.
S. ( 2) of t/Je Stctimr.
·
Section 4(3) of the Land Acquisition (Amendment and Validation)
Act, 1967 pr<1vides that where acquisition of any. particular land has been
mJde under the Land Acquisition Act 1894, a, simple interest at the rate
of six per cent per annum on the market value Of such lanJ as determined
under S. 23 of the Land Acquisition Act 1894 from the date of exriry
of three years to the drle of tender of payment of oompensation, shat be
paid and Section 23 (I) of the La Ad Acquisition Act provides for the
various factors to be considered· by Coun in determining the. amount of
compensation;. such as, the market value of the land at the date of publication. under S. 4 of tho Act, the damage susmined by the person etc.,
and s, 23(2)- providft> that· in addition, to the .market value of the land,
the Court shall, award in· every case, a sum of 15% on such market value
for compulsory acquisition.
On a question· whether interest was payable under S. 4(3) of the
Amending Act, not. only on the market value of the land as determined
under s. 23(1); but also on the additional amount of 15% (solatium)
payable. on such market value under Sub. Section (2) of that Section,,
HELD': (I) The additional amount of 15% cert .. inly forms part of
the. amount of compensation because under S. 23, the compensation is to
consist of what is provided' for in Sub-section (I); plus the additional
amount
of
15%
on
the market
value
of the
land
acquired.
But 'compensation' and 'm&rket value' are distinct expressions and have
been used as such in the Land Acquisition Act. The key to the meaning
of the word "compensation" is to be found in S. 23(1) and it consists
of the market value of the land and the sum of 15% of such market
value, which is stated to be the consideration for the compulsory nature
of the acquisition.
Market value is, therefore, only one of the components in the determination of the amount of compensation. If the legislature has used the word "market value"' in S. 4(3) of the Amending Act,
it must be held that it was done deliberately and what was intended was
that interest should be pay&ble on the market value of the land and not
on the amount of compensation. [725F]
. Raja Vyringlrar/a Narayana Gajapatiraju v. The Revenue Divisional
Officer, Vizagapatam 66 I.A. 104; Clraturbhuj Pa11dri & Ors. v. Collector,
Rajgarh L1969J 1 S.C.R. 412; Sub-Col/ector of Godavari v. Saragam I.LR.
30 Mad. 151 and Krishna Bai v. The Secretary o} State for India in Council; I.L.R. 42 All. 555 referred to.
Union of India v. Natlru R.F.A. 104 of 1968 decided on 21-12-68
of the IDelhi High Court is over-ruled.
CIVIL APPLLLATE JURISDICTION :
Civil Appeal No. 1014
of 1971.
Appeal by special leave from the judgment and order dated
Decemher 24,.1970 of the Delhi High Court at New Delhi in R.F.
No. 279 of i 969.
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UNION v. i. R. MEHAR (Grover, /.)
721
L. N. Sinha, Solicitor-General of India, S. N. Prasad a.,d
R. N. Sw:htile.y, for the appellant.
V. C .. i\fahajcm, for the respondents.
The J udgme;it of the Court was delivered by
GROVER, J.
The sole point for deter.nination in this appeal
bly special leave from a judg;nent of the Delhi High Court relates
to the true meaning and constru..:tion of the expression "market
value" employed in s. 4(3) of the Land Acquisition (Amendment
and Validation) Act, 1967, hereinafter called the 'AmcndinJ!: Act'.
The facts may be briefly stated. By a notification dated
October 24, 1961 issued under s. 4 of the Land A~quis1tion Act
1894, 'hereinafter called the 'Principal Act' certain land in the
revenue estate of Shakurpur was sought to be acquired,. The Land
Acquisition Collector gave an award dated March 1,.1967 faing
compensation at the rate of Rs. 3500 per Bigha .. The resp

## Text

720
UNION OF INDIA
v.
SHIU RAM MEHAR & ANR.
October 26, 1972
[A. N. GROVER. K. K. MATHEW AND A. K. MUKHERJEA, JJ.]
Lant/ Acquisition (Amendment and Validation) Act 1967-S. 4(3)-
Wh11her interest n'a.t payable on the 1narket value of the land acquired,
und t1U·o 011 rhc• c11110111u of 15 t'/b payable on such marktt 1·alue under Sub.
S. ( 2) of t/Je Stctimr.
·
Section 4(3) of the Land Acquisition (Amendment and Validation)
Act, 1967 pr<1vides that where acquisition of any. particular land has been
mJde under the Land Acquisition Act 1894, a, simple interest at the rate
of six per cent per annum on the market value Of such lanJ as determined
under S. 23 of the Land Acquisition Act 1894 from the date of exriry
of three years to the drle of tender of payment of oompensation, shat be
paid and Section 23 (I) of the La Ad Acquisition Act provides for the
various factors to be considered· by Coun in determining the. amount of
compensation;. such as, the market value of the land at the date of publication. under S. 4 of tho Act, the damage susmined by the person etc.,
and s, 23(2)- providft> that· in addition, to the .market value of the land,
the Court shall, award in· every case, a sum of 15% on such market value
for compulsory acquisition.
On a question· whether interest was payable under S. 4(3) of the
Amending Act, not. only on the market value of the land as determined
under s. 23(1); but also on the additional amount of 15% (solatium)
payable. on such market value under Sub. Section (2) of that Section,,
HELD': (I) The additional amount of 15% cert .. inly forms part of
the. amount of compensation because under S. 23, the compensation is to
consist of what is provided' for in Sub-section (I); plus the additional
amount
of
15%
on
the market
value
of the
land
acquired.
But 'compensation' and 'm&rket value' are distinct expressions and have
been used as such in the Land Acquisition Act. The key to the meaning
of the word "compensation" is to be found in S. 23(1) and it consists
of the market value of the land and the sum of 15% of such market
value, which is stated to be the consideration for the compulsory nature
of the acquisition.
Market value is, therefore, only one of the components in the determination of the amount of compensation. If the legislature has used the word "market value"' in S. 4(3) of the Amending Act,
it must be held that it was done deliberately and what was intended was
that interest should be pay&ble on the market value of the land and not
on the amount of compensation. [725F]
. Raja Vyringlrar/a Narayana Gajapatiraju v. The Revenue Divisional
Officer, Vizagapatam 66 I.A. 104; Clraturbhuj Pa11dri & Ors. v. Collector,
Rajgarh L1969J 1 S.C.R. 412; Sub-Col/ector of Godavari v. Saragam I.LR.
30 Mad. 151 and Krishna Bai v. The Secretary o} State for India in Council; I.L.R. 42 All. 555 referred to.
Union of India v. Natlru R.F.A. 104 of 1968 decided on 21-12-68
of the IDelhi High Court is over-ruled.
CIVIL APPLLLATE JURISDICTION :
Civil Appeal No. 1014
of 1971.
Appeal by special leave from the judgment and order dated
Decemher 24,.1970 of the Delhi High Court at New Delhi in R.F.
No. 279 of i 969.
A
B
c
D
E
F
G
II
A
B
c
D
E
F
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11
UNION v. i. R. MEHAR (Grover, /.)
721
L. N. Sinha, Solicitor-General of India, S. N. Prasad a.,d
R. N. Sw:htile.y, for the appellant.
V. C .. i\fahajcm, for the respondents.
The J udgme;it of the Court was delivered by
GROVER, J.
The sole point for deter.nination in this appeal
bly special leave from a judg;nent of the Delhi High Court relates
to the true meaning and constru..:tion of the expression "market
value" employed in s. 4(3) of the Land Acquisition (Amendment
and Validation) Act, 1967, hereinafter called the 'AmcndinJ!: Act'.
The facts may be briefly stated. By a notification dated
October 24, 1961 issued under s. 4 of the Land A~quis1tion Act
1894, 'hereinafter called the 'Principal Act' certain land in the
revenue estate of Shakurpur was sought to be acquired,. The Land
Acquisition Collector gave an award dated March 1,.1967 faing
compensation at the rate of Rs. 3500 per Bigha .. The respondents
being dissatisfied with the award applied for a ref ere nee under
s. 18 of the Principal Act claiminl! enhancement in compc;:'.<;.it1on.
The Additional District Judge held that the market value ot the
land on the relevant date was Rs 5,000 per Bigha and th•;
claimants were entitled to enhancement at the r-ate of Rs. 1500 per
Bigha. He also directed that interest ;hould be awarded at 63
per annum on the market value of the land from October 24,
1964 till the date of tender of the payment of the amount awarded
by the Collector. This was in view of s. 4 ( 3) of the Amending
Act since the date of the notification under s, 6 of the Principal
Act was August 16, 1966 which was more than three years from
the date of the notification under s. 4 of the principal Act. He also
awarded interest on the enhanced amount from the date of dispossession till the date of payment of the amount in court. The Union
of India filed an appeal to the Delhi High Court. No dispute was
raised. with regard to the interest awarded under s.
28 of the
Principal Act. The controversy was confined only to the question
of interest under s. 4(3) of the Amending Act. Jn view of a previous decision of the Delhi High Court in Union of India
v.
Nathu(') a learned single judge dismissed the appeal.
Before us the correctness of the decision of the Division Bench
mentioned above on the interpretation of s. 4(3) of the Amending
Act particularly with r~ference to the true neaning of the e.xpression "market value" has been challenged.
It is necessary to refer to the provisions of the Principal Act
and the Amending Actto the extent they are material and relevant
for the purpose of this appeal. Clause (a) of s. 3 of the Principal
Act defines the expression "land" as inclnding benefits to arise
out of land and things attached to the, earth or pennanently
, <(!) R.F.A. 104 of 1968 decided on 21-12-1968.
722
SUPREME COURT REP'ORTS
[1973] 2 s.c.R.
fastened to anything att!lched to the earth. Section 4 of that Acb
provided for publication of prelin'linary notification. Section SA
provides for hearing of objections and s. 6 for declaration of
intended acquisition. Section 6 ( 1) provides, inter alia, that subject
to the provisions of Part VII of the Principal Act when the appropriate government is satisfied, after considering the report, if any,
made under s. S(A) sub-s. (2) that any particular land is needed
for a public purpose or for a company a declaration shall be made
to that effect. In that sub-section the following was inserted by s .. 3
of the Amending Act :
"And different declarations may be made from time
to time in respect of different parcels of any land covered
by the same notification under s.4 sub-s. ( 1 ) irrespective
of whether one report or different reports has or have
been made (wherever required) under s.
5-A, subsection (2)".
In place of the proviso the following proviso was substituted :
"Provided that no declaration in respect of any particular land covered by a notification under s. 4, sub-s.
(I) published after the commencement of the Land
Acquisition. (Amendment and Validation) Ordinance.
1967 shall be made after the expiry of three years from
the date of such publication".
Section 4 of the Amending Act is as follows :
"4. Validation of certain acquisitions.
(1) ........ ..
(2) ........ ..
(3) Where acquisition of any particular land covered
by a notification under sub-s. ( 1 ) of s. 4 of the. Principal /
Act, published before the commencement of the Land,
Acquisition (Amendment and Validaition) Ordinance
1967, is or has been made in pursuance of any declaration under section 6 of the Principal Act,
whether
made before or after such commencement, and such
declaration is or has been made after the expiry of
three years from the date of publication .of such notification, there shall be paid simple interest, calculated at
the rate of ~x percentum per annum on the market value
of such land, as de_termined under section 23
of the
Principal Act, from the date of expiry of the said period
of three years to the date of tender of payment of
compensation awarded by the Collector for the acquisition of $UCh land :
Provided . . . . . . . . . . . . . . . . . . . .. "
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UNION v. s. R. MEHAR (Grover, J.)
723
Section l l of the principal Act provides for inquiry and award by
the ColJcctor. The award has to include the compensation which,
in the opinion of the Collector, should be allowed for the land.
Section 18 enables any person interested who has not accepted
the award of the Collector to make a written application to him
requiring him to refer the matter for the determination of the cour~
when his objection relates to the amount of compensation apart
from other maHers. Section 23 of the Principal
Act must be
reproduced in its entirety.
S. 23 "(!) In determining the amount of compensation to be awarded for land acquired under this Act,
the Court shall take into considerationFirst., the market value of the land at the date of the
publication of the notification under s. 4, sub-s. ( l )·
Secondly,
the damage sustained
by the
person
interested by reason of the taking of any standing crops
or trees which may be on the land at the time of the
Collector's taking possession thereof.
Thirdly, the damage (if any),
sustained by the
person, at the time of the Collector's taking possession
of the land, by reason of severing rnch land from his
other land;
Fourthly, the damage (if any), sustained by the
person inte1ested, at the time of the Collector's taking
possession of the land, by reason of the acquisition
injuriously affecting his other property, movable or
.immovable, in any other manner, or his earning;
Fifthly, if, in consequence of the acquisition of the
land by the Collector, the person interested is compelled
to change his residence or place of btusiness, the reasonable expenses (if any) incidental to such change; and
Sixthly, the change (if any) bona fide resulting from
diminution of the profits of. the land between the time
of the pμblication of the declaration under s. 6 and the
time oi the Collector's takin_g possession of the land .
(2) In addition to the market v.alue of the land as
above provided, the Court shall in every case award a
sum of fifteen per centum on such market value in consideration of the compulsory nature of the acquisition'',
Sections 28 and 34 of the Principal Act provided for payment of
interest on the excess amount of compensation as directed by the
court and when the amount of compensation is not paid or deposited on or before taking possession of the land.
724
SUPREME COURT REPORTS
fl 973] 2 S-.C.R.
In the case decided by the Division Bench of the Delhi High 4
Court one of the main points which arose was whether the market
value on which interest has to be awarded in the circumstances
mentioned in s. 4(3) of the amending Act would include the statutory charge of 15 % on that market value as provided for by
s. 23(2) of the Principal Act. The decision of the Division Bench
on this point was as .follows:-
B
"It therefore appears to us that while dealing with
the question of market value of the land the statutciry
charge of 15% on such market value as provided for
in sub-s. (2) of s. 23 has got to be added to tfte market
value of the land, although it may still be regarded
as an additional charge to the market value of the land.
The addition of this amount to the market value of the
land as defined in s. 3(a) of the principal Act, is therefore a part of the market value of the land "as determined under s. 23 of the Principal Act" mentioned
in sub-s. (3) of s. 4 of the Validating Act, 1967. Section
23· is wide enough not only to include the "market
value" of the land as defined in s. 3 (a) of the Act ~t
also the additional 153 under sub-s. (2) of s.~3 which
by all 2ccounts. becomes a part of the market value of
the land. Without that addition there can be no determination of the market value of the land as "under section
23 of the Principal Act".
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The Division Bench of the High Court thus came to the conclusion that interest was payable under s. 4(3) of the Amending Act
),.
not only on the market value of the land as determined under
s. 23(1) but also on the additional amount of 153 payable on
such market value u.nder.sub-s. (2J of that section. This additional
payment is popularly called the "solatium". On behalf of the·
F
Union of lridia the correctness of the view of the Delhi High Court
has been strongly assailed. It has been urged by the learned
Solicitor General that market value cannot possibly include the
"solatium" which is a payment which does not form part of the
market value of the land. It is an additional amount which the
court has to award in every case on the market value in consiG
deration of the compulsory nature of the acquisition.
The High Court relied on certain decisions of different High
Courts which turn on what was included in the expression "land"
as defined in s. · 3(a) qf the princi_pal Act and for determining the
mμrket value of all those things that fall within that expression. The H
l{i_gh Court appears to have read those judgments in a way which
would justify the conclusion that the word "market value" as used
in sub-s. (2) of s. 23 of the principal Act was not confined only
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UNION I'. s. R. MEHAR (Grover, J.)
725
to the market value mentioned in s. 23(1) "first" but it also included the various items which have to be taken into consideration and which are covered by clauses "secondly" to "sixthiy" in
s. 23 (l). This Court had occasion in Chaturbhuj Panda & Others
v. The Co//ector, Rajgarh ( 1 ) to consider the ques1:ion whether the
value of trees standing on the land was to be added to the markeb
value of the Jarid for the purpose 9f the addition of 15 3 solatium. Referring to some of the iuc!gments on which the High
Ce!!rt relied i.e. Sub-Collector of Godavari v. Saragam(') and
Krishna Bai v. The Secretary of State for India in Council(') it was
observed that the law laid down by these cases was correct but
the question which was considered by this Court was confined
only to the poini whether the value of trees was to be included in
the market value for the purpose of awarding the 153 solatium.
This Court held that the statutory allowance under s. 23 ( 2) had to
be given on the value of the trees because under s. 3 (a~ of the
Principal Act the expression "land" includes benefits to arise out
of land and things atfached to the earth. In other words the
decision rested on the meaning of the expression "land" and not
on the fact that clause "secondly" in s. 23(1) refers to the damage
sustained by reason of taking any trees which, may be on the land.
It is altogether unnecessary in the present case to determine the
question whether the market value on which 15 3 so la ti um is to
be awarded by the court would include the various items given in
clauses "secondly" to "sixthly" in s. 23(1) of the Principal Act.
What we are concerned with is w.hethef the expression "market
value·• ins. 4(3) of the Amending Act will take in.the additional
amount of 15 % which is to be awarded on the market value of
·the land acquired under s. 23 (2) c.f the Principal Act. We can·
find no warrant for the view which appealed to the High Court
that market value would consist.of not only the market value of
t1'e land but also the 153 solatium which is to be granted under
s. 23(2) in consideration of the compulsory nature of acquisition.
The additional amount of 15 % certainly forms part of the amount
of compensation because under s. 23 the compensation is to
consist of what is provided for in sub-s. (1) and the additional
amount of 15% on the market value of the land acquired. But
compensation and market value are distinct expressions and· have
been used as such in the Acquisition Act. It is not possible for
anyone to coniend that solatium falls within the expression "land"
within the meaning of s. 3 (a) of the Principal Act. Since under
s. 4(3) of the Amending Act. !t is only the market value of land
on which interest has to b~ pJid solatium cannot fom1 part of
the market value of the land. In the well known decision of the
Privy Council
in Raja Vyrigherla Narayana Gajapatiraju v.
(I) [19691 1 SCR. 412.
(2) !LR 30 Mad. 151.
(3) !LR 42. All 555.
726
SUPREME COURT Rf PORTS
[1973] 2 S.C.R.
The Revenue Divisional Officer, Vizagapatam(') it was laid down
A
that market value is the price which a willing vendor might
reasonably expect to obtain from a willing purchaser. Disinclination of the vendor to part with his land and the urgent necessity
of the purchaser to bu1. must alike be disregarded and both must
be treated as persons dealing in the matter at arms length and
without compulsion. It is somewhat interesting that
tl.~ Law
n
Commission of India in its report submitted in 1957 on the need
for reform in the law of land acquisition observed :
"We are non also in favour of omitting Section 23
(2) so as to exclude solatium of 153 for the cvmpulsory
nature of the acquisition. It is not enough for a person
to get the market value of the land as compensation in
c
order to place himself in a position similar. to that which
he could have occupied had there been no acquisition;
he may have to spend a considerable further amount for
putting himself in the same position as before ........ .
As pointed out by Fitzgerald the community has
no
right to enrich itself by deliberately taking away
the
property of any of its members. in such circumstances
D
without providing adequate compensation for it. This
principle has been in force in India ever since the Act of
1870. The Select Committee which examined the Bill
of 1893 did not think it necessary to omit the provision
but on the other hand transferred it to Section 23".
It seems to us that the term "market value" has acquired a defiE
nite connotation by judicial decisions. Any addition to the value
of the land to the owner whose land is compulsorily acquired
which addition is the result of such factors as are unrelated to the
open market cannot be regarded as a part of.the market .value. It
is significant and has been noticed at an earlier stage also that
according to the other sections which appear in the Principal' F
Act interest is payable on such amount which is either a oart of
compensation or is the totd compensation
payable itself. If
market value and compensation were intende<,l by the legislature
to have the same meaning it is difficult to comprehend why th~
word "compensation" in s. 28 and 34 and not "market. value" was
used. The key to the meaning of the word "compensation" is to be
found in s. 23(1) and that consists (a) of the market value of the
G
land and (b) the sum of 15 3 on such market value which is
stated to be the consideration for the compulsory nature of the
acquisition. Market value is therefore ·only one of the components in the determination of the amount of compensation. If the
legislature has used· the word "market value" in s. 4(3) of the
Amending Act it must be held that it was done deliberately and
ff
what was intended v.as that interest should be payable on the
nprket value of the Jan_d and not on the amount of compensation
<il 66 1.A.--!04-:-----
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UNION v. s. R. MEHAR (Grover, J.)
727
otherwise there was no reason why the Parliament should not
have employed tl:e word "compensation" in the aforesaid provision
-0f the Amending Act.
For the reasons given above we are unable to accept the_yiew
of the High Court that market value in s. 4(3) of the Amending
Act means the same thing as compensation and includes the
amount of 153 payable under s. 23(2) on the market value of
the land. This appeal, rherefore, succeeds to the extent that the
amo.int awarded to the Claimants shall be computed in accordance'
with our decision. In all other respects the appeal is dismissed. The
parties are let't to bear their own costs in this Court.
SN.
Appeal partly allowed.