REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4259 OF 2002

Avinash Dhavaji Naik …Appellant

Versus

State of Maharashtra …Respondent

WITH

CIVIL APPEAL NO. 4266 OF 2002 CIVIL APPEAL NO. 4262 OF 2002

CIVIL APPEAL NO. 4260-4261 OF 2002 CIVIL APPEAL NO. 4263 OF 2002

CIVIL APPEAL NO. 4264-4265 OF 2002

J U D G M E N T  

S.B. SINHA, J :

1. These appeals involving similar questions of fact and law were taken

up for hearing together and are being disposed of by this common judgment.

2. By reason of a notification dated 3.02.1970, the State of Maharashtra

expressed its desire to acquire a large chunk of land situated in 96 villages

for  the  purpose  of  forming  new twin  city  near  Bombay called  as  ‘New

Bombay Project’.  By reason of the said notification, 53 acres of land, i.e.,

5300  sq.  m.  belonging  to  the  appellants  herein   and  situated  in  village

Wahal in the District of Raigad, Maharashtra was sought to be acquired.   

A declaration in terms of Section 6 of the Land Acquisition Act (for

short “the Act”) was made on 21.05.1971.

3. A notice under Section 9 of the Act was issued pursuant whereto the

claimants  –  appellants  filed  their  applications  for  payment  of  enhanced

compensation.   

4. The Land Acquisition Collector made its award.  Aggrieved by and

dissatisfied therewith, the appellants filed applications before the Collector

for reference in terms of Section 18 of the Act pursuant whereto reference

was made to the Court of District Judge in the year 1986.

5. Before  the  Reference  Court,  the  parties  adduced  their  respective

evidences.  Appellants examined one Jeevan Kulkarni (PW-2) as an expert

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witness.  He made valuation of the lands in question.  He visited the land on

or about 20.06.1987 and prepared a report estimating the value of the land at

the rate of Rs.15/- per sq. m., i.e., Rs. 60,000/- per acre.  By reason of the

award dated 30.01.1988, the Reference Court awarded compensation at the

rate of Rs. 5/- per sq.m. with all other benefits.   

6. In reference cases involved in Civil Appeal Nos. 4260-4261 of 2002

(Ramdas Dattatraya Naik v.  The State of Maharashtra)  and Civil  Appeal

Nos. 4264-4265 of 2002 (Dattatraya Krishna Naik (since deceased) through

his proposed Legal Representatives) v. The State of Maharashtra), however,

compensation was awarded upon adopting the belting method at the rate of

Rs. 6 and 10 per sq. m. respectively.

7. Both the parties preferred appeals and cross-appeals thereagainst.  By

reason  of  the  impugned  judgment,  whereas  the  appeal  preferred  by  the

appellants had been dismissed, the cross appeals preferred by the State in

Civil Appeal Nos. 4260-4261 of 2002 and in Civil Appeal Nos. 4264-4265

of 2002 was allowed holding that compensation determined at the rate of

Rs. 5 per sq. m. was justified.  However, in Civil Appeal Nos. 4264-4265 of

2002 where the Trial Court awarded compensation at the rate of Rs. 10 per

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sq.  m.,  it  was  reduced  to  Rs.  7/-  per  sq.  m. by reason  of  the  impugned

judgment.   

8. Mr. Uday U. Lalit, learned senior counsel, in support of these appeals,

would contend that the Reference Court as also the High Court could not

have rejected  the testimony of  Mr.  Jeevan Kulkarni  who made a modest

estimate in regard to valuation of the land at the rate of Rs. 15 per sq. m.

Drawing our attention to a judgment of the Bombay High Court in

Unama Padu Hudar & Ors. v.  The State of Maharashtra [First Appeal No.

754 of  1986, decided on 25 & 26th February, 1993],  the learned counsel

urged that in respect of villages Panvel and Kamothe, the High Court itself

adopted  belting  system  and  granted  various  amounts  of  compensation

depending upon the proximity of  the village from the National  Highway

running between Bombay and Pune to the following effect:

“Group No. First Appeal No. Rate granted per sq. m. I.  Abutting  the Highway

754/1986 763/1986

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II. Within 800 Metres 751/1986 (Part) 756/1986

23

III.  Abutting  Kamothe Z.P.  Road  to  1200 Metres

753/1986 751/1988 (Part) 752/1986

22`

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IV-A.  800  Mtrs.  to 2200  Mtrs  from Bombay  –  Pune Highway

755/1986 20

IV-B.  20  Mtrs  from Z.P. Rd., & Gaothan to 640 Mtrs from Z.P. Rd & Gaothan

743/1986 20”

9. Our attention was also drawn to the fact  that  in some cases where

award could not be made and published within a period of two years from

24.09.1984 from which date Section 11A was inserted in the Act, a fresh

notification was issued in the year 1986.  Recently, the Bombay High Court

by  reason  of  a  judgment  and  order  dated  21.06.2007  has  granted

compensation at the rate of Rs. 1,725/- per sq. m.  It was urged that in these

views of the matter and keeping in view the fact that the appellant in Civil

Appeal No. 4259 of 2002 has paid great fees for obtaining compensation at

the rate of Rs. 20 per sq. m., this Court may award compensation suitably.

10. Mr.  Sanjay V. Kharde,  learned counsel  appearing on behalf  of  the

State, on the other hand, supported the impugned judgment.

For the sake of convenience, we may hereto below place the relevant

details:

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Civil  Appeal No.

Area Award Reference Court

High Court

4259 of 2002 5300 sq. m. Re. 1 Rs. 5 Rs. 5 4266 of 2002 13600 sq.m. Re. 1 Rs. 5 Rs. 5 4262 of 2002 23300 sq. m. Re. 1 Rs. 5 Rs. 5 4260-61  of 2002

19800 sq. m. Re. 1 Rs. 6 Rs. 5

4263 of 2002 22490 sq. m. Re. 1 Rs. 5 Rs. 5 4264-65  of 2002

5  acres  2 guntas

Re. 1 Rs. 10 Rs. 5 (in  one  case Rs. 7)

11. The purpose for acquisition of land was building a new city.  A vast

tract of land was sought to be acquired.  Indisputably, in terms of Section 23

of the Act, the market value of the land was required to be determined as

was obtaining in the year 1970 when the notification under Section 4 of the

Act was issued.  It is unfortunate that despite the fact that notification was

issued  under  Section  4  of  the  Act  as  far  back  as  on  3.02.1970  and  a

declaration under Section 6 of the Act was issued on 21.05.1971, the award

came to be passed only on 30.06.1986 and that too probably, only having

regard to the consequences ensuing in terms of Section 11A of the Act.

12. A finding of fact was arrived at by the learned Reference Judge that

no sale instance was available for the lands situated in the village Wahal

and there was no industrial or commercial development therein.  The Pune-

Bombay Highway was constructed in the year 1978.  The M.I.D.C. pipeline

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was constructed in the year 1978.  There was no railway station nearby the

village.  The villagers did not obtain any electricity connection.  The land

was a grassy land.

13. In absence of any example of sale being available, the reference court

was required to take recourse to other methods of valuation.  We do not find

that enough materials had been brought on record to establish the yield of

the lands sought to be acquired, which are admittedly agricultural in nature.

In  all  fairness,  the  State  should  have  brought  on  record  the  requisite

information,  viz.,  the  nature  of  the  crop,  the  annual  average  yield,

availability of irrigation facilities, etc. so as to enable the reference court to

arrive at a correct decision in regard to grant of compensation under the Act

14. Although the lands in question were agricultural in nature, they were

being used for making a town like Bombay.  A new port known as Nhava

Sheva Port had come into being which is a few kilometers away from the

village.  The roads were being constructed.  The road to Nhava Shiva Port

from Bombay is a District  Board Road which is  within  7 Kms. from the

village in question.  A copy of the new Bombay Development Plan has been

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placed before us to point  out  construction  of  the  National  Highway, i.e.,

Bombay-Pune road as also the other District Board roads.   

The potentiality of a land for the purpose of development as also for

building purposes would depend upon a large number of factors.

15. For the said purpose, the court may not only have to bear in mind the

purpose  for  which  the  lands  were  sought  to  be  acquired  but  also  the

subsequent events to some extent.  In a case of this nature the court may

proceed on the presumption that such a vast tract of land, viz., 96 villages

were  sought  to  be  acquired  at  the  same  time  for  construction  of  New

Bombay.   

16. We are not unmindful of the fact that development in the entire area

was not possible at one point of time.  Development of the area must have

taken place in phases.  We are also not unmindful of the fact that the price

of the land may skyrocket depending upon the development as also future

potentiality.

17. The  High  Court,  as  noticed  hereinbefore,  in  respect  of  village

Kamothe adopted a belting system.  It awarded compensation varying from

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Rs. 20 to Rs. 25 per sq. m. depending upon the proximity from the National

Highway.  In respect of a village Panvel, however, although the lands were

not proximate to the National Highway but a standard was adopted for the

purpose of grant of compensation on the proximity from the District Board

Roads.

18. If that  criterion  is  to  be adopted,  in  our  opinion,  some subsequent

events  may also be taken into  consideration  therefor.   In  search of  legal

principles of valuation of land, we may notice some decisions.

In Rao Narain Singh (Dead) By LRs. v. Union of India [(1993) 3 SCC

60], this Court held:

“8. Building potentiality of the acquired land, claimed to be possessed by the acquired land, can assume no significance in the instant case as ‘the comparable sales method’ of valuation of land is resorted  to  by  the  High  Court.  Such  method  is resorted to, as the acquired land was found to be comparable  in  its  essential  features  with  land(s) respecting which evidence of certain sale deed(s), was  produced.  Hence,  the  contention  of  the learned  counsel  for  the  appellant  raised  to establish  that  the  acquired  land  had  building potentiality at the time of its acquisition, need not engage our consideration.”

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Yet again in  Viluben Jhalejar Contractor (dead) By LRs. v.  State of

Gujarat [(2005) 4 SCC 789], it was held:

“The amount  of  compensation cannot  be ascertained with mathematical  accuracy.   A  comparable  instance  has  to  be identified having regard to the proximity from time angle  as well  as  proximity from situation  angle.   For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-à-vis the land under acquisition by placing the two in  juxtaposition.   The  positive  and  negative  factors  are  as under:

Positive factors Negative Factors (i) smallness of size (i) largeness of area (ii) proximity to a road (ii)  situation  in  the  interior  at  a

distance from the road (iii) frontage on a road (iii)  narrow strip  of  land  with  very

small frontage compared to depth (iv) nearness to developed area (v)  lower  level  requiring  the

depressed portion to be filled up (v) regular shape (v)  remoteness  from  developed

locality (vi) level vis-à-vis land under acquisition

(vi)  some  special  disadvantageous factors  which  would  deter  a purchaser

(vii) special value for an owner of an adjoining  property to  whom it  may have some very special advantage.

Whereas a smaller plot may be within the reach of many, a large block of  land will  have to  be developed preparing  a layout  plan,  carving  out  roads,  leaving  open spaces,  plotting out smaller plots, waiting for purchasers and the hazards of an

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entrepreneur.  Such development charges may range between 20% and 50% of the total price.”

19. Applying  the  aforementioned  legal  principles  to  the  fact  of  the

present  case,  we  are  of  the  opinion  that  if  the  belting  system is  taken

recourse to, compensation at the rate of Rs. 10/- per sq. m. would sub-serve

the ends of justice.

20. The Reference Court in another case leading to First Appeal No. 646

of  1995  [State  of  Maharashtra  v.  Shri  Trimbak  Joma  Thakur]  fixed  the

amount of compensation at Rs. 230 per sq. m.  The Reference Court in the

instant  case,  having  regard  to  the  non-agricultural  potential  of  the  land,

made the valuation at the rate of Rs. 5 per sq. m.  It was held:

“…Admittedly  those  lands  are  not  from  village Wahal.   Considering this type of  evidence of  an expert,  I certainly conclude that  bearing in mind the  distance  of  the  acquired  lands  from  Panvel which is far expanding city, this land has certainly N.A. potentiality in the year 1970 also.  There are other  industrial  developments  and  particularly Nhava  Sheva  Port  Trust,  Navy,  the  lands  would have  certainly  fetch  the  price  more  than  the awarded  price.   In  the  circumstances,  from  the evidence on record,  I  say that  the Opponent  has paid  less  compensation  and  it  is  necessary  to increase  the  amount  of  compensation….Thus, considering the  evidence before  me, I  can  guess

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the  possible  correct  rate  of  compensation  and according  to  me,  it  is  necessary  to  award compensation at the rate of Rs. 5 per square metre for the present acquired lands.”

21. We have  arrived  at  the  rate  of  Rs.10/-  per  sq.  m. of  land  for  the

purpose  of  grant  of  compensation  because  the  distance  between  village

Panvel and Wahal is about nine kms.  Panvel was a municipal area, Wahal

was  a  gram  panchayat.   We  have  noticed  hereinbefore  that  even  the

electricity had not reached the Village Wahal.

22. Appellant  in  Civil  Appeal  No.  4259  of  2002,  in  his  deposition

categorically  admitted  the  factors  to  which  we  have  taken  note  of

heretobefore as regards non-development of the land.  The expert opinion of

the valuer also could not be fully relied upon as not only he had visited the

village in the year 1986 but also in his evidence, he admitted:

“…In  my  valuation  report,  I  have  taken capitalization  method.   While  taking  income capitalization  method,  I  have  noted  that  in  the Indian context, it is very difficult to prove the agri. Income because of the heart  percentage illiteracy and  no  accounts  are  maintained  by  the agriculturist…”   

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It is in that view of the matter, the Reference Court did not rely upon

his evidence, stating:

“I found that Mr. Kulkarni has not considered the aspect of capitalization properly.  For the purpose of capitalization, he mainly relied upon the lease in  favour  of  M.I.D.C.   In  fact  M.I.D.C.  has installed the pipeline in the year 1978 as stated by the claimant.   So on the date of notification, the lease  instance  was  not  available.   Consequently, the  conclusion  drawn  by  Mr.  Kulkarni  on  the strength  of  capitalization  will  not  be  helpful  to determine the price of the land as on the date of notification.  Further, Mr. Kulkarni has considered the sale instances from villages in Thane District. Mr. Kulkarni has fairly admitted that he could not get  any sale  instance  from village  Wahal  or  the adjoining  villages.   He has  further  admitted  that there are no industrial or commercial activities in village Wahal in 1970.  Thus, his guess work, with regard  to  N.A.  potentiality  is  based  on  the  sale instances and the awards which he has considered. From his report it appears that he has considered, sale instance from village shahabaj which is 3 to 4 kms. away from village Wahal.  The rate paid in the sale instance is Rs. 7.77 per square metre.  The Awards  which  he has  considered  also  show that amounts of Rs. 8 to Rs. 15 per square metre are awarded by various Courts for adjoining lands…”

23. Another  aspect  of  the  matter  cannot  also  be  lost  sight  of.   In  the

instant case, the Land Acquisition Collector valued the lands at 35 paise per

sq. m., the Reference Court opined that valuation would be Rs. 5 per sq.m.

Whereas in First Appeal No. 754 of 1986 decided on 26.02.1993, the Land

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Acquisition Collector itself  valued the land at the rate of Rs. 6 per sq.m.

wherewith the Reference Court did not differ and the belting system for the

first time was adopted by the High Court itself, in First Appeal No. 646 of

1995  decided  on  21.06.2007,  the  Land  Acquisition  Collector  valued  the

lands  at  the rate  of  Rs. 200 to  230 per  sq.  m. which was upheld  by the

Reference Court.  In that case, notification under Section 6 of the Act was

issued in the year 1986.  Within a span of 16 years, a lot of development had

taken place.  The lands in question in that case involved commercial lands

and deeds  of sale were available for the purpose of  determination of the

amount of compensation.

24. However, if not the judgment dated 21.06.2007, the judgment dated

26.02.1993, in our opinion, can be put to use at least for a limited purpose,

viz., option of belting method and grant of compensation on the basis of the

proximity of the National Highway and the other.

25. Keeping  in  view  the  aforementioned  principles  in  mind,  we  have

arrived at the aforementioned figure of Rs. 10 per sq. m.   

In a case of this nature, in our opinion, some guess-work is inevitable.

[See Viluben Jhalejar Contractor (supra)].  We must, however, add that the

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judgment rendered by the High Court in Civil Appeal No. 4264-65 of 2002

may be a safe guide particularly when the Reference Court itself opined that

the valuation of the land should be determined at Rs. 10 per sq. m.  Thus,

the  said  valuation  adopted  may  be  considered  as  providing  for  some

guideline.   

26. The  appeals  are  allowed  in  part  and  to  the  extent  mentioned

hereinbefore.  In the facts and circumstances of the case, there shall be no

order as to costs.

………………………….J. [S.B. Sinha]

..…………………………J.     [Cyriac Joseph]

New Delhi; April 15, 2009

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