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CASE NO.: Appeal (civil)  5112 of 2007

PETITIONER: Lucknow Development Authority

RESPONDENT: Krishna Gopal Lahoti and Ors

DATE OF JUDGMENT: 02/11/2007

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 5112 OF 2007 (Arising out of SLP (C) No.12446 of 2005)

Dr. ARIJIT PASAYAT, J.

1.      Leave granted.  

2.      Challenge in this appeal is to the judgment of a Division  Bench of the Allahabad High Court, Lucknow Bench  dismissing the appeal filed by the appellant under Section 54  of the Land Acquisition Act, 1894 (in short the ’Act’) read with  Section 96 of the Code of Civil Procedure, 1908 (in short  ’CPC’).  

3.      In the First Appeal challenge was to the award dated  18.2.1998 passed by the Presiding Officer, Nagar Mahapalika  Tribunal, Lucknow in a reference under Section 18 of the Act  in land case No.746 of 1991 titled Krishna Gopal Lahoti v.  State of U.P.

4.      The factual background in a nutshell is as follows:

       A large area of land measuring 194 bigha 19 biswa 14  biswansi and 14 kachwansi situated in village Purania and  Mahibullapur was sought to be acquired by appellant- Lucknow Development Authority under the housing and  development scheme known as "Timber Nagar Avasiya  Yojana". Khasra plot No.379 measuring 8 bigha, and Khasra  plot No.394 measuring 2 bigha, 8 biswa 15 biswansi situated  at village Mahibullapur and belonging to the claimants  Krishna Gopal Lahoti, Sharad Kumar Lahoti, Sunil Kumar  Lahoti and Sudhir Kumar Lahoti were also acquired under the  said scheme. The relevant notification under Section 4 was  issued on 26.3.1986. The notification under Section 6 of the  Act was published on 28.5.1986. The possession of the  acquired land was taken on 17.12.1986 and Award under  Section 11 of the Act was made on 27.5.1988 by the Special  Land Acquisition Officer. The Special Land Acquisition Officer  in his Award under Section 11 of the Act determined the  market value of the land in question at the rate of Rs.2.20 per  sq. ft.

5.      Aggrieved by the aforesaid Award, reference under  Section 18 was preferred by the land owners, inter alia, stating  that adjoining to the land in question, there is Lucknow-

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Sitapur Highway and nearby the acquired land there are  number of colonies such as Aliganj Colony, Kapurthala  Complex, P & T Colony, Arif Complex, Public Service  Commission and Office of Geological Survey of India.

6.      According to the landowners, the land in question has  great potential value and the market value as determined by  the Special Land Acquisition Officer is quite inadequate.  The  market value of the land at the rate of Rs.60/- per sq.ft. was  claimed by the respondents besides statutory benefit under  Act 68 of 1984.

7.      The Lucknow Development Authority and the State of  U.P. filed written statements separately. It was stated that the  compensation as determined and awarded by the Special Land  Acquisition Officer is quite adequate and the claimants are not  entitled to the benefits of the provisions of Act 68 of 1984. It  was stated that claim petition is barred by time. It is also  barred by the provisions of the Urban Land Ceiling Act, 1976  (in short ’ULC’ Act) and by the provisions of Section 31 of the  Act.

8.      Both the parties led oral and documentary evidence.  

9.      The learned Tribunal could not find any substance in the  pleas raised by the appellants regarding claim being barred  under various heads as alleged in the written statements and  all the issues were decided in negative against the appellant.  The Tribunal further found that the claimants are entitled to  the benefit of provisions of Act of 68 of 1984 and on the basis  of the evidence on record, the Tribunal determined the market  value of the land at Rs.6/- per sq. ft. and accordingly  compensation was awarded by the impugned Award.           10.     Against the Award, the First Appeal was filed before the  High Court. Primarily, it was contended before the High Court  that the Tribunal had not properly evaluated the evidence on  record and wrongly placed reliance on a sale deed relating to a  small piece of land. It was also submitted that without any  proper appreciation of materials on record the compensation  was enhanced.  

11.     Stand of the respondents before the High Court was that  there was no illegality in the Award passed by the reference  court. It was submitted that the land was situated near  densely populated area having great potential value and the  appellate authority is selling the same land at the rate of  Rs.300/- per sq. ft. The reference court on the basis of oral  and documentary evidence has awarded compensation at the  rate of Rs.6/- per sq. ft. along with other benefits as provided  under the Act. The High Court found that the claimants had  filed number of sale deeds of varying rates ranging between  Rs.10/- per sq. ft. to Rs.5/- per sq. ft. but the sale deed  relating to the plot No.166 situated at Mahibullahpur was  relied upon by the Tribunal and the reasons for enhancing the  compensation were assigned which according to the High  Court did not call for any interference. The High Court did not  find any substance in the plea of the appellant that the sale  deed (Ex.C-38) was unduly relied upon by the Tribunal. It was  pointed out that the sale deed is related to a very small piece  of land as against the large area of more than 10 bighas  involved in the present case.  The High Court referred to  certain decisions of this Court to hold that while determining  the market value of the land, the potentiality of the land is a  very material consideration and several factors like location of

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the land, its surroundings, available facilities thereon in the  vicinity, nature of the land have to be taken into account.  The  High Court also found that there was no similarity between  the land which was the subject matter of dispute in land  acquisition case No.204 of 1992 where the rate fixed was  Rs.1.85 per sq. ft.

12.     The High Court further found that two sale deeds (Ga 26  and Ga 27) reflected that the rate was Rs.3/- per sq. ft.  However, instances were referred to in holding that the market  value is much higher. After granting deduction of 25% on  account of expenses to be incurred towards plotting and  development charges, the rate was fixed at Rs.6/- per sq. ft.  Therefore, the High Court did not find any substance in the  stand that the deduction should be at least 40% and not 25%  as done. Accordingly, appeal as noted above was dismissed.  

13.     In support of the appeal, learned counsel for the  appellant re-iterated the stand taken before the High Court.

14.     In response, learned counsel for the respondents  submitted that three sale deeds namely, C-38, 39 and 40  clearly show that rate is much higher. It was pointed out that  this Court has depending on the facts of the case, allowed  deductions ranging between 20% to 33%. That cannot be a  hard and fast rule and in fact it would depend upon various  factors.

15.     Where large area is the subject matter of acquisition, rate  at which small plots are sold cannot be said to be a safe  criteria. Reference in this context may be made to three  decisions of this Court in The Collector of Lakhimpur v.  Bhuban Chandra Dutta (AIR 1971 SC 2015), Prithvi Raj  Taneja (dead) by Lrs. v. The State of Madhya Pradesh and Anr.  (AIR 1977 SC 1560) and Smt. Kausalya Devi Bogra and Ors.  etc. v. Land Acquisition Officer, Aurangabad and Anr. (AIR  1984 SC 892).  

16.     It cannot, however, be laid down as an absolute  proposition that the rates fixed for the small plots cannot be  the basis for fixation of the rate. For example, where there is  no other material it may in appropriate cases be open to the  adjudicating Court to make comparison of the prices paid for  small plots of land. However, in such cases necessary  deductions/adjustments have to be made while determining  the prices.  

17.     In the  case of Suresh Kumar v. Town Improvement  Trust, Bhopal (1989 (1) SVLR (C) 399) in a case  under the  Madhya Pradesh Town Improvement Trust Act, 1960 this  Court held that the rates paid for small parcels of land do not  provide a useful guide for determining the market value of the  land acquired. While determining the market value of the land  acquired it has to be correctly determined and paid so that  there is neither unjust enrichment on the part of the acquirer  nor undue deprivation on the part of the owner. It is an  accepted principle as laid down in the case of Vyricherla  Narayana Gajapatiraju v. Revenue Divisional Officer,  Vizagapatam (AIR 1939 P.C. 98) that the compensation must  be determined by reference to the price which a willing vendor  might  reasonably expect to receive from the willing purchaser.  While considering the market value, disinclination of the  vendor to part with his land and the urgent necessity of the  purchaser to buy it must alike be disregarded, neither must be  considered as acting under any compulsion. The value of the

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land is not to be estimated as its value to the purchaser. But  similarly this does not mean that the fact that some particular  purchaser might desire the land more than others is to be  disregarded. The wish of a particular purchaser, though not  his compulsion may always be taken into consideration for  what it is worth. Section 23 of the Act enumerates the matters  to be considered in determining compensation. The first  criterion to be taken into consideration is the market value of  the land on the date of the publication of the notification  under Section 4(1). Similarly, Section 24 of the Act  enumerates the matters which the Court shall not take into  consideration in determining the compensation. A safeguard is  provided in Section 25 of the Act that the amount of  compensation to be awarded by the Court shall not be less  than the amount awarded by the Collector under Section 11.  Value of the potentiality is to be determined on such materials  as are available and without indulgence in any fits of  imagination. Impracticability of determining the potential  value is writ large in almost all cases. There is bound to be  some amount of guess work involved while determining the  potentiality.

18.     It can be broadly stated that the element of speculation is  reduced to minimum if the underlying principles of fixation of  market value with reference to comparable sales are made:  

(i)     when sale is within a reasonable time of  the date of notification under Section 4(1);         (ii)    it should be a bona fide transaction; (iii)   it should be of the land acquired or of the  land adjacent to the land acquired; and          (iv)    it should possess similar advantages.

19.     It is only when these factors are present, it can merit a  consideration as a comparable case (See The Special Land  Acquisition Officer, Bangalore v. T. Adinarayan Setty (AIR  1959 SC 429).  

20.     These aspects have been highlighted in Ravinder Narain  and Anr. V. Union of India (2003 (4) SCC 481)

21.     The deduction to be made towards development charges  cannot be proved in any strait-jacket formula. It would depend  upon the facts of each case.  

22.     It is well settled that in respect of agricultural land or  undeveloped land which has potential value for housing or  commercial purposes, normally 1/3rd amount of  compensation has to be deducted out of the amount of  compensation payable on the acquired land subject to certain  variations depending on its nature, location, extent of  expenditure involved for development and the area required for  roads and other civic amenities to develop the land so as to  make the plots for residential or commercial purposes. A land  may be plain or uneven, the soil of the land may be soft or  hard bearing on the foundation for the purpose of making  construction; may be the land is situated in the midst of a  developed area all around but that land may have a hillock or  may be low-lying or may be having deep ditches. So the  amount of expenses that may be incurred in developing the  area also varies. A claimant who claims that his land is fully  developed and nothing more is required to be done for  developmental purposes, must show on the basis of evidence  that it is such a land and it is so located. In the absence of  such evidence, merely saying that the area adjoining his land

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is a developed area, is not enough particularly when the extent  of the acquired land is large and even if a small portion of the  land is abutting the main road in the developed area, does not  give the land the character of a developed area. In 84 acres of  land acquired even if one portion on one side abuts the main  road, the remaining large area where planned development is  required, needs laying of internal roads, drainage, sewer,  water, electricity lines, providing civil amenities etc. However,  in cases of some land where there are certain advantages by  virtue of the developed area around, it may help in reducing  the percentage of cut to be applied, as the developmental  charges required may be less on that account. There may be  various factual factors which may have to be taken into  consideration while applying the cut in payment of  compensation towards developmental charges, maybe in some  cases it is more than 1/3rd and in some cases less than 1/3rd.  It must be remembered that there is difference between a  developed area and an area having potential value, which is  yet to be developed. The fact that an area is developed or  adjacent to a developed area will not ipso facto make every  land situated in the area also developed to be valued as a  building site or plot, particularly, when vast tracts are  acquired, as in this case, for development purpose.  

23.     The aforesaid aspects were highlighted in Kasturi and  Ors. v. State of Haryana (2003 (1) SCC 354)  

24.     A reference may also be made to what has been stated in  Kiran Tandon v. Allahabad Development Authority and Anr.  (2004 (10) SCC 745), State of West Bengal v. Kedarnath  Rajgarhia Charitable Trust Estate (2004 (12) SCC 425) and V.  Hanumantha Reddy (dead) by Lrs. V. Land Acquisition Officer  & Mandal R. Officer (2003 (12) SCC 642).

25.     Keeping in view the general principles and the factual  scenario as evident from the materials brought on record, we  sustain the market value fixed (i.e. Rs.8/- sq.ft.) but instead of  25% development charges one-third has to be deducted. The  entitlements shall be worked out on that basis.  

26.     The appeal is allowed to the aforesaid extent with no  order as to costs.