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PETITIONER: MAHABIR PRASAD SANTUKA & ORS.

       Vs.

RESPONDENT: COLLECTOR, CUTTACK & ORS.

DATE OF JUDGMENT11/02/1987

BENCH: SINGH, K.N. (J) BENCH: SINGH, K.N. (J) SEN, A.P. (J)

CITATION:  1987 AIR  720            1987 SCR  (2) 289  1987 SCC  (1) 587        JT 1987 (1)   401  1987 SCALE  (1)301  CITATOR INFO :  F          1989 SC1222  (10)

ACT:     Land        Acquisition         Act,        1894--S.23-- Compensation--Market value--Determination of--Offer of  land to  industrialists on concessional rate-- Whether  indicates ’market value’ of land.

HEADNOTE:     Certain  plots  of  land owned by  the  appellants  were acquired  by the Government for the purpose of  construction of Aviation Research Centre. The Collector awarded compensa- tion  at the rate of Rs.2,000 per acre. On a reference,  the Subordinate  Judge enhanced the compensation and awarded  at the  rate of Rs. 15,000 per acre. On appeal by the  respond- ents,  the High Court reduced the compensation holding  that since the State Government had been offering land situate in the  adjacent Industrial Area to the industrialists  at  the rate  of  Rs.7,500 per acre, the  appellants  were  entitled compensation  at that rate and that the appellants had  pur- chased the land at the rate of Rs. 100 per acre in the  year 1956,  they  were  not entitled to  compensation  more  than Rs.7,500 per acre.     In the appeal to this Court, on behalf of the appellants it  was contended that the High Court was not  justified  in reducing  the  compensation as there was ample  evidence  or record  to show that the market value of the land  was  much more  than  determined by the High Court  and  developmental activities  had  taken place near the land as  a  result  of which the value of the land had appreciated tremendously and that for adjacent land acquired by the same Notification was determined  by  the  High Court itself at the  rate  of  Rs. 15,000 per acre. Allowing the appeal,     HELD: 1. The judgment and the order of the High Court is set aside and R is directed that the appellant shall be paid compensation at the rate of Rs. 15,000 per acre. [294E]     2.  Section  23 of the Land Acquisition Act,  1894  lays down  principles for determining compensation  according  to which the owner is entitled to receive the market value  for the land. [291H]

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290     3. Market value means what a willing purchaser would pay to  a willing seller for the property having regard  to  the advantages available to the land and the development activi- ties which may be going on in the vicinity and the  potenti- ality of the land. [292A-B]     4. An offer of sale of land to industrialists on conces- sional  rates  with a view of induce them to  set  up  their industries  in a particular area does not reflect  the  pre- vailing  market  value of the land. The  industrialists  who were  offered  the land at concessional rates were  not  the willing purchasers. [292F]     5.  The High Court committed error in proceeding on  the assumption that the concessional rate offered by the Govern- ment  to  the industrialists indicated the market  value  of similar land. [292F-G]     6. In the instant case, on the evidence on record it  is apparent that the land in question is adjacent to the indus- trial  area where a large number of factories  are  situate. Even  though the land was being used for  agricultural  pur- poses  but it was fit for non-agricultural purposes  and  it had potentiality for future use as factory or building site. [292B-C]     7. There is no valid reason to award compensation to the appellants at a reduced rates specially so when the respond- ents have failed to point out any material difference in the situation,  topography, lay out of the appellants’  land  in respect  of which compensation has been awarded at the  rate of Rs. 15,000 per acre. [293F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  696  of 1973.     From  the  Judgment  and Order dated  14.7.1972  of  the Orissa High Court in First Appeal No. 117 of 1971. B.P. Singh and Ranjit Kutnar for the Appellants. Vijay Mohanty, P.N. Misra S.K. Jaina for the Respondents. The Judgment of the Court was delivered by,     SINGH,   J.  This  appeal  on  certificate  under   Art. 133(1)(a) of the Constitution is directed against the  Judg- ment  and Order of the High Court of Orissa at Cuttack  set- ting aside the order of the Subordi- 291 nate Judge, Cuttack and reducing the amount of  compensation awarded to the appellants.     The  appellants  are owners of plots  in  dispute  which include Plot Nos. 177/16, 177/16-A, 177/17 and 177/17-A  and situate  in  village Jagbhairab having an area of  about  12 acres.  A notification under sec.4 of the  Land  Acquisition Act, 1894 was’issued on 2.2.67 and in pursuance thereof  the appellants’  land along with other land was acquired by  the Government  for  the  purpose of  construction  of  Aviation Research Centre at Charbatiya. The Collector award compensa- tion to the appellants at the rate of Rs.2,000 per acre.  On a  reference  made  at the instance of  the  appellants  the Subordinate Judge, Cuttack awarded compensation at the  rate of  Rs.15,000  per acre. On appeal by the  respondents,  the High  Court modified the order of the Subordinate Judge  and directed  that  the appellants be paid compensation  at  the rate  of Rs.7,500 per acre. Aggrieved, the  appellants  have preferred  this appeal after obtaining certificate from  the High Court.     Learned  counsel for the appellants urged that the  High

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Court was not justified in reducing the compensation awarded by  the  Subordinate Judge, as there was ample  evidence  on record  to show that the market value of the land  was  much more  than  determined by the High Court  and  developmental activities  had taken near the land as result of  which  the value of the land had appreciated tremendously. The  learned counsel  brought to our notice a number of judgments of  the High Court where compensation for adjacent land acquired  by the  same  Notification was determined at the  rate  of  Rs. 15,000  per acre. In those cases Advocate General  appearing on  behalf  of  the respondents before the  High  Court  had conceded that the claimants were entitled to compensation at the  rate  of Rs.15,000 per acre in the  area  in  question. Learned  Counsel further urged that the appellants’ land  as well  as the land of other claimants who have  been  awarded compensation at the rate of Rs. 15,000 per acre by the  High Court  are adjacent and there was no valid ground  to  award compensation to the appellants at a reduced rate.      We  have been taken through the judgment  under  appeal and  other judgments of the High Court and the  evidence  on record.  After  hearing counsel for the parties  and  having perused the records we find merit in the appellants’ submis- sion. It is well settled that the owner of the acquired land is  entitled  to  compensation on the basis  of  its  market value. Section 23 of the Act lays down principles for deter- mining compensation according to which the owner is entitled to receive 292 market value of the land. Market value means what a  willing purchaser  would  pay to a willing seller for  the  property having  regard to the advantages available to the  land  and the  development  activities which may be going  on  in  the vicinity  and the potentiality of the land. On the  evidence on  record it is apparent that the land in dispute is  adja- cent  to  the Industrial area of Charbatiya  where  a  large number of factories including Orissa Textile Mills,  Kalinga Tubes  Ltd.,  a number of other factories are  situate.  The evidence  on record further indicates that even  though  the land was being used for agriculture purposes but it was  fit for  non-agricultural purposes and it had  potentiality  for future use as factory or building site. The learned Subordi- nate  Judge on perusal of the oral and documentary  evidence on  record  determined the market value of the land  at  the rate of Rs. 15,000 per acre. The High Court held that  since the  State Government had been offering land situate in  the adjacent  Industrial Area to the industrialists at the  rate of  Rs.7,500 per acre, the appellants were entitled to  com- pensation  at that rate. In our opinion the High Court  com- mitted  error  in  taking that approach, as  it  had  itself observed  that the State Government had offered land to  the industrialists  to enable them to set up industries and  the price  of  the land was offered to them  at  a  concessional value  with a view to induce them to set up  factory.  After making  that  observation High Court was  not  justified  in determining  the  market value of the land at  Rs.7,500  per acre,  as the offer of land to Industrial  enterprenuers  at concession  rate could not reflect the market value  of  the land.     Market  value  means, the prince which  a  purchaser  is willing  to pay of the similar land to a willing-seller.  An offer of sale of land to industrialists on concessional rate with  a view to induce them to set up their industries in  a particular  area do not reflect the prevailing market  value of the land. The industrialists who were offered the land at concessional rates are not the willing purchasers. The  High

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Court  committed error in proceeding on the assumption  that the concessional rate offered by the Govt. to the  Industri- alists indicated the market value of similar land.     The  High Court further held that since  the  appellants had  purchased the land at the rate of Rs. 100 per  acre  in the  year  1956, they were not entitled, in  any  event,  to compensation  more  than  Rs.7,500 per acre,  this  view  is untenable. There is evidence on record to show that the land which was purchased in the year 1956 had no potentiality  at that  stage, as Industrial acre had not developed  near  the land. After the setting up industrial area of Charbatiya the price of the land 293 situate in its vicinity had increased tremendously. It is  a matter  of  common  knowledge that price of  land  near  the vicinity of industrial area is bound to rise. Admittedly the appellants’ land is situate near the industrial area, there- fore  its value had increased and the High  Court  committed error  in ignoring this aspect by determining the  compensa- tion.  Plot No. 177 is a big plot having  various  sub-plots which  are  owned by different persons. The  appellants  are owners of Plots Nos. 177/16, 177/16-A, 177/17 and  177/17-A. The land contained in other sub-plot Nos. 177/19, 177/10 and 177/7  was  also acquired and the  compensation  in  respect thereof was determined by High Court uniformally at the rate of Rs. 15,000 per acre. There are five judgments of the High Court on record in respect of various sub-plots of Plot  No. 177. On a perusal of those judgments, it is evident the High Court has awarded compensation at the rate of Rs. 15,000 per acre for the land which is quite adjacent to the  appellants land.  The High Court has observed in its Judgment in  First Appeal  No. 173 of 1971 connected with First Appeal No.  174 of 1971, Collector, Cuttack v. Karunakar Mahanty, decided on October  21,  1975, that the Advocate General  appearing  on behalf of the State conceded that in view of the decision of the High Court in respect of the similar land in the vicini- ty it was not possible on his part to question the valuation of  the acquired land as fixed by the Subordinate  Judge  at the  rate  of  Rs. 15,000 per acre. In that  case  plot  no. 177/13  was the subject matter of the acquisition.  We  have also  perused a copy of the map which is on record. We  find that  the appellant’s land is quite adjacent to those  plots which were the subject matter of the decision in the appeals decided  by  tile  High Court where  compensation  has  been awarded  at the rate of Rs. 15,000 per acre. In the  circum- stances  there is no valid reason to award  compensation  to the  appellant at a reduced rate specially so when  the  re- spondents  have failed to point out any material  difference in  the  situation, topography, lay out of  the  appellants’ land  with  that of the adjacent land in  respect  of  which compensation has been awarded at the rate of Rs. 15,000  per acre.  If the impunged order of the High Court under  appeal is upheld an anomalous position would arise inasmuch as  the appellants will be denied that amount of compensation  which has  been awarded to other claimants in respect  of  similar adjacent land. We are therefore of the opinion that the High Court committed error in interferring with the order of  the Subordinate Judge and in determining the compensation at the rate  of Rs.7,500 per acre. We hold that the appellants  are entitled to compensation at the rate of Rs. 15,000 per  acre as determined by the learned Subordinate Judge. The High Court has awarded solatium at the rate of 15% in 294 consideration of compulsory nature of acquisition and it has further  awarded interest at the rate of 6% per  annum  from

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the  date  of taking over the possession till  the  date  of deposite  of amount of compensation Learned counsel for  the appellants  urged  that  in view of the  amendment  made  in Section  23 and 28, of the Act by the Amending Act  of  1984 appellants  were entitled to solatium at the rate of 30%  of the  compensation and they are further entitled to  interest at  the  rate  of 9% per annum. He placed  reliance  on  the decision  of  this Court in Bhag Singh v.  Union  Territory, Chandigarh,  [1985] Suppl. 2 115 where it was held  that  in view  of  Sec. 30(2) of the Amending Act  the  amended  Sec. 23(2)  which  provided for solatium at the rate  of  30%  is applicable  to all pending proceedings whether they  may  be pending  before  the  Collector, Court, High  Court  or  the Supreme  Court. We are informed that this question has  been referred  to  a larger Bench and a  Constitution  Bench  has heard argument and the judgment is reserved. In this view we refrain from expressing any opinion on the question, if  and when  judgment is delivered in the matter and if the  appel- lants are found entitled to the increased amount of solatium and interest they would also be entitled to receive the same in accordance with law.     We accordingly allow the appeal, set aside the  judgment and  order of the High Court and direct that the  appellants shall  be  paid compensation at the rate of Rs.  15,000  per acre.  The appellants are entitled to their costs.  The  re- spondents are directed to pay the costs of the appeal to the appellants which we quantify Rs.5000. A.P.   S                                              Appeal allowed. 295