REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5616 OF 2004

Radha Mudaliyar … Appellant

Versus

Spl. Tahsildar (Land ACQ.),  T.N.H. Board            …  Respondent

WITH

CIVIL APPEAL NO.5628 OF 2004

Dhanapooshanam … Appellant

Versus

Special Tahsildar (L.A.), Chennai & Anr.         …  Respondents

WITH

CIVIL APPEAL NO.5732 OF 2004

N. Thananchayan … Appellant

Versus

Special Tahsildar (L.A.) Chennai & Anr.         …  Respondents

WITH

CIVIL APPEAL NO.8818  OF 2010  (Arising out of SLP (C) No.9736 of 2004)

K. Gomathi & Ors. … Appellants

Versus

Special Tahsildar (L.A.), Madras & Anr. …  Respondents

J U D G M E N T

Swatanter Kumar, J.

1. Leave granted in SLP (C) No.9736 of 2004.

2. Application for impleadment in Civil Appeal No.5616 of  

2004 is allowed.

3. By this  judgment,  we will  dispose of  the  three Civil  

Appeals being Civil Appeal Nos.5616, 5628 and 5732 of 2004  

and a  Civil  Appeal  arising  out  of  Special  Leave  Petition  (C)  

No.9736 of 2004 as they arise from a common judgment with

somewhat similar facts.   

FACTS

4. For the purposes of brevity and to avoid repetition, we  

would be referring to the facts in Civil Appeal No.5616 of 2004.  

A notification under Section 4(1) of the Land Acquisition Act,  

1894  (for  short,  ‘the  Act’)  was  issued  by  the  Industries  

Department  of  the  State  of  Tamil  Nadu  on  23.01.1985  to  

acquire land in the Revenue Estate of village Kadaperi, Hamlet  

of Tambaram, Tambaram Taluk within the municipal limits of  

the city including the land admeasuring 7.06 acres belonging  

to  the  appellant.   This  notification  came  to  be  issued  in  

furtherance of the scheme, which was sanctioned by the State  

Industries Promotion Corporation of Tamil Nadu (SIPCOT) on  

03.04.1984 and a total of 261.42 acres of land was acquired  

for setting up the Madras Export Processing Zone (MEPZ).  The  

entire  land,  including dry and wet  lands,  was sought to be  

acquired as a compact block for the project in question.  In  

response to the publication of the notification, the interested  

persons filed objections in terms of Section 5A of the Act which

were considered by the Land Acquisition Officer (for short, the  

‘LAO’) and declaration under Section 6 of the Act was issued  

on 23.04.1986.  After notice to the interested persons/owners,  

Award  No.  3/86  was  made  and  published  by  the  LAO  on  

28.11.1986.  The LAO awarded  compensation  at  the  rate  of  

`  145/- per cent for an extent of 64 cents and  `  110 for 6.42  

acres of another kind of land and also awarded compensation  

at  different  rates  for  the  superstructures  raised  by  the  

appellants on their  respective lands.   The possession of the  

land  was  taken  on  03.02.1987.   The  compensation  was  

received by the appellants under protest on 04.07.1987 and  

they preferred references under Section 18 of the Act.

According to the appellants, the market price of the land in  

question was between `  7,000/- and `  8,000/- per cent in the  

years 1983-84.  In 1985-86 the land was sold at the rate of `  

45,000/-  to  `  50,000/-  per  ground.   In  this  appeal,  the  

appellants had claimed compensation at that rate.  They also  

stated that they had raised nearly 160 coconut trees and dug  

a big well fitted with electric motor by incurring a cost of ` 1.5  

lakh on the land in question.   We may notice  that  various

appellants had raised different claims on these grounds.  The  

Collector,  as  already  noticed,  had  awarded  compensation  

uniformly  at  the  rates  mentioned  supra  while  awarding  

compensation separately for the well, trees, etc.

5. The  parties  led  evidence  before  the  Reference  Court  

and the Reference Court, vide its judgment dated 09.12.1988,  

enhanced  the  compensation  payable  to  the  claimants  to  

`3,600/- per cent as agricultural land by relying upon Exhibits  

A1,  A4  and  A5.  The  Reference  Court  granted  the  following  

relief to the claimants:

“1) The valuation fixed by the lands acquired at  Rs.110/-  and  Rs.145/-  per  cent,  by  the  Land  Acquisition  Officer  has  been  raised  and  a  fresh  valuation at Rs.3,600/- per cent is fixed for the entire  area of the acquired lands;

2) The valuation at Rs.2,675/- per coconut tree,  fixed by the Land Acquisition Tahsildar is held to be  correct and confirmed;

3) The valuation for the well and the pump-set  made  by  the  Land  Acquisition  Tahsildar  at  Rs.44,487/- has been enhanced to Rs.1,76,862/- and  fixed accordingly;

4) Further it is ordered that the claimant should  be  paid  30%  solatium  for  the  above  amounts  and  interest  at  the  rate  of  12%  from  23.1.1985  to  28.11.1986 and further 9% interest from 3.2.1987 to

2.2.1988.   It  is  ordered  that  the  sum  of  Rs.1,88,887.85  fixed  as  compensation  by  the  Land  Acquisition  Tahsildar  for  the  land,  trees,  well  and  pump-set  should  be  deducted  from  the  above  amount.   It  is  further  ordered that  the  claimant  is  entitled to the interest at the rate of 15% per annum  for  the  difference  amount  of  compensation  from  3.2.1988 till date of deposit of the compensation into  Court.”

6. Aggrieved by the said judgment of the Reference Court,  

the Government, through the LAO, filed an appeal before the  

High Court challenging the correctness of the same.  The High  

Court, vide its judgment dated 05.02.2001, declined to accept  

the reasoning recorded by the Reference Court in its different  

judgments  under  appeal  and  reduced  the  compensation  

payable  to  the  claimants  at  the  rate  of  `  2018/-  per  cent.  

Thus, the High Court, while partially accepting the appeal of  

the State, granted the following relief:

“Therefore,  considering  the  fact  the  lands  under  acquisition are not developed at all,  whereas, under  adjoining lands are developed, deduction at the rate of  40% for prescribing the correct value by the learned  Judge cannot be held to be erroneous.  Therefore, we  are of the considered view that the market value of the  acquired  lands  can  be  determined  by  adopting  the  value  as  per  Ex.A4,  i.e.  Rs.3,363/-,  and  after  a  deduction of 40% towards development charges, the  market  value  will  be  Rs.2,018/-  per  cent.   The  claimant  is  entitled  to  compensation  for  the  7.06

acres of acquired lands at this rate, i.e., 14,24,708/-.”

7. Before discussing the merits in these appeals, it needs  

to be noticed that different sale instances were produced as  

exhibits  in  different  references.   As  far  as  the  question  of  

enhancing  the  compensation  awarded  to  the  claimants  on  

account of trees, well and other improvements on the land in  

question is concerned, we may notice that it is apparent from  

the  record  of  the  case  as  well  as  the  arguments  addressed  

before  this  Court  that  the  correctness  of  the  compensation  

awarded by the Reference Court was hardly questioned before  

the  High  Court  and even before  this  Court.  As  there  is  no  

serious challenge to the quantum of compensation awarded on  

this  account,  we  do  not  propose  to  discuss  this  issue  any  

further.    Thus, only two issues have been raised before us,  

namely:  (a)  that  the  High  Court  has  not  appreciated  the  

evidence on record in its correct perspective.  The High Court  

has  applied  deduction  of  40%  which,  in  the  facts  and  

circumstances of the case, is not called for.  This has resulted  

in serious prejudice to the interest of the claimants and they  

have not been awarded the fair market value of their acquired

lands;  and  (b)  they  have  not  been  awarded  solatium  and  

interest in accordance with law.

DISCUSSION ON MERITS  

8. In Civil Appeal No.5616 of 2004, the claimant is the  

owner of land admeasuring 7.06 acres in a compact square  

shape falling in Survey Nos.16 and 24/1 in the Revenue Estate  

of  Kadaperi  village.  Exhibits  A1,  A4  and  A5  are  the  sale  

instances from the same village which had been produced by  

the claimant in support of her claim. Exhibits A2 and A3 are  

the valuation reports in relation to the well and the pump on  

the acquired land. Exhibit A6 is the photo copy of Kadaperi  

village map.  Exhibits A1, A4 and A5 are dated 7th November  

1984, 12th March 1984 and 15th June 1984 respectively.  The  

Reference Court appears to have firstly relied upon Exhibit A5  

and while assuming that value of the land under  this exhibit  

was  ` 6,000/- per cent then proceeded to apply 40% deduction  

on account of road facilities and the fact that these were the  

sale  instances  relating  to  plots  and  resultantly  awarded  `  

3,600/-  per  cent  as  the  compensation  payable  to  the

claimants.  Reference was also made to Exhibit A4 where the  

land had been sold at the rate of ` 4,545/- per cent.  The Court  

noticed that value of the land had been increasing in the area  

day-by-  day  and  various  facilities  such  as  school,  college,  

hospital and banks were available quite near the acquired land  

and even a Railway Station was located within a distance of  

one  kilometer.   While  taking  Exhibit  A4  as  the  basis,  the  

Reference Court erred in adding 40% increase to the reflected  

value in the sale deed.  The error is due to the reasons that  

actual sale consideration of Exhibit  A4 was  `  3363 per cent  

and the intervening period between the date of the sale deed  

and issuance of notification under Section 4 was not two years  

as  noticed  by  that  Court.   Though  the  compensation  was  

determined primarily on the basis of Exhibit A4, the learned  

Reference Court noticed that the land in Exhibit A5 had been  

sold at the rate of Rs.6,000/- per cent under that document.  

This impression of  the Reference Court is  not supported by  

any evidence on record as under Exhibit A5 the land was, in  

fact,  sold  at  the  rate  of  `  2,180/-  per  cent  on  15.06.1984.  

However,  the  learned  Reference  Court  computed  somewhat

similar  compensation with reference to the  two Exhibits  A4  

and A5.  It may be noticed that Exhibit A4 is three months  

prior to the date of execution of Exhibit A5.

9. In Civil Appeal arising out of SLP (C) No. 9736 of 2004,  

the Tahsildar vide Award No.5 of 1986 dated 29.11.1986 had  

fixed the compensation  at  `  145.85 per cent on the basis of  

Exhibits A2 and A3 respectively. These documents, as well as  

Exhibit  A4  were  considered  to  be  inadmissible  by  the  

Reference Court in its order dated 18.11.1990 and rejected as  

they  were  neither  the  original  sale  deeds  nor  copies  of  

registered documents.  The rejection thereof is not questioned  

in the present appeals.  The Court had primarily relied upon  

Exhibit A1 and awarded the compensation.  The High Court,  

while  adopting  the  reasoning  given  in  its  judgment  in  Civil  

Appeal No. 5616 of 2004, reduced the compensation relying  

upon Exhibit A4 in that case and after making 40% deduction  

awarded the compensation.  

10. In the backdrop of the above factual matrix and the  

judgments of  the Courts under appeal,  this Court  imprimus

has to examine as to what would be the just and fair market  

value  of  the  land  on  the  basis  of  which  the  compensation  

payable  to  the  claimants  should  be  determined in  terms of  

Section 23 of the Act.  It is a well settled principle of law that  

comparable sale instances, subject to their satisfying the basic  

ingredients  of  law,  are  the  best  piece  of  evidence  to  be  

considered by the Court  for  the purpose of  determining the  

compensation.  Even awards and transactions of the adjacent  

areas have been treated as best evidence which will fall within  

the  zone  of  consideration  by  the  Court.  Of  course,  such  

instances  must  be  comparable  and  legally  admissible  in  

evidence. In this aspect, we may refer to the judgments of this  

Court in the case of Harcharan v. State of Haryana,  [(1982) 3  

SCC  408];  Kantaben  Manibhai  Amin  vs. Special  Land  

Acquisition Officer, Baroda, [(1989) 4 SCC 662] and ONGC Ltd.  

vs. Sendhabhai  Vastram  Patel,  [(2005)  6  SCC  454].  

Comparable  sale  instances  are  the  safest  method  for  

determining the market value of the acquired land and as laid  

down in  Shaji  Kuriakose  vs. Indian Oil Corporation,  [(2001) 7  

SCC 650], it should satisfy the factors, inter alia, (1) the sale

must be genuine transaction; (2) the sale deed must have been  

executed  at  the  time  proximate  to  the  date  of  issuance  of  

notification under Section 4 of the Act; (3) the land covered by  

the sale must be in vicinity of the acquired land; (4) the land  

covered by the sale must be similar to the acquired land; and  

(5)  size  of  the  plot  of  the  land  covered  by  the  sale  be  

comparable to the acquired land.  The sale instances should  

preferably  be closest  to the  date  of  the  notification as then  

alone  it  would  satisfy  the  touchstone  of  the  principles  

contemplated under Section 23 of the Act, as held in Kanwar   

Singh vs. Union of India, [(1998) 8 SCC 136].

11. In Civil Appeal No.5616 of 2004, three sale instances  

were produced and proved by the claimants on the record of  

the Reference Court.  These are Exhibit A1, A4 and A5 and  

their details are as follows :

EXHIBIT DATE OF SALE DEED

AREA SOLD TOTAL SALE CONSIDERATION

VALUE PER CENT

A1 07.11.1984 5 Cents ` 20,000 ` 4,000/-

A5 15.06.1984 4.13 Cents ` 9,000 ` 2,180/-

A4 12.03.1984 5.5 Cents ` 18,500 ` 3,363/-

It needs to be noticed that all these lands are located  

in the Revenue Estate of the same village from where the land  

has been acquired.  The land, subject matter of Exhibit A4 is  

located  in  Survey  No.165  and,  as  apparent  from the  above  

table,  admeasuring  approximately  5.5  cents  was  sold  for  a  

sum of  `18,500/- and the rate comes to  `  3,363/- per cent.  

However,  it  is  in  evidence  that  when  this  document  was  

presented for  registration,  the concerned Registrar  made an  

endorsement  raising  an  objection  with  regard  to  the  sale  

consideration  declared  in  the  sale  deed.   According  to  the  

Registrar,  Mark  A5  was  the  endorsement  vide  which  the  

parties were directed to pay  stamp duty taking the value of  

the  land  in  question  to  be  `  25,000/-.   The  total  sale  

consideration  being  `  25,000/-,  the  rate  of  the  land  would  

come to `  4,545/- per cent.  This document was registered as  

per endorsement on record on 15.6.1984 while the date of the  

presentation and execution of  the sale deed was 12.3.1984.  

We  would  not  like  to  go  into  the  question  whether  as  per  

Exhibit A4 the sale consideration should be  `  18,500/- or it  

should be `  25,000/-.  The question as to what is the effect of

enhancement of the sale consideration by the Registrar for the  

purpose of payment of stamp duty, on the market value of the  

acquired land while determining the compensation payable to  

the claimants, need not be examined by us.  In this case, the  

same is specifically kept open.  For the purposes of the present  

case, we would take the value of the land at the rate of ` 3,363  

per cent.  

Exhibits A1 and A5 again are the sale instances from  

the same Revenue Estate and are quite close to the date of  

notification  under  Section  4,  Exhibit  A1 is  dated  7.11.1984  

while Exhibit A5 is dated 15.6.1984.  None of the parties to the  

proceedings  have  questioned  the  genuineness,  legality  or  

otherwise of these documents and, in fact, as it appears from  

the record before us there is hardly any objection regarding  

their admissibility or being read in evidence.

12. Now, let us examine whether Exhibits A1, A4 and A5  

satisfy the above stated tests.  They were admitted in evidence  

in accordance with law as they are genuine transactions and  

are the closest sale instances to the date of the notification as  

available  on  record  and  the  land,  subject  matter  of  the

transaction, is quite similar to the acquired land and, in fact,  

it is from the same village.  Of course, the area, stated in these  

sale instances, is comparatively much smaller in size than the  

acquired land.  The sale deed is dated 12.03.1984 while the  

notification under Section 4 was issued on 23.01.1985.  Thus,  

there is a difference of nearly ten months between these two  

dates.   The  claimants  would  be  entitled  to  the  benefit  of  

increase for this intervening period.  Annual increase of 10%  

to  15% is  normally  allowed  by  the  court  where  the  record  

reflects increasing trend in the sale price of the land.  This  

principle  is  often  applied  by  this  Court  while  determining  

compensation.   Reference can be made to the judgments of  

this  Court  in  ONGC  Ltd.  vs. Rameshbhai  Jivanbhai  Patel   

[(2008) 14 SCC 745] and Sardar Jogendra Singh (dead) by LRs.  

vs. State of Uttar Pradesh [(2008) 17 SCC 133].  We have opted  

to apply the minimum increase possible because of the short  

intervening period between the execution of the sale deed and  

issuance of notification under Section 4.  Consequence of the  

above addition would be that the value of the land in terms of  

Exhibit A4 as on the date of the notification under Section 4

would be `  3,699/- per cent rounded off to `  3,700/- per cent  

which, when reasonable deduction is applied,  would give more  

or less the same rate of compensation as computed by us on  

the basis of Exhibit A1.

13. Now,  the  next  question  that  arises  is  whether  the  

claimants  would  be  entitled  to  receive  the  compensation  at  

this rate or certain element of deduction needs to be applied in  

the facts and circumstances of the case.  The deduction can be  

applied for different aspects while determining compensation.  

If  the size of the plot is very small and the same has to be  

taken into consideration for non-availability of other evidence  

and where the land acquired is a large chunk of land, then it  

would be advisable  to  apply  some deduction on that  score.  

Reference  in  this  regard  may  be  made  to  Land  Acquisition  

Officer  vs. Nookala  Rajamallu  [(2003)  12  SCC  334].   In  

alternative  or  in  addition  thereto,  deduction  can  also  be  

applied  on  account  of  wastage  of  land  and  development  

charges.   In the  present  case,  the  land has been acquired,  

which  apparently  was  an  agricultural  land  at  the  time  of  

acquisition, to carry out the development scheme for the MEPZ

sanctioned by the SIPCOT.  The development purpose, being in  

public interest, is bound to result in utilization of part of the  

land for  the purposes of  roads,  by-links,  water  & electricity  

lines and other infrastructural amenities of the project.  This  

Court, depending on the facts and circumstances of the case,  

has taken the view that deduction on account of expenses of  

development  of  the  sites  could  vary  from  20%  to  70%  

depending on the nature of the land, its situation, the purpose  

and stage of development as held by this Court in the case of  

K.S.  Shivadevamma  vs. Assistant  Commissioner  and  Land  

Acqusition  Officer  [(1996)  2  SCC  62],  Ram  Piari  vs. Land  

Acquisition  Collector,  Solan  [(1996)  8  SCC  338],  Chimanlal   

Hargovindas vs. Special Land Acquisition Officer, Poona [(1988)  

3  SCC  751],  Hasanali  Walimchand  (Dead)  by  Lrs.

vs. State  of  Maharashtra [(1998)  2  SCC  388[.  In  K.S.  

Shivadevamma (supra), this Court held as under:

“10. It is then contended that 53% is not automatic  but depends upon the nature of the development and  the  stage  of  development.  We  are  inclined  to  agree  with the learned counsel that the extent of deduction  depends upon development need in each case. Under  the Building Rules 53% of land is required to be left  out.  This  Court  has laid  as a general  rule  that  for

laying  the  roads  and  other  amenities  33-1/3%  is  required to be deducted. Where the development has  already taken place, appropriate deduction needs to  be made. In this case, we do not find any development  had  taken  place  as  on  that  date.  When  we  are  determining compensation under Section 23(1), as on  the date of notification under Section 4(1), we have to  consider  the  situation  of  the  land  development,  if  already  made,  and  other  relevant  facts  as  on  that  date.  No doubt, the land possessed potential  value,  but no development had taken place as on the date,  In view of the obligation on the part of the owner to  hand over the land to the City Improvement Trust for  roads and for other amenities and his requirement to  expend  money  for  laying  the  roads,  water  supply  mains,  electricity  etc.,  the  deduction  of  53%  and  further deduction towards development charges @ 33- 1/3%, ordered by the High Court, was not illegal.”

The  above  view  was  reiterated  in  the  case  of Nookala  

Rajamallu (supra).

14. On  similar  lines,  this  Court  in  the  case  of  V.  

Hanumantha  Reddy  (Deceased)  by  Lrs.  vs. Land  Acquisition  

Officer  &  Mandal  R.  Officer [(2003)  12  SCC  642],  while  

considering that the acquired land was adjacent to developed  

land, held that neither its high potentiality nor its proximity to  

a  developed  land  can  be  a  ground  for  not  deducting  the  

development charges and that normally 1/3rd deduction could  

be allowed.  

as the High Court have relied upon Exhibit A4 or A5 or both of  

them,  still  they have  arrived at drastically  different rates of  

compensation payable to the claimants.  While the High Court  

took the value of  Exhibit  A4 as  `  3,363/- per cent,  without  

adding any element of increase for the intervening period, it  

applied  deduction  at  the  rate  of  40%  and  awarded  

compensation at the rate of  `  2,018/- per cent.  On the other  

hand the Reference Court took the total sale consideration of  

Exhibit  A4 as  `  25,000/- in place of  `  18,500/- and applied  

40% increase while awarding compensation to the claimants.  

Of course, the Reference Court also applied 40% deduction on  

account of development charges and taking the gross value at  

the rate of  `  6,000/- per cent awarded compensation at the  

rate of `3,600/- per cent.   

In our considered view, both the Reference Court as well as  

the High Court have fallen in error of law in computing the  

compensation payable to the claimants.  On the one hand, the  

High Court  ignored an important  aspect  of  the  case  in  not  

awarding enhancement in the value of the land as it had come  

in evidence that there was increasing trend in the sale price of

the land in that area.  The documentary evidence of Exhibits  

A1 and A4 also  shows the increasing  trend.   On the  other  

hand, the Reference Court fell in error in giving 40% increase  

for a short intervening period of ten months.  Both the High  

Court  as  well  as  the  Reference  Court  had  applied  the  

deduction at the rate of 40% but still awarded compensation  

at antipodal rates.

Another reason which we must notice and, in fact, it is not  

clear to us either from the judgment of the High Court or that  

of  the  Reference  Court  as  to  why Exhibit  A1 has not  been  

taken  into  consideration  by  both  the  Courts.  In  our  view,  

Exhibit A1 is the sale instance from the Revenue Estate of the  

same village and is located close to the developed area.  The  

sale deed was executed only three months prior to the date of  

notification under  Section  4 of  the  Act  and also  reflected a  

reasonable  value  where  the  land  was  sold  at  the  rate  of  `  

4,000/- per cent while as per Exhibit A4, the land was sold at  

the rate of `  3,363/- on 12.3.1984, thus, indicating increasing  

trend in the value of the land.  If appropriate increase is given  

on  the  basis  of  Exhibit  A4  for  the  intervening  period  and

deduction at a reasonable rate less than 40% is applied, it will  

approximately give the same rate of compensation as would be  

computed with reference to Exhibit A1.   

Now, let  us examine the exact compensation payable to the  

claimants  with  reference  to  Exhibit  A1.   Genuineness  of  

Exhibit  A1  has  neither  been  questioned  nor  held  to  be  a  

transaction which was executed only to enhance the value of  

the  acquired  land.  Exhibit  A1  is  a  comparable  piece  of  

evidence which can safely be relied upon by the Court while  

determining the compensation in regard to the acquired land.  

Learned  counsel  for  the  claimants,  while  relying  upon  the  

judgment of this Court in Kasturi & Ors. vs. State of Haryana  

[(2003)  1  SCC 354],  contended  that  the  acquired  land  has  

great potential and is located adjacent to the developed land  

and as such the deduction should not be more than 20% on  

these  counts.   However,  learned  counsel  appearing  for  the  

respondents relied upon the other judgments already referred  

by us supra that the deduction should not be less than 40%.  

Having examined the facts and circumstances of the case and  

the evidence on record, we are of the considered view that rule

of approximately 1/3rd deduction can be fairly applied to the  

present case.  The land certainly has potential and even the  

sale instances show that the land from the Revenue Estate of  

the same village was sold as plots and a number of facilities,  

as indicated above, were available in the vicinity.  Examining  

the cumulative effect of the evidence on record in relation to  

location,  potential  and  similarity  of  land,  we  consider  it  

appropriate  that  deduction  of  more  than  30%  would  be  

prejudicial to the interest of the claimants whose lands have  

been acquired by the State in exercise of its power of eminent  

domain.  It is a compulsory acquisition and it is expected of  

the State to be just and fair and award the compensation to  

the claimants which satisfies mandate of law contained in the  

provisions of Section 23 of the Act.  Therefore, applying 30%  

deduction  to  the  value  indicated  in  Exhibit  A1  (deduction  

being  made  both  on  account  of  size  of  the  plot  and  

development  charges),  the  claimants  would  be  entitled  to  

receive compensation at the rate of  `  2,800/- per cent for the  

acquired land.  As in the other appeals, the High Court had  

only  relied  upon  its  judgment  which  is  impugned  in  Civil

Appeal No.5616 of 2004, therefore, it is not necessary for us to  

discuss the evidence in those cases in any further detail.  The  

claimants in all these appeals would be entitled to the same  

rate of compensation.   

17. The argument of the appellants is that they have been  

denied solatium and interest by the High Court while referring  

to the judgment of this Court in Prem Nath Kapur v. National   

Fertilizers  Corporation  of  India  Ltd.  [(1996)  2 SCC 71].   It  is  

contended that in view of the law clearly stated by this Court  

in the case of  Sunder v.  Union of  India [(2001) 7 SCC 211],  

which has been consistently followed by different Benches of  

this Court, the claimants are entitled to solatium as well as  

the  interest  on the  awarded  amount.  We  find merit  in  this  

contention.

18. The Constitution Bench of this Court  in the case of  

Sunder (supra) had clearly stated that the Court has to keep in  

mind  that  the  compulsory  nature  of  acquisition  is  to  be  

distinguished from voluntary sale or transfer.   In the latter,  

there is a willing buyer and seller.  In the case of acquisition, it  

is  compulsory  and deprives  the  owner  of  an opportunity  to

negotiate  and  bargain  the  sale  price  of  its  land  as  it  will  

entirely depend on what the Collector or the court determines  

as  the  amount  of  compensation  in  accordance  with  the  

provisions of the Act.  The solatium envisaged in sub-section  

(2) of Section 23 is “in consideration of the compulsory nature  

of  acquisition”.   Thus,  the  solatium  is  not  the  same  as  

damages on account of the landowner’s disinclination to part  

with the land acquired. If such compensation as determined in  

terms of Section 23 of the Act is not paid within one year from  

the date  of  taking possession of  the  land,  then in terms of  

proviso to Section 34 interest shall stand escalated to 15% per  

annum from the date of the expiry of the said period of one  

year on the amount of compensation or part thereof which has  

not been paid or deposited before the date of such expiry.  The  

Court further held that it is inconceivable that the solatium  

amount would attract only the escalated rate of interest from  

the expiry of one year and that there would be no interest on  

solatium  during  the  preceding  period.   Hence  the  person  

entitled to the compensation awarded is  also entitled to get  

interest  on  the  aggregate  amount  including  solatium.   It

appears from the impugned judgment that the High Court had  

relied upon the judgment of  this Court in the case of  Prem  

Nath Kapur (supra) and the judgment of this Court in the case  

of Sunder (supra) came to be pronounced after the judgment of  

the High Court.  While relying upon the law existing at that  

time,  the  High  Court  had declined to  grant  the  interest  on  

solatium but  made  it  subject  to  the  pronouncement  in  the  

case  of Kapur  Chand  Jain  vs. State  of  Himanchal  Pradesh  

[(1999) 2 SCC 89], wherein this Court subsequently made a  

reference  to  a  larger  Bench  and  the  judgment  in  Sunder  

(supra) came to be pronounced.  In any case there can be no  

doubt in law that the claimants are entitled to the solatium  

and the interest thereupon at the rate specified in proviso to  

Section 34 of  the Act for  the relevant period.   Even in this  

regard the judgment of the High Court, therefore, cannot be  

sustained.

19. For  the  reasons  aforestated  we  partially  allow  the  

appeals of the appellants that the claimants/appellants would  

be entitled to receive compensation at the rate of ` 2,800/- per  

cent for the acquired land and the consequential benefits of

Section 23(1)A.  The claimants would also be entitled to get  

interest on solatium according to proviso to Section 34B of the  

Act.  As already noted, the claimants have not pressed for any  

enhancement for the superstructures namely well, trees, etc.  

which, in any case, is hereby rejected.   

20. In the facts and circumstances of the cases parties are  

left to bear their own costs.

.. …..................................J.

[Dr. Mukundakam Sharma]

.… …................................J.

New Delhi,  [Swatanter  Kumar]

October 8, 2010.