REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2706-2707 OF 2004

Bilkis and others …Appellant(s)

                Versus

State of Maharashtra and others …Respondent(s)

J U D G M E N T

GANGULY, J.

1. Heard learned counsel for the parties.

2. The deceased Shaikh Rasheed Shaikh Latik was the  

owner of the land gut no. 29 adms. 80 Aar situated at  

Thana Tq. Soyegaon. His entire land was acquired by  

the Land Acquisition Officer (hereinafter ‘LAO’) for  

the development of tourism plan of Ajintha villages  

Fardapur  and  Thana,  taluka  Soyegaon,  district  

Aurangabad.  A  notification  was  published  under  1

Section  4(1)  of  the  Land  Acquisition  Act,  1894  

(hereinafter ‘the Act’) on 16.4.1990. It was followed  

by  the  notification  under  Section  6  published  on  

12.9.1991.

3. The LAO passed an award dated 22.7.1993 wherein  

he  classified  the  lands  into  two  groups,  and  the  

group  within  which  the  land  of  the  deceased  was  

classified  was  given  compensation  at  the  rate  of  

Rs.300/- per Aar and Rs.3,79,498/- towards structures  

and Rs.6,300/- towards fruit-bearing trees.

4. Aggrieved, the claimants filed references before  

the Reference Court. The Reference Court, vide order  

dated  27.6.2001,  partly  allowed  the  reference  

petitions. It found that the land under acquisition  

was converted into non-agricultural land in 1993 and  

the  LAO  was  wrong  to  ignore  the  said  fact  while  

granting compensation and taking the acquired land to  

be agricultural land. Thus, it enhanced compensation  

to an amount of Rs.650/- per Aar as cost of land. The  

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Reference Court also gave specific findings to the  

following effect:

1. The claimant was unable to prove that  

he had constructed a hotel of 2400 sq.  

ft.  on  the  acquired  land.  Thus,  it  

concluded  that  the  evidence  of  the  

claimant was insufficient to prove that  

the  value  of  the  structure  was  more  

than  the  compensation  awarded  by  the  

LAO.

2.The  evidence  of  the  claimant  was  also  

insufficient to prove that bore or well  

existed on the land. Thus, the claimant  

was  held  not  entitled  to  enhanced  

compensation towards well or bore.

3.The  LAO  had  granted  compensation  for  

sitaphal,  bor,  coconut,  mango  and  jamun  

trees. The claimant was unable to prove  

the existence of any more trees or plants  

on his lands and therefore he was held not  

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entitled to enhanced compensation towards  

trees and flower plants.

4.The claimant claimed to be earning annual  

income  of  Rs.24,000/-  from  his  hotel  

business.  On  perusal  of  evidence,  the  

Court concluded that there was definitely  

no  hotel  in  existence  and  an  inference  

could only be drawn that he was running a  

small hotel like a tea stall, and that  

such  business  had  no  future  prospects.  

Thus,  he  was  not  entitled  to  any  

compensation for loss of business.

5. Being  still  aggrieved,  the  claimants  filed  

appeals before the High Court for further enhancement  

of compensation. The State also appealed before the  

High Court for reduction of compensation awarded by  

the Reference Court.   

6. The High Court, vide its judgment dated 3.4.2003  

dismissed  the  appeal  of  the  claimants  and  partly  

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allowed the appeal of the State. It upheld all the  

findings  of  the  Reference  Court,  except  the  

computation with respect to market value of the land,  

which it reduced to Rs.500/- per Aar. The reasoning  

High Court gave for the same was that while non-

agricultural  permission  had  been  given  for  the  

acquired land, it could not be the sole basis to  

treat the entire land as being non-agricultural or  

being  used  for  commercial  purposes.  The  non-

agricultural  permission  had  been  based  on  certain  

conditions, one of which was that the grantee would  

commence non-agricultural use of land within one year  

from  the  date  of  such  order  unless  the  same  was  

extended,  failing  which  the  permission  would  be  

cancelled.  According  to  the  High  Court,  the  

construction of the hotel for which compensation had  

been granted was located on an area of 2400 sq. ft.  

and  this  by  itself  would  not  make  the  entire  

remaining  land  as  non  agricultural  or  used  for  

commercial purposes. The High Court relied on  Smt.  

Kamlabai  Jageshwar  Joshi  and  others v. State  of  

Maharashtra and others (AIR 1996 SC 981) and State of  5

Maharashtra  and  others v. Digamber  Bhimashankar  

Tandale and others [1996 (2) SCC 583].

7. Further, the High Court held that the permission  

granted by the village Panchayat revealed that there  

was a structure standing on the acquired land, and  

even if benefit of doubt was given in favour of the  

claimants, the structure did not exceed 2400 sq. ft.  

The High Court also recorded a finding that village  

Thana was located on the Aurangabad-Jalgaon highway  

at a distance of 95 kms. from Aurangabad and about 50  

kms. from Jalgaon. The Ajantha caves were located 6  

to 8 kms. from the said village. The acquired land  

was adjacent to the State highway and in proximity of  

junction point on the approach road leading to the  

caves. On the land in front of it, i.e. Gut No. 28,  

there was another hotel by the name of Hotel Gazal.  

As per evidence, travellers on the said highway would  

stop  and  utilize  the  services  of  the  restaurants  

either  in  Gut  No.  28  or  29.  However,  there  was  

nothing further to show that the land appurtenant to  

the lodging and boarding house was being used for any  6

commercial purpose and it was by choice of the owners  

that it was not being used for agricultural purposes.  

Thus, the High Court took the view that the Reference  

Court  erred  in  treating  the  entire  land  as  

commercial/non-agricultural.  Accordingly,  it  held  

that  compensation  of  Rs.420/-  per  are  for  the  

agricultural land would be just and proper, however  

as the land was adjacent to the highway, market value  

of the land was fixed at Rs.500/- per are.  

8. Aggrieved, the claimants approached this Court by  

way  of  appeal  for  further  enhancement  of  

compensation.

9. We have perused the material on record and heard  

the parties. We are of the opinion that the judgment  

of the Reference Court deserves to be restored and  

that of the High Court set aside.

10. The High Court has reduced compensation on the  

ground  that  the  land,  though  was  given  non-

agricultural permission, it could not be treated as a  7

basis  for  treating  the  entire  land  as  non-

agricultural. We disagree with this view. The High  

Court has relied on the case of Kamlabai Jageshwar  

Joshi  (supra) and Digamber  Bhimashankar  Tandale  

(supra).

11. In the case of Kamlabai Jageshwar Joshi (supra),  

it was found that at the time of acquisition, as per  

the report of the Land Acquisition Officer in the  

award,  there  was  no  development,  though  the  lands  

were situated within the municipal limits. Sanction  

had been obtained for converting the lands into non-

agricultural lands. In view of these circumstances, a  

bench  of  this  court  concluded  that  permission  for  

conversion was obtained by the appellant with a view  

to inflate the market value, after becoming aware of  

the proposal for acquisition. This Court also found  

that  except  obtaining  sanction  for  conversion  no  

further  action  to  develop  the  lands  was  taken.  

Accordingly,  this  Court  proceeded  to  award  

compensation taking the land to be agricultural land.

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12. In  the  case  of  Digamber  Bhimashankar  Tandale  

(supra),  on the date of the notification the lands  

were agricultural lands though situated within the  

municipal limits. It is also in evidence that the  

lands  were  converted  for  non-agricultural  purpose.  

But  as  on  the  date  of  notification,  there  was  no  

development  in  that  area.  The  oral  evidence  was  

adduced in which it was shown that upto a distance of  

3/4th km. of the lands there was development. Some  

illegal constructions were made on the lands. Under  

those circumstances, the court concluded that as on  

the date of the notification there was no potential  

value  to  the  lands  though  converted  into  non-

agricultural lands.  

13. We  believe  that  the  present  case  can  be  

distinguished from the abovementioned judgments. From  

evidence  on  record,  though  the  claimant  has  been  

unable to prove the existence of a hotel, it has been  

found  that  some  structures  for  the  same  existed.  

Therefore, unlike the abovementioned judgments, there  

is some development on the acquired land. Further,  9

admittedly, travellers would stop by and utilize the  

hotel services provided by the claimants. The land is  

also adjacent to the Aurangabad-Jalgaon highway and  

is only 6 to 8 kms. away from the Ajantha caves, an  

internationally  famous  tourist  destination.  Thus,  

there is great future potential for development with  

respect to the acquired land. The potential to which  

the  land  is  reasonably  capable  of  being  used  in  

future by the owner should be taken into account in  

assessing compensation.  

14. In light of these circumstances, the compensation  

awarded by the Reference Court appears us to be just  

and  reasonable,  having  been  determined  after  

correctly appreciating all the material evidence on  

record.  There  was  no  need  for  the  High  Court  to  

reduce  the  same.  Accordingly,  we  set  aside  the  

judgment of the High Court and restore the award of  

the Reference Court.

15. The appeals are partly allowed and the award of  

the Reference Court is restored. 1

16. No order as to costs.

.......................J. (G.S. SINGHVI)

.......................J. New Delhi (ASOK KUMAR GANGULY) April 05, 2011

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