23 August 1996
Supreme Court
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GUJARAT INDUSTRIAL DEVELOPMENTCORPORATION Vs NAROTTAMBHAI MORARBHAI & ANR.


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PETITIONER: GUJARAT INDUSTRIAL DEVELOPMENTCORPORATION

       Vs.

RESPONDENT: NAROTTAMBHAI MORARBHAI & ANR.

DATE OF JUDGMENT:       23/08/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Delay condoned.      Leave granted.      Heard learned counsel on both sides.      Notification  under   Section  4   (1)  of   the   Land Acquisition Act,  1894  [for  short,  the  ’Act"]  was  last published on April 10, 1989 acquiring a large extent of land admeasuring  8,61,515  sq.mtr.  for  public  purpose,  viz., industrial development;  the land  was at  that time fit for cultivation  but   possessed  of  potential  value  and  was situated in outskirts of Surat. The Land Acquisition Officer in his  award dated  April 15,  1991 awarded  compensation @ Rs.5/- per  sq.mtr. On  reference, the extra Assistant Judge by his  award and  decree dated  April 19, 1994 enhanced the compensation to  Rs.25/- per  sq.mtr. On  appeal by both the claimants as  well  as  the  State,  the  High  Court  while dismissing the  appeals of  the State  further enhanced  the compensation to  Rs.33/- per  sg.mtr. Thus  these appeals by special leave.      Though the  land was  waste land but being possessed of potent value  was fit  for building purposes and is situated in outskirts of industrial city, the courts below were right in taking into consideration potential value of the land for determination of  compensation. In awards for lands notified under Section  4(1) published  between December 15, 1986 and December 29,  1989, compensation was awarded in the range of Rs. 4.75 per sq.mtr. to Rs. 7/per sq.mtr. In respect of land situated in lchhapur to a extent of around 908 sq. mtr., the market value  was in  the range of Rs.33 per sq.mtr. Relying upon that, the High Court enhanced the compensation. In view of the fact that the lands are situated at a distance of two kilometers from  the acquired  lands reliance  on sale deed, Ex.22 by the High Court was wholly unjustified in law. It is accordingly excluded.  However, we  agree that the lands are possessed of  potential value,  as found  by all  the courts below.      No prudent  purchaser would  purchase large  extent  of

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land on  the basis  of sale of a small extent of land in the open market.  The acid test the court should always adopt in determining  market   value  in  the  matter  of  compulsory acquisition would  be to  eschew feats of imagination sit in the arm  chair of  a prudent  willing purchaser,  it  should consider whether  the willing  vendee would  offer the  rate which  the   trial   court   proposes   to   determine   the compensation. Taking  these facts into consideration, we are of the  view that  the reasonable  and adequate compensation for the  lands would  be at net rate of Rs.22/- per sq.mtr., after giving  deduction  of  1/3rd  of  the  amount  towards developmental chargers.  Therefore, the  claimants would  be entitled to the compensation @ Rs. 22/- per sq.mtr. They are also entitled  to the  statutory benefits  on  the  enhanced compensation.      The appeal are accordingly allowed. No costs.