HARIDWAR DEVELOPMENT AUTHORITY v.

RAGHUBIR SINGH (Civil Appeal No. 1150-1167 of 2010)

JANUARY 29, 2010 [R.V. Raveendran and K.S. Radhakrishnan, JJ.]

2010 (2) SCR 201

The Order of the Court was delivered by

O R D E R

R.V.RAVEENDRAN, J. 1. Leave granted. Heard the parties.

2.  The  first  batch  of  appeals  is  filed  by  the  Haridwar  Development  

Authority  (‘the  Authority’,  for  short),  the  beneficiary  of  an  acquisition.  The  

connected  appeals  are  filed  by  the  claimants-landowners  whose  lands  

measuring  38.6.8  Bighas  (8,45,174  sq.ft.)  in  village  Jwalapur,  Tehsil  and  

District  Haridwar,  were  acquired  for  planned  development  of  a  housing  

colony,  under preliminary notification dated 7.12.1991 and final  notification  

dated 16.5.1992. As the ranks of parties in the appeals and counter-appeals  

vary, the appellant in the first batch (who is the second respondent in other  

appeals) will  be referred to as the “Authority”.  The respondents in the first  

batch (who are the appellants in the other appeals) are referred to as the  

“claimants”.

3.  The Land Acquisition Collector  made an award dated 9.5.1994.  He  

divided the acquired lands into three belts and awarded compensation at the  

rate of Rs.26.25 per sq.ft. for the lands falling in the first belt, Rs.17.50 per  

sq.ft.  for  lands falling in second belt  and Rs.13.12 per sq.ft.  for  the lands  

falling in the third belt. The Reference Court however limited the division of  

the acquired lands into only two categories, that is lands falling within 500  

metres from the National Highway and lands falling beyond 500 metres from  

the  National  Highway.  In  regard  to  the  first  category,  it  awarded  

compensation at the rate of Rs.26.25 per sq.ft. and for the second category

Rs.17.50  per  sq.ft.  Feeling  aggrieved,  both  sides filed  appeals.  The High  

Court awarded a uniform rate of Rs.26.25 per sq.ft. for all the acquired lands  

and  rejected  the  belting  system  adopted  by  the  collector  and  the  

categorization  adopted  by  the  Reference  Court.  The  High  Court  also  

confirmed  that  claimants  will  be  entitled  to  all  statutory  benefits,  that  is  

additional  amount  under section 23(1A),  solatium under section 23(2) and  

interest under section 28 of the Land Acquisition Act, 1894 (‘Ac’ for short).

4. Neither the Reference Court nor the High Court increased the base  

‘rate’ of compensation arrived at by the Collector, that is Rs.26/25. . While the  

collector divided the acquired lands into three belts and reduced the rates for  

lands  in  the  second  and  third  belts  (interior  lands),  the  Reference  Court  

restricted the division of the acquired land into two belts and adopted the  

rates fixed by the Collector for the first  and second belts. The High Court  

treated all the acquired lands uniformly and awarded the same compensation  

for all lands by adopting the base rate of Rs.26/25 fixed by the Collector. The  

Authority challenges the award on the following two grounds: (i)  The High  

Court  ought  to have retained the three belt  categorisation adopted by the  

collector instead of awarding a uniform rate for all  the lands. (ii)  The High  

Court ought not to have awarded interest under section 28 of the Act, when  

the Reference Court had not awarded any interest under the said section. On  

the  other  hand,  the  claimants  in  their  appeals  have  contended  that  the  

compensation awarded was low and the Reference Court  and High Court  

ought to have increased the compensation to at least Rs.40/00 per sq.ft. They  

also contend that the High Court was justified in awarding compensation at a  

uniform rate for all the acquired lands and in awarding interest under section  

28 of the Act.

5.  On  the  contentions  urged,  the  following  questions  arise  for  

consideration :

(i) Whether the High Court ought to have adopted the belt method for  

award of compensation?

(ii) Whether the compensation awarded requires to be increased?

(iii) Whether the award of interest under section 28 of the Act is not  

sustainable?

Re : Question (i)

6. The question whether the acquired lands have to be valued uniformly  

at the same rate, or whether different areas in the acquired lands have to be  

valued at different rates, depends upon the extent of the land acquired, the  

location,  proximity  to  an  access  road/Main  Road/Highway  or  to  a  

City/Town/Village, and other relevant circumstances. We may illustrate :

(A). When a small and compact extent of land is acquired and the entire  

area is similarly situated, it will be appropriate to value the acquired land  

at a single uniform rate.

(B). If a large tract of land is acquired with some lands facing a main road  

or a national highway and other lands being in the interior, the normal  

procedure is to value the lands adjacent to the main road at a higher rate  

and the interior lands which do not have road access, at a lesser rate.

(C) Where a very large tract of land on the outskirts of a town is acquired,  

one end of the acquired lands adjoining the town boundary, the other end  

being two to three kilometres away, obviously, the rate that is adopted for  

the land nearest  to the town cannot  be adopted for  the land which is  

farther away from the town. In such a situation, what is known as a belting  

method is adopted and the belt or strip adjacent to the town boundary will  

be given the highest price, the remotest belt will be awarded the lowest  

rate, the belts/strips of lands falling in between, will be awarded gradually  

reducing rates from the highest to the lowest.

(D) Where a very large tract of land with a radius of one to two kilometres  

is acquired, but the entire land acquired is far away from any town or city  

limits, without any special Main road access, then it is logical to award the  

entire  land,  one uniform rate.  The fact  that  the distance between one  

point to another point in the acquired lands, may be as much as two to  

three kilometres may not make any difference.

7. The acquisition with which we are concerned relates to a comparatively  

small extent of village land measuring about 38 bighas of compact contiguous  

land.  The High Court  was of  the view that  the  size  and situation  did  not  

warrant any belting and all lands deserved the same rate of compensation.  

The Authority has not placed any material to show that any area was less  

advantageously  situated.  Therefore  the  view  of  the  High  Court  that  

compensation  should  be  awarded  at  an  uniform  rate  does  not  call  for  

interference.

Re : Question (ii)

8. The collector has referred to several sale transactions but relied upon  

only one document, that is sale deed dated 19.12.1990 relating to an extent  

of 11,550 sq.ft. of land sold for Rs.4,04,250/-, which works out to a price of  

Rs.35 per sq.ft. The collector deducted 25% from the said price, as the relied  

upon  sale  transaction  related  to  a  small  extent  of  11,550  sq.ft.  and  the  

acquired area was a larger extent 8,45,174 sq.ft. By making such deduction,  

he arrived at the rate as Rs.26.25 per sq. ft. The Reference Court and the  

High Court have also adopted the said sale transaction and valuation.

9.  The claimants  do  not  dispute  the  appropriateness  of  the  said  sale  

transaction  taken  as  the  basis  for  determination  of  compensation.  Their  

grievance is that no deduction or cut should have been effected in the price  

disclosed by the sale deed, for arriving at the market value, in view of the  

following factors: (i) that the acquired lands were near to the main Bye-pass  

Road and had road access on two sides; (ii) that many residential houses had

already come up in the surrounding areas, and the entire area was already  

fast developing; and (iii) that the acquired land had the potential to be used  

an urban residential  area. When the value of a large extent of agricultural  

land has to be determined with reference to the price fetched by sale of a  

small  residential  plot,  it  is  necessary  to  make  an  appropriate  deduction  

towards the development cost, to arrive at the value of the large tract of land.  

The  deduction  towards  development  cost  may  vary  from  20%  to  75%  

depending upon various factors (see :  Lal Chand vs. Union of India – 2009  

(15) SCC 769). Even if the acquired lands have situational advantages, the  

minimum deduction  from the  market  value of  a  small  presidential  plot,  to  

arrive at the market value of a larger agricultural land, is in the usual course,  

will  be in the range of 20% to 25%. In this case, the Collector has himself  

adopted a 25% deduction which has been affirmed by the Reference Court  

and High Court. We therefore do not propose to alter it.

10. Only one grievance of the claimants remains to be addressed. The  

claimants  pointed  out  that  the  relied  upon  sale  transaction  is  dated  

19.12.1990, whereas the notification under section 4(1) of the Act in this case  

was of 7.12.1991; and as there is a gap of nearly one year, an appropriate  

increase in the market value should have been provided keeping in view the  

steady increase in prices. It is well settled that an increase in market value by  

about 10% to 12% per year can be provided, in regard to lands situated near  

urban areas having potential for non-agricultural development. (See : Sardar  

Jogendra Singh vs. State of UP – 2008 (17) SCC 133).

11. we are therefore of the view that the value arrived at by the Collector,  

and accepted  by  the  Reference Court  and the  High Court  requires  to  be  

increased by 12% in view of the fact that the preliminary notification was one  

year  after  the  relied  upon sale  transaction.  Accordingly  by  increasing  the  

value of Rs.26/25 by 12%, we arrive at the market value as on 7.12.1991 as  

Rs.29/40, rounded off to Rs.29/50 per sq.ft.

Re : Question (iii)

12.  The  Authority  points  out  that  the  Land  Acquisition  Collector  had  

awarded interest under section 34 of the Act, but the Reference Court did not  

award any interest under section 28 of the Act. It is contended that when the  

Reference Court  chose not  to award any interest,  the High court  erred in  

awarding  interest  under  section  28  of  the  Act,  in  addition  to  the  interest  

awarded by the Collector under section 34 of the Act.

13. The collector awarded interest under section 34 of the Act, on the  

compensation offered, at the rate of 9% per annum for a period of one year  

from the date of  taking possession and thereafter  at  the rate  of  15% per  

annum. The reference court did not specifically award any interest, because it  

did not ‘increase’ the market value, but merely reclassified the acquired land  

into  two  categories  instead  of  three  categories  and  adopted  the  first  and  

second rates awarded by the collector for the two categories. However the  

High Court deleted the belting/ categorisation and awarded a uniform rate of  

Rs.26.25  per  sq.ft.  Therefore,  there  was  in  fact  an  increase  in  the  

compensation awarded for lands which were earlier classified by the Collector  

as second and third belt lands. Therefore, interest under section 28 of the Act  

had to be granted. The scheme of the Act is that in regard to compensation  

amount, interest is payable at the rate of 9% per annum for a period of one  

year from the date of taking possession and thereafter at 15% per annum  

until deposit is made. In regard to the compensation that is offered by the  

Land Acquisition Collector, the interest is payable under section 34 of the Act.  

In regard to the increase in such compensation,  which is awarded by the  

Reference  Court  or  any  appellate  court,  such  interest  is  awarded  under  

section 28 of the Act.  Sections 34 and 28 of the Act do not duplicate the  

award  of  interest,  but  together  cover  the  entire  amount  of  compensation  

awarded. The award of interest on the enhanced amount under section 28 of  

the Act  is the normal  rule.  The refusal  of  interest  should be by assigning  

special  or  specific  reasons.  The contention  of  the  Authority  that  the  High

Court  ought  not  to  have  awarded  interest  under  section  28  is  therefore  

untenable.

14. In view of the above, the appeals filed by the Authority are dismissed.  

The  appeals  filed  by  the  claimants  -  landowners  are  allowed  and  the  

compensation is increased from Rs.26.25 per sq.ft. to Rs.29.50 per sq.ft. We  

reiterate that the claimants will be entitled to all the statutory benefits, that is  

additional  amount  under section 23(1A),  solatium under section 23(2) and  

interest under section 28 of the Act. Parties to bear their respective costs.