http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

CASE NO.: Appeal (civil)  7096 of 2000 Appeal (civil)  7097-7098 of 2000

PETITIONER: Smt. Lila Ghosh (Dead) through LR, Shri Tapas Chandra Roy

RESPONDENT: The State of West Bengal                 

DATE OF JUDGMENT: 18/11/2003

BENCH: S. N. Variava & H. K. Sema.

JUDGMENT: J U D G M E N T

Variava, J.

               These two Appeals are against the judgment dated 16th   March, 2000.

               Briefly stated the facts are as follows:

It appears that in the concerned premises there was a film studio.  The  owner had obtained a decree of eviction against the studio.  The  Appeals against that decree were dismissed all the way to this Court.     Thereafter execution proceedings were filed to evict the film studio.  At  that stage, in order to help the film studio, the State Government on  24th December, 1979 requisitioned the property and took possession  thereof.  The requisition was challenged by filing Writ Petition No. 850  of 1980.  On 28th February, 1980  a settlement was arrived at between  the State Government and the owner.   It was agreed that this  property would be acquired by the State Government.  A sum of  Rs.11,00,000/-  was paid by the Government in advance of  acquisition.   

       Section 4 Notification was issued in July, 1982.  However, it was  only published in the locality on 5th of August, 1983.  Thus for our  purposes the relevant date would be 5th August, 1983.  As the  Government was not taking any further steps, a Writ Petition was filed.  On 22nd May, 1985 the declaration under Section 6 was issued.  An  Award came to be passed on 16th September, 1986.  In this Award,  the price of land was fixed at Rs.10,940/- per cottah and for the  structures a sum of Rs.5,65,726/- was awarded.  Solatium at the rate  of 30% was also awarded.  So was additional compensation awarded  at the rate of 12% from 5/8/1983 to the date of Award.  

       Not being satisfied the claimants filed a Reference under Section  18.    Neither party led any evidence of any sale instances.  Both the  parties relied upon the judgment dated 30th May, 1983 in L.A. Case  No.16/1975 which was in respect of acquisition of an adjoining  property belonging to the Golf Club.  The Reference Court valued the  property in various ways, one of which was to take the value as given  in the judgment dated 30th May, 1983 for that portion of the acquired  land which was farthest from the road.  Thereafter applying the belting  method the value was arrived at on the following basis:

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

"1/2-3rd Belt area 42.94 Kt.@ 10,360 p.k. @ 4,44,858.40p 3/8th-3rd Belt area  6.68 Kt. @ 7,770 P.K. @     51,903.60p 1/2-2nd Belt area recess 6.68 Kt.@ 10,360 @    71,276.00p 2/3rd-2nd Belt area 41.30 Kt. @ 13,813.33 P.K.@5,70,490.52 1st Belt area 23.68 Kt.@ 20,720 P.K. @ 4,90,649.60p                   ________________      ____________________ Total:             121.48 Kts.          Rs.16,29,178.92p"

The Reference Court then took into account the fact that the earlier  acquisition was in respect of Notification dated 8th February, 1975 and  gave an appreciation of 10% per annum for 9-1/2 years.  The  Reference Court also gave an appreciation of 10% for potentiality and  further 10% for largeness.  The Reference Court thus arrived at the  figure of Rs. 31,300/- per cottah.  The Reference Court then  proceeded to value the land in various other methods.  It then took  an average of the figures arrived at by calculating in different figures  and arrived at a figure of Rs. 27,000/- per cottach.   The Reference  Court also increased the value of the structure to Rs. 9,04,360/-.  The  Reference Court granted interest with effect from 24th December,  1979.    Still not being satisfied, the claimants filed an Appeal in the High  Court.  The Respondents filed cross-objections in the High Court.  The  High Court by the impugned Judgment fixed the value of the land at  Rs.31,300/- per cottah.  The High Court has held that Reference Court  having fixed compensation on basis of earlier judgment could not  have proceeded to compute compensation on any other basis.  The  High Court held that the belting method was correct.  The High Court  directed that interest was payble from 8th December, 1986.

                Mr. Salve submitted that the Appeal of the State was not  maintainable in as much as they had not challenged the belting  method or the valuation fixed by the Reference Court.  He pointed out  that in the impugned Judgment it was mentioned that the Appellants  had not pressed the cross appeal.   On the other hand, Mr. Rohtagi  submitted that the statement in the impugned Appeal to the effect  that the cross Appeal was not pressed was erroneous.  He submitted  that this was clear from the fact that at the instance of the State the  date from which interest was payable had been altered.  In our view,  it is not necessary to go into this controversy.  In our view, even in  the Appeal filed by the claimants the State can always challenge  valuation.  We have therefore heard the parties on merits.

                        It was contended, on behalf of the Appellants, that this was a  compact block of land which had been acquired for the purposes of a  film studio.  It was submitted that there was no necessity to use the  belting method.  It was submitted that the price of the entire land  should be one.  That the belting method is not the correct method to  be applied, in such a case, was not seriously disputed by Mr. Rohtagi.    Both counsels however differed on what the compensation should be.   

       We are of the opinion that this was not a fit case for application  of the belting method.   The acquisition was of land on which a film  studio stood.  The acquisition was for the purposes of the film studio.   It was a compact block of land which was acquired for a specific  purpose.  The land was not acquired for development into small plots  where the value of plots near the road would have a higher value  whilst those further away may have a lesser value.   In such cases  where a compact block is acquired the belting method would not be  the correct method.            The next question is what is the value which has to be fixed for  the land?   As stated above neither party filed any sale instances.   Both the parties only relied upon the Judgment in Land Acquisition  Case No. 61 of 1975.   According to the claimants the Judgment dated

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

30th May, 1983 in L. A. Case No. 61 of 1975 fixes compensation at Rs.  12,950/- per cottah, whereas according to the State the Judgment  fixes compensation at Rs. 10.360/-.  To resolve this controversy, one  would have to look at that judgment.

       That judgment was in respect of an acquisition of a very large  plot of land admeasuring 17 bighas, 11 cottahs, 12 chittaks and 7 sq.  ft.  The land then acquired belonged to the Tollygunge Golf Club  which held 343 bighas, 7 cottahs and 12 chittaks.  A reading of the  Judgment dated 30th May, 1983 in L. A. Case No. 61 of 1975 shows  that the land then acquired was situated in a developed residential  cum commercial area.  That land was adjoining the land with which  we are concerned.   Thus the surrounding area would be the same.   The Judgment shows that that land had a road frontage of 2775 ft.   on Deshpran Sasmal Road and a frontage of 845 ft. on Baburam  Ghosh Road.   The judgment sets out that Deshpran Sasmal Road had  a width of 120-130 ft. road, whereas Baburam Ghosh Road was a less  wide road.  The present land has a frontage of only 170 ft. on  Baburam Ghosh Road.  In the earlier case sale instances had been  filed.  The Court considered those sale instances and after averaging  the price of those sale instances concluded that the value was Rs.  11,260/- per cottah.  The Court then added 37-1/2 % for a wider road  frontage.  While so adding the Court again clarified that this was  because it had a large frontage on the 120-130 ft. wide Deshpran  Sasmal Road and also on the less wide Baburam Ghosh Road.   Considering the fact that the present land only has a frontage on  Baburam Ghosh Road, which is a less wide road, obviously an  appreciation of 37-1/2% cannot be given.  Also as stated above the  present acquisition is of a compact block of land for an existing film  studio.   Therefore a road frontage does not have so much value in  such a case.  In our view, at the most an appreciation of 5% can be  given for frontage in the present case.  In the earlier judgment the  Court then applied a depreciation of 22-1/2 % for undeveloped  condition of the land and for larger size and irregularity of shape.   After deducting 22-1/2% from 37-1/2% the Court calculated net  appreciation to be 15%.  The price of 11,260/- was therefore  increased to Rs.12,950/-.  This is the figure which according to the  claimants is value fixed in the earlier judgment.  In the earlier case,  the Court then applied a co-efficient of 0.8% as the acquired land was  a small piece out of a large tract of land and calculated the value at  Rs. 10,360/- per cottah.  This value was arrived at by multiplying Rs.  12,950/- by 0.8%.  According to the State this is the value fixed in  the earlier judgment.

       As set out hereinabove by averaging the price of the sale  instances the value arrived at was Rs.11,260/-.  In our view, this is  the price fixed in the earlier judgment.  The additions and deductions  are due to the peculiar nature of that land which do not apply in this  case.  As stated above in this case there is no frontage on a very wide  road and therefore only 5% appreciation can be given for road  frontage.  However, even the land now acquired is a large piece of  land.   There must therefore be some deduction for largeness.  The  price of Rs.11,260/- is fixed on basis of sale instances of small plots  of land.  It is well known that a large piece of land would never fetch  the same price as a small piece of land.  In our view, for largeness a  depreciation of 5% can be given.  Giving the above appreciation and  depreciation the price remains at Rs.11,260/- per cottah.  The earlier  acquisition was of the year 1974.  Normally Courts give an  appreciation of 10% per annum.  Therefore for the 9-1/2 years there  must be an appreciation at 95%.  Thus to the figure of Rs.11,260/-  a  sum of Rs. 10,697/- will have to be added.  This would bring the  value to Rs. 21,957/- per cottah.

       It was submitted that the Court must also take into account the  potentiality.  It was submitted that the Reference Court and the High

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

Court have both given 10% towards potentiality and this must be  maintained.  We are unable to accept that submission.  It is to be  seen that in arriving at the figure of Rs.11,260/- potentiality had  already been taken into consideration.  This is clear from the  Judgment dated 3rd May, 1983 in L. A. Case No. 61 of 1975 wherein it  has been observed as follows:

"Therefore the potentialities have already been taken care  of in determining the average market price on the basis of  the comparable units situated in a newly developed post  residential locality."

Thus the Reference Court and High Court both fell into error in giving  a 10% increase for potentiality. Once potentiality has been taken care  of no question arises of giving an additional percentage towards  potentiality.

       It was next submitted that there must be a 10% appreciation for  largeness.  It was pointed out that both the Reference Court and the  High Court has given this appreciation.  We are unable to understand  the submission or the rationale of the Reference Court and the High  Court in giving an appreciation of 10% for largeness.  The normal rule  is that if a plot is large, then there must be depreciation for largeness.   As already stated hereinabove large plots always fetch less than small  plots.  Therefore there is no question of appreciation for largeness.                                                        It was next submitted that there must be a 10% appreciation  on account of the fact that a Metro Railway Station is a stone throw  away from this land.  It must be noted that the Metro Railway Station  has come up on the land in respect of which the judgment dated 30th  May, 1983 was given.  Apart from the fact that Metro Railway Station  has come up everything else namely shops, hospital, T.V. center,  residential cum commercial area remains the same as in respect of  earlier acquisition.  Even earlier there was a Tram Terminal and Bus  Stop close by.  The mere fact that the Metro Railway Station has come  up would therefore not necessitate giving any appreciation on that  account.

It was next submitted that in the earlier judgment there was a  deduction of 20% and this deduction should be added back.  As we  have not deducted 20% no question arises of adding back the same.     

Thus we hold that compensation payable is at the rate of Rs.  21,957/- per cottah. The claimant would also be entitled to all  statutory benefits available to them under the Act.    

The next question which arises is from what date interest is  payable.  On behalf of the claimants it was argued that possession  was taken as far back as on 24th December, 1975.  Reliance was  placed on Section 34 of the Land Acquisition Act.  It was submitted  that interest has to be paid from the date of taking possession.  It  was pointed out that the Reference Court had directed payment of  interest from the date of taking possession.  However, the High Court  has directed payment of interest only from 8th December, 1986.  In  support of this submission, reliance was placed on the case of Shree  Vijay Cotton & Oil Mills Ltd.  vs.  State of Gujarat  reported in 1991(1)  SCC 262.  In this case the possession had been taken much prior to  the acquisition proceedings.  This Court directed payment of interest  under Sections 28 and 34 from the date of taking possession.  It was  submitted that this authority clearly lays down that the interest must  be paid from the date of actual possession.

On the other hand Mr. Rohtagi submitted that interest is payable

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

under Section 34, only provided compensation is payable and the  same is not paid or deposited.  He submitted that compensation can  only be paid after an award is made.   He submitted that interest can  only run from the date of the Award.  He further submitted that under  the Consent Terms dated 28th February, 1980 the claimant had been  paid a sum of Rs.11,00,000/- in advance even before the acquisition  proceedings started.  He pointed out that another sum of  Rs.11,00,000/- was also paid to them on 21st May, 1986.  He pointed  out that this was also before the Award was made.  He pointed out  that another sum of Rs.7,45,266/- was paid under the orders of the  Court on 18th July, 1986.  He pointed out that before the Award was  passed, a sum of Rs.29,45,266/- was already paid to the claimants.   He submitted that therefore this was a case where the claimant had  already received a very large amount prior to the Award being made.   He submitted that if these amounts are taken into consideration, then  it would be found that no interest would be payable under Section 34.   Mr. Rohtagi also pointed out that pursuant to the orders of this Court,  a further sum of Rs.70,00,000/- was paid on 3rd July, 1977 and a sum  of Rs.52,00,000/- was deposited in Court.  He further pointed out that  another sum of Rs.60,00,000/- has already been deposited in this  Court on 13th December, 2002.  He submitted that the State must get  credit for all these amounts and that there can be no interest on the  amounts paid or deposited from the dates on which they were so paid  or deposited.  On behalf of the claimants it was fairly conceded that  on the amounts paid or deposited, interest would not run.

Even though the authority in Shree Vijay Cotton & Oil Mills Ltd.  appears to support the claimants, it is to be seen that apart from  mentioning Sections 28 and 34, no reasons have been given to justify  the award of interest from a date prior to commencement of  acquisition proceedings.  A plain reading of Section 34 shows that  interest is payable only if the compensation, which is payable, is not  paid or deposited before taking possession.  The question of payment  or deposit of compensation will not arise if there is no acquisition  proceeding.  In case where possession is taken prior to acquisition  proceedings a party may have a right to claim compensation or  interest.  But such a claim would not be either under Section 34 or  Section 28.  In our view interest under these Sections can only start  running from the date the compensation is payable.   Normally this  would be from the date of the Award.  Of course, there may be cases  under Section 17 where by invoking urgency clause possession has  been taken before the acquisition proceedings are initiated.  In such  cases, compensation, under the Land Acquisition Act, would be  payable by virtue of the provisions of Section 17.   As in cases under  Section 17 compensation is payable  interest may run from the date  possession was taken.  However, this case does not fall into this  category.   

In view of the above, we hold that the valuation would be a sum  of Rs.21,957 per cottah.  The claimants would also be entitled to  solatium at the rate of 30% and further entitled to additional  compensation at the rate of 12% from 5th August, 1983 to 16th  September, 1986.  If after giving credit for the amounts paid or  deposited, it is found that compensation payable has not been paid or  deposited then interest thereon, either under Section 28 or 34 will be  payable from that date of the Award i.e. 16th September, 1986 till  payment.

The Appeals stand disposed of accordingly.  There will be no  order as to costs.

       + 5 8274-8292 2001 5 8293-8311 2001