19 November 2004
Supreme Court


Case number: C.A. No.-006276-006276 / 1999
Diary number: 7218 / 1999



CASE NO.: Appeal (civil)  6276 of 1999

PETITIONER: M/s. Ahad Brothers                                       

RESPONDENT: State of M.P. & Anr.                                     

DATE OF JUDGMENT: 19/11/2004



Shivaraj V. Patil J.

       Pursuant to the Notification issued under Section 4(1)  of the Land Acquisition Act, 1894 (for short ’the Act’) an  extent of 16.81 acres of land comprised in Khasra Nos. 870,  871, 872, 973 and 1623/873 was acquired.  The Land  Acquisition Officer, considering the appellant as the owner,  passed Award fixing the market value of the land acquired  at the rate of Rs.450/- per acre and awarded a sum of  Rs.15,307.58 paise as compensation.  Not being satisfied  with the amount of compensation, so awarded, the  appellant sought for reference under Section 18 of the Act  for enhancement of compensation claiming a sum of  Rs.32,91,771.50.  The Reference Court accepted the Award  made by the Land Acquisition Officer holding that the  compensation awarded was adequate.  Consequently, it  rejected the reference.  Aggrieved by the order of the  Reference Court the appellant filed First Appeal No. 82 of  1969 in the High Court.  The High Court allowed the appeal,  set aside the order of Reference Court and remanded the  matter to it to decide the reference afresh.  The learned  District Judge (Reference Court) framed an additional issue  as to what was the market value of the land acquired on  the date of Notification issued under Section 4(1) of the  Act.  On the basis of the evidence recorded learned District  Judge recorded a finding that the market value of the land  was Rs.2/- per square foot and awarded a sum of  Rs.14,64,480 as compensation for the land and Rs.6,600/-  as compensation for the trees standing thereon with  solatium and interest.  The State, aggrieved by the order of  the Reference Court, filed First Appeal No. 141 of 1980 in  the High Court.  The appellant also filed cross objections  seeking further enhancement of the compensation as per  the claim.  During the pendency of the appeal State  Government made application for amendment in the written  statement to the effect that the appellant was not the  owner of the land and was a licensee or a lessee.  The State  Government also made an application seeking permission to  file additional evidence.  The High Court allowed the  applications made for amendment as well as for taking the  additional evidence.  The High Court after allowing the said  applications set aside the Award made by the District Court  and remitted the matter again to the Additional District  Judge for determining the right of the appellant in the land  and to determine the market value of those rights on the  date of Notification issued under Section 4(1) of the Act.   However, after the remand the State Government did not



amend its written statement as directed by the High Court.   But the learned District Judge in compliance of the order of  the High Court framed additional issues and took additional  evidence.  On the basis of the material available on record  the learned District Judge recorded findings that the  appellant was having ownership rights in the acquired land.   He determined the market value of the land acquired at  Rs.16,64,480/- and Rs.6,600/- as compensation for the  trees and solatium at the rate of 15% as also interest at the  rate of 3% per year from the date of taking possession of  the land.  The State Government for the second time filed  appeal in the High Court questioning the validity and  correctness of the order made by the learned District Judge.   The appellant also filed cross objections claiming  enhancement of the compensation for the land acquired at  the rate of Rs.5/- per square foot.  The High Court partly  allowed the appeal filed by the State and dismissed the  cross objections filed by the appellant by the impugned  judgment.  In the impugned judgment the High Court fixed  market value of the land acquired at the rate of Rs.2/- per  square yard as against the market value fixed by the  Reference Court at the rate of Rs.2/- per square foot.   Further, the High Court held that the appellant was entitled  for compensation only to the extent of lease hold interest in  the acquired land and that they were not owners of the  land.  Hence the appellant is before this Court aggrieved by  the impugned judgment and order passed by the High  Court.         The learned counsel for the appellant strongly  contended that (1) the jurisdiction of the civil court in  deciding reference under Section 18 of the Act is limited  and is of special nature; reference proceedings could not be  converted into a suit for adjudication for title over the land  acquired; the High Court committed an error in deciding the  question of title and holding that the appellant had only  lease hold interest in the land acquired.  (2) The High Court  should have appreciated the fact that the respondent-State  had throughout acknowledged the title of ownership of the  appellant over the land right from the date of issuance of  Notification under Section 4(1) of the Act; respondent-State  was bound by their conduct and they were estopped from  claiming otherwise at later stage, i.e., after the whole  acquisition proceedings were completed, Award had been  passed and that too in the second round before the High  Court.  (3) The High Court committed a serious error in  interfering with the well-reasoned and justified findings  recorded by the District Judge on proper appreciation of  both oral and documentary evidence; the High Court did  not dislodge the reasons recorded by the District Court in  recording findings.  (4) No material was placed on record to  establish that the appellant was only a lessee and not the  owner; the State had accepted the appellant as the owner  of the land and it was bound by the same; even otherwise  the State failed to establish by placing any material on  record to show that the appellant was only a lessee.  In  support of his submissions the learned counsel placed  reliance on few decisions of this Court.         Per contra, the learned counsel for the respondents  made submissions supporting the impugned judgment  adopting the very reasons recorded in favour of the State in  the impugned judgment.         The learned counsel further submitted that when on  an earlier occasion the High Court had permitted the State  Government to file written statement to raise a plea as  regards the right of the appellant only as a lessee or a



licensee over the property in question and that having not  been challenged by the appellant any further, it was not  open to the appellant to contend that the Reference Court  could not consider the question of title over the land  acquired.         In the light of the rival contentions advanced and the  submissions made on behalf of the parties, the two  questions arise for consideration  - (1) whether the High  Court was right in going into the question of title over the  property acquired by the State and in recording a finding  that the appellant had only leasehold interest in the said  land; (2) whether the High Court was right in interfering  with the market value of the land determined by the  Reference Court.         The IVth Addl. District Judge, Bhopal (Reference  Court) on proper consideration and appreciation of both  documentary as well as oral evidence recorded a finding  that the respondent-State could not prove that the  appellant was only the licensee on the acquired land.  One  Aadh Narayan (DW1) examined on behalf of the  respondent-State in his evidence stated that he was  employed in the office of the Director of Land Records.  He  was not able to support the case of the respondent that the  appellant was a lessee or licensee.  He admitted in his  evidence that there was no lease deed executed between  the parties as per the records available in the office.  There  was also no record to show that the appellant was a  licensee.  In his cross-examination, he admitted that he  could not tell whether the acquired land belonged to the  State or it was acquired by State later on.  Abdul Rahuf  Khan (PW3) examined in support of the case of the  appellant in his evidence stated that no lease deed was  executed by State and that no lease amount was paid to  the State and his firm was the owner of the land acquired.   He further stated that he had obtained this land in 1950  from the State for the purpose of establishing bone mill; the  appellant-firm is recorded as owner in revenue records of  the State; the Land Acquisition Officer also treated the  appellant as owner and made the award showing the  appellant as the owner in the notification issued to acquire  the land.  The learned Addl. District Judge, referring to  various documents in para 9 of the judgment in the light of  the oral evidence concluded that the respondent-State  failed to establish that the appellant is only a  lessee/licensee when all along the appellant was shown as  the owner and even the Land Acquisition Officer treated the  appellant as owner.  The State contending otherwise had to  establish its case that the appellant was only  lessee/licensee, failed to do so.  The High Court, in our  view, committed a serious error in reversing this finding of  the Reference Court without dislodging the reasons  recorded by the Reference Court in support of its conclusion  on this point.         The contention that it was not open to the appellant to  urge that the Reference Court could not consider the  question of title over the land having not challenged the  order made by the High Court earlier permitting the  amendment of the written statement, has no force.  Merely  because permission was granted to amend the written  statement did not mean that the appellant could not resist  the claim of the respondent-State as regards its right as  owner over the land acquired.  The respondent-State itself  has treated the appellant all along as the owner of the land.   Not only in the notification acquiring the land, name of the  appellant is shown as owner, even the revenue records also



show the appellant as owner.  Further the Land Acquisition  Officer passed award in respect of this land treating the  appellant as owner entitled to receive compensation.  If the  State was owner of the land in question, there was no  reason for it to acquire its own land.  The State cannot said  to be a person interested to agitate any claim either under  Section 18 or under Section 30 of the Act.  The court  exercising jurisdiction under Section 18 could not decide the  question of the title of the State over the acquired land.   The position of law is clear in this regard by recent  judgment of this Court in Sharda Devi vs. State of Bihar  & Anr. [(2003) 3 SCC 128].  The sole question that arose  for consideration in that case was \026 when the State  proceeds to acquire land on an assumption that it belongs  to a particular person, can the award be called into question  by the State seeking a reference under Section 30 of the  Act on the premise that the land did not belong to the  person from whom it was purportedly acquired and was a  land owned by the State having vested in it.  In para 36 of  the said judgment, having considered various aspects and  the scheme of the Act, this Court has concluded thus:- "36.     To sum up, the State is not a "person  interested" as defined in Section 3(b) of the Act.   It is not a party to the proceedings before the  Collector in the sense, which the expression  "parties to the litigation" carries.  The Collector  holds the proceedings and makes an award as a  representative of the State Government.  Land  or an interest in land pre-owned by the State  cannot be the subject matter of acquisition by  the State.  The Question of deciding the  ownership of the State or holding of any interest  by the State Government in proceedings before  the Collector cannot arise in the proceedings  before the Collector [as defined in Section 3(c)  of the Act].  If it was government land there was  no question of initiating the proceedings for  acquisition at all.  The Government would not  acquire the land, which already vests in it.  A  dispute as to the pre-existing right or interest of  the State Government in the property sought to  be acquired is not a dispute capable of being  adjudicated upon or referred to the civil court for  determination either under Section 18 or Section  30 of the Act.  The reference made by the  Collector to the court was wholly without  jurisdiction and the civil court ought to have  refused to entertain the reference and ought to  have rejected the same.  All the proceedings  under Section 30 of the Act beginning from the  reference and adjudication thereon by the civil  court suffer from lack of inherent jurisdiction and  are therefore a nullity liable to be declared so."

       In the present appeal, it is not the case of the  respondent-State that the title of the appellant had come to  an end on happening of any event or change taking place  after making of the award by the Collector.  As stated in  para 37 in the case of Sharda Devi (supra), the decision in  this appeal does not preclude the State from pursuing such  other legal remedy before any other forum, if available in  law and if such a claim is maintainable in law.  In the light  of the judgment of this Court afore-mentioned, in our view,  the High Court committed an error in taking a view that the  question of title could be decided in the proceedings arising



under Section 18 of the Act.  Hence, the finding recorded by  the High Court in the impugned judgment that the appellant  had only leasehold interest in the land cannot be sustained.         The Reference Court after due consideration of oral  and documentary evidence determined the market value of  the land acquired @Rs.2 per sq.ft. as on the date of issuing  notification under Section 4(1) dated 23.12.1962.   The  Land Acquisition Officer had awarded compensation @450/-  per acre and also awarded a sum of Rs. 6600/- as  compensation for the trees that existed in the land.  The  Reference Court being conscious that the market value of  the land had to be determined as on the date of 4(1)  notification i.e. 23.12.1962 took into consideration sale  deeds of the year 1954, 1955, 1960 and 1963 and also one  sale deed of 1962. In para 22 of the judgment of the  Reference Court, it is stated thus:- "Therefore, it is proved from the statements  given by claimant and his witnesses that  Balawant Singh had sold the land attached to  disputed land @ Rs. 2-5 per squire foot to  Shyamlal in 1963 and Shyamlal purchased the  land in New Market @ 2.20 per squire foot in  1960.  There is a difference in threats of land in  Bhopal Mahanagar in 1960 and 1962,  therefore, I am of the view that the rate of the  disputed land was Rs. 2.5 per squire foot on  the date of Notification u/s 4(1) of Land  Acquisition Act got issued in the official  Gazette."                  It is also noticed that the land acquired is situated on  the State Highway of Bhopal-Jabalpur; it is one and half  mile away from Hamidiya bus stand; BHEL factory is two  and half miles away from this land; facilities like electricity,  water and phone are available to this land; transportation is  also available for passengers and goods and that the land in  question is surrounded by other industrial establishments.   It was not used as agricultural land at the time of  acquisition.  The Reference Court in its order having noticed  above facts as observed thus:- "In these circumstances, the reasoning of land  acquisition Officer that disputed land should be  valued by treating the agriculture is baseless.   The disputed land is situated within the limits of  Nagar Nigam of Bhopal Mahanagar and situated  at bank of the Public Road which is in between  Mahanagar and BHEL.  It is in the interest of  justice to find out that what would an ordinary  purchaser have paid for the disputed land on  2.12.1962."

       Thus, on a proper appreciation of evidence, as already  stated above, the Reference Court determined the market  value of the land acquired @Rs. 2 per sq. ft.  The High  Court in the impugned judgment without considering the  material on record in order to determine the proper market  value and even without considering the reasons recorded by  the reference Court as to the market value has simply  stated: - "Thus, we are of the considered view that the  price fixed by the Reference Court at the rate of  Rs. 2/- per sq. ft. does not deserve to be  upheld."          Thereafter the High Court held that "admittedly it had



the potentiality on the date of publication of the notification  under Section 4(1) of the Act, considering the proximity to  the urban areas, its potentiality for development and its  character, we think it appropriate to fix the price on the  basis of square yard.  Considering the entire gamut of facts,  we think Rs. 2/- should be the just price per square yard  and accordingly, we so hold." The reference Court as well the High Court both have  concurrently held that the land acquired, though was an  agricultural land, was not being used for agricultural  purpose as on the date of issuing 4(1) notification and it  had potentialities for purpose of creating building sites.  The  Reference Court was right in determining the market value  of the land acquired @Rs. 2/- per sq. ft. but it committed  an error in not giving any deduction towards developmental  charges.  In our view, having regard to the location and  surroundings of the acquired land, as already indicated  above, it would be just and appropriate to deduct 30%  towards developmental charges out of the amount of  compensation payable to the appellant @Rs. 2/- per sq. ft. In view of what is stated above, the impugned  judgment and order cannot be sustained.  Hence, the  appeal is allowed.  The impugned judgment is modified  awarding the compensation to the appellant as owner of the  land acquired @ Rs. 2/- per sq. ft. after deducting 30% of  the market value of the land calculated on the basis of Rs.  2/- per sq. ft.  The appellant is also entitled for all the  statutory benefits on the amount of compensation so  determined.  The appeal is disposed of accordingly.  No  costs.