IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION   

CIVIL APPEAL NO. 9525 OF 2003   

Shashikant Bansal ……..Appellant

Versus

Gwalior Improvement Trust/ Gwalior Development Authority …….Respondent

With CIVIL APPEAL NO. 9529 OF 2003   

Gwalior Improvement Trust/ Gwalior Development Authority …..Appellant

Versus

Shashikant Bansal …….Respondent

J U D G M E N T

G.S. Singhvi,  J.

1. These appeals are directed against judgment dated 14.12.2000 of the  

Division Bench of Madhya Pradesh High Court whereby the appeal filed by  

Shashikant Bansal (hereinafter referred to as ‘the appellant’) under Section

147 of the Madhya Pradesh Town Improvement Trust Act, 1960 (for short,  

`the  Act’)  was  partly  allowed and market  value  of  the  land acquired  by  

Gwalior  Improvement  Trust/Gwalior  Development  Authority  (hereinafter  

referred to as `the respondent’) was fixed at the rate of Rs.1.50 per square  

feet minus 25% development cost and the appellant’s claim for payment of  

interest on solatium was rejected.

2. The appellant’s land comprised in Khasra Nos. 48 to 53, 60 to 63 and  

65  to  67  measuring  16.04  Bighas  situated  in  Keshobaagh,  Gwalior  was  

acquired for execution of the residential scheme framed by the respondent.  

The appellant was offered a sum of Rs.1,98,975/- as compensation for the  

land, house and wells existing over the land but he did not accept  the same.  

Therefore, a reference was made under Section 72(3) of the Act to the Joint  

Tribunal of All Town Improvement Trusts of Madhya Pradesh (for short,  

`the Tribunal’).  The Tribunal considered the rival pleadings and evidence  

and passed award dated 14.7.1992, the relevant portion of which reads thus:

“We  direct  that  the  development  authority  Gwalior  the  successor  in  office  of  Gwalior  Improvement  Trust  do  pay  Rs.12000/-  per  bigha  as  compensation  for  the  acquired land,  Rs.40,000/-  per  well  i.e.  Rs.  80,000/-  for  two  wells.   Rs.  50,000/- for the house on the land, Rs.30,000/- for the standing  trees and plants on the land, Rs.50,000/- for the boundary wall,  Rs.3500/-  for  pipes  and  angles,  Rs.5000/-  for  the  standing  

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sugarcane crop, Rs.15000/- for the amount spent in leveling the  land,  Rs.5000/-  for  the  loss  of  pump  house  and  water  tank  (house) and Rs.4000/- for tin shed.  The development authority,  Gwalior shall also pay 6% interest on the above amount from  30.7.76 and 16% solatium on the above amount.”

3. Feeling dissatisfied with the market value fixed by the Tribunal, the  

appellant preferred an appeal under Section 147 of the Act.  The Division  

Bench of the High Court partly  allowed the appeal and fixed the market  

value of the land at the rate of Rs.1.50 per square feet but ordered deduction  

of development cost at the rate of 25%.  The Division Bench rejected the  

appellant’s  claim for  award  of  interest  on  solatium by  relying  upon  the  

judgment of this Court in Yadavrao P. Pathade v. State of Maharashtra  

(1996) 2 SCC 570.

4. Shri R.P. Gupta, learned senior counsel appearing for the appellant  

argued  that  the  direction  given  by  the  High  Court  for  payment  of  

compensation to the appellant at  the rate of Rs.1.50 per square feet  after  

deducting  25%  development  cost  is  not  only  unjustified,  but  is  legally  

unsustainable  because in an identical  case of  Narayan Prasad v.  Nagar  

Sudhar  Nyas  and  others (First  Appeal  No.  3  of  1993  decided  on  

30.8.2000), the market value of the land was fixed at Rs. 1.50 per square feet  

without any deduction.  Learned senior counsel extensively referred to the  

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evidence  adduced by the  parties  before the  Tribunal  and argued that  the  

High  Court  committed  an  error  by  directing  deduction  of  25%  towards  

development cost ignoring that the land had already been developed by the  

appellant.  He made a pointed reference to the statements of PWs. 1, 2 and 3,  

who were examined by the appellant and documents marked Exts. P1 to p17  

to  show  that  the  appellant  had  already  leveled  the  land,  constructed  

boundary wall,  tube wells,  tin  sheds,  power house and had planted large  

number of fruit bearing trees and submitted that in the absence of any contra  

evidence, there was no legal basis for applying the rule of 25% deduction  

towards the development cost.  Learned senior counsel also relied upon the  

amendments made in the Land Acquisition Act, 1894 (for short, ‘the 1894  

Act’) by Amendment Act No. 68 of 1984, the judgments of this Court in  

Balammal v. State of Madras AIR 1968 SC 1425, Nagpur Improvement  

Trust  and  another  v.  Vithal  Rao  and  others AIR  1973  SC  689,  

Maharashtra  State  Road  Transport  Corporation  v.  State  of  

Maharashtra (2003)  4  SCC  200  and  argued  that  even  though  the  

appellant’s  land  was  acquired  under  the  State  Act,  he  is  entitled  to  the  

benefit of the amendment made in the 1894 Act.  Learned senior counsel  

further argued that in view of the Constitution Bench judgment in Sunder v.  

Union of India (2001) 7 SCC 211 by which the judgment in Yadavrao P.  

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Pathade v. State of Maharashtra (supra) was overruled, the appellant is  

entitled to the interest on the amount of solatium.  

5. Ms.  Indu  Malhotra,  learned  senior  counsel  appearing  for  the  

respondent fairly admitted that in the case of  Narayan Prasad,  which is  

identical to the appellant’s case, the High Court had fixed the market value  

of  the  acquired  land  at  Rs.1.50  per  square  feet  without  25%  deduction  

towards  development  cost  and  that  C.A.  No.  9526/2006  filed  by  the  

respondent against the judgment of the High Court has been dismissed today  

on the ground of smallness of the amount,  but argued that the impugned  

judgment  cannot  be  said  to  be  vitiated  by  any error  of  law because  the  

deduction  of  25% towards  development  cost  was  necessary  because  the  

respondent  had  to  spend  substantial  amount  in  providing  amenities  

necessary for a housing scheme.  On the issue of the appellant’s entitlement  

to get interest on solatium, Ms. Malhotra conceded that such benefit will be  

admissible to him in the light of the judgment of the Constitution Bench in  

Sunder v. Union of India (supra).

6. We have considered the  respective  arguments/submissions.   In  our  

view, the Division Bench of the High Court did not commit any error by  

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fixing the market value of the acquired land at the rate of Rs.1.50 per square  

feet,  but  the  deduction  of  25%  towards  development  cost  was  totally  

uncalled for and unjustified.  While the appellant had adduced oral as well as  

documentary evidence to show that he had already developed the land by  

leveling the same, constructing boundary wall, tube wells, power house, tin  

sheds and fixing the pipes and angles and also by planting large number of  

fruit bearing trees, the respondent did not adduce any evidence to disprove  

the same or that any particular amount was to be spent for the purpose of  

making  improvements.   Therefore,  the  deduction  of  25%  towards  

development cost is legally unsustainable.

7. The question whether the appellant is entitled to interest on solatium  

must be answered in his favour in view of the judgment of the Constitution  

Bench  in   Sunder  v.  Union  of  India (supra)  and  another  judgment  in  

Virender Singh v. Union of India (2003) 10 SCC 86. We may also observe  

that in view of the law laid down in Balammal v. State of Madras (supra),  

Nagpur  Improvement  Trust  and  another  v.  Vithal  Rao  and  others  

(supra) and Maharashtra State Road Transport Corporation v. State of  

Maharashtra (supra),  the  appellant  is  entitled  to  the  benefits  which  are  

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admissible to a person whose land is acquired under the 1894 Act including  

interest on solatium.   

8. In  the  result,  Civil  Appeal  No.9525  of  2003  is  allowed  and  Civil  

Appeal No.9529 of 2003 is dismissed.  The respondent is directed to pay  

enhanced compensation  to  the  appellant  in  terms of  the  judgment  of  the  

High  Court  without  making  any  deduction.   The  appellant  shall  also  be  

entitled  to  interest  on solatium.  The amount payable  to the appellant  in  

terms of this judgment should be paid within a period of 2 months from the  

date of receipt/production of copy of this judgment.

….………………….…J. [G.S. Singhvi]

…..…..………………..J. [Asok Kumar Ganguly]

New Delhi July 26, 2010

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