Holding

Compensation for the acquired land should be fixed at Rs 10 per square metre, applying the belting method while considering potentiality and positive/negative factors.

Summary

The State of Maharashtra acquired about 5,300 sq m of agricultural land in 96 villages for the New Bombay Project under the Land Acquisition Act, 1894. The Land Acquisition Collector initially valued the land at Rs 0.35 per sq m; the reference court, using the belting method, enhanced compensation to Rs 5‑10 per sq m, which the High Court later reduced. The landowners appealed, contending that an expert’s valuation of Rs 15 per sq m should be accepted. The Supreme Court held that the expert’s evidence could not be relied upon because it was based on a post‑notification valuation and improper capitalization, and that in the absence of sale data the court may apply the belting method, considering potentiality and positive/negative factors. Applying these principles, the Court fixed compensation at Rs 10 per sq m, partially allowing the appeals.

Issues considered

The admissibility and reliability of the expert valuation of Rs 15 per sq m for compensation under Section 23 of the Land Acquisition Act, 1894.
Method of determining market value of land where no comparable sale data exist, including the applicability of the belting method and consideration of potentiality and positive/negative factors.
Whether the compensation awarded by the reference court should be enhanced in view of the purpose of acquisition and subsequent developments.

Legislation cited

Land Acquisition Act, 1894s. 11A, s. 18, s. 23, s. 4, s. 6, s. 9

Subjects

Land acquisitionCompensationValuationBelting methodPotentialitySection 23Agricultural landExpert testimonyMarket value

Judgment

[2009) 6 S.C.R. 222

A AVINASH OHAVAJI NAIK
v.
STATE OF MAHARASHTRA
(Civil Appeal No. 4259 of 2002)

APRIL 15, 2009
B
[S.B. SINHA ANO CYRIAC JOSEPH, JJ.]

LAND ACQUISITION ACT, 1894:

c s. 23 - Compensation for land acquired - computation of
- Belting method - Large tract of grassy lands agriculture in
nature and situate in 96 villages acquired in 1970 - Land
Acquisition Collector awarded compensation at Rs. 0. 351- per
sq m. - Findings recorded by reference court that no sale
D instance was available, there was no industrial or commercial
development, no railway station nearby, villages had no lo

electricity connection - No evidence brought on record by··
State to indicate annual average yield - Adopting belting
method, reference court enhanced the compensation to Rs. 5,
Rs.6 and Rs.101- per sq. m. - High Court reducing
E
compensation from 101 to Rs.71- per sq.m. and upholding
Rs.51- per sq. me. for other lands - Held: In case of this nature
some1 guess work is inevitable - However, keeping in view the
principle of potentiality and positive and negative factors, ...
compensation at Rs. 101- per sq. would be appropriate.
F
The respondent State, in order to form a new city
under ·New Bombay Project' Issued on 3.2.1970 a
Notification u/s 4 of the Land Acquisition Act, 1894 .
ac;qulring a large tract of land situate in 96 villages. A
G declaration u/s 6 of the Act was published on 21-5-1971. .,,
The Land Acquisition Collector valued the lands at 35
palse per sq.m. The reference court adopting the belting
method enhanced the compensation to Rs.5/· Rs.6/- and
Rs.1 Of· per sq.m. for various lands. The High Court
H 222
AVINASH DHAVAJI NAIK v. STATE OF 223
MAHARASHTRA
-•
reduced the compensation to Rs.7 for the lands for A
which the reference court had awarded compensation at
the rate of Rs.10/@ per sq. m. and fOr other lands held the
compensation at the rate of Rs.5/a per sq. m. as Justified.
In the appeals filed by the land owners, It was 8
contended for the appellants that the reference court and
the High Court erred In rejecting the evidence of expert
witness (PW 2) who had estimated value of .lands at
Rs.15/· per sq.m.

Allowing the appeals In part, the Court c
HELD:1. As regards the valuation of lands made by
the expert witness (PW 2), the reference court rightly held
that the same could not be fully relied upon because .the
valuer visited the land on or about 20-6-1987 whereas o
notification u/s 4 of the Land Acquisition Act, 1894 was
Issued on 3-2-1970 and declaration In terms of s.6 was
made on 21·5-1971; and that the valuer did not consider
the aspect of capitalization properly. [Paras 11 and 22]
[228-F-G; 233-C-D]
E
2.1. Findings of fact were arrived at by the reference
court that no sale Instance was available for the lands
situated In the village and there was no industrial or
commercial development therein; that there was no
railway station nearby the village; that the villagers did F
not obtain any electricity connection; and that the land
was a grassy land. Enough material was not brought on
record to establish the yield of the lands sought to be
acquired, which are admittedly agricultural In nature. In
all fairness, the State should have brought on record the G
requisite Information, viz., the nature of the crop, the
annual average yield, availability of Irrigation facilities, etc.
so as to enable the reference court to arrive at a correct
decision In regard to grant of compensation under the
Act. [Paras 12 and 13] [229·A·D] H
224 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 2.2. In order to assess potentiality of a land, the court
may not only have to bear in mind the purpose for which
the lands were sought to be acquired but also the
subsequent events to some extent. In a case of this
nature the court may proceed on the presumption that
B such a vast tract of land, viz. lands of 96 villages were
sought to be acquired at the same time for construction
of New Bombay. Some guess-work Is inevitable,
However, the judgment rendered by the High Court In ·
respect of the lands covered In Civil Appeal No. 4264-66
c of 2002 may be a safe guide particularly when the
reference court itself opined that the valuatlon of the land
should be determined at Rs. 10 per sq. m. Thus, the said
valuation adopted may be considered as providing for
some guideline. Therefore, keeping in view the aspect of
D potentiality of the land and positive and negative factors,
compensation at the rate of Rs. 10/- per sq. m. would
subserve the ends of justice. [Paras 15, 18, 19 and 25]
[229-G-H; 232-C·D; 235-A-C]

Rao Narain Singh (Dead) by Lrs. v. Union of India (1993)
E 3 SCC 60 and Viluben Jhalejar Contractor (dead) by Lrs. v.
State of Gujarat (2005) 4 SCC 789, referred to.
Case law referene:
(1993) 3 sec so referred to Para 17
F
(2oos) 4 sec 789 referred to Para 17
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4259 of 2002.

G From the Judgment & Order dated 13.06.2001 of the High
Court of Judicature at Bombay in first Appeal No. 233/1989.

WITH

C.A. NO. 4266/2002, 4262/2002, 4260-4261/2002, 4263/
H
AVINASH DHAVAJI NAIK v. STATE OF 225
MAHARASHTRA
.. 2002,· 4264-4265/2002 . A

Uday U. Lalit, Shivaji M. Jadhav, Prasenjit Keswani, Nitin
Sangra, Amol Chetak and Prasant Kumar for the Appellants.

Sanjay V. Kharde and Asha Gopalan Nair (for Ravindra
Keshavrao Adsure) for the Respondents. B

The Judgment of the Court was delivered by

S.B. SINHA, J. 1. These appeals involving similar
questions of fact and law were taken up for hearing together c
and are pei~g cji~posed of by this common judgment.

2. By reason pf a notification !fated 3.02.1970, the State
of M(lharashtr~ expressep its desire to acquire a large chunk
of land situated in 96 villa9~~ fqr- the pyrpose of forming new
twin city near Bombay called as 'New Bombay Project'. By o·
reason of the said notification, !5;} acres of lpnd, i.e., 5300 sq.
v
m. belonging to the appellants herein and situated in village
Wahal in the District of Raigad, Maharashtra was sought to be
I
acquired.
E
A declaration in terms of Section 6 of the Land Acquisition
Act (for short "the Act") was made on 21.05.1971.

3. A notice under Section 9 of the Act was issued pursuant
_. whereto the claimants - appellants filed their applications for

- payment of enhanced compensation.

4. The L€lnd Acquisition Collector made its award.
F

Aggri~ved by and dissatisfied therewith, the appellants filed
applications before the Collector for reference in terms of
Section 18 of the Act pursuant whereto reference was made G
to the Court of District Judge in the year 1986.
p

5. Before t~e Reference Court, the parties adduced their
respective evidences. Appellants examined one Jeevan
Kulkarni (PW-2) as an expert witness. He made valuation of
H
226 SUPREME COURT REPORTS [2009] 6 S.C.R.

A the lands In question. He visited the land on or about
20.06.1987 and prepared a report estimating the value of the
land at the rate of Rs.15/- per sq. m., I.e., Ra. 60,000/· per acre.
By reason of the award dated 30.01.1988, the Reference Court
awarded compensation at the rate of Rs. 5/- per sq.m. with all
B other benefits.
6. In reference cases Involved In Civil Appeal Nos. 4260-
4261 of 2002 (Ramdas Dattatraya Naik v. The State of
Maharashtra) and Civil Appeal Nos. 4264-4265 of 2002
(Dattatraya Krishna Naik (since deceased) through his
c proposed Legal Representatives) v. The State of Maharashtra),
however, compensation was awarded upon adopting the belting
method at the rate of Rs. 6 and 10 per sq. m. respectively
7. Both the parties preferred appeals and cross-appeals "
D thereagainst. By reason of the Impugned judgment, whereas
the appeal preferred by the appellants had been dismissed, the v
cross appeals preferred by the State in Civil Appeal Nos. 4260-
4261 of 2002 and in Civil Appeal Nos. 4264-4265 of 2002 was
allowed holding that compensation determined at the rate of
E Rs. 5 per sq. m. was justified. However, in Civil Appeal Nos.
4264-4265 of 2002 where the Trial Court awarded
compen~ation at the rate of Rs. 10 per sq. m., it was reduced
to Rs. 7/- per sq. m. by reason of the impugned judgment.
....
8. Mr. Uday U. Lalit, learned senior counsel, in support of
F these appeals, would contend that the Reference Court as also
the High Court could not have rejected the testimony of Mr.
Jeevan Kulkarni who made a modest estimate in regard to
valuation of the land at the rate of Rs. 15 per sq. m.

G Drawing our attention to a judgment of the Bombay High
Court in Unama Padu Hudar & Ors. v. The State of ....
Maharashtra [First Appeal No. 754 of 1986, decided on 25 &
26th February, 1993], the learned counsel urged that in respect
of villages Panvel and Kamothe, the High Court itself adopted
H belting system and granted various amounts of compensation
AVINASH DHAVAJI NAIK v. STATe OF 227
MAHARASHTRA [S.B. SINHA, J.]
depending upon the proximity of the village from the National A
Highway running between Bombay and Pune to the following
effect:

"Group No. First Appeal No. Rate granted B
per sq. m.
I. Abutting the 754/1986 25
Highway 763/1986
II. Within 800 751/1986 (Part) 23 c
Metres 756/1986
-
111. Abutting 753/1986 22
Kamothe Z. P. 751/1988 (Part)
Road to 1200 752/1986
Metres 0

IV-A. 800 Mtrs. to 755/1986 20
2200 Mtrs from
Bombay - Pune
Highway E
IV-B. 20 Mtrs 743/1986 20"
from Z.P. Rd.,
& Gaothan to
640 Mtrs from
Z.P. Rd & F
Gaothan

9. Our attention was also drawn to the fact that in some
cases where award could not be made and publlshed within a
period of two years from 24.09.1984 from which date Section G ·
11A was inserted in the Act, a fresh notification was Issued in
the year 1986. Recently, the Bombay High Court by reason of
a judgment and order dated 21.06.2007 has granted
compensation at the rate of Rs. 1, 725/- per sq. m. It was urged
that In these v.iews of the matter and keeping in view the fact H
228 SUPREME COURT REPORTS [2009] 6 S.C.R.

A that the appellant in Civil Appeal No. 4259 of 2002 has paid
great fees for obtaining compensation at the rate of Rs. 20 per
sq. m., this Court may award compensation suitably.

10. Mr. Sanjay V. Kharde, learned counsel appearing on
behalf of the State, on the other hand, supported the impugned
8
judgment.

For the sake of convenience, we may hereto below place
the relevant details:

c Civil Appeal Area Award Reference High
No. Court Court
4259 of 2002 5300 sq. m. Re. 1 Rs. 5 Rs. 5
4266 of2002 13600 sq.m. Re. 1 Rs. 5 Rs. 5
D 4262 of 2002 23300 sq. m. Re. 1 Rs. 5 Rs. 5
4260-61 of 2002 19800 sq. m. Re. 1 Rs. 6 Rs. 5 ..
4263 of 2002 22490 sq. m. Re. 1 Rs. 5 Rs. 5
4264-65 of 2002 5 acres 2 Re. 1 Rs. 10 Rs. 5
E guntas (in one
case
Rs. 7)

11. The purpose for acquisition of land was building a new
F city. A vast tract of land was sought to be acquired. Indisputably,
in terms of Section 23 of the Act, the market value of the land
was required to be determined as was obtaining in the year
1970 when the notification under Section 4 of the Act was
issued. It is unfortunate that despite the fact that notification was
G issued under Section 4 of the Act as far back as on 3.02.1970
and a declaration under Section 6 of the Act was issued on
21.05.1971, the award came to be passed only on 30.06.1986
and that too probably, only having regard to the consequences
ensuing in terms of Section 11A of the Act.
H
AVINASH DHAVAJI NAIK v. STATE OF 229
.¥ MAHARASHTRA [S.B. SINHA, J.]
12. A finding of fact was arrived at by the learned A
Reference Judge that no sale instance was available for the
lands situated in the village Wahal and there was no industrial
or commercial development therein; The Pune-Bombay
Highway was Gonstructed in the year 1978. The M.l.D.C.
pipeline was constructed in the year 1978. There was no B
railway station nearby the village. The villagers did not obtain
any electricity connection. The land was a grassy land.

13. In absence of any example of sale being available, the
reference court was required to take recourse to other methods
of valuation. We do not find that enough materials had been
c
brought on record to establish the yield of the lands sought to
be acquired, which are admittedly agricultural in nature. In all
fairness, the State should have brought on record the requisite
information, viz., the nature of the crop, the annual average
yield, availability of irrigation facilities, etc. so as to enable the D
· · reference court to arrive at a correct decision in regard to grant
of compensation under the Act
14. Although the lands in question were agricultural in
nature, they were being used for making a town like Bombay. E
A new port known as Nhava Sheva Port had come into being
which is a few kilometers away from the village. The roads were
being constructed. The road to Nhava Shiva Port from Bombay
is a District Board Road which is within 7 Kms. from the village
in question. A copy of the new Bombay Development Plan has F
been placed before us to point out construction of the National
Highway, i.e., Bombay-Pune road as also the other District
Board roads.

The potentiality of a land for the purpose of development
.i· as also for building purposes would depend upon a large G
number of factors.

15. For the said purpose, the court may not only have to
bear in mind the purpose for which the lands were sought to
be acquired but also the subsequent events to some extent. In H
230 SUPREME COURT REPORTS [2009) 6 S.C.R.

A a case of this nature the court may proceed on the presumption
that such a vast tract of land, viz., 96 villages were sought to
be acquired at the same time for construction of New Bombay.

16. We are not unmindful of the fact that development in '
~

B the entire area was not possible at one point of time.
Development of the area must have taken place in phases. We
are also not unmlndful of the fact that the price of the land may
skyrocket depending upon the development as also future
potentiality.
c 17. The High Court, as noticed hereinbefore, in respect of
village Kamothe adopted a belting system. It awarded
compensation varying from Rs. 20 to Rs. 25 per sq. m.
depending upon the proximity from the National Highway. In
respect of a village Panvel, however, although the lands were
D not proximate to the National Highway but a standard was
adopted for the purpose of grant of compensation on the
proximity from the District Board Roads. -
18. If that criterion is to be adopted, in our opinion, some
subsequent events may also be taken into consideration
E
therefor. In search of legal principles of valuation of land, we
may notice some decisions.
In Rao Narain Singh (Dead) By LRs. v. Union of India
[(1993) 3 SCC 60), this Court held: .
F
"8. Building potentiality of the acquired land, claimed
to be possessed by the acquired land, can assume no
significance in the instant case as 'the comparable sales
method' of valuation of land is resorted to by the High
G Court. Such method is resorted to, as the acquired land
was found to be comparable in its essential features with
land(s) respecting which evidence of certain sale deed(s),
was produced. Hence, the contention of the learned
counsel for the appellant raised to establish that the
acquired land had building potentiality at the time of its
H
AVINASH DHAVAJI NAIK v. STATE OF 231
MAHARASHTRA [S.B. SINHA, J.]
_.
acquisition, need not engage our consideration." A
Yet again in Viluben Jhalejar Contractor (dead) By LRs.
V. State of Gujarat [(2005) 4 SCC 789), it was held:

"The amount of compensation cannot be
ascertained with mathematical accuracy. A comparable B
instance has to be identified having regard to the proximity
from time angle as well as proximity from situation angle.
For determining the market value of the land under
acquisition, suitable adjustment has to be made having
regard to various positive and negative factors vis·a·vis c
the land under acquisition by placing the two in
juxtaposition. The positive and negative factors are as
under:
Positive factors Negative Factors D
(i) smallness of size (i) largeness of area
(ii) proximity to a road (ii) situation in the interior at
a distance from the road
E
(iii) frontage on a road (iii) narrow strip of land with
very small frontage
compared to depth
(iv) nearness to (v) lower level requiring
developed area the depressed portion to F
be filled up
(v) regular. shape (v) remoteness from
developed locality
G
(vi) level vis-a-vis land (vi) some special
under acquisition disadvantageous factors .
which would deter a
purchaser
H
232 SUPREME COURT REPORTS [2009] 6 S.C.R.
•
A (vii) special value for an
owner of an adjoining
property to whom it
may have some very
special advantage.
B
Whereas a smaller plot may be within the reach of
many, a large block of land will have to be developed
preparing a layout plan, carving out roads, leaving open
spaces, plotting out smaller plots, waiting for purchasers
and the hazards of an entrepreneur. Such development
c charges may range between 20% and 50% of the total
price."

19. Applying the aforementioned legal principles to the fact
of the present case, we are of the opinion that if the belting
D system is taken recourse to, compensation at the rate of Rs.
10/- per sq. m. would sub-serve the ends of justice. ..
20. The Reference Court in another case leading to First
Appeal No. 646of1995 [State of Maharashtra v. Shri Trimbak
Joma Thakur] fixed the amount of compensation at Rs. 230
E per sq. rn. The Reference Court in the instant case, having
regard tC> the non-agricultural potential of the land, made the
valuation at the rate of Rs. 5 per sq. m. It was held:
...
"... Admittedly those lands are not from village Wahal.
F Considering this type of evidence of an expert, I certainly
conclude that bearing in mind the distance of the acquired
lands from Panvel which is far expanding city, this land has
certainly N.A. potentiality in the year 1970 also. There are
other industrial developments and particularly Nhava Sheva
G Port Trust, Navy, the lands would have certainly fetch the
pric:e more than the awarded price. In the circumstances, ....
from the evidence on record, I say that the Opponent has
paid less compensation and it is necessary to increase
the amount of compensation .... Thus, considering the
H evidence before me, I can guess the possible correct rate
'
_,

AVINASH DHAVAJI NAIK v. STATE OF 233
MAHARASHTRA [S.B. SINHA, J.]
·* of compensation and according to me, it is necessary to A
award compensation at the rate of Rs. 5 per square metre
for the present acquired lands."

21. We have arrived at the rate of Rs.10/- per sq. m. of
~

I'
land for the purpose of grant of compensation because the B
distance between village Panvel and Wahal is about nine kms. ·
Panvel was a municipal area, Wahal was a gram panchayat.
... We have noticed hereinbefore that even the electricity had not
reached the Village Wahal.

.... 22. Appellant in Civil Appeal No. 4259 of 2002, in his c
• deposition categorically admitted the factors to which we have
taken note of heretobefore as regards non-development of the
land. The expert opinion of the valuer also cou!d not be fully
relied upon as not only he had visited the village in the year
1986 but also in his evidence, he admitted: D
- "... In my valuation report, I have taken capitalization
method. While taking income capitalization method, I have
noted that in the Indian context, if is very difficult to prove
the agri. Income because of the heart percentage illiteracy E.
and no accounts are maintained by the agriculturist..."

It is in that view of the matter, the Reference Court did not
rely upon his evidence, stating:

"I found that Mr. Kulkarni has not considered the aspect of F
capitalization properly. For the purpose of capitalization,
he mainfy relied upon the lease in favour of M.l.D.C. In fact
M.l.D.C. has installed the pipeline in the year 1978 as
stated by the claimant. So on the date of notification, the
lease instance was not available. Consequently, the G
conclusion drawn by Mr. Kulkarni on the strength of ·
_capitalization will not be helpful to determine the price of
the land as on the date of notification. Further, Mr. Kulkarni
has considered the sale instances from villages in Thane
District. Mr. Kulkarni has fairly admitted that he could not H
234 SUPREME COURT REPORTS [2009] 6 S.C.R.

•
A get any sale instance from village Wahal or the adjoining
villages. He has further admitted that there are no industrial
or commercial activities in village Wahal in 1970.. Thus, his
guess work, with regard to N.A. potentiality is based on
the sale instances and the awards which he has
B considered. From his report it appears that he has.
considered, sale instance from village shahabaj which is
3 to 4 kms. away from village Wahal. The rate paid in the
sale instance is Rs. 7.77 per square metre. The Awards
which he has considered also show that amounts of Rs. 8
c to Rs. 15 per square metre are awarded by various Courts
for adjoining lands ... •

23. Another aspect of the matter cannot also be lost sight
of. In the instant case, the Land Acquisition Collector valued the
lands at 35 paise per sq. m., the Reference Court opined that
D valuation would be Rs. 5 per sq.m. Whereas in First Appeal
No. 754 of 1986 decided on 26.02.1993, the Land Acquisition .
Collector itself valued the !and at the rate of Rs. 6 per sq.m.
wherewith the Reference Court did not differ and the belting
system for the first time was adopted by the High Court itself,
E in First Appeal No. 646 of 1995 decided on 21.06.2007, the
Land Acquisition Collector valued the lands at the rate of Rs.
200 to 230 per sq. m. which was upheld by the Reference Court.
In that case, notification under Section 6 of the Act was issued
in the year 1986. Within a span of 16 years, a lot of · '
F development had taken place. The lands in question in that case
involved commercial lands and deeds of sale were available
for the purpose of determination of the amount of
compensation.
\ '. ",'~

24. However, if not the judgment dated 21.06.2007, the
G
judgment dated 26.02.1993, in our opinion, can be put to use ...
at least for a limited RUrpose, viz., option of belting method and
grant of compensation on the basis of the proximity of the
National Highway and the other.
H
AVINASH DHAVAJI NAIK v. STATE OF 235
MAHARASHTRA [S.B. SINHA, J.]
25. Keeping in view the aforementioned principles in mind, A
we have arrived at the aforementioned figure of Rs. 10 per sq.
m.
In a case of this nature, in our opinion, some guess-work
is Inevitable. [See Viluben Jhalejar Contractor (supra)]. We
8
must, however, add that the judgment rendered by the High
Court in Civil Appeal No. 4264-65 of 2002 may be a safe guide
particularly when the Reference Court itself opined that the
valuation of the land should be determined at Rs. 10 per sq.
m. Thus, .the said valuation adopted may be considered as C
providing for some guideline.
26. The appeals are allowed in part and to the extent
mentioned hereinbefore. In the facts and circumstances of the
case, there shall be no order as to costs.
D
R.P. Appeals partly allowed.