MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT & ORS.versusSTATE OF PUNJAB & ORS.

                         [2012] 4 S.C.R. 24


A     MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT &
                        ORS.
                                   V.
                    STATE OF PUNJAB & ORS.
                  (Civil Appeal No. 4005 of 2012)
B
                           APRIL 27, 2012

         [P. SATHASIVAM AND J. CHELAMESWAR, JJ.)

        Land Acquisition Act, 1894:
c
       Compensation - Interest on solatium and additional
  market value - Sale exempl<:irs - Annual increase -
  Deduction - Held: When there are several exemplars with
  reference to similar lands, it is the general rule that the
o highest of the exemplars, if it is satisfied that it is a bona fide
  transaction, has to be considered and accepted - It is not
  desirable to take an average of various sale deeds placed
  before the authority/court for fixing fair compensation - Sale
  exemplar being of 21'2 years prior to s.4 Notification in the
E instant case, annual increase is fixed at 12% - However, the
  exemplar being of a smaller plot, a 20% deduction will be
  allowed from the market value - Compensation awarded
  accordingly - Claimant shall also be entitled to other statutory
  benefits including interest on solatium and additional market
  value.
F
       The subject land admeasuring 33 acres, was
  acquired in terms of Notification dated 22.12.1979 uls 4
  of the Land Acquisition Act, 1894 (the Act). Dissatisfied
  by the award dated 27.10.1982, passed by the Collector,
G the appellants filed an application for reference uls 18 of
  the Act. The reference court enhanced the compensation
  to Rs.1,00,000/- per acre. The High Court declined to
  interfere.

H                                  24
 MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT                 25
        & ORS. v. STATE OF PUNJAB
    In the instant appeals, the appellants claimed             A
compensation in terms of higher exemplar, namely, Ext.
A-61, instead of averaging the prices, and interest on
solatium.

    Allowing the appeal, the Court                             B
      HELD: 1.1 The reference court failed to take note of
the highest exemplar, namely, the sale transaction under
Ext. A-61 dated 22.07.1977. When the land is being
compulsorily taken away from a person, he is entitled to
the highest value which similar land in the locality is C
shown to have fetched in a bona fide transaction entered
into between a willing purchaser and a willing seller near
about the time of the acquisition. When there are several
exemplars with reference to similar lands, it is the general
rule that the highest of the exemplars, if it is satisfied that D
it is a bona fide transaction, has to be considered and
accepted. It is not desirable to take an average of various
sale deeds placed before the authority/court for fixing fair
compensation. Therefore, the market value as per Ext.A-
61dated22.07.1977 was Rs. 1,39,130.43 per acre (approx. E
Rs.1.40 lakhs per acre). The said sale deed was two and
a half years prior in time than s. 4(1) notification dated
22.12.1979. There is no reason to eschew the above sale
transaction. It is also pointed out that the lands covered
under Ext.A-61 are nearer to the lands of the appellants F
under acquisition. [para 12 and 15] [32-C-D]

    Sri Rani M. Vijayalakshmamma Rao Bahadur, Ranee
of Vuyyur vs. Collector of Madras, (1969) 1 MLJ 45 (SC);
State of Punjab and Another vs. Hansraj (Dead) by LRS. G
Sohan Singh and Others, (1994) 5 SCC 734; Anjani Molu
Oessai vs. State of Goa and Another 2010 (14) SCR 997 =
(2010) 13 sec 710 - relied on.

   1.2 This Court has time and again granted 10% to
15% increase per annum. The annual increase is fixed at        H
    26       SUPREME COURT REPORTS               [2012] 4 S.C.R.


A   12% per annum and with that rate of increase, the market
    value of the appellants' land would come to Rs.1,82,000
    per acre as on the date of notification. [para 16) [32-G; 33-
    C]

8      Ranjit Singh vs. Union Territory of Chandigarh (1992) 3
  SCC 659; Delhi Development Authority vs. Bali Ram Sharma
  & Ors. (2004) 6 SCC 533; ONGC Ltd. vs. Rameshbhai
  Jivanbhai Patel 2008 (11) SCR 927 = (2008) 14 SCC 745;
  Union of India vs. Harpat Singh & Ors. (2009) 14 SCC 375 -
C relied on

         1.3 The exemplar Ext.A-61 dated 22.07 .1977 is quite
    reasonable and acceptable. However, considering the
    fact that the area of land under Ext. A-61 dated 22.07.1977
    is a smaller one, it is but proper that appropriate
D   deduction should be made for the same. Thus, the market
    value for the acquired land is fixed at Rs.1,82,000/- minus
    Rs.36,400/- (towards 20% deduction) equivalent to
    Rs.1,45,600/- rounded at Rs.1,45,000/- per acre which is
    quite fair, reasonable and acceptable. [para 17) [33-F, H;
E   34-A]

         Trisha/a Jain & Anr. vs. State of Uttarancha/ & Anr., 2011
    (8) SCR 520 =2011 (6) SCC 47; State of Madhya Pradesh
    & Ors. vs. Kashiram (dead) by L.Rs. & Ors., 2010 (14) SCC
F   506 and Prabhakar Raghunath Patil & Ors. vs. State of
    Maharashtra, 2010 (13) SCR 586 = 2010 (13) SCC 107 -
    relied on.

        2. The claimant is also entitled to get interest on
    solatium and additional market value. [para 18) [34-8)
G
        Sunder vs. Union of India, (2001) 7 SCC 211; Gurpreet
    Singh vs. Union of India, (2006) 8 SCC 457 - followed.

         State of Haryana vs. Kailashwati, AIR 1980 P&H 117 -
    referred to.
H
 MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT                27
        & ORS. v. STATE OF PUNJAB
                    Case Law Reference:                        A

    (1969) 1 MLJ 45 (SC)     relied on            para 12
    (1994) 5 sec 734         relied on            para 12
    2010 (14) SCR 997        relied on            para 14      B
    (1992) 3 sec 659         relied on            para 16
    (2004) 6 sec 533         relied on            para 16

    2008 (11) SCR 927        relied on            para 16
                                                               c
    (2009) 14 sec 375        relied on            para 16
    2011 (8 ) SCR 520        relied on            para 17
    2010 (14) sec 506        relied on            para 17
    2010 (13 ) SCR 586       relied on            para 17      D

    (2001) 1 sec 211         followed             para 18
    (2006) 8 sec 457         followed             para 18
    AIR 1980 P&H 117         referred to          para 18      E
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4005 of 2012.

    From the Judgment & Order dated 06.01.2009 of the High
Court of Punjab & Haryana at Chandigarh in R.F.A. No. 998 of   F
1988 (0 & M).

    Dhruv Mehta, Bijoylashmi, Raghav Pandey, Hema
Shekhawat, Shobha for the Appellants.

    T.S. Doabia, Vivek Goyal, AAG, Jagjit Singh Chhabra, G
Manindra Dubey, Ametesh Gaurav, Kuldip Singh for the
Respondents.

    The Judgment of the Court was delivered by
                                                               H
    28       SUPREME COURT REPORTS                [2012] 4 S.C.R.


A        P. SATHASIVAM, J. 1. Leave granted.

         2. This appeal is directed against the final judgment and
    order dated 06.01.2009 passed by the High Court of Punjab
    and Haryana at Chandigarh in R.F.A. No. 998 of 1988 (O&M)
8   along with seven other appeals by which the High Court
    declined to interfere with the order dated 11.02.1988 of the
    Additional District Judge, Faridkot in L.R. No. 20 of 1984.

         3. Brief facts:

c        (a) Colonel Sir Harindar Singh, since deceased, was the
    former ruler of the State of Faridkot. In 1979, 259 Kanals and
    16 Marlas (33 acres) of land owned by him had been acquired
    by the Punjab Government for extension of existing Grain
    Market at Faridkot vide Notification No. 14(68)M-iv-78/17315
o   dated 22.12.1979 under Section 4 of the Land Acquisition
    Act, 1894 (hereinafter referred to as "the Act") which was
    published in the Punjab Government Gazette. Notification under
    Section 6 of the Act was issued on 19 .02 .1982. The award by
    the Collector was announced on 02.10.1982 and possession
E   of the land was also taken on that day. The Collector awarded
    compensation at the rate of Rs.15,000/- per acre for Nehri land,
    Rs.10,000/- per acre for Sarani land and Rs.25,000/- per acre
    for Banjar Kadim land and Ghair Mumkin land. The total
    compensation awarded including solatium at 15% was
F   Rs.4,85,202.86/-.

       (b) Aggrieved by the award passed by the Collector, on
  27.10.1982, the appellants filed an application for reference
  under Section 18 of the Act. The Additional District Judge,
  Faridkot, by order dated 11.02.1988 in LR. No. 20 of 1984
G disposed of the reference by enhancing the compensation to
  Rs.1,00,000/- per acre.

         (c) Against the aforesaid order, the appellants preferred
    R.F.A. No.998 of 1988 before the High Court. The High Court,
H   by the impugned common order and judgment dated
MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT & 29
 ORS. v. STATE OF PUNJAB [P. SATHASIVAM, J.]

06.01.2009, declined to interfere with the order passed by the A
Additional District Judge and did not enhance the
compensation as claimed by the appellants.

     (d) Aggrieved by the order passed by the High Court, the
appellants have filed this appeal by way of special leave before     B
this Court.

    4. Heard Mr. Dhruv Mehta, learned senior counsel for the
appellants, Mr. Vivek Goyal, learned Additional Advocate
General for the State of Punjab and Mr. T.S. Doabia, learned
senior counsel for respondent No.2.                          C

     5. The only point for consideration in this appeal is whether
the appellants have made out a case for higher compensation
as claimed.
                                                                     D
     6. The materials placed before the Land Acquisition
Collector and the Reference Court show that the land is of great
potential value inasmuch as the same being strategically
located at a commercial hub abutting main roads and
surrounded by commercial building including that of Canal
Colony, Godowns of Food Corporation of India, private and E
Government Residential Colonies, Red Cross Bhawan,
Government Medical College, existing Grain Market and
Godown of Warehousing Corporation. It was also pointed out
that one pocket of the land known as "Tikoni" is having main
roads on three sides.                                            F

     7. In support of their claim for higher compensation, the
appellants have relied upon various sale deeds in the reference
under Section 18 of the Act. It was further seen that the
Reference Court discarded all the sale instances related to area G
less than one kanal and proceeded to consider other sale
instances. It was pointed out that the State of Punjab did not
challenge the said criteria adopted by the Reference Court. By
pointing out the same, it was argued on the side of the
                                                                     H
    30         SUPREME COURT REPORTS              [2012] 4 S.C.R.


A   appellants that the exemplars for sale of one kanal or more are
    available to be relied upon.

         8. The Reference Court has taken into consideration three
    sale exemplars which are Ext.A-48, Ext. A-52 and Ext.A-61. It
8   is the grievance of the appellants that in the place of relying
    upon the highest exemplars, the Reference Court erroneously
    determined the market price of the appellants land by averaging
    the prices of all the three exemplars and thereby awarded a
    compensation of Rs. 1 lakh per acre. The High Court upheld
C   the said order of the Reference Court.

        9. The appellants are aggrieved on two aspects, firstly the
    highest exemplar, namely, Ext. A-61 should have been relied
    upon in the place of averaging the prices and secondly, the
    Reference Court did not grant interest on solatium.
D
         10. The Reference Court held the following three sale
    transactions relied upon by the appellants as relevant for
    determination of the market value of the land in dispute:


E
         Sale Deed       Date      Area       Price
                                   (K-M)      (Rs.K-M) (Rs./acre)

         Ex. A-48     29.05.1979    3-4       31,000      77,500

F        Ex.A-52      20.03.1978    1- 5.25   19,000      1,21,600

         Ex.A-61      22.07.1977    1-3       20,000      1,39,130


    Considering all these transactions including other references,
G   the Reference Court disposed of the matter by a common order
    whereby the compensation was enhanced to Rs.1,00,000/- per
    acre.

           11. Since the measurements of the land under acquisition

H
MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT & 31
 ORS. v. STATE OF PUNJAB [P. SATHASIVAM, J.)
are in kanals and marlas in the State of Punjab, the conversion     A
of these units in acres and square yards is being set out as
under:

    20 marlas        =        1 kanal
    8 kanals         =        1 acre                                B
    160 marlas       =        1 acre
    1 acre           =        4840 sq. yds.
    1 kanal          =        605 sq. yds.
    1 maria          =        30.25 sq. yds.
                                                                    c
     12. As pointed out above, the Reference Court failed to
take note of the highest exemplar, namely, the sale transaction
under Ext.A-61 dated 22.07.1977. In this regard, it is useful to
refer the decision of this Court in Sri Rani M.
Vijaya/akshmamma Rao 8Jhadur, Ranee of Vuyyur vs.
Collector of Madras, (1969) 1 MLJ 45 (SC). In this case, this       D
Court has held thus:
    " ... where sale deeds pertaining to different transactions
    are relied on behalf of the Government, that representing
    the highest value should be preferred to the rest unless        E
    there are strong circumstances justifying a different course.
    In any case we see no reason why an average of two sale
    deeds should have been taken in this case."
     13. In State of Punjab and Another vs. Hansraj (Dead)
by LRS. Sohan Singh and Others, (1994) 5 SCC 734, this F
Court has held that method of working out the 'average price'
paid under different sale transactions is not proper and that one
should not have, ordinarily recourse to such method. This Court
further held that the bona fide sale transactions proximate to
the point of acquisition of the lands situated in the G
neighbourhood of the acquired lands are the real basis to
determine the market value.
    14. This Court in Anjani Molu Dessai vs. State of Goa and
Another, (201 O) 13  sec  71 O, after relying upon the earlier
decisions of this Court in M. Vijayalakshmamma Rao                  H
    32       SUPREME COURT REPORTS                   [2012] 4 S.C.R.


A   Bahadur (supra) and Hansraj (supra) held in para 20 as under:

         "20. The legal position is that even where there are several
         exemplars with reference to similar lands, usually the
         highest of the exemplars, which is a bona fide transaction,
         will be considered."
B
    Again, in para 23, it was held that "the averaging of the prices
    under the two sale deeds was not justified."

         15. It is clear that when there are several exemplars with
c reference to similar lands, it is the general rule that the highest
    of the exemplars, if it is satisfied, that it is a bona fide
    transaction has to be considered and accepted. When the land
    is being compulsorily taken away from a person, he is entitled
    to the highest value which similar land in the locality is shown
0   to have fetched in a bona fide transaction entered into between
    a willing purchaser and a willing seller near about the time of
    the acquisition. In our view, it seems to be only fair that where
    sale deeds pertaining to different transactions are relied on
    behalf of the Government, the transaction representing the
E   highest value should be preferred to the rest unless there are
    strong circumstances justifying a different course. It is not
    desirable to take an average of various sale deeds placed
    before the authority/court for fixing fair cqmpensation .
                                                .)
         16. Based on the above principles, the market value as
F   per Ext.A-61 dated 22.07 .1977 was Rs. 1,39, 130.43 per acre
    (approx. Rs.1.40 lakhs per acre). The said sale deed was two
    and a half years prior in time than Section 4(1) notification dated
    22.12.1979. There is no reason to eschew the above sale
    transaction. It is also pointed out that the lands covered under
G   Ext.A-61 are nearer to the lands of the appellants under
    acquisition. This Court has time and again granted 10% to
    15% increase per annum. In Ranjit Singh vs. Union Territory
    of Chandigarh (1992) 3 SCC 659, this Court applied the rule
    of 10% yearly increase for award of higher compensation. In
H   Delhi Development Authority vs. Bali Ram Sharma & Ors.
 MEHRAWAL KHEWAJI TRUST (REGO.), FARIDKOT                  33
 & ORS. v. STATE OF PUNJAB [P. SATHASIVAM, J.]
(2004) 6 sec 533, this Court considered a batch of appeals       A
and applied the rule of annual increase for grant of higher
compensation. In ONGC Ltd. vs. Rameshbhai Jivanbhai Patel
(2008) 14 SCC 745, this Court held that where the acquired
land is in urban/semi-urban areas, increase can be to the tune
of 10% to 15% per annum and if the acquired land is situated     B
in rural areas, increase can be between 5% to 7.5% per annum.
In Union of India vs. Harpat Singh & Ors. (2009) 14 SCC 375,
this Court applied the rule of 10% increase per annum. Based
on the above principle, we fix the annual increase at 12% per
annum and with that rate of increase, the market value of the    c
appellants' land would come to Rs.1,82,000 per acre as on the
date of notification.
      17. Though the Reference Court relied on the sale
transaction covered under Ex. A-48 dated 29.05.1979 and fixed
compensation @ Rs.1 lakh per acre inasmuch as under Ex. A- D
61 dated 22.07.1977, i.e., even two and a half years prior to
notification under Section 4( 1) of the Act, the adjacent lands
have fetched higher price and in the light of the principles laid
down in the above decisions, we are of the view that exemplar
Ex.A-61 dated 22.07.1977 is quite reasonable and acceptable. E
However, as rightly pointed out by the learned counsel for
Respondent No.2 and considering the fact that the area of land
under Ex. A-61 dated 22.07.1977 is a smaller one, it is but
proper that appropriate deduction should be made for the same.
In Trisha/a Jain & Anr. vs. State of Uttarancha/ & Anr., 2011 F
(6) sec 47, this Court has held that the value of sale of small
pieces of land can be taken into consideration for determining
the value of large tract of land but with a rider that the Court
while taking such instances into consideration has to make a
reasonable deduction keeping in view of other attendant G
circumstances. Similar view has been expressed in State of
Madhya Pradesh & Ors. vs. Kashiram (dead) by L.Rs. & Ors.,
2010 (14) SCC 506 and Prabhakar Raghunath Patil & Ors.
vs. State of Maharashtra, 2010 (13) SCC 107. In view of the
same, it would be just and reasonable to allow deduction @
20%. By applying the above method, the market value for the H
    34       SUPREME COURT REPORTS                 [2012] 4 S.C.R.


A   acquired land is fixed at Rs.1,82,000/- minus Rs.36,400/-
    (towards 20% deduction) equivalent to Rs.1,45,600/- rounded
    at Rs.1,45,000/- per acre which is quite fair, reasonable and
    acceptable.
         18. The other grievance of the appellants is that interest
B   on solatium and additional market value was not granted. This
    aspect has been considered and answered by the Constitution
    Bench in the case of Sunder vs. Union of India, (2001) 7 SCC
    211. While considering various decisions of the High Courts
    and approving the decision of the Punjab and Haryana High
C   Court rendered in State of Haryana vs. Kailashwati, AIR 1980
    P&H 117, this Court held that the interest awardable under
    Section 28 would include within its ambit both the market value
    and the statutory solatium. In view of the same, it is clear that
    the person entitled to the compensation awarded is also
D   entitled to get interest on the aggregate amount including
    solatium. The above position has been further clarified by a
    subsequent Constitution Bench judgment in Gurpreet Singh vs.
    Union of India, (2006) 8 SCC 457. Based on the earlier
    Constitution Bench decision in Sunder (supra), the present
E   Constitution Bench held that the claimants would be entitled for
    interest on solatium and additional market value if the award
    of the Reference Court or that of the appellate Court does not
    specifically refer to the question of interest on solatium and
    additional market value or where the claim had not been
F   rejected either expressly or impliedly. In view of the same, we
    hold that the appellants are entitled to interest on solatium and
    additional market value as held in the above referred two
    Constitution Bench judgments.
       19. In the light of the above discussion, the appellants have
G made out a case for enhancement of compensation.
  Accordingly, the same is fixed at Rs.1,45,000/- per acre with
  all other statutory benefits including interest on solatium and
  additional market value. The appeal is allowed to the extent
  mentioned above. No order as to costs.
H R.P.                                             Appeal allowed.