RADHA MUDALIYARversusSPL. TAHASILDAR (LAND ACQ.), T.N.H. BOARD

                   [201 O] 13 (ADDL.) S.C.R. 154

A                     RADHA MUDALIYAR
                                v.
        SPL. TAHASILDAR (LAND ACQ.), T.N.H. BOARD
              (Civil Appeal No. 5616 of 2004 etc.)
                         OCTOBER 8, 2010
B
       [DR. MUKUNDAKAM SHARMA AND SWATANTER
                     KUMAR, JJ.]

        Land Acquisition Act, 1894:
c
       s. 23 - Compensation - Basis for determination - Held:
  Comparable sale instances are the best piece of evidence
  for the purpose of determining the compensation - Even
  transactions of the adjacent areas and closest sale instances
D to the date of the notification are best evidence - In case of
  increasing trend in value of land, the claimants are entitled
  to the benefit of increase for the intervening period - Annual
  increase of 10% to 15% is normally allowed by the court where
  the record reflects increasing trend in the sale price of the land
  - In the instant case, 10% is allowed because of the short
E intervening period between the execution of the sale deed and
  issuance of notification uls. 4.

        s.23 - Deduction - Applicability of, while determining
  compensation - Held: The deduction can be applied for
F different aspects - If the size of the plot of comparable sale
  is vety small and the same has to be taken into consideration
  for non-availability of other evidence and the land acquired
  is a large chunk of land, then some deduction on that score
  is applicable - Deduction on account of expenses of
G development of the sites could vary from 20% to 70%
  depending on the nature of the land, its situation, the purpose
  and stage of development - In the instant case, agricultural
  land was acquired to carty out the development scheme for
  setting up export processing zone - The development
H                                154
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                      155
            ACQ.), T.N.H. BOARD
purpose, being in public interest, is bound to result in               A
utilization of part of the land for the purposes of roads, by-links,
water and electricity lines and other infrastructural amenities
of the project- In the facts and circumstances of the case,
deduction of 30% is applied.

      ss. 23(/-A), 23(2) and 34, proviso - Consequential
                                                                       8
benefits, solatium and interest - Held: The claimants are
entitled to solatium as well as the interest on the aggregate
amount including solatium, at the rate specified in proviso to
s. 34 - Solatium is in consideration of compulsory nature of
acquisition - The compulsory nature of acquisition is to be            C
distinguished from voluntary sale or transfer - In the latter,
there is a willing buyer and seller - In the case of acquisition,
it is compulsory and deprives the owner of an opportunity to
negotiate and bargain the sale price of its land as it will entirely
depend on the Collector or the court to determine the amount           D
of compensation in accordance with the provisions of the Act.

     On 23.1.1985, a Notification under Section 4 of the
Land Acquisition Act, 1894 was issued by the Industries
Department of the State of Tamil Nadu to acquire land in               E
furtherance of the scheme sanctioned by the State
Industries Promotion Corporation of Tamil Nadu
(SIPCOT) and a total of 261.42 acres of land was acquired
for setting up the Madras Export Processing Zone (MEPZ).
The land acquisition officer awarded compensation @ Rs.
                                                                       F
145 per cent for an extent of 64 cents and Rs. 110 for 6.42
acres of another kind of land and also awarded
compensation at different rates for the superstructures
raised by the claimants-appellants on their respective
lands. The possession of the land was taken. The
appellants received the compensation under protest.                    G
They filed applications for reference under Section 18 of
the Act. The reference court enhanced the compensation
payable to the claimants to Rs. 3,600/- per cent as
agricultural land by relying upon Exhibits A4 and A5. On
                                                                       H
    156 SUPREME COURT REPORTS [2010] 13 (AOOL.) S.C.R.


A appeal, the High Court reduced the compensation
  payable holding that the market value of the acquired
  lands would be Rs. 2,018/- per cent by adopting the value
  as per Ex.A4, i.e. Rs. 3,363/-and making a deduction of
  40% towards development charges.
B      In the instant appeals, it was contended for the
  appellants that the High Court did not appreciate the
  evidence on record in its correct perspective and appl.ied
  deduction of 40% which, in the facts and circumstances
  of the case, was not called for; and the appellants were
C not awarded solatium and interest in accordance with
  law.

       Partly allowing the appeals, the Court

       HELD: 1.1. It is a well settled principle of law that
0
  comparable sale instances, subject to their satisfying the
  basic ingredients of law, are the best piece of evidence
  to be considered by the court for the purpose of
  determining the compensation. Even awards and
  transactions of the adjacent areas have been treated as
E best evidence. Of course, such instances must be
  comparable and legally admissible in evidence. Three
  sale instances were produced and proved by the
  claimant. Of course, the area, stated in those sale
  instances, was comparatively much smaller in size than
F the acquired land. The land, subject matter of Exhibit A4
  admeasuring approximately S.S cents was sold for a sum
  of Rs.18,500/- and the rate came to Rs. 3,363/- per cent.
  Exhibits A1 and AS again were the sale instances from
  the same revenue estate and were quite close to the date
G of notification under Section 4. Exhibit A1 was dated
  7.11.1984 while Exhibit AS was dated 15.6.1984. None of
  the parties to the proceedings had questioned the
  genuineness, legality or otherwise of those documents
  and, in fact, there was no objection regarding their
H
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND               157
            ACQ.), T.N.H. BOARD
admissibility. Exhibit A1 was not taken into consideration A
by both the courts. The Exhibit A4 was dated 12.03.1984
while the notification under Section 4 was issued on
23.01.1985. There was a difference of nearly ten months
between these two dates. The claimants were entitled to
the benefit of increase for this intervening period. Annual B
increase of 10% to 15% is normally allowed by the court
where the record reflects increasing trend in the sale
price of the land. This principle is often applied by this
Court while determining compensation. In the instant
case, the minimum increase possible is allowed because c
of the short intervening period between the execution of ·
the sale deed and issuance of notification under Section
4. The consequence of the addition would be that the
value of the land in terms of Exhibit A4 as on the date of
the notification under Section 4 would be Rs. 3,6991- per D
cent rounded off to Rs. 3,7001- per cent which, when
reasonable deduction is applied, would give more or less
the same rate of compensation as computed on the basis
ofExhibitA1. [Paras 10, 11, 12) [168-A-B, G; 169-C-D; 170-
A-B-D-H; 171-A]
                                                                E
     Harcharan v. State of Haryana (1982) 3 SCC 408;
Kantaben Manibhai Amin v. Special Land Acquisition Officer,
Baroda (1989) 4 SCC 662; ONGC Ltd. v. Sendhabhai
Vastram Patel (2005) 6 SCC 454; Shaji Kuriakose v. Indian
Oil Corporation (2001) 7 SCC 650; Kanwar Singh v. Union         F
of India (1998) 8 SCC 136; ONGC Ltd. v. Rameshbhai
Jivanbhai Patel (2008) 14 SCC 745; Sardar Jogendra Singh
(dead) by LRs. v. State of Uttar Pradesh (2008) 17 SCC 133
- relied on.
                                                                G
     1.2. While determining compensation, the deduction
can be applied for different aspects. If the size of the plot
is very small and the same has to be taken into
consideration for non-availability of other evidence and
the land acquired is a large chunk of land, then it would
                                                                H
   158    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A be advisable to apply some deduction on that score. In
  the instant case, the land was acquired, which apparently
  was an agricultural land at the time of acquisition, to carry
  out the development scheme for the MEPZ sanctioned by
  the SIPCOT. The development purpose, being in public
B interest, is bound to result in utilization of part of the land
  for the purposes of roads, by-links, water and electricity
  lines and other infrastructural amenities of the project.
  This Court, depending on the facts and circumstances of
  the case, has taken the view that deduction on account
c of expenses of development of the sites could vary from
  20% to 70% depending on the nature of the land, its
  situation, the purpose and stage of development. The
  courts would have to apply some guess work while
  determining such a question inasmuch as it is not always
  possible to determine the quantum of compensation with
0
  exactitude or arithmetical accuracy. Of course, this
  permissible guess work has to be used with great
  caution and within the determinants of law declared by
  this Court from time to time. Despite the fact that both the
  reference court as well as the High Court relied upon
E Exhibit A4 or A5 or both of them, still they arrived at
  drastically different rates of compensation payable to the
  claimants. While the High Court took the value of Exhibit
  A4 as Rs. 3,363/- per cent, without adding any element of
  increase for the intervening period, it applied deduction
F at the rate of 40% and awarded compensation at the rate
  of Rs. 2,018/- per cent. On the other hand, the reference
  court took the total sale consideration of Exhibit A4 as
  Rs. 25,000/- in place of Rs. 18,500/- and applied 40%
  increase while awarding compensation to the claimants.
G Of course, the reference court also applied 40%
  deduction on account of development charges and
  taking the gross value at the rate of Rs. 6,000/- per cent
  awarded compensation at the rate of 3,600/- per cent.
  Both the reference court as well as the High Court have
H fell in error of law in computing the compensation
 RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND              159
           ACQ.), T.N.H. BOARD

payable to the claimants. The High Court ignored an           A
important aspect of the case in not awarding
enhancement in the value of the land as it had come in
evidence that there was increasing trend in the sale price
of the land in that area. The documentary evidence of
Exhibits A1 and A4 also showed the increasing trend. On       B
the other hand, the reference court fell in error in giving
40% increase for a short intervening period of ten
months. Both the High Court as well as the reference
court had applied the deduction at the rate of 40% but
still awarded compensation at antipodal rates. [Paras 13,     c
15, 16] [171-8-F; 172-H; 173-A-B; 174-E-H; 175-A-C]

     Land Acquisition Officer v. Nookala Rajamallu (2003) 12
SCC 334; K. S. Shivadevamma v. Assistant Commissioner
and Land Acqusition Officer (1996) 2 SCC 62; Ram Piari v. D
Land Acquisition Collector, Solan (1996) 8 SCC 338;
Chimanlal Hargovindas v. Special Land Acquisition Officer,
Poona (1988) 3 SCC 751; Hasanali Walimchand (Dead) by
Lrs v. State of Maharashtra (1998) 2 SCC 388; V.
Hanumantha Reddy (Deceased) by Lrs. v. Land Acquisition
Officer & Manda/ R. Officer (2003) 12 SCC 642; Charan Dass E
(Dead) by Lrs. v. H.P. Housing and Urban Development
Authority, 2009 (12) SCALE 293 - relied on.
     1.3. Having examined the facts and circumstances of
the case and the evidence on record, rule of F
approximately 113rd deduction can be fairly applied to the
instant case. The land certainly has potential and even
the sale instances show that the land from the revenue
estate of the same village was sold as plots and a number
of facilities, were available in the vicinity. Examining the G
cumulative effect of the evidence on record in relation to
location, potential and similarity of land, the deduction of
more than 30% would be prejudicial to the interest of the
claimants whose lands have been acquired by the State
in exercise of its power of eminent domain. It is a
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    160   SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R.


A compulsory acquisition and it is expected of the State to
  be just and fair and award the compensation to the
  claimants which satisfies mandate of law contained in the
  provisions of Section 23 of the Act. Therefore, applying
  30% deduction to the value indicated in Exhibit A1
8 (deduction   being made both on account of size of the
  plot and development charges), the claimants would be
  entitled to receive compensation at the rate of Rs. 2,800/
  - per cent for the acquired land and consequential
  benefits in terms of s. 23(1-A). [Para 16 and 19] [176-B-G;
C 178-D]
         Kasturi & Ors. v. State of Haryana (2003) 1 SCC 354 -
    referred to.
         2. The claimants are entitled to solatium as well as
    the interest on the awarded amount. The court has to
0
    keep in mind that the compulsory nature of acquisition
    is to be distinguished from voluntary sale or transfer. In
    the latter, there is a willing buy~r and seller. In the case
    of acquisition, it is compulsory and deprives the owner
    of an opportunity to negotiate and bargain the sale price
E   of its land as it will entirely depend on what the Collector
    or the court determines as the amount of compensation
    in accordance with the provisions of the Act. The solatium
    envisaged in sub-section (2) of Section 23 is "in
    consideration of the compulsory nature of acquisition".
F   Thus, the solatium is not the same as damages on
    account of the landowner's disinclination to part with the
    land acquired. If such compensation as determined in
    terms of Section 23 of the Act is not paid within one year
    from the date of taking possession of the land, then in
G   terms of proviso to Section 34 interest shall stand
    escalated to 15% per annum from the date of the expiry
    of the said period of one year on the amount of
    compensation or part thereof which has not been paid
    or deposited before the date of such expiry. The person
H   entitled to the compensation awarded is also entitled to
~
     RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                   161
               ACQ.), T.N.H. BOARD
    get interest on the aggregate amount including solatium.          A
    In any case, there can be no doubt in law that the
    claimants are entitled to the solatium and the interest
    thereupon at the rate specified in proviso to Section 34
    of the Act for the relevant period. Even in this regard, the
    judgment of the High Court, therefore, cannot be                  B
    sustained. [Paras 17, 18) [177-A-H; 178-A-C)

        Sunder v. Union of India (2001) 7 SCC 211 - relied on.

         Prem Nath Kapur v. National Fertilizers Corporation of
    India Ltd. (1996) 2 SCC 71; Kapur Chand Jain v. State of          c
    Himanchal Pradesh (1999) 2 SCC 89 - referred to.
                        Case Law Reference:
        (1982) 3 sec 408            relied on              Para 10
                                                                      D
        (1989) 4 sec 662            relied on              Para 10
                                     .r::, .c-'.
        (2005) 6 sec 454      iliAr~lied on                Para 10
        (2001 > 1 sec 650          relied on
                              r.:- t
                                0
                                                           Para 10
        (2008) 14 sec 745       -  relied o-n';            Para 12    E
                                          bnC'
        (2008) 11 sec 133          relied on               Para 12
                                                   11 ..
        (2003) 12 sec 334           relied on              Para 13
        (1996) 2 sec 62             relied on              Para 13    F
        (1996) 8 sec 338            relied on              Para 13
        (1988) 3 sec 751            relied on              Para 13
        (1998) 2 sec 388            relied on              Para 14
                                                                      G
        (2003) 12 sec 642           relied on              Para 14
        2009 (12) SCALE 293         relied on              Para 15
        (2003) 1 sec 354            referred to            Para 16
                                                                      H
    162     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A         (1996) 2 sec 11            referred to      Para 17
          (2001 > 1 sec 211          relied on        Para 17
          (1999) 2 sec 89            referred to      Para 18
B       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    5616 of 2004.

        From the Judgment & Order dated 06.11.2002 of the High
    Court of Madras in AS No. 411 of 1991.

c                                   WITH

    Civil Appeal No. 5732 of 2004.

    Civil Appeal No. 5628 of 2004.

D Civil Appeal No. 8818 of 2004.

      A.T.M. Sampath, T.S. Shanthi, N. Karunanidhi, K.K. Mani
  and Abhishek Krishna'ldr1~e 1Appellant.
                     n/"\ ·.. ·1
      Harish Chander, Ft Nedumaran, Vimal Dubey, Subhash,
E Padmalakshmi Nigam, A.K. Sharma, D.S. Mahra and V.K.
  Verma for the Respondent.
                         110
          The Judgment of the Court ws delivered by
                            '
          SWATANTER KUMAR, J. 1. Leave granted in SLP (C)
    No.9736 of 2004.            ·

        2. Application for impleadment in Civil Appeal No.5616 of
    2004 is allowed.

        3. By this judgment, we will dispose of the three Civil
    Appeals being Civil Appeal Nos.5616, 5628 and 5732 of 2004
    and a Civil Appeal arising out of Special Leave Petition (C)
    No.9736 of 2004 as they arise from a common judgment with
    somewhat similar facts.
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                   163
   ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
FACTS                                                               A

      4. For the purposes of brevity and to avoid repetition, we
would be referring to the facts in Civil Appeal No.5616 of 2004.
A notification under Section 4(1) of the Land Acquisition Act,
1894 (for short, 'the Act') was issued by the Industries            B
Department of the State of Tamil Nadu on 23.01.1985 to
acquire land in the Revenue Estate of village Kadaperi, Hamlet
of Tambaram, Tambaram Taluk within the municipal limits of the
city including the land admeasuring 7.06 acres belonging to the
appellant. This notification came to be issued in furtherance of    C
the scheme, which was sanctioned by the State Industries
Promotion Corporation of Tamil Nadu (SIPCOT) on 03.04.1984
and a total of 261.42 acres of land was acquired for setting up
the Madras Export Processing Zone (MEPZ). The entire land,
including dry and wet lands, was sought to be acquired as a
compact block for the project in question. In response to the       D
publication of the notification, the interested persons filed
objections in terms of. Section 5A of the Act which were
considered by the Land Acquisition Officer (for short, the 'LAO')
and declaration under Section 6 of the Act was issued on
23.04.1986. After notice to the interested persons/owners,          E
Award No. 3186 was made and published by the LAO on
28.11.1986. The LAO awarded compensation at the rate of Rs.
145/- per cent for an extent of 64 cents and Rs. 110 for 6.42
acres of another kind of land and also awarded compensation
at different rates for the superstructures raised by the            F
appellants on their respective lands. The possession of the land
was taken on 03.02.1987. The compensation was received by
the appellants under protest on 04.07.1987 and they preferred
references under Section 18 of the Act.
                                                                    G
     According to the appellants, the market price of the land
in question was between Rs. 7,000/- and Rs. 8,000/- per cent
in the years 1983-84. In 1985-86 the land was sold at the rate
of Rs. 45,000/- to Rs. 50,000/- per ground. In this appeal, the
appellants had claimed compensation at that rate. They also         H
    164 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C R.


A stated that they had raised nearly 160 coconut trees and dug
  a big well fitted with electric motor by incurring a cost of Rs.
  1.5 lakh on the land in question. We may notice that various
  appellants had raised different claims on these grounds. The
  Collector, as already noticed, had awarded compensation
B uniformly at the rates mentioned supra while awarding
  compensation separately for the well, trees, etc.

       5. The parties led evidence before the Reference Court
  and the Reference Court, vide its judgment dated 09.12.1988,
  enhanced the compensation payable to the claimants to Rs.
C 3,600/- per cent as agricultural land by relying upon Exhibits A1,
  A4 and A5. The Reference Court granted the following relief
  to the claimants:

         "(1)   The valuation fixed by the lands acquired at Rs.110/
D               - and Rs.145/- per cent, by the Land Acquisition
                Officer has been raised and a fresh valuation at
                Rs.3,600/- per cent is fixed for the entire area of the
                acquired lands;

         (2)    The valuation at Rs.2,675/- per coconut tree, fixed
E
                by the Land Acquisition Tahsildar is held to be
                correct and confirmed;

          (3)   The valuation for the well and the pump-set made
                by the Land Acquisition Tahsildar at Rs.44,487/- has
F               been enhanced to Rs.1,76,862/- and fixed
                accordingly;

          (4)   Further it is ordered that the claimant should be
                paid 30% solatium for the above amounts and
G               interest at the rate of 12% from 23.1.1985 to
                28.11.1986 and further 9% interest from 3.2.1987
                to 2.2.1988. It is ordered that the sum of
                Rs.1,88,887.85 fixed as compensation by the Land
                Acquisition Tahsildar for the land, trees, well and
                pump-set should be deducted from the above
H
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                    165
   ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
            amount. It is further ordered that the claimant is       A
            entitled to the interest at the rate of 15% per annum
            for the difference amount of compensation from
            3.2.1988 till date of deposit of the compensation
            into Court."
                                                                     B
     6. Aggrieved by the said judgment of the Reference Court,
the Government, through the LAO, filed an appeal before the
High Court challenging the correctness of the same. The High
Court, vide its judgment dated 05.02.2001, declined to accept
the reasoning recorded by the Reference Court in its different       C
judgments under appeal and reduced the compensation
payable to the claimants at the rate of Rs. 2018/- per cent. Thus,
the High Court, while partially accepting the appeal of the State,
granted the following relief:

     "Therefore, considering the fact the lands under acquisition    D
     are not developed at all, whereas, under adjoining lands
     are developed, deduction at the rate of 40% for prescribing
     the correct value by the learned Judge cannot be held to
     be erroneous. Therefore, we are of the considered view
     that the market value of the acquired lands can be              E
     determined by adopting the value as per Ex.A4, i.e.
     Rs.3,363/-, and ~fter a deduction of 40% towards
     development charges, the market value will be Rs. 2,018/
     - per cent. The claimant is entitled to compensation for the
     7.06 acres of acquired lands at this rate, i.e., 14,24,708/-    F
      "

     7. Before discussing the merits in these appeals, it needs
to be noticed that different sale instances were produced as
exhibits in different references. As far·as the question of
enhancing the compensation awarded to the claimants on               G
account of trees, well and other improvements on the land in
question is concerned, we may notice that it is apparent from
the record of the case as well as the arguments addressed
before this Court that the correctness of the compensation
                                                                     H
    166   SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R.


A awarded by the Reference Court was hardly questioned before
  the High Court and even before this Court. As there is no
  serious challenge to the quantum of compensation awarded on
  this account, we do not propose to discuss this issue any
  further. Thus, only two issues have been raised before us,
B namely: (a) that the High Court has not appreciated the
  evidence on record in its correct perspective. The High Court
  has applied deduction of 40% which, in the facts and
  circumstances of the case, is not called for. This has resulted
  in serious prejudice to the interest of the claimants and they
c have not been awarded the fair market value of their acquired
  lands; and (b) they have not been awarded solatium and interest
  in accordance with law.

    DISCUSSION ON MERITS

D      8. In Civil Appeal No.5616 of 2004, the claimant is the
  owner of land admeasuring 7.06 acres in a compact square
  shape falling in Survey Nos.16 and 24/1 in the Revenue Estate
  of Kadaperi village. Exhibits A 1, A4 and AS are the sale
  instances from the same village which had been produced by
E the claimant in support of her claim. Exhibits A2 and A3 are
  the valuation reports in relation to the well and the pump on the
  acquired land. Exhibit A6 is the photo copy of Kadaperi village
  map. Exhibits A1, A4 and AS are dated 7th November 1984,
  12th March 1984 and 15th June 1984 respectively. The
F Reference Court appears to have firstly relied upon Exhibit AS
  and while assuming that value of the land under this exhibit was
  Rs. 6,000/- per cent then proceeded to apply 40% deduction
  on account of road facilities and the fact that these were the
  sale instances relating to plots and resultantly awarded Rs.
G 3,600/- per cent as the compensation payable to the claimants.
  Reference was also made to Exhibit A4 where the land had
  been sold at the rate of Rs. 4,545/- per cent. The Court noticed
  that value of the land had been increasing in the area day-by-
  day and various facilities such as school, college, hospital and
  banks were available quite near the acquired land and even a
H
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                     167
   ACQ.}, T.N.H. BOARD [SWATANTER KUMAR, J.]
 Railway Station was located within a distance of one kilometer.      A
 While taking Exhibit A4 as the basis, the Reference Court erred
 in adding 40% increase to the reflected value in the sale deed.
 The error is due to the reasons that actual sale consideration
 of Exhibit A4 was ' 3363 per cent and the intervening period
 between the date of the sale deed and issuance of notification       B
 under Section 4 was not two years as noticed by that Court.
 Though the compensation was determined primarily on the
 basis of Exhibit A4, the learned Reference Court noticed that
 the land in Exhibit A5 had been sold at the rate of Rs.6,000/-
 per cent under that document. This impression of the Reference       C
 Court is not supported by any evidence on record as under
 Exhibit A5 the land was, in fact, sold at the rate of Rs. 2, 180/-
 per cent on 15.06.1984. However, the learned Reference Court
 computed somewhat similar compensation with reference to the         0
 two Exhibits A4 and A5. It may be noticed that Exhibit A4 is
.three months prior to the date of execution of Exhibit A5.

     9. In Civil Appeal arising out of SLP (C) No. 9736 of 2004,
the Tahsildar vide Award No.5 of 1986 dated 29.11.1986 had
                                                                      E
fixed the compensation at Rs.145.85 per cent on the basis of
Exhibits A2 and A3 respectively. These documents, as well as
Exhibit A4 were co~sidered to be inadmissible by the
Reference Court in its order dated 18 .11 .1990 and rejected as
they were neither the original sale deeds nor copies of               F
registered documents. The rejection thereof is not questioned
in the present appeals. The Court had primarily relied upon
Exhibit A 1 and awarded the compensation. The High Court,
while adopting the reasoning given in its judgment in Civil
Appeal No. 5616 of 2004, reduced the compensation relying             G
upon Exhibit A4 in that case and after making 40% deduction
awarded the compensation.

    10. In the backdrop of the above factual matrix and the
judgments of the Courts under appeal, this Court imprimus has         H
    168 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   to examine as to what would be the just and fair market value
    of the land on the basis of which the compensation payable to
    the claimants should be determined in terms of Section 23 of
    the Act. It is a well settled principle of law that comparable sale
    instances, subject to their satisfying the basic ingredients of law,
B   are the best piece of evidence to be considered by the Court
    for the purpose of determining the compensation. Even awards
    and transactions of the adjacent areas have been treated as
    best evidence which will fall within the zone of consideration by
    the Court. Of course, such instances must be comparable and
C   legally admissible in evidence. In this aspect, we may refer to
    the judgments of this Court in the case of Harcharan v. State
    of Haryana, [(1982) 3 SCC 408]; Kantaben Manibhai Amin
     vs. Special Land Acquisition Officer, Baroda, [(1989) 4 SCC
    662] and ONGC Ltd. vs. Sendhabhai Vastram Patel, [(2005)
0
    6 SCC 454]. Comparable sale instances are the safest
    method for determining the market value of the acquired land
    and as laid down in Shaji Kuriakose vs. Indian Oil Corporation,
    [(2001) 7 sec 650], it should satisfy the factors, inter alia, (1)
E   the sale must be genuine transaction; (2) the sale deed must
    have been executed at the time proximate to the date of
    issuance of notification under Section 4 of the Act; (3) the land·
    covered by the sale must be in vicinity of the acquired land; (4)
    the land covered by the sale must be similar to the acquired
F   land; and (5) size of the plot of the land covered by the sale be
    comparable to the acquired land. The sale instances should
    preferably be closest to the date of the notification as then alone
    it would satisfy the touchstone of the principles contemplated
    under Section 23 of the Act, as held in Kanwar Singh vs. Union
G   of India, [(1998) 8 sec 136].

         11. In Civil Appeal No.5616 of 2004, three sale instances
    were produced and proved by the claimants on the record of
    the Reference Court. These are Exhibit A 1, A4 and A5 and their
H . details are as follows :
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                  169
   ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
                                                                   A
 Exhibit Date of      Area Sold      Total sale     Value Per
         Sale                        Consid-        Cent
         Deed                        eration


 A1      07.11.1984 5 Cents          Rs. 20,000     Rs. 4,000/-    B
 A5      15.06.1984 4.13 Cents       Rs. 9,000      Rs. 2,180/-

 A4      12.03.1984 5.5 Cents        Rs. 18,500     Rs. 3,363/-

      It needs to be noticed that all these lands are located in   c
the Revenue Estate of the same village from where the land
has been acquired. The land, subject matter of Exhibit A4 is
located in Survey No.165 and, as apparent from the above
table, admeasuring approximately 5.5 cents was sold for a sum
of Rs. 18,500/- and the rate comes to Rs. 3,363/- per cent.        D
However, it is in evidence that when this document was
presented for registration, the concerned Registrar made an
endorsement raising an objection with regard to the sale
consideration declared in the sale deed. According to the
Registrar, Mark A5 was the endorsement vide which the parties
were directed to pay stamp duty taking the value of the land in    E
question to be Rs. 25,000/-. The total sale consideration being
Rs. 25,000/-, the rate of the land would come to Rs. 4,545/- per
cent. This dpcument was registered as per endorsement on
record on 15.6.1984 while the date of the presentation and
execution of the sale deed was 12.3.1984. We would not like        F
to go into the question whether as per Exhibit A4 the sale
consideration should be Rs. 18,500/- or it should be Rs.
25,000/-. The question as to what is the effect of enhancement
of the sale consideration by the Registrar for the purpose of
payment of stamp duty, on the market value of the acquired land    G
while determining the compensation payable to the claimants,
need not be examined_by us. In this case, the same is
specifically kept open. For the purposes of the present case,
we would take the value of the land at the rate of Rs. 3,363 per
cent.                                                              H
    170    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
                                                   /


A       Exhibits A 1 and A5 again are the sale instances from the
  same Revenue Estate and are quite close to the date of
  notification under Section 4, Exhibit A 1 is dated 7 .11.1984
  while Exhibit A5 is dated 15.6.1984. None of the parties to the
  proceedings have questioned the genuineness, legality or
B otherwise of these documents and, in fact, as it appears from
  the record before us there is hardly any objection regarding their
  admissibility or being read in evidence.

          12. Now, let us examine whether Exhibits A1, A4 and A5
e satisfy the above stated tests. They were admitted in evidence
     in accordance with law as they are genuine transactions and
    arethe closest sale instances to the date of the notification as
    available on record and the land, subject matter of the
    transaction, is quite similar to the acquired land and, in fact, it
     is from the same village. Of course, the area, stated in these
D    sale instances, is comparatively much smaller in size than the
     acquired land. The sale deed is dated 12.03.1984 while the
     notification under Section 4 was issued on 23.01.1985. Thus,
    there is a difference of nearly ten months between these two
    dates. The claimants would be entitled to the benefit of increase
E   for this intervening period. Annual increase of 10% to 15% is
     normally allowed by the court where the record reflects
    increasing trend in the sale price of the land. This principle is
    often applied by this Court while determining compensation.
    Reference can be made to the judgments of this Court in ONGC
F   Ltd. vs. Rameshbhai Jivanbhai Patel [(2008) 14 sec 745]
    and Sardar Jogendra Singh (dead) by LRs. vs. State of Uttar
    Pradesh [(2008) 17 sec 133]. We have opted to apply the
    minimum increase possible because of the short intervening
    period between the execution of the sale deed and issuance
G   of. notification under Sec;tion 4. Consequence of the above
    addition would be that the value of the land in terms of Exhibit
    A4 as on the date of the notification under Section 4 would be
    Rs. 3,699/- per cent rounded off to Rs. 3,700/- percent which,
    when reasonable deduction is applied, would give more or less
H   the same rate of compensation as computed by us on the basis
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                      171
   ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
of Exhibit A 1.                                                         A

      13. Now, the. next question that arises is whether the
claimants would be entitled to receive the compensation at this
rate or certain element of deduction needs to be applied in the
facts and circumstan.ces of the case. The deduction can be
                                                                        8
applied for different aspects while determining compensation.
If the size of the plot is very small and the same has to be taken
into consideration for non-availability of.other evidence and
where the land acquired is a large chunk of land, then it would
be advisable to apply some deduction on that score. Reference           C
in this regard may be made to Land Acquisition Officer vs.
Nookala Rajama//u [(2003) 12 SCC 334]. In alternative or in
addition thereto, deduction can also be applied on account of
wastage of land and development charges. In the present case,
the land has been acquired, which apparently was an
agricultural land at the time of acquisition, to carry out the          D
development scheme for the MEP;?: ,sanctioned by ~he SIPCOT.
The development purpose, being in public interest, i~ bound to
result in. utilization of part of the land for the purposes of roads,
by-links, water & electricity lines and oth-e.r infrastructural
amenities of the project. This Court, depending on the facts and
circumstances of the case, has taken·the view that deduction
on account of expenses of development of the sites could vary
from 20% to 70% depending on the nature of the lar:id, its
situation, the purpose and stage cif development as held by this
Court in the case of K. S. Shivadevamma vs. Assistant.                  F
Commissioner and Land Acqusition Officer [(1996) 2 SCC
62], Ram Piari vs. Land Acquisition Collector, Sola,n [(1_996)
8 SCC 338], Chimanlal Hargovindas vs. "Specfal Land
Acquisition Officer, Poona [(1988) 3 SCC 751], Hasanali
Walimchand (Dead) by Lrs. vs. State of Maharashtra [(1998)              G'
2 SCC 388]. In K.S. Shivadevamma (supra), this Court held
as under:

     "10. It is then contended that 53% is not automatic but
     depends upon the nature of the deve~opmentj_n_d the                If
    172 SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R.


A       stage of development. We are inclined to agree with the
        learned counsel that the extent of deduction depends upon
        development need in each case. Under the Building Rules
        53% of land is required to be left out. This Court has laid
        as a general rule that for laying the roads and other
B       amenities 33-1/3% is required to be deducted. Where the
        development has already taken place, appropriate
        deduction needs to be made. In this case, we do not find
        any development had taken place as on that date. When
        we are determining compensation under Section 23( 1), as
c       on the date of notification under Section 4(1). we have to
        consider the situation of the land development. if already
        made, and other relevant facts as on that date. No doubt,
        the land possessed potential value, but no development
        had taken place as on the date, In view of the obligation
Q       on the part of the owner to hand over the land to the City
        Improvement Trust for roads and for other amenities and
        his requirement to expend money for laying the roads,
        water supply mains, electricity etc., the deduction of 53%
        and further deduction towards development charges @ 33-
        1/3%, ordered by the High Court, was not illegal."
E
        The above view was reiterated in the case of Nookala
    Rajamallu (supra).

        14. On similar lines, this Court in the case of V.
F Hanumantha Reddy (Deceased) by Lrs. vs. Land Acquisition
  Officer & Manda/ R. Officer [(2003) 12 SCC 642], while
  considering that the acquired land was adjacent to developed
  land, held that neither its high potentiality nor its proximity to a
  developed land can be a ground for not deducting the
G development charges and that normally 1/3rd deduction could
  be allowed.

         15. We may also notice that the Courts would have to apply
    some guess work while determining such a question inasmuch
    as it is not always possible to determine the quantum of
H
 RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                 173
  ACQ.), T.N.H. BOARD [SWATANTER. KUMAR, J.]
compensation with exactitude or arithmetical accuracy. Of        A
course, this permissible guess work has to be used with great
caution and within the determinants of law declared by this
Court from time to time. This Court in the case of Charan Dass
(Dead) by Lrs. vs. H.P. Housing and Urban Development
Authority, [2009 (12) SCALE 293] held as under:                  B

    "10. Section 15 of the Act mandates that in determining
    the amount of compensation, the Collector shall be guided
    by the pmvisions contained in Sections 23 and 24 of the
    Act. Section 23 provides that in determining the amount C
    of compensation to be awarded for the land acquired
    under the Act, the Court shall, inter alia, take into
    consideration the market value of the land at the date of
    the publication of the Notification under Section 4 of the
    Act. The Section contains the list of positive factors and
    Section 24 has a list of negatives, vis-a-vis the land under D
    acquisition, to be taken into consideration while
    determining the amount of compensation. As already
    noted, the first step being the determination of the market
    value of the land on the date of publication of Notification
    under Sub-section (1) of Section 4 of the Act. One of the E
    principles for determination of the market value of the
    acquired land would be the price that a willing purchaser
    would be willing to pay if it is sold in the open market at
    the time of issue of Notification under Section 4 of the Act.
    But finding direct evidence in this behalf is not an easy F
    task and, therefore, the Court has to take recourse to other
    known methods for arriving at the market value of the land
    acquired. One of the preferred and well accepted methods
    adopted for ascertaining the market value of the land in
    acquisition cases is the sale transactions on or about the   53
    date of issue of Notification under Section 4 of the Act. But .
    here again finding a transaction of sale on or a few days
    before the said Notification is not an easy exercise. In the /
    absence of such evidence contemporaneous transactions
    in respect of the lands, which have similar advantages and H
    174     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A         disadvantages is considered as a good piece of evidence
          for determining the market value of the acquired land. It
          needs little emphasis that the contemporaneous
          transactions or the comparable sales have to be in respect
          of lands which are contiguous to the acquired land and are
B         similar in nature and potentiality. Again, in the absence of
          sale deeds, the judgments and awards passed in respect
          of acquisition of lands, made in the same village and/or
          neighbouring villages can be accepted as valid piece of
          evidence and provide a !>ound basis to work out the
c         market value of the land after suitable adjustments with
          regard to positive and negative factors enumerated in
          Sections 23 and 24 of the Act. Undoubtedly, an element
          of some guess work is involved in the entire exercise, yet
          the authority charged with the duty to award compensation
          is bound to make an estimate judged by an objective
D
          standard."

                                                (emphasis supplied)

       16. Despite the fact tha.t both the Reference Court as well
E as the High Court have relied upon Exhibit A4 or AS or both of
  them, still they have arrived at drastically different rates of
  compensation payable to the claimants. While the High Court
  took the value of Exhibit A4 as Rs. :3,363/- per cent, without
  adding any element of increase for the intervening period, it
F applied deduction at the rate of 40% and awarded
  compensation at the rate of Rs. 2,018/- per cent. On the other
  hand the Reference Court took the total sale consideration of
  Exhibit A4 as Rs. 25,000/- in place of Rs. 18,500/- and applied
  40% increase while awarding compensation to the claimants.
G Of course, the Reference Court also applied 40% deduction
  on account of development charges and taking the gross value
  at the rate of Rs. 6,000/- per cent awarded compensation at
  the rate of Rs. 3,600/- per cent.

          In our considered view, both the Reference Court as well
H
 RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                    175
  ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
as the High Court have fallen in error of law in computing the      A
compensation payable to the claimants. On the one hand, the
High Court ignored an important aspect of the case in not
awarding enhancement in the value of the land as it had come
in evidence that there was increasing trend in the sale price of
the land in that area. The documentary evidence of Exhibits A 1     B
and A4 also shows the increasing trend. On the other hand, the
Reference Court fell in error in giving 40% increase for a short
intervening period of ten months. Both the High Court as well
as the Reference Court had applied the deduction at the rate
of 40% but still awarded compensation at antipodal rates.           c
      Another reason which we must notice and, in fact, it is not
clear to us either from the judgment of the High Court or that of
the Reference Court as to why Exhibit A 1 has not been taken
into consideration by both the Courts. In our view, Exhibit A 1
is the sale instance from the Revenue Estate of the same            D
village and is located close to the developed area. The sale
deed was executed only three months prior to the date of
notification under Section 4 of the Act and also reflected a
reasonable value where the land was sold at the rate of Rs.
4,000/- per cent while as per Exhibit A4, the land was sold at      E
the rate of Rs. 3,363/- on 12.3.1984, thus, indicating increasing
trend in the value of the land. If appropriate increase is given
on the basis of Exhibit A4 for the intervening period and
deduction at a reasonable rate less than 40% is applied, it will
approximately give the same rate of compensation as would           F
be computed with reference to Exhibit A 1.

     Now, let us examine the exact compensation payable to
the claimants with reference to Exhibit A 1. Genuineness of
Exhibit A 1 has neither been questioned nor held to be a            G
transaction which was executed only to enhance the value of
the acquired land. Exhibit A 1 is a comparable piece of
evidence which can safely be relied upon by the Court while
determining the compensation in regard to the acquired land.
Learned counsel for the claimants, while relying upon the
                                                                    H
    176 SUPREME COURT REPORTS [201 O] 13 (ADDL.) S.C.R.


A judgment of this Court in Kasturi & Ors. vs. State of Haryana
  [(2003) 1 sec 354), contended that the acquired land has
  great potential and is located adjacent to the developed land
  and as such the deduction should not be more than 20% on
  these counts. However, learned counsel appearing for the
B respondents relied upon the other judgments already referred
  by us supra that the deduction should not be less than 40%.
  Having examined the facts and circumstances of the case and
  the evidence on record, we are of the considered view that rule
  of approximately 1/3rd deduction can be fairly applied to the
c present case. The land certainly has potential and even the sale
  instances show that the land from the Revenue Estate of the
  same village was sold as plots and a number of facilities, as
  indicated above, were available in the vicinity. Examining the
  cumulative effect of the evidence on record in relation to
  location, potential and similarity of land, we consider 'it
0
  appropriate that deduction of more than 30% would be.
  prejudicial to the interest of the claimants whose lands have
  been acquired by the State in exercise of its power of eminent
  domain. It is a compulsory acquisition and it is expected of the
  State to be just and fair and award the compensation to the
E claimants which satisfies mandate of law contained in the
  provisions of Section 23 of the Act. Therefore, applying 30%
  deduction to the value indicated in Exhibit A 1 (deduction being
  made both on account of size of the plot and development
  charges), the claimants would be entitled to receive
F compensation at the rate of Rs. 2,800/- per cent for the
  acquired land. As in the other appeals, the High Court had only
  relied upon its judgment which is impugned in Civil Appeal
  No.5616 of 2004, therefore, it is not necessary for us to discuss
  the evidence in those cases in any further detail. The claimants
G in all these appeals would be entitled to the same rate of
  compensation.

       17. The argument of the appellants is that they have been
  denied solatium and interest by the High Court while referring
H to the judgment of this Court in Prem Nath Kapur v. National
  RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND                      177
   ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
Fertilizers Corporation of India Ltd. [(1996) 2 SCC 71]. It is          A
contended that in view of the law clearly stated by this Court in
the case of Sunder v. Union of India [(2001) 7 SCC 211], which
has been consistently followed by different Benches of this
Court, the claimants are entitled to solatium as well as the
interest on the awarded amount. We find merit in this contention.       B

      18. The Constitution Bench of this Court in the case of
 Sunder (supra) had clearly stated that the Court has to keep
 in mind that the compulsory nature of acquisition is to be
distinguished from voluntary sale or transfer. In the latter, there     C
 is a willing buyer and seller. In the case of acquisition, it is
 compulsory and deprives the owner of an opportunity to
 negotiate and bargain the sale price of its land as it will entirely
 depend on what the Collector or the court determines as the
 amount of compensation in accordance with the provisions of
 the Act. The solatium envisaged in sub-section (2) of Section          D
 23 is "in consideration of the compulsory nature of acquisition".
 Thus, the solatium is not the same as damages on account of
 the landowner's disinclination to part with the land acquired. If
 such compensation as determined in terms of Section 23 of
the Act is not paid within one year from the date of taking             E
 possession of the land, then in terms of proviso to Section 34
 interest shall stand escalated to 15% per annum from the date
 of the expiry of the said period of one year on the amount of
 compensation or part thereof which has not been paid or
 deposited before the date of such expiry. The Court further held       F
 that it is inconceivable that the solatium amount would attract
 only the escalated rate of interest from the expiry of one year
and that there would be no interest on solatium during the
 preceding period. Hence the person entitled to the
 compensation awarded is also entitled to get interest on the           G
 aggregate amount including solatium. It appears from the
 impugned judgment that the High Court had relied upon the
judgment of this Court in the case of Prem Nath Kapur (supra)
and the judgment of this Court in the case of Sunder (supra)
came fo be pronounced after the judgment of the High Court.             H
    178    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A While relying upon the law existing at that time, the High Court
  had declined to grant the interest on solatium but made it
  subject to the pronouncement in the case of Kapur Chand Jain
  vs. State of Himanchal Pradesh [(1999) 2 SCC 89], wherein
  this Court subsequently made a reference to a larger Bench
B and the judgment in Sunder (supra) came to be pronounced.
  In any case there can be no doubt in law that the claimants are
  entitled to the solatium and the interest thereupon at the rate
  specified in proviso to Section 34 of the Act for the relevant
  period. Even in this regard the judgment of the High Court,
c therefore, cannot be sustained.

         19. For the reasons aforestated we partially allow the
    appeals of the appellants that the claimants/appellants would
    be entitled to receive compensation at the rate of Rs. 2,800/-
    per cent for the acquired land and the consequential benefits
D   of Section 23(1 )A. The claimants would also be entitled to get
    interest on solatium according to proviso to Section 348 of the
    Act. As already noted, the claimants have not pressed for any
    enhancement for the superstructures namely well. trees, etc.
    which, in .any case, is hereby rejected.
E
          20. In the facts and circumstances of the cases parties are
    left to bear their own costs.

    D.G.                                          Appeals allowed.




                    '   .