Holding

The claimant is entitled to compensation at Rs 20 per square yard less Rs 3,000 per acre due to the land's advantageous location and industrial suitability.

Summary

The appellant, Sharadamma, widow of B.M. Venkataswamappa, owned land in Byappanahalli that was acquired for the expansion of the New Government Electric Factory. She claimed compensation of Rs 20 per square yard, but the Land Acquisition Officer initially awarded Rs 8,000 per acre; the Reference Court later enhanced it to Rs 20 per square yard less Rs 3,000 per acre, accounting for conversion charges. The High Court set aside this award and remanded the case, after which the Reference Court, relying on the Supreme Court’s decision in Special Land Acquisition Officer v. B.M. Krishnamurthy, awarded Rs 18,000 per acre, which the High Court upheld. The Supreme Court examined the land’s superior location—adjacent to a National Highway, railway line, and industrial area—and held that the claimant was entitled to the higher rate of Rs 20 per square yard less Rs 3,000 per acre. Consequently, the Court allowed the appeals and directed that compensation be paid at that rate, with costs.

Issues considered

Whether the compensation for the acquired land should be fixed at Rs 20 per square yard less Rs 3,000 per acre, considering the land's location and industrial potential.
Whether the conversion charge of Rs 3,000 per acre should be deducted from the compensation despite the land not being formally converted to non‑agricultural use.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 4

Subjects

Land acquisitionCompensationConversion chargeIndustrial potentialValuationNational HighwaySupreme Court

Judgment

.;.<.

A SHARADAMMA
J(
v.
SPECIAL LAND ACQUISITION OFFICER AND ANR.

FEBRUARY 9, 2007

B [C.K. THAKKER AND LOKESHWAR SINGH PANTA, JJ.]

Land Acquisition Act, I 894-Land acquisition-Compensation-Claim
of-Land situated on National Highway near railway line and suitable for ··~

industrial purpose-Claim of Rs. 201- per square yard-Courts below
c awarding compensation at the rate of Rs, 18,0001- per acre-Correctness
of-Held: In view of the location of the land, compensation awarded at the
rate of Rs. 201- per square yard less Rs. 30001- per acre towards conversion
charges, proper.

D Notification was issued For acquisition of land owned by the appellant
for expansion of New Government Electric Factory. Appellant demanded
compensation of Rs. 20.00 per square yard Land Acquisition Officer awarded
,.t
compensation of Rs. 8,000 per acre. Appellant filed Reference. Reference
,_
Court enhanced the compensation and awarded Rs. 20 per square yard less
Rs. 3,000/- per acre since the land was having potentiality to conversion for
E non-agricultural use. Aggrieved. Authorities filed appeals. High Court noted
that the Reference Court relied upon earlier award but the same was
challenged and was before this Court. Therefore High Court remanded the
matter to the Reference Court. Reference Court relied on the decision of
Supreme Court in Special Land Acquisition Officer Bang/ore v. B.M.
Kirshnamurthy, and awarded compensation at the rate of Rs. 18,000/- Per acre.
F
High Court upheld the award. Hence the present appeals. t
Allowing the appeals, the Court

HELD: The claimant is right in submitting that both the Courts were
not correct in not awarding compensation as claimed by the appellant. It is
G also right in referring to B.M Krishnamurthy, particularly as to location of
the land in question for claiming enhanced compensation vis-a-vis land in B.M
Krishnamurthy' case. The map on record clearly shows that the land in -.... ~

question is better located than the land in B.M Krishnamurthy's case. The
then Special Land Acquisition Officer, Bangalore from 1964 to 1967 admitted
H 402

.,
SHARADAMMA v. SPECIAL LAND ACQUISITION OFFICER [THAKKER, J.) 403

.,.. that Kissan Factory was located at the distance of3/4th mile from the acquired A
land and that the Corporation limits were about two furlongs from the acquired
land. There was industrial potentiality of the lands though the acquired lands
were not converted. He stated that lands were situated on National Highway
of Bangalore-Madras, near Raihvay line and situated in Industrial Area.
Thus, in view of the location of land, the claimant is entitled to compensation
at the rate of Rs. 20 per square yard as claimed by her. It is admitted that the B
land was not converted to non-agricuJtural use for which the owner was
required to pay an amount of Rs. 3,000 per acre and to that extent the amount
-~ deserves to be reduced. Thus, the claimant is entitled to compensation at the
rate of Rs. 20 per square yard less Rs. 3,000 per acre. [Paras 12 and 13]
[407-F-H; 407-A-D] c
Special Land Acquisition Officer, Bangalore v. B.M Krishnamurthy,
[1985] 1 sec 469, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6587-6588 of
2000. -D
_. From the Judgment and Final Order dated 12. l 0 .1998 of the High Court
of Karnataka at Bangalore in M.F.A. No. l 387c/w and 1376/1994.
-.J

S.S. Javali and P.R. Ramasesh for the Appellant.

Sanjay R. Hegde, Vikrant Yadav, Sashidhar, Shiv Kumar Suri, Naveen R. E
Nath, Anita Shenoy and Lalit Mohini Bhat for the Respondents.

The Judgment of the Court was delivered by

C.K. THAKKER, J. l. The present appeals arise out of a common
-~
judgment and order passed by the High Court of Kamataka at Bangalore on F
October 12, 1998 in MFA Nos. 1387of1994 and 1376of1994. By the said
order, the High Court confirmed the order passed by the Reference Court on
May 31, 1993 in LAC Nos. 33 of 1980 and 76 of 1980.

2. To appreciate the grievance of the appellant, it is necessary to state
few facts. G

.. "'1-.
3. The appellant Smt. Sharadamma, widow ofB.M. Venkataswamappa is
the owner of land bearing Survey Nos. 112 and 113 situate at village
Byappanahalli. Survey No. 112 admesures 2 acres while Survey No. 113
admeasures l acre and l gunta. The land was sought to be acquired for
expansion of New Government Electric Factory ('NGEF' for short), Bangalore. H
~

404 SUPREME COURT REPORTS [2007] 2 S.C.R.

A A preliminary notification under Section 4 of the Land Acquisition Act, 1894
(hereinafter referred to as 'the Act') was issued on March 26, 1965. The
claimant demanded an amount of Rs.20.00 per square yard for the land. The
Land Acquisition Officer, by an award dated October 25, 1965 awarded
compensation of Rs.8,000 per acre. It is not in dispute that possession of land
was taken over on November 16, 1965. Since the claimant was not satisfied
B with the amount offered by the Land Acquisition Officer vide his award
·referred to above, she sought Reference under Section 18 of the Act and the
Principal Civil Judge, Bangalore District vide his order dated May 31, 1972
enhanced the compensation and awarded Rs.20.00 per square yard less Rs.3,000 -!-
per acre in view of the fact that though the land was having potentiality to
c conversion for non agricultural use, no such order of conversion had been
passed and it had come in evidence that conversion charge was Rs.3,000 per
acre. Thus the claimant's contention was upheld and the compensation was
awarded. The authorities, however, were aggrieved by the enhancement and
approached the High Court by filing appeals. The High Court noted that the
Reference Court relied upon earlier award but it was challenged and the case
D was before this Court (Supreme Court). The matter was thus in a 'fluid
situation'. The High Court, therefore, thought it proper to set aside the order
,J.
passed by the Reference Court and to remand the matter for fresh adjudication
in accordance with law. It accordingly set aside the order passed by the 1--

Reference Court granting liberty to the parties to adduce further evidence and
E directed the Reference Court to decide it afresh in accordance with law. After
the remand, the Reference Court once again considered
I
the matter on merits.
By that time, the matter had already been decided by this Court in Special
Land Acquisition Officer, Bangalore v. B.M Krishnamurthy, [1985] 1 SCC
469. The Reference Court, relying on B.M. Krishnamurthy held that the
claimant was entitled to compensation at the rate of Rs.18,000 per acre and
F the order was passed accordingly. The said order was confirmed by the High f-·
Court which has been challenged in the present appeals.

4. Leave was granted by this Court on November 17, 2000 and the matter
has been placed for final hearing. We have heard learned counsel for the
parties.
G
5. The learned counsel for the appellant contended that the Reference
Court had committed an error in not awarding compensation at the rate of i-r" .....
Rs.20 per square yard which had been done earlier by an order da:ed July 31,
1972. It was submitted that no doubt the High Court set aside the said order
H passed by the Reference Court and remitted the matter with a direction to
SHARADAMMA v. SPECIAL LAND ACQUISITION OFFICER [THAKKER, J.] 405

~-. decide it afresh, keeping in view the fact that a similar order was challenged A
by the State Authorities and the matter was pending in this Court. But it was
submitted that the matter was decided by this Court on January 22, 1985 in
B. M. Krishnamurthy and the said decision clearly helps the claimant. The
Reference Court was, therefore, not justified in awarding compensation of
Rs.18,000 per acre. The High Court also committed similar error and hence the
order passed by Reference Court and confirmed by the High Court deserves B
to be set aside by allowing the appeals.

6. The learned counsel for the respondents, however, supported the
?
-'"-
order of the Reference Court and of the High Court. According to him, the
earlier order passed by the Reference Court in 1972 could not be taken into
consideration since it was set aside by the High Court. There is no error in
c
the impugned order which deserves interference by this Court.

7. Having heard learned counsel for the parties, in our opinion, the
appeals deserve to be allowed.
D
8. It is no doubt true that the order passed by the Reference Court on
-~ July 31, 1972 awarding compensation to the claimant at the rate of Rs.20 per
squarC' yard was set aside by the High Court in the light of subsequent
- "' development and challenge to a similar award before this Court. But it cannot
be overlooked that while dealing with the matter and considering the claim
of the claimant, the Reference Court considered the situation and location of E
the land.

In paragraph 10, the Court observed:

"10. The only controversial question is about the market value of the
·4, lands acquired. To find out this aspect, the location of the land has F
to be borne in mind. The lands involved in these cases are in S.No.
112, 113 and 26 ofByappanahalli. Of them, it is admitted that S.No.26
is behind NGEF and S.No. 112 and 113 are in front of NGEF. The
evidence shows that NGEF had been built sometime prior to the
acquisition of these lands. S.No. 112 and 113 are abutting National
High Way namely Bangalore-Madras Road and on one side these two G
i-
S.Nos. they have another road leading from Bangalore-Madras road
to N.G.E.F. and some other villages. The evidence shows that just
" opposite to S.No.112 and 113 is the Aero Engine Factory. Its location
is made clear from the village map Ex.P-24 and Ex.P-25. The evidence
-a. placed before this Court also shows that these lands are near the H

-i
406 SUPREME COURT REPORTS [2007) 2 S.C.R.

A Corporation limits. There is a Isolation Hospital near the acquired
land. It is also in evidence that on the northern side of S.No.112 and -~
113 is the Bangalore-Madras Railway line. It is also in evidence that
there are railway quarters near the acquired land. The evidence of
P.W.2 shows that he had fonned a lay out in S.No. 10 ofByappanahalli
which is also shown to be very close to the acquired land. There is
B also evidence that Byappanahalli railway station and Marshalling yard
are very near the acquired land, particularly near S.No.26. The evidence
shows that lot of building activity has taken place in and around

c
about the acquired land. This would show that the lands acquired had
good transport facilities. The fact that number of quarters are also
found nearby would also indicate that the lands acquired were also
suited for building purposes".
-1-
-
9. Keeping in view the site of the land, the Court observed that it would
clearly prove that having regard to the location of the lands, they were suited
for industrial purpose. It was also observed that the fact that the lands were
D ideally situated for industries was 'practically conceded' by Syed Abdul
Khader, witness examined by the respondents as RWithe Land Acquisition
Officer, who made the position clear in his General Valuation Memorandum. +
The Reference Court also noticed that Survey Nos. 112 and 113 had a frontage
to the main road. The claimant had placed material to show that some lands ·-
which were very near to the acquired lands had been requisitioned for the
E Military and the market price of such land was Rs.27 per square yard. The
Court also considered the location of land bearing Survey No. 14 of
Benniganahalli (which was the subject-matter of challenge in B.M.
Krishnamurthy). It was in interior part and did not have a frontage unlike the
land of Survey No. 112 or 113. The land of Survey No.112 and 113 had a better
F situation -and must get better compensation. ).---

10. Regarding conversion ofland, the Court in the earlier order observed:

"I have fixed the minimum that could be given for converted lands at
Rs.20/- per sq. yard. This would mean that this Court has to find out
G whether the lands are all converted or not. I feel that only in respect
of S.No.112 there is evidence that it is converted land. P. W.4 has told
the court that he had asked her relative PW5 to apply for conversion -.l

ofS.No.112. PW4 and PW5 have a joint interest in S.No.112. PW4 is
entitled to 2 acres in it while the remaining 2-30 guntas belong to
PW5. PW5 has stated that he had applied to the Deputy Commissioner
H ........
SHARADAMMA v. SPECIAL LAND ACQUISITION OFFICER [THAKKER, J.] 407
. ..,. to convert this land for non-agricultural purpose. Ex.P-8, issued by the A
Deputy Commissioner, Bangalore District, shows that the Deputy
Commissioner had intimated him that action is being taken to consider
his application for conversion of this land. The Deputy Commissioner
has requested PW5 not to put this land to non-agricultural use till the
Deputy Commissioner takes a final decision in the matter. No evidence
has been placed before me to show that the Deputy Commissioner has
B
neither accorded sanction nor refused to accord sanction for the
conversion of this land. The evidence of PW5 that the Deputy
~ Commissioner did not send any intimation in this connection stands
unrebutted. Therefore, under law, the sanction of conversion of the
land for non-agricultural purpose is deemed to have been granted. c
Hence S.No. J.12 has to be held as a converted land on the date of the
preliminary. notification".

11. In the present proceedings, however, the Reference Court, relying
on B.M Krishnamurthy, awarded Rs.18,000/- per acre. The High Court, in the
impugned order, inter alia, stated that large number of lands situated in D
Benniganahalli and Byappanahalli were acquired for the NGEF under the Land
t Acquisition Act which are abutting the lands in question and since in respect
- .;
of other lands compensation was awarded at the rate of Rs.17,500 or Rs.18,000
per acre, award of Rs.18,000 per acre to the claimants in the instant cases
could not be said to be inadequate or insufficient. The High Court also
observed that the Supreme Court awarded an amount of Rs.12.50 paise per
E
sq. yard to the claimants and hence the claimants were not entitled to anything
more and the award of Rs.18,000 per acre could not be interfered with.

12. In .our view, the learned counsel for the claimant is right in submitting
that both the Courts were not correct in not awarding compensation as F
- J,
claimed by the appellant. The counsel is also right in referring to B.M
Krishnamurthy, particularly as to location of the land in question for claiming
enhanced compensation vis-a-vis land bearing Survey No. 14. For the said
purpose, he relied upon paragraph 6 of B.M Krishnamurthy. The counsel also
drew our atten~ion to map which is on record. It clearly shows that the land
of Survey Nos. 112 and 113 is better located than the land of Survey No. 14 G
' < in B.N. Krishnamurthy. He also referred to deposition of Syed Abdul Khader,
•r. the then Special Land Acquisition Officer, Bangalore from 1964 to 1967. The
witness admitted that Kissan Factory was located at the distance of 3/4th mile
, from the acquired land. He further stated that the Corporation limits were
about two furlongs from the acquired land. There was industrial potentiality
H
A
408 SUPREME COURT REPORTS l2007] 2 S.C.R.

of the lands though the acquired lands were not converted. He stated that
Survey No. 112 was situated adjoining Bangalore-Madras Highway and was
...
in between old Madras road and Madras-Bangalore Railway line. According
to him, New Aero Engine Factory was very much in existence at the time of
acquisition and it was opposite Survey No.112 on the other side of the old
B Madras road. Near about the acquired land, there were other factories also.
Corporation limit was within a distance of 50-60 yards from Aero Engine
Factory limits. He further stated that approach road from NGEF to old Madras
road was adjacent to Survey No. 112. Byappanahalli Railway Station was I
or 1- 112 furlongs form Survey No. 112. He admitted that Survey No. 113 was
abutting Survey No.112 and what was stated about Survey No.112 held good
C as regards Survey No.113 also. He admitted that Bangalore-Madras road was
a National Highway.

13. In view of the location of land being situated on National Highway
of Bangalore-Madras, near Railway line and situated in Industrial Area, 'in our
opinion, the claimant is entitled to compensation at the rate of Rs.20 per
D square yard as claimed by her. Of course, it is admitted that the land was not
converted to non-agricultural use for which the owner was required to pay
an amount of Rs.3,000 per acre and to that extent the amount deserves to be
reduced. Accordingly, both the appeals are allowed and the claimant is held
entitled to compensation at the rate of Rs.20 per square yard less Rs.3,000 per
~- -
acre. The appeals are accordingly allowed with costs to the said extent.

N.J. Appeals allowed.

.. ,