Holding

The High Court erred by not giving due weight to the claimant’s purchase price and the lack of documentary evidence, and by improperly considering post‑notification development; therefore, its enhanced compensation order is set aside and the matter remitted for fresh determination.

Summary

The State acquired about 21 hectares of land owned by Indian Standard Metal Co. Ltd. (the claimant) under a notification issued on 3 February 1970 pursuant to Section 4 of the Land Acquisition Act, 1894. The claimant had earlier purchased part of the land in 1964‑65 and received a portion of the land from the Government in 1967. After the award of compensation by the Special Land Acquisition Officer, the claimant filed a land reference seeking enhanced compensation, arguing that the land’s value should reflect industrial development in the vicinity. The Bombay High Court enhanced the compensation, holding that location and post‑notification development warranted a higher rate. On appeal, the Supreme Court held that the High Court failed to consider the claimant’s purchase price, ignored the non‑production of sale deeds, and gave undue weight to development that occurred after the 1970 notification, contrary to the principle that compensation is fixed as of the date of acquisition. Consequently, the Supreme Court set aside the High Court’s enhanced award and remitted the matter for fresh consideration.

Issues considered

The appropriate date for fixing compensation under the Land Acquisition Act – whether it is the date of the Section 4 notification or a later date reflecting post‑notification development.
Whether the purchase price paid by the claimant for land acquired in 1964‑65 is a relevant factor in determining compensation.
Whether the High Court erred in enhancing compensation by considering industrial growth and development despite lack of documentary evidence and witness testimony indicating post‑1970 development.
Whether sale instances of small parcels of land are relevant to the valuation of a large tract of land.

Legislation cited

Land Acquisition Act, 1894s. 11, s. 12(2), s. 18, s. 4, s. 6, s. 9(1), s. 9(2), s. 9(3), s. 9(4)

Subjects

Land acquisitionCompensation valuationPurchase price relevanceSection 4 notificationIndustrial development factorDocumentary evidenceSale deedsEnhanced compensation

Judgment

SPECIAL LAND ACQUISITION OFFICER A
v.
INDIAN STANDARD METAL CO. LTD.

SEPTEMBER 30, 2004

[ARIJIT PASAYAT AND C.K. THAKKER, JJ.] B
"
Land Acquisition Act, 1894-Land Acquisition-Compensation-Claim
for enhanced amount-Non production of documentary evidence showing
purchase price of land by claimant-Claimant witnesses not proving the
purchase price-Government produced document showing purchase price to
be much lower-Development of the land was post Notification u/s 4-
c
Compensation enhanced by High Court in view of industrial growth in the
vicinity-On appeal, held: When claimant had purchased the land, purchase
price of the same was an important factor in determining the value of
acquired land-Since High Court order was in disregard of documentary
evidence, and in disregard of fact of non-production of sale deeds and D
witnesses, the same is set aside-Matter remitted back to High Court for
reconsideration.

The land of the respondent-claimant was acquired by State
Government by issuing Notification in February, 1970 under Section 4 E
of Land Acqui!>ition Act, 1894. A part of the acquired land had been
given to the claimant by the Government after having acquired the
same in 1967 and some part of the land was purchased by the claimant
in 1964-65. Land Acquisition Authority passed an Award fixing the
market value of the land. Claimant filed Land Reference. claiming
enhanced compensation. In the Reference Claimant Witness No. 1, the F
Power of Attorney Holder deposed that the entire development of the
land was not prior to or in or about 1970 and the same was after the
said period. Claimant Witness No. 2, the valuer of the land deposed that
he was entrusted the work of valuation ofacquired lantl by the Company
in 1986; and that in the area there was no industry aild no commercial G
zone was formed before 1970. Reference Court in view of the fact that
documents regarding purchase of the land in 1964-65 ought to have
been produced by the claimant; and since according to Government the
. land was purchased by the claimant at much lower price and the
Government had relied upon Index Extract showing the price paid by
the claimant in 1964-65 awarded a slightly enhanced compensation. H
895
896 SUPREME COURT REPORTS (2004] SUPP. 4 S.C.R.

A Dissatisfied with the quantum of compensation claimant filed first appeal
claiming further enhanced compensation. High Court awarded enhanced
compensation holding that location of the land was near several important
places and assessing the market value of those lands compensation had
to be awarded in consonance with the industrial growth in the vieinity.

B In appeal to this Court appellant-State co.-itended that amount of
compensation is to be determined on the date of Notification u/s. 4 of the
Act and not subsequent thereto; that the amount of compensation could
not have been enhanced by High Court in view of evidence of two
witnesses that the development was post 1970; and that the land in
C question· being a large track of land, sale instances sought to be relied
upon by the claimant in respect of small pieces of land were not relevant.

Partly allowing the appeal, the Court

HELD: 1. Relevant and germane consideration has not been taken
D into account by the High Court in deciding the appeal and enhancing the
amount of compensation. High Court had not appreciated the evidence
of witnesses for the claimant's property. By making the observations that
the documents regarding purchase of land in the year 1964-65 ought
to have been produced by the Company, the Reference Court has
E not committed any illegality. The High Court, has not considered this
aspect in its proper perspective. The Reference Court also observed
that according to the Government, some land was subject matter of purchase
· by the Company in 1964-65 and price paid by the Company was much
lower. The State also relied upon Index Extracts showing the price paid by
the Company in 1964-65. (903-B-C; 900-G-H; 902-D-E-F]
F
2. In the instant case, the acquisition of land is on a large scale and
as such, sale instances of small pieces of land would not be of much
assistance to the claimant. Therefore, the High Court ought not to have
given undue importance to sale instances. (903-B-C]
G
3. Since the High Court failed to consider documentary evidence.as
also the fact of non-production of sale deeds by the Company and also the
evidence of two witnesses for the claimant in its proper perspective, decision
of the High Court is set aside and remitted to the High Court so that the
High Court may consider the matter afresh in the light of the evidences
H before it and in the light of observations made by this Court. _[903-D-E]
SPL. LAND ACQUISITION OFFICER v. INDIAN STANDARD METAL CO. LTD. [THAKKER. J.] 897
t:•

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6368 of2004. A
From the Judgment and Order dated 3.7.2001 of the Bombay High
Court in F.A. No. 758 of 1988.

R.K. Adsure and Mukesh K. Giri for the Appellant.
B
Gopal Subramaniam, Rana Mukherjee, Siddharth Guatam and Goodwill
Indeevar for the Respondent.

The Judgment of the Court was delivered by

THAKKER, J. : Leave granted.
c
This appeal by special leave is directed against the judgment and order
dated July 3, 2001 in First Appeal No. 758 of 1988 by the High Court of
Judicature at Bombay partly allowing the appeal of the claimants for grant
of enhanced compensation. D
The brief facts of the case are that the respondent-claimant, the India
Standard Metal Comany Limited ("Company" for short) owned various
pieces of land admeasuring about 21 hectres and 31.5 acres (2,13,150 Sq.
Mtrs.) located at village Wadghar in Taluka Panvel of District Raigard in
Maharashtra. Those lands were acquired by the State Government for New E
Bombay Project by issuing notification dated February 3, 1970 under Section
4 of the Land Acquisition Act, 1894 (hereinafter referred to as "the Act")
which was published in Government Gazette on February 4, 1970.
Corrigendum dated September 5, 1970 was published in Government Gazette
on September 7, 1970. Thereafter, notification under Section 6 of the Act was F
issued on October 25, 1972 which was published in Government Gazette on
December 7, 1972. Notices under Section 9(1) and 9(2) of the Act were
issued on May l 0, 1973 and were published in Government Gazette on May
21, 1973 and May 10, 1973 respectively. Individual notices under Section
9(3) and 9(4) were also issued on October IO, 1975 which came to be served
on respondent-Company on October 16, 1975. Respondent-Company claimed
G
compensation @ Rs. 20 per square yard for non-agricultural land and @ Rs.
15 per square yard for agricultural land. The Special Land Acquisition
Officer, Metro Centre No. I, Panvel passed an award under Section 11 of
the Act on February 22, 1985 and fixed the market value of the land including
trees, construction, solatium and additional compensation. etc. as Rs. H
898 SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R.

A 7,40,832.67 ps thereby fixing the market value of the land at Rs. l.10 ps per
sq. mtr. An amount of Rs. 7,40,832.75 was paid to the claimants on February
25, 1985 and possession of the entire land was· taken over.
.....
After receipt of notice under Section 12(2) of the Act, being dissatisfied
with the award, the claimant-respondent-Company filed a Land Reference
B
being LAR No. 189 of 1986 under Section 18 of the Act before the Special
Land Acquisition Officer requesting him to forward the same to the Civil
Court for adjudication and claimed compensation for entire land at the
unifonn rate of Rs. 15 per sq. metre. Thus, additional amount of Rs.
29,58,790 was claimed. The appellant-State filed its written statement before
c the Civil Judge, Senior Division Raigad at Alibag in the Reference. In the
Land Reference, respondent-Company examined its Power of Attorney
holder Balchandra Shantaram Sule as C. W.1 as also Jeewan Naraya Kulkarni
as C.W.2, valuer who visited the land in August-September, 1986. The Civil
Judge, Raigad by an order April 18, 1987 awarded comensation @ Rs. 1.80
D per sq. metre. Thus, additional amount of Rs. 5,09,103.60 together with
interest @ 9% for first year and @ 15% for subsequent years was granted.

Dissatisfied with the quantum of compensation, the respondent-Company
preferred First Appeal No. 758 of 1988 before the High Court of Bombay
and claimed compensation at the uniform rate of Rs. 15 per sq. meter.
E Claimant-respondent also filed Civil Application No. 930 of 1992 in pending
First Appeal No. 756 of 1988 seeking pennission to produce additional
evidence and also sought amendment by claiming enhanced compensation
@ Rs. 45 per sq. meter. The High Court by the impugned order dated July
3, 2001 awarded enhanced compensation of the acquired land@ Rs. 12.50
F per sq. meter for entire land by deducting development charges @ 20%. It
was observed by the High Court that location of the land was near several
important places and assessing the market value of those lands compensation
had to be awarded in consonance with the industr~al growth in the vicinity.
The Court stated that N.A. potentiality of the land was also required to be
considered. The Court further observed that valuation report of Expert Valuer
G was ignored by the trial Judge without assigning reasons. The Court noted
that a consistent view has been taken in such cases th~t development aspect
has to be considered. It observed;

"We may further note that this court has taken consistent view
H in the case involving the lands in the same area in respect of the
SPL. LAND ACQUISITION OFFICER v. INDIAN STANDARD METAL CO. LTD. [THAKKER, J.] 899

compensation to be awarded and while dealing with the land situated A
in the adjacent villages, it was held the development factor for
consideration of the market value was on the basis of their proximity
to various factors such as National Highway, State High Highways
and other infrastructural facilities. Therefore, if we are to follow the
same rule consistent with other decisions of this court, and taking B
into account all the relevant aspects in respect of the location of the
impugned land along with its potentiality, we are of the view that
the proper rate of compensation for this land would be Rs. 12.50
ps. per sq. mtr."

Being dissatisfied with the order of the High Court, the Special Land c
Acquisition Officer has preferred this appeal by special leave.

Notice was issued pursuant to which the respondent appeared. A counter
- affidavit and affidavit in rejoinder have been filed. We have heard learned
counsel for the parties. D
Learned counsel for the appellant contended that the High Court has
committed an error of law as well as of jurisdiction in allowing the appeal.
It was submitted that the relevant date for deciding the quantum of
compensation was Notification under Section 4 of the Act. The said
Notification was issued in February, 1970. It was, therefore, on the basis of E
that date that the amount of compensation was required to be determined.
Development of the area was subsequent to and post 1970 and the "lmount
of compensation could not be fixed considering the development of area after
1970. The High Court by considering such development committed an error
in enhancing the amount of compensation. It was also submitted that the F
Reference Court considered the evidence of two witnesses of the claimant
in its proper perspective. From the said evidence, it was clear that most of
the development was post 1970. So far as the evidence of Jeewan Naraya
Kulkarni, the valuer is concerned, it was urged that he had admitted that he
was entrusted with the work of valuation of acquired land by the claimants
only in August, 1986, i.e. after more than 15 years of issuance of notification G
under Section 4 of the Act. He visited the land thereafter, i.e. in the end of
1986 and prepared his report on that basis. Obviously, therefore, he had no
knowledge as to what happened between 1970 and 1986 except what he had
heard from other persons or so-called information received by him. The
counsel fi.~rther submitted that the land in question is a large track of land H
900 SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R.

A admeasuring more than 2 kilometers. Sale instances sought to be relied upon
by the claimants in respect of small pieces of lands, therefore, were not much
relevant and not comparable. Deduction of 9evelopment charges would have
been more comparing the development of recent past. In calculating
development charges @ 20%, an error on the face of the record has been
B committed by the High Court. Serious grievance voiced by the learned
counsel for the appellant was that the High Court has not considered
extremely important material, namely, that a part of the land was acquired
by the Government for the Company as also the fact that the Company had
purchased some land by private negotiations in or about 1964-65. In spite
of insistence by the appellant, no documentary evidence was furnished nor
c sale-deeds were produced by the Company. All those facts ought to have been
appreciated by the High Court before allowing the appeal and granting
enhancement of compensation. By not doing so, the High Court acted
illegally and the order allowing the appeal by the High Court deserves to be
set aside by restoring the order passed by the Reference Court.
D
Mr. Gopal Subramaniam, senior advocate nppearing for the respondent-
Company, on the other hand, supported the order passed by the High Court.
The counsel submitted that in undoubted exercise of appellate jurisdiction,
the High Court considered all points argued by the parties and recorded a
finding that the land was developed land and such development was there
E even in 1970 when the Notification under Section 4 of the Act was issued.
It also took into account potential non-agricultural use of land which was
indeed a relevant and vital fact. The value's report was considered in the light
of substantive evidence of the valuer wherein he had stated about the
development ofland in or about 1970. The counsel also submitted that though
F the deduction of development charges @ 20 per cent was on higher side, the
High Court reduced the amount of compensation by depriving the appellant-
Company of substantial amount. The order of the High Court has not caused
prejudice to the Government and the appeal deserves to be dismissed.

Having given our thoughtful consideration to the rival contentions of
G the parties, in our opinion, the appeal deserves to be partly allowed. The High
Court allowed the appeal of the Company and granted enhancement in the
amount of compensation by deducting development charges @ 20 per cent.
To us, however, it appears that the learned counsel for the appellant is right
in submitting that the High Court had not appreciated the evidence of
H witnesses for the claimants properly. From the evidence of Balchandra S/o
SPL. LAND ACQUISITJON OFFICER v. INDIAN STANDARD METAL CO. LTD. [THAKKER, J.] 90 l

Shantaram Sule, Claimant-Witness No. l, it appears that the entire development A
was not prior to or in or about 1970 and such development was after the said
period. Moreover, the evidence of architect-cum-valuer Claimant-Witness
No. 2 also relates to the period of August, 1986 and thereafter. In his
examination-in-chief itself, he has stated that in August, 1986, he was
entrusted with the work of valuation of acquired land by the Company. He B
thereafter visited the acquired land. He also admitted that he visited the place
four times. Afterwards, he studied the development in neighbouring area and
its effect on the acquired land. He -visited the office of Talathi and collected
necessary information regarding sale transactions and valuation of land by
studying the sale transactions from 1967 to 1972.
c
In Cross-examination, the witness admitted that he did not know that
the acquired land was purchased by the claimant in 1967. He also admitted
that he did not feel to see sale transactions in respect of the land in question.
He denied that he ignored those transactions because otherwise valuation
could not be enhanced. He had to admit that there was no industry in Wadghar D
village and no commercial zone was formed in Wadghar village before 1970.
There was no residential colony except college campus quarters. So far as
acquired land is concerned, he admitted that in 1970, it was partly agricultural
land and partly uncultivable. All the sale instances except the award ofNIDC
were on the eastern side of the Bombay Highway and the acquired land was
about 2 kilometers away from Bombay-Pune Highway and by road it was E
2.5 kilometers. All the sale instances were between ·soo meters and l
kilometer from Bombay-Pune Highway. The sale deeds were in respect of
minimum area of 500 sq. mtrs. and maximum of 1500 sq. mtrs .
.
It is clear from the record and also from the cross-examinatton of F
Claimant-Witness No. l that the Government had acquired some land (12
acres) for the respondent-Company. The Government gave possession of the
land to the Company in April, 1967. The witness then stated that he was not
aware what was the price paid to the Government for acquisition of that lar.d.
He also stated that he could not trace the record in the office. He could not
say as to whether the Company had papers when the representation was made G
to the Government. He could not give the name of the officer who dealt with
the purchase of the land. He stated that he had no personal knowledge in the
matter. He admitted that though some land was purchased by the Company
thereafter, he was unable to produce sale deeds in respect of the said land.
He also stated that he ha~ not procured also transactions of the land nearby. H
902 SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R.

A He had not made any enquiry about those transactions. He had flatly stated
that he was not going to produce any sale deed. In further cross-examination
he admitted that all the industries mentioned by him were towards the north
of Panvel. There was no industry near about the acquired land. He admitted ,•
that he did· not know whether prior to 1970 there was any commercial or
industrial area and residential activities within the vicinity of the acquired
B
land. He also did not know the situation of the acquired land in or before
1970.

From the evidences of the two witnesses of the claimant as also from
other evidence, the Reference Court observed that admittedly some land was
c purchased in the year 1964 by the Company itself and yet witness No. l stated
that he was not knowing anything about the purchase price. The Court noted
that the transactions were of 1964-1965 and thus "not so much immemorial
so as to treat the record evidence lost". In the cir.cumstances, those documents
ought to have been produced by the company.
·. D
In our opinion, by making the above observations, the Reference Court
has not committed any illegality. The High Court, unfortunately, has not
considered this aspect in its proper perspective. Again, the Reference Court
was right in stating that when the claimant itself has purchased some land,
purchase price of the land was an important factor in determining the value
E of the acquired land. The Reference Court also observed that according to
the Government, some land was subject matter of purchase by the Company
in 1964-65 and price paid by the Company was much lower ranging from
0.45 paise to 0.75 paise per sq. mtr. The State also relied upon Index Extracts
(Ex. 37) showing the price paid by the Company in 1964-65. In view of non-
F production of documentary evidence of the land purchased by the Company,
the Reference Court observed :

"It cannot be ignored that it price that was actually paid for a
particular piece of land by the claimants in the year 1964-65 is
within their knowledge and obviously it is a company viz. Indian
G Standard Metal Company Ltd. that has kept accounts and has
furnished extensive list of machinery that was required to be
purchased at the time of starting factory on t~e acquired land and
must be presumed to be in possession of the record and the 11 sale
deeds that were executed. The year 1964-65 is ·not so much
H immemorial so as to treat the record as lost and therefore, obviously
SPL. LAND ACQUISITION OFFICER v. INDIAN STANDARD METAL CO. LTD. [THAKKER, J.) 903

it looks that the claimants are not willing to put forth the relevant· A
record and for one reason or the other they want to suppress the fact
viz. the price that was paid for the acquired pieces in the year 1964-
65 ."

It is thus clear that a relevant and germane consideration has not been B
taken into account by the High Court in deciding the appeal and enhancing
the amount of compensation. To us, the submission on behalf of the appellant
is also well-founded that in the instant case, the. acquisition of land is on a
large scale of more than 2 kilometers, and as such, sale inst~ces of small
pieces of land would not be of much assistance to the claimant. In our
opinion, therefore, the High Court ought not to have given undue importance C
to sale instances. Since· the High Court failed to consider documentary
evidence as also· the fact of non-production of sale deeds by the Company
and also the evidence of two witnesses for the claimants in its proper
perspective, it would be appropriate if we set aside the decision of the High
Court and remit the matter to the High Court so that the Court may consider D
the matter afresh in the light of the evidence before it and in the light of
observations made by us hereinabove.

For the foregoing reasons, the appeal deserves to be partly allowed and
is allowed by setting aside the order passed by the High Court. We remit the
matter to the High Court for taking an appropriate decision afresh in E
accordance with law. In the facts and circumstances of the case, however,
there shall be no order as to costs.

K.K.T. Appeal partly allowed.