Holding

Market value of acquired land must include its potentiality and special urban advantage, justifying an enhancement of compensation to Rs 14,000 per acre while upholding the valuation of the house and well.

Summary

The Madhya Pradesh Town Improvement Trust acquired 152 acres of land, including 12.62 acres owned by Suresh Kumar, under Section 68 of the Town Improvement Trust Act. The Trust offered compensation that the appellant challenged, leading the Compensation Tribunal to award modest sums and the High Court to raise the land value to Rs 12,000 per acre. The appellant appealed to the Supreme Court, contending that the house and well were undervalued, that the land should be treated as urbanised developed land with special potential value, and that the High Court erred in its calculation of market value. The Court held that market value must be assessed by considering the land's potentiality and special advantage of proximity to urban areas, and that the High Court had not erred on the valuation of the house and well. Accordingly, the compensation for the land was enhanced by one‑sixth to Rs 14,000 per acre, the 15% solatium was retained and interest was raised to 9% per annum. The appeal was therefore allowed in part.

Issues considered

The appropriate method for determining market value of land acquired under the Town Improvement Trust Act, including consideration of potential and special value.
Whether the house and well on the appellant's land were undervalued.
Whether the High Court erred in deducting development charges from the agreed price in calculating market value.
Whether the Supreme Court may interfere with the High Court's award under Article 136 of the Constitution.

Legislation cited

Constitution of Indias. 136
Land Acquisition Act, 1894s. 23, s. 24, s. 25, s. 4
Madhya Pradesh Town Improvement Trust Act, 1960s. 68, s. 71

Subjects

land acquisitioncompensationmarket valuespecial valuepotentialityurban developmentArticle 136valuation principlessolatiuminterest

Judgment

A SURESH KUMAR
v.
TOWN IMPROVEMENT TRUST, BHOPAL

MARCH 3, 1989
B [G.L. OZA AND K.N. SAIKlA, JJ.]

Madhya Pradesh Town Improvement Trust-Section 68-Land
acquired-Compensation for such /and-Determine market value
taking into account its special value. f
Constitution of India, 1950:-Art. 136--Appeal involving ques-
c tion of valuation of acquired /and-interference with award-Only when
erroneous principle invoked or important piece of evidence overlooked
or misapplied.

Land Acquisition Act, 1894-Sections, 4, 23-25-Compensation
for land acquired-Principles for <ietermination-Determine market
D
value of land taking into consideration its special value.

Respondent-Town Improvement Trust Bhopal acquired 152
acres of land in village J amalpura under section 68 of the Madhya
Pradesh Town Improvement Trust Act within the municipal limits of
Bhopal. That land included 12.62 acres of land belonging to the appel- -+
E lant on which stood a house, a well and some trees. The appellant being
not satisfied with the amount of compensation offered to him by the
Trust, made a Reference to the Compensation Tribunal. The Tribunal
awarded compensation at the rate of Rs.6,000 per acre for the land,
Rs.5,000 for the building, Rs.3,000 for the well and Rs.815 for the
trees. Thus the Tribunal awarded a total sum of Rs.1,20,000 as com- -'1
F pensation as against a claim ofRs.13,39,560 made by the appellant. On 1
appeal, the High Court, maintained the award in respect of the build·
ing, well and the trees but enhanced the same so far as the land is
concerned by determi_nitlg the market value of Rs.12,000 per acre.
Working or this basis, including 15% solatium, the total amount of
compensation awarded worked out to be Rs.1,84,923.
G
Being dissatisfied with the Order of the High Court, he has come
up to this Court after obtaining special leave. "

The main contentions urged by the appellant are (i) that the house
and well are undervalued; (ii) that the land ought to have been treated
as urbanised developed land; (iii) that potential value of the land has not
908
SURESH v. TOWN IMPROVEMENT TRUST 909

been taken into consideration while determining compensation; (iv) that
A
the value of the sales of similar plots has wrongly been rejected.

Partly allowing the.appeal, this Court,

HELD: Jn determining market value, where there was no suffi-
cient direct evidence of market price, the Court is required to ascertain B
as best as possible from the materials before it, what a willing vendor
would reasonably have expected to obtain from a willing purchaser
from the land in its particular position and with its particular poten-
tiality. [914C-D]

A land which is certainly or likely to be used in the immediate or
reasonably near future for building purposes but which at the valuation c
date is waste land or has been used for agricultural purposes, the
owner, however, willing a vendor he is, is not likely to be content to sell
the land for its value as waste or agricultural land as the case may be.
The possibility of its being used for building purposes would have to be
taken into account. However, it must not be valued as though it had D.
already been built upon. It is the possibilities of the land and not its rea-
lised possibilities that must be taken into consideration. [914E-F]

In estimating the marktt value of the land, all the capabilities of
the land and all its legitimate purposes to which it may be applied, or
for which it may be adapted are to be considered and not merely the E
condition it is in and the use to which it is put at the time applied by the
owner. The proper principle is to ascertain the market value of the land
taking into consideration the special value which ought to be attached to
the special advantage possessed by the land; namely, its proximity to
developed urbanised areas. [915A-ll]
F
The value of the potentiality has to be determined on such
materials as are available and without indulgence in Ots of imagina-
tion. [91511-C]

A court of appeal interferes not when the judgment under attack
is not right, but only when it is shown to be wrong. [912E] G

)< In an appeal under Art. 136 of the Constitution of India involving
the question of valuation of acquired land, the Supreme Court will not
interfere with the award unless some erroneous principle has been
invoked or some important piece of evidence has been overlooked or
misapplied. -[91211-cf - H
910 SUPREME COURT REPORTS [1989) 1 S.C.R.

A When the willing vendor had agreed to seU land at 14 annas per sq.
feet after development and the development charge was to he paid by the
willing purchaser it could he reasonable to deduct only 50% on account
of the land to he set apart for roads, drains etc. and not beyond that.
Considering this aspect of the matter and the potential value of the land
as urban developed area the Court took the view that the compensation
B may justly he enhanced by l/6th i.e. to Rs.14,000 per acre. Solatium@
15% was maintained but the rate of interest was raised to 9% on the
enhanced compensation till payment. [918F-G]

Atmaram Bhagwant v. Collector of Nagpur, A.I.R. 1929 P.C. 92,
followed; Dollar Company Madras v. Collector of Madras, [1975]
C Suppl. S.C.R. 403; Gajapatiraju v. Rev. Divisional Officer, A.I.R.
1939 P.C. 98; Mahabir Prasad Santuka v. Collector, Cuttack, [1987] 1
S.C.C. 587 aud U.P. Government v. H.S. Gupta, A.I.R. 1957 S.C.
202.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2931
D (N) of 1981.

From the Judgment and Order dated 7 .10.1980 of the Madhya
Pradesh High Court in MisceUaneous First Appeal No. 78 of 1974.

L.M. Singhvi, D. Bhandari and A.K. Sanghi for the Appellant.
E
T.S. Krishnamurthy Iyer and S.K .. Gambhir for the Respondent.

F
The Judgment of the Court was delivered by

K.N. SAIKIA, J. This Civil Appeal by special leave is from the
order dated 7.10.1980 of the High Court of Madhya Pradesh, Jabalpur
in Misc (F) Appeal No. 78 of 1974, allowing the appeal and enhancing
·i
compensation for land acquired by the Improvement Trust, Bhopal.

The Improvement Trust, Bhopal, hereinafter referred to as 'the
Trust', acquired 152 acres of land of Village Jamalpura by Notification
G dated 30th April, 1965 issued under Section 68 of the Madhya Pradesh
Town Improvement Trust Act, 1960, hereinafter referred to as 'the
Act', and took possession of the land sometimes in June, 1967. Out of :<
these acquired land the instant appellant owned 12.62 acres where-
upon stood a house, a well and some trees. The whole of the acquired
land including that of the appellant was within the limits of Bhopal
H Municip;µ Co!Jl<>ration. On 25.3.1966 Notifica(jon under Section 71 of

•
SURESH v. TOWN IMPROVEMENT TRUST [SAIKIA, J.J 911

the Act was issued vesting the land in the Trust. The Trust offered
A
compensation at the rate of Rs.950 per acre(@ 14 paise per sq. ft.)
amounting to Rs.11,997 .00; for the well Rs.3, 108; and for the trees
Rs.815 and for compulsory acquisition 15% amounting to Rs.2,400.
The appellant made reference, No. 8 of 1970 to the Compensation
Tribunal under Section 72(3) of the Act. The Tribunal awarded com-
pensation at the rate.of Rs.6,000 per acre (Rs.0.28 Paise per sqr. ft.) B
for the land, Rs.5,000 for the building, Rs.3,000 for the well and
Rs.815 for the trees. Thus the Tribunal by its award dated 25th
November, 1972 awarded a total sum of Rs.1,20,060 inclusive of
interest as compensation to the appellant, as against his claim at the
rate of Rs.20,000 per acre for the land, Rs.20,000 for the building,
Rs.5,000 for the well, Rs.2,500 for the trees and Rs.10,000 for loss of
business and earnings, his total claim amounting to Rs.13,39,560. On C
appeal, being Misc. (F) Appeal No. 78 of 1974, the High Court
maintained the award in respect of the Building, well and the trees,
but enhanced.the compensation in respect of the land determining the
market value at Rs.12,000 per acre and the total area being 12.62 acres
the total compensation inclusive of that allowed for the house etc. and D
15% solatium worked out to Rs.1,84,293. Dissatisfied, the appellant
obtained leave and filed this appeal.

Dr. L.M. Singh vi learned counsel for the appellant submits, inter
alia, that the house and the well were grossly undervalued; that .both
the Tribunal as well as the High Court misdirected themselves in treat: E
iQ.g the land as agricultural land but not as urbanised developed land
on the erroneous ground that there was no building activity of substan-
tial nature at the time of acquisition in spite of the fact that a part of the
land was already converted to Abadi; that both the Tribunal as well as
the High Court failed to take into consideration the potential value of
the land; and that evidence of sales of similar plots was not accepted F
on the ground that those pertained to small plots; and that the High
Court committed an error when it deducted the development charge
from the agreed price instead of adding .it to the agreed price while
calqilating the market value.

Mr. Krishnamurthi learned counsel for the respondent Trust G
submits that the house and the well were properly valued; that it was
)(
not correct that the Tribunal did not correctly consider the question of
the nature of the land which if held to be agricultural because it did not
find therein any building activity of substantial nature. At any rate,
counsel submits, the High Court took into consideration the potential
value of the land and as such there was no omission to COJ1sider any H
912 SUPREME COURT REPORTS [1989] 1 S.C.R.

'A relevant material or misdirection in tliiS regard. Counsel, however,
fails to explain the reason of deducting the development charge from
the agreed price, instead of adding it, while calculating market value of
the lands on the basis of evidence produced by the claimant. This,
however, according to. counsel, is not a sufficient ground for our
interference in this appeal under Article 136 of the Constitution of
IB India.
'

In an appeal under Article 136 of the Constitution of India
involving the question of valuation of acquired land, this Court will not
interfere with the award unless some erroneous principle has been
invoked or some important piece of evidence has been overlooked or
C misapplied, as was held in Atmaram Bhagwant v. Collector of Nagpur,
A.LR. 1929 P.C. 92. In Dollar Company, Madras v. Collector of
Madras, 1975 Suppl. S.C.R. 403 the Land Acquisition Officer awarded
Rs.800 per ground as compensation and the City Civil Court on refer-
ence awarded at the rate of Rs.1,000 per ground, and the High Court
on appeal awarded Rs.1800 per ground. The appellant himself
D purchased the ~nit land about 10 months bii(ore the Notification under
Section 4 was made at a price of Rs.410 i)er ground whereafter the
appellant has spent a little- money on filling up a pond. Dismissing the
appeal it was observed that this Court interferes with the judgment of
the High Court only if the High Court applies a principle wrongly or
because some important point affecting valuation has been overlooked
E or misapplied. A Court of appeal interferes not when the judgment
under attack is not right, but only when it is shown to be wrong. As
there was no error in principle in the High Court judgment nor had any
of the limited grounds on which that Court's jurisdiction could be
legitimately exercised was made out, the appeal was dismissed. There- '--..,
fore, it is for the the appellant to show that there is ground for interfer- I
F ence in this case.

As regards the value of the house, the Land Compensation
Tribunal clearly observed that it visited the spot and found that the
house 'was in extremely dilapidated condition having big cracks in
foundation, walls and pillars. The foundation was getting loose. The
G roof of asbestos sheets was sagging, indicating that the wood rafters
had been badly damaged. Doors and windows were in bad condition.
The two verandahs of the house were temporary, with roof of asbestos
sheets.'

The house, according to the Tribunal might be 20 to 25 years old
H and d~preciation wowd be 5% per year. Considering the above factors
SURESH v. TOWN IMPROVEMENT TRUST ISAIKIA, J.I 913
~-

J( we are of the view that the compensation awarded, namely, Rs.5,000 is
A
reasonable. Also from evidence we find that Rs.3,000 for the well was
reasonable. There was no error of principle and hence there can be no
grievance on these counts.
,.
Regarding nature of the land the Tribunal noted that the claim-
ants in most of the references asserted that the acquired land should be B
1 valued as urban house site because of alleged potential value and had
claimed compensation between the Rs.3 to Rs.1 per sqr. ft. The Trust
disputed the claim and urged that the lands at the time of acquisition,
.-.:~ were either agricultural or- merely fallow land and they had absolutely
no urban site value. Th~. claimants also urged that the lands were
situated within Corporation limits and lands of some of the claimants
were already diverted (converted). We agree with Mr. Krishnamurthi
c
that though the Tribunal treated it as agricultural, the High Court
>-
proceeded on the principle of developed land. ·

It is true that the marker value of the land acquired has to be
correctly determined and paid so that there is neither unjust enrich- D
ment on the part of the· acquirer nor undue deprivation on the part of
the owner. Dr. Singhvi argues that failing to consider potential value is
an error of principle. It is an accepted principle as was laid down in
..j,.- Gajapatiraju v. Rev. Divisional Officer, A.LR. 1939 P.C. 98 that the
compensation must be determined by reference to tli_e price which a
willing vendor might reasonably expect to obtain from willing pur- E
chaser. The disinclination of the vendor to part with his land and the

-- \
urgent necessity of the purchaser to buy it must alike be disregarded.
Neither must be considered as acting under compulsion. The value of
the land is not to be estimated at its value to the purchaser but this

r does not mean that the fact that some particular purchaser might
desire the land more than others is to be disregarded. The wish of a F
particular purchaser,
.
though not his compulsion, may always be taken.
into _consideration for what it is worth. Any sentimental value for the
vendor need not be taken into account. The vendor is to be treated as a
vendor willing to sell at the market price. Section 23 of the Land
Acquisition Act, 1894, enumerates the matters to be considered in
determining compensation. The first to be taken into consideration is G
the market value of the land on the date of the publication of the
)< Notification under Section 4(1). Market value is that of a willing
vendor and a willing purchaser. A willing vendor would naturally take
into consideration such factors as would contribute to the value of his
land including its unearned increment. A willing purchaser would also
consider more or less the same factors. There may be many ponder- H
914 SUPREME COURT REPORTS [1989) 1 S.C.R.

able and imponderable factors in such estimation or guess work.
A
Section 24 of the Act enumerates the matters which the Court shall not
take into consideration in determining compensation. Section 25 pro-
vides that the amount of compensation awarded by the Court shall not
be less than the amount awarded by the Collector under Section 11. As
was observed in Gajapatiraju (supra) sometimes, it happens that the
B land to be valued possesses some unusual, and it may be, unique
features, as regards its position or its potentiality. In such a case the
court has to ascertain as best as possible from the materials before it
what a willing vendor might reasonably expect to obtain from a willing
purchaser, for the land in that particular position and with that particu-
lar potentiality. In the instant case also the acquired land possesses
some important features being located within the Corporation area
c and its potentiality for being developed as a residential area. In such a
situation in determining its market value, where there was no suffi-
cient direct evidence of market price, the Court was required to ascer-
tain as best as possible from the materials before it, what a willing
vendor would reasonably have expected to obtain from a willing
D purchaser from the land in this particular position and with this
particular potentiality. It is an accepted principle that the land is not to
be valued, merely by reference to the use to which it has been put at
the time at which its value has to be determined, that is, the date of the
notification under Section 4, but also by reference to the use to which
it is reasonably capable of being put in the future. A land which is
E certainly or likely to be used in the immediate or reasonably near
future for building purposes but which at the valuation date is waste
land or has been used for agricultural purposes, the owner, however ,..
willing a vendor he is, is not likely to be content to sell the land for its
value as waste or agricultural land as the case may be. The possibility
of its being used for building purposes would have to be taken into
F account. However, it must not be valued as though it had already been
built upon. It is the possibilities of the land and not its realised pos-
sibilities that must be taken into consideration. In other words, the
value of the land should be determined not necessarily according to its
present disposition but laid out in its lucrative and advantageous way
in which the owner can dispose it of. It is well established that the
G special, though natural, adaptability of the land for the purpose for
which it is taken, is an important element to be taken into considera-
tion in determining the market value of the land. In such a situation
the land might have already been valued at more than its value as
agricultural land, if it had any other c~pabilities. However, only
reasonable and fair capabilities but not far-fetched and hypothetical
H capabilities are to be taken into consideration. In sum, in estimating
SURESH v. TOWN IMPROVEMENT TRUST [SAIKIA, J.] 915

the market value of the land all of the capabilities of the land, and all
A
~· its legitimate purposes to which it may be applied or for which it may
be adapted are to be considered and not merely the condition it is in
and the use to which it is at the time applied by the owner. The proper
principle is to ascertain the market value of the land taking into consid-
eration the special value which ought to be attached to the special
advantage possessed by the land; namely, its proximity to developed B
urbanised areas.
The value of the potentiality has to be determined on such mate'
rials as are available and withoul indulgence in fits of the imagination.
In Mahabir Prasad Santuka v. Collector, Cuttack, [1987] 1 S.C.C. 587
the evidence on record was that the land was being used for agricul-
tural purposes but it was fit for non-agricultural purposes and it had C
potentiality for future use as factory or building site and that on
industrialisation of the neighbouring areas the prices increased
tremendously, and that aspect, it was held, could not be ignored in
determining compensation.
On the question as to whether the land was urbanised developed D
land or not we find that the Tribunal consolidated all the 15 references
arising out of the acquisition for the purpose of recording evidence
and, that is, how it came to consider the Exts. P-1, P-2, P-3, and P-8
being. agreements of sale executed by Phool Chand Gupta who was
father of the claimant in reference No. 1 of 1970 while the petitioners
reference was No. 8 of 1970. Similarly the Ext. D-1 to D-6 also E
pertained to small plots of land out of land in reference No. 1 of 1970.
The High Court rightly held that the Exts. P-1, P-2, P-3 and P-8 and
the sale deeds Exts. D-1 to D-6 furnished a more reliable data for
working out the market value. If those lands were the urban developed

r
'
house site lands, their prices would have reflected the same. It cannot,
therefore be said that High Court was in error in taking the above F
Exts. into consideration. However, potential value was not separately
considered. Exts. P-1, P-2, P-3 and P-8 were agreements of sale ex-
ecuted on 29th July, 1961 in respect of small parcels of land wherein
the vendor agreed to sell the land at that time at the rate of 14 annas
per sqr. ft .. to Rs.1 per sqr. ft. It was further agreed that the vendees
would pay development charges at the rate of 4 annas per sqr. ft. The G
vendor and the respective vendees were examined. It should be noted
that the Exts. were agreements to sell and not sales. The High Court
observed· that the idea behind those transactions was that the vendor

.,
would apply to the revenue authority for diversion and the town plan-
ning authority for sanction of lay-out plan and the sale deeds Would be
executed after the land was developed. T)I~ Jiiglt Cm!fl aj§o n()t~d t!Jl\t H
916 SUPREME COURT REPORTS [1989) 1 S.C.R.
lo
there was nothing to show that the agreements were prepared only to I'- .
A
be used later as evidence of market value. In December 1960 Phool i:;·
Chand Gupta applied for diversion of his land to the Sub-Divisional
Officer. In January 1961 application was also made to the Town Plan-
ning Authority for sanction of the lay-out plan but in the meantime the
land was notified for acquisition under the Land Acquisition Act
B sometimes in 1962 and Phool Chand Gupta tried to extricate his land
from acquisition which, however, did not materialise and, as already I'
noted, on 30.4.65 the instant notification to acquire under Section 68
of the Act was issued. Rejecting the contention that the agreements
were spurious, the High Court observed that the very fact that applica- ),-,_
tions were made for diversion and for sanction of lay-out plan went to
show that the owner was interested in the development in the land and
c in selling it after dividing it into plots. Thus, the High Court, rightly
took into consideration the above Ei<ts, which pertained to a part of
..\
the acquired land of 152 acres.

The High Court also considered the sale deeds Exts. D-1 to D-6
D which pertained to small plots of lands out of land in reference No. 1 of
1970. Those sale deeds were registered in 1966-67, but the agreements
to sale were entered into in 1959-62. The respective purchasers and the
vendors were examined. The market value on the basis of Ext. D-2
made in the sale deed of 1962 selling only to 12.50 sqr. ft. for Rs.260
~-
which worked out to Rs.8712 per acre. The High Court did not say that
E these Exts. were rejected. By Ext. P-5, P-6 and P-32 small parcels of
land, at Kumharpura were sold. Kumharpura was noted to be two to
three furlongs away from the acquired land. The market rate according J'=
to these Exts. ranged from Rs.1.88 to 2.34 per sqr. ft. The High Court
observed that these sales could not be a useful guide for determining

F
the market value of land acquired. We are of the view that compared
to Exts. P-1, P-2, P-3 and P-8 Exts. P-5 and P-6 and P-32 were less
indicative of the market value of the acquired land. We feel that the
appellant should have no grievance for rejection of these sales of
i
Kumharpura. We find force in the contention of Dr. Singhvi that
potential value was not taken into account in this case to the extent it
should have been done. From the award dated 25.11.1972 it appears
G that the acquired land was situated at Village Nissatpura, within
Corporation limits of Bhopal Town and consisting of Khasra No. 190/
73, 136/74, 178/74, 135/75-76, the total area being 12.62 acres. The :',
High Court found that the land was bounded on three sides by three

H
roads: towards the eastern side by Berasia road; towards the western
side b)' Sultania road; and towards the northern side by P.G.B.T.
College Road. Southern boundary of the land was a Nala. The High
.,.
SURESH v. TOWN IMPROVEMENT TRUST JSAIKIA, J.J 917

Court also noticed that the land abutted to roads, namely, Berasia
A
road and P. G .B. T. College road and the claimant had a house on the
land and that the claimant had stated that he had obtained water and
electricity connection from the Corporation and the electricity Board.
7.60 acres of land out of 12.62 acres had been diverted and the land
Wt;lS even.
B
At paragraph 14 of the special leave petition it is stated that the
land is approachable from two different and important localities of
Bhopal Town. From Bajaria Chowk Shahjanabad, a road, called
Sultania Infantry road, proceeds Military Lines called Sultania
Infantry lines. On both sides of this road, there is the thickly habited
locality of Shahjahanabad, till about two furlongs. Slightly ahead is the
enterance porch gate of the Military lines. Just before the gate, a c
tarred road bifurcates on the right hand side and it enters the acquired·
land of Swatantra Kumar Ref. No. 1/70. This tarred road was con-
structed by the Trust after acquisition of the lands. It goes on all sides
of village Jamalpura, which is surrounded on all sides by the lands of
Ref. No. 1/70. A part of land of Ref. No. 1/70 was developed after
D
acquisition, and the tarred road reaches the developed plots. We have
to note that such detail evidence was not there before the Tribunal and
no benefit of development pursuant to and after the acquisition can be
taken into consideration. Even so, from the map and juxtaposition we
have no doubt that the acquired land had potentialities which deserved
to be counted.
E
In U.P. Government v. H.S. Gupta, A.LR. 1957 S.C. 202 where
in computing compensation for acquisition of an estate outside the
Municipal area the High Court had given valid and weighty reasons for
adopting the principle that the valuation should be on plot-wise though
there was certain advantages in computing the value at the block rate
where vast area of land was acquired, this Court held that in the F
circumstances of that case the proper mode of valuation was plot rate
basis. In the instant case the application of the principle that if the land
has to be sold in one block consisting of a large area, the rate likely to
be fixed per sq. ft. would be lower than if an equal extent of land is
parcelled out into smaller bits and sold to different purchasers could
not be found fault with. The price fetched for smaller extent of land G
similarly situated with the same kind of advantages and drawbacks can
also be applied to a large area valued plot-wise instead of block-wise.
In the instant case relying on Exts. P-1, P-2, P-3 and P-8 and
considering the fact that applications were made· for diversion and for
sanction of a lay-out plan the High Court found that it went to show H
that the owner was interested in developing the land and in selling it by
tl.
"

918 SUPREME COURT REPORTS [1989] 1 S.C.R.

dividing it into plots. The lowest rate of price in these agreements was
A
14 annas. per sqr. ft. and the agreements mentioned that 4 annas per ""
sqr. ft. would be needed for developing the land. This charge was to be
paid by the purchaser. So the price of developed land would be Rs.1/2
per sqr. ft. The evidence of M.P. Jain (D.W. 9), Senior Draftsman of
the Improvement Trust went to show that expenses for improvement
B of land ranged from Rs.1.50 to 2 per sqr. ft. The statement of Shri Jain
was recorded in 1972. Making some allowance for the increase in the
t
rate the High Court considered it proper to hold that in 1965 when this
land was acquired the charges for improvement would have worked at
75 paise (12 annas) per sqr. ft. It had also come in the evidence of Shri
·~>-
Jain that 50 to 60 per cent of the land had to be left for roads, drainage,
gardens, school etc. and it was only thei:i that the lay-out plan was
c sanctioned. High Court, accordingly, deducted improvement charges
at the rate of 12 annas per sqr. ft., and the market rate for unimproved -i
land in the light of these agreements worked out to 6 annas per sqr. ft.
As 50% of the land at least had to be left out for roads etc; so the
market rate of 3 annas per sqr. ft. was applied for the entire
D undeveloped land. Market rate thus worked out to Rs.8,000 per acre
approximately. However, the High Court awarded Rs.12,000 per acre.
There was an additional factors in the calculation. Mr. Krishnamurthi
therefore submitted that the High Court took into consideration the
potential value of the land as a developed area but while making ....
calculation it may have committed mistake. To our mind the error was
in wholly overlooking the basic price agreed to be paid by the purch-

-
E
aser and the standard of development they visualised. The whole of
the basic price could not be expected to be eaten up by the develop-
ment of the land to the standard contemplated by the vendor and
purchaser. When the willing vendor ,has agreed to sell land at 14 annas

F
per sqr. ft. after development and the development charge was to be
paid by the willing purchaser, it could be reasonable to deduct only
50% on account of the land to be set apart for roads, drains etc. and
i
not beyond that. Considering this aspect of the matter and the poten-
tial value of the land as urban developed area we are of the view that
the compensation may justly be enhanced by 1/6th to Rs.14,000 per
acre and we do so. We maintain 15% solatium but raise the rate of
G interest to 9% on the enhanced compensation from today till payment.
We leave it open for the appellant to move for higher interest and
solatium if entitled by virtue of subsequent judgment of this Court, if -.:
any.
In the result, this appeal is allowed as above. We make no order
as to costs.
H
Y.L. Appeal allowed.
II