THE CENTRAL WAREHOUSING CORPORATIONversusTHAKUR DWARA KALAN UL-MARUF BARAGLAN WALA

                 [2023] 14 S.C.R. 926 : 2023 INSC 940



                            CASE DETAILS
         THE CENTRAL WAREHOUSING CORPORATION
                                     v.
  THAKUR DWARA KALAN UL-MARUF BARAGLAN WALA
                 (DEAD) & ORS.
                 (Civil Appeal Nos. 6918-6919 of 2023)
                           OCTOBER 19, 2023
   [VIKRAM NATH AND AHSANUDDIN AMANULLAH, JJ.]
                             HEADNOTES
      Issue for consideration: High Court if justified in raising the amount
of compensation per square yard on the date of notification u/s.4, Land
Acquisition Act, 1894 on the basis of cumulative annual increase at the rate
of 15% for a period of 11 years, taking base figure from an order of Reference
Court dtd.30.08.2000 relating to acquisition of land of the same village of
the year 1989, and the period of 11 years being counted from 1989 to 2000,
the year of the notification issued u/s.4 of the 1894 Act.
     Land Acquisition Act, 1894 – Determination of fair and just
compensation – Annual increase whether on cumulative basis or non-
cumulative basis – Rate of applying annual increase – Period to be
applied:
      Held: The consistent view taken by this Court for awarding annual
increase to determine the just compensation varies from case to case
and the period to be applied is a major factor to be considered – In the
present case, the period is 11 years which is pretty large – Fair and
reasonable compensation in the present case would be best determined if
8% annual increase is applied with cumulative effect as the gap is huge
i.e. 11 years – For shorter period of 3-5 years, it could have been 10% or
12% – But in no case 15% would be justified for a period of 11 years as
awarded by the High Court – In the present case, given the 11 years gap,
8% would be just and proper – On rough assessment, the compensation
would be equivalent to compensation awarded by the Reference Court
– High Court fell in error in enhancing the compensation by applying
the cumulative annual increase of 15% – Impugned judgment set aside
                                    926
THE CENTRAL WAREHOUSING CORP. v. THAKUR DWARA KALAN 927
          UL-MARUF BARAGLAN WALA (DEAD)


– Land Acquisition Collector to calculate the compensation at the rate
as determined. [Paras 23-26]
      LIST OF CITATIONS AND OTHER REFERENCES
      General Manager, Oil and Natural Gas Corporation Limited vs.
Rameshbhai Jivanbhai Patel and Another (2008) 14 SCC 745 : 2008 [11]
SCR 927; Ashrafi and Others Vs. State of Haryana and Others (2013) 5
SCC 527 : 2013 [6] SCR 148; Narbadi Devi & Ors. Vs. State of Haryana
Order of Supreme Court dtd.22.08.2014 in SLP(c)Nos.20531-20565 of
2014; Ramrao Shankar Tapase vs. Maharashtra Industrial Development
Corporation and Others (2022) 7 SCC 563 : 2013 [6] SCR 148; State of
Haryana and Another vs. Subhash Chander and Others (2023) 5 SCC 435
– referred to.
      OTHER CASE DETAILS INCLUDING IMPUGNED
             ORDER AND APPEARANCES
     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6918-6919
of 2023.
     From the Judgment and Order dated 01.06.2016 of the High Court of
Punjab & Haryana at Chandigarh in RFA Nos. 2400 of 2004 and 295 of 2005.
     Appearances:
    Harin P Raval, Sr. Adv., Shaiwal Srivastava, Mrs. Rachna Gupta,
Advs. for the Appellant.
     Rakesh Kumar Khanna, Sr. Adv., Mrs. Tanuj Bagga Sharma, Dr. M.K.
Ravi, Ramya Khanna, K. Uday Kapoor, Sumit Jidani, Rajesh Sehgal, Ms.
A. Sumathi, B. K. Satija, Ms. Yagya Kalla, Advs. for the Respondents.
      JUDGMENT / ORDER OF THE SUPREME COURT


                              JUDGMENT
     VIKRAM NATH, J.
     1. Application for substitution is allowed.
     2. Leave granted.
928             SUPREME COURT REPORTS                       [2023] 14 S.C.R.


      3. The present appeals assail the correctness of common judgment
and order of the High Court of Punjab & Haryana at Chandigarh dated
01.06.2016, whereby the appeal filed by Respondent No.1 (RFA No. 295 of
2005) was partly allowed, and the appeals filed by the appellant and State
of Haryana (respondent No.2) (RFA No. 2400 of 2004 and RFA No. 2522
of 2004)were dismissed, raising the amount of compensation to Rs.493/-
per square yard on the date of notification under Section 4 of the Land
Acquisition Act, 18941. The basis for the same being cumulative annual
increase at the rate of 15% for a period of 11 years. The base figure was taken
from an order of Reference Court dated 30.08.2000 relating to acquisition
of land of the same village Naraingarh of the year 1989, and the period of
11 years being counted from 1989 to 2000, the year of the notification dated
10.11.2000 issued under Section 4 of the 1894 Act.
       4. Relevant facts for deciding the present appeals are as follows:
       i)     Notification was issued under Section 4 of the 1894 Act on
              10.11.2000 for acquiring land measuring 80 Kanals, 11 Marlas
              out of the revenue estate of Naraingarh, District Ambala for the
              benefit of the appellant.
       ii)    Objections were invited as per the provisions of the 1894
              Act;however, no objections were filed.
       iii) Declaration under Section 6 of the 1894 Act was issued on
            19.03.2001.
       iv)    The Land Acquisition Collector/Sub Divisional Officer (Civil)
              who was duly authorised to give the award, started the process
              on 25.09.2001 by serving notices under Section 9 of the 1894
              Act. After the parties led evidence and considering material
              on record, vide award dated 12.10.2001 the Land Acquisition
              Collector determined the rate of compensation atRs.3.50 lacs per
              acre, which would be equivalent to Rs.2,187.50Ps. per Marla and
              further equivalent to Rs.72.31 per square yard being the market
              value prevailing on the date of notification under Section 4 of
              the 1894 Act.


1     In short, ‘1894 Act’
THE CENTRAL WAREHOUSING CORP. v. THAKUR DWARA KALAN 929
   UL-MARUF BARAGLAN WALA (DEAD) [VIKRAM NATH, J.]


     5. The Land Acquisition Collector considered the following factors to
determine the rate of compensation:
     a)    No objections were filed with respect to area and classification
           of the land in question.
     b)    The land owners (respondents) did not put forth any specific claim
           with regard to the market value of the land. The only claim was
           that fair and reasonable compensation be awarded.
     c)    The acquired land was purely an agricultural land situated by the
           side of a link road.
     d)    Report of the Committee constituted at the Divisional Level for
           evaluation under the chairmanship of Divisional Commissioner
           had fixed the market rate of Rs.3,50,000/- per acre after
           considering the market rates provided from the Office of the
           District Collector, Ambala.
     e)    The material provided by the local revenue Patwari regarding
           sale deeds of similar land executed within closed proximity on
           the material date.
     6. The respondent preferred a reference under Section 18 of the 1894
Act on 19.11.2001 seeking enhancement of compensation primarily for the
following reasons:
     (i)   The acquired land was Chahi land (Irrigated land) which was
           used for residential purposes, and was situated within the Abadi
           near the Naraingarh District as well as near the sector carved
           by Haryana Urban Development Authority and was also near
           the Government College, Naraingarh and Government Senior
           Secondary School, Naraingarh.
     (ii) The Market value of the acquired land was not less than Rs.30
          lacs per acre at the relevant time and therefore the claim of Rs.35
          lacs per acre was made.
      7. The appellant filed his objections and written statement in the
reference proceedings denying all the assertions made by the respondent
in the reference.
930            SUPREME COURT REPORTS                      [2023] 14 S.C.R.


      8. After considering the material on record, the Reference Court/
Additional District Judge, Ambala allowed the reference and determined the
market value at Rs.6,310/- per Marla equivalent to Rs.208.59/- per square
yard by taking into account 12% (simple/flat) increase per annum for 11 years
from 1989 to 2000. Reliancewas placed upon a judgment dated 30.08.2000
of the Reference Court pertaining to acquisition of land in the year 1989 of
the same village (Naraingarh), wherein the Reference Court had fixed the
rate at Rs.2720/- per Marla equivalent to Rs.89.91 per square yard.
      9. Aggrieved with the enhancement by the Reference Court, both the
parties appealed before the High Court. The said appeals came to be decided
by the common impugned order of the High Court as already mentioned in
the opening paragraph.
     10. The High Court granted an annual increase at the rate of 15% on
cumulative basis for a period of 11 years,relying upon the judgment of this
Court in the case of General Manager, Oil and Natural Gas Corporation
Limited vs. Rameshbhai Jivanbhai Patel and Another2. While entertaining
the special leave petition, this Court vide interim order dated 11.11.2016
granted stay subject to condition that the appellant would deposit 50% of
the compensation as determined by the High Court. In compliance to the
same, the appellant deposited Rs.2,54,46,007/- on 04.01.2017 which was
subsequently allowed to be withdrawn by the respondent vide order dated
12.04.2017. The said amount has since been withdrawn.
     11. The appellant further pointed out that it has actually paid a total
amount of Rs.3,72,01,551/- to the respondent. The breakup of which is as
follows: (i) Rs.49,71,728/- was paid at the time of award; (ii) under interim
order of the High Court, further amount of Rs.65,69,816/-along with TDS
of Rs.2,14,000/- was paid; and (iii) further Rs.2,54,46,007/- was deposited
and paid as directed by this Court.
      12. We have heard learned senior counsels for the parties and have
also perused the material on record.
     13. The core question to be decided in the present appeals is as to
what would be a fair and just compensation so as to do justice between the


2     (2008) 14 SCC 745
THE CENTRAL WAREHOUSING CORP. v. THAKUR DWARA KALAN 931
   UL-MARUF BARAGLAN WALA (DEAD) [VIKRAM NATH, J.]


parties that is to say that land owners may get a fair and reasonable amount
of compensation for losing their land, and at the same time balancing the
State exchequer by not awarding an amount which may be in excess of the
market value so as not to put an additional burden on the appellant which
is a State entity.
      14. It is an admitted position that there is no material in the form of
exemplars of the relevant time that is the date of the notification under
Section 4 of the 1894 Act so as to facilitate determination of the market
value. Whatever sale deeds have been referred by the appellant, cannot be
taken as exemplars to determine the market value for which the reasons
given by the High Court are reasonable and we have no reason to interfere
with the same. Thus, we have to fall back upon the order of the Reference
Court dated 30.08.2000which related to an acquisition of the year 1989.
This Reference Court order of 30.08.2000 has been relied upon by the
Reference Court and the High Court in the present case. The question to
be determined would be as to at what rate the annual increase be applied?
The Reference Court applied 12% flat rate increase, whereas High Court
applied 15% cumulative.
      15. The law on the point of annual increase whether on cumulative
basis or non-cumulative basis and the rate of annual increase to be applied
are thus to be considered. Based upon the same a balance and equitable
compensation needs to be determined in the present case.
     16. The following cases have been relied upon by the parties with
respect to determining the just compensation.
     i)    General Manager, Oil and Natural Gas Corporation Limited
           vs. Rameshbhai Jivanbhai Patel and Another (supra),
     ii)   Ashrafi and Others Vs. State of Haryana and Others3,
     iii) Narbadi Devi &Ors. Vs. State of Haryana4,
     iv)   Ramrao Shankar Tapase vs. Maharashtra Industrial
           Development Corporation and Others5,


3   (2013) 5 SCC 527
4   SLP(c)Nos.20531-20565 of 2014, (22.08.2014- Order)
5   (2022) 7 SCC 563
932            SUPREME COURT REPORTS                        [2023] 14 S.C.R.


       v)    State of Haryana and Another vs. Subhash Chander and
             Others6
      17. The case which was referred to by the High Court was Rameshbhai
Jivanbhai Patel (supra). It no doubt referred to determining compensation
on the basis of annual increase with cumulative effect, but at the same time
it had put a caution that such annual increase can be taken only for 4-5
years as beyond that it would be unsafe to uniformly apply the same rate
for increase and that too with cumulative effect. Paragraph 15 of the said
judgment may be reproduced here which mentions the reasons where the
gap is of several years, such standards may not be reliable rather the same
maybe unsafe.
       “15. Normally, recourse is taken to the mode of determining the
       market value by providing appropriate escalation over the proved
       market value of nearby lands in previous years (as evidenced by
       sale transactions or acquisitions), where there is no evidence of any
       contemporaneous sale transactions or acquisitions of comparable lands
       in the neighbourhood. The said method is reasonably safe where the
       relied-on sale transactions/acquisitions precede the subject acquisition
       by only a few years, that is, up to four to five years. Beyond that it
       may be unsafe, even if it relates to a neighbouring land. What may
       be a reliable standard if the gap is of only a few years, may become
       unsafe and unreliable standard where the gap is larger. For example,
       for determining the market value of a land acquired in 1992, adopting
       the annual increase method with reference to a sale or acquisition in
       1970 or 1980 may have many pitfalls. This is because, over the course
       of years, the “rate” of annual increase may itself undergo drastic
       change apart from the likelihood of occurrence of varying periods
       of stagnation in prices or sudden spurts in prices affecting the very
       standard of increase.”
    18. In the said case, after laying down the caution, this Court awarded
cumulative annual increase at the rate of 7.5% for a period of five years.



6     (2023) 5 SCC 435
THE CENTRAL WAREHOUSING CORP. v. THAKUR DWARA KALAN 933
   UL-MARUF BARAGLAN WALA (DEAD) [VIKRAM NATH, J.]


      19. In the case of Ashrafi and others (supra), this Court amongst
many issues, considered the issue of applying annual increase cumulatively
for determining just compensation. It also considered the law laid down in
the case of Rameshbhai Jivanbhai Patel (supra) and many other judgments
on the said point. It applied formula of 12% annual increase cumulatively
for a period of five years. The base rate being of the year 1987 whereas the
acquisition in question being of 1993.
     20. We will also refer to order dated 22.08.2014 in the case of Narbadi
Devi & others (supra) which relied upon the judgment in the case of Ashrafi
&others (supra) and accepted the annual increase of 12% cumulatively.
The High Court in the said case had although followed the dictum in the
judgment of Ashrafi &others (supra), however, the annual increase of
12% was granted at a flat rate by the High Court and not cumulatively. This
Court accordingly had modified the order of the High Court to the aforesaid
extent that 12% annual increase would be cumulative.
      21. Recently, in the year 2022, this Court in the case of Ramrao
Shankar Tapase (supra) citing the judgment in the case of Rameshbhai
Jivanbhai Patel (supra) and other similar matters, awarded annual increase
cumulatively at the rate of 12% for a period of three years. The High Court
in the said case had applied annual increase cumulatively at the rate of 10%.
      22. The latest judgment is of 2023 in the case of Subhash Chander
(supra). In this case, the Court held that rate of annual increase could vary
from 8% to 15% per year. However, considering the facts of the said case,
this Court had awarded 10% annual increase cumulatively for a period of
two years only.
     23. From the above, we notice that the consistent view taken by this
Court for awarding annual increase to determine the just compensation
varies from case to case and the period to be applied is a major factor to be
considered. In the present case, the period is 11 years which is pretty large
as compared to the time period considered in the cases referred to above.
      24. Taking an overall view in the matter and the consistent view of
this Court, the fair and reasonable compensation in the present case would
be best determined if we apply 8% annual increase with cumulative effect.
This is for the reason that the gap is huge i.e. 11 years. For shorter period
934            SUPREME COURT REPORTS                       [2023] 14 S.C.R.


of 3-5 years, it could have been 10% or 12%. But in no case 15% would
be justified for a period of 11 years as awarded by the High Court in the
impugned order. In the present case, given the 11 years gap, 8% would be
considered just and proper.
      25. On rough assessment, the compensation would be equivalent to
compensation awarded by the Reference Court. The High Court fell in
error in enhancing the compensation by applying the cumulative annual
increase of 15%.
     26. In view of the above, the appeals are allowed. The impugned
judgment and order of the High Court dated01.06.2016is set aside. The
Land Acquisition Collector to calculate the compensation at the rate as
determined above.
      27. According to the appellant, an amount of Rs.3,72,01,551/- had
already been deposited and also disbursed to the respondents. In case,
after the final calculation, the Land Acquisition Collector finds that any
additional amount has been paid to the respondents, the same be recovered
in accordance with the law, however, if the final calculation requires some
additional amount to be paid to the respondents, the same to be paid within
two months from the date of receipt of this judgment.
      28. There shall be no order as to costs.
      29. Pending applications, if any, are disposed of.


Headnotes prepared by:                                         Appeals allowed.
Divya Pandey