Holding

Compensation must be based on market value as of the notification date, allowing at least a one‑third deduction for development and permitting separate deductions for largeness, and interest on solatium is payable.

Summary

The appellants' lands were acquired in 1980 under the Land Acquisition Act, 1894 for submergence by the Kadana Dam. The dispute centered on how to determine the market value of the acquired lands, whether deductions for development and for the largeness of the tract could both be made, the appropriate percentage of such deductions, and whether interest on solatium was payable. The High Court had relied on a sale deed of a 46.30‑sq‑m plot in a different village and allowed a 33% deduction for large plots and 25% for small plots, denying interest on solatium. The Supreme Court held that compensation must be based on market value as of the date of the notification under s.4(1), permitting a deduction of at least one‑third for development and allowing separate deductions for largeness, and directed compensation at Rs 160 per sq m for large plots and Rs 175 per sq m for small plots, with interest on solatium payable. The Court emphasized that lands to be submerged have no potential value and that interest accrues from the date of possession.

Issues considered

How should market value of land acquired for submergence be determined when only a small, unrelated sale deed is available as a comparable?
Whether deductions for development purposes and for the largeness of the land can both be made, and what percentage is appropriate?
Whether interest on solatium under the Land Acquisition Act is payable in the present case?
Whether the purpose of acquisition (submergence) affects the assessment of compensation

Legislation cited

Land Acquisition Act, 1894s. 11, s. 18, s. 23, s. 23(2), s. 28, s. 34, s. 4(1), s. 6, s. 9

Subjects

Land acquisitionCompensationMarket valueDevelopment deductionSolatiumInterest on compensationSubmergenceSection 23Section 4(1)Section 34Comparable sale

Judgment

A VILUBEN JHALEJAR CONTRACTOR (D) BY LRS.
v.
ST ATE OF GUJARAT

APRIL 13, 2005

B [B.P. SINGH AND S.B. SINHA, JJ.]

Land Acquisition Act, 1894 :

ss. 4(1) and 23-Acquisition of/and-Compensation-Determination of-
C Factors to be considered-Held, market value of the land acquired is to be
determined as on the date ofpublication ofnotification u/s 4(1)-A comparable
sale instance may be identified having regard to proximity from time angle as
also from situation angle-When amount of compensation is to be determined
on yardage basis, at least one third of land acquired should be deducted
D towards development purposes-Different deductions, one for largeness of
land and another for development costs are permissible-On facts, since lands
were acquired as they would submerge under Dam water and development of
the area had stopped, the lands would not have any potential value-
Compensation determined accordingly-Claimants would be entitled to interest
on solatium.
E
Appellants' lands were acquired in the year 1980 under the
provisions of the Land Acquisition Act, 1894, as the same would have come
under submergence of water of Kadana Dam. As regards compensation,
the litigation between the parties went upto the High Court which based
F its decision on a sale deed for 46.30 sq. m trs. of land of a different village;
and upon making a deduction of 33% for larger areas and 25% for smaller
areas held the claimants entitled to compensation at the rate of Rs. 180
per sq. mtr. and Rs. 206 per sq. mtr. respectively for the large and small
areas. The High Court, however, held that the claimants were not entitled
to irrterest on the amount of solatium.
G
In the appeals filed by the State Government as well as the claimants,
it was contended for the State that the High Court erred in relying on the
sale deed of a small area, and in not deducting 50% from the value of the
lands keeping in view the large area of the lands as also on the ground of

H 542
VILUBENJHALEJARCONTRACTOR(D)BYLRS. v. STATE OFGUJRAT 543

future developments which were required to be made. For the claimants A
it was contended that the lands under acquisition were fully developed and
the High Court erred in relying on the sale deed of the land of a different
village for the purpose of making deductions towards future developments;
and deduction both for the largeness as well as development was not
permissible.
B
Disposing of the appeals, the Court

HELD : 1.1. When the amount of compensation is determined on
yardage basis, at least one-third of the land acquired should be deducted
towards development purposes, viz. providing roads, electricity, drainage C
facility and other betterment developments. Such development charges
may be in between 33% and 53%. (549-G-H)''

Basavva (Smt.) and Ors. v. Sp/. Land Acquisition Officer and Ors.,
(1996) 9 SCC 640; Bhagwathula Samanna and Ors. v. Special Tehsildar and
Land Acquisition Officer, Visakhapatnam Municipality, Visakhapatnam, [1991) D
4 SCC 506; Land Acquisition Officer & Revenue Divisional Officer, Chittor
v. L. Kamalamma (Smt.) (D) by Lrs. and Ors., [1998i 2 SCC 385;
Administrator General of West Bengal v. Collector, Varanasi, [1988) 2 SCC
150; K.S. Shivadevamma and Ors. v. Assistant Commissioner and Land
Acquisition Officer and Anr., [1996) 2 SCC 62; Hasanali Khanbhai & Sons
and Ors. v. State ofGujarat, [1995) 2 SCC 422; L.A.O. v. Nookala Rajamallu, E
(2003) 10 SCALE 307; Kasturi and Ors. v. State of Haryana, [2003] 1 SCC
354; Tejumal Bhojwani (Dead) through Lrs. and Ors. v. State of UP., [2003)
10 SCC 525; V. Hanumantha Reddy (D) by Lrs. v. Land Acquisition Officer
& Manda! R. Officer, [2003) 12 SCC 642; HP. Housing Board v. Bharat S.
Negi and Ors., [2004) 2 SCC 184 and Kiran Tandon 's. Allahabad f
Development Authority and Anr., (2004) 10 SCC 745, relied on.

Ravinder Narain and Anr. v. Union of India, (2003) 4 SCC 481; The
Registrar, University ofAgricultural Sciences, Dharwad v. Ba/anagouda (D)
by Lrs. and Ors.,(CA Nos. 62-65 of 2000 decided by Supreme Court on
10.12.2003), cited. G

1.2. Section 23 of the Land Acquisition Act, 1894 specifies the matter
required to be considered in determining the compensation, the principal
among which is the determination of market value of the land on the date
of the publication of the notification under sub-section (1) of Section 4 of H
544 SUPREME COURT REPORTS [2005) 3 S.C.R.

A the Act. Where definite material is not forthcoming either in the shape of
sales of similar lands in the neighborhood at or about the date of
notification under Section 4(1) or otherwise, other sale instances as well
as other evidences have to be considered. However, in the instant case the
sale instance, for comparison, having regard to·the nature and areas of
B the land, carves out a distinction, inasmuchas the area sold und~r the sale
instance is 46.30 square meters while two plots under acquisition measured
18528 square meters and 10993 sq. mtrs. respectively. Keepfog in view
the decisions of this Court, it cannot be said that there cannot be different
deductions, one for the largeness of the land and another for development
costs. (550-D-F; 554-B-D)
c 1.3. The amount of compensation cannot be ascertained with
mathematical accuracy. A comparable instance has to be identified having r
regard to the proximity from time angle as well as proximity from situation
angle. For determining the market value of the land under acquisition,
suitable adjustment has to be made having regard to various positive and
D negative factors vis-a-vis the land under acquisition by placing the two in
juxtaposition as detailed in the judgment. (550-G-H; 551-A) ·

1.4. The purpose for which the land is acquired must also be taken
into consideration. In the instant case, the lands were acquired because
they would submerge under water. The land would not have any potential
E value. The development of area where the land was situated had stopped.
'.fhe parties were aware of the consequences of the project undertaken by.
the Government. [554-B-C)

2. Having regard to the entire facts and circumstances of the case,
F interest of justice would be subserved if compensation is determined at
the rate of Rs. 160 per sq. mtr. for the large plots and Rs. 175 per sq.
mtr. for the small plots.The claimants-appellants, however, would be
entitled to interest on solatium as the said question is no longer res integra.
(554-D-E)

G Sunder v. Union of India, (20011 7 SCC 211, relied on

Prem Nath Kapur and Anr. v. National Fertilizers Corporation of India
Limited and Ors., [1996) 2 SCC 71, stands overruled.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2485 of2001.
H
VILUBEN JHALEJAR CONTRACTOR {D) BY LRS. v. STATE OF GUJRAT [S.B. SINHA, J.j 545

From the Judgment and Order dated 7.7.2000 of the Gujarat High A
Court in F.A. No. 106 of 2000.
WITH

C.A. Nos.,,_2486-2487 of 2001. B
-I

- . Ranjit Kumar, Vimal Chandra S. Dave, Ms. Neelam Kalsi and Shailendra
Narayan Singh with him for the Appellant.

Ms. Hemantika Wahi and Ms. Monika Bapna for the Respondent

The Judgment of the Court was delivered by
c
S.B. SINHA, J. The Govemmen_t of Gujarat issued a notification under
Section 4(1) of the Land Acquisition Act (the Act) for acquisition of lands
situated in the town Santrampur which would have come under submergence
of water released from Kadana Jalagar Vojna due to water logging at Kadana D
Dam. A declaration in terms of Section 6 was made on 13th October, 1980.
In response to the notification issued to the claimants under Section 9 of the
Act, compensation at the rate of Rs. 40 per square feet for the acquired lands
was claimed. Compensation ranging from Rs. 35 to Rs. 60 per square meter
. was offered by the Land Acquisition Officer in terms of an award dated 16th
March, 1982 under Section 11 of the Act. An application for reference was E
filed by the claimants under Section 18 of the Act requiring the Land
Acquisition Officer to refer the matter relating to determination of the market
value of the acquired lands to the Civil Court. Before the Reference Court,
the claimants initially claimed compensation at the rate of Rs. 200 per square
meter which was subsequently enhanced to Rs. 250 per square meter. By a F
judgment and order dated 16th April, 1996, the learned District Judge allowed
the reference application filed by the claimants determining the market value
at the rate of Rs. 225 per square meter. The State of Gujarat preferred an
appeal thereagainst in the High Court of Gujarat which was marked as First
Appeal No. 5041196. A Division Bench of the High Court by a judgment and
order dated 11th May, 1999 allowed the said appeal and remitted the matter G
to the Reference Court on the premise that the deed of sale whereupon the
- claimants relied upon had not been proved in accordance with law. Before
the· District Court, upon remand parties adduced evidence.

The Reference C()urt relying on or on the basis of a deed of sale dated
H
546 SUPREME COURT REPORTS (2005) 3 S.C.R.

A 15th December, 1978 (Ex. 145), whereunder a piece of land measuring 46.30
square meters situated at Godhra Bhagat was sold and other evidences brought
on records ·came to the conclusion that the lands under acquisition would
have fetched at least Rs. 200 per square meter. The Reference Court was
further of the opinion that the claimants were furthennore to incur development
B charges which would have varied between 33% to 53% and on the basis
thereof detennined the market value at the rate of Rs. 134 per square meter.

Furthermore, the Reference Court extended the statutory benefits of
solatium in tenns of Section 23(2) of the Act as well as interest thereon in
terms of Section 28 thereof. Both the parties preferred appeals thereagainst
C before the High Court of Gujarat.

A Division Bench of the High Court was of the view that the acquired
lands were fully developed. The records of the case also indicated that after
the acquired lands were submerged in the water of Kadana dam, the
development of the area of Pratappura had shifted to the locality known as
D Godhra Bhagal. The basis for awarding compensation was the deed of sale
dated 15th December, 1978 (Ex. 145), whereby approximately 46.30 square
meters had been transferred at a consideration of Rs. 270 per square meter,
· and upori making a deduction of 33% for the larger area and 25% for the
smaller area, the claimants were held to be entitled to receive compensation
E at the rate of Rs. 180 per square meter having large area and Rs. 200 per
square meter for the lands having small area.

The High Court, however, having regard to the decision of this Court
in Prem Nath Kapur and Anr. v. National Fertilizers Corporation of India
Ltd and Ors., [1996] 2 SCC 71 was of the opinion that the claimants were
F not entitled to interest on the amount of solatium. Aggrieved thereby, both
the parties are before us.

Ms. Hemantika Wahi, learned counsel appearing on behalf of the State
of Gujarat would contend that the High Court committed a manifest error in
passing the impugned judgment relying on or on the basis of the deed of sale
G of Survey No. 1177 which measured only 46.30 square meters and situated
in a different locality whereas the area under acquisition was approximately
30,000 square meters belonging to one family.

The learned counsel would contend that the High Court ought to have
H deducted 50% from the value of the land in Survey No. 1177, not only
VILUBEN JHALEJAR CONTRACTOR (D) BY LRS. v. ST ATE OF GUJRA T [S.B. SINHA,J.] 54 7

keeping in view of the fact the acquired lands have large area but also on the A
ground of future developments which were required to be made. It was
submitted that keeping in view the fact that the claimants would be getting
the amount of compensation in lump sum, the High Court erred in passing
the impugned judgment. In support of the said proposition, strong reliance
has been placed on Bhagwathu/a Samanna and Ors. v. Special Tahsildar and
Land Acquisition Officer, Visakhapatnam Municipality, Visakhapatnam, [ 1991] B
4 SCC 506, Land Acquisition Officer Revenue Divisional Officer, Chittor v.
'L. Kama/amma (Smt.) Dead by LRs and Ors., (1998] 2 SCC 385 and Ravinder
Narain and Anr. v. Union of India, [2003] 4 SCC 481.

Mr. Ranjit Kumar, learned senior counsel appearing on behalf of the C
Claimants-Appellants, on the other hand, would contend that the High Court
failed to take into consideration the fact that the lands situated in village
Pratappura were fully developed whereas lands situated in Godhra Bhagat
were not'so developed and in that view of the matter it was not a case where
the amount of compensation should have been determined upon deduction to
the extent of 33% and 25% respectively for the large and small area. It was D
further contended that deduction both for the largeness of the area as well as
the development is not permissible. Reliance in this connection has been
placed The Registrar, University of Agricultural Sciences, Dharwad v.
Balanagouda (Dead) By LRs. and Ors., Civil Appeal Nos. 62-65 of 2000
disposed of on 10th December, 2003.
E
It was further contended that the High Court committed a manifest
error in refusing to grant interest on solatium relying on or on the basis of
the decision of this Court in Prem Nath Kapur (supra) which stands overruled
by a Constitution Bench of this Court in Sunder v. Union of India, (2001] 7
sec 21 i. F
The land under acquisition consisted of 16_ plots. Out of them two plots
measured 18528 square meters and 10993 square meters respectively. The
area of the small plots which" are 14 in number are as under :

"S.No. C.T.S. No. Area acquired (in sq.m) G
I. 833 130.00
,.___
2. 838 46.20
3. 839 35.28
4. 834 365.56
H
548 SUPREME COURT REPORTS (2005] 3 S.C.R.

A 5. 857 234.00
6. 858 47.77
7. 859 47.97
8. 860 47.97
B 9. 861 46.60
10. 862 63.18
11. 840 54.60
12. 841 42.00
c 13. 842 26.40 ' --
14. 843 28.38

Total 1215.91"

The learned Land Acquisition Collector in his award noticed that the
D population ofSantrampurtown was 12000. The acquired lands were situated
near an area known as Main market. It was held:

"Pucca residential houses, quarters of Government employees, rest
house and open lands are there very near to the acquired lands.
Acquired lands are of regular square shape having even level and is
E located in downwards about 4 feet from road level, surrounding lands
are generally used for purpose other than agriculture purpose. These
lands are more useful for residential purpose i.e. all lands are having
N.A. potentialiaties. S.No. 25 is "Wada" land and this land is situated
towards Godhra Lunawada road. Lunawada and on Northern side of
F road going towards Santrampur and near Chikhota river Santrampur
is reserved for recreation place in implemented development. map,
whereas presently well and Bungalow of His Highness Maharaja Shri
Krushnakumar Sinh is situated in the said land."

The High Court as regard the question as to whether the area is a
G developed one or not noticed the deposition of Barjorbhai Jalejar Contractor
who alleged:

"The acquired lands were having facilities of electricity, water and
roads. It is borne out.from his evidence that the claimants' ancestors
were carrying on business of distillery till 1949 and thereafter they
H
VILUBEN JHALEJAR CONTRACTOR (D) BY LRS. v. STATE OF GUJRA T [S B SINHA,J.) 549

had started business of pulse and rice mills on the acquired lands. It A
is an admitted fact that the acquired lands were converted into non-
agricultural use since many years prior to the acquisition."

Before us, Ms. Wahi did not raise any contention that the sale instance
relied upon by the Reference Court as also the High Court was improper.
She, however, drew our attention to the following observations made by the B
Reference Court:

"However, the fact remain that the lands under acquisition are situated
in the area called as Pratappura in Santrampura town, whereas the
sale deed, ex. 145, pertains to a property situated in Godhra Bhagol
area The sale deed is not about the property situated in Pratappura C
area. Furthermore, though the amount of consideration of the entire
land is Rs. 20,000/-, but there is no just and proper data about the
valuation of the built up portion of the said plot. The L.A. Officer
in his award dtd. 16.3.82 fixed the valuation of the built-up portion
at Rs. 7,500 but in the sale deed, ex. 145, nothing specific is mentioned D
about the separate valuation of the built-up portion in the land. The
witness Giriraj Pandit, in his deposition, stated that when the property
was purchased, at that time, construction work in the plot was only
upto plinth level. However, in this connection, perusing the sale
deed, ex. 145, it is, specifically, stated that in the land, a house was
situated and even Santrampur Municipality issued a house no. 3484, E
to this house. Therefore, this part of the deposition of witness Giriraj
Pandit, appears to be contrary to the averments made in the sale deed,
ex. 145."

Pratappura appears to be a small town. There is nothing on record to
show that the area was fully urbanized. However, in the area, a distillery, a F
Rice Mill, a Pulse Mill and even an Ice Factory had been running. Although,
the Land Acquisition Collector referred to certain sale instances in his award,
as indicated hereinbefore, we may assume that the sale deed dated 15th
December, 1978 (Ex. 145) should be the basis for determination of
compensation despite the fact that it relates to a very .small piece of land. G
While determining the amount of compensation, certain factors must be taken
into consideration. When the amount of compensation is determined on
yardage basis, at least one-third of the land acquired should be deducted
towards development purposes, viz., providing roads, electricity, drainage
facility and other betterment developments. Such development charges may
H
550 SUPREME COURT REPORTS [2005] 3 S.C.R.

A be in between 33% to 53%.
The Reference Court was of the view that although the area was
developed, there is nothing on record to show that there had been facilities
of internal roads drainage and other facilities. The learned Reference Court,
however, arrived at a finding of fact that nothing was brought on record to
B show that on the date on which the possession had been taken, a distillery,
rice mill, pulse mill and ice factory had been functioning. ,.
'
The Reference Court, as noticed hereinbefore, was of the opinion that
keeping in view of the fact that the area of the land covered by Ex. 145 was
a small piece of land,. the market price for the acquired land should be
C determined at Rs. 200 per square meters wherefrom 33% should be deducted
towards development charges. The High Court, however, was of the opinion
that 33% should be deducted from the total amount of consideration covered
by Ex. 145 for the large area and 25% for the small area.

D Section 23 of the Act specifies the matters required to be considered in
determining the compensation; the principal among which is the determination
of the market value of the land on the date of the publication of the notification
under Sub-section {l) of Section 4.

One of the principles for determination of the amount of compensation
E for acquisition of land would be the willingness of an informed buyer to offer
the price therefor. It is beyond any cavil that the price of the land which a \
willing and informed buyer would offer would be different in the cases
where the owner is in possession and enjoyment of the property and in the
cases where he is not.

F Market value is ordinarily the price the property may fetch in the open
market if sold by a willing seller unaffected by the special needs of a particular
purchase. Where definite material is not forthcoming either in the shape of
sales of similar lands in the neighbourhood at or about the date of notification
under Section 4(1) or otherwise, other sale instances as well as other evidences
G have to be considered.

The amount of compensation cannot be ascertained with mathematical
accuracy. A comparable instance has to be identified having regard to the
proximity from time angle as well as proximity from situation angle. For ''I
determining the market value of the land under acquisition, suitable adjustment
H has to be made having regard to various positive and negative factors vis-a-
VILUBEN JHALEJAR CONTRACTOR (D) BY LRS. v. STATE OF GUJRA T [S.B. SINHA, J.] 55 J

vis the land under acquisition by placing the two in juxtaposition. The A
positive and negative factors are as under :
Positive factors Negative Factors

(i) smallness of size (i) largeness of area
(ii) proximity to a road (ii) situation in the interior at a
B
diStance from the road

(iii) frontage on a road (iii) narrow strip of land with very
small frontage compared to depth

(iv) nearness to developed area (iv) lower level requiring the C
depressed portion to be filled up

(v) regular shape (v) remoteness from developed
locality

(vi) some special disadvantageous
D
(vi) level vis-a-vis land under
acquisition factors whiCh would deter a
purchaser
(vii) special value for an owner
of an adjoinmg property to
whom it may have some very E
special advantage.

Whereas a smaller plot may be within the reach of many, a large block
of land will have to be developed preparing a layout plan, carving out roads,
leaving open spaces, plotting out smaller plots, waiting for purchasers and
the hazards of an entrepreneur. Such development charges may range between F
... 20% and 50% of the total price .

Certain peculiar features of this case may, at this juncture, be noticed.
Due to construction of Kadana Dam and due to water logging causing
submergence, the development of Pratappura even according to the Claimants
had practically stopped. Development shifted to the area known as Godhra G
Bhagat. The finding of the Reference Court to the effect that the acquired
lands had potentiality for more development is, thus, not correct.

A river known as Suki intervened between the Santrampur town and
Godhra Bhagat. In a case of this nature, it is difficult to evolve a principle H
552 SUPREME COURT REPORTS [2005] 3 S.C.R.

A which would apply to all situations. Some amount of rational guess work,
in our opinion, is inevitable.

The purpose for which acquisition is made is also a relevant factor for
determining the market value. In Basavva (Smt.) and Ors. v. Sp/. Land
Acquisition Officer and Ors., [1996] 9 SCC 640, deduction to the extent of
B 65% was made towards development charges.

In Bhagwathula Samanna (supra), it has been held :

"11. The principle of deduction in the land value covered by the
comparable sale is thus adopted in order to arrive at the market value
C of the acquired land. In applying the principle it is necessary to
consider all relevant facts. It is not the extent of the area covered
under the acquisition which is the only relevant factor. Even in the
vast area there may be land which is fully developed having all
amenities and situated in an advantageous position. If smaller area
within the large tract is already developed and suitable for building
D
purposes and have in its vicinity roads, drainage, electricity,
communications etc. then the principle of deduction simply for the
reason that it is part of the large tract acquired, may not be justified.

In L. Kamalamma (supra), this Court held :
E " ..... Ext. B-30 is a sale deed dated 9-8-i976, the transaction having
taken place prior to eight months from the issue of the preliminary
notification for acquisition of land in the present case. Having found
that the piece of land referred in Ext. B-30 is situated very close to
the lands that are acquired under the notification in question the
F reference court and the High Court relied upon the said document
and, in our view, rightly. Further when no ~ales of comparable land·
/
were available where large chunks of land had been sold, even land
. transactions in respect of smaller extent of land could be taken note
of as indicating the price that it may fetch in respect of large tracts
of land by making appropriate deductions such as for development of
G the land by providing enough space for roads, sewers, drains, expenses
involved in formation of a layout, lump sum payment as also the
waiting period required for selling the sites that would be formed.
---'.
·In Administrator General of West Bengal v. Collector, Varanasi, [1988]
H 2 sec 150, deduction to the extent of 53% was allowed.
VI LUBEN JHALEJAR CONTRACTOR (D) BY LRS. v. STATE OF GUJRA T (S.B. SINHA, J.] 553

In K.S. Shivadevamma and Ors. v. Assistant Commissioner and Land A
Acquisition Officer and Anr., [ 1996) 2 SCC 62, it was held :

"10. It is then contended that 53% is not automatic but depends upon
the nature of the development and the stage of development. We are
inclined to agree. with the learned counsel that the extent of deduction
depends upon development need in each case.· TTnder the Building B
Rules 53% of land is required to be left out. This Court has laid as
a general rule that for laying the roads and other amenities 33-113%
is required to be deducted. Where the development has already taken
place, appropriate deduction needs to be made. In this case, we do
not find any development had taker1 place as on that date. When we C
are determining compensation under Section 23(1), as on the date of
notification under Section 4(1 ), we have to consider the situ.ation of
the land development, if already made, and other relevant facts as on
that date. No doubt, the land possessed potential value, but no
development had taken place as on the date. In view of the obligation
on the part of the owner to hand over the land to the City Improvement D
Trust for roads and for other amenities and his requirement to expend
money for laying the roads, water supply mains, electricity etc., the
deduction of 53% and further deduction towards development charges
@ 33-1/3%, as ordered by the High Court, was not illegal.

In Hasana/i Khanbhai & Sons and Ors. v. State of Gujarat, [1995] 2
E
SCC 422 and L.A.O. v. Nook.ala Rajamallu, (2003) 10 SCALE 307, it has
been noticed that where lands are acquired for specific purposes deduction by
way of development charges is permissible.

We are not, however, oblivious of the fact that normally one-third F
deduction of further amount of compensation has been directed in some
cases. [See Kasturi and Ors. v. State of Haryana, [2003) l SCC 354, Tejumal
Bhojwani (Dead} Through LRS. and Ors. v. State of UP., [2003] 10 SCC
525, V. Hanumantha Reddy (Dead) BY LRS. v. Land Acquisition Officer &
Manda/ R. Officer, [2003) 12 SCC 642, H.P. Housing Board v. Bharat S.
Negi and Ors., [2004) 2 SCC 184 and Kiran Tandon v. Allahabad Development G
Authority and Anr., [2004) 10 SCC 745.

In The Registrar, University of Agricultural Sciences, Dharwad (supra),
whereupon Mr. Ranjit Kumar placed strong reliance, the Court noticed that
if the acquisition is made for agricultural purpose, question of development H
554 SUPREME COURT REPORTS (2005] 3 S.C.R.

A thereof would not arise; but if the sale instance was in respect of small piece
of land whereas the acquisition is for a large piece of land, although
development cost may not be deducted, there has to be deduction for largeness
of the land and also for the fact that these are agricultural lands. In that view
of the matter, deduction at the rate of 33% made by the High Court was
B upheld. It may not, therefore, be correct to contend, as has been submitted
by Mr. Ranjit Kumar, that there cannot be different deductions, one for the
largeness of the land and another for development costs.

We have noticed hereinbefore that the purpose for which the land is
acquired must also be taken into consideration. In the instant case, the lands
C were acquired because they were to be submerged under water. The land
would not have any .potential value. The development of area where the land
was situated had stopped. On the other hand, the development began on the
other side of the river Suki. The parties were aware of the consequences of
the project undertaken by the Government of Gujarat. The sale instances, for
comparison, having regard to the nature and area of the land carves out a
D distinction, inasmuchas the area sold under Ex. 145 is 46.30 square meters
while two plots under acquisition measured 18528 square meters and l 0993
square meters respectively. We, therefore, are of the opinion, having regard
to the entire facts and circumstances of this case that interest of justice would
be subserved if compensation is determined at 'the rate of Rs. 160 per square
E meter for the large plots and Rs. 175 per square meter for the small plots.

The claimants Appellants, however, would be entitled to interest on
solatium as the said qµestion is no longer res integra.

In Sunder (supra), this Court overruled Prem Nath Kapur (supra). The
F Constitution Bench held :

"24. The proviso to Section 34 of the Act makes the position further
clear. The proviso says that "if such compensation" is not paid within
one year from the date of taking possession of the land, interest shall
stand escalated to 15% per annum from the date of expiry of the said
G period of one year "on the amount of compensation or part thereof
which has not been paid or deposited before the date of such expiry".
It is inconceivable that the solatium amount would attract only the
escalated rate of interest from the expiry of one year and that there
would be no interest on solatium during the preceding period. What
the legislature intended was to make the aggregate amount under
H
VI LUBEN JHALEJAR CONTRACTOR (D) BY LRS. v. STATE OF GUJRAT [S.B. SINHA, J.) 555

Section 23 of the Act to reach the hands of the person as and when A
the award is passed, at any rate as soon as he is deprived of the
possession of his land. Any delay in making payment of the said sum
should enable the party to have interest on the said sum until he
receives the payment. Splitting up the compensation into different
components for the purpose of payment of interest under Section 34
was not in the contemplation of the legislature when that section was B
framed or enacted.

These Appeals are disposed of with the aforementioned directions. There
shall be no order as to costs.

R.P. Appeals disposed of.