Supreme Court: In appeals challenging the correctness of common judgment and order passed by Punjab and Haryana High Court on 1-06-2016 raising the compensation amount to Rs 493 per square yard on date of notification under Section 4 of Land Acquisition Act, 1894 (‘1894 Act’), the Division Bench of Vikram Nath* and Ahsanuddin Amanullah, JJ. found the annual increase at the rate of 8% just and proper, as compared to 15% increase awarded by the High Court, due to a huge gap of 11 years.
The cumulative annual increase at the rate of 15% for a period of 11 years was the basis for such increase by the High Court, and the base figure was taken from Reference Court order dated 30-08-2000 related to acquisition of land of the same village for 1989, and the 11 years period being counted from 1989 to 2000.
Factual Background
A notification under Section 4 of the 1894 Act was issued on 10-11-2000 for acquisition of land measuring 80 Kanals, 11 Marlas for the appellant’s benefit against which, no objections were filed, therefore, declaration under Section 6 of 1894 Act was issued on 19-03-2001. The Land Acquisition Collector/Sub Divisional Officer (civil), duly authorized to give award started the process on 25-09-2001 vide notices under Section 9, parties led evidence, and award on 12-10-2001 determined the rate of compensation at Rs 3.5 lakhs per acre, equivalent to Rs. 2,187.5 Ps per Marla, or Rs 72.31 per square yard being the market value prevailing on the date of notification under Section 4 of 1894 Act.
The factors considered by the Land Acquisition Collector while determining the rate of compensation included no objection against area and classification of land in question, absence of any specific claim of market value by the landowners, land being agricultural land, Divisional Level Committee report finding market rate as Rs 3,50,000 per acre based on market rates provided by District Collector and material provided by local revenue regarding sale deeds.
The respondent preferred enhancement of compensation under Section 18 of 1894 Act claiming it to be Chahi (irrigated) land used for residential purposes situated near sector carved by the Haryana Urban Development Authority, near government school and college, having market value of not less than Rs 30 lakhs. The Reference Court (Additional District Judge) allowed the reference and determined market value at Rs 6,310 per Marla equivalent to Rs 208.59 per square yard for 12% increase per annum for 11 years. Aggrieved by the said enhancement, both the parties appealed before the High Court which granted annual increase at the rate of 15% on cumulative basis relying on ONGC Ltd. v. Rameshbhai Jivanbhai Patel, (2008) 14 SCC 745, which the Supreme Court while entertaining a Special Leave Petition granted interim stay on 11-11-2016 requiring 50% deposit by the appellant for compensation determined by the High Court and the amount was subsequently withdrawn.
Fair and Just Compensation for Land Acquisition
The Court considered what would be a fair and just compensation to do justice between the parties so that landowners get a fair and reasonable compensation for losing their land, balancing the State exchequer by not awarding an amount exceeding the market value not to put additional burden on the State entity.
The Court noted the absence of date of notification under Section 4 of 1894 Act to facilitate determination of market value, and that the sale deeds referred to by the appellant could not be taken as exemplars to determine market value. Therefore, the Court turned towards the Reference Court order dated 30-08-2000 relating to acquisition in the year 1989 as relied upon by the Reference Court and the High Court in the instant matter. It further highlighted that the Reference Court applied 12% flat rate increase, while the High Court applied 15% cumulative.
The Court perused the cases referred to and relied upon by the parties to determine compensation. In Rameshbhai Jivanbhai Patel (supra) as referred to by the High Court, the Court explained that the same dealt with compensation based on annual increase with cumulative effect, but had put a caution that such annual increase can be taken only for 4-5 years and that beyond that it would be unsafe to uniformly apply the same rate for increase and that too with cumulative effect.
Further in Ashrafi v. State of Haryana, (2013) 5 SCC 527, the Court had considered several inssues including the issue of applying annual increase cumulatively for determining just compensation, and the law laid in Rameshbhai Jivanbhai Patel (supra) and others, and applied formula of 12% annual increase cumulatively for a period of five years, base rate being of the year 1987 whereas the acquisition in question being of 1993. With reference to order dated 22-08-2014 in Narbadi Devi v. State of Haryana, which granted annual increase at 12% to be cumulative. In the recent case of Ramrao Shankar Tapase v. Maharashtra Industrial Development Corpn., (2022) 7 SCC 563 awarded annual increase cumulatively at the rate of 12% for a period of three years as against the 10% rate applied by the High Court. Even in State of Haryana v. Subhash Chander, (2023) 5 SCC 435, the Court held that rate of annual increase could vary from 8% to 15% per year.
Considering the consistent view of the Court while awarding annual increase for determination of just compensation varying from case to case, period to be applied being a major factor for consideration. The Court highlighted that the period was 11 years in the instant matter, pretty large as compared to the cases referred above.
The Court expressed that “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 of 3-5 years, it could have been 10% or 12%.” The Court did not find the 15% increase to be justified for an 11-year period as awarded by the High Court in the impugned order and considered the 8% increase as just and proper, roughly being equivalent to compensation awarded by the Reference Court.
The Court therefore allowed the instant appeal and directed the Land Acquisition Collector to calculate the compensation at the rate decided by the Court, and to adjust the same with the amount already deposited.
[Central Warehousing Corpn. v. Thakur Dwara Kalan ul-Maruf Baraglan Wala, 2023 SCC OnLine SC 1361, decided on 19-10-2023]
Judgment authored by: Justice Vikram Nath
Know Thy Judge | Supreme Court of India: Justice Vikram Nath
Leading Judgment