CHAKASversusSTATE OF PUNJAB & ORS.

                        [2011) 10 S.C.R. 618


A.                             CHAKAS
                                   v.
                    STATE OF PUNJAB & ORS.
                  (Civil Appeal No. 7258 of 2011)
                         AUGUST 24, 2011
B
      [DALVEER BHANDARI AND DEEPAK VERMA, JJ.]

        LAND ACQUISITION ACT, 1894:

c       s.23 - Compensation for the land acquired -
  Computation of - Base price - Comparable sale deed - Held:
  Market value has to be assessed as at the time of s.4
  notification - Appropriate sale deed would be Ext. PB as it is
  touching the issuance of s.4 notification and is for more than
0 20 bighas of land - Further, tax department granted a
  clearance certificate with regard to it - It is a genuine and bona
  fide transaction - As per this sale deed the base price of the
  land acquired is fixed at Rs. 4,08,0001- per acre.

       s.23 - Market value of land acquired - Deductions -
E Held: The land was reserved for industrial purposes and 80-
  85 industries are already located in the adjoining area - The
  bulk of the land has been given to the allottee-beneficiary for
  setting up its own industry and other infrastructure thereon -
  Thus, the land likely to be used towards the roads, sewage
F and other such facilities would be minimum as most of the
  vacant land would be utilized by the allottee for its own benefits
  - Therefore, a deduction of 10% from the base price would
  be reasonable - Reference court directed to calculate the
  amount of compensation accordingly and pay the same to the
G appellants and all such other land owners whose lands have
  been acquired - Appeal - Benefit extended to similarly
  situated non-appellants also.

        The State Government-respondent No. 1 in CA No.
H                                618
       CHAKAS v. STATE OF PUNJAB & ORS.                  619


7258 of 2011, for the purposes of setting up of an             A
Industrial Focal Point, issued a notification u/s 4 of the
Land Acquisition Act, 1894 on 13.11.1992 for acquiring
550.03 acres of lands of four villages. The Land
Acquisition Officer pronounced the award fixing different
rates for the lands of four villages. However, the reference   8
court held that the land owners of all the four villages
were entitled to receive compensation at a uniform rate
of Rs. 1.5 lakhs per acre. The Single Judge of the High
Court enhanced the compensation to Rs.2.75 lakhs per
acre. Both the land owners and the beneficiary-                C
respondent no. 3, filed the appeals.
    The question for consideration before the court was:
what would be proper, adequate, just and reasonable
compensation to be awarded to the land owners for the
land acquired by the respondent State?                         D
    Allowing the appeals filed by the land owners and
dismissing those filed by the beneficiary, the Court
      HELD: 1.1 From the evidence of P.W 31, Patwari of
Halqa of all the four villages, it is clearly made out that all E
these villages are adjoining each other and form a
compact block. He has further admitted that more than
80 to 85 industries near and adjoining the acquired land
are already running and doing their business since long.
The area acquired has been reserved for industrial F
purposes. He has further deposed that if the land had not
been acquired, many factories would have sprung up in
the acquired land. His evidence is corroborated by other
government officials, who had appeared before the
reference court. It is also not in dispute that the said land G
is situated on the Ambala-Chandigarh Highway. From the
evidence adduced by respondent Nos. 1 and 2, it cannot
be disputed that it was a valuable land for the land
owners and it had great potential. Obviously, in 1992, the
                                                                H
    620    SUPREME COURT REPORTS              [2011) 10 S.C.R.

A market value of the same, at the time of issuance of
  notification u/s 4 of the Act, would be much more than
  what has been awarded to them by the impugned
  judgment. [para 12-13) [626-B-F]

       1.2 The appellant, to prove his case with regard to
8 market value of the land, had produced many sale deeds,
  but the most appropriate sale deed touching the
  issuance of notification u/s 4 is Ext.P .8. The said land is
  with regard to the land almost abutting the acquired land.
  The total area of the land so purchased was 20 Bighas
C and 8 biswas. Before execution of the sale deed, an
  Agreement to Sell dated 30.10.1992 (Ext. P.45) was
  executed between the vendor and the vendee which was
  very close to the s.4 notification dated 13.11.1992 in the
  instant case. The said land is almost abutting the
D acquired land. As required under the law, permission
  was sought from the Income Tax Department which
  granted a Clearance Certificate (Ext. P.44). It can safely
  be assumed to be a genuine and bona-fide transaction
  between two parties, who had nothing to do with the
E acquisition of land of the appellant. The whole
  transaction executed under the Sale deed (Ext. P.8) fully
  proves and establishes the case of the appellant. As per
  this sale deed, the base price of the land would come to
  Rs. 4,08,000/- per acre. Therefore, the correct base price
F of the land acquired would be Rs. 4,08,000/- per acre.
  [para 14-16) [626-G-H; 627-C-H; 628-A]
      Shri Rani M. Vijayalakshmamma Rao Bahadur Vs.
  Collector of Madras (1969) 1 MLJ (SC) 45; and General
  Manager, Oil and Natural Gas Corporation Ltd. Vs.
G Rameshbhai Jivanbhai Patel and Anr. 2008 (11) SCR 927     =
  (2008) 14 sec 745 - relied on.
       2.1 The reference court committed a grave error in
    deducting 50% of the value assessed by it, towards
H
      CHAKAS v. STATE OF PUNJAB & ORS.               621


development charges and further reduced the said A
amount for the reasons not assigned by him. The single
Judge has enhanced the amount of compensation but
committed an error in fixing the base price as 2,75,000/-
per acre for the acquired land, applying the doctrine of
reasonable cut to the average price worked out by him B
at Rs.3,42,527/- per acre. This Court does not approve of
the reasonings adopted either by the reference court or
by the High Court. How much amount is to be deducted
from the base price would depend on various factors.
[para 19] [630-F-G; 631-A]                                c
     2.2 In the case in hand, the bulk of the land that is
almost 525 acres has been given to respondent No.3, the
Corporation for setting up its own industry and other
infrastructure thereon. Thus, the lands likely to be used
towards roads, sewage and other such facilities would be 0
minimum as most of the vacant land would be utilised by
respondent No. 3 for its own benefits. Needless to say,
once the industry is set up, it would be for the financial
benefit and gain of respondent No.3 year after year. Thus,
looking to the matter from all angles, respondent No. 3- E
Corporation would be a great beneficiary at the cost of
depriving the appellant-land owner of his sole livelihood
of agriculture. [paras 20 and 21) [631-B-C]

     2.3 Therefore, it is neither desirable nor proper to F
deduct more than 10% of the amount from the base price
fixed by this Court at Rs. 4,08,000/-. On the amount, so
arrived at, the appellant would be entitled for statutory
benefits as mandated under the amended provisions of
the Act. [paras 22 and 24) [631-D; 633-C-D]               G

    Atma Singh (D) throu-gh Lrs. and Ors. Vs. State of
                                         =
Haryana and Another. 2007 (12) SCR 1120 (2008) 2 SCC
568 - relied on.

    3. The reference court is directed to recalculate the   H
      622        SUPREME COURT REPORTS             (2011) 10 S.C.R.


C..   amount of compensation to be awarded to the appellants
      and all such other land owners whose lands have been
      acquired, in the light of the direction as contained in this
      judgment and to pay them the remainder amount
      accordingly. [para 25] [633-E]
B
                           Case Law Reference:
            (1969) 1 MLJ (SC) 45      relied on           para 17
            2008 (11) SCR 927         relied on           para 18
c           2007 (12) SCR 1120        relied on           para 23
          CIVIL APPELLATE JURISDICTION : Civil Appeal No.
      7258 of 2011.

          From the Judgment & Order dated 03.05.2006 of the High
D     Court of Punjab & Haryana at Chandigarh in R.F.A. No. 148 of
      2000.
                                    WITH
      C.A. Nos. 7259, 7260, 7261, 7262, 7263, 7264, 7265, 7266,
E     7267, 7268, 7269, 7270, 7271, 7272, 7273-7304, 7305, 7306-
      7315, 7316, 7317, 7318-7322 of 2011.

           L. Nageswara Rao, Navin Chawla, Gaurav Kaushi, Tushar
      Singh, Gagan Gupta, Pradeep Gupta, Dr. Rajeev B. Masodkar,
F     A.K. Sh~gi, Parinav Gupta, K.K. Mohan for the Appellant.

           Neeraj Kr. Jain, Anil Grover, MG, Kuldip Singh, Ajay Pal,
      Sanjay Singh, Umang Shankar, Ugra Shankar Prasad, Kamal
      Mohan Gupta, Pawan Sharma (for B. Vijayalakshmi Menon) for
      the Respondents.
G
            The Judgment of the Court was delivered by

            DEEPAK VERMA, J. 1. Leave granted.

          2. Question as to what would be proper, adequate, just and
H     reasonable compensation to be awarded to the appellant for
             I
       CHAKAS v. STATE OF PUNJAB & ORS.                        623
              [DEEPAK VERMA, J.]

the land acquired by the respondent State, has once again              A
cropped up for our consideration in this and the connected
appeals.

      3. In this appeal, the land owner, whose land has been
 acquired by the State of Punjab is before us for enhancement
                                                                       8
 of compensation awarded to him by the High Court and the
 beneficiary respondent No. 3 Mis. Nahar Industries Infrastructure
 Corporation Ltd. (hereinafter shall be referred to as 'the
 Corporation') has preferred separate appeals for reduction of
the-compensation awarded to the appellant by the High Court.           C
Since both set of appeals arise out of the common judgment
and order pronounced by the learned Single Judge in Regular
First Appeal No. 1072 of 1999 in the High Court of Punjab and
Haryana at Chandigarh on 03.05.2006, they have been heard
analogously and are being disposed of by this common
judgment and order.                                                    D

     4. It may be noted that for the sake of brevity and
convenience, facts of appeal arising out of SLP(C) No.1578
of 2007 have been taken into account.
                                                                       E
    5. Short facts, shorn of unnecessary details are mentioned
herein below:
                                                                           •
       Respondent No. 1 - State of Punjab, for the purposes of
setting up of an Industrial Focal Point in Tehsil Rajpura District
Patiala issued a notification on 13.11.1992 under Section 4 of         F
the Land Acquisition Act (hereinafter shall be referred to as 'the
Act') for acquiring 550.03 acres in villages Lalru, Jalalpur, Lehli,
and Hassanpur of the aforesaid Tehsil and District. The public
purpose mentioned in the same was for Industrial Focal Point.
Subsequently, by issuance of another notification under Section        G
6 of the Act, on 08.04.1993, the aforesaid land was declared
to have been acquired. Thereafter, the Land Acquisition
Collector started the process of computing the amount of
compensation to be awarded to the land owners. The Land
Acquisition Officer pronounced his award on 12.9.1994 fixing           H
        624     SUPRe:ME COURT REPORTS                (2011] 10 S.C.R.

    A different rates per acre for the lands of four villages. The
      appellant and other land owners feeling highly dissatisfied with
      the amount of compensation so assessed by the Land
      Acquisition Officer, preferred references under Section 18 of
      the Act to the Civil Court at Patiala.
    B
           6. The matter was accordingly referred to the Additional
      District Judge, Patiala for working out the amount of
      compensation to be awarded to the appellant and other such
      similarly situated appellants. Both the parties led evidence
      before the Reference Court. On the basis of the evidence so
    C adduced by the parties, the Reference Court was pleased to
      assess the value of the entire acquired land in four villages at
      a uniform rate and consequently held that the land owners were
      entitled to receive compensation of Rs. 1.5 lakh per acre,
      besides the individual claims made by land owners with regard
    D to super structure, trees and other facilities available in their
      respective lands were also taken into consideration. The land
      owners were also held entitled for the statutory benefits as per
      the amended provisions of the Act.

    E       7. Still not being satisfied with the amount of compensation
        so awarded to them, the land owners preferred appeals before
        the High Court under Section 54 of the Act, whereas the
•       beneficiary respondent No. 3 herein the Corporation also
        preferred appeals purportedly, for reduction of the
    F   compensation awarded to the appellant. The Learned Single
        Judge heard the matters together and disposed of by the
        common judgment and order, which is being impugned, once
        again by both sides on a variety of grounds. --

           8. We have accordingly heard Mr. L. Nageswara Rao,
    G Senior Advocate ably assisted by M/s Navin Chawla, Gaurav
      Kaushik, Tushar Singh praying for further enhancement of
      compensation and Mr. Anil Grover, AAG, Punjab with Mr. Kuldip
      Singh and Mr. Neeraj Kumar Jain, Senior Advocate with Mr.
      Sanjay Singh Advocate for the respondent Corporation at
    H length and perused the records.
        CHAKAS v. STATE OF PUNJAB & ORS.                          625
               [DEEPAK VERMA, J.]

   9. Certain dates material for deciding the said appeal are           A
mentioned hereinbelow:

1. Notification under Section 4     Issued on    Fro acquisition of
   of the Section                   13.11.1992   550.03 acres of land
2.   Notification under Section 6   Issued on                           B
     of the Section                 08.04.1993
3. Award of Land Acquisition        Passed on
   Officer                          12.09.1994
4. Award of the Reference           Dated        Amoun,t'. compensa-
   Court                            07.12.1998   tion at . 1.50 lakhs   c
                                                 per acre.
5. Judgment and order of the        Pronounced fixing the rate of
   High Court                       on         compensation at Rs.
                                    03.05.2006 2.75 lakhs per acre.

     10. Shri L. Nageswara Rao, Senior Advocate appearing D
for the appellant contended before us that the High Court
committed a grave error in computation of the base price on
the strength of the average price worked out from the sale
deeds Exh. P.1, P.2, P.3, P.8, and P.15 and further committed
another grave error in deducting amounts from the same. E
According to him, in the process, the amount of compensation
awarded is much lower than what should have been awarded.
On the other hand,· 1earned counsel for respondent Mr. Anil
Grover, AAG, Punjab and Mr. Neeraj Kumar Jain, Senior
Advocate appearing for respondent No.3 submitted that the F
appellant has only been able to prove the market value of the
land from the sale deed at Rs. 2.85 lacs per acre. He further
contended that there was no mistake committed by the Court
in taking out the average price for working out the amount of
compensation to be awarded to the appellant.                  G

     11. Learned counsel for respondent No. 3 Mr. Neeraj
Kumar Jain strongly contended before us that the Corporation
has preferred appeals for deduction of the amount, primarily
on the ground that more deductions should have been made
                                                                        H
    626      SUPREME COURT REPORTS                    [2011] 10 S.C.R


A   than what was allowed by the High Court and in any event nc
    case has been made out for further enhancement of amount 01
    compensation, which is already exorbitant and higher.

         12. First of all, we would like to deal with the location and
    potentiality of the acquired land. From the evidence of P.W 31
8
    Charanjit Singh, Patwari of Halqa of all the four villages, it is
    clearly made out that all these villages are adjoining each other
    and form a compact block. He has further admitted that more
    than 80 to 85 industries near and adjoining the acquired land
C   are already running and doing their business since long. The
    area acquired has been reserved for industrial purposes. He
    has further deposed that if the land had not been acquired, many
    factories would have sprung up in the acquired land. The details
    of the industries which are already running in vicinity have been
    given vividly by him. It is also not in dispute that the said land is
D   situated on the Ambala-Chandigarh Highway.

          13. The evidence of other government officials, who had
    appeared before the Reference Court, reflects that the land
    acquired have great Industrial potential as more than 80-85 big
E   industries have already set up their factories in the close vicinity
    to the acquired land. They have admitted that the acquired land
    is situated on the main Ambala-Chandigarh Highway. From the
    evidence adduced by respondent Nos. 1 ·and 2, it cannot be
    disputed that it was a valuable land for the land owners and it
F   had great potential. Obviously, in 1992, the market value of the
    same, at the time of issuance of notification under Section 4
    of the Act, would be much more than what has been awarded
    to them vide the impugned judgment.

        14. However, the question which still remains for
G   consideration is, on what basis, should the amount of
    compensation is to be worked out. The appellant to prove his
    case with regard to. market value of the land had produced
    many sale deeds but only relevant following five sale deeds are
    taken into consideration:
H
        CHAKAS v. STATE OF PUNJAB & ORS.                        627
               [DEEPAK VERMA, J.]

Exhibit No. Dated of sale deed         Price paid Price per acre        A
P.1         16.08.1990                 1,20,000   3,02,157
 P.2           16.08.1990              1,50,000      3,51,219
 P.3           16.08.1990              1,50,000      3,51,219
                                                                        B
 P.8           20.04.1993              17,34,000    4,08,000
 P.15          04.06.1990              9,75,000     2,99,041

     15. The appellant had also examined the vendors of the
aforesaid sale deeds to show the genuineness and correctness C
of the same. The most appropriate sale deed touching the
issuance of notification under Section 4 is Exh. P.8. The base
price of the land per acre according to this comes to Rs.
4,08,000/-. The total area of the land so purchased was 20
Bighas and 8 biswas. Before execution of the sale deed, an D
Agreement to Sell dated 30.10.1992 (Exh. P.45) was executed
between the vendor and vendee. As required under the law,
permission was sought from the Income Tax Department which
granted a Clearance Certificate Exh. P.44.
       16. It is also pertinent to mention here that the land so sold   E
 covered under (Exh.P.8) sale deed neither belonged to any of
 the land owners nor they had any interest whatsoever in the said
 deed. Thus, it can safely be assumed that it was a genuine and
 bona-fide transaction between two parties, who had nothing to
do with the acquisition of land of the appellant. It was not            F
executed for the purposes of creating evidence as Agreement
to sell (Exh. P.45) is dated 30.11.1992, before the issuance of
 Notification under Section 4 of the Act. On the said date, it could
not have been imagined that the adjoining land is going to be
acquired shortly. The said land is almost abutting the acquired         G
land. It is also manifest that the Agreement dated 13.10.1992
is very close to the notification issued on 13.11.1992 under
Section 4 of Act. The whole transaction executed under the
Sale deed Exh. P.8 fully proves and establishes the case of the
appellant. As per this sale deed, the base price of the land            H
    628      SUPREME COURT REPORTS                   [2011) 10 S.C.R.


A   would come to Rs. 4,08,000/- per acre. According to us, the
    correct base price would be Rs. 4,08,000/- per acre.

         17. It is profitable to refer to the following judgment of this
    Court on this issue. (1969) 1 MLJ (SC) 45 Shri Rani M.
8   Vijayalakshmamma Rao Bahadur Vs. Collector of Madras.
    Relevant para 2 is reproduced hereinbelow:

          "It seems to us that there is substance in the first contention
          of Mr. Ram Reddy. After all when land is being
          compulsorily taken away from a person he is entitled to say
c         that he should be given the highest value which similar land
          in the locality is shown to have fetched in a bona fide
          transaction entered into between a willing purchaser and
          a willing seller near about the time of the acquisition. It is
          not disputed that the transaction represented by Ex Rule
D         19 was a few months prior to the notification under Section
          4, that it was a bona fide transaction and that it was
          entered into between a willing purchaser and a willing
          seller. The land comprised in the sale deed is 11 grounds
          and was sold at Rs. 1951 per ground. The land covered
E         by Rule 27 was also sold before the notification but after
          the land comprised in Ex. Rule 19 was sold. It is true that
          this land was sold at Rs. 1096 per ground. This, however,
          is apparently because of two circumstances. One is that
          betterment levy at Rs.500/- per ground had to be paid by
F         the vendee and the other that the land comprised in it is
          very much more extensive, that is about 93 grounds or so:
          Whatever that may be, it seems to us to be only fair that
          where sale deeds pertaining to different transactions are
          relied on behalf of the Government, that representing the
          highest value should be preferred to the rest unless there
G
          are strong circumstances justifying a different course. In
          any case we see no reason why an average of two sale
          deeds should have been taken in this case."

        18. The said judgment has been considered by this Court
H   reported in (2008) 14 SCC 745 General Manager, Oil and
      CHAKAS v. STATE OF PUNJAB & ORS.                       629
             [DEEPAK VERMA, J.]
Natural Gas Corporation Ltd. Vs. Rameshbhai Jivanbhei Patel         A
and Anr. wherein the Division Bench has considered this
aspect of the niatter succinctly in para 13, 14 and 15
reproduced hereinbelow:

           13) Primarily, the increase in land prices depends       B
    on four factors: situation of the land, nature of development
    in surrounding area, availability of land for development in
    the area, and the demand for land in the area. In rural
    areas, unless there is any prospect of development in the
    vicinity, increase in prices would be slow, steady and          C
    gradual, without any sudden spurts or jumps. On the other
    hand, in urban or semi-urban areas, where the
    development is faster, where the demand for land is high
    and where there is construction activity all around, the
    escalation in market price is at a much higher rate, as
    compared to rural areas. In some pockets in big cities, due     D
    to rapid development and high demand for land, the
    escalations in prices have touched even 30% to 50% or
    more per year, during the nineties.

            14) On the other extreme, in remote rural areas         E
    where there was no chance of any development and hardly
    any buyers, the prices stagnated for years or rose
    marginally at a nominal rate of 1% or 2% per annum. There
    is thus a significant difference in increases in market value
    of lands in urban/semi-urban areas and increases in             F
    market value of lands in the rural areas. Therefore, if the
    increase in market value in urban/semi-urban areas is
    about 10% to 15% per annum, the corresponding
    increases in rural areas would at best be only around half
    of it, that is, about 5% to 7.5% per annum. This rule of        G
    thump refers to the general trend in the nineties, to be
    adopted in the absence of clear and specific evidence
    relating to increase in prices. Where there are special
    reasons for applying a higher rate of increase, or any
    specific evidence relating to the actual increase in prices,
                                                                    H
    630      SUPREME COURT REPORTS                (2011) 10 S.C.R.


A         then the increase to be applied would depend upon the
          same.

               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
B
        in previous years (as evidenced by safe transactions or
        acquisitions), where there is no evidence of any
        contemporaneous safe transactions or acquisitions of
        comparable lands in the neighbourhood. The said method
        is reasonably safe where the relied-on safe transactions/
c       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
D       gap is larger. Fo~ example, for determining the market
        value of a land acquired in 1992, adopting the annual
        increase method with reference to a safe or acquisition in
        1970 or 1980 may have many pitfalls. This is because,
        over the course of years, the "rate" of annual increase may
E       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."
F      19. The Reference Court committed a grave error in
  deducting 50% of the value assessed by him, towards
  development charges and further reduced the said amount for
  the reasons not assigned by him. The learned Single Judge
  vide the impugned judgment has enhanced the amount of
  compensation but committed an error in fixing the base price
G as 2, 75,000/- per acre for the acquired land, applying the
  doctrine of reasonable cut to the average price worked out by .
  him at Rs.3,42,527/- per acre. We do not approve of the
  reasonings adopted either by the reference Court or by the High
  Court. How much amount is to be deducted from the base price
H
       CHAKAS v. STATE OF PUNJAB & ORS.                       631
              [DEEPAK VERMA, J.]

would depend on various factors.                                      A
     20. As mentioned hereinabove, in the case in hand the bulk
of the land that is almost 525 acres has been given to
respondent No.3, the Corporation for setting up its own industry
and other infrastructure thereon. Thus, the lands likely to be used
towards roads, sewage and other such facilities would. be             8
minimum as most of the vacant land would be utilised by
respondent No. 3 for its own benefits.
      21. Needless to say, once the industry is set up, it would
be for the financial benefit and gain of respondent No.3 year         c
after year. Thus, looking to the matter from all angles,
respondent No. 3 - Corporation would be a great beneficiary
at the cost of depriving the appellant - land owner of his sole
livelihood of agriculture.
    22. Therefore, it is neither desirable nor proper to deduct D
more than 10% of the amount in the base price fixed by us at
Rs. 4,08,000/-. We accordingly do so. ·
     23. The question with regard to the deduction to be made
also stands settled by this Court in Atma Singh (dead) through
Lrs. and Ors. Vs. State of Haryana and Another. (2008) 2 SCC          E
568. The relevant portion thereof are reproduced herein below:
    "14) The reasons given for the principle that price fetched
    for small pots cannot form safe basis for valuation of large
    tracts of land, according to cases referred to above, are
    that substantial area is used for development of sites like F
    laying out roads, drains, sewers, water and electricity lines
    and other civic amenities. Expenses are also incurred in
    providing these basic amenities. That apart it takes
    considerable period in carving out the roads making
    sewers and· drains and waiting for the purchasers. G
    Meanwhile the invested money is blocked up and the return
    on the investment flows after a considerable period of time.
    In order to make up for the area of land which is used in
    providing civic amenities and the waiting period during
    which the capital of the entrepreneur gets locked up a H
    632       SUPREME COURT REPORTS                   [2011] 10 S.C.R.


A         deduction from 20% onward, depending upon the facts of
          each case, is made.
            15) The question to be considered is whether in the
            present case those factors exist which warrant a deduction
          . by way of allowance from the price exhibited by the
B           exemplars of small plots which have been filed by the
            parties. The land has not been acquired for a housing
            colony or government office or an institution. The land has
            been acquired for setting up a sugar factory. The factory
            would produce goods worth many crores in a year. A sugar
c           factory apart from producing sugar also produces many by-
            products in the same process. One of the by-products is
            molasses, which is produced in huge quantity. Earlier, it
            had no utility and its disposal used to be a big problem.
            But now molasses is used .for production of alcohol and
D           ethanol which yield lot of revenue. Another by-product
            begasse is now use for generation of power and press
            mud is utilized in manure. Therefore, the profit from a sugar ·
            factory is substantial. Moreover, it is not confined to one
            year but will accrue every year so iong as the factory runs.
E           A housing board does not run on business lines. Once
            plots are carved out after acquisition of land and are sold
            to public, there is no scope or earning any money in future.
            An industry established on acquired land, if run efficiently,
            earns money or makes profit every year. The return from
F           the land acquired for the purpose of housing colony, or
            offices, or institution cannot even remotely be compared
            with the land which has been acquired for the purpose of
            setting up a factory or industry. After all the factory cannot
            be set up without land and if such land is giving substantial
            return, there is no justification for making any deduction
G           from the price exhibited by the exemplars even if they are
            of small plots. It is possible that a part of the acquired land
            might be used for construction of residential colony for the
            staff working in the factory. Nevertheless, where the
            remaining part of the acquired land is contributing to
H
         CHAKAS v. STATE OF PUNJAB & ORS.                   633
                [DEEPAK VERMA, J.] ·

       production of goods yielding good profit, it would not be    A
       proper to make a deduction in the price of land shown by
       the exemplars of small plots as the reasons for doing so
       assigned in various decisions of this court'are not
       applicable in the case under consideration."
     24. In the light of the aforesaid contention and taking cue B
from the settled position of law decided by this Court in the
aforesaid matters, we are of the firm opinion that the base price
has to be fixed @ Rs. 4,08,000/- per acre. Keeping in mind
that more than 525 acres has been given to respondent No. 3
- Corporation, which in turn has set up its factory, a deduction C
of 10% on the aforesaid amount would be reasonable.
Needless to say on the aforesaid amount, the appellant would
be entitled for statutory benefits as mandated under the
amended provisions of the Act. This appeal and the connected
appeals filed by land owners are hereby allowed and the D
appeals filed by respondent No.3 are dismissed .
     . 25. The Reference Court is hereby directed to recalculate
the amount of compensation to be awarded to the appellants
and all such other land owners whose lands have been acquired
in the light of the direction as contained hereinabove and to pay   E
them the remainder amount within a period of 2 months from
the date of communication of this order.
     26. For the foregoing reasons, this and the connected
appeals preferred by land owners are hereby allowed and
those filed by the Corporation are dismissed with costs             F
throughout. Counsel's fee quantified at Rs. 10,000/- in each
Appeal.

R.P.                                     Appeals disposed of.