MALA ETC. ETC.versusSTATE OF PUNJAB AND OTHERS

                  [2023] 11 S.C.R. 121 : 2023 INSC 735



                             CASE DETAILS

                            MALA ETC. ETC.
                                      v.
                  STATE OF PUNJAB AND OTHERS
                  (Civil Appeal Nos. 3992-4000 of 2011)
                            AUGUST 17, 2023
       [BELA M. TRIVEDI AND DIPANKAR DATTA, JJ.]

                              HEADNOTES

        Issue for consideration : Whether the order passed by the High Court
conferring the total amount of compensation payable to the land owners at
Rs. 2,400/- per marla for the land Chahi, for the remaining kinds of land for
the village Purhiran, and for all kinds of land for village Sutehri, along with
all statutory benefits available under the Land Acquisition Act, by applying
one third cut on the assessed market value of Rs. 3,000/- per marla, towards
development charges; and by not relying upon the sale deeds executed for
the shops prior to the date of acquisition, warrants any inference u/Art. 136
of the Constitution.
     Land Acquisition: Compensation – Award of – Assessment of
market value of the lands by the High Court – Deduction of one third
amount towards development charges – Correctness of:
       Held : High Court considered the relevant factors prescribed under the
Act – It duly considered all the sale instances in the light of the evidence on
record and relied upon sale instances executed in close proximity to the date
on which the lands in question were acquired – Assessment of market value
so determined after imposing cut of one third towards development charges
was rightly done, thus, does not warrant any interference. [Paras 10 and 15]
      Land Acquisition : Compensation – Award of – Deduction towards
development charges – Determination of:
       Held : Courts should keep in mind the nature of land, area under
acquisition, the development of land and its extent of development, the purpose
                                      121
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of acquisition etc – While determining the market value of large chunk of
land, the value of smaller pieces of land could be taken into consideration,
however, after making appropriate deduction in the value of lands or setting
apart land required for carving out roads, leaving open spaces, plotting out
smaller plots etc – Percentage of deduction or the extent of area required
to be set apart has to be assessed by the courts having regard to the size,
shape, situation, user etc. of the lands acquired – It is essentially a kind of
guess work the courts are expected to undertake. [Para 11]
      Land Acquisition – Market value of the land – Determination
of – Guiding principles:
       Held : For ascertaining the market value of the land, its existing
condition, location and user, its proximity to residential, commercial or
industrial area etc. are the factors to be considered – Size and nature of
the lands acquired and size and nature of the lands in respect of which sale
instances are produced, are also an important aspects – Sale instances of
small piece of land cannot form reasonable basis to determine the market
value of large chunk of land, unless suitable deductions are made in respect
of development charges – Deductions to be made would depend on the
nature of land, its topography, special features and state of its development
so as to make it suitable for the purpose for which it is acquired. [Para 8]
     Constitution of India: Art. 136 – Extra-ordinary jurisdiction
under – Exercise of:
      Held : Under Art. 136, plenary jurisdiction exercisable on assuming
appellate jurisdiction has been conferred upon the Supreme Court –
However, it is an extraordinary jurisdiction which must be exercised in
exceptional circumstances with great care and caution. [Para 7]

       LIST OF CITATIONS AND OTHER REFERENCES

     Haryana State Industrial Development Corporation vs. Pran
Sukh and Others (2010) 11 SCC 175; Chimanlal Hargovinddas v.
Special Land Acquisition Officer, Poona and Anr. (1988) 3 SCC 751 :
[1988] 1 Suppl. SCR 531; Lal Chand v. Union of India and Anr. (2009)
15 SCC 769 : [2009] 13 SCR 622; Kasturi and Ors. v. State of Haryana
(2003) 1 SCC 354 : [2002] 4 Suppl. SCR 117; ig. Sahib Singh Kalha
        MALA ETC. ETC. v. STATE OF PUNJAB AND OTHERS                           123


and Ors vs. Amritsar Improvement Trust and Others AIR (1982) SC
940 – referred to.

       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3992-4000
of 2011.
      From the Judgment and Order dated 17.08.2010 of the High Court
of Punjab and Haryana at Chandigarh in CWP Nos.20433, 20318, 20319,
20320, 20321, 20329, 20330, 20333 OF 2009 and CWP No.154 of 2010.
       With
       Civil Appeal Nos. 5218, 5219 and 10693 of 2011.
       Appearances:
       P. S. Patwalia, Sr. Adv., Yadav Narender Singh, Satish Kumar, Kamal
Mohan Gupta, Sudarshan Singh Rawat, S. Suni, Sunny Sachin Rawat, Ms.
Saakshi Singh Rawat, Ms. Pragati Neekhra, Aditya Bhanu Neekhra, Advs.
for the Appellants.
       Ajay Pal, Mayank Dahiya, Kuldip Singh, Advs. for the Respondents.

        JUDGMENT/ORDER OF THE SUPREME COURT

                                 JUDGMENT
       BELA M. TRIVEDI, J.
        1. This batch of 12 appeals arise out of the common judgment and order
dated 17.08.2010 passed by the High Court of Punjab and Haryana at Chandigarh
in Civil Writ Petition No.20433/2009 and others (in all 40 writ petitions). Before
the High Court, 14 writ petitions were filed by the land owners and 26 writ petitions
were filed by the Improvement Trust, Hoshiarpur. Vide the impugned judgment,
the High Court allowed the writ petitions filed by the land owners by enhancing the
market value of the acquired land to Rs.2,000/- per marla and granted all statutory
benefits available under the Land Acquisition Act 1894 (hereinafter referred to as
the said Act). The High Court also granted the benefit of Rs.400/- at 10% per marla
to the assessed amount for two years.Meaning thereby, the High Court accorded
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the total amount of compensation payable to the land owners at Rs.2,400/- per
marla along with all statutory benefits available under the Act. The High Court
dismissed the writ petitions filed by the Improvement Trust.
        2. The Hoshiarpur Improvement Trust (Respondent No.3 herein)
prepared a scheme for the purpose of Development Scheme (residential)
under Sections 24, 25 and 28 of the Punjab Town Improvement Act 1922
in an area admeasuring 291 kanals 7 marlas situated within the Municipal
limits in village Purhiran and Sutehri. Out of the said land, 230 kanals
9 marlas belonged to the Municipal Committee, Hoshiarpur, which
were taken over by the Respondent No.2, Land Acquisition Collector
(Improvement Trust) through negotiations. To acquire the rest of the
lands admeasuring 59 kanals 3 marlas, a notification under Section 36
of the Improvement Act was issued on 29.07.1994. After completing the
formalities of hearing the objections etc, the notification under Section 41
of the Improvement Act was issued on 10/14.07.1995. The respondent/
Land Acquisition Collector passed an award on 11.07.1997 awarding the
compensation at Rs 1.07 lakhs per acre for Chahi (Rs.668.75 per marla)
and Rs.1.10 lakh per acre for the remaining kinds of lands (Rs.687.50
per marla) for village Purhiran and Rs.1.50 lakh per acre for all kinds of
land (Rs.714.30 per marla) for the village Sutehri. The Land Acquisition
Collector also assessed Rs. 46,61,760/- for 52 structures/buildings standing
at the spot, Rs.70,300/- towards the cost of tube wells, Rs.30,069/- towards
fruit bearing trees and Rs.37,824.54 paisa towards compensation of rest
of the trees existing at the spot. The Land Acquisition Collector further
awarded the statutory benefits under the said Act. The Land owners being
dissatisfied by the award passed by the respondent (LAC) had preferred
reference under Section 18 of the said Act. The Reference Court/Tribunal
vide common award dated 17.04.2009 enhanced the compensation from
Rs.668.75/- per marla to Rs.1337.50 per marla for the land Chahi and
from Rs.687.50/- per marla to Rs. 1375/- per marla for remaining kinds of
land in village Purhiran, and enhanced the compensation from Rs.714.30
to Rs.1428.60 per marla for all kinds of land for the village Sutehri. The
Tribunal further awarded the statutory benefits under the Act.
       3. The petitioners/land owners being dissatisfied by the said award
passed by the Reference Court/Tribunal, preferred fourteen Civil writ
petitions before the High Court. The respondent Improvement Trust also filed
        MALA ETC. ETC. v. STATE OF PUNJAB AND OTHERS                      125
                    [BELA M. TRIVEDI, J.]

26 writ petitions challenging the said award passed by the said Tribunal. The
High Court disposed of all the writ petitions vide the impugned common
judgment as stated hereinabove.
       4. The Learned Senior Advocate Mr. P.S. Patwalia for the appellants
submitted that the lands in question were being used both for commercial
and residential purposes and the High Court had erred in not relying upon
the sale deeds executed for the shops prior to the date of acquisition, which
showed continuous rise in the prices.
      5. He further submitted that the High Court had committed gross error
in applying one third cut on the assessed market value of Rs.3,000/- per
marla, towards development charges though admittedly the lands acquired
were situated within the Municipal limits of the villages. The structures/
buildings standing thereon, clearly established that the acquired lands were
neither undeveloped nor underdeveloped lands. He relied upon the case of
Haryana State Industrial Development Corporation vs. Pran Sukh and
Others1 to buttress his submissions.
       6. The learned counsel for the respondent state however submitted
that when a large chunk of land is being acquired, a suitable deduction is
required to be made towards the development charges as per the settled legal
position, which has rightly been done by the High Court.
       7. In view of the above, let us see whether the impugned judgment
warrants any inference of this Court exercising extraordinary jurisdiction
under Article 136 of the Constitution of India. Undoubtedly, a plenary
jurisdiction exercisable on assuming appellate jurisdiction has been conferred
upon the Supreme Court under Article 136, nonetheless it is an extraordinary
jurisdiction which must be exercised in exceptional circumstances and that
too with great care and caution.
       8. The guiding principles for determining the market value of the land
at the date of the publication of the notification under Section 4(1) in view
of Section 23(1) of the said Act, are well settled by this Court in catena of
decisions. Accordingly, the determination of market value is the process
of predicting an economic event that is assuming a price a willing vendor
would offer to a willing purchaser in normal market conditions, but not an
event of anxious dealing at arm’s length nor a facade of sale nor fictitious
sale brought about in quick succession or otherwise to inflate the market
value. No doubt, for ascertaining the market value of the land, its existing
1   (2010) 11 SCC 175
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condition, location and user, its proximity to residential, commercial or
industrial area etc. are the major factors required to be considered. The size
and nature of the lands acquired and size and nature of the lands in respect
of which sale instances are produced on record, also would be an important
aspects in as much as normally the sale instances of small piece of land can
not form reasonable basis to determine the market value of large chunk of
land, unless suitable deductions are made in respect of development charges.
How much deductions should be made would depend on the nature of land,
its topography, special features and state of its development so as to make
it suitable for the purpose for which it is acquired.
       9. In the instant cases, the Tribunal after recording the submissions
of the counsels for the parties and recording the sale instances on record,
without any further analysis of evidence or discussion, abruptly enhanced
the market rates of the acquired lands to almost double the rates at which
the compensation was assessed by the Land Acquisition Collector. The
Tribunal enhanced the rates from Rs. 668.75/- to Rs. 1337.50/- per marla
for the land Chahi and from Rs. 687.50/- to Rs. 1375/- per marla for the
remaining kinds of land for the village Purhiran, and enhanced from Rs.
714.30/- to Rs. 1428.60/- per marla for all kinds of land for village Sutehri.
The said rates have been further enhanced by the High Court to Rs. 3,000/-
per marla for all the lands in question.
       10. Though the Learned Senior Counsel Mr. Patwalia had sought to
submit that the High Court had failed to consider the sale instance of the
shop executed in close proximity of the date on which the lands in question
were acquired, we do not find any merit in the said submission. The High
Court has duly considered all the sale instances in the light of other evidence
on record and after duly reasoning out as to why the other sale instances
should not be relied upon, has relied upon the sale instances dated 31.08.1992
(Ex. P/30) and dated 14.08.1992 (Ex. P/32) which were executed in close
proximity to the date on which the lands in question were acquired. The
solitary sale instance of shop has rightly been ignored, the other sale instances
more germane and relevant of the lands situated in nearby area of the area
of acquisition being available on record.
      11. The next submission made by Mr. Patwalia with regard to the
one third cut imposed by the High Court has also hardly any force. The
High Court after determining the market value of the lands acquired at
        MALA ETC. ETC. v. STATE OF PUNJAB AND OTHERS                      127
                    [BELA M. TRIVEDI, J.]

Rs. 3000/- per marla, has deducted one third amount therefrom towards the
development charges taking into consideration the settled legal position.
It is well settled position of law that while determining the deduction for
development charges, the courts should keep in mind the nature of land,
area under acquisition, whether the land is developed or not, if developed
to what extent, the purpose of acquisition etc. Though, it is true that while
determining the market value of large chunk of land, the value of smaller
pieces of land could be taken into consideration, however, after making
appropriate deduction in the value of lands or setting apart land required for
carving out roads, leaving open spaces, plotting out smaller plots etc. The
percentage of deduction or the extent of area required to be set apart has to
be assessed by the courts having regard to the size, shape, situation, user
etc. of the lands acquired. It is essentially a kind of guess work the courts
are expected to undertake.
     12. In Chimanlal Hargovinddas v. Special Land Acquisition Officer,
Poona and Anr.2, this Court held as under:
      “8. ……. The first two grounds are devoid of merit. It is common
      knowledge that when a large block of land is required to be valued,
      appropriate deduction has to be made for setting aside land for carving
      out roads, leaving open spaces, and plotting out smaller plots suitable
      for construction of buildings. The extent of the area required to be
      set apart in this connection has to be assessed by the court having
      regard to the shape, size and situation of the concerned block of land
      etc. There cannot be any hard and fast rule as to how much deduction
      should be made to account for this factor. It is essentially a question
      of fact depending on the facts and circumstances of each case. It does
      not involve drawing upon any principle of law.”
       13. In Lal Chand v. Union of India and Anr.3, this Court held that:
      “14. The “deduction for development” consists of two components.
      The first is with reference to the area required to be utilised for
      developmental works and the second is the cost of the development
      works. For example, if a residential layout is formed by DDA or
      similar statutory authority, it may utilise around 40% of the land area
2   (1988) 3 SCC 751
3   (2009) 15 SCC 769
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      in the layout, for roads, drains, parks, playgrounds and civic amenities
      (community facilities), etc.
      15. The development authority will also incur considerable expenditure
      for development of undeveloped land into a developed layout, which
      includes the cost of levelling the land, cost of providing roads,
      underground drainage and sewage facilities, laying water lines,
      electricity lines and developing parks and civil amenities, which would
      be about 35% of the value of the developed plot. The two factors taken
      together would be the “deduction for development” and can account
      for as much as 75% of the cost of the developed plot.
      16 to 21…….
      22. Some of the layouts formed by the statutory development
      authorities may have large areas earmarked for water/sewage treatment
      plants, water tanks, electrical substations, etc. in addition to the usual
      areas earmarked for roads, drains, parks, playgrounds and community/
      civic amenities. The purpose of the aforesaid examples is only to show
      that the “deduction for development” factor is a variable percentage
      and the range of percentage itself being very wide from 20% to 75%.”
      14. This Court in the judgment reported as Kasturi and Ors. v. State
of Haryana4, held that there may be various factual factors which may
have to be taken into consideration while applying the cut in payment of
compensation towards developmental charges, maybe in some cases it is
more than 1/3rd and in some cases less than 1/3rd. This Court held as under:
      “7 ……. However, in cases of some land where there are certain
      advantages by virtue of the developed area around, it may help in
      reducing the percentage of cut to be applied, as the developmental
      charges required may be less on that account. There may be various
      factual factors which may have to be taken into consideration while
      applying the cut in payment of compensation towards developmental
      charges, maybe in some cases it is more than 1/3rd and in some
      cases less than 1/3rd. It must be remembered that there is difference
      between a developed area and an area having potential value,
      which is yet to be developed. The fact that an area is developed or

4   (2003) 1 SCC 354
        MALA ETC. ETC. v. STATE OF PUNJAB AND OTHERS                      129
                    [BELA M. TRIVEDI, J.]

      adjacent to a developed area will not ipso facto make every land
      situated in the area also developed to be valued as a building site or
      plot, particularly when vast tracts are acquired, as in this case, for
      development purpose.”
       15. The High Court in the impugned judgment after applying
the ratio of decisions in case of Brig. Sahib Singh Kalha and Ors vs.
Amritsar Improvement Trust and Others5 and other decisions to the facts
of these cases, came to the conclusion that a cut of one third was required
to be imposed on the amount of compensation awarded by it. When the
impugned judgment of High Court reveals that the High Court has taken into
consideration the relevant factors prescribed under the Act, as interpreted
by this Court, the assessment of market value so determined does not
warrant any interference of this Court in the appeals under Article 136 of
the Constitution of India.
      16. In that view of the matter, the appeals being devoid of merits are
dismissed.

Headnotes prepared by:                                       Appeals dismissed.
Nidhi Jain




5   AIR (1982) SC 940