Holding

The High Court erred in reducing compensation for Kuhal and Katuhal lands below the Collector’s offer; those awards are restored, and for other lands compensation is set at Rs 14,195 per bigha less a 33⅓% deduction for development charges, with solatium and interest awarded but no additional amount under Section 23(1‑A).

Summary

The Supreme Court examined appeals by landowners against a Himachal Pradesh High Court order that reduced compensation for lands acquired under the Land Acquisition Act, 1894. The Collector had originally offered compensation of Rs 14,195 per bigha for Kuhal land and Rs 9,425 per bigha for Katuhal land, while the High Court uniformly lowered the award to Rs 7,100 per bigha for all categories. The Court held that, under Section 25, a court cannot award compensation less than the Collector’s offer, and therefore restored the Collector’s award for Kuhal and Katuhal lands. For the remaining lands, the Court fixed compensation at Rs 14,195 per bigha after deducting 33⅓% as development charges, rejecting the High Court’s 50% deduction. The appellants were not entitled to additional amounts under Section 23(1‑A) but were awarded solatium of 30% and interest. The appeals were disposed of accordingly.

Issues considered

Whether the High Court could reduce compensation for Kuhal and Katuhal lands below the amount offered by the Collector under Section 25 of the Land Acquisition Act, 1894.
Whether all acquired lands possessed the same potential for building purposes, justifying a uniform market value and a 50% deduction for development charges.
Whether the claimants were entitled to additional compensation under Section 23(1‑A) of the Act.

Legislation cited

Land Acquisition Act, 1894s. 11, s. 18, s. 23(1-A), s. 25, s. 26, s. 4(1), s. 54

Subjects

Land acquisitionCompensationSection 25Development chargesSolatiumInterestUniform market valueSection 23(1-A)Appellate jurisdiction

Judgment

'
.1-·

RAM PIARI AND ANR. ETC. A
v.
-~-, LAND ACQUISITION COLLECTOR, SOLAN AND ORS. ETC.

MARCH 12, 1996

[K. RAMASWAMY AND K. VENKATASWAMI, JJ.] B

Land Acquisition Act, 1894: Sections 4(1), 11, 18, 25, 26 and 54.

Land acquisition-Compensation--Power of Court to reduce-Co/lee-
>J<
tor classify the acquired lands into seven categories and awarding compensa-
tion @Rs. 14195 per bigha for Kuhal land and Rs. 9425 per bigha for Katuhal
c
land-High Court reducing the compensation to the unifonn rate of Rs. 7100
per bigha-Appeal-Held on reference or appeal the Court cannot reduce the
compensation to less than the offer made by the Collecto,-f/eld High Court
committed an e1ror of law in reducing the compensation i11 respect of Kuhal
and Katuha/ lands-Award of Collector restored i11 respect of these lands. D
_, Land acquisition-All lands acquired for common purpose namely
• ,. commercial purpos,.....ffigh Court recording a finding that as 011 the date of
acquisition lands were agricultural land, they require development-In such
circumstances High Court committed ell"Or in detennining development char-
E
ges @ 50o/u-Direction that 33V3% of the market value be deducted towards
development charges-Reliance not placed by High Court on the sale deeds
but on the maximum amount awarded by the collector as basis for detennina-
tion of compensation held right.

~ K VasundaraDevi v.Revenue Divisional Officer (LAO), [1995) 5 SCC
426, rererrred to.
F

Land Acquisitioll-i3eneficiary-Authority accepting the awar<f-There-
after issuing notice to the purchasers to pay revised price on the basis cf
enhanced market valuc::-Direction to development authority to recover the
amount and pay the amount recovered at the rate detem1ined by Court to
G
respective landowners-Claimallls held not entitled to additional amount
""G- under section 23( 1-Aj but held entitled to solatium and interest.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5237-39
of 19% Etc. Etc. H
307
308 SUPREME COURT REPORTS [1996] 3 S.C.R.
A From the Judgment and Order dated 4.5.95 of the Himachal Pradesh
High Court in R.F.A. No. 95 of 1990.

R.K. Jain, Ashok K. Chhabra, Ms. Madhu Moolchandani, Rakesh K.
Khanna and Surya Kant for the Appellants.

B T. Sridharan, Rajiv Nanda, T.A. Khan, (N.K. Shrama) (NP) and Y.P.
Rao for the Respondents.

The following Order of the Court was delivered :

C Leave granted in SLP (C) Nos. 18543-45, 19947-49, 18644 and 18646
.
'
of 1995.

Notification under Section 4(1) of the Land Acquisition Act, 1894
(for short, the 'Act') was published on 3.9.1973 acquiring 863 bighas of land
situated in villages Gumma, Kamli, Dangyar and Ambota in Parwanoo
D township. The award under Section 11 was made by the Collector on
14.7.1977. He determined the compensation at varying rates between Rs.
14,195 per bigha and Rs. 500 per bigha for lands classified into seven
categories. On reference under Section 18, the District Judge, Solan by
award and decree dated 15.5.1991 uniformly awarded compensation at the
E uniform rate of Rs. 14,195 per bigha. In Civil Appeal Nos. 8274-83 of 1985,
acquisition was made in 1976 but the lands were left cut from 1973
notification. On November 9, 1978, the Land Acquisition Collector
awarded compensation similar to compensation awarded for 1973 acquisi-
tions. Taking into consideration the trend in appreciation of land prices,
the District Judge vide award dated May 23, 1991 warded common price
F for all categories of land, i.e., Rs. 24,000 per bigha. On appeal by the State
and cross appeals by the claimants, the High Court by judgment and order
dated 4.5.1995 reduced the compensation to the uniform rate of Rs. 7,100
per bigha. Dissatisfied with the reduction, the claimants have filed these
appeals by special leave.

G This Court issued notice dated 28.8.1995 confined to the correctness
of the order of the High Court with respect to first two categories of lands,
namely, Kubal land for which the Land Acquisition Officer awarded a sum
of Rs. 14, 195 per bigha and Katuhal land for which a sum of Rs. 9,425 has
been awarded. In earlier cases, notice was not confined to the above
H aspects but leave was granted. Thus all these appeals have been posted
r
RAM PIAR!v. LAND ACQN. COLLECTOR 309

together for disposal. A

Shri Ashok Chhabra and Shri R.K. Jain, learned counsel appearing
for the appellants raised three-fold contention. Firstly, that the High Court
has committed manifest error in reducing the compensation lo 1 and 2
category lands, namely, Kuhal and Katuhal lands for which the Land
Acquisition Officer had offered compensation at the rate 0f Rs 14,195 and B
Rs. 9,425 per bigha respectively which is an offer and under Section 25 of
the Act, t.he High Court cannot reduce the compensation less than what
was offered by the Collector. Secondly, it is contended that in view of the
finding recorded by the District Judge and the High Court, namely, that
the lands are possessed of potential value for building purposes, 50% C
reduction of compensation resulting in uniform rate of Rs. 7,100 per bigha
is not correct. The claimants are entitled to higher compensation. It is also
contended that deduction of 50% towards developmental charges is not
correct on the facts in this case since the finding of the High Court is that
all the lands are possessed of same potentialities. Thirdly, it is contended D
by Shri Jain, learne.d senior counsel that after the award was made by the
reference Court under Section 26, notices were issued to the purchasers to
pay revised price on the basis of the enhanced value. When the same was
questioned the High Court dismissed the same. Therefore, when the
beneficiary was seeking to avail of the award passed by the Court and
sought to recover the enhanced compensation form the beneficiaries, noth- E
ing prevented the State to have the compensation paid to the land owners
whose land has been acquired. Shri Parbhakar Rao, learned counsel for
the respondent resisted all the contentions.

The first question, therefore, is : whether the High Court was jus- F
tified in reducing the compensation in respect of Kuhal and Katuhal lands
classified by the Collector to Rs. 14,195 and Rs. 9,425 per bigha respec-
tively. Section 25 of the Act says that the amount of compensation awarded
by the Court shall not be less than the amount awarded by the Collector
under Section 11. It is settled law that the award made by the Collector is
an offer made by him on behalf of the Government and the State is bound G
by the offer. While on reference under Section 18 or on appeal against the
enhanced compensation under Section 54, the Court cannot reduce the
compensation less than the offer made by the Collector. Therefore. The
High Court while fixing the uniform rate of compensation to all the lands
@ Rs. 7100 per higha committed error of law in reducing the compensation H
310 SUPREME COURT REPORTS [1996] 3 S.C.R.
•
A tu the lands classified by the Collector to be Kubal and Katuhal lands for
which compensation @ Rs. 14,195 and Rs. 9,425 per bigha respectively was
offered. The High Court, therefore, in that perspective has committed
error of law in reducing the compensation in respect of the above lands.
Accordingly, the award of the Collector is restored in respect of the lands
classified by him as Kuhal and Katuhal lands.
B
The next question is : whether all other lands are possessed of same
potentialities for awarding uniform market value in respect of all the lands.
No doubt, the High Court found that all the lands are acquired for the
common prupose, namely, commercial purpose. But it has recorded a >.
C finding that as on the date of the acquisition the lands arc agricultural
lands, they require development. Under those circumstances, on the date
of the acquisition, the lands did not possess of the potential value for
building purposes though notification was issued for commercial purpose.
However, the High Court has committed error in determining developmcn-
D ta! charges @ 50%. It is seen that the lands are abutting the hill slopes and
the national highway, though used as agricultural lands. This Court has
considered the entire case ]a\V in a 1atest judgment in K. Vasundara Devi
v. Revenue Divisional Officer (LAO}, [1995] 5 SCC 426 and bald that the
Court will be justified in deducting market value between 33-1/3% and 60%
of the compensation based upon the facts in each case. On the facts of this
E case, we are of the opinion that deduction of 33V3% would meet the ends
of justice.

The decuction of 1/3rd share as directed by this Court would not be
applicable to the Kuhal and Katuhal lands which were offered by the
F Collector. Since that was only an offer, it did not bind the parties; hence f::i
no deduction in that behalf could be made from the said offer. Under those
circumstances, we are of the considered view that 33-1/3% of the market
value would be deducted towards developmental charges.

No doubt, Shri Ashok Chhabra, learned counsel placed reliance on
G the sale deeds which are marked in the case right from 1970 to 1978 and
reflected varied prices, it is seen that the lands are situated in four villages.
They are not contiguous to each other but are situated at different spots
wherever it is feasible to construct township. Under these circumstances,
it would be difficult on the facts in this case, to pin point a particular sale
H deed which reflects the proximate potentiality or the similarity of the land
RAM PIARI v. LAND ACQN. COLLECTOR 311

under acquisition. Moreover, all the sale deeds are of small extents varying A
form 1/2 bigha to 8 bighas in one sale deed. The High Court, therefore,
was right in placiog reliance not on all the sale deeds but on the maximum
amount awarded by the collector to be the basis for determination of the
compensation. Based thereon, the High Court has reduced 50% towards
developmental charges and determined the compensation at Rs. 7,100 per
bigha. The basis adopted by the High Court cannot be said to be vitiated B
by any wrong principle of law. Therefore, the market value of the lands of
the respondents including kutuhal lands, i.e., item 2 to 7 of classification
made by the Land Acquisition Officer, should be determined@ Rs. 14,195
per bigha after deducting 33-1!3% towards developmental charges to arrive
at the market value; the balance amount would be the market value which C
would be just and adequate compensation.

In fact, in this case obviously the development authority accepted the
award of the Court, acted upon it and issued notice to the purchaser,
calling upon them to pay the compensation on the basis of the enhanced
market value determined by the the District Judge. On the facts of this D
case, we think that the development authority having accepeted the award,
though the State carried the matter in appeal, has succeeded upon prin-
ciple of law. The development authority is directed to recover the amount
and pay the amount so recovered at the rate determined by the Court to
the respective land owners. We direct that this direction may not he treated E
to be a precedent. On the facts of this case, we think that the above
direction would meet the ends of justice. The appellants are not entitled
to additional amount under Section 23(1-A). They are entitled to solatium
@ 30% and interest @ 9% per annum from the date of taking possession
for one year and thereafter @ 15% per annum on the enhanced compen-
sation till the date of its deposit into the Court. F

The appeals are disposed of accordingly. No costs.

T.NA. Appeals disposed of.