SMT. INDUMATI CHITALEYversusGOVERNMENT OF INDIA AND ANR.

                   SMT. JNDUMATI CHITALEY                                       A
                             v.
                GOVERNMENT OF INDIA AND ANR.

                           NOVEMBER 1, 1995

              [K. RAMASWAMY AND B.N. KlRPAL, JJ.]                               B

      Land Acquisition Act, 1894 :

      Compensatio1r-Award of-Square foot basis-Per se illegal-Lands
being agiieultural lands compensation detennined by Reference Court on that
basis held vali~Also entitled to solarium and enhanced compensation.
                                                                                c
       Certain lands were acquired under the Land Acquisition Act for
establishment of grain godown by the Central Government. The Land
Acquisition Officer in his award adopted market value to some lands @
SO paise per sq. ft. and @ 49 paise per sq. ft. in respect of other lands and   D
determined the compensation after deducting the developmental costs at
Rs. 2,28,134.91 and ultimately paid to the claimants the total compensation
of Rs. 38,414.91.

      On a reference the Civil Judge evaluated the lands on two methods,
one as agricultural land @ Rs. 5000 per acre and another as developed           E
area and after deducting developmental costs @ Rs. 8,000 per acre,
determined the total compensation including solatium and interest at Rs.
1,22,250.

      On appeal the High Court adopted the market value of the land at
90 paise per S<J. ft. but deducted the development costs at Rs. 18,000 per      F
acre of the total extent of land and directed the payment of the balance
amount. Hence the appeal.

      Allowing the appeal, this Court

      HELD 1. Admittedly the lands remained to be agricultural land even        G
though situated within the limits of the Nagpur Municipal Corporation.
The attempt of the appellant to have them converted into non-agricultural
lands was rejected and the lands continued to be agricultural lands
without being development for building purposes. This Court has
repeatedly deprecated the method of evaluating the compensation on the          H
                                     701
    702                   SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A basis of square foot. When a large extent of 17.57 acres of land is offered
    for sale by private negotation, no one would come forward to purchase
    such a vast extent of land on s<1uare foot basis. The principle of determin-
    ing the compensation of square foot basis is per se illegal. [703-D-E)

          2. If the lands are sold in tlie open market as agricultural land, they
B   were capable of sale @ Rs. 5000 per acre. The Reference Court had deter-
    mined market value as agricultural lands @ Rs. 90,000. Though alternative
    method had been adopted to use it as plots for the building purposes which
    also was adopted by the High Court, the alternative method adopted by the
    Reference Court as well as by the High Cpurt is not correct on the facts of
c   this case. Accordingly, the appellant would be entitled to the market value
    of the land. for a total sum of Rs. 90,000 together with statutory rate of
    interest @4% per annum and also 15% solatium on the enhanced compen-
    sation under Section 23(2) of the Act. [703,H, 704-A-B)

          CIVIL APPELLATE JURISDICTION : Civil Appeal<;-Nos. 2336-
D 36A of 1978.
         From the Judgment and Order dated 7.8.78 of the Bombay High
    Court in A. No. 80 & F.A. No. 76 of 1966.

          U.R. Lalit, P.H. Parekh and Ms. Sunita Shamra for the Appellant.
E
          Wasim Qadri for the Respondents.

          The following Order of the Court was delivered :

         Notification under Section 4(1) of the Land Acquisition Act, 1894
F (for short, 'the Act') was published in the State Gazette on October 26,
  1960' acquiring an extent of 17 acres 57 cents situated within the Nagpur
  Municipal limits for establishment of grain godown by the Central Govern-
  ment. The Land Acquisition Officer in his award under Section 11 on
  April 13, 1967 adopted market value lo some lands @ 50 paise per sq. ft.
  and to some on 49 paise per sq. ft. and determined the compensation after
G deducting the developmental costs at Rs. 2,28,134.91 and ultimately paid
  to the claimants the total compensation of Rs. 38, 414.91. On reference
  under Section 18, the senior Civil Judge by his award and decree dated
  June 30, 1966 evaluated the land on two methods, name)y, as an agricul-
  tural land @ Rs. 5,000 per acre or alternatively as a developed area and
H after deducting the developmental costs @ Rs. 8,000 per a.;,e determined the
               INDUMATI CHITALEY v. GOVf. OF INDIA                       703

total compensation including solatium and interest at Rs. 1,22,250. On          A
appeal, the High Court in F.A. Nos. 80/66 and 76/66, both filed by the
appellant as well as by the State, by judgment and decree dated August 7,
1978 adopted that the market value of the land would be at 90 paise per
sq.ft. but deducted the developmental costs at Rs. 18,000 per acre of the
total extent of the land and directed payment of the balance amount after
                                                                                B
deducting the amount already paid, of the sum of Rs. 48,694.51. Thus this
appeal by special leave.

       It is contended by Sri U.R. Lalit, learned senior counsel for the
appellant that the High Court having fixed the market value @ 90 paise
per sq.ft. committed error of law in deducting Rs.18,000 per acre on the        C
entire total extent of the land of 17.57 acres and thereby the compensation
under Section 23(1) which was legally due and payabie to the appellant was
substantially reduced. The principle adopted by the High Court is, there-
fore, vitiated by clear error of law warranting interference. It is seen that
admittedly the lands remained to he agricultural land even though situated      D
within the limits of the Nagpur Municipal Corporation. The attempt of the
appellant to have them converted into non- agricultural lands was rejected.
Thereby, the lands continued to be agricultural lands without being
developed for building purposes. The question is what would be the
principle to be adopted in this case. This Court has repeated depreciated
the method of evaluating the compensation on the basis of square foot.          E
When a large extent of 17.57 acres of land is offered for sale by private
negotiation, would any prudent purchaser negotiate to purchase lands put
for sale in open market at square foot basis? No one would come forward
to purchase such a vast extent of land on square foot basis. It is seen that
the lands are admittedly agricultural lands. Therefore, no one would prefer     F
to purchase the agricultural land on square foot basis. The principle of
determining the compensation on square foot basis is per se illegal.

      The question thus is what would be the reasonable market value
when the lands are determined as agrict1ltural lands. Though the learned
Government pleader appeared before the Reference Court contended that G
the market value was Rs. 1,5000 per acre, the Court did not accept that
contention and held that the prevailing market value as on October 26,
1960 was @ Rs. 5,000 per acre which was also accepted by the High Court.
lt would thus be seen that if the lands are sold in the open market as an
agricultural land, they were capable of sale @ Rs. 5,000 per acre. The H
    704                  SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A   Reference Court had determined market value as agricultural land @ Rs.
    90,000. Though alternative method had been adopted to use it as plots for
    the building purposes which also was adopted by the High Court, we think
    that the alternative method adopted by the Reference Court as well as by
    the Hig.li Court is not correct on the facts of this case. Accordingly, we
    hold that the appellant would be entitled to the market value of the land
B   for a total sum of Rs. 90,000 together with statutory rate of interest @ 4%
    per annum and also 15% solatium on the enhanced compensation under
    S.ection 23(2) of the Act. The appeals are accordingly allowed to the above
    extent, setting aside the award and decree of the Reference Court as well
    as of the High Court, The decree shall be drawn accordingly and the
c   appellant shall be paid the said amount.

           The appeals are allowed with costs throughout.

    G.N.                                                     Appeals allowed.