THE STATE OF M.P. ETC.versusHARISHANKAR GOEL AND ANR. ETC.

                       THE STATE OF M.P. ETC.                                   A
                                     v.
               HARISHANKAR GOEL AND ANR. ETC.

                             AUGUST 7, 1996

           [K. RAMASWAMY AND G.B. PATIANAIK, .lJ.[                              B

      Land Acquisition Act, 1894:

       Ss.4(1 ), 11, 18, 23(1-A), 23(2) and 28-Acq11isitio11 of more titan 33
bigltas of land in 1964-Awai-d by Collector in 1966 dete1111ining compensa-     C
tion at the rate of Rs. 3,150 per big/ta-Award and decree by reference cowt
i11 1975 enhancing compensation at the rate of Re.I per sq. ft.-High Cowt
dete1111ini11g compensation at Rs. 0.90 per sq. ft. and awarding enhanced
solatiunz, interest and additional aniount as available under Anzendntent Act
68 of 1984---Held, reference cowt and High Cowt committed ennr of law in
detennining compensation of such a large extent of land on sq.ft. basis-High    D
Cowt also committed el1'or of law in allowing benefits of enhanced solatiwn
and additional amoum under s.23(1-A) and 23(2) as also interest under
proviso "28-Compensation detennined at Rs. 4 per sq. yd. and deduction
would be 25% towards developmental charges.

     CIVIL APPELLATE JURISDICTION : Civil appeal nc. 2297 of                    E
1987 Etc.

     From the Judgment and Order dated 28.10.86 of the Madhya
Pradesh High Court in M.A. No. 83 of 1975.
                                                                                F
      K.N. Shukla, Prashant Kumar and S.K. Agnihotri for the Appellants.

      S.S. J aveli and Vivek Gambhir for the Respondents.

      The following Order of the Court was delivered :

      These appeals arise from the Judgment of the High Court of Madhya G
Pradesh. On a difference of opinion among two learned Judges, third
Judge on reference in Miscellaneous Appeal No. 82175 and 83/75 enhanced
the compensation. The notification under Section 4(1) of the Land Acquisi-
tion Act I of 1894 was published on January 17, 1964 acquiring 33 bighas
15 biswas of land belonging to two different individuals for industrial H
                                   349
    350                  SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A purpose. The Land Acquisition Officer by his award under Section 11
    determined compensation on March 14, 1966 at Rs. 3,150 per bigha treat-
    ing the lands to be agricultural lands. On reference under Section 18, the
    Additional District Judge by his award and decree dated May 15, 1975
    enhanced the compensation to Rs. 1 per sq. ft. and also awarded statutory
    benefits. On appeal, learned Judge B.C. Verma, J. determined compensa-
B   tion at 0.90 per sq. ft. deducted 15% towards developmental charges.
    Learned Judge R.C. Srivastava, J. determined the compensation at Rs. 0.50
    per sq. ft. and deducted 25% towards developirental charges. On refer-
    ence, learned Judge T.N. Singh, J. agreed with the determination of com-
    pensation B.C. Verma, J. at Rs. 0.90 per sq. ft. but deducted 20% towards
c   developmental charges. He also awarded enhanced solatium, interest and
    additional amount as available under the Amendment Act 68 of 1984. Thus
     these appeals by the State and also cross appeal by the claimants claiming
     compensation at Rs. 1 per sq. ft.


D          The question that arises for consideration is as to what is the rate of
    compensation that the lands are capable to secure in an open market. It is
    not in dispute that though they were the agricultural lands as on the date
    of notification the respondents who are no other than the builders and
    developers had, after the purchase obtained sanction under Section 172 of
    the Madhya Pradesh Revenue Code for conversion of the land into non-
E   agricultural lands, but no sanction from the municipality of construction of
    any colonisation, was obtained. Even learned Judge B.C. Verma, J. had
    noted in his judgment that though the respondents - claimants had entered
    into the agreement of sales with the prospective purchasers, they had not
    completed the sale transactions. Those agreements were brought into
F   existence to bolster the claims. However, the learned Judge found that the
    lands were situated very near to the Vicky moped factory. They abut the
    Jhansi Road; Sitholi railway station is one mile from the acquired lands,
    but they are situated outside the municipal limits of Gwalior Municipal
    Corporation. Their lands arc fit for developing industries, housing colonies,
    godown, petrol pumps etc. The evidence also disclosed that the land was
G   not improved and it was not even land. Considered in this background, the
    learned Judge had accepted the sale deed executed by one of the claimants
     for a small extent of land at Rs. 0.50 per sq. ft. but having found that the
     lands were possessed of potential value, determined the compensation at
     Rs. 0.90 per sq. ft. and, as stated earlier, deducted 15% towards develop-
H    mental charges. Learned Judge Srivastava, J. relied upon the very sale
                      STATE v. HARISHANKAR GOEL                          351

  deeds put forth by the claimants and held that they could not claim higher    A
  than what they had put up, namely, Rs. 0.50 per sq. ft. and, therefore,
  determined the compensation on that premise and deducted 25% toward'
· developmental charges. As seen, _learned T.N. Singh, J. had agreed with
  B.C. Verma, J. in determining the compensation at Rs. 0.90 per sq. ft.

         The question, therefore, is : what would be the reasonable market
                                                                                B
 value the lands are capable to fetch as on the date of the notification had
 it been sold in the open market to a willing purchaser? It is seen that when
 33 and odd bighas of land was sought to be sold in the open market, no
 willing prudent purchaser would with any credulity agree to purchase it on
 sq. ft. basis. It is well settled law that the Judge determining compensation  c
 in a compulsory acquisition should eschew feats of imagination; sit in the
 arm chair of a willing purchaser and put a question to himself whether as
 a willing prudent purchaser, he would offer the same price sought to be
 awarded for the acquired land. It would, therefore, be clear that the
 learned .fudges did not apply correct legal tests to determine the compen- D
 sation but determined the compensation on the basis of sq. ft. which is
 illegal per se. We, therefore, hold that the learned Judges had applied
 wrong principle of law in determining compensation.


       The question then arises is what would be the just and adequate
 compensation which the lands are capable to fetch in the open market? It       E
 is seen that the lands are situated beyond the municipal limits and on
 uneven land. But for the Vicky moped factory, there was no other imme-
 diate development. The claimants themselves purchased the lands as
builders to develop the lands. They did not file their own sale deeds to
show at what rate they had purchased the land which would have furnished        F
best material. Admittedly, no sanction frorµ the Municipal Corporation or
any competent authority was obtained in that behalf to construct housing
colony. Necessarily when the land was to await some time for development
either for industrial or colonisation, the price that could not be secured at
the rates was put forth by the claimants. They themselves had sold at Rs.       G
0.50 per sq. ft. for a small extent of land. The learned Judges, therefore,
had not correctly appreciated the correct principles of law in determining
the compensation. Having found that the lands were possessed of potential
value the compensation could be determined on the basis of the market
value on square yard basis. Considered from this perspective, we are of the
view that the market value for the land would be Rs. 4 pe sq. yd. and we        H
    352                   SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A   agree with learned Judge Srivastava, J. that the deduction should be 25%
    towards developmental charges since it is in evidence that acquisition is for
    industrial purpose and electricity was immediately available as found by
    learned Judge T.N. Singh, J. The lands are adjacent to national high-way.
    It is settled ,law that normally 33-1/3% should be deducted towards
    developmental charges. In this case as a special case, 25% is deducted. It
B
    wili not be treated as pretent.

           The learned Judges were wholly wrong in applying the Amendment
    act 68 of 1984 since the acquisition was made in the year 1964 and the
    Collector had made the award on March 14, 1966 and the reference Court
C   itself determined the compensation on May 15, 1975. Under those cir-
    cumstances, the .claimants are not entitled to the additional benefits of
    enhanced solatium under Section 23(2) at 30%, interest under proviso to
    Section 28 at .9% for the first year from the date of taking possession and
    thereafter at 15% till date of deposit' on the enhanced compensation and
    additional amount under Section 23(1-A). The judgment in that behalf also
D   stands set aside. Instead, the claimants will be entitled to solatium at 15%
    on the enhanced compensation and interest at 4% on the enhanced com-
    pensation from the date of taking possession till date of deposit into Court.

         The appeals of the State are accordingly allowed and the cross
    appeal of the' claimants stands dismissed, but in the circumstances, without
E
    costs.

    R.P.                                                       Appeals allowed.