Supreme Court Enhances Land Compensation: Maya Devi vs. State of Haryana (2018)

Date of the Judgment: 25 January 2018
Citation: (2018) INSC 57
Judges: Ranjan Gogoi, J., R. Banumathi, J.
Can post-notification sale deeds be considered for determining land compensation? The Supreme Court of India addressed this critical question in Maya Devi vs. State of Haryana. This case revolves around the appropriate compensation for land acquired by the Haryana State Warehousing Corporation. The court had to determine whether the High Court was correct in its valuation and deduction for development charges. The judgment was delivered by a two-judge bench comprising Justice Ranjan Gogoi and Justice R. Banumathi, with Justice Banumathi authoring the opinion.

Case Background

The Haryana State Warehousing Corporation acquired 40 kanal and 8 marlas of land in Rania for constructing a warehouse. The land acquisition process began with a notification under Section 4(1) of the Land Acquisition Act, 1894, on 12 February 1988. Out of this, 21 kanal and 6 marlas belonged to the appellants. A subsequent notification under Section 6 of the Act was issued on 21 February 1989. The Land Acquisition Officer awarded compensation at Rs. 75,000 per acre on 19 May 1990.

Dissatisfied with the compensation, the appellants filed a reference petition under Section 18 of the Land Acquisition Act, 1894, before the Additional District Judge, Sirsa, which was dismissed on 15 February 1993. The appellants then appealed to the High Court of Punjab and Haryana. The High Court, using a sale deed from 26 May 1983 as an exemplar, enhanced the compensation to Rs. 2,19,413 per acre after applying a 67.5% deduction for development charges.

The landowners initially filed a Special Leave Petition before the Supreme Court, which they later withdrew to file a review petition before the High Court. In the review, they presented a sale deed dated 27 December 1988 and a subsequent acquisition notification dated 27 March 1989, where the High Court had awarded a higher compensation of Rs. 7,26,000 per acre. The High Court dismissed the review, stating that the sale deed of 27 December 1988 was post-notification and that the subsequent acquisition was irrelevant. This led to the current appeals before the Supreme Court.

Timeline

Course of Proceedings

The matter initially went before the Additional District Judge, Sirsa, who dismissed the reference petition for enhanced compensation. The appellants then approached the High Court of Punjab and Haryana, which enhanced the compensation to Rs. 2,19,413 per acre. The appellants, dissatisfied with this enhancement, filed a Special Leave Petition before the Supreme Court, which was later withdrawn to file a review petition before the High Court. The High Court dismissed the review, leading to the current appeal before the Supreme Court.

Legal Framework

The case primarily revolves around Section 23 of the Land Acquisition Act, 1894, which deals with the determination of compensation. Sub-section (1) of Section 23 of the Land Acquisition Act, 1894, specifies that compensation should be based on the market value of the land at the date of the notification under Section 4(1). The Supreme Court referred to its previous judgment in Kolkata Metropolitan Development Authority v. Gobinda Chandra Makal and Anr. (2011) 9 SCC 207, which clarified that the relevant date for determining market value is the date of the Section 4(1) notification. The court emphasized that post-notification increases in market value should not be considered.

The relevant legal provisions are:

• ✓ Section 4(1) of the Land Acquisition Act, 1894: This section deals with the publication of a preliminary notification for land acquisition.
• ✓ Section 6 of the Land Acquisition Act, 1894: This section pertains to the declaration of intended acquisition.
• ✓ Section 18 of the Land Acquisition Act, 1894: This section allows for a reference to the court for determination of compensation.
• ✓ Section 23(1) of the Land Acquisition Act, 1894: This section outlines the factors to be considered in determining compensation, primarily the market value at the date of the Section 4(1) notification.

Arguments

Appellants’ Arguments:

• ✓ The appellants argued that the High Court should have considered the sale deed dated 27 December 1988 as an exemplar, as it was only ten months after the notification date. They contended that rejecting it solely because it was a post-notification sale was not justified.
• ✓ They argued that the High Court erred in applying a 67.5% deduction for development charges. They submitted that the acquired land was within municipal limits and had significant commercial and residential potential, thus warranting a lower deduction.
• ✓ The appellants highlighted that the High Court had awarded a significantly higher compensation of Rs. 7,26,000 per acre for the acquisition of adjacent land through a notification dated 27 March 1989. They argued that this disparity indicated that the compensation awarded in their case was inadequate.

Respondents’ Arguments:

• ✓ The respondents contended that the High Court was correct in not considering the sale deed dated 27 December 1988, as it was a post-notification sale. They relied on the principle that compensation should be based on the market value at the time of the Section 4(1) notification.
• ✓ They justified the 67.5% deduction for development charges, arguing that the exemplar used by the High Court was for a small plot of land and that the acquired land required significant development.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the High Court was justified in not considering the sale deed dated 27 December 1988 as an exemplar on the ground that it was a post-notification sale.
2. Whether the High Court was justified in applying a maximum cut of 67.5% for development charges considering the land’s potential for commercial and residential use.
3. Whether the High Court’s award of compensation was inadequate, considering the higher compensation awarded for the acquisition of adjacent land.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• ✓ The Supreme Court followed Kolkata Metropolitan Development Authority v. Gobinda Chandra Makal and Anr. (2011) 9 SCC 207* to reiterate that post-notification sales cannot be considered.
• ✓ The Court referred to Haryana State Agricultural Market Board and Anr. v. Krishan Kumar and Ors. (2011) 15 SCC 297*, Lal Chand v. Union of India and Another (2009) 15 SCC 769* and Andhra Pradesh Housing Board v. K. Manohar Reddy and Ors. (2010) 12 SCC 707* to discuss the principles of deduction for development charges.
• ✓ The Court relied on Major General Kapil Mehra and Ors. v. Union of India and Anr. (2015) 2 SCC 262*, Sabhia Mohammed Yusuf Abdul Hamid Mulla v. Land Acquisition Officer (2012) 7 SCC 595*, Kasturi v. State of Haryana (2003) 1 SCC 354*, Tejumal Bhojwani v. State of U.P. (2003) 10 SCC 525*, V. Hanumantha Reddy v. Land Acquisition Officer (2003) 12 SCC 642*, H.P. Housing Board v. Bharat S. Negi (2004) 2 SCC 184* and Kiran Tandon v. Allahabad Development Authority (2004) 10 SCC 745* to reiterate the rule of one-third deduction for development charges.
• ✓ The Court also referred to Tehsildar (LA) v. A. Mangala Gowri (1991) 4 SCC 218*, Gulzara Singh v. State of Punjab (1993) 4 SCC 245*, Santosh Kumari v. State of Haryana (1996) 10 SCC 631*, Revenue Divl. Officer and LAO v. Sk. Azam Saheb (2009) 4 SCC 395*, A.P. Housing Board v. K. Manohar Reddy (2010) 12 SCC 707*, Ashrafi v. State of Haryana (2013) 5 SCC 527* and Kashmir Singh v. State of Haryana (2014) 2 SCC 165* to highlight that one-third deduction towards development charges is generally allowed.
• ✓ The Court referred to Haryana State Agricultural Market Board v. Krishan Kumar (2011) 15 SCC 297*, Director, Land Acquisition v. Malla Atchinaidu (2006) 12 SCC 87*, Mummidi Apparao v. Nagarjuna Fertilizers & Chemicals Ltd. (2009) 4 SCC 402* and Lal Chand v. Union of India (2009) 15 SCC 769* to highlight that 30% to 50% deduction towards development was allowed.
• ✓ The Court referred to Basavva v. Land Acquisition Officer (1996) 9 SCC 640*, Kanta Devi v. State of Haryana (2008) 15 SCC 201*, Subh Ram v. State of Haryana (2010) 1 SCC 444* and Chandrashekar v. Land Acquisition Officer (2012) 1 SCC 390* to show that deductions of more than 50% were also upheld in certain cases.
• ✓ The Court referred to Subh Ram and Others v. State of Haryana and Anr. (2010) 1 SCC 444* to highlight that deduction of 67% was not improper.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the established legal principle that compensation for land acquisition should be determined based on the market value at the time of the initial notification under Section 4(1) of the Land Acquisition Act, 1894. The Court emphasized that post-notification sales cannot be considered as exemplars for determining compensation. However, the Court also recognized the need for a fair and reasonable deduction for development charges. While the High Court had applied a 67.5% deduction, the Supreme Court found this to be excessive and opted for a one-third deduction, which is a more commonly applied standard.

The Court’s reasoning was primarily based on legal principles and precedents, with a lesser emphasis on the specific factual details of the case. This is reflected in the higher percentage allocated to legal considerations.

Logical Reasoning:

The Court considered the High Court’s reliance on a sale deed of a small plot of land and the need for development of the acquired land. The Court also considered the various precedents on the deduction for development charges. The Court noted that the development cost incurred by statutory agencies is much higher than the cost incurred by private developers. The Court also considered the fact that the acquired land has to be developed for construction of a warehouse.

The Court stated, “Applying the ratio of the above decision, we are of the view that the post notification instances cannot be taken into consideration for determining the compensation of the acquired land.”

The Court also observed, “In a catena of judgments, this Court has taken the view to apply one-third deduction towards the development charges.”

The Court further stated, “In the facts and circumstances of the present case and considering that the exemplar dated 26.05.1983 was for a small extent of land and that the acquired land has to be developed for construction of warehouse, we deem it appropriate to apply one-third deduction and deducting one-third that is Rs.2,21,629/- from Rs.6,64,887/-, the compensation to be awarded is arrived at Rs.4,43,258/- per acre.”

Key Takeaways

• ✓ Post-notification sale deeds should not be considered for determining compensation in land acquisition cases.
• ✓ A one-third deduction for development charges is generally considered appropriate for undeveloped land with potential for development.
• ✓ Courts may deviate from the one-third deduction rule based on specific facts and circumstances.
• ✓ The market value of the land is to be determined on the date of the preliminary notification under Section 4(1) of the Land Acquisition Act, 1894.

Directions

The Supreme Court modified the High Court’s judgment and directed that the appellants/claimants are entitled to an enhanced compensation of Rs. 4,43,258 per acre, payable with all statutory benefits. The Court also clarified that the appellants/claimants would not be entitled to claim interest for the period of delay in preferring the appeals from the review.

Conclusion

The Supreme Court’s judgment in Maya Devi vs. State of Haryana reinforces the principle that compensation for land acquisition should be based on the market value at the time of the initial notification, and that post-notification sales cannot be considered. The Court also clarified that while deductions for development charges are necessary, they should be reasonable and not excessive. The Court’s decision to apply a one-third deduction for development charges reflects a balanced approach, taking into account both the need to compensate landowners fairly and the costs associated with developing acquired land.