2022 (7) TMI 1350 - SC - Indian Laws

Seeking Enhancement of amount of compensation for the lands acquired mainly relying upon the prevailing Ready Reckoner rates of the land - whether prices mentioned in the Ready Reckoner for the purpose of calculation of the stamp duty, which are fixed for the entire area can be used as basis to determine the compensation under the Land Acquisition Act? - HELD THAT - Whether the prices mentioned in the Ready Reckoner can be the basis for determining the compensation for the lands acquired under the Land Acquisition Act has been dealt with by this Court in the two decisions of this Court in the case of Jawajee Nagnatham 1994 (1) TMI 276 - SUPREME COURT and Krishi Utpadan Mandi Samiti, Sahaswan 2004 (1) TMI 715 - SUPREME COURT . In the case of Jawajee Nagnatham, this Court has observed and held that the amount of compensation for the lands under the Land Acquisition Act is determined by adopting the method of valuation namely, (1) opinion of experts; (2) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (3) a number of years purchase of the actual or immediately prospective profits of the lands acquired. It is observed that in determining the market value, the Court has to take into account either one or the other of the three methods to determine market value of the lands appropriate to the facts of a given case to determine the market value. Thereafter, this Court considered whether the Basic Valuation Register would form the foundation to determine the market value. The aforesaid decision in the case of Jawajee Nagnatham has been subsequently followed in a subsequent decision of this Court in the case of Lal Chand 2009 (8) TMI 1248 - SUPREME COURT and it is observed that the market value of the land under Section 23 of the Land Acquisition Act cannot be fixed on the basis of the rates mentioned in the Basic Valuation Registers' maintained for the purpose of collection of proper stamp duty. In that case, as the Reference Court determined the amount of compensation on the value of the land fixed by the District Magistrate for stamp duty purposes, this court has observed and held that the same was erroneous. As such, we are in complete agreement with the view taken in the aforesaid two decisions that the prices mentioned in the Ready Reckoner for the purpose of calculation of the stamp duty, which are fixed for the entire area, cannot be the basis for determination of the compensation under the Land Acquisition Act. It is required to be noted that in the present case, the Reference Court did consider the submission on behalf of the claimants to determine the market value on the basis of the Ready Reckoner. Why the prices mentioned in the Ready Reckoner, which is basically for the purpose of collecting proper stamp duty and registration charges shall not be the basis for determination of the compensation for the lands acquired under the Land Acquisition Act is required to be considered from another angle also. It cannot be disputed that the rates mentioned in the Ready Reckoner are for the lands of the entire area and the uniform rates are determined with respect to different lands. There cannot be a uniform market value of the land for the purpose of determination of the compensation for the lands acquired under the Land Acquisition Act. As observed herein above, the market value of the different lands vary from place to place and it depends upon various factors - the impugned judgment and order passed by the High Court is hereby quashed and set aside and the judgment and order passed by the Reference Court determining the compensation @ Rs.21/- per sq. ft. is hereby restored. Appeal allowed.

Summary

Issues Involved:
1. Whether the High Court erred in enhancing the compensation based on the Ready Reckoner rates.
2. Validity of relying on the Ready Reckoner for determining compensation under the Land Acquisition Act.
3. Applicability of the Government Resolution dated 31.10.1994 in determining compensation.

Issue-wise Analysis:

1. Whether the High Court erred in enhancing the compensation based on the Ready Reckoner rates:
The High Court's decision to enhance the compensation from Rs. 21/- per sq. ft. to Rs. 174/- per sq. ft. was challenged by BSNL. It was argued that the High Court erred in relying solely on the prevailing Ready Reckoner rates, which led to an 800% increase in the compensation amount. The appellant cited previous Supreme Court rulings in Jawajee Nagnatham Vs. Revenue Divisional Officer, Adilabad, A.P. and Ors., and Krishi Utpadan Mandi Samiti, Sahaswan Vs. Bipin Kumar, which held that Ready Reckoner rates are not permissible for such determinations.

2. Validity of relying on the Ready Reckoner for determining compensation under the Land Acquisition Act:
The Supreme Court reiterated its stance from Jawajee Nagnatham and Krishi Utpadan Mandi Samiti, emphasizing that compensation under the Land Acquisition Act should be determined using one of three methods: expert opinion, bona fide transactions of similar lands, or prospective profits of the land. The Court clarified that the Ready Reckoner, used primarily for stamp duty purposes, lacks statutory foundation for determining market value for compensation. The Reference Court's refusal to accept Ready Reckoner rates was upheld, as it was based on the deposition of PW-3 and PW-4, who admitted that the Ready Reckoner was not reflective of actual market transactions.

3. Applicability of the Government Resolution dated 31.10.1994 in determining compensation:
The claimants and the High Court relied on the Government Resolution, which suggested using Ready Reckoner rates for compensation determination. However, the Supreme Court found this approach contrary to established legal principles. The Court noted that market value varies based on numerous factors such as location, development status, and land size. Therefore, uniform rates from the Ready Reckoner cannot be applied to different lands for compensation purposes. The Supreme Court emphasized that the market value must be determined based on specific land characteristics and prevailing conditions, not a generalized rate.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the Reference Court's compensation determination of Rs. 21/- per sq. ft. The Court concluded that the High Court erred in relying on the Ready Reckoner and the Government Resolution, which do not provide a valid basis for determining compensation under the Land Acquisition Act. The appeal was allowed without any order as to costs.