Karnataka High Court
Union Of India vs Mahaboob Bee And Ors on 13 January, 2025
Author: S.Sunil Dutt Yadav
Bench: S.Sunil Dutt Yadav
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MFA No.202184 of 2017
C/W MFA No.202183 of 2017
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 13TH DAY OF JANUARY, 2025
PRESENT
THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV
AND
THE HON'BLE MR. JUSTICE RAJESH RAI K
MISCL. FIRST APPEAL NO.202184 OF 2017 (LAC)
C/W
MISCL. FIRST APPEAL NO.202183 OF 2017 (LAC)
IN MFA NO.202184 OF 2017
BETWEEN:
UNION OF INDIA
THE DEPUTY CHIEF ENGINEER,
CONSTRUCTION-III,
SOUTH CENTRAL RAILWAY,
KESHWAPUR, HUBLI - 23.
REPRESENTED BY
Digitally signed by
BASALINGAPPA ASSISTANT EXECUTIVE ENGINEER
SHIVARAJ
DHUTTARGAON (CONSTRUCTION),
Location: HIGH
COURT OF
SOUTH WESTERN RAILWAY, GANGAWATI.
KARNATAKA ...APPELLANT
(BY SRI NARENDRA M. REDDY, ADVOCATE)
AND:
1. MAREPPA
S/O LATE EERANNA @ EARAPPA,
AGE:65 YEARS,
OCC: AGRICULTURE,
R/O: NELIHAL VILLAGE,
TQ: & DIST:RAICHUR - 584 101.
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MFA No.202184 of 2017
C/W MFA No.202183 of 2017
2. THE SPECIAL LAND ACQUISITION OFFICER
MUNIRABAD-MEHABOOB NAGAR
RAILWAY LINE CONSTRUCTION PLAN
AT SINDHANUR -584 101.
3. THE PRINCIPAL SECRETARY
REVENUE DEPARTMENT GOVERNMENT OF
KARNATAKA, 5TH FLOOR, M.S. BUILDING,
BANGALORE - 560 001.
...RESPONDENTS
(BY SRI SHIVAKUMAR TENGLI, AGA FOR R2 AND R3;
NOTICE TO R1 SERVED)
THIS MFA IS FILED UNDER SECTION 54(1) OF LAND
ACQUISITION ACT, PRAYING TO CALL FOR THE RECORDS IN
L.A.C. NO.53/2010 ON THE FILE OF PRINCIPAL SENIOR CIVIL
JUDGE AND C.J.M. RAICHUR AND ALLOW THE APPEAL BY
SETTING ASIDE THE JUDGMENT AND AWARD DATED
06.12.2016 PASSED BY LEARNED PRINCIPAL SENIOR CIVIL
JUDGE AND C.J.M., RAICHUR IN L.A.C. NO.53/2010 IN THE
INTEREST OF JUSTICE AND EQUITY.
IN MFA NO.202183 OF 2017
BETWEEN:
UNION OF INDIA
THE DEPUTY CHIEF ENGINEER,
CONSTRUCTION-III,
SOUTH CENTRAL RAILWAY,
KESHWAPUR, HUBLI - 23.
REPRESENTED BY
ASSISTANT EXECUTIVE ENGINEER
(CONSTRUCTION),
SOUTH WESTERN RAILWAY, GANGAWATI.
...APPELLANT
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MFA No.202184 of 2017
C/W MFA No.202183 of 2017
(BY SRI NARENDRA M. REDDY, ADVOCATE)
AND:
1. MEHABOOB BEE
W/O MASJID SAB @ MASOOD SAB,
AGE: MAJOR,
OCC: AGRICULTURE,
R/O: NELIHAL VILLAGE,
TQ. & DIST: RAICHUR - 584 101.
2. THE SPECIAL LAND ACQUISITION OFFICER
MUNIRABAD-MEHABOOB NAGAR
RAILWAY LINE CONSTRUCTION PLAN
AT SINDHANUR -584 101.
3. THE PRINCIPAL SECRETARY
REVENUE DEPARTMENT GOVERNMENT OF
KARNATAKA, 5TH FLOOR, M.S. BUILDING,
BANGALORE - 560 001.
...RESPONDENTS
(BY SRI SHIVAKUMAR TENGLI, AGA FOR R2 AND R3;
NOTICE TO R1 SERVED)
THIS MFA IS FILED UNDER SECTION 54(1) OF LAND
ACQUISITION ACT, PRAYING TO CALL FOR THE RECORDS IN
L.A.C. NO.54/2010 ON THE FILE OF PRINCIPAL SENIOR CIVIL
JUDGE RAICHUR AND ALLOW THE APPEAL BY SETTING ASIDE
THE JUDGMENT AND AWARD DATED 06.12.2016 PASSED BY
LEARNED PRINCIPAL SENIOR CIVIL JUDGE, RAICHUR IN L.A.C.
NO.54/2010 IN THE INTEREST OF JUSTICE AND EQUITY.
THESE APPEALS COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
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MFA No.202184 of 2017
C/W MFA No.202183 of 2017
CORAM: HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV
AND
HON'BLE MR. JUSTICE RAJESH RAI K
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV) MFA No.202184/2017 has been filed challenging the judgment and award of the Reference Court passed in LAC No.53/2010 whereby the Reference Court has enhanced the compensation at the rate of Rs.15,00,000/- per acre.
The order of the Reference Court was a common judgment and award as regards LAC Nos.53/2010, 52/2010 54/2010 and 83/2010.
2. MFA No.202183/2017 has been filed challenging the judgment and award passed in LAC No.54/2010. In light of the judgment and award being passed in common as regards LAC Nos.53/2010 and 54/2010, both the appeals are taken up together and are disposed of by a common order.
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3. It is to be noticed that the beneficiary has filed these appeals. The relevant facts made out are that the State of Karnataka had sought to acquire land of the land owners in Sy.No.110/2 measuring 1 acre 1 gunta situated at Mamadapur village, taluk and district Raichur for formation of new railway line by virtue of notification under Section 4(1) of the Land Acquisition Act, 1894 and the notification passed on 18.06.2005 (MFA No.202184/2017).
4. Insofar as MFA No.202183/2017, the challenge relates to the judgment and award of the Reference Court relating to the land of the land owner in Sy.No.138/2 measuring 2 acres situated at Mamadapur village, taluk and district Raichur which was sought to be acquired for formation of new railway line by virtue of the 4(1) notification referred to above.
5. It is to be noticed that the Special Land Acquisition Officer had awarded market value of the acquired land at Rs.88,825/- per acre for wet land and this -6- NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 has now been enhanced to Rs.15,00,000/- per acre by virtue of the order of the Reference Court.
6. Learned counsel for the appellant - beneficiary submits that the Reference Court has solely relied on the consent award at Ex.P-20 passed with respect to lands at Munirabad as regards Mehaboobnagar Railway line which consent award was passed on 04.10.2012 relating to irrigated lands valued at Rs.15,00,000/- per acre. It is submitted that taking note of such consent award with respect to land for a different taluk may not be proper and would not benefit either the land owners nor would it reflect the appropriate market value. It is further pointed out that as regards similar contention raised with respect to lands for the same project wherein the Reference Court had awarded Rs.15,00,000/- per acre as regards irrigated lands and same was taken up before this Court in MFA No.200777/2015 and other connected matters, the co-
ordinate bench of this Court disposed of the said appeals by order dated 15.10.2020 and had noticed that mere -7- NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 reliance on the consent award may not be accurate after noticing several judgments of the Apex Court and accordingly it is submitted by learned counsel appearing for the appellant-beneficiary that in light of the said appeals having been disposed of by setting aside orders of the Reference Court, taking note of an identical legal contention and remanding the matter back for fresh consideration in light of the directions made therein, the present appeals may also be disposed of on same grounds.
7. It is to be noticed that the land owners though served, have remained absent. Perused the order passed in MFA No.200777/2015 and connected matters. The point for consideration is as follows:
Whether case is made out to set aside the order of the Reference Court and to remand the matter back for fresh consideration in light of the order passed in MFA No.200777/2015 and connected matters?
8. A perusal of the order of the Reference Court would indicate that the Reference Court has relied on the -8- NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 consent award though consent award was passed on 04.10.2012. The said consent award has been marked before the Trial Court at Ex.P-20. A perusal of the order by the Reference Court would clearly indicate that the fixation of market value was solely on the basis of the consent award passed by the Land Acquisition Officer of Munirabad. It is admittedly the position that Ex.P-20 relates to lands pertaining to Koppal taluk while the present case relates to lands of Mamdapur village though in respect of Raichur taluk. It is to be noticed that the Reference Court though has taken note of such fact, has observed that Koppal taluk and Raichur taluk are adjoining to each other, having irrigation facility and they can be treated at par with each other and proceeded to pass an award relying on the consent award.
9. This aspect has been noticed by the co-ordinate bench of this Court in MFA No.200777/2015 and has opined that market value of each land will have to be assessed differently depending on the material on record -9- NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 and mere reliance on consent award may not be appropriate. The relevant extracts of the judgment in MFA No.200777/2015 from paragraphs 16 to till end are as follows:
"16. It is further germane to notice that the Special Land Acquisition Officer in respect of the properties belonging to the claimants at Mamdapur village had, on spot inspection, declared that the lands belonging to the claimants were all dry lands, more specifically reporting that they were all tail end lands and only dry crops could be raised in all the properties. The said report is neither questioned nor challenged.
17. The Reference Court notwithstanding the afore-stated spot inspection report by the Special Land Acquisition Officer, held that the Government had in the year 1972 declared that the properties of the claimants and the like were all irrigated properties in terms of its publication in the official gazette on 7.12.1972. The Reference Court in spite of the clear evidence of the Special Land Acquisition Officer in terms of his report placing reliance upon the gazette notification considered the lands to be semi- irrigated lands. The Special Land Acquisition Officer was examined as R.W.1 before the Reference Court and in his deposition, he has clearly stated that the properties in question were tail-end lands and the claimants were raising only dry crops. There is absolutely no cross examination of the Special Land Acquisition Officer by the claimants in respect of the afore-stated categorical assertion.
18. The Reference Court further relied upon Ex.P.31, which concerns the properties acquired at Sindhanur of Raichur District and Gangavathi taluk of Koppal District for a similar purpose of formation of new railway line, wherein the Special Land Acquisition Officer, on consent, had fixed the compensation of Rs.6.00 lakhs per acre for dry lands, Rs.8.00 lakhs per acre for semi irrigated lands and Rs.15.00 lakhs per acre for fully irrigated lands. It is
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 pertinent to note at this stage itself that the lands are neither nearby nor in the same taluk or district and are at a distance of nearly 50 Kms. The Reference Court further placed reliance on a plethora of correspondences with regard to the consent award mentioned supra to determine the afore stated compensation. Ex.P.35 was the letter addressed by Deputy Commissioner to the Secretary, Revenue Department seeking permission to pass the consent award in respect of the properties situated at Channalli and six other villages of Sindhanur Taluk and Ex.P.36 was the approval given by the Deputy Commissioner, Raichur to pass the consent award at the rates stated supra.
19. The claimants placing exclusive reliance on the consent award, in all their cases, as different exhibits, claimed the same compensation on the ground that the Special Land Acquisition Officer in his cross examination admitted the award of compensation to properties acquired in Koppal taluk for the same purpose. Though the claimants had contended that their properties have tremendous N.A. potential and would fetch more than Rs.25.00 lakhs per acre, they sought compensation of only Rs.15.00 lakhs per acre as is granted under the consent award in respect of acquisition of land for the same purpose in different taluks, i.e., Koppal, Gangavathi and Sindhanur. The Reference Court, placing complete reliance on the documents and without looking into the nature of lands, as to whether the lands are dry lands or semi irrigated lands or fully irrigated lands, held that the lands of the claimants can be safely considered to be semi irrigated lands. In Paragraph 16 of the impugned order, wherein the Reference Court held that the properties of the claimants to be semi irrigated lands, reads as follows:
"16. At this stage it is necessary to refer the award passed by the Land Acquisition Officer, which is marked at Ex. C -
4. At the time of spot inspection, the Land Acquisition Officer noticed that the properties acquired at Mamdapur village are dry lands. Though according to Land Acquisition Officer, the Asst. Executive Engineer, No-2, Canal Sub - Division, Yermarus Camp had declared as irrigated properties and the same is published in the official gazette on 7-12-72 at the time of spot inspection the L.A.O noticed that the properties were tail end lands and claimants were raising only dry crops in the said properties. Therefore, considering the situation of the properties in question, the
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 L.A.O has considered the properties as dry lands and awarded the compensation. But the fact remains that admittedly in the year 1972 itself in the official gazette the properties in question have been declared as irrigated lands through Tungabhadra Left Bank Canal. The claimants contended that they were raising two crops in a year since the properties in question are fully irrigated and they were raising two crops in a year. In so far as the observation of the Land Acquisition Officer that the properties in question are tail end lands and claimants were rising dry crops, absolutely there is no cross - examination of RW-1 on the said aspect. Since the properties are irrigated through canal it cannot be said that either the properties in question are fully irrigated or dry lands. It can safely be held that the properties are semi irrigated properties. Accordingly the properties in question are considered as semi irrigated properties."
The afore-extracted paragraph is the only reasoning given by the Reference Court to hold that the lands of the claimants are semi irrigated lands and to determine the market value at Rs.8.00 lakhs per acre. It is pertinent to note that the irrigation department has not been examined in support of the alleged notification. The case of the claimants is that their lands are fully irrigated lands and hence entitiled to compensation at the rate of Rs.15.00 lakhs per acre along with statutory benefits. The Reference Court, if was convinced that consent award is binding, ought to have also considered as to whether the claimants would be entitled to other statutory benefits, in the light of the law laid down by the Apex Court in the case of Ranveer Singh Vs. State of Uttar Pradesh reported in (2016) 14 SCC 191 and (1995)5 SCC 746(para-8).
20. As contended by the learned Counsel for the Railways, the Reference Court has straight away relied on the consent awards concerning acquisition of lands in Koppal, Gangavathi and Sindhanoor Taluk whereas the lands in question are in Raichur taluk and has determined the market value at the same rate applicable to the properties of the claimants without appreciating any evidence with regard to the nature of the lands and without any basis.
21. Since the issue is with regard to the method of determination of market value, it is apposite to refer to the judgment of the Hon'ble Supreme Court which has laid down and postulates the criteria to be looked into by
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 the Courts for determining the market value of lands acquired and which law ought be scrupulously followed by the Reference Court. The Hon'ble Supreme Court in the case of CHIMANLAL HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER reported in (1988) 3 SCC 751, was pleased to hold as follows:
"3. Before tackling the problem of valuation of the land under acquisition, it is necessary to make some general observations. The compulsion to do so has arisen as the trial Court has virtually treated the award rendered by the Land Acquisition Officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to same extent. The true position therefore requires to be capsulized.
15. The following factors must be etched on the mental screen:
"(1) A Reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the court cannot take into account the material relied upon by the Land Acquisition Officer in his award unless the same material is produced and proved before the court. (2) So also the award of the Land Acquisition Officer is not to be treated as a judgment of the trial court open or exposed to challenge before the court hearing the Reference. It is merely an offer made by the Land Acquisition Officer and the material utilised by him for making his valuation cannot be utilised by the court unless produced and proved before it. It is not the function of the court to sit in appeal against the award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate court. (3) The court has to treat the Reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant).
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 (6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price.
(7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance which provides the index of market value.
(8) Only genuine instances have to be taken into account. (Sometimes instances are rigged up in anticipation of acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-à-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do.
(13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do.
We may illustrate some such illustrative (not exhaustive) factors:
Plus factors Minus factors
1 smallness of size 1 largeness of area
2 proximity to a road 2 situation in the interior
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C/W MFA No.202183 of 2017
at a distance from the
road
3 Frontage on a road 3 Narrow strip of land
with very small
frontage compared to
depth
4 nearness to 4 lower level requiring
developed area the depressed portion
to be filled up
5 regular shape 5 Remoteness from
developed locality
6 Level vis-à-vis land 6 Some special
under acquisition disadvantageous factor
which would deter a
purchaser
7 Special value for an
owner of an adjoining
property to whom it
may have some very
special advantage
(15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10,000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.
(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the judge must place himself.
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 (17) These are general guidelines to be applied with understanding informed with common sense.
22. The afore-extracted judgment of the Hon'ble Supreme Court is again reiterated by the Hon'ble Apex Court in the case of UNION OF INDIA Vs. DYAGALA DEVAMMA reported in (2018) 8 SCC 485 wherein the Hon'ble Supreme Court has held as follows:
15. Before we examine the facts of this case, it is necessary to take note of the general principles of law on the subject in question which are laid down by this Court in several cases and some of which were also cited at the Bar by the learned counsel for the parties.
Indeed, if we may say so, the law on the several issues urged herein by the learned counsel for the parties is already settled by this Court and what has varied in its application depends on the facts of each case.
16. In Chimanla Hargovinddas v. LAO [Chimanlal Hargovinddas vs. LAO, (1988) 3 SCC 751] , this Court dealt with the question as to how the Court should determine the valuation of the lands under acquisition and what broad principle of law relating to acquisition of land under the Act should be kept in consideration to determine the proper market value of the acquired land.
17. In para 4 of the judgment, this Court laid down as many as 17 principles, which are reproduced below for perusal: (Chimanlal Hargovinddas case [Chimanlal Hargovinddas v. LAO, (1988) 3 SCC 751] , SCC pp. 754-56, para 4) "(1)-(4)*** (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant).
(6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day.
It has also to be assumed that the vendor is willing to sell the land at a reasonable price.
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 (7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance which provides the index of market value.
(8) Only genuine instances have to be taken into account.
(Sometimes instances are rigged up in anticipation of acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects.
(10) The most comparable instances out of the genuine instances have to be identified on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-à-vis land under acquisition by placing the two in juxtaposition.
(12) A balance sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do.
(13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors.
(14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:
Plus factors Minus factors
1. smallness of size 1. largeness of area
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C/W MFA No.202183 of 2017
2. proximity to a road 2. situation in the interior
at a distance from the
road
3. Frontage on a road 3. narrow strip of land
with very small frontage
compared to depth
4. Nearness to 4. lower level requiring
developed area the depressed portion to
be filled up
5. regular shape 5. remoteness from
developed locality
6. level vis-à-vis land 6. some special
under acquisition disadvantageous factor
which would deter a
purchaser
7. special value for an
owner of an adjoining
property to whom it
may have some very
special advantage
(15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard- and-fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq yd cannot be compared with a large tract or block of land of say 10,000 sq yd or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a layout, carving out roads,leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.
(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself.
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 (17) These are genera guidelines to be applied with understanding informed with common sense."
18. These principles are invariably kept in mind by the courts while determining the market value of the acquired lands (also see Union of India v. Raj Kumar Baghal Singh [Union of India v. Raj Kumar Baghal Singh, (2014) 10 SCC 422 : (2015) 1 SCC (Civ) 17] ).
19. In addition to these principles, this Court in several cases have laid down that while determining the true market value of the acquired land especially when the acquired land is a large chunk of undeveloped land, it is just and reasonable to make appropriate deduction towards expenses for development of acquired land. It has also been consistently held that at what percentage the deduction should be made varies from 10% to 86% and, therefore, the deduction should be made keeping in mind the nature of the land, area under acquisition, whether the land is developed or not and, if so, to what extent, the purpose of acquisition, etc. It has also been held that while determining the market value of the large chunk of land, the value of smaller pieces of land can be taken into consideration after making proper deduction in the value of lands especially when sale deeds of larger parcel of land are not available. This Court has also laid down that the court should also take into consideration the potentiality of the acquired land apart from other relevant considerations. This Court has also recognised that the courts can always apply reasonable amount of guesswork to balance the equities in order to fix a just and fair market value in terms of parameters specified under Section 23 of the Act. (See Trishala Jain v. State of Uttaranchal [Trishala Jain v. State of Uttaranchal, (2011) 6 SCC 47 : (2011) 3 SCC (Civ) 178] and Vithal Rao v. LAO [Vithal Rao v. LAO, (2017) 8 SCC 558 : (2017) 4 SCC (Civ) 155] .) The law declared by the Hon'ble Supreme Court in the afore extracted judgments are the guiding principles as to how the market value has to be determined for the lands acquired when Reference is sought under Section 18(1) of the Act.
23. The Reference Court has failed to consider any of the parameters laid down by the Apex Court in the afore- extracted judgment and the impugned order completely falls foul of the law declared by the Apex Court insofar as
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 it pertains to determination of market value of the land that is acquired, in the present case the land of the claimants acquired for the purpose of formation of new railway line.
24. The Reference Court has further erred in placing blind reliance on the consent awards passed in respect of acquisitions in difference taluks. The reference Court has failed to consider the distance between the lands covered under the consent awards and the subject lands. It has failed to adjudge the similarity of the lands, the developments surrounding the lands on the date of notification for acquisition. More so when the distance between Gangavathi and Sindhanur is about 50 Kms and Sindhanur to Raichur Taluk (where the present lands are situated) is more than 100 Kms. Placing blind reliance on an earlier order of the Reference Court or an earlier award which has become final and determining the compensation without there being analysis of any other evidence, is also contrary to law, in the light of the law laid down by the Apex Court in the case of Manoj Kumar and Others V. State of Haryana and Others reported in (2018) 13 SCC 96, wherein the Apex Court at paragraphs 11 to 16 has held has follows:
"11. In our opinion, the High Court could not have placed an outright reliance on Swaran Singh case [Swaran Singh v. State of Haryana, 2012 SCC OnLine P&H 19044] , without considering the nature of transaction relied upon in the said decision. The decision could not have been applied ipso facto to the facts of the instant case. In such cases, where such judgments/awards are relied on as evidence, though they are relevant, but cannot be said to be binding with respect to the determination of the price, that has to depend on the evidence adduced in the case. However, in the instant case, it appears that the land in Swaran Singh case [Swaran Singh v. State of Haryana, 2012 SCC OnLine P&H 19044] was situated just across the road as observed by the High Court as such it is relevant evidence but not binding. As such it could have been taken into consideration due to the nearness of the area, but at the same time what was the nature of the transaction relied upon in the said case was also required to be looked into in an objective manner. Such decisions in other cases cannot be adopted without examining the basis for determining compensation whether sale transaction referred to therein can be
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 relied upon or not and what was the distance, size and also bona fide nature of transaction before such judgments/awards are relied on for deciding the subsequent cases. It is not open to accepting determination in a mechanical manner without considering the merit. Such determination cannot be said to be binding.
12. We have come across several decisions where the High Court is adopting the previous decisions as binding. The determination of compensation in each case depends upon the nature of land and what is the evidence adduced in each case, may be that better evidence has been adduced in later case regarding the actual value of property and subsequent sale deeds after the award and before preliminary notification under Section 4 are also to be considered, if filed. It is not proper to ignore the evidence adduced in the case at hand. The compensation cannot be determined by blindly following the previous award/judgment. It has to be considered only a piece of evidence, not beyond that. The court has to apply the judicial mind and is supposed not to follow the previous awards without due consideration of the facts and circumstances and evidence adduced in the case in question. The current value reflected by comparable sale deeds is more reliable and binding for determination of compensation in such cases award/judgment relating to an acquisition made before 5 to 10 years cannot form the safe basis for determining compensation.
13. The awards and judgment in the cases of others not being inter parties are not binding as precedents. Recently, we have seen the trend of the courts to follow them blindly probably under the misconception of the concept of equality and fair treatment. The courts are being swayed away and this approach in the absence of and similar nature and situation of land is causing more injustice and tantamount to giving equal treatment in the case of unequals. As per situation of a village, nature of land, its value differ from distance to distance, even two to three kilometre distance may also make the material difference in value. Land abutting highway may fetch higher value but not land situated in interior villages.
14. The previous awards/judgments are the only piece of evidence on a par with comparative sale transactions. The similarity of the land covered by previous judgment/award is required to be proved like any other comparative exemplar. In case previous award/judgment is based on exemplar, which is not
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 similar or acceptable, previous award/judgment of court cannot be said to be binding. Such determination has to be outrightly rejected. In case some mistake has been done in awarding compensation, it cannot be followed; on the ground of parity an illegality cannot be perpetuated. Such award/judgment would be wholly irrelevant.
15. There is yet another serious infirmity seen in following the judgment or award passed in acquisition made before 10 to 12 years and price is being determined on that basis by giving either flat increase or cumulative increase as per the choice of individual Judge without going into the factual scenario. The said method of determining compensation is available only when there is absence of sale transaction before issuance of notification under Section 4 of the Act and for giving annual increase, evidence should reflect that price of land had appreciated regularly and did not remain static. The recent trend for last several years indicates that price of land is more or less static if it has not gone down. At present, there is no appreciation of value. Thus, in our opinion, it is not a very safe method of determining compensation.
16. To base determination of compensation on a previous award/judgment, the evidence considered in the previous judgment/award and its acceptability on judicial parameters has to be necessarily gone into, otherwise, gross injustice may be caused to any of the parties. In case some gross mistake or illegality has been committed in previous award/judgment of not making deduction, etc. and/or sufficient evidence had not been adduced and better evidence is adduced in case at hand, previous award/judgment being not inter partes cannot be followed and if land is not similar in nature in all aspects it has to be outrightly rejected as done in the case of comparative exemplars. Sale deeds are on a par for evidentiary value with such awards of the court as court bases its conclusions on such transaction only, to ultimately determine the value of the property."
In terms of the law declared by the Hon'ble Supreme Court in the above judgments, placing reliance on the earlier judgments/award without considering the facts of the cases on hand would be committing an error in law and the Reference court has placed blind reliance on the consent awards, without considering the facts and evidence in the cases before it.
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017
25. Perusal of the impugned orders in all these appeals, clearly show that the market value has been determined without complying with principles laid down in Section 23 of the said Act of 1894 and the judgments of the Hon'ble Supreme Court in cases of Hargovinddas (Supra), Dyagala Devamma (Supra) and Manoj Kumar (Supra).
26. In the circumstances, without going into the merits of the claim of the appellant railways and that of the claimants in their respective appeals filed by them, we deem it appropriate to set aside the award of the Reference Court and remit the matter back to the Reference Court for a fresh determination strictly in consonance with the law declared in the judgments of the Hon'ble Supreme Court in cases of HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER reported in (1988) 3 SCC 751, UNION OF INDIA Vs. DYAGALA DEVAMMA reported in (2018) 8 SCC 485 and MANOJ KUMAR AND OTHERS Vs. STATE OF HARYANA AND OTHERS reported in (2018) 13 SCC 96.
27. For the aforementioned reasons, we pass the following:
ORDER (1) MFA No.200777/2015, MFA No.202026/2016, MFA No.200772/2015, MFA No.200774/2015, MFA No.200771/2015, MFA No.202027/2016, MFA No.202024/2016, MFA No.202025/2016, MFA No.202033/2016, MFA No.202032/2016, MFA No.202034/2016, MFA No.200775/2015, MFA No.200776/2015, MFA No.200770/2015, MFA No.200773/2015, MFA No.200778/2015, MFA No.202031/2016 and MFA No.202030/2016 are allowed and the order of the Reference Court in LAC Nos.49/2009, 71/2010, 86/2009, 89/2009, 61/2009, 72/2009, 84/2009, 53/2009, 78/2010, 91/2009, 104/2010, 57/2009, 51/2009, 59/2009, 55/2010, 57/2010, 07/2011, 85/2009, is set aside.
(2) MFA No.202133/2014, MFA No.202130/2014, MFA No.202139/2014, MFA No.202136/2014, MFA No.202137/2014, MFA No.202138/2014, MFA No.202135/2014, MFA No.202132/2014, MFA No.202131/2014, MFA No.202129/2014, MFA No.202124/2014, MFA No.202134/2014, MFA
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 No.202122/2014, MFA No.202123/2014, MFA No.202125/2014, MFA No.202126/2014, MFA No.202127/2014 and MFA No.202128/2014 are dismissed.
(3) The matters are remitted back to the Reference Court for a decision afresh strictly in consonance with the principles laid down by the Hon'ble Supreme Court in the cases of HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER, reported in (1988) 3 SCC 751, UNION OF INDIA Vs. DYAGALA DEVAMMA reported in (2018) 8 SCC 485 and MANOJ KUMAR AND OTHERS Vs. STATE OF HARYANA AND OTHERS reported in (2018) 13 SCC 96 within a period of six months from the date of receipt of the copy of the order.
(4) The Registry is directed to circulate this order to all the Presiding Officers of the Reference Courts for its strict adherence.
(5) The records shall be retransmitted forthwith to the Reference Court.
(6) In view of the appeals being allowed & remanded, the appellants are entitled to refund of court fee in accordance with law.
(7) There shall be no order as to costs."
10. It must be noticed that the co-ordinate bench has clearly observed after referring to judgments of Supreme Court that Reference Court placing blind reliance on consent award, without considering facts and case before it, was erroneous. The co-ordinate bench has also observed that the impugned orders show that the market value has been determined without taking note of the principles laid down in Section 23 of the Land Acquisition
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 Act, 1894 and disposed of the appeals by setting aside the order of the Reference Court.
11. In the present case also, a detailed perusal of the award of the Reference Court would indicate that the clinching point taken note for consideration is the amount fixed in the consent award. Admittedly, as the consent award relates to land in Koppal taluk, while in the present case, lands in Mamadapur fall within Raichur District. The mere reliance solely on the consent award as observed by the co-ordinate bench would not be sufficient. Matter requires consideration by taking note of observations made by the co-ordinate bench in MFA No.200777/2015.
Reliance on a consent award of land acquired cannot be binding as in case of a consent award the compensation is agreed upon by consent and not adjudication. The compensation to be determined for each land depends upon various factors as enumerated by the Apex Court in Chimanlal Hargovinddas vs. Special Land Acquisition
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 Officer1. The Court while taking note of various factors, could not have ignored the evidence of the claimant in the form of Exs.P-1 to P-50 which includes award passed in the case of comparable lands as asserted by the claimants. The recent decision of the Apex Court in Special Land Acquisition Officer and others vs. N. Savitha2 would also be relevant insofar as observations are made that consent awards cannot be readily taken as 'comparables' for fixing compensation. Accordingly, the approach of the Reference Court cannot be accepted and the market value of land will have to be assessed independently looking into the evidence on record let in by the claimant taking note of the principles to be kept in mind as held by the co-ordinate bench. In light of the same, the point for consideration is to be answered in the affirmative.
12. Accordingly, the following:
1(1988) 3 SCC 751 2 2022 LiveLaw (SC) 316
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NC: 2025:KHC-K:166-DB MFA No.202184 of 2017 C/W MFA No.202183 of 2017 ORDER
(i) The appeals are allowed.
(ii) The judgment and award of the Reference Court is set aside and the matter is remitted for fresh consideration to the Reference Court, which is to adjudicate the reference taking note of the observations made by the co-ordinate bench in MFA No.200777/2015.
Registry to send back the Trial Court records.
There shall be refund of court fee in terms as stipulated under Section 64 of the Karnataka Court Fees and Suits Valuation Act, 1958.
Sd/-
(S.SUNIL DUTT YADAV) JUDGE Sd/-
(RAJESH RAI K) JUDGE SWK List No.: 1 Sl No.: 7 CT-VK