TH DAY OF JULY v. Maharashtra

#50. We find that in the present case, the appellants were required to knock at the doors of the courts on number of occasions during the period of last twenty-two years. The appellants have been deprived of their property without paying any compensation for the same in the said period of last twenty-two years. As already discussed hereinabove, the appellants had purchased the plots in question for construction of residential houses. Not only have they not been able to construct, but they have also not been even paid any compensation for the same. As discussed hereinabove, though right to property is no more a fundamental right, in view of the provisions of Article 300-A of the Constitution of India, it is a constitutional right. A person cannot be deprived of his property without him being paid adequate compensation in accordance with law for the same.

#51. In the present case, it can clearly be seen that there is no delay which can be attributed to the appellants in not getting compensation, but it was on account of the lethargic attitude of the officers of the State/KIADB that the appellants were deprived of compensation.

#52. Only after the notices were issued in the contempt proceedings, the compensation was 17 determined by the SLAO on 22-4-2019 taking guideline values prevailing in the year 2011 for determining the market value of the acquired land.

#53. No doubt that as already observed by us hereinabove, we do not find any error in the approach adopted by the learned Single Judge of the High Court in holding that the SLAO could not have shifted the date and it could have been done only by this Court in exercise of powers under Article 32/142 of the Constitution of India or by the High Court under Article 226 of the Constitution of India. However, the learned Single Judge of the High Court instead of relegating the appellants to again go through the rigours of determination by SLAO, ought to have exercised powers under Article 226 of the Constitution to do complete justice. Even the Division Bench of the High Court on a hypertechnical ground non-suited appellants.

#54. In that view of the matter, we find that it is a fit case wherein this Court in exercise of its powers under Article 142 of the Constitution should direct shifting of the date for determination of the market value of the land in question of the appellants.

#55. If the compensation to be awarded at the market value as of the year 2003 is permitted, it would amount to permitting a travesty of justice and making the constitutional provisions under Article 300-A a mockery." 18 In Special Land Acquisition Officer, UK Project v. Mahaboob and Another's case (supra), the Apex Court has held the following:- “12. The total compensation as per the award of the LAO made in 1991, was Rs.5300/- (excluding statutory additions). Having lost his land, and consequently, the means of livelihood, the land-loser had to engage a lawyer and fight for a reasonable compensation by seeking reference to the court. The Reference Court determined the compensation as Rs.30,420/- per acre on 10-3-

#2005. This means an increase of about Rs.35,000/- in compensation (plus statutory additions) for the acquired land. But the land-loser was not given this amount.

#13. The State Government filed a appeal, then a second appeal and then an SLP. The result is except the paltry amount which he must have received when the LAO made the award, the land-loser has not received any compensation for nearly 17 years and had to fight the litigation before three courts for a total compensation of Rs.40,000/- (excluding statutory benefits). Apart from the fact that the land-loser would have spent virtually the entire amount for litigation, whatever amount he may ultimately receive will not get him even one-fourth or one-fifth of the extent of land which he lost by acquisition. Unless the process of acquisition gives him a reasonable compensation either at the time of or immediately after the dispossession, the compensation will be a mirage for most land-losers 19

#14. Statistics show that most of acquisitions relate to lands held by small farmers, whose livelihood depends upon the acquired land. The land is taken purportedly in accordance with law by resorting to acquisition proceedings. The Collector (LAO) is supposed to offer a compensation by taking all relevant circumstances relating to market value into account.

#15. To safeguard the interests of the land- loser, the Act requires the Collector to make the award before the landowner is dispossessed. The intention is that the land-loser will immediately be able to draw compensation and purchase some suitable or make appropriate arrangements for his livelihood. But in practice the Collectors (LAOs) seldom make reasonable offers. They tend to err on the “safer” side and invariably assess very low compensation. Such meagre awards force the land-loser to seek reference to the civil court for increase in compensation in regard to almost every award made by the LAO. In fact, many a time, even the Reference Courts are conservative in estimating the market value and it requires further appeals by the land-loser to the High Court and the Supreme Court to get just compensation for the land.

#16. We can take judicial notice of the fact that in several States the awards of the Reference Court or the judgments of the High Court and this Court increasing the compensation, are not complied with and the land-losers are again driven to courts to initiate time-consuming execution process (which also involves considerable expense 20 by way of lawyer's fee) to recover what is justly due. Resultantly the land-losers seldom get a substantial portion of proper compensation for their land in one lump sum immediately after the acquisition.” In Kolkata Municipal Corporation and Another v. Bimal Kumar Shah's case (supra), the Apex Court held that Article 300-A of the Constitution of India comprises of seven sub-rights, including the right to compensation and the non-compliance of which would amount to violation of the right. The Apex Court has held as under:- "28. While it is true that after the 44th Constitutional Amendment [the Constitution (44th Amendment) Act, 1978], the right to property drifted from Part III to Part XII of the Constitution, there continues to be a potent safety net against arbitrary acquisitions, hasty decision-making and unfair redressal mechanisms. Despite its spatial placement, Article 300-A, which declares that “no person shall be deprived of his property save by authority of law” has been characterised both as a constitutional and also a human right. To assume that constitutional protection gets constricted to the mandate of a fair compensation would be a disingenuous reading of the text and, shall we say, offensive the egalitarian spirit of Constitution. 21

#29. The constitutional discourse compulsory acquisitions, has hitherto, rooted itself within the “power of eminent domain”. Even within that articulation, twin conditions of acquisition being for a public purpose and subjecting the divestiture to the payment of compensation in lieu of acquisition were mandated. Although not explicitly contained in Article 300-A, these twin requirements have been read in and inferred as necessary conditions for compulsory deprivation to afford protection to the individuals who are being divested of property. A post-colonial reading of the Constitution cannot limit itself to these components alone. The binary reading of the constitutional right to property must give way to more meaningful renditions, where the larger right to property is seen as comprising intersecting sub- rights, each with a distinct character but interconnected to constitute the whole. These sub- rights weave themselves into each other, and as a consequence, State action or the legislation that results in the deprivation of private property must be measured against this constitutional net as a whole, and not just one or many of its strands.

#30. What then are these sub-rights or strands of this swadeshi constitutional fabric constituting the right to property? Seven such sub- rights can be identified, albeit non-exhaustive. These are: 22 (i) The duty of the State to inform the person that it intends to acquire his property —the right to notice, (ii) The duty of the State to hear objections to the acquisition — the right to be heard, (iii) The duty of the State to inform the person of its decision to acquire — the right to a reasoned decision, (vi) The duty of the State to demonstrate that the acquisition is for public purpose — the duty to acquire only for public purpose, (v) The duty of the State to restitute and rehabilitate — the right of restitution or compensation, (vi) The duty of the State to conduct the process of acquisition efficiently and within prescribed timelines of the proceedings — the right to an efficient and expeditious process, and (vii) The final conclusion of the proceedings leading to vesting — the right of conclusion.

#31. These seven rights are foundational components of a law that is tune with Article 300-A, and the absence of one of these or some of them would render the law susceptible to challenge. The judgment of this Court in K.T. Plantation declares that the law envisaged under Article 300-A must be in line with the overarching principles of rule of law, and must be just, fair, and reasonable. It is, of course, precedentially sound to describe some of these sub-rights as “procedural”, a nomenclature that often tends to undermine the inherent worth of these safeguards. These seven sub-rights may be procedures, but they do constitute the real content of the right to property under Article 300-A, non- 23 compliance of these will amount to violation of the right, being without the authority of law. x x x x x

33.7.1. Upon conclusion of process of acquisition and payment of compensation, the State takes possession of the property in normal circumstances. The culmination of an acquisition process is not in the payment of compensation, but also in taking over the actual physical possession of the land. If possession is not taken, acquisition is not complete. With the taking over of actual possession after the normal procedures of acquisition, the private holding is divested and the right, title and interest in the property, along with possession is vested in the State. Without final vesting, the State's, or its beneficiary's right, title and interest in the property is inconclusive and causes lot of difficulties. The obligation to conclude and complete the process of acquisition is also part of Article 300-A.” In Competent Authority v. Barangore Jute Factory reported in (2005) 13 SCC 477, the Apex Court while determining the quantum of compensation in a compulsory acquisition observed as follows:-

#14. Having held impugned notification regarding acquisition of land is invalid because it fails to meet the statutory requirements and also having found that taking possession of the land of the writ petitioners in the present case in pursuance of the said notification was not in 24 accordance with law, the question arises as to what relief can be granted to the petitioners. The High Court rightly observed that the acquisition of land in the present case was for a project of great national importance i.e. the construction of a national highway. The construction of a national highway on the acquired land has already been completed as informed to us during the course of hearing. No useful purpose will be served by quashing the impugned notification at this stage. We cannot be unmindful of the legal position that the acquiring authority can always issue a fresh notification for acquisition of the land in the event of the impugned notification being quashed. The consequence of this will only be that keeping in view the rising trend in prices of land, the amount of compensation payable to the landowners may be more. Therefore, the ultimate question will be about the quantum of compensation payable to the landowners. Quashing of the notification at this stage will give rise to several difficulties and practical problems. Balancing the rights of the petitioners as against the problems involved in quashing the impugned notification, we are of the view that a better course will be to compensate the landowners, that is, the writ petitioners appropriately for what they have been deprived of. Interests of justice persuade us to adopt this course of action.

#15. Normally, compensation is determined as per the market price of land on the date of issuance of the notification regarding acquisition of 25 land. There are precedents by way of judgments of this Court where in similar situations instead of quashing the impugned notification, this Court shifted the date of the notification so that the landowners are adequately compensated. Reference may be made to: (a) Ujjain Vikas Pradhikaran v. Raj Kumar Johri [(1992) 1 SCC 328] (b) Gauri Shankar Gaur v. State U.P. [(1994) 1 SCC 92] (c) Haji Saeed Khan v. State of U.P. [(2001) 9 SCC 513] In that direction the next step is what should be the crucial date in the facts of the present case for determining the quantum of compensation. We feel that the relevant date in the present case ought to be the date when possession of the land was taken by the respondents from the writ petitioners. This date admittedly is 19-2-2003. We, therefore, direct that compensation payable to the writ petitioners be determined as on 19-2-2003, the date on which they were deprived of possession of their lands. We do not quash the impugned notification in order not to disturb what has already taken place by way of use of the acquired land for construction of the national highway. We direct that the compensation for the acquired land be determined as on 19-2-003 expeditiously and within ten weeks from today and the amount of compensation so determined, be paid to the writ petitioners after adjusting the amount already paid by way of compensation within eight weeks thereafter. The claim of interest on the amount of compensation so determined is to be decided in accordance with law by the appropriate 26 authority. We express no opinion about other statutory rights, if any, available to the parties in this behalf and the parties will be free to exercise the same, if available. The compensation as determined by us under this order along with other benefits, which the respondents give to parties whose lands are acquired under the Act, should be given to the writ petitioners along with what has been directed by us in this judgment.”

#17. We have considered the contentions advanced in detail. The scheme of the 1894 Act provides for taking possession of property which is required for a public purpose after giving due notice to the land owners, after considering their objections and publishing a declaration under Section 6 of the 1894 Act and after computing the value of the land so acquired and tendering the same to the land owners with the statutory benefits and interest as provided in the 1894 Act. Section 17 of the 1894 Act provides for taking of possession of the property even without the award being passed in cases of extreme emergency. However, even in such cases 80% of the compensation for the land as estimated by the Collector has to be tendered to the land loser or deposited before taking possession. In the instant 27 case, no such tender of compensation or deposit thereof was made. It is an admitted case that even as on the date of filing of this appeal seeking enhancement of compensation, the amount awarded by the SLAO had neither been tendered nor deposited in full.

#18. In the peculiar facts and circumstances of the instant case, we are of the opinion that this is a fit case where the value of the land acquired has to be calculated reckoning the date of deposit of the first tranche of compensation or at least the date of reference as sought for in the appeal, as the relevant date for calculating the value of the land. We are fully aware that the jurisdiction being exercised by us in this appeal is appellate in nature and not the extraordinary original jurisdiction exercisable under Article 226 of the Constitution of India.

#19. The Apex Court in Bernard Francis’ case (supra), has clearly held that the power to postpone the date of the effect of the acquisition can be exercised by the Apex Court under Article 32/142 of the Constitution of India 28 as also by this Court under Article 226 thereof. It was held as under:- “16. We are in agreement with the findings of the learned Single Judge of the High Court, inasmuch as the SLAO cannot shift/postpone the date of preliminary notification. In case, upon appreciation of the material placed on record if this Court or the High Court, in exceptional circumstances, came to the conclusion that the acquisition proceedings themselves were liable to be quashed only then by exercising inherent powers this Court under Article 32/142 or the High Courts under Article 226 of the Constitution of India, respectively, can shift/postpone the date of preliminary notification to a later date. In our considered opinion, therefore, the learned Single Judge of the High Court rightly came to the conclusion that the award dated 22-4-2019 be quashed and set aside and ordered accordingly.” However, in the extraordinary circumstances available in this case, where it is an admitted fact that no compensation whatsoever was tendered or deposited till 14.12.2015, we are of the opinion that this is a case where extraordinary measures are called for even in the exercise of the appellate jurisdiction. This Court being privy to a gross injustice done to a citizen cannot refuse to exercise jurisdiction on a 29 technicality that what is being exercised is appellate jurisdiction under the provisions of the 1894 Act.

#20. Having held that the date of valuation must be reckoned as 11.03.2014, the determination of per cent value to be ascribed to the acquired land as on that date, arises for consideration. On the question of determination of market value of acquired lands, this Court in State of Karnataka, by Principal Secretary to Government, Revenue Department and Others v. Arthur Pereira and Others reported in 2019 SCC OnLine Kar 984, held as follows:- "8. It is well settled that the determination of market value of the acquired lands under the provisions of the said Act, always involves an element of guess work. But, the determination of the market value has to be made by adopting well recognized methods. In the present case, Reference Court by using comparison method, placing reliance on the sale instances of two registered sale deeds in respect of adjacent comparable land. The comparison method is a very well accepted method." 30

#21. The appellant has placed on record Ex.P4 dated

07.01.2010 which evidences the sale of 22 cents of land in neighbourhood a consideration Rs.35,00,000/-, yielding a per-cent rate of Rs.1,59,091/- and Ex.P5 dated 28.01.2011 evidences the sale of 3.5 cents of land in the adjacent village within 500 metres of the acquired land for Rs.12,00,000/-, yielding a per-cent rate of Rs.3,42,857/-. The extent acquired from the appellant being one acre, it would be appropriate to adopt Ex.P4 as the base exemplar wherein the sale transaction was in respect of 22 cents of land.

#22. Further, the principles governing the application of cumulative escalation over an established sale exemplar are well-settled by the Apex Court in General Manager, Oil and Natural Gas Corporation Ltd. v. Rameshbhai Jivanbhai Patel reported in (2008) 14 SCC 745, held as follows:- "14. On the other extreme, in remote rural areas where there was no chance of any development and hardly any buyers, the prices stagnated for years or rose marginally at a nominal rate of 1% or 2% per annum. There is thus a 31 significant difference in increases in market value of lands in urban/semi-urban areas and increases in market value of lands in the rural areas. Therefore, if the increase in market value in urban/semi-urban areas is about 10% to 15% per annum, the corresponding increases in rural areas would at best be only around half of it, that is, about 5% to 7.5% per annum. This rule of thumb refers to the general trend in the nineties, to be adopted in the absence of clear and specific evidence relating to increase in prices. Where there are special reasons for applying a higher rate of increase, or any specific evidence relating to the actual increase in prices, then the increase to be applied would depend upon the same.

#15. Normally, recourse is taken to the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years (as evidenced by sale transactions or acquisitions), evidence contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood. The said method is reasonably safe where the relied-on sale transactions/acquisitions precede subject acquisition by only a few years, that is, up to four to five years. Beyond that it may be unsafe, even if it relates to a neighbouring land. What may be a reliable standard if the gap is of only a few years, may become unsafe and unreliable standard where the gap is larger. For example, for determining the 32 market value of a land acquired in 1992, adopting the annual increase method with reference to a sale or acquisition in 1970 or 1980 may have many pitfalls. This is because, over the course of years, the “rate” of annual increase may itself undergo drastic change apart likelihood of occurrence of varying periods of stagnation in prices or sudden spurts in prices affecting the very standard of increase.

#16. Much more unsafe is the recent trend to determine the market value of acquired lands with reference to future sale transactions or acquisitions. To illustrate, if the market value of a land acquired in 1992 has to be determined and if there are no sale transactions/acquisitions of 1991 or 1992 (prior to the date of preliminary notification), the statistics relating to sales/acquisitions in future, say of the years 1994-1995 or 1995-1996 are taken as the base price and the market value in 1992 is worked back by making deductions at the rate of 10% to 15% per annum. How far is this safe? One of the fundamental principles of valuation is that the transactions subsequent to the acquisition should be ignored for determining the market value of acquired lands, as the very acquisition and the consequential development would accelerate the overall development of the surrounding areas resulting in a sudden or steep spurt in the prices. x x x x x" 33 In view of the principles laid down by the Apex Court in the above-mentioned case, we are of the view that cumulative escalation at the rate of 15% per annum is the appropriate measure for arriving at the market value as on 11.03.2014. The Apex Court in General Manager, Oil and Natural Gas Corporation Ltd.'s case (supra) has held that cumulative escalation ought to be applied for a period not exceeding four to five years preceding the date of acquisition, beyond which it may be unsafe to uniformly apply the same rate with cumulative effect. Therefore, cumulative escalation at 15% per annum over four years applied to Rs.1,59,091/- per cent established by Ex.P4, results in per cent rate of Rs.2,78,252/-, accordingly rounded off to Rs.2,78,000/- per cent, as the market value of the acquired land as on

11.03.2014. In addition to the enhanced market value, the appellant is entitled to all statutory benefits and interest in accordance with law, with interest from 11.03.2014.

#23. Having considered the contentions advanced and in view of the admitted factual position in the instant case, we are of the opinion that this is a fit case where the 34 compensation due is to be re-fixed, taking note of the date of the reference as sought for in this appeal. From the affidavit placed on record by the SLAO, it is clear that though the acquisition was initiated in the year 1990 and award was passed in the year 1992, the reference was made only on 11.03.2014. No fault can be attributed to the appellant for the said delay since the affidavit on record by the respondents only states that the delay in deposit of compensation happened due to administrative and procedural reasons. The first tranche of compensation, that is, part of the un-enhanced amount was deposited only on

14.12.2015. We make it clear that this judgment is being rendered in the peculiar facts and circumstances of the instant case, where no compensation whatsoever was paid or deposited before the said date and shall not be treated as a precedent for the purpose of Section 28-A of the 1894 Act.

#24. In the above view of the matter, we direct as follows:- (i) The Miscellaneous First Appeal is allowed in part. 35 (ii) The Compensation shall be re-determined taking the market Rs.2,78,000/- per cent, together with solatium and statutory interest

11.03.2014, the date taken into account for deciding compensation. (iii) The amount already paid or deposited shall be deducted and the balance amount shall be deposited within a period of four months from date of receipt of copy of the judgment. (iv) The appellants are permitted to withdraw enhanced amount deposited accordance with law. All pending Interlocutory Applications and memos shall stand disposed of and are consigned to the records. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (TARA VITASTA GANJU) JUDGE cp*