Ready Reckoner Price cannot be the basis for determining compensation for land acquisition: SC declares Bombay HC’s decision per incuriam  

Supreme Court: While reversing the impugned decision of the Bombay High Court, M.R. Shah* and B.V. Nagarathna, JJ., held that the prices mentioned in the Ready Reckoner cannot be the basis for determining compensation for the land acquired under the Land Acquisition Act, 1894. 

By the instant appeal, Bharat Sanchar Nigam Limited (BSNL) had assailed the impugned order of the Bombay High Court enhancing amount of compensation for the acquired land by mainly relying upon the prevailing Ready Reckoner rates of the land. 

Background  

The respondents’ land was acquired by the State Government for BSNL. The Land Acquisition Officer declared the award determining the total compensation at Rs.14,33,703/- (at Rs.13.32 per sq. ft.). At the instance of the respondents, a reference was made to the Reference Court, which enhanced the amount of compensation to Rs.21/- per sq. ft.  

In appeal, the Bombay High Court enhanced the amount of compensation to Rs.174/- per sq. ft. (more than 800% of the Reference Court compensation and about 1300% of the compensation awarded by the Land Acquisition Officer).  

The Rule for Determination of Compensation  

In Jawajee Nagnatham v. Revenue Divisional Officer, A.P., (1994) 4 SCC 595, and Krishi Utpadan Mandi Samiti v. Bipin Kumar, (2004) 2 SCC 283, the Court while determining whether the prices mentioned in the Ready Reckoner can be the basis for determining the compensation for the land acquired under the Land Acquisition Act had observed and held that the amount of compensation for the land 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 land acquired or the land adjacent to the land acquired and possessing similar advantages; and  

(3) a number of years purchase of the actual or immediately prospective profits of the land acquired.  

It was 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 the market value of the land appropriate to the facts of a given case to determine the market value. Subsequently, in Lal Chand v. Union of India, (2009) 15 SCC 769, the Court 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.  

Following the aforementioned views, the Court opined 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.   

Relying on Chimanlal Hargovinddas v. LAO, (1988) 3 SCC 751, the Court opined that there may be various factors, which are required to be considered for determining the market value of the land. The market value of the land depends upon the location of the land; area of the land; whether the land is in a developed area or not; whether the acquisition is of a small plot of land or a big chunk of land and the number of other advantageous and disadvantageous factors are required to be considered.  

Hence, the Court held that there cannot be a uniform market value of the land for the purpose of determination of the compensation for the land acquired under the Land Acquisition Act and that the market value of the different land varies from place to place and it depends upon various factors as observed hereinabove.  

Analysis of the Impugned Decision  

Finding the impugned decision per incuriam, the Court noted that the High Court had not followed the decisions laid down in Jawajee Nagnatham (supra) and Krishi Utpadan Mandi Samiti, Sahaswan (supra), on whether while determining the compensation for the land acquired under the Land Acquisition Act, the Ready Reckoner prices, which are for the determination of the stamp duty can be considered or not. Hence, the Court held that the High Court had seriously erred in not following the aforementioned decisions which were binding on it under Article 141 of the Constitution.  

Therefore, the Court held that the High Court was wrong in enhancing the amount of compensation by 800% from Rs. 21/- per sq. ft. to Rs. 174/- per sq. ft. relying upon the rates mentioned in the Ready Reckoner. 

Conclusion  

In view of the above, the appeal was allowed and the impugned decision was set aside. The judgment passed by the Reference Court determining the compensation at Rs.21/- per sq. ft. was restored. 

[BSNL v. Nemichand Damodardas, 2022 SCC OnLine SC 815, decided on 11-07-2022]  


Judgment by: Justice M.R. Shah 


Appearance: 

For BSNL: Senior Advocate R.D. Agrawala  

For State: Advocate Sachin Patil  

For Respondents: Senior Advocate Kiran Suri 


Kamini Sharma, Editorial Assistant has put this report together 

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