2021 INSC 0518
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICITON
CIVIL APPEAL NOS. 3875­3876 OF 2009
Ramesh Kumar   .. Appellant(s)
Versus
Bhatinda Integrated Cooperative 
Cotton Spinning Mill and Ors.        .. Respondent(s)
With
CIVIL APPEAL NO. 5669 OF 2021
(Arising out of Special Leave Petition (C) No.9470 of 2010)
Bant Singh and Ors. .. Appellant(s)
Versus
The State of Punjab & Ors.       .. Respondent(s)
With
CIVIL APPEAL NO. 5670  OF 2021
(Arising out of Special Leave Petition (C)No.15117 of 2010)
Gurbachan Singh (D) By LRs and Anr.    ..Appellant(s)
Versus
The State of Punjab and Ors. ..Respondent(s)
With

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CIVIL APPEAL NOS.9185­9196 of 2017
Gurjant Singh & Anr. etc. etc. ..Appellant(s)
Versus
The State of Punjab through Chief Secretary,
Department of Cooperation and Ors. ..Respondent(s)
J U D G M E N T
M. R. Shah, J.
Civil Appeal Nos. 3875­3876 OF 2009
1. Arising out of the impugned common judgment and order
dated 19.09.2008 passed by the High Court in RFA No.3476 of
1999 filed by the original claimants for enhancement and RFA
No.1507 of 1999 filed by the Bhatinda Integrated Co­operative
Cotton Spinning & Ginning Mills Ltd.
Special Leave Petition No.9470 of 2010
Leave granted.
Arising   out   of   RFAs   No.2648   of   1999   (Bant   Singh   and
Ors. vs. State of Punjab and Ors.), the appeal which was filed

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by   the   original   claimants   for   enhancement   of   the
compensation.     However,   it   is   required   to   be   noted   that   RFA
No.1505 of 1999 filed by the Bhatinda Integrated Co­Operative
Cotton   Spinning   &   Ginning   Mills   Ltd.   vs.   Bant   Singh   and
others is not under challenge.
Special Leave Petition No.15117 of 2010
Leave granted.
Arising   out   of   RFA   No.2645   of   1999   which   was   filed   by
the   original   claimants   Gurbachan   Singh   and   others   for
enhancement of compensation. It is required to be noted that
no   appeal   has   been   preferred   by   the   original   claimants
(Gurbachan Singh and others) challenging the order passed in
RFA   No.1505   of   2019   which   was   filed   by   the   Bhatinda
Integrated Co­Operative Cotton Spinning & Ginning Mills Ltd.
which has been allowed by the High Court and the amount of
compensation has been reduced.

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CIVIL APPEAL NOS.9185­9196 of 2017
Civil   Appeal   Nos.9895­9897   of   2017   arising   out   of   RFA
Nos.2642,   2643,   2644,   2645,   2646,   2648   of   1999   and   RFA
Nos. 1505, 1508, 1509, 1510, 1515 and 1516 of 1999.
2. As common question of law and facts arise in this group
of   appeals,   all   these   appeals   are   decided   and   disposed   of
together by this common Judgment and Order.
2.1 Vide   notification  dated   06.06.1988   issued   under   Section
4   of   the   Land   Acquisition   Act,   1894   (for   short,   ‘the   Act’),   the
lands   owned   by   the   original   claimants   admeasuring   297
Kanals and 1 Marla situated in the revenue estate of Jassi Pau
Wali,   Distt.   Bhatinda,   Punjab   came   to   be   acquired   for   public
purpose,   namely,   establishment   of   Bhatinda   Integrated
Cooperative Cotton Spinning and Ginning Mills Ltd. (for short,
‘the   Spinning   Mill’).     The   same   was   followed   by   a   notification
under   Section   6   of   the   Act   on   08.06.1988.     The   Land
Acquisition   Officer   vide   Award   dated   05.10.1989   determined
the value of the land at Rs.25,000/­ per acre and awarded the
compensation accordingly.  At the instance of the land owners

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the   references   were   made   to   the   Reference   Court.     Vide
common   Judgment   and   Award   dated   27.02.1999,   the
Reference   Court   determined   the   market   value   of   the   land   at
Rs.1,12,000/­ per acre.  Before the Reference Court it was the
case   on   behalf   of   the   land   owners   that   the   acquired   land   is
situated   just   on   the   main   Bhatinda   Mansa   Road   and   has   a
very   potential   value   of   being   used   for   commercial   and
residential purposes as well as the industrial purposes.  Before
the   Reference   Court   the   land   owners   heavily   relied   upon   the
registered Sale Deeds Ex.A.W.6/C to Ex. A.W.6/H executed on
or about 24.05.1979 at the rate of Rs.50,000/­ per acre.   The
Reference   Court   took   into   account   the   aforesaid   sale   deed
Ex.A.W.6/C   to   determine   the   market   value   of   the   lands
acquired   and   considering   the   time   gap   of   about   9   years
between   the   date   of   the   execution   of   the   aforesaid   sale   deeds
and Section 4 Notification thereby granted the increase of 12%
in   the   price   of   the   land   per   year   and   applied   the   cut   of   25%
and  finally  determined  the value  of the  land  at Rs.1,12,000/­

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per acre and accordingly enhanced the award of compensation
by common Judgment and Order dated 27.02.1999.
2.2 Feeling   aggrieved   and   dissatisfied   with   the   common
Judgment  and Award passed by  the  Learned Reference Court
whereby it enhanced the amount of compensation considering
the  market  value of the land  at  Rs.1,12,000/­ per   acre, both,
the   original   claimants   as   well   as   the   Spinning   Mill   preferred
the appeals before the High Court.  The land owners preferred
the   appeals   for   enhancement   of   the   compensation.   By
impugned   common   Judgment   and   Order   the   High   Court   has
allowed   the   appeals   preferred   by   the   Spinning   Mill   reducing
the   amount   of   compensation   and   determining   the   value   of
acquired   land   at   Rs.88,400/­   per   acre.     The   High   Court   also
considered the Sale Deed Ex.AW6/C as a base for determining
the   value   of   the   acquired   land   and   also   added   12%   annual
increase.     However,   the   High   Court   imposed   the   cut   of   15%
instead of 25% as adopted by Learned Reference Court.  Thus,
the   appeals   preferred   by   the   Spinning   Mill   came   to   be   partly
allowed.     Consequently,   the   appeals   preferred   by   the   original

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land   owners   which   were   filed   for   the   enhancement   of   the
compensation came to be dismissed by the High Court.
2.3 Feeling   aggrieved   and   dissatisfied   with   the   common
impugned Judgment passed by the High Court partly allowing
the appeals preferred by the Spinning Mill and dismissing the
appeals   preferred   by   the   land   owners   for   enhancement   of
compensation and determining  the value of the acquired land
at   Rs.88,400/­   per   acre,   the   land   owners   have   preferred   the
present appeals.
3. Shri Vinay Mathew, Shri Yadav Narender Singh and Shri
Sridhar   Potaraju,   Learned   Advocates   appearing   on   behalf   of
the appellants – original land owners and Shri Puneet Kansal,
Learned   Advocate   appearing   on   behalf   of   the   Respondent   –
Spinning Mill.   At this stage, it is required to be noted that so
far as the Bhatinda Integrated Co­operative Cotton Spinning &
Ginning   Mills   Ltd.   is   concerned,   it   has   been   ordered   to   be
wound   up   and   the   Liquidator   has   been   appointed   and   Shri
Puneet   Kansal,   Learned   Advocate   has   appeared   on   behalf   of
Liquidator of the Spinning Mill.

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4. Learned Counsel appearing on behalf of the land owners
have made the following submissions:
(i) that   both,   the   Learned   Reference   Court   as   well   as
the High Court have failed to consider the exemplar
being the sale deed dated 04.05.1981 by  which the
land   admeasuring   70   meters   away   from   the
acquired   land   was   sold   at   Rs.1,17,600/­   per   acre.
It is submitted that as held by this Court in the case
of   Mehrawal   Khewaji   Trust,   Faridkot   and   Ors.
Vs.   State   of   Punjab   and   Ors.,   (2012)   5   SCC   432
the   highest   of   the   exemplars   which   is   a   bona   fide
transaction   has   to     be   considered.     It   is   submitted
that   the   said   sale   deed   was   executed   in   the   year
1981 and  considering   the  time given of  7 years  the
annual increase of 7 years was required to be taken;
(ii) that   the   High   Court   has   erred   in   taking   annual
increase   at   the   rate   of   12%   at   the   flat   rate   which
would   lead   to   anomalous   results   as   opposed   to
cumulative rate;

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(iii) it   is   submitted   that   exemplar   sale   deed   that   was
accepted   by   the   courts   below   is   dated   24.05.1979
which is more than 9 years before the notification of
acquisition   was   made   and   thus   9   years   of
cumulative   increase   has   to   be   applied   to   the   value
of the land at Rs.50,000/­ per acre.   Heavy reliance
is placed on the decision of this Court in  ONGC Ltd.
vs.   Rameshbhai   Jivanbhai   Patel   &   Anr. ,   (2008)
14 SCC 745.
In   the   aforesaid   decision,   it   is   categorically   held   by
this   Court   that   it   is   logical,   practical   and
appropriate   to   apply   cumulative   rate  as   opposed   to
flat rate.  It is submitted that aforesaid decision has
been   subsequently   followed   and/or   applied   in   the
case   of   Ashok   Kumar   and   Ors.   vs.   State   of
Haryana and Ors.,  (2015) 15 SCC 200;
(iv) that Reference Court as well as the High Court both
have erred in adopting cut of 25%/15% of the value
towards development. It is submitted that while the

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Reference   Court   has   adopted   cut   of   25%   of   the
market   price,   the   High   Court   deducted   15%.     It   is
submitted  that  considering  the  location  and   nature
of the land that was acquired as well as the purpose
for   which   it   was   acquired   (for   commercial   purpose
for   spinning   mill)   no   cut   from   the   market   price
should   have   been   made   and   the   land   owners   were
entitled   to   the   market   price   without   any   cut.     It   is
further submitted that the acquired land is only 30
acres and the nature of the land is semi urban and
the   same   was   adjoining   the   municipal   limits   of
Bhatinda   and   it   was   further   found   that   the   area
surrounding   the   acquired   land   consisted   of
factories,   go­downs,   residential   houses   and   the
cantonment areas thus no deduction on account of
any   development   charges   should   have   been   made;
(v) that   the   land   was   acquired   for   setting   up   profit
making   enterprise   i.e.   cotton   spinning   mill   and
therefore, also no deduction should have been made

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in  the price of the exemplar.   Reliance is placed on
the   decision   of   this   Court   in   the   case   of   Atma
Singh  vs.  State of Haryana,  (2008) 2 SCC 568.
4.1 Making   the   above   submissions   and   further   relying   the
decisions of this Court in the cases of  Anjani Molu Dessai vs.
State   of   Goa   and   Anr. ,   (2010)   13   SCC   710   and   Trishala
Jain and Anr.   Vs.   State of Uttaranchal and Anr. , (2011) 6
SCC 47, it is prayed to allow the present appeals and enhance
the amount of compensation considering the value of the land
of Rs.1,50,000/­ per acre.
5. All   the   appeals   are   opposed   by   Learned   Counsel
appearing   on   behalf   of   the   Liquidator   of   Spinning   Mill.     It   is
submitted   on   behalf   of   the   Learned   Counsel   for   Liquidator   ­
Spinning   Mill   that   the   mill   was   a   Co­operative   Society   and
became   operational   only   in   1992.     The   mill   went   into   huge
losses   because   of   various   factors   which   resulted   in   complete
erosion   of   the   capital   on   account   of   which   the   mill   was
brought into winding up vide orders dated 09.05.2003.  All the

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land   owners   have   been   paid   in   full   as   per   the   High   Court
Judgment.
5.1 Now   so   far   as   reliance   placed   upon   the   decision   in   the
case   of   Rameshbhai   Jivanbhai   Patel   (Supra)   by   the   land
owners   to   apply   the   rate   of   12%   increase   cumulatively;   it   is
submitted that the said decision is distinguishable on facts.  It
is submitted that in the subsequent decision in the case of  Lal
Chand  vs.  Union of India , (2009) 15 SCC 769, this Court has
held   that   the   Court   should,   before   adopting   a   standard
escalation,   satisfy   itself   that   there   were   no   adverse
circumstances.     It   is   submitted   in   the   present   case   that   the
State of Punjab was engulfed in militancy from 1979 onwards
till 1992.  There was large scale exodus of families belonging to
one particular community from the State on account of which
there were practically  no buyers for the land.   It is submitted
that   as   such   on   account   of   militancy   prices   had   crashed   to
around Rs.25,000/­ per acre.  

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5.2 It   is   submitted   that   therefore,   even   the   compensation
granted to the land owners is already on the higher side.  It is
submitted therefore in the facts and circumstances of the case
the submission on behalf of the land owners that there should
not be any deduction at all may not be accepted.
5.3 Now   so   far   as   the   reliance   placed   upon   the   Sale   Deed
dated   04.05.1981,   it   is   submitted   that   the   sale   deed   was   for
small   portion   of   land   being   1   Kanal   14   Marlas   against   297
Kanal   1   Marla   of   land   and   therefore,   the   same   has   not   been
rightly   accepted   by   the   Reference   Court   as   well   as   the   High
Court.
5.4 It is further submitted that even otherwise the cut of 15%
towards   development   charges   does   not   require   any
interference as the land was agricultural (soft soil) acquired for
industrial purpose.
5.5 It   is   submitted   that   therefore,   considering   the   oral   facts
and circumstances of the case no interference of this Court is

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called   for.     Therefore,   it   is   prayed   to   dismiss   the   present
appeals.
6. Heard   Learned   Counsel   for   the   parties   respectively   at
length.
6.1 In   the   present   case   the   Notification   under   Section   4   of
the Act has been issued on 06.06.1988.   The land in question
was acquired for the public purpose for establishing Bhatinda
Integrated Cooperative Cotton Spinning and Ginning Mills Ltd.
The   Land   Acquisition   Officer,   Bhatinda   awarded   the
compensation   considering   the  value   of  the   land   at  the  rate  of
Rs.25,000/­   per   acre.     The   Reference   Court   relying   upon   the
sale deed dated 24.05.1979 as Ex. AW6/C  by  which  the land
admeasuring   43   kanals   13   marlas   out   of   the   acquired   land
was   purchased   by  Shri  Sudarshan  Kumar   and   Mrs.  Surinder
Anand   at   the   rate   of   Rs.50,000/­   per   acre   and   thereafter
adding   12%   per   acre   and   thereafter   adopting   the   cut   of   25%
determined   the   compensation   at   Rs.1,12,000/­   per   acre.
Thereafter   the   High   Court   by   the   impugned   common
Judgment and Order has allowed the appeals preferred by the

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spinning mills and dismissed the appeals preferred by the land
owners, by determining the value at Rs.88,400/­ per acre after
adopting cut of 15%.
6.2 Having   heard   the   Learned   Counsel   for   the   respective
parties the questions which are posed for consideration of this
Court are: 
(i) Whether in the facts and circumstances of the
case   the   Courts   below   have   erred   in   taking
annual   increase   at   the   rate   of   12%   at   the   flat
rate and not applying the cumulative rate?
(ii) Whether in the facts and circumstances of the
case the High Court has erred in adopting the
cut/deduction   of   15%,   while   determining   the
value of the land acquired?
6.3 Now   so   far   as   the   submission   on   behalf   of   the   land
owners that while considering the annual increase at the rate
of  12%,  the  High  Court  ought  to   have  applied  the  cumulative
rate   and   reliance   placed   upon   the   decision   of   this   Court   in
Rameshbhai   Jivanbhai   Patel   (Supra)   and   in   the   case   of

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Ashok Kumar  (Supra)  are concerned, it is true that as held by
this   Court   in   aforesaid   two   decisions   increase   in   the   market
value should be at a cumulative rate and not at a flat rate.  In
the   case   of   Rameshbhai   Jivanbhai   Patel   (Supra)   in
paragraph   18,   it   is   specifically   observed   and   held   that   when
market   value   is   sought   to   be   ascertained   with   reference   to
transactions   which   took   place   before   the   acquisition,   the   law
adopted   is   to   collect   the   year   to   year   increase.     It   is   further
observed and held that as the percentage of increase is always
with   reference   to   the   previous   year’s   market   value,   the
appropriate method is to adopt the increase cumulatively and
not  applying  a  flat  rate.    However,  at  the  same  time  it  is  also
observed   and   held   in   the   said   decision   that   it   is   reasonably
safe   to   determine   the   market   value   by   providing   appropriate
escalation  over  the  approved  market  value   of  nearby   lands   in
the   previous   years,   when   relied   on   sale
transactions/acquisitions   precede   the   subject   acquisition   by
only a few years, i.e., upto 4­5 years.  It is further observed in
the said decision in para 15 that beyond that it may be unsafe,

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even   if   it   relates   to   a   neighbouring   land.     In   para   15   it   is
observed and held as under:
“   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   acquisition),
where   there   is   no   evidence   of   any
contemporaneous   sale   transactions   or
acquisitions   of   comparable   lands   in   the
neighbourhood.   The   said   method   is   reasonably
safe   where   the   relied­on­sale
transactions/acquisitions   precedes   the   subject
acquisition by only a few years, that is upto 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 only a few years,
may   become   unsafe   and   unreliable   standard
where   the   gap   is   larger.   For   example,   for
determining the 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
from   the   likelihood   of   occurrence   of   varying
periods of stagnation in prices or sudden spurts
in prices affecting the very standard of increase.
In the present case both, the Reference Court as well as
the   High   Court,   have   determined   the   value   of   the   land
considering   the   Sale   Deed   dated   24.05.1979   which   is   more
than   9   years   before   the   notification   of   the   acquisition.
Therefore, considering the observations made by this Court in

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para 15 in the case of   Rameshbhai Jivanbhai  Patel   (Supra)
reproduced hereinabove and considering the fact that time gap
between the sale deed relied upon and the date of notification
of acquisition is more than 9 years, the courts below ought to
have   been   very   cautious   in   relying   upon   the   Sale   Deed   dated
24.05.1979.   Be that it may and assuming that the Sale Deed
dated 24.05.1979 was the best evidence available to determine
the   value   of   land   acquired   in   that   case   also   taking   annual
increase   at   the   rate   of   12%   is   not   justified.     We   are   of   the
opinion   that,   in   the   facts   and   circumstances   of   the   case   the
annual   increase/escalation   ought   to   have   been   at   the   rate   of
10% maximum.  Even otherwise, it is required to be noted that
State  of   Punjab   suffered   due  to   militancy   from   1979  onwards
till   1992   and   because   of   that   the   prices   would   have   crashed.
Therefore, to grant the escalation/price rise at the rate of 12%
would   not   be   justified   at   all.     After   considering   the   case   of
Rameshbhai Jivanbhai Patel  (Supra),  it is observed and held
by this Court in the case of  Lal Chand  (Supra) that even if the
transaction   is  2  to   3  years   prior   to   the   acquisition,  the   Court

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should,   before   adopting   a   standard   escalation   satisfy   itself
that   there   were   no   adverse   circumstances.     It   is   further
observed   and   held   that   the   question   is   therefore,   necessary
before   increasing   the   price   with   reference   to   the   old
transactions.     Therefore,   assuming   that   the   appellants   are
right in submitting that the increase in land value should have
been   adopted   on   cumulative   basis,   in   the   peculiar   facts   and
circumstances   of   the   case   noted   hereinabove,   we   see   no
reason   to   interfere   with   the   impugned   judgment   and   order
passed by the High Court.
6.4 Now so far as the submission on behalf of the appellants
of   not   taking   into   consideration   the   other   sale   deeds,   it   is
required to be noted that those sale deeds are with respect to
small portions of land and thereafter rightly discarded.
6.5 Now   so   far   as   the   deduction   at   the   rate   of   15%   towards
the   development   charges,   it   also   does   not   call   for   any
interference of this Court considering the fact that the land in
question   at   the   relevant   time   was   an   agricultural   land.
However,   taking   into   consideration   the   fact   that   the   sale

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instance dated 24.07.1979 relied upon was a quite big chunk
of land and the location of the acquired land and the land was
acquired for spinning mill, the High Court has rightly adopted
15% cut,  which  in  the facts and circumstances  of the  case is
not required to be interfered with. 
7. At  this stage, it is also required to be noted that though
the   land   was   acquired   in   the   year   1988,   the   same   was   made
operational only in the year 1992 and therefore, has gone into
liquidation   in   the   year   2003.     The   entire   amount   of
compensation as determined by the High Court has been paid.
We see no reason to interfere with the common Judgment
and   Order   passed   by   the   High   Court.     In   view   of   the   reasons
stated   hereinabove   all   these   appeals   fail   and   deserve   to   be
dismissed.  The appeals are dismissed accordingly.
However, no order as to costs.
…………………………………J.
              (M. R. SHAH)
…………………………………J.
New Delhi,        (ANIRUDDHA BOSE)
September 13, 2021

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