ASTEKAAR NAGANAATHA RAO AND ORS. ETC. versus THE ASSISTANT COMMISSIONER AND LAND ACQUISITION OFFICER AND ORS. ETC.

Citation: [1996] 1 S.C.R. 180 · Decided: 05-01-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Appeal(s) allowed

Judgment (excerpt)

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ASTEKAAR NAGANAATHA RAO AND ORS. ETC. 
v. 
THE ASSISTANT COMMISSIONER AND LAND ACQUISITION 
OFFICER AND ORS. ETC. 
JANUARY 5, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.] 
land Acquisition Act, 1894 : 
lands acquired for establishment of Air Force Station-Civil Court 
enhancing conipensation adopting method of hypothetical lay out-High Court 
rejecting the method adopted-Since the land other than the land acquired 
were not available .for sale in open lrtarket, held High Court rightly rejected the 
niethod--On appeal, in response to Supreme Coll.rt' s suggestion parties agreeing 
for Rs. 45,000 per acre with solatium at 30% and additional amount at 12% per 
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a1ulu1n under S. 23( IA) from laking possession-Ordered according[~ Inter-
est entitlement at 9o/o from date o.f publication of notification and 15% fron1 date 
o.f expiry o.f 011e year thereo.f--Land revenue not to be deducted.from a1nount 
payable as rent. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1616-25 of 
1996. 
From the Judgment and Order dated 12.11.91 of the Karnataka High 
Court in M.F.A. Nos. 1821, 1769, 1772-73, 1775, 1797-99, 1815 and 1916 of 
1989. 
S.S. Javali R.K. Anand C.S. Kothwale, Ms. Kiran Suri, R.C. Mishra, Ms. 
Dr. Meera Aggarwal, Ms. Anil Katiyar, Ms. Sushma Suri, A.D.N. Rao, K.H. 
Nobin singh and M. Veerappa for the appearing parties. 
The following Order of the Court was delivered : 
Leave granted. 
Around 300 acres of agricultural land situated in Sarnbre (Belgaum 
Airport), Balekundri, Mutage were requisitioned in 1942, possession thereof 
was taken in 1942 and the court below had put the date on December 31, 1942, 
for the defence purposes, via., establishment of Air Force Station. The notifi-
cation under Section 4(1) of the Land Acquisition Act, 1894 (for short, "the 
Act") acquiring these lands was published on February 24, 1983. The Land 
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A.N. RAO v. ASSTT. COMMR. & LAND ACQUISITION OFFICER 
181 
Acquisition Officer (LAO) determined the compensation @ Rs. 6,000 per acre. 
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On reference, the civil Court enhanced the compensation to Rs. 70,400 per acre 
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adopting the method of hypothetical lay-out. The High Court in the impugned 
judgment made in MFA Nos. 1821/89 & batch remanded the matters without 
upholding the hypothetical lay-out giving reasons in support thereof. (When the 
lands are frozen for open sale the hypothetical lay-out is an artificial embellish-
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ment to award higher compensation). The question would arise : Whether the 
lands other than the acquired land, were available for sale in the open market. 
In 1942, when possession was taken as agricultural land for air field, the lands 
could not have been sold in 1942 for building purposes as hypothetical for lay-
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out. The High Court was, therefore, right in rejecting the application of principle 
of hypothetical lay-out which is but a figment. 
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In view of the fact that cases are pending for a long time, we have 
suggested to the counsel for the Union of India as well as for the claimants to 
have a negotiation for settlement of the amount. We are informed that pursuant 
to directions of this Court the parties have settled the amount at Rs. 45,000 per 
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acre with solarium at 30% and also entitlement of additional amount at 12% per 
annum under Section 23(1-A) of the Act, p•yable from the date of taking 
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possession. The only point on which the parties could not reach a consensus is 
the entitlement to payment of interest. It is contended by Shri Javali, the learned 
senior counsel that from 1942 no amount as rent has been paid and now stated 
to have been paid partly a sum for 1975-76 to 1982 and it cannot be considered 
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to be lease amount. In view of the settlement by the parties that the compensation 
payable to the appellants is Rs. 45,000 per acre, the question of determination 
of the compensation does not arise. Consequently, they are also entitled to the 
compensation at that rate and solarium at 30% and also additioqal amount at 
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12% under Section 23(I-A) of the Act, as agreed upon by the parties, from the 
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date of taking possession which the Court has fixed viz., December 31, 1942. 
In other words, the claimants would be entitled to the additional amount from 
January l, 1943 till the date of publication of notification under Section 4(1). 
The question that arises for consideration is from what date the appellants are 
entitled to interest. The additional affidavit filed in this Court would sho

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