ST ATE OF MAHARASHTRA ETC. versus DIGAMBAR BHIMASHANKAR TANDALE AND ORS. ETC.

Citation: [1996] 2 S.C.R. 90 · Decided: 02-02-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Case Partly allowed
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Judgment (excerpt)

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A 
ST ATE OF MAHARASHTRA ETC. 
v. 
DIGAMBAR BHIMASHANKAR T ANDALE AND ORS. ETC. 
FEBRUARY 2, 1996 
B 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.j 
Land Acquisition Act, 1894: 
Compensation-Award of-When large eJ.tent of land is acquired sales 
c of small pieces of lctnd though genuine cannot be relied upon-Also on date 
of notification though lands converted into non-a!Jlicultural lands, there was 
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no development in tlie area-The lands did not possess potential value as 
building site on the date of notification-Therefore ~ompensation cannot be 
. detennined on sq. yd. or Sq. mt. basis-However lands situated near 17iennal 
D 
Power Station fixed at Rs. 40,000 per acre-Claimants entitled to solatium 
and interest as also interest on enhanced compensation. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3374-76 
of 1996 Etc. 
E 
From the Judgment and Order dated 8.3.94 of the Bombay High 
Court in F.A. Nos. 68, 70 and:71 of 1988. · 
D.M, Nargolkar and A.S. Bhasme for the Appellants. 
V.N. Ganpule, Ashok Kumar Singh, Ms. Punam Kumar and A.B. Lal 
F 
for the Respondents. 
The following Order of the Court was delivered : 
Delay condoned. Leave granted. 
G 
We have heard the counsel on both sides. The notification under 
Section 4(1) of the Land Acquisition Act was published in the State 
Gazette on July 14, 1977 acquiring 12.50 acres of land for extension of the 
Thermal Power Station at Parali Vaidyanath Municipality. The Land Ac-
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quisition Officer in his award dated 20.9.1978 determined the compensa-
tion at Rs. 3,000 per acre, namely, 72.5 per Acre, On reference, the 
H Additional District Judge by his award and decree dated April ·27, 1987 
90 
j 
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STATEv. D.B. TANDALE 
91 
enhanced the compensation at Rs. 5 per sq. ft. On appeal, the High Court A 
while confirming the said determination, reduced l/3rd of the amount 
towards development charges. Thus these appeals by special leave by the 
State as well as by the Electricity Board and also by the claimants against 
the deduction of 1/3rd amount. Thus these appeals are heard together. 
The only question is : what will be the just and adequate compensa-
tion to which the lands are capable to fetch in open market? It is settled 
law that the determination of compensation on sq. ft. basis is an illegal 
principle followed by the courts. The reference Court on feats of imagina-
tion has done it. When 12.50 acres of land is sought to be acquired, no 
reasonable prudent purchaser would come forward to purchase the land 
on the sq. ft. basis. It would be incredulous to believe such a purchase. 
Therefore, the premise on which the reference Court and the High Court 
had proceeded to determine the compensation is obviously illegal. It is not 
B 
c 
in dispute that as on the date of the notification the lands were agricultural 
lands though situated within the municipal limits. It is also in evidence that D 
the lands were converted for non-agricultural purpose. But as on the date 
of notification there was no development in that area. the oral evidence 
was adduced in which it was shown that upto a distance of 3/4th km. to the 
lands there was development. Some illegal constructions were made on the 
lands. Under those circumstances, as on the date of the notification there 
was no potential value to the lands though converted into non-agricultural E 
lands. The determination of the compensation on the basis of the potential 
value is also illegal. 
The reference Court has relied upon several sale deeds dated 
14.1.1976, Exs. 48, 49 and 50 of a small extent of land sold on sq. ft. basis p 
and on that premise the Court had determined the compensation. It is 
settled law that when a large extent of land is acquired, the sales of small 
pieces of land though genuine, cannot be relied -upon as the basis to 
determine the compensation. Accordingly, they are excluded. Having ex-
cluded those documents, there is no other acceptable evidence to deter-
mine compensation on the basis of sq. yd. or sq. mtr. Accordingly, it is not G 
capable to determine the compensation on sq. yd. or sq. mt. basis since the 
lands are not possessed of potential value as building site as on the date 
of notification. 
The question then is what would be the just, fair and adequate H 
92 
SUPREME COURT REPORTS 
(1996] 2 S.C.R. 
A compensation the lands can fetch? In the facts and circumstances and in 
view of the statement made by the Land Acquisition Officer that the lands 
are abutting the Thermal Power
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