STATE OF MADHYA PRADESH versus SMT. SHANTABHAI AND ORS.

Citation: [1995] 1 S.C.R. 416 · Decided: 18-01-1995 · Supreme Court of India · Bench: K. RAMASWAMY, N. VENKATACHALA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
E 
c 
STATE OF MADHYA PRADESH 
v. 
SMT. SHANTABHAI AND ORS. 
JANUARY 18, 1995 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.] 
Land Acquisition Act, 1894-Notiftcation u/s 4(1)-Land acquired--
Compensation-Determination of market value-Reliance on respondents' 
purchase price. 
Respondents' 22 acres 63 decimals of l~nd for Rs. 1,08,000 on Sep· 
tember 4, 1974 for industrial purposes for RS. 1,08,000 was acquired by 
publication of notification just two days latei~n reference the Land 
Acquisition Officer's award of Rs. 1500 per acre wa~ enhanced to Rs. 4,900 
D per acre by the Civil Court which amounted to Rs. 1,08~000 in all. The High 
Court, on appeal by the Respondent, enhanced the Compensation to Rs. 
10,000 per acre making the total amount Rs. 2,27,000. Appeal by special 
leave was filed against the order. 
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Allowing the appeal, this Court 
HELD : 1. The respondent's purchase of the property for a con· 
sideration of Rs. 1,08,000, ipso facto furnishes the sole basis for determina· 
tion of market value of the self same land. 1417-H, 418-A] 
2. No reasonable and prudent buyer in normal market conditions 
F would agree to pay a sum of Rs. 2,27,000 for land purchased by the seller 
two days earlier for Rs. 1,08,000. [418-B] 
3. The High Court .totally ignored relevant consideration while en· 
hancing the compensation without application of mind on the basis of sale 
G transactions of small bits of other land. [ 418-C] 
V.M. Salgoacar and Brother Ltd. v. Union of India, C.A. No. 3800/89 
dated January II, 1995, relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2944 of 
H 1984. 
416 
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STATEOFM.P.v. SHANTABHAI 
417 
From the Judgment and Order dated 1.11.83 of the Madhya Pradesh A 
High Court in F.A. No. 17 of 1981. 
B.S. Banthia, S.K. Agnihotri for the Appellant. 
R.P. Bhatt, Vivek Gambhir and S.K. Gambhir for the Respondents. 
B 
The following Order of the Court was delivered : 
A notification under s.4(1) of the Land Acquisition Act, 1894, (fo1 
short, 'the Act') was published in the State gazette on September 6, 1974 
acquiring 22 acres 63 decimals of the land situated in village Rasoolpur of 
Devdas Distt. of M.P. for industrial purpose. The Land Acquisition Officer C 
in his award dated June 1975 determined the market value at Rs. 1,500 per 
acre and given the compensation with statutory benefits. On reference, the 
Civil Court by its award and decree dated October 22, 1980 enhanced the 
compensation to Rs. 4,900 per acre which worked out to Rs.1,08,000 in all. 
At this stage it is relevant to mention that the respondent herself purchased D 
the entire acquired land under registered sale deed dated September 4, 
1974, just two days earlier to the date of publication of preliminary notifica-
tion for a total sum of Rs. 1,08,000. The respondent not being satisfied, 
carried the matter in appeal to the High Court under s.54 of the Act. The 
High Court, by its impugned judgment in Transfer appeal No. 323/82 dated E 
November 1, 1983, enhanced the compensation to R~. 10,000 per acre. In 
other words, the High Court awarded a total compensation of Rs. 2,27,000 
with statutory benefits thereon, Feeling aggrieved against enhanced com-
pensation awarded by the High Court this appeal by special leave has been 
filed. 
The High Court, in our considered view, committed palpable and 
manifest error of law in ignoring the sale deed of the respondent herself 
dated September 4, 1974 wherein she had paid total consideration of a sum 
F 
of Rs. 1,08,000 for the acquired land. It is contended by learned senior 
counsel for the respondent that this is an industrial area and the very 
purpose for which acquisition is sought to be made is for industrial pur· G 
pose. The respondent herself purchased the property for industrial pur-
pose. The High Court had rightly taken into consideration those facts and 
circumstances and enhanced the compensation. We find no force in the 
contention. When the respondent herself had purchased the property for 
the purpose of establishing an industry and got the sale deed registered on H 
418 
SUPREME COURT REPORTS 
(1995) 1 S.C.R. 
A Septt::mber 4, 1974, it would furnished ipso facto the sole basis for deter-
mination of market value of the self same land. For the property purchased 
by paying a consideration of Rs. 1,08,000, no reasonable and prudent 
buyer, within two days thereafter, would purchase the land. by paying a 
sum of Rs. 2,27,000 as determined by the High Court.
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