V.M. SALGOACAR AND BROTHER LTD. versus UNION OF INDIA

Citation: [1995] 1 S.C.R. 188 · Decided: 11-01-1995 · Supreme Court of India · Bench: K. RAMASWAMY, SUJATA V. MANOHAR · Disposal: Dismissed
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Judgment (excerpt)

A 
V.M. SALGOACAR AND BROTHER LTD. 
v. 
UNION OF INDIA 
JANUARY 11, 1995 
B 
(K. RAMASWAMY AND MRS. SUJATA V. MANOHAR, JJ.) 
Land Acquisition Act, 1894-SecA(lrAward of compensa-
~ 
tion-Where compensation to be detennined at the market value of the land 
C on the basis of small sale transactions or at the potential value thereof. 
Appellant's lands were acquired and the Land Acquisition Officer 
determined the compensation at Rs. 5 per sq. metre. He relied on the 
appeliant's stated purpose of usage of the land for staff quarters, the fact 
of a freeze on land development and used the purchase price of the 
D appellant as a base added compound interest and a small increase to 
arrive at the said market value of Rs. 5 per sq. metre. On referen~e under • 
S. 18 of the Act the District Judge enhanced it to Rs. 50 per sq. metre. The 
respondents moved the High Court against the order of enhancement. The 
High Court reversed the award and decree of the District Judge and 
E 
confirmed the award of the Collector. 
The appellants challenged the High Court order in this Court con-
tending that the lands possessed by them were of potential value as there 
was a rising trend in the market when land was sold out in small plots. 
They had brought four sale instances on record as a foundation for 
F 
determining the market value of the lands in question. They argued that 
the High Court erred in excluding those sale instances as irrelevant. 
The respondents contended that the sale instances were small and a 
few of them were post-notification sales. Development and appreciation of 
G land had been frozen to enable proper determination of the market value 
as the land was to be acquired for public purposes, therefore, there would 
be no potential buyers. As appellant himself had not purchased the proper-
ty for sale to third parties the District Judge was not justified in relying 
on the sale instances to determine the market value. 
H 
Dismissing the appeal, this Court 
188 
-+-- ' 
V.M.SALGOACAR &BROS. LTD. v. U.0.1. 
189 
HELD : 1.1. The Land Ac9uisition Officer was correct in starting A 
with the factor of used of the land for the appellant's staff quarters, i.e. 
own use, the consideration of Rs. 60,000 paid.for it and the fact of a freeze 
on development as a base to determine the market value. [191-B-C] 
1.2. The sale instances and the prices, indicated therein are absolute-
ly irrelevant for determining the compensation as the property was not B 
purchased with a view to sell to third parties. (191-G] 
1.3. The appellant is not entitled to the enhanced market value of Rs. 
50 per sq. meter on the basis of small sale instance brought on record. The 
High Court in another case had determined Rs. 3 per sq. yard to be the C 
market value of adjacent lands acquired in 1967. The District Judge 
committed palpable error in recording a finding that this determinatipn 
was irrelevant. [191-F, 192-B] 
1.4. In appropriate cases potential value of the land as on the date 
-..-
of notification, realised or realisable price, would form the basis for D 
compensation but in the facts and circumstances of the present case the 
potential value of the land bears on relevance. (192-D] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3800 of 
1989. 
From the Judgment and Order dated 5.12.88 of the Bombay High 
Court in F.C.A. No. 54 of 1986. 
R.F. Nar~an, K.J. John and Pratap Venugopal for the Appellant 
Ms. Indra Sawhney for Ms. A. Subhashini for the Respondent. 
The following Order of the Court was delivered : 
This appeal by special leave at the behest of the claimant arises from 
E 
F 
the judgment of tli.e Division Bench of the Bombay High Court at Goa G 
Bench dated December 5, 1988 made in First Civil Appeal No. 54/86. 
Notification acquiring an extent of 21920 Sq. metres situated in Chicalim 
village near Goa Airport was notified in the Gazette dated July 6, 1970 
under s. 4(1) of the Land Acquisition Act, 1894, (for short the Act) for the 
Naval Air Station. The Land Acquisition Officer in his award dated March 
26, 1976 determined the compensation at Rs. 5 per sq. metre. Possession H 
190 
SUPREME COURT REPORTS 
(1995] 1 S.C.R. 
A 
was taken on February 28, 1977. On reference under. s.18, the District 
Judge determined the compensation by his award and decree dated March 
31, 1986 at Rs. 50 per sq. metre. Feeling aggrieved against the above 
enhanced market value, the State went in appeal. The High Court, as stated 
earlier, allowed t
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