UNION OF INDIA vs. DYAGALA DEVAMMA .

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOs. 6986­6987  OF 2018 (Arising out of S.L.P.(C) No.10358­10359 of 2015) Union of India                         ….Appellant(s) VERSUS Dyagala Devamma & Ors.             ….Respondent(s)                   J U D G M E N T Abhay Manohar Sapre, J. 1) Leave granted. 2) These   appeals   are   filed   against   the   final judgment   and   order   dated   08.08.2014   passed   by the High Court of Judicature at Hyderabad for the Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2018.07.25 17:07:07 IST Reason: 1 State of Telangana and the State of Andhra Pradesh in LAAS No.762 of 2010 and CO(SR) No.373 of 2011 whereby the High Court dismissed the appeal filed by the appellant herein and partly allowed the cross objections   filed   by   the   respondents   herein   and enhanced the compensation as mentioned in detail infra . 3) We   herein   set   out   the   facts,   in   brief,   to appreciate   the   issues   involved   in   these   appeals. 4) 0n 12.11.2003,   the State of Andhra Pradesh issued a notification under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as “the Act”) and acquired the land measuring about 101­ 00 acres (SY No.398/3 and other connected survey numbers) situated at Jagitial Municipality,  District Karimnagar (AP). The acquisition of land was for a public purpose, namely, " laying new broad gauge 2 single railway line from Karimnagar to Jagitial Phase –II by the appellant­Railways ". This was followed by issuance of notification under Section 6 of the Act and then possession on 02.12.2003. 5) The   Land   Acquisition   Officer   (LAO)   started proceedings   under   Section   11   of   the   Act   for determination of the compensation payable to the landowners for their lands. By award No.26/2006 dated 14.07.2006, the LAO determined the market value   of   the   acquired   land   at   the   rate   of " Rs.1,30,000/­   per   acre   for   wet   lands "   and " Rs.1,24,000/­ per acre for dry lands ". The LAO also awarded compensation for structures, wells etc. to some landowners.  6) The claimants (landowners) felt aggrieved and sought reference under Section 18 of the Act to the Civil   Court   in   OP   No.27/2007.   By   award   dated 23.07.2010,   the   Civil   Court   (Sr.   Civil   Judge, 3 Jagitial) re­determined the market value of the land in   question.   The   Reference   Court   determined   the market value of the acquired land at Rs.21,29,600/­ per acre uniformly.  However, having regard to the totality   of   facts   of   the   case,   the   Reference   Court considered   it   just   and   proper   to   deduct   50% towards   developmental   charges   and   accordingly worked   out   the   market   value   of   the   land   at " Rs.10,64,800/­   per   acre "   for   being   paid   to   the landowners.  7) The appellant­Railways felt aggrieved and filed appeal  before   the   High   Court  of   Andhra   Pradesh whereas the landowners also felt aggrieved and filed cross   objections   claiming   enhancement   of   the market value determined by the Reference Court. 8) By   impugned   judgment,   the   High   Court dismissed the appeal filed by the appellant­Railways and partly allowed the cross objections filed by the 4 landowners   and   enhanced   the   compensation   to Rs.15,97,200/­ per acre. The High Court, upheld the market value determined by the Reference Court i.e.   Rs.21,29,600/­   per   acre   but   reduced   the deduction towards developmental charges from 50% to   25%   and   accordingly   worked   out   the compensation   “ at   the   rate   of   Rs.15,97,200/­   per acre” .   It   is   against   this   judgment,   the   appellant­ Railways felt aggrieved and filed the present appeals by way of special leave before this Court. 9) Heard   Mr.   Vikramjit   Banerjee,   learned Additional  Solicitor   General  for   the  appellant­UOI and Mr. B. Adinarayana Rao, learned senior counsel for the respondents. 10) Mr.   Vikramjit   Banerjee,   learned   Additional Solicitor General appearing for the appellant while assailing   the   legality   and   correctness   of   the 5 impugned   judgment   essentially   made   two submissions.  11) In the first place, learned ASG contended that the   High   Court   erred   in   further   enhancing   the compensation at Rs.15,97,200/­  per acre.  12) According   to   him   the   compensation determined by the Reference Court payable at the rate of Rs.10,64,800/­ per acre was just, legal and proper and, therefore, it did not call for any further enhancement. 13) In the second place, learned ASG urged that having placed reliance on exemplar Sale Deed (Ex­ P­18)   for   determining   the   market   value,   the Reference   Court   rightly   deducted   50%   towards development charges, whereas the High Court erred in deducting 25% towards developmental charges.  14) According   to   learned   ASG,   the   High   Court ought   to   have   appreciated   that   there   were   three 6 distinguishing factors appearing from the exemplar sale   deed   (Ex.P­18).     Due   to   these   three   factors, deduction   of   50%  towards   developmental   charges from the market value was called for.  These factors are, First, Sale Deed (Ex.P­18) was for a very small piece of land (19 Guntas=1/2 acre);   Second, the land which was the subject matter of Ex­P­18 had a peculiar   site   because   it   was   situated   facing   two roads ­ one on the east side and other on the north side; and Third,  it was a developed land.  15) It was, therefore, urged that so far as the land in question is concerned, the same did not have these   factors   and,   therefore,   the   Reference   Court rightly considered it proper to deduct 50% towards developmental charges from the market value which was worked out on the basis of Sale Deed (Ex.P­18). It was urged that the High Court without assigning any   reasons   much   less   cogent   reasons   erred   in 7 reducing developmental charges from 50% to 25% from   the   market  value.     Learned   ASG,   therefore, prayed for restoration of the award of the Reference Court in place of impugned judgment of the High Court. 16) Per   contra,   learned   senior   counsel   for   the respondents (landowners) supported the impugned judgment and contended that it does not call for any interference and hence the appeals deserve to be dismissed. 17) The question arises for consideration in these appeals is whether the High Court was justified in deducting 25% towards developmental charges from the market value of the land in question against 50% deduction made by the Reference Court.   In other   words,   having   regard   to   the   facts   and circumstances of the case, whether the Reference Court   was   justified   in   deducting   50%   from   the 8 market value of the land or whether the High Court was justified in deducting 25%. 18) Before we examine the facts of this case, it is necessary to take note of general principles of law on the subject in question which are laid down by this Court in several cases and some of which were also cited at the Bar by the learned counsel for the parties. Indeed, if we may say so, law on the several issues urged herein by the learned counsel for the parties is already settled by this Court and what has varied in its application depends on the facts of each case. 19) In   Chimanlal   Hargovinddas   vs   Special   Land Acquisition Officer, Poona & Anr.  (1988) 3 SCC 751, this Court dealt with the question as to how the Court should   determine   the   valuation   of   the   lands   under acquisition and what broad principle of law relating to acquisition of land under the Act should be kept in 9 consideration to determine the proper market value of the acquired land.  20) In Para 4 of the judgment, this Court laid down as many as 17 principles, which are reproduced below for perusal: “ (1) to (4)…………………………………. (5) The   market   value   of   land   under acquisition   has   to   be   determined   as   on   the crucial   date   of   publication   of   the   notification under   Section   4   of   the   Land   Acquisition   Act (dates of notifications under Sections 6 and 9 are irrelevant). (6) The  determination  has  to be made standing on the date line of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase   land   from   the   open   market   and   is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price. (7) In doing so by the instances method, the   court   has   to   correlate   the   market   value reflected   in   the   most   comparable   instance which provides the index of market value. (8) Only  genuine   instances  have   to  be taken  into account.  (Sometimes instances  are rigged up in anticipation of acquisition of land.) (9) Even post­notification instances can be   taken   into   account   (1)   if   they   are   very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a 10 higher   price   on   account   of   the   resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations: (i) proximity from time angle, (ii) proximity from situation angle. (11) Having   identified   the   instances which   provide   the   index   of   market   value   the price   reflected   therein   may   be   taken   as   the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis­ à­vis land under acquisition by placing the two in juxtaposition. (12) A   balance­sheet   of   plus   and   minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition   has   thereafter   to   be   deduced   by loading the price reflected in the instance taken as  norm for  plus factors and  unloading it  for minus factors. (14) The   exercise   indicated   in   clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:

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(15) The   evaluation   of   these   factors   of course depends on the facts of each case. There cannot   be   any   hard   and   fast   or   rigid   rule. Common   sense   is   the   best   and   most   reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10,000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots,   waiting   for   purchasers   (meanwhile   the invested   money   will   be   blocked   up)   and   the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance   at   an   appropriate   rate   ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for   carving   out   lands   and   plotting   out   small plots. The discounting will to some extent also depend on whether it is a rural area or urban area,   whether   building   activity   is   picking   up, 12 and   whether   waiting   period   during   which   the capital of the entrepreneur would be locked up, will   be   longer   or   shorter   and   the   attendant hazards. (16) Every case must be dealt with on its own   fact   pattern   bearing   in   mind   all   these factors as a prudent purchaser of land in which position the judge must place himself. (17) These   are   general   guidelines   to   be applied   with   understanding   informed   with common sense.” 21) These principles are invariably kept in mind by the Courts while determining the market value of the acquired   lands   (also   see   Union   of   India   vs.   Raj Kumar   Baghal   Singh   (Dead)   Through   Legal Representatives & Ors.,  (2014) 10 SCC 422). 22) In   addition   to   these   principles,     this   Court   in several cases have laid down that while determining the true market value of the acquired land especially when   the   acquired   land   is   a   large   chunk   of undeveloped land, it is just and reasonable to make appropriate   deduction   towards   expenses   for 13 development   of   acquired   land.   It   has   also   been consistently   held   that   at   what   percentage   the deduction should be made varies from 10% to 86% and, therefore, the deduction should be made keeping in mind the nature of the land, area under acquisition, whether the land is developed or not and, if so, to what extent, the purpose of acquisition, etc.   It has also   been   held   that   while   determining   the   market value of the large chunk of land, the value of smaller pieces of land can be taken into consideration after making   proper   deduction   in   the   value   of   lands especially when sale deeds of larger parcel of land are not available.  This Court has also laid down that the Court   should   also   take   into   consideration   the potentiality   of   the   acquired   land   apart   from   other relevant   considerations.   This   Court   has   also recognized   that   the   Courts   can   always   apply reasonable   amount   of   guesswork   to   balance   the 14 equities in order to fix a just and fair market value in terms of parameters specified under Section 23 of the Act.   (See   Trishala   Jain   &   Anr.   Vs.   State   of Uttaranchal & Anr. , (2011) 6 SCC 47 and  Vithal Rao (2017) & Anr. Vs. Special Land Acquisition Officer,  8 SCC 558)  23) Keeping in mind the aforementioned principles, when we take note of the facts of the case at hand, we find that firstly, the land acquired in question is a large chunk of land (101 acres approx.); Secondly, it is not   fully   developed;   Thirdly,   the     respondents (landowners) have  not filed any  exemplar sale deed relating to large pieces of land sold in acres to prove the   market   value   of   the   acquired   land;   Fourthly, exemplar   relied   on   by   the   respondents,   especially Ex.P­18   pertains   to   very   small   pieces   of   land   (19 guntas);   Fifthly,   the   three   distinguishing   features 15 noticed   in   the   land   in   sale   deed   (Ex.P­18)   are   not present in the acquired land.   24) It   was   for   the   aforementioned   reasons,   in   our opinion, the Reference Court was justified in making deduction of 50% towards developmental charges from the market value.  The High Court, in our opinion, did not assign any good reason as to why and on what basis, it considered proper to make deduction towards developmental charges at the rate of 25% in place of 50%.   25) This   Court   has   held   in   Trishala   Jain’s   case (supra) that it depends upon the facts of each case to decide for determination of the market value of the land   as   to   what   percentage   should   be   adopted   for deduction.     In   our   opinion,   the   reasons   mentioned above were rightly made basis by the Reference Court to support the deduction of 50%.   16 26) So far as the determination of market value made by   the   Reference   Court   is   concerned,   i.e., Rs.21,29,600/­ per acre, the same having been upheld by the High Court, we do not find any justification to examine this issue again.  Even the learned ASG did not   challenge   this   finding   and   confined   his submissions only relating to the issue of percentage of the deduction only. 27) Learned counsel for the respondents was not able to point out any fact/evidence which could persuade us to uphold the reasoning and conclusion arrived at by the High Court in the impugned judgment.  28) In   view   of   the   foregoing   discussion,   we   are inclined to uphold the reasoning and the conclusion arrived at by the Reference Court instead of the High Court. 17 29) As a consequence of the foregoing discussion, the appeals   succeed   and   are   accordingly   allowed. Impugned   judgment   is   set   aside   and   that   of   the Reference Court (Civil Court) dated 23.07.2010 in OP No.27/2007 is restored. ……........................……........J. [ABHAY MANOHAR SAPRE] ………...................................J   [UDAY UMESH LALIT]    New Delhi; July 25, 2018  18