Full Judgment Text
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PETITIONER:
ADMINISTRATOR GENERAL OF WEST BENGAL
Vs.
RESPONDENT:
COLLECTOR, VARANASI
DATE OF JUDGMENT16/02/1988
BENCH:
VENKATACHALLIAH, M.N. (J)
BENCH:
VENKATACHALLIAH, M.N. (J)
NATRAJAN, S. (J)
CITATION:
1988 AIR 943 1988 SCR (2)1025
1988 SCC (2) 150 JT 1988 (1) 529
1988 SCALE (1)484
CITATOR INFO :
R 1989 SC2051 (4)
R 1991 SC2027 (5,6)
R 1992 SC2298 (9)
ACT:
Land Acquisition Act, 1894: Sections 4, 11, 18 and 23-
Compensation-Valuation of land-Determination of market
value-Price fetched for comparative land sold at time of
section 4 Notification-Best evidence of valuation-Land with
building-Determination of value of building-Free growth on
land-Whether can be valued on basis of horticultural value.
Solatium and interest-Applicability of higher rates-
Effect of U.P. Land Acquisition (Amendment) Act 1972 and
Central Amendment Act 1982-Question left open in view of
pendency of Bhag Singh v. U.T. Chandigarh.
Practice and Procedure: Compensation to be awarded for
change of residence-Question under Section 23 clause Fifthly
L.A. Act 1894-Raised for first time in S.L.P. under Article
136 without taking specific ground-New plea-Disallowed.
HEADNOTE:
%
The suit property known as "Gopal Lal Villa" situated
on the outskirts of the city of Varanasi was a sprawling 60
years old building, part of the estate of a Raja, and vested
in the appellant. It was acquired pursuant to preliminary
Notification dated 4.7.1959 under the Land Acquisition Act
1894 for the purposes of the Education Department of the
Government of Uttar Pradesh.
The building was of about 25,000 square feet plinth
area comprising 35 rooms, halls and other appurtenances, and
the 23.66 acres of ground appurtenant to the building, had
431 fruit and 13 timber trees and 12 bamboo clumps.
The appellant claimed compensation of Rs.8,00,580 for
the land valuing it at Rs.352 per decimal. Rs.3,50,000 for
the building and structures; Rs.41,010 for the tree growth
and Rs.5,000 as compensation for change of residence.
The Land Acquisition Officer by his Award dated
4.11.1961
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under s. 11 of the Land Acquisition Act determined the
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market value of the land at Rs.3,31,340 valuing it at Rs.140
per decimal; of the building and superstructure at Rs.57,660
and of the tree growth at Rs.355.83.
Being aggrieved with the aforesaid determination of
compensation the appellant did not accept the offer
contained in the Award, and sought for a reference under s.
18 of the Act to the Civil Court.
The District Court enhanced the market value of the
land to Rs.4,73,200 i.e. from Rs.140 to Rs.200 per decimal
and left the valuation of the building and the tree growth
undisturbed.
The High Court affirmed the Award of the District Court
and dismissed the appellant’s claim for further enhancement.
In the appeal to this Court, it was contended on behalf
of the appellant that the claim of Rs.352 per decimal was
not accepted and that the High Court in affirming the
valuation of the land at a mere Rs.200 per decimal
overlooked certain settled principles of valuation. It
adopted the District Judge’s valuation which was the average
of the valuation reflected in Ext. 2 and Ext. 19 while the
higher of the two figures indicated by Ext. 2 should have
been adopted. It was further contended that the appellant
was entitled to solatium and interest at higher rates in
view of the re-introduction of s. 23(2) in 1972 by the U.P.
Land Acquisition (Amendment) Act, 1972 and under the Central
Amendment Act 68 of 1984.
On behalf of the respondent it was contended that the
changes in law brought about by the State Amendment Act No.
28 of 1972 and the Central Amending Act 68 of 1984 are
presumptively prospective except to the extent that they are
made expressly or by compelling implication retrospective in
the extension of their benefits.
On the question whether:
(1)<the estimate of the market-value of the acquired
land at Rs.200 per decimal is unreasonably low and is
arrived at ignoring the evidence on record and settled
principles of valuation.
(2)< the valuation of the buildings and structures at a
mere Rs.57,660 calls for an upward revision.
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(3)< the award made for the tree-growth is inadequate
and is required to be valued higher.
(4)< appellant is entitled to the benefit of s. 23(2)
of the Act as introduced by the U.P. Land Acquisition
(Amendment) Act 1972 providing for solatium and to higher
rates of solatium and interest under the Central Amending
Act 1984 on the ground that proceedings were pending in
appeal before this Court on the dates the amendments came
into force.
Appeal allowed in part-compensation awarded for land
left undisturbed, compensation for building and tree growth
enhanced.
^
HELD: 1.(i) The determination of market-value of a
piece of land with potentialities for urban use is an
intricate exercise which calls for collection and collation
of diverse economic criteria. [1033C-D]
(ii) The market value of a piece of property for
purposes of s. 23 of the Land Acquisition Act is stated to
be the price at which the property changes hands from a
willing seller to a willing, but not too anxious a buyer,
dealing at arm’s length. [1033D]
(iii) Prices fetched for similar lands with similar
advantages and potentialities under bonafide transactions of
sale at or about the time of the preliminary notification
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are the usual, and indeed the best, evidences of market
value. Other methods of valuation are resorted to if the
evidence of sale of similar lands is not available. [1033E-
F]
(iv) Prices fetched for smaller plots cannot form safe
bases valuation of large tracts of land as the two are not
comparable properties. [1034E]
Collector of Lakhimpur v. B.C. Dutta, AIR 1971 SC 2015;
Mirza Nausherwan Khan & Anr. v. The Collector (Land
Acquisition), Hyderabad, [1975] 2 SCR 184; Padma Uppal etc.
v. State of Punjab & Ors., [1977] 1 SCR 329 and Smt.
Kaushalya Devi Bogra & Ors.v. The Land Acquisition Officer,
Aurangabad & Anr., [1984] 2 SCR 900, referred to.
(v) However, if it is shown that the large extent to be
valued does admit of and is ripe for use for building
purposes; that building plots that could be laid-out on the
land would be good selling propositions and that valuation
on the basis of the method of a hypothetical lay out
1028
could with justification be adopted, then in valuing such
small, laid out sites the valuation indicated by sale of
comparabe small sites in the area at or about the time of
the notification would be relevant. [1034G-H]
(vi) In a case such as the above, necessary deduction
for the extent of land required for the formation of roads
and other civic amenities; expenses of development of the
sites by laying out roads, drains, sewers, water and
electricity lines, and the interest on the outlays for the
period of deferment of the realisation of the price; the
profits on the venture etc. are to be made. [1034H; 1035A-B]
Sahib Singh Kalha & Ors. v. Amritsar Improvement Trust
and Ors., [1982] 1 SCC 419 referred to.
(vii) Prices fetched for small plots cannot directly be
applied in the case of large areas, for the reason that the
former reflects the ’retail’ price of land and the latter
the ’wholesale’ price. [1035B]
(viii) Subsequent transactions which are not proximate
in point of time to the acquisition can be taken into
account for purposes of determining whether as on the date
of acquisition there was an upward trend in the prices of
land in the area. [1035C]
(ix) Where it is shown that the market was stable and
there were no fluctuations in the prices between the date of
the preliminary notification and the date of such subsequent
transaction, the transaction could also be relied upon to
ascertain the market value. (a) When there is evidence to
the effect that there was no upward surge in the prices in
the interregnum. (b) The burden of establishing this would
be squarely on the party relying on such subsequent
transaction. [1035C-D,G]
State of U.P. v. Major Jitender Kumar, AIR 1982 SC 877
referred to.
In the instant case, the appellant did not endeavour to
show that between the date of preliminary notification i.e.
4.7.1959 and the date of Ext. 24 i.e. 18.8. 1960 there was
no appreciation in the value of land in the area. Therefore,
Ext. 24 cannot be relied upon as affording evidence of the
market value as on 4.7.1959. [1035G-H]
(xi) The valuation of land made in the present case
does not call for or justify any upward revision at all. (a)
There is no justification to interfere with the
determination of the market value of the land approved by
the High Court. [1036C-D]
1029
In the instant case Rs.200 per decimal for the large
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extent of the acquired land works out to 40% of the "retail"
price even if Rs.500 is taken as the ’retail’ price. That
apart, in the case of land with potentialities for a more
profitable use it is necessary to acknowledge, and make due
allowance for, the possibility that the land might not be
applied for the prospective use at all or not so applied
within a reasonable time. [1036H; 1037A-B]
Bombay Improvement v. Mervanji Manekji Mistry, AIR 1926
Bombay 420 referred to.
2.(i) Usually land and building thereon constitute one
unit. Land is one kind of property; land and building
together constitute an altogether different kind of
property. The latter must be valued as one unit. [1037C-D]
(ii) However, where, the property comprises extensive
land and the structures standing do not show that full
utilisation potential of the land is realised it might not
be impermissible to value the property estimating separately
the market value of the land with reference to the date of
the preliminary-notification and to add to it the value of
the structures as at that time. [1037D-E]
(iii) By the above method, building value is estimated
on the basis of the prime-cost or replacement-cost less
depreciation. The rate of depreciation is, generally,
arrived at by dividing the cost of construction (less the
salvage valued at the end of the period of utility) by the
number of years of utility of the building. [1037E-F]
(iv) The factors that prolong the life and utility of
the building, such as good maintenance, influence and bring
down the rate of depreciation. [1037F]
In the instant case, the estimate of the proper market-
value of the building has not received the requisite
attention both before the High Court and the District Court.
It is no doubt true that the Valuation Report, Ext. I, was
prepared on 20.7. 1960 one year after the date of the
preliminary notification. But the extent of the built area
was about 25,000 sq. ft. There is no evidence to suggest
that the rates mentioned and adopted in Ext. I were not
rates valid for a spread out period. No case was made out
that the building had lost its utility and that the only
mode of valuation appropriate to the case was one of
awarding merely the salvage-value. The building, according
to the evidence was quite
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strong though about 60 years old at the time. The
appropriate thing to do would have been to set aside the
award in so far as the valuation of the building is
concerned and remit the matter for a fresh determination of
its market value as on 14.7.1959. However, in the interest
of justice it would be proper to make some ready and rough
estimate drawing such sustenance as the evidence on record
could afford and impart a quietus to this vexed litigation.
Accordingly, the compensation for the buildings and
structures is enhanced from Rs.57,660 to Rs.2,00,000.
[1038G-H; 1039D-G; 1040G]
3. Where land is valued with reference to its
potentiality for building purposes and on the basis of
prices fetched by small sites in a hypothetical lay-out the
tree growth on the land cannot be valued independently on
the basis of its horticultural value or with reference to
the value of the yield. This principle, however, does not
come in the way of awarding the timber-value or the salvage-
value of the tree growth after providng for the cost of
cutting and removing. [1040G-H; 1041A]
In the instant case, the evidence shows that there were
471 fruit bearing trees and plants, 13 timber trees and 12
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bamboo clusters. Though there is some evidence as to the
value of the yield, there is no evidence about the timber
value and fuel value of the trees. The District Judge has
awarded a sum of Rs.355.85 for the entire tree growth.
Having regard to the large number of trees and to the fact
that some of them were timber trees, it would be appropriate
to award a lump-sum of Rs.7,500 under this head. The
compensation for tree growth is accordingly enhanced from
Rs.355.85 to Rs.7,500. [1041A-C]
4. By the U.P. Land Acquisition (Amendment) Act, 1954,
Section 23(2) had been deleted from the statute. It was re-
introduced by the U.P. Land Acquisition (Amendment) Act
1972. The preliminary notification for the acquisition was
issued subsequent to the deletion. Whether re-introduction
of sub-section (2) would enure to the benefit of the person
whose land is acquired on the ground that proceedings in
appeal were pending on the date of introduction of that
provision, and availability for further enhancement of the
solatium and rates of interest under the Central Amendment
Act 68 of 1984 are left open with consent of counsel to be
agitated after final decision in Bhag Singh v. U. T. of
Chandigarh, by a larger Bench of this Court. [1041E-F;
1042B]
5. The point concerning compensation to be awarded for
change of residence under clause ’fifthly’ in section 23(1)
does not appear to have been raised and urged before the
High Court. No specific ground
1031
has also been taken in this behalf in the appeal before this
Court. The appellant should not, therefore, be permitted to
re-agitate this question over again in this Court. [1042D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No.877 of
1974.
From the Judgment and Decree dated 17.11.1971 of the
Allahabad High Court in First Appeal No. 171 of 1966.
D.N. Mukherjee, G.S. Chatterjee and A. Bhattacharjee
for the Appellant.
Prithvi Raj and Mrs. Shobha Dikshit for the Respondent.
The Judgment of the Court was delivered by
VENKATACHALIAH, J. This appeal, for enhancement of
compensation, by Special leave, arises out of and is
directed against the judgment and decree dated 17th
November, 1971 of the High Court of Allahabad in First
Appeal No. 171 of 1966 affirming the Award and Decree dated
13.12.1965 of the Ist Addl. District Judge, Varanasi, made
in a Reference Under Section 18 of the Land Acquisition Act
1894.
Property known as "Gopal Lal Villa" a sprawling 60 year
old building of about 25,000 square feet of plinth-area
comprising of 35 rooms, halls and other appurtenances, its
large 23.66 acre grounds with 431 fruit and 13 Timber trees;
12 Bamboo-clumps, situated on the outskirts of the City of
Varanasi, originally part of the estate of Raja P.N. Tagore,
and now vesting in the Administrator General, West Bengal,
was acquired pursuant to the preliminary notification,
published in the Gazette, dated, 4.7.1959 for the purposes
of the education department of the Government of Uttar
Pradesh.
2. Before the Land Acquisition Officer, Appellant
claimed compensation of Rs.8,00,580 (at Rs.352 per decimal)
for the land; Rs.3,50,000 for the building and structures;
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Rs.41,010 for the tree growth; and Rs.5,000 as compensation
for change of residence.
The Land Acquisition Officer, however, by his Award
dated 4.11.1961 under Section 11 of the Act determined the
market-value of the land at Rs.3,31,340 valuing it Rs. 140
per decimal (or Rs.14,000 per
1032
acre); of the building and structures at Rs.57,660 and of
the treegrowth at Rs.355.83. Appellant, not having accepted
the offer contained in the award, sought for a reference
under Section 18 of the Act to the Civil Court in
proceedings pursuant to which the District-Court enhanced
the market-value of the land to Rs.4,73,200 (from Rs.140 to
Rs.200 per decimal) leaving the valuation of the building
and the tree-growth undisturbed. The High Court has affirmed
the Award dismissing appellant’s claim for further
enhancement before it.
3. We have heard Shri D.N. Mukherjee, learned counsel
in support of the appeal and Shri Prithviraj, learned
Senior-Advocate for the respondent. We have been taken
through the judgment under appeal and the evidence on
record.
On the contentions urged at the hearing, the following
points fall for consideration:
(a) Whether the estimate of the market-value of the
acquiredland at Rs.200 per decimal is unreasonably
low and is arrived at ignoring the evidence on
record and settled principles of valuation?
(b) Whether the valuation of the buildings and
structures at a mere Rs.57,660 calls for an upward
revision?
(c) Whether the award made for the tree-growth is
inadequate and is required to be valued higher?
(d) Whether appellant is entitled to the benefit of
Sec. 23(2) of the Act as introduced by the U.P.
Law Acquisition (Amendment) Act 1972 providing for
solatium and, further, to higher rates of solatium
and interest under the Central Amending Act (Act
No. 68 of 1984) on the ground that proceedings
were pending in appeal before this court on the
dates these amendments came into force?
4. Re: Contention (a)
The acquired land had the potentiality for building
purposes. Learned District Judge found that:
".... The Land Acquisition Officer himself
realised this fact and has observed that "the land
under acquisition is
1033
situated within the Corporation limits in Mohalla
Orderly Bazar, a thickly populated locality and is
near to Kutchery. It has, therefore, a potential
value as building site." I may add here that
though the acquired land is at a distance of about
3 to 3 1/2 miles from the main markets of Varanasi
City, yet every thing of daily need and of day
today utility is available in the market which
exists in the locality of the acquired land. It
may also be added that the land adjacent to the
west of the acquired land known as ’Tagore Nagar’
formerly formed part of this Gopal Lal Villa and
both were covered by one boundary. The land of
Tagore Nagar has been divided into small portions
and a colony with residential quarters has grown
up there. This was already in existence before the
present acquisition ....."
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The determination of market-value of a piece land with
potentialities for urban use is an intricate exercise which
calls for collection and collation of diverse economic
criteria. The market-value of a piece of property, for
purposes of Section 23 of the Act, is stated to be the price
at which the property changes hands from a willing seller to
a willing, but not too anxious a buyer, dealing at arms
length. The determination of market-value, as one author put
it, is the prediction of an economic event. viz, the price-
outcome of a hypothetical sale, expressed in terms of
probabilities. Prices fetched for similar lands with similar
advantages and potentialities under bona fide transactions
of sale at or about the time of the preliminary notification
are the usual, and indeed the best, evidences of market-
value. Other methods of valuation are resorted to if the
evidence of sale of similar lands is not available.
In the District-court, appellant relied upon eight
transactions of what, according to him, were sale, of
similar lands. The transactions at Ext. 18, 20, 21 and 22,
dated, 25.3.1952, 1.12.1955, 11.8.1953 & 11.7.1957
respectively were rejected by learned District Judge on the
ground that they were long enterior in point of time to the
acquisition and lacked the element of contemporaneity. Ext.
23 dated, 25.10.1958 and Ext. 24 dated, 18.8.1960 were also
held not to afford reliable evidence of market-value on the
ground that while in the former case the property was sold
along with a construction thereon without any indication as
to the apportionment of the price between the land and the
construction, in the latter case the sale was about an year
subsequent to the date of the preliminary notification.
1034
What remained were the evidence of sale transactions at
Exts. 2 and 19 dated 16.9.1958 and 22.12.1958 respectively
indicating a price of Rs.1250 and Rs.900 per biswa
respectively. The District Judge struck an average of the
two and fixed the rate at Rs.1075 per biswa which worked out
to about Rs.350, or thereabouts, per decimal. But since Ext.
2 and Ext. 19 related to very small plots, the learned
District Judge on some calculations of his own, fixed the
rate of Rs.200 per decimal for the acquired land.
5. Shri Mukharji in support of the appellant’s claim @
Rs.352 per decimal submitted that the High Court, in
affirming the valuation of the land at a mere Rs.200 per
decimal, overlooked certain settled principles of valuation
in that it approved the process-adopted by the learned
District Judge-of striking an average of the valuations
reflected in Ext. 2 and Ext. 19, while the higher of the two
figures indicated by Ext. 2, should have been adopted.
Learned Counsel submitted that the acquired land, though
situate about 3 1/2 miles away from the heart of Varanasi
City, had all the potentiality for use for building purposes
and that the rejection of the evidence of market-value
afforded by Ext. 24, the transaction of sale dated 14.7.1960
which indicated a price of Rs.2,000 per biswa on the ground
that it was an year later than the preliminary notification
was erroneous.
6. It is trite proposition that prices fetched for
small plots can not form safe-bases for valuation of large
tracts of land as the two are not comparable properties.
(See Collector of Lakhimpur v. B.C. Dutta, AIR 1971 SC 2015;
Mirza Nausherwan Khan & Anr. v. The Collector (Land
Acquisition), Hyderabad, [1975] 1 SCR; Padma Uppal etc. v.
State of Punjab & Ors., [1971] 1 SCR; Smt. Kaushalya Devi
Bogra & Ors. v. The Land Acquisition Officer Aurangabad &
Anr., [1984] 2 SCR. The principle that evidence of market-
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value of sales of small, developed plots is not a safe guide
in valuing large extents of land has to be understood in its
proper perspective. The principle requires that prices
fetched for small developed plots cannot directly be adopted
in valuing large extents. However, if it is shown that the
large extent to be valued does admit of and is ripe for use
for building purposes; that building lots that could be
laid-out on the land would be good selling propositions and
that valuation on the basis of the method of a hypothetical
lay-out could with justification be adopted, then in valuing
such small, laid-out sites the valuation indicated by sale
of comparable small sites in the area at or about the time
of the notification would be relevant. In such a case,
necessary deductions for the extent of land required for the
formation of roads and other civic
1035
amenities; expenses of development of the sites by laying-
out roads, drains, sewers, water and electricity lines, and
the interest on the outlays for the period of deferment of
the realisation of the price; the profits on the venture
etc. are to be made. In Sahib Singh Kalha & Ors. v. Amritsar
Improvement Trust and Ors., (See 1982 1 SCC 419, this court
indicated that deductions for land required for roads and
other developmental expenses can, together, come-up to as
much as 53%. But the prices fetched for small plots cannot
directly be applied in the case of large areas, for the
reason that the former reflects the ’retail’ price of land
and the latter the ’wholesale’ price.
The sale transaction at Ext. 24 was an year later. Such
subsequent transactions which are not proximate in point of
time to the acquisition can be taken into account for
purposes of determining whether as on the date of
acquisition there was an upward trend in the prices of land
in the area. Further under certain circumstances where it is
shown that the market was stable and there were no
fluctuations in the prices between the date of the
preliminary notification and the date of such subsequent
transaction, the transaction could also be relied upon to
ascertain the market-value. This court in State of U.P. v.
Maj. Jitender Kumar, (See AIR 1982 SC 877) observed:
"..... It is true that the sale deed Ext. 21 upon
which the High Court has relied is of a date three
years later than the Notification under S. 4 but
no material was produced before the Court to
suggest that there was any fluctuation in the
market rate at Meerut from 1948 onwards till 1951
and if so to what extent. In the absence of any
material showing any fluctuation in the market
rate the High Court thought it fit to rely upon
Ex. 21 under which the Housing Society itself had
purchased land in the neighbourhood of the land
dispute. On the whole we are not satisified that
any error was committed by the High Court in
relying upon the sale deed Ex. 21....."
But this principle could be appealed to only where there is
evidence to the effect that there was no upward surge in the
prices in the interregnum. The burden of establishing this
would be squarely on the party relying on such subsequent
transaction. In the present case appellant did not endeavour
to show that between the date of preliminary notification
i.e. 4.7.1959 and the date of Ext. 24 i.e. 18.8.1960 there
was no appreciation in the value of land in the area.
Therefore, Ext. 24 cannot be relied upon as affording
evidence of the market-
1036
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value as on 4.7.1959. We cannot accept the argument that the
price indicated in Ext. 24 should be accepted after allowing
an appropriate deduction for the possible appreciation of
the land-values during the period of one year. Apart from
other difficulties in this exercise, there is no evidence as
to the rate and degree of appreciation in the values of land
so that the figure could be jobbed backwards from 14.7.1960
to 4.7.1959.
7. It appears to us that even if the value at Rs.1,250
as on 27.8.1958 indicated by Ext. 2 is adopted and something
is added thereto for the possible appreciation for the
period till the preliminary notification, also taking into
account the trend of appreciation in the prices in the area
as indicated by Ext. 24 and the value of small developed
sites is estimated somewhere between Rs.1,400 and Rs.1,600
per biswa or Rs.450 to Rs.500 per decimal, yet, the
valuation made in the present case does not call for or
justify any upward revision at all. There is a simple way of
cross checking these results. The value of small plots-
Rs.500 per decimal as now estimated-represents what may be
called the "retail" price of the land. What is to be
estimated therefrom is the "wholesale" price of land. In
Bombay Improvement v. Mervanji Manekji Mistry, (See AIR 1926
Bombay 420) Mecleod CJ suggested a simple rule:
".....Valuation cases must be dealt with just as
much from the point of view of the hypothetical
purchase as of the claimant. The valuation itself
must often be more or less a matter of guesswork.
But it is obviously wrong to fix upon a valuation
which, judged by everyday principles, no purchaser
would be likely to give ....."
".....I have always been adverse to elaborate
hypothetical calculations which are no more likely
to lead to a fair conclusion than far simpler
methods. But, in any event, no harm can be done by
testing a conclusion arrived at in one way by a
conclusion arrived at in another ....."
".....A very simple method of valuing land
wholesale from retail prices is to take anything
between one and half onethird, according to
circumstances of the expected gross valuation, as
the wholesale price....."
(emphasis supplied)
In the present case, Rs.200 per decimal for the large
extent of the
1037
acquired land works out to 40% of the "retail" price even if
we take, Rs.500 as the "retail" price. That apart, in the
case of land with potentialities for a more profitable use,
it is necessary to acknowledge, and make due allowance for,
the possibility that the land might not be applied for the
prospective use at all or not so applied within a reasonable
time.
There is, therefore, no justification to interfere with
the determination of the market-value of the land approved
by the High Court. Contention (a) is accordingly answered
against the appellant.
8. Re: Contention (b)
The District Court proceeded to value the property on
the "Land and Building Method". The appositeness of this
method to the present case was not debated before us.
Usually, land and building thereon constitute one unit. Land
is one kind of property; land and building together
constitute an altogether different kind of property. They
must be valued as one unit. But where, however, the property
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comprises extensive land and the structures thereon do not
indicate a realisation of the full developmental potential
of the land, it might not be impermissible to value the
property estimating separately the market-value of the land
with reference to the date of the preliminarynotification
and to add to it the value of the structures as at that
time. In this method, building-value is estimated on the
basis of the primecost or replacement-cost less
depreciation. The rate of depreciation is, generally,
arrived at by dividing the cost of construction (Less the
salvage value at the end of the period of utility) by the
number of years of utility of the building. The factors that
prolong the life and utility of the building, such as good
maintenance, necessarily influence and bring down the rate
of depreciation.
Hari Shanker Misra PW 3 referring to the nature and
quality of the building stated:
".... The Northern part of this Villa was double
storeyed and rest was single storeyed. Its plinth
was 3 feet high and rooms were 14 feet high. The
building bore 35 rooms and besides this there was
a big hall 65 feet x 22 feet. Its floor was made
up of some patent stones. Some monthly some market
and Vkiya were stoned. The doors were 8 feet x 4
feet and they were made up of Burma teak wood and
up ways were double doored. When Improvement Trust
oc-
1038
cupied the property of Nejai at that time building
was well maintained. Over and above the main
building there were manager quarters. Kitchen, out
house, servant quarters, Chowkidar quarters and a
stable. Now they were in good condition. Its
boundary wall was 7 feet and at some places they
were 8 feet high. This also consists of 2 iron
gates. One is main gate and the other one is by
its side of some distance......"
Learned District Judge based his valuation almost entirely
upon the report of the Chief Engineer, estimating the
building at Rs.57,660. That report itself was not brought on
record in the proceedings of reference. It is not clear from
the judgment of the High Court whether this estimate of
Rs.57,660 represented the cost of replacement of the
structure less depreciation or whether it represented merely
the salvage-value of the building. High Court rejected the
Valuation Report, Ext. 1 relied upon by the appellant on the
ground that it was made with reference to a date which was
an year later than the preliminary notification. The High
Court observed:
".... The appellant had examined Narain Chand Das,
an Overseer who had assisted the Executive
Engineer, in preparing the valuation of the
constructions and the well. The report of the
Executive Engineer is Ext. 1 on the record. It
appears from the said report that the valuation
was determined on the basis of the rates
prevailing in the year 1960 where-as the
preliminary notification in the instant case was
issued in the year 1959. Moreover, this building
appears to be about 60 years old and the market
value thereof could not be determined on the basis
of the cost of constructions prevailing in the
year 1960. This method of calculating the market
value of the property is obviously erroneous and
cannot be accepted. No other evidence was produced
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by the appellant to determine the value of the
constructions and the well. The evidence produced
by him being not satisfactory, the compensation
already determined by the Land Acquisition Officer
in respect of this item of the property was not
liable to be enhanced....."
We are afraid the estimate of the proper market-value
of the building has not received the requisite attention
both before the High Court and the District Court. It is no
doubt true that Ext. 1 was prepared on 20.7.1960, an year
after the date of the preliminary notifi-
1039
cation in the present case; but the extent of the built-area
was about 2,500 sq. ft. Ext. 1 gives a breakdown of the area
of the various parts of the building and sets out the nature
of the construction and proceeds to estimate the value in
terms of the then current PWD rates less depreciation of
20%. The rates adopted were not particular to the date of
valuation i.e. 20.7.1960. The PWD rates are operative over a
period, generally for an year or so. The extent or the
quality of construction were also not in dispute. The main
building of an area of 18828 sq. ft. consisted of 35 rooms,
and a big hall with ’Marble Flooring’, ’Burma Teak
Shutters’, ’Stone Slab Roofing’, a portico with ’Glazed
Gracian Pillars’ etc. In Ext. 1, the main portion was valued
at Rs.12 per sq. ft. Apart from the main building, there
were other appurtenances such as the Managers’ quarters,
kitchen-house, chowkidars’ quarters, out-house, stables,
pucca wells etc. The other structures have been valued area-
wise at much lesser rates, according as the nature of the
construction. The decendants of Raja P.N. Tagore, it was
claimed, were residing in the building till a few days
before possession was taken. There is no evidence to suggest
that, the rates mentioned and adopted in Ext. 1 were not
rates valid for a spread-out period.
It appears to us somewhat unreasonable that the
extensive building of 25,000 sq. ft. with big-halls and 35
rooms constructed with quality-material, marble flooring,
burma teak joinery should be valued at a mere Rs.57,660. No
case was made-out that the building had lost its utility and
that only mode of valuation appropriate to the case was one
of awarding merely the salvage-value. The building,
according to the evidence, was quite strong though about 60
years old at the time.
Having regard to the circumstances of this case, the
appropriate thing to do would have been to set-aside the
award in so far as the valuation of the building is
concerned and remit the matter for a fresh determination of
its market-value as on 14.7.1959. But the parties have been
at litigation for decades. The acquisition is of the year
1959. We, therefore, thought-and put to the learned counsel
on both sides-whether in the interests of justice, it would
not be proper to make some rough and ready estimate, drawing
such sustenance as the evidence on record could afford and
impart a quietus to this vexed litigation. Learned counsel
very fairly submitted that this would be the appropriate
course. In the very nature of things, the exercise that we
make, must share the imperfections of the evidence on
record. But then, some element of speculation is inevitable
in all valuations. In the
1040
best of exercises some measure of conjecture and guess-work
is inherent in the very nature of the exercise.
9. We may first proceed to estimate the prime-cost of
the building. The measurement set-out in Ext. 1 is not
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disputed. If Ext. 1 is taken as the starting point for the
estimate of cost of replacment as on 4.7.1959; the
depreciation of 20% allowed in Ext. 1 has to be added back
and, further, some deduction towards the possible escalation
of costs of construction between the date of preliminary-
notification and of the period of validity of the rates
adopted in Ext. 1 has to be made. On this basis, the cost of
replacement could be estimated at about Rs.4 lakhs. This
works out to Rs.16 sq. ft. on the average. Even in respect
of 1959, this figure may not be much, having regard to the
quality of the construction.
From this sum of Rs.4 lakhs, depreciation for the past
life of 60 years of building would have to be deducted.
Depreciation depends upon and is deduced from factors such
as the cost of the construction; the expected life-span; its
salvage-value realisable at the end of the period of utility
etc. Rate of depreciation is generally, the prime-cost less
salvage value divided by the life-span. These, of course,
are matters of evidence. In the present case, if we make a
rough and ready estimate of the salvage-value at say, 10% of
the cost and estimate the period of utility of life-span of
the building at, say, 90 years, the depreciation which is
the annual loss of value due to physical wear and tear works
out to about Rs.4,000 per year or roughly 1%. Without going
to the finer details of the calculation of the depreciation
on the progressive written-down values, we think, an
estimate of 50% of the cost of the building may, again on a
rough and ready basis, be deducted towards depreciation. The
market-value of the building as on the date of the
preliminary notification could accordingly be fixed at
Rs.2,00,000.
Accordingly, the compensation for the buildings and
structures is enhanced from Rs.57,660 to Rs.2,00,000, point
(b) is held and answered accordingly.
10. Re: Contention (c): So far as the tree-growth is
concerned, it is trite proposition that where land is valued
with reference to its potentiality for building-purposes and
on the basis of prices fetched by small sites in a
hypothetical lay-out, the tree-growth on the land cannot be
valued independently on the basis of its horticultural value
or with reference to the value of the yield. But this
principle does not
1041
come in the way of awarding the timber-value or the salvage
value of the tree-growth after providing for the cost of
cutting and removing. The evidence shows that there were 471
fruit-bearing trees and plants: 13 timber trees and 12
Bamboo clusters. Though there is some evidence as to the
value of the yield, this may not be a relevant factor having
regard to the principles of valuation appropriate to the
case. There is no evidence about the timber value and the
fuel value of the trees. Learned District Judge has awarded
a sum of Rs.355.85 for the entire tree-growth. Having regard
to the large number of trees and to the fact that some of
them were timber trees, we think we should award lumpsum of
Rs.7,500 under this head.
Accordingly, compensation for the tree-growth is
enhanced from Rs.355.85 to Rs.7,500.
11. Re: Contention(d)
This leaves us with the question whether the benefit of
Section 23(2) introduced by the UP Land Acquisition
(Amendment) Act 1972 (Act No. 28 of 1972) providing for a
solatium is available to the appellant on the ground that
the proceedings in appeal were pending as on the date when
that provision was introduced. It is to be recalled that by
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U.P. Land Acquisition (Amendment) Act (Act No. 22 of 1954)
Section 23(2) had been deleted from the statute. The
preliminary notification was long subsequent to this
deletion. The question is whether the introduction or re-
introduction of Section 23(2) in 1972 would enure to the
benefit of the appellant on the premise that rules of
construction appropriate to such remedial measures would
require their benefit to be extended to pending proceedings.
Appellant has also claimed the benefit of the further
enhancement of the solatium and the rates of interest under
Central Amending Act 68 of 1984. Shri Mukharjee submitted
that these amendments, both by the State Law and the Central
Law, were remedial legislations and would apply to pending
actions.
Shri Prithviraj, on the contrary, submitted that these
changes in the law, brought in by the amended provisions are
presumptively prospective except to the extent that they are
made expressly or by compelling implication retrospective in
the extension of their benefits. Learned Counsel said that
application of these provisions even to pending proceedings
envisages a principle of retro-active application which must
expressly be enabled by the statute or is to be inferred as
an inevitable implication.
1042
Shri Mukharjee relied upon certain observations of this
court in the case of Bhag Singh & Ors. v. Union Territory of
Chandigarh, (See 1985 Suppl. 2 SCR 949). There are some
observations at 958 of the report which tend to lend support
to Shri Mukharjee. But the matter is pending decision at the
hands of a larger bench.
12. In the circumstances, learned counsel on both sides
submitted that the appeal be disposed of on the other points
leaving it open to the appellant to agitate Contention (d)
after a final pronouncement in Bhag Singh’s case, if in the
light of the said judgment, this claim or any part of it
survives. We accept this submission and reserve liberty to
the appellant accordingly.
13. Shri Mukharjee sought to raise another point
concerning compensation to be awarded for change of
residence under Clause ’fifthly’ in Sec. 23(1); but as this
point does not appear to have been raised and urged before
the High Court. We think, we should not permit the appellant
to re-agitate this question over again in this court. It is
also to be observed that no specific ground is taken in this
behalf in this appeal either.
14. In the result, this appeal is allowed in part and
while the compensation determined and awarded for the land
is left undisturbed, the compensation awarded for the
building and tree-growth is enhanced from Rs.57,660 to
Rs.2,00,000 and from Rs.355.85 to Rs.7,500 respectively.
Appellant shall be entitled to interest at 6% on the
enhanced amount of compensation from the date of taking of
possession till realisation. Liberty is reserved to the
appellant to seek such additional relief on Contention (d)
depending upon the ultimate decision in Bhag Singh’s case.
The appeal is disposed of accordingly. The appellant shall
be entitled to the costs in this appeal. The advocate’s fee
fixed at Rs.2,500.
N.V.K. Appeal allowed.
1043