The Special Land Acqn Officeer (Mhada) And Prop. Sadanand Garage Shri Kappu A. Shetty vs Shree Siddhyvinayak Ganpati Temple Trust (Acquiring Body)

CNR No : HCBM020098662005

LAR-7-2004+Jud.doc
Sayali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
LAND ACQUISITION REFERENCE NO.07 OF 2004
The Special Land Acquisition
Officer … Applicant
And
1. Shri. Kapu A. Shetty
2. Century Developers Pvt Ltd ... Claimants
And
Shree Siddhivinayk Ganapati
Temple Trust … (Acquiring Body)
SAYALI
DEEPAK
UPASANI
Digitally signed by
SAYALI DEEPAK
UPASANI
Date: 2026.11.03
11:33:45 +0530
WITH
LAND ACQUISITION REFERENCE NO.04 OF 2005
The Special Land Acquisition
Officer … Applicant
And
Prop. Sadanand Garage Shri. Kappu
A. Shetty Kakasaheb Gadgil Marg
... Claimants
And
Shree Siddhivinayk Ganapati
Temple Trust … (Acquiring Body)
WITH
LAND ACQUISITION REFERENCE NO.05 OF 2005
The Special Land Acquisition
Officer … Applicant
And
1. Century Developers Pvt Ltd
2. Smt. Nethra Sanjeeva Shetty,
3A. Nethra Sanjeeva Shetty w/o
Sanjeeva Babu Shetty since
Deceased.
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4. Balkrishna N. Shetty
5. Smt. Nagaveni B. Shetty,
6. Mudhusudan Reddy,
7. Minal Finances P. Limited ... Claimants
And
Shree Siddhivinayk Ganapati
Temple Trust … (Acquiring Body)
Dr. Milind Sathe, Advocate General with Ms. Anjali
Helekar, GP with Ms. Jyoti Chavan, Additional GP, Mr.
Prashant Kamble., AGP for State.
Mr. Prasad Dhakephalkar, Senior Advocate with Mr.
Vivek Walavalkar i/b Mr. Sameer Bhalekar, for
Claimant No. 5 in LAR/07/2004.
Mr. Pravin Samadani, Senior Advocate with Mr.
Shashikant Surana, Mr. Madhur Surana, for Acquiring
Body.
Mr. Yatin R. Shah with Mr. Harsh Y. Shah, Ms. Tejashree
Tawde, for Claimant No. 3 in LAR/7/2004 and
Claimant in LAR No.04/2005.
Mr. Siddharth Rajamohan i/b Punit B. Anand, for
Claimant No. 2 in LAR/05/2005.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 27, 2026.
PRONOUNCED ON : NOVEMBER 03, 2026
JUDGMENT:
1. The present Land Acquisition References have been filed by
the claimants. Since the questions of fact and law arising in all the
References are similar and connected with each other, they have
been heard together and are being decided by this common
judgment to avoid repetition of facts.
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2. The present land acquisition references concerned the
determination of compensation and its apportionment in respect of
Final Plot No. 901, T.P.S. IV, Mahim Division, bearing C.S. No.
1/1209 of Lower Parel Division, situated at Prabhadevi, Mumbai.
The acquired property measured about 642.92 square metres and
included the structure known as Sadanand Garage. The land was
acquired for a public purpose connected with Shree Siddhivinayak
Trust. The claimants in LAR No. 7 of 2004, who claimed to be the
owners of the acquired land, challenged both the amount of
compensation awarded by the Land Acquisition Officer and the
manner in which that amount was divided among the persons
claiming an interest in the property. They submitted that the
valuation adopted and the apportionment made in the award were
incorrect. The Land Acquisition Officer had referred three matters
to this Court. LAR No. 7 of 2004 concerned the owners, namely
the Ambekars. LAR No. 4 of 2005 concerned M/s. Sadanand
Garage. LAR No. 5 of 2005 concerned M/s. Century Developers,
flat purchasers Nethra Saneeva Shetty, Sanjeev Babu Shetty,
Balkrishna N. Shetty, Nagveni B. Shetty and Madhusudan Shetty,
and M/s. Minal Finance Pvt. Ltd. Since all three references related
to the same acquired property, this Court, by its order dated 8
August 2007, directed that common evidence be recorded in all of
them. The acquired property measured 642.98 square metres and
was identified as Final Plot No. 901, corresponding to C.S. No.
1/1209, T.P.S. IV, Mahim Division, Mumbai. Its boundaries were
Final Plot No. 899 on the north and east, Kakasaheb Gadgil Marg
on the south, and Final Plot No. 903 on the west.
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3. The notification under Section 4 of the Land Acquisition Act
was dated 3 September 2002 and was published in Aaple
Mahanagar on 13 September 2002 and in Daily Navshakti on 14
September 2002. The notification under Section 6 was dated 11
July 2003 and was published on 24 July 2003. It was published in
Tarun Bharat on 17 July 2003 and The Asian Age on 19 July 2003.
The property had been inspected on 5 October 2001, and the joint
survey report was received on 5 December 2002. The joint survey
records described the owners as Dattaram Vitthal Ambekar, Sulina
N. Shinde, Sunita Dattaram Ambekar and Shubhangi Dattaram
Ambekar, represented through their constituted attorney, Ajit
Dattaram Ambekar. The report named Mahaian N. Irani and
Taramati Mohanlal Desai as lessors and Maheli Karsetji Pande as
lessee. M/s. Sadanand Garage, described as a partnership firm,
and M/s. Century Developers Pvt. Ltd. were recorded as agreement
holders or developers. The total plot area was recorded as 642.98
square metres. The survey report recorded four coconut trees and
one gulmohar tree, each approximately 34 feet in height, with an
average breadth of about 5.2 feet. It recorded two structures. One
measured 420.38 square feet and the other 226.94 square feet.
The land was described as non-agricultural. The award under
Section 11 of the Land Acquisition Act was made by the Special
Land Acquisition Officer, MHADA, on 16 February 2004. The total
compensation awarded was ₹ 2,01,37,662/-. According to the
apportionment recorded in the material supplied, 1,38,07,301/- ₹
₹
was allocated to Mr. Ambekar and 43,30,360/- to Kappu Shetty.
The entry relating to Century Developers does not specify an
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amount in the supplied table. The total compensation was
calculated by applying a rate of 21,679/- per square metre to 500 ₹
square metres and a rate of 19,511/- per square metre to the ₹
remaining 142.98 square metres. The latter rate was derived from
the rate of 21,679/- per square metre. The rate of 21,679/- per ₹ ₹
₹
square metre was calculated by multiplying 16,300/- by 1.33,
which represented the permissible FSI available on the relevant
date. The Land Acquisition Officer adopted 16,300/- per square ₹
metre as the market rate on the basis of the 2002 Ready Reckoner.
4. Mr. Siddharth Rajamohan, learned Advocate appearing for
Claimant No.2 in LAR No.5 of 2005, submitted that Claimant
Nos.2 and 3 had entered into agreements in 1993 for purchase of
proposed Flat Nos.301 and 302 in the property bearing Final Plot
No.901, T.P.S. IV, Mumbai. Claimant No.1 had paid Rs.18,00,000/-
and Claimant No.2 had paid Rs.13,80,500/- towards the purchase,
but the sale transactions could not be completed because the land
was acquired. It was submitted that, before the acquisition, the
Acquiring Body had entered into an agreement dated 10 March
1999 with Century Developers and Claimant Nos.2 and 3. Under
this agreement, the Acquiring Body had agreed to pay
Rs.25,00,000/- each to Claimant Nos.2 and 3 for settling their
claims. Clause M provided that they would release their claims
after receiving the agreed amounts. However, the payments were
not made and the releases were not completed due to the
subsequent acquisition. According to the claimants, this agreement
showed that the Acquiring Body had accepted their claims and had
agreed to pay them for giving up their rights. Learned Advocate
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submitted that Section 3(b) of the Land Acquisition Act, 1894
gives a wide meaning to the expression “person interested”. It
includes a person claiming an interest in the compensation and is
not confined only to the owner of the land. The SLAO had issued
notices under Section 9 to Claimant Nos.2 and 3 and had referred
to them as proposed flat purchasers in the acquisition record. The
award dated 16 April 2004 had recorded the amounts paid by
them towards the proposed purchase. It was, therefore, contended
that the SLAO had knowledge of their claims and payments, and
ought to have examined their entitlement instead of ignoring the
same. The recording of these amounts in the award was relied
upon as supporting evidence of the payments made by the
claimants.
5. Learned Advocate submitted that the award did not give
proper reasons for rejecting the claims of Claimant Nos.2 and 3
and had failed to consider their agreements, the amounts paid by
them and the subsequent agreement dated 10 March 1999 with
the Acquiring Body. It was contended that Section 55(6)(b) of the
Transfer of Property Act, 1882 gives a buyer, in the circumstances
stated therein, a charge upon the property for the purchase money
paid in anticipation of delivery, together with interest. According to
the claimants, merely because their earlier agreements were
executed before 1999, their rights arising from the payments made
under those agreements could not be ignored. Learned Advocate
submitted that the SLAO's observation that the earlier agreements
could not be considered as comparable sale instances because they
were prior to 1998 had no bearing on the separate contractual
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claims of Claimant Nos.2 and 3. The question whether those
transactions could be used for determining the market value of the
acquired land was different from the question whether the
purchasers had any enforceable right against the compensation
payable for the acquired property. It was, therefore, submitted that
the claims ought to have been separately examined, at least to the
extent of the amounts paid and applicable interest, subject to proof
of their legal entitlement. The non-payment of the amounts
promised under the agreement dated 10 March 1999 and the fact
that the proposed releases were never completed were relied upon.
The claimants accordingly requested that their contractual and
statutory rights be considered and that compensation be
apportioned in their favour to the extent permissible in law. In
support of these submissions, learned Advocate relied upon the
judgment of this Court in Mohammed Akil Khan v. Premraj
Jawanmal Surana , 1971 SCC OnLine Bom 77.
6. Claimant No. 3, M/s. Sadanand Garage, submitted that it
had been in occupation of the entire Final Plot No. 901,
admeasuring 769 square yards or 642.98 square metres, since
1971. According to it, the property was taken on rent by Sadanand
R. Shetty from the original owners, the Kowlis, and the garage
business was later converted into a partnership firm in 1985 or
1986. Claimant No. 3 stated that it was carrying on garage
business in a structure admeasuring about 2,500 square feet,
having a mezzanine floor of about 800 square feet, and was using
the open portion of the plot. In support of its occupation, it relied
upon the rent receipts issued by the original owners, the BEST
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electricity bill dated 25 May 1978, the Ward Officer's receipt dated
23 June 1977, the Shop Act licence dated 4 April 1975 and the
receipt issued by the Assessor and Collector on 11 August 1978. It
relied upon the proceedings in RAE Suit No. 1014/3093 of 1988,
filed by Claimant No. 1 against the garage, which came to be
dismissed by the Small Causes Court on 16 November 1988.
According to Claimant No. 3, no steps were taken to restore the
suit or obtain its eviction. It was submitted that the documents and
the earlier proceedings showed that the garage was an existing
occupant of the property and that its occupation was known to the
owners. Claimant No. 3 relied upon the agreement dated 18 July
1992 entered into between the owners and M/s. Century
Developers Pvt. Ltd. for sale of the property for Rs.51 lakhs. The
agreement itself referred to the garage as a tenant of the entire
plot and recorded that the property was being dealt with on an “as
is where is” basis, subject to the rights and occupation of the
existing occupants. The subsequent power of attorney dated 20
July 1992 and the tenancy agreement dated 3 July 1995 were
relied upon to show that Century Developers had dealt with the
garage as an occupant of the property.
7. Claimant No. 3 submitted that the agreement dated 2
January 1996 between the garage and Century Developers
provided for surrender of its rights in the property when
redevelopment was undertaken. Under that arrangement, the
garage was to receive six flats, three having an area of 900 square
feet each and three having an area of 950 square feet each, along
with four car parking spaces, against payment of construction costs
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of Rs.37 lakhs. According to the claimant, this arrangement
showed that the garage had substantial rights in the property and
that its occupation was required to be settled before
redevelopment could take place. It was submitted that Century
Developers had entered into arrangements with the garage for the
purpose of preventing encroachment on the open land and
ensuring that redevelopment would not be obstructed. The
tenancy agreement of 3 July 1995 recorded rent of Rs.140/- per
month for the garage structure and Rs.600/- per month for the
remaining open space. Claimant No. 3 maintained that the
developers had permitted it to continue using the open space until
the development work was ready to commence, when it was
expected to vacate and cooperate with the construction. The
claimant relied upon Clauses 7 and 8 of the agreement dated 2
January 1996, which provided for its cooperation and surrender of
rights against allotment of the agreed flats and parking spaces. It
was submitted that the owners had not challenged these
arrangements when they were made and had not taken any
effective steps to develop or manage the property. According to the
claimant, the cross-examination of Claimant No. 5 showed that he
had not visited the property for several years and was not aware of
the possession handed over to Century Developers or the steps
taken by them for development. Claimant No. 3 therefore
contended that the owners could not now disregard the documents
executed by Century Developers during the period when it was
acting under the authority given to it by the owners.
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8. Claimant No. 3 relied upon the agreement dated 10 March
1998 executed with the Siddhivinayak Temple Trust or the
Acquiring Body. Under this agreement, the Trust had agreed to pay
Rs.2,73,50,000/- to the garage for surrender of its rights in Plot
No. 901 and for enabling it to obtain alternative accommodation.
The agreement provided for payment of interest at 12% per
annum after the stipulated period. According to the claimant, the
agreement was entered into pursuant to the decision taken by the
Trustees and was signed by the Trustees then in office. It showed
that the Trust had accepted the existence and value of the garage's
rights in the property and had agreed to pay the amount for
obtaining vacant possession. Claimant No. 3 relied upon the Trust's
valuation report dated 19 July 1999, prepared by M/s. Joshi and
Parulekar, which assessed the value of the entire property at Rs.4.6
crore. It was submitted that the report was obtained by the Trust
itself for the purpose of purchasing the property and therefore
deserved consideration while deciding the compensation. The
claimant referred to the letters issued by the Trust from time to
time, including its letter dated 8 March 2001, which described the
plot as being in the possession of Claimant No. 3 and having a
garage shed standing on it. The minutes of the meeting of the
Trustees dated 16 April 2001 were relied upon to show that the
Trust was considering purchase of the property and settlement of
the rights of the tenants and occupants. According to Claimant No.
3, the proposed amounts payable under the arrangement were
Rs.2,73,50,000/- to the garage, Rs.1,31,50,000/- to Century
Developers and Rs.95,00,000/- to the owners. These amounts, it
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was submitted, showed that the Trust itself had treated the rights
of the garage and the developers as having substantial value. The
claimant therefore contended that the agreed consideration and
the Trust's own valuation were important material for deciding the
value of the interest taken away from it by acquisition.
9. Claimant No. 3 submitted that the acquisition proceedings
were initiated despite the earlier agreement with the Trust and its
objections regarding the requirement of the land. It referred to the
steps taken by the Trust and the Government from 2001 onwards,
including the correspondence with the Revenue Department and
the Collector, the approval granted on 9 May 2002 and the
appointment of the Special Land Acquisition Officer. According to
the claimant, the initial proposal referred to Plot No. 905, which
was later corrected to Plot No. 901 by a corrigendum dated 16
June 2003. The notification under Section 4 was issued on 12
September 2002 for the public purpose of providing a “Waiting
hall and rest house for the devotees” and was published in the
newspapers on 14 September 2002. Claimant No. 3 objected to the
acquisition on the ground that the Trust had already agreed to pay
consideration for surrender of its rights and that the acquisition
was being used to avoid that agreement. It questioned whether the
Trust actually required the property and requested an enquiry into
the availability of space in the existing Trust building and the
adjoining portion of Plot No. 903. The claimant complained that
its request for a personal hearing was initially not accepted and
that the steps towards issuance of the notification under Section 6
were being taken before completion of the enquiry under Section
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5A. It filed Writ Petition No. 551 of 2003 challenging the approval
and the notification under Section 4. After receiving a notice for
personal hearing and submitting objections, the petition was
withdrawn on 20 June 2003 with liberty to approach the Court if
the objections were overruled and a notification under Section 6
was issued. The notification under Section 6 was thereafter issued
on 9 July 2003, and Claimant No. 3 filed Writ Petition No. 2019 of
2003. The award was made on 16 February 2004. Under the
award, Rs.43,30,360/- was granted to Claimant No. 3, whereas
Rs.1,38,07,302/- was granted to Claimant No. 5. Claimant No. 3
pointed out that these amounts were far below the consideration
which the Trust had earlier agreed to pay for surrender of its rights
and possession.
10. Claimant No. 3, through its learned Advocate Mr. Yatin R.
Shah, submitted that the evidence and documents on record
established that it was in actual possession and use of the entire
plot. It relied upon the rent receipts issued in the name of
Sadanand Garage, the property tax receipts paid to the BMC from
1978 until 21 March 2003, the electricity and telephone bills, the
municipal licences and the inspection reports. It was submitted
that no other person had paid property taxes in respect of the
property during this period. The claimant relied upon the rent
receipts issued by Century Developers and the documents relating
to the tenancy agreement, which, according to it, showed that the
developers had recognised its occupation of the structure and the
open land. It relied upon the cross-examination of Claimant No. 5
to contend that the owners had neither visited the plot nor taken
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effective steps to manage it after the agreement with Century
Developers. The claimant submitted that the earlier suit filed
against it had been dismissed and no proceedings were taken to
recover possession. It therefore claimed that it continued in
possession until 30 March 2005, when the Trust forcibly
dispossessed it. According to the claimant, on 10 March 2005, the
Trust, through its agents and security personnel, entered the
property, removed vehicles and demolished the garage with the
help of a bulldozer. Several vehicles belonging to customers were
damaged and the garage's spare parts, furniture, tools and repair
equipment were removed without giving it an opportunity to take
them away. It complained that the police had refused to register its
complaint. Claimant No. 3 relied upon paragraphs 23 to 25 of its
affidavit of evidence and the answers given in cross-examination,
particularly Questions Nos. 30, 32, 44, 101, 113, 130, 131, 147,
151, 156 to 159, 169, 171, 182, 199 to 211, 243 and 263, to
support its case regarding possession and damages. It relied upon
the documents showing that the Trust had sought its permission to
use a portion of the property on Angaraki Chaturthi. According to
the claimant, these requests were made to it and not to the
owners, which showed that the Trust itself recognised it as the
person in actual occupation and control of the plot.
11. On the basis of these facts, Claimant No. 3 submitted that it
was entitled to a substantial share of the compensation. It
contended that the actual consideration agreed to be paid by the
Trust for surrender of its rights was the best available evidence of
the value of its interest, as it represented an arrangement between
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parties who were willing to settle the matter. The claimant relied
upon the valuation report obtained by the Trust and submitted
that, since it was in exclusive possession of the property, it was
entitled to 75% of the compensation, leaving 25% to the owners. It
relied upon Mathura Prosad Rajgharia and Others v. State of West
Bengal , AIR 1971 SC 465; Kachrulal Hiralal Dhoot v. The
Gurudwara Board, Nanded and Others , AIR 1979 Bom 31; Mangat
Ram, Etc. v. State of Haryana and Others , AIR 1996 SCW 2700;
Sadasheorao Krishnarao Buti, Money-Lender v. Collector, Nagpur ,
AIR 1942 Nagpur 86; Batan Singh and Others v. Nathu Birju , AIR
1961 Punjab 503; Bai Saraswati Jeshankar and Another v. Agent,
Bharatkhand Textile Manufacturing Co. Ltd., Ahmedabad and
Others , AIR 1967 Guj 36; Shamalbhai Lallubhai Patel v. The
Additional Special Land Acquisition Officer , AIR 1977 SC 899;
Thakur Kuldeep Singh (Dead) through Legal Representatives and
Others v. Union of India and Others , AIR 2010 SC 1272; and State
of West Bengal v. Muss. Nurjahan Sakil and Another , AIR 1985 Cal
39. These decisions were relied upon in support of the claim that a
tenant or occupant having an interest in the acquired property
could receive compensation for the rights taken away by
acquisition and that the compensation could be apportioned by
considering the nature and value of the respective interests.
Claimant No. 3 sought compensation for the damage caused to its
vehicles, goods, equipment and other movable property during
demolition and dispossession. It requested that the amount already
awarded to it be enhanced by considering the agreement with the
Trust, the valuation report and the evidence regarding its
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possession and occupation. It claimed the applicable interest and
other statutory benefits, contending that the amount awarded by
the Land Acquisition Officer did not represent the value of the
rights which it had lost.
12. Claimant No. 5 submitted that the market value of the
acquired property was required to be determined with reference to
the date of the notification under Section 4(1) of the Land
Acquisition Act, which was stated to be 12 December 2002. It was
contended that the Land Acquisition Officer had before him 12
registered sale transactions received from the office of the
Assistant Registrar, Old Custom House, Mumbai. These
transactions related to land, buildings, flats, shops and commercial
or industrial properties for different years between 1994 and 2000.
However, except Sale Instance No. 10, which was considered but
rejected, the remaining sale instances were not properly examined.
Claimant No. 5 submitted that Sale Instances Nos. 10 and 12 were
particularly relevant because they related to nearby properties and
transactions of the year 2002. The objection that Sale Instance No.
10 included a ground-floor structure could have been dealt with by
making suitable deductions for the value of the structure. Similarly,
Sale Instance No. 12 could not have been rejected only because it
related to commercial or industrial property. According to the
claimant, after making proper adjustments for the difference in use
and nature of the properties, such transactions could be considered
for finding the market value of the acquired land. It was pointed
out that the Land Acquisition Officer had relied upon the Ready
Reckoner rate of land with residential construction, while rejecting
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a sale instance on the ground that it included a structure. This,
according to the claimant, was not consistent. Claimant No. 5
therefore submitted that the market value could not have been
fixed at only 21,679/- per square metre and claimed a much ₹
higher rate on the basis of actual sale transactions and the
evidence of Mr. Hitendra Mehta, Architect and Valuer.
13. Claimant No. 5 relied upon the valuation report dated 5
February 2010 submitted by Mr. Hitendra Mehta. The valuer had
considered two sale instances. The first related to Plot No. 967,
admeasuring 665.55 square metres, sold under an agreement
dated 6 December 2002. On the basis of this transaction, he
assessed the value of the acquired land at 1,74,518.29/- per ₹
square metre. The second related to Plot No. C-4, comprising parts
of Final Plot Nos. 952 and 954, admeasuring 1,239.86 square
metres, under a transaction dated 5 March 2001. On that basis, he
assessed the rate at 1,52,988.31/- per square metre. The valuer ₹
ultimately considered the first sale instance to be more suitable
and arrived at a rate of 1,70,200/- per square metre for the ₹
acquired property. Claimant No. 5 submitted that the valuer had
been cross-examined, but his evidence had not been shaken. The
acquiring body had not examined any expert to dispute his
valuation. It was submitted that the acquired land was non-
agricultural land situated in an important area of Mumbai, close to
Siddhivinayak Temple. The land had residential as well as
commercial development potential, with permissible FSI of 1.33 on
the relevant date. The claimant relied upon the development plans
and the Intimation of Disapproval issued on 8 April 1986 for
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construction of a building having a stilted ground floor and seven
upper floors. According to the claimant, the valuer had considered
the location, development potential, FSI, proximity of the
comparable properties and the rise in prices between 2000 and
2002. He had made suitable adjustments for the differences
between the properties. The claimant relied upon Ashok Kumar &
Ors. v. State of Haryana & Ors. , (2015) 15 SCC 200; Krishan
Kumar v. Union of India & Ors. , (2015) 15 SCC 220; P. Ram Reddy
& Ors. v. Land Acquisition Officer, Hyderabad , (1995) 2 SCC 305;
Suresh Kumar v. Town Improvement Trust , (1989) 2 SCC 329;
Viluben Jhalejar Contractor v. State of Gujarat , (2005) 4 SCC 789;
and Chimanlal Hargovinddas v. Special Land Acquisition Officer,
Poona , (1988) 3 SCC 751. On the basis of these decisions, it was
submitted that the development potential of the land and the
advantages and disadvantages of the comparable properties were
required to be considered while determining its market value. The
claimant therefore sought compensation on the basis of the
valuation made by Mr. Mehta.
14. Claimant No. 5 raised an alternative objection regarding the
Ready Reckoner zone applied by the Land Acquisition Officer. It
was submitted that the acquired property was C.S. No. 1/1209 of
Lower Parel Division and Final Plot No. 901 of Mahim, T.P.S. IV.
The Property Register Card showed the correct C.S. number as
1/1209. According to the claimant, the Land Acquisition Officer
wrongly treated Final Plot No. 901 as C.S. No. 901 and applied the
rate of Zone 19/123 instead of Zone 17/115. The applicable rate
was stated to be 20,350/- per square metre instead of 16,300/- ₹ ₹
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per square metre. On this alternative basis, the claimant sought
compensation of ₹ 2,54,19,286/-. Without prejudice to this
alternative claim, the claimant submitted that, in the absence of
comparable transactions involving vacant plots in the vicinity, the
value of nearby developed properties could be considered after
making appropriate deductions for construction, development
expenses, developer's profit, plot size, road width, location and
FSI. In rejoinder, it was submitted that the acquired land was
closer to Siddhivinayak Temple than the properties covered by Sale
Instances Nos. 1 and 2. Its location and other advantages therefore
justified a higher valuation. The acquiring body had not produced
any expert evidence to disprove the valuation report. It was
submitted that the valuer had considered both sale instances and
had preferred Sale Instance No. 1 because it was more suitable for
comparison. Sale Instance No. 2 was not discarded and continued
to support the valuation. Referring to paragraph 24.0 of the
valuation report, the claimant pointed out that the valuer had
found both transactions comparable. The claimant submitted that
the 95% negative adjustment shown in the valuation report was an
admitted arithmetical mistake and that the correct adjustment was
49%, having regard to the difference between the FSI of 2.59
available to the comparable property and the FSI of 1.33 available
to the acquired land. After correcting this figure, the claimant
claimed that the total positive adjustment would be 96% and that
the market value would work out to 2,28,037.24/- per square ₹
metre. On this basis, the value of the acquired land admeasuring
642.98 square metres was claimed at 14,66,23,383.80/-. ₹
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15. Claimant No. 5 challenged the amounts awarded to M/s.
Century Developers Pvt. Ltd. and Mr. Kappu A. Shetty. So far as
Century Developers was concerned, it was submitted that its suit
for specific performance of the development agreement dated 18
July 1992 had been dismissed on 5 May 1999. The agreement had
been terminated by notice dated 27 March 1996. According to the
claimant, Century Developers had not complied with the
agreement and had failed to pay the balance consideration. The
power of attorney dated 20 July 1992 was stated to have been
given only for negotiating with the tenant and the municipal
authorities. It did not authorise Century Developers to sell flats or
create tenancy rights in the property. The claimant relied upon
Clause 23 of the development agreement, which provided for
forfeiture of the amount paid in case of failure to comply with the
agreement. It was therefore contended that Century Developers
₹
was not entitled to the amount of 20,00,000/- awarded to it,
particularly when it had not produced evidence to establish its
entitlement. The claimant questioned the valuation of
₹ 57,72,480/- made in respect of 184.32 square metres and
submitted that the award did not disclose the basis for arriving at
that figure. The division of that amount, under which 75% was
given to Mr. Kappu A. Shetty and 25% to the claimants, was
challenged. It was submitted that Mr. Shetty had not paid rent to
the owners and had failed to establish any lawful relationship with
them. He was alleged to be in occupation without authority. The
claimant relied upon its affidavit in lieu of evidence dated 13
December 2006 and submitted that Mr. Shetty had not led
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evidence to establish his claim for compensation. It was therefore
contended that no amount should have been awarded to him.
Claimant No. 5 sought deletion of Claimant Nos. 1 and 2 from the
proceedings through Chamber Summons No. 1617 of 2016, on the
ground that they had no right, title or interest in the acquired
property.
16. Mr. Prasad Dhakephalkar, learned Senior Advocate appearing
for Claimant No. 5, strongly disputed the claim of M/s. Sadanand
Garage and its assertion that it was a tenant of the entire acquired
property. He submitted that the original rent receipt dated 10 April
1977 was issued in the name of M/s. Sadanand Garage, Proprietor
Sadanand R. Shetty, and showed payment of 140/- towards rent ₹
of the workshop shed. According to him, this document could
establish, at the highest, tenancy of the shed measuring about 184
square metres. It did not establish tenancy of the entire plot
admeasuring 642.98 square metres or the surrounding open land.
He pointed out that the case of the garage was that it was
originally a proprietary concern and was later converted into a
partnership firm in 1986. However, no partnership deed or other
document was produced to show when and how the proprietary
concern became a partnership firm, whether Sadanand Shetty was
a partner, or whether the original tenancy was transferred to the
partnership firm. The registration extract dated 31 July 1993 did
not disclose the names of the partners or show that the tenancy
was an asset of the firm. It was submitted that no rent receipt in
the name of the partnership firm had been produced for the long
period between 1977 and 1995. The rent receipts issued by
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Century Developers could not establish any valid tenancy because
Century Developers had never become the owner of the property.
Its agreement with the Ambekars was only an agreement to sell. It
had been terminated on 26 March 1996 and its suit for specific
performance had been dismissed on 5 May 1999. The agreement
did not authorise Century Developers to create a new tenancy or
transfer the earlier tenancy to the partnership firm. Learned Senior
Advocate relied upon the evidence in RAE Suit No. 1014/3093 of
1988 and the cross-examination of Deepak Kappu Shetty. He
submitted that Deepak had no personal knowledge of the original
tenancy or the circumstances in which the garage was taken on
rent. Though his father was alive, he was not examined to prove
the claim. The evidence contained different versions about the
year in which the partnership firm was constituted, namely 1985
and 1986. It was pointed out that Sadanand Shetty had died in
1986 and his legal heirs had not come forward to establish how
the alleged partnership firm acquired his tenancy rights. Learned
Senior Advocate therefore submitted that the garage had failed to
prove that the partnership firm was the lawful tenant of the entire
plot or even that the original tenancy of the shed had been
transferred to it. He contended that the agreement dated 10 March
1998 with the Siddhivinayak Temple Trust could not create
tenancy rights in favour of the garage. For these reasons, he sought
dismissal of LAR No. 5 of 2005 and submitted that Century
Developers was not entitled to any share in the compensation.
17. In submissions, Mr. Dhakephalkar addressed the method of
valuation and the amounts claimed by the owners. He submitted
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that the property measured 642.98 square metres and was situated
near Siddhivinayak Temple. However, on the date of acquisition,
tenants and other occupants were in possession and two structures
were standing on the land. The property was therefore subject to
claims and occupation which affected its marketability. The value
of vacant land between a willing buyer and a willing seller could
not be directly applied without considering these circumstances. At
the same time, he submitted that the development agreement with
Century Developers had already been terminated and its suit had
been dismissed before acquisition. Therefore, no subsisting right
under that agreement could be treated as an encumbrance against
the owners. He alternatively submitted that, in the absence of
reliable sale instances of vacant land, the Ready Reckoner method
adopted by the Land Acquisition Officer could be considered,
subject to correction of the applicable zone from Zone 19/123 to
Zone 17/115. He pointed out that the owners had sought only
₹ 1,69,922.90/- as enhancement in their reference under Section
18. He nevertheless supported the use of nearby developed
properties for valuation, provided suitable deductions were made
for construction and other factors. On the basis of the revised
valuation, the claimants sought enhanced compensation of
₹ 14,59,59,554/-, with the value of land assessed at
₹ 14,66,23,383.80/-, together with construction value, tree value,
solatium at 30% and additional amount under Section 23(1-A).
After deducting 1,38,07,302/- already paid to the owners, they ₹
claimed that the excess compensation payable as on the award
date was 20,22,91,435.55/-. They sought interest under Section ₹
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28 of the Land Acquisition Act at 9% per annum for the first year
and 15% per annum thereafter until realisation. Relying upon
Sunder v. Union of India , (2001) 7 SCC 211; Jai Krishan v. State of
Uttarakhand & Ors. , (2014) 12 SCC 164; NHAI v. Tarsem Singh ,
2026 SCC OnLine 481, and the other authorities referred to in
their submissions, they contended that interest on enhanced
compensation could not be denied arbitrarily. It was pointed out
that the award was made on 16 February 2004, the owners filed
their objections on 29 March 2004 and the reference was made on
3 September 2004. There was, according to them, no delay on
their part in seeking enhancement. They opposed the request of
the acquiring body to exclude the period during which the status
quo order remained in force, contending that they were entitled to
the statutory interest under Section 28.
18. Mr. Milind Sathe, learned Advocate General appearing for
the State of Maharashtra, submitted that the Land Acquisition
Officer had considered 12 sale instances while determining the
market value of the acquired land. Referring to the Stamp Duty
Ready Reckoner for 2002, he submitted that the applicable zone
was Zone 19/123, which included Plot No. 901. According to him,
the Ready Reckoner rate used by the Land Acquisition Officer
supported an enhanced compensation calculation of
₹ 2,54,19,286/-. The applicable rate for developed land in
₹
Zone/Sub-zone 19/123 was 16,300/- per square metre. Referring
to clause 22.3 of the valuer’s report, the learned Advocate General
submitted that Claimant No. 5’s case was supported by the entry at
Serial No. 9 concerning permissible Floor Space Index (FSI). He
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pointed out that the permissible FSI for Sale Instance No. 1 was
2.59, whereas the FSI available for the acquired land was 1.33. In
his submission, the adjustment should have been a reduction of
49%, rather than 95%. He submitted that Sale Instance No. 1
involved a transaction between a developer and a bank, in which
the bank’s particular requirements would have affected the price. It
was, therefore, not a suitable instance for determining the market
value of the acquired land. The learned Advocate General
submitted that the entire building, including the constructed
portion, formed part of the sale transaction relied upon by the
valuer. That transaction could not, therefore, be treated as a
reliable basis for fixing the market value of the land alone. He
submitted that both sale instances relied upon by Claimant No. 5’s
valuer should be rejected and that the Ready Reckoner rate should
be used to determine the market value.
19. Mr. Pravin Samdani, learned Senior Advocate appearing for
the Acquiring Body, submitted that the acquired land admeasures
642.98 square metres and, on the relevant date, it was occupied by
tenants, mainly M/s. Sadanand Garage, which was carrying on its
business there. There were two existing structures on the property
and an earlier agreement with M/s. Century Developers Pvt. Ltd.
was in existence. Thus, according to the Acquiring Body, the
property was not vacant land and was subject to different rights
and claims. A purchaser would have to take into account these
existing occupants and agreements while deciding whether to
purchase the property and at what price. Its market value could
not, therefore, be determined in the same manner as vacant land
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available for sale between a willing buyer and a willing seller.
Learned Senior Advocate submitted that the valuation made by the
Land Acquisition Officer on the basis of the Ready Reckoner rates
should be accepted, since no reliable sale instance of vacant land
in the vicinity was available. He, however, accepted that the Ready
Reckoner rate had been taken from the wrong zone. The correct
zone was 17/115 and not 19/123, and the valuation would have
to be reconsidered by applying the rate of the correct zone. He
pointed out that the owners, while seeking a reference under
Section 18 of the Land Acquisition Act, had claimed enhancement
of only Rs.1,69,922.90/-. Without prejudice to this submission, he
stated that Sale Instance No. 10 obtained by the Land Acquisition
Officer from the Sub-Registrar could be considered after making
proper deductions. Though that transaction related to premises
situated on the ground floor, this difference could be taken care of
by making a suitable deduction. deductions would be necessary
towards the developer's profit, administrative expenses,
construction costs, size of the plot, location and width of the
adjoining road. According to the Acquiring Body, this sale instance
could at the highest be used only after making such adjustments.
20. Learned Senior Advocate submitted that the two sale
instances relied upon by the claimants' valuer were not proper
comparisons for determining the value of the acquired land. So far
as Sale Instance No. 2 was concerned, he submitted that the valuer
himself had not considered it as the more suitable instance. As
regards Sale Instance No. 1, he pointed out that the property
covered by that transaction related to a building constructed in
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1951 and having an FSI higher than 1.33, which, according to the
Acquiring Body, was not permissible for the acquired land on the
date of the Section 4 notification. The transaction involved sale of
the entire building to a single purchaser for its own particular use.
It was therefore a special transaction and the price could not be
treated as the ordinary market rate of the acquired land. It was
submitted that the property covered by Sale Instance No. 1 was a
redevelopment property under Regulation 33(7), having the
benefit of incentive FSI of about 2.56, whereas the basic
permissible FSI was only 1.33. The building was newly constructed
and consisted of residential flats. It was sold as a whole to a
financial institution, ICICI, under a package transaction. The price
paid in such a transaction was influenced by the additional
development potential and the special requirements of the
purchaser. The property stood on a plot of about 665.55 square
metres and offered greater development possibilities than the
acquired land. Learned Senior Advocate pointed out that the
property covered by Sale Instance No. 1 was situated in a more
peaceful residential locality, on a wider road, whereas the acquired
land was on a narrower road in a congested area and very close to
Siddhivinayak Temple. The temple attracted a large number of
devotees from early morning until about 10:00 p.m., resulting in
considerable crowd and traffic throughout the day. According to
the Acquiring Body, these circumstances were disadvantages and
ought to result in a negative adjustment. The valuer's positive
adjustment of 50% on account of proximity to the temple was
therefore disputed. The suggestion that the acquired property had
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potential for use as a clinical nursing home or for commercial
purposes was denied. It was submitted that such use could not be
assumed merely because the property was situated near the
temple. On these grounds, the Acquiring Body contended that Sale
Instance No. 1 was not a proper comparable transaction and
should not be relied upon.
21. Without prejudice to the above objections, learned Senior
Advocate submitted that even if Sale Instance No. 1 was
considered, the calculations made by the valuer required
substantial correction. According to the Acquiring Body, apart from
deducting 20% towards the developer's profit, a 10% had to be
deducted towards administrative expenses. The construction cost
adopted by the valuer at Rs.7,000/- per square metre, equivalent
to about Rs.650.32/- per square foot, was disputed. It was
submitted that the construction cost during the relevant period
could not have been less than Rs.1,500/- per square foot. On
making these deductions, the Acquiring Body calculated the net
land value at Rs.5,09,80,875/-, instead of Rs.7,74,33,771.39/-
adopted by the valuer. After dividing this amount by the plot area
of 665.55 square metres, the basic land rate would work out to
Rs.76,599.62/- per square metre, instead of Rs.1,16,345.53/- per
square metre. The Acquiring Body disputed the adjustments made
by the valuer for the differences between the two properties. It
submitted that no positive adjustment should be given for the
shape of the plot, frontage, road access or proximity to a public
garden. A negative adjustment of 10% was proposed for the user
potential and another negative adjustment of 10% for proximity to
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Siddhivinayak Temple. The negative adjustment for the difference
in permissible FSI was proposed at 49%, having regard to the FSI
of 2.59 available to the property covered by Sale Instance No. 1
and the FSI of 1.33 available to the acquired land. The total
corrected adjustment was thus shown as a negative 69%, instead
of the positive 50% adopted by the valuer. On this calculation, the
Acquiring Body claimed that the market rate of the acquired land
would be only Rs.23,745.88/- per square metre, equivalent to
Rs.2,206.07/- per square foot. It placed a comparative calculation
before the Court showing the transaction value of
Rs.10,88,82,500/-, deduction of developer's profit, additional
deduction of administrative expenses, construction cost at
Rs.1,500/- per square foot and the resulting net land value. It set
out the proposed adjustments for size, shape, locality, civic
amenities, road frontage, access, user potential, topography, FSI
and proximity to the public garden and Siddhivinayak Temple.
According to the Acquiring Body, while the valuer's calculation
resulted in a rate of Rs.1,74,518.29/- per square metre, the
corrected calculation would result in a rate of only Rs.23,745.88/-
per square metre. It was therefore submitted that the valuation
report could not be accepted without making these corrections.
22. Learned Senior Advocate submitted that an order of status
quo was in force from 20 February 2004 until 10 March 2005 and
that the occupants of the garage had not handed over possession
during that period. According to the Acquiring Body, if interest was
otherwise found payable, the period covered by the status quo
order should be excluded while calculating it. In conclusion, it was
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submitted that no sale instance on record could be treated as a
proper comparison with the acquired property. The two
transactions relied upon by the claimants' valuer related to
constructed properties and were not subject to the same
occupation and other claims which affected the acquired land. The
Acquiring Body maintained that Sale Instance No. 10 could be
considered only after making suitable adjustments. It submitted
that, since the Ready Reckoner rate had been applied from the
wrong zone, the market value could be reconsidered by applying
the rate of the correct zone and making appropriate adjustments
for the advantages and disadvantages of the acquired property. In
support of these submissions, learned Senior Advocate relied upon
the judgments of the Supreme Court in New Okhla Industrial
Development Authority v. Harnand Singh (Dead) through Legal
Representatives and Others , 2024 SCC OnLine SC 1691, and M. B.
Gopala Krishna and Another v. Special Deputy Collector, Land
Acquisition , (1990) 3 SCC 594.
REASONS AND FINDINGS:
Relevant date, nature of the property and principles for deciding
market value:
23. The first question which has to be decided is what was the
market value of Final Plot No. 901 of Town Planning Scheme No.
IV, Mahim Division, situated at Kakasaheb Gadgil Marg,
Prabhadevi, Mumbai, on the date of acquisition. The area of this
property is stated to be 642.98 square metres. It is described as
C.S. No. 1/1209 of Lower Parel Division. The property was
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acquired for the public purpose of constructing Bhakti Niwas and a
waiting room for the devotees coming to Shree Siddhivinayak
Ganapati Temple.
24. Before looking at the different valuations relied upon by the
parties, the relevant date for deciding the market value has to be
fixed. The notification under Section 4 of the Land Acquisition Act,
1894, is stated to have been issued on 3 September 2002.
According to the owners, it was published in the newspapers on 13
September 2002 and 14 September 2002. The valuation report of
C.W.2, Hitendra K. Mehta, shows that the notification was
published in the Government Gazette on 19 September 2002.
Thus, 19 September 2002 is the last date of the publications
referred to above. C.W.2 has taken this date while calculating the
market value. One of the letters written in December 2002 refers
to a notice under Section 4 of the Land Acquisition Act dated 12
December 2002. However, from the material placed before me, it
appears that the acquisition was carried forward on the basis of
the notification dated 3 September 2002 and its publication in
September 2002. Merely because there is a letter written in
December 2002, it cannot be said that the notification under
Section 4 was published for the first time on 12 December 2002. I
proceed on the basis that 19 September 2002 is the relevant date
for deciding the market value. It is necessary to decide the actual
area of the acquired property. Some documents mention the area
as 642.96 square metres or 642.92 square metres. One part of the
valuation report gives a different area. However, the award, the
comparison tables in the valuation report and the final calculation
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made by C.W.2 all proceed on the basis of 642.98 square metres.
The description of the property and the award support this area. I
take the area of the acquired land as 642.98 square metres for
deciding the present issue.
25. Section 23(1) of the Land Acquisition Act, 1894, requires the
Court to find the market value of the land on the date when the
notification under Section 4(1) was published. The question is not
how much the acquiring body was ready to pay because it had
some special need for the land. The question is what price the
property could reasonably have received in the open market if a
willing seller had offered it to a willing purchaser on the relevant
date. In this connection, the Supreme Court in Thakur Kuldeep
Singh , in paragraph 12, has observed that the nature of the land,
its suitability, its proposed use, the income received or which could
be received from it, its special features and the sale transactions of
land covered by the same notification are all relevant factors. In
paragraph 13, the Supreme Court has observed:
“The Land Acquisition Collector as well as the court should
always keep in their mind that the object of assessment is to
arrive at a reasonable and adequate market value of the
land. While doing so, imagination should be eschewed and
mechanical assessment of evidence should be avoided. More
attention should be on the bona fide and genuine sale
transactions as guiding star in evaluating the evidence. The
relevant factor would be that of the hypothetical willing
vendor would offer for the land and what a willing purchaser
of normal human conduct would be willing to buy as a
prudent man in normal market conditions prevailing in the
open market in the locality in which the acquired lands are
situated as on the date of notification under Section 4(1) of
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the Act. In other words, the Judge who sits in the armchair
of the willing buyer and seeks an answer to the question
whether in the given set of circumstances as a prudent buyer
he would offer the same market value which the court
proposed to fix for the acquired lands in the available market
conditions. The market value so determined should be just,
adequate and reasonable.”
26. From the above principle, it is clear that the Court cannot
decide the market value merely by looking at the amount
demanded by one party or offered by the other. The Court has to
consider the property as a normal purchaser would consider it
before agreeing to buy. The benefits available to the property have
to be taken into account. Its difficulties and disadvantages have to
be seen. If any special feature is said to increase the value, there
must be some evidence to support that increase. Normally, the
most useful evidence for deciding market value is the evidence of
genuine sale transactions of similar properties. In Jawajee
Nagnatham v. Revenue Divisional Officer, (1994) 4 SCC 595,
paragraph 5, the Supreme Court considered the different methods
of valuation and observed:
“Generally the second method of valuation is accepted as the
best.”
27. The second method referred to by the Supreme Court means
considering the price paid in a genuine sale transaction within a
reasonable period. The transaction may relate to the acquired land
or to nearby land having similar advantages. The Supreme Court
has again explained what conditions should be considered before
relying upon sale transactions. In paragraph 25, it has held:
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“However, for utilizing these sale deeds as the foundation for
determining compensation, it is imperative that these sale
instances satisfy certain criteria of comparability. In this
regard, it is necessary that the sale deeds adhere to the
following factors:
i. the sale must be a genuine transaction;
ii. the sale deed must have been executed at the time
proximate to the date of the notification issued under
Section 4 of the 1894 Act;
iii. the land covered by the sale must be in the vicinity of
the acquired land; and
iv. the nature of such land, including its size, must be
similar to the acquired land.”
28. The Supreme Court has held in paragraph 26 of the same
decision that a sale transaction relating to a smaller or bigger plot
cannot be rejected only because its area is different. Such a
transaction can be considered after making proper deductions or
adjustments. A small developed plot may get a higher rate than a
large piece of land. In the case of a large plot, some area may have
to be kept aside for roads, open spaces and other facilities.
Therefore, the difference in the area of two properties has to be
considered while comparing them. Applying these principles to the
present case, it is clear that every sale transaction cannot be
accepted without examining its details. At the same time, a sale
transaction cannot be rejected only because the property is not
exactly the same as the acquired property. Differences in area,
frontage, road access, permitted use, shape and development
possibility can be considered by making proper adjustments. But
such adjustments must be reasonable and should have some
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support from the evidence.
Award of the Land Acquisition Officer, Ready Reckoner and earlier
valuation obtained by the Trust:
29. The Land Acquisition Officer, MHADA, declared the award
on 16 February 2004. The total compensation awarded was Rs.
2,01,37,662/-. The amount was directed to be divided between the
persons interested in the property. While calculating the market
value, the Land Acquisition Officer took the rate of Rs. 16,300/-
per square metre and multiplied it by the permissible FSI of 1.33.
In this manner, the rate of Rs. 21,679/- per square metre was
calculated for 500 square metres. For the remaining area of 142.98
square metres, a different rate of Rs. 19,511/- per square metre
was applied.
30. The learned Advocate General submitted that the Land
Acquisition Officer had correctly relied upon Zone 19/123 of the
Ready Reckoner for the year 2002. According to the State, the
acquired property falls within this zone and the correct rate is Rs.
16,300/- per square metre. The State submitted that twelve sale
transactions had been obtained from the office of the Registrar and
were considered by the Land Acquisition Officer. On this basis, it
was submitted that the valuation made by C.W.2 is too high and
that the Ready Reckoner rate should be accepted. On the other
hand, the owners have relied upon the valuation report of C.W.2.
C.W.2 has stated that the correct zone under the Ready Reckoner
for 2002 was Zone 17/115. According to him, the rate in that zone
was Rs. 20,350/- per square metre for FSI of 1.00. After applying
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FSI of 1.33, he calculated the rate at Rs. 27,065.50/- per square
metre. He tried to find out the land rate from the rate of a
residential flat mentioned in the Ready Reckoner. After deducting
the developer's profit and construction cost, he arrived at Rs.
34,666.67/- per square metre. Thus, there is a dispute between the
parties even about the zone in which the acquired property falls.
The State relies upon Zone 19/123, whereas C.W.2 relies upon
Zone 17/115. The material placed before me does not contain any
independent and clear certificate from the competent authority
which finally decides this issue. In such a situation, it would not be
proper to accept either zone only because one party says that its
zone is correct.
31. However, the more important question is whether the Ready
Reckoner can be treated as final proof of the market value. In
Jawajee Nagnatham , paragraph 5, the Supreme Court considered
the legal position regarding the Basic Valuation Register and held:
“we hold that the basic value of registration has no statutory
base. It cannot form any basis to determine the market value
of the acquired lands under Section 23 of the Act.”
32. The Supreme Court has made it clear that the market value
has to be decided on the basis of genuine sale transactions or other
proper evidence. The Ready Reckoner may be referred to for some
purpose. But it cannot replace actual market transactions. I do not
accept the submission of the State that the rate of Rs. 16,300/- per
square metre, or the rate arrived at after multiplying it by FSI of
1.33, must be treated as the market value only because it is
mentioned in the Ready Reckoner. There is a dispute between the
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parties about the correct zone. This makes it more difficult to
accept the Ready Reckoner as the only basis for deciding the value.
33. I have considered the submission that the Land Acquisition
Officer had obtained twelve sale transactions. The valuation report
of C.W.2 records that the Land Acquisition Officer had called for
sale transactions from the Registrar of Assurances. According to
C.W.2, several of those transactions were not suitable for
comparison because they related to flats, shops or properties
having buildings. They did not give a clear basis for finding the
value of vacant land. The Land Acquisition Officer ultimately relied
upon the Ready Reckoner for making the main calculation. Merely
because twelve sale transactions were collected, it does not mean
that all of them were suitable for comparison. The nature of the
property, date of sale, area, permitted use and the price paid have
to be examined. A sale transaction relating to a small flat or shop
cannot be directly compared with a plot of land measuring 642.98
square metres. Before making such a comparison, the value of the
building and other necessary adjustments have to be considered.
34. I have considered Mathura Prasad Rajgharia , paragraph 15.
The Supreme Court observed that an award based upon an
agreement between the acquiring authority and the claimant can
have evidentiary value. It observed:
“Even if an order made by the Collector valuing land with
the consent of the acquiring authority and the claimant may
not strictly be regarded as an award made on a consideration
of all the relevant materials, the agreement formally reached
between the acquiring authority and the claimant agreeing
to a certain amount to be paid as compensation for the land
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acquired is good evidence of the market value of the land.”
35. In that case, there was an agreement between the claimant
and the acquiring authority. The Collector accepted that agreement
and made the award on that basis. The facts of the present case
are different. The Ready Reckoner entry is not an agreement
between a willing buyer and a willing seller. It is not shown that
the award of the Land Acquisition Officer was made on the basis of
a final agreement between the owners and the acquiring body
about the market value of the entire land. Therefore, the principle
laid down in Mathura Prasad does not make the Ready Reckoner
rate final or conclusive in the present case. I am unable to accept
the submission of the State that the market value should be
restricted to the Ready Reckoner rate. The award of the Land
Acquisition Officer is relevant for understanding how the
compensation was calculated. But the actual market value has to
be decided independently after considering the evidence placed
before this Court.
36. I have considered the valuation report dated 19 July 1999
prepared by M/s. Joshi and Parulekar on the instructions of Shree
Siddhivinayak Ganapati Temple Trust. This report relates to the
same Final Plot No. 901. It records the area as about 642.96
square metres and describes an old structure standing on the plot.
The report states that the structure was being used as a motor
repairing garage and that a major part of the plot was vacant,
though it was being used for repair work and parking. The said
report was prepared because the Trust wanted to obtain additional
land for expanding its premises. It records that the existing temple
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premises were not enough for the large number of devotees
visiting the temple. The Trust wanted to join the acquired plot with
the adjoining plot and use the combined land for its own
requirements. The report states that the Trust was ready to pay
some additional amount over and above the market value because
of its special requirement. The report valued the land at Rs.
5,000/- per square foot of FSI area. By taking the area of 9,202
square feet, it arrived at Rs. 4,60,10,000/-. However, the report
makes it clear that this valuation was made because the Trust had
a special requirement. It proceeds on the assumption that all legal
difficulties would be cleared and that the property would be
available free from all encumbrances. The claimant, relying upon
this report, submitted that the Trust had valued the property at Rs.
4.60 crores in 1999. It was submitted that the market value in
September 2002 must be much higher. This submission has some
importance. The report was prepared by a professional valuer who
had inspected the property and considered the locality. It is an
important fact that the Trust was ready to pay a higher amount
because the plot was specially useful for expanding its temple
premises. However, this report cannot be treated as a sale deed or
a completed sale transaction. It was prepared at the request of the
Trust for its own requirement of purchasing the property. The
report says that the Trust was prepared to pay an additional
amount over and above the market value. It assumes that the
property would be free from all encumbrances. Therefore, the
amount of Rs. 4.60 crores cannot be treated as the actual market
value of the property on the relevant date of acquisition. It can
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only be considered as some supporting material showing the value
which the Trust was considering for its own purpose in 1999.
37. The submissions regarding the agreement with the Trust
dated 10 March 1998 and the minutes of the Trust dated 16 April
2001 require consideration. Claimant No. 3 relies upon the
proposal and the amounts which the Trust had agreed or offered to
pay to different persons interested in the property. It is submitted
that the Trust had offered a total amount of Rs. 2,73,50,000/- and
that the amount proposed for the tenant and other persons was
much more than the amount proposed for the owners. These
documents may have some importance while deciding the claims
of persons who say that they had tenancy, development or other
rights in the property. But the amount proposed for settling
different rights cannot be treated as the market value of the entire
property. The Trust wanted the property for expanding its own
premises. It was negotiating with different persons who were
claiming different rights. The amount offered to a tenant or
developer may include the value of their individual rights, the
amount required for getting vacant possession and other
settlement conditions. It cannot be treated as the price which an
independent purchaser would pay for the land in the open market.
In this regard, the principle stated by the Supreme Court in
Mathura Prasad has to be applied carefully. A final agreement
between the acquiring authority and the claimant, where the
amount is accepted as compensation for the land, can be good
evidence. But an internal valuation report or a proposal made for
settling different claims is not the same as a completed sale
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transaction or an agreed award. I give some evidentiary value to
the 1999 report and the later proposals of the Trust. However, I do
not treat them as the final basis for deciding the market value.
Sale Instance No. 1 and Sale Instance No. 2 relied upon by C.W.2:
38. C.W.2, Hitendra K. Mehta, is an architect and a Government
registered valuer. He has stated that he has been working as an
architect since 1985 and was familiar with the Prabhadevi locality.
He inspected the acquired property on 12 August 2009 and the
places of the sale instances on 17 September 2009. His report is
dated 5 February 2010. He has stated that he could not find
suitable sale transactions of vacant land. Therefore, he considered
transactions relating to land with buildings. He then deducted the
construction cost and the developer's profit to find out the value of
the land. I do not find that this method can be rejected only
because the sale transactions included buildings. When there is no
suitable direct sale transaction of vacant land, a transaction of land
with a building can be considered. But before doing so, the value
of the structure and the cost of construction have to be deducted.
The Supreme Court in the decision reported as New Okhla
Industrial Development Authority , paragraph 26, has recognised
that sale transactions of properties having different sizes and
nature can be considered after making proper deductions or
adjustments.
39. The first sale instance relied upon by C.W.2 is a Deed of
Conveyance dated 5 December 2002. The vendor was M/s. Suraj
Estate Developers Pvt. Ltd. and the purchaser was ICICI Bank Ltd.
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The property was Final Plot No. 967 of Town Planning Scheme No.
IV, Mahim, situated at Shankar Ghanekar Marg, Prabhadevi. The
area of the land was 665.55 square metres. The consideration was
Rs. 10,88,82,500/-. This transaction related to land with a
proposed building. The proposed development consisted of a stilt
and seven upper floors with residential flats. The total carpet area
was stated to be 17,045 square feet. C.W.2 calculated the built-up
area at 20,454 square feet by adding 20%. He then deducted 20%
towards the developer's profit and deducted the construction cost.
After making these deductions, he arrived at a net land value of
approximately Rs. 7,74,33,771/-. On the basis of the land area of
665.55 square metres, the land rate was calculated at
approximately Rs. 1,16,346/- per square metre.
40. The State has submitted that this transaction should not be
considered because the purchaser was a bank and the transaction
included a building. The State has submitted that the transaction
may have been affected by the special requirements of the
purchaser. I do not find that the transaction can be rejected only
for these reasons. The transaction is recorded in a registered
conveyance. The consideration is mentioned in it. The area of the
land is close to the area of the acquired land. Both properties fall
within Town Planning Scheme No. IV, Mahim. Both are situated in
the Prabhadevi locality. The sale property is about 350 metres
away from the acquired property. These similarities are important
and cannot be ignored.
41. The objection that the transaction included a building is
answered to a considerable extent by the method used by C.W.2.
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He has not treated the entire consideration as the value of the
land. He has deducted the developer's profit and construction cost
and calculated the land value. The State has not produced any
separate expert calculation to show that the construction cost or
the developer's profit deducted by C.W.2 is completely wrong. The
fact that ICICI Bank Ltd. was the purchaser does not make the
transaction a special or artificial transaction. There is no evidence
to show that the consideration was increased because of any
special benefit available only to the bank. The transaction has to
be considered on its own facts. The consideration recorded in a
registered conveyance is relevant evidence, unless there is material
to show that it was not a genuine market transaction. At the same
time, there are some difficulties in relying upon this transaction.
The report refers to a Memorandum of Intent dated 24 October
2000, which recorded that the price had been decided. It refers to
payments made over a period starting from 1995 and continuing
up to the date of conveyance. Therefore, the price was not first
decided on 5 December 2002. This fact affects the importance
which can be given to this transaction.
42. C.W.2 has explained that the transaction continued over a
long period and that it would be safer to take the date of the
conveyance as the effective date. He then applied an annual
increase of 10% and made a downward adjustment of about
2.45% to bring the transaction rate from 5 December 2002 to 19
September 2002. In this manner, he arrived at approximately Rs.
1,70,200/- per square metre. I agree that the date of the registered
conveyance cannot be ignored. However, the earlier Memorandum
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of Intent is an important fact. The consideration had been decided
before the relevant date. I do not treat this sale transaction as final
proof. I consider it a strong comparable transaction because its
area, locality, and Town Planning Scheme are similar. But I keep in
mind the earlier date on which the price appears to have been
settled. C.W.2 has compared the shape, frontage, access, user
potential, FSI and closeness to public facilities of the two
properties. According to him, the acquired plot has a more regular
shape, better frontage and some other advantages over the first
sale property. He has made positive adjustments in favour of the
acquired land. He has made a substantial negative adjustment
because of the difference in FSI.
43. The second sale instance relied upon by C.W.2 is a
conveyance dated 5 March 2001. The property was Plot No. C-4,
bearing part of Final Plot Nos. 952 and 954 of Town Planning
Scheme No. IV, Mahim, situated at Appasaheb Marathe Marg,
Prabhadevi. It was sold by M/s. Solar Developers to K. Vysya Bank
Ltd. The area of the land was 1,239.86 square metres. The
consideration for the land and building was Rs. 24,85,00,000/-.
The property had a building which was constructed in 1951. C.W.2
removed the value of furniture and fixtures and took the
consideration of Rs. 24,85,00,000/-. He deducted 20% towards the
developer's profit. He deducted the construction cost after giving
40% depreciation because the building was constructed in 1951.
After making these deductions, he arrived at a net land value of
approximately Rs. 19,96,67,464/-. On the basis of the land area of
1,239.86 square metres, the land rate was calculated at
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approximately Rs. 1,61,040/- per square metre. This second
property is larger than the acquired property. Its area is almost
twice the area of the acquired plot. It had an existing building and
was being used for office purposes. The acquired property, on the
other hand, had residential development potential with some
permitted commercial use along with it. There was a difference in
access. The second sale property could be reached through a right
of way about six metres wide, whereas the acquired property
directly touched Kakasaheb Gadgil Marg.
44. C.W.2 made adjustments for these differences. He gave a
positive allowance because the acquired property was smaller, had
better frontage and had direct access. He made negative
adjustments for the difference in permitted use and FSI. He
considered the difference in the distance of the properties from
Siddhivinayak Temple and the public garden. After making these
adjustments, he arrived at a rate of approximately Rs. 1,52,988/-
per square metre for the acquired land as on 5 March 2001. He
then applied an increase of 15.40% for the period between 5
March 2001 and 19 September 2002. The resulting rate came to
about Rs. 1,76,548/- per square metre. He rounded this amount to
Rs. 1,76,500/- per square metre. The State has submitted that the
second sale transaction should be rejected because it relates to
land with an old building. It is submitted that the property is larger
and its use is different. I accept that there are differences between
the two properties. However, these differences do not make the
transaction completely useless for comparison. C.W.2 has not
compared the full consideration as if it was the value of vacant
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land. He has deducted the construction cost and depreciation.
Thereafter, he has made adjustments for area, use, FSI, frontage
and access. The second sale property is not as close in size to the
acquired property as the first sale property. It is older by about one
year and six months from the relevant date. The increase of
15.40% is based on an assumed annual increase of 10%. The
report does not refer to any separate group of sale transactions
which independently proves that the market during that period
increased at exactly 10% every year. Therefore, the increase
calculated by C.W.2 is only an estimate. It cannot be treated as an
exact figure. Even then, the second sale transaction gives an
important check on the rate arrived at from the first sale
transaction. After making the stated adjustments, it gives a rate of
approximately Rs. 1,76,500/- per square metre. This is close to the
rate of Rs. 1,70,200/- per square metre arrived at from the first
sale transaction. The difference between the two adjusted rates is
not very large, particularly when the difference in the size, date
and use of the properties is kept in mind. I find that Sale Instance
No. 1 is the more useful and more comparable transaction. Sale
Instance No. 2 is not being taken as the main basis for deciding the
market value. However, it gives support to the rate arrived at from
the first transaction. Both transactions have to be considered
together. It would not be proper to look at either of them
separately without considering the other.
Cross-examination of C.W.2, disputed adjustments and effect of
occupation and encumbrances:
45. The evidence of C.W.2 has been tested in cross-examination.
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His answers are required to be considered because the final rate of
Rs. 1,70,200/- per square metre depends upon the adjustments
made by him in the comparison tables. In Question Nos. 98 and
99, C.W.2 admitted that the allowances mentioned in the last
column of his report were based on his own satisfaction. He
admitted that the final positive percentage was his own
assessment. In Question No. 139, he again accepted that the
percentages were based on his own satisfaction. He did not accept
the suggestion in Question No. 120 that the percentages were
incorrect. He did not accept the suggestions in Question Nos. 195
and 212 that the allowances and the valuation were wrong. From
these answers, it is clear that the percentages were not taken from
any fixed provision or statutory table. They were based upon the
professional assessment of the valuer. This does not mean that they
must be rejected. While valuing land, several factors have to be
considered. However, the expert must explain why a particular
factor has been given a particular percentage. The Court has to
examine whether his explanation is reasonable and supported by
the material on record.
46. There is an important admission regarding corrections in the
valuation report. In Question No. 5, C.W.2 was asked when he
realised that certain mistakes in the report required correction. He
stated that he realised the mistakes after filing his affidavit, when
he was studying the report for attending the cross-examination. In
Question No. 6, he accepted that he had realised the mistakes
before 1 April 2010. In Question No. 7, he stated that he had
verbally informed his Advocate and had asked that the corrections
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marked in his copy be shown before the Commissioner before the
cross-examination started. This answer requires some care while
considering the report. A valuation report should be correct when
it is filed. If any corrections are required, they should be brought
on record so that the other side gets an opportunity to examine
them. Corrections cannot remain only in the private copy of the
expert. Since the corrections were not formally brought on record,
the value of the report is reduced to that extent. However, this
admission does not show that the entire valuation was deliberately
or materially false. The report still contains the sale details,
calculations, and the basis on which the expert arrived at the final
rate. I will examine the actual calculations instead of rejecting the
entire report only because some corrections were required.
47. The question of frontage was put to C.W.2. He had given an
additional allowance of 40% to the acquired land as compared
with both the sale properties. The acquired plot has a substantial
frontage on Kakasaheb Gadgil Marg. Sale Instance No. 1 had a
much smaller frontage. Sale Instance No. 2 did not have direct
frontage and could be approached through a right of way. Thus,
the difference in frontage is real and has to be considered. The
State has questioned whether an allowance of 40% is too much. I
agree that this exact percentage cannot be accepted only because
the expert has stated it. However, it cannot be disputed that a plot
directly touching a public road and having a frontage of about
18.29 metres has an advantage over a plot having a narrow
frontage or no direct frontage. C.W.2 has considered an actual
advantage of the acquired property. The exact percentage is a
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matter of valuation. But the basic advantage is supported by the
details of the properties. In Question No. 100, the expert was
questioned about the width of the road. The road in Sale Instance
No. 1 was 27.44 metres wide, whereas Kakasaheb Gadgil Marg
was 15.25 metres wide. C.W.2 explained that a wider road may
have more traffic and congestion. According to him, a road of
15.25 metres may be more convenient in some situations. This
explanation is possible. The value of a road frontage does not
depend only upon the width of the road. The traffic and the use of
the property are important. I do not find that the additional
allowance of 5% for access is wholly unreasonable.
48. The shape of the plots was considered. In Question No. 134,
the expert was asked why he had not given any difference for the
shape of Sale Instance No. 2, which was described as polygonal,
whereas the acquired plot was described as regular and
rectangular. He explained that the sale plot had a right of way
along with it and that both plots had the possibility of rectangular
construction. He explained that Sale Instance No. 1 was more
irregular in shape and that the acquired plot had a better shape.
Thus, the difference in shape is a relevant factor. The allowance of
20% in the first comparison is not without any basis.
49. The issue of FSI requires closer consideration. In Question
No. 88, C.W.2 stated that the FSI of Sale Instance No. 1 was
calculated at 2.59 on the basis of the carpet area and the super
built-up area recorded in the conveyance. He stated that the FSI of
the acquired land was taken as 1.33 on the basis of the
Development Control Regulations and the approved plans annexed
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to his report. In Question Nos. 89 and 90, he accepted that the
same Development Control Regulations applied to both properties.
In response to the question, he stated that the ordinary permissible
FSI in both localities was 1.33, though certain concessions under
the Development Control Regulations could result in the actual
permissible FSI being different from one plot to another. The State
has submitted that the allowance of minus 95% for the difference
in FSI in Sale Instance No. 1 is not correct. According to the State,
the difference between FSI 2.59 and FSI 1.33 would justify an
adjustment of about minus 49%. This submission has force. The
difference between FSI 2.59 and FSI 1.33 cannot, on a simple
comparison, justify a deduction of 95%. The expert has not given a
clear mathematical explanation for making such a large deduction.
I find that the FSI allowance of minus 95% has not been explained.
The submission of the State that an adjustment of about minus
49% would be more consistent with the numerical difference has
merit. However, the expert has adopted the higher negative
adjustment of minus 95%. In other words, he has made a larger
deduction against the acquired land than what the State says
would be justified. This fact does not show that the figure of Rs.
1,70,200/- per square metre is excessive. If the FSI deduction is
reduced to minus 49%, the rate arrived at from this comparison
would increase, subject to the other adjustments.
50. C.W.2 has relied upon the sanctioned plan dated 8 April
1986. He stated that the plan showed a stilt and seven upper
floors. However, in Question No. 104, he accepted that no
construction had been carried out according to that plan. In
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Question No. 105, he stated that he did not know why the
construction had not been carried out. In Question No. 109, he
accepted that he was not aware whether the plan had been
renewed. In Question No. 110, he stated that the validity of an
IOD and sanctioned plan was ordinarily one year, though the
Corporation could permit revalidation up to three years under its
policy. These answers show that the old sanctioned plan cannot be
treated as a development permission which was still valid in 2002.
The expert has not proved that the plan had been renewed. I do
not accept the suggestion that the entire development shown in
the plan of 1986 was certainly available as a legal right on the
relevant date. However, the matter does not end here. C.W.2 has
stated that the permissible FSI under the Development Control
Regulations applicable to the locality was 1.33. This was not based
only on the old plan. He has referred to the Development Control
Regulations and has considered the approved plan while assessing
the possible development. The permissible FSI of 1.33 is a relevant
factor, though the higher development shown in the old plan
cannot be treated as a confirmed right.
51. The permitted use of the acquired land has been considered.
The report states that the property was in a residential zone, but
certain commercial and other related uses were permitted under
the Development Control Regulations. The expert referred to shops
and other profitable uses such as banks and nursing homes. The
State has questioned the positive allowance given to the acquired
land while comparing it with Sale Instance No. 1. The comparison
table describes both properties as having residential use with
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related commercial uses. It records that the acquired land had the
advantage of shops on the ground floor. The positive allowance of
25% is not explained as as the advantage of frontage or access. I
do not treat this percentage as final . However, the permitted use
of the land and the possibility of commercial use on the ground
floor are matters which a normal purchaser would consider.
52. The most disputed adjustment is the 50% allowance given
because the acquired property is close to Shree Siddhivinayak
Temple. The acquired land is stated to be about 15.25 metres from
the temple. Sale Instance No. 1 is about 350 metres away and Sale
Instance No. 2 is about 500 metres away. The expert has stated
that the acquired land is separated from the temple by only a small
plot and that the temple is a well-known landmark. In Question
Nos. 111 to 115, C.W.2 accepted that the area around the temple
was crowded and congested. He nevertheless stated that the
closeness of the property to the temple added value. In Question
No. 180, he accepted that his opinion was based on his own study
and was not supported by any authoritative book on valuation. In
Question Nos. 207 to 211, he accepted that the exact percentage
was not given in any book and that the figure of 50% was worked
out by him. I have carefully considered this admission. Merely
because the temple is famous or important to devotees, it cannot
justify an increase of 50% in the value of every nearby property.
Market value has to be decided from the point of view of a normal
purchaser. It cannot depend only upon religious feelings. The
expert himself accepted that the locality was crowded and
congested. This is a disadvantage which has to be considered. At
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the same time, the acquired plot is not merely situated somewhere
in the general area of Prabhadevi. It is immediately next to the
temple area and is separated from it only by a small intervening
plot. The two sale properties relied upon by the expert are situated
at a much greater distance. This is an actual difference in location.
The acquired plot has frontage on a public road and the possibility
of permitted commercial use. A normal purchaser may attach some
value to such close location because of visibility, movement of
people and the commercial opportunities which may arise from
that position.
53. I do not accept that every plot situated within 700 or 800
metres of the temple must receive an increase of 50%. The expert
himself clarified in Question Nos. 170 to 176 that the percentage
would change from plot to plot depending upon the actual
distance and location. His answers show that the 50% adjustment
was intended for properties very close to the temple and not for
the whole neighbourhood. The exact figure of 50% remains the
expert's own assessment. It is not proved by any separate sale
transaction of a plot situated at an equal distance from the temple.
However, the advantage arising from the location is supported by
the site plan and the distance mentioned in the report. The State
has not produced any other valuation to show that such immediate
closeness has no value or that the congestion has reduced the price
of the land around the temple. I consider the closeness to the
temple as an important factor. However, it cannot be treated as a
fixed rule for every plot in Prabhadevi. The expert has been
questioned about the closeness of the properties to railway stations
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and public transport. In Question Nos. 181 to 192, he accepted
that railway access and public transport are relevant factors. He
explained that all three properties were within about 500 metres
of railway stations and that the difference was not important for
the purpose of comparison. This explanation appears reasonable.
The report refers to the availability of BEST buses, taxis and other
public transport. I do not find any material error on this point.
54. It is true that the percentage adjustments in the report are
not free from doubt. Some are based upon the expert's own
assessment and some require a better explanation. The total
allowance of 80% shown in the first comparison table does not
match the individual percentages mentioned in that table. I have
not accepted that total merely because it is mentioned in the
report. The later calculation and conclusion in the report proceed
on an adjustment which gives a rate of about Rs. 1,70,200/- per
square metre. I have considered the calculation in the report, the
individual factors and the answers given in cross-examination
before deciding whether the final rate can be accepted. There is
one more aspect. The 1999 valuation report of the Trust records
that the property was being used as a garage and that a major
portion of the plot was vacant. The submissions of Claimant No. 3
state that it was in possession of the entire plot and that the whole
open space had been given to it under tenancy. The owners dispute
this claim. The rent receipt dated 10 April 1977 is stated by the
owners to relate only to a workshop shed. The material refers to
other structures and the use of open space for parking and garage
activities. I am not deciding the entire dispute about tenancy in
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this part of the judgment. That question relates to the nature and
extent of the rights of the persons interested in the property and
their entitlement to compensation. However, the physical condition
of the land on the relevant date is important for deciding its
market value. The record shows that there was a garage structure
and that some portion was being used for repair activities and
parking. It shows that a major portion of the plot was vacant. The
claim that the entire area of 642.98 square metres was under the
exclusive tenancy of Claimant No. 3 is not established merely from
the 1999 valuation report.
55. In M.B. Gopala Krishna , paragraph 5, the Supreme Court has
observed:
“A freehold land and one burdened with encumbrances do
make a big difference in attracting willing buyers. A freehold
land normally commands higher compensation while the
land burdened with encumbrances secures lesser price. The
fact of a tenant in occupation would be an encumbrance and
no willing purchaser would willingly offer the same price as
would be offered for a freehold land.”
56. The above principle is clear. If a lawful tenant is occupying
the property, it is an encumbrance and a purchaser would consider
it while deciding the price. But the extent of that encumbrance is
important. In the present case, the material shows that there was a
garage structure and that part of the land was being used for
garage activities and parking. It does not establish that the whole
plot was occupied by a tenant under one tenancy. The extent of
lawful occupation and the rights of Claimant No. 3 have to be
decided on the evidence led in the reference concerning
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apportionment.
57. I do not accept the claim that the entire market value should
be reduced on the assumption that the whole plot was subject to
one tenancy. At the same time, I do not ignore the fact that part of
the property was occupied. The sale transactions considered by
C.W.2 were transactions of land with buildings. He has deducted
the construction cost before arriving at the value of the land. The
record does not provide a reliable basis for making any numerical
deduction for the disputed occupation. If a deduction is made
without knowing the exact area and legal nature of the
occupation, that deduction would have no proper basis.
58. The claim of Claimant No. 3 that it should receive 75% of
the compensation has to be kept separate from the question of
market value. First, the market value of the acquired property has
to be decided. Thereafter, the amount payable to the owners,
tenant, developer or any other person having an interest in the
compensation has to be decided according to the nature of their
respective rights. In Kachrulal Hiralal Dhoot , paragraph 5, this
Court has held that the right to receive compensation is not
restricted only to a person having a proprietary interest. It
observed:
“In our judgment, the right to receive compensation for
compulsory acquisition of land is not restricted to those
persons who have a legal or proprietary interest or estate in
the land and is available to all persons who have a right or
claim to land, even if such right or claim does not amount to
legal or proprietary estate or interest in the land.”
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59. This principle is relevant while considering who can be
treated as a person interested in the compensation. However, it
does not mean that every person claiming occupation becomes
entitled to a particular percentage of the compensation. The right
claimed and the extent of that right still have to be proved by
evidence. In Sadasheorao Krishnarao Buti , paragraph 10, the Court
observed:
“As I have said, it is difficult to deduce any principle from
these cases except the one that the first thing to do is to find
out the market value of the land and then apportion that
between the landlord and the tenant according to their
several interests in the land.”
60. I find this approach proper. First, the market value has to be
decided. The claim of 75% by the tenant or any other share
claimed by the owners or developers cannot be used for changing
the market price. Claimant No. 3 has relied upon Mangat Ram ,
paragraph 7, where the Supreme Court directed that the tenant
would receive three-fourths and the landlord one-fourth of the
compensation. That decision was given after considering the facts
and the nature of the tenancy in that case. It does not lay down
that every tenant in every land acquisition is entitled to three-
fourths of the compensation. The respective rights have to be
decided on the evidence available in the present case. Similarly,
the decision in Mohammad Akil Khan v. Premraj Jawanmal
Surana, 1971 SCC OnLine Bom 77, paragraphs 14 to 16, deals
with the rights of a purchaser under an agreement of sale where
the contract could not be completed because of acquisition. The
Court held that, in the facts of that case, the purchaser could claim
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from the compensation amount the purchase money and earnest
money with interest because the land had been converted into
compensation. This principle may be relevant while considering
the claim of a person who proves a charge or other interest under
an agreement of sale. However, it does not decide the market rate
of the entire plot in the present case. I keep the decision regarding
market value separate from the question of apportionment. The
claim of Claimant No. 3 regarding its status as tenant, the extent of
the area occupied by it, the rights of Century Developers and the
rights of the other claimants will be considered on the basis of the
documents and evidence relating to their respective claims. No
particular percentage of compensation is being decided only on the
basis of the findings recorded in this part.
Final assessment and determination of the market value:
61. I have considered the valuation report of C.W.2, the two sale
transactions relied upon by him, his cross-examination, the Ready
Reckoner for 2002, the award of the Land Acquisition Officer and
the earlier valuation obtained by the Trust. I have considered the
objections raised by the State and the submissions made on behalf
of the owners and Claimant No. 3. The State is right in saying that
the valuation report cannot be accepted without carefully
examining it. Some percentage adjustments are based upon the
expert's own assessment. The old sanctioned plan of 1986 has not
been shown to have been renewed. The 50% allowance for
closeness to the temple is not supported by any fixed formula in a
valuation book. The total percentage shown in the first comparison
table does not match the individual percentages. These matters
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require the Court to be careful before accepting the final figure.
However, these shortcomings do not justify rejecting the entire
valuation report. The report is based upon two registered sale
transactions in the same general locality. The first sale property is
in the same Town Planning Scheme and has an area of 665.55
square metres, which is close to the acquired land measuring
642.98 square metres. The second sale property is in the same
locality, though it is larger in area and has a different use. The
expert has deducted the construction cost and developer's profit
and has made adjustments for the main differences between the
properties.
62. The first sale transaction gives an adjusted rate of about Rs.
1,70,200/- per square metre as on 19 September 2002. The second
sale transaction, after the adjustments and increase made by the
expert, gives an adjusted rate of about Rs. 1,76,500/- per square
metre. Both rates are close to each other. This is an important
circumstance. It shows that the result obtained from the first
comparison is not standing alone. The second sale transaction,
though less similar in size and use, broadly supports the same
range of market value. The State has submitted that, in Sale
Instance No. 1, the FSI adjustment should be minus 49% and not
minus 95%. I have accepted that the figure of minus 49% is more
consistent with the numerical difference between FSI 2.59 and FSI
1.33. This correction would increase the rate arrived at from the
first sale transaction. It would not reduce it. Therefore, this
objection does not establish that the rate of Rs. 1,70,200/- per
square metre is excessive. I have considered the objection that the
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purchaser in Sale Instance No. 1 was a bank and that the
transaction included a building. There is no sufficient evidence to
show that the consideration was artificial or was paid for some
special benefit which had nothing to do with the land. C.W.2 has
deducted the development profit and construction cost. The
second sale transaction independently gives a rate close to the first
transaction after adjustments. The objection regarding the building
does not justify rejecting both transactions. The Ready Reckoner
rate adopted by the Land Acquisition Officer is much lower.
However, the State and the owners themselves have raised a
dispute about the correct zone. More importantly, the Ready
Reckoner cannot be the only basis for deciding market value under
Section 23 of the Land Acquisition Act. Genuine sale transactions
provide better evidence. I do not accept the submission that the
market value must be restricted to the Ready Reckoner rate.
63. The 1999 valuation report of the Trust is not sufficient to
decide the market value. It was prepared because of the special
requirement of the Trust. It proceeded on the assumption that the
land would be free from encumbrances and stated that the Trust
was ready to pay more because the land was useful for expansion
of its temple premises. The report is relevant, but it is not a
completed sale transaction. The negotiations and offers made by
the Trust to the owners, tenant, and developer relate to settlement
of their separate interests. They do not establish the market price
of the entire property as on 19 September 2002.
64. The location of the acquired land is an important factor. It is
situated very close to Shree Siddhivinayak Temple and has direct
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frontage on Kakasaheb Gadgil Marg. By the relevant date, the
locality was developed and had civic amenities, public transport,
educational institutions and other facilities. The land had
development potential under the Development Control
Regulations. These are advantages which a normal purchaser
would consider before purchasing the property.
65. There were some disadvantages. The area around the temple
was crowded. The property had a garage structure and was being
used for repair activities and parking. The old sanctioned plan was
not shown to have been renewed. These matters have been
considered. However, they do not take away the value of the
property or make it comparable with land situated in a less
developed or less accessible locality.
66. I have considered whether any deduction should be made
because of the claim of tenancy. The record does show occupation
of a garage structure and use of part of the open land. But the
material does not establish that the entire acquired land was under
one tenancy. The 1999 valuation report records that a major
portion of the plot was vacant. The extent and legal nature of the
occupation will have to be considered while deciding the
apportionment of compensation. In the absence of reliable
evidence to calculate a reduction in the market price of the entire
plot, I do not consider it proper to make any deduction without a
proper basis.
67. The final figure of Rs. 1,70,200/- per square metre given by
the expert is supported by the second sale transaction, which gives
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a rate of about Rs. 1,76,500/- per square metre. The second rate is
higher. However, the first sale transaction is more similar in area
and is situated in the same Town Planning Scheme. I consider it
proper to give greater importance to Sale Instance No. 1. I am
aware that the expert has admitted that some of the percentage
allowances were based upon his own assessment. However, market
valuation is not a matter of applying one fixed mathematical
formula to every property. The Court has to look at the actual
circumstances and arrive at a reasonable figure. The expert has
explained the physical and development differences between the
sale properties and the acquired land. His evidence is sufficient to
show the general level of the market rate, though some individual
adjustments have to be considered with care. The final figure of
Rs. 1,70,200/- per square metre is not higher than the figure
independently arrived at from Sale Instance No. 2. The fact that
the two adjusted rates are close to each other is an important
check on the result. I find that the rate of Rs. 1,70,200/- per
square metre represents a fair and reasonable market value of the
acquired land on 19 September 2002.
68. The area of the acquired land is 642.98 square metres. The
market value of the land is calculated as follows: 642.98 square
metres × Rs. 1,70,200/- per square metre = Rs. 10,94,35,196/-.
The valuation report has separately considered the structures and
trees. C.W.2 has taken Rs. 3,33,634/- for the structure, Rs.
46,666/- for four coconut trees and Rs. 5,000/- for the Gulmohar
or Raintree. The total value of these items is Rs. 3,85,300/-. The
valuation of the structure is stated to be based upon the valuation
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made by the Executive Engineer, P.W.D.
69. Accordingly, the total value of the land and the separately
assessed items is calculated as follows:
(i) Market value of land: Rs. 10,94,35,196/-. (ii)
Structures and trees: Rs. 3,85,300/-. (iii) Total: Rs.
10,98,20,496/-.
70. The above amount represents the market value of the land
and the separately assessed value of the structures and trees. The
statutory additions, solatium and interest, if payable, will have to
be calculated separately according to the provisions of the Land
Acquisition Act, 1894. These amounts are not included in the
market value per square metre decided above. I hold that the
market value of Final Plot No. 901 of Town Planning Scheme No.
IV, Mahim Division, admeasuring 642.98 square metres, was Rs.
1,70,200/- per square metre as on 19 September 2002. The total
market value of the land is Rs. 10,94,35,196/-. After adding the
separately assessed value of the structures and trees amounting to
Rs. 3,85,300/-, the total amount comes to Rs. 10,98,20,496/-.
71. The claim for enhancement beyond the above rate is not
accepted. The objection of the State that the market value should
be restricted to the Ready Reckoner rate is rejected. The question
of division of compensation between the owners, the tenant, the
developer and other persons interested in the property will be
decided separately on the basis of the rights proved by each of
them.
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Finding On Apportionment Of Compensation Between The Owners
And M/s. Sadanand Garage:
72. The next issue which requires consideration is how the
compensation awarded for Final Plot No. 901, admeasuring
642.98 square metres, is to be divided between the owners and
M/s. Sadanand Garage. According to the owners, they are the
owners of the land and, therefore, the entire compensation should
be paid to them. M/s. Sadanand Garage, on the other hand, claims
that it was occupying the entire plot as a tenant. It has, therefore,
claimed 75 per cent of the compensation, leaving only 25 per cent
for the owners. Both sides have relied upon the documents, their
earlier transactions and the conduct of the parties for supporting
their respective claims.
73. After considering the material on record, I am unable to
accept the claim of either side in its entirety. It is not disputed that
the owners had ownership rights in the land. At the same time, the
documents show that M/s. Sadanand Garage was carrying on its
garage business from the property for a long period. It was using
the shed as well as the open space around it. Therefore, the rights
and interest of the Garage cannot be ignored while deciding the
compensation. The entire amount cannot be given to the owners
by ignoring the occupation of the Garage. But, merely because the
Garage was occupying and using the property, it cannot be treated
as the owner of the entire land. Its occupation alone does not give
it a right to claim the entire compensation or even 75 per cent of
the same. It is necessary to understand that determining the
market value of the property and deciding the share of each person
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in the compensation are two separate questions. The market value
of the property is first required to be determined. After that, the
respective rights of the owners and the tenant are required to be
examined. The compensation awarded on acquisition is for the
rights which have been taken away by the acquisition. The owners
do not lose their interest in the land merely because they were not
physically occupying it. Similarly, the tenant cannot be denied any
interest in the compensation merely because the land stood in the
name of the owners.
74. The Supreme Court has considered this issue in Kiran
Tandon v. Allahabad Development Authority , (2004) 10 SCC 745.
In paragraph 23, the Supreme Court has observed as follows:
“Leasehold rights being limited in nature and entirely
different from ownership right, a lessee is not entitled to the
entire amount of compensation for the acquired land.”
75. The Supreme Court has stated in paragraph 24 that the
amount payable to a lessee will depend upon the conditions of the
lease and the period during which the lessee could have continued
in possession. The Court has referred to a case of perpetual lease
where 75 per cent of the compensation was given to the lessee and
25 per cent to the Government. That division was made having
regard to the special nature of the perpetual lease and the rights
given to that lessee. It cannot be understood to mean that every
tenant is entitled to 75 per cent of the compensation. Paragraph 25
of Kiran Tandon is required to be noticed. In that case, the lease
was to come to an end on 8 June 1987, whereas possession was
taken on 16 June 1987. Even according to the claimant, possession
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was taken only 21 days before the lease was going to expire. In
these circumstances, the Supreme Court held:
“In such circumstances, we are of the opinion that the
claimant should get 20 per cent of the compensation amount
and the balance 80 per cent is payable to the State
Government.”
76. This Court, in Dossibai Nanabhoy Jeejeebhoy v. P.M.
Bharucha , 1958 SCC OnLine Bom 90 : (1958) 60 Bom LR 1208,
has explained how the compensation is required to be divided
between different persons. In paragraph 20, the Court observed:
“In apportioning the compensation the Court has to give to
each claimant the value of the interest which he has lost by
compulsory acquisition.”
77. The Court has explained that the compensation is for the
different interests which have been taken away because of
acquisition. Therefore, it has to be divided fairly between all those
persons who were having some interest in the property. The Court
has explained three methods for doing this. Firstly, the Court may
separately find out the value of the owner's interest and the
tenant's interest and then divide the compensation accordingly.
Secondly, the value of both the interests may be separately worked
out, and the total compensation may be divided in that same
proportion. Thirdly, where it is not possible to find out the exact
value of each interest separately, the Court may divide the total
compensation into proper shares by considering the material
which is available before it. The main thing which is stated in this
judgment is that the Court cannot decide the share of the parties
by taking some figure without any proper basis or by following a
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fixed proportion in every case. The actual rights and interests of
the parties in the acquired property have to be seen. In paragraph
20, the Court has made it clear that:
“The Court must, in each case, having regard to the
circumstances and the possibility of a precise determination
of the value having regard to the materials available, adopt
that method of valuation which equitably distributes the
compensation between the persons entitled thereto.”
78. The same principle has been followed by this Court in
Kachrulal Hiralal Dhoot . In paragraph 4, the Court has held that
the interest of a person claiming compensation is not limited only
to ownership or any other legal right in the land. Even a person
who has a right to remain in occupation or possession of the
property, or has some claim relating to the land, may be entitled to
compensation when such right or claim comes to an end because
of acquisition. The Court has recognised that even a person having
an irrevocable licence may be considered as a person interested,
though such licence does not make him the owner of the land.
Therefore, what is required to be considered is whether such
person was having some right or interest in the property which has
been taken away because of acquisition. Merely because such
person is not the owner of the land, he cannot be denied
compensation on that ground alone.
79. The Delhi High Court in Harkishan v. Delhi Simla Catholic
Archdiocese , 1980 SCC OnLine Del 321, has explained how
compensation can be divided between the landlord and the tenant.
In paragraph 37, the Court has considered the difficulty which may
arise in finding out the separate value of the landlord's rights and
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the tenant's rights. Paragraph 38 explains that where the separate
interests of both parties can be valued, the compensation should
be divided according to such values. Paragraph 39 explains that
where only one interest can be valued, that amount can be given
to the person whose interest has been valued and the remaining
amount can be paid to the other person. For the present case,
paragraph 40 of Harkishan is of particular importance. It considers
a situation where it is not possible to calculate the separate value
of the landlord's interest and the tenant's interest. The Court has
observed:
“Thirdly, it may be that neither the interest of the landlord
nor that of the tenant can be accurately valued in terms of
money. What is to be done then? The only possible answer is
that the court should do the best it can to arrive at a ratio
and divide the compensation accordingly. In finding the
ratio, regard must naturally be had to the evidence. But,
what if there is no evidence or it is unsatisfactory? In that
situation, how should the court proceed in the matter? Well,
it can lay down some ‘rough and ready’ rule based on a ‘fair
estimate’”
80. The Court has made it clear that this rough and ready
method is not a fixed rule which must be followed in every case. It
can be adopted where the facts and circumstances make it
necessary. The present matter requires such consideration. Neither
the owners nor M/s. Sadanand Garage has produced any valuation
report which separately gives the value of the ownership rights
and the value of the tenancy rights as on the relevant date. In
paragraph 68 of Harkishan , the Court has considered how the
compensation should be divided when the land gets additional
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value because of its development potential. In this connection, the
Court has referred to the following observation in F.G. Natesa Aiyar
v. Kaja Maruf Sahib , AIR 1927 Mad 489:
‘This enhanced value is not due to the exertion either of the
landlord or the tenant, it is a sort of windfall which has come
to both the parties. There is no reason why one alone should
have the whole of it and not the other.’
81. The Court observed:
“Even a layman would agree that the only fair way of dealing
with the ‘windfall’ is to divide it ‘half and half’.”
82. This observation has some relevance to the present dispute.
However, the matter cannot be decided only by relying upon this
observation. The acquired land is situated in an important locality
and had development potential. Its value was not restricted to the
old garage structure or the rent which was being paid. The owners
had ownership rights in the property, though such rights were
subject to the rights of the Garage. On the other hand, the Garage
had been occupying and using the property for its business for a
long period. The acquisition has affected the rights of both sides.
Therefore, the additional value arising from the land cannot be
given wholly to either the owners or the Garage. Paragraph 74 of
Harkishan makes it clear that no one fixed ratio can be applied to
all cases. The Court observed:
“No general rule can be extracted from these or the other
cases to which I have referred. Indeed, most of them
themselves contain observations that there is no general
rule.”
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83. The Court has explained that the division will depend upon
the facts of the particular case, the nature of the tenancy and the
law governing that tenancy. Therefore, equal division in the ratio
of 50:50 is not required to be made in every case. Such a division
can be made only when the evidence and the nature of the rights
make such division fair and proper. Paragraph 81 of Harkishan is
required to be considered while examining the submission of the
owners that they were not in physical possession of the property.
The Court has explained that the owner's interest has to be
considered after taking into account the rights of the tenant. It
observed:
“The relevant interest of the society is ownership minus
possession, not plus possession.”
84. The meaning of this observation is that the owner cannot
claim the value of the property as though the land was vacant and
was available in his own possession when a tenant was occupying
it. The owner continues to have an interest in the land, but that
interest is subject to the rights of the tenant. The interest of the
tenant must be considered. At the same time, the owner's rights do
not disappear only because the tenant was in possession of the
property. In paragraphs 85 and 86 of Harkishan , the Court
considered certain transactions in which the ownership rights and
occupancy rights were separately sold to the same purchaser.
Those transactions showed a division of 46:54 in favour of the
tenants. The Court noticed that there was very little difference
between the two shares. It observed that if both agreements had
been entered into on the same day, the division would have been
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50:50. On that basis, the Court found that an equal division was
supported by those transactions. This shows that equal division
may be proper where the facts support such a division. But it
cannot be done without considering the evidence in the particular
case.
85. Keeping the above principles in mind, it is now necessary to
examine the evidence regarding the rights claimed by M/s.
Sadanand Garage. Its case is that it was a tenant of the entire Final
Plot No. 901 from the year 1971. According to the Garage, the
original tenancy was taken by Sadanand R. Shetty from the then
owners, namely, the Kowlis. Thereafter, the garage business
continued in the same name. It claims that the original proprietary
concern was later converted into a partnership firm and that
Deepak Shetty and other partners became connected with the
business. In support of this case, the Garage has relied upon rent
receipts, electricity bills, municipal records, licences,
correspondence with the Trust and agreements entered into with
M/s. Century Developers. The rent receipt dated 10 April 1977 is
an important document in this regard. It is issued in the name of
M/s. Sadanand Garage, Proprietor Sadanand R. Shetty. It records
payment of Rs.140/- for the month of April 1977 towards rent of
the workshop shed at Kakasaheb Gadgil Marg. This receipt shows
that the Garage was not a stranger or a person who had entered
the property without any connection with the original owners. It
had a tenancy connection with them. But the description given in
the receipt is important. The rent was paid for the workshop shed.
The receipt does not state that the entire land admeasuring 642.98
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square metres was given on rent to the Garage. Therefore, this
document supports the tenancy in respect of the garage structure. ,
however, it does not prove that the entire open plot was given on
rent to the Garage. The owners have submitted that the receipt
was issued only in the name of the proprietary concern of
Sadanand R. Shetty. According to them, there is no document to
show that the tenancy was transferred to the partnership firm.
They have pointed out that in the claim filed by M/s. Sadanand
Garage, it has been described as a proprietary concern, whereas in
the affidavit of evidence it has been described as a partnership
firm. The owners submit that no partnership deed has been
produced. They have pointed out that the person who was
originally the proprietor has not entered the witness box to explain
how the tenancy was transferred to the partnership firm.
86. The objection raised by the owners in this regard requires
consideration. The documents contain different descriptions
regarding the constitution of M/s. Sadanand Garage. The original
rent receipt is in the name of the proprietary concern of Sadanand
R. Shetty, whereas the later claim is made by the partnership firm.
Deepak Shetty has stated in his evidence that the firm was
constituted in 1971 and that his father and uncle were its partners.
There is a submission that the partnership came into existence in
or about 1985 or 1986. However, the complete partnership records
showing the actual date and the manner in which the proprietary
concern was converted into a partnership firm have not been
produced before me. At the same time, the above objection
regarding the constitution of the firm does not remove the earlier
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tenancy or the later occupation of the garage premises. The
business continued under the name of Sadanand Garage. The
owners themselves referred to Sadanand Garage in the
proceedings filed before the Court of Small Causes. The agreement
with M/s. Century Developers and the later correspondence with
the Trust refer to the Garage and its occupation. The municipal
and other records relied upon by the Garage show that garage
business was being carried on at the property. I, therefore, find
that the material establishes a continuing tenancy and occupation
interest connected with the Garage. However, the persons claiming
compensation on behalf of the firm must establish their legal
connection with the continuing business. No individual can receive
compensation merely by describing himself as a proprietor or
partner unless his entitlement is established.
87. The owners have relied upon the proceedings filed before
the Court of Small Causes at Bombay in R.A.E. Suit No. 1014/3093
of 1988. The copy placed on record contains a summons with the
heading “Summons To A Tenant Holding Over”. The plaintiffs are
shown as Ambekar and the defendants include Sadanand Garage.
The plaint and other papers are found in the annexed pages 180 to
186. These documents show that the owners had filed proceedings
against the Garage for recovery of possession. The description of
the proceedings as one against a tenant holding over supports the
case that the Garage was occupying the property under a tenancy
arrangement. It does not support the submission that the Garage
was a stranger or a trespasser.
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88. The Garage has submitted that the suit was dismissed for
default on 16 November 1988 and was not restored thereafter. The
available copy of pages 180 to 186 contains the summons, index
and pleadings. However, the order by which the suit was dismissed
is not found in those papers. Therefore, I cannot treat the alleged
dismissal for default as a finding of the Small Causes Court that
the Garage was a tenant of the entire plot. Even if dismissal for
default is established, it would not mean that the rights of the
parties were decided on merits. However, the filing of the suit is
relevant. It shows that the owners were aware of the occupation of
the Garage and had approached the Court for seeking its removal.
This supports the existence of a dispute regarding possession and
tenancy. But it does not establish the exact area which was covered
by the tenancy.
89. The Garage has relied upon the agreement dated 18 July
1992 entered into between the owners and M/s. Century
Developers. According to the Garage, this agreement was an
agreement for sale of the property for Rs.51,00,000/- and was not
merely a development agreement. It has pointed out that the
agreement refers to the occupation of the Garage and that the
property was agreed to be dealt with on an “as is where is” basis,
subject to the occupants of the structures standing thereon. The
owners, however, submit that the agreement with Century
Developers was never completed and was subsequently
terminated. The contents of the agreement of 1992 are relevant for
deciding the present dispute. They show that when the owners
entered into the arrangement with Century Developers, they were
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aware that the Garage was occupying the property. The Garage has
relied upon this agreement to show that it was carrying on its
business in the open land in addition to the structure. This
material supports the case of the Garage that its use was not
confined only to the inside portion of the shed. However, the fact
that the Garage was carrying on its business in the open land does
not mean that the entire plot admeasuring 642.98 square metres
had been given to it under an exclusive tenancy.
90. The Garage has relied upon the Power of Attorney dated 20
July 1992. According to it, Century Developers was authorised
under this Power of Attorney to negotiate with the tenants and
occupants and to make suitable arrangements for carrying out the
development. The Garage says that the owners had permitted
Century Developers to deal with its rights and had not objected
when agreements were entered into. The owners, on the other
hand, submit that the authority given to Century Developers was
only to negotiate with the occupants. According to them, it did not
give Century Developers any authority to create a fresh tenancy
over the entire open land.
91. The Power of Attorney and the agreement with Century
Developers are required to be considered together. These
documents show that the owners knew that the property was
occupied and that some arrangements with the occupants were
necessary before the development could be carried out. But the
authority to negotiate with the occupants cannot be treated as
authority to create permanent tenancy rights over the entire land.
The Garage has relied upon the tenancy agreement dated 3 July
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1995 executed by Century Developers. This agreement is a
relevant circumstance showing the arrangement made by Century
Developers with the Garage. However, from the material placed
before me, it is not established that Century Developers had
authority to bind the owners by creating tenancy rights over the
entire open plot.
92. The Garage has relied upon the agreement dated 2 January
1996. According to the Garage, under this agreement it had agreed
to surrender its rights at the time of redevelopment. In return, it
was to receive six flats. Three flats were to be of about 900 square
feet each and three flats were to be of about 950 square feet each,
along with parking spaces, after payment of the agreed
construction cost. This arrangement is important because it shows
that the parties were treating the occupation and surrender of the
Garage as having substantial value. Normally, a person who has no
recognised interest in the property would not enter into an
arrangement for surrendering such rights in return for flats.
However, this agreement is required to be considered along with
the events which took place thereafter. The owners say that they
had terminated the arrangement with Century Developers and had
revoked the Power of Attorney. They rely upon the fact that
Century Developers had filed Suit No. 2132 of 1999 for specific
performance of the agreement dated 18 July 1992 and that the
suit was dismissed on 5 May 1999. The Garage, on the other hand,
submits that the owners did not take any steps to cancel the
arrangements made with it and that the agreement dated 2
January 1996 continued to remain binding. In my view, the
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agreement dated 2 January 1996 is evidence regarding the nature
and value of the Garage's occupation and the negotiations for
surrender of its rights. But this agreement alone does not establish
that the Garage became the owner of the land or acquired a
permanent right over every part of the open plot. The proposed
allotment of flats was connected with redevelopment and
construction. The flats were not allotted under the agreement and
the development did not take place., the dispute between the
owners and Century Developers regarding their agreement
resulted in dismissal of the suit for specific performance. In these
circumstances, the proposed allotment of six flats cannot be
treated as giving the Garage a direct right to receive 75 per cent of
the acquisition compensation. Still, the agreement is an important
circumstance. It shows that the rights and occupation of the
Garage were not of little or negligible value.
93. The Garage has relied upon the agreement dated 10 March
1998 between the Trust and M/s. Sadanand Garage. According to
the Garage, the Trust had agreed to pay Rs.2,73,50,000/- for
acquiring its rights in the property and for making arrangements
for its alternative accommodation. The Garage submits that the
agreement was signed by the Trustees and was not merely an
informal offer. It has relied upon the minutes of the Trust meeting
dated 16 April 2001 and the subsequent correspondence to show
that the Trust wanted to purchase the rights of the Garage before
proceeding with the acquisition. This agreement is an relevant
circumstance to be considered. It shows that the acquiring body
was treating the Garage as a person whose occupation and rights
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were required to be settled before the property could be obtained.
The amount discussed between the Trust and the Garage was
substantial. Therefore, it cannot be said that the Garage had no
interest or value in the property. The fact that the Trust was
prepared to enter into such an arrangement supports the claim of
the Garage that its interest was required to be taken into account.
However, the amount of Rs.2,73,50,000/- cannot straightaway be
treated as the market value of the tenancy interest of the Garage
for dividing the compensation. The agreement was not a
completed sale of the entire land by the owners to the Garage. It
was concerned with surrender of the Garage's rights and with
providing alternative accommodation. The Trust had its own
special requirement of obtaining the property for expansion of the
temple and for providing facilities to the devotees. Therefore, the
amount offered may have included the special need of the Trust
and the amount required for obtaining vacant possession. It cannot
be assumed that this amount represents only the ordinary market
value of the tenancy interest of the Garage.
94. There is some difficulty in the figures relied upon by the
Garage. At one place, it is stated that the Trust had agreed to pay
Rs.2,73,50,000/- to the Garage. At another place, the Garage
refers to the Trust agreeing to pay Rs.95,00,000/- to the owners
and Rs.1,31,50,000/- to Century Developers. These two amounts
together come to Rs.2,26,50,000/-. The remaining amount of
Rs.47,00,000/- is not explained when compared with the figure of
Rs.2,73,50,000/-. The different figures have not been placed
before the Court in a manner which would show that the Trust had
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finally divided the total value of the property between the Garage
and the owners in the ratio of 75:25.
95. The Garage has relied upon the valuation report prepared by
M/s. Joshi and Parulekar on 19 July 1999, at the instance of the
Trust. The report has valued the property at Rs.4,60,10,000/-.
According to the Garage, even on the basis of this valuation, it
should receive 75 per cent of the amount because it was in
exclusive possession of the entire plot. The owners have disputed
this claim. It is necessary to see what the valuation report records.
The valuer has stated that the old structure standing on the plot
was being used as a motor repairing garage. The report states that
“A major portion of the plot area is vacant.” It records that,
according to the documents available with the valuer, the plot area
was sub-leased to the garage owner for repair work and parking.
Thus, the report accepts that the Garage was occupying and using
the property. But it does not support the claim that the Garage was
in exclusive possession of every part of the property. On the
contrary, the valuer has mentioned that a major portion of the land
was vacant. The manner in which the amount of Rs.4,60,10,000/-
was worked out is required to be noticed. The report has taken the
available FSI as 1.33 and calculated the FSI area at 9,202 square
feet. Thereafter, the rate of Rs.5,000/- per square foot of FSI area
has been applied. The report mentions that the Trust was ready to
pay some additional amount because the land was absolutely
required by it. More importantly, the valuation was made on the
assumption that the property would be available “free of any
encumbrances”. This means that the amount of Rs.4,60,10,000/-
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was calculated on the basis that the property would be made
available after clearing the legal difficulties and without any
existing rights or claims affecting it. Therefore, this report is not a
separate valuation of the tenancy interest of the Garage.
96. I, therefore, accept the submission of the Garage that the
valuation report prepared for the Trust is relevant and that it
shows that the Garage had a valuable occupation interest in the
property. But the submission that 75 per cent of the amount
mentioned in that report belongs to the Garage cannot be
accepted. The report has not divided the value between the owners
and the tenant. It has not separately calculated the value of their
respective rights. It does not state that the Garage was in exclusive
possession of the entire plot. On the contrary, it records that a
major portion of the land was vacant. Therefore, the report cannot
be directly relied upon for deciding the respective shares of the
owners and the Garage.
97. The Garage has relied upon the letters written by the Trust
seeking its permission to use a portion of the property during
Angaraki Chaturdashi and on other occasions. According to the
Garage, these letters were addressed to it and not to the owners. It
submits that this shows that it was in control of the entire plot.
These letters are certainly relevant. They show that the Trust was
dealing with the Garage as a person having occupation and control
over at least some portion of the property. However, merely
because the Trust asked for permission to use a portion of the
property on particular occasions, it cannot be held that the entire
plot was given to the Garage under an exclusive tenancy. The
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letters support the occupation of the Garage. But they do not show
the exact area covered by its tenancy. The Garage has relied upon
municipal tax receipts, electricity bills, licences and other
documents. It says that it was paying municipal taxes and was
carrying on its garage business under the necessary licence at the
property. These documents support the fact that the Garage was
carrying on its business and using the premises for a long period.
They support the rent receipt and are in line with the earlier suit
filed by the owners. However, payment of municipal charges or
holding a licence for carrying on business does not establish
ownership or tenancy over the entire land. These documents have
to be considered along with the agreements and the other
material. When all these documents are considered together, they
establish that the Garage was occupying the premises and carrying
on its business there. But they do not prove that it had exclusive
tenancy over the entire area of 642.98 square metres.
98. The owners have submitted that the Garage had not paid
rent after 1978 and was, therefore, occupying the land without
any authority. The Garage, on the other hand, says that the
original owners had issued rent receipts from 1977 to 1984 and
that after the present owners acquired the property, they stopped
accepting rent. The material placed before me contains different
statements about the last date on which rent was paid. The rent
receipt which has been identified is dated 10 April 1977. The
Garage has relied upon other receipts. However, there is no
complete and clear account showing the rent paid or offered after
the original owners transferred the property. In these
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circumstances, I am unable to hold that the Garage had regularly
paid rent continuously till the date of acquisition. However, this
weakness in the case of the Garage does not mean that its
occupation became unauthorised immediately after the rent
receipts stopped. The agreement entered into by the owners with
Century Developers refers to the Garage and its occupation. The
proceedings filed before the Small Causes Court describe the
Garage as a tenant holding over. The arrangement with Century
Developers and the later dealings with the Trust, including the
correspondence, show that the Garage continued to be treated as
an occupant whose rights were required to be settled. Therefore,
the absence of regular rent receipts for the later period is certainly
a circumstance which goes against the Garage. But it does not
completely remove the tenancy and occupation interest which is
otherwise supported by the documents.
99. The owners have submitted that the Garage was a tenant
only of the shed. According to them, the use of the open land for
parking or repair work did not create any tenancy rights over the
open plot. This submission can be accepted to some extent. The
original rent receipt refers to the workshop shed. The valuation
report prepared for the Trust refers to sub-letting for garage
activities and parking. The agreement of 1992 refers to the Garage
carrying on its business on the open land. These documents show
that the use of the Garage was not limited only to the inside
portion of the shed. However, there is no clear and reliable
document executed by the owners which gives the Garage
exclusive tenancy over the entire area of 642.98 square metres.
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100. The claim of the Garage that it was the only person in
possession of the entire property from 1978 till 2005 is not fully
supported by the evidence. Its own evidence refers to different
measurements of the structure, mezzanine floor and open space.
The valuer appointed by the Trust, who had inspected the property,
has recorded that a major portion of the plot was vacant. The joint
survey and other material refer to more than one structure
standing on the property. Therefore, I am unable to accept the
claim that the Garage was in exclusive possession of the entire plot
in the manner stated by it. At the same time, the evidence does
show that the Garage was occupying the garage structure and
using the surrounding open space for its business and parking. Its
interest in the property was substantial and cannot be ignored.
101. The owners have submitted that they were never in physical
possession of the property and that the Garage was using the land
without paying rent. Even if the owners were not occupying the
property, their ownership rights continued to exist. They had rights
over the land, though those rights were subject to the tenancy and
occupation rights of the Garage. The acquisition took away the
ownership interest of the owners. The observation made in
paragraph 81 of Harkishan that the landlord's interest is
“ownership minus possession, not plus possession” is important in
this regard. It means that the owners cannot claim the entire value
as if the property was vacant and was in their actual possession.
But the Garage cannot claim the entire value as if the owners had
no title or any remaining interest in the property.
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102. The Garage has submitted that the SLAO had accepted the
division of compensation in the ratio of 75:25 and, therefore, the
same division should be followed by this Court. In support of this
submission, it has referred to the amount of Rs.43,30,360/-
awarded to Kappu A. Shetty and the calculation of Rs.57,72,480/-
for an area of 184.32 square metres. According to the Garage, 75
per cent of this amount was given to the tenant and the remaining
25 per cent was given to the owners. The award does show that
the SLAO calculated Rs.43,30,360/- as 75 per cent of
Rs.57,72,480/- in respect of an area of 184.32 square metres.
However, the Garage has questioned why the value of
Rs.57,72,480/- was taken and why the amount was divided in the
ratio of 75:25 without giving reasons. The award does not explain
why the interest of the Garage was taken as 75 per cent in respect
of that particular area. It does not explain why the same ratio
should be applied to the entire property. The total award contains
a separate amount for the owners and an amount of
Rs.20,00,000/- for Century Developers. Therefore, the Garage
cannot rely upon only one part of the award and submit that the
SLAO had finally decided that it was entitled to 75 per cent of the
entire compensation. The earlier division is under challenge in
these references. It is, therefore, necessary to decide the issue on
the basis of the evidence placed before this Court.
103. The Garage has relied upon Mangat Ram and other decisions
to submit that a tenant who is in exclusive possession should
receive three-fourths of the compensation and the landlord should
receive only one-fourth. I have considered this submission. The
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difficulty in accepting it is that the present case is not one where
the evidence proves that the Garage was the exclusive tenant of
the entire land under a perpetual lease. The evidence shows that
the Garage had a long-standing tenancy of the garage structure
and had an associated right to occupy and use the open space. But
the exact area and the conditions of its tenancy over the open land
have not been proved with the same clarity. The observations
made in paragraph 74 of Harkishan show that no fixed ratio can
be applied in every case. The ratio adopted in another case cannot
be followed without examining the nature and extent of the rights
proved in the present matter.
104. The owners have challenged the amount of Rs.20,00,000/-
awarded by the SLAO to Century Developers. They submit that the
agreement with Century Developers was terminated, the Power of
Attorney was revoked and the suit for specific performance was
dismissed. According to the owners, Century Developers had no
right to receive any part of the compensation. The Garage, on the
other hand, relies upon the arrangements made by Century
Developers with it. It submits that the owners cannot now deny
those arrangements after having permitted Century Developers to
deal with the property.
105. The claim of Century Developers is a separate claim arising
out of its agreement with the owners and the subsequent dealings
between them. The dismissal of its suit for specific performance is
certainly a relevant circumstance. However, the finding being
recorded here is limited to the division of the land compensation
between the owners and M/s. Sadanand Garage. No additional
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share can be created in favour of either of these two parties merely
because Century Developers had entered into a development or
other contractual arrangement. The separate claim of Century
Developers, along with the claims of the flat purchasers, will have
to be considered in the appropriate reference on the basis of the
evidence relating to their respective rights. The division made
between the owners and the Garage in this judgment shall not
result in the same amount of compensation being paid twice.
106. M/s. Sadanand Garage has claimed that when the Trust took
possession of the property, its garage structure was demolished, its
vehicles were damaged and its tools, spare parts, furniture and
other materials were removed. It says that it was not given an
opportunity to remove those articles. It has submitted that its
evidence regarding the damage was not challenged during cross-
examination. These are serious allegations. However, the value of
the land and the division of compensation for the acquired
immovable property are separate from the claim regarding damage
to movable articles, vehicles or business materials. Such a claim
cannot be added to the share of the tenant in the land
compensation unless the ownership of the articles, the actual loss
and the amount of damage are separately proved. The claim
regarding such damage will have to be considered on the basis of
the evidence and in accordance with the liberty, if any, granted by
the earlier orders of this Court. No amount towards such damage
is included in the division made below.
107. I have considered whether the separate interests of the
owners and the Garage can be valued on the basis of the material
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available before me. The owners have not produced any valuation
which determines the value of their ownership interest after taking
into account the occupation of the Garage. The Garage has not
produced any expert valuation which separately determines the
market value of its tenancy interest. The valuation report prepared
for the Trust is for the entire property and proceeds on the
assumption that the property would be available free of
encumbrances. The amount mentioned in the agreement with the
Trust is not the result of any completed sale. It includes matters
concerning surrender of rights and alternative accommodation.
The earlier agreements with Century Developers do not give any
final and accepted valuation of the separate interests. The division
made by the SLAO does not give sufficient reasons for adopting the
ratio of 75:25 in respect of the area of 184.32 square metres. In
these circumstances, it is not possible to determine the exact
money value of the ownership interest and the tenancy interest by
making a separate calculation. The Court has to make the best
possible estimate on the basis of the evidence available. The
Garage had a tenancy connection with the property for a long
period. Its occupation of the garage structure is supported by the
rent receipt. The suit filed by the owners and the description of the
Garage as a tenant holding over support this position. The later
agreement with Century Developers and the dealings with the
Trust show that the occupation and surrender of the Garage had
substantial value. The Garage had its business establishment at the
property and was using the open space for its business activities
and parking. On the other hand, the Garage has not proved that it
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had exclusive tenancy over the entire plot. The original rent
receipt refers to the workshop shed. The agreement of 1992 refers
to the Garage carrying on business on the open land, but it does
not prove exclusive tenancy over the whole plot. The valuation
report prepared for the Trust records that a major portion of the
land was vacant. The exact area of the open land covered by the
tenancy has not been established. The Garage has not proved that
it had a perpetual lease or ownership rights over the land. The
owners continued to hold title over the entire plot and their
ownership interest was taken away by the acquisition.
108. Therefore, the claim of the owners that the entire
compensation should be paid to them cannot be accepted. In the
same manner, the claim of the Garage that it should receive 75 per
cent of the entire compensation cannot be accepted. The interest
of the Garage was more than a temporary occupation for carrying
on business. However, it was less than ownership or a proved
perpetual lease over the entire plot. The owners had substantial
ownership rights, though those rights were subject to the
established tenancy and occupation rights of the Garage. After
considering the entire evidence, I find that an equal division of the
land compensation between the owners and M/s. Sadanand
Garage would be a fair and reasonable estimate of their respective
interests. This conclusion is not being reached on the basis of any
general rule that the landlord and tenant must always receive
equal shares. It is based upon the facts of the present case. The
Garage had been occupying and using the property for carrying on
its business for a long period. Its rights were recognised in the
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dealings with the owners, the developer and the Trust. The owners
continued to have ownership and reversionary rights in the land.
There is no reliable evidence on the basis of which the separate
value of these two interests can be calculated more accurately.
Therefore, equal division is being adopted as a fair estimate having
regard to the facts of this case. This approach is consistent with the
method explained in paragraphs 40, 68, 74 and 85 to 86 of
Harkishan .
109. I now proceed to consider the value of the existing structure
and trees. In the earlier part of this judgment, the value of the land
has been determined at Rs.10,94,35,196/-. The value of the
existing structure and trees has been assessed at Rs.3,85,300/-.
Out of this amount, Rs.3,33,634/- is towards the value of the
structure or shed, Rs.46,666/- is towards the value of four coconut
trees and Rs.5,000/- is towards the value of one other tree. The
Garage was using the shed for carrying on its garage business.
However, the rent receipt dated 10 April 1977 refers to the
workshop shed. The valuation report prepared for the Trust
describes the old structure as being used for motor repairing
garage and refers to the garage owner using the area on a sub-
lease basis. No clear document has been produced to show that
M/s. Sadanand Garage had constructed the shed or that it was the
owner of the physical structure. Its occupation as a tenant and its
use of the property for business have been considered while
deciding its share in the land compensation. I, therefore, find that
the amount of Rs.3,33,634/- towards the value of the physical
shed is payable to the owners according to their respective title
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shares. The amount of Rs.51,666/- towards the value of the trees
is payable to the owners. There is no material to show that the
trees belonged to the Garage.
110. The division of the principal compensation will, therefore, be
as follows. The land compensation of Rs.10,94,35,196/- shall be
divided equally between the owners and M/s. Sadanand Garage.
The owners shall receive Rs.5,47,17,598/- and M/s. Sadanand
Garage shall receive Rs.5,47,17,598/-. The amount of
Rs.3,85,300/- towards the physical structure and trees shall be
paid to the owners. Thus, the total amount payable to the owners
will be Rs.5,51,02,898/- and the total amount payable to M/s.
Sadanand Garage will be Rs.5,47,17,598/-. The total of both
amounts comes to Rs.10,98,20,496/-. The statutory additions,
including solatium, additional amount and interest, shall be
payable according to the principal compensation found payable to
each party and in the same proportion. This will, however, remain
subject to the applicable provisions of the Land Acquisition Act and
the findings recorded regarding entitlement to such statutory
benefits. Any amount which has been paid or withdrawn by any
party shall be adjusted against the amount found payable to that
party. No party shall be entitled to receive the same component of
compensation twice.
111. For the reasons stated above, I hold that M/s. Sadanand
Garage has proved a substantial tenancy and occupation interest in
the acquired property. However, it has not proved that it had
exclusive tenancy or ownership rights over the entire plot. Its claim
for 75 per cent of the entire compensation is, therefore, rejected.
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The owners have proved their ownership interest. But their claim
to receive the entire compensation is rejected because the land was
subject to the established tenancy and occupation rights of the
Garage. The land compensation shall be divided equally. That is,
50 per cent shall be paid to the owners collectively and the
remaining 50 per cent shall be paid to M/s. Sadanand Garage. The
value of the existing shed and trees shall be paid to the owners for
the reasons stated above.
Claim of M/s. Century Developers:
112. The claim of M/s. Century Developers is arising out of the
agreement dated 18 July 1992 executed by the owners and the
Power of Attorney dated 20 July 1992. The owners say that M/s.
Century Developers did not comply with the conditions of the
agreement. Therefore, they terminated the agreement. In support
of this, they rely upon the notice dated 27 March 1996 and the
revocation of the Power of Attorney. They point out that M/s.
Century Developers had filed Suit No.2132 of 1999 for specific
performance of the agreement. However, the said suit was
dismissed on 5 May 1999. In spite of these facts, the Special Land
Acquisition Officer granted an amount of Rs.20,00,000/- to M/s.
Century Developers. The relevant reasons recorded in the Award
are reproduced below:
“Shri Ambekar, landlord had entered into an Agreement with
M/s. Century Developers Pvt. Ltd., on 18.7.1992 for
developing this property and on 20.7.1992 executed a Power
of Attorney. However, as the terms and conditions in the
agreement were not complied with, Shri Ambekar has
cancelled and revoked the Agreement and Power of Attorney
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executed with Shri Century Developers, on 21 February
19[year unclear in original. During the aforesaid period of
Agreement, Century Developers have paid a sum of Rs. 20
Lakhs to Shri Ambekar towards development. Since Century
Developers Pvt. Ltd. is entitled to receive this amount from
the consideration amount payable to the Developer, it shall
be paid.”
113. The reasons given in the Award do not appear to be
satisfactory. The Award records that the agreement was cancelled
because M/s. Century Developers had not complied with its terms
and conditions. But, thereafter, it holds that M/s. Century
Developers is entitled to receive Rs.20,00,000/- from the
compensation amount. The terms of the agreement have not been
examined. There is no consideration of the purpose for which the
amount was paid, whether the agreement contained any condition
for forfeiture, and what was the effect of termination of the
agreement. Merely because M/s. Century Developers had paid the
amount to the owners earlier, it cannot claim that the same
amount must be returned to it from the compensation payable for
acquisition of the land. The owners rely upon Clause 23 of the
agreement. According to them, M/s. Century Developers did not
comply with the terms of the agreement and, therefore, the
amount paid by it stood forfeited. This submission will have to be
examined by considering the agreement as a whole. If the
agreement provides that the amount can be forfeited in case of a
particular breach, it is necessary to find out whether that breach
had taken place and whether the conditions for forfeiture were
satisfied. The amount cannot be directed to be returned to the
developer only on the ground that it had paid the amount to the
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owners at an earlier point of time.
114. The dismissal of Suit No.2132 of 1999 is an important
circumstance. The owners submit that M/s. Century Developers
had filed that suit seeking specific performance of the agreement
dated 18 July 1992, but it could not succeed. According to the
owners, after dismissal of the suit, M/s. Century Developers cannot
now claim any share in the compensation by proceeding on the
footing that the agreement was still in force and had continued.
The dismissal of the suit is certainly a relevant circumstance and
cannot be ignored. However, the effect of such dismissal will
depend upon the decree and the reasons given by the Court. If the
suit was dismissed after examining the rights of the parties under
the agreement and deciding the dispute on merits, its effect would
be different. The position would be different if the suit was
dismissed on a technical ground or for default. The material placed
before this Court only shows that the suit was dismissed on 5 May
1999. The complete judgment and the exact reason for dismissal
have not been placed before this Court. Therefore, I cannot hold
that the suit had finally decided every monetary claim which may
arise out of the agreement. At the same time, M/s. Century
Developers must establish its own legal right to claim any part of
the compensation. The fact that it had entered into an agreement
with the owners and paid Rs.20,00,000/- to them does not prove
that it had become owner of the land or had acquired any
enforceable right in the compensation payable for acquisition of
the land. The agreement was terminated. The Power of Attorney
was revoked. The suit for specific performance was dismissed. In
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these circumstances, M/s. Century Developers was required to
show what right, if any, continued to remain with it even after
termination of the agreement and dismissal of the suit.
115. The material placed before this Court does not show that
M/s. Century Developers produced any independent evidence to
prove its right to recover Rs.20,00,000/- or to claim any share in
the land compensation. The Award does not decide this issue. It
only records that M/s. Century Developers had paid the amount to
the owners and, on that basis, directs that the amount should be
returned to it from the compensation. Such a direction cannot be
accepted unless it is first decided whether, under the agreement,
the amount was refundable or whether it had become liable to be
forfeited. M/s. Sadanand Garage relies upon the agreement dated
3 July 1995 and the agreement dated 2 January 1996 executed by
M/s. Century Developers. According to M/s. Sadanand Garage,
these documents were executed when the development
arrangement was still continuing. It submits that the owners did
not raise any objection to these documents at that time. These
documents may have relevance while considering the rights
claimed by M/s. Sadanand Garage. However, merely because these
agreements were executed, it cannot be said that M/s. Century
Developers continued to have an independent right to claim the
land compensation even after termination of its agreement with
the owners. In view of the above circumstances, the claim of M/s.
Century Developers for Rs.20,00,000/- is rejected in these
references. This finding is only with regard to its claim for a share
in the land acquisition compensation. The amount cannot be
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awarded to M/s. Century Developers merely because the Award
records that it had earlier paid Rs.20,00,000/- to the owners. It is
not necessary for this Court to decide whether M/s. Century
Developers may have any separate remedy under the agreement
for recovery of this amount.
Claims of the persons claiming as flat purchasers:
116. M/s. Century Developers had entered into agreements with
different persons for purchase of flats. The material placed before
this Court refers to agreements in favour of Nethra Sanjeeva
Shetty, Sanjeev Babu Shetty, Balkrishna Narayan Shetty, Nagveni
Balkrishna Shetty, Madhusudan Reddy and Minal Finance Pvt. Ltd.
The dates of these agreements and the amounts mentioned in
them are different. For example, the agreement in favour of Nethra
Sanjeeva Shetty is dated 29 June 1993, along with a
supplementary agreement dated 26 June 1996. The agreement in
favour of Minal Finance Pvt. Ltd. is dated 28 April 1995. There are
agreements in favour of other purchasers, mentioning different
areas of flats and different amounts of consideration. These
agreements show that M/s. Century Developers had entered into
transactions with persons who were expecting to get flats in the
building proposed to be constructed on the property. Their claims
cannot be rejected only because they were not the owners of the
land. A person having a valid agreement for purchase of a flat may
have a contractual right which can be considered. However, what
was the exact nature of that right and how far it extended will
have to be seen from the agreement and the other evidence placed
on record.
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117. The first difficulty is that the material before this Court does
not show that the proposed building was completed or that these
purchasers had become owners of any constructed flats on the
acquired land. The agreements were in respect of flats which were
proposed to be constructed in future. However, the land came to
be acquired. Therefore, the purchasers have to establish that their
agreements had created some existing legal right connected with
the acquired property and that such right was lost because of the
acquisition. They must show that the loss of such right gives them
an entitlement to claim any amount from the compensation. The
second difficulty is that these agreements were executed by M/s.
Century Developers. Its authority to enter into such agreements
and to bind the owners is disputed. The owners submit that the
Power of Attorney given to the developer was limited and did not
authorise it to sell flats. The development agreement was
terminated. The suit filed by the developer for specific
performance was dismissed. In these circumstances, the flat
purchasers have to establish under what authority M/s. Century
Developers had entered into these agreements and to what extent
those agreements were binding upon the owners. The third
difficulty is that the material placed before this Court does not give
complete details of the claim of each purchaser. In respect of every
purchaser, it is necessary to know how much amount was paid,
how much amount was still payable, what were the exact
conditions of allotment, whether possession of the flat was given
and whether the agreement was still in force on the date of
acquisition of the land. These facts have not been established.
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Merely producing an agreement mentioning a particular flat and
its consideration amount is not enough to decide what amount of
compensation, if any, is payable to that purchaser.
118. These agreements may give rise to contractual claims against
M/s. Century Developers. However, a claim under an agreement
against the developer cannot become a share in the compensation
payable for acquisition of the land. The purchasers have to
establish that they had some right in the acquired property or
some legally enforceable interest in that property which came to
an end because of the acquisition. The material presently available
before this Court does not establish such a right with sufficient
certainty. I find that the flat purchasers have not established, in
these references, any independent share in the compensation
payable for the acquired land. Their claims for apportionment of
the land compensation are rejected. This finding does not mean
that the agreements are declared void for all purposes. The finding
is confined only to the question of apportionment which is
required to be decided in these references. On the evidence placed
before this Court, the flat purchasers have not established that they
are entitled to any particular part of the statutory compensation.
119. In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:
(i) The references are partly allowed in the above terms;
(ii) The total land acquisition compensation of
Rs.10,94,35,196/- shall be apportioned in the following
manner:
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(a) The owners shall be entitled to 50% of the land
compensation, amounting to Rs.5,47,17,598/-.
(b) M/s. Sadanand Garage shall be entitled to the
remaining 50% of the land compensation, amounting
to Rs.5,47,17,598/-.
(iii) The amount of Rs.3,85,300/- awarded towards the
acquired structure and trees shall be payable to the owners
in accordance with their respective shares and title;
(iv) The claim of M/s. Century Developers for payment of
Rs.20,00,000/- from the land acquisition compensation is
rejected;
(v) The claims of the persons claiming as flat purchasers
for apportionment of the land acquisition compensation are
rejected;
(vi) It is clarified that the rejection of the claims of M/s.
Century Developers and the flat purchasers is confined to
their claim for apportionment of the statutory land
acquisition compensation. Their separate contractual rights
and remedies, if any, are not decided by this order;
(vii) The statutory benefits and additional amounts payable
under the Land Acquisition Act shall follow the
apportionment of the principal land compensation in the
same proportion, subject to the applicable provisions of law
and the findings recorded in this judgment;
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(viii) Any amount paid or withdrawn by any claimant shall
be duly adjusted against the amount payable to that
claimant. No claimant shall receive payment twice in respect
of the same compensation;
(ix) The concerned authority shall calculate and release the
respective amounts to the claimants in accordance with this
judgment with in 8 weeks from today;
(x) The references are disposed of in the above terms. In
the circumstances, there shall be no order as to costs.
(AMIT BORKAR, J.)
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