Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
PETITIONER:
MEHTA RAVINDRARAI AJITRAI (DECEASED) THROUGHHIS HEIRS AND LE
Vs.
RESPONDENT:
STATE OF GUJARAT
DATE OF JUDGMENT08/08/1989
BENCH:
KANIA, M.H.
BENCH:
KANIA, M.H.
KULDIP SINGH (J)
CITATION:
1989 AIR 2051 1989 SCR (3) 743
1989 SCC (4) 250 JT 1989 (3) 321
1989 SCALE (2)296
ACT:
Land Acquisition Act, 1894: ss. 4 & 23--Compensation for
acquired land--Market value-Determination of--Post-acquisi-
tion instances--Admissibility of--Prices fetched for similar
lands at or about the time of preliminary notification the
best evidence of market value.
HEADNOTE:
Certain lands situated on the outskirts of a large city
were acquired by the respondent-State after issuing prelimi-
nary notification under s. 4(1) of the Land Acquisition Act,
1894 on August 6, 1956 for construction of an industrial
estate.
The appellants claimed compensation at the rate of Rs.3
per sq. yard and cited in support thereof an agreement of
sale dated January 21,1957 and a conveyance dated April 2,
1957 pertaining to a piece of land adjoining the acquired
land showing the sale price at the rate of Rs.3 per sq.
yard. The respondent-State relied on an auction sale dated
February 23, 1953 at about 41p. per sq. yard, evidenced by
Ex. 112, and the instance evidenced by Ex. 118 pertaining to
sale to a minor, transacted by his father.
The Land Acquisition Officer classified the land as
superior agricultural land and awarded the compensation at
the rate of Rs.2200 per acre, i.e., about 45p. per sq. yard.
In the reference, the Civil Judge did not rely upon any
of the instances proved before him, but considering the
general situation of the land and its considerable building
potentiality fixed the rate of compensation at Rs.4400 per
acre, i.e., about 90p. per sq. yard.
Dismissing the appeal, the High Court took the view that
the valuation fixed by the Civil Judge was justified. It
held that a postacquisition sale could not be regarded as a
comparable instance at all, since the acquisition for con-
struction of the industrial estate was bound to have pushed
up the prices in the surrounding area. It placed reliance on
the evidence furnished by the instance at Ex. 112, over a
year prior to
744
the date of s. 4 notification, but discarded the instance
evidence by Ex. 118 relied on by the State.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
Allowing the claimants’ appeal by special leave, the Court,
HELD: The market value of a piece of property for pur-
poses of s. 23 of the Land Acquisition Act, is stated to be
the price at which the property changes hands from a willing
seller to a willing, but not too anxious a buyer, dealing at
arm’s length. Prices fetched for similar lands with similar
advantages and potentialities under bona fide transactions
of sale at or about the time of the preliminary notification
are the usual and, indeed, the best, evidence of market
value. [747C]
Administrator General of West Bengal v. Collector,
Varanasi, [1988] 2 SCC 150, referred to.
In the instant case, the instance evidenced by Ex. 112
pertaining_ to sale of land in government auction relied on
by the High Court was a distress sale. There were execution
proceedings pending against the vendor. It could, thus,
hardly furnish any reliable evidence for estimating the
market value of the land in question. The instance evidenced
by Ex. 118 was rightly discarded by the High Court. Only a
certified copy of the sale deed pertaining thereto was
produced in. the trial court. The evidence of the purchaser,
who was minor at the time when the sale deed was executed,
had no evidentiary value as he had no personal information
regarding the sale. No other person conversant with the sale
was examined by the State. [748AB, CF]
The only comparable instance on the basis of which the
market value at the time of the s. 4 notification in respect
of the acquired land could be determined was, therefore, the
sale proved by the sale deed dated April 2, 1957 and the
preceding agreement of sale dated January 21, 1957. Though
entered into about five months alter the notification it
could be fairly regarded as reasonably proximate to the
acquisition. The price fixed under the said agreement was
Rs.3 per sq. yard. However, there seem to have been some
rise in the price of land on account of the acquisition of
the land in question for purposes of constructing the indus-
trial estate. Further, the land proposed to be purchased
under the agreement was adjoining the land of the purchaser
and the purchaser might have paid some extra amount for the
convenience of getting the neighbouring land. These factors
have to be taken into account and appropriate deductions
made from the rate disclosed in the agreement in estimating
the market value. Considering these together with
745
the situation and potentialities of the acquired land, it
would be proper to fix its market value at Rs.8800 per acre,
which comes to about Rs. 1.80p. per sq. yard. The decree
passed by the Civil Judge to be amended accordingly. [748G,
747E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2169 of
1970.
From the Judgment and Order dated 12.8.68 of the Gujarat
High Court in F.A. No. 233 of 1963.
B.K. Mehta, U.A. Rana, Bhushan B. Oza and K.L. Hathi for
the Appellants.
G.A. Shah and M.N. Shroff for the Respondent.
The Judgment of the Court was delivered by
KANIA, J. This is an appeal by special leave granted by
this Court under Article 136 of the Constitution. The appeal
arises out of land acquisition proceedings.
The appellants before us are the heirs and legal repre-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
sentatives of the original claimants. Appellants Nos. 1(a)
to 1(c) are the heirs and legal representatives of original
claimant No. 1 and appellants Nos. 2(i) to 2(ii) are the
heirs and legal representatives of original claimant No. 2.
The acquisition was in respect of an area admeasuring 15
acres and 1 guntha belonging to claimant No. 1 (Original)
and area admeasuring 6 acres and 25 gunthas belonging to
claimant Nos. 1 and 2 (Original). The lands are situated in
the Bhavnagar District and are on the outskirts of the
Bhavnagar City and adjoining the Bhavnagar Rajkot Road. The
acquisition forms part of a larger acquisition for the
construction of an industrial estate at Bhavnagar. The
preliminary notification under section 4(1) of the Land
Acquisition Act, 1894 was published on August 6, 1956. The
claimants made their claims before the Land Acquisition
Officer who classified the lands as superior of Bagayat type
of agricultural land and awarded compensation at the rate of
Rs.2200 per acre which would come to about 0.48 p. per sq.
yard. This award was not accepted by the claimants and they
made a reference which came up for hearing before the
learned Civil Judge, Senior Division, Bhavnagar. The evi-
dence of some instances of sale
746
was led before the learned Civil Judge by the respective
parties but he did not rely upon any of the instances proved
before him. He considered the general situation of the lands
and held that on the evidence it was shown that the lands
had a considerable building potentiality and the Land Acqui-
sition Officer was in error in so far as he did not take
that potentiality into account. The learned Civil Judge
considered the general situation of the land under acquisi-
tion and the potential value of the same for building pur-
poses and fixed the rate of compensation at Rs.4,400 per
acre which had come to about 0.90p. per sq. yard. Being
dissatisfied, the claimants preferred an appeal against the
decision of the learned Civil Judge, Bhavnagar to the High
Court of Gujarat. The Division Bench of. the High Court,
which disposed of the appeal, took the view that the valua-
tion fixed by the learned Civil Judge was justified and
dismissed the appeal. This appeal is directed against the
said decision of the High Court.
We do not feel called upon to enter into a detailed
scrutiny of the evidence led by the parties before the
learned Civil Judge. The main instance relied upon by the
claimants was by way of an agreement to sell dated January
21, 1957 and a sale deed dated April 2, 1957 in respect of
the sale of 42552 square yards of land out of survey No.
333/2 which is adjoining the land with which we are con-
cerned which forms part of survey No. 33 1. The land sold
under this instance was known as "Kesarbagh" and was sold to
Mahalaxmi Mills Limited by Prince Nirmal kumar singhji. The
rate at which it was sold works out to Rs.3 per sq. yard. On
the basis of this instance, the claimants had made their
claim at Rs.3 per sq. yard before the Land Acquisition
Officer. The High Court inter alia rejected this instance on
the basis that the contents of the sale deed were not prop-
erly proved. However, after an order for remand made by this
Court on August 25, 1981 evidence has been led regarding
this sale and the sale deed has been duly proved by the
evidence of one Dharamdas, a director of Mahalaxmi Mills
Limited, the purchaser, and the vendor Prince Nirmal kumar
singhji. It was marked originally as Exhibit 87 and after
the evidence on remand as Exhibit 152. The evidence shows
that this land was just adjacent to the land of the purchas-
er, Mahalaxmi Mills Limited. The agreement of sale is dated
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
January 21, 1957 and the conveyance or sale-deed is dated
April 2, 1957 as aforestated. The price has been fixed under
the agreement of sale. This agreement of sale was entered
into about five months after the publication of section 4
notification in the case before us The High Court rejected
the said instance on the ground that the contents of the
sale-deed were not proved although the execution was thereof
duly proved. In view of the
747
evidence led after remand, it cannot be disputed that this
agreement of sale as well as the sale deed have been duly
proved and they have been duly marked as exhibits. The High
Court further took the view that in any event, no reliance
could be placed on this instance of sale because the acqui-
sition of the land in question before us was for the con-
struction of an industrial estate at Bhavnagar and such
construction was bound to have pushed up the price of land
in the surrounding area. There is, however, nothing in the
evidence to show that there was any sharp or speculative
rise in the price of the land after the acquisition and this
has been noticed by the High Court. It appears that under
these circumstances, the High Court was not justified in not
taking this instance into account at all as it has done on
the ground that it was a post-acquisition sale and could not
be regarded as a comparable instance at all. The market
value of a piece of property for purposes of section 23 of
the Land Acquisition Act is stated to be the price at which
the property changes hands from a willing seller to a will-
ing, but not too anxious a buyer, dealing at arms length.
Prices fetched for similar lands with similar advantages and
potentialities under bona fide transactions of sale at or
about the time of the preliminary notification are the usual
and, indeed the best, evidences of market value. (See:
Administrator General of West Bengal v. Collector, Varanasi,
[1988] 2 SCC 150 at para 8. )
Keeping these factors in mind, we feel that although the
instance reflected in the sale deed (Exhibit 152) and the
agreement for sale in connection with that land, pertains to
a sale after the acquisition, it can be fairly regarded as
reasonably proximate to the acquisition and, in the absence
of any evidence to show that there was any speculative or
sharp rise in the prices after the acquisition the agreement
to sell dated January 21, 1957 must be regarded as furnish-
ing some light on the market value of the land on the date
of publication of section 4 notification. However, certain
factors have to be taken into account and appropriate deduc-
tions made from the rate disclosed in the said agreement to
sell in estimating the market value of the land with which
we are concerned at the date of the acquisition. One of
these factors is that there seems to have been some rise in
the price of land on account of the acquisition of the land
in question before us for purposes of constructing an indus-
trial estate. Another factor is that the land proposed to be
purchased under the said agreement to sell was adjoining the
land of the purchaser and the purchaser might have paid some
extra amount for the convenience of getting the neighbouring
land.
We find that the High Court placed reliance on the evidence
748
furnished by the instances at Exhibit 112 relied on by the
State. By Exhibit 112 land admeasuring 4 acres (19,360 sq.
yard) was sold from Survey No. 384 for Rs.8,000. This sale
deed is dated February 23, 1953, that is, over a year prior
to the date of the section 4 notification in the case before
us. The purchaser stated in the witness box that apart from
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
Rs.8,000 mentioned as the consideration in the sale deed, he
had to pay an extra amount of Rs.4,000. Although the High
Court has not relied upon this statement, it cannot be
altogether ignored. The land was sold at a Government auc-
tion which means that it was a distress sale. There were
execution applications pending against the vendor. Under
these circumstances, there is a little doubt that it was a
distress sale and it hardly furnishes any reliable evidence
for estimating the market value of the land. Therefore,
although the price of the land appearing in that instance
comes to about 0.62p. per sq. yard, it furnishes no reliable
guidance regarding the market price of the land. As far as
the sale instance evidenced by Exhibit 118 is concerned, it
has been discarded by the High Court and, in our view,
rightly so. In the Trial Court neither the vendor nor the
purchaser nor any person conversant with the sale was exam-
ined. Not the original but only a certified copy of the sale
deed was produced. After the remand the situation appears to
be hardly any better. The State examined one Virbhadrasingh
on whose behalf the land was purchased under the said sale
deed. He was a minor at the time when the sale deed (Exhibit
118) was executed. Virbhadrasingh’s father had purchased the
land in Virbhadrasingh’s name as Virbhadrasingh was a minor
only about 12 years old at that time.
The evidence of Virbhadrasingh has no evidentiary value
as he has no personal information regarding the sale under
Exhibit 118. One Ratilal who prepared the said document gave
evidence in court but he did not have any personal knowledge
about the transaction either. Under these circumstances, no
reliance can be placed on Exhibit 118.
In our view, the only comparable instance on the basis
of which the market value at the time of the section 4
notification in respect of the acquired land can be deter-
mined is the sale proved by the sale deed (Exhibit 152) and
the preceding agreement for sale in respect of the land sold
which was entered into about five months after the notifica-
tion. The price thereunder is Rs.3 per sq. yard. From that
price certain deductions have to be made on account of the
various factors which have been enumerated earlier such as
the rise in prices of land after the acquisition and so on.
Taking into account all these factors including the situa-
tion and potentialities of the acquired land, it ap-
749
pears to us that it would be proper to fix the market value
of the acquired land at Rs.8,800 per acre which comes to
about Rs. 1.80 per sq. yard and we direct accordingly. The
decree passed by the Civil Judge, Senior Division, Bhavnagar
will be amended accordingly.
The respondent will pay to the appellants one half of
the costs of the appeal in this Court. There will be no
change as far as the rest of the order is concerned.
P.S.S.
750