Full Judgment Text
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PETITIONER:
LAND ACQUISITION & ANR. ETC.
Vs.
RESPONDENT:
SMT. JASTI ROHINI & ANR. ETC.
DATE OF JUDGMENT27/10/1994
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
VENKATACHALA N. (J)
CITATION:
1995 SCC (1) 717 JT 1995 (2) 339
1994 SCALE (5)75
ACT:
HEADNOTE:
JUDGMENT:
ORDER
1. Leave granted.
2. In disposal of the three appeals by this common
judgment, we shall refer to SLP(C) No. 12300/94 as first
case and to SLP(C) Nos.3528-29 as second case.
3. Notification issued under s.4(1) of the Land
Acquisition Act, 1894 in the first case was published on
June 16, 1983 for acquiring 9.47 acres near Eluru town of
West Godavari Dist. of Andhra Pradesh to provide house sites
to the poor. Again, 14. 1 0 acres of land was acquired in
the second case for the same purpose by publishing the
Notification under s.4(1) on March 23, 1985. The Land
Acquisition Officer awarded compensation under s. 11 at
Rs.40,000/- per acre in both the cases. On reference, the
Sub-ordinate Judge, Eluru, enhanced the market value in the
first case to Rs. 105/- per sq. yard by deducting 30% for
developmental charges out of Rs. 150/- per sq. yard fixed as
its value, with usual solatium and interest. In the second
case, he enhanced to Rs.70/-per sq. yard as claimed by the
claimants therein. On appeal, the High Court, by the
impugned separate judgments dated September 29, 1993
enhanced die market value to Rs. 150/- in respect of land in
the second case but he upheld in the first case the market
value of the land at Rs.150/per sq. yard granting the usual
solatium and interest. Thus, these appeals by special
leave.
4. We have heard learned counsel on both sides and
considered the reasoning or the High Court and also of the
reference court vis-a-vis the evidence on record. Both the
Courts committed manifest error of law. The main thrust of
the arguments for the claimants is that the award of the
Civil Court in Ex.A-3 marked in the second case relating to
notification dated Janu-
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ary 10, 1977 acquiring 2.17 acres of land in T.S. No.135 of
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the nearby lands, the LAO had awarded at Rs.8.75 per sq. yd.
and the reference court determined its compensation at, Rs.
50/- per sq. yd., which was upheld on appeal by the High
Court. The fixation of market value of acquired lands as
prevailing in 1983-85 a Rs.150/- is not high. Claimant also
relied upon another award on reference which is the subject
matter in the first case and yet another award Ex.A12 in
O.P. No.6/85 which is pending in appeal in the High Court
apart from the sale deed Ex.AIO relied on and accepted by
the High Court in both the cases and Ex.A16 and 17 in the
first case.
5. The question, therefore, is what would be the market
value prevailing as on the respective dates of
notification. In the first case claimants have relied upon
two sale deeds Ex.A16 and 17 sold on February 2, 1983 from
the very same acquired land and claimed to be on the basis
of a lay-out said to have been obtained from the competent
authorities. According to the claimants, it would work out
at Rs. 150/- per sq. yd. Since the claimants themselves had
sold those lands to others, they would reflect the market
value of lards as prevailing near about the date of acqui-
sition and could be of assistance to determine the
compensation as on 1983. In the other case, the claimants
relied upon the very same award as also sale deed Ex. A. IO
in which the land sold is 120 sq. yd. for a sum of Rs.
16,000/- working out at Rs. 133/ - per sq. yd. The
reference court relied upon the Basic Valuation Register
maintained by the municipalities on the basis of the
notification issued by the Government under s.47-A of the
Stamp Act. In fact, the reference court mainly relied upon
that document and awarded compensation on its basis.
6. The admissibility and evidentiary value of the entries
in the Basic Value Register was considered by this Court in
Jawajee Nagnatham v. Revenue Divisional Officer, Adilabad,
A.P., 1994 (4) SCC 595. After an elaborate consideration
this Court held that the Basic Value Register is maintained
only for fiscal purpose of collecting stamp duty and
registration charges. The market value mentioned therein
cannot form a foundation to determine the compensation u/s.
23(1) of the Act. It is settled law that the market value
should be determined on the hypothesis of the price fetched
in the bona fide sale by a willing vendor who would agree to
sell the lands to a willing vendee of the acquired land or
the land in the neighborhood possessed of similar features.
The notification u/s.47(A) which is meant to be a guide for
collection of revenue cannot form the basis for
determination of market value of the land under s.23(1) of
the Act. The question of fixation of market value is a
paradox which lies at the heart of the law of compulsory
purchase of land. The paradox lies in the facts that the
market value concept is purely a phenomena evolved by the
courts to fix the price of land arrived between the
hypothical willing buyer and willing seller bargaining as
prudent persons without a medium of constraints or without
any extraordinary circumstances. But the condition of free
market is the very opposite of the condition of the
compulsory purchase which is ex-hypothesis, a situation of
constraints. Therefore, to say, that for compulsory
purchase, compensation is to be assessed and market value is
to be determined in that state of affairs has to be
visualised in terms by its direct opposite. To solve the
riddle, courts have consistently evolved the principle that
the present value as on the date of the compulsory
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acquisition comprised of all utility reached in a
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competitive field as on the date of the notification and the
price on which a prudent and willing vendor and a similar
purchaser would agree. The value of the land shall be taken
to be the amount that the land if sold in the open market by
a willing seller might be expected to realise from a willing
purchaser. A willing seller is a person who is a free agent
to offer his land for sale with all its existing advantages
and potentialities as on the date of the sale and willing
purchaser taking all factors into consideration would offer
to purchase the land as on the date of the sale. Future
suitability or adaptability of the land for any purpose
shall not be taken into account. The compensation must,
therefore, be determined by reference to the price which a
willing vendor might reasonably expect to obtain from a
willing purchaser as on the date of the notification
published under s.4(1). The disinclination of the seller to
part with his land and the urgent necessity of the vendee to
purchase the land must, alike, be disregarded and neither of
them must be considered as acting under compulsion.
7. The reasonable method to determine the market value of
the acquired land is on the evidence of transactions of bona
fide sales of acquired land , but not on evidence of sales
of such land got up having had knowledge of the proposed
acquisition, the former would furnish reasonable basis to
determine the compensation. In its absence, bona fide sales
but not manipulated sales of the lands in the neighbourhood
possessed of same or similar quality and having the same or
similar advantages would give an unerring assurance to the
court to determine just and proper compensation. Such sales
must not only be proved but also be bona fide transactions
etc. These factors must be established as a fact by
examining either the vendor or the vendee. Marking of
certified copies of sale deeds are not proof of either the
contents or the circumstances in which it came to be
executed. Bona fide sale or series of sales of small pieces
of land do not furnish the sole basis to determine market
value. Bona fide sales may furnish evidence of the market
conditions for consideration. Fixation of market value on
the basis of the basic valuation register is, therefore,
illegal and unsustainable.
8. Section 24 of the Act puts an embargo on the court that
it shall not take into consideration the degree of urgency
for the acquisition; disinclination of the person interested
to pan with possession of the acquired land; any increase in
the value of the land acquired likely to accrue from the use
to which it will be put when acquired; any increase to the
value of the other land of the person interested likely to
accrue from the use to which the land acquired will be put
to; any layout or improvements on or disposal of the ] and
acquired etc. without the sanction of the Collector or after
s.4(1) notification was published, special suitability or
adaptability of the land for any purpose or any increase in
the value of the land on account of its being put to any use
which is forbidden of law are opposed to public policy.
Therefore, in determining the market value and fixation of
the compensation, the court should be alive to these factors
and keep them at the back of the mind and should not be
influenced by the future or later development in the
locality or neighbourhood and should not get influenced by
the prevailing situation as on the date. of the
determination of the
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compensation. Its consideration should alone be confined
to the market value prevailing as on the date of the
notification under s.4(1).
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9.The question then is whether the High Court is right to
determine market value on the basis of Ex.A.10; reference
awards and potential values as house sites. It is seen that
in the first case 9.49 acres of land was acquired and in the
second case 14. 1 0 acres of land was acquired. For an
acquisition of such vast area, reliance of small extents of
land of 120 sq. yd. does not furnish any satisfactory basis
for fixation of the market value. Ex.A. 10 is of a small
extent and its value at Rs.133/- per sq. yd. offers no
assistance. The High Court, therefore, was clearly in error
in determining the market value solelyon the’ basis of Ex.A.
10 marked, in the second case to determine the market value
at enhanced rate of Rs. 150/-. It is at the height of the
illegality. The same document was marked in the first case.
Ex.A-16 and Ex.A-17 no doubt relate to the lands under
acquisition in the first case. It would be obvious that the
proposal for acquisition would take long time for its taking
final shape culminating in the issuance and publication of
the notification under s.4(1). The proposed acquisition
would be invariably within the knowledge of the owners of
the land. It is apparent from the dates of sale that they
were not bona fide sales between a willing vendor to a
willing vendee and price shown in the sale deeds were
inflated to boost up the market condition for determination
of compensation. Ex.A.3, the award and decree of the civil
court of 1977 acquisition wherein compensation at Rs.50/was
fixed is also based on the got up sales. These factors were
not critically examined either by the Reference court or the
High Court. So these sales also do not assist the
claimants. Equally Ex. A. 12 in O.P. No. 56 of 1985 is also
based on the basic value register and its foundation is
knocked of at its bottom by the decision of this court. For
the said reasons determination of compensation is vitiated
by application of wrong principles of law.
10. When we exclude these documents from consideration,
we do not have any other evidence except the fact that the
lands are situated near Eluru Municipality within the master
plan prepared for the municipal town. The finding recorded
by the LAO in the award was that there is no upward trend in
the prices, The High Court also accepted the, finding of the
reference court, that the lands, are interior though abut
the main road. It was also found that there are no
developmental activities in the neighbourhood as on the date
of notification, the LAO, therefore, treated these lands as
agricultural lands. In our view, he is right in treating
these lands correctly as agricultural lands.
11. Shri Tata Rao, the learned Senior counsel for the
claimants in the second case placed reliance on the judgment
of this Court reported in Gulzara Singh v. State of Punjab,
1993 (4) SCC 245, and contended that this Court had accepted
the potential value as a basis to determine the market
value, and accordingly, he contended that the lands being
situated within the municipal limits, have potential value
and that therefore, market value should be determined on
that basis. We find no force in the contention. In fixing
the market value on the basis of its potentiality for use
for building purposes, it must be established by evidence
aliunde that the potential purpose must exist as on the date
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of acquisition by other possible purchasers in the market
conditions, prevailing as on the date of the notification;
Existence of constructed house or construction activity in
other similar lands in the locality for the purpose
contended for or of purchase for such purposes as on the
date of proposed acquisition prima facie indicates that
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there is demand for and the possibility of the immediate
user of the land and it is a reasonable possibility to infer
that the acquired lands also are possessed of potential
value. Therefore, the existence of a demand for and a
market at the time of acquisition for potential use must be
established as a fact from reliable and acceptable evidence
to show that if the acquired land has been thrown into the
market, others would have bought it for the special purposes
or for building activity which would show the demand for and
a market to purchase the land possessed of potential value
for the purpose of building activity at that time. On proof
thereof the land must not be valued as though it has already
been built up but the possibility to use for building
purpose existing as on the date of the notification must be
taken into consideration. The question whether the land has
potential value as a building site or not is primarily one
of fact depending upon diverse factors as to its conditions,
the use to which it is put or is reasonably capable of being
put and its suitability for building purpose. Its proximity
to residential, commercial or industrial area, existence of
educational, cultural, industrial or commercial
institutions, existence of amenities like water,
electricity, drainage and the possibility of future
extension in that area, the existence of or prospects of
development schemes, the existence or absence of building
activities towards the acquired land or in the neighbourhood
thereof are the relevant facts to be taken into con-
sideration in evaluating the market value on the basis of
potential use of the land. it is true that an element of
guess, in an estimate, would have a play in determining the
market value. But the present value alone falls to be
determined and feats of imagination should not run riot or
travel beyond its manifest limits nor be an arbitrary or
whim of the court in determining the compensation or the
fixation of the market value. The existing conditions, the
demand for the land in the neighbourhood and other related
and relevant facts should be taken into consideration in
determining the compensation on the basis of potential value
of the land. In Gulzara Singh’s case, it was found that the
sale deed Ex.A.9 was a genuine sale deed between a willing
vendor and a willing vendee and it furnished the basis for
determination of the market value. It was also found that
the land was situated in the developing area and accordingly
this Court took those factors into consideration, and had
fixed the market value on the basis of potential value on
existing conditions.
12.Equally the decision in Inder Singh & Ors. v. U.O.L, 1993
(3) SCC 240, renders little assistance. In that case also,
it was found that abadi land fetched Rs’ 33,600/- per acre
and they had potential value for development, such as for
building houses etc. as in the immediate neighbourhood the
lands were developed for industrial purpose. Taking those
factors, this Court had determined the market value of abadi
lands at Rs.42,000/- and of other barani lands at
Rs.38,000/- In view of the nature of lands in that case,
this court had determined the market value at the rates
mentioned therein after recording the finding that the land
possessed of
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potential value. In the appeals on hand, if the sale deeds
are excluded from consideration, there is no other evidence
to consider that the lands are possessed of potential value
for building purposes. Though the acquisition was for
providing house sites to the poor, there is no building
activities in the neighbourhood, there is no rise in the
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market condition and since the lands are admittedly
agricultural lands as on that date, the fixation of the
market value as agricultural lands is just and fair, instead
of remanding the case as contended for by Sri Tata Rao for
further evidence.
13. In the first case the notification was of the year 1983
and in the second case it was of the year 1985. Taking
these factors into consideration, we find that the market
value for the lands covered in the first case could be
determined at Rs.65,000/- per acre and for the lands in the
second case the market value could be determined at
Rs.80,000/- per acre. The claimants are entitled to 12%
additional compensation under s.23(1-A) from the date of
notification till date of taking possession till date of
deposit into court. In the first case possession was taken
on March 15, 1985 and in the second case on May 25, 1985.
Therefore, 12% additional compensation shall be paid to the
claimants from the respective dates of s.4(1) notification
till the date of taking possession. The claimants are
entitled to solatium under s.23(2) at 30% and the interest
under s.28 at 9 % on the enhanced compensation from the date
of the taking possession for one year and 15% after the
expiry of one year till date of-deposit into the court.
14. The appeals are accordingly allowed. The award and
decree of the reference court under s.26 and the judgement
and decree of the High Court under s.54 are set aside. The
claimants are entitiled to the aforesaid amounts. In the
circumstances, parties are directed to bear their own
respective costs.
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