Full Judgment Text
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PETITIONER:
SPL. TEHSILDAR LAND ACQN. VISHAKAPATNAM
Vs.
RESPONDENT:
SMT. A. MANGALA GOWRI
DATE OF JUDGMENT09/08/1991
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
KASLIWAL, N.M. (J)
CITATION:
1992 AIR 666 1991 SCR (2) 472
1991 SCC (4) 218 JT 1991 (3) 444
1991 SCALE (2)301
CITATOR INFO :
R 1992 SC2298 (10)
ACT:
Land Acquisition Act, 1894: Section 23--Acquisition of
land--Compensation--Market value--Fixation of--Principles to
be followed --Acquisition for housing scheme--Valuation of
land--Deduction from the market value for development of
land--Dependant on situation of land and need for develop-
ment.
Constitution of India, 1950: Article 136--Land Acquisi-
tion--Compensation--Valuation of land--When Supreme Court
would interfere.
HEADNOTE:
The respondent’s land admeasuring 5 acres-589-1/3 Sq.
yards was acquired by the State Government in 1963 for a
housing scheme and compensation at Rs.1.58 per Sq. yard was
awarded. On reference, the Civil Court enhanced the compen-
sation to Rs. 10 per Sq. yard with solatium at 15 per cent
and interest at 4 per cent. On appeal and cross appeals, the
High Court confirmed the award.
In the appeal before this Court, on behalf of the De-
partment, it was contended that the respondent had purchased
the land in question in 1961 in three documents at Rs.0.42
p. per sq. yard and sold in 1963 one acre of the land at
Rs.5 per sq. yard and, therefore, the deeds under which the
transactions took place reflected the prevailing market
value of the land in question, and courts below committed
grave error in relying on a decision of the High Court
awarding Rs. 10 per sq. yard in respect of another land
acquired under a Notification of 1961, and that when a large
extent of land was acquired for a housing scheme, at least
1/3 of the land should be deducted towards laying the roads,
setting up parks, drainage and other amenities.
Allowing the appeal, this Court,
HELD: 1.1 The market value postulated in Section 23(1)
of the Land Acquisition Act, 1894 is designed to award just
and fair compensation for the lands acquired. The word
"market value" would postulate price of the land prevailing
on the date of the publication of the notifica-
473
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tion under Section 4(1). In determining the market value of
the land, the price which a willing vendor might reasonably
expect to obtain from a willing purchaser would form the
basis. For ascertaining the market rate, the Court can rely
upon such transactions which would offer a reasonable basis
to fix the price. The price paid in sale or purchase of the
land acquired within a reasonable time from the date of the
acquisition of the land in question would be the best piece
of evidence. In its absence the price paid for a land pos-
sessing similar advantages to the land in neighbourhood of
the land acquired in or about the time of the notification
would supply the data to assess the market value. [475E-G]
Periya & Pareekanni Rubbers Lief. v. State of Kerala,
[1990] Supp. 1 SCR 362, referred to.
1.2 In the instant case, admittedly, the claimant pur-
chased land at Rs.0.42 p. and in a span of one year and four
months, sold at Rs.5 per sq yard. When the claimants them-
selves sold as a willing seller of an acre of land @ Rs.5
per sq. yard, if a large extent of five acres and odd under
acquisition is offered to be sold as a block, it would not
fetch higher rate but surely be negotiated for a lesser
rate, if not the same market value of Rs.5 due to time lag
of nine months. May be the payment of Rs. 10 per sq yard to
the owner of another land acquired in 1961 was a windfall.
Taking the totality of the facts and circumstances, the High
Court committed grave error in completely ignoring the sale
transactions of the lands under acquisition. In view of the
time lag, the prevailing market value of the land as on the
date of the notification would be Rs.6 per sq. yard. [476B,
E-G]
1.3 In Building Regulations, setting apart the lands for
development of roads, drainage and other amenities like
electricity etc. are condition precedent to approve lay out
for building colonies. Therefore, based upon the situation
of the land and the need for development, the deduction
shall be made. Where acquired land is in the midst of al-
ready developed land with amenities of roads, drainage,
electricity etc. then deduction of 1/3 would not be justi-
fied. In the rural areas housing schemes relating to weaker
sections, deduction of 1/4 may be justified. [477G-H, 478A]
Spl. Tehsildar, Vishakapatnam v. Rednam Dharma Rao &
Ors., CA No. 4187 of 1982 decided on July 17, 1990; Tribeni
Devi & Ors. v. Collector of Ranchi, [1972] 3 SCR 208 at 213;
Smt. Kaushalya Devi Bogre & Ors. etc. v. The Land Acquisi-
tion Officer, Aurangabad, [1984] 2 SCR 900; Vijay Kumar
Motilal v. State of Maharashtra, [1981] 2 SCC 719; Vijay-
singh Liladhar v. Special Land Acquisition Officer, [1983] 3
SCC
474
760; Spl. Land Acquisition Officer, Bangalore v.T. Adinaray-
an Setty, [1959] Sppl. 1 SCR 404 and The Tehsildar, Land
Acquisition, Vishakapatnarn v.P. Narasing Rao & Ors., [1985]
1 APLJ. 99, relied on.
1.4 In the instant case, 1/3 of the market value should
be deducted for development of the lands. [478B]
1.5 The market value is determined at Rs.6 per sq. yard
and after deducting 1/3 for development of lands, it would
be Rs.4 per sq. yard. [478C]
2. It is settled law that when wrong application of a
principle has been made or important points affecting valua-
tion have been overlooked or misapplied by the High Court or
Reference Court, this Court would, under Article 136 of the
Constitution, correct the same.
The Spl. Land Acquisition Officer, Bangalore v.T. Adina-
rayan Setty, [1959] Suppl. 1 SCR 404; Dattatrayaya Shankarb-
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hat Ambalgi and Ors. v. The Collector of Sholapur and Anr.,
AIR (1970) SC 850 [1971] 3 SCC 43; The Dollar Co. Madras v.
Collector of Madras, [1975] Suppl. SCC 403 and Padma Uppal
etc. v. State of Punjab & Ors., [1977] 1 SCR 329, relied on.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1351 of
1976.
From the Judgment and Order dated 24.11. 1975 of the
Andhra Pradesh High Court in A.S. No. 691 of 1972.
T.V.S.N. Chari for the Appellant.
A. Subba Rao and A.D.N. Rao for the Respondents.
The Judgment of the Court was delivered by
K. RAMASWAMY, J.This appeal by special leave arises
against the Division Bench judgment dated November 24, 1975
in A.S. No. 691 of 1972 of the A.P. High Court fixing the
market value @ Rs. I0 per square yard. The facts lie in a
short compass are stated thereunder. By notification under
section 4(1) of the Land Acquisition Act 1894 (in short ’the
Act’) was published in the State Gazette on November 21,
1963 to acquire 5 acres-589-1/3 sq. yards in T.S. No. 981,
Block No. 34 of Waitair Ward, Vishakapatnam for a housing
scheme. The Collector
475
awarded at Rs. 1.58 per sq. yard and on reference, the Civil
Court enhanced the compensation to Rs. 10 per sq. yard with
solatium at 15 per cent and interest at 4 per cent. The
respondent claimed @ Rs. 12 per sq. yard. On appeal and
cross appeals the High Court confirmed the award and dis-
missed the appeal as well as cross objections for enhance-
ment to Rs. 12 per sq. yard. Two contentions have been
raised by Shri Narsimahachari, the learned counsel for the
appellant. Under Ex. B. 6 dated August 3, 1961; under Ex.
B-7 dated Sept. 5, 1961 and Ex. B-8, dated Sept. 8, 1961 the
respondent purchased one acre-1936 sq. yards in each docu-
ments in the same T.S. No. 981 @ -0.42 p. per sq. yard. He
sold on January 24, 1963 in an extent of one acre under Ex.
B. 10 @ Rs.5 per sq. yard. Therefore,’ the aforesaid sale
deeds, Ex. B. 6, B. 7, B. 8 and B. 10 will reflect the
prevailing market value of the land in question. The Trial
Court and the High Court committed grievous error in placing
reliance on a decision of the High Court in A.S. No. 191 of
1967 dated November 11, 1970 awarding @ Rs. 10 per sq. yard
in respect of 6,209 sq. yards in T.S. No. 1008, Block No.
39, Waitair Beach Road which was acquired under a notifica-
tion dated March 19, 1961 for the purpose of Caltex Oil
Refinery. The price fixed therein does not reflect the
correct market value while the bona fide sale deed of pur-
chase and sale by the respondents relating to the acquired
land are available on records and form correct basis. The
courts below committed grave error of law in completely
excluding those sale transactions and relying upon that
judgment. We find force in the contention, though Shri Subba
Rao, learned counsel for the respondent vehemently resisted,
it. It is settled law by catena of decisions that the market
value postulated in s. 23(1) of the Act designed to award
just and fair compensation for the lands acquired. The word
"market value" would postulate price of the land prevailing
on the date of the publication of the notification under
section 4(1). This Court repeatedly laid the acid test that
in determining the market value of the land, the price which
a willing vendor might reasonably expect to obtain from a
willing purchaser would form the basis to fix the market
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value. For ascertaining the market rate, the Court can rely
upon such transactions which would offer a reasonable basis
to fix the price. The price paid in sale or purchase of the
land acquired within a reasonable time from the date of the
acquisition of the land in question would be the best piece
of evidence. In its absence the price paid for a land pos-
sessing similar advantages to the land in the neighbourhood
of the land acquired in or about the time of the notifica-
tion would supply the data to assess the market value. It is
not necessary to cite all the decisions suffice to state
that in a recent judgment in Periya & Pareekanni Rubbers
Ltd. v. State of Kerala, [1990] Supp. 1 SCR
476
362 a bench of this Court, to which one of us K.R.S., J.,
was a member surveyed all the relevant precedents touching
the points. In the light of the settled legal position let
us consider whether the High Court and the Civil Court are
justified in excluding the sale deeds completely and to
place reliance on another judgment of the Division Bench of
the High Court of A.P. Admittedly, the claimant is a vendee
in Ex. B. 6 to B. 8 @ -0.42 paise. In a span of one year and
four months, they sold @ Rs.5 per sq. yard; It is common
knowledge that proposal for acquisition would be known to
everyone in the neighbourhood, in particular, to the owners
of the property and it is not uncommon that sale transac-
tions would be brought into existence before the publication
of s. 4(1) notification so as to form the basis to lay
higher claim for compensation. We do assume that Ex. B. 10
is a genuine and bona fide sale transaction. In respect of
one acre of the land in the self-same land when sold at Rs.5
per sq. yard, would it fetch in a short period of nine
months, double the market value, namely. @ Rs. 10 per sq.
yard. We have no doubt that it would not get that price for
5 acres and odd area. It is undoubted that in respect of a
notification of 1961 in which another T.S. number in the
locality, namely, T.S. No. 1008, ultimately, the High Court
awarded @ Rs. 10 per sq. yard. Perhaps had there been no
bona fide or genuine sale transaction relating to the self-
same land, the reliance placed on that judgment may be
justified but exclusion of bona fide and genuine sale trans-
actions in respect of the same land under acquisition and to
place reliance on the award of some other land is obviously
illegal. When the claimants themselves sold as a willing
seller of an acre of land @ Rs.5 per sq. yard large extent
of five acres and odd under acquisition, if it is offered
to be sold as a block, it would not fetch higher rate but
surely be negotiated for a lesser rate if not the same
market value @ Rs.5 due to time lag of nine months. No
attempt was made by the respondent to explain under what
circumstances they came to sell their lands @ Rs.5 per sq.
yard when they expect higher value @ Rs. 10 per sq. yard.
May be the payment of Rs. 10 per sq. yard, be wind fall to
the owner of the land in T.S. No. 1008 Taking the totality
of the facts and circumstance, we hold that the High Court
committed grave error to completely ignore the sale transac-
tions of the lands under acquisition. In view of the time
lag we have no hesitation to conclude that the prevailing
market value of the land as on the date of the notification
would be Rs.6 per sq. yard.
It is next contended by Shri Narsimahachari that
when a large extent of land was acquired for a housing
scheme, at least 1/3 of the land should be deducted towards
laying the roads, setting up parks,
477
drainage and other amenities. The High Court committed
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manifest error in omitting to deduct 1/3 of the land.
Shri Subba Rao, the learned counsel for the respondent
contended that the High Court had noted this contention of
the appellant and considered that the market value of the
land would be Rs. 12 per sq. yard and after giving the
deduction of 1/3 it would come to Rs. 10. The reasoning of
the High Court is proper and warrants no interference. In
support thereof he placed reliance in Spl. Tehsildar, Visha-
kapatnam v. Rednam Dharma Rao & Ors., C.A. No 4187 of 1982,
dated July 17, 1990 wherein this Court had upheld the deduc-
tion of 1/5 from the market value towards developmental
charges. It is settled law that the High Court and the
Reference court when made wrong application of a principle
or important points effecting valuation has been over looked
or misapplied, this Court would under Art. 136 correct the
same, vide The Spl. Land Acquisition Officer, Bangalore v.T.
Adinarayan Setty, [1959] Suppl. 1 S.C.R. 404; Dattatrayaya
Shankarbhat Ambalgi and Ors. v. The Collector of Sholapur
and Anr., AiR 1970 SC 850-’[1971] 3 S.C.C. 431; The Dollar
Co., Madras v. Collector of Madras, [1975] Supp. SCC 403 and
Padma Uppal Etc. v. State of Punjab & Ors., [1977] 1 SCR
329.
In Tribeni Devi & Ors. v. Collector of Ranchi, [1972] 3
S.C.R. 208 at 2 13, this Court held that "in order to devel-
op that area at least the value of 1/3 of the land will have
to be deducted for roads, drainage and other amenities". On
this basis the value of the land at Rs.2,08,135.70 per acre
would, after the deduction of 1/3 come to Rs. 1,38,757 per
acre. In Smt. Kaushalya Devi Bogre & Ors. etc. v. The Land
Acquisition Officer, Aurangabad, [1984] 2 S.C.R. 900 this
Court held that deduction of 1/3 was held to be reasonable.
In Vijay Kumar Motilal v. State of Maharashtra, [1981] 2 SCC
7 19 i/3rd was deducted towards developmental charges in
undeveloped area. In Vijaysingh Liladhar v. Special Land
Acquisition Officer, [1988] 3 SCC 760 the deduction of i/4th
by the High Court which was not challenged in this court was
upehld. In Spl. Land Acquisition Officer, Bangalore v. T.
Adinarayan Setty, supra, deduction of 25 per cent was held
to be reasonable. It is to be noted that in building Regula-
tions, setting apart the lands for development of roads,
drainage and other amenties like electricity etc. are condi-
tion precedent to approve lay out for building colonies.
Therefore, based upon the situation of the land and the need
for development the deduction shall be made. Where acquired
land is in the midst of already developed land with ameni-
ties of roads, drainage, electricity etc. then deduction of
1/3 would not be justified. In the
478
rural areas housing schemes relating to weaker sections
deduction 1/4 may be justified. On that basis, this court in
R. Dharma Rao’s case upheld deduction of 1/5 because the
owner while obtaining the lay out had already set apart
lands for road and drainage. Therefore, deduction of 1/3
would be reasonable. In fact in The Tehsildar, Land Acquisi-
tion, Vishakapatnam v.P. Narasing Rao & Ors., [1985] 1
A.P.L.J. 99, a Division Bench of the High Court surveyed
judgments of the High Court relating to housing schemes of
Vishakapatnam upholding deduction of 1/3 to be reasonable.
Accordingly we hold that 1/3 of the market value should be
deducted for development of the lands. The High Court com-
mitted greivous error in giving a curious reasoning of
valuing at Rs. 12 and upholding Rs. I0 to be the market
value after deduction, though *.he market value was deter-
mined at Rs. 10. Accordingly the appeal is allowed. The
market value is determined at Rs.6 per sq. yard and after
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deducting 1/3 the market value is Rs.4 per sq. yard. The
respondents are entitled to 15 per cent Solatium on market
value and 4 per cent interest thereon from the date of
dispossession. But in the circumstances parties are directed
to pay and receive their own costs.
N.P.V. Appeal al-
lowed.
479