Anjani Molu Dessai vs State Of Goa & Anr

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8042 OF 2004

Anjani Molu Dessai ... Appellant

vs.

State of Goa & Anr. ... Respondents

O R D E R

R.V. RAVEENDRAN J.

An area of 3,65,375 sq.m. of land in Balli

Village, Quepem Taluk, Goa was acquired for laying the New

Broad Gauge line for Konkan Railway in pursuance of

preliminary notification dated 27.6.1991 (published on

30.7.1991) and final declaration dated 4.11.1991. The

acquisition included parts of survey Nos. 45/1, 45/5, 45/6,

51/1 and 51/2 of Balli village measuring 60343 sq.m. (for

short the `acquired lands') belonging to the appellant. The

Land Acquisition Collector, by his Award dated 7.12.1993,

awarded compensation at the rate of Rs.12/- per sq.m. for

bharad (orchard) lands and Rs.6/- per sq.m. for irrigated

(paddy) lands. The Reference Court and the High Court affirmed

the said valuation by rejecting the reference and appeal by the appellant. The refusal to increase the compensation is

under challenge in this appeal by special leave. The only

question that arises for consideration is whether compensation

awarded, should have been at a higher rate.

Description, Location and potential of the land

2. AW-1 (power of attorney holder of the

appellant) has given evidence stating that the acquired lands

are level lands, fit for construction; that all amenities and

facilities including a market, a school, a hospital, temple

and the village panchayat office are situated within a

distance of half kilometer; that there is an access road right

upto the acquired lands and the bus stop is also within half a

kilometer; that electricity, water and telephone facilities

are available for the acquired lands; and that there are

houses within a distance of 50 meters from acquired lands. He

has also stated that the acquired lands are orchard lands with

coconut, cashew, mango, jackfruit and other trees, with houses

and a well. The Land Acquisition Collector has also confirmed

in the Award that the lands are situated in Balli village;

that the major portion of the lands with several structures

and a well, lies on the eastern side of National Highway from

Margao to Karwar. The award also states that the major portion

of acquired lands is bharad (orchard) land consisting of

cashew, coconut and other fruit bearing trees and some small portions are paddy fields.

3. The High Court has also referred to the

situation of the property and has noted that the acquired

lands are in a village where all basic amenities like primary

health centre, high school, post office were available within

a distance of 500 meters. It can therefore be safely concluded

that the acquired lands are not undeveloped rural land, but

can be urbanisable land situated near a developed semi-urban

village with access to all infrastructure facilities.

Basis of compensation awarded

4. The Land Acquisition Collector has relied upon two

sale transactions in his award to arrive at the market value of

the acquired lands.

4.1 The first is a Sale Deed dated 30.8.1989 relating to sale

of 2055 sq.m. of land in survey No.83 which is situated at a

distance of 200 m. from the acquired lands which was sold at the

rate of Rs.43.80 per sq.m. The Award states that the land sold

under the deed dated 30.8.1989 is a developed bharad type of

land with approach road. Therefore it is similar to the acquired

lands. The description of the land and the extent of the land

sold, make it clear that what was sold was an orchard land and

not a residential plot. To arrive at the market value of the acquired land, the Land Acquisition Collector deducted 45% from

the sale price of Rs.43.80 per sq.m., towards `development

cost', i.e. providing approach roads and open spaces, expenses

relating to development work, conversion charges etc. He thus

arrived at the value of the undeveloped plot as Rs.24 per sq.m.

As there was a gap of 23 months between the date of the said

sale and the date of preliminary notification in this case, the

Collector provided a cumulative increase at the rate of 14.5%

per annum over the said Rs.24/- to arrive at the market value as

on 30.7.1991 as Rs.32.24 per sq.m.

4.2) The second sale deed relied upon by the Collector

is dated 30.1.1990 and related to the sale of 7600 sq.m. of land

in survey No.77 of Balli Village situated at a distance of one

km from the acquired land, sold at the rate of Rs.3 per sq.m. As

there was a gap of about 18 months between the date of the said

sale deed and the date of preliminary notification, the

collector provided a cumulative rate of 14.5% per annum over

Rs.3/- and arrived at the market value on 30.7.1991 as Rs.3.82

per sq.m.

5. The Collector next averaged the said two rates

derived from the sale prices under the two sale deeds (that is,

Rs.32.24 per sq.m. and Rs.3.82 sq.m.) and arrived at the market

value for bharad type of land as Rs.18 per sq.m. However, as the Collector had separately valued and awarded compensation for the

trees (that is Rs.24,14,677/- for the entire 3,65,375 per sq.m.

acquired) he was of the view that the average value of trees per

sq.m. would be around Rs.6/- and that should be deducted from

the said market value of Rs. 18 per sq.m. He thus awarded

compensation at the rate of Rs.12 per sq.m. for the bharad land.

Thereafter he determined the rate of paddy lands as Rs.6/- per

sq.m.

The appellant's claim

6. The appellant contended that the market value

determined by the Land Acquisition Collector was very low and

sought compensation at the rate of Rs.250/- per sq.m. The

appellant contended that the Reference Court and the High

Court had erroneously rejected the evidence produced, that is

three comparable sales which showed that the market value was

much more. The three exemplar sale deeds relied upon by the

land owner relating to the said village were: (i) sale deed

dated 6.1.1989 under which an extent of 2000 sq.m. land with

trees was sold at a rate of Rs.100/- per sq.m.; (ii) sale deed

dated 7.3.1991 whereby 896 sq.m. of land at a distance of 300

m. from the acquired lands was sold at a price of Rs.150/- per

sq.m.; (iii) sale deed dated 3.4.1991 whereby 300 sq.m. of

land situated at a distance of 200 meter was sold at a price

of Rs.221.66 per sq.m. The respondents, on the other hand, contended that the three exemplars were rightly rejected and

the valuation by the Land Acquisition Collector was rightly

upheld.

Valuation of the acquired lands

7. The appellant examined the purchasers under the

Sale Deeds dated 7.3.1991 (Ex.AW 1/C) and 3.4.1991((Ex.AW

1/D). The purchaser in regard to Sale Deed dated 6.1.1989 was

not examined. However, the power of attorney holder of the

appellant (AW-1) has referred to the said Sale Deed dated

6.1.1989. On careful consideration, we find that the reference

Court and the High Court have rightly refused to rely upon the

said three Sale Deeds for determination of the market value of

the acquired lands.

7.1) The first Sale Deed dated 6.1.1989 related to a sale by

the owner of a land to his own company, that is, a private

limited company of which he was the Director. Such a sale can

not normally be treated as an independent sale by a willing

seller to a willing buyer. No one connected with the sale was

examined to establish that it was a sale at market value. This

sale was therefore rightly rejected.

7.2) The second Sale Deed dated 7.3.1991 was in respect of a

small area measuring 28 m. x 32 m. (896 sq.m.) which was carved out of a residential property situated within the

village abadi of Balli, adjoining the Government Hospital. It

was purchased for the purpose of construction of shop. The

acquired lands are agricultural orchard lands situated away

from the village abadi area. Therefore the said sale deed does

not relate to a comparable land.

7.3) The third Sale Deed dated 3.4.1991 also related to the

sale of a part of a residential property in the village abadi

area and related to a corner plot measuring 300 sq.m. situated

at a distance of 50 m. from Balli market. That sale also does

not relate to a comparable land.

8. We are of the view that the concurrent

rejection of these three Sale Deeds by the Reference Court and

High Court are therefore proper and do not call for

interference. If the said three Sale Deeds are excluded, there

is no other evidence from the appellant's side for determining

the market value. However there is no need for a remand, as

reasonable material is otherwise available for determination

of market value in the form of two sale transactions that were

relied upon by the Land Acquisition Collector himself in his

award.

9. As already noticed, the sale deed dated 30.8.1989

relates to sale of similar bharad land in Sy.No.83 of Balli Village. The extent of the land sold was about half an acre. The

distance between the acquired lands and the land in Sy.No.83

sold under the deed dated 30.8.1989, was hardly 200 meters. The

said sale therefore relates to a comparable land and furnishes a

reasonable basis for assessing the market value of the acquired

land, by providing appropriate increase to cover the

appreciation in prices during the gap of about two years between

30.8.1989 (date of sale deed) and 30.7.1991 (date of publication

of the preliminary notification).

10. The Land Acquisition Collector however committed a

serious error in deducting 45% from the sale price disclosed

by the Sale Deed dated 30.8.1989 towards the cost of

development. It is well settled that deduction for development

cost has to be made only where the value of a small

residential/commercial/industrial plot of land in a developed

layout is made the basis for arriving at the market value of a

nearly large tract of undeveloped agricultural land. Where the

land sold under the relied upon sale deed and the acquired

lands are both are of similar nature (as in this case where

both are bharad lands) the question of making any deduction

towards development cost to arrive at the cost of `undeveloped

land' would not arise. Such a deduction would have been

necessary if the sale deed relied upon related to a developed

residential or commercial plot. Therefore, we are of the view

that the Land Acquisition Collector was not justified in making 45% deduction from the price disclosed by the Sale Deed

dated 30.8.1989.

11. The Sale Deed relied upon by the Land Acquisition

Collector was dated 30.8.1989. The relevant date for

determination of compensation is 30.7.1991. Having regard to

the fact that acquired lands were in an urbanisable area with

readily available infrastructural facilities, we are of the

view that the cumulative increase of 14.5% per annum adopted

by the Collector in his award, would be appropriate. By

providing such increase, for two years, we would be able to

arrive at the market value of the acquired land as on the date

of publication of the preliminary notification. By providing

such appreciation at 14.5% for two years on the base price of

Rs.43.80 per sq.m. the market value as on 30.7.1991 for the

acquired bharad lands would be Rs.57.42, rounded of to

Rs.57.50 per sq.m.

12. The next question that arises for consideration is

whether the compensation should be determined only with

reference to the said sale deed dated 30.8.1989 or whether the

other Sale Deed dated 31.1.1990 relied upon by the Land

Acquisition Collector, whereby 7600 sq.m. of land in Sy.No. 77

at a distance of one kilometer was sold at the rate of Rs.3/-

per sq.m. should also be taken note of by averaging the two

prices. As against the Sale Deed dated 30.8.1989 which was in regard to a land situated at a distance of 200 meters, the

Sale Deed dated 31.1.1990 related to a land which was more

than one kilometer away. There is nothing to show that it was

similar bharad land. Further the very fact that the first Sale

Deed which is relied upon and accepted by the Land Acquisition

Collector as relating to a comparable land is at a price of

Rs.43.80 per sq.m., would demonstrate that the second sale

deed showing a very low sale price of Rs.3/- per sq.m. cannot

be considered to be a comparable sale. When the second sale

deed relied upon is at a rate which is only 1/15 th of the price

disclosed by the first sale deed, obviously they are not

comparable sales. Further the award of the Collector

specifically states that the land sold under sale deed dated

30.8.1989 is a similar land, that is, a bharad land at a

distance of 200 meter. Significantly there is no such finding

that the subject matter of the second sale dated 31.1.1990

which was one kilometer away, was a similarly situated land.

The sale deed dated 31.1.1990 should therefore be inferred to

be either an undervalued sale or a distress sale or at all

events not a comparable sale. The Land Acquisition Collector

was not therefore justified in averaging the sale prices of

the two sale deeds. Once it is found that the first sale deed

was in regard to a comparable land and the second sale deed

was not in regard to a comparable land, the second sale deed

dated 31.1.1990 ought to have been excluded from

consideration.

13. The legal position is that even where there are several

exemplars with reference to similar lands, usually the highest

of the exemplars, which is a bona fide transaction, will be

considered. Where however there are several sales of similar

lands whose prices range in a narrow bandwidth, the average

thereof can be taken, as representing the market price. But

where the values disclosed in respect of two sales are

markedly different, it can only lead to an inference that they

are with reference to dissimilar lands or that the lower value

sale is on account of under-valuation or other price

depressing reasons. Consequently averaging can not be resorted

to. We may refer to two decisions of this Court in this

behalf.

13.1) In Sri Rani M. Vijayalakshmanna Rao Bahadur, Ranee of

Vuyyur Vs. The Collector of Madras, 1969 (1) MLJ 45, a three

Judge Bench of this Court observed that the proper method for

evaluation of market value is by taking the highest of the

exemplars and not by averaging of different types of sale

transactions. This Court held:

"It seems to us that there is substance in the first contention of Mr.Ram Reddy. After all, when the land is being compulsorily taken away from a person, he is entitled to say that he should be given the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition. It is not disputed that the transaction represented by Exhibit R-19 was a few months prior to the notification under section 4, that it was a bona fide transaction and that it was entered into between a willing purchaser and a willing seller. The land comprised in the sale deed is 11 grounds and was sold at Rs.1,961 per ground. The land covered by Exhibit-27 was also sold before the notification, but after the land comprised in Exhibit R-19 was sold. It is true that this land was sold at Rs.1,096/- per ground. This, however, is apparently because of two circumstances. One is that betterment levy at Rs.500 per ground had to be paid by the vendee and the other that the land comprised in it is very much more extensive, that is about 93 grounds or so. Whatever that may be, it seems to us to be only fair that where sale deed, pertaining to different transactions are relied on behalf of the Government, that representing the highest value should be preferred to the rest unless there are strong circumstances justifying a different course. In any case we see no reason why an average of two sale deeds should have been taken in this case."

13.2) In State of Punjab Vs. Hans Raj (1994) 5 SCC 734, this

court held:

"Having given our anxious consideration to the respective contentions, we are of the considered view that the learned single Judge of the High Court committed a grave error in working out average price paid under the sale transactions to determine the market value of the acquired land on that basis. As the method of averaging the prices fetched by sales of different lands of different kinds at different times, for fixing the market value of the acquired land, if followed, could bring about a figure of price which may not at all be regarded as the price to be fetched by sale of acquired land. One should not have, ordinarily recourse to such method. It is well settled that genuine and bona fide sale transactions in respect of the land under acquisition or in its absence the bona fide sale transactions proximate to the point of acquisition of the lands situated in the neighbourhood of the acquired lands possessing similar value or utility taken place between a willing vendee and the willing vendor which could be expected to reflect the true value, as agreed between reasonable prudent persons acting in the normal market conditions are the real basis to determine the market value."

Therefore, we are of the view that the averaging of the prices

under the two Sale Deeds was not justified. The Sale Deed dated 31.1.1990 ought to have been excluded for the reasons

stated above. That means compensation for the acquired lands

had to be fixed only with reference to the Sale Deed dated

30.8.1989 relied upon by the Land Acquisition Collector which

will be Rs.57.50 per sq.m. As the said market value has been

fixed with reference to comparable bharad land with fruit

trees, the question of again separately awarding any

compensation for the trees situated in the acquired land does

not arise.

14. The Land Acquisition Collector had valued the trees at

Rs.6/- per sq.m. to arrive at the value of the lands without

trees. On that basis the market value of paddy land situated

amidst the bharad land can be arrived at by deducting Rs.6/-

per sq.m. In the absence of any other evidence, we fix the

said rate for paddy land on that basis, that is, Rs.51.50 per

sq.m.

Conclusion

15. The appellant will thus be entitled to compensation at

the rate of Rs.57.50 per sq.m. in respect of bharad land

without any additional or separate compensation for trees. The

appellant will be entitled to compensation at the rate of

Rs.50/- per sq.m.

16. We, accordingly, allow this appeal in part as follows:

(i) The compensation for the acquired lands (bharad lands) is increased to Rs.57.50 per sq.m. (instead of Rs.12/- per sq.m. plus value of trees awarded by the LAC) and Rs.51.50 per sq.m. for paddy lands (as against Rs.6/- per sq.m. awarded by the LAC)

(ii) The respondent shall pay to the appellant, additional amount under Section 23(1A) of Land Acquisition Act, 1894, at 12% per annum from 30.7.1991 to 17.3.1992 (date of taking possession) and solatium at 30% under Section 23(2) of the said Act, on the compensation amount.

(iii) The respondents shall pay to the appellant, interest at the rate of 9% per annum from 30.7.1991 for a period of one year and 15% per annum thereafter till date of deposit under Section 28 of the said Act on the amount awarded in excess of what was awarded by the Land Acquisition Collector.

(iv) The award made in regard to structures is not disturbed.

(v) Appellant will be entitled to costs through out from the respondents.

...................J. ( R.V. RAVEENDRAN )

New Delhi ..................J. December 07, 2010. ( A.K. PATNAIK )