Radha Mudaliyar vs Spl. Tahsildar (Land Acq.), T.N.H. Board

a big well fitted with electric motor by incurring a cost of ` 1.5

lakh on the land in question. We may notice that various appellants had raised different claims on these grounds. The

Collector, as already noticed, had awarded compensation

uniformly at the rates mentioned supra while awarding

compensation separately for the well, trees, etc.

5. The parties led evidence before the Reference Court

and the Reference Court, vide its judgment dated 09.12.1988,

enhanced the compensation payable to the claimants to

`3,600/- per cent as agricultural land by relying upon Exhibits

A1, A4 and A5. The Reference Court granted the following

relief to the claimants:

"1) The valuation fixed by the lands acquired at Rs.110/- and Rs.145/- per cent, by the Land Acquisition Officer has been raised and a fresh valuation at Rs.3,600/- per cent is fixed for the entire area of the acquired lands;

2) The valuation at Rs.2,675/- per coconut tree, fixed by the Land Acquisition Tahsildar is held to be correct and confirmed;

3) The valuation for the well and the pump-set made by the Land Acquisition Tahsildar at Rs.44,487/- has been enhanced to Rs.1,76,862/- and fixed accordingly;

4) Further it is ordered that the claimant should be paid 30% solatium for the above amounts and interest at the rate of 12% from 23.1.1985 to 28.11.1986 and further 9% interest from 3.2.1987 to 2.2.1988. It is ordered that the sum of Rs.1,88,887.85 fixed as compensation by the Land Acquisition Tahsildar for the land, trees, well and pump-set should be deducted from the above amount. It is further ordered that the claimant is entitled to the interest at the rate of 15% per annum for the difference amount of compensation from 3.2.1988 till date of deposit of the compensation into Court."

6. Aggrieved by the said judgment of the Reference Court,

the Government, through the LAO, filed an appeal before the

High Court challenging the correctness of the same. The High

Court, vide its judgment dated 05.02.2001, declined to accept

the reasoning recorded by the Reference Court in its different

judgments under appeal and reduced the compensation

payable to the claimants at the rate of ` 2018/- per cent.

Thus, the High Court, while partially accepting the appeal of

the State, granted the following relief:

"Therefore, considering the fact the lands under acquisition are not developed at all, whereas, under adjoining lands are developed, deduction at the rate of 40% for prescribing the correct value by the learned Judge cannot be held to be erroneous. Therefore, we are of the considered view that the market value of the acquired lands can be determined by adopting the value as per Ex.A4, i.e. Rs.3,363/-, and after a deduction of 40% towards development charges, the market value will be Rs.2,018/- per cent. The claimant is entitled to compensation for the 7.06 acres of acquired lands at this rate, i.e., 14,24,708/-."

7. Before discussing the merits in these appeals, it needs

to be noticed that different sale instances were produced as

exhibits in different references. As far as the question of

enhancing the compensation awarded to the claimants on

account of trees, well and other improvements on the land in

question is concerned, we may notice that it is apparent from

the record of the case as well as the arguments addressed

before this Court that the correctness of the compensation

awarded by the Reference Court was hardly questioned before

the High Court and even before this Court. As there is no

serious challenge to the quantum of compensation awarded on

this account, we do not propose to discuss this issue any

further. Thus, only two issues have been raised before us,

namely: (a) that the High Court has not appreciated the

evidence on record in its correct perspective. The High Court

has applied deduction of 40% which, in the facts and

circumstances of the case, is not called for. This has resulted

in serious prejudice to the interest of the claimants and they

have not been awarded the fair market value of their acquired lands; and (b) they have not been awarded solatium and

interest in accordance with law.

DISCUSSION ON MERITS

8. In Civil Appeal No.5616 of 2004, the claimant is the

owner of land admeasuring 7.06 acres in a compact square

shape falling in Survey Nos.16 and 24/1 in the Revenue Estate

of Kadaperi village. Exhibits A1, A4 and A5 are the sale

instances from the same village which had been produced by

the claimant in support of her claim. Exhibits A2 and A3 are

the valuation reports in relation to the well and the pump on

the acquired land. Exhibit A6 is the photo copy of Kadaperi

village map. Exhibits A1, A4 and A5 are dated 7th November

1984, 12th March 1984 and 15th June 1984 respectively. The

Reference Court appears to have firstly relied upon Exhibit A5

and while assuming that value of the land under this exhibit

was ` 6,000/- per cent then proceeded to apply 40% deduction

on account of road facilities and the fact that these were the

sale instances relating to plots and resultantly awarded `

3,600/- per cent as the compensation payable to the claimants. Reference was also made to Exhibit A4 where the

land had been sold at the rate of ` 4,545/- per cent. The Court

noticed that value of the land had been increasing in the area

day-by- day and various facilities such as school, college,

hospital and banks were available quite near the acquired land

and even a Railway Station was located within a distance of

one kilometer. While taking Exhibit A4 as the basis, the

Reference Court erred in adding 40% increase to the reflected

value in the sale deed. The error is due to the reasons that

actual sale consideration of Exhibit A4 was ` 3363 per cent

and the intervening period between the date of the sale deed

and issuance of notification under Section 4 was not two years

as noticed by that Court. Though the compensation was

determined primarily on the basis of Exhibit A4, the learned

Reference Court noticed that the land in Exhibit A5 had been

sold at the rate of Rs.6,000/- per cent under that document.

This impression of the Reference Court is not supported by

any evidence on record as under Exhibit A5 the land was, in

fact, sold at the rate of ` 2,180/- per cent on 15.06.1984.

However, the learned Reference Court computed somewhat similar compensation with reference to the two Exhibits A4

and A5. It may be noticed that Exhibit A4 is three months

prior to the date of execution of Exhibit A5.

9. In Civil Appeal arising out of SLP (C) No. 9736 of 2004,

the Tahsildar vide Award No.5 of 1986 dated 29.11.1986 had

fixed the compensation at ` 145.85 per cent on the basis of

Exhibits A2 and A3 respectively. These documents, as well as

Exhibit A4 were considered to be inadmissible by the

Reference Court in its order dated 18.11.1990 and rejected as

they were neither the original sale deeds nor copies of

registered documents. The rejection thereof is not questioned

in the present appeals. The Court had primarily relied upon

Exhibit A1 and awarded the compensation. The High Court,

while adopting the reasoning given in its judgment in Civil

Appeal No. 5616 of 2004, reduced the compensation relying

upon Exhibit A4 in that case and after making 40% deduction

awarded the compensation.

10. In the backdrop of the above factual matrix and the

judgments of the Courts under appeal, this Court imprimus has to examine as to what would be the just and fair market

value of the land on the basis of which the compensation

payable to the claimants should be determined in terms of

Section 23 of the Act. It is a well settled principle of law that

comparable sale instances, subject to their satisfying the basic

ingredients of law, are the best piece of evidence to be

considered by the Court for the purpose of determining the

compensation. Even awards and transactions of the adjacent

areas have been treated as best evidence which will fall within

the zone of consideration by the Court. Of course, such

instances must be comparable and legally admissible in

evidence. In this aspect, we may refer to the judgments of this

Court in the case of Harcharan v. State of Haryana, [(1982) 3

SCC 408]; Kantaben Manibhai Amin vs. Special Land

Acquisition Officer, Baroda, [(1989) 4 SCC 662] and ONGC Ltd.

vs. Sendhabhai Vastram Patel, [(2005) 6 SCC 454]. Comparable sale instances are the safest method for

determining the market value of the acquired land and as laid

down in Shaji Kuriakose vs. Indian Oil Corporation, [(2001) 7

SCC 650], it should satisfy the factors, inter alia, (1) the sale must be genuine transaction; (2) the sale deed must have been

executed at the time proximate to the date of issuance of

notification under Section 4 of the Act; (3) the land covered by

the sale must be in vicinity of the acquired land; (4) the land

covered by the sale must be similar to the acquired land; and

(5) size of the plot of the land covered by the sale be

comparable to the acquired land. The sale instances should

preferably be closest to the date of the notification as then

alone it would satisfy the touchstone of the principles

contemplated under Section 23 of the Act, as held in Kanwar

Singh vs. Union of India, [(1998) 8 SCC 136].

11. In Civil Appeal No.5616 of 2004, three sale instances

were produced and proved by the claimants on the record of

the Reference Court. These are Exhibit A1, A4 and A5 and

their details are as follows :

EXHIBIT DATE OF AREA SOLD TOTAL SALE VALUE PER SALE DEED CONSIDERATION CENT A1 07.11.1984 5 Cents ` 20,000 ` 4,000/-

A5 15.06.1984 4.13 Cents ` 9,000 ` 2,180/-

A4 12.03.1984 5.5 Cents ` 18,500 ` 3,363/-

It needs to be noticed that all these lands are located

in the Revenue Estate of the same village from where the land

has been acquired. The land, subject matter of Exhibit A4 is

located in Survey No.165 and, as apparent from the above

table, admeasuring approximately 5.5 cents was sold for a

sum of `18,500/- and the rate comes to ` 3,363/- per cent.

However, it is in evidence that when this document was

presented for registration, the concerned Registrar made an

endorsement raising an objection with regard to the sale

consideration declared in the sale deed. According to the

Registrar, Mark A5 was the endorsement vide which the

parties were directed to pay stamp duty taking the value of

the land in question to be ` 25,000/-. The total sale

consideration being ` 25,000/-, the rate of the land would

come to ` 4,545/- per cent. This document was registered as

per endorsement on record on 15.6.1984 while the date of the

presentation and execution of the sale deed was 12.3.1984.

We would not like to go into the question whether as per

Exhibit A4 the sale consideration should be ` 18,500/- or it

should be ` 25,000/-. The question as to what is the effect of enhancement of the sale consideration by the Registrar for the

purpose of payment of stamp duty, on the market value of the

acquired land while determining the compensation payable to

the claimants, need not be examined by us. In this case, the

same is specifically kept open. For the purposes of the present

case, we would take the value of the land at the rate of ` 3,363

per cent.

Exhibits A1 and A5 again are the sale instances from

the same Revenue Estate and are quite close to the date of

notification under Section 4, Exhibit A1 is dated 7.11.1984

while Exhibit A5 is dated 15.6.1984. None of the parties to the

proceedings have questioned the genuineness, legality or

otherwise of these documents and, in fact, as it appears from

the record before us there is hardly any objection regarding

their admissibility or being read in evidence.

12. Now, let us examine whether Exhibits A1, A4 and A5

satisfy the above stated tests. They were admitted in evidence

in accordance with law as they are genuine transactions and

are the closest sale instances to the date of the notification as

available on record and the land, subject matter of the transaction, is quite similar to the acquired land and, in fact,

it is from the same village. Of course, the area, stated in these

sale instances, is comparatively much smaller in size than the

acquired land. The sale deed is dated 12.03.1984 while the

notification under Section 4 was issued on 23.01.1985. Thus,

there is a difference of nearly ten months between these two

dates. The claimants would be entitled to the benefit of

increase for this intervening period. Annual increase of 10%

to 15% is normally allowed by the court where the record

reflects increasing trend in the sale price of the land. This

principle is often applied by this Court while determining

compensation. Reference can be made to the judgments of

this Court in ONGC Ltd. vs. Rameshbhai Jivanbhai Patel

[(2008) 14 SCC 745] and Sardar Jogendra Singh (dead) by LRs.

vs. State of Uttar Pradesh [(2008) 17 SCC 133]. We have opted

to apply the minimum increase possible because of the short

intervening period between the execution of the sale deed and

issuance of notification under Section 4. Consequence of the

above addition would be that the value of the land in terms of

Exhibit A4 as on the date of the notification under Section 4 would be ` 3,699/- per cent rounded off to ` 3,700/- per cent

which, when reasonable deduction is applied, would give more

or less the same rate of compensation as computed by us on

the basis of Exhibit A1.

13. Now, the next question that arises is whether the

claimants would be entitled to receive the compensation at

this rate or certain element of deduction needs to be applied in

the facts and circumstances of the case. The deduction can be

applied for different aspects while determining compensation.

If the size of the plot is very small and the same has to be

taken into consideration for non-availability of other evidence

and where the land acquired is a large chunk of land, then it

would be advisable to apply some deduction on that score.

Reference in this regard may be made to Land Acquisition

Officer vs. Nookala Rajamallu [(2003) 12 SCC 334]. In

alternative or in addition thereto, deduction can also be

applied on account of wastage of land and development

charges. In the present case, the land has been acquired,

which apparently was an agricultural land at the time of

acquisition, to carry out the development scheme for the MEPZ sanctioned by the SIPCOT. The development purpose, being in

public interest, is bound to result in utilization of part of the

land for the purposes of roads, by-links, water & electricity

lines and other infrastructural amenities of the project. This

Court, depending on the facts and circumstances of the case,

has taken the view that deduction on account of expenses of

development of the sites could vary from 20% to 70%

depending on the nature of the land, its situation, the purpose

and stage of development as held by this Court in the case of

K.S. Shivadevamma vs. Assistant Commissioner and Land

Acqusition Officer [(1996) 2 SCC 62], Ram Piari vs. Land

Acquisition Collector, Solan [(1996) 8 SCC 338], Chimanlal

Hargovindas vs. Special Land Acquisition Officer, Poona [(1988)

3 SCC 751], Hasanali Walimchand (Dead) by Lrs.

vs. State of Maharashtra [(1998) 2 SCC 388[. In K.S.

Shivadevamma (supra), this Court held as under:

"10. It is then contended that 53% is not automatic but depends upon the nature of the development and the stage of development. We are inclined to agree with the learned counsel that the extent of deduction depends upon development need in each case. Under the Building Rules 53% of land is required to be left out. This Court has laid as a general rule that for laying the roads and other amenities 33-1/3% is required to be deducted. Where the development has already taken place, appropriate deduction needs to be made. In this case, we do not find any development had taken place as on that date. When we are determining compensation under Section 23(1), as on the date of notification under Section 4(1), we have to consider the situation of the land development, if already made, and other relevant facts as on that date. No doubt, the land possessed potential value, but no development had taken place as on the date, In view of the obligation on the part of the owner to hand over the land to the City Improvement Trust for roads and for other amenities and his requirement to expend money for laying the roads, water supply mains, electricity etc., the deduction of 53% and further deduction towards development charges @ 33- 1/3%, ordered by the High Court, was not illegal."

The above view was reiterated in the case of Nookala

Rajamallu (supra).

14. On similar lines, this Court in the case of V.

Hanumantha Reddy (Deceased) by Lrs. vs. Land Acquisition

Officer & Mandal R. Officer [(2003) 12 SCC 642], while

considering that the acquired land was adjacent to developed

land, held that neither its high potentiality nor its proximity to

a developed land can be a ground for not deducting the

development charges and that normally 1/3rd deduction could

be allowed.

15. We may also notice that the Courts would have to

apply some guess work while determining such a question

inasmuch as it is not always possible to determine the

quantum of compensation with exactitude or arithmetical

accuracy. Of course, this permissible guess work has to be

used with great caution and within the determinants of law

declared by this Court from time to time. This Court in the

case of Charan Dass (Dead) by Lrs. vs. H.P. Housing and Urban

Development Authority, [2009 (12) SCALE 293] held as under:

"10. Section 15 of the Act mandates that in determining the amount of compensation, the Collector shall be guided by the provisions contained in Sections 23 and 24 of the Act. Section 23 provides that in determining the amount of compensation to be awarded for the land acquired under the Act, the Court shall, inter alia, take into consideration the market value of the land at the date of the publication of the Notification under Section 4 of the Act. The Section contains the list of positive factors and Section 24 has a list of negatives, vis-a-vis the land under acquisition, to be taken into consideration while determining the amount of compensation. As already noted, the first step being the determination of the market value of the land on the date of publication of Notification under Sub- section (1) of Section 4 of the Act. One of the principles for determination of the market value of the acquired land would be the price that a willing purchaser would be willing to pay if it is sold in the open market at the time of issue of Notification under Section 4 of the Act. But finding direct evidence in this behalf is not an easy task and, therefore, the Court has to take recourse to other known methods for arriving at the market value of the land acquired. One of the preferred and well accepted methods adopted for ascertaining the market value of the land in acquisition cases is the sale transactions on or about the date of issue of Notification under Section 4 of the Act. But here again finding a transaction of sale on or a few days before the said Notification is not an easy exercise. In the absence of such evidence contemporaneous transactions in respect of the lands, which have similar advantages and disadvantages is considered as a good piece of evidence for determining the market value of the acquired land. It needs little emphasis that the contemporaneous transactions or the comparable sales have to be in respect of lands which are contiguous to the acquired land and are similar in nature and potentiality. Again, in the absence of sale deeds, the judgments and awards passed in respect of acquisition of lands, made in the same village and/or neighbouring villages can be accepted as valid piece of evidence and provide a sound basis to work out the market value of the land after suitable adjustments with regard to positive and negative factors enumerated in Sections 23 and 24 of the Act. Undoubtedly, an element of some guess work is involved in the entire exercise, yet the authority charged with the duty to award compensation is bound to make an estimate judged by an objective standard."

(emphasis supplied)

16. Despite the fact that both the Reference Court as well as the High Court have relied upon Exhibit A4 or A5 or both of

them, still they have arrived at drastically different rates of

compensation payable to the claimants. While the High Court

took the value of Exhibit A4 as ` 3,363/- per cent, without

adding any element of increase for the intervening period, it

applied deduction at the rate of 40% and awarded

compensation at the rate of ` 2,018/- per cent. On the other

hand the Reference Court took the total sale consideration of

Exhibit A4 as ` 25,000/- in place of ` 18,500/- and applied

40% increase while awarding compensation to the claimants.

Of course, the Reference Court also applied 40% deduction on

account of development charges and taking the gross value at

the rate of ` 6,000/- per cent awarded compensation at the

rate of `3,600/- per cent.

In our considered view, both the Reference Court as well as

the High Court have fallen in error of law in computing the

compensation payable to the claimants. On the one hand, the

High Court ignored an important aspect of the case in not

awarding enhancement in the value of the land as it had come

in evidence that there was increasing trend in the sale price of the land in that area. The documentary evidence of Exhibits

A1 and A4 also shows the increasing trend. On the other

hand, the Reference Court fell in error in giving 40% increase

for a short intervening period of ten months. Both the High

Court as well as the Reference Court had applied the

deduction at the rate of 40% but still awarded compensation

at antipodal rates.

Another reason which we must notice and, in fact, it is not

clear to us either from the judgment of the High Court or that

of the Reference Court as to why Exhibit A1 has not been

taken into consideration by both the Courts. In our view,

Exhibit A1 is the sale instance from the Revenue Estate of the

same village and is located close to the developed area. The

sale deed was executed only three months prior to the date of

notification under Section 4 of the Act and also reflected a

reasonable value where the land was sold at the rate of `

4,000/- per cent while as per Exhibit A4, the land was sold at

the rate of ` 3,363/- on 12.3.1984, thus, indicating increasing

trend in the value of the land. If appropriate increase is given

on the basis of Exhibit A4 for the intervening period and deduction at a reasonable rate less than 40% is applied, it will

approximately give the same rate of compensation as would be

computed with reference to Exhibit A1.

Now, let us examine the exact compensation payable to the

claimants with reference to Exhibit A1. Genuineness of

Exhibit A1 has neither been questioned nor held to be a

transaction which was executed only to enhance the value of

the acquired land. Exhibit A1 is a comparable piece of

evidence which can safely be relied upon by the Court while

determining the compensation in regard to the acquired land.

Learned counsel for the claimants, while relying upon the

judgment of this Court in Kasturi & Ors. vs. State of Haryana

[(2003) 1 SCC 354], contended that the acquired land has

great potential and is located adjacent to the developed land

and as such the deduction should not be more than 20% on

these counts. However, learned counsel appearing for the

respondents relied upon the other judgments already referred

by us supra that the deduction should not be less than 40%.

Having examined the facts and circumstances of the case and

the evidence on record, we are of the considered view that rule of approximately 1/3rd deduction can be fairly applied to the

present case. The land certainly has potential and even the

sale instances show that the land from the Revenue Estate of

the same village was sold as plots and a number of facilities,

as indicated above, were available in the vicinity. Examining

the cumulative effect of the evidence on record in relation to

location, potential and similarity of land, we consider it

appropriate that deduction of more than 30% would be

prejudicial to the interest of the claimants whose lands have

been acquired by the State in exercise of its power of eminent

domain. It is a compulsory acquisition and it is expected of

the State to be just and fair and award the compensation to

the claimants which satisfies mandate of law contained in the

provisions of Section 23 of the Act. Therefore, applying 30%

deduction to the value indicated in Exhibit A1 (deduction

being made both on account of size of the plot and

development charges), the claimants would be entitled to

receive compensation at the rate of ` 2,800/- per cent for the

acquired land. As in the other appeals, the High Court had

only relied upon its judgment which is impugned in Civil Appeal No.5616 of 2004, therefore, it is not necessary for us to

discuss the evidence in those cases in any further detail. The

claimants in all these appeals would be entitled to the same

rate of compensation.

17. The argument of the appellants is that they have been

denied solatium and interest by the High Court while referring

to the judgment of this Court in Prem Nath Kapur v. National

Fertilizers Corporation of India Ltd. [(1996) 2 SCC 71]. It is

contended that in view of the law clearly stated by this Court

in the case of Sunder v. Union of India [(2001) 7 SCC 211],

which has been consistently followed by different Benches of

this Court, the claimants are entitled to solatium as well as

the interest on the awarded amount. We find merit in this

contention.

18. The Constitution Bench of this Court in the case of

Sunder (supra) had clearly stated that the Court has to keep in

mind that the compulsory nature of acquisition is to be

distinguished from voluntary sale or transfer. In the latter,

there is a willing buyer and seller. In the case of acquisition, it

is compulsory and deprives the owner of an opportunity to negotiate and bargain the sale price of its land as it will

entirely depend on what the Collector or the court determines

as the amount of compensation in accordance with the

provisions of the Act. The solatium envisaged in sub-section

(2) of Section 23 is "in consideration of the compulsory nature

of acquisition". Thus, the solatium is not the same as

damages on account of the landowner's disinclination to part

with the land acquired. If such compensation as determined in

terms of Section 23 of the Act is not paid within one year from

the date of taking possession of the land, then in terms of

proviso to Section 34 interest shall stand escalated to 15% per

annum from the date of the expiry of the said period of one

year on the amount of compensation or part thereof which has

not been paid or deposited before the date of such expiry. The

Court further held that it is inconceivable that the solatium

amount would attract only the escalated rate of interest from

the expiry of one year and that there would be no interest on

solatium during the preceding period. Hence the person

entitled to the compensation awarded is also entitled to get

interest on the aggregate amount including solatium. It appears from the impugned judgment that the High Court had

relied upon the judgment of this Court in the case of Prem

Nath Kapur (supra) and the judgment of this Court in the case

of Sunder (supra) came to be pronounced after the judgment of

the High Court. While relying upon the law existing at that

time, the High Court had declined to grant the interest on

solatium but made it subject to the pronouncement in the

case of Kapur Chand Jain vs. State of Himanchal Pradesh

[(1999) 2 SCC 89], wherein this Court subsequently made a

reference to a larger Bench and the judgment in Sunder

(supra) came to be pronounced. In any case there can be no

doubt in law that the claimants are entitled to the solatium

and the interest thereupon at the rate specified in proviso to

Section 34 of the Act for the relevant period. Even in this

regard the judgment of the High Court, therefore, cannot be

sustained.

19. For the reasons aforestated we partially allow the

appeals of the appellants that the claimants/appellants would

be entitled to receive compensation at the rate of ` 2,800/- per

cent for the acquired land and the consequential benefits of Section 23(1)A. The claimants would also be entitled to get

interest on solatium according to proviso to Section 34B of the

Act. As already noted, the claimants have not pressed for any

enhancement for the superstructures namely well, trees, etc.

which, in any case, is hereby rejected.

20. In the facts and circumstances of the cases parties are

left to bear their own costs.

..

.....................................J. [Dr. Mukundakam Sharma]

....

...................................J. New Delhi, [Swatanter Kumar]

October 8, 2010.