Vithal Rao And Anr Etc vs The Special Land Acquisition Officer

CIVIL APPEAL Nos.1645-1647 OF 2016

Vithal Rao & Anr. Etc. ….Appellant(s) VERSUS The Special Land Acquisition Officer .…Respondent(s)

WITH

CIVIL APPEAL No.1648 OF 2016 Annappa since dead by His Lrs. & Ors. ….Appellant(s) VERSUS The Special Land Acquisition Officer .…Respondent(s)

JUDGMENT

Abhay Manohar Sapre, J.

1) These appeals are filed by the land owners against the

final judgment and order dated 07.07.2014 passed by the

High Court of Karnataka, Circuit Bench at Dharwad in M.F.A.

No. 25301, 25302, 25303 and 25304 of 2012 whereby the Signature Not Verified Digitally signed by NARENDRA PRASAD Date: 2017.10.24 High Court allowed the appeals in part and modified the 17:25:31 IST Reason:

Award dated 24.08.2012 passed in LAC Nos. 107, 106, 108

1 and 109 of 2004 by the Court of Senior Civil Judge, Mudhol

and re-determined the compensation at Rs.13,93,920/- per

acre as against Rs.6,75,000/- per acre with all statutory

benefits as envisaged under Section 23 of the Land Acquisition

Act, 1894 (hereinafter referred to as “the Act”) .

2) We herein set out the facts, in brief, to appreciate the

issues involved in these appeals.

3) The respondent, by Notification dated 25.01.2003 issued

under Section 4(1) of the Act followed by final Notification

dated 26.03.2003 issued under Section 6(1) of the Act,

acquired the lands belonging to the appellants in Survey No.

554/1 measuring 16 acres 27 guntas, Survey No. 554/2

measuring 15 guntas, Survey No. 555/2 measuring 3 acres 34

guntas and Survey No. 553/A/1 measuring 9 acres 14 guntas

(total 30.8 guntas approx.) situated at Mudhol village and

Taluk for the purpose of construction of Rehabilitation Centre

in favour of the displaced persons of Gudadinni Village of

Bilagi Taluk, whose properties came to be submerged under

Upper Krishna project.

4) By awards dated 22.07.2003, the Special Land

Acquisition Officer determined the market value of the

acquired lands at the rate of Rs.96,164/- per acre.

2

5) Being aggrieved by the awards made by the Land

Acquisition Officer, the appellants (land owners) sought

reference to the Senior Civil Judge, Mudhol under Section

18(1) of the Act and claimed compensation at the rate of

Rs.300/- to Rs.350/- per sq. ft. for the acquired lands inter

alia on the ground of building potentiality and comparable sale

deeds of the several plots in the vicinity of the acquired lands.

Their applications were registered as LAC Nos. 107, 106, 108

and 109 of 2004. The Reference Court clubbed them

together and recorded common evidence in LAC No.

107/2004.

6) By common judgment and Award dated 24.08.2012, the

Reference Court, by relying upon its earlier judgment dated

18.12.2009 passed in LAC No. 1659/2000 wherein the market

value was determined at the rate of Rs.5,00,000/- per acre,

fixed the market value of the acquired lands of the appellants

at the rate of Rs.5,00,000/- per acre and awarded the

compensation of Rs.6,75,000/- per acre inclusive of

Rs.1,75,000/- per acre towards escalation price at the rate of

5% per annum from 21.08.1996, the date on which the

Notification under Section 4(1) was issued in LAC No. 1659 of

2000 till 25.01.2003, the date on which the Notification under

3 Section 4(1) was issued in the cases at hand.

7) Aggrieved by the compensation determined by the

Reference Court, the land owners filed appeals being M.F.A.

Nos. 25301, 25302, 25303 and 25304 of 2012 before the High

Court.

8) By impugned judgment dated 07.07.2014, the High

Court allowed the appeals in part and while setting aside the

award of the reference Court and disagreeing with its

reasoning re-determined the compensation at Rs.13,93,920/-

per acre as against Rs.6,75,000/- per acre awarded by the

Reference Court with all statutory benefits as envisaged under

Section 23 of the Act.

9) The High Court, inter alia, held by relying on the price

(Rs. 64/- per sq. ft.) value of one exemplar sale deed (Ex.P-61)

out of 11 sale deeds filed by the appellants and deducting 50%

towards development charges from its price determined the

market value at Rs.13,93,920/- per acre (Rs. 32/- per sq. ft.).

10) Against the said judgment, the appellants have filed

these appeals before this Court seeking further enhancement

in the compensation awarded by the High Court.

11) Heard Mr. Dhruv Mehta, learned senior counsel for the

appellants and Mr. Basava Prabhu S. Patil, learned senior

4 counsel for the respondent.

12) Mr. Dhruv Mehta, learned senior counsel appearing for

the appellants(land-owners) while assailing the legality and

correctness of the impugned order mainly raised five

submissions.

13) In the first place, learned counsel urged that the High

Court having rightly held that the appellants were not

awarded adequate compensation by the Land Acquisition

Officer and the reference Court commensurate with the

market value of the acquired land erred in awarding

compensation only at the rate of Rs.13,93,920/- per acre., i.e.,

at the rate of Rs. 32/- per sq. ft.

14) According to learned counsel, firstly, the compensation

awarded by the High Court is wholly inadequate and not

commensurate with the market value of the acquired land and

secondly, it is against the evidence adduced by the appellants

and hence unsustainable in law.

15) In the second place, learned counsel urged that the

appellants have filed in evidence 11 sale deeds of the

exemplar’s land to prove the market rate of the acquired land.

Learned counsel pointed out that out of 11 sale deeds, some

sale deeds were part of the acquired land whereas the

5 remaining pertained to the land adjacent to the acquired land.

16) It was urged that since these 11 sale deeds were executed

much prior in point of time from the date of issuance of

Notification under Section 4, therefore, such sale deeds are

the best piece of evidence as they represent the correct

price/value of the acquired land for proving the market value

of the acquired land.

17) Learned counsel urged that out of 11 sale deeds, two sale

deeds, which represent the highest value should have been

made the basis for determining the market value of the

acquired land.

18) In the third place, learned counsel urged that out of 11

sale deeds, the High Court having rightly held the four sale

deeds (Ex- 55,56,59 and 61) to be of relevance for proving the

market value of the acquired land erred in excluding the three

sale deeds out of the four while determining the market value

of the acquired land and confined its reliance only on one sale

deed, namely, Ex-61(which was for Rs. 64/- per sq. ft.) for

determining the market value without any justification. It was

also his submission that the High Court erred in making

deduction of 50% out of the price of Ex.P-61 sale deed without

there being any justification and reduced its price to Rs. 32/-

6 per sq. ft. This finding, according to learned counsel, is legally

unsustainable and hence deserves to be set aside.

19) In the fourth place, learned counsel urged that out of 11

sale deeds, 2 sale deeds, viz., Exs. 55 and 56 represented the

land to have been sold at Rs. 218/- per sq. ft. and, therefore,

Rs.218/- per sq. ft. rate should have been held to be the

market rate of the acquired land that being the highest price

of the land out of 11 sale deeds and, accordingly, the

compensation should have been determined at the rate of

Rs.218/- per sq ft., if not more.

20) In the fifth place, learned counsel urged that it being an

admitted fact that the acquired land is abutting the main

district road (MDR) in the city and further surrounded by

developed colonies and several institutions/organisations etc.

in its near proximity and being non-agricultural land situated

within the limits of municipality has potentiality to undertake

any housing project over the land and, therefore, the rate

claimed by the appellants is well justified having regard to the

totality of the circumstances.

21) It is essentially these submissions learned counsel for

the appellants(land owners) elaborated in his arguments with

the aid of evidence adduced and decided case law of this

7 Court.

22) In reply, Mr. B.P.S. Patil, learned senior counsel

appearing for the respondent supported the impugned order

and contended that the submissions urged by the appellants’

counsel has no merit. Learned counsel contented that 11 sale

deeds relied on by the appellants relate to very small

area/plots whereas the acquired area is quite large (30 acres)

and, therefore, the price shown in such sale deeds is of no

relevance and nor can these sale deeds be relied on to

determine the true market value of the acquired land.

23) Learned counsel also doubted the bona fides of the sale

deeds and contented that the manner in which the

transactions were made pursuant to these sale deeds, clearly

show that the transactions made therein are not genuine. In

substance, the submission of learned counsel for the

respondent was that the appeals have no merit.

24) Having heard the learned counsel for the parties and on

perusal of the record of the case, we find force in some of the

submissions of learned counsel for the appellants.

25) Before we examine the facts of this case, it is necessary

to take note of general principle of law on the subject which is

laid down by this Court in several cases some of which were

8 also cited at the bar by the learned counsel for the parties.

Indeed, if we may say so, law on the several issues urged

herein by the learned counsel for the parties is fairly well

settled and what has varied is its application to the facts of

each case.

26) In Chimanlal Hargovinddas vs Special Land

Acquisition Officer, Poona & Anr. (1988) 3 SCC 751, this

Court dealt with the question as to how the Court should

determine the valuation of the lands under acquisition and

what broad principle of law relating to acquisition of land

under the Act should be kept in consideration to determine

the proper market value of the acquired land.

27) In Para 4 of the judgment, this Court laid down as many

as 17 principles, which are reproduced below for perusal:

“(1) to (4)………………………………….

(5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant).

(6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price.

(7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance which provides the index of market value.

9 (8) Only genuine instances have to be taken into account. (Sometimes instances are rigged up in anticipation of acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects.

(10) The most comparable instances out of the genuine instances have to be identified on the following considerations:

(i) proximity from time angle,

(ii) proximity from situation angle. (11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-à-vis land under acquisition by placing the two in juxtaposition.

(12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do.

(13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors.

(14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:

Plus factors Minus factors 1. smallness of size 1. largeness of area 2. proximity to a road 2. situation in the interior at a distance from the road 3. frontage on a road 3. narrow strip of land with very small frontage compared to depth

4. nearness to developed area 4. lower level requiring the depressed portion to be filled up

5. regular shape 5. remoteness from developed locality

6. level vis-à-vis land under 6. some special acquisition disadvantageous factor which would deter a purchaser

7. special value for an owner of an adjoining

10 property to whom it may have some very special advantage

(15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10,000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.

(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the judge must place himself.

(17) These are general guidelines to be applied with understanding informed with common sense.”

28) These principles are invariably kept in mind by the

Courts while determining the market value of the acquired

lands (see also Union of India vs. Raj Kumar Baghal Singh

(Dead) Through Legal Representatives & Ors. (2014) 10 SCC

422).

29) In addition to these principles, this Court in several

cases have also laid down that while determining the true

11 market value of the acquired land and especially when the

acquired land is a large chunk of undeveloped land, it is just

and reasonable to make appropriate deduction towards

expenses for development of acquired land. It has also been

consistently held that at what percentage the deduction

should be made vary from 10% to 86% and, therefore, the

deduction should be made keeping in mind the nature of the

land, area under acquisition, whether the land is developed or

not and, if so, to what extent, the purpose of acquisition, etc.

It has also been held that while determining the market value

of the large chunk of land, the value of smaller piece of land

can be taken into consideration after making proper deduction

in the value of lands and when sale deeds of larger parcel of

land are not available. This Court has also laid down that the

Court should also take into consideration the potentiality of

the acquired land apart from other relevant considerations.

This Court has also recognized that the Courts can always

apply reasonable amount of guesswork to balance the equities

in order to fix a just and fair market value in terms of

parameters specified under Section 23 of the Act. (See

Trishala Jain & Anr. Vs. State of Uttaranchal & Anr., (2011)

6 SCC 47) 12

30) Keeping the aforementioned principles in mind when we

take note of the facts of the case at hand, we find that firstly,

the land acquired in question is a large chunk of land (30

acres approx.); Secondly, the purpose of acquisition is

“Establishment of Rehabilitation Centre"; Thirdly, it is situated

within the municipal limits; Fourthly, its one side is abutting

the main district road (MDR); Fifthly, it is not fully developed;

Sixthly, some buildings have come up in its near proximity;

Seventhly, the appellants(land owners) have not filed any

exemplar’s sale deeds relating to large piece of land sold in

acres to prove the market value of the acquired land; Eighthly,

all sale deeds relied on by the appellants pertain to very small

piece of land such as, 25x55ft., 40x20ft., 40x40ft., 12x45ft,

30x40ft., 12x45ft., 60x60ft., 10x65ft., 50x65ft., 40x65ft. and

29x49ft. whereas the land acquired, as mentioned above, is

quite large (30 acres) and the price at which these small plots

were sold is Rs.85/- per sq. ft., Rs.70/- per sq. ft., Rs.80/- per

sq. ft., Rs 69/- per sq. ft., Rs. 55/- per sq. ft., Rs. 64/- per sq.

ft., Rs. 65 per sq. ft., Rs. 100/- per sq. ft., and Rs.218/- per

sq. ft.,; Ninthly, these eleven plots were sold prior to the date

of acquisition (2000, 2001 and 2002) whereas the acquisition

was in the year 2003; Tenthly, the small parcel of lands sold

13 under these sale deeds are situated in near proximity of the

acquired land and some were part of the acquired land;

Eleventhly, all the eleven sale deeds are held bona fide and

proper and lastly, these sale deeds, therefore, can be relied on

for determining the proper market value of the acquired land.

31) Taking into account the factual scenario of the acquired

land and having regard to the totality of the circumstances

taken note of supra, we are of the considered view that it

would be just, fair and proper to take out the average value of

these plots. Since the acquired land is not fully developed and

it requires for construction of rehabilitation centre, it would be

just, fair and proper to deduct 40% of the amount towards

development charges out of the average price worked out.

Such deduction is permissible in law (Land Acquisition

Officer Revenue Divisional Officer, Chittor vs. L.

Kamalamma (Smt.) Dead by LRs. & Ors. Etc.(1998) 2 SCC

385.

32) The average value of the land in this way is worked out to

Rs.99/- per sq. ft. and after deducting 40% towards

development charges, we get a rate of Rs.60/- per sq. ft.

(rounded off).

33) In our considered opinion, the market value of Rs.60/-

14 per sq. ft. which we have worked out, is just, fair and proper

market value of the acquired land having regard to the totality

of the circumstances taken note of above and on applying the

aforementioned principle of law laid down by this Court. It is

this value which, in our opinion, should have been awarded to

the appellants for the acquired land.

34) We are unable to accept the submission of learned

counsel for the appellants when he urged that the appellants

are entitled to claim compensation at the rate of Rs.218/- per

sq. ft. or even more that being the highest rate of the land out

of total sale deeds.

35) As held supra, firstly, all the sale deeds relate to very

small piece of land; secondly, except two parcels of land sold

for Rs.100/- and Rs.218/-, remaining plots were sold in the

range of Rs.55/- to Rs.85/- and lastly, the appellants did not

file any sale deed in relation to large chunk of land to prove

the price in acres. For these reasons, in our view, it is not safe

to rely on one or two isolated sale deeds of high value of very

small plots. We have, therefore, preferred to work out the

average of these sale deeds for determining the market value

of the acquired land.

36) In the light of foregoing discussion, the appeals succeed

15 and are accordingly allowed in part. The impugned order is

modified to the extent that the appellants are held entitled to

claim compensation for the acquired land at the rate of

Rs.60/- per sq ft. As a consequence, the appellants are held

entitled to claim all statutory compensation accordingly.

37) Let the compensation now awarded by this Court by

enhanced rate be re-worked and after making proper

calculation and verification of the land, the same be paid to

the appellants (respective land owners) within 3 months from

the date of this order.

……..................................J. [ABHAY MANOHAR SAPRE]

………...................................J. [SANJAY KISHAN KAUL] New Delhi;

July 07, 2017

16