The Special Land Acquisition ... vs The Wallace Flour Mills Co. Ltd. ...
2003 Latest Caselaw 1126 Bom

JUDGMENT

F.I. Rebello, J.

1. Pursuant to an application by the claimants under Section 18 of the Land Acquisition Act for enhancement of compensation, being dissatisfied with the Award of the Land Acquisition Officer, the Special Land Acquisition Officer has referred the matter. Section 4 Notification for acquisition of land was issued on 7th May, 1973. By his Award of 10th March, 1978 the Land Acquisition Officer fixed market value at the rate of Rs. 140/- per square meter. The Award would disclose that there were also 9 persons claiming compensation as residential tenants and one person as a business tenant. The area of the land acquired admeasured 3477.14 square meters. The entire compensation, apart from some amounts awarded to the tenants, which are meager amounts, have been awarded to the claimants herein. The claimants, being dissatisfied with the market value as fixed by the Special Land Acquisition Officer, by application made under Section 18, has claimed that compensation ought to be awarded to him at the @ Rs. 500/ - per month. A perusal of the Award, which is a part of the record, would show that in fixing the market value, the Special Land Acquisition Officer relied upon the sale instance of an adjoining property, which was an agreement to sell land from C.S. No. 4/14 and 15/3 of Matunga Division admeasuring 4259.00 square yards at the rate of Rs. 130/- per square yard or Rs. 155/- per square meter in 1974 by the Applicants themselves from the owners. That land was reserved for public housing in the Development Plan of "F" Ward. There were four old structures on the land, three being ground floor structures and one ground plus one floor structure. The Bombay Municipal Corporation, the applicant herein, was a tenant of about 3/4 of the property.

2. The only issue, therefore, which arises before this Court and which has to be answered is the issue of enhancement, if sought for by the claimant for the acquired land seeking enhancement from Rs. 140/- to Rs. 500/- per square meter.

3. The claimant, on his behalf, has examined Shri Jaidev Krishnaram Divecha, an Engineer, who is practising as an Architect and was a partner in the Firm M/s. Sykes, Patker and Divecha upto 1983 and since 1984, he has started his own Firm viz. Sykes and Divecha. Apart from the evidence of this witness, neither the claimants nor the S.L.A.O. or the Acquiring Body has led any evidence. The case, therefore, will have to be examined based on the evidence of Shri Divecha. In his evidence, he has stated that the property is ideally located at a distance of about 700 feet from Dadar (East) Railway Station, which is a very good locality and at a distance of 1800 feet from the property is Dadar TT, which is a busy bus terminus. The property is close to Dadar Market and situated in a residential and commercial area. Access to the property is via sixty feet wide Road from Dr. Ambedkar Marg, which is a main road. Out of the acquired land, an area admeasuring 2979 square meters was vacant and there were some small structures occupying about 500 square meters. The property was capable of being put to use for construction of residential as well as commercial buildings. The property had potential for development. He has further deposed that such properties are valued on the basis of value of the land and the value of the break-up material of the structure standing thereon and he has accordingly valued the property. Both, in his Valuation Report and in his evidence before this Court, he has relied on three sale instances. The first instance relates to assignment of prepetual leasehold rights held by Tata Mills Limited in favour of one Elias Simon Andrades of a plot of land admeasuring 4168 per square meter. The property is identified under C.S. No. 8 (Part) of Dadar -Naigaon Division and situate at Dr. Ambedkar Road. A certified copy of the Deed of Assignment dated 25th March, 1969 has been taken on record and marked as Exhibit-C. This plot is situated about 3400 feet from the acquired land. It is 3500 feet away from Dadar Station and 4000 feet away from the Bus Terminus. The land, though situated on Shopping Line, was not used for the purpose of Shopping Complex by the purchaser and the price has been paid accordingly. In his opinion, the acquired land is more advantageously situated than the land identified under Exhibit-C. The leasehold rights were agreed to be sold at the rate of Rs. 269/- per square meter on 29th October, 1968. The second instance relied upon by him is another assignment whereby perpetual leasehold rights were agreed to be assigned by Tata Mills Co-operative Housing Society by document dated 12th September 1970. The Deed of Assignment is dated 27th March, 1972 which has been marked in evidence as Exhibit -D. This land is about 3400 feet away from the property. It is located on Dr. Ambedkar Road, but is about 3500 feet away from Dadar Station and about 4000 feet away from the Bus Terminus. It is adjoining Exhibit-C. In his opinion, the property under acquisition is more advantageously situated than the land which is the subject matter of Exhibit-D and would command a higher price. Reliance is also placed on the land situated at Plot No. 12 (South) of Sewree Wadala Estate, where the perpetual leasehold rights were agreed to be assigned by the Bombay Dyeing and Manufacturing Company Limited to the President of India under document dated 3rd February, 1971 and by an Assignment Deed dated 29th March, 1971. It is marked as Exhibit-E. It is located about 2600 feet away from the acquired land and is located on Dr. Ambedkar Road about 3200 feet away from Dadar Station and about 2800 feet away from the Bus Terminus. In the opinion of the witness, the acquired land is more advantageously situated than the land at Exhibit-E and would command higher price. The sale price in respect of Exhibit-E as on 3rd February, 1971 was Rs. 239/- per square meter. It was acquired for construction of a Telephone Exchange. From this evidence it is clear that the land under Exhibit-C, agreement was on 29th October, 1968 and the assignment was on 26th March, 1969 at the rate of Rs. 269/- per square meter. In respect of Exhibit-D - the agreement to sell was entered into on 12th September, 1970 and the Assignment is dated 27th March, 1972, the consideration was Rs, 227/- per square meter. In respect of Exhibit-E, the Deed of Assignment is dated 29th March, 1971; the document is dated 3rd February, 1971 for a consideration of Rs, 239/- per square meter. The witness, in his evidence, in respect of the sale Instances relied upon by the Land Acquisition Officer, has deposed that 3/4 of the said land was occupied by Bombay Municipal Corporation as a tenant and was also under reservation and hence the owner could not have developed the same. The price of Rs. 155/- per square meter, by which the owner sold to the Bombay Municipal Corporation in the year 1974, was under these circumstances. He has also deposed that tenanted properties are valued on the basis of return available from the rent and thus fetch far lesser value than vacant lands. The tenanted properties fetch about 33% of the market value of vacant land. He has also deposed that between 1968 and 1973, the price of the land in the island City of Mumbai was increasing at the rate of about 15% per annum and applying the said rate, he has fixed the market value of the acquired land at Rs. 541/- per square meter on the date of acquisition.

This witness was cross-examined on behalf of the Acquiring Body. He admits that Exhibit-C to Exhibit-E are not Sale Deeds, but sale instances of leasehold rights. He has deposed that for considering the valuation of 1973, sale instances for the year 1979, 1971 and 1972 would be relevant. He has also stated that sale instances of the subsequent years may be relevant and in some cases, may not be relevant. As he was called upon to value the property for the year 1973, for the purpose of his valuation, he had taken sale instances for a couple of years previous to that year and a couple of years after that year. He has explained that when he refers to comparative instances, he means the locality and the area of the plot as also user of the plot. He has further deposed that in his 40 years as a valuer, he has never come across two instances of exactly comparable properties. He has further stated that the acquired land is not comparable to the land covered by the sale instance. He has considered the plus and minus factors for the purpose of valuation. He admits that out of Exhibits C, D and relied upon by him, none of them are exactly comparable compared to the acquired property. He has stated that in his Report, he has not given the percentage figures of plus and minus variations. Each of the properties would have some plus points and some minus points in comparison to the acquired properties. He denied that as the Report does not show the plus and minus percentages and it was merely his opinion. He has reiterated that he has taken into account the plus and minus factors in preparing the Report. He admits that in the Report, there is nothing to indicate which arc the plus and minus factors he has taken into consideration while fixing the market value. He has further deposed that in his Report he has made no reference to the comparable sale instances as, when he prepared the Report, he was not aware that the Report would be used in Court. It was prepared by him to support the claim before the Special Land Acquisition Officer. He has then explained the method followed by him in valuing the property which is tenanted. He has explained that in respect of the acquired land, most of the land was vacant and the area occupied by structures was small, he did not apply the rental method. In respect of area of the strut-lures which existed, he sets out that at the highest, it would be 15% of the acquired land. He has further stated that in normal course for the area occupied by structures, the rental method would be followed, but in this case, that was not done because these were single storeyed structures. Referring to Exhibit-C, he points out that the negative factor to be taken into consideration was that the property was situated further from the Railway Station as compared to the acquired land. The same negative factor was taken into consideration while considering Exhibit-D. While considering Exhibit-E, apart from the distance from the Railway Station, the distance of the market was also considered. That also would be a minus factor. He states that he has no proof to show that between the period 1968 to 1973, price of the land in the island City of Mumbai was increasing at the rate of 15% per annum. He denied that valuation was done only on the basis of 15% increase between the period 1968 to 1973. He denied that in his examination-in-chief, apart from 15% increase, he has not referred to any other factor. He has stated that he made enquiry in the market and that was also considered while fixing the market value. The information was gathered in the year 1974. He admits that information is neither set out in the Report or any affidavit before the Court. While considering the rental method, he has pointed out that while considering deductions for fixing valuation, what has to be considered are Municipal taxes, amounts towards repairs, land revenue and rent collection charges. Normally, more than 50% of the rent collected would go towards outgoings.

4. On behalf of the claimants, their learned Counsel contends that considering Exhibits C, D and E and the oral evidence of Shri Jaidev Divecha, an expert Valuer, who has had experience since 1969 till date, this Court must accept his evidence. It is pointed out that freehold land would fetch a higher price than leasehold land and in these circumstances, the Court ought to award market value at the rate of Rs. 500/- per square meter. Reliance has been placed in the judgment of Land Acquisition Officer Revenue Divisional Officer, Chittor v. L. Kamalamma (Smt) Dead by Legal Representatives and Ors. for the proposition that if there are no sales of comparable land available, then even land transaction in respect of smaller extent of land where large tracts had been acquired, could be taken note of, as indicative of the price that it may fetch in respect of large tracts of land by making appropriate deductions such as for development of the land by providing enough space for roads, sewers, drains and other matters. Reliance was also placed in the judgment of V.G. Kulkarni v. Special Land Acquisition Officer . To my mind, this judgment would be of no assistance as the Apex Court has noted that the principle of taking judicial notice cannot be extended to escalation of market price of land every year and it is for the claimant to adduce evidence.

On the other hand, on behalf of the Acquiring Body, it is contended that evidence of Shri Jaidev Divecha ought to be rejected. It is pointed out that while preparing his Valuation Report, he has not taken into consideration the plus and minus factors of the acquired land and of the sale instances which he has relied upon. This has also not been explained or come in his evidence by way of examination-in-chief. It is further contended that in the opinion of the said witness, for the purpose of fixing the market value, sale instances of two to three years previous to the acquisition and two years to three years subsequent to the acquisition ought to be considered. In this case, the sale instances are of earlier years and, therefore, ought not to have been considered. It is further contended that considering that at least 15% of the land was tenanted land, the same market value could not have been fixed for the tenanted land as for the open land. It is, therefore, pointed out that the Award of the Land Acquisition Officer suffers from no infirmity and consequently, the claim should be rejected.

5. Once land is acquired under the Land Acquisition Act and compensation is paid, the land vests in the State, free of all encumbrances. In other words, the State and the Acquiring Body will get the land free from tenants, who may be claiming right as tenants and/or any other right. The market value is basically fixed for the land. Structures are valued separately. Any person entitled to the land does not get compensation more than the market value or the value of structures. The compensation would be apportioned between the owner of the land and the person, who has an interest in the land. In these circumstances, though the normal test is of a willing buyer and a willing purchaser, yet in the case of an acquisition where the land vests in the State, free from encumbrances, the test, in my opinion, need not be rigid based on the principle of a willing buyer and a willing purchase. What has to be fixed is the market value of the land. The determining factor is the potential of the land and the purpose for which it can be used. In the instant case, it has come on record that the land was situated in an area which was earmarked for both, commercial and residential purposes. This has come from the evidence of the witness. It would, therefore, be relevant while fixing the market value, to consider the potential of the land. With that, we now come to the three sale instances deposed to by the witness. Even if the Valuation Report is ignored, the witness has stepped into the Witness Box and has deposed to the three sale instances. It is, therefore, necessary to find out, whether Exhibits C, D and E can be taken into consideration while fixing the market value of the land. Exhibit-C, as pointed out earlier, is a larger plot of land than the acquired land. The witness has considered the land in Exhibit-C vis-avis the acquired land from the point of nearness of the Railway Station, Bus Terminal and market. Both the lands are situated on Dr. Ambedkar Road. Exhibit-C, though is fronted by the road and has a Shopping Line. In other words, it could be better commercially exploited, though in fact it was not. The acquired land, however, had an access of a sixty feet road from Dr. Ambedkar Marg and was closer to Dadar Railway Station, the Bus Stand and the market which are important commercial areas. The price of the land on 29th October, 1968 was Rs. 269/- per square meter. In my opinion, this sale instance can be taken into consideration. The only question would be whether the price of the acquired land should be based on the price at which Exhibit-C was assigned. The second instance is Exhibit-D where the Deed of Assignment is dated 27th March, 1972 and was purchased by the Hind Mata Cutpiece Merchants Association Co-operative Housing Society Limited by Agreement dated 12th February, 1970. The Deed of Assignment itself is dated 27th March, 1972. The price of the land, as on 12th September, 1970, was at. the rate of Rs. 227/- per square meter. This land is further from Dadar Railway Station and the Bus Terminus, whereas the acquired land is situated much closer as already set out. This instance, therefore, can also be considered. Though it has not come in the evidence of the witness that it is on the Shopping Line, from Exhibit-B and the plan attached to it, both Exhibits C and D are adjacent to each other. Therefore, Exhibit-D also would be having a Shopping Line. This instance, therefore, also would be relevant in considering the market value. The third instance is an Assignment Deed dated 29th March, 1971 where the land was acquired by the Mahanagar Telephones pursuant to an Agreement between the President of India and the Bombay Dyeing and Manufacturing Company Limited at a price of Rs. 239/- per square meter. Considering the distances from the Dadar Railway Station and the Bus Terminus, the acquired land would be more advantageously situated than the instance at Exhibit-E. That also would be relevant. We, therefore, have Exhibits C and D situated on Dr. Ambedkar Marg, which had the advantage of a Shopping Line and for which the market value was fixed at Rs. 269/- on 25th March, 1969 and Rs. 227/- in document dated 12th September, 1970. The third instance, Exhibit-E, is an instance of 3rd February, 1971 and the market value is Rs. 239/-. The market value, therefore, between the years 1969 and 1971 is between Rs. 269/- as reflected in Exhibit-C and Rs. 227/- as reflected in Exhibit-D. The other aspect of the matter is that the acquired land does not front on the main road, but is further away from the road. The exact distance has not come on record. However, it has an access of a sixty feet wide road. The land is also situated close to the Dadar market. Railway Station and the Bus Terminus. Exhibit-E was located in an Industrial area and was voluntarily purchased at the rate of Rs. 237/- per square meter in the year 1971. From the plan, it is clear that this land is much more inside from Dr. Ambedkar Marg and yet, the price was fixed at Rs. 237/-. The acquired land had further 500 square meter of tenanted land. As pointed out In the earlier part of the discussion, in matters of acquisition, where the land vests free from encumbrances, in the State, existence of the structures would not have much greater bearing insofar as the Acquiring Body is concerned. The Notification under Section 4 in the instant case was issued in the year 1973.

6. Taking Exhibits C and D, which were more advantageously positioned for commercial exploitation and at the same time, considering Exhibit-E, which is situated in the inner area in an Industrial Zone, it would be possible to fix the market value for the entire land, whether occupied or free, as of 1969 at the rate of Rs. 210/- and using the capitalisation method, the market, value on the date of the Notification i.e. 7th May, 1973, would be Rs. 305/-. The Acquiring Body had taken possession of the land on 20th June, 1972. The claimant also would be entitled to enhanced solatium at the rate of 30% instead of 15% awarded on the market value. The compensation so arrived at, less the amount paid, would carry interest in the first year at 9% p.a. and thereafter at 15% p.a. till payment. In the year 1972. the Acquiring Body had paid to the claimant, a sum of Rs. 2,07,275/-. The Special Land Acquisition Officer, in his Award, awarded in favour of the claimant, a sum of Rs. 5,68,667/-. The difference in the said amount will carry interest at the rate of 9% p.a. from the date of Notification under Section 4 for the first annum and thereafter, at 15% till payment.

7. Reference is answered accordingly. No costs.

8. The amount to be deposited by the Acquiring Body with the Special Land Acquisition Officer within 16 weeks from today.

9. All concerned parties to act on an ordinary copy of this Order, duly authenticated by the Personal Secretary.