Shri Dev Sharma vs Union Of India (Uoi) And Ors.
2005 Latest Caselaw 321 Del

JUDGMENT

B.C. Patel, C.J.

1. This appeal is preferred against the order of reference court made on 29.10.1997 by the Additional District Judge in LAC No. 38/1981 (new LAC No. 333/93 dated 13.07.1993). The notifications under Sections 4, 6 and 17 of the Land Acquisition Act, 1894 (hereinafter referred to as the 'Act') were issued on 15.02.1979 and the possession was taken by the authorities on 23.03.1979. After following the procedure laid down in the Act, the Land Acquisition Collector (in short `LAC') made an award being 140/79-80 on 22.03.1980 determining Rs. 7,000/- per bigha as the fair market value.

2. The claimant being aggrieved by the fixation of price by the LAC, moved an application under Section 18 of the Act. On appreciation of the evidence placed before the reference court in the aforesaid case, the reference court held that the claimant is entitled to get fair market price @ Rs. 15,225/- per bigha with consequential benefits as per the Act. It may be noted that initially before the reference court claim was limited to Rs. 25,000/-. However, it was increased to Rs. 75,000/- by the claimant. It may be noted that before the LAC in response to notice under Section 9 of the Act, the claim was made @ Rs. 25,000/- per bigha.

3. Against the award made by the reference court, before us, it was contended by learned counsel that in a nearby village namely Dhirpur, vide notification of the even date, lands were acquired and vide award No. 21/80-81, the LAC awarded compensation @ 5,000/- per bigha which was increased by the reference court to Rs. 18,500/- per bigha and on an appeal before the High Court, on appreciation of evidence, the fair market price was fixed @ Rs. 50,000/- per bigha. On this issue, learned counsel for the respondent has pointed out that village Dhirpur cannot be treated at par with the land situated in village Jharoda Majra Burari. Looking to the facilities available in village Dhirpur as also the development, location etc., the Court determined the price. However, at the same time, it is required to be noted that when the claimant is making a claim before the Court, it is for the claimant to lead sufficient evidence to arrive at a conclusion as to what would be the market value of the land.

4. The intention of Section 23 of the Act taken as a whole is to provide a complete indemnity to a person whose land is compulsorily acquired. It is the value to the seller of the property in its actual condition at the time of expropriation with all its possibilities excluding every advantage due to carrying out of the scheme for the purpose for which the property is compulsorily acquired. Value to be paid for the land is the value to the owner as it existed at the date of notification under Section 4 of the Act and the value to the owner consists in all the advantages which the land possesses, present or future, but it is the present value alone of such advantages that falls to be determined.

5. For the determination of compensation mere production of a map with the judgment of a court in another group of land acquisition cases would not, by itself, be sufficient to evaluate the land on a particular basis. It cannot be left to any guess work. In the absence of substantive evidence produced by the claimant, if the Court is asked to determine the price on the basis of other instances of nearby villages, it would be difficult to arrive at a correct market value.

6. The Apex Court in the country has repeatedly laid down the acid test for 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 of fixing the market value. For ascertaining the market value, the Court would be justified in relying upon such transaction which would offer a reasonable basis to fix the price. The Apex Court in the case of Special Tahsildar vs. Mangala Gauri has pointed out that the price paid in sale or purchase of the land acquired within a reasonable time of the date of notification under Section 4(1) of the Act would be the best piece of evidence. Considering the acid test of a willing purchaser and a willing buyer the Court should sit in the arm chair of the said willing buyer to have the answer to a question whether in the given set of circumstances as a prudent buyer he would offer the same market value which the Court proposed to fix for the acquired land in the available market conditions. It is the bounden duty of the Court of public functions and judicial dispensation in determination of the market value of the acquired land. There must be an objective assessment of the conditions prevailing in the market, nature of user of the land to which the land was put on the date of notification, situation of the land, the income derived there from and all other relevant attending circumstances. This is with a view to determine the market value which should be just, adequate and reasonable. For this purpose, some guess work is also involved. There must be a reasonable basis and feats of imagination to be eschewed. The following aspects are required to be borne in mind while determining the amount of compensation:-

(1) If a part or parts of the land taken up has or have been previously sold such sales are taken as fair basis upon which making all proper allowances for situation etc. to determine the value of that taken;

(2) To ascertain the net annual income of the land, and to deduce its value by allowing a certain number of years purchase of such income according to the nature of the property; and

(3) To find out the prices at which lands in the vicinity have been sold and purchased and making all due allowances for situation, to deduce from such sales the price which the land in question will probably fetch if offered to the public.

7. In determining the market value of the land the Court has to consider the following:-

(1) The price paid within a reasonable time for the land itself;

(2) The rents and profits of the land received shortly before the acquisition;

(3) The prices paid for adjacent lands possessing similar advantages; and

(4) The opinion of the experts or valuators.

8. It is also required to be kept in mind that where a large block of land is required to be valued, appropriate deduction is to be made for setting aside land for carving out roads, leaving open spaces and marking out smaller plots suitable for construction of buildings. The extent of area required to be set apart in this connection has to be assessed by the Court having regard to the shape, size and situation of the concerned block of land. There cannot be any hard and fast rule as to how such deduction should be made to account for this factor. It is essentially a question of fact depending on the facts and circumstances of each case. It does not involve any decision upon any principle of law. 50% deduction in such a situation would be just and reasonable.

9. It is also required to be noted that the land situated in the interior in the midst of large blocks of undeveloped land will not fetch the same value as the land which is nearer to the developed area and nearer to the road. The development of lands which are nearer to the developed area and nearer to road can reasonably be accepted to take place much earlier.

10. It is also required to be noted that the lands situated far away from the municipal limits and possibility of imposition of statutory restrictions to develop the lands for building purposes are relevant circumstances in determining the market value of the land. The Court must bear in mind that where an agricultural land is acquired which is not ordinarily put to use for the purpose of residence, the price to be determined ordinarily should be on yield basis. The land cannot be put to use other than agricultural or if it is required to be put to other use some permission is required to be taken or conversion charges are required to be paid. Such various other aspects are required to be borne in mind by the Court.

11. The Apex Court in the case of Hasanali Khanbhai & Sons and Ors. v. State of Gujarat pointed out that "However, if it is found that large extent to be valued admits of and is ripe for use of building purposes, that building lots could be laid out on the land could be a good selling proposition and that valuation on the basis of method of small layout could with justification be adopted. Then in valuing such small layout any such valuation as included in the sales comparably small sites in some area at the time of notification would be relevant in such cases. Necessary deduction for the extent of the land required for formation of the roads and other civic amenities requires to be made. In that case 50% was deducted." The Court also pointed out the decision of the Apex Court in the case of Bhagwathula Samanna v. Special Tahsildar & Land Acquisition Officer, Visakhapatnam Municipality :

"4. The facts in Bhagwathula Samanna case were that the lands were situated in already developed area and that, therefore, this Court had held that no deduction towards developmental charges could be made. The ratio therein is of little assistance. When the lands are sought to be used for building purposes, admittedly the entire land cannot be used for building purposes without providing roads, drainage, electricity and other civic amenities for which necessary deduction of 1/3rd should also be made as held in a catena of decisions of this Court."

12. In the case of Hasanali Khanbhai (supra) the Court pointed out as under in paragraph 5:-

"In this case, having considered the situation of the land being far away from the outer municipal limits though situated near about the railway line, that itself would be a factor to be taken into consideration in determining the market value. Added to that, there is a possibility to impose statutory restrictions to develop the lands for building purposes. No prudent purchaser would hazard to purchase such large extent of lands at the rates when small extents of lands are sold in plots. True that the purchasers hazarded to purchase lands in the neighbouring survey numbers and have taken grave risk. But it would be safe guide to adopt the same price offered by them. Considered from this perspective and from the totality of facts on record, we are of the view that the High Court was well justified in deducting 60% of the value and giving Rs. 4 per sq. yard."

13. The Apex Court reiterated the aforesaid principle in the case of K. Vasundara Devi v. Revenue Divisional Officer (LAO) .

14. So far as valuation of agricultural land is concerned, ordinarily the calculation must be based on the average produce per year per acre. However, if the agricultural land is situated just on the outskirts of a city the yield method only may not be appropriate because the land is nearer to developed areas and, therefore, it must get the benefit of that development. Similarly, a parcel of agricultural land situated on the highway will have to be considered in a different manner. When the land abuts on the road leading to the village will have a different value. These are the aspects to be taken into consideration while determining the fair market value of agricultural land. If the agricultural land is not having benefits just referred to hereinabove, then one will have to consider the average yield. However, if in the nearby area a parcel of land is disposed of, the same would be a guiding factor. It is also required to be borne in mind that though there is no development of land, but as the same is situated within the municipal limits and continued to remain as agricultural land would not fetch the same market price as may be determined for developed land. One will have to convert the land from agricultural land to non agricultural use. These are the aspects to be kept in mind and agricultural land which has potential value that has to be considered. The Supreme Court in the case of Land Acquisition Officer v. Male Pullamma pointed out that the acquired land was used for poultry purpose and, there was no development in the area or in the neighborhood on the date of notification. The Supreme Court has, therefore, held that the High Court was not justified in determining the market value treating the land acquired as possessing potential value.

15. If the land acquired, though agricultural land, is found to be possessed of high potentialities, consequently, for such agricultural land with building potentialities having industrial development around, the prevailing market value may not be the criterion and the potential value has to be considered to determine the market value of such land.

16. Special features, if any, are also required to be taken into consideration, such as the only parcel available in the vicinity of industrial zone or the land is fit for a particular use and price has increased or is increasing for industrial use or such other specific use must be taken into consideration. In the case of State of Maharashtra v. Digambar Bhimshankar Tandale it was held that the agricultural land though was converted for non agricultural use and situated within the municipal limits, but the land had no potential value as there was no development in the area, then determination of compensation on acreage basis was proper and not on comparative sales of small pieces of land, even if within the municipal limits did not have any potential value.

17. It is required to be noted that if there is no comparable unit, the other alternative method is the capitalized value compensation in respect of agricultural land which should be allowed on the basis of 20 years purchase. However, the same method can be adopted where there is evidence of profits yielded from the land. There is no exact yardstick for measuring the net income and there is no exact yardstick for arriving at a fair market value of the land on the basis of agricultural produce. The valuation of land itself is a matter of guess work and after arriving at such a net income per year, it will have to be capitalized by applying a proper multiplier which the Apex Court in the case of State of Gujarat v. Rama Rani has held that a multiplier of 10 would be appropriate. However, at the same time 50% is required to be reduced to arrive at net annual income.

18. Agricultural land with irrigation well cannot be treated as a special case. The Supreme Court has pointed out that the question of granting further enhancement by the Court for irrigation well situated in the acquired agricultural land would not arise.

19. It is also required to be noted that it is for the claimant to lead evidence or place sufficient evidence on record in support for the claim which he has made. If the land situated at Village A is acquired and fair market value is determined for the said land, the same fair market value cannot be determined for the land acquired in an adjoining Village B at the same rate, unless on evidence it is established that in view of comparative assessment about quality, potentiality etc of the lands situated in both the villages have same value in terms of money. What is submitted is that if in a nearby village the price is determined, then the same market value should be determined. The same cannot be accepted. If for the land situated at Village A whatever the price is determined is to be blindly given for the land situated in Village B or thereafter for the land situated in Village C and likewise for lands up to Village Z, then whatever the amount is determined for land at Village A should be automatically the market value of the land at Village Z irrespective of distance, facilities available, quality of land, potentiality etc. Such contention cannot be accepted.

20. It is required to be noted that other aspects are required to be borne in mind while determining price of land such as facilities provided in the village such as water, electricity, bus facility, train facility, or other civic amenities such as hospitals, post office, school, high school or other institutes in or near the village. Again land to be acquired is situated near the market of the village should not be compared with the land situated far away from the market of the village or Abadi. To arrive at a fair market value these are the aspects to be borne in mind.

21. In the instant case, no evidence has been placed on record except placing reliance on an award made for the land situated in another village and that too the land situated in that village had better potentialities on account of development.

22. Considering the aforesaid aspects, the Court has to examine various aspects to determine the market value. It is also required to be noted that the Court has to examine where the land is situated, whether main road is passing nearby the land or a smaller road is passing nearby the land.

23. In the instant case, the LAC in his award relying on some other award, mentioned that market value in the case is assessed at Rs. 7,000/- per bigha. The quality, location and potentialities of the land are the same as in the land involved in the present award and therefore the fair and reasonable market value would be @ Rs. 7,000/- per bigha and as assessed accordingly. At the same time, it is required to be noted that there is a sale deed placed on record by the claimant himself for adjoining parcel of land wherein the price was determined @ Rs. 12,500/- per bigha for the transaction which was recorded on 19th day of April, 1975. However, possession was taken earlier on or about 19.12.1973 and therefore it can be said that this must be the amount for the transaction which took place in 1973. So, considering this aspect the market value on the date of notification should be @ of Rs. 22,150/- per Bigha keeping in mind 10% escalation rate per year. May be that in 1973 between two individuals there was an agreement. For village Dhirpur, lands were acquired pursuant to notification of the same date and ultimately the market value was fixed @ Rs. 50,000/- per bigha. However, as indicated above, because of the development of village Dhirpur, a higher price is awarded but at the same time as this parcel of land is abutting on the main road, we have to examine as to what should be the fair market value. Considering the fact that both villages are different and in absence of any other evidence, on the basis of the location, we will have to determine the price and in view of the statement made in the award by the LAC, we are of the opinion that some discount is required to be considered for arriving at a conclusion so far as acquired land situated in this village is concerned. Considering the advantage that a main 120' feet road, and T junction of other two roads, one leading to village, and taking a discount @ 20%, in our opinion, Rs. 40,000/- per bigha would be the correct market value and the same is not disputed by the counsel for the appellant.

24. Ordinarily Rs. 22,150/- would be the proper market value. However, in the instant case, when transaction on which reliance is placed took place in 1973, there is nothing on record to indicate that at the relevant time there was existence of a main road of 120 feet and other roads. It is in the absence of this aspect reflected in the document and the map which is produced on record which is showing that when the acquisition took place roads were constructed, the benefit as aforesaid is given and the market price is determined at Rs. 40,000/- per Bigha. It is in view of this the price is to be determined for the land acquired in this case at the aforesaid rate.

25. However, the claimant himself having confined his claim to Rs. 25,000/- per bigha in response to a notice issued under Section 9 of the Act as also in view of the decision of the Apex Court in the case of Land Acquisition Officer-cum DGNO, AP Vs. B.V. Reddy & Sons , price will have to be considered, which is required to be offered to the claimant in view of Section 25 as applicable at the relevant time. Prior to the amendment Section 25 was as under :

"Section 25, prior to its amendment by Act 68 of 1984 :

25. Rules as to amount of compensation . - (1) When the applicant has made a claim to compensation, pursuant to any notice given under Section 9, the amount awarded to him by the court shall not exceed the amount so claimed or be less than the amount awarded by the Collector under Section 11.

(2) When the applicant has refused to make such claim or has omitted without sufficient reason (to be allowed by the Judge) to make such claim, the amount awarded by the court shall in no case exceed the amount awarded by the Collector.

(3) When the applicant has omitted for a sufficient reason (to be allowed by the Judge) to make such claim, the amount awarded to him by the court shall not be less than, and may exceed, the amount awarded by the Collector."

26. The Court pointed out that the aforesaid provision contained in sub-section (1) of Section 25 itself limits the power of reference court for a reference being made under Section 18 to the quantum of compensation which could be awarded. In view of this decision of the Apex Court, appellant is held entitled to compensation @ Rs. 25,000/- per bigha with other benefits as available under the Land Acquisition Act.

27. It is required to be noted that in para `6' of the judgment reference court has considered the position in respect of 2 khasra numbers out of the land in question which was the subject matter of reference under Sections 30 and 31 of the Act and according to the learned Judge that attained a finality. However, it is contended that appeal was preferred against that judgment and therefore it goes without saying that as per the decision rendered in that appeal, the parties will have to act. This is only for the purpose of clarification. Learned counsel has further pointed out to this Court that this Court should also interfere with this issue. However, we are of the opinion that we are not required to deal with this aspect except clarifying the position as aforesaid.

28. The appeal is accordingly allowed with proportionate costs.