Land Acquisition Act, 1894 - 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 inconsideration to determine the proper market value of the acquired land - Discussed.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE
JURISDICTION
[ABHAY MANOHAR SAPRE] AND [UDAY UMESH LALIT] JJ.
July 25, 2018
CIVIL APPEAL NOs. 69866987 OF 2018
(Arising out of S.L.P.(C)
No.1035810359 of 2015)
Union of India ….Appellant(s)
VERSUS
Dyagala Devamma & Ors. ….Respondent(s)
J U D G M E N T
Abhay
Manohar Sapre, J.
1) Leave granted.
2) These appeals are filed
against the final judgment and order dated 08.08.2014 passed by the High Court
of Judicature at Hyderabad for theState of Telangana and the State of Andhra
Pradesh in LAAS No.762 of 2010 and CO(SR) No.373 of 2011 whereby the High Court
dismissed the appeal filed by the appellant herein and partly allowed the cross
objections filed by the respondents herein and enhanced the compensation as
mentioned in detail infra.
3) We herein set out the
facts, in brief, to appreciate the issues involved in these appeals.
4) 0n 12.11.2003, the State of Andhra Pradesh issued a notification
under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as “the
Act”) and acquired the land measuring about 10100 acres (SY No.398/3 and other
connected survey numbers) situated at Jagitial Municipality, District Karimnagar
(AP). The acquisition of land was for a public purpose, namely, "laying new broad gaugesingle
railway line from Karimnagar to Jagitial Phase –II by the appellantRailways". This was followed by issuance of notification under Section 6 of
the Act and then possession on 02.12.2003.
5) The Land Acquisition
Officer (LAO) started proceedings under Section 11 of the Act for determination
of the compensation payable to the landowners for their lands. By award
No.26/2006 dated 14.07.2006, the LAO determined the market value of the
acquired land at the rate of "Rs.1,30,000/per acre for wet lands" and "Rs.1,24,000/per acre
for dry lands".
The LAO also awarded compensation for structures, wells etc. to some landowners.
6) The claimants (landowners)
felt aggrieved and sought reference under Section 18 of the Act to the Civil
Court in OP No.27/2007. By award dated 23.07.2010, the Civil Court (Sr. Civil
Judge,Jagitial) redetermined the market value of the land in question. The
Reference Court determined the market value of the acquired land at
Rs.21,29,600/per acre uniformly. However, having regard to the totality of
facts of the case, the Reference Court considered it just and proper to deduct
50% towards developmental charges and accordingly worked out the market value
of the land at "Rs.10,64,800/per acre" for being paid to the landowners.
7) The appellantRailways felt
aggrieved and filed appeal before the High Court of Andhra Pradesh whereas the
landowners also felt aggrieved and filed cross objections claiming enhancement
of the market value determined by the Reference Court.
8) By impugned judgment, the
High Court dismissed the appeal filed by the appellantRailways and partly
allowed the cross objections filed by thelandowners and enhanced the
compensation to Rs.15,97,200/per acre. The High Court, upheld the market value
determined by the Reference Court i.e. Rs.21,29,600/per acre but reduced the deduction
towards developmental charges from 50% to 25% and accordingly worked out the compensation
“at the rate of
Rs.15,97,200/per acre”. It is against this judgment, the appellantRailways felt
aggrieved and filed the present appeals by way of special leave before this
Court.
9) Heard Mr. Vikramjit
Banerjee, learned Additional Solicitor General for the appellantUOI and Mr. B.
Adinarayana Rao, learned senior counsel for the respondents.
10) Mr. Vikramjit Banerjee,
learned Additional Solicitor General appearing for the appellant while assailing
the legality and correctness of theimpugned judgment essentially made two submissions.
11) In the first place,
learned ASG contended that the High Court erred in further enhancing the compensation
at Rs.15,97,200/per acre.
12) According to him the
compensation determined by the Reference Court payable at the rate of
Rs.10,64,800/per acre was just, legal and proper and, therefore, it did not
call for any further enhancement.
13) In the second place,
learned ASG urged that having placed reliance on exemplar Sale Deed (ExP18) for
determining the market value, the Reference Court rightly deducted 50% towards development
charges, whereas the High Court erred in deducting 25% towards developmental
charges.
14) According to learned ASG,
the High Court ought to have appreciated that there were threedistinguishing
factors appearing from the exemplar sale deed (Ex.P18). Due to these three factors, deduction of 50% towards
developmental charges from the market value was called for. These factors are,
First, Sale Deed (Ex.P18) was for a very small piece of land (19 Guntas=1/2
acre); Second, the land which was the subject matter of ExP18 had a peculiar
site because it was situated facing two roads one on the east side and other on
the north side; and Third, it was a developed land.
15) It was, therefore, urged
that so far as the land in question is concerned, the same did not have these
factors and, therefore, the Reference Court rightly considered it proper to
deduct 50% towards developmental charges from the market value which was worked
out on the basis of Sale Deed (Ex.P18). It was urged that the High Court without assigning any reasons
much less cogent reasons erred inreducing developmental charges from 50% to 25%
from the market value. Learned ASG, therefore, prayed for restoration of the
award of the Reference Court in place of impugned judgment of the High Court.
16) Per contra, learned senior
counsel for the respondents (landowners) supported the impugned judgment and
contended that it does not call for any interference and hence the appeals
deserve to be dismissed.
17) The question arises for
consideration in these appeals is whether the High Court was justified in deducting
25% towards developmental charges from the market value of the land in question
against 50% deduction made by the Reference Court. In other words, having
regard to the facts and circumstances of the case, whether the Reference Court
was justified in deducting 50% from themarket value of the land or whether the
High Court was justified in deducting 25%.
18) Before we examine the
facts of this case, it is necessary to take note of general principles of law
on the subject in question which are laid down by this Court in several cases
and some of which were 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 already settled by this Court and
what has varied in its application depends on the facts of each case.
19) 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 inconsideration to
determine the proper market value of the acquired land.
20) 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.
(8) Only genuine instances have to be taken into account.
(Sometimes instances are rigged up in anticipation of acquisition of land.)
(9)
Even postnotification 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 ahigher 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 visà vis land under acquisition by placing the
two in juxtaposition.
(12) A balancesheet 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 visà vis land under acquisition 6. some special disadvantageous factor
which would deter a purchaser
7. special value for an owner of an adjoining 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.”
21) These principles are invariably kept in mind by the Courts
while determining the market value of the acquired lands (also see Union of India vs. Raj
Kumar Baghal Singh (Dead) Through Legal Representatives & Ors., (2014) 10 SCC 422).
22) In addition to these
principles, this Court in several cases have laid down that while determining the
true market value of the acquired land especially when the acquired land is a
large chunk of undeveloped land, it is just and reasonable to make appropriate
deduction towards expenses fordevelopment of acquired land. It has also been consistently
held that at what percentage the deduction should be made varies 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 pieces of land can be taken into consideration after making proper
deduction in the value of lands especially 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 theequities 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 and Vithal Rao & Anr.
Vs. Special Land Acquisition Officer, (2017) 8 SCC 558)
23) Keeping in mind the aforementioned
principles, 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 (101 acres
approx.); Secondly, it is not fully developed; Thirdly, the respondents (landowners)
have not filed any exemplar sale deed relating to large pieces of land sold in
acres to prove the market value of the acquired land; Fourthly, exemplar relied
on by the respondents, especially Ex.P18 pertains to very small pieces of land
(19 guntas); Fifthly, the three distinguishing featuresnoticed in the land in
sale deed (Ex.P18) are not present in the acquired land.
24) It was for the
aforementioned reasons, in our opinion, the Reference Court was justified in
making deduction of 50% towards developmental charges from the market value.
The High Court, in our opinion, did not assign any good reason as to why and on
what basis, it considered proper to make deduction towards developmental
charges at the rate of 25% in place of 50%.
25) This Court has held in Trishala Jain’s case (supra) that it depends
upon the facts of each case to decide for determination of the market value of
the land as to what percentage should be adopted for deduction. In our opinion,
the reasons mentioned above were rightly made basis by the Reference Court to
support the deduction of 50%.
26) So far as the determination of market value
made by the Reference Court is concerned, i.e., Rs.21,29,600/per acre, the same
having been upheld by the High Court, we do not find any justification to examine
this issue again. Even the learned ASG did not challenge this finding and
confined his submissions only relating to the issue of percentage of the
deduction only.
27) Learned counsel for the
respondents was not able to point out any fact/evidence which could persuade us
to uphold the reasoning and conclusion arrived at by the High Court in the
impugned judgment.
28) In view of the foregoing
discussion, we are inclined to uphold the reasoning and the conclusion arrived
at by the Reference Court instead of the High Court.
29) As a consequence of the
foregoing discussion, the appeals succeed and are accordingly allowed. Impugned judgment is set aside and that of the Reference Court
(Civil Court) dated 23.07.2010 in OP No.27/2007 is restored.