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PETITIONER: BHAGAWATHULLA SAMANNA AND ORS.

       Vs.

RESPONDENT: SPECIAL TAHSILDAR AND LAND ACQUISITION OFFICERVISAKHAPATNAM

DATE OF JUDGMENT18/09/1991

BENCH: FATHIMA BEEVI, M. (J) BENCH: FATHIMA BEEVI, M. (J) KASLIWAL, N.M. (J)

CITATION:  1992 AIR 2298            1991 SCR  Supl. (1) 172  1991 SCC  (4) 506        JT 1991 (4)    56  1991 SCALE  (2)613

ACT: Land Acquisition Act, 1894:     Section  24--Compensation--Award  of--Expenses  required for  development of the land---Deduction of one-third  value thereof--Whether and when justified.

HEADNOTE:     The  appellants’  lands  were acquired  under  the  Land Acquisition  Act. The appellants claimed land value  at  the rate of Rs. 10 per sq. yard, but the Land Acquisition  Offi- cer  awarded  compensation at the rate of  Rs.0.88  per  sq. yard.  On  a reference the Sub-Judge determined  the  market value  at Rs. 11 per sq. yard on the basis of  certain  com- parable  transactions, but granted the compensation  at  the rate of Rs. I0 as the appellants themselves had claimed only at  that  rate.  On an appeal preferred by  the  Respondent- State,  the  High Court determined the market value  of  the lands  at the rate of Rs. 6.50 per sq. yard and reduced  the total compensation, following the decision of this Court  in Tribeni  Devi v. Collector, Ranchi, AIR 1972 SC 141  that  a deduction  of  1/3  of the value is to be  made  when  large extent of land is acquired under housing scheme.     Aggrieved  by the High Court’s decision, the  appellants preferred  the  present appeals, contending  that  the  High Court  had  erroneously applied the principle laid  down  in Tribeni  Devi’s   case  without  properly  appreciating  the nature of the land in question and the purpose for which  it had been acquired.  It was further contended that there  was no justification for making any deduction since the land  in question  was  fully developed and  eminently  suitable  for being  used  as  house sites. Even in respect  of  the  land acquired  for the purpose of formation of the road,  it  was argued,  the High Court wrongly proceeded on the basis  that expenses have to be incurred for development.     On behalf of the Respondents, it was contended that  the appellants’ lands form part of large tract acquired for  the purpose of construction of 173 houses, that the other transaction based .on which compensa- tion was decided by the Sub-Judge, related to small plots of land  which  were fully developed and  while  comparing  the

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transactions,  it  was necessary to take  into  account  the development  that  is required to be made for  bringing  the acquired  land suitable for the purpose of construction  and that 1/3 of the value was rightly deducted. Allowing the appeals, this Court,     HELD  1.  The principle of deduction in the  laud  value covered by the comparable sale is adopted in order to arrive at  the market value of the acquired land.  In applying  the principle  it is necessary to consider all  relevant  facts. It is not the extent of the area covered under the  acquisi- tion, the only relevant factor. Even in the vast area  there may  be land which is fully developed having  all  amenities and  situated in an advantageous position. If  smaller  area within the large tract is already developed and suitable for building purposes and have in its vicinity roads,  drainage, electricity,  communications  etc.  then  the  principle  of deduction simply for the reason that it is part of the large tract acquired, may not be justified. [177-D]. Tribeni  Devi  v.  Collector,  Ranchi,  AIR  1972  SC  1417, distinguished.     Kaushalya Devi v. Land Acquisition Officer, [1984] 2 SCR 900;  Administrator  General of West  Bengal  v.  Collector, Varanasi, AIR 1988 SC 943; Special Tahsildar, Land  Acquisi- tion, Vishakapatnam v. Smt, A. Mangala Gown, 1991 (2)  Scale 301, relied on.     2   In the instant case, the lands involved are of  even level  and  fit for construction without the  necessity  for levelling  or reclamation. Having found that the land is  to be valued only as building sites and stated the advantageous position  in which the land in question lies though  forming part  of  the larger area, the High Court  should  not  have applied the principles of deduction. [177 F-H]     3.   The  proposition  that large area  of  land  cannot possibly fetch a price at the same rate at which small plots are  sold is not absolute proposition and in  given  circum- stances  it  would be permissible to take into  account  the price  fetched  by the small plots of land.  If  the  larger tract of land because of advantageous position is capable of being  used for the purpose for which the smaller plots  are used and is also situated in a 174 developed  area  with little or no  requirement  of  further development,  the  principle of deduction of the  value  for purpose  of comparison is not warranted. With regard to  the nature of the plots involved in these two cases, it has been satisfactorily shown on the evidence on record that the land has  facilities of road and other amenities and is  adjacent to a developed colony and in such circumstances it is possi- ble  to utilise the entire area in question as house  sites. In  respect  of  the land acquired for the  road,  the  same advantages are available and it did not require any  further development. [178-B,C).

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1221  & 1222 of 1977.     From the Judgment dated 20.1.1976 of the Andhra  Pradesh High Court in Appeal Nos. 758 and 632 of 1975. Mrs.  Shyamala Pappu and Ms. Indira Sawhney for  the  Appel- lants. T.V.S.N. Chari for the Respondent. The Judgment of the Court was delivered by     FATHIMA BEEVI, J. The appellants arc aggrieved that  the

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High  Court  by the common judgment dated 20.1.1976  in  two cases  had  substantially reduced on erroneous  grounds  the enhanced  compensation allowed by the Subordinate  Judge  on reference under Section 18 of the Land Acquisition Act  (for short the Act).     Civil Appeal No. 1222 of 1977 relates to acquisition  of Ac.  8.33  cents of land in Survey No.  2/1  of  Dondaparthi village  in pursuance to Notification under Section 4(1)  of the  Act published on 7.7.1966 for construction of  quarters for the staff of Porl Trust.     Civil Appeal No. 1221 of 1977 relates to acquisition  of Ac.1.68 cents of land in Survey No. 2/2A of the same village in  pursuance to the Notification published on 1.8.1968  for the  purpose of formation of the national highway  diversion road.     The appellants claimed land value at the rate of Rs.  10 per sq. yard since the Land Acquisition Officer awarded only 0.88  paise  per  sq. yard. The  learned  Subordinate  Judge determined  the market value of the land at the rate of  Rs. 11  per sq- yard accepting as basis the value of land  under the  transactions  evidenced  by Exhibits A-1  to  A-4,  but granted the compensa- 175 tion  at  the rate of Rs. 10 per sq. yard as  the  claimants themselves  had claimed compensation at the rate of  Rs.  10 per  sq. yard.  The State preferred appeal against the  said judgment  of  the ’Subordinate Judge to the  High  Court  of Andhra Pradesh. The High Court accepted Exhibits A-I to  A-4 as  reflecting  the value of land in the  neighbourhood.  It however following the decision of this Court in Tribeni Devi v. Collector, Ranchi, AIR 1972 SC 1417, that a deduction  of 1/3 of the value is to be made when large extent of land  is acquired  under housing scheme, determined the market  value of the appellants land at the rate of Rs. 6.50 paise per sq. yard and accordingly reduced the total compensation  allowed by the Subordinate Judge.     The learned counsel for the appellants contended  before us that the High Court had erroneously applied the principle laid  down in Tribeni Devi’s case (supra)  without  properly appreciating  the  nature of the land in  question  and  the purpose  for  which it had been acquired. It  was  submitted that the land in question was fully developed and  eminently suitable  for  being used as  house  sites  and,  therefore, there was no justification for making any deduction.  It  is also  pointed out that even in respect of the land  acquired for  the  purpose of formation of the road, the  High  Court wrongly  proceeded  on the basis that expenses  have  to  be incurred for development and thus in awarding the  compensa- tion, the High Court wrongly applied principles of deduction of  1/3  of  the value. The learned  counsel  has  taken  us through  the  relevant  evidence  and  maintained  that  the learned Subordinate Judge had reduced the land value to  Rs. 10 per sq. yard though the market value was higher at Rs. 11 per  sq.  yard only because the  appellants  had  themselves limited the claim to Rs. 10 per sq. yard     The  learned counsel for the respondent maintained  that the appellants’ land forms part of large tract acquired  for the  purpose of construction of houses, that the  sale  deed Exhibits  A-1 to A-4 relate to small plots which  are  fully developed and when the transaction is compared, it is neces- sary  to take into account the development that is  required to  be made for bringing the acquired land suitable for  the purpose of construction and that the High Court was right in making  the deduction of 1/3 of the value in the  facts  and circumstances of the case.

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   In awarding compensation in acquisition proceedings, the Court  has necessarily to determine the market value of  the land  as  on the date of the relevant  Notification.  It  is useful  to consider the value paid for similar land  at  the material time under genuine transactions.  The market  value envisages the price which a willing purchaser may pay  under bona fide trans- 176 fer to a willing seller. The land value can differ depending upon  the  extent and nature of the land sold. A  fully  de- veloped  small  plot in an important locality  may  fetch  a higher value than a larger area in an undeveloped  condition and  situated in a remote locality. By comparing  the  price shown  in  the transactions all variables have to  be  taken into  consideration.  The transaction in regard  to  smaller property  cannot,  therefore, be taken as a real  basis  for fixing  the compensation for larger tracts of  property.  In fixing the market value of a large property on the basis  of a sale transaction for smaller property, generally a  deduc- tion  is  given taking into consideration the  expenses  re- quired  for development of the larger tract to make  smaller plots  within that area in order to compare with  the  small plots dealt with under the sale transaction. This  principle has  been  stated  by  this Court  in  Tribeni  Devi’s  case (supra).     In Kaushalya Devi v. Land Acquisition Officer, [1984]  2 SCR 900, this Court observed at pages 912-913 as under:               "When large tracts are acquired, the  transac-               tion  in  respect of small properties  do  not               offer                 a                 proper               guideline  ........................In  certain               other  cases  this Court  indicated  that  for               determining  the  market  value  of  a   large               property  on the basis of a  sale  transaction               for  smaller  property a deduction  should  be               given."     We shall also refer to the observations of this Court in Administrator General of West Bengal v. Collector, Varanasi, AIR 1988 SC 943: --               "The  principle that evidence of market  value               of  sales of small, developed plots is  not  a               safe  guide in valuing large extents  of  land               has  to be understood in its  proper  perspec-               tive.  The  principle  requires  that   prices               fetched  for  small  developed  plots   cannot               directly be adopted in valuing large  extents.               However, if it is shown that the large  extent               to be valued does admit of and is ripe for use               for building purposes; that building lots that               could  be laid-out on the land would  be  good               selling propositions and that valuation on the               basis of the method of a hypothetical  lay-out               could  with justification be adopted, then  in               valuing such small, laid-out sites the  valua-               tion  indicated  by sale of  comparable  small               sites in the area at or about the time of  the               notification  would  be relevant.  In  such  a               case,  necessary deductions for the extent  of               land  required for the formation of roads  and               other civic amenities; expenses of development               of  the  sites  by  laying-out  roads,  drains               sewers,  water and electricity lines, and  the               interest  on  the outlays for  the  period  of               deferment of the realisation of the price; the               profits on the venture etc. are to be made."

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             177     This Court has in a recent decision in  Special  Tahsil- dar  Land  Acquisition,  Vishakapatnam v.  Smt.  A.  Mangala Gowri,  1991(2)  Scale 301, following  Tribeni  Devi’s  case pointed out as under:-               "It  is to be noted that in  building  Regula-               tions setting apart the lands for  development               of  roads, drainage and other  amenities  like               electricity  etc. are condition  precedent  to               approve lay out for building colonies.  There-               fore,  based upon the .situation of  the  land               and  the  need for development  the  deduction               shall be made.  Where acquired land is in  the               midst of already developed land with amenities               of  roads,  drainage,  electricity  etc.  then               deduction  of 1/3 would not be  justified.  In               the  rural areas housing schemes  relating  to               weaker sections deduction of 1/4 may be justi-               fied."     The principle of deduction in the land value covered  by the  comparable sale is thus adopted in order to  arrive  at the  market  value of the acquired land.   In  applying  the principle it is necessary to consider all relevant facts. It is not the extent of the area covered under the acquisition, the only relevant factor. Even in the vast area there may be land  which  is  fully developed having  all  amenities  and situated in an advantageous position. lf smaller area within the large tract is already developed and suitable for build- ing  purposes  and  have in its  vicinity  roads,  drainage, electricity,  communications  etc.  then  the  principle  of deduction simply for the reason that it is part of the large tract acquired, may not be justified.     The  national  highway runs very near  to  the  proposed Port-trust colony. The lands acquired already for the  South Eastern  Railway Staff Quarters lie to the southern side  of the  land  under acquisition. The town planning  trust  road runs on the northern side of the land under acquisition. The colony is in the fast developing part of the municipal town. The  plot of Ac. 1.68 cents in Survey No. 2/2A acquired  for the   formation  of  the  diversion  road  is  adjacent   to built-in-area.  The land involved in these cases is of  even level  and  fit for construction without the  necessity  for levelling or reclamation. The High Court has itself conclud- ed on the evidence that the lands covered by the acquisition are  located  by the side of the National  Highway  and  the southern railway staff quarters with the town planning trust road  on the north. The neighbouring areas are  already  de- veloped ones and houses have been constructed, and the  land has potential value for being used as building sites. Having found  that the land is to be valued only as building  sites and  stated the advantageous position in which the  land  in question  lies though forming part of the larger  area,  the High Court should not have applied the principles of  deduc- tion.  It is not in every case that such deduction is to  be allowed.  Where the acquired land is in the 178 midst  of  already developed land with amenities  of  roads, electricity etc., the deduction in the value of the compara- ble land is not warranted.     The proposition that large area of land cannot  possibly fetch a price at the same rate at which small plots are sold is  not absolute proposition and in given  circumstances  it would be permissible to take into account the price  fetched by  the  small plots of land. If the larger  tract  of  land because  of advantageous position is capable of  being  used

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for the purpose for which the smaller plots are used and  is also situated in a developed area with little or no require- ment  of further development, the principle of deduction  of the  value for purpose of comparison is not warranted.  With regard  to  the nature of the plots involved  in  these  two cases,  it has been satisfactorily shown on the evidence  on record that the land has facilities of road and other ameni- ties  and  is  adjacent to a developed colony  and  in  such circumstances  it is possible to utilise the entire area  in question as house sites. In respect of the land acquired for the  road, the same advantages are available and it did  not require  any further development. We are, therefore, of  the view that the High Court has erred in applying the principle of  deduction;  and reducing the fair market value  of  land from Rs. 10 per sq. yard to Rs. 6.50 paise per sq. yard.  In our opinion, no such deduction is justified in the facts and circumstances  of  these cases. The  appellants,  therefore, succeed.     In the result, the appeals are allowed and the  respond- ent is directed to pay the compensation as determined by the learned  Subordinate  Judge with interest  and  solatium  in accordance  with law. In the circumstances of the  case,  we make no order as to costs. G.N.                               Appeals allowed. 179