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CASE NO.: Appeal (civil)  9205-07 of 2003 Special Leave Petition (civil)  7407-09 of 2003

PETITIONER: The Land Acquisition Officer, Nizamabad, District, Andhra Pradesh        

RESPONDENT: Nookala Rajamallu and Ors.                               

DATE OF JUDGMENT: 21/11/2003

BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT,J

       Leave granted.

       Lands of the respondents (hereinafter referred to as the  ’claimants’) measuring 11.33 acres situated in Kammarpally village,  Nizamabad District were acquired by the Government for providing house  sites to weaker sections of people. The Notification under Section 4(1)  of the Land Acquisition Act, 1894 (for short the ’Act) was gazetted on  4.6.1988. The claimants owned small extent of lands situated in  different survey numbers. The Land Acquisition Officer (in short the  ’LAO’) passed an award fixing the market value of the acquired land at  Rs.12,325 per acre. Not accepting the compensation awarded by the LAO  claimants sought for reference under Section 18 of the Act for  enhancement. The Reference Court after considering the evidence, both  oral and documentary, awarded compensation at the rate of Rs.10/- per  sq. yard besides awarding the statutory benefits available. Before the  Reference Court, several instances of sales were pressed into by the  claimants. Ex.B/2 dated 18.6.1986 was for an extent of land measuring  170 sq.yards. The Ex.B/3 related to an award of the year 1981 whereunder  Rs.9/- was awarded as compensation per square yard. Ex.B/4 is the sale  deed dated 23.1.1988 where extent of land was 162 square yards, and the  rate of consideration was Rs.82/- per sq. yard. Ex.B/5 is in respect of  sale deed of 9.9.1985 where the extent of land was 127.5 square yards,  and the sale consideration was Rs.109/- per sq. yard. Claimants being  still not satisfied with the enhanced compensation filed an appeal  before the Andhra Pradesh High Court. A Division Bench of the said Court  by the impugned judgment held that the market value payable to the  claimants was to be taken at Rs.55/- per sq. yard.

       Taking into account the extent of land covered by the exemplar  sale deeds and the award made in respect of acquisition during the year  1981 the High Court was of the view that the instances of sales were  comparable sales in respect of the lands under acquisition. Focusing of  the sale consideration of the instance covered by Ex.B/4, and making  1/3rd deduction  for development, the value was fixed at Rs.54/- per sq.  yard. As there was time gap of five months between Ex. B/4 and the  notification, the escalation was taken to be Rs.1/- per sq. yard.  Accordingly, the rate of Rs.55/- per sq. yard was fixed and the  statutory entitlements were also directed to be paid.   

       Learned counsel for the appellant submitted that the High Court  did not take note of the relevant aspects like the extent of land  covered by the Exhibits, and the proximity between the dates of sales

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and the date of acquisition, and more importantly the fixation of rates  per square yard in respect of acquisition in 1981. According to him, had  these factors been considered, the rate could not have been as high as  fixed by the High Court.  

       Per contra, Mrs. K. Amreshwari, learned senior counsel appearing  for the respondents-claimants submitted that the High Court has adopted  a right approach in fixing the rates. The instances of sales related to  lands which were situated at a close proximity to the acquired land. The  instance of award cited by the appellant related to an interior small  village and did not have the advantages which the acquired lands have.  

Where large area is the subject matter of acquisition, rate at  which small plots are sold cannot be said to be a safe criteria.  Reference in this context may be made to few  decisions of this Court in  The Collector of Lakhimpur v. Bhuban Chandra Dutta (AIR 1971 SC 2015),  Prithvi Raj Taneja (dead) by Lrs. v. The State of Madhya Pradesh and  Anr. (AIR 1977 SC 1560) and Smt. Kausalya Devi Bogra and Ors. etc. v.  Land Acquisition Officer, Aurangabad and Anr. (AIR 1984 SC 892).  

       It cannot, however, be laid down as an absolute proposition that  the rates fixed for the small plots cannot be the basis for fixation of  the rate. For example, where there is no other material it may in  appropriate cases be open to the adjudicating Court to make comparison  of the prices paid for small plots of land. However, in such cases  necessary deductions/adjustments have to be made while determining the  prices.  

       In the  case of Suresh Kumar v. Town Improvement Trust, Bhopal  (AIR 1989 SC 1222) in a case  under the Madhya Pradesh Town Improvement  Trust Act, 1960 this Court held that the rates paid for small parcels of  land do not provide a useful guide for determining the market value of  the land acquired. While determining the market value of the land  acquired it has to be correctly determined and paid so that there is  neither unjust enrichment on the part of the acquirer nor undue  deprivation on the part of the owner. It is an accepted principle as  laid down in the case of Vyricherla Narayana Gajapatiraju v. Revenue  Divisional Officer, Vizagapatam (AIR 1939 P.C. 98) that the compensation  must be determined by reference to the price which a willing vendor  might  reasonably expect to receive from the willing purchaser. While  considering the market value disinclination of the vendor to part with  his land and the urgent necessity of the purchaser to buy it must alike  be disregarded. Neither must be considered as acting under any  compulsion. The value of the land is not to be estimated as its value to  the purchaser. But similarly this does not mean that the fact that some  particular purchaser might desire the land more than others is to be  disregarded. The wish of a particular purchaser, though not his  compulsion may always be taken into consideration for what it is worth.  Section 23 of the Act enumerates the matters to be considered in  determining compensation. The first criteria to be taken into  consideration is the market value of the land on the date of the  publication of the notification under Section 4(1). Similarly, Section  24 of the Act enumerates the matters which the Court shall not take into  consideration in determining the compensation. A safeguard is provided  in Section 25 of the Act that the amount of compensation to be awarded  by the Court shall not be less than the amount awarded by the Collector  under Section 11. Value of the potentiality is to be determined on such  materials as are available and without indulgence in any fits of  imagination. Impracticability of determining the potential value is writ  large in almost all cases. There is bound to be some amount of guess  work involved while determining the potentiality.

       It can be broadly stated that the element of speculation is  reduced to minimum if the underlying principles of fixation of market  value with reference to comparable sales are made:

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(i)     when sale is within a reasonable time of the  date of notification under Section 4(1);         (ii)    it should be a bona fide transaction; (iii)it should be of the land acquired or of the land  adjacent to the land acquired; and          (iv)    it should possess similar advantages.

       It is only when these factors are present, it can merit a  consideration as a comparable case (See The Special Land Acquisition  Officer, Bangalore v. T. Adinarayan Setty (AIR 1959 SC 429).  

       The evidence of record shows that the acquired lands were  agricultural lands. Obviously, their valuation would differ to a  considerable extent from the land used for house sites. In such a case,  necessary deductions for the extent of land acquired 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  realization of the price, the profits on the venture etc. are to be  made. (See Administrator General of West Bengal v. Collector, Varanasi  (1988 (2) SCC 150). In Brig. Sahib Singh Kalha and Ors. v. Amritsar  Improvement Trust and Ors. (1982 (1) SCC 419) the deduction for such  development was taken as 53%.  

       In K.S. Shivadevamma and Ors. v. Assistant Commissioner and Land  Acquisition Officer and Anr. (1996 (2) SCC 62) this Court held as  follows:

"it is then contended that 53% is not automatic but  depends upon the nature of the development and the  stage of development. We are inclined to agree with  the learned counsel that the extent of deduction  depends upon development need in each case. Under the  Building Rules 53% of land is required to be left  out. This Court has laid as a general rule that for  laying the roads and other amenities 33-1/3% is  required to be deducted. Where the development has  already taken place, appropriate deduction needs to  be made. In this case, we do not find any development  had taken place as on that date. When we are  determining compensation under Section 23(1), as on  the date of notification under Section 4(1), we have  to consider the situation of the land development, if  already made, and other relevant facts as on that  date. No doubt, the land possessed potential value,  but no development had taken place as on the date. In  view of the obligation on the part of the owner to  hand over the land to the City Improvement Trust for  roads and for other amenities and his requirement to  expend money for laying the roads, water supply  mains, electricity etc., the deduction of 53% and  further deduction towards development charges @33- 1/3%, ordered by the High Court, was not illegal".          

       On applying the principles of law as set out in various decisions  referred to above to the facts of the case we feel that deduction at the  rate of 53% from the value indicated in Ex.B/4 would bring the rate per  square yard to be around Rs.40/-. The rate is accordingly fixed. The  claimants shall be entitled to compensation at the rate of Rs.40/- per  sq. yard along with statutory entitlements including interest on  solatium. The appeals are allowed to the aforesaid extent. Costs made  easy.  

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