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PETITIONER: MEHTA RAVINDRARAI AJITRAI (DECEASED) THROUGHHIS HEIRS AND LE

       Vs.

RESPONDENT: STATE OF GUJARAT

DATE OF JUDGMENT08/08/1989

BENCH: KANIA, M.H. BENCH: KANIA, M.H. KULDIP SINGH (J)

CITATION:  1989 AIR 2051            1989 SCR  (3) 743  1989 SCC  (4) 250        JT 1989 (3)   321  1989 SCALE  (2)296

ACT:     Land Acquisition Act, 1894: ss. 4 & 23--Compensation for acquired land--Market value-Determination  of--Post-acquisi- tion instances--Admissibility of--Prices fetched for similar lands  at or about the time of preliminary notification  the best evidence of market value.

HEADNOTE:     Certain lands situated on the outskirts of a large  city were acquired by the respondent-State after issuing prelimi- nary notification under s. 4(1) of the Land Acquisition Act, 1894  on  August 6, 1956 for construction of  an  industrial estate.     The appellants claimed compensation at the rate of  Rs.3 per  sq. yard and cited in support thereof an  agreement  of sale  dated January 21,1957 and a conveyance dated April  2, 1957  pertaining to a piece of land adjoining  the  acquired land  showing  the sale price at the rate of  Rs.3  per  sq. yard.  The respondent-State relied on an auction sale  dated February  23, 1953 at about 41p. per sq. yard, evidenced  by Ex. 112, and the instance evidenced by Ex. 118 pertaining to sale to a minor, transacted by his father.     The  Land  Acquisition Officer classified  the  land  as superior  agricultural land and awarded the compensation  at the rate of Rs.2200 per acre, i.e., about 45p. per sq. yard.     In the reference, the Civil Judge did not rely upon  any of  the  instances proved before him,  but  considering  the general situation of the land and its considerable  building potentiality  fixed the rate of compensation at Rs.4400  per acre, i.e., about 90p. per sq. yard.     Dismissing the appeal, the High Court took the view that the  valuation  fixed by the Civil Judge was  justified.  It held that a postacquisition sale could not be regarded as  a comparable  instance at all, since the acquisition for  con- struction of the industrial estate was bound to have  pushed up the prices in the surrounding area. It placed reliance on the  evidence furnished by the instance at Ex. 112,  over  a year prior to 744 the  date of s. 4 notification, but discarded  the  instance evidence by Ex. 118 relied on by the State.

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Allowing the claimants’ appeal by special leave, the Court,     HELD:  The market value of a piece of property for  pur- poses of s. 23 of the Land Acquisition Act, is stated to  be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arm’s length. Prices fetched for similar lands with  similar advantages  and potentialities under bona fide  transactions of sale at or about the time of the preliminary notification are  the  usual and, indeed, the best,  evidence  of  market value. [747C]     Administrator  General  of  West  Bengal  v.  Collector, Varanasi, [1988] 2 SCC 150, referred to.     In  the instant case, the instance evidenced by Ex.  112 pertaining_ to sale of land in government auction relied  on by the High Court was a distress sale. There were  execution proceedings  pending  against the vendor.  It  could,  thus, hardly  furnish  any reliable evidence  for  estimating  the market value of the land in question. The instance evidenced by  Ex. 118 was rightly discarded by the High Court. Only  a certified  copy  of  the sale deed  pertaining  thereto  was produced in. the trial court. The evidence of the purchaser, who  was minor at the time when the sale deed was  executed, had  no evidentiary value as he had no personal  information regarding the sale. No other person conversant with the sale was examined by the State. [748AB, CF]     The  only comparable instance on the basis of which  the market value at the time of the s. 4 notification in respect of the acquired land could be determined was, therefore, the sale  proved  by the sale deed dated April 2, 1957  and  the preceding  agreement of sale dated January 21, 1957.  Though entered  into  about five months alter the  notification  it could  be  fairly regarded as reasonably  proximate  to  the acquisition.  The price fixed under the said  agreement  was Rs.3  per  sq. yard. However, there seem to have  been  some rise  in the price of land on account of the acquisition  of the land in question for purposes of constructing the indus- trial  estate.  Further, the land proposed to  be  purchased under the agreement was adjoining the land of the  purchaser and the purchaser might have paid some extra amount for  the convenience of getting the neighbouring land. These  factors have  to  be taken into account and  appropriate  deductions made from the rate disclosed in the agreement in  estimating the market value. Considering these together with 745 the  situation and potentialities of the acquired  land,  it would be proper to fix its market value at Rs.8800 per acre, which  comes  to about Rs. 1.80p. per sq. yard.  The  decree passed by the Civil Judge to be amended accordingly.  [748G, 747E]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2169  of 1970.     From the Judgment and Order dated 12.8.68 of the Gujarat High Court in F.A. No. 233 of 1963.     B.K. Mehta, U.A. Rana, Bhushan B. Oza and K.L. Hathi for the Appellants. G.A. Shah and M.N. Shroff for the Respondent. The Judgment of the Court was delivered by     KANIA, J. This is an appeal by special leave granted  by this Court under Article 136 of the Constitution. The appeal arises out of land acquisition proceedings.     The appellants before us are the heirs and legal  repre-

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sentatives  of the original claimants. Appellants Nos.  1(a) to 1(c) are the heirs and legal representatives of  original claimant  No.  1 and appellants Nos. 2(i) to 2(ii)  are  the heirs and legal representatives of original claimant No. 2.     The acquisition was in respect of an area admeasuring 15 acres  and 1 guntha belonging to claimant No.  1  (Original) and  area  admeasuring 6 acres and 25 gunthas  belonging  to claimant Nos. 1 and 2 (Original). The lands are situated  in the  Bhavnagar  District  and are on the  outskirts  of  the Bhavnagar City and adjoining the Bhavnagar Rajkot Road.  The acquisition  forms  part  of a larger  acquisition  for  the construction  of  an  industrial estate  at  Bhavnagar.  The preliminary  notification  under section 4(1)  of  the  Land Acquisition  Act, 1894 was published on August 6, 1956.  The claimants  made  their claims before  the  Land  Acquisition Officer who classified the lands as superior of Bagayat type of agricultural land and awarded compensation at the rate of Rs.2200  per acre which would come to about 0.48 p. per  sq. yard. This award was not accepted by the claimants and  they made  a  reference  which came up  for  hearing  before  the learned  Civil Judge, Senior Division, Bhavnagar.  The  evi- dence of some instances of sale 746 was  led  before the learned Civil Judge by  the  respective parties but he did not rely upon any of the instances proved before him. He considered the general situation of the lands and  held that on the evidence it was shown that  the  lands had a considerable building potentiality and the Land Acqui- sition  Officer  was in error in so far as he did  not  take that  potentiality  into account. The  learned  Civil  Judge considered the general situation of the land under  acquisi- tion  and the potential value of the same for building  pur- poses  and  fixed the rate of compensation at  Rs.4,400  per acre  which  had come to about 0.90p. per  sq.  yard.  Being dissatisfied, the claimants preferred an appeal against  the decision  of the learned Civil Judge, Bhavnagar to the  High Court  of  Gujarat. The Division Bench of. the  High  Court, which disposed of the appeal, took the view that the  valua- tion  fixed  by the learned Civil Judge  was  justified  and dismissed  the appeal. This appeal is directed  against  the said decision of the High Court.     We  do  not feel called upon to enter  into  a  detailed scrutiny  of  the  evidence led by the  parties  before  the learned  Civil Judge. The main instance relied upon  by  the claimants  was by way of an agreement to sell dated  January 21,  1957 and a sale deed dated April 2, 1957 in respect  of the  sale  of 42552 square yards of land out of  survey  No. 333/2  which  is adjoining the land with which we  are  con- cerned  which forms part of survey No. 33 1. The  land  sold under this instance was known as "Kesarbagh" and was sold to Mahalaxmi Mills Limited by Prince Nirmal kumar singhji.  The rate at which it was sold works out to Rs.3 per sq. yard. On the  basis  of this instance, the claimants had  made  their claim  at  Rs.3  per sq. yard before  the  Land  Acquisition Officer. The High Court inter alia rejected this instance on the basis that the contents of the sale deed were not  prop- erly proved. However, after an order for remand made by this Court  on  August 25, 1981 evidence has been  led  regarding this  sale  and the sale deed has been duly  proved  by  the evidence  of  one Dharamdas, a director of  Mahalaxmi  Mills Limited,  the purchaser, and the vendor Prince Nirmal  kumar singhji.  It was marked originally as Exhibit 87  and  after the  evidence on remand as Exhibit 152. The  evidence  shows that this land was just adjacent to the land of the purchas- er, Mahalaxmi Mills Limited. The agreement of sale is  dated

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January  21, 1957 and the conveyance or sale-deed  is  dated April 2, 1957 as aforestated. The price has been fixed under the  agreement of sale. This agreement of sale  was  entered into  about five months after the publication of  section  4 notification  in the case before us The High Court  rejected the  said  instance on the ground that the contents  of  the sale-deed were not proved although the execution was thereof duly proved. In view of the 747 evidence  led after remand, it cannot be disputed that  this agreement  of sale as well as the sale deed have  been  duly proved and they have been duly marked as exhibits. The  High Court  further took the view that in any event, no  reliance could be placed on this instance of sale because the  acqui- sition  of the land in question before us was for  the  con- struction  of  an industrial estate at  Bhavnagar  and  such construction  was bound to have pushed up the price of  land in  the surrounding area. There is, however, nothing in  the evidence  to  show that there was any sharp  or  speculative rise in the price of the land after the acquisition and this has  been noticed by the High Court. It appears  that  under these circumstances, the High Court was not justified in not taking  this instance into account at all as it has done  on the ground that it was a post-acquisition sale and could not be  regarded  as a comparable instance at  all.  The  market value  of a piece of property for purposes of section 23  of the Land Acquisition Act is stated to be the price at  which the property changes hands from a willing seller to a  will- ing,  but not too anxious a buyer, dealing at  arms  length. Prices fetched for similar lands with similar advantages and potentialities  under bona fide transactions of sale  at  or about the time of the preliminary notification are the usual and,  indeed  the  best, evidences of  market  value.  (See: Administrator General of West Bengal v. Collector, Varanasi, [1988] 2 SCC 150 at para 8. )     Keeping these factors in mind, we feel that although the instance  reflected in the sale deed (Exhibit 152)  and  the agreement for sale in connection with that land, pertains to a  sale after the acquisition, it can be fairly regarded  as reasonably proximate to the acquisition and, in the  absence of  any evidence to show that there was any  speculative  or sharp rise in the prices after the acquisition the agreement to sell dated January 21, 1957 must be regarded as  furnish- ing  some light on the market value of the land on the  date of  publication of section 4 notification. However,  certain factors have to be taken into account and appropriate deduc- tions made from the rate disclosed in the said agreement  to sell  in estimating the market value of the land with  which we  are  concerned at the date of the  acquisition.  One  of these factors is that there seems to have been some rise  in the price of land on account of the acquisition of the  land in question before us for purposes of constructing an indus- trial estate. Another factor is that the land proposed to be purchased under the said agreement to sell was adjoining the land of the purchaser and the purchaser might have paid some extra amount for the convenience of getting the neighbouring land. We find that the High Court placed reliance on the evidence 748 furnished  by the instances at Exhibit 112 relied on by  the State.  By Exhibit 112 land admeasuring 4 acres (19,360  sq. yard)  was sold from Survey No. 384 for Rs.8,000. This  sale deed is dated February 23, 1953, that is, over a year  prior to the date of the section 4 notification in the case before us. The purchaser stated in the witness box that apart  from

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Rs.8,000 mentioned as the consideration in the sale deed, he had  to pay an extra amount of Rs.4,000. Although  the  High Court  has  not  relied upon this statement,  it  cannot  be altogether  ignored. The land was sold at a Government  auc- tion  which  means that it was a distress sale.  There  were execution  applications  pending against the  vendor.  Under these  circumstances, there is a little doubt that it was  a distress sale and it hardly furnishes any reliable  evidence for  estimating  the market value of  the  land.  Therefore, although  the price of the land appearing in  that  instance comes to about 0.62p. per sq. yard, it furnishes no reliable guidance  regarding the market price of the land. As far  as the sale instance evidenced by Exhibit 118 is concerned,  it has  been  discarded  by the High Court and,  in  our  view, rightly  so. In the Trial Court neither the vendor  nor  the purchaser nor any person conversant with the sale was  exam- ined. Not the original but only a certified copy of the sale deed was produced. After the remand the situation appears to be hardly any better. The State examined one  Virbhadrasingh on  whose behalf the land was purchased under the said  sale deed. He was a minor at the time when the sale deed (Exhibit 118) was executed. Virbhadrasingh’s father had purchased the land in Virbhadrasingh’s name as Virbhadrasingh was a  minor only about 12 years old at that time.     The evidence of Virbhadrasingh has no evidentiary  value as  he has no personal information regarding the sale  under Exhibit 118. One Ratilal who prepared the said document gave evidence in court but he did not have any personal knowledge about the transaction either. Under these circumstances,  no reliance can be placed on Exhibit 118.     In  our view, the only comparable instance on the  basis of  which  the  market value at the time of  the  section  4 notification  in respect of the acquired land can be  deter- mined is the sale proved by the sale deed (Exhibit 152)  and the preceding agreement for sale in respect of the land sold which was entered into about five months after the notifica- tion.  The price thereunder is Rs.3 per sq. yard. From  that price  certain deductions have to be made on account of  the various  factors which have been enumerated earlier such  as the rise in prices of land after the acquisition and so  on. Taking  into account all these factors including the  situa- tion and potentialities of the acquired land, it ap- 749 pears to us that it would be proper to fix the market  value of  the  acquired land at Rs.8,800 per acre which  comes  to about  Rs. 1.80 per sq. yard and we direct accordingly.  The decree passed by the Civil Judge, Senior Division, Bhavnagar will be amended accordingly.     The  respondent will pay to the appellants one  half  of the  costs  of the appeal in this Court. There  will  be  no change as far as the rest of the order is concerned. P.S.S. 750