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CASE NO.: Appeal (civil)  1500 of 2004

PETITIONER: Pattammal & Ors.                                         

RESPONDENT: Union of India & Anr.                           

DATE OF JUDGMENT: 08/11/2005

BENCH: Ashok Bhan & Altamas Kabir

JUDGMENT: J U D G M E N T With

Civil Appeal Nos. 1501 of 2004, 1502 of 2004 and  Civil Appeal No 6651 of 2005 @ SLP(Civil)No. 6309/04

ALTAMAS KABIR,J.

        Leave granted in Special Leave Petition (Civil) No.  6309/04.

       9 Hectares 75 Ares and 12 Ca of land situated in  Keezhaveli Village at Karaikal , Pondicherry, in Ward  No. G, Block No. 3, spread over 11 town survey  numbers was sought to be acquired for the construction  of a stadium to provide playground facilities for the  students of Schools and Colleges situated at Karaikal.   Notifications under Section 4(1) of the Land Acquisition  Act, 1894 (hereinafter referred to as ’the Act’), were  published in the Official Gazette on 26th December and  28th December, 1989, respectively, upon receipt of the  approval of the government.         The market value of the lands was fixed by the  Collector at Rs.2,550/- per Are upon treating the same  as ’Wet’ lands.  Several claimants whose lands were  involved in the acquisition proceedings asked for  references to be made under Section 18 of the  aforesaid Act and the references were all taken up for  consideration by the Additional District Judge,  Pondicherry, as the Reference Court.  By its Award  dated 24th January, 1994, the Reference Court  classified the lands in question as having potential  value as house sites and fixed the market value thereof  at Rs.13,500/- per Are.         The Union of India and the Referring Officer filed  separate appeals in the High Court of Judicature at  Madras against the findings and order dated 24th  January, 1994, passed by the Reference Court.  Three  of the appeals were numbered as AS 591/94, 594/94  and 573/2003.  AS No.591 of 1994 filed by the Union of  India against one Jayaraman  and Appar was disposed  of on 23rd February, 2001, by the High Court of  Judicature at Madras by reducing the market value of  the lands fixed at Rs.13500/- per Are by the Reference  Court to Rs.7000/- per Are.  Aggrieved by the said  decision the respondent filed a review petition No. 69 of

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2001 which was dismissed on 6th September, 2002.   Civil Appeal No. 1501 of 2004 is directed against the  judgment of the High Court of Judicature at Madras in  the said review petition.         A separate appeal by way of special leave, being  Civil Appeal No. 1502 of 2004, has been filed by the  said respondents in AS No. 591 of 1994 against the  judgment and order passed by the High Court of  Judicature at Madras on 23rd February, 2001, against  the judgment and decree of the Reference Court.         Civil Appeal No. 1500 of 2004 has been filed by  another set of claimants (Pattammal & Ors.) against  the judgment and order of the High Court of Judicature  at Madras dated 23rd February, 2001, in AS No. 594 of  1994 preferred by the Union of India and the Referring  Officer.         The other appeal by way of special leave petition  (Civil) 6309 of 2004 has been filed by S. Bavani against  the judgment and order dated 18th September 2004  passed by the High Court of Judicature at Madras in AS  No. 573 of 1994.         By virtue of the impugned judgment, in respect of   all claims concerning the acquisition of the lands for  construction of the stadium at Karaikal, the market  value of the acquired lands which had been fixed at Rs.  2,550/- per Are by the Land Acquisition Officer and had  been enhanced to Rs.13500/- per Are by the Reference  Court, was reduced to Rs.7000/- by the High Court.    These separate appeals have been preferred by the  claimants and since they all involve the lands acquired  for the aforesaid purpose by Notification published  under Section 4(1)  the Act on 26th December and 28th  December, 1989, respectively, the same have been  taken up for hearing and disposal together. For the sake of convenience the Award passed by  the Reference Court in LAOP No. 42 of 1993, being the  reference of Smt. Pattamal and two others, is taken up  for consideration as the leading case, which will also  govern the other appeals. As initially mentioned hereinbefore, the Land  Acquisition Collector classified the acquired lands as  ’Wet’ lands and fixed the market value thereof at  Rs.2550/- per Are.  The Reference Court took note of  the fact that the petitioners before him had been doing  business in real estate of purchasing land and  developing them into housing sites.  It also took note of  the fact that the acquired lands are situated at a place,  which had tremendous potential value and had been  wrongly classified as ’wet’ lands.  It was noted that the  said lands are situated just behind Joseph Colony  abutting Meetu Street, which links the lands with  Thomas Arul Street and is very near to the junction of  Thomas  Arul Street and By-Pass Road.  It was noticed  further that the By-Pass is the broadest road in Karaikal  connecting the new bus stand to Thomas Arul Street  and that important Government Offices like the  Administrative Office, Court, General Hospital,  Municipal Office, Schools and colleges are located very  near to the acquired lands.   It appears that there is a  residential colony called Bharat Nagar Extension  situated within 200 meters from the acquired lands and  the beach road is situated within 500 meters where  there are a number of Government and Private  buildings.  It was further noted that Government had  acquired large tracts of land along the beach road for

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various public purposes like construction of Excursion  center, Automatic Telephone Exchange, Postal  Employees quarters, etc.  It was the finding of the  Reference Court that the acquired lands are potential  house sites which were ideal for house construction and  that but for the acquisition  the petitioners could have  sold a portion of the acquired lands as house sites.         The Reference Court thereafter went on to  consider some of the contemporaneous conveyances  and sale deeds executed and registered at about the  same time as the publication of the notification under  Section 4(1) of the  Act.          The first sale deed to be taken into consideration  was one dated 17th October, 1988 which was marked  as A-12, whereby 0.2 Ares 07 Centiares was sold at the  rate of Rs.6739/- per Are.  The second sale Deed also  dated 17th October, 1988 and  marked as Exhibit A-13,  was in respect of 0.2 Ares 37 Centiares   of land  situated in the same area which was sold at the rate of  Rs. 8937.34 per Are.  The third deed dated 7th  December 1988 was also in respect of land situated in  the same area measuring 0.1 Are 71 Centiares     sold  at the rate of Rs.11.695.90 per Are.   The fourth sale  deed dated 3rd May, 1989 was one executed in respect  of 01 Are 70 centiares   of land situated in the same  area as the acquired lands at the rate of Rs.14,705/-  per Are.           As will appear from the Award of the Reference  Court, by a subsequent sale deed dated 2nd August,  1989 a nearby plot was sold at the rate of Rs.13,450/-  per Are.         Considering the location of the acquired lands and  their high potential for commercial exploitation the  Reference Court recorded the fact that there had been  a steep escalation in the land value in the area in  question within a short interval which fact was also  admitted by the Land Acquisition Officer.  Accordingly,  placing reliance on Exhibit A-15, the Reference Court  fixed the market value of the acquired property at Rs.  13,500/- per Are, together with 30 percent solatium  and 12 percent additional market value in terms of  Section 23(1A) of the Act.         As mentioned hereinbefore, the same  enhancement was made in respect of the lands covered  by the other reference cases with which we are  concerned.         A.S. Nos. 591 of 1994 and 504 of 1994 were both  disposed of by two separate judgments both dated 23rd  February 2001 passed by the Division Bench of the  Madras High Court.   The reasoning in both the  judgments are identical.  Before the High Court it was  sought to be contended on behalf of the appellants- Union of India that the Reference Court had wrongly  fixed the market value of the acquired lands at  Rs.13,500/- per Are  on the basis of Exhibit A-15 dated  3rd May, 1989, since none of the parties to the  document had been examined as required under  Section 51 A of Act.   In support of such contention  reliance was placed on the decisions of this Court in  Meharban and Ors.etc. vs. State of U.P. and Ors.  reported in A.I.R. 1997, SC 2664; A.P. State Road  Transport Corporation, Hyderabad vs. P. Venkaiah and  Ors. reported in 1997 (1) SCC 128 and State of U.P.  and Anr. Vs. Rajendra Singh, reported in  AIR 1996 SC  1564.

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       In view of the aforesaid decisions of this Court,  the Madras High Court came to a finding that Exhibit A- 15  which had been  relied upon by the Reference Court  to fix the market value of the acquired lands could not  be considered in the absence of examination of the  parties to the documents.  In other matters involving  some of the lands acquired for the construction of the  stadium, the Division Bench of the Madras High Court  had fixed the market value of the lands acquired at Rs.  7000/- per Are.  On the basis of the above, the Madras  High Court reduced the market value of the acquired  lands from Rs.13,500/- per Are to Rs.7,000/- per Are.         Aggrieved by the said decision of the Madras High  Court in reducing the market value of the lands as  awarded by the Reference Court from Rs.13,500/- per  Are to Rs.7,000/- per Are, the respondents in the said  two appeals have preferred CA 1500 of 2004 and CA  No. 1501 of 2004.  As mentioned hereinabove, CA  1502 of 2004 was filed against the order dismissing the  review petition of the appellants in CA 1501 of 2004.         The fourth appeal is by way of Special Leave  Petition (Civil) No. 6309 of 2004 against the judgment  and order of the Division Bench of the Madras High  Court dated 18th September 2004 in A.S. No. 573 of  1994 also reducing the market value of the acquired  lands fixed by the Reference Court at Rs. 13,500/- per  Are to Rs.7000/- per Are.         On behalf of the appellants it was sought to be  urged that the impugned judgments of the Madras High  Court were based on an erroneous appreciation of the  law relating to the fixation of market value of lands  acquired for public purposes.  It was urged that the law  as explained in the case of Meharban  and Ors. and the  two other judgments of this Court on which reliance  had been placed by the High Court had, in fact, been  reversed by a Constitution Bench of this Court in the  case of Cement Corporation of India Limited vs. Purya  and Ors., reported in 2004 (8) SCC 270.  In the said  decision it was emphasized that the view expressed in  Meharban’s case was not the correct interpretation and  that under Section 51A of the Act, a presumption as to  the genuineness of the contents of document is  permitted to be raised without examination of the  parties thereto, if the said presumption is not rebutted  by other evidence.  In the said case this Court  reiterated the views expressed by this Court in the case  of Land Acquisition Officer and Mandal Revenue Officer  Vs. V. Narasaiah, reported in 2001(3) SCC 530,  wherein it was held, inter alia, as follows:-         "14, The words "may be accepted as  evidence" in the section indicate that there is  no compulsion on the court to accept such  transaction as evidence, but it is open to the  court to treat them as evidence.   Merely  accepting them as evidence does not mean  that the court is bound to treat them as  reliable evidence.  What is sought to be  achieved is that the transactions recorded in  the documents may be treated as evidence,  just like any other evidence, and it is for the  court to weigh all the pros and cons to decide  whether such transaction can be relied on for  understanding the real price of the land  concerned."

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       Apart from the above, it was also contended that  the Madras High Court had failed to consider the  potential value of the lands for commercial exploitation,  having regard to the location of the lands sought to be  acquired as had been commented upon by the  Reference Court.  It was urged that the Land  Acquisition Officer had himself admitted the steep  escalation in the market value of lands in the locality in  a span of one year and that the  market value was   much higher than what was fixed by the Madras High  Court  and had been paid for similar sites even more  than one year prior to the Notification under Section  4(1) of the Act.         In addition to the above, it was sought to be  contended, that, in any event, the Madras High Court  had erred in reducing the market value which had been  fixed by the Reference Court after due consideration of  all the cogent  materials  available on record.         It was submitted that the Madras High Court had   reduced the market value of the lands in question  in   complete disregard of the methods to be employed for  fixation of market value and instead of relying upon the  comparable method had chosen to adopt the average  method which was without any evidentiary  basis and  also upon an erroneous construction of the law as  contained in Section 51A of the  Act.            It was urged that the judgments of the Madras  High Court were liable to be set aside and the Awards  of the Reference Court were liable to be restored.         Appearing for the respondents in all the appeals  Mr. T.L.V. Iyer, Senior Advocate, firstly urged that the  Reference Court had failed to take into consideration  the fact that by the sale deed dated 15th July, 1988,  being Exhibit A-I, some of the appellants had  purchased 2 Hectares 9 Ares and 14 Ca  of land, which  comprised a part of land which had been acquired, at  the rate of about Rs.377.90 per Are and in respect of  same land compensation was now being sought for at  the rate of Rs.13,500/- per Are.         Mr. Iyer also referred to Exhibits A-12, A-13 and  A-14 where the price of certain small house plots was  fixed at Rs.6,739/- per Are and upto a maximum of  Rs.11,695.90 per Are.   As to Exhibit A-15, Mr. Iyer  submitted that the same could not be taken as a  yardstick, inasmuch as, by the said sale deed, the  appellants in CA No. 1500 of 2004 had sold a small  house plot, for the purpose of creating evidence.   Mr.  Iyer submitted that the High Court of Madras had  rightly chosen not to rely on Exhibit A-15, although on  a reasoning which had subsequently been dissented  from by this Court in a later judgment.         Mr. Iyer also contended that merely because of  the potential value of the acquired land for commercial  exploitation, it could not be said that the character of  the said lands had changed, and  that they continued to  be ’Wet’ lands as had originally been classified by the  Land Acquisition Collector.  As to what would be the  value after development was a matter of conjecture  and could not be the basis for fixation of the market  value of the lands when acquired.         In support of his aforesaid submissions, Mr. Iyer  referred to the decision of this Court in the case of  Printers House Pvt. Ltd. vs. Saiyadan  (Deceased) by  Lrs. and Ors. reported in 1994 (2) SCC 133, wherein  

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the manner in which the comparable sale method was  to be applied  in determining the market value had  been explained.  It was explained that it is the price  reflected in the sale or award pertaining to a land  closest or nearest to the acquired land in all its features  and under the average price reflected in such  comparable sales or awards which form the basis.  Mr.  Iyer submitted that since some of the lands had been  acquired by the appellants in CA No. 1500 of 2004 in  July 1988 at the rate of Rs.377.90 per Are, the same in  keeping with the subsequent sale deeds dated 17th  October, 1988 and 7th December 1988 had been taken  by the Madras High Court as comparable units for fixing  the market value.          The aforesaid decision of this Court was also relied  upon by Mr. Iyer in support of his contentions that in  determining the market value the Court has to mark  the location and the features, which include both  advantages and disadvantages, of the land covered by  the Award, involving the location, size, shape,  potentiality and tenure etc. thereof.                 Mr. Iyer contended that in applying the  comparable method, the Court also has to take into  account the size and the area of the land acquired and  those forming the basis of the comparable units.   It  was urged that the market value of  large tracts of the  land could certainly not be the same as a small house  site.  It was urged that the Reference Court had erred  in relying on the sale deeds pertaining to small house  sites when the area under acquisition  comprised large  tracts of land to be converted into a stadium.   In  support of the said submission Mr. Iyer referred to and  relied on a decision of this Court in H.P. Housing Board  vs. Bharat S. Negi and Ors, 2004 (2) SCC 184, wherein  the said principle has been explained.                 Mr. Iyer concluded his submissions by  referring to G.O. M.S. No. 14 dated Pondicherry, 8th  February, 1989 in which instructions had been given in  regard to the procedure to be followed for the purpose  of site selection under the  Act.  From  the said  Government Order  Mr.Iyer pointed out that the market  value was required to be assessed after taking into  account the potential value of the land, thereby  meaning  all the reasonable properties  which the land  was  likely to possess in respect of its user.   The  potential value was also required to  be assessed after  taking into consideration the purpose for which the land  is acquired.  While deciding upon the nature of land,  the classification shown in the revenue records should  not alone be relied upon but the potential use to which  the land can be put should also be taken into account.   Mr. Iyer placed special emphasis on sub-para (iii) of  Paragraph 2 wherein it was explained that in acquiring  vast extent of land for urban purposes, the land should  be valued as an urban land, diminishing 20 to 33 1/3  percent of the assessed value towards improvement  and amenities.  Furthermore, in assessing the market  value only the sale data, prior to the date of notification  under Section 4(1) should be taken into account, even  though, the post notification sales could be taken note  of for knowing the rise in the price trend.  The said  Government Order also referred to size and location of  the land to be acquired for determining the market  value of the acquired lands.                 Mr. Iyer urged that the judgments and orders

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of the Madras High Court had been based on the  aforesaid principles and did not require any interference  by this Court.         Having carefully considered the submissions made  by Mr. Iyer on behalf of the respondents, and by the  different sets of counsels for the appellants in these  four appeals, we are unable to agree with the views  expressed by the Madras High Court and the  submissions in respect thereof made by Mr. Iyer. In  fact, Mr. Iyer’s submissions, in our view, only  strengthen the case of the appellants since the Madras  High Court has decided the matters in a manner, which  is contrary to established principles of fixation of  market value for acquisition purposes, which have been  explained in detail in the aforesaid Government Order  dated Pondicherry, 8th February, 1989, referred to by  Mr. Iyer.         Apart from the above, the Madras High Court in  making the impugned judgments relied on the earlier  decisions of this Court   requiring proof of documents  for the purposes of Section 51A of the Act, which view  had been overruled subsequently firstly in V.  Narasaiah’s case (supra), and was later reiterated by  the Constitution Bench in Cement Corporation of India  Ltd.’s case (supra). In fact, in the Printers House  Pvt.Ltd. case (supra), relied upon by Mr.Iyer, it has  been indicated that the determination of market value  of the acquired plot on average basis was incorrect in  that it overlooked the comparable method.            In our view, the Reference Court had adopted the  correct procedure upon examination of the location and  potential value of the acquired lands in its detailed  award, as also the contemporaneous sale deeds which  indicated that there had been a steep escalation of the  price of lands in the immediate vicinity of the acquired  lands, which fact had also been admitted by the Land  Acquisition Officer.         In our view, there was no justification for the  Madras High Court to have reduced the market value of  the acquired lands which had been fixed at Rs.  13,500/- per Are by the Reference Court.            All these appeals must therefore be allowed.  The  Judgments and orders of the Madras High Court  impugned in these appeals are all set aside and the  Awards as made by the Reference Court out of which  these appeals arise are restored.         Before parting with these appeals it will be  necessary to indicate that on 24th August, 2001 when  notice was issued on SLP(C) No. 3476 of 2001 which  was subsequently converted into CA No. 1500 of 2004,  an order was made that notice be issued on  condition  that the excess amount collected would  be refunded to  the State within a month from the date of the order.  In  other words, since the appellants had obtained  compensation at a higher rate from the Reference  Court, which had been reduced by the Madras High  Court, the appellants were directed to deposit the  difference in the two amounts as a condition precedent  for issuance of notice.   Similarly, on 14th August, 2003,  when notice was issued in connection with SLP (Civil)  No. 11579 of 2003, a similar order was made.  Along  with the above, the appellants were also directed to  deposit their title deeds of the acquired lands, which  directions had been duly complied with by the  appellants in the first three appeals.  As far as the

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fourth appeal is concerned, leave is being granted by  the present judgment.         Since, we have chosen to restore the valuation as  fixed by the Reference Court, the appellants will be  entitled to return of the difference amount deposited by  them in terms of the order passed in these appeals  together with their title deeds which they had  deposited.         Such reimbursement and return of the title deeds  are be effected expeditiously, but positively within one  month from the date of the communication of this  Judgment.         The appeals are disposed of accordingly.   The parties will bear their respective costs.