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PETITIONER: SPL. TEHSILDAR LAND ACQN. VISHAKAPATNAM

       Vs.

RESPONDENT: SMT. A. MANGALA GOWRI

DATE OF JUDGMENT09/08/1991

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. KASLIWAL, N.M. (J)

CITATION:  1992 AIR  666            1991 SCR  (2) 472  1991 SCC  (4) 218        JT 1991 (3)   444  1991 SCALE  (2)301  CITATOR INFO :  R          1992 SC2298  (10)

ACT:     Land  Acquisition Act, 1894: Section 23--Acquisition  of land--Compensation--Market value--Fixation of--Principles to be  followed --Acquisition for housing scheme--Valuation  of land--Deduction  from  the market value for  development  of land--Dependant  on situation of land and need for  develop- ment.     Constitution of India, 1950: Article 136--Land  Acquisi- tion--Compensation--Valuation  of land--When  Supreme  Court would interfere.

HEADNOTE:     The  respondent’s land admeasuring 5  acres-589-1/3  Sq. yards  was  acquired by the State Government in 1963  for  a housing scheme and compensation at Rs.1.58 per Sq. yard  was awarded. On reference, the Civil Court enhanced the  compen- sation  to Rs. 10 per Sq. yard with solatium at 15 per  cent and interest at 4 per cent. On appeal and cross appeals, the High Court confirmed the award.     In  the appeal before this Court, on behalf of  the  De- partment, it was contended that the respondent had purchased the  land in question in 1961 in three documents at  Rs.0.42 p.  per  sq. yard and sold in 1963 one acre of the  land  at Rs.5 per sq. yard and, therefore, the deeds under which  the transactions  took  place reflected  the  prevailing  market value  of the land in question, and courts  below  committed grave  error  in  relying on a decision of  the  High  Court awarding  Rs.  10 per sq. yard in respect  of  another  land acquired under a Notification of 1961, and that when a large extent  of land was acquired for a housing scheme, at  least 1/3 of the land should be deducted towards laying the roads, setting up parks, drainage and other amenities. Allowing the appeal, this Court,     HELD:  1.1 The market value postulated in Section  23(1) of the Land Acquisition Act, 1894 is designed to award  just and  fair  compensation  for the lands  acquired.  The  word "market value" would postulate price of the land  prevailing on the date of the publication of the notifica- 473

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tion under Section 4(1). In determining the market value  of the land, the price which a willing vendor might  reasonably expect  to  obtain from a willing purchaser would  form  the basis. For ascertaining the market rate, the Court can  rely upon such transactions which would offer a reasonable  basis to fix the price. The price paid in sale or purchase of  the land acquired within a reasonable time from the date of  the acquisition of the land in question would be the best  piece of  evidence. In its absence the price paid for a land  pos- sessing  similar advantages to the land in neighbourhood  of the  land acquired in or about the time of the  notification would supply the data to assess the market value. [475E-G]     Periya  & Pareekanni Rubbers Lief. v. State  of  Kerala, [1990] Supp. 1 SCR 362, referred to.     1.2  In the instant case, admittedly, the claimant  pur- chased land at Rs.0.42 p. and in a span of one year and four months,  sold at Rs.5 per sq yard. When the claimants  them- selves  sold as a willing seller of an acre of land  @  Rs.5 per sq. yard, if a large extent of five acres and odd  under acquisition  is offered to be sold as a block, it would  not fetch  higher  rate but surely be negotiated  for  a  lesser rate,  if not the same market value of Rs.5 due to time  lag of nine months. May be the payment of Rs. 10 per sq yard  to the  owner of another land acquired in 1961 was a  windfall. Taking the totality of the facts and circumstances, the High Court committed grave error in completely ignoring the  sale transactions of the lands under acquisition. In view of  the time lag, the prevailing market value of the land as on  the date of the notification would be Rs.6 per sq. yard.  [476B, E-G]     1.3 In Building Regulations, 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. Therefore, 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  al- ready  developed  land with amenities  of  roads,  drainage, electricity  etc. then deduction of 1/3 would not be  justi- fied. In the rural areas housing schemes relating to  weaker sections, deduction of 1/4 may be justified. [477G-H, 478A]     Spl.  Tehsildar,  Vishakapatnam v. Rednam Dharma  Rao  & Ors., CA No. 4187 of 1982 decided on July 17, 1990;  Tribeni Devi & Ors. v. Collector of Ranchi, [1972] 3 SCR 208 at 213; Smt.  Kaushalya Devi Bogre & Ors. etc. v. The Land  Acquisi- tion  Officer,  Aurangabad, [1984] 2 SCR  900;  Vijay  Kumar Motilal  v. State of Maharashtra, [1981] 2 SCC  719;  Vijay- singh Liladhar v. Special Land Acquisition Officer, [1983] 3 SCC 474 760; Spl. Land Acquisition Officer, Bangalore v.T. Adinaray- an  Setty,  [1959] Sppl. 1 SCR 404 and The  Tehsildar,  Land Acquisition, Vishakapatnarn v.P. Narasing Rao & Ors., [1985] 1 APLJ. 99, relied on.     1.4 In the instant case, 1/3 of the market value  should be deducted for development of the lands. [478B]     1.5 The market value is determined at Rs.6 per sq.  yard and  after deducting 1/3 for development of lands, it  would be Rs.4 per sq. yard. [478C]     2.  It is settled law that when wrong application  of  a principle has been made or important points affecting valua- tion have been overlooked or misapplied by the High Court or Reference Court, this Court would, under Article 136 of  the Constitution, correct the same.     The Spl. Land Acquisition Officer, Bangalore v.T. Adina- rayan Setty, [1959] Suppl. 1 SCR 404; Dattatrayaya Shankarb-

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hat Ambalgi and Ors. v. The Collector of Sholapur and  Anr., AIR (1970) SC 850 [1971] 3 SCC 43; The Dollar Co. Madras  v. Collector  of Madras, [1975] Suppl. SCC 403 and Padma  Uppal etc. v. State of Punjab & Ors., [1977] 1 SCR 329, relied on.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1351  of 1976.     From  the  Judgment and Order dated 24.11. 1975  of  the Andhra Pradesh High Court in A.S. No. 691 of 1972. T.V.S.N. Chari for the Appellant. A. Subba Rao and A.D.N. Rao for the Respondents. The Judgment of the Court was delivered by     K.  RAMASWAMY,  J.This appeal by  special  leave  arises against the Division Bench judgment dated November 24,  1975 in  A.S. No. 691 of 1972 of the A.P. High Court  fixing  the market  value @ Rs. I0 per square yard. The facts lie  in  a short  compass are stated thereunder. By notification  under section 4(1) of the Land Acquisition Act 1894 (in short ’the Act’)  was  published in the State Gazette on  November  21, 1963  to acquire 5 acres-589-1/3 sq. yards in T.S. No.  981, Block  No. 34 of Waitair Ward, Vishakapatnam for  a  housing scheme. The Collector 475 awarded at Rs. 1.58 per sq. yard and on reference, the Civil Court enhanced the compensation to Rs. 10 per sq. yard  with solatium  at  15 per cent and interest at 4  per  cent.  The respondent  claimed  @ Rs. 12 per sq. yard.  On  appeal  and cross  appeals the High Court confirmed the award  and  dis- missed  the appeal as well as cross objections for  enhance- ment  to  Rs.  12 per sq. yard. Two  contentions  have  been raised  by Shri Narsimahachari, the learned counsel for  the appellant.  Under Ex. B. 6 dated August 3, 1961;  under  Ex. B-7 dated Sept. 5, 1961 and Ex. B-8, dated Sept. 8, 1961 the respondent  purchased one acre-1936 sq. yards in each  docu- ments  in the same T.S. No. 981 @ -0.42 p. per sq. yard.  He sold on January 24, 1963 in an extent of one acre under  Ex. B.  10 @ Rs.5 per sq. yard. Therefore,’ the  aforesaid  sale deeds,  Ex.  B.  6, B. 7, B. 8 and B. 10  will  reflect  the prevailing  market value of the land in question. The  Trial Court and the High Court committed grievous error in placing reliance on a decision of the High Court in A.S. No. 191  of 1967 dated November 11, 1970 awarding @ Rs. 10 per sq.  yard in  respect of 6,209 sq. yards in T.S. No. 1008,  Block  No. 39, Waitair Beach Road which was acquired under a  notifica- tion  dated  March 19, 1961 for the purpose  of  Caltex  Oil Refinery.  The  price  fixed therein does  not  reflect  the correct  market value while the bona fide sale deed of  pur- chase  and sale by the respondents relating to the  acquired land  are available on records and form correct  basis.  The courts  below  committed grave error of  law  in  completely excluding  those  sale transactions and  relying  upon  that judgment. We find force in the contention, though Shri Subba Rao, learned counsel for the respondent vehemently resisted, it. It is settled law by catena of decisions that the market value  postulated in s. 23(1) of the Act designed  to  award just and fair compensation for the lands acquired. The  word "market value" would postulate price of the land  prevailing on  the  date of the publication of the  notification  under section 4(1). This Court repeatedly laid the acid test  that in determining the market value of the land, the price which a  willing vendor might reasonably expect to obtain  from  a willing  purchaser  would form the basis to fix  the  market

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value. For ascertaining the market rate, the Court can  rely upon such transactions which would offer a reasonable  basis to fix the price. The price paid in sale or purchase of  the land acquired within a reasonable time from the date of  the acquisition of the land in question would be the best  piece of  evidence. In its absence the price paid for a land  pos- sessing similar advantages to the land in the  neighbourhood of  the land acquired in or about the time of the  notifica- tion would supply the data to assess the market value. It is not  necessary  to cite all the decisions suffice  to  state that  in  a recent judgment in Periya &  Pareekanni  Rubbers Ltd. v. State of Kerala, [1990] Supp. 1 SCR 476 362  a bench of this Court, to which one of us  K.R.S.,  J., was  a member surveyed all the relevant precedents  touching the  points. In the light of the settled legal position  let us  consider whether the High Court and the Civil Court  are justified  in  excluding the sale deeds  completely  and  to place reliance on another judgment of the Division Bench  of the High Court of A.P. Admittedly, the claimant is a  vendee in Ex. B. 6 to B. 8 @ -0.42 paise. In a span of one year and four  months,  they sold @ Rs.5 per sq. yard; It  is  common knowledge  that proposal for acquisition would be  known  to everyone in the neighbourhood, in particular, to the  owners of  the property and it is not uncommon that  sale  transac- tions would be brought into existence before the publication of  s.  4(1)  notification so as to form the  basis  to  lay higher  claim for compensation. We do assume that Ex. B.  10 is  a genuine and bona fide sale transaction. In respect  of one acre of the land in the self-same land when sold at Rs.5 per  sq.  yard,  would it fetch in a short  period  of  nine months,  double the market value, namely. @ Rs. 10  per  sq. yard. We have no doubt that it would not get that price  for 5  acres and odd area. It is undoubted that in respect of  a notification  of  1961 in which another T.S. number  in  the locality, namely, T.S. No. 1008, ultimately, the High  Court awarded  @  Rs. 10 per sq. yard. Perhaps had there  been  no bona fide or genuine sale transaction relating to the  self- same  land,  the  reliance placed on that  judgment  may  be justified but exclusion of bona fide and genuine sale trans- actions in respect of the same land under acquisition and to place reliance on the award of some other  land is obviously illegal.  When the claimants themselves sold as  a   willing seller  of an acre of land @ Rs.5 per sq. yard large  extent of  five  acres and odd under acquisition, if it is  offered to  be sold as a block, it  would not fetch higher rate  but surely  be  negotiated for a lesser rate if   not  the  same market  value  @  Rs.5 due to time lag of  nine  months.  No attempt  was  made by the respondent to explain  under  what circumstances  they came to sell their lands @ Rs.5 per  sq. yard  when they expect higher value @ Rs. 10 per  sq.  yard. May be the payment of  Rs. 10 per sq. yard, be wind fall  to the owner of the land in T.S. No. 1008  Taking the  totality of the facts and circumstance, we hold that  the High  Court committed grave error to completely ignore the sale transac- tions  of the lands under acquisition. In view of  the  time lag  we have no hesitation to conclude that  the  prevailing market value of the land as on the date of the  notification would be Rs.6 per sq. yard.         It  is  next contended by Shri  Narsimahachari  that when  a  large  extent of land was acquired  for  a  housing scheme, at least 1/3 of the land should be deducted  towards laying the roads, setting up parks, 477 drainage  and  other  amenities. The  High  Court  committed

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manifest error in omitting to deduct 1/3 of the land.     Shri  Subba Rao, the learned counsel for the  respondent contended  that the High Court had noted this contention  of the  appellant and considered that the market value  of  the land  would  be  Rs. 12 per sq. yard and  after  giving  the deduction  of 1/3 it would come to Rs. 10. The reasoning  of the  High Court is proper and warrants no  interference.  In support thereof he placed reliance in Spl. Tehsildar, Visha- kapatnam v. Rednam Dharma Rao & Ors., C.A. No 4187 of  1982, dated July 17, 1990 wherein this Court had upheld the deduc- tion  of  1/5 from the market  value  towards  developmental charges.  It  is  settled law that the High  Court  and  the Reference  court when made wrong application of a  principle or important points effecting valuation has been over looked or  misapplied, this Court would under Art. 136 correct  the same, vide The Spl. Land Acquisition Officer, Bangalore v.T. Adinarayan  Setty, [1959] Suppl. 1 S.C.R. 404;  Dattatrayaya Shankarbhat  Ambalgi and Ors. v. The Collector  of  Sholapur and  Anr., AiR 1970 SC 850-’[1971] 3 S.C.C. 431; The  Dollar Co., Madras v. Collector of Madras, [1975] Supp. SCC 403 and Padma  Uppal  Etc. v. State of Punjab & Ors., [1977]  1  SCR 329.     In Tribeni Devi & Ors. v. Collector of Ranchi, [1972]  3 S.C.R. 208 at 2 13, this Court held that "in order to devel- op that area at least the value of 1/3 of the land will have to be deducted for roads, drainage and other amenities".  On this basis the value of the land at Rs.2,08,135.70 per  acre would,  after the deduction of 1/3 come to Rs. 1,38,757  per acre.  In Smt. Kaushalya Devi Bogre & Ors. etc. v. The  Land Acquisition  Officer, Aurangabad, [1984] 2 S.C.R.  900  this Court held that deduction of 1/3 was held to be  reasonable. In Vijay Kumar Motilal v. State of Maharashtra, [1981] 2 SCC 7  19  i/3rd was deducted towards developmental  charges  in undeveloped  area.  In Vijaysingh Liladhar v.  Special  Land Acquisition Officer, [1988] 3 SCC 760 the deduction of i/4th by the High Court which was not challenged in this court was upehld.  In Spl. Land Acquisition Officer, Bangalore  v.  T. Adinarayan  Setty, supra, deduction of 25 per cent was  held to be reasonable. It is to be noted that in building Regula- tions,  setting  apart the lands for development  of  roads, drainage and other amenties like electricity etc. are condi- tion  precedent  to approve lay out for  building  colonies. Therefore, 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  ameni- ties of roads, drainage, electricity etc. then deduction  of 1/3 would not be justified. In the 478 rural  areas  housing schemes relating  to  weaker  sections deduction 1/4 may be justified. On that basis, this court in R.  Dharma  Rao’s case upheld deduction of 1/5  because  the owner  while  obtaining the lay out had  already  set  apart lands  for  road and drainage. Therefore, deduction  of  1/3 would be reasonable. In fact in The Tehsildar, Land Acquisi- tion,  Vishakapatnam  v.P.  Narasing Rao &  Ors.,  [1985]  1 A.P.L.J.  99,  a Division Bench of the High  Court  surveyed judgments  of the High Court relating to housing schemes  of Vishakapatnam  upholding deduction of 1/3 to be  reasonable. Accordingly  we hold that 1/3 of the market value should  be deducted  for development of the lands. The High Court  com- mitted  greivous  error  in giving a  curious  reasoning  of valuing  at  Rs. 12 and upholding Rs. I0 to  be  the  market value  after deduction, though *.he market value was  deter- mined  at  Rs. 10. Accordingly the appeal  is  allowed.  The market  value is determined at Rs.6 per sq. yard  and  after

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deducting  1/3  the market value is Rs.4 per sq.  yard.  The respondents  are entitled to 15 per cent Solatium on  market value  and  4  per cent interest thereon from  the  date  of dispossession. But in the circumstances parties are directed to pay and receive their own costs. N.P.V.                                          Appeal   al- lowed. 479