IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3332 OF 2001

T.S. Ramachandra Shetty ...   Appellant

              Versus

Chairman, Karnataka Housing Board & Another ... Respondents

WITH

CIVIL APPEAL NOS.3333 AND 3334 OF 2001

J U D G M E N T

Dalveer Bhandari, J.

We are disposing of Civil Appeal Nos.3332 to 3334

of 2001 by this judgment.  The facts of these appeals are

identical.   For  the  sake  of  convenience,  the  facts  are

being  taken  from  Civil  Appeal  No.3332  of  2001.

Appellant’s land measuring 1 acre 32 guntas in Survey

No.32/1  at  Henjagondanahalli  village  was  acquired

pursuant  to  the  preliminary  notification  published  on

20.5.1997.

The  Land  Acquisition  Officer  had  granted

compensation at the rate of Rs.17,500/- per acre.  The

Reference  Court on appeal  enhanced the amount from

Rs.17,500/- to Rs.2,17,800/- per acre.  This amount was

calculated  at  the  rate  of  Rs.5/-  per  square  feet.   The

Karnataka  Housing  Board  aggrieved  by  the  said

judgment  preferred  appeal  before  the  High  Court  of

Karnataka.  The Division Bench of the Karnataka High

Court  while  taking  into  consideration  all  the  facts

reduced the amount of compensation from Rs.2,17,800/-

to Rs.1,30,680/- per acre.  This amount of compensation

has been calculated at the rate of Rs.3/- per square feet.

In  the  impugned  judgment,  the  High  Court  has

mentioned  that  the  claimant-appellant  herein  himself

had  purchased  the  land  in  question  on  24.3.1986  for

Rs.45,000/- which is based on calculation at the rate of

Rs.1.75 per square ft.

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The  preliminary  notification  under  section  4(1)  of

the  Act  was  issued  a  year  later  i.e.  20.5.1987.   The

appellant relied on the sale deeds executed subsequently

and  that  too  for  smaller  pieces  of  lands  meant  for

housing sites being Ex.P.2 and that of 1990.  The High

Court  in  the  impugned  judgment  has  rightly  observed

that  Ex.P.2  cannot  be  taken  into  consideration

particularly keeping in view that the sale deed in respect

of this very acquired land which was effected only a year

ago  in  1986  itself  was  available  as  a  ready  basis  for

determining the market value of the land.

The High Court in the impugned judgment observed

that  after  giving  reasonable  deductions  towards

development charges, the market rate can be safely taken

as  Rs.3/-  per  square  feet  since  this  price  was  even

suggested  for  the  lands  in  question  even  by  the

respondent  –  Housing  Board  to  the  claimant-witness.

The  High  Court  granted  compensation  at  the  rate  of

Rs.3/- per square feet.  The compensation in this case

worked out to be Rs.1,30,680/- per acre.  The High Court

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also observed that the appellant – land owner will also be

entitled to other statutory benefits and interest as per the

provisions contained under sections 23 and 28 of the Act.

The fact is that this very land was purchased by the

appellant a year ago i.e.  on 24.3.1986 for  Rs.45,000/-

and for the same land the High Court gave compensation

of  Rs.1,30,680/-  per  acre  only  after  a  year.   In  our

considered opinion, the view which has been taken in the

impugned  judgment  is  in  consonance  with  the  settled

legal  position.   The  High  Court  has  taken  into

consideration  all  the  relevant  facts  in  granting

compensation.   The  High  Court  was  fully  justified  in

giving  due  weightage  to  the  fact  that  the  sale  deed  of

1986 in respect of this very acquired land was available

and the same ought to be the basis for determining the

market value of the land.

Learned counsel for the respondent placed reliance

on the case of Bangaru Narasingha Rao Naidu & Ors.

v. Revenue Divisional Officer, Vizianagaram (1980) 1

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SCC 575.  In this case, this Court observed that the best

evidence  of  the  market  value  of  the  acquired  land  is

afforded  by  transactions  of  sale  in  respect  of  the  very

acquired land.     

In  the  case  of  Special  Tehsildar  Land

Acquisition,  Vishakapatnam  v.  A.  Mangala  Gowri

(Smt.) (1991) 4 SCC 218, this Court observed as under:

“The market value postulated in Section 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).   

The acid test that for 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 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 possessing  similar  advantages  to  the  land  in  the neighbourhood of the land acquired in or about the time of  the  notification  would  supply  the  data  to assess the market value.  But exclusion of bona fide and  genuine  sale  transactions  in  respect  of  the same land under acquisition and to place reliance on the award of some other land is obviously illegal.

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In the case of  Periyar and Pareekanni Rubbers

Ltd. v. State of Kerala  (1991) 4 SCC 195, in para 10,

this Court observed as under:  

“10. ..When the Courts are called upon to fix the market value of the land in compulsory acquisition, the best evidence of the value of property is the sale of the acquired land to which the claimant himself is  a  party,  in  its  absence  the  sales  of  the neighbouring lands. In proof of the sale transaction, the  relationship  of  the  parties  to  the  transaction, the market conditions, the terms of the sale and the date of the sale are to be looked into. These features would  be  established  by  examining  either  the vendor or vendee and if they are not available, the attesting witnesses who have personal knowledge of the  transaction  etc.  The  original  sale  deed  or certified  copy  thereof  should  be  tendered  as evidence.  The  underlying  principle  to  fix  a  fair market value with reference to comparable sales is to  reduce  the  element  of  speculation.  In  a comparable  sale  the  features  are:  (1)  it  must  be within  a  reasonable  time  of  the  date  of  the notification; (2) it should be a bona fide transaction; (3) it should be a sale of the land acquired or land adjacent  to  the  land  acquired  and  (4)  it  should possess  similar  advantages.  These  should  be established  by  adduction  of  material  evidence  by examining as stated above the parties to the sale or persons  having  personal  knowledge  of  the  sale transactions. The proof also would focus on the fact whether the transactions are genuine and bona fide transactions.”  

Learned  counsel  for  the  respondent  also  placed

reliance on  Printers House Pvt. Ltd. v. Cold Storage

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and Food Products and Ors. (1994)  2 SCC 133.  He

drew  our  attention  to  paragraph  7  of  this  judgment

which  deals  with the  similar  proposition  that  the  sale

price  of  the  acquired  land  is  an  important  factor  for

determining the compensation.   

Reliance  has  also  been  placed  on  the  case  of

Ranvir Singh and Another v. Union of India (2005) 12

SCC  59.   In  this  case,  the  Court  reiterated  the  well

settled  principle  that  the  sale  deeds  pertaining  to  the

portion of lands which are subject to acquisition would

be the most relevant piece of evidence for assessing the

market value of the acquired lands.   

The  facts  of  the  case  of  The  Dollar  Company,

Madras v. Collector of Madras (1975) 2 SCC 730 are

identical  to  the  facts  of  the  instant  case.   Relevant

portion of paragraphs 5 and 6 read as under:

“In determining the market value the main criterion is  what  a  willing  purchaser  would  pay  a  willing vendor.  Ordinarily a party will be entitled to get the amount  that  he  actually  and  willingly  paid  for  a particular  property,  provided  the  transaction  be bona fide and entered into with due regard to the prevalent  market  conditions  and  is  proximate  in

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time to the  relevant  date  under  Section 23.   The best evidence of the value of property is the sale of the very property to which the claimant is a party. If  the sale  is  of  a recent  date,  then all  that need normally be proved is that the sale was between a willing purchaser and a willing seller, that there has not been any appreciable rise or fall since and that nothing has been done on the land during the short interval to raise its value.  But if the sale was long ago, may be the Court would examine more recent sales of comparable lands as throwing better light on current land value.   Such lands should be close by  and  not  a  mile-and-half  away  as  one  of  the examples  pressed  here  was.   So,  an  actual transaction  with  respect  to  the  specific  land  of recent  date  is  a  guide-book  that  courts  may  not neglect  when  called  upon  to  pin  the  precise compensation.”  

Similarly, in the instant case, only an year ago, the

appellant himself  purchased this very piece of land for

Rs.45,000/-  and  after  an  year,  the  State  has  given

compensation of Rs.1,30,680/-, which cannot be said to

be  inadequate  by  any  stretch  of  imagination.  The

Reference  Court  was  not  justified  in  enhancing  the

amount of compensation to Rs.2,17,800/-.  There is no

basis whatsoever.   In our considered opinion, the view

which  has  been  taken  by  the  High  Court  in  the

impugned judgment is based on settled legal position of

law, as indicated in some of the cases noted above.  No

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interference is called for. These appeals being devoid of

merits are accordingly dismissed, leaving the parties to

bear their own costs.

…….……………………J. (Dalveer Bhandari)

.……………………..J.    (H.S. Bedi)

New Delhi; January 22, 2009.

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