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PETITIONER: THE STATE OF M.P. ETC.

       Vs.

RESPONDENT: HARISHANKAR GOEL & ANR. ETC.

DATE OF JUDGMENT:       07/08/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

CITATION:  1996 SCALE  (6)39

ACT:

HEADNOTE:

JUDGMENT:                           W I T H                 CIVIL APPEAL NO.2796 OF 1987                             AND                 CIVIL APPEAL NO.2298 OF 1987                          O R D E R      These appeals arise from the judgment of the High Court of Madhya  Pradesh. On  a difference  of opinion  among  two learned judges,  third Judge  on reference  in Miscellaneous Appeal No.82/75  and 83/75  enhanced the  compensation.  The notification under  Section 4(1) of the Land Acquisition Act 1 of  1894 was  published on  January 17,  1964 acquiring 33 bighas  15   biswas  of  land  belonging  to  two  different individuals for  industrial purpose.  The  land  Acquisition Officer  by   his  award   under   Section   11   determined compensation on  March 14,  1966 at  Rs. 3,150/-  per  bigha treating the  lands to  be agricultural  lands. On reference under Section 18, the Additional District Judge by his award and decree  dated May  15, 1975 enhanced the compensation to Rs.1/- per  sq. ft.  and also awarded statutory benefits. On appeal, learned  Judge B.C.Verma, J. determined compensation at 0.90/-  per sq.  ft. deducted  15% towards  developmental charges. Learned  Judge R.C.  Srivastava, J.  determined the compensation at  Rs. 0.50  per sq.  ft .  and  deducted  25% towards developmental  charges. On  reference, learned Judge T.N. Singh, J. agreed with the determination of compensation B.C. Verma,  J. at  Rs.0.90 per  sq. ft.  but  deducted  20% towards developmental  charges.  He  also  awarded  enhanced solatium, interest  and additional amount as available under the Amendment  Act 68  of 1984.  Thus these  appeals by  the State and  also  cross  appeal  by  the  claimants  claiming compensation at Rs.1/- per sq. ft.          The question that arises for consideration is as to what is the rate. of compensation that the lands are capable to secure  in an  open market.  It is  not in  dispute  that though they  were the  agricultural lands  as on the date of notification the  respondents who  are  no  other  than  the

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builders and  developers had,  after the  purchase  obtained sanction under  Section 172  of the  Madhya Pradesh  Revenue Code for conversion of the land into non-agricultural lands, but no  sanction from  the municipality  for construction of any colonisation,  was obtained.  Even  learned  Judge  B.C. Verma,  J.  had  noted  in  his  judgment  that  though  the respondents- claimants  had entered  into the  agreement  of sales  with   the  prospective   purchasers,  they  had  not completed  the  sale  transactions.  Those  agreements  were brought into  existence to  bolster the claims. However, the learned Judge  found that  the lands were situated very near to the  Vickoy moped  factory. They  abut the  Jhansi  Road; Sitholi railway station is one mile from the acquired lands, but they  are  situated  outside  the  municipal  limits  of Gwalior Municipal  Corporation.  Their  lands  are  fit  for developing  industries,  housing  colonies,  godown,  petrol pumps etc:.  The evidence  also disclosed  that the land was not improved  and it  was not  even land. Considered in this background, the  learned Judge  had accepted  the sale  deed executed by  one of the claimants for a small extent of land at Rs. 0.50 per sq. ft. but having found that the lands were possessed of potential value, determined the compensation at Rs.0.90 per  sq. ft.  and, as  stated earlier,  deducted 15% towards developmental  charges. Learned Judge Srivastava, J. relied upon  the very  sale deeds put forth by the claimants and held that they could not claim higher than what they had put up,  namely,  Rs.  0.50  per  sq.  ft.  and,  therefore, determined the compensation on that premise and deducted 25% towards developmental  charges. As seen, learned T.N. Singh, J. had  agreed  with  B.C.  Verma,  J.  in  determining  the compensation at. Rs. 0.90 per sq. ft.      The  question,   therefore,  is:   what  would  be  the reasonable market value the lands are capable to fetch as on the date  of the  notification had  it been sold in the open market to  a willing  purchaser? It is seen that when 33 and odd bighas of land was sought to be sold in the open market, no willing  prudent purchaser would with any credulity agree to purchase  it on sq.ft. basis. It is well settled law that the  judge   determining  compensation   in   a   compulsory acquisition should  eschew feats  of imagination  sit in the arm chair  of a  willing purchaser  and put  a  question  to himself whether  as a  willing prudent  purchaser  he  would offer the  same price  sought to be awarded for the acquired land. It  would, therefore, be clear that the learned Judges did  not   apply  correct   legal  tests  to  determine  the compensation but  determine the compensation on the basis of sq.ft. Which  is illegal.  per se.  We, therefore, hold that the learned  Judges had  applied wrong  principle of  law in determining compensation.      The question  then arises is what would be the just and adequate compensation which the land are capable to fetch in the open  market? It  is seen  that the  land  are  situated beyond the  municipal limit  and on uneven land. But for the Vickoy  moped   factory,  there   was  no   other  immediate development. The claimants themselves purchased the lands as builders develop the lands. They did not file their own sale deeds to show at what rate they had purchased the land which would  have   furnished  best   material.   Admittedly,   on sanction from  the Municipal  Corporation or  any  competent authority was  obtained in  that behalf to construct housing colony. Necessarily when the land was to await some time for development either for industrial or colonisation, the price that could  not be  secured at the rate was put forth by the claimants. They  themselves had  sold at Rs. 0.50 per sq.ft. for a  small extent  of land. The learned Judges, therefore,

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had not  correctly appreciated  the  correct  principles  of law in  determining the  compensation. Having found that the ends were  possessed of  potential  value  the  compensation could determined  on the basis of the market value on square yard basis.  Considered from this perspective, we are of the view that  the market value for the land would be Rs.4/- per sq. yd.  and we agree with learned Judge Srivastava, J. that the deduction  should be  25% towards  developmental charges since it  is in  evidence that acquisition is for industrial purpose and  electricity was  immediately available as found by learned  Judge T.N.  Singh, J.  The lands are adjacent to national highway.  It is  settled law  that normally 33-1/3% should be  deducted towards  developmental charges.  In this case as  a special  case, 25%  is deducted.  It will  not be treated as present.      The learned  Judges were  wholly wrong  in applying the Amendment Act  68 of  1984 since the acquisition was made in the year  1964 and the Collector had made the award on March 14, 1966  and the  reference  Court  itself  determined  the compensation on May 15, 1975. Under those circumstances, the claimants are  not entitled  to the  additional benefits  of enhanced solatium  under Section 23(2) at 30% interest under proviso to Section 28 at 9% for the first year from the date of taking  possession and  thereafter at  15% till  date  of deposit on  the enhanced  compensation and additional amount under Section  23(1-A). The  judgment in  that  behalf  also stands set aside. Instead, the claimants will be entitled to solatium at 15% on the enhanced compensation and interest at 4% on  the enhanced  compensation from  the date  of  taking possession till date of deposit into Court.      The appeals  of the  State are  accordingly allowed and the cross  appeal of  the claimants stands dismissed, but in the circumstances, without costs.