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PETITIONER: THE U.P. JAL NIGAM, LUCKNOWTHROUGH ITS CHAIRMAN & ANR.

       Vs.

RESPONDENT: M/S. KALRA PROPERTIES (P) LTD.,LUCKNOW & ORS.

DATE OF JUDGMENT:       17/01/1996

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

CITATION:  1996 AIR 1170            1996 SCC  (3) 124  JT 1996 (1)   354        1996 SCALE  (1)389

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. Ramaswamy, J.      We have  heard the learned counsel on both sides in the Contempt Petition  as well  as in  I.A. No.  3/94 to  review order passed  in dismissing  the appeal  with directions and also the  order dated  May 5,  1994  passed  in  the  Review Petition. In view of the facts that have been brought to our notice, we  directed that the main matter should be disposed of on merits. Accordingly the review petition, Interlocutory Application, contempt  petition and  the civil  appeal  have been posted  together. After  hearing the  counsel  on  both sides, we  are satisfied  that manifest  errors of  law have been committed  in this  case. Consequently,  all the orders passed by  this Court  are set  aside; contempt petition and the interlocutory  applications are  dismissed; and the main appeal is revived.      We have  heard the  counsel on  both sides  on  merits. Notification under Section 4(1) of the Land Acquisition Act, 1894 (for  short, "the  Act") and  Section 17(4), dispensing with the  enquiry under Section 5A was published on March 8, 1973 acquiring  land measuring  0.23 acres  for setting up a pumping station  to drain  out flood  water from  low  lying areas of Buster Palace, Ziamou. The acquired lands bear plot Nos. 97 to 100. Declaration under Section 6 was published on October 9, 1973. Possession of the land was taken on July 5, 1973 and  no award  came to be passed. M/s. Karla Properties (P) Ltd., the respondent in the main case, had purchased the acquired land  by sale  deed dated  February 3,  1989 for  a total  consideration  of  Rs.  60,000/-.  He  filed  a  writ petition in  the High  Court  for  mandamus  commanding  the appellants to  pay compensation  in respect  of the lands in question on  the basis  of the  market value  fixed  by  the District Magistrate,  Collector, Lucknow  (Annexure  No.  6) filed in  the High  Court. The Division Bench by order dated November  17,   1992,  allowed  the  writ  petition,  issued

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mandamus and  directed that  the compensation should be paid to the  respondents in  accordance  with  the  market  value assessed by  the Collector  at the  rate of  Rs.  200/-  per square foot  with all consequential benefits of solatium and interest under  the Act  as amended  by Amendment  Act 68 of 1984.      The  learned   Attorney  General   for  the  appellants contended that after the judgment, it has come to light that in respect  of the  self-same lands, the market value as per the guidelines  issued by  the Government was determined for stamp duty  at Rs.  80/- per  square yard in Ziamou area and the respondent  himself  had  purchased  the  land  for  Rs. 60,000/- in  1989. The  determination of the compensation by the Collector  @ Rs.  200/- per  square foot  is an  obvious error apparent  on the face of the record and the directions issued by  the Division Bench are vitiated by manifest error of law.  Shri Gopal Subramanyam, the learned senior counsel, who has sought for and granted 15 adjournments on the ground that matter  is being  settled, has  informed the Court that the settlement has not been reached and it is under process. He has  sought further extension of time. Since the case has been adjourned several times, we are not inclined to adjourn the case.  In his usual fairness, he has stated that he does not stand  on technicalities.  The respondent  has purchased the land  in question.  The acquisition covered about 10,000 square  feet  in  addition,  the  respondent  had  purchased another 5,000/-  square feet which was also taken possession of by  the respondent  under the  notification but  the same does not  from part  of the  acquisition. He  contended that since possession  was taken before declaration under Section 6 was  published, it  was not validly taken. Admittedly, the award was  not made  even after two years of the coming into force of  the Amendment  Act.  Therefore,  the  notification under Section 4(1) and the declaration under Section 6 shall stand lapsed  by  operation  of  Section  11A  of  the  Act. Thereby, the  respondent is  entitled to the compensation on the basis of prevailing market value. The District Collector had assessed  the market  value at  Rs.200/- per square foot and, therefore,  there is  no illegality in the order of the Division bench  in directing  payment of  the compensation @ Rs.  200/-  per  square  foot  and  also  the  consequential solatium and  interest. Having  regard to  the facts of this case, we  were not  inclined to further adjourn the case nor to remit the case for fresh consideration by the High Court. It is  settled law that after the notification under Section 4(1) is  published in the Gazette any encumbrance created by the owner  does not  bind the  Government and  the purchaser does not  acquire any  title to  the property. In this case, notification under  Section 4[1]  was published on March 24, 1973, possession of the land admittedly was taken on July 5, 1973 and  pumping station  house was  constructed. No doubt, declaration under  Section 6  was published later on July 8, 1973. Admittedly  power under  Section 17(4)  was  exercised dispensing with  the enquiry under Section 5A and on service of the  notice under  Section 9  possession was taken, since urgency was  acute, viz.,  pumping station  house was  to be constructed to drain out flood water. Consequently, the land stood vested in the State under Section 17 [2] free from all encumbrances. It is further settled law that once possession is taken,  by operation  of Section 17(2), the land vests in the State  free from  all encumbrances unless a notification under Section  48(1) is published in the Gazette withdrawing from the  acquisition. Section  11A, as amended by Act 68 of 1984, therefore, does not apply and the acquisition does not lapse.  The   notification  under   Section  4(1)   and  the

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declaration under  Section 6, therefore, remain valid. There is no  other provision  under the  Act to  have the acquired land divested, unless, as stated earlier, notification under Section  48(1)   was  published   and  the   possession  are surrendered pursuant  thereto. That  apart, since M/s. Kalra Properties, respondent  had purchased  the  land  after  the notification under  Section 4(1)  was published, its sale is void against  the State  and it  acquired no right, title or interest in  the land.  Consequently, it is settled law that it cannot  challenge the validity of the notification or the regularity  in   taking  possession   of  the   land  before publication  of   the  declaration   under  Section   6  was published.      The  next   question  is:  whether  the  respondent  is entitled to  compensation and,  if so, from what date and at what  rate?   The  original  owner  has  the  right  to  the compensation under  Section 23(1)  of the Act. Consequently, though the respondent acquired no title to the land, at best he would be entitled to step into the shoes of the owner and claim payment  of the  compensation, but  according  to  the provisions of  the Act.  It is  settled law  that the  price prevailing  as  on  the  date  of  the  publication  of  the notification under  Section 4(1)  is the  price to which the owner or  person who has an interest in the land is entitled to. Therefore,  the purchaser  as a person interested in the compensation, since  he steps  into the  shoes of  erstwhile owner, is entitled to claim compensation.      This Court  in Jawajee Nagnatham vs. Revenue Divisional Officer, Adilabad,  A.P. &  Ors. [(1994)  4  SCC  595],  had considered whether  market value  of the acquired land would be determined  on the  basis  of  basic  valuation  register maintained by the Collector for the purpose of levy of stamp duty under  the Stamps  Act and  the method  of valuation on that basis  is valid in law. This question was considered in extensor in  the context  of the  power of  the State  under Section 47A of the Stamps Act to fix the basic valuation for stamp duty. After elaborate survey of the amendments made by the State  legislature by  local amendment to the Stamps Act under Section 47a, this Court had held that the market value shall be  determined only  on  the  basis  of  the  evidence adduced by  the claimant  and in  rebuttal  thereof  by  the State, as  to the prevailing market value of that particular land. The  basic  valuation  is  only  for  the  purpose  of collecting the  stamp duty  and that,  therefore, it  cannot form foundation to determine the market value.      The finding  of the  Court that the concession that the market value  determined by  the Collector  on the  basis of basic valuation  would be  properly  applied,  is  obviously illegal.  Shri   Gopal  Subramaniam   contended   that   the Government of  U.P. had  issued  three  different  circulars accepting the  position that  the basic valuation would form basis for determination of the compensation under Section 23 [1] and  that,  therefore,  the  High  Court  was  right  in accepting  the  valuation  made  by  the  Collector  and  in directing to  pay the  compensation on that basis. After the judgment in  Nagnathan’s case [supra], the Division Bench of the High Court of Allahabad in State of U.P. & Ors. vs. Shau Singh [1995  HVD Vol.  I 191]  had held that the rates fixed for the  collection of  stamp duty  cannot be relied upon to determine market  value. Therefore,  the instructions issued by the  Government for  determination of the market value on the basis of basic valuation register were held illegal. The Collector, therefore, was obviously wrong in determining the compensation under  Section 23(1) on the basis of prevailing rates in 1992 as per basic valuation circulars.

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    In  view   of  the  settled  legal  position  that  the compensation should be determined on the basis of the market value of  the acquired  land prevailing  as on  March  1973, though the  Attorney  General  repeatedly  argued  that  the acquired land  was not  situated in  a developed area, while Shri Gopal Subramaniam contended that it is at the corner of a developed  area and  that, therefore,  the  land  commands higher  market   value.  Even   the  contention   of   Gopal Subramaniam of  the situation  of the  land is accepted. The admitted circumstance  that can be taken into consideration, is that  the land  was acquired to establish pump station to drain out flood water in the low-lying area. In other words, as on  1973, the lands were not in a developed condition and that  the   lands  are  near  the  submerged  area  and  the acquisition is  to set  up pump  station to  drain out flood water. It  would be  obvious that  in course  of time, there would be  development and  as in  1992, the  area might have been fully  developed. But by operation of Section 24 of the Act,  the   subsequent   development   is   irrelevant   for determination  of  the  compensation.  Though  the  Attorney General repeatedly  referred to  the statistical data of the market value in 1980-82 at Rs. 10/- to 15/- per square foot, it is  equally settled  law that  the date  is not  evidence unless evidence  is adduced.  It is equally settled law that when a  large extend  of land  is  acquired,  it  cannot  be determined on  square foot  basis. Therefore,  it should  be determined only on the basis of yardage. If the principle of determination of  compensation on  yardage basis is adopted, it is  equally settled  law that  at least 1/3rd of the land required should be deduction towards developmental purposes, namely, providing  roads, electricity,  drainage  facilities and  other   betterment  developments.  In  1989,  when  the respondent himself had purchased property, it had valued the market value  at Rs.  60,000/-.  Therefore,  it  is  further settled law  that the  same would  form basis,  provided the sale is  a bona  fide sale between willing parties in normal market conditions  and it  was not  intended to  inflate the market  value  of  the  land  under  acquisition.  As  found earlier, in  1973 there  was no  development since  the very acquisition was  for draining  out flood water in that area. It obviously  does not command large market value but in due course, neighboring  area might  have developed.  Considered from this perspective and in the facts and circumstances, we are of  the considered  view that no useful purpose would be served by  remitting the  case  to  the  High  Court  or  by directing  the   Land  Acquisition   Officer  to   determine compensation. We  are of the view that the respondents would be entitled  to a  total compensation  of Rs.  25,000/-. The respondent is  also entitled  to interest @ 6% from the date of taking  possession till the date of deposit of the amount in the  Court.  The  respondent  is  also  entitled  to  15% solatium on  Rs. 25,000/-  determined as  compensation.  The appellant is  directed to deposit the said amount within six months from  the date  of the  receipt  of  this  order.  If possession of  any land  in excess  of the  land covered  by Section 4  [1] has  been taken, our order would not cover it and appropriate action according to law should be taken.      The appeal is accordingly allowed and the writ petition stands disposed of but, in the circumstances, without costs.