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PETITIONER: UNION OF INDIA & ORS. ETC.

       Vs.

RESPONDENT: SHRI CHAIN SINGH & ORS. ETC.

DATE OF JUDGMENT:       08/05/1997

BENCH: K. RAMASWAMY, K.S. PARIPOORNAM

ACT:

HEADNOTE:

JUDGMENT:                             WITH               CIVIL APPEAL NO. 3569-70OF 1997 [Arising out of SLP (C) No. 11052-53/97 CC 3592-93/97)]                          O R D E R      Leave granted.  We have  heard learned  counsel on both sides.      The land  to an  extent of  1007 kanals  and  6  marlas situated in  village Sansoo  in Tehsil and District Udhampur was initially requisitioned under Section 6 of the Jammu and Kashmir Requisition  and Acquisition  of Immovable  Property Act. On  December 26,  1968, proceedings  for acquisition of the land  were initiated.  The compensation  was  determined under Section  8 of  the Act by the Land Acquisition officer at the rate of Rs. 12, 000/-, Rs. 10, 000/- and Rs. 9, 000/- per kanal  to Warhal Changhi, Warhal Mandi and Banjar Kadeem lands respectively.  Dissatisfied therewith,  an application under From  ’G’ seeking  reference was filed. The Arbitrator was appointed  under Rule  9 read  with Section  8(1) of the Act. Thereafter  the Arbitrator  determined the compensation at the  rate of  70, 000/- per kanal, On appeal, the learned single judge  confirmed the same and the Division Bench held that no  Letters Patent  Appeal would lie. Thus, this appeal by special leave.      It is  seen  that  the  Land  Acquisition  Officer  has addcued the  oral  as  well  as  documentary  evidence.  The claimants also filed the documentary evidence as well as the oral  evidence.   On  consideration  of  the  evidence,  the Arbitrator as  well as  the High  Court have  held that  the lands are  situated in a developed area and possessed of and commanded good market value for sale in the open market to a willing  purchaser  and,  therefore,  they  are  capable  of fetching market  value raging from Rs. 1 lakh to Rs. 2 lakhs per acre  and in view of the fact that the sale deeds relied on were  in respect  of small pieces of land they determined the compensation at the rate of Rs. 70, 000/- per acre.      The  question   is:  whether  the  view  taken  by  the Arbitrator as  well as  by the High Court is correct in law? It is  settled law  that under  Section 8(3)  of the Act, as amended by  Act 6  of 1977, the compensation payable for the acquired property  under Section  7 shall, in the absence of

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an agreement,  be the  price which  the requisitioned  party would have fetched in the open market, if it had remained in the same condition as it was at the time of the requisition, and been  sold on  the date  of the  acquisition in the same condition. In  other words,  the principle  required  to  be applied would be that the existing conditions as on the date of the  acquisition (as  if existed  in conditions) in which the  land  existed  on  the  date  of  requisition,  be  the determining factor  for fixing  the compensation  as per the market value  prevailing as  on the  date of the acquisition and compensation has to be determined accordingly.      This Curt  in Union  of India  vs. Hari  Krishan Khosla (dead) by  Lrs, [(1993)  Supp. 2  SCC 149  at 166,  para 61] considered  the   question   under   the   Requisition   and Acquisition of  the Immovable  Property Act,  1952 which  is pari material to the Act, and held thus:      " We  are of  the opinion  that the      amount of compensation can be fixed      by agreement  under Section  8  (1)      (b). In  the  absence  of  such  an      agreement,  it   is  left   to  the      discretion of  the arbitrator.  The      arbitrator under  Section 8 (1) (e)      is to  hear the dispute. Thereafter      he is to determine the compensation      which appears to him to be just. He      must    have    regard    to    the      circumstances of  each  case  while      applying  the  provisions  of  Sub-      Section (3)  (a) of Section 8 which      reads as under:      "8. (3)  The  compensation  payable      for the acquisition of any property      under Section 7 shall be      (a)    the    price    which    the      requisitioned property  would  have      fetched in  the open  market, if it      has remained  in the same condition      as  it   was   at   the   time   of      requisitioning and been sold on the      date of acquisition or      (b)         *          *         *           (emphasis supplied)      In  our   view,   the   significant      omission of  solatium is indicative      of    the     legislative    intent      necessitating   stress    on    the      expressions     "     just"     and      "circumstances   of    each   case"      occurring in  sub-section  (1)  (e)      thereof      Yet another  distinguishing feature      is the  expression "  open market".      The reason  why solatium  h as  not      been provided is that "open market"      contemplates a  bargain  between  a      free  buyer   and  a   free  seller      unfettered by  the consideration of      requisition     and      consequent      acquisition."      The principle  for determination  of market  value  has been laid down by this Court in a catena of decisions one of which is  Periyar & Rubbers LTd. vs. State of Kerala [(1991) 4 SCC at 207, para 16] which reads as under:      "Equally it  is statutory  to  note

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    that the  claimant  has  legal  and      legitimate  right  to  a  fair  and      reasonable compensation to the land      he is deprived of by legal process.      The    claimant     has    to    be      recompensated for rehabilitation or      to    purchase     similar    lands      elsewhere. In  some cases  for lack      of comparable  sales it  may not be      possible to adduce evidence of sale      transactions  of  the  neighbouring      lands possessed  of same or similar      quality. SO insistence of adduction      of precise  or scientific  evidence      would  cause  disadvantage  to  the      claimants  in   not   getting   the      reasonable and  proper market value      prevailing   on    the   date    of      notification under   Section  1(1).      Therefore, it is the paramount duty      of     the     Land     Acquisition      Judge/authority to  keep before him      always the  even  scales  to  adopt      pragmatic     approach      without      indulging in "facts of imagination"      and assess  the market  value which      is  reasonably   capable  to  fetch      reasonable market  value.  What  is      fair and reasonable market value is      always a question of fact depending      on  the  nature  of  the  evidence,      circumstances and  probabilities in      each case.  The guiding  star would      be the  conduct of  a  hypothetical      willing  vendor   would  offer  the      lands and  a willing  purchaser  in      normal  human   conduct  would   be      willing to  buy as a prudent man in      normal market  conditions as on the      date  of   the  notification  under      Section 4(1)  but  not  an  anxious      buyer dealing  at arm’s  length nor      facade of  sale or fictitious sales      brought about  in quick  succession      or otherwise  to inflate the market      value."      Thus, it  could be  seen that the endeavor of the court or the  arbitrator should  be to  sit in  the arm chair of a prudent willing  purchaser; keep  the consideration  of  the feats of  imagination at  bay; seek  answer to  the question whether a  willing and prudent buyer would offer to purchase the land  from the open market from a willing seller, at the same rate  which is  proposed to  be determined  by the Land Acquisition Officer/Court.  All the relevant features, viz., the nature  of the land, the quality of the land, the market conditions prevailing as on the date of the acquisition, the income derived  from the  land etc.,  should be  taken  into consideration. Thus,  the question  is: if  the similar land remains in  the same  condition at  the time of acquisition, would a  prudent purchaser  after to purchase 1007 kanals at Rs. 70,000/-  per kanal?  The Court  is required to consider what will  be the  true market  value in  that  behalf.  The arbitrator and  the High Court have thrown the tests laid by judicial  decisions  to  winds.  It  is  seen  that  in  the acquisition proceedings, the Tehsildar had collected various

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documents which  now have  been proved through the witnesses as to the value as on June 30, 1987 and they have worked out the compensation  at the rate of Rs. 12, 000/- per Kanal for the Warhal  Changhi, Rs.  10,000/- for  Warhan Mandi and Rs. 9,000/- for  banjar Kadeem. It is not disputed nor can it be disputed that the lands had developed in and around the land on account  of  the  military  estate  established  in  that village.  The   present  development  has  been  taken  into consideration which  is wrong in law. There is no doubt that the land  owners are  not having  any other  land except the small piece  of land.  But that would not be a consideration for totally  ignoring the prevailing market value and fixing the compensation  de hors  the prevailing  market value. The documents reliod  on by  the claimants show in the map filed before us,  that the  lands are  situated far  away from the lands under  acquisition, Equally,  the lands  in respect of which sale  deeds were  filed by the Government are situated in Sansoo  village itself which is very near to the acquired lands. The  market value  fetched by  the lands, i.e., small pieces of the extent of 4 and 5 marlas respectively, between August 10,  1996 and  April 27,  1987  hardly  work  out  to minimum of  Rs. 10,000/-  and the  maximum of Rs. 20, 000/-. Even the  sale deeds  relied on  by  the  claimants  are  of maximum  of   6  marlas   of  land;  though  the  house  was constructed,  it  was  sold  for  Rs.  32,000/-.  Thus,  the compensation worked out to Rs. 80,000/- per kanal.      Under these  circumstances, considering the totality of the facts  and circumstances and sitting in the arm chair of a willing  purchaser, we  think that  the appropriate market value would   be  Rs. 30,000/-  per kanal and the High Court and the Arbitrator, therefore, have committed manifest error in determining the compensation                        (C,A, 3568/97)      Accordingly, the  appeal is  allowed. The claimants are entitled to  interest as  per the  Act. With  regard to  the determination of the value of the trees, we are not inclined to disturb  the determination  made by the Arbitrator. It is open to  the appellants  to have the excess amount recovered from the respective persons as per rule. No costs.      CA No.  3569-70/97 [@  SLP (C) No. 11052-53/97 CC 3592- 93/97] filed by the claimants stand dismissed.      No costs.