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PETITIONER: DOLLAR COMPANY, MADRAS

       Vs.

RESPONDENT: COLLECTOR OF MADRAS

DATE OF JUDGMENT01/05/1975

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH GUPTA, A.C.

CITATION:  1975 AIR 1670            1975 SCR  403  CITATOR INFO :  R          1977 SC 580  (9)  R          1989 SC1222  (5)  RF         1992 SC 666  (3)  RF         1992 SC1406  (14)

ACT: Land Acquisition Act--Section 23-Market Value--Principle  on which Appellate Court interferes.

HEADNOTE: The  suit land was acquired under the Land Acquisition  Act. The  Land Acquisition Officer awarded Rs. 800 per ground  as compensation.   The City Civil Court awarded at the rate  of Rs. 1000/- per ground.  The High Court on appeal awarded Rs. 1800  per ground.  The appellant himself purchased the  suit land about 10 months before the notification under s. 4  was made at a price of Rs. 410 per ground.  The appellant  spent a little money on filling up the pond. HELD : Dismissing the appeal, This  Court interferes with the judgment of the  High  Court only  if  the  High Court applies  a  principle  wrongly  or because  some important point affecting valuation  has  been overlooked or misapplied.  A court of appeal interferes  not when  the judgment under attack is not right, but only  when it is shown to be wrong. [404 E-FG] HELD  FURTHER-Market value is what a willing purchaser  will pay  a  willing vendor.  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 was long ago,  the  Court would  examine  more recent sales of  comparable  lands  a,% throwing better light on current land value.  In the present case,  the appellant himself purchased the land at the  rate of Rs. 410 per ground. [404 H. 405 A.B] HELD-There  is  no  error in principle  in  the  High  Court judgment  nor has any of the limited grounds on which  these Court’s jurisdiction can be legitimately exercised been made out. [408-CD]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 667 of 1968.

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From the judgment and order dated 31st January, 1967 of  the Madras High Court in Appeal No. 412 of 1962. N.  Natesan,  K.  Jayaram  and  R.  Chandrasekher,  for  the appellant Govind Swaminathan, N. S. Sivam, A. Y. Rangam and A.  Subha- shini, for the respondent. The Judgment of the Court was delivered by KRISHNA IYER, J.-This is a pedestrian appeal by a land-owner whose  property,  having been acquired compulsorily  by  the State,  asks  for more compensation, probably  appetised  by increases  over  the Collector’s award granted by  the  City Civil  Court  and  the High Court.  The  grounds  urged  are conventional,  based on comparison of prices shown  in  land sales  in  the neighborhood and the  general  escalation  of urban land values in the country. 404 127 odd ’grounds’ (a ground is around 5-1/2 cents; actually- 2,400 sq. ft) were acquired in 1959 for the construction  of a Housing Colony for the Madras Port Trust employees by  the then Madras State.  They comprise R. S. No. 4032/1 and other items  with which we are not concerned, since the owners  of those items have not come  up in appeal to this Court.   The relevant notification under s. 4( 1) was made on August  12, 1959 and so the compensation has to be pegged to the  market value  as on that date.  Of course, 16 years have rolled  by since,  thanks  to  delay  which has come  to  stay  in  the administrative and forensic processes of our land.  That  is by the way.  The Land Acquisition Officer awarded Rs.  800/- per  ground.  The City Civil Court, approaching the  problem of  valuation plot-wise, as for a housing colony,  made  the necessary deductions involved in that process and awarded at the  rate  of Rs. 1,000/- per ground.  The  High  Court,  on appeal,  made  an  upward  revision,  discarding  the  trial court’s  approach and awarded Rs. 1,800/- per  ground.   The State has not come up in appeal, but the unquenched claimant asks for more in appeal, demanding at least Rs. 2,200/-  per ground. Generally  speaking, a cardinal component in the  escalation of  prices  of urban realty which does not  find  sufficient expression in the ancient Land Acquisition Act, 1894 is  the developmental    operations   inevitable   in   a    rapidly industrialising society for which the individual owner makes no  social contribution.  Be that as it may, courts have  to apply  the legislation as extant, it being left to the  law- makers  to harmonize social justice which individual  rights by appropriate reforms.  We have to proceed to determine the compensation  according to the canons crystallized in s.  23 of the Act. At the outset, we must warn ourselves of the broad guideline that  in an appeal from an award granting compensation  this Court  will not interiere unless there is something to  show not merely that on the balance of evidence it is possible to reach a different conclusion but that the judgment cannot be supported  by reason of a wrong application or principle  or because  some important point affecting valuation  has  been overlooked  or  misapplied.  Moreover, there  is  a  prudent condition to which the appellate power, generally  speaking, is  subject.   A  court,of appeal interferes  not  when  the judgment under attack is not right but only when it is shown to be wrong.  These twin principles serve as backdrop to our approach to the rival contentions in the case. It is true that compensation for compulsory acquisition,  as governed  by s. 23, gives high priority to the market  value of  the  land  at  the  date  of  the  publication  of   the notification  under  s. 4, sub-s. (1).  But what  is  market

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value ? It is a common place of this branch of jurisprudence that  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 time to the  relevant  date under S. 23.  We may even say that the best evidence of  the value of property is the sale of the very property to which  405 the  claimant  is a party.  If the sale is of  recent  date, then  all that need normally be proved is that the sale  was between  a willing purchaser and 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 (See Parks ’Principles  &  Practice  of Valuations’  p.  29-Eastern Law  House-Calcutta,-IV  Edition 1970).  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.  We emphasize this facet because the appellant himself purchased the land in question just ten months before the notification under s. 4(1), at  a price  of Rs. 410 per ground.  There was a pond in the  pot, the  filling up of which is alleged to have cost some  extra money  according to the appellant, but he gave  no  evidence before the court on this matter with the result that we  are left  with the estimate made by the Public Works  Department for  the  filling up of the pond which works out at  a  much lesser  figure.  In short, less than a year before the  date of  commencement of acquisition proceedings,  the  appellant himself  had purchased this land at a price around  Rs.  450 (making  allowance for the pond which he had filled up)  and he  has been awarded Rs. 1,800 per ground by the High  Court Instead of wandering around neighboring lands or guessing as to  what the price of the disputed land might have been,  we have  before us the actual purchase of the suit property  by the  appellant  himself and he has not set up any  case  of. special features or circumstances depressing the land  value or  affecting the particular transaction so that  one  could ignore that sale as the product of artificial circumstances. We  have  thus a situation where the law  should  express  a judgment  from  the experience of the appellant  himself  as against   a  judgment  from  speculation  based   on   other transactions. Clinching   evidence  to  correct  uncertain   prophesy   is furnished  here  by  the  claimant’s  conduct.   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  fix  the precise compensation.  Viewed from  a  slightly different  aspect  it  is but  fair  that  compulsory  land- acquisition  while assuring a just equivalent should not  be converted  into  an avaricious windfall.  Can an  owner  who brought the land at Rs. 400 per ground and laid out a little more  money  on it, grouse: on the score  of  inadequate  or unjust  recompense, if within a year after his own  purchase he  is paid by the State 400 per cent of what he  spent  for the identical land ? Neither morality nor legality is viola- ted  in such a case; for even a black marketeer’s bosom  may not  be  uneasy at the prospect of such a fortune  which  he could not have bargained for when he became the owner of the land  some months before.  ’It is the duty of the  state  or federal  government, in the conduct of the inquest by  which compensation  is  ascertained, to see that it is  just,  not merely to the individual whose property is taken, but to the public which is to pay for it’ (See 27 Am Jur 2nd  paragraph

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266,  p.  53  of  Vol.  27).   All  things  considered,  the appellant stands self-condemned by his own deed of purchase. Property. valuation as a practiced art is greatly influenced by legal and economic constraints.  But, in this case, we do not have any 406 complex   considerations   since  helpful   indicators   are available.   Price paid-by the owner recently represents  an expression  of market value, as bow fide evidence of  value, subject,to  such  matters  as (a) the  relationship  of  the parties; (b) the market conditions and the terms of sale and (c) the date of gale.  It may not end the enquiry but goes a long way to solve the problem.  In this collection it may be useful  to refer to the decision of this Court in S.  L.  A. Officer v. T.A. Setty(1) where it was observed :               "It  is not disputed that the function of  the               court  in awarding compensation under the  Act               is  to ascertain the market value of the  land               at the date of the notification under S.  4(1)               and  the  methods  of  valuation  may  be  (1)               opinion of experts, (2) the price paid  within               a reasonable time in bone fide transactions of               purchase  of the lands acquired or  the  lands               adjacent to the lands acquired and  possessing               similar  advantages and (3) a number of  years               purchase   of   the  actual   or   immediately               prospective profits of the lands acquired".                   (p. 432, para 9-emphasis, ours) Appreciating  this lethal consequence, Sri Natesan,  learned counsel,  suggested rather obscurely that there  might  have been  peculiar possibilities why this land was sold  to  his client  at  a  low price.  But  the  reasoning  breaks  down because the claimant has not even hinted in his pleading  or cared to testify what special circumstances played upon  the transaction by which he got this identical land at the price he  paid.  We cannot be swayed by surmises floating in  mid- air,  particularly where the party who urges these  feathery likelihoods  stood  mute at the trial stage.  He  failed  to speak only to become a martyr for silence. Sri Natesan switched on to the prices of other lands in  the locality  to  overcome  the  self-created  obstacle  of  his client’s  purchase.  This is specious logic.  When  decisive evidence  of  the  market value  of  the  land  compulsorily acquired  is  unavailable  you seek  light  from  comparable neighborhood.   Such  is  not the case here.   Even  so,  we traveled  with counsel on to other lands, to gather  whether any grave error had crept into the High Court’s  assessment. The  discovery made was that lands in the near  neighborhood were sold sometime earlier at prices ranging from Rs. 300 to Rs.  400  and  in one case Rs. 900 (Ex.   R2  to  R7)  while distant neighbors like that covered by Ex.  C11 were  valued by court at around Rs. 2,200 or Rs. 2,400 per ground.   This wide  disparity may be a trifle mystifying.  Even so, we  go by lands close by and not by one a mile-and-half away as Ed- C11 plot.  In an industrial area, land prices are  sensitive to an intricate variety of factors. Propinquity  to  highway or ports and  many  industrial  and social  imponderables enter the verdict of  evaluation.   So much so we cannot automatically assert, with reference to  a piece of land a mile-and-half (1)  A.I.R. 1959 S.C. 429. 407 away, that it serves as a guide for fixing the price of. the suit plot.  What. the High Court has done is to have at  the back of its mind the various sales, Exhibits R2 to R7, which

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fall  far below the value demanded by the claimant  and  the high  prices  awarded by the same High Court  in  regard  to other lands distances away, have regard to the then  growing industrial potential and make an intelligent guess.  May  be as  the  learned Advocate General has pointed  out,  in  the light  of  evidence  regarding  the  precise  land  and  the particular  owner, there was no justification  for  awarding such  a  high price as has been done but the State  has  not bothered  to come up in appeal and we cannot hold  that  the High  Court  was in error in making out of the  totality  of materials  available,  a  best judgment  assessment  of  the market value.  No serious flaw in principle, no omission  to consider  important  material  or like  infirmity  has  been pointed out to fault the judges on the appraisal. Nevertheless,  Shri Natesan contended strenuously  that  the sales showing low prices were not reliable for two  reasons. They  were ’distress’ sales and prices had gone up from  the dates  of  those  deeds which  were’  of  1949-50.   Neither argument  is conclusive.  True, a few of the  sales  suggest some pressure inducing the vendors to dispose of their land. But there are other deeds which are unblemished by any  such depressant.   Having gone through the documents in  question we are satisfied that none of the sales bear marks of  throw away prices. The  other argument that prices must have  inexorably  risen from  1949  to  1959 is  no  axiomatic  proposition.   True, generally speaking, there has been an inflationary spiral in India which has not spared really.  But there is evidence in the present case to show that between 1949 and 1952 lands in this  very area stood stationary in their  prices.   Various geo-economic  factors  have affected land  prices,  some  to boost  them, others to slump them.  Therefore we  cannot  be persuaded to hold that a relentless rise in land prices  has come  to stay.  Take but one example : If a land  adjoins  a factory  which needs to be expanded further, a higher  price may be offered by that factory owner.  Likewise, if a  heavy tax on construction of buildings or ceiling on vacant  urban land  is  in the offing, prices of building sites  may  come down.   It  may  even  be said that such  a  factor  as  the application  of the MISA to smugglers may depress prices  of many  items,  including land and foreign  cars,  in  certain places.   Another exotic example.  In some  American  cities the  influx of certain colored races into the downtown  area brings  down the market value of real estate, under  current social conditions. While  it is true that the area we are concerned with is  an industrial  belt,  we cannot forget that there  are  housing colonies  also  as adjuncts so that some lands may  be  less suitable  for industrial buildings but may still  be  useful for  workers’  houses.   It is in evidence  that  the  plots acquired here had ponds, the appellant himself having filled up the pond in his plot: This shows incidentally that  high- rising constructions may require pile-driving at high  cost. We  need not guess at the various chancy factors  except  to state that having 10 SC/ 75-27 408 due regard to the conspectus of circumstances, including the appellant’s  own  cost  price, the Court has  made  a  sound judgment.   In this view, we do not think there is need  for further  discussion  of the facts pressed before us  by  the appellant.  We agree with him that the purpose for which the land  is acquired has no bearing on the value to  determined by the Court but our conclusion remains unaltered. We see no reason, no law nor justice, to interfere with  the

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judgment  under appeal.  Maybe, the appellant  is  aggrieved that  slightly  inferior lands acquired  simultaneously  and adjoining  his  plot have been given the same value  as  has been awarded to him.  It may also be that each court he  has approached has improved upon the price awarded by he earlier one  and  therefore  he  might  have  obtained   certificate hopefully.   And looking at his lost land now, years  later, when  real estate has risen in price much more, he may  sigh at  what  is  fixed and strive to yet more.   But  a  closer examination has disclosed no error in principle ,a the  High Court’s judgment nor has any of the limited ground on  which this Court’s jurisdiction can be legitimately exercised been made out. The  appeal is dismissed but, in the circumstances,  without costs. P.H.P.                           Appeal dismissed 409