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PETITIONER: GULZARA SINGH AND ORS., ETC.

       Vs.

RESPONDENT: STATE OF PUNJAB AND ORS.

DATE OF JUDGMENT11/05/1993

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. SAHAI, R.M. (J)

CITATION:  1993 SCR  (3) 645        1993 SCC  (4) 245  JT 1993 (3)   668        1993 SCALE  (2)808

ACT: Land  Acquisition  Act, 1984: Section  23(1)--Acidetest  for Market  Value  of  acquired land--Relevance  of  Sale  deeds mutation entries, Average price, Margin for wholesale  price of large extent, Deduction for development charges.

HEADNOTE: Notification  under section 4 for acquisition of 89 Acres  4 Kanals  and  12  Marlas  of land in  a  village  in  Punjab, published   on   January  27,  1978.    Appellants   claimed compensation  Rs. 30,000 per Bigha i.e. Rs. 1500 per  Biswa, on  the  ground  that 15 Biswas of land  situated  near  the acquired land had been sold on July 12,1977, for Rs.  24,000 which  works  out to Rs. 1600 per Biswa.   Land  Acquisition Collector  classified  the  acquired land In  6  blocks  and awarded Market Value ranging between Rs. 30,000 to Rs,  6000 per acre.  In reference under Section 18, the District Judge disagreed  with classification.  The learned Judge,  relying on  sale  deeds  dated  September  4,1972,  June  14,  1976, February 23, 1977 and July 15, 1977, all for small  extents, awarded compensation @ Rs. 800 for the rest of land, besides solatium  and interest.  Appeals filed in the High Court  by State  of  Punjab and by one batch  of  claimants.   Another batch  of  claimants filed cross  objections.   The  learned Single  Judge  allowed  appeals  filed  by  the  State   and dismissed  appeals  and cross-objections of  the  claimants. Market Value was determined, on working out average price on the basis of sale deeds dated September 4,1972 and June  14, 1976  filed by claimants and mutation entries  dated  August 31, 1977 and October 4,1977 filed by the State.  Belting was carved  at depth of 100 Ft. from main road and deduction  of 1/3rd  was made towards development  charges.   Consequently market  value  determined  @  Rs. 750  per  Biswa  for  land abutting  main road and @ Rs. 500 per Biswa for the rest  of land.   Judgment and order of the learned Single  Judge  was confirmed by Division Bench. Claimants,  by  special  leave petition  filed  appeals  for higher compensation.  This court determined market value  at Rs. 1000 per Biswa and allowing the appeals to that extent, HELD It is settled law that to determine market value of the land,  the  sales of land under requisition if  any  or  the sales in the neighborhood lands,

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646 that  possessed of same or similar features or fertility  or other advantageous features would furnish basis to fix  just and fair market value. (649-E) The price for which the willing vender would offer the  land and willing vendee would agree to purchase it, as a  prudent man in normal market conditions, as on date of  notification or  near about the date, is acid test to fix  market  value. Sales  and  purchases of land at throw away  price  at  arms length  or depressed sales or facade of sales made in  quick succession to inflate market value do not offer any basis to determine just Market Value. (649-F) In  order  to adjudge, whether sales are  bonafide,  whether consideration  mentioned in the deed was infect  and  really passed,  whether the lands covered by sale deeds and  relied on   possessed   of  same  or  similar   potentialities   or fertilities or advantageous features would be brought out on record only by examination of the vendor or the vendee or if neither of them is available, the attesting witness, who has personal   knowledge   of  the  bargain   and   passing   of consideration.  Hence it is mandatory. (650-A) Periyar & Pareekanni Rubbers Ltd. v. State of Kerala: [1991] 4 SCC 195. Sale deeds of small extents being retail price do not  offer comparable  basis to fix compensation, when large  block  is acquired.   If sale transactions relate to the  lands  under acquisition  and  if  found  to  be  genuine  and   bonafide transactions,  then  it  may be  considered  but  reasonable margin must be given in fixing wholesale price. (650-E) Collector  of Lakhimpur v. Bhuban Chandra Dutta AIR 1971  SC 2015;  Mirza Nausherwoan Khan & Another v.  Collector  (Land Acquisition) Hyderabad [1975] 2 SCR 184; Ram Rattan & Others v. State of Uttar Pradesh [1977] 2 SCR. 184; Smt.  Kaushalya Devi Bogra & Others v. Land Acquisition Officer,  Aurangabad JUDGMENT: Others  [1977]  1  SCR 329; Administrator  General  of  West Bengal  v.  Collector Varanasi AIR 1988 SC 943  and  Special Tehsildar  Land Acquisition v. A Mangal Gowri [1991]  4  SCC 218. Court in the first instance has to determine as to which  of the sale deeds are relevant, proximate in point of time  and offer comparable base to 647 determine  market value.  The after average price has to  be worked  out and the contention that highest value should  be fixed cannot he accepted. (651-D) State  of Madras v. A.M. Ranjan & Another [1976] 3 SCR  356; Collector  of Lakhimpur v. Bhuban Chandra Dutta AIR 1971  SC 2015;   Sint.   Kaushalva  Devi  Bogra  &  Others  v.   Land Acquisition  Officer, Aurangabad & Another [1984] 2 SCR  900 and  Administrator  General  of West  Bangal  v.  Collector, Varanasi AIR 1988 SC 943. The   Principle   of   belting  is   perfectly   legal   and unexceptionable, as the lands abutting the main road up to a specified  depth  depending on factual material  on  record, would  fetch  higher  market value than  lands  situated  in interior area. (652-A) If  the acquired land is undeveloped, deduction of at  least 1/ 3rd, is necessary towards development charges. (652-F) Brig.   Sahib Singh Kalha & Others v.  Amritsar  Improvement Trust  & Others [1982] 1 SCC 419; Administrator  General  of West  Bengal v. Collector Varanasi AIR 1988 SC 943;  Special Tehsildar, Land Acquisition v.  A. Mangal Gowri [1991] 4 SCC 218; and Bhagwathula Swamnanna & Others v. Special Tehsildar Land Acquisition Visakhapatnam [1991] 4 SCC 506. (535-D-E)

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& CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8670 of 1983. From  the JudGment and Order dated 3. 9. 1982 of the  Punjab and Haryana HiGh Court in ReGular First Appeal No. 1 105  of 198 1.                         WITH C.A.  Nos. 8634 to 86-58/83 and 8660-62/83, 8665 to  8669/83 and 8671-72/ 83 Prem Prasad Juneja and R.S. Sodhi for the Appellants. H.M. Singh for G.K. Bansal for the Respondents. 648 The Judgment of the Court was delivered by K.  RAMASWAMY,  J.  The common questions of  law  arose  for decision  in  these  appeals.  Hence they  are  disposed  of together.    Notification  under  s.  4  (1)  of  the   Land Acquisition Act 1 of 1984 was published in the Punjab  State Gazette on January 27, 1978 acquiring 89 acres 4 canals  and 12  marlas  of  land situated in Dhuri  village  for  public purpose,  namely  to  set  up  new  Mandi  Township.    The. appellants  claimed at the rate of Rs. 30.000  per  Bighabut Land  Acquisition Officer after classifying the  lands  into six blocks A to F, awarded market value ranging between  Rs. 30,000  to Rs. 6,000 acre.  On reference under s. 18 of  the Act,  the District Judge, Sangrur in his judgment dated  May 13,  1981 disagreed with the classification and  found  that all the lands are possessed of the same quality.  Relying on sale-deeds,  Ex. p-3 dated September4,1972, p-5  dated  June 14,1976, p-2 dated February 23, 1977 and p-4 dated July  15, 1977, all small extents, he calculated at an average of  Rs. 1300 per Biswa and awarded to the lands belonging to Jaswant Kaur Baldev Singh and Gurdev Singh at the rate of Rs.  1,000 per  Biswael  finding that their lands  are  abutting  Abadi (village)  and for the rest awarded at the rate of  Rs.  800 per Biswa with statutory solatium at 15% and interest of  6% per annum on enhanced compensation.  Dissatisfied  therewith the  State filed the appeals and against disallowed  claims, the  claimants  in one batch filed appeals  and  in  another batch  filed  cross-objections.  The  learned  Single  Judge relied on Ex. p3 and p-5 filed by the claimants and Ex.  R-4 and  R-6  filed  by the State as  comparable  instances  and calculated  the  average  which worked out at  Rs.  750  per Biswa.   He found that the lands are possessed of  potential value  for further building purposes.  Therefore, he  carved out  belting  at a depth of 100 ft. from the  main  road  to those  lands, deducted 1/3rd towards  developmental  charges and  awarded the market value at the rate of Rs. 750 to  the land situated abutting to the main road to the depth of  100 ft.  and  for the balance lands at the rate  of  Rs.500  per Biswa.  The State appeals were allowed and of the  claimants and  cross  objection were dismissed.   The  Division  Bench confirmed  the  judgment of the learned Single  Judge.   The claimants  filed  these appeals by special  leave.   In  the first batch no witness has been examined, but in the  second batch witnesses were said to have been examined in proof  of these documents but their evidence was not made part of  the record.  Equally of the sale deeds. It  is seen that the documents in the second batch p-  top-1 include  those filed in the first batch.  Ex. p-5  is  dated Sept.  4, 1972, in which 20 Biswas of land was sold for  Ice Factory.   It  was situated in the town itself.   The  price fetched  therein was Rs. 20,000 Therefore, it worked out  at the  rate of Rs. 1,000 per Biswa.  Ex. p10 is  dated  August

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25,  1975, 7 Biswas of land in Dhaula village was  sold  for Rs. 649 75,000  which works out at rate of Rs. 1071 per Biswa.   Ex. p-7  is  dated  June 14,. 1976,3 Bighas 16  Biswas  of  land situated  at  Dhularoad side was sold for  Rs.  4,500  which works  out at the rate of Rs. 1285 per Biswa.  Ex.p-8  dated June 15, 1977 is for 4 Biswas of land at Dhula road sold for Rs.  4,000 which works out at Rs. 1,000 per Biswa.  Ex.  p-4 is dated Feb. 23, 1977,3 Biswas of land in the heart of  the town  Dhuri  was sold for Rs. 6,000 which works out  to  Rs. 2,000  per Biswa.  Ex. p-6 is dated may 18,1977, one  Bigha7 Biswas  were sold for Rs. 1,000, which works out to Rs.  370 per  Biswa.  This land is away from the town and  also  from the  acquired  land.   Ex. p-9 is dated July  12,  1977,  15 Biswas  of land were sold for Rs. 24,000 working out at  the rate of Rs. 1,600 per Biswa.  Based thereon it was contended that Ex. p-9 fetches the highest market value and is  nearer to  the  date  of notification and  would  offer  comparable price.   The High Court ought to-have fixed market value  at that  rate.  The High Court committed illegality in  relying on two sale-deeds of the claimants and two mutation  entries on  behalf  of  the  state  in  working  out  the   average. Therefore,  fixation  of the market value is  illegal.   The mutations  are  not admissible as neither  sale  deeds  were filed not any body connected with them are examined. The question, therefore, is whether these sale  transactions would reflect the prevailing market value of the land of the total  extent  of 90 acres.  It is seen that  in  the  first batch  no-one was examined to prove the documents.   In  the second  batch  though  witnesses  were  said  to  have  been examined,  the  evidence  is not  on  record.   Neither  the reference  court nor the High Court discussed  the  evidence and  no finding was given.  So we do not have the  advantage of any findings in that behalf.  The state filed 5  mutation entries  which were marked.  The sale entries Ex.R-6  is  of October 4,1977 and Ex.  R-5 of November 13, 1977.  The rates of  lands  in Saledeeds executed between March  7,  1977  to November 13, 1977, i.e. R-2 on 7.3.77, R-3 on 8.6.77, R-4 on 31.8.77  and R-5 on 30.11.77 work out between Rs. 83 to  Rs. 450  per  Biswa.  It is settled law that  to  determine  the market value of the land under s. 23(1) of the Act the sales of  the land under requisition, if any, or the sales in  the neighbourhood  lands  that  possessed  of  same  or  similar potentialities  or fertility or other advantageous  features would furnish basis to determine just and fair market  value on  the premise of hypothetical willing vendor  and  willing vendee.   The  willing vendor who would offer the  land  and willing  vendee  who would agree to purchase the land  as  a prudent  man in normal market conditions as on the  date  of the notification or near about the date of the  notification is the acid test.  It is also settled law that the sale  and purchase  of lands at a throw away price at arm’s length  or depressed sales or fecal of sales brought into existence  in quick succession to inflate the market value would not offer any  basis  to  determine just market value.   In  order  to adjudge  whether  sales are bonafide sales  between  willing vendor and 650 willing  vendee and whether the consideration  mentioned  in deed  was, in fact and really passed on under  transaction’. whether  the  lands  covered by sale-deeds  and  relied  on, possessed  of same or similar potentialities or  fertilities or advantageous features would be brought on record only  by examining the vendor or the vendee or if neither of them  is

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available, the attesting witness who has personal  knowledge of  the  bargain  and  passing  of  the  consideration   are mandatory.  Vide Periyar & Pareekanni Rubbers Ltd. v.  State of  Kerala [1991] 4 SCC 195 wherein this court surveyed  the entire  case  Law  in that respect.   Since  none  has  been examined  in the first batch the sale transactions  referred to either by the state or by the claimants cannot be  relied upon.   In the second batch since the evidence has not  been referred to by the courts below nor discussed by them nor we have the advantage to go through the same, we cannot rely on the same to further enhance the market value.  Therefore, we are  left  with no option. but to reject  those  sale-deeds. Moreover,  except Ex. p-9 all other sale-deeds are  of  very small  extents.  This court consistently has taken the  view in  Collecior of Lakhimpur v. Bhuban Chandra Dutta AIR  1971 SC  2015 Mirza Naushery voan Khan & Anr. v. Collector  (Land Acquisition). Hyderbad [1975] 2 SCR 184; Rain Rattan &  Ors. v. State of U. P. [1977] 2 SCR 184 Smt.Kaushalya Devi  Bogra & Ors.v.Land Acquisition officer, Aurangabad & Anr. [1984] 2 SCR  900; Padma.  Uppal v. State of Punjab & Ors.  [1977]  1 SCR 329, Administrator General of West Bengal v.  Collector. Varanasi  AIR  1988  SC  943  and  Special  Tehsildar,  Land Acquisition  v. A. Mangala Glowri [1991]4 SCC 218 that  sale deeds  of  small  extents being retail price  do  not  offer comparable  basis  to fix compensation when large  block  of land  is  acquired.  To an intending bonafide  purchaser  if such block of 90 acre is offered for sale, would he agree to purchase  at  retail  price or far  less  value?   Under  no circumstance  he  would agree to purchase at  retail  prices mentioned above.  In view of the settled legal position  the saledeeds,  sought  to be relied upon, do not  give  us  any basis to determine the market value.  Every endeavour  would be  made to fix fair and reasonable market value.   If  sale transactions  relate to the lands under acquisition  and  if found to be genuine and bonafide transaction between willing vendor  and vendee then it may be considered but  reasonable margin must be given in fixing whole sale price.  Therefore, all the documents except p-9 are rejected. The  next contention is that the sale-deed Ex. p-9 by  which 15  Biswas were sold for Rs. 24,000 which works out  at  the rate  of Rs. 1,600 per Biswa and whether this hiohest  price should  be  given to the appellants.  As stated  earlier  we have  no evidence before us as to under  what  circumstances this  document came to be executed and what is the  distance between the lands and for what purpose the land was sold and what is the 651 comparable nature of the land, fertility and  potentialities of  the  land,  etc.  The contention  relying  on  state  of Madras v.A.M.Ranjan & Anr. [1976] 3SCR35 that highest  value should be fixed cannot be accepted in view of the consistent late. view of this court.  In Collector of lakhimppur’s case (supra),  this court accepted the principle of average,  but however,  rejected  the  small  extent  of  the  lands  arid enhancement based on the average at Rs. 15,000 per Bigha was reduced  to Rs. 10.000 per Bicha.  In Smt.  Kausalya  Devi’s case (supra), this court noted that large extent of land  in the  developed  Aurangabad  town was  acquired  for  Medical College, accepted the principle of average worked out by the reference  court, varying between Rs. 2.25 to Rs.  5.00  per sq. yard and this court ultimately fixed the market value at the rate of Rs. 1.50 per sq. yard.  In Administrator General of West Bengal’s case (supra) this court upheld rejection of the  small  plots of lands and accepted  two  sale-deeds  of large  extent  working out the average rate at Rs.  500  per

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Decimal  and  ultimately reference court  fixed  the  market value at the rate of Rs. 200 per Decimal.  It is, therefore, clear that the court in the first instance has to  determine as  to  which of the sale deeds are relevant,  proximate  in point of time and offer comparable base to determine  market value.   Thereafter the average price has to be worked  out. It  would be seen that this court has taken consistent  view of working out average and further deductions have been made in fixing just and fair market value when large chunk of the land was acquired.  We respectfully agree and adhere to  the principle  and  we find no compelling reason to  divert  the stream or arrest the consistence. The  question  then is whether the reduction of  the  market value by the learned Single Judge is warranted on facts  and under law.  In his judoment the learned Judge found that the acquired lands are situated between railway line on the  one side  and link road going from Dhuri to Sarona on the  other side.  On the third side it is surrounded by the in  habited area  of Dhuri town.A small portion in Khasra No.  2585  was abutting the Dhola road and the rest of the acquired land is just behind the inhabited area.  While acquiring these lands the Govt. have excluded the built up area. He  also found that there is tendency of extension of  Abadi village  towards acquired lands.  Therefore, he  found  that the lands arepossessed of "Potential value for being  housed for urban purpose in the near future and, therefore, had  to be valued as such" Thus  we have the evidence that the lands are  possessed  of potential  value for being used for building  purposes.   In fact,  the acquisition itself is for construction  of  Mandi Township.   The principle of belting is perfectly legal  and unexception- 652 ble  as  the lands abutting the main road upto  a  specified depth,  depending on actual material on record, would  fetch higher market rate than the lands situated a interior  area. However, on facts of this case the belting is not  warranted for the reason that as seen on three sides there exist roads and  abutting the village.  As per the plan as found by  the High  Court there exists a road cutting across the  acquired lands.   Therefore, there is not only access on three  sides but  also to interior lands.   Thus in our view belting  and fixation of differential rates of value is not justified. The  next question is what would be the reasonable and  just market value the lands were likely to fetch.  In view of the fact that there is no evidence available and since the  High Court found that the lands are possessed of potential  value the rate of Rs. 1,000 per Biswa as awarded by civil court to the  lands abutting abadi and the lands upto a depth of  100 ft is upheld.  In view of the preceding finding we hold that the  fixation  of  uniform rate of Rs. 1,000  per  Biswa  is legal. It  is  seen  that  this  acquired  land  of  90  acres   is undoubtedly   undeveloped  area  and  necessarily   requires development  by laying the roads, parks, drainage,  lighting and  other civic amenities.  In Brig.  Sahib Singh  Kalha  & Ors.  v. Amritsar Improvement Trust & Ors. [1982] 1 SCC  419 and  Administrator  General of West, Bengal’s  case  (supra) this  court  deducted 53% of the undeveloped  lands  towards developmental  charges while fixing market value at  decimal rate  etc.  towards amenities.  In  Special  Tehsildar  Land Acquisition,  Vishakapatnam’s case,(supra) this  court  made deduction  at  1/3rd.   The  appellant  placed  reliance  on Bhagwathula  Swamnana  &  Ors.  v.  Special  Tahsildar  Land Acquisition.   Visakhapatnam  [1991] 4 SCC  506  where  this

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court did not deduct any land towards developmental charges. But  in that case it was found that the lands  acquired  are situated  in fully developed area.  On  those  circumstances this  court  did not deduct any land  towards  developmental charges.  It is seen that the consistent view of this  court now is that deduction of at least 1/3rd is necessary towards developmental  charges.  Therefore, we uphold  deduction  of 1/3rd towards development charges from the market value  and determine  the  market  value at Rs.  670  per  Biswa.   The learned  judge while deducting 1/3rd fixed market  value  at Rs. 759 of frontage lands and Rs. 500 to interior land.  Rs. 750  is  obvious  mistake, but the state did  not  take  any action  to have itch corrected not filed appeals.   Fixation of Rs. 750 per Biswa of lands from road upto a depth of  100 ft.  became final.  So we cannot interfere or correct it  in claimants  appeal.  But for the rest of the lands  we  award Rs.  670 per Biswa. with solatium at 15% and interest at  6% on  the  enhanced  market  value from  the  date  of  taking possession till date of payment. 653 The appeals are accordingly allowed to the above extent.  In the  circum stances parties are directed to bear  their  own costs. I.S.G.                       Appeal allowed 654