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PETITIONER: K.POSAYYA & ORS.

       Vs.

RESPONDENT: SPECIAL TAHSILDAR

DATE OF JUDGMENT10/05/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. VENKATACHALA N. (J)

CITATION:  1995 AIR 1641            1995 SCC  (5) 233  JT 1995 (5)   174        1995 SCALE  (3)683

ACT:

HEADNOTE:

JUDGMENT:           THE 10TH DAY OF MAY,1995 Present:           Hon’ble Mr.Justice K.Ramaswamy           Hon’ble Mr.Justice N.Venkatachala Mr.P.P. Rao, Sr. Adv. Mr. Naramimha P.S. and Mr. V.G. Pragasam, Advs. with him for the Appellants Mr. Guntur Prabhakar, Adv. for the Respondent                 J U D G M E N T The following Judgment of the Court was delivered:           IN THE SUPREME COURT OF INDIA           CIVIL APPELLATE JURISDICTION           CIVIL APPEAL NOS. 5568-5571..........OF 1995     (Arising out of SLP Nos.17933-36/94) K. POSAYYA & ORS.                         ...APPELLANTS                         VERSUS SPECIAL TAHSILDAR                         ...RESPONDENT                         W I T H            CIVIL APPEAL NOS 5572-5574 OF 1995            (Arising out of SLP Nos.19266-68/94)                      J U D G M E N T K. RAMASWAMY. J.           Leave granted.           Jelluru  and   Yerrakaluva  Reservoir  to  prevent inundation of  agricultural lands and to control floods, was taken out  and 500  acres of  land was acquired as a part of Vengalrayasagar project  for submersion.  Notification under s. 4(1)  of the Land Acquisition Act, 1894, (for short, ‘the Act’) was published on March 22, 1979. 400 acres of land, as a part  of  that  Scheme  situated  in  Alivelu  village  in Polavaram Mandal in West Godavari District of Andhra Pradesh was acquired,  out of  which, we  are concerned  with  about 163.80 acres  in these appeals. The Land Acquisition Officer in his  award dated July 31, 1980, fixed the market value of the lands  at Rs.  400/- per acre. The lands are rain-fed in which  dry  crops  were  raised  prior  to  acquisition.  On

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reference under  s.18, the  Subordinate Judge  enhanced  the compensation to Rs. 22,000/- per acre. The High Court in the impugned judgment  in Appeal  No. 1341  and  batch  of  1992 reduced the  compensation to  Rs.400/- per  acre. Thus these appeals by special leave.      Shri PP Rao, learned senior counsel for the appellants, contended that  Alivelu  village  is  situated  in  notified tribal area  in which  the  Scheduled  Areas  Land  Transfer Regulation Act, 1970 is in force which prohibits sale of the lands by  the tribals  to the  non-tribals.  The  appellants being tribals  could  not  secure  any  sale  deed.  In  the neighbouring village  under Ex.A-1  dated October  12,  1980 when one  acre of  land was  sold for a sum of Rs. 20,000/-, the High Court was not justified in refusing to act upon the same. Equally,  it is contended that in another judgment and decree of  the High Court, in relation to lands acquired for Vengalrayasagar project,  determined the compensation at the rate of Rs.20,000/- per acre, the appellants are entitled to at least  to Rs.22,000/-  per acre.  Being the  tribal, they cannot afford  to purchase  the lands  elsewhere. The court, therefore,  should   grant  compensation  at  "reinstatement value" for rehabilitation of the tribals under Ex.A-5 and A- 6, the  awards made  by the  reference court  in OP  No. 17- 18/80,  the   Subordinate  Judge  awarded  at  the  rate  of Rs.22,000/- per  acre which  became final.  The  High  Court misapplied the principle laid by this Court in Administrator General of  West Bengal  v. Collector, Varanasi, AIR 1988 SC 943,  in  reducing  the  price  applying  the  principle  of deduction of  50% to the agricultural lands. The High Court, therefore, erred  in wrong  application of the principles of law in  determining the  compensation  to  the  agricultural land.      The  question,  therefore,  is,  what  is  the  correct principle of  law to  be applied  in determining  the market value of  vast extent  of lands were acquired for a project. Admittedly, Ex.A-1  dated December  31, 1980  is  the  torch light for  the claimants  to lay  higher claim. It is a post notification sale of the land situated in Chakradevarapalli. According to  the claimants, it is situated at a distance of 3 to  4 kilometers  from the  village Alivelu.  According to Land Acquisition  Officer,  the  distance  between  the  two villages is  30 Kms.  Possession of these lands, admittedly, was  taken   between  April  15,  1977  i.e.  prior  to  the notification under  s.4(1) and  July 14, 1980, shortly after the notification under s.4(1). It would, thus, be clear that the  sale   deed  was   brought  into  existence  after  the notification and  possession was taken of the lands. This is the notorious  document relied in all the references running into 302.  Only the  attestor was  examined in  proof of the documents. It  would be  obvious that  it was  a brought  up document to  inflate the  market value  of the  lands  under acquisition not  only in this village but in the surrounding villages. The  High Court, therefore, was right in rejecting the  said   document  and   refuse  to  place  reliance  for determination of  the compensation. Exhibit A-2, judgment of the single  Judge of the High Court in AS No.2500/86 arising out of  OP No.49/84  of the  same reference court. The lands therein were  acquired for Vengalrayasagar project. They are the wet  lands. Since the counsel for the Government did not appear and  no material  was placed  on record  and since in earlier cases,  award was confirmed for a sum of Rs.22,000/- per acre,  the single  Judge enhanced  the  compensation  to Rs.22,000/-. That  is obviously  illegal approach adopted by the High  Court in  determining the  market value of project area, large tracts of lands covered by the project. It would

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appear that  the learned Judge was not brought to the notice of other  references. Therefore,  it cannot  be  formed  the basis to  fix the  market value at a higher rate, though the judgment may be wrong.      Equally the  judgment in Ex.A-3 dated February 14, 1985 in AS  No. 232/82 and batch arising out of OP No. 111/80 and batch of  the Band situated in Tadavai village, the Division Bench determined  market value  at the  rate of Rs. 20,000/- per acre.  The foundation for the said determination was the notorious sale-deed  Ex.A-1 which was marked therein as A-3. Equally, Ex.  A-4 in  OP No. 57/84 of the reference court is founded upon  the earlier  decision. Ex.A-5 and A-6, namely, OP Nos.17-18/89  dated November 29, 1990 were founded on the judgments-Ex. A-2 etc. in which Subordinate Judge granted at the rate  of Rs.  22,000/- per acre. Since the very basis of determination of  the  compensation  is  clearly  erroneous, Ex.A-5 and  A-6 cannot  form any  basis for determination of the compensation.  The Division  Bench of  the High Court in this appeal,  placing reliance on Ex.A-5 and A-6 which arose from the  same village  Alivelu, reduced the market value to Rs.12,000/- per  acre on  the ratio in Administrator General of West  Bengal’s case.  It is true, as rightly contended by Shri Rao,  that the ratio therein relates to the urban lands fit for  building purpose  and the  same principle cannot be applied in determination of the market value of agricultural land. The  contention that  the  doctrine  of  reinstatement value in  determination of  the market value to the lands of depressed value  due to  operation  of  the  Andhra  Pradesh Scheduled  Areas   Land  Transfer   Regulation   Act,   1970 prohibiting alienation  of the  land between the tribals and non-tribals, though,  prima facie appears to be alluring but on deeper  consideration, it  cannot to  commend acceptance. What is relevant in fixation of the market value of the land under  s.23(1)  is  prevailing  price  as  on  the  date  of notification under  s.4(1). The  reasoning of the High Court that since the tribals have no capacity to purchase the land and the  lands, therefore, are not possessed of market value also is not a correct approach.      It is settled law that market value is to be determined either on  the basis  of the  prevailing prices  of sale and purchase between  willing vendor and willing vendee or value of the crops realised applying suitable 10 years multi-plier or in  case of  land valued  of  expert  valuer  like  urban properties could  be considered  for  determination  of  the compensation. Market value cannot be fixed with mathematical precision but must be based on sound discretion exercised by the reference  court in  arriving  at  just  and  reasonable price. It  should not  be based  on feats  of imagination or flight  of   fancy.  Determination   of   compensation   for compulsory acquisition  involves consideration  of the price which a  typothical willing purchaser can be expected to pay for the  lands in  the existing  use as  well  as  relatable potentialities. The  acid test  is  the  arm  chair  of  the willing vendor  would offer  and a  prudent  willing  buyer, taking all  relevant prevailing  conditions  of  the  normal market, fertility  of the land, location, suitability of the purpose it  was purchased,  its existing  potentialities and likely use  to which the land is capable of being put in the same condition  would offer to pay the price, as on the date of the  notification. In case of acquisition of large tracts of lands  for projects  situated in  several villages, stray sale-deed of  small extent here and there would not form the basis to  determine the  compensation. The  reference  court should be  circumspect, pragmatic  and careful  in analysing the evidence  and arriving  at just and fair market value of

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the lands  under acquisition  which could  be fetched on the date of  the notification. The nature of the land, the crops raised and  the nature  of the  income likely  to be derived from the  lands, the  expenditure to be incurred for raising the crops  and the  net profits  etc. would  be the relevant factors in  arriving at the net market value and if evidence is produced  in  that  behalf  on  its  basis  applying  the suitable 10  years multi-plier,  the market value need to be determined. The  owner or claimant should not be put to loss by under  valuation. But,  at the same time public exchequer should not be put to undue burden by excess valuation. It is the statutory  duty of  the Court  to maintain  the  balance between diverse interests.      Claimant stands  in the  position of  plaintiff and the onus is  on him to adduce necessary and relevant evidence in proof of the objection for higher compensation. The court is also  enjoined  to  carefully  scrutinise  and  analyse  the evidence and  applying the  arm  chair  test  of  a  prudent purchaser and a willing vendor or the realised income on the crops, the  true, correct  and fair  market value  should be arrived at.  The reference  court has  absolutely failed  to apply these tests in determining the compensation. Rejecting the evidence  relied on by the claimants under Ex. A-1 to A- 6, there  is no  other evidence to enhance the compensation. The doctrine  of reinstatement  value cannot  be applied  in determining the  market value  under s.23(1) of the Act. The reason is  obvious. There  will always  be a gap between the date of  the  notification  and  the  date  of  payment.  To recompensate the  loss,  payment  of  interest  under  s.28, solatium under  s.23(2)  and  appropriate  cases  after  the Amendment Act  68/84 has  come into  force, 12% per annum of the additional  amount under  s.23(1-A) are provided for. It would, therefore,  be illogical and unrealistic to apply the doctrine of  reinstatement value  in  determination  of  the compensation under s.23(1).      In this  view, though  the High Court has applied wrong principle but  the conclusion  reached by  the High Court in determining the  compensation at Rs.12,000/- per acre cannot be  said  to  be  illegal  warranting  interference.  Before parting with  the case,  we  express  hope  that  the  State Government should  settle all  the claims in a Lok Adalat as was done  in respect  of acquisition  of lands for Srisailam Project and  Vishakhapatnam Steel  Project. The  appeals are accordingly dismissed. No costs.