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PETITIONER: M/S. HASANALI KHANBHAI & SONS AND ORS...

       Vs.

RESPONDENT: STATE OF GUJARAT

DATE OF JUDGMENT26/07/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. PARIPOORNAN, K.S.(J)

CITATION:  1995 SCC  (5) 422        JT 1995 (6)    92  1995 SCALE  (4)786

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Notification  under   Section  4   [1]  of   the   Land Acquisition Act,  1894 [for  short, ‘the Act’] was published in the State Gazette of Gujarat on March 17, 1960, acquiring 7 acres and 28 gunthas of land to establish orphanage at the outskirts  of  Rajkot  Municipality.  The  Land  Acquisition Collector awarded compensation by his award dated 30th July, 1962 at  the rate  of Rs.  1.25 per  sq. yard as against the claim of  Rs. 18/-  per sq. yard. Dissatisfied therewith, on apapellants’ reference  Civil Court  by its award and incree dated 31st July,1973 determined the compensation at the rate of Rs.  2.05 per sq. yard. On appeal to the High Court under Section 54  of the  Act, Gujarat  High Court by its judgment dated 1st  July, 1975  in First  Appeal  No.242/1973,  while holding that  the lands  under acquisition  are  capable  to fetch market  value at  the rate  of Rs.10.00  per sq. yard, determined the compensation after 60% deduction, at the rate of Rs.4/-  per sq.  yard. In  appeal by  special leave under Article 136  of the  Constitution, appellants challenges the corretness of  the deduction at do% of the price determinaed to the lands under acquisition.      Shri Dholakia, learned senior counsel for the appellant strenuously contended  that the  reasoning of  the  Division Bench in  giving deduction  of 60%  price are fallacious and legally unsustainable.  It is contended that having accepted the sale  transactions in  survey Nos.  334 and  335  to  be genuine and  offer to  be comparable  sales to determine the compensation, would  indicate that  in  the  year  1960  the market value  was ranging  between Rs. 12 to 13 per sq. yard which were  sold again  in 1961 at the rates varying between Rs. 13  to 18  per sq.  yard. The same would indicate that a prudent willing  purchaser would offer to purchase the lands at the  rate of  Rs. 12-18  per sq.  yard. Therefore, having determined the  compensation at the rate of Rs. 10/- per sq. yard, the  High Court  was not justified in reducing 60% and

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wrongly fixed  compensation at  the rate  of Rs. 4/- per sq. yard.  He   also  further  contended  that  the  restrictive conditions  which,   in  future,   may  be  imposed  by  the appropriate authority  on the  development of  the land were not a  relevant circumstance  to  peg  down  the  prevailing price. He  also contended that the size of the land acquired and  the  location  are  not  relevant  since  there  is  an indication that  there was already steady development in the area  and   buildings  were   already  constructed   in  the neighbourhood  and  that,  therefore,  the  deductions  were illegal. In  support thereof,  he placed  strong reliance on Chimanlal Hargovingdas vs. Special land Acquisition Officer, Poona &  Ors. [(1988)  3 SCC  751] and  Bhagwathula Samana & Ors. vs.  Special  Tehsildar  &  Land  Acquisition  Officer, Vishakapatnam Municipality [AIR 1992 SC 2298].      The learned counsel for the State strongly resisted the contention of  Shri Dholakia.  The question,  therefore,  is whether the  High Court  was right  in deducting  60% of the price in  determining the  compensation. Since the State had not  come   in  appeal  against  the  determination  of  the compensation at  Rs.10/- per  sq. yard,  the need to go into its correctness  is obviated.  But suffice  it to state that the High  Court has  rested its conclusion on diverse facts. The first,  in our  view, rightly  is  that  the  lands  are situated far away from the municipal limits so as to use for building purpose;  secondly, possibility of the restrictions to be  imposed by the State under Section 74 of the Highways Act is  always imminent.  Thirdly, the  vast extent of lands acquired. Lastly,  the  comparative  extent  of  land  under acquisition and  the smallness  of the  lands covered by the sales in  Survey Nos. 334 and 335. It had held that sales of small extent  do not  offer  as  a  comparable  instance  in determination  of   the  compensation  of  vast  lands.  The question is  whether these  principles are  not relevant and germane to  adjudge the  market value ultimately to be fixed by the Court. It is true, as contended by Mr. Dholakia, that the counsel  appearing for  the State in the Reference Court had not  adverted in  the cross-examination  to the relevant factors to  be elicited  in  the  cross-examination  of  the witness examined  on behalf  of the  appellant.  But  it  is settled law  by series  of judgments  of this Court that the court is not like an umpire but is required to determine the correct  market   value  after   taking  all   the  relevant circumstances, evinces  active participation in adduction of evidence; calls  to his  aid  his  judicial  experience;  he evalutae the  relevant facts  from the  evidence  on  record applying correct  principles of  law which would be just and proper  for   the  land   under  acquisition.   It  is   its constitutional, statutory  and social duty. The court should eschew aside  feats of  imagination but occupy the arm-chair of a  prudent willing  but not  too  anxious  purchaser  and always ask  the question  as  to  what  are  the  prevailing conditions and  whether  a  willing  purchaser  would  as  a prudent  man  in  the  normal  market  conditions  offer  to purchase the  acquired land  at the  rates mentioned  in the sale deeds.  After due  evaluation taking  all relevant  and germane facts  into consideration,  the Court must answer as to what  would be  the just  and fair  market  value.  These principles were  enunciated by  this Court in, all decisions including the  one relied  on by Mr. Dholakia which needs no reiteration. It  is a  question of  fact  in  each  case  to consider whether  the land under acquisition is possessed of such value  which  includes  potential  value,  if  any,  as comparable with  reference to  the evidence on record. It is seen that  the sale  instances referred and relied on by the

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High Court  in Survey  Nos. 334  and 335 are small pieces of land; they  do not  offer as comparable sales. This Court in Administrator General of West Bengal vs. Collector, Varanasi [AIR 1988  SC 943]  has settled  the law  that when sales of small lands  are found to be germane sales in developed area between willing  purchaser and  willing vendor  but not  too anxious buyer  the value  of small  developed  plots  cannot directly be adopted in fixing the price for large extent and is not  a safe  guide in  valuing  large  extent  of  lands. However, if  it is  found that  large extent  to  be  valued admits of  and is  ripe for  use of  building purposes, that building lots  could be  laid out  on the land could be good selling proposition  and that  valuation  on  the  basis  of method of  hypothetical layout  could with  justification be adopted.  Then   in  valuing  such  small  layout  any  such valuation as included in the sales comparably small sites in some area  at the  time of notification would be relevant in such cases.  Necessary deduction  for the extent of the land required for  the formation  of the  roads and  other  civic amenities  requires  to  be  made.  In  that  case  50%  was deducted.      The facts  in Bhagwathula  Samana’s case  [supra]  were that the  lands were  situated in already developed area and that, therefore,  this Court  had  held  that  no  deduction towards developmental  charges  could  be  made.  The  ratio therein is of little assisance. When the lands are sought to be used  for building  purposes, admittedly  the entire land cannot be  used  for  building  purposes  without  providing roads, drainage,  electricity and  other civic amenities for which necessary  deduction of  1/3rd should  also be made as held in a catena of decisions of this  Court.      It is  seen that  when a large track of land of 7 acres and 28  gunthas was purchased by the claimant owners in 1956 at Rs.251 per acre, in 1960 when the notification was issued what would  be the  reasonable and  probable price  which  a reasonable prudent  purchaser would offer when a large track of land  is offered  for sale  in open market. In this case, neighbouring land  was sold at the rate of Rs.960/- per acre in 1960  as against  the price  which is paid in 1956 at the rate of  Rs.251/- per  acre. In  1956, he himself valued and assessed the  land that  it has  potentiality at the rate of Rs. 251/-  per acre.  It is  settled  law  that  instead  of proceeding on  the feats of imagination the Court has to sit in the  arm-chair of  a prudent  purchaser and then consider whether a  prudent purchaser  would be  willing to  purchase such a large extent of land and if so at what price. In this case, having  considered the situation of the land being far away from  the outer  minicipal limits  though situated near about the  railway line, that itself would be a factor to be taken into  consideration in  determing  the  market  value. Added to  that, there  is a  possibility to impose statutory restrictions to  develop the  lands for buildig purposes. No prudent purchaser   would  hazard  to  purchase  such  large extent of  land at the rates when small extents of lands are sold in plots. True that the purchasers hazarded to purchase lands in  the neighbouirng  survey numbers   and  have taken grave risk. But it would not be safe guide to adopt the same price offered  by them. Considered from this perspective and fromthe totality of facts on record, we are of the view that the High  Court was  well justified  in deducting 60% of the value and  giving Rs.  4/- per  sq. yard. Accordingly, we do not find  any  justification  warranting  interference.  The appeal is dismissed but in the circumstances, with no costs.

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