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PETITIONER: THE SPECIAL LAND ACQUISITION OFFICER, BANGALORE

       Vs.

RESPONDENT: T. ADINARAYAN SETTY

DATE OF JUDGMENT: 07/11/1958

BENCH: DAS, S.K. BENCH: DAS, S.K. IMAM, SYED JAFFER KAPUR, J.L.

CITATION:  1959 AIR  429            1959 SCR  Supl. (1) 404  CITATOR INFO :  RF         1968 SC1425  (20)  APL        1970 SC 850  (2)  F          1972 SC1417  (4)  RF         1975 SC1670  (7)  R          1977 SC 580  (9)  RF         1979 SC 472  (10)  F          1984 SC 892  (13)  RF         1992 SC 666  (3,4)

ACT: Land Acquisition-Principles of valuation-Exemplars, use  of- Land Acquisition Act, 1894 (1 Of 1894), ss. 11 and 23.

HEADNOTE: Certain  land belonging to the respondent  was  compulsorily acquired  by the Government for a maternity hospital.   Most of  the  land consisted of building sites but  there  was  a building  on a small portion of the land and a  portion  was low  lying-land.  The Special Land Acquisition Officer  held on  the basis of the value of sites previously sold  by  the respondent,  that the market value of the land was Rs.  10/- per  sq.  yard and awarded a sum of Rs.  1,41,169/-  to  the respondent   as   compensation.   He  did   not   give   any compensation  for  the low lying land or for  the  building. Against this award the respondent raised an objection and  a reference  was  made to the District  judge.   The  District judge  accepted the rate of Rs. 10/- per sq. yard  as  fair, reduced  the  amount of deductions  for  providing  electric installations  by  Rs.  10,000/- and allowed a  sum  of  Rs. 10,000/-  for the low lying area at the rate of Rs. 3/-  per sq.  yard, thereby increasing the amount of compensation  by Rs.  20,000/-.  Not being satisfied the respondent  appealed to  the  High Court.  The High Court held that the  rate  of compensation  for  the land except the  low  lying  portion, should  be  Rs.  13/8/- per sq yard and for  the  low  lying portion  it  should  be Rs. 8/8/- per  sqyard.   It  further awarded a sum of Rs. 7,000/- for the building.  In  arriving at the figure of Rs. 13/8/- the High Court took into account only  four  sale  transactions which had been  made  by  the respondent at the rates of Rs. 12, I5, 14 and 7/8/- per  sq. yard   but  did  not  take  into  consideration  two   other

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transactions  which had been made by the respondent  at  the rates  of Rs. 6/8/- and Rs. 10 per sq. yard.  It  calculated the average of the four transactions to be Rs. 12/2/per  sq. yard and then took a second average between Rs. 15/-, 405 which  was the maximum price obtained by the respondent  and RS.  12/2/-  and arrived at the figure of Rs.  13/8/-.   The High Court was also influenced by considerations such as the purpose  for  which the land was acquired.,  the  report  of certain  medical authorities as to the unsuitability of  the land for the maternity hospital and the delay in putting the land to the use for which it was acquired. Held,  that with regard to the valuation of the land,  other than  the  low  lying portion, the  High  Court  misdirected itself by taking into account extraneous considerations  and had  committed  an  error of principle in  arriving  at  the figure  of  Rs.  13/8/-  by  adopting  a  wrong  method   of ascertaining the market value.  The High Court ought to have taken  the  average  of all the six  sale  transactions  and arrived  at the proper valuation of Rs. 11/. per  sq.  yard. There  was  no justification for ignoring two  of  the  sale transactions  or for taking a second average.  With  respect to the compensation for the low lying land and the  building there was no error of principle or otherwise in the findings of the High Court and no interference was called for.

JUDGMENT:    CIVIL  APPELLATE  JURISDICTION: Civil Appeal  No  138  of 1955. Appeal from the judgment and decree dated October 15,  1953, of the Mysore High Court at Bangalore in Regular Appeal  No. 255 of 1950-51, arising out of the order dated September 18, 1950,  of  the Court of the District  Judge,  Bangalore,  in Misc.  Case No. 39 of 1947-48. G.   Channappa, Assistant Advocate-General, Mysore  R. Gopala Krishnan and T. M. Sen, for the appellant’ A.   V. Viswanatha Sastri, M. A. Rangaswami, K. R. Sarma and K. R. Choudhury, for the respondent. 1958.   November 7. The Judgment of the Court was  delivered by S.   K. DAS, J.-This appeal by the Special Land  Acquisition Officer,  Bangalore,  has been brought to this  Court  on  a certificate granted by the High Court of Mysore, and is from the  decision of the said High Court dated October 5,  1953, in a regular appeal from an order made by the 2nd Additional District  Judge,  Bangalore,  on September 18,  1950,  on  a reference  under s. 18 of the Land Acquisition Act  (herein. after referred to as the Act). The  facts so far as they are relevant to the appeal  before us are these.  An area of about 51,243 squard 406 yards of land was acquired by Government under  Notification No.  M.  11054  Med.  80-45-25 dated  April  16,  1946,  for development   of   the  Appiah  Naidu  Maternity   Home   at Malleswaram,  Bangalore  City, into  a  Maternity  Hospital. There were eight owners interested in the property acquired, out  of whom two objected to the award made by  the  Special Land  Acquisition Officer, now appellant before us.  One  of these  two was T. Adinarayana Shetty, a diamond merchant  of Mysore  City.  Originally, he was the respondent before  us, and  on his death his son and legal representative has  been brought  into  the  record as the sole  respondent  to  this appeal.    The   deceased   respondent   Adinarayana   Setty

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(hereinafter called the respondent) was interested in 48,404 sq.  yards out of the total area, and it may be stated  here that  there  is no dispute before us that out  of  the  said 48,404  sq. yards an area of about 3,000 sq. yards  consists of  land  which  has  been  variously  characterised  as   a depression or a pit or low-lying land (called ’halla’ in the local  vernacular  language).  Out of the  total  amount  of compensation   awarded  by  the  Special  Land   Acquisition Officer,   a  sum  of  Rs.  1,41,169/was  awarded   to   the respondent.  The Special Land Acquisition Officer  proceeded on  the  following basis for his award.  Firstly,  he  found that  the  land  value  in and  around  Bangalore  City  had increased  in  recent  years  owing  to  the  war  and   the respondent  had paid to the Deputy  Commissioner,  Bangalore District,  a  sum  of money called  a  conversion  fine  for sanctioning  a  scheme  of converting  the  land  into  non- agricultural land.  Thereafter, a layout for building  sites was  prepared and approved by the Municipality and the  res- pondent sold a few of the sites shown in the layout to  some purchasers.   This  was done before the publication  of  the preliminary  notification  of acquisition; but the  sale  of further   building   sites  was  stopped  after   the   said publication.  Secondly, the Special Land Acquisition Officer took  into consideration the value of the sites sold by  the respondent and came to the conclusion that Rs. 10/- per  sq. yard  was  the  market value of the land  in  question.   He awarded  to  the respondent compensation  for  approximately 48,404- sq. yards at the 407 rate of Rs. 10/- per sq. yard, but after deducting therefrom an area of 26,248 sq. yards which, according to the  Special Land Acquisition Officer, was required for making roads  and drains  as  per the layout scheme.  The  total  amount  thus calculated came to Rs. 2,21,563. and odd and from this a sum of  Rs.  98,807  was  again  deducted  as  representing  the expenditure  which  would be required for making  roads  and drains.   The net amount was thus found to be  Rs.  1,22,756 and odd and adding 15% as the statutory compensation payable to  the respondent the total amount awarded by, the  Special Land  Acquisition  Officer to the respondent,  came  to  Rs. 1,41,169/-.   Against this award, the respondent  raised  an objection,  and  a  reference was accordingly  made  to  the District  Judge of Bangalore under s. 18 of the  Act.   This reference  was  heard by the 2nd Additional  District  Judge who,  by  his order dated September 18, 1950,  came  to  the following conclusions:- (i) that the rate awarded by the Land Acquisition Officer at Rs. 10/- per sq. yard was fair and should be,upheld;- (ii) that  a  sum  of Rs. 10,000/-  for  providing  electric installation out of the sum of Rs. 98,807/- deducted by  the Land  Acquisition Officer from the compensation  payable  to the respondent should not be deducted; and (iii)     that  with  regard to the area of  the  low-lying. land which I was completely excluded by the Land Acquisition Officer,  the respondent should get at the rate of  Rs.  3/- per sq. yard or approximately a sum of I Rs. 10,000/-. In  other  words,  the  learned  Additional  District  Judge increased the compensation in favour of the respondent by  a sum  of  about  Rs.  20,000/-.   Not  being  satisfied,  the respondent preferred an appeal to the High Court of, Mysore. The  learned Judges of the High Court found that the  proper compensation for the land,. except the portion characterised as low-lying, should be Rs. 13/8/per sq. yard and as to  the low-lying  portion it should be reduced by Rs. 51-  per  sq. yard  inasmuch  as  a sum of  Rs.  15,000/-  was  necessary,

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according to the 408 evidence  given  in the case, for filling it  up;  in  other words,  the High Court awarded compensation at the  rate  of Rs.  8/8/-  per sq. yard for the low-lying land.   The  High Court  also  reduced the area which had to be  deducted  for making  roads,  etc., according to the  layout  scheme  from 26,248  sq. yards to 12,101 sq. yards.  It also reduced  the layout charges to Rs. 64,432/-.  The High Court added to the compensation a sum of Rs. 7,000/- as the value of a building which the respondent had constructed on one of the sites  on the  finding  that the construction was made  prior  to  the preliminary  notification.  In this respect the  High  Court departed  from the finding of the Land  Acquisition  Officer that  the  building was put up after the publicaion  of  the preliminary notification.  The total amount of  compensation which the High Court awarded came to about Rs. 4,80,000  and odd. As the judgment of the High Court was a judgment of reversal and  the appellant felt dissatisfied with it, a  certificate of  fitness was asked for and was granted by the High  Court on  July  6, 1954.  The present appeal has been  brought  to this Court in pursuance of that certificate. The appellant has confined his appeal to the following three points: (1) payment of compensation of a sum of Rs.  7,000/- for  the building said to have been constructed  before  the publication of the preliminary notification; (2) payment  of compensation at Rs.,8/8/per sq. yard for the low-lying  land (halla);  and (3) payment of compensation at Rs. 13/8/-  for the remaining land after deducting the area for making roads and buildings.  We may state that there is no dispute before us  now as to the area which should be so deducted and  also as  to the amount of layout charges, as the findings of  the High  Court  on these two points nave  not  been  challenged before us. On behalf of the respondent our attention has been’ drawn to the  decisions  of the Privy Council in Charan Das  v.  Amir Khan  (1), Narsingh Das v. Secretary of State for India  (2) and Nowroji Bustomji Wadia v. (1) (1920) 47 I.A. 255. (2) (1924) 52 I.A. 133. 409 Bombay  Government (1).  On these decisions it is  submitted by learned counsel that though s. 26 of the Act was  amended in  1921  by insertion of sub-s. (2) which says  that  every award  shall  be deemed to be a decree’ and thus  an  appeal therefrom  must  be considered and determined  in  the  same manner  as if it is a judgment from a decree in an  ordinary suit the established practice of the Privy Council has  been not  to  interfere  with  a  finding  on  the  question   of valuation,  unless  there  is  some  fundamental   principle affecting  the  valuation  which renders  it  unsound.   The practice,  it  is stated, was based on  two  considerations: first,  that  the courts in India were  more  familiar  with local  conditions and circumstances on which  the  valuation depended and, secondly, the Privy Council found it necessary to  limit  the extent of the enquiry in order to  spare  the parties  costly and fruitless litigation.  On behalf of  the appellant  it  is  submitted that this Court  has  no  doubt adopted  the practice that it will not ordinarily  interfere with concurrent findings of fact, but this Court has no such established practice as was adopted by the Privy Council  in valuation  cases  even  where a difference  of  opinion  has occurred  between two courts upon the number of  rupees  per yard  to  be  allowed for a plot of land.   He  has  further

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submitted  that the reasons for the practice adopted by  the Privy Council do not apply with equal force to this Court. In  view of the facts of this case and the opinion which  we have formed after hearing learned counsel for both  parties, we do not think it necessary to make any final pronouncement as  to  the  practice which this Court  should  adopt  in  a valuation  case  where  two courts have  differed.   We  are content  to  proceed  in this case on the  footing  that  we should not interfere 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 of  principle or because some important point affecting valuation has been overlooked or misapplied. (1)  (1925) 52 I.A. 367. 52 410 We  are  satisfied that there is no error  of  principle  or otherwise in the findings of the High Court as to the  first two  points  urged  in support of the  appeal.   As  to  the construction of the building for which a compensation of Rs. 7,000 has been awarded, the clear finding of the High  Court is  that  it  was  constructed  prior  to  the   preliminary notification.  It has been further stated before us that the building is in actual occupation of the medical  department. Learned  counsel for the appellant has taken us through  the evidence  on the question of construction of the  house  and the  application for a licence for building the said’  house which  was made by the respondent to the  Bangalore  Munici- pality.   We are unable to hold that that evidence  has  the effect of displacing the clear finding of the High Court. As  to the low-lying land, we consider that the  High  Court has  given very good reasons for its  finding.   Admittedly, the  area of the low-lying land (halla) is about  3,000  sq. yards.  The Land Acquisition Officer valued it at Rs. 3  per sq.  yard.  A sum of Rs. 15,000 has been deducted  from  the compensation  payable to the respondent on the  ground  that that  amount will be required for filling up  the  low-lying -land and converting it into building sites.  Therefore, the position  is that the respondent has not only been  made  to part with 3,000 sq. yards of land at 3 per sq. yard, but  he has  also  been made to pay Rs. 15,000 for  filling  up  the land.  If these two figures are added, even then the  market value  of the land comes to about Rs. 8 per sq. yard.   This is  so  even if we do not follow the method adopted  by  the High  Court that the sum of Rs. 15,000 for 3,000  sq.  yards gives  an  average  of Rs. 5 per sq. yard  and  that  amount should be deducted from the rate of Rs. 13-8-0 per sq.  yard fixed as the proper compensation for the remaining land.  We are of the opinion that on the materials before us the value per sq. yard fixed by the High Court for the low-lying  land is fully justified even on adoption of the method  suggested by  learned counsel for the appellant.  Learned counsel  for the respondent has referred us to the circumstance that some of the sales 411 of building sites which the respondent had made  appertained to  the  low-lying land and he has  further  emphasised  the circumstance that just opposite the low-lying land which  is at the eastern end of the entire area, some houses had  been built.     We   have   taken   these   circumstances    into consideration,  but do not think that the  conclusion  which learned counsel for the respondent wishes us to draw follows therefrom.   First of all, it is by no means clear that  the sales of the building sites at the low rate of Rs. 6-8-0  or

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thereabout  appertained  to the low-lying  land  only,  and, secondly,  the  mere circumstance that some  buildings  have been  made on land opposite the low-lying lands but  on  the other  side of the road, does not necessarily mean that  the low-lying  lands  are as valuable as the other land  in  the area.   We are therefore of the view that  the  compensation fixed  by  the  High Court for the  low-lying  land  is  not vitiated  by  any error of the kind which will  justify  our interference with it. We now proceed to consider the third and main point urged on behalf  of the appellant, namely, the rate of 13/8  per  sq. yard  for the other land in the area.  Learned  counsel  for the  appellant has submitted before us that the  High  Court has  committed  two fundamental errors in arriving  at  this finding.  Furthermore, the High Court has been influenced by extraneous considerations such as the purpose for which  the land was acquired, the report of certain medical authorities as  to  the unsuitability of the land for  the  purpose  for which it was acquired, and the delay in putting the land  to the  use for which it was acquired.  We agree  with  learned counsel  for  the  appellant  that  these  were   extraneous considerations  which  had  no bearing on  the  question  of valuation   and  the  learned  Judges  of  the  High   Court misdirected themselves as to the scope of the enquiry before them  when  they  imported  these  considerations  into  the question of valuation.  We further think that the High Court committed  an error of principle in arriving at  the  figure Rs.  13/8  and the error was committed by adopting  a  wrong method in ascertaining the market value of the land at the 412 relevant time.  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  bonafide  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. In the case under our consideration  the High  Court  adopted  the second method,  but  in  doing  so committed  two serious errors.  There were altogether  seven transactions of alienation made by the respondent.  One  was a  gift which must necessarily be excluded. The earliest  of the sales was in favour of Muniratham which was made on  May 15,  1945.  Another was made on July 18, 1945.  This was  in favour of Venugopal who was the husband of a  grand-daughter of  the  respondent.  Four other transactions in  favour  of Kapinapathy,  Puttananjappa,  Shamanna and  Rajagopal  Naidu were  made in August, 1945.  The notification under s. 4  of the Land Acquisition Act was made on October 4, 1945.   What the  learned Judges of the High Court did was to  take  only four   out   of   the  aforesaid   six   transactions   into consideration  and then to draw an average price  therefrom. The learned Judges gave no sufficient reason why two of  the transactions  were left out.  In one part of their  judgment they said : "  The  evidence discloses that the appellant  has  effected four  sales  about a couple of months prior to the  date  of preliminary  notification and the rates secured by  him  are Rs. 12, 15, 14 and 7/8 which on calculation give an  average of  Rs. 12/2 per sq. yard ". Why the transaction of May  15, 1945,  which was at a rate of Rs. 6/8 per sq. yard only  was left  out  it is difficult to  understand.   Similarly,  the transaction of July 18, 1945, was at the rate of Rs. 10  per

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sq. yard.  That also was left out.  We are of the view  that this  arbitrary selection of four transactions only  out  of six has vitiated the finding of the High Court.  If all the six  transactions of sale are taken into consideration,  the average  rate  comes to about Rs. 10/13 per sq.  yard  only. Having  arbitrarily discarded two of the  transactions,  the learned Judges of the High Court committed another error  in taking  a second average.  Having arrived at an  average  of Rs. 12/2 per sq. yard from the four transactions referred to above,  they  again took a second average  between  Rs.  15, which was the maximum price obtained by the respondent,  and Rs.  12/2.  Having struck this second average,  the  learned Judges of the High Court arrived at the figure of Rs.  13/8. No sound reasons have been given why this second average was struck  except  the  extraneous reasons  to  which  we  have already  made a reference.  It is obvious that  the  maximum price Rs. 15 per sq. yard had already gone into the  average when an average was drawn from the four transactions.  It is difficult to understand why it should be utilised again  for arriving  at the market value of the land in  question.   We are  of  the  view  that if the  aforesaid  two  errors  are eliminated,  then  the proper market value of  the  land  in question is Rs. 11 only.  Learned counsel for the  appellant has drawn our attention to the claim made by the  respondent himself  before the Land Acquisition Officer (Ex. 11).   The respondent had therein said: Hence, under the standing orders compensation has to be paid at rates for building land in the neighbourhood.  This  rate ranges  from  Rs. 10 to Rs. 12, an average of Rs. 10  a  sq. yard,  as could be verified from entries in the  local  Sub- Registrar’s Office and Bangalore City Municipal Office.   At any rate, I myself have sold in the course of this year some six sites out of the land proposed to be acquired for  rates ranging from Rs. 7 to Rs. 15 or on an average of Rs. 10  per sq. yard.  At this rate the compensation amount will be  Rs. 5,12,430 and adding the statutory allowance of Rs. 76,860 at 15  per cent. on the compensation amount on account  of  the compulsory nature of the acquisition, the total cost of  the land will be Rs. 5,89,290 or nearly six lakhs of rupees." 414 The  learned  Judges of the High Court  took  the  aforesaid claim  to  mean that the average rate was Rs.  10  ,per  sq. yard, only if the entire area was taken into  consideration; but the rate would be different if small building sites were sold-  according to a layout scheme.  It is worthy of  note, however,  that  in his claim the respondent  clearly  stated that  even  as  building  land  the  average  rate  in   the neighbourhood ranged from Rs. 10 to Rs. 12 per sq. yard  and he had himself sold six building sites at an average rate of about  Rs. 10 per sq. yard.  It is worthy of note  that  the six transactions to which the respondent referred were sales of small building sites.  It appears to us, therefore,  that the  High  Court had in effect given the respondent  a  rate more favourable than what he had himself claimed. We  consider, therefore, that on a proper  consideration  of the  materials in the record and after eliminating  the  two errors which the High Court had committed, the proper  value of the land in question should be Rs. 11 per sq. yard. The result, therefore, is that we allow this appeal to  this limited  extent  only, namely, the order of the  High  Court will  be modified by substituting the figure Rs. 11 per  sq. yard  for the figure Rs. 13/8 awarded by the High  Court  as compensation to the respondent for land other than the  low- lying  land.  We maintain the order of the High  Court  that the  parties  will receive and pay costs  in  proportion  to

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their success and failure, as now determined, in the  courts below; but so far as the costs of this Court are  concerned, the  parties  must  bear their own costs in  view  of  their divided success here.                     Appeal partly allowed. 415