1998 JTR(SC) 80
1998 AIR(SC) 781 ; 1998 AIR(SCW) 497 ; 1998 1 AllCJ 639 ; 1998 1 ALT(SC) 27 ; 1998 ILR(Kar) 926 ; 1998 1 JT 141 ; 1998 2 MLJ 92 ; 1998 1 Scale 133 ; 1998 2 SCC 385 ; 1998 1 UJ 365 ; 1998 1 KLT(Online) 1199 ; 1998 1 Supreme 251
1998(1) Supreme 251
Supreme Court of India
(From Andhra Pradesh High Court)
G.T. Nanavati and Rajendra Babu, JJ.
Land Acquisition Officer, Revenue Divisional Officer, Chittoor --Appellant
versus
Smt. L. Kamalamma (dead) by Lrs. & Ors. -Respondents
Civil Appeal Nos. 247-248 of 1998
(Arising out of SLP (Civil) No. 24359 of 1996 and SLP(C) No. 24827 of 1996)
Decided on 19-1-1998
Counsel for the Parties :
For the Appellant : Mr. L. Nageshwar Rao, Mr. G.R.K. Prasad, Mr. V. Sreedhara Reddy and Mr. G. Prabhakar, Advocates.
For the Respondents : Mr. Krishnamurthi Swami and Mr. M.A. Chinnaswamy, Advocates.
Important Point
When no sales of comparable land was available where large chunks of land had been solet, even land transactions in respect of smaller extent of land could be taken note of as indicating the price that it may fetch in respect of large tracts of land by making appropriate deductions.
Act
Referred
:EVIDENCE ACT : S.57
LAND ACQUISITION ACT : S.23, S.4(1)
(A) The Land Acquisition Act, read alongside Section 57 of the Evidence Act and Section 4(1) of the Land Acquisition Act, governs the procedure for acquiring land for public purposes, determining compensation, and resolving disputes through reference to a Civil Court. In this case, the notification under Section 4(1) authorized acquisition of land in Puttur, and subsequent awards and appeals were adjudicated under Sections 6, 18, and 54 of the Act, where compensation rates were fixed, modified, and reviewed by judicial authorities based on market value and development potential.
(B) Key legal principles include that compensation for land acquired must reflect market value, considering future urban development and potential; judicial review under Section 54 allows High Court modification of awards; classification of land into multiple compensation categories is unsustainable when the entire tract has uniform development potential; and reliance on prior land sale deeds is permissible to ascertain market value, with appropriate deductions for development costs and time.
Facts of the case:
Land measuring 10 acres 1 cent was acquired under Section 4(1) of the Land Acquisition Act in 1977, with compensation initially awarded in categories. A reference court set compensation at Rs. 100 per sq. yard, which the High Court modified by reducing it by 25 percent for road reservations. Another plot of about 1 acre 55 cents was similarly acquired and compensated, with the High Court fixing compensation at Rs. 125 per sq. yard, later reduced by Rs. 30 per sq. yard. The Land Acquisition Officer appealed these modifications, challenging the reliance on a sale deed and the compensation rates.
Findings of Court:
The High Court correctly noted the rising land prices in Puttur, an urban area adjacent to a main route and near prominent temples, thereby recognizing the land's urban development potential. The court held that classification by the Land Acquisition Officer was unsustainable, that the entire land had uniform potential, and that the rate fixed by the reference court was appropriate but subject to a higher reduction for development and waiting periods.
Issues:
Whether the High Court erred in modifying the compensation rates; whether reliance on a distant sale deed was valid; whether classification of land into different compensation categories was permissible; and to what extent deductions for development and time should be applied to market value.
Ratio Decidendi:
When land acquired has uniform potential for urban development, compensation must be based on market value determined with reference to recent sales of comparable land, but the awarded amount must be reduced for development costs, time value of money, and waiting periods; classification of land into multiple compensation slabs is not sustainable when the entire tract is intended for uniform urban use.
Result:
The appeals are allowed in part, the compensation rate is fixed at Rs. 100 per sq. yard as the market value, and the final compensation payable is reduced to Rs. 60 per sq. yard for both cases after accounting for development and waiting period deductions.
(A) The Land Acquisition Act, read alongside Section 57 of the Evidence Act and Section 4(1) of the Land Acquisition Act, governs the procedure for acquiring land for public purposes, determining compensation, and resolving disputes through reference to a Civil Court. In this case, the notification under Section 4(1) authorized acquisition of land in Puttur, and subsequent awards and appeals were adjudicated under Sections 6, 18, and 54 of the Act, where compensation rates were fixed, modified, and reviewed by judicial authorities based on market value and development potential.
(B) Key legal principles include that compensation for land acquired must reflect market value, considering future urban development and potential; judicial review under Section 54 allows High Court modification of awards; classification of land into multiple compensation categories is unsustainable when the entire tract has uniform development potential; and reliance on prior land sale deeds is permissible to ascertain market value, with appropriate deductions for development costs and time.
Facts of the case:
Land measuring 10 acres 1 cent was acquired under Section 4(1) of the Land Acquisition Act in 1977, with compensation initially awarded in categories. A reference court set compensation at Rs. 100 per sq. yard, which the High Court modified by reducing it by 25 percent for road reservations. Another plot of about 1 acre 55 cents was similarly acquired and compensated, with the High Court fixing compensation at Rs. 125 per sq. yard, later reduced by Rs. 30 per sq. yard. The Land Acquisition Officer appealed these modifications, challenging the reliance on a sale deed and the compensation rates.
Findings of Court:
The High Court correctly noted the rising land prices in Puttur, an urban area adjacent to a main route and near prominent temples, thereby recognizing the land's urban development potential. The court held that classification by the Land Acquisition Officer was unsustainable, that the entire land had uniform potential, and that the rate fixed by the reference court was appropriate but subject to a higher reduction for development and waiting periods.
Issues:
Whether the High Court erred in modifying the compensation rates; whether reliance on a distant sale deed was valid; whether classification of land into different compensation categories was permissible; and to what extent deductions for development and time should be applied to market value.
Ratio Decidendi:
When land acquired has uniform potential for urban development, compensation must be based on market value determined with reference to recent sales of comparable land, but the awarded amount must be reduced for development costs, time value of money, and waiting periods; classification of land into multiple compensation slabs is not sustainable when the entire tract is intended for uniform urban use.
Result:
The appeals are allowed in part, the compensation rate is fixed at Rs. 100 per sq. yard as the market value, and the final compensation payable is reduced to Rs. 60 per sq. yard for both cases after accounting for development and waiting period deductions.
JUDGMENT
Rajendra Babu, J.-Leave granted.
2. An extent of land measuring 10 acres 1 cent comprised in different survey numbers situated at Puttur adjoining Govindapalem of Chittoor District was notified for acquisition under Section 4(1) of the Land Acquisition Act (hereinafter referred to as “the Act”) in the Gazette on 28th April, 1977. After issuing final notification under Section 6 of the Act, the Land Acquisition Officer passed an award on 28.2.1981 determining the compensation payable in respect of the lands in question. He grouped the lands into five categories and paid at different rates of compensation. So far as lands which were classified by him as non agricultural, he fixed a compensation of Rs. 50/- per sq. yard to the 1st and 2nd group and at Rs. 45/-, 40/- and 35/- per sq. yard to the rest of the groups depending upon their locations. He also classified certain lands as agricultural lands and awarded a compensation of Rs. 9375/- per acre and Rs. 13,334/- per acre depending upon their locations. On a reference made under Section 18 of the Act to the Civil Court, the award made by the Land Acquisition Officer was modified having found that classification into agricultural and non-agricultural lands or into four groups in non-agricultural lands was not sustainable and entire land had a potentiality of being used for building purposes and, therefore, the compensation was fixed at Rs. 100/- per sq. yard. The matter was carried by the Land Acquisition Officer in appeal to the High Court under Section 54 of the Act and certain claimants also filed cross appeals. The High Court took into consideration that in Puttur town, the trend of the price was on the rise at a fast pace and bearing in mind the future potentiality of the land in question in comparison to sales of similar lands accepted the rate fixed by the Reference Court, however by reducing by 25 per cent thereof inasmuch as 1/4th of the land will have to be reserved for drains, sewers, roads and such other amenities to be provided in the lay out that may be formed subsequently.
3. Another piece of land measuring about 1 acre 55 cents was also acquired under a Notification under Section 4(1) of the Land Acquisition Act published in gazette on 15.3.1974 for the same purpose and the Land Acquisition Officer determined compensation payable at Rs. 10,526/- per acre while on Reference, the Civil Court enhanced the same to Rs. 100/- per sq. yard and the High Court on appeal fixed the market value at Rs. 125/- per sq. yard. The compensation was reduced by Rs. 30/- per sq. yard following its decision to which we have referred to now. These two appeals are preferred by the Land Acquisition Officer.
4. In challenging this order made by the High Court Shri, Nageshwar Rao, learned counsel for the appellant submitted that the High Court and the Reference Court relied upon Exb. B-30 which is a sale deed dated 9.8.1976 under which 100 sq. feet of land had been sold. Neither the High Court nor the Reference Court ought to have relied upon this document since the land situated was far away from the lands in question. Apart from the fact that it was only a small piece of land which had been sold whereas a vast tract of land measuring over 10 acres was acquired under the Notification in question, he also pointed out that even assuming that the rate mentioned in Exb. B-30 could be taken into consideration in determining the market value of the land, sufficient deductions had not been given towards development and other relevant matters. He also submitted that the compensation paid should be drastically reduced.
5. Learned counsel for the respondents, however, submitted that the High Court and the Reference Court had taken all relevant factors into consideration in determining the market value and the compensation awarded by them is unassailable.
6. The general trend in the prices of land is on the rise and the judicial notice of the same had been taken by the High Court correctly and therefore, cannot be challenged. Puttur is an urban area and the lands in question are abutting the main leading from Tirupathi to Anokonam via Puttur and the acquired land was in the heart of Puttur town. To the north of the land in question there is a famous Venkateswaraswamy Temple and to the immediate south, the famous Tiruthani, one of the abodes of Lord Subrahamanyaswamy. Therefore taking into consideration, the topography of the land we may safely proceed on the basis that the High Court had correctly noted the situation of the land in question which has the potentiality of being developed as urban land. Exb. B-30 is a sale deed dated 9th August, 1976, the transaction having taken place prior to eight months from the issue of preliminary Notification for acquisition of land in the present case. Having found that the piece of land referred in Ex. B-30 is situated very close to the lands that are acquired under the Notification in question the Reference Court and the High Court relied upon the said document and, in our view, rightly. Further when no sales of comparable land was available where large chunks of land had been sold, even land transactions in respect of smaller extent of land could be taken note of as indicating the price that it may fetch in respect of large tracts of land by making appropriate deductions such as for development of the land by providing enough space for roads, sewers, drain, expenses involved in formation of a lay out, lumpsum payment as also the waiting period required for selling the sites that would be formed.
7. The argument advanced by Shri Nageshwar Rao that the classification by Land Acquisition Officer was in order and ought not to have been interfered with by the Reference Court or the High Court does not appeal to us. When a land is acquired which has the potentiality of being developed into an urban land, merely because some portion of it abuts the main road, higher rate of compensation should be paid while in respect of the lands on the interior side should be at lower rate may not stand to reason because when sites are formed those abutting the main road may have its advantages as well as disadvantages. Many a discerning customer may prefer to stay in the interior and far away from the main road and may be willing to pay reasonably higher price for that site. One cannot rely on the mere possibility so as to indulge in a meticulous exercise of classification of the land as was done by the Land Acquisition Officer when the entire land was acquired in one block and therefore classification of the same into different categories does not stand to reason.
8. The Reference Court, however, merely took note of the price noted in Exb. B-30, the sale deed while the High Court deducted only towards the space that the required for formation of roads or other amenities altogether ignoring the time required for formation of the lay out, the period for which the money would be locked up in the investment and the waiting period as also for the reduced price for land when lumpsum payment is made. Bearing in mind these aspects we are of the view that the High Court should have reduced the price arrived at by the Reference Court at Rs. 100/- per sq. yard by atleast 40 per cent.
9. In the circumstances of the case, we hold that the market value fixed at Rs. 100/- sq. yard relying upon Exb. B-30, the sale deed, to be correct. However, we reduce the compensation payable to Rs. 60/- per sq. yard computing the whole of the land under acquisition in the two cases on the aforesaid basis. The respondents are entitled to the statutory benefits as awarded by the courts below. The award made by the Reference Court as modified by the High Court shall stand further modified as indicated by us in the course of this Order. The appeals are allowed in part.
Appeals allowed in Part.
**********