2003 JTR(SC) 254
2003 4 AIC 923 ; 2003 AIR(SC) 1987 ; 2003 AIR(SCW) 1491 ; 2003 2 AllMR(SC) 717 ; 2003 1 AndhWR(SC) 618 ; 2003 5 AWC 3596 ; 2003 103 DLT 673 ; 2003 DNJ 319 ; 2003 2 GLH 180 ; 2003 2 ICC 783 ; 2003 ILR(Kar) 1143 ; 2003 5 JT 160 ; 2003 3 KLT(SN) 47 ; 2003 1 PLJ 300 ; 2003 2 PLR(SC) 262 ; 2003 2 RCR(Civ) 212 ; 2003 2 Scale 509 ; 2003 4 SCC 481 ; 2003 2 SCR 424 ; 2003 2 UPLBEC 1718 ; 2003 2 WBLR 316 ; 2003 KHC 1319 ; 2003 2 Supreme 893
2003(2) Supreme 893
SUPREME COURT OF INDIA
(From Delhi High Court)
Doraiswamy Raju and Arijit Pasayat, JJ.
Ravinder Narain and Anr. -Appellants
versus
Union of India -Respondent
Civil Appeal Nos. 11733-11734 of 1995
With
Civil Appeal No. 11735 of 1995
Decided on 28-2-2003
Counsel for the Parties :
For the Appellants : Ashok H. Desai, Sr. Advocate, Pallav Shishodia and D.N. Mishra, Advocates.
For the Respondent : H.L. Agrawal, Sr. Advocate and Y.P. Mahajan, Advocate.
IMPORTANT POINT
Keeping in view the principles of fixation of market value with reference to comparable sales the Apex Court fixed Rs. 40/- per sq.yd as valuation of lands acquired under Section 4 notifications is this case.
Act Referred :LAND ACQUISITION ACT : ., S.23, S.4
(A) The Land Acquisition Act, 1894, provides the statutory framework for determining compensation when land is compulsorily acquired, with Section 4 governing the issuance of acquisition notifications and Section 23 outlining the principles for ascertaining market value. In these appeals, the Act's provisions are directly engaged as lands were acquired under Notifications dated 13-11-1959 and 15-7-1960, and the valuation disputes center on interpreting the market value on the notification date. The Act mandates that compensation must reflect the market value as of that specific date, considering factors outlined in Section 23, while Section 24 excludes certain considerations, and Section 25 ensures the compensation awarded by the Court is not less than that by the Collector, thereby providing a structured methodology to balance the interests of the acquirer and the landowner.
(B) Key legal principles include that compensation must be based on the market value of the land on the date of the notification, using bona fide, contemporaneous comparable sales that are proximate, similar in advantages, and made without compulsion; the valuation must adhere to the principles under Section 23 of the Act, while avoiding factors disallowed under Section 24; and where large areas are acquired, small plot sales may be considered only with necessary adjustments, and the court must ensure the valuation is neither excessive nor unduly prejudicial to either party.
Facts of the case:
The acquired lands are located near the Mall or Delhi Karnal Road adjoining National Highway No. 1. Notifications under Section 4 of the Act were issued on 13-11-1959 and 15-7-1960. For the 1959 notification, the land was divided into two blocks with different rates for Bagh Nehri, Gair Mumkin, garden land, and other land. For the 1960 notification, a flat rate per bigha was applied. The Land Acquisition Authorities fixed compensation rates per bigha, which were challenged and revised by the Delhi High Court by comparing contemporaneous sales and averaging rates for residential and shop plots after adjusting for plotted area and development charges. The appellants contended the High Court undervalued the land by not considering more comparable sales and market trends, while the respondent defended the detailed factual analysis.
Findings of Court:
The court acknowledged that while large-area acquisitions typically require different valuation methods, small plot sales can be used as a basis where appropriate adjustments are made. It accepted the High Court's approach of averaging contemporaneous sales after accounting for the plotted area and relevant charges, finding no significant fluctuation to justify a higher rate. Consequently, the court fixed the average compensation at Rs. 61.50 per sq. yard for both notifications, translating to Rs. 40 per sq. yard, and dismissed the appeals without costs.
Issues:
Whether the Delhi High Court correctly applied the principles of valuation under the Land Acquisition Act, 1894, by relying on small plot sales and averaging contemporaneous transactions; whether the market value was fairly determined in the context of a large-area acquisition; and whether the adjustments made for plotted area and development charges were appropriate.
Ratio Decidendi:
The compensation under the Land Acquisition Act must be based on the market value as of the notification date, determined through bona fide, comparable sales that are contemporaneous, proximate, and adjusted for the extent of plotted area and relevant factors; where such sales are reliable, their average can fix the compensation, and the courts detailed factual analysis is sufficient to reject appeals unless there is a clear error.
Result:
The appeals are dismissed, with compensation fixed at Rs. 61.50 per sq. yard for both notifications, equivalent to Rs. 40 per sq. yard, and no costs awarded.
(A) The Land Acquisition Act, 1894, provides the statutory framework for determining compensation when land is compulsorily acquired, with Section 4 governing the issuance of acquisition notifications and Section 23 outlining the principles for ascertaining market value. In these appeals, the Act's provisions are directly engaged as lands were acquired under Notifications dated 13-11-1959 and 15-7-1960, and the valuation disputes center on interpreting the market value on the notification date. The Act mandates that compensation must reflect the market value as of that specific date, considering factors outlined in Section 23, while Section 24 excludes certain considerations, and Section 25 ensures the compensation awarded by the Court is not less than that by the Collector, thereby providing a structured methodology to balance the interests of the acquirer and the landowner.
(B) Key legal principles include that compensation must be based on the market value of the land on the date of the notification, using bona fide, contemporaneous comparable sales that are proximate, similar in advantages, and made without compulsion; the valuation must adhere to the principles under Section 23 of the Act, while avoiding factors disallowed under Section 24; and where large areas are acquired, small plot sales may be considered only with necessary adjustments, and the court must ensure the valuation is neither excessive nor unduly prejudicial to either party.
Facts of the case:
The acquired lands are located near the Mall or Delhi Karnal Road adjoining National Highway No. 1. Notifications under Section 4 of the Act were issued on 13-11-1959 and 15-7-1960. For the 1959 notification, the land was divided into two blocks with different rates for Bagh Nehri, Gair Mumkin, garden land, and other land. For the 1960 notification, a flat rate per bigha was applied. The Land Acquisition Authorities fixed compensation rates per bigha, which were challenged and revised by the Delhi High Court by comparing contemporaneous sales and averaging rates for residential and shop plots after adjusting for plotted area and development charges. The appellants contended the High Court undervalued the land by not considering more comparable sales and market trends, while the respondent defended the detailed factual analysis.
Findings of Court:
The court acknowledged that while large-area acquisitions typically require different valuation methods, small plot sales can be used as a basis where appropriate adjustments are made. It accepted the High Court's approach of averaging contemporaneous sales after accounting for the plotted area and relevant charges, finding no significant fluctuation to justify a higher rate. Consequently, the court fixed the average compensation at Rs. 61.50 per sq. yard for both notifications, translating to Rs. 40 per sq. yard, and dismissed the appeals without costs.
Issues:
Whether the Delhi High Court correctly applied the principles of valuation under the Land Acquisition Act, 1894, by relying on small plot sales and averaging contemporaneous transactions; whether the market value was fairly determined in the context of a large-area acquisition; and whether the adjustments made for plotted area and development charges were appropriate.
Ratio Decidendi:
The compensation under the Land Acquisition Act must be based on the market value as of the notification date, determined through bona fide, comparable sales that are contemporaneous, proximate, and adjusted for the extent of plotted area and relevant factors; where such sales are reliable, their average can fix the compensation, and the courts detailed factual analysis is sufficient to reject appeals unless there is a clear error.
Result:
The appeals are dismissed, with compensation fixed at Rs. 61.50 per sq. yard for both notifications, equivalent to Rs. 40 per sq. yard, and no costs awarded.
JUDGMENT
Arijit Pasayat, J.- In these three appeals, the controversy lies within a very narrow compass relating to the valuation of lands acquired under the Land Acquisition Act, 1894 (in short the Act ).
2. As the points in issue are common they are dealt with together. Notifications under Section 4 of the Act were issued on 13-11-1959 and 15-7-1960 in the two cases. The acquired lands according to the appellants are situated on the main road known as the Mall or Delhi Karnal Road near to National Highway No. 1. They claimed Rs. 60 per sq. yard along with interest and solatium. So far as the acquisitions covered by the Notification dated 13-11-1959 is concerned, the Land Acquisition Collector divided the acquired land into two blocks and fixed the market value of land in these blocks separately. As regards Bagh Nehri land, the rate was fixed at Rs.4,000/- per bigha and Gair Mumkin land @ Rs.3,500/- per bigha in respect of block A. In respect of Block B, he fixed the market value of garden land @ Rs. 3,500/- per bigha and for other land @ Rs.3,000/- per bigha. So far as the acquisition relating to Notification dated 15.7.1980 is concerned, the Land Acquisition Collector fixed the compensation at the flat rate of Rs. 3,400/- per bigha.
3. Reference were made under Section 18 of the Act. In the first case, the reference Court fixed the compensation at Rs.26,000/- per bigha and in the second case also similar rate was fixed. Matter was carried in appeals before the Delhi High Court which by the impugned judgment fixed the compensation @ Rs. 30,000/- per bigha. While fixing the value, references were made to several instances of sale contemporaneous to the period. The High Court felt that the residential plots and the shop plots had to be sold at different rates and their average was worked out to fix the compensation. The High Court made reference to the instances cited by the appellants to hold that they related to smaller plots and do not provide a reasonable comparison. High Court also made reference to various data provided by way of evidence and came to conclude that the total plotable areas cannot be taken into account and only the plotted areas have to be reckoned. It was hypothetically noted that if the total plotable area was 1000 sq. yds. plotted area on the basis of materials on record, would come to 637 sq. yds. It also took note of the development charges, miscellaneous charges on account of brokerage, administration, interest on investment etc. and worked out the net price to fix the market value.
4. Mr. Ashok Desai, learned senior counsel appearing for the appellants submitted that the High Court erred in not taking note of comparable cases and placed reliance on instances of sale which cannot be termed to be contemporaneous. With reference to the location of the acquired land, it was submitted that the market value as fixed is certainly on the lower side. Judicial notice can be taken note of rapid upward trend in prices and, therefore, for the subsequent notification, higher rates were fixed.
5. Per contra, Mr. H.L. Agrawala, learned senior counsel appearing for the respondent submitted that the High Court made detailed analysis of the factual position and has rightly fixed the market value. There is no material to substantiate the plea of upward trend in prices.
6. Where large area is the subject matter of acquisition, rate at which small plots are sold cannot be said to be a safe criteria. Reference in this context may be made to three decisions of this Court in The Collector of Lakhimpur v. Bhuban Chandra Dutta (AIR 1971 SC 2015), Prithvi Raj Taneja (dead) by Lrs. v. The State of Madhya Pradesh and Anr. (AIR 1977 SC 1560) and Smt. Kausalya Devi Bogra and Ors. etc. v. Land Acquisition Officer, Aurangabad and Anr. (AIR 1984 SC 892).
7. It cannot, however, be laid down as an absolute proposition that the rates fixed for the small plots cannot be the basis for fixation of the rate. For example, where there is no other material it may in appropriate cases be open to the adjudicating Court to make comparison of the prices paid for small plots of land. However, in such cases necessary deductions/adjustments have to be made while determining the prices.
8. In the case of Suresh Kumar v. Town Improvement Trust, Bhopal (1989 (1) SVLR (C) 399) in a case under the Madhya Pradesh Town Improvement Trust Act, 1960 this Court held that the rates paid for small parcels of land do not provide a useful guide for determining the market value of the land acquired. While determining the market value of the land acquired it has to be correctly determined and paid so that there is neither unjust enrichment on the part of the acquire nor undue deprivation on the part of the owner. It is an accepted principle as laid down in the case of Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam (AIR 1939 P.C. 98) that the compensation must be determined by reference to the price which a willing vendor might reasonably expect to receive from the willing purchaser. While considering the market value disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy it must alike be disregarded. Neither must be considered as acting under any compulsion. The value of the land is not to be estimated as its value to the purchaser. But similarly this does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded. The wish of a particular purchaser, though not his compulsion may always be taken into consideration for what it is worth. Section 23 of the Act enumerates the matters to be considered in determining compensation. The first criteria to be taken into consideration is the market value of the land on the date of the publication of the notification under Section 4(1). Similarly, Section 24 of the Act enumerates the matters which the Court shall not take into consideration in determining the compensation. A safeguard is provided in Section 25 of the Act that the amount of compensation to be awarded by the Court shall not be less than the amount awarded by the Collector under Section 11. Value of the potentiality is to be determined on such materials as are available and without indulgence in any fit of imagination. Impracticability of determining the potential value is writ large in almost all cases. There is bound to be some amount of guess work involved while determining the potentiality.
9. It can be broadly stated that the element of speculation is reduced to minimum if the underlying principles of fixation of market value with reference to comparable sales are made:
(i) when sale is within a reasonable time of the date of notification under Section 4(1);
(ii) it should be a bona fide transaction;
(iii) it should be of the land acquired or of the land adjacent to the land acquired; and
(iv) it should possess similar advantages.
10. It is only when these factors are present, it can merit a consideration as a comparable case (See The Special Land Acquisition Officer, Bangalore v. I. Adinarayan Setty (AIR 1959 SC 429).
11. Keeping the aforesaid principles in view we feel that on the basis of the instances pressed into service by the acquiring authority and the land owner-appellants, the average can be fixed @ Rs. 61.50/- for both the notifications in question by adopting the extent of plotted area as done by the High Court which appears to be appropriate in the circumstances of the case. Therefore, the rate per sq. yard can be fixed @ Rs. 40/-. Though it was contended that there was marked variation in price relating to the instances of sale, vis-a-vis second notification, it does not appear, on the basis of evidence on record, that the fluctuation was of very high magnitude. The marginal differences noticed do not warrant any higher fixation of price. The entitlements of the appellants be accordingly worked out in addition to statutory entitlement, if any. The appeals are accordingly disposed of. No costs.
(N.K.R.) Appeal disposed of accordingly.
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