1995 JTR(SC) 1186
1996 AIR(SCW) 40 ; 1995 4 CurCC(SC) 354 ; 1995 9 JT 106 ; 1995 6 Scale 698 ; 1996 7 SCC 3 ; 1995 Supp5 SCR 534
SUPREME COURT OF INDIA
(Delhi High Court)
K Ramaswamy, K S Paripoornan
RATAN LAL GUPTA AND OTHERS, APPELLANTS
VERSUS
UNION OF INDIA, RESPONDENT.
Civil Appeal No. 3279 of 1984
decided on November 21, 1995.
Act Referred :LAND ACQUISITION ACT : S.23
(A) The Land Acquisition Act, 1874, Section 23, read with Section 4(1), governs the notification and acquisition of land for public purposes, providing the statutory framework under which the land comprising approximately 5.29 acres in Yaquatpur, Delhi was acquired in 1964. Subsequent determination of compensation by the Collector, challenges through appeals under Section 54, and revisions by the High Court and this court have shaped the quantum of compensation for this parcel, which lies in an undeveloped area adjacent to a developed locality.
(B) Key principles include that market value must reflect the true resale potential of the land, small plot sales in a developed area cannot be directly used to value larger tracts in an undeveloped area, and a substantial discount is warranted for land requiring future development. The court reiterated the principle of deducting a significant percentage for undeveloped plots and enhancing compensation with interest and solatium.
Facts of the case:
The land, measuring about 5.29 acres (28 bighas), was notified for acquisition in 1964. Compensation was initially fixed at Rs 5000 per bigha, later revised multiple times through appeals, with the High Court fixing an average market value at Rs 40 per sq. yard. The present appeal questioned this average, particularly the treatment of development charges and the distinction between developed and undeveloped areas.
Findings of Court:
The court found that the lands are in an undeveloped area adjacent to Greater Kailash-I and that prior sale transactions of small plots cannot be the sole basis for valuation. It held that a 60% to 78.45% deduction is appropriate for such land, leading to a revised market value of Rs 50 per sq. yard.
Issues:
The primary issue was whether the market value fixed by the High Court correctly accounted for the undeveloped status of the land and the appropriate discount for development requirements.
Ratio Decidendi:
Where land is in an undeveloped area adjacent to developed zones, market value must be determined based on the resaleable potential after necessary development, requiring a substantial deduction from developed-area prices; 78.45% of the land is non-saleable for plots due to development needs, justifying a rate of Rs 50 per sq. yard.
Result:
The appeal is allowed, compensation is enhanced to Rs 50 per sq. yard with 6% interest from possession until deposit, and a 15% solatium is payable on the enhanced amount.
(A) The Land Acquisition Act, 1874, Section 23, read with Section 4(1), governs the notification and acquisition of land for public purposes, providing the statutory framework under which the land comprising approximately 5.29 acres in Yaquatpur, Delhi was acquired in 1964. Subsequent determination of compensation by the Collector, challenges through appeals under Section 54, and revisions by the High Court and this court have shaped the quantum of compensation for this parcel, which lies in an undeveloped area adjacent to a developed locality.
(B) Key principles include that market value must reflect the true resale potential of the land, small plot sales in a developed area cannot be directly used to value larger tracts in an undeveloped area, and a substantial discount is warranted for land requiring future development. The court reiterated the principle of deducting a significant percentage for undeveloped plots and enhancing compensation with interest and solatium.
Facts of the case:
The land, measuring about 5.29 acres (28 bighas), was notified for acquisition in 1964. Compensation was initially fixed at Rs 5000 per bigha, later revised multiple times through appeals, with the High Court fixing an average market value at Rs 40 per sq. yard. The present appeal questioned this average, particularly the treatment of development charges and the distinction between developed and undeveloped areas.
Findings of Court:
The court found that the lands are in an undeveloped area adjacent to Greater Kailash-I and that prior sale transactions of small plots cannot be the sole basis for valuation. It held that a 60% to 78.45% deduction is appropriate for such land, leading to a revised market value of Rs 50 per sq. yard.
Issues:
The primary issue was whether the market value fixed by the High Court correctly accounted for the undeveloped status of the land and the appropriate discount for development requirements.
Ratio Decidendi:
Where land is in an undeveloped area adjacent to developed zones, market value must be determined based on the resaleable potential after necessary development, requiring a substantial deduction from developed-area prices; 78.45% of the land is non-saleable for plots due to development needs, justifying a rate of Rs 50 per sq. yard.
Result:
The appeal is allowed, compensation is enhanced to Rs 50 per sq. yard with 6% interest from possession until deposit, and a 15% solatium is payable on the enhanced amount.
A.QADRI, Mukul Mudgal, Tripurari Ray, VASIM A.QADRI
ORDER
1. The application for substitution is allowed.
2. Notification under Section 4(1) of the Land Acquisition Act, 1874 (for short the Act) acquiring, land admeasuring about 5.29 acres (28 bighas) comprised in Khasra Nos. 351/305/162 etc. situated in Yaquatpur, Delhi for the planned development (was published in the Union Gazette on 4-2-1964). The Collector in his award dated 26-5-1965 determined compensation at Rs 5000 per bigha together with 15% solatium and interest @ 6%. The Additional District Judge by his award and decree dated 5-8-1969, determined the compensation at the rate of Rs 30 per sq. yard. On further appeal under Section 54 of the Act, the learned Single Judge determined market value at Rs 78 per sq. yard, deducted Rs 7 for development charges, fixed the land available as per the layout at 78.45% of the land areas saleable for plots. The learned Judge further held that market value for undeveloped area was Rs 23 per sq. yard while for the developed area in Greater Kailash Part I, the market value came to Rs 39.34 per sq. yard. On application of the average, the learned Judge fixed the market value at Rs 40 per sq. yard. On letters patent appeal, the Division Bench in the impugned judgment and decree dated 26-8-1981 dismissed the appeal. Thus this appeal by special leave.
3. Shri Mukul Mudgal, learned counsel appearing for the claimants, contended that the learned Single Judge having found that a sum of Rs 7 per sq. yard would be required for development charges of the saleable land of 78.45% as per the layout, committed an error of law in fixing average price of developed and undeveloped land at Rs 40 per sq. yard. Having determined the market value at Rs 78 per sq. yard and having deducted an amount towards development charges and also determined the saleable plots of land at 78.45% of the land, he committed an error of law for further reducing the market value. Thus the learned Single Judge has applied wrong principle of law warranting interference.
4. The question, therefore, is what would be the correct market value that could be fixed as compensation of the land in question. It is seen that strong reliance was placed before the Reference Court on the sale transaction relating to developed area and undeveloped area. In the undeveloped area, the market value was Rs 23 per sq. yard and in the developed area, the market value was Rs 39.34 per sq. yard. It is seen that the High Court found these lands connected with developed roads.
5. It has been repeatedly held by a catena of decisions of this Court that when the market value is to be determined on the basis of small plots of land the same price cannot be expected to be realised when a large track of land is offered to a willing purchaser by a willing vendor. When layout has been obtained and the land is situated in a developed area, though sale relating to small plots of lands were produced before the Court, on recording a finding that such sales are genuine and not intended to inflate the market value of the land, this Court held that necessary directions should be given in determining the true market value based on resaleable price at a future date.
6. It is an admitted fact that the lands in question are in undeveloped area though adjacent to the developed area, viz., Greater Kailash-I. The average price given by the Court also does not appear to be correct. In Administrator General of W.B. v. Collector [(1988) 2 SCC 150 : AIR 1988 SC 943], in paragraph 6, this Court had laid the principle of deduction of 53%, when small plots of land were found to be of genuine sale and situated in a potentially developed area as a wholesale price. In Hasanali Khanbhai and Sons v. State of Gujarat [(1995) 5 SCC 422] this Court also considered all the earlier cases and held that the small extents of land sold in plots, would not furnish the sole basis to fix same price offered by them. Therefore, the deduction of 60% of the value per sq. yard by the High Court was upheld by this Court. It is seen that since the lands in question are situated in undeveloped area, though adjacent to the road, it would take long time for realisation of potentialities as they would require further development. Considered from this prospective, the price of the developed area cannot be adopted ipso facto as the basis to determine compensation to these lands. Considering the facts that the land required development and having deducted 78.45% land which was required for building purposes, we think that proper market value would be Rs 50 per sq. yard. The appellants, therefore, are entitled to be compensated at that rate with interest at the rate of 6% on the enhanced compensation from the date of taking possession till the date of deposit into the Court. The claimants also are entitled to solatium @ 15% on the enhanced compensation.
7. The appeal is allowed but, in the circumstances, without costs.