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2003 DIGILAW 231 (HP)

COLLECTOR, LAND ACQUISITION v. NAGESH KUMAR

2003-08-18

R.L.KHURANA

body2003
JUDGMENT R.L. Khurana, J.—Land measuring 8-09-03 bighas of village Matkehar, Tehsil Jogindernagar, District Mandi, came to be acquired by the State under the provisions of the Land Acquisition Act, 1894 (for short : the Act) for a public purpose, namely, for the construction of "Machhyal Kuthera Road" in pursuance of the notification dated 4.4.1989 issued under Section 4 of the Act. Such notification was published in the official Gazette on 20.5.1989 and the two daily newspapers (Dainik Tribune and Vir Pratap) respectively on 6.10.1989 and 8.10.1989. This acquisition also included the land of respondents No. 1 and 2 comprising of khasra Nos. 352/1 and 356/1 measuring 1-09-13 bighas and khasra No. 341 measuring 0-05-10 bighas. 2. The Collector, Land Acquisition, vide his award, being award No. 26 dated 9.7.1991, assessed the market value of the acquired land at a flat rate of Rs. 4,000 per bigha irrespective of the classification of land as "Dhani Doem", "Barani Doem" and "Kharetar". In addition to the award of compensation at the abovesaid market value, the Collector further awarded:— (a) compulsory acquisition charges at 30% of the total compensation payable in respect of the acquired land; (b) Additional compensation under Section 23(1-A) of the Act at the rate of 12% per annum from the date of taking over possession, that is, May, 1983 to 30.6.1991; and (c) Interest on the amount of compensation at the rate of 9% per annum from 1.5.1983 (the date of possession till 30.4.1984 and at the rate of 15% per annum from 1.5.1984 till 30.6.1991. 3. On a reference having been made under Section 18 of the Act, the learned Additional District Judge, Mandi, on the consideration of evidence placed before him by the parties assessed the market value of the acquired land and held the respondents No. 1 and 2 to be entitled to compensation for their land as under :— (i) Dhani Doem land Rs. 8,000 per bigha. (ii) Barani Doem land Rs. 6,400 per bigha. (iii) Kharetar land Rs. 4,480 per bigha. 4. 8,000 per bigha. (ii) Barani Doem land Rs. 6,400 per bigha. (iii) Kharetar land Rs. 4,480 per bigha. 4. The respondents No. 1 and 2 were held further entitled to benefits under Section 23 of the Act on the enhanced amount and interest at the rate of 9% per annum for one year from the date of taking of possession of the land and thereafter at the rate of 15% per annum till the amount of enhanced compensation is paid/deposited in the Court. 5. Feeling aggrieved by the award, the State appellant is before this Court by way of the present appeal assailing the award dated 31.5.1996 of the learned Additional District Judge. 6. It was contended by the learned Advocate General on behalf of the appellant that the learned Court below has gravely erred in assessing the market value of the acquired land on the basis of the sale transaction Ex. PX which was in respect of a very small piece of land measuring 1.5 biswas. 7. It may be noticed that vide Ex. PX a piece of land measuring 1.5 biswas was sold for a sum of Rs. 1,000, that is, at the rate of Rs. 13,333 per bigha. By taking such value of a small plot, the learned Additional District Judge has given an allowance of 40% and thereby assessed the market value of a bigger area at 60% of such value, that is, at the rate of Rs. 8,000 per bigha in respect of Dhani Doem Classification of land. The market value of Barani Doem land has been assessed at 80% of the Dhani Doem land while value of kharetar land has been assessed at 70% of the Dhani Doem land. 8. The Apex Court in Administrator General of West Bengal v. Collector, Varanasi, AIR 1988 SC 943, has held to the following effect :— "The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing large extents of land has to be understood in its proper perspective. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. However, if it is shown that the large extent to be valued does admit of and is ripe for use for building purposes; that building lots that could be laid out on the land would be good selling propositions and that valuation on the basis of the method of a hypothetical layout could with justification be adopted, then in valuing such small, laid out sites the valuation indicated by sale of comparable small sites in the area at or about the time of the notification would be relevant. In such a case, necessary deductions for the extent of land required for the formation of roads and other civic amenities; expenses of development of the sites by laying out roads, drains, sewers, water and electricity lines, and the interest on the outlays for the period of deferment of the realisation of the prices the profits on the venture etc. are to be made." 9. A Division Bench of this Court in Karam Chand v. State of Himachal Pradesh, 1996 (2) SLC179, has held that deduction to be allowed while assessing the market value of a large area of land on the basis of a smaller plot of land can be very well neutralised with the rise in price during the intervening period. 10. The apex Court in Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona and another, AIR 1988 SC 1652, has laid down the factors which are required to be kept in view while determining the market value of the acquired land. These factors are :— "(1) A reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the Court cannot take into account the material relied upon by the Land Acquisition Officer in his award unless the same material is produced and proved before the Court. (2) So also the Award of the Land Acquisition Officer is not to be treated as a judgment of the trial Court open or exposed to challenge before the court hearing the reference. It is merely an offer made by the Land Acquisition Officer and the material utilized by him for making his valuation cannot be utilized by the Court unless produced and proved before it. It is merely an offer made by the Land Acquisition Officer and the material utilized by him for making his valuation cannot be utilized by the Court unless produced and proved before it. It is not the function of the court to sit in appeal against Award approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate Court. (3) The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court. Of course, the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of he land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of Notifications under Sections 6 and 9 are irrelevant). (6) The determination has to be made standing on the date line of valuation (date of publication under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day It has also to be assumed that the vendor is willing to sell the land at a reasonable price. (7) In doing so by the instances method, the Court has to correlate the market value reflected in the most comparable instance which provides the index of market value. (8) Only genuine instances have to be taken into account. (Sometimes instances are rigged up in anticipation of Acquisition of Land). (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations : (i) proximity from time angle, (ii) proximity from situation angle. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations : (i) proximity from time angle, (ii) proximity from situation angle. (11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicted in Clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (non exhaustive) factors :— Plus factors Minus factors. 1. Smallness of size. 1. Largeness of area. 2. Proximity to a road. 2. Situation in the interior at a distance from the road. 3. Frontage on a road. 3. Narrow strip of land with very small frontage compared to depth. 4. Nearness to developed area. 4. Lower level requiring the depressed portion to be filled up. 5. Regular shape 5. Remoteness from developed locality. 6. Level vis-a-vis land under acquisition. 6. Some special disadvantageous factor which would deter a purchaser. 7. Special value for an owner of an adjoining property to whom it may have some very special advantage. (15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10000 sq. yds. or more. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approx, between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards. (16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself. (17) These are general guidelines to be applied with understanding informed with common sense." (Emphasis supplied) 11. It has further been pointed out that evaluation of the above factors would depend on the facts and circumstances of each case and there cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. 12. Ex. PX pertains to the period about 6 years prior to the issuance of notification under Section 4 of the Act in the present case. Judicial notice can be taken of the fact that the value of real estate has been increasing year to year. Though there is nothing on record to show the extent of the increase in prices of the land during 1983 to 1989, however, fact remains that there has been some increase in such prices. 13. Judicial notice can be taken of the fact that the value of real estate has been increasing year to year. Though there is nothing on record to show the extent of the increase in prices of the land during 1983 to 1989, however, fact remains that there has been some increase in such prices. 13. Following the ratio laid down by the Honble Supreme Court in the above referred to cases and in the absence of specific evidence with regard to the extent in the increase of land, on the facts and in the circumstances of the case, the learned Additional District Judge has rightly assessed the market value of the acquired land by giving necessary deductions at the rate of 40% in the price fetched for a small plot of land. The market value as assessed by the learned Additional District Judge calls for no interference. 14. It was next contended by the learned Advocate General that an error has been committed by the Court below in awarding interest on the enhanced amount with effect from the date of possession of the land. It was contended that though the possession was taken by the State on 1.5.1983, such possession was taken much before the issuance of notification under Section 4 of the Act and as such the same cannot be said to have been taken under the Act. Therefore, interest is not payable from the date of possession. 15. The Honble Supreme Court in Pradip Chandra Parija and others v. Pramod Chandra Patnaik and others, (2002) 1 SCC 142, has held that in a case where the possession has been taken before the issuance of a notification under Section 4 of the Act, additional compensation under Section 23(lA) of the Act is payable from the date of notification under Section 4 of the Act up to the date of the award. 16. 16. Similarly, in respect of the interest payable under Section 28 of the Act, it has been held by a Full Bench of this Court in RFA No. 322 of 2000 (Narotam Ram v. Land Acquisition, Collector) decided on 25.9.2002, following the ratio laid down by the Honble Supreme Court that in the event of possession having been taken prior to issuance of notification under Section 4 of the Act, interest would be payable on the enhanced amount from the date of notification under Section 4 of the Act for one year at the rate of 9% per annum and thereafter at the rate of 15% per annum till the date of payment- of such enhanced amount. 17. The learned Additional District Judge has, as such, erred in allowing additional compensation at the rate of 12% per annum under Section 23(1 A) of the Act and interest under Section 28 of the Act from the date of taking of possession. The impugned award to this extent cannot be sustained. 18. As a result, the present appeal is partly allowed and while maintaining the market value of the acquired land as assessed by the learned Court below and the direction that the respondents No. 1 and 2 shall be entitled to solatium at the rate of 30% of the enhanced amount, the impugned award is modified to the extent that the respondents No. 1 and 2 shall be further entitled to :— (a) additional compensation at the rate of 12% per annum on the market value of the land under Section 23(1A) of the Act from the date of issuance of notification under Section 4 till the date of award; and (b) interest under Section 28 of the Act on the enhanced amount at the rate of 9% per annum from the date of issuance of notification under Section 4 of the Act for one year and thereafter at the rate of 15% per annum till the date of payment of the enhanced amount. 19. Parties are left to bear their own costs. Appeal partly allowed.