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2003 DIGILAW 541 (KAR)

ASST. COMMISSIONER v. MAHABALESHWAR BATU NAIK

2003-07-11

T.S.THAKUR

body2003
TIRATH S. THAKUR, J. ( 1 ) COMMON question of fact and law arise for consideration in all these appeals filed by the Karnataka Housing Board ( KHB for short) and the Land Acquisition Officer, against different orders made by the Court of Additional Civil Judge (S. Dvn,) Karwar, whereby the amount of compensation payable to the respondents-land owners has been enhanced from Rs 1,625/- per gunta to Rs 9,200/- per gunta. The controversy arises in the following backdrop: ( 2 ) A large extent of land measuring 74 acres situate in different survey Numbers of village Baad I of Karwar Taluk was notified for acquisition in terms of a preliminary notification dt 18. 2. 1982. The purpose underlying the acquisition was the formation of a housing layout by the KHB. The LAO in due course made and published an award determining the compensation payable to the land owners at the rate of Rs 1,625/- per gunta on a uniforms basis. Not satisfied with that amount, the owners secured references under section 18 of the Land Acqusition Act to the Civil Court for determination of the just and fair compensation payable to them. These references have been disposed of in different batches by the reference Court in terms of different order. First of these orders was passed on 29-6-2000 in LAC No 2 of 1998 by which the reference court declared that the compensation determined by the LAO was wholly incommensurate with the market value of the land acquired from the owners. The Court further held that there was overwhelming evidence to prove that the acquired land was situate within the municipal limits in a busy locality of Karwar Town, and had therefore acquired considerable non agricultural potential on account of several commercial, residential and office buildings having come up in close proximity to the acquired area. On the question of the amount of compensation payable to the land owners, the reference Court primarily relied upon an earlier order passed by it in LAC Nos 61, 62, 63, 65 and 66 of 1988 connected with LAC No 108 and 111 of 1993 in which the said Court had determined the compensation payable to the land owners at Rs 10,000/- per gunta. While disposing of the said earlier references and determining compensation at the rate of Rs 10,000/- gunta, the reference Court appears to have fixed what it describes as the base value of the land and added to the same certain amount towards the potential value. It adopted a similar method in the instant case and determined the so called base value at Rs 6,800/- per gunta and added to the same the 'potential value' of Rs 2380/- per guna taking the total to Rs 9,180/- per gunta which was rounded of to Rs 9,200/- per gunta. To the same effect are similar but separate orders passed by the said Court in a batch of other land acquisition cases disposed of by orders dated 28-9-2000 and 31-7-2000. While MFA No 4831 and 4692 of 2000 have been filed by the appellants. Housing Board and the LAO against the order of the reference Court in LAC 2 of 1998, the remaining MFAs arise out of the orders passed by the said Court in other LACs in which it has relied upon the decision in LAC 2 of 1998 apart from the decision rendered in LACs No 61,62,63,65 of 1998 and connected matters. It is noteworthy that while the reference Court has passed its orders on different dates, the notification for acquisition of the land, the purpose for the acquisition and the amount of compensation awarded by the Court is the same in all. The material on the basis of which the Court has determined the amount of compensation and the method adopted for doing so is also common. The appeals were in that view heard together for disposal by a common order. ( 3 ) BEFORE we proceed to deal with the merits of the contention urged by M/s K. P. Ashok Kumar and Balakrishnan Counsel appearing for the appellants, we need mention that the reference court has adopted a method of calculating the market value of the land which we have found difficult to support. As observed earlier, the reference Court has first determined what it describes as the base value of the land and then added to the said value what it describes as the potential value. Neither of these two expressions have a known legal significance nor is the method adopted by the court judicially recognized. As observed earlier, the reference Court has first determined what it describes as the base value of the land and then added to the said value what it describes as the potential value. Neither of these two expressions have a known legal significance nor is the method adopted by the court judicially recognized. The owners are entitled to the payment of market value of the land while determining which value the Civil court is required to keep in view factors that are stipulated in Section 23 of the LA Act excluding those that are mentioned in Section 24 thereof. Neither of the two provisions refers to or prescribes a method by which the Court may be required first to determine the base value of the land and then add a further amount representing its potential value. The entire exercise which the Court dealing with land acquisition cases is required to undertake is meant to arrive at the true market value of the land on the date of issue of preliminary notification. Such value is represented by what a willing purchaser is ready to pay to a willing seller. The judicially recognized methods of determination of compensation are: (1) By reference to comparable sale transactions during the relevant period, and. (2) in the case of agricultural land and in the absence of comparable sale transactions by capitalization of the yield from of the land under acquisition. ( 4 ) OUT of the two methods, the former is considered to be more accurate and dependable, the latter being followed only in cases where sales statistics of comparable transactions are not available. In the process of determining the market value based on similar sale transactions, the Court is required to consider a variety of factors viz, whether the land had non agricultural potential, whether comparable sale transaction is of a developed area, whether the purchaser of the comparable sale transaction had any special reason to purchase the property for a higher price, whether the land covered by comparable transaction has any special advantages over the land under acquisition and so on. In cases where the comparison is by reference to sale of similar parcels of land, the Courts have evolved a method by which a certain percentage is deducted towards development charges and the area to be left out for construction of roads, drainages and other amenities. In cases where the comparison is by reference to sale of similar parcels of land, the Courts have evolved a method by which a certain percentage is deducted towards development charges and the area to be left out for construction of roads, drainages and other amenities. Suffice it to say, that none of the recognized methods envisages the dual process of first determining the base price and then adding to the same the potential value of the land. The method adopted by the reference Court, is if we may say so, unknown to law. We have disapproved of that method while dealing with MFA No 2145 of 1998 and connected matters arising out of the acquisition for the ITI at Karwar disposed of by our order dt 9-7-2003. In that view therefore the order passed by the reference Court is wholly unsustainable and could be set aside on that ground alone. ( 5 ) THAT does not however mean that the matter must necessarily be remitted back to the reference Court to determine the market value afresh in accordance with the methods that are legally recognized. It is fairly well settled that if the material on record is sufficient to enable the appellate Court to dispose of the case finally on merits, it need not remit the matter to the trial Court for fresh orders, no matter the order passed by the trial Court is on any preliminary or short ground found to be unsustainable. In fairness to counsel appearing for the parties, we must record that none of them argued for a remand to the reference Court to determine the market value afresh. The appeals were instead argued at length on merits so that a just and fair amount of compensation could be determined and awarded to the owners without delay. ( 6 ) COMING then to the claim made by the respondent land owners, the prayer for enhancement of compensation was based primarily on four different sale transactions evidenced by sale deeds marked Exs P4, P5, P6 and P7. ( 6 ) COMING then to the claim made by the respondent land owners, the prayer for enhancement of compensation was based primarily on four different sale transactions evidenced by sale deeds marked Exs P4, P5, P6 and P7. In terms of sale deed marked Ex p4, a parcel of land measuring 30 x 40 ft in a housing colony at karwar was sold in August, 1982 for a sum of Rs 10,000/- A similar sale evidenced by sale deed marked Ex P5 another site situate in the same colony measuring 30 x 40 ft was sold for a sum of Rs 9,200/- again in 1982. The third sale transaction relied upon by the respondent owners related to an area measuring 6 guntas sold in january, 1982 for a sum of Rs 47,000/- The fourth and the only other sale transaction which the respondent owners relied upon, related to a parcel of land measuring 2 guntas sold in February, 1998 for a sum of Rs 24,000/- It is not in dispute that the sale transaction evidenced by the documents mentioned above, related to different parcels of land situate within the municipal limits of karwar. It is also not in dispute that except the locational peculiarities of each site that is sold in terms of the said documents, the lands covered by the transactions was generally comparable with the land acquired from the respondents. As to what would be the reasonable and fair amount of compensation payable to the owners on the basis of the said transactions, however remains to be determined. While doing so, we cannot over look the fact that the sale transaction represented by sale deeds marked Ex P4 and Ex P5 related to sites sold in a housing layout. The area sold is just about 1 gunta in each case. In comparison, the land acquired from the respondent owners measures a vast extent of 74 acres. The price paid by the purchaser for a single gunta in a developed colony cannot obviously be taken as a safe basis for determination of compensation for a large extent of land acquired for formation of the housing layout. In comparison, the land acquired from the respondent owners measures a vast extent of 74 acres. The price paid by the purchaser for a single gunta in a developed colony cannot obviously be taken as a safe basis for determination of compensation for a large extent of land acquired for formation of the housing layout. The decisions of the Supreme Court in TRIVENI DEVI vs collector RANCHI ADMINISTRATOR GENERAL OF WEST bengal vs COLLECTOR, VARANASI RATANLAL GUPTA AND others vs UNION OF INDIA K. VASUNDHARA DEVI vs revenue DIVISIONAL OFFICER (LAO), GULZAR SINGH vs state OF PUNJAB5 have authoritatively held that sale transactions of smaller pieces of land in developed area may be made a basis for determination of compensation of a larger extent only if no other comparable transaction is available and only after a suitable deduction towards development charges is made. The consideration paid by the purchasers of sites in Ex P4 and Ex P5 shall therefore have to be reduced by the amount required for development in order that the rate so available may be applicable to a larger extent of land. Such a deduction is necessary to bring the larger extent of land at par with the land by reference to which the amount of compensation is sought to be fixed. The extent of deduction has however been itself the subject matter of different pronouncements of the Supreme Court. The dominant view that runs through all these pronouncements is that the deduction would depend upon the extent of development that is required in the undeveloped area in order to make the same comparable with the land which is sold from out of a developed area. The deductions have thereof varied depending upon the extent of development that will be required to be made to hypothetically bring the larger area at par with the area that was sold in terms of a comparable transaction. These deductions have generally varied between 33 to 65%. The rule is that greater the development required the higher the deduction. ( 7 ) WITH the above background in view, the question is as to what ought to be deducted from out of the sale consideration paid in terms of Ex P4 and Ex P5. These deductions have generally varied between 33 to 65%. The rule is that greater the development required the higher the deduction. ( 7 ) WITH the above background in view, the question is as to what ought to be deducted from out of the sale consideration paid in terms of Ex P4 and Ex P5. The most important aspect that may have to be kept in view while deciding the extent of deduction is the fact that the two sites sold in terms of said two documents are situate in a colony which was meant for those belonging to Scheduled castes and Scheduled Tribes from the weaker sections of the society. The fact that the sites were meant for houseless poor people would show that the extent of development in the colony may not have been comparable with what is expected in a modern housing layout. Deduction of 40% of the total value of the land towards roads, drainage and development thereof, apart from amenities would therefore in our view suffice. We have while relying upon the said two transactions in the appeal arising out of the acquisition for ITI and APMC made a similar deduction. If 40% is deducted out of the sale consideration in terms of Ex P4 and Ex P5, the rate per gunta would work out to Rs 6,000/- in the case of Ex P4 and Rs 5,520/- per gunta in case of Ex P5. ( 8 ) WE are then left with only two other transactions viz, 6 guntas sold for Rs 47,000/- in terms of Ex P6 and 2 guntas of similar undeveloped land sold six years later for Rs 24,000/- or Rs 12,000/ - per gunta in terms of Ex P7. In either of these two cases, the land is like the area acquired from the respondents undeveloped. There is therefore no question of deducting any amount on account of development charges although certain deduction on account of the area sold in terms of said transaction being small in comparison to the acquired area is usually made. We have while disposing of MFA 3602 of 1997 and connected matters (D D 24. 6. 2003), deducted 15% of consideration exchanged on account of the smaller sizes of the land that is sold and the long period for which the owners would have to wait to dispose of all the sites. We have while disposing of MFA 3602 of 1997 and connected matters (D D 24. 6. 2003), deducted 15% of consideration exchanged on account of the smaller sizes of the land that is sold and the long period for which the owners would have to wait to dispose of all the sites. In our view, a similar deduction in the instant cases is also justified. If 15% is deducted out of ex P6, the rate per gunta would come to Rs 6,800/ -. In the case of ex P7 we have to deduct apart from 15% towards waiting period, a further 50% on account of the fact that the sale transaction in that 1. 1972 (1) SCC 480 . 2. AIR 1988 S. C. 943/1986 (2) SCC 1503. 1995 (6) SCALE 698 4. AIR 1995 SC 2481 5. 1993 (4) SCC 245 case is 6 years after the preliminary notification was issued in the instant case. If 65% is thus deducted out of Rs 12,000/- per gunta, the effective rate would work out to Rs 5,100/- per gunta. ( 9 ) WE have in the process four different rates available to us after making the requisite deductions. These are Rs 6,000/- per gunta in case of Ex P4, Rs 5,520/- per gunta in case of Ex P5, Rs 6,800/ - per gunta in the case of Ex P6 and Rs 5,100/- per gunta in the case of Ex P7. The average of the said rates can in our opinion, be taken to arrive at a reasonable price that can be said to be one of the inputs for determining the true market value. That average comes to Rs 5,885/- per gunta. ( 10 ) WE may now refer to our judgment in MFA No 2145 of 1998 and connected matters disposed of on 9. 7. 2003. Those appeals arose out of the orders passed by the reference Court in connection with acquisition for the ITI. We have after examining the various aspects and upon consideration of the material available in that case come to the conclusion that the land owners were entitled to compensation @ Rs 8,000/- per gunta as against Rs 10,000/- per gunta awarded by the reference Court. The acquisition in that case had taken place two years later. We have after examining the various aspects and upon consideration of the material available in that case come to the conclusion that the land owners were entitled to compensation @ Rs 8,000/- per gunta as against Rs 10,000/- per gunta awarded by the reference Court. The acquisition in that case had taken place two years later. In the ordinary course, the amount paid in that case may have to be off loaded at the rate of 10% p. a. for the two years intervening the two acquisitions, but we consider it unnecessary to do any such off loading in the instant case. We say so because the land acquired for ITI is situate in village Baad II which is farther from the town of Karwar in comparison to Baad I in which the lands acquired in the instant case are situate. It is common ground that the acquired lands are in comparison to the acquisition made for ITI nearer to the city centre hence relatively more valuable. If the nearness to the city and the time gap that separates the two acquisitions neutralise each other, we can take Rs 8,000/- per gunta awarded in the said case also as one of the inputs. If that be so, the average of the two rates i. e, one based on sale transactions and the other based on the rates awarded for comparable would come to Rs 5,585/-+8000 2 = 6,927/- That amount can in our opinion can safely rounded off to Rs 7,000/- per gunta which should in our view represent the just and fair compensation payable to the owners. ( 11 ) IN the result, these appeals succeed and are allowed, but only in part and to the extent that instead of Rs 9,200/- awarded by the reference Court, the respondent land owners shall be entitled to compensation at the rate of Rs 7,000/- per gunta with all proportionate consequential benefits such as additional market value, consortium and interest on the same. The impugned orders passed by the reference Court shall accordingly stand modified. In the circumstances of the cases, there shall be no order as to costs. --- *** --- .