SUPREME COURT OF INDIA

Before:- A.P. Misra and Ruma Pal, JJ.

Civil Appeal No. 4310 of 1997. D/d. 2.11.2000.

Land Acquisition Officer - Appellant

Versus

B. Vijender Reddy and others - Respondents

Land Acquisition Act, 1894, Section 23 - Acquisition of land - Compensation claim - Fixation of - Held, some element of guesswork is always involved while fixing compensation for acquired land - However, to make it valid such guesswork must be based on a firm foundation consisting of the totality of the evidence, including the sale price of comparable land, and escalation of price in the years preceding and succeeding notification under Section 4 - On facts held, High Court rightly fixed market value at Rs. 60,000/- per acre on basis of sale deeds adduced by respondent - However, High Court erred in enhancing the rate by Rs. 30,000/- on account of escalation, when there was no proof of escalation.

[Para ]

Cases Referred :-

1. Administrator General of W.B. v. Collector, Varanasi, (1988) 2 SCC 150.

2. P. Ram Reddy v. Land Acquisition Officer, Hyderabad Urban Development Authority, (1995) 2 SCC 305.

3. Bhagwathula Samanna v. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality, (1991)4 SCC 506 : 1991 Supp (1) SCR 172.

4. Special Land Acquisition Officer, Bangalore v. T. Adinarayan Setty, AIR 1959 Supreme Court 429 : 1959 Supp (1) 404.

ORDER

Ruma Pal, J. - Heard learned counsel for the parties.

2. The present appeal is directed against the judgment and order dated 31-7-1996 in Appeal No. 1560 of 1989 passed by the High Court of Andhra Pradesh at Hyderabad.

3. The questions raised by the appellant are:

(a) Whether the High Court is justified in fixing the market value of the acquired land at the rate of Rs 90,000 per acre on the facts and circumstances of this case?

(b) Whether the High Court is justified in placing reliance on Exhibits A-1 and A-2, the sale deeds in which the respondents are the vendors?

4. In order to appreciate the controversy, it is necessary to give short facts.

5. A notification under Section 4(1) was issued on 19-2-1983 under the Land Acquisition Act, 1894 (hereinafter referred to as ?the Act?) for the acquisition of 9 acres of land in Chityal village of Warangal district for providing house sites to the weaker sections. On 18-6-1983 the possession of the said land was taken. The Land Acquisition Officer considering the various sale deeds fixed the market value of the land at the rate of Rs 10,000 per acre. The respondents not satisfied, preferred reference under Section 18 of the said Act. The referring court fixed the market value at the rate of Rs 12,000 per acre. The respondents, still not satisfied, filed an appeal in the High Court. The High Court allowed the appeal of the respondents by enhancing the rate of land to Rs 90,000 per acre relying on the sale deeds Exhibits A-1 and A-2. The relevant sale deeds considered by the High Court which call for our consideration are Exhibit A-1 dated 7-4-1980, Exhibit A-2 dated 9-4-1980, Exhibit A-3 dated 16-2-1983 and Exhibit A-6 dated 28-5-1980. So far as Exhibits A-1, A-2, A-3 are concerned, each one of them are of 20 guntas of land (half acre), while Exhibit A-6 is of 3 guntas of land. We are informed 40 guntas make one acre.

6. Learned counsel for the appellant submits, this exorbitant increase by the High Court from Rs 12,000 per acre to Rs 90,000 per acre is unsustainable. This increase is largely conjectural and could not be justified on the facts and circumstances of the present case. One submission for the appellant is, the High Court while relying upon Exhibits A-1 and A-2 which are of April 1980, three years prior to Section 4 notification should not have enhanced the rate of compensation from the rate in the said sale deeds by Rs 10,000 per acre per year, as it is based on no evidence. Reference is also made to the panchnama which is recorded at the time of enquiry and referred to in the order passed by the Subordinate Judge wherein the value of the land recorded is Rs 60,000 per acre. Relevant portion is quoted hereunder:

?PW 1 is the first claimant Vijender Reddy. He deposed that Claimants 2 and 3 are his younger brothers, that at the time of the enquiry there was a panchnama, wherein the value of the land in question was fixed at Rs 60,000 per acre.?

7. Learned counsel for the appellant also refers to Exhibit C-3 which is application dated 23-1-1984 by the claimants to the District Collector which records that the Tahsildar, Chityal had negotiated with them and they agreed for a compensation of Rs 12,000 per acre and in fact in the last para of the same they agreed as an undertaking to part with the said land for the consideration of Rs 11,000 per acre as a negotiated price. The submission is, in this background, the fixation of rate of compensation at the rate of Rs 90,000 per acre cannot be sustained. In addition, submission is, no deduction for the development charge has been made in fixing the rate. He further submits, no reliance can be placed on Exhibit A-6, it being of a very small piece of land when the acquisition in question is of a large block of land i.e. 9 acres. He submits, the price fixed for small developed block is only the retail price, hence the deduction has to be made from such price as acquisition of large acquired land is the wholesale price. Reliance is placed on the case of Administrator General of W.B. v. Collector, Varanasi, (1988) 2 SCC 150. He also relied on the case of P. Ram Reddy v. Land Acquisition Officer, Hyderabad Urban Development Authority, (1995) 2 SCC 305. He relies on the following passage where this Court holds: (SCC p. 321, para 17)

?[W]here the small extent of land sold is insignificant when compared with large extent of land acquired, the market value of large extent of acquired lands shall not be determined on the basis of value fetched by sale of infinitesimally small extent of land. But, in exceptional cases when small extent of land sold for a price as compared with the acquired large extent of land, the market value of which is required to be determined is not so insignificant, the court depending upon the possibility of the large extent of land of the claimant being sold as a small extent of land as that already sold for a price the market value of the large extent could be fixed on the basis of the price fetched by sale of small extent. Even then, how far the price fetched by sale of small extents can be made the basis for determining the market value of large extents must necessarily depend on the fact situation including that as to why the purchase was made, in each case, which has come on its record. ? Thus, how far the value fetched by sale of small extents of lands could form the basis for determining the market value of the acquired land has to inevitably depend upon the allowances to be made for factors which distinguish the acquired land from the plots of land sold and the sale value of which is relied upon as the basis for determining the market value of the acquired land.?

8. On the other hand, learned Senior Counsel appearing for the respondent claimants submits, there is no error committed by the High Court in fixing the rate of compensation at the rate of Rs 90,000 per acre. The submission is, both Exhibits A-1 and A-2 are exemplars of three years prior to Section 4 notification, where the rate recorded is Rs 60,000 per acre. In fact the said two exhibits show that Respondent 1 claimant was himself the vendor selling 20 guntas of land for Rs 30,000, the rate comes to Rs 60,000 per acre. At that time the vendor-claimant was not even aware of the possibility of acquisition of the land in question, hence it cannot be submitted that he inflated the price there. Further submission is, the Court has rightly taken judicial notice of the escalation of prices for the years in question and hence enhancement of the value of the land by Rs 10,000 per acre per year cannot be said to be such which requires any interference. He also referred to Exhibit A-6 wherein 3 guntas of land was sold for Rs 9000. The rate comes to Rs 1,20,000 per acre. This sale deed is dated 28-5-1980 also about 3 years prior to the said Section 4 notification. The submission is, if this is taken into consideration and taking the totality of the circumstances, the fixation of the rate by the High Court cannot be said to be such which calls for any interference.

9. So far as Exhibits A-1 and A-2 are concerned, they cannot be said to be small pieces of land. Each one of them is of half acre each. The rate admittedly is Rs 60,000 per acre, which is the rate three years prior to the date of Section 4 notification. Exhibit A-6 could be said to be of a small piece of land, as it is of three guntas only. If we reduce this by 50% still the rate comes to Rs 60,000 per acre, which is also an exemplar, three years prior to the date of Section 4 notification.

10. Learned counsel for the respondent rightly submits that Exhibit C-3 is not proved. He refers to the evidence of R-1, the only witness examined on behalf of the appellant, who has not proved this document. Hence, no reliance can be placed on the same. The emphasis for the respondent is that there is clear finding recorded by the High Court that the land under acquisition is a better land than the land covered by Exhibits A-1 and A-2, hence escalating rate over and above Exhibits A-1 and A-2 cannot be said to be wrong. Reference is also made about Exhibit A-4, but we are not considering this as the High Court rightly records that this has not been proved.

11. With reference to the reduction of rate towards development charge, the submission is, on the facts of the present case, as the appellant has not raised this issue earlier nor led any evidence hence, cannot be considered for the first time in the present appeal before this Court. It is submitted, if this was raised, the claimant would have proved that this land is fully developed with Government buildings and offices, electricity etc. It is mixed question of fact and law and cannot be raised now. He also submits that when a large area of land is acquired, rate not based on square yard but acreage, then it is a price that a willing purchaser is ready to purchase hence question of reduction towards development charge would only be considered, in relation to a similar piece of land where the rate of acquisition is per square yard and not per acreage. Reliance is placed on the case of Bhagwathula Samanna v. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality, (1991)4 SCC 506 : 1991 Supp (1) SCR 172. The passage relied upon reads thus: (SCC pp. 510-11, para 11)

?11. The principle of deduction in the land value covered by the comparable sale is thus adopted in order to arrive at the market value of the acquired land. In applying the principle it is necessary to consider all relevant facts. It is not the extent of the area covered under the acquisition which is the only relevant factor. Even in the vast area there may be land which is fully developed having all amenities and situated in an advantageous position. If smaller area within the large tract is already developed and suitable for building purposes and have in its vicinity roads, drainage, electricity, communications etc. then the principle of deduction simply for the reason that it is part of the large tract acquired, may not be justified.?

12. Finally, reliance is placed on Special Land Acquisition Officer, Bangalore v. T. Adinarayan Setty, AIR 1959 Supreme Court 429 : 1959 Supp (1) 404, which is with reference to the scope of Article 136 as to when this Court should interfere with the fixation of rate under the Land Acquisition Act. This Court has held:

?6. In view of the facts of this case and the opinion which we have formed after hearing learned counsel for both parties, we do not think it necessary to make any final pronouncement as to the practice which this Court should adopt in a valuation case where two courts have differed. We are content to proceed in this case on the footing that we should not interfere unless there is something to show, not merely that on the balance of evidence it is possible to reach a different conclusion, but that the judgment cannot be supported by reason of a wrong application of principle or because some important point affecting valuation has been overlooked or misapplied.?

13. The first question we proceed to consider is, whether the High Court was right to enhance the rate from the rate recorded in Exhibits A-1 and A-2 by Rs 10,000 per acre per year for three years. It is true, in the fixation of rate of compensation under the Land Acquisition Act, there is always some element of guesswork. But that has to be based on some foundation. It must spring from the totality of evidence, the pattern of rate, the pattern of escalation and escalation of price in the years preceding and succeeding Section 4 notification etc. In other words, the guesswork could reasonably be inferable from it. It is always possible to assess the rate within this realm. In the present case, we find there are three exemplars i.e. Exhibits A-1 and A-2 which are three years preceding the date of notification and Exhibit A-3 which is of the same point of time when Section 4 notification was issued.

14. It is significant to record that all these three exemplars cover the area of half acre. It is also significant, the rate in each of these exemplars comes to Rs 60,000 per acre. It is also significant that Exhibits A-1 and A-2 are of the year 1980 while Exhibit A-3 is of the year 1983. This indicates that during these three years there has not been any escalation of the prices of land in the area in question. It is also relevant to mention that even Exhibit A-6 on which strong reliance has been placed by the respondents is an exemplar also of the year 1980 showing the rate to be Rs 1,20,000 per acre, though of small area of land indicative, if at all that the price in these three years in question if not gone down, has not escalated specially when we compare this to the exemplar viz. Exhibit A-3 of 1983. In view of the evidence on record, and in the absence of any other relevant evidence, the High Court fell into error to enhance the rate for the acquired land by Rs 30,000 per acre, by increasing further from Rs 60,000 per acre to Rs 10,000 per acre per annum for three years. There seems no justification to enhance the rate to Rs 90,000 per acre. Hence it is not possible for us to accept this part of the finding of the High Court through which it fixed the rate at Rs 90,000 per acre.

15. Hence for the same reason, the submission for the respondent that the rate if in the year 1980 was Rs 60,000 per acre the escalation for the next succeeding three years granted by the High Court is valid also cannot be accepted. The evidence on record clearly shows that there was no escalation of value of land during the period 1980 to 1983. Hence proper rate would come to Rs 60,000 per acre to which the claimant is entitled.

16. The last question which arose for our consideration is, whether any reduction for the development charge from the rate fixed should be done. The submission for the respondents is, in the present case not only at no stage the appellant has raised this question in its plea but has led no evidence. On the contrary, even the map on the record shows it is a fully developed area, with Government offices, electricity etc. If this question was raised at any stage the claimant would have proved to the contrary. It is true in the present case the appellant has neither pleaded nor led any evidence in this regard. On the other hand, learned counsel for the respondents in addition relies on the finding recorded by the High Court that the acquired land in question is a better situated land than the land covered by Exhibit A-1 and Exhibit A-2, so if at all the rate fixed should have been higher than what is fixed through the exemplars. We find some force in this submission. On the evidence on record, suffice it to say, on the facts of this case, in the absence of any plea or any evidence, we do not find it fit to further reduce the rate from what is fixed in Exhibits A-1 and A-2.

17. In view of the aforesaid findings, we conclude that enhancement of rate from Rs 12,000 per acre to Rs 90,000 per acre by the High Court cannot be sustained. However, on the facts and circumstances of this case, the rate fixed in the exemplars Exhibits A-1, A-2 and A-3 is proper and just, which is Rs 60,000 per acre. Finding to the contrary to this extent by the High Court is set aside. Rest of the judgment of the High Court does not call for any interference. So we answer the two questions raised in this appeal by holding:

(a) The High Court was not right to fix the compensation at the rate of Rs 90,000 per acre.

(b) The High Court was right in placing reliance on Exhibits A-1 and A-2, the sale deeds in which the claimants are vendors.

18. Accordingly, the appeal is partly allowed. Costs on the parties. Since the acquisition is of the year 1983, the balance amount of compensation as per rate approved by us as above, which has yet not been paid to the claimants shall be paid within three months from today.

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