Himachal Pradesh State Electricity Board Ltd. & Another vs Govind Singh Pathania

Sushil Kukreja, J

The instant appeal has been preferred by the appellants/Himachal Pradesh State Electricity Board Ltd. (HPSEB), who were respondents before the learned Court below (hereinafter referred to as “the appellants”) under Section 54 of the Land Acquisition Act, 1894 (for short “the Act”) against award dated 30.04.2013, passed by learned Additional District Judge(II), Kangra at Dharamshala, District Kangra, H.P. (hereinafter referred to as “the learned Reference Court”), in RBT Reference Case No. 113-N/2011/2007, whereby the learned Reference Court had enhanced the compensation

The brief facts of the case are that Notification under Section 4 of the Act qua the acquisition of the land of the petitioner/claimant, situated in village Jassur Tehsil Nurpur, District Kangra, was issued on 02.05.2003. The said notification was published in H.P. Rajpatra on 24.05.2003 and in news papers, i.e., Amar Ujala on 16.05.2003 and in Divya Himachal on 16.05.2003 and wide publicity in the locality was made on 04.07.2003. The aforesaid land was to be acquired for public purp se, i.e., for construction of Circle & Divisional Store. Subsequently, notification under Sections 6 and 7 was also issued and the same was published in H.P. Rajpatra on 13. 03.2004, in news papers, i.e., Amar Ujala and Dainik Bhaskar on 18.03.2004 and publicity in the locality was made on 24.03.2004. Thus, the land of the petitioner/claimant, comprised in Khata No. 59 min, Khatauni No. 93, Khasras No. 398, 416, 418 to 420 Plots-5, measuring 0-06-41 hectares, situated in Mohal and Mouza Jassur, Tehsil Nurpur, District Kangra, H.P., was acquired by State Electricity Board for the above mentioned public purpose. Thereafter Land Acquisition Collector, H.P. State Electricity Board announced Award No. 281, dated 14.09.2005, qua the above acquisition.

The petitioner/claimant, feeling aggrieved with the award of the Land Acquisition Collector, H.P. State Electricity Board preferred a petition under Section 18 of the Act before the learned Reference Court for enhancement of the compensation, which was allowed and the award passed by Land Acquisition Collector, H.P. State Electricity Board was modified to the extent that he market value of the acquired land was assessed at Rs.840/- per centare. The petitioner/claimant was also held entitled for solatium, additional compensation and interest etc. Hence, the appellants/HPSEB preferred the instant appeal under Section 54 of the Act with a prayer to quash and set-aside the impugned award, dated 30.04.2013, passed by the learned Reference Court. On the other hand, the petitioner/claimant also preferred Cross Objections No. 17 of 2015, under Order 41 Rule 22 read with Section 151 of CPC for enhancement of compensation @ Rs.2,163/- per centare alongwith all the statutory benefits and interest.

I have heard learned Senior Counsel for the appellants/non-cross objectors, learned counsel for the respondent/cross-objector and carefully examined the records.

The learned Senior Counsel for the appellants contended that the learned Reference court had erred in appreciating the material available on record and had wrongly applied the law to the facts of the case. She also contended that the learned Reference Court had erred in fixing the rate of land @ Rs.840/- per centare that too on the basis of sale deed, dated 16.07.2002 (Ex.PW-1/C), for a small piece of land wherein land sold was 0-00-38 hectare, whereas in the instant case the acquired land was 0-06- 41 hectare. Lastly, it is prayed that the instant appeal be allowed and the impugned award, dated 30.04.2013, be q ashed and set-aside. She has also placed reliance up n the following judicial pronouncements of law:

Union of India vs. Premlata & others, (2022) 7 SCC 745;

State of Madhya Pradesh & another vs. Radheshyam & others, (2023) 17 SCC 528;

Haryana State Industrial & Infrastructure Development Corporation Limited & others, (2023) 19 SCC 419; &

Horrmal (deceased) through his LRs & others vs. State of Haryana & others, 2024 (12) SCALE.

On the other hand, the learned counsel for the respondent/cross-objector contended that the learned Reference Court had erred in applying deduction of 40% while assessing the market value of the acquired land. He further contended that even if deduction of 40% is applied, then also the market value of the acquired land will come to Rs 1263/-per centare and not Rs.840/- per centare, as assessed by the learned Reference court.

I have closely scrutinized the entire evidence on record. The petitioner/claimant himself stepped into the witness-box as PW-1 and tendered in evidence his affidavit, wherein he stated that the acquired land was on the national highway Pathankot-Mandi-Manali and the Land Acquisition Collector had not awarded c mpensation properly as per the market rate, as the market rate of land at Jassur was more than Rs.50,000/-per marla, i.e., 19 hectare meters. This witness had placed on record sale deed, Ex. PW-1/C, which was executed in the same villa e on 16.07.2002. PW-2 Jagdish Singh, the then Patwari, had placed on record Akash Shajra Kishtwar, Ex. PW-2/A, and he deposed that except Khasra No. 398, all other khasra numbers of the suit land were within 20 meters from the National Highway and 50 meters from the main chowk of bus stand Jassur. He further deposed that near the acquired land there was a market and the land adjoining to the national highway was more valuable than other land. He had placed on record copies of jambandi, Ex. PW-2/B, Ex. PW-2/C and Ex. PW-2/D. PW-3 Shri Rajinder Kumar, the then Head Registration Clerk, had produced the copy of notification, Ex.PW-3/A.

On the other hand, respondents examined Shri Jitan Raina as RW-1, who deposed that at the time of awarding compensation, Land Acquisiti n Officer had assessed the compensation as per the rules and provisions and as per the market rate available on the pa ticular time. This witness, in his cross-examination, admitted that the acquired land adjoins the national highway and it was a compact plot.

As per the settled principle of law, compensation for the land acquired has to be determined at market value. Market value is t e price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in most advantageous manner excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. The determination of market value is the prediction of an economic event viz. a price outcome of hypothetical sale expressed in terms of probabilities. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality.

In Mehta Ravindrarai Ajitrai (deceased) through his heirs and LRs & others v. State of Gujarat (1989) 4 SCC 250, the Hon’ble Supreme Court held that the market value of a property for the purpose of Secti n 23 f the Act is the price at which the property changes hands from a willing seller to a willing purchaser, but not too anxious a buyer, dealing at arms length. The relevant portion of the aforesaid judgment reads as under:

“4. ……….The market value of a piece of property for purpose of Section 23 of the Land Acquisition Act is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual and, indeed the best, evidences of market value.”

In Atma Singh & others vs. State of Haryana & another (2008) 2 SCC 568, the Hon’ble Supreme Court held that the market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing conditions with all its existing advantages and its potential possibilities when led out in most advantages manner, excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value, disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded. The question whether a land has potential value or not, is primarily one of the facts depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like, water, electricity, possibility of their fur her extension, whether near about town is developing or has prospect of development have to be taken into consideration. The relevant portion of the aforesaid judgment reads as under:

“4. ……The expression “market value” has been the subject- matter of consideration by this Court in several cases. The market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in most advantageous manner excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded. The guiding star would be the conduct of hypothetical willing vendor who would offer the land and a purchaser in normal human conduct would be willing to buy as a prudent purchaser in normal human conduct would be willing to buy as a prudent man in normal market conditions but not an anxious dealing at arm’s length nor façade of sale nor fictitious sale brought about in quick succession or otherwise to inflate the market value.

For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. It is well settled that market value of a property has to be determined having due regard to its existing condition with all its existing advantages and its potential possibility when led out in its most advantageous manner. The question whether a land has potential value or not, is primarily one of fact depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like water, electricity, possibility of their further extension, whether near about town is developing or has prospect of development have to be taken into consideration.”

For ascertaining market value of the acquired land, the Court can no doubt rely upon such sale transactions, which would offer a reasonable basis to fix the price, for which purpose, a sale transaction relating to a smaller parcel of land can be considered for the purpose of assessing the market value in respect of a large tract f land, after making appropriate deductions such as for development of land, for providing space for roads, sewers, drains, expenses involved in formation of a lay ut, lump- sum payments, as well as for the waiting period required for selling the sites that would be formed and other expenses involved therein, but before doing so, t e evidentiary value of such a sale deed is required to be carefully scrutinized. As held in the case of Land Acquisition Officer vs. Nookala Rajamallu reported as (2003) 12 SCC 334, in order to adopt the price reflected in the sale deed, the following conditions are required to be met:

"9. It can be broadly stated that the element of speculation is reduced to a 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

It is only when these factors are present, it can merit a consideration as a comparable case (see Special Land Acquisition Officer v. T. Adinarayan Setty AIR 1959 SC 429)."

In Union of India vs. Pramod Gupta (dead) by LRs & others, 2005 (12) SCC 1, the Hon’ble Supreme Court held that the best method, as is well-known, would be the amount which a willing purchaser would pay to the owner of the land. In the absence of any direct evidence, the Court, however, may take recourse o various other known methods. Evidence admissible the efor inter alia would be the sale deeds, judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighboring villages. Such a judgment/award in the absence of any other evidence like deed of sale, report of the expert and other relevant evidence would have only evidentiary value. The relevant portion of the aforesaid judgment reads as under:

“24 While determining the amount of compensation payable in respect of the lands acquired by the State, the market value therefor indisputably has to be ascertained. There exist different modes therefor.

The best method, as is well known, would be the amount which a willing purchaser would pay to the owner of the land. In absence of any direct evidence, the court, however, may take recourse to various other known methods. Evidences admissible therefor inter alia would be judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighboring villages. Such a judgment and award, in the absence of any other evidence like the deed of sale, report of the expert and other relevant evidence would have only evidentiary value.”

The onus was upon the petitioner/claimant to prove the market value of the land at the time of the issuance of the notification under Section 4 of the Act.

In the instant case, the petitioner has placed reliance upon certified copy of sale deed, PW-1/C, wherein land measuring 0-00-38 hectare was sold for Rs 80,000/-. The respondents have failed to produce on record any cogent and satisfactory evidence with respect to the market value of the land at the time of the issuance f the n tification under Section 4 of the Act. Therefore, in he absence of any other evidence on record, the learned Refe ence court had rightly placed reliance upon the aforesaid sale deed, Ex. PW-1/C. Since the sale deed pertains to small piece of land i.e. 0-00-38 hectare and vide notification under Section 4 of the Act, the total acquired land was 0-06-41 hectares, the question arises for consideration is as to whether the aforesaid sale deed can be relied upon in order to assess the market value of the land. In Union of India vs. Premlata & others, (2022) 7 SCC 745, the Hon’ble Supreme Court has held that generally the sale instances with respect to small plots/parcels of land are not comparable to a large extent of land for the purpose of determining compensation, however, in case of acquisition of large tracts of land and the exemplars are of small portion of land, there shall be a suitable deduction towards the development costs. The relevant portion of the aforesaid judgment reads as under:

“11. We are in complete agreement with the view taken by the Reference court as well as the High Court regarding the sale instances produced as Exts. 50, 51 and 27 All the sale instances are with respect to small plots and even the same instances were of the year 1987. In the present case, notification under Section 4 of the 1894 Act has been issued in the year 1992. As per the settled position of law, small plots/parcels of land cannot offer the same market value as when a large tract of land is purchased in an open market by a willing and prudent purchaser. As per the settled position of law, generally the sale instances with respect to small pl ts/parcels of land are not comparable to a large extent f land for the purpose of determining the compensati n. In Mahanti Devi v. Jaiprakash Associa es L d., (2019) 5 SCC 163, after following the decision of his Court in Viluben Jhalejar Contractor v. State of Gujarat, (2005) 4 SCC 789, it is held that in case of acquisition of large tracts of land and the exemplars are of small portion of land, there shall be a suitable ded ction towards development costs.

…                                                      …                                             …                                   …                                       …                …                …                …

…………..Considering the aforesaid facts and circumstances and the relevant factors, we are of the opinion that if 40% deduction is ordered to be made towards development charges, it can be said to be an appropriate deduction towards development charges in the facts and circumstances of the case.”

In the instant case also, the learned Reference Court had rightly made deduction of 40% towards the development charges while placing reliance on sale deed, Ex. PW-1/C.

The learned counsel for the respondent/cross-objector contended that the learned Reference Court had erred in applying deduction of 40% while assessing the market value of the acquired land. He further contended that even if deduction of 40% is applied, then also the market value of the acquired land will come to Rs.1263/- per centare and not Rs.840/- per centare, as assessed by the learned Reference court. He also contended the amount had wrongly been calculated by the learned Reference Court, which deserves to be rectified as it has caused great prejudice to the respondent/cross-objector.

Now, the6 question which arises for consideration is as to what would be the market value of the acquired land after making 40% deduction of the amount with respect to transaction vide sale deed, Ex. PW-1/C. As per sale deed, Ex. PW-1/C, land measuring 0-00-38 hectare was sold for Rs.80,000/ - per hectare or Rs.2105/- per centare. Thus, 40% of Rs.2105/ - will come to Rs.842/-. Therefore, the deduction will be Rs.842/- per centare. After 40% deduction, the value of the land will come to Rs.1263/- (Rs.2105 – Rs.842 =Rs.1263/-). However, the learned Reference Court had erroneously calculated the amount by assessing the market value of the acquired land @ Rs.840/- per centare. Thus by making deduction of 40% towards the development charges, while placing reliance on sale deed, Ex. PW-1/C, the market value of the acquired land will come to Rs.1263/- (Rs.2105 – Rs.842 =Rs.1263/-) per centare instead of Rs.840/- per centare as assessed by the Reference Court.

Therefore, in view of what has been discussed hereinabove, appeal, filed by the appellants, being devoid of merits, deserves dismissal and is accordingly dismissed whereas cross objections, preferred by the respondent/cross-objector are allowed.

Hence,the impugned award, dated 30.04.2013, passed by the learned Reference Court stands modified and the market value of the acqui ed land is assessed @ Rs.1263/-per centare. Rest of the award including the interest component shall remain unchanged

It goes without saying that the compensation will be calculated by the appellant Board only on the basis of the land value, as fixed by this Court. The appeal stands disposed of accordingly.

Pending application(s), if any, shall also stand(s) disposed of.