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Judgment
This appeal under Section 54 of the Land Acquisition Act, 1894 (hereinafter referred to as ''Act, 1894'') has arisen from award/judgment dated 18.7.2000 and decree dated 16.8.2000 passed by Shri Shiv Charan, 1st Additional District Judge, Ghaziabad in Land Acquisition Reference (hereinafter referred to as ''LAR'') No. 82 of 1987 determining market value of acquired land at the rate of Rs. 30,000/- per pakka bigha (Rs. 10/- per square yard) besides other dues like solatium, interest etc. under Act, 1894.
Acquisition proceedings were initiated by State of Uttar Pradesh at the instance of respondent i.e. New Okhla Industrial Development Authority (hereinafter referred to as ''NOIDA'') proposing to acquire land at village Suthari, Pargana Dadri, District Ghaziabad (now District Gautam Budh Nagar), (176 bighas 17 biswas and 19 5/6 biswansi) [1363 bighas 12 biswas and 15 biswansi (852.107 acres)] by publishing notification under Section 4(1) of Act, 1894 on 1.6.1976. Notification under Section 6(1) of Act, 1894 was published on 20.12.1976. Possession of land was taken on 28.10.1976. Special Land Acquisition Officer (hereinafter referred to as ''SLAO'') determined market value by award dated 15.7.1978 at the rate of Rs. 16,207.57/- per pakka bighas and Rs. 8,103.59/- per bigha.
Dissatisfied with aforesaid award, claimant - land owner made application for reference under Section 18 of Act, 1894 to District Judge for determination of market value pursuant whereto award impugned has been made by court below determining market value at the rate of Rs. 10/- per square yard.
This appeal is at the instance of claimant - land owner, who is aggrieved by determination of market value by court below, contending that appropriate and correct market value should have been Rs. 30/- per square yard and compensation determined by court below is extremely inadequate, unjust and unreasonable.
The only question for our consideration in this appeal is "whether market value of Rs. 10/- per square yard, determined by court below, is just, valid and adequate or not?"
Appellant is a housing society registered under Societies Registration Act, constituted for acquiring land to provide its members for residential and development purposes. It purchased 176 bighas 17 biswas and 19 5/6 biswansi (534.122.50 square yards) land between 1972 to 76 at village Suthari for the purposes of allotting residential plots to its members and also to develop basic amenities like education etc.
NOIDA came into existence on 1.5.1976 under the provisions of U.P. Industrial Area Development Act, 1976. For planned industrial development, appellant''s land along with others was acquired under the provisions of Act, 1894 at the instance of NOIDA. At the time of acquisition the land was being used for agricultural purposes. Before Reference Court claimant - appellant examined H.L. Chitkara as PW-1 and Ram Richh Pal as PW-2 while defendant examined Narendra Kumar, Lekhpal as DW-1 and Ashok Kumar Sharma, Amin as DW-2. At the time of acquisition there was no development in nearby area and was at the stage of commencement. In this regard court below has observed as under: -
Translation by Court
"The disputed land in the instant matter was acquired on 01.06.1976 by way of a notification, and at that time the development work in Noida area was not officially started. At that time, the disputed land was undeveloped. There was no road etc. in its vicinity as well. Evidence has also been produced with respect to the proximity of the disputed property to Delhi. It is a well known fact that the land of Noida is adjacent to the border of Delhi, and Connaught Place is 15-16 kms away. Even after this, it is still a relevant fact that the land was undeveloped."
Counsel for appellant could not dispute that documents, referred to before court below, in support of subsequent acquisitions cannot constitute relevant material for determining market value at the time of acquisition in present case, since subsequent development cannot be helpful to determine market value of a land acquired much earlier. We have to examine corresponding material to determine market value at the relevant time.
It is in this context we find it appropriate to consider legal principles laid down in last several decades on the question, how market value of land, acquired forcibly under the provisions of Act 1894, should be determined. These principles have been settled in a catena of decisions of Apex Court as well as this Court, and some of such decisions may be referred hereinbelow.
In Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona and Another, , the Court has said that a reference is like a suit which is to be treated as an original proceeding. The claimants is in the position of a plaintiff who has to show that the price offered for his land in the Award is inadequate. However, for the said purpose the Court would not consider the material, relied upon by Land Acquisition Officer in Award, unless the same material is produced and proved before the Court. The Reference Court does not sit in appeal over the Award of Land Acquisition Officer. The material used by Land Acquisition Officer is not open to be used by the Court suo motu unless such material is produced by the parties and proved independently before the Reference Court. Determination of market value has to be made as per market rate prevailing on the date of publication of notification under section 4 of Act, 1894. The basic principle which has to be followed by Reference Court for determining market value of land, as if, the valuer i.e. the Court is a hypothetical purchaser, willing to purchase land from the open market and is prepared to pay a reasonable price, as on the crucial day, i.e., date of publication of notification under section 4 of the Act, 1894. The willingness of vendor to sale land on reasonable price shall be presumed. The Court, therefore, would co-relate market value reflated in the most comparable instance which provides the index of market value. Only genuine instances would be taken into account. Sometimes even post-notification instances may be taken into account if they are very proximate, genuine and acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. Proximity from time angle and from situation angle would be relevant considerations to find out most comparable instances out of the genuine instances. From identified instances which would provide index of market value, price reflected therein may be taken as norm and thereafter to arrive at the true market value of land under acquisition, suitable adjustment by plus and minus factors has to be made. In other words a balance sheet of plus and minus factors may be drawn and the relevant factors may be valuated in terms of price variation as a prudent purchaser would do. The market value of land under acquisition has to be deduced by loading the price reflected in the instances taken for plus factors and unloading for minus factors.
The size of the land, therefore, would constitute an important factor to determine market value. It cannot be doubted that small size plot may attract a large number of persons being within their reach which will not be possible in respect of large block of land wherein incumbent will have to incur extra liability in preparing a lay out and carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers etc. The Court said that in such matters, the factors can be discounted by making deduction by way of an allowance at an appropriate rate ranging between 20% to 50%, to account for land, required to be set apart for carving out road etc. and for plotting out small plots.
The concept of smaller and larger plots should be looked into not only from the angle as to what area has been acquired, but also the number of land holders and size of their plots. When we talk of concept of prudent seller and prudent buyer, we cannot ignore the fact that in the category of prudent seller the individual land holder will come. It is the area of his holding which will be relevant for him and not that of actual total and collective large area which is sought to be acquired.
In V.M. Salgoacar and Brother Ltd. Vs. Union of India (UOI), the land acquired by notification dated 06.07.1970 in village Chicalim near Goa Airport belonged to a single owner. The Court observed when land is sold out in smaller plots, there may be a rising trend in the market, of fetching higher price in comparison to the plot which are much higher in size. Having said so the Court further said " though the small plots ipso facto may not form the basis per se to determine the compensation, they would provide foundation for determining the market value. On its basis, giving proper deduction, the market value ought to be determined".
Again in Shakuntalabai (Smt) and Others Vs. State of Maharashtra, , 20 acres of land in Akola town was sought to be acquired by notification published on 11.08.1965 under section 4(1) of Act, 1894 which was also owned by a single person. It is in this context the Court said "the Reference Court committed manifest error in determining compensation on the basis of sq. ft. When land of an extent of 20 acres is offered for sale in an open market, no willing and prudent purchaser would come forward to purchase that vast extent of land on sq. ft. basis. Therefore, the Reference Court has to consider valuation sitting on the armchair of a willing prudent hypothetical vendee and to put a question to itself whether in given circumstances, he would agree to purchase the land on sq. ft. basis. No feat of imagination is necessary to reach the conclusion. The answer is obviously "no".
We may also notice at this stage that deduction for development is different than deduction permissible in respect of largeness of area vis-�-vis exemplar of small piece of land. Many times, land owners relied on the rates on which development authorities used to offer allotment of developed plots cropped out by them in residential or industrial area. Such rates apparently cannot form basis for compensation for acquisition of undeveloped lands for reasons more than one. The market value in respect of large tract of undeveloped agricultural land in a rural area has to be determined in the context of a land similarly situated whereas allotment rates of development authorities are with reference to small plots and in a developed lay out falling within urban or semi-urban area. The statutory authorities including development authorities used to offer rates with reference to economic capacity of the buyer like economic weaker sections, low income group, middle income group, higher income group etc. Therefore, rates determined by such authorities are not uniform. The market value of acquired land cannot depend upon economic status of land loser and conversely on the economic status of the body at whose instance the land is acquired. Further, normally, land acquired is a freehold land whereas allotment rates determined by development authorities etc. constitute initial premium payable on allotment of plots on leasehold basis.
However, where an exemplar of small piece of land is relied, in absence of any other relevant material, Court may determine market value in the light of evidence relating to sale price of small developed plots. In such cases, deduction varying from 20% to 75% is liable to apply depending upon nature of development of lay out in which exemplar plot is situated.
In Lal Chand Vs. Union of India (UOI) and Another, , Court noticed that this deduction for development constitutes two components- one is with reference to area required to be utilized for development work and second is the cost of development work. It further held that deduction for development in respect of residential plot may be higher while not so where it is an industrial plot. Similarly, if acquired land is in a semi-developed urban area or in any undeveloped rural area, then deduction for development may be much less and vary from 25 to 40 percent since some basic infrastructure will already be available. The percentage is only indicative and vary depending upon relevant factors. With reference to exemplars of transfer of land between private parties, Court would also look into the intrinsic evidence, i.e., the exemplar sale deed where the sale deed recites financial difficulties of vendor and urgent need to find money as a reason for sale or other similar factors, like litigation or existence of some other dispute. These are all the factors constituting intrinsic evidence of a distress sale.
In Lal Chand v. Union of India (supra), the Court also observed, if acquisition is in regard to a large area of agricultural land in a village and exemplar sale deed is also in respect of an agricultural land in the same village, it may be possible to rely upon the sale deed as prima facie evidence of prevailing market value even if such land is at the other end of village, at a distance of one or two kilometers. But, the same may not be the position where acquisition relates to plots in a town or city where every locality or road has a different value. A distance of about a kilometer may not make a difference for the purpose of market value in a rural area but even a distance of 50 meters may make a huge difference in market value in urban properties. Thus, distance between two properties, the nature and situation of property, proximity to the village or a road and several other factors may all be relevant in determining market value.
Normally, the Courts have held that exemplars should be such which are before the date of notification under Section 4(1) of Act, 1894 but an exemplar sale deed of a subsequent period of date of acquisition notification is not completely ruled out to be relevant document provided circumstances to justify the same are available.
In State of Uttar Pradesh Vs. Major Jitendra Kumar and Others, , notification under Section 4 was published on 6.1.1948. The Court determined rate of compensation relying on sale deed dated 11.7.1959, i.e., a document executed after almost three and half years after the date of acquisition notification. Supreme Court upheld reliance of such document observing that if there is no material to show that there was any fluctuation in market rate between the date of acquisition and the date of concerned sale deed, such document may be considered as a relevant material in absence of any other apt evidence. This view was followed in a subsequent decision, i.e., Administrator General of West Bengal v. Collector, Varanasi, AIR 1998 SC 943, where the Court said as under: -
"Such subsequent transactions which are not proximate in point of time to the acquisition can be taken into account for purposes of determining whether as on the date of acquisition there was an upward trend in the prices of land in the area. Further under certain circumstances where it is shown that the market was stable and there were no fluctuations in the prices between the date of the preliminary notification and the date of such subsequent transaction, the transaction could also be relied upon to ascertain the market value."
We need not go into a catena of other decisions rendered in the last several decades since we have benefit of a recent Division Bench decision of this Court in First Appeal No. 454/2003 and other connected matters, Meerut Development Authority through Its Secretary v. Basheshwar Dayal (since deceased) Through His L.Rs. and another decided on 01.08.2013 wherein the legal principles settled by Apex Court in various judgments, relevant for determination of market value have been crystallized as under:--
"(i) Function of the Court in awarding compensation under the Act is to ascertain the market value of the land on the date of the notification under Section 4(1) ,
(ii) The method for determination of market value may be:
(a) Opinion of experts,
(b) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages,
(c) a number of years purchase of the actual or immediately prospective profits of the land acquired.
( Jawajee Nagnatham Vs. Revenue Divisional Officer, Adilabad, A.P. and Others, )
(iii) While fixing the market value of the acquired land, comparable sales method of valuation is preferred than other methods of valuation of land such as capitalisation of net income method or expert opinion method. Comparable sales method of valuation is preferred because it furnishes the evidence for determination of the market value of the acquired land at which a willing purchaser would pay for the acquired land if it had been sold in the open market at the time of issue of notification under Section 4 of the Act. However, comparable sales method of valuation of land for fixing the market value of the acquired land is not always conclusive but subject to the following factors:--
(a) Sale must be a genuine transaction,
(b) the sale deed must have been executed at the time proximate to the date of issue of notification under Section 4 of the Act,
(c) the land covered by the sale must be in the vicinity of the acquired land,
(d) the land covered by the sales must be similar to the acquired land
(e) the size of plot of the land covered by the sales be comparable to the land acquired.
(f) if there is dissimilarity in regard to locality, shape, site or nature of land between land covered by sales and land acquired, it is open to the Court to proportionately reduce the compensation for acquired land.
(iv) The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-�-vis the land under acquisition which are as under: -
(v) 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.
(vi) Deduction not to be done when land holders have been deprived of their holding 15 to 20 years back and have not been paid any amount.
(vii) In fixing market value of the acquired land, which is undeveloped or underdeveloped, the Courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made for implementation of the public purpose for which land is acquired. ( Valliyammal and Another Vs. Special Tahsildar (Land Acquisition) and Another etc. etc., ).
(viii) When there are several exemplars with Reference to similar lands, it is the general rule that the highest of the exemplars, if it is satisfied, that it is a bona fide transaction has to be considered and accepted. When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition.( Mehrawal Khewaji Trust (Regd.), Faridkot and Others Vs. State of Punjab and Others, ).
(ix) In view of Section 51A of the Act certified copy of sale deed is admissible in evidence, even the vendor or vendee thereof is not required to examine themselves for proving the contents thereof. This, however, would not mean that contents of the transaction as evidenced by the registered sale deed would automatically be accepted. The legislature advisedly has used the word ''may''. A discretion, therefore, has been conferred upon a Court to be exercised judicially, i.e., upon taking into consideration the relevant factors. Only because a document is admissible in evidence, the same by itself would not mean that the contents thereof stand proved. Having regard to the other materials brought on record, the Court may not accept the evidence contained in a deed of sale. ( Cement Corporation of India Ltd. Vs. Purya and Others, , Cement Corpn. of India Ltd. v. Purya and others).
(x) While fixing the market value of the acquired land, the Land Acquisition Collector is required to keep in mind the following factors: -
(a) Existing geographical situation of the land.
(b) Existing use of the land.
(c) Already available advantages, like proximity to National or State Highway or road and/or developed area,
(d) Market value of other land situated in the same locality/village/area or adjacent or very near the acquired land.
(xi) Section 23(1) of the Act lays down what the Court has to take into consideration while Section 24 lays down what the Court shall not take into consideration and have to be neglected. The main object of the enquiry before the Court is to determine the market value of the land acquired. 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. 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.
(xii) 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.
(xiii) In fixing market value of the acquired land, which is undeveloped or underdeveloped, the Courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made for implementation of the public purpose for which land is acquired. Deduction of "development cost" is the concept used to derive the "wholesale price" of a large undeveloped land with Reference to the "retail price" of a small developed plot. The difference between the value of a small developed plot and the value of a large undeveloped land is the "development cost". ( Sabhia Mohammed Yusuf Abdul Hamid Mulla (D) by L.Rs. and Others Vs. Special Land Acquisition Officer and Others, )."
In Valliyammal and Another Vs. Special Tahsildar (Land Acquisition) and Another etc. etc., the Court has looked into various earlier judgments laying down guiding principles for determination of market value of acquired land. The Court has observed that comparable sales method of valuation is preferred since it furnishes the evidence for determination of market value of acquired land at which a willing purchaser would pay for acquired land if it had been sold in open market at the time of acquisition. However, this method is not always conclusive and there are certain factors, which are required to be fulfilled and on fulfillment of those factors, compensation can be determined. Such factors are (a) sale must be a genuine transaction; (b) sale deed must have been executed at the time proximate to the date of issue of notification under Section 4 ; (c) land covered by the sale must be in the vicinity of acquired land; (d) land covered by the sales must be similar to acquired land; and (e) size of plot of the land covered by the sales be comparable to the land acquired. If there is dissimilarity in regard to locality, shape and size or nature of land, court can proportionately reduce compensation depending upon disadvantages attached with the acquired land. Further, for determining market value, potentiality of acquired land should also be taken into consideration. The potentiality means, capacity or possibility for changing or developing into state of actuality. It is well settled that market value of 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 Court stated that when undeveloped or underdeveloped land is acquired the exemplar is in respect to developed land, detection towards deduction can be made. Normally, such deduction is 1/3, but it is not a hard and fast rule.
In Bhule Ram Vs. Union of India (UOI) and Another, the Court in para 7 has observed that valuation of immovable property is not an exact science, nor it can be determined like algebraic problem, as it bounds in uncertainties and no strait-jacket formula can be laid down for arriving at exact market value of the land. There is always a room for conjecture, and thus the court must act reluctantly to venture too far in this direction. The factors such as the nature and position of the land to be acquired, adaptability and advantages, the purpose for which the land can be used in the most lucrative way, injurious affect resulting in damages to other properties, its potential value, the locality, situation and size and shape of the land, the rise of depression in the value of the land in the locality consequent to the acquisition etc., are relevant factors to be considered. It further said that value, which has to be assessed, is the value to the owner, who parts with his property, and not the value to the new owner, who takes it over. Fair and reasonable compensation means the price of a willing buyer, which is to be paid to the willing seller. Though the Act does not provide for "just terms" or "just compensation", but the market value is to be assessed taking into consideration the use to which it is being put on acquisition and whether the land has unusual or unique features or potentialities. The Court then also considered as to what is the concept of guess work and observed that it is not unknown to various fields of law as it applies in the cases relating to insurance, taxation, compensation under the Motor Vehicle Act as well as under the Labour Laws. Having said so, the Court further said:--
"The court has a discretion applying the guess work to the facts of the given case but is not unfettered and has to be reasonable having connection to the facts on record adduced by the parties by way of evidence. The court further held as under:--
"''Guess'' as understood in its common parlance is an estimate without any specific information while "calculations" are always made with reference to specific data. "Guesstimate" is an estimate based on a mixture of guesswork and calculations and it is a process in itself. At the same time "guess" cannot be treated synonymous to "conjecture". "Guess" by itself may be a statement or result based on unknown factors while "conjecture" is made with a very slight amount of knowledge, which is just sufficient to incline the scale of probability. "Guesstimate" is with higher certainty than more "guess" or a "conjecture" per se." (para 8)
In Bhupal Singh and Others Vs. State of Haryana while the above principles laid down in various cases were reiterated, the Court in para 18 of the judgment said: -
"Law on the question as to how the court is required to determined the fair market value of the acquired land is fairly well settled by several decisions of this Court and remains no more res integra. This Court has, inter alia, held that when the acquired land is a large chunk of undeveloped land having potential and was acquired for residential purpose then while determining the fair market value of the lands on the date of acquisition, the appropriate deductions are also required to be made."
It is also reaffirmed that where an exemplar relates to small piece of developed land and is sought to be relied to determine market value on large tract of undeveloped acquired land, deduction can be applied ranging between 20% to 75%. The Court in para 20 of the judgment relied upon its decision in Chandrashekar (D) by L.Rs. and Others Vs. Land Acquisition Officer and Another, stating that the deduction has two components, one is development and another with respect to the size of the area. The earlier percentage of deduction was restricted in Subh Ram and Others Vs. Haryana State and Another, stating that deduction of both components should be around 1/3 each in its entirety, which would roughly come to 67% of component of sale consideration of exemplar sale transaction. Thus, with respect to escalation of price where exemplar is much earlier in point of time, the Court in K. Devakimma and Others Vs. Tirumala Tirupati Devasthanams and Others said that recourse can be taken in appropriate cases to the mode of determining market value by providing appropriate escalation over the proved market value of nearby land in previous years where there is no evidence of any contemporaneous sale transaction or acquisition of comparable lands in neighbourhood. The percentage of escalation may vary from case to case so also the extent of years to determine the rates.
In the light of above general guidelines and also considering the fact that claimants have to be considered as plaintiffs before Reference Court, therefore, onus initially lay upon them to prove what is the appropriate market rate, we proceed to consider whether in the present case such onus has been discharged by plaintiffs or not.
Court below has referred to an award dated 21.2.1990 in LAR No. 176 of 1979 and another award dated 30.5.1995 in LAR No. 378 of 1979. They relate to acquisition commenced on 1.6.1976 and therein market value was determined at Rs. 30,000/- per pakka bigha. Relying thereto the court below has determined market value in the present case also. Several awards, which relate to much subsequent acquisitions, have been placed on record. As we have already said the same would not constitute valid material to determine market value on 1.6.1976 for the reason that pace of development in the area of NOIDA, after its constitution, has been very fast and, therefore, subsequent acquisition would not lay down valid material to determine market value of earlier acquisition. LAR''s of corresponding period have determined the same market value, as has been done in the case in hand, and nothing has been brought before this Court by learned counsel for appellant to show that there was valid material which may justify higher rate of compensation than what has been determined by court below.
In these facts and circumstances, we are of the view that rates determined by court below are justified, valid, adequate and warrant no interference. The question formulated above is answered against the appellant.
Appeal lacks merit and is dismissed with costs.