Civil Appeals Nos
272 1  2722 N of 1972
From the Judgment and order dated 3031972 of the Bombay High Court in First Appeal No 44062 and 577 of 1962
Dr DY Chandrachud section Dutt and PH Parekh for the Appelant
AM Khanwilkar and Ajit section Bhasme for the Respondents
The Judgment of the Court was delivered by THAKKAR J
Controversy is centred on the question of valuation of the lands under acquisition
The trial Court had correctly valued the lands and the High Court had erroneously revised the valuation downwards complains the original owner of the land who is the appellant in these two allied appeals
The lands in question situated in a locality known as Tigris Camp  within the city limits of Poona in Maharashtra admeasuring 15 acres and 17 Gunthas comprised in Survey Nos 85 and 86 were 1
By Certificate under Article 133 la of the Constitution of India as it existed at the material time
534 placed under acquisition pursuant to a Notification under section 4 of the Land Acquisition Act published on March 8 1956
The acquisition was a part of the total acquisition of 101 acres 33 Gunthas made for a public purpose viz for construction of the Headquarters Poona Rural Police Charge
The appellant was not satisfied with the compensation offered by the Land Acquisition officer in respect of his parcel of 15 Acres 7 Gunthas and applied for a reference being made under section 18 of the Land Acquisition Act
Two references were made to a Civil Court under section 18 of the Land Acquisition Act for determining the market value of the lands for the purpose of awarding compensation to the appellants
The Trial Court determined the market value of 2 14 acres forming part of Survey Nos 85 and 86 at Rs1500 per acre
Market value in respect of the remaining 13 acres and 7 Gunthas was determined at Rs8692 per acre
The present dispute is confined to valuation of 13 Acres 7 Gunthas forming part of Survey No 85
The High Court has reduced the total compensation payable in respect of the land in question from Rs114517 computed at Rs8692 per acre to Rs63846 which works out at Rs484587 per acre thereby reducing the compensation awarded to the appellant by Rs50554 in respect of this parcel of land
Before tackling the problem of valuation of the land under acquisition it is necessary to make some general observations
The compulsion to do so has arisen as the Trial Court has virtually treated the award rendered by the Land Acquisition officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to some extent
The true position therefore requires to be capsulized
The following factors must be etched on the mental screen 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 utilised by him for making his valuation cannot be utilised by the Court unless produced and proved before 535 it
It is not the function of the Court to suit in appeal against the 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 land under acquisition has to be determined as on the crucial date of publication of the notification under sec
4 of the Land Acquisition Act dates of Notifications under secs
6 and 9 are irrelevant
6 The determination has to be made standing on the date line of valuation date of publication of notification under sec
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
Some times 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 proximate2 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
536 l0 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 there after 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 indicated 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 not exhaustive factors Plus factors Minus factors 1
smallness of size
largeness of area
2 proximity to a road
situation in the interior at a distances from the Road
frontage on a road
narrow strip of land with very small frontage compared to death
nearness to developed area
lower level requiring the depressed portion to be filled up
regular shape
remoteness from developed locality
537 6
level vis a vis land 6
some special under acquistion
disadvantageous factor which would deter a purchaser
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 l000 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 looked up will be longer or shorter and the attendant hazards
16 Every case must be dealt with on its own facts 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
The problem which has surfaced in the present appeals needs to be recapitulated
The question is whether in scaling down the total compensation payable to the appellant from Rs114517 to Rs63846 the High Court has violated any principle of valuation or adopted any faulty methodology
538 The formula evolved by the High Court may be briefly outlined
The High Court has taken into account the market value reflected in the instances pertaining to small parcels of land cited by the parties which on the analysis of the evidence have been considered as compar able subject to factors of differentiation
The High Court has valued the land having best situation admeasuring 9 acres comprised in Survey No 86 which abuts on the Ganeshkhand Road at Rs20000 per acre
Having done so the market value reflected therein has been unloaded to account for the minus factors pertaining to the rest of the lands including the land in question
The lands comprised in Survey No 86 situated in the interior were valued at Rs16000 per acre whereas lands abutting on Pashan Road were valued at Rs12000 per acre
The appellant s land which was agricultural land albeit with future potential for development as building site was situated far far in the interior in the midst of blocks of undeveloped land
The formula for evaluation involved taking of three steps 1 The High Court formed the opinion that allowance for largeness of block deserved to be made at 25 instead of 20 as done by the Trial Court
2 The High Court formed the opinion that the development would take about 12 years to reach the appellant s land
On these premises the High Court formed the opinion that the land of the appellant could be valued at Rs7000 per acre as a block
3 The High Court directed that the market value so ascertained should be further depressed to account for the factor as regards the waiting period of 12 years which was the estimated period for development reaching the appellant s land
The present value  of the land was accordingly de duced by depressing the valuation of Rs7000 per acre by reference to Miram s Tables on the basis of discount rate of 5 per annum to account for the factor that approximately 12 years would elapse before development could reach the appellant s land
That is how the total compensation payable to the appellant for the block of land admeasuring 13 acres 7 gunthas was determined at Rs63846 which works out at approximately Rs484587 per acre
539 The valuation made by the High Court has been faulted on three A grounds 1 The High Court should not have made a deduction of 25 in place of deduction made by the Trial Court at 20 to account for the factor pertaining to the largeness of the block of land under acquisition
2 The High Court had grossly undervalued the land in determining the market value of the appellants  land at Rs7000 per acre
3 There was no warrant for pushing down or depressing the market value of land as determined by the Trial Court in order to deduce the present value  by reference to Miram s Tables to account for the factor as regards the estimated time lag for development reaching the block of land in question which was situated in the interior
Besides the time lag of 12 years as estimated by the High Court was excessive and unrealistic
The first two grounds are devoid of merit
It is common knowledge that when a large block of land is required to be valued appropriate deduction has to be made for setting aside land for carving out roads leaving open spaces and plotting out smaller plots suitable for construction of buildings
The extent of the area required to be set apart in this connection has to be assessed by the Court having regard to shape size and situation of the concerned block of land etc
There cannot be any hard and fast rule as to how much deduction should be made to account for this factor
It is essentially a question of fact depending on the facts and circumstances of each case
It does not involve drawing upon any principle of law
It cannot be said that the High Court has committed any error in forming the opinion that having regard to the facts and circumstances of the case 25 deduction was required to be made in this connection
The High Court cannot be faulted on this score
The more serious grievance of the appellant however is that the High Court has depressed the market value excessively in evaluating the land in question at Rs7000 per acre as compared to the land abutting on the Ganeshkhand Road valued at Rs20000 per acre the land abutting in the interior of Survey No 86 valued at Rs16000 and land abutting on Pashan Road valued at Rs12000 per acre
A glance 540 at the sketch on the record shows that the appellant s land is situated very much in the interior as compared to the other parcels of land
It is in the midst of large blocks of undeveloped land
A hypothetical purchaser would not offer the same market value for lands with such a situation as lands which are nearer to the developed area and abut on a road or are nearer to a road
The development of lands which are nearer to the developed area and nearer to the road can reasonably be expected to take place much earlier
Only after such lands are developed and construction comes up the development would proceed further in the interior
It would not be unreasonable to visualize that a considerable time would elapse before development could reach the block of undeveloped land located in the interior
Besides the land which is situated in the interior does not fetch the same value as the land which is nearer to the developed area and nearer to the road
If a hypothetical purchaser opts to purchase the land situated in the interior in the midst of an undeveloped area he would doubtless take into account the factor pertaining to the estimated time for development to reach the land in the interior
For his capital would be unprofitably looked up for a very long time depending on the estimated time required for the development to reach the land in the interior
Meanwhile he would have to suffer loss of interest
It is therefore understandable that the land in the interior would fetch much smaller price as compared to the lands situated nearer to the developed locality
More so as all these factors are incapable of precise or scientific evaluation
The valuer has to indulge in some amount of guess work and make the best of the situation
The High Court having accorded anxious consideration to all these factors of uncertainty has arrived at the valuation of Rs7000 per acre
Says the High Court in paragraph 51 of the Judgment This brings up for final consideration the plots which we have described as interior plots in all the survey numbers and which do not have a frontage on the roads
A lower price will have to be provided for these plots since the plot holders will have to spend moneys for getting water and drainage connections which are given only upto the Municipal Roads
Then again in our opinion the interior plots would not be sold at all as long as any of the plots having a frontage on Pashan Road or Baner Road are sold though once such plots have been disposed of the demand for interior plots would certainly pick up
Here again it is impossible to be precise in fixing the value but in our opinion the interior plots may fairly be valued at Rs7000 541 per acre
As stated earlier the sales of these plots would commence after all the plots having a frontage on Pashan Road and Baner Road are disposed of ie after 12 years and we may say that those plots would be sold within a period of about 4 years
 It is not possible to find fault with the reasoning or conclusion of the High Court
The High Court was day in and day out engaged in valuation of the lands in different parts of the state and was fully aware of the landscope
There is no yardstick by which the future can be forseen with any greater degrees of preciseness
The High Court has made the estimate as regards the time lag for development to reach the appellant s land to the best of its judgment
Having taken into account all the relevant factors the High Court has arrived at the aforesaid determination
And in doing so the High Court has not committed any error or violated any principle of valuation
It is purely a question of fact and it is not possible to detect any error even in the factual findings recorded by the High Court
In fact the High Court has been extremely considerate and has approached the question of valuation with sympathy and understanding for the land owner
The High Court did not opt for an easy way out by taking the view that since there was no comparable instance of undeveloped lands in the interior on the basis of which the valuation of the appellant s land could be made the Award made by the land Acquisition officer should remain undisturbed
The High Court has done the best under the circumstances albeit by making recourse to some guess work which in the circumstances of the case was inevitable
There is no material on the basis of which this Court can uphold the plea of the appellant that the valuation at Rs7000 per acre does not reflect the true market value or that the land in question is under valued
The argument urged by the appellant in this behalf under the circumstances cannot be accepted
Turning now to the third ground it appears that the appellant s grievance is justified
The grievance is that there was no warrant for making any further deduction once the land was valued at Rs7000 as against the valuation of the best parcel of land at Rs20000 which was made precisely to account for the factor pertaining to its situation in the interior
There was therefore no warrant for ascertaining the present value of Rs7000 as if Rs7000 would be fetched after 12 years
Now the parcel of land admeasuring 13 acres 7 gunthas comprised in Survey No 85 which was situated very much in the interior was valued by the Trial Court at Rs 10866 per acre less 20 to account for roads etc
This parcel of land was valued at Rs7000 per acre by the High 542 Court
The High Court had valued the land with the best situation on the Ganeshkhand Road at Rs20000 per acre
As against this the appellant s land was valued at mere Rs7000 per acre which reflected an unloading by Rs13000 per acre which works out at 65
This pushing down was made to account for its situation in the interior on the premise that development would take about 12 years to reach the land under acquisition
If the appellant s land just adjoined the land valued at Rs20000 per acre it would have been valued at the same figure of Rs20000
It has been valued at Rs7000 per acre precisely because it is so situated that development would reach the appellant s land after 12 years as estimated by the High Court
But after 12 years it would become land adjoining to developed area and not land which could be treated as in the interior
Therefore if present value was to be ascertained it should be ascertained on the basis of present value of land which would fetch Rs20000 per acre after 12 years and not present value of land which would fetch Rs7000 per acre after 12 years
In fact present value of Rs20000 payable at the end of 12 years at 8 would work out at Rs6942 3971 x 20000  69421
The High Court was therefore right in valuing the land in interior at Rs7000 per acre but wrong in directing that present value of Rs7000 payable after 12 years should be ascertained
The last ground is thus well founded 
In the result appellant must be awarded compensation at Rs7000 per acre subject to deduction or allowance of 25 to account for land required to be set apart for roads open spaces etc
In other words appellant will be entitled to be paid compensation for 13 acres 7 gunthas comprised in Survey No 85 at Rs5250 per acre Rs7000 less 25 ie Iess 1750Rs5250 in place of the lesser sum awarded by the High Court
Appeal must be partly allowed to this extent accordingly
F The question however remains whether the appellant is entitled to the benefit of Central Amending Act Act 68 of 1984 providing payment of solatium and interest at enhanced rates on the ground that present appeals were pending before this Court on 30th April 1982
The appellants would be entitled to the benefit thereof by virtue of section 302 of the Act if the view is taken that the said Act has retrospective operation in the sense that amended section 232 and section 28 apply also in relation to an order under appeal against an award made by the Collector of Court between April 30 1982 and the commencement of the Amending Act
This must depend on the deci 1
See Mirarm s Table 7 at 657 of AK Mitra s Theory and Practice of Valuation 2nd Edition Published by Eastern Law House
543 sion of the Constitution Bench which is expected soon
The appellant Will be entitled to the benefit of Central Amending Act Act 68 of 1984 in case the Constitution Bench upholds the view expressed in Bhag Singh case 1985 3 SCC p 737 and overrules the view expressed in Kamalajammanniavaru Case 1985 1 SCC p 582
In case the Constitution Bench affirms the view taken in Kamalajammanniavaru Case the appellant will not be entitled to such benefit
Appeal is partly allowed accordingly to the aforesaid extent
Order passed by the High Court is modified to the corresponding extent
Having regard to the facts and circumstances of the case there will be no order regarding costs in this Court
SL Appeal allowed


Summary:
The appellants have been appointed in the UP Civil Service as direct recruits on the basis of competitive examination held by the UP Service Commission
They are governed by the UP Civil Service Executive Branch Rules 1941
The respondents were recruited under the UP Non Technical Class II Services Reservation of Vacancies for Demobilised officers Rules 1973 andor UP
Non Technical Class IIGroup B  Services Appointment of Demobilised officers Rules 1980
They were either Emergency Commissioned officers or Short Service Commissioned Officers of the armed forces
They were demobilised from the armed forces in or about 1968
In order to rehabilitate such persons who rendered services to the country during the operation of the emergency when the nation s security was in peril due to aggression the 1973 Rules were framed under the proviso to article 309 of the Constitution of India
In 1976 a seniority list was prepared showing the respondents as seniors to the appellants on the basis of their service in the armed forces and the gaps between their discharge and recruitment in civil service
Similar list was prepared in 1980 as well
Aggrieved by this the appellants moved two writ petitions before the High Court challenging the validity of the 1973 Rules as also the 1980 Rules
The High Court held that these Rules were legal and valid and upheld the validity of the impugned seniority list
These two appeals by special leave are against the High Court judgment
On behalf of the appellants it was contended that the High 575 Court s interpretation of Rule 6 of the 1973 Rules relating to seniority and pay was in excess of the relief intended to be granted by the rule
It was also urged that when a candidate who was in the armed forces joined civil service the assumption should be that he had entered the civil service at the second opportunity of competing for the recruitment but no other period including that between the discharge and recruitment would be taken into account for the purpose of computing his seniority
The contention of the Respondents was that since only ten per cent of the vacancies were reserved for war service candidates it was difficult for them to get a chance within a reasonable time after their discharge from war service and it would be quite consistent with rules of natural justice to take into account the interregnum between the date of discharge and the date of recruitment in civil service
Allowing the appeals this Court  HELD 11
The High Court was right in holding that the 1973 Rules as also the 1980 Rules are quite legal and valid
However under Rule 6 of the 1973 Rules or Rule 5 of the 1980 Rules only a reasonable period of three years for taking the examination and the time taken for recruitment or posting would be taken into consideration for the purpose of computing seniority and pay
582D E 12
Under Rule 6 of the 1973 Rules the recruitment of a war service candidate will be assumed to have been made in the year in which he had the second opportunity of competing for such recruitment the first being on attaining the minimum age to compete
It does not provide for the period between demobilisation and recruitment of a war service candidate in the civil service
Nor does it forbid consideration of such period
It cannot however he denied that after the discharge from war service there will be some lapse of time for the recruitment of a candidate in the Provincial Civil Service
There is a question of competing in the examination
Though Rule 6 does not provide for any gap to be taken into consideration it is apparent that some reasonable period has to be allowed to a candidate to enable him to avail himself of the opportunity of appearing at the competitive examination for recruitment in the Provincial Civil Service
Competitive examinations are generally difficult and at least two years  time should be allowed to a candidate after his discharge for his preparation for the competitive examination and that will be his first opportunity
The second opportunity will arise in the next year that is in the third year 576 of his discharge from the armed forces
In other words he should be allowed three years for competing in the relevant examination for recruitment in the civil service
Apart from the three years the period of time taken for recruitment or posting will also be taken into consideration for the purpose of computing the seniority of a war service candidate
580H 581C H 13
If however a candidate does not avail himself of the opportunity within three years of his discharge from war service or takes the examination but becomes unsuccessful the period between his discharge and subsequent recruitment will not be taken into account for the purpose of computing the seniority
582C This Court set aside the judgment of the High Court relating to the interpretation of Rule 6 of the 1973 Rules quashed the seniority lists of 1976 and 1980 and directed the State of UP to prepare the seniority list within six months in the light of this judgment 582F G