Case: State of Uttar Pradesh Vs. Ram Swarup and Others

BHARGAVA, J. 1. These appeals by the State of Uttar Pradesh have been filed in this Court on the basis of certificate granted by the High Court of Allahabad under Article 133(1)(a) of the Constitution in respect of proceedings arising out of acquisition of land of the various respondents under the Land Acquisition Act (hereinafter referred to as "the Act"). Seven plots of land with an area of 84, 2092 sq. ft. in the city of Lucknow were acquired for public purpose. The land is situated by the side of Murtaza Hussain Road. Originally, the land belonged to the respondents in Civil Appeal No. 756 of 1967. The respondents in the other three civil appeals are transferees from these respondents. Those transfers were made by sale-deeds executed on 6, December 1955, after the intention of the Government about the acquisition had become known to the respondents in view of steps taken for survey in November, 1955. The sale-deeds have, however, been recognised by the courts and the compensation in respect of the areas covered by the sale-deeds has been granted to the purchasers. These sale-deeds were not accepted as exemplars by any of the courts for determining the compensation payable for the land acquired. 2. The Land Acquisition Officer awarded a sum of Rs. 31, 534.50 P. for the whole of the area acquired, valuing it at the rate of Annas 6/- per sq. ft. Thereupon, the respondents moved applications under Section 18 of the Act and, references were made to the District Judge. These references came for decision under Section 23 of the Act before the Civil Judge who exercised delegated powers as District Judge under the Act. Before the Civil Judge, reliance was placed by the respondents, in order to prove the fair amount of compensation, on two sale-deeds, Ex-s. 1 and 2 executed by Dr. K. S. Nigam in favour of Smt. Ram Lali and Nand Kishore Avasthi on 13, September 1956 and October 10, 1956, respectively. In the sale-deed Ext. 1, an area of 784 sq. ft. was sold for a sum of Rs. 2, 700/- while, in the other sale-deed Ext. 2, an area of 990 sq. ft. was sold for a sum of Rs. 3, 000/-. The Civil Judge also held that Dr. Nigam had made certain constructions before transferring these plots to Smt. Ram Lali and Nand Kishore Avasthi. These constructions consisted of foundations for construction of walls and of some of the walls constructed up to a very small height. These two plots adjoined another third plot belonging to Dr. Nigam. According to the evidence of Dr. Nigam, which was accepted, a sum of Rs. 4, 000/- was spent on the constructions in all the three plots, so that the Civil Judge held that a sum of Rs. 1, 333/- was spent on constructions in each of these two plots which were the subject-matter of the sale-deeds Exts. 1 and 2. He treated the sale consideration as including value of the constructions to the extent of Rs. 1, 333/- and, after deducting these amounts from the sale price, he worked out the average rate of the land sold by Dr. Nigam at Rs. 1.75 P. per sq. ft. He also took into account the fact that the two plots sold by Dr. Nigam were abutting the main Murtaza Hussain Road and were 32 ft. wide from the edge of the road. Consequently, in working out the valuation of the land acquired which had much larger area, he divided the land into two belts. The first belt of a width of 50 ft. was considered by him to be comparable with the land sold by Dr. Nigam and hence, he applied the rate of Rs. 1.75 P. per. sq. ft. to this land. The rest of the land was treated as being in a second belt away from the road and he reduced the rate for working out its compensation in the proportion of 7 : 4, so that he valued the rest of this land at Rs. 1/- per sq. ft. Further, he deducted from the whole area 25 per cent. in making the valuation as being land required for providing amenities, such as roads, lanes, parks, etc. The total amount awarded between all the respondents by the Civil Judge on this basis was Rs. 71, 844/-. 3. The respondents appealed to the High Court. The High Court approved the decision of the Civil Judge to treat the sale-deeds Exts. 1 and 2 as appropriate exemplars, but varied the method of calculation in some respects. The High Court held that the constructions, which were made, were of no use at all to the purchasers and, hence, the Civil Judge was not justified in deducting their price from the sale consideration when working out the rate at which the land was sold in these two sale-deeds. The High Court, consequently, calculated that the average rate at which the land was sold in these two sale-deeds came to Rs. 3.27 per sq. ft. The High Court reduced it to Rs. 3/- per sq. ft. on the ground that Rs. 27/- per sq. ft. may represent the value of the material of the constructions which must have become available to the purchasers when they started new constructions and demolished the constructions already made by Dr. Nigam. The High Court further held that the Civil Judge was not justified in deducting 25 per cent. for roads, lanes, parks, etc. from the entire land acquired and that there was justification for doing so only in respect of the land situated in the second belt. So far as the first belt is concerned the High Court was of the view that only one single road 20 ft. wide needed to be constructed in the land covered by this belt, so that the only area required for roads would be 20 ft. x 50 ft. Out of the area of the first belt, therefore, the High Court permitted deduction of only 1, 000 sq. ft. as land needed for roads, etc. while in the rest, the High Court approved of the deduction of 25 per cent, made by the Civil Judge. The High Court further worked out the rate for the land in the second belt by reducing the price of Rs. 3/- per sq. ft. in the proportion of 7 : 4 which gave a rate of Rs. 1.71p. per sq. ft. On this basis, the total amount awarded by the High Court between the various respondents came to Rs. 1, 31, 641/-. It is against this judgment of the High Court that the State Government has come up to this Court in these appeals. 4. In these appeals, only two points have been urged on behalf of the appellant against the judgment of the High Court. These are - (1) that the High Court was wrong in not deducting the cost of construction in Dr. Nigamâ€™s plots sold under sale-deeds Exs. 1 and 2, specially when those plots were very small ones compared to the area of the land now being acquired; and (2) that the deduction for roads, parks, etc. should have been at the rate of 25 per cent. even in the first belt and, in addition, in calculating the compensation for the land, allowance should also been made for cost of constructing and laying down lanes and roads and providing other amenities.5. So far as the first point is concerned, it appears from the evidence that the constructions that were made by Dr. Nigam could not be of much use to the purchasers. On the other hand, as the evidence of Nand Kishore Avasthi, one of the purchasers, shows, he had actually to demolish part of the constructions and had to incur extra expenditure for that purpose. Shyam Lal, who is concerned with the other sale-deed, also stated that the material used in the constructions would have to be dug out when he made his constructions in the land sold under the other sale-deed. In calculating the rate for purpose of an exemplar, the courts have to determine the market price which a willing purchaser would be prepared to pay to a willing seller. So far as the sale deeds Exts. 1 and 2 are concerned, it is clear from the evidence that the purchaser could not have taken into account the benefit of the constructions when they offered to purchase at the prices agreed upon and incorporated in the sale-deeds. It seems that Dr. Nigam was keen to sell these plots, so that he could not expect any compensation for those constructions. In the circumstances, we cannot hold that the High Court committed any error in not deducting the price of the constructions when calculating the rate at which land was sold under these two sale-deeds. for the appellant referred us to two decisions In re South Eastern Railway Company v. London County Council, ((1915) 2 Ch D 252.) and Cedars RapidsManufacturing and Power Company v. Locoste and Others, ((1914) AC 569.) where it was held that when compensation is to be paid for compulsory acquisition, the price to the determined is that which the owner, whose land is acquired, would expect to be given to him. Relying on these cases, it was urged that, even when calculating the price of the exemplars Exts. 1 and 2, the price which Dr. Nigam expected should be taken into account and not the price which the purchasers in the two sale-deeds may have been expected to pay willingly. On the face of it, these two cases are not at all applicable for the principle sought to be supported on their basis. It is true that, when somebody is deprived of his land by compulsory acquisition, he must be paid the compensation by determining the value of the land to him, but that does not mean that, in calculating the market price, the value to the seller alone must be taken into account even in the case of a voluntary sale. Market value can only be properly ascertained by finding out what a willing purchaser would pay and what a willing seller would accept. The High Court, therefore, in adopting the principle and holding that the cost of constructions in the case of sales by Dr. Nigam must be ignored, did not commit any error. The High Court reduced the average rate worked out on the basis of the sale-deeds at Rs. 3.27 to Rs. 3/- on the basis that, after demolition of the constructions, the broken bricks available may represent benefit to such an extent as would cover price of that land at Rs. 27 per sq. ft. This decision, if at all, is favorable to the appellant inasmuch as it ignores the fact that, in order to get those broken bricks for use, the purchasers would have to spend money on labour required to dig out the existing constructions. In any case, the appellant can make no grievance at all that the High Court has ignored any deduction which should legitimately have been made in working out the rate.6. On the second point, we are unable to find any force in either of the two submissions made on behalf of the appellant. The argument was raised in the High Court as well as in this Court on the assumption that the land, which is being acquired, has a very large area, so that a number of roads, etc may have to be laid out in this land. In fact, the total area being acquired, as mentioned earlier is 84, 092 sq. ft. which is less than two acres. In order to develop land having an area of less than two acres, there can be no need for laying out extensive roads and lanes or a park. It is true that the Municipal Engineer, who appeared on behalf of the appellant, stated that, in case this area had been allowed to be developed privately, the Municipal Corporation would have required that a park should also be laid out; but we are unable to accept this statement from him, because, in a small area of less than two acres, only a few houses can be built and there would hardly be any need for leaving land for a park in order to avoid congestion. Of course, each house constructed may have to leave some open land within its compound when the land is divided into smaller plots for construction of separate houses. The roads and lanes also would not be required to be very extensive. In these circumstances, one road cutting across the first belt will surely be sufficient to enable traffic to go to the sub-plots in the second belt and, if that road be 20 ft. wide, it would only cover an area of 1, 000 sq. ft. out of the land comprised in the first belt. It may also be noticed that, according to the only map available on the record, the land acquired has not only Murtaza Hussain Road on one side of it, but it also has a â€˜kachhaâ€™ road on another side, viz to the north of it. Access to the land in the second belt would also be, therefore, available by converting that â€˜kachhaâ€™ road into a proper â€˜puccaâ€™ road, so that extra land will not be needed for construction of many roads or lanes. In the circumstances, we cannot say that he High Court committed any error in holding that an area of only 1, 000 sq. ft. out of the first belt and 25 per cent, of the land in the second belt should be left out for construction of roads, lanes, etc. We are also unable to accept that there is no principle which requires that, in calculating the market price of the land, account must be taken of the actual expenditure which will be incurred on construction of roads and lanes. That will be part of the development later which will naturally enhance the price of the land. Consequently, none of the points raised on behalf of the appellant for challenging the decree passed by the High Court has any force.

Decision:
0[ds]5. So far as the first point is concerned, it appears from the evidence that the constructions that were made by Dr. Nigam could not be of much use to the purchasers. On the other hand, as the evidence of Nand Kishore Avasthi, one of the purchasers, shows, he had actually to demolish part of the constructions and had to incur extra expenditure for that purpose. Shyam Lal, who is concerned with the other, also stated that the material used in the constructions would have to be dug out when he made his constructions in the land sold under the other. In calculating the rate for purpose of an exemplar, the courts have to determine the market price which a willing purchaser would be prepared to pay to a willing seller. So far as the sale deeds Exts. 1 and 2 are concerned, it is clear from the evidence that the purchaser could not have taken into account the benefit of the constructions when they offered to purchase at the prices agreed upon and incorporated in theit was urged that, even when calculating the price of the exemplars Exts. 1 and 2, the price which Dr. Nigam expected should be taken into account and not the price which the purchasers in the twos may have been expected to pay willingly.On the face of it, these two cases are not at all applicable for the principle sought to be supported on their basis. It is true that, when somebody is deprived of his land by compulsory acquisition, he must be paid the compensation by determining the value of the land to him, but that does not mean that, in calculating the market price, the value to the seller alone must be taken into account even in the case of a voluntary sale. Market value can only be properly ascertained by finding out what a willing purchaser would pay and what a willing seller would accept. The High Court, therefore, in adopting the principle and holding that the cost of constructions in the case of sales by Dr. Nigam must be ignored, did not commit any error. The High Court reduced the average rate worked out on the basis of thes at Rs. 3.27 to Rs. 3/on the basis that, after demolition of the constructions, the broken bricks available may represent benefit to such an extent as would cover price of that land at Rs. 27 per sq. ft. This decision, if at all, is favorable to the appellant inasmuch as it ignores the fact that, in order to get those broken bricks for use, the purchasers would have to spend money on labour required to dig out the existing constructions. In any case, the appellant can make no grievance at all that the High Court has ignored any deduction which should legitimately have been made in working out the rate.6. On the second point, we are unable to find any force inr of thetwo submissions made on behalf of the appellant. The argument was raised in the High Court as well as in this Court on the assumption that the land, which is being acquired, has a very large area, so that a number of roads, etc may have to be laid out in this land. In fact, the total area being acquired, as mentioned earlier is 84, 092 sq. ft. which is less than two acres. In order to develop land having an area of less than two acres, there can be no need for laying out extensive roads and lanes or a park. It is true that the Municipal Engineer, who appeared on behalf of the appellant, stated that, in case this area had been allowed to be developed privately, the Municipal Corporation would have required that a park should also be laid out; but we are unable to accept this statement from him, because, in a small area of less than two acres, only a few houses can be built and there would hardly be any need for leaving land for a park in order to avoid congestion. Of course, each house constructed may have to leave some open land within its compound when the land is divided into smaller plots for construction of separate houses. The roads and lanes also would not be required to be very extensive. In these circumstances, one road cutting across the first belt will surely be sufficient to enable traffic to go to thes in the second belt and, if that road be 20 ft. wide, it would only cover an area of 1, 000 sq. ft. out of the land comprised in the first belt. It may also be noticed that, according to the only map available on the record, the land acquired has not only Murtaza Hussain Road on one side of it, but it also has a â€˜kachhaâ€™ road on another side, viz to the north of it. Access to the land in the second belt would also be, therefore, available by converting that â€˜kachhaâ€™ road into a proper â€˜puccaâ€™ road, so that extra land will not be needed for construction of many roads or lanes. In the circumstances, we cannot say that he High Court committed any error in holding that an area of only 1, 000 sq. ft. out of the first belt and 25 per cent, of the land in the second belt should be left out for construction of roads, lanes, etc. We are also unable to accept that there is no principle which requires that, in calculating the market price of the land, account must be taken of the actual expenditure which will be incurred on construction of roads and lanes. That will be part of the development later which will naturally enhance the price of the land. Consequently, none of the points raised on behalf of the appellant for challenging the decree passed by the High Court has any force.