$-6 *IN THE HIGH COURT OF DELHI AT NEW DELHI + LA.APP. 787/2008 GIAN CHAND AGGARWAL Appellant Through: Mr.I.S.Dahiya, Advocate. versus UOI & ORS Respondents Through: Mr.Sanjay Poddar, Senior Advocate with jVjr.Sanjay Pathak and Mr.Siddharth Panda, Advocates for UOI. Mr.M.K.Singh, Advocate for DDA. CORAM: HON'BLE MRJUSTICE PRADEEP NANDRAJOG ORDER % 26.09.2011 For orders, see LA.App.No.656/2008. PRADEEP NANDRAJOG, J. SEPTEMBER 26, 2011 mm 3 Digitally Signed By:AMULYA Signature Not Verified . IN THE HIGH COURT OF DELHI AT NEW DELHI % ludament Reserved^Onr19^''August 2011 ludament Delivered 0n:2&'^ September, 2011 + LA.APP. 656/2008 SUSHIL:KUMAR ••• Appellant Through: Mr. 1. S. Dahiya, Mr. Deepak Khosia, Mr. N. S. Negi, Mr. S.K. Verma, Mr. B.D. Sharma, Mr.. P.S. Vats,, Mr. R.K. Saini, Mr. S.K. Rout, Mr. S.S. Rana, Advocates Vs. • UOI & ORS.- ... Respondents , ' , Through:, Mr Sanjay Poddar, Senior Advocate . & Mr. Sanjay Kumar Pathak, Mr.Sachin Nawani, Mr. SJddharth Panda and Ms. K Kaomudi Kirah, Advocates for R-1. ' AND • + LA.APP. 6S7/?0q8....^APP.751/2008J^APP. 752/2008, LAAPP. 753/2008,(fLA.APP. 787/200SV^A.APP. 788/2008, LA.APP. 789V2008, TMPPr~7W2Ua< LA.APP. 791/2008, LA.APP. 792/2008, LA.APP. 794/2008, LA.APP. 133/2009. (Relating to Notification dated 21.07.1993 issued under Section 4 of the L.A. Act 1894 & Award No.04/1996-97, Village- Rithala) CORAM: HON'BLE MR. JUSTICE PRADEEP INiANDRAJOG .1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to Reporter or not? 3. Whether the judgment should be reported .in the LA.App.No.656/2008&coimectedmatters Page1of18' Digest? PRADEEP MANDRAIQG, I. 1. Land measuring .43-07 bigha was acquired pursuant to a notification issued under Section 4 of the. Land Acquisition Act 1894 on 21.07.1993. The acquisitidn was for a public purpose, namely, Rohipl .Residential Scheme under the Planned ,, Development of Delhi. The notification was followed by a declaration under Section 6 of the L.A.Act which was issued on 15.07.1994. , After following the due process, the Land Acquisition Collector announced an award bearing No.4/1996- 97, whereby he assessed the fair market value of the acquired land (5) ?96,875/- per bigha. Statutory benefits payable as per the L.A.Act 1894, as amended from time to time, were directed to be paid to the claimants. 2. Dissatisfied, with the detefminatio:n of the fair market value by the Land Acquisition Collector, the land owners sought reference under Section 18 of the L.A.Act before the learned Reference Court. .After affording an opportunity to • lead evidence to the parties, the learned Reference Court, vide judgment and decree dated 08.02.2008 passed in LAC Mo.230/2000 titled Naresh Bhushan (Since deceased) Thr. LRS. l/s. Union of India, disposed of the reference by enhancing the compensation to ^1,39,026.40 per bigha. On the enhanced compensation statutory benefits as per the L.A.Act 1894 as amended from time to time were directed to be paid and on ;which issue there is no dispute. Other decisions have •followed. ' , . ' , LA.App.No.656/2008& connectedmatters Page2.ofl8 3 3. The land owners are still dissatisfied" with the compensation, assessed and- seek the same to be enhanced under the above-captioned appeals! . 4. I proceed with my discussion, on the subject by highlighting that the Land Acquisition Collector as well as the learned Reference Court, while determining compensation, have relied upon the notification dated 03.05.1990 issued by the Government of Delhi whereunder the Government of Delhi fixed the minimum agricultural price in Delhi with effect from 27.04.1990 (a) ?96,875/- per bigha. The only, difference between the two, assessments is that the learned Land Acquisition Collector did not take, into account the fact that he was concerned with determining the fair market value of land as on the date 21.7.1993 and the minimum price fixed by the Government was as on 27.04.1990. , The learned Reference Court had granted appreciation @11.5% for a period of 39 months and 22 days i.e. the interregnum period. 5. , Arguing the appeals, learned counsel for the appellants urged that 3-pieces of evidence have been ignored by the. learned Reference Court and thus urged that the appeals be allowed by enhancing the compensation firstly: (a) The land acquired in village Rithala which was the subject matter of consideration was for. the further expansion of the • Rohini Residential Scheme and that earlier lands acquired in village Rithala and adjoining villages had already been developed for residential housing purposes ^ and transferred either on free-hold tenure or leaserhold tenure at rates ranging between ^100/- per square meter to •?2,050/- per square meter, depending upon the, size and category of LA.App.No.656/2008 & connected matters. Page 3 of 18 persons to whom allotment was made i.e. economically weaker sections, low income group, middle income group and high income group. It was urged that effecting suitable deduction from the mean average of said rates, fair market value should be determined. Brochure published by DDA was relied upon as evidence. (b) In the alternative it was urged that vide circular dated 03.03.1993 (Exhibit PW-3/1) issued by. the Ministry of Urban Development effective from 1.4.1992 the Government of India had notified rates at which it would charge unearned.increase if perpetual lessees transferred their lease-hold interest in land demised in perpetuity to them by the "Government. Counsel urged that the Government having itself notified the rate' which it would treat as the market rate of land for charging unearned increase was bound to pay the same price when it acquired land in Delhi. (c) With reference to Ex.PW-2/1, a plan.showing the location of the subject land ad-measuring 43.07 bigha learned counsel urged that the rate for charging unearned increase as per Ex.PW:3/l had to ,be granted in view of the decision of, a Division Bench of this Court reported as 2006 (136) DLT 1 DDA 1/5. LAC& Ors. (d) Lastly it was urged that worse-cum-worst appreciation @ 12% per annum., cumulatively and not; 11.5% simple for a period of39 months and 22 days oughtto have been granted.' 6. The first submission urged by learned counsel, with reference to price at which DDA had allotted developed plots, is premised on evidence which is inchoate and incomplete and the argument advanced by learned counsel for the appellants • LA.App.No.656/2008(fe connectedmatters Page4 of18 7 on similar quality of evidence was considered by the Supreme Court in the decision reported as 2009 (15) SCC 769 La! Chand 1/5. UOL The discussion in paras 11 to 27 of the said decision are relevant and I extract the same as under;-• " Whether the DDA brochure is relevant evidence? 11. The PDA brochure (Ext. X-1) dated 9-2-1981 is an. invitation seeking applications from members of the, public for allotment of plots on lease basis under the Rohini Residential Housing Scheme. The brochure stated that the plots were', in a layout formed/to be , formed in Rithala and the surrounding villages. The brochure gives the following provisional rates for allotment of,plots on leasehold basis: SI. No. 'Plot size Category Rate (per square metre) 1. 26 sq m Economically weaker sections f 100 (EWS) 2. 32 sq nh Low income group (LIG) ?125 3. 48 sq m Low income group (LIG) ? 150 4. 60 sq m Middle income group (MIG) ^200 5. 90 sq m Middle income group (MIG), ? 200 • The appellants contend that Rs 150 per square metre which is the average of the said provisional rates, should be taken- as indicative • of the ruling market price. 12. On careful consideration, we are of the view that such allotment rates of plots adopted by development authorities like DDA cannot form the basis for award of compensation for acquisition of undeveloped lands for several reasons. Firstly, market value has to be determined with reference to large tracts of undeveloped agricultural lands,in a rural area, whereas the allotment rates of development authorities are with reference to small plots in a developed layout falling within urban area. Secondly, DDA and other statutory - , authorities adopt/different rates for plots in the same area with reference to the economic capacity of the • • LA.App.No.656/2Q08&connectedmatters Page5 of18 S' buyer, making it difficult to ascertain the real market , value, whereas market. value , determination for acquisitions is uniform and does not depend upon the economic status of the land-loser. Thirdly, vye are,, concerned with market value of freehold land, whereas ^ the allotment "rates" in the DDA brochure refer to the initial premium payable on allotment of plots on leasehold basis. We may elaborate on these three factors. First factor 13. The percentage of "deduction for development" to be,made to arrive at the market value of large tracts • of undeveloped agricultural land (with potential for development), with reference .to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which th^ exemplar plots are situated. 14. The "deduction for development" consists of two components.. The first is with reference to the area required to be utilised for developmental works and the . , second is the cost of the development works. For example, if a residential layout is formed by DDA-or similar statutory authority, it may utilise around,40% of ' the land area in the layout, for roads, drains, parks, ' playgrounds and civic amenities (communityfacilities), etc. 15.. The development authority will , also incur - considerable expenditure for development of undeveloped land into a developed layout, which • includes the cost of levelling the land, cost of providing roads, underground drainage and ,sewage facilities, - laying water lines, -electricity lines and developing parks and civil amenities, which would be about 35% of the value of the developed plot. The two factors taken - together would be the "deduction for development" and can account for as much as 75% of the cost of the . developed plot. LA.App.No.656/2008&connectedmatters, Page 6 of18 16. On the other hand, if the residential plot is in an •unauthorised private residential layout/the percentage of "deduction for development" may be far less. This is,; because in an unauthorised layout, usually no land will be set apart for parks, playgrounds and comniunity facilities. Even if any land is set apart, it is likely to be minimal. The roads and drains will also be narrower, just adequate for movement of vehicles. The amount, spent on development work would also be comparatively less and. minimal. Thus the deduction on account of the two factors in respect of plots' in unauthorised layouts, would be only about 20% plus 20% in all 40% as against 75% in regard to DDA plots. 17. The "deduction for development" with reference to prices of plots in authorised private residential layouts may range between 50% to 65% deperiding upon the standards and quality of the layout. 18.' The position with reference to industrial layouts will be different. As the industrial plots will be large (say of the size of one or two acres or more as contrasted with the size of residential plots measuring 100 sq m to 200 sq m), and as there will be very limited civic amenities and no playgrounds>. the area to be , set apart for development (for roads, parks,, playgrounds and civic amenities) will' be far less; and the cost to be incurred for development will also, be marginally less, with the result the deduction to be made from the cost of an industrial- plot may range only between 45% to 55% as-contrasted from 65% to 75% for residential-plots. 19., If the acquired land is in a semi-developed urban area, and not an undeveloped rural area, then the deduction for development may be as much less, that is, as little.as 25% to 40%, as some basic, infrastructure will already be available. {Note\ The percentages mentioned above are,tentative standards and subject to proof to the contrary.) LA.App.No.656/2008&connectedmatters • Page 7. of18 /t> 20. Therefore the deduction for the "development factor" to be made with reference to the price of a. small plot in a developed layout, to arrive at the cost of undeveloped land, will be far more than the deduction with reference to the price- of; a small plot in an unauthorised private layout or an industrial layout. It is also well known that the development cost incurred,by statutory agencies is much higher than the cost incurred by private developers, having regard to higher overheads and expenditure. • 21. Even among the layouts formed by DDA, the percentage of land utilised for roads, civic amenities, parks and playgrounds may vary with reference to the nature of layout—whether it is residential, residential- cum-commercial or industrial; and even ahiong residential layouts, the percentage will differ having - regard to the size of the plots, width of the roads, extent of community'facilities, parks and playgrounds provided. . 22. Some of the layouts formed by the statutory ' development authorities may have large areas earmarked for water/sewage treatment plants, water tanks, electrical substations, etc. in addition to the usual areas earmarked for roads, drains, parks, playgrounds and community/civic amenities. •The purpose of the aforesaid examples is only to show that the "deduction for development" factor is a .variable , percentage and the range, of percentage itself being- very wide from 20% to 75%. Second factor 23. DDA and other statutory development authorities adopt different rates for allotment of, plots in the same layout, dependi^ng upon the economic status of the allottees, classifying them as high income group, middle income group, low- income group, and economically weaker sections. As a consequence, in the. same layout, plots may be earmarked for persons belonging to economically weaker sections at a LA.App-No.656/2008&connectedmatters Page 8of18 II price/premium of Rs 100 sq m, whereas the price/premium charged may. be Rs 150 per square metre for members of low income group, Rs 200 per square metre for persons belonging to middle income group and Rs 250 per square metre for persons • belonging to high income groups. 24. The ratio of sites in a layout •reserved for HIG, MIG, LIG and EWS may also vary. All these varying factors reflect in the rates for allotment. It will be illogical to take the/average of the allotment rates, as • the "market value" of those plots does'not depend upon the cost incurred, by DDA statutory authority, but upon the paying capacity of. the applicants for . allotment. Third factor 25. Some development authorities allot plots on freehold basis, that is, by way of absolute sale. Some development authorities like DDA allot plots on leasehold basis. Some have premium which is almost equal to sale price, with, a nominal annual rent, whereas others have lesser premium, and more substantial'annual rent. 26. There are standard methods for determining the • annual rental value with reference to the value of a freehold property. There are also standard methods for determining the value of freehold (ownership) rights with reference to the annuarrehtal income in regular leases. But it is very difficult to arrive at the market value of a freehold property with reference to the premium for a leasehold plot allotted by DDA. As the period of lease is long, the rent is very nominal, " sometimes there is a tendency among the public to equ'ate the lease premium rate (allotment price) ' •charged by DDA,'as being equal to the market-value of the property. 27.' However, in view of the difficulties referred to above, it is not safe or advisable to rely upon the LA.App.No.656/2008&connectedmatters , Page 9of18 tz allotment rates/auction rates in regard to the plots, formed by DDA in a developed layout, in determining the market value of the adjoining undeveloped freehold lands. The DDA brochure price has therefore, to be excluded as being not relevant," 7. I had referred to the same material relied upon in the instant case pertaining tp Rohini Residential Housing Scheme in my decision dated 23.8.2011 in LA.App.No.266/2008 Sinah 1/5, (JO! & Anr. and with reference to the decision of the Supreme Court in La! Chands case (supra) had held that it would be neither safe nor advisable to determine fair market •value of subject lands on the basis of this inchoate evidence. I reiterate my reasoning therein which may be read as reasoning in the instant decision'as well and thus negate the .first plea urged. . 8. Argument (b) and (c) are intertwined for the reason •justification to be paid the land price.in terms of Ex.PW-3/1 is by drawing attention to the plan Ex.PW-2/1and the decisionof • a Division Bench of this Court reported as 2006 (136) DLT 1 DDA i/5. LAC & Ors. . , , 9. The site plan tx.PW-2/1 would reveal that the subject land -ad-measures 43.07 bigha. i.e. 43,700 square, yards. Ex.PW-8/1 i.e. the lay out plan of Rohini Residential Scheme jp . would reveal that on all, 4 sides of the subject land •development has. been carried out. 10. Land which formed, the subject matter of consideration .before the Division Bench in the decision reported as 2006 (136) DLT 1 DDA i/5. LAC & Ors ad-measured only 2,000 square yards and had been left out from the earlier acquisition . 'end by the time . said land was acquired, complete 'LA,App.Noi656/2008&connectedmatters ' ' Page 10 of18 u development had taken place around the said 2,000 square yards of land. Now, virtually no development is required to exploit the 2,000 square yards of land if it is bounded by developed land all around. Thus, there can be no equivalence with respect to the principleto be adopted for a small parcel of land ad-measuring 2,000 square yards which is bounded on all 4 sides by developed lands and a parcel of land ad-measuring 43,700 square yards bounded on- all 4 sides by developed •lands for the reason if the purpose of acquisition is a housing scheme, lot of development wouid,have to be carried out on the 43,700 square yards ofjand. Roads, parks, space for utilities etc. would have to be left out. Expenditure would have to be incurred on main -roads, storm water drains, street lights and sewage lines and the same inchoateness will permeate the quality of evidence as was found in the decision in Lai •Chancfs case (supra). Thus, argument (b) and (c) as noted hereinabove cannot be accepted: 11. 1may only highlightthat the Halqa Patwariof was examined as a witness in the references and his testimony brings out that there existsa nallaliin the acquiredland, which depreciatesits price..There was no,structureon the land and mere existence,of a road within the acquired land would not render the land a fully developed area, requiring no further development activity. 12. 1 may note that lands in, village Rithala have been acquired since 1961 on many occasionsfor Rohini Residential Scheme. Besides the lands situated in village Rithala, the lands in the adjoiningvillages,namely,Shahbad Daulatpurand •Pooth Kalan were also acquired earlier for the same Rohini LA.App.No.656/2008&connectedmatters ' . ' Page11 of18 Residential Sclieme, whicin is one of tine largest residential schemes in Delhi. Certain lands situated in-villageShahbad Daulatpur was earlier acquired vide notification dated . 23 06 1989 for the said purposeof Rohini ResidentialScheme. ADivision Bench of this Court, in RFA No.677/1994titled inxmi Narain ptc. Union of India, after exannining •similarevidence,in its decisiondated 30.09.2008,determined the fair market value to be at ^89,620/- per bigha as of 23.6.1989 and rejected similar argument with regard to comparisonwitli developedland. 13 Imay also note thatwhileassessingthe fair marketvalue of land acquired pursuant to the notificationsissued in the year 1980-81,a Division Bench of this court,'while adopting the DDA's brochure and the sale price of developed plots, assessed the fair market value at HB/- per sq.yds. While making such an assessment,the DivisionBench also deducted 60»/o towards developmentcharges. The nnain judgmentwas rendered in the decision reported as 95 (2002) DLT 605 iai I/, iinlnnofIndia,which Imay referto as JasRaUtl- Said decision was challengedbefore the .Supreme Court and was reversedin the decisionreportedas 2005 (12) SCC 59 Ranyeer .nH Another Vs.JJnioa^tMiS.-The reasoning of the DivisionBench was found faulty and the matterwas remanded • for fresh consideration. 14 On remand, a Division Bench of this Court assessedthe fair marketvalueof the land at ?27lpersq.ydsas againstRs 73 per sq.ydsfixed earlier. The decisionin remand is reportedas. 130 (2006) DLT 700 toe Rath 1/5; UniorLOfMiS.- Ireferto the •bid decision as las_Rat!vU. Agafnst this decision. Leave to j ^ Page 12 of 18 LA.App.No.'656/2008&connectedmatters >3 It Appeal was granted by the Supreme Court and the final decision rendered was in La! Chands case (supra), in which fair market value was enhanced to 00.50 per square yards, but argumentbased upon fixing the land price with reference to the rate at which developedplots were transferredby DDA with suitable adjustments towards development was specificallyrejected. ' 15 In the decision reported as 1995 (2) SCC 305 P. Rani nr. 1/9. "nr, ArnuMtinn Officer, Hydej^bacLUrtm Authority.HyderabacLA^ it observed as under:-,. "11. Pricesfetched by sales of buildingplots whi^ • may become availablecould be of buildmg plots in 'eithera fully developedlayoutof buildingplotsor in Tn undevelopedlayoutof building plots, situatedin ?he vidnfty of the acquired land with building potentiality. If the market value of the acquired land with buildingpotentialityhas to be ® basis of the evidence of the said prices, the first fhina required to be done is to prepare a • hypo^hSallayoutof buildingplots of .. land: itself. Then, how much of land out or tne acquired land becomes availableto be made into nbts similarto those in the developed layout o buildinq plots or in the undeveloped layout of • ' building plots has to be found out. '^the bu, ding • nlots which so become available,were to be sold at •t^he prices at which the building plots m the developed by out of building plots or undeveloped layout-ofbuilding plots couldliavef date envisaged in Section 4(1) of the Act, what would be the total amount of such prices v^nch could have been obtained has to be seen. Then S could have been' the losses su fered .o S^penses incurred for getting such tot^amount has to be found out. The marl<et value of the acquiredland with buildingpotentiality,can then be j ++ Page 13 of 18 • LA.App.No.656/2008&connectedmatters . • • 14 regarded as the total amount of the prices of sales of, all the- building plots envisaged in the hypotheticallayoutof buildingplots in the acquired land .minus the losses which could have been suffered or expenses which could have beeri incurred in making the hypothetical l^Y^^ building,plots in the acquired land on par with the developed layout of building plots • or the undeveloped layout of building plots as the case may be. If losses to be suffered or expensesto be incurredfor making a layout of building plots in the acquiredland with building potentialityfor purposes of selling such building plots at Pnces to be fetched by similar building plots in the developed layoutof building plots or in the undevelopedlayout of building plots are to be found out, the losses which might have been suffered or expenseswhich might have been incurred by the owners of the lands of either of a developed layout of building plots or of an undevelopedlayout of building plots in making such lay outs, could, prove to be the best . evidence. The evidence of losses suffered or ' expenses incurred in having made a layout of building plots may relate to lands lost for laying roads, drain, sewerages,parks etc, costs incurredjn the making of roads, drains, sewerages, providing watersupply, electricsupply, losses on mvestn^nts and paying of. conversion charges, development charges etc. in a developed layout or an . •undeveloped layout in which building Pots had been laid and sold and which sales form the basis fc^ determiningthe market value of the acc^ired land. If evidenceto be adduced in the said regard is of public authorities or local boards or. private developers,who will' have formed such layouts of building plots in the land in the neighbourhoodof the acquired land and sold them, c^^'^ l3e of great value. No difficulty.arises when a! the materialsneeded to determinethe marketvalue of the acquired land with building P°t^ial^yon the basis of ahypotheticallayoutof^buildingP to ^ • formed in respect of it is made available to the Court, so as