IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MRS. JUSTICE M.C.HARI RANI FRIDAY, THE 23RD JANUARY 2009 / 3RD MAGHA 1930 LA.App..No. 121 of 2008() ------------------------- LAR.88/2003 of SUB COURT,THODUPUZHA .................... APPELLANT: RESPONDENT ----------------------------- STATE OF KERALA REP. BY THE DISTRICT COLLECTOR, IDUKKI. BY SR.GOVT.PLEADER SHRI P.K.BABU & SR.GOVT.PLEADER SHRI BASANT BALAJI RESPONDENT/OCCUPANT-CLAIMANT: ---------------------------------------- JOSE SIMON,S/O.CHUMMAR, CHERUKARA, EZHAVOOR. ADV. SRI.RAJU K.MATHEWS THIS LAND ACQUISITION APPEAL HAVING BEEN FINALLY HEARD ON 23/01/2009, ALONG WITH LAA NO.132 OF 2008 & CON.CASES THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON I.A.NO.261/08 IN L.A.A.NO.121/08 //DISMISSED// SD/- PIUS C.KURIAKOSE, JUDGE. 23.1.09 SD/-M.C.HARI RANI, JUDGE. C.R. PIUS C. KURIAKOSE & M.C. HARI RANI,JJ ============================== L.A.A.NOS.121, 132,135,722 & 732 OF 2008 & L.A.A.NO.1791/2007, L.A.A.NOS.832, 1336,1553,& 1086 OF 2008 ============================ DATED THIS THE 23RD DAY OF JANUARY 2009 JUDGMENT Pius C.Kuriakose,J. L.A.A.Nos.132/2008, 722/2008 and 732/2008 have been preferred by the claimants while all other appeals have been preferred by the Government. All these appeals pertain to acquisition of land in Thodupuzha and Karikkode villages for the purpose of construction of Kanjiramattom-Mangattukavala Road. The relevant notification under Section 4(1) was published on 18- 2-2000. The Land Acquisition Officer categorized the properties under acquisition into two groups, viz. Group-I and Group-II on the basis of availability of PWD road frontage or frontage of other roads respectively. For properties coming in Group-I, the Land Acquisition Officer awarded the land value at the rate of L.A.A.NOS.121/2008 & CON.CASES -2- Rs.6541/- per cent corresponding to Rs.16,165/- per Are. This was done by relying on basis document which was proved in the case as Ext.R4. Since the Awarding Officer did not come across a document which is suitable for fixing market value for properties coming in Group—II, what he did was to award 76% of the value he fixed for properties in Group-I as the value of properties in Group-II. Thus for the properties in Group-II he fixed the land value at the rate of Rs.5,000/- per cent corresponding to Rs.12,350/- per Are. Before the Reference Court, the evidence on the side of the claimants consisted of Exts.A1 to A4 and the oral testimonies of AWs.1 to 3 and Ext.X1 on the side of the respondent/Government, which consisted of Exts.R1 to R4. Ext.R4 as already indicated was the copy of the basis document. There was no counter oral evidence on the side of the Government. Ext.C1 commission report submitted by the Commissioner, who was deputed on the application submitted by the claimants and Exts.C1(a) rough sketch prepared by him appended to the said report also formed part of the evidence. The Reference Court on evaluating the evidence would find that L.A.A.NOS.121/2008 & CON.CASES -3- the Land Acquisition Officer was not justified in relying on Ext.R4 document to fix the market value of the properties under acquisition and we also feel that the above view taken by the Reference Court is correct. Ext.A2 is copy of sale deed No.772/98 dated 26-3-1998( some two years prior to the publication of the notification under Section 4(1)). Ext.A2 pertains to 6.10 cents of land. The bare land value revealed by Ext.A2 is Rs.70,146/- per cent. It was noticed by the Reference Court that Ext.A2 property is situated at Manakkattu Junction on the northern side of Thodupuzha town unlike the acquired property in the leading case L.A.R.88/2003 (subject matter of L.A.A.No.121/2008 and 132/2008) which is situated in the southern side of the town. The Advocate Commissioner had reported in Ext.C1 commission report that Ext.A2 property pertains to land which is inferior in quality to the acquired property and that Ext.A2 land was low lying land. The Commissioner had also reported that in terms of value also the acquired property was superior to Ext.A2 property. The learned Judge has accepted Ext.A2 as recording a genuine sale executed L.A.A.NOS.121/2008 & CON.CASES -4- in usual course of business and has observed in the judgment that “Ext.A2 can also be taken note of for comparative study”. Ext.A3 was a post notification document in respect of property in Thodupuzha Village revealing centage value of Rs.one lakh per cent. Ext.A3 was rejected by the court below and in our opinion on good reasons. The claimants relied mostly on Ext.A4 document. Ext.A4 was in respect of 34 cents of land situated near to Mangattukavala. The purchaser in Ext.A4 was a Government of India Company, viz. Indian Oil Corporation and centage value as revealed in Ext.A4 is Rs.1,60,500/-. The learned Subordinate Judge found on the basis of Ext.C1 and the oral testimony of AW3, the Commissioner, that Ext.A4 property was situated at a distance of 100 metres away from the acquired property. It was also found that in all relevant aspects the properties covered by Ext.A4 and acquired property are comparable. Reliance on Ext.A4 was stiffly resisted by the Government on the ground that Ext.A4 is a post notification document and also on the ground that being the result of a negotiation between a Government of India Company which was L.A.A.NOS.121/2008 & CON.CASES -5- badly in need of a site to put up a petroleum outlet, the company became prepared to purchase the property paying price which was higher than the prevailing market rate. 2. The learned Subordinate Judge has considered the arguments of the Government that being a post-notification document, Ext.A4 cannot be relied on. The learned Judge has referred to judgment of this Court in Narayana Iyer v. State of Kerala,1990(1)K.L.T.432, Jacob v. State of Kerala, 1998(1) I.L.R.119 and State of Kerala v. Dr.Susheela Varghese & Others, 1999(2)K.L.J.594 and taken the view that there is no bar in relying on sale documents which are executed subsequent to the publication of the notification under Section 4(1). Thus purporting to follow the ratio of those judgments, the learned Judge has proceeded to rely on Ext.A4. However, the learned Judge did take into account the circumstance that execution of Ext.A4 is 25 months after the date of publication of the relevant Section 4(1) notification and on that reason the court would make a reduction of 30% from the value of Rs.1,60,500/- reflected in Ext.A1. The court would also find on the basis of L.A.A.NOS.121/2008 & CON.CASES -6- the sketch which was appended to Ext.A1 file( the file pertaining to purchase of Ext.A4 property by the I.O.C.) that unlike the acquired property, A4 property was already a developed property. Noticing the complete absence of any evidence on the side of the claimants showing that the acquired property was also developed property, the learned Judge deducted 10% of the value shown in Ext.A4 towards development charges. Over and above these two deductions, a further deduction of 5% was also made towards incidental charges and thus the learned Judge concluded that the correct market value of the property under acquisition was 55% of the land value revealed in Ext.A4 and would refix the land value at Rs.82,500/- per cent. The Government in these appeals challenge reliance placed by the Reference Court on Ext. A4 and also the enhancement granted to the claimants above the rate fixed by the officer in his original award. The claimants in their appeals are claiming enhancement of Rs.24,075/- per cent over and above what is awarded under the impugned judgment for properties coming in Group-I and a proportionate increase for properties coming in Group II. L.A.A.NOS.121/2008 & CON.CASES -7- 3. We have heard the submissions of Mr.P.K.Babu, learned Senior Government Pleader in some of the appeals preferred by the Government and those of Mr.Basant Balaji, learned Senior Government Pleader in the other appeals preferred by the Government. We have heard the submissions of Mr.Raju K.Mathews, learned counsel for the appellants in L.A.A.Nos.132,722 & 732/2008 in support of those appeals and also in defence of appeals L.A.A.Nos.121/08,135/2008 & L.A.A.No.1791/2007. We have also heard the submissions of Smt.Sudha Babu and Sri.Mathew John, learned counsel for the respondents/claimants in the other L.A.As. 4. The learned Government Pleaders would assail the findings of the reference court. According to them, the Reference Court was not at all justified in placing reliance on Ext.A4. It was submitted that Ext.A4 cannot be treated as a normal transaction in the sense that it was got executed by a multi-crore highly profit making Government of India Company who were very keen on establishing and developing a petroleum outlet within the area of Thodupuzha Municipality and were prepared to pay any price L.A.A.NOS.121/2008 & CON.CASES -8- demanded by the purchasers. Ext.A4, it was argued, at any rate should not have been taken into account since it was a post notification document and the land value in the locality had increased due to several reasons including the reason that the Kanjiramattom-Mangattu Kavala road was coming up in the area. Any increase in the land value on account of the subject acquisition is to be ignored even in terms of Section 24 so submitted by the learned Government Pleaders. 5. Mr.Raju K.Mathews, learned counsel for the claimants took us extensively through the commissioner’s report and the oral evidence adduced by the commissioner. According to him, it is a very convincing report which is submitted by the commissioner and the learned subordinate Judge also had virtually accepted the correctness of the data supplied by the commissioner. He pointed out that there was no cross examination at all of the commissioner in respect of his evidence regarding the comparability of the acquired property with Ext.A4 property and the values of the properties. The learned counsel would assail the decision of the learned Subordinate Judge in L.A.A.NOS.121/2008 & CON.CASES -9- making deductions on the value revealed by Ext.A4. He submitted that, at any rate deduction by 45% was not at all justified. He would further submit that it was clear from Ext.C1 commission report that the property covered by Ext.A2 was inferior to the acquired property. He pointed out that even Ext.A2 reveals a land value of above Rs.70,000/- and when addition is given to the value revealed by Ext.A2 for passage of time and for the relative superiority of the acquired property, it will be possible, at any rate to sustain the enhancement granted by the court for the acquired properties. Smt.Sudha Babu and Mr.Mathew K.John would support the impugned judgments. They would argue that there was no justification for the court below to have deviated from the ratio maintained by the Land Acquisition Officer in respect of the land value of properties in Group-I and Group-II. 6. We have very anxiously considered the submissions at the Bar and we have gone through the records which were made available to us. The ratio emerging from various judicial precedents including those referred to by the learned L.A.A.NOS.121/2008 & CON.CASES -10- Subordinate Judge in the impugned judgment pertaining to reliance to be placed by the Reference Court on post notification documents is that post notification documents can be relied on in the absence of relevant pre-notification documents provided that the increased land value reflected in post notification document is not on account of the result of the acquisition and that such document can be relied on, if there is cogent evidence to find that during the period from the date of the relevant Section 4(1) notification and the date of the post notification document relied on, the land value had been remaining static. In the instant case, the learned Judge himself has found that the land value had been increasing during the period prior to the notification under Section 4(1) and subsequent to the same. 7. The argument that the increase in the value of Ext.A4 property is also on account of the emergence of Kanjiramattom – Mangattukavala Road resulting from the present acquisition and hence the said value cannot be taken into account is to a certain extent founded on Section 24 of the Land Acquisition Act. Section 24 deals with matters which are to be neglected by the L.A.A.NOS.121/2008 & CON.CASES -11- court while determining compensation for the acquired 0property. The relevant portions of the section are extracted below. “24. Matters to be neglected in determining compensation: But the Court shall not take into consideration-- xx xx xx xx fifthly, any increase to the value of the land acquired likely to accrue from the use to which it will be put when acquired; sixthly, any increase to the value of the other land of the person interested likely to accrue from the use to which the land acquired will be put;” Though Section 24 in strict sense applies only to the exercise of determining compensation for the acquired property, the principle underlying the above two clauses of Section 24 can be imported to exclude a third party's document from the reckoning for determining compensation for the acquired property if it becomes evident that the higher value revealed in that document is wholly or in part due to the accomplishment of purpose of the acquisition. 8. The Supreme Court had occasion to deal with the L.A.A.NOS.121/2008 & CON.CASES -12- admissibility of post notification documents to determine the value of the acquired property in G.M.Oil & Natural Gas Corporation Ltd. v. R.Jivanbhai Patel & another, 2008 SAR (Civil) 894. Their Lordships would observe as follows at paragraph 13 of the judgment: “Much more unsafe is the recent trend to determine the market value of acquired lands with reference to future sale transactions or acquisitions. To illustrate, if the market value of a land acquired in 1992 has to be determined and if there are no sale transactions/acquisitions of 1991 or 1992 (prior to the date of preliminary notification), the statistics relating to sales/acquisitions in future, say of the years 1994-1995 or 1995-96 are taken as the base price and the market value in 1992 is worked back by making deductions at the rate of 10% to 15% per annum. How far is this safe? One of the fundamental principles of valuation is that the transactions subsequent to the acquisition should be ignored for determining the market value of acquired lands, as the very acquisition and the consequential development would accelerate the overall development of the surrounding areas resulting in a sudden or steep spurt in the prices. Let us illustrate. Let us assume there was no development activity in a particular area. The appreciation in market price in such area would be slow and minimal. But if some lands in that area are acquired for a residential/ commercial/industrial layout, there will be all round development and improvement in the infrastructure/amenities/facilities in the next one or two years, as a result of which the surrounding lands will become more valuable. Even if there is no actual improvement in infrastructure, the potential and possibility of improvement on account of the proposed residential/commercial/industrial layout will result in a higher rate of escalation in prices. As a result, if the L.A.A.NOS.121/2008 & CON.CASES -13- annual increase in market value was around 10% per annum before the acquisition, the annual increase in market value of lands in the areas neighbouring the acquired land, will become much more, say 20% to 30% or even more on account of the development/ proposed development. ..... ....... ....... .. .. .... ... Courts should therefore avoid determination of market value with reference to subsequent/ future transactions”. Lastly Their Lordships would say that even if it becomes inevitable to rely on a future transaction, there should be greater caution in applying the prices fetched for transactions in future. We will at once state that in the present case there is no acceptable evidence available on record to show that the higher value reflected in Ext.A4 is due to emergence of Kanjiramattom – Mangattukavala Road which is subject matter of the present acquisition. But at the same time, we are of the firm view that when on the finding of the learned Subordinate Judge himself, Ext.A2, a relevant pre-notification document which could have been adopted as basis for fixing the land value of the properties under acquisition was available in the case, it was absolutely unnecessary for the learned Subordinate Judge to have relied on Ext.A4, a post notification document. 9. Ext.C1(a)sketch produced by the commissioner along L.A.A.NOS.121/2008 & CON.CASES -14- with Ext.C1 report which is practically approved by the Reference Court will show that in terms of distance, Ext.A2 property could have been taken into account. The commissioner has certainly reported that Ext.A2 property is slightly inferior in quality to the acquired property. In the absence of any effective cross examination of the commissioner on his evidence as AW2 regarding this aspect, we are inclined to hold that in terms of quality, the acquired property was slightly superior to Ext.A2 property. But we are convinced from the sketch prepared by the Advocate Commissioner and also from the findings of the learned Subordinate Judge himself which are not under challenge by the claimants that in terms of locational advantage,i.e.,nearness of important institutions and establishments in the locality, Ext.A2 property is eligible for a higher value than the acquired property. 10. The value revealed in Ext.A2 is 70,146/- per cent. In G.M.Oil & Natural Gas Corporation Ltd. v. R.Jivanbhai Patel & another (supra) the Supreme Court has dealt extensively with the question of granting increased value on the basis of the passage of time between date of document relied on and the date of L.A.A.NOS.121/2008 & CON.CASES -15- publication of the relevant notification. Their Lordships have referred to the judgment of the Supreme Court in Ranjit Singh v. Union Territory of Chandigarh, (1992) 4 SCC 659, Land Acquisition Officer and Revenue Divisional Officer v. Ramanjulu & others, (2005) 9 SCC 594 and also to the decision of the Supreme Court in Krishi Utpadan Mandi Samiti Sahaswom v. Bipin Kumar, (2004) 2 SCC 283 wherein the Supreme Court had accepted an escalation of 10% to 15% per annum for land value based on the time lag between date of the document relied on and date of the publication of the notification under section 4(1) and noticed that all those cases related to acquisition of lands in urban or semi-urban areas. According to Their Lordships, increase in land value depends on four factors, viz., (i) situation of the land, (ii) nature of development in surrounding area, and (iii) availability of land for development in future and the demand for land in the area. Their Lordships say that in rural areas unless there is any prospect of development in the vicinity, increase in prices would be slow, steady and gradual, without any sudden spurts or jumps. On the other hand, in urban or semi- L.A.A.NOS.121/2008 & CON.CASES -16- urban areas, where the development is faster, where the demand for land is high and where there is construction activity all around, the escalation in market price is at a much higher rate, as compared to rural areas. Their Lordships would conclude that if the increase in market value in urban/semi-urban areas is about 10% to 15% per annum, the corresponding increase in rural areas would at best be only around half of it, i.e., about 5% to 7.5% per annum. This, then Lordships say is a rule of thumb which refers to the general trend in the nineties, and the same is to be adopted in the absence of clear and specific evidence relating to increase in price. Their Lordships have also observed that where there are special reasons for applying a higher rate of increase, or any specific evidence relating to the actual increase in prices, then the increase to be applied would depend upon the same. 11. We must notice that the acquired property in this case was situated within the limits of the Thodupuzha Municipality which cannot be treated as a rural area. But since there is no convincing evidence in this case as to what was the percentage of L.A.A.NOS.121/2008 & CON.CASES -17- increase per year in the value of land within Thodupuzha Municipality during the relevant period, the ideal percentage to be added for passage of time to the value revealed in Ext.A2 is 7.5% per year. Thus an addition of at least 15% will have to be given to the above value of Rs.70,146/- per cent reflected in Ext.A2 towards passage of two years' time which means that the correct market value of A2 property as on the date of the relevant section 4(1) notification will be Rs.80,667/-. On reckoning the plus and minus factors of the acquired properties and the property covered by Ext.A2 as revealed by the commissioner’s report and the unchallenged findings of the learned Subordinate Judge, we are of the view that the correct market value to be fixed for the acquired property as on the date of Section 4(1)notification in this case will be Rs.82,500/- per cent. Thus modifying the judgment of the Reference Court, we refix the value of the properties in Group-I at Rs.82,500/-per cent. 12. We are unable to approve the decision of the learned Subordinate Judge in fixing the value of Group-II properties at L.A.A.NOS.121/2008 & CON.CASES -18- 70% of the value of the properties in Group-I. According to us, the ratio fixed by the Land Acquisition Officer between the values of properties in Group I and Group-II is a more correct one and at any rate the Government does not have a case that it is not the correct ratio which is fixed by the Land Acquisition Officer between the values of the two categories of properties. We, therefore, refix the value of the acquired properties in Group-II at Rs.61,875/-, i.e. at 75% of the value fixed for properties in Group-I. 13. The above discussions will lead these appeals to the following result. 14. L.A.A.Nos.121/08, 135/08. 832/08, 1336/08, 1553/08 and 1086/08 will stand allowed to the extent of refixing the value of acquired properties in Group No.I to Rs.82,500/- and the value of the acquired properties in Group No.II at Rs.61,875/-. However, since no appeal or cross-objections have been filed by the claimants in respect of properties coming under Group No.II, the award of Rs.61,792/- per cent fixed by the reference court in respect of such properties will stand confirmed. But in respect of L.A.A.NOS.121/2008 & CON.CASES -19- properties coming in Group No.I, the claimants will be entitled for enhanced amounts only on the basis of the refixation at Rs.82,500/- pr cent under this judgment. It is needless to mention that all such claimants are entitled for statutory benefits admissible under sections 23(2), 23(1-A) and 28 of the Land Acquisition Act in respect of the enhanced compensation. L.A.A.Nos.132/08, 722/08 and 732/08 will stand dismissed. In the circumstances, the parties will suffer their respective costs in these appeals. PIUS C. KURIAKOSE, JUDGE M.C. HARI RANI, ks. JUDGE L.A.A.NOS.121/2008 & CON.CASES -20- Thus the result is that the appeals preferred by the Government are allowed to the above extent and the appeals preferred by the claimants are dismissed that the value of the properties in L.A.A.Nos.…… ...................................is refixed at Rs.82,500/- and the value of the properties involved in L.A.A.Nos…….......................................................is refixed at Rs.61,875/-. It is needless to mention that the enhanced compensation will be refixed and the claimants are entitled to all statutory benefits admissible under Sections 23(2), 23(1A) and 28 of the Land Acquisition Act. The parties are directed to suffer their respective costs. It is seen that in terms of impugned judgments, the claimants in L.A.R.No………… have been awarded only 61792/- per cent. In the absence of any cross objection or appeals by those claimants, we are not in a position to extent the benefit of our re-fixation of the compensation to the claimants. L.A.A.NOS.121/2008 & CON.CASES -21- PIUS C. KURIAKOSE & M.C. HARI RANI,JJ ============================== L.A.A.NOS.1791/2007, L.A.A.NOS. 121, 132,135,722 & 732 OF 2008 & L.A.A.NOS.832, 1336,1553,& 1086 OF 2008 ============================ DATED THIS THE DAY OF JANUARY 2009 JUDGMENT Pius C.Kuriakose,J. PIUS C. KURIAKOSE & M.C. HARI RANI,JJ ============================== L.A.A.NOS.1791/2007, L.A.A.NOS. 121, 132,135,722 & 732 OF 2008 & L.A.A.NOS.832, 1336,1553,& 1086 OF 2008 L.A.A.NOS.121/2008 & CON.CASES -22- ============================ DATED THIS THE 23RD DAY OF JANUARY 2009 JUDGMENT Pius C.Kuriakose,J.