IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA. RFA No.372 of 2008 along with RFA Nos.373, 374, 375, 376, 377 & 378 of 2008 and RFAs No.23, 24, 25 & 26 of 2009. Reserved on: 13th August, 2009 Date of Decision : 14th September, 2009 RFA No. 372 of 2008 Deepak Rohal & another …Appellants v. State of H.P. & others …Respondents RFA No. 373 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Deepak Rohal & Ors. …Respondents RFA No. 374 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Med Ram & Ors. …Respondents RFA No. 375 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Santosh & Ors. …Respondents RFA No. 376 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Shiv Ram & Ors. …Respondents RFA No. 377 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Roshan Lal & Ors. …Respondents 2 RFA No. 378 of 2008 H.P. Housing & Urban Dev. Authority …Appellant v. Mathri & another …Respondents RFA No. 23 of 2009 Med Ram …Appellant v. Land Acquisition Collector & Anr. …Respondents RFA No. 24 of 2009 Santosh …Appellant v. Land Acquisition Collector & Anr. …Respondents RFA No. 25 of 2009 Roshan Lal & Anr. …Appellants v. Land Acquisition Collector …Respondents RFA No. 26 of 2009 Mathri alias Dwarku …Appellant v. Land Acquisition Collector & Anr. …Respondents Coram: The Hon’ble Mr.Justice Sanjay Karol, Judge. Whether approved for reporting? 1 Yes. For the appellants: Mr. Y. P. Sood, Advocate (in RFA No.372/2008) and for respondents No. 1 & 2 (in RFA No.373/2008) For the appellants: Mr. Bhupinder Gupta, Sr. Advocate with Mr. Neeraj Gupta, Advocate (in RFAs No. 373 to 378 of 2008) and for respondent No.3 (in RFA No. 372 of 2008) and for respondent No.2 (in RFAs No. 23 to 26 of 2009) ` 1 Whether reporters of Local Papers may be allowed to see the judgment? 3 For the appellants: Mr. V. K. Sharma, Advocate (in RFAs No. 23 to 26 of 2009) For the State : Mr. R.K.Bawa, Advocate General with Mr. J. S. Rana, Asstt. A.G. For respondent No.1 Mr. M.S.Thakur, Advocate with Mr. Inderjeet Narwal, Advocate (in RFAs No.374, 375 & 378 of 2008) and for respondents No.1 & 2 ( in RFAs No. 376 & 377 of 2008). Sanjay Karol, J. Both the claimants and the beneficiary are aggrieved of the award dated 22.9.2008 passed by the District Judge, Shimla, H.P. in Land Reference petitions filed by the claimants. The land reference petitions were consolidated by the District Judge in terms of its order dated 14.6.2006 and the evidence recorded in Land Reference Petition No.16-S/4 of 2008/2006 titled as Deepak Rohal & Anr. vs. State of H.P. & Ors. was directed to be read as evidence in all the connected files and the parties were directed to lead evidence in the said reference petition. The common impugned award was passed by the Court below, hence, the present appeals filed by the H.P. Housing Board (beneficiary) as also the claimants have been heard and decided together. The details of the land reference petitions and the appeals arising there from is as under:- Land Ref. Nos. Name of Parties RFAs No. 16-S/4 of 2008/2006 Deepak Rohal v. State of H.P. & Ors. 372/2008 & 373/2008 4 17-S/4 of 2008/2006 Med Ram v. L.A.C. & Anr. 374/2008 & 23/2009 18-S/4 of 2008/2006 Santosh v. L.A.C. & Anr. 375/2008 & 24/2009 19-S/4 of 2008/2006 Shiv Ram & Anr. v. L.A.C. & Anr. 376/2008 20-S/4 of 2008/2006 Roshan Lal & Anr. v. L.A.C. & Anr. 377/2008 & 25/2009 21-S/4 of 2008/2006 Mathri @ Dwarkoo v. L.A.C. & Anr. 378/2008 & 26/2009 Heard learned counsel for the parties and perused the record. From the award passed by the Land Acquisition Collector (SDO (C), Shimla (Rural), Distt. Shimla,H.P. in Case No. 1/98, dated 26.2.2001, it is evident that for public purpose, namely, ‘construction of residential Colony’, on 10.3.1998, the State Government issued Notification under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as ’the Act’), which was published in the Official Gazette on 21.3.1998. Initially, the Government had intended to acquire 81.7 bighas of land situated in Mahal Pateog, Tehsil & Distt. Shimla, but, however, in terms of the Notification dated 23.7.1999, 42.8 bighas of land was de-notified and only 38.19 bighas of land was acquired for the said public purpose. In terms of the award, the extent and the classification of the acquired land is as under:- “1. Bakhal Awal : 12-13 bighas 2. Bakhal Doem : 03-05 bighas 3. Ghasani : 20-4 bighas 5 4. Banjar Kadim : 0-6 bighas 5. Gair Mumkin : 2-11 bighas” The Collector Land Acquisition, while passing the award observed that the land owners did not produce any Sale Deed for putting up their claim regarding the market value of the land, hence, the one year average price, based on different land transactions which had taken place at the time of publication of the Notification under Section 4 of the Act, as obtained from the Revenue Field Agency, was taken into consideration and made basis for determining the market value. Consequently, on the basis of one year average between 1.4.1997 to 31.3.1998, the market value of the land was determined as under:- 1. Bakhal Awal : 8,87,264.00 per bigha 2. Bakhal Doem : 5,99,503.00 “ 3. Ghasani : 1,99,834.00 “ /Banjar Kadim/ Gair Mumkin. Aggrieved of the same, the claimants filed Land Reference Petitions claiming compensation of Rs.10 lacs per bigha, considering that the instant acquired land is situated in an area which is commonly known as New Shimla, a new and separate township set up by the State where all developmental activities had already taken place. Prior to the acquisition of the land large number of housing complexes had been constructed by the Shimla Development Authority and thereafter by its successor H.P. Housing Board. At the time of acquisition of the land, Mauza Pateog, where the acquired land is situate, had all 6 facilities of road, telephone, electricity, water supply, Government offices, Banks public offices. These factors were not taken into consideration by the Collector while passing the award. Further, acquisition of part of the land, pursuant to the de-notification has resulted into severance of property, thus, diminishing and reducing its value apart from causing extra burden in maintaining the same. While opposing further enhancement, the respondent-state in its reply admitted the existence of the infrastructure created by the Himachal Pradesh Housing Board in village Pateog prior to the initiation of the acquisition proceedings. Original respondent No.3, H.P. Housing Board, pursuant to an enactment having been re-constituted and renamed as Himachal Pradesh Housing and Urban Development Authority (HIMUDA), by filing its reply inter alia denying that neither the market value of the land in village Pateog to be Rs.10 lacs per bigha or that complete developmental activity in Mauza Pateog, had taken place prior to the initiation of the acquisition proceedings. In the judgment HIMUDA be inter changeably read as Housing Board also. The Court below, based on the pleadings of the parties, framed the following issues:- 1. Whether petitioners are entitled to enhanced compensation as alleged, if so to what extent? ….OPP 7 2. Whether respondent No.2 is not liable to pay interest as alleged in preliminary objection No.2? ….OPR-2. 3. Relief. In support of their claim, the claimants examined 5 witnesses, namely, Mrs. Amrita Bhardwaj (PW-1), Shri Deepak Rohal (PW-2), Shri Krishan Gopal (PW-3), Shri Med Ram (PW-4) & Shri Bhagat Ram (PW-5) and proved on record the Lease Deeds executed by the respondent-HIMUDA in favour of the allottees to whom the plots in a fully developed Colony set up in Mauza Pateog itself were allotted. The details thereof are as under:- Ext.PW-1/A Lease Deed dated 15.5.1997 196.18 Sq.Mtrs. Rs.2010/- per Sq. Mtrs. Ext.PW-1/B Lease Deed dated 15.5.1997 140.38 Sq.Mtrs. Rs.3638/- per Sq. Mtrs. Ext.PW-1/C Lease Deed dated 15.5.1997 257.12 Sq.Mtrs. Rs.1869/- per Sq. Mtrs. Ext.PW-1/D Lease Deed dated 15.5.1997 265.76 Sq.Mtrs. Rs.1869/- per Sq. Mtrs. Ext.PW-1/E Lease Deed dated 15.5.1997 160.67 Sq.Mtrs. Rs.2010/- per Sq. Mtrs. In rebuttal, the respondents examined Shri Rajinder Singh (RW-1), Shri Kesar Singh (RW-2), Shri Bimal (RW-3), Shri Des Raj Gandhi (RW-4), Mrs. Kanta Sharma (RW-5), Shri Durga Dutt Sharma (RW-6) and Shri Kamal Jeet (RW-7) and produced on record the letter approving rates by the State Government, 8 the one year average of Mauza Pateog for the period 1.4.97 upto 31.3.98 and the Sale Deeds, details of which are as under:- RW-1/A Rates of Approval RW-1/B One year average 1.4.97 to 31.3.98 RW-2/A Sale Deed 24.10.97 Pateog 0-4 biswas 42000/- 279.03 per Sq.Mtrs. RW-2/B Sale Deed 5.5.97 Pateog 0-4 biswas 42000/- 279.03 per Sq.Mtrs. RW-2/C Sale Deed 8.4.97 Pateog 0-4 biswas 35000/- 232.52 per Sq.Mtrs. RW-2/D Sale Deed 24.11.97 Pateog 0-4 biswas 45000/- 298.96 per Sq.Mtrs. RW-2/E Sale Deed 13.6.97 Pateog 0-4 biswas 44000/- 292.31 per Sq.Mtrs. RW-2/F Sale Deed 28.6.97 Pateog 0-4 biswas 36000/- 239.17 per Sq.Mtrs. RW-2/G Sale Deed 30.3.98 Pateog 0-4 biswas 40220/- 267.20 per Sq.Mtrs. Ext.PX-1 Award Dated 29.9.2003 Notification u/s 4 dt. 28.7.2001 287.70 per Sq.Mtrs. Appreciating the material on record, the Court below rejected the claim for payment of compensation with regard to severance of property for the reason that no evidence with respect thereto was led by the claimants. However, accepting the prayer for enhancement of the market rate, the Court below in principal accepted Lease Deeds Ext.PW-1/A to Ext.PW-1/E to be made basis for determining the market value. In terms thereof, the market 9 value worked out to be Rs.2076 per sq. mtr. but however, considering the fact, as proved on record by the claimants’ witnesses, that the acquired land was required to be developed and only 45% of the same could be used for construction, deducted 2/3rd from the same and determined the market value of the acquired land to be Rs.700/- per Sq. Mtr. The Sale Deeds produced on record by HIMUDA were not considered for want of any material to justify the comparability of the exemplar land with that of the acquired land. Accordingly, the Court below enhanced the market value of the acquired land to be Rs.700/- per Sq.Mtr. irrespective of its nature, except for the land for which higher market value had been assessed by the Land Acquisition Collector. As noticed above, the Collector had awarded the amount lower than the enhanced amount only in respect of Ghasani/Banjar Kadeem/ Gair Mumkin categories of land. From the material on record (Ext.RW-3/A) as also the statements of the witnesses, it is evident that on the instant acquired land, the State had decided to establish a Housing Colony which was to be Part-II of the already established Phase- III of the Housing Colony set up by HIMUDA in the Satellite Township by the name of New Shimla. Phase-III is adjacent to the road coming from the famous Bishop Cotton School, which is in the center of the new township and is also nearer to Phase-I of the said Township. From the statement of RW-3, it is clear 10 that entry to Phase-I and II is at a distance of about 100 mtrs. from the entry to Phase-III of the New Shimla township. Whether the Housing Colony to be set up on the acquired land was actually an extension of the earlier established Housing Colony or not, is not evident from the record but however, the record conclusively establishes the fact that the acquired land was having entrance and approach from the National Highway constructed by the State Government in the year 1980 itself, which is evident from the statements of RW-4 and PW-3 to PW-5. Further, the acquired land is just at a distance of 10 to 15 minutes of walk from Housing Colony is also evident from the statements of RW-3, RW-4, RW-7 as also the claimants witnesses. In one voice and without any contradiction the claimants witnesses have stated that prior to the initiation of the instant acquisition proceedings, land belonging to the claimants herein was partly acquired by the State Government in the years 1986,1988 and 1989 on which the Housing Colony had been established by HIMUDA. (PW-2, PW-3, PW-4 & PW-5). With the development of the land carried out by the respondent-State through its Agency, all modern amenities like electricity, water supply, telephone, public school, banks, corporate office, petrol pump, shopping centers, office of the State, Central Government and other multi national companies were established. That the instant acquired land had all modern amenities, such as, electricity, water and in village Pateog, a residential Colony already stood established by the Housing 11 Board is evident from the statements of almost all the witnesses examined by the parties. Evidently, it has been established that the Housing Board had executed Lease Deeds Ext.PW1/A to Ext.PW1/E prior to 10.3.1998, the date of initiation of the acquisition proceedings. Lease Deed with regard to the plots allotted in a fully developed Housing Colony stands established by the Board itself. From the statement of PW-4, it is further evident that the instant acquired land was adjacent to the township (New Shimla) and considering that it had all modern amenities and facilities and falling under the category of commercial and developed, no one was ready to sell the land. No doubt the part of the acquired land was Ghasani and not put to commercial use but however according to PW-2 the land was not having steep slope and therefore, it did not require much developmental activity. This of course does not mean that the claimants themselves had carried out any developmental activity on the acquired land which is also evident from the statements of PW-2 & PW-4. It is equally true that the instant acquired land was required to be developed before a Housing Colony could be established thereupon. Thus with the passage of time, the instant acquired land came to be situated in a fully developed and commercial locality. Even in the absence of any developmental activity in existence on the instant acquired land, it had great potential of being put to commercial use. 12 The Lease Deeds Ext.PW-1/A to Ext.PW-1/E stand proved by Mrs. Amrita Bhardwaj (PW-1), Junior Assistant with the respondent authority who has admitted that these Lease Deeds were with respect to plots given on lease on the land acquired by the Government in Mauza Pateog, New Shimla and the lease money, determined on the basis of the market rates of a developed Colony stands received by the department. The average of all these lease deeds works out to be Rs.2279 per sq. mtr. Perusal of the Lease Deeds reveal that the residential plots in the Colony set up by the State stand allotted for a period of 99 years with restrictive rights of transfer and the lessor having all rights on the mines and minerals on the land underneath. Considering the factual matrix, the exemplar lease deeds can definitely be made basis for determining the market value. However, the exemplar land being situated in a fully developed area, having all amenities and the restrictive nature of the rights flowing there from needs to be kept in mind while determining the compensation payable to the claimants herein. The respondents have proved the execution of the Sale Deeds Ext.RW-2/A to Ext. RW-2/G through the statement of Shri Kesar Singh (RW-2), Registration Clerk, office of the Sub Registrar, Shimla. No doubt, RW-5, RW-6 & RW-7 have proved on record sale transactions Ext.RW-2/A to Ext. RW-2/C but, however, these witnesses could not prove the similarity of the 13 exemplar sale land with that of the instant acquired land. RW-5 has not seen the acquired land purchased by him situated on a dhank (steep slope/cliff). Similarly, the testimonies of RW-6 & RW-7 are also to the said effect. None of these witnesses have deposed that they had actually seen the instant acquired land and, therefore, in the absence of any material to show the comparability of the instant acquired land with that of the exemplar sale land with regard to its potential, use, nature, the Sale Deeds placed on record by HIMUDA cannot be relied upon (Cement Corpn. of India Ltd. v. Purya & Ors. (2004) 8 SCC 270. Testimony of RW-1 is of not much use as he has only proved letter Ext.RW-1/A whereby rates were approved by the State. Ext.RW-1/B as proved on record by him, is the one year average for the period 1.4.1997 to 31.3.1998 with respect to Mauza Pateog as maintained by the revenue authorities. Why the Collector did not consider the Sale Deeds on the basis of which said one year average report was maintained has not been explained in the award. The Collector could have taken the same into consideration while determining the market value. That apart the Apex Court in Krishi Utpadan Mandi Samiti, Sahaswan v. Bipin Kumar (2004) 2 SCC 283, has held that one year average report cannot be made basis for determining the market value of the acquired land, for the reason that the same is maintained by the revenue authorities for the purposes of complying with the provisions of the Indian Stamp Act. Further Mauza Pateog is sufficiently big, comprising 14 fully developed, commercial, non-agricultural and agricultural rural and urban areas. Hence, the Sale Deeds on the basis of which one year average report has been maintained cannot be said to be of the area in and around the place where the instant acquired land was situated or a fully developed residential Colony was established by HIMUDA. In any event there is no evidence to the said effect. Shri Bimal (RW-3),Draughtsman, office of HIMUDA, and Shri Desh Raj Gandhi (RW-4), Assistant Engineer, office of HIMUDA, have deposed that only 45% of the total area acquired is likely to be used for construction of residential houses and the remaining area is to be utilized for road, path, parking and other basic amenities. He has admitted that atleast 20 private buildings are still in existence which are adjacent to the acquired land and that HIMUDA recovered from the allottees the price of the land as well as the price of the surplus land along with the development charges. Undisputedly, the developmental activity for setting up of a road and providing basic amenities is required to be carried out on the instant acquired land. The acquired land was not having much gradient and not many retaining walls or other developmental activity of such like nature was required to be carried out on the same. Even though it could not be proved on record but however from the suggestion made by the claimants to the witnesses of HIMUDA, it appears that the Government had de-notified from acquisition certain area for which major 15 development activity was required to be carried out. Importantly, the claimants instant acquired land was meant only to develop 36 plots and 72 flats and it can be inferred that the land was acquired for setting up an extension Colony of the already established Housing Colony of the State. The question however which needs to be considered is as to what is the amount which is necessarily required to be deducted from the market value determined on the basis of Lease Deeds Ext.PW-1/A to Ext.PW-1/E. The principles of law for determining the market value of the land and payment of compensation are now settled. The market value of a property for the purposes of Section 23 of the Act is the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual and, indeed the best evidences of market value. {Mehta Ravindrarai Ajitrai (Deceased) through his Heirs and LRs. and Others v. State of Gujarat (1989) 4 SCC 250, Nelson Fernandes & Ors. v. Special Land Acquisition Officer, South Goa & Ors. (2007) 9 SCC 447}. The market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in most advantageous 16 manner, excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded. The question whether a land has potential value or not, is primarily one of fact depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like, water, electricity, possibility of their further extension, whether near about Town is developing or has prospect of development have to be taken into consideration. (Atma Singh and others v. State of Haryana and another (2008) 2 SCC 568). The most reliable way to determine the value is to rely on the instances of sale portions of the same land as has been acquired or adjacent lands made shortly before or after the Section 4 Notification. {Panna Lal Ghosh & Ors. v. Land Acquisition Collector & Ors. (2004) 1 SCC 467}, If there is evidence or admission on behalf of the claimants as to the market value commanded by the acquired land itself, the need to travel beyond the boundary of the acquired land is obviated. Instances of sale in respect of the similar land situated in the same village and/or neighbouring villages could be taken to be a guiding factors for determination of market value. {Shakuntalabai (Smt.) & Ors. v. State of 17 Maharashtra (1996) 2 SCC 152, ONGC Limited v. Sendhabhai Vastram Patel & Ors. (2005) 6 SCC 454}. In Union of India v. Harinder Pal Singh & Ors. [(2005) 12 SCC 564], it was observed that in the absence of any contemporaneous document, the market value of the acquired land in a village which was acquired at the same time as the lands in other villages, was considered to be correct comparative unit for determination of the market value of the acquired lands but however, in Kanwar Singh v. Union of India [(1998) 8 SCC 136], it cautioned that transactions of neighbouring village are not reliable where the situation and potentialities of lands in the two villages were different. In Union of India v. Pramod Gupta (Dead) by LRs. & Ors. [(2005) 12 SCC 1], the Apex Court held that the best method, as is well-known, would be the amount which a willing purchaser would pay to the owner of the land. In absence of any direct evidence, the court, however, may take recourse to various other known methods. Evidence admissible therefor inter alia would be judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighbouring villages. Such a judgment and award in the absence of any other evidence like deed of sale, report of the expert and other relevant evidence would have only evidentiary value. 18 Further it was reiterated that one of the modes of computing the market value would be with reference to judgments and awards passed in respect of acquisitions of similar land subject to such increase or decrease thereupon as may be applicable having regard to the accepted principles laid down therefor. The extent of the land, the nature thereof, advantages and disadvantages occurring therein amongst others would be relevant factors for determining the actual market value of the property. It was further reiterated that for the purpose of determining the market value of the acquired lands on the basis of the comparable sales method, the land sought to be compared must be similar in potentiality and nature. It also took note of the fact that the market