IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 02-03-2009 CORAM: THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN AND THE HONOURABLE MR. JUSTICE K.K.SASIDHARAN A.S.Nos.707 and 708 of 2003, 727 to 734 of 2003, 544 of 2005, 706 of 2006 and 444 to 453 of 2008 The Special Tahsildar (LA) ..Appellant in AS.No. Neighbourhood Scheme, 707/2003, 708/2003, Erode. 727/2003, 728/2003, 729/2003, 730/2003, 731, 732, 733 & 734 of 2003, 544/05 and 706 of 2006 1st Respondent in Cross Appeal No. 452/08, 453/08, 444/08, 451/08, 450/08, 449/08, 448, 447/08, 446/08 ..vs.. Jeganatha Gounder ..1st Respondent in AS.No.707/03 and Appellant in Cross Appeal No.452/08 The Executive Engineer, ..2nd Respondent in and Administrative Officer, AS.No./Cross Appeal Housing Scheme, Nos.707/03, 452/08, Erode. 453/08, 727/03, 444/08, 451/08, 450/08, 449/08, 732/03, 447/08, 446/08, 445/08, 544/05 & 706/06 https://hcservices.ecourts.gov.in/hcservices/ 3rd Respondent in AS.No.708/03, 728/03 729/03, 730/03 and 734/03 5th Respondent in AS.No.731/03 4th Respondent in AS.No.733/03 R. Sundaram (died) R. Duraisamy S. Nallasivam ..Respondents 1,2,4,5 S. Babu & 6 in AS.No.708/03 S. Divya (Minor) and Appellants in rep. by Mother & Natural Cross Appeal No.453/08 Guardian Jagadeeswari (Claimants & Beneficiary) 1. Veerasamy ..Respondents 1 to 3 in 2. Selvaraj AS.No.727/03 and 3. Mahesh Appellants in Cross Appeal No.444/08 Shownthiram (died) Chidambaram Jayalakshmi Gowriammal Agilandam Devathaal ..Respondents 1,2,4 to 9 in AS.No.728/03 and Maragatham Nil, Appellants 1 to 7 in Cross Appeal No. Prabhakaran 451/08 (Claimants) RR4 to 9 impleaded as LRs of the deceased first respondent vide order dated 21.09.2006 made in CMP.No.8966 to 8971/06. Ellachiappan @ Ellaiah Gounder ..Respondents 1 & 2 in AS.No.729/03 and Aruchunan Appellants in Cross Appeal No.450/08 (Claimants) https://hcservices.ecourts.gov.in/hcservices/ Sivaprakasam ..Respondents 1 & 2 in AS.No.730/03 and Chandran Appellants in AS.No. 459/08 (Claimants) Viswanatha Gounder ..Respondents 1 to 4 in AS.No.731/03 and Thambana Gounder Appellants in Cross Appeal No.448/08 Valliyammal (Claimants) Palaniswamy Chidambaram ..1st Respondent in AS.No.732/03 and Appellant in Cross Appeal No.447/08 (Claimant) Chinnasamy ..Respondents 1 to 3 in AS.No.733/03 and Arukkani Appellants in Cross Appeal No.446/08 Krishnamurthy (Claimants) Chinnasamy ..Respondents 1 & 2 in AS.No.734/03 and Jagadeesan Appellants in Cross Appeal No.445/08 (Claimants) Nachimuthu ..1st Respondent in AS.No.544/05 Thangamuthu Gounder ..1st Respondent in AS.No.706/06 and (Claimant) Appeals against the judgment and decree of the learned Additional Subordinate Judge of Erode in L.A.O.P.Nos.26, 27, 32, 39, 38, 37, 36, 35, 34, 33 of 2002 and L.A.O.P.Nos.11/2003, 3/2004 respectively dated 27-11-2002. https://hcservices.ecourts.gov.in/hcservices/ For appellant : Mr. V. Ravi, Spl. G.P.(AS) in all the appeals For respondents : Mr.P.S.Raman, Addl.Advocate General for Mr.K.Chelladurai Assisted by Mr.S.Kasikumar for TNHB in all cases. Mr. R. Gandhi, Senior Counsel for Mr. V.P. Sengottuvel for R1 in A.S.No.707 of 2003 for RR4 to 6 in A.S.No.708 of 2003 for RR1 to 3 in A.S.No.727 of 2003 for RR4 to 9 in A.S.No.728 of 2003 for RR1 & 2 in A.S.No.729 of 2003 for RR1 & 2 in A.S.No.730 of 2003 for RR1 to 4 in A.S.No.731 of 2003 for R1 in A.S.No.732 of 2003 for RR1 to 3 in A.S.No.733 of 2003 for RR1 & 2 in A.S.No.734 of 2003 for Appellants in A.S.Nos.444 to 453 of 2008 Mr.M.M.Sundaresh for R.1 in A.S.No.544 of 2003 Mr.S.Rajagopal for R2 in A.S.No.708 of 2003 for R2 in A.S.No.728 of 2003 Mr.S.Dhanasekaran for R.1 in A.S.No.706 of 2006 COMMON JUDGMENT K.K.SASIDHARAN, J These Land Acquisition appeals involving common questions of fact and law were taken up for consideration together and are being disposed of by this common judgment. 2. These appeals relate to the Land Acquisition Proceedings that commenced as per Section 4(1) notification dated 17.1.1997 and https://hcservices.ecourts.gov.in/hcservices/ 19.2.1997 and published in the Gazette on 12.2.1997 and 19.3.1997 respectively. 3. The extent of property acquired as per the relevant notifications are as follows: a) Notification dt.17.1.1997 -- 55.89 Acres b) Notification dt.19.2.1997 -- 51.75 Acres 4. The details of the land acquisition Original Petitions and the related appeals and Cross Objections and the compensation awarded by the Land Acquisition Officer as well as by the Reference Court and the findings recorded after remand are detailed in the tabular columns below. NOTIFICATION DATED 17.01.1997 ERODE HOUSING BOARD BATCH (LAOP) DISTRICT/TALUK – ERODE VILLAGE-ERODE 'C' VILLAGE (KASIPALAYAM) 4(1) NOTIFICATION- APPROVED IN G.O.Ms.No. 25 Hg.&U.D.D. Dated 17.1.1997 4(1) NOTIFICATION PUBLISHED IN THE GAZETTE ON 12.2.1997 AWARD No.1/2000 dt.3.3.2000 Sl. No. A.S. No. Cross Objec- tion / Appeal No. LAOP No. Date of LAOP order Survey No. Extent in Hec. & Acre Amount awarded by LAO (per Acre) Amount fixed by Reference Court (Per Sq.ft.) Amount fixed after remand (in Sq.ft.) 1 2 3 4 5 6 7 8 9 10 1 707/ 03 452/08 26/02 27.11.02 727/3 1.01.0 Hec/2.50 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 2 706/ 06 Nil 3/04 24.03.05 722/1, 2,3 4.18.0 Hec/10.3 3 Ac. 50,000/- Rs.30/- per sq.ft. Rs.19.28 per sq.ft. 3 708/ 03 453/08 27/02 27.11.02 726/2 0.26.0 Hec/0.64 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. https://hcservices.ecourts.gov.in/hcservices/ NOTIFICATION DATED 19.02.1997 DISTRICT/TALUK – ERODE VILLAGE-ERODE 'C' VILLAGE (KASIPALAYAM) 4(1) NOTIFICATION- APPROVED IN G.O.Ms.No. 73 Hg.&U.D.D. Dated 19.2.1997 4(1) NOTIFICATION PUBLISHED IN THE GAZETTE ON 19.3.1997 AWARD No. 2 /2000 dt.31.6.2000 Sl. No. A.S.No. Cross Object- ion/App eal No. LAOP No. Date of LAOP order Survey No. Extent in Hec. & Acre Amount awarded by LAO (per Acre) Amount fixed by Reference Court (Per Sq.ft.) Amount fixed after remand (in Sq.ft.) 1 2 3 4 5 6 7 8 9 10 1 727/03 444/08 32/02 29.11.02 472/2 2.56.0 Hec./6.33 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 2 728/03 451/08 39/02 29.11.02 487/2 0.02.0 Hec./0.05 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 3 729/03 450/08 38/02 29.11.02 474/1 1.08.0 Hec./2.66 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 4 730/03 449/08 37/02 29.11.02 472/1B 1.15.0 Hec./2.84 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 5 731/03 448/08 36/02 29.11.02 488/4 0.07.0 Hec./0.17 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 6 732/03 447/08 35/02 29.11.02 487/1 0.30.0 Hec./0.74 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 7 733/03 446/08 34/02 29.11.02 473/2 0.08.0 Hec./0.20 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 8 734/03 445/08 33/02 29.11.02 473/ 1B & 474/2 1.62.0 Hec./4.00 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 9 554/05 nil 11/03 31.03.04 487/1 0.62.0 Hec./1.53 Ac 50,000/- Rs.28/- per sq.ft. Rs.19.28 per sq.ft. 5. The factual matrix as projected in L.A.O.P. No.32/2002 corresponding to A.S.No.727/2003 is extracted below as background facts. A.S.No.727/99 (LAOP 32/02) At the instance of the Tamil Nadu Housing Board an extent of 6.33 acres of land was acquired from the claimants as https://hcservices.ecourts.gov.in/hcservices/ per Section 4(1) notification dated 19.2.1997. The acquisition was for the purpose of putting up residential houses for the Tamil Nadu Housing Board. The Land Acquisition Officer, upon consideration of documents, determined the market value of the property at Rs.50,000/- per acre even though the land owners have claimed a sum of Rs.50/- per sq.ft. Aggrieved by the award of the Land Acquisition Officer, proceedings under Section 18 of the Land Acquisition Act was initiated. Before the Reference Court the claimants contended that the acquired property is situated very near to Erode-Perundurai as well as Sennimalai Road junction. It was further contended that the residential colonies like Anna Nagar, Sri Nagar, Bharathi Nagar, Rail Nagar, Jeeva Nagar, Subramania Nagar, Kalaignar Karunanidhi Nagar, etc., are all in the vicinity. The property was having potential value for housing as well as for business purposes. There are also Arts Colleges, Women's College, Kongu Higher Secondary School, St.Joseph Clinic,hospitals and other infrastructural facilities in the area. A sum of Rs.50/- per sq.ft was claimed as compensation. 6. In the counter filed by the Housing Board as well as by the Land Acquisition Officer before the Reference Court, it was contended that market value was arrived at on the basis of document No.2290/96 dated 5.7.1996, which showed the sale value at Rs.50,000/- per acre. According to the Land Acquisition Officer 64 documents registered during the relevant period was verified and document No.50 alone was retained. It was only on the basis of the said document the market value was determined which according to them reflects the correct value as on the date on which Section 4(1) notification was issued. 7. Before the Reference Court, the claimants have marked documents relating to survey No.871/2 dated 23.1.1985 wherein an extent of 1344 sq.ft. of land was sold at the rate of Rs.17.11 Per sq.ft., sale deed dated 14.12.1988 relating to the property having an extent of 1200 sq.ft. in survey Nos.732 and 733 which shows the value at Rs.15/- per sq.ft., and another document dated 30/12/1988 executed by one M.Damodaran in favour of Mr.N.Ardhanareeswaran wherein an extent of 1200 sq.ft. was sold at the rate of Rs.10.67 per sq.ft. They have also marked the following documents in support of their plea that the market rate was very high in the area during the time of acquisition. Survey No. Document dated Extent square feet Value per square feet 733/2 06.03.1989 1700 Rs.12/- 735/12 15.02.1990 1185 Rs.22/- 733/1 07.09.1990 1800 Rs.25/- 489/2 04.09.1990 1500 Rs.20/- https://hcservices.ecourts.gov.in/hcservices/ Survey No. Document dated Extent square feet Value per square feet 733/1 & 3 08.02.1991 1200 Rs.15/- 733/1 15.07.1991 1800 Rs.35/- 733/1 & 3 23.1.1992 1200 Rs.35/- 806/2 02.04.1992 1085 Rs.33/- - 22.04.1992 - Rs.35/- 733/1 30.03.1993 1800 Rs.14.50 732/1 & 2 17.11.1993 1103 Rs.41/- 735/1 25.04.1994 1200 Rs.40/- 733/1 to 3 09.11.1994 1043 Rs.47.72 - 27.10.1994 2400 Rs.65/- 733/12 30.01.1997 900 Rs.63.10 8. The witnesses examined on the side of the claimants have also highlighted the importance of the locality, the potential of the land, income which have they have been receiving from the land as well as the locational advantages of the property. 9. The Reference Court on a consideration of Ex.C.18 marked on the side of the claimants was of the opinion that the value of property in the area has gone up to Rs.65/- per sq.ft. The Reference Court also rendered a factual finding that from 1985 onwards vacant sites were sold at a higher rate in the area and during the time of the relevant acquisition land value was in the range of Rs.65/- per sq.ft. The Reference Court also found from the evidence tendered by the claimants that the site was fit for using as house sites and observed that the Government have not proved that the value was boosted in the sale documents produced by the claimants. The contention of the Land Acquisition Officer that the documents produced by the claimants were all sale relating to smaller extent and as such no reliance could be placed on those documents, were negatived by the Reference Court on the ground that the Government acquired several small extent of property from the claimants. The Reference Court, took note of the 1991 acquisition, wherein the Land Acquisition Officer has determined the market value at Rs.37,500/- per acre and opined that the valuation after six years of the said acquisition would be much more in the area. Therefore the Reference Court was of the opinion that 10% increase could be given every year by fixing the valuation for the year 1991 as Bench Mark. 10. The Reference Court observed that even in the earlier acquisition initiated in 1991 market value was found to be Rs.30/- per sq.ft. and as such the market rate in 1997 would be a sum of Rs.53/- per sq.ft, if 10% increase is given every year. https://hcservices.ecourts.gov.in/hcservices/ 11. The Reference Court also placed reliance on the document dated 9.11.1994 produced by the claimants, evidencing market value at Rs.47.72 per sq.ft. The Reference Court also observed that the property was in a developed area, where residential houses could be constructed without spending any amount for development. Accordingly, the Reference Court arrived at a finding that on account of the earlier acquisition the land value has increased considerably in the area and accordingly the Court fixed the market rate at Rs.42/- per sq.ft. and after giving deduction the market rate was arrived at Rs.28/- per sq.ft. 12. The award of the Reference Court was challenged by the Land Acquisition Officer as well as by the claimants and the matter was remanded by this Court to the Reference Court to render its finding after taking further evidence. 13. Subsequent to the remand, the claimants have produced further evidence. In the evidence of the claimants tendered before the Reference Court they have reiterated the importance of the locality, locational advantages of the property as well as infrastructural facilities available in the area and accordingly they have claimed a sum of Rs.60/- per sq.ft. as market value. The Land Acquisition Officer has contended that the documents produced by the claimants relate to property in a highly developed area and the extent was also very small. The Land Acquisition Officer further contended that in the connected land acquisition of the year 1991, only a sum of Rs.2,18,500/- per acre was awarded by the Reference Court and considering the nature of the land and the necessity to spend considerable amount for development of the property, the value as shown in the documents produced by the claimants cannot be relied on for fixing the correct market rate. The Tamil Nadu Housing Board also produced documents in support of the contention that what was awarded by the Land Acquisition Officer was actually the market rate. FINDINGS AFTER REMAND: 14. The Reference Court found that the property is situated in a covetable locality and it is suitable for construction of residential houses. The Court rejected the contention of the Land Acquisition Officer that considerable amount was necessary to be spent for development of the property. Similarly the contention that the value should be fixed only on acre basis was also rejected by the Reference Court. The Reference Court was of the view that the documents collected by the Land Acquisition Officer and retained as data land, were all situated far away from the acquired property and some of the documents which were also part of the documents collected by the Land Acquisition Officer showed that property was sold at the rate of Rs.3,15,200/- per acre. The Reference Court found that the documents exhibited on the side of the claimants showed a sum of Rs.12 lakhs per acre and considering the small size of the site https://hcservices.ecourts.gov.in/hcservices/ involved in the basic documents produced by the claimants and the amount necessary for development, the Reference Court was of the opinion that 30% of the value has to be earmarked towards development charges and accordingly market rate was fixed at Rs.27.55 per sq.ft. and after deducting the development charges, a sum of Rs.19.20 per sq.ft. was arrived at as the market rate. SUBMISSIONS: 15. The learned Senior Counsel appearing on behalf of the claimants contended that there was a tremendous increase in the value of the property in Erode and the value was increased substantially also on account of the acquisition of the property by the Housing Board in the year 1991. According to the learned Senior Counsel, the acquired property is located in a very covetable area surrounded by housing colonies and the site is fit for construction of residential houses without incurring development charges. The learned Senior counsel also submitted that the documents exhibited on the side of the claimants clearly shows the value of the property in the area as on 1997 and as such the Reference Court was not justified in fixing the lesser value and accordingly prayed for enhancing the value at Rs.50/- per sq.ft. 16. The learned Special Government Pleader as well as learned Additional Advocate General appearing on behalf of the Tamil Nadu Housing Board supported the award of the Land Acquisition Officer. According to the learned Government Pleader, the documents relied on by the claimants have nothing to do with the market rate prevailing in the area and those documents were all sales made up for the purpose of getting enhanced compensation. According to the learned Additional Advocate General even the value fixed for the acquisition initiated in the year 1991 by the Reference Court was much than the market rate and when the said award itself is a matter under challenge, the claimants are not entitled to rely on the value as fixed by the Reference Court for the 1991 acquisition, for the purpose of determining the value, relating to the property covered by the later notification. CONCEPT OF MARKT VALUE: 17. There are well accepted norms for the purpose of fixing the market rate. While fixing the market value, the Land Acquisition Officer is required to consider the location of the property, its advantages as well as the potential. Neither the documents showing an inflated rate nor the distress sale is relevant for the purpose of fixing the land value. The Reference Court has to sit in the arm- chair of a willing seller and a willing purchaser and the market rate has to be determined by taking into account all the positive and negative factors. The purpose for which the property was acquired, the nature of the property, presence of roads, electricity, https://hcservices.ecourts.gov.in/hcservices/ educational institutions, hospital facilities and other infrastructural facilities available in the area are all relevant for the purpose of arriving at the market value. LEGAL PRINCIPLES: 18. The Honourable Supreme Court in STATE OF UTTAR PRADESH v. RAM KUMARI DEVI (AIR 1996 SC 3370) laid down the test to be adopted for the purpose of arriving at the market value in the following words:- "........It is laid down by this Court which is well settled principle that it is the duty of the Court to assess reasonable compensation. Burden is on the owner to prove the prevailing market value. On adduction of evidence by the parties, the acid test which the Court has to adopt is that the Court has to sit in the arm-chair of a prudent purchaser, eschew feats of imagination and consider whether a reasonable prudent purchaser in the open market would offer the same price which the Court is intending to fix the market value in respect of the acquired land. Since it is the compulsory acquisition, it is but the solemn duty of the Court to assess reasonable compensation so as to allow the same to the owner of the land whose property has been acquired by compulsory acquisition and also it avoid needless burden on public exchequer. No feats of imagination would require to bog the mind that when 13.75 acres of land was offered for sale in an open market, no prudent man would have credulity to purchase that land on sq.ft. basis." 19. The positive as well as negative factors to be taken into consideration for arriving at the correct market value was considered by the Honourable Supreme Court in Viluben Jhalejar Contractor v. State of Gujarat,(2005) 4 SCC 789, wherein it was held thus : "18. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefor. It is beyond any cavil that the price of the land which a willing and informed buyer would offer would be https://hcservices.ecourts.gov.in/hcservices/ different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not. 19. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered. 20. The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis- à-vis the land under acquisition by placing the two in juxtaposition. The positive and negative factors are as under: Positive factors Negative factors (i) smallness of size (i) largeness of area (ii) proximity to a road (ii) situation in the interior at a distance from the road (iii) frontage on a road (iii)narrow strip of land with very small frontage compared to depth (iv) nearness to developed area (iv) lower level requiring the depressed portion to be filled up (v) regular shape (v) remoteness from developed locality (vi) level vis-à-vis land under (vi) some special disadvantageous acquisition factors which would deter a purchaser (vii)special value for an owner of an adjoining property to whom it may have some very special advantage 21. Whereas a smaller plot may be within the reach of many, a large block of land will have to be developed preparing a layout plan, carving out roads, leaving https://hcservices.ecourts.gov.in/hcservices/ open spaces, plotting out smaller plots, waiting for purchasers and the hazards of an entrepreneur. Such development charges may range between 20% and 50% of the total price." 20. In Atma Singh v. State of Haryana,(2008) 2 SCC 568 = 2007 (14) Scale 109, the Honourable Supreme Court reiterated the legal position that in considering the market value, the guiding star would be the conduct of hypothetical willing vendor and willing purchaser and not an anxious dealing at arms length. 21. In a recent decision of a three Judge Bench of the Honourable Supreme Court in REVENUE DIVISIONAL OFFICER – cum- L.A.O. v. SHAIK AZAM SAHEB ETC. (2009(1) SCALE 545), the positive as well as negative factors indicated in VILUBEN JHALEJAR CONTRACTOR v. STATE OF GUJARAT (2005) 4 SCC 789) as factors germane for consideration for the purpose of determining the market value was re-iterated thus:- "11. Determination of market value of a land acquired in terms of the provisions of the said Act depends upon a large number of factors, the first being the nature and quality of the land, i.e., whether agricultural land or homestead land. Apart from nature and quality of land in the event the agricultural lands are acquired the other factors relevant therefor are also required to be considered, namely, as to whether they are irrigated or non-irrigated, extent of facilities available for irrigation, location of the land, closeness thereof from any road of highway, the evenness of land, its position in different seasons particularly in rainy season, existence of any building or structure as also the development in and around the area. A host of other factors will also have a bearing on determining the valuation of land. 12. The mode and manner in which determination of such valuation are to be carried out would also depend upon the facts and circumstances of each case, namely, whether any deed of sale executed in respect of similarly situated land near about the date of issuance of notification under Section 4(1) of the Act is https://hcservices.ecourts.gov.in/hcservices/ available, or in absence of any such exemplars whether the claim can be determined on yield basis or in case of an orchard on the basis of the number of fruit bearing trees and the yield therefrom. 13. One other important factor which also should be borne in mind is that it may not be safe to rely only on an award involving a neighbouring area irrespective of the nature and quality of the land. For determination of market value again, the positive and negative factors germane therefor should be taken into consideration, as laid down by this Court in VILUBEN JHALEJAR CONTRACTOR v. STATE OF GUJARAT (2005) 4 SCC 789)." 22. The principles governing determination of market value with reference to the earlier decisions of the Supreme Court was considered recently by a two Judge Bench of the Honourable Supreme Court in FARIDABAD GAS POWER PROJECT, NTPC LTD. ETC. v. OM PRAKASH & ORS., ETC. reported in 2009(2)SCALE 219). MARKET VALUE – YEAR TO YEAR INCREASE BASIS: 23. The learned Senior Counsel