Ast 1 app669.05.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.669 OF 2005 IN LAND ACQUISITION REFERENCE NO.05 OF 1999 1. The Controller of Rationing, ) having office at Royal Insurance ) Building, 5 th floor, J.T.Road, ) Churchgate, Mumbai 400 020. )... Appellant. )(Org.Acquiring Body) ) 2. The Special Land Acquisition Officer ) MHADA, 3 rd floor, Old Custom House ) Fort, Mumbai – 400 023. )...Appellants )(Org.Applicant) Vs. 1. Bhavsar Construction Co. Pvt. Ltd. ) 301 Sagar Mansion, 40 ) Bhulabhai Desai Road, ) Mumbai-400 026. ) ) 2. Sharda Co-op. Hsg. Society Ltd. ) Narayan Wadi Trust Building, ) Khadilkar Road, 86, C.P.Tank, ) Mumbai – 400 004. )... Respondents )(Org. claimants). ALONGWITH Ast 2 app669.05.sxw CROSS OBJECTION NO. 1 OF 2009 IN APPEAL NO.669 OF 2005 1. Bhavsar Construction Co. Pvt. Ltd. ) 301 Sagar Mansion, 40 ) Bhulabhai Desai Road, ) Mumbai-400 026. ) ) 2. Sharda Co-op. Hsg. Society Ltd. ) Narayan Wadi Trust Building, ) Khadilkar Road, 86, C.P.Tank, ) Mumbai – 400 004. )... Cross Objectioners. )(Org. Respondents). Vs. 1. The Controller of Rationing, ) having office at Royal Insurance ) Building, 5 th floor, J.T.Road, ) Churchgate, Mumbai 400 020. ) ) 2. The Special Land Acquisition Officer ) MHADA, 3 rd floor, Old Custom House ) Fort, Mumbai – 400 023. )...Respondents )(Org.Appellants) -------------- Mr.P.G.Lad, AGP for Appellants. Mr.Mahesh Thorat for Respondents. -------------- Ast 3 app669.05.sxw CORAM : D.K.DESHMUKH AND V.R.KINGAONKAR, JJ. DATE : MARCH 25, 2010. JUDGMENT(Per V.R.Kingaonkar,J) 1. This appeal arises out of the Judgment in Land Acquisition Reference No.05/1999. By that Judgment, the learned Single Judge enhanced compensation awarded by the Special Land Acquisition Officer(SLAO) alongwith proportionate solatium and other components. By Award dated 5 th November, 1998, the SLAO MHADA awarded compensation for acquired property of the claimants, who are respondents in this appeal with which they were not satisfied. The claimants caused the reference under section 18 of the Land Reference Act, 1894(For short “the LA Act”) for enhancement of the compensation amount. Ast 4 app669.05.sxw The Respondents have filed cross-objection in the appeal seeking further enhancement of compensation amount. 2. The facts relevant to the appeal are thus: The acquired property is a plot bearing CS No.1461 admeasuring 1906.53 sq.ft. out of the total area consisting of 21216 sq.ft. situated on Jagannath Shankar Sheth Road, Girgaon, Mumbai. The acquired plot is mostly covered by godown called “Pednekar Godown” consisting of ground floor and mezzanine floor. There are other constructions standing on the remaining unacquired land, which are in occupation of several tenants. The original property was owned by Kawaji Mistry and Menocher Mistry, who were brothers inter se. It appears that somewhere in 1966, the godown was requisitioned by the Government for housing a Rationing Office. The entire property was purchased by the claimants- M/s.Bhavsar Construction Pvt.Ltd. in the year 1993 from Mistry brothers for the purpose of its development by demolishing the structure standing Ast 5 app669.05.sxw thereon. Prior to the said purchase, acquisition proceedings were initiated by the SLAO in respect of the part of the plot where the godown was standing. A notification under section 4 of the LA Act was issued declaring intention to acquire 1601 sq.ft. for the purpose of housing the Rationing Office. That was followed by notification under section 6 of the Act. Notice under section 9 of the Act was issued on 15/1/1994. Still, however, no progress was made in the matter for some period. However, on 25 th March, 1997, a fresh notification under section 4 was issued and the same was published in the Government Gazette on 3/4/997 indicating that the earlier proceedings had been dropped and fresh acquisition proceedings were undertaken. The acquisition proceedings again halted for some period and therefore, the claimants filed Writ Petition No.1276 of 1998 seeking direction from this Court to State Government for immediate declaration of the award. This Court disposed of the said Writ Petition on 6/9/1998 with a direction to the State to publish the award within a period of 3 months. The SLAO thereafter, drew the award whereby total compensation of Rs.76,05,898/- was awarded inclusive of Ast 6 app669.05.sxw 30% solatium and 12% interest. The SLAO determined the market value of the acquired land at the rate of Rs.2660/- per sq.ft and that of the structure at the rate of Rs. 335/- per sq.ft. The claimants sought compensation at the rate of Rs.15,000/- per sq. ft. They urged that the market value of the acquired land was much more and the SLAO had undervalued the acquired property. They claimed, therefore, compensation of Rs. 5,19,85,050/-. 3. On merits, the learned Single Judge held that the market value of the acquired land was Rs. 4542.00 per sq.ft. That was accessed for 2916.39 sq.ft. including the area of mezzanine floor. The learned Single Judge held that the claimants were entitled to receive relevant enhancement of solatium at the rate of 30%. The enhanced compensation payable on account of the market value which was determined at the above rate alongwith other components was found to be Rs.1,99,56,182.48ps. Ast 7 app669.05.sxw 4. Before the reference Court, the claimants relied upon testimony of CW Harshad Maniar, who is an expert valuer. He gave valuation report on the basis of comparative sale instances in respect of the properties called “Daulat Mansion” and “Prasad Chambers” as shown vide sale deeds dated 2/5/1996(Exh.B) and August, 1997(Exh.C). The learned Single Judge partly accepted the opinion of the expert valuer-C.W.Maniar through a major part of the report(Exh.A) was found unacceptable. It appears that the building called “Daulat Mansion” is situated approximately 400 meters away from the acquired property. It is a ground plus 4 floors with total built up area of 4090 sq.ft. and the ground floor of 988 sq.ft. thereof is in possession of a tenant. This property was sold for Rs.1,07,00,000/-. The sale was effected at the rate of Rs.11,100/- per sq. ft. Another property called “Prasad Chambers” is at a distance of 250 meters from the acquired property. It is a ground plus four floors. The property was sold for consideration of Rs.1,10,25,630/- i.e. at the rate of Rs.16,501/- per sq. ft. In his report, CW Maniar averaged the two rates and worked out a common rate of Rs.16,100/- per sq. ft, which according Ast 8 app669.05.sxw to him, could be the reasonable market value, for which a willing buyer might have purchased the acquired property. Thus, he had worked out market value of the acquired property at Rs.4,02,46,182/-. As stated earlier, the Reference Court held that the market value of the acquired property was Rs.1,32,46,243/- being valued at the rate of Rs.4542/- per sq. ft. 5. We have heard learned Counsel for the parties. Counsel appearing for the Appellant(Acquiring Body) would submit that the Reference Court erroneously considered the acquired area to be 2916.39 sq. ft. instead of 1906.53 sq. ft. He contended that the area of mezzanine floor should not have been included in the acquired area and the separate valuation of the structure was impermissible. He argued that valuation of the structure at Rs.63,869/- is incorrectly made by the reference Court though balance life of the said structure is practically nil. He further argued that sale instance in respect of “Daulat Mansion” was uncomparable and yet it was considered by the Reference Court. His Ast 9 app669.05.sxw main contention is that the entire property bearing C.S.No.1461 was agreed to be sold to the claimants on 26/2/1993 for consideration of Rs. 75 lakhs by Mistry Brothers though the sale deed was actually executed on 28 th April, 2000(Exh.4 colly) and the remaining part of the property, excluding the acquired property, was the best sale instance available for comparison which the reference Court has not properly appreciated. The Counsel therefore, urged to properly slash down the increased quantum of compensation by allowing the appeal. 6. We have carefully scrutinized the version of CW Maniar and the relevant evidence adduced by the claimants. The did not adduce any evidence before the Reference Court. We have noticed that though the two sale instances referred by CW-Maniar are the basis for his report(Exh.A), yet the Reference Court discarded one of such sale instance pertaining to the property called “Prasad Chambers”. The reference Court seems to have duly considered the agreement of sale dated 26 th February, 1993(Exh.2) executed by Mistry Brothers in favour of Ast 10 app669.05.sxw the claimants. The Reference Court noticed that the entire property was agreed to be sold for consideration of Rs.75 lakhs. The transaction was to be completed on or before 31 st July, 1993. Still, however, the Sale Deed(Exh.4 colly) came to be executed only on 28 th April, 2000. The question is whether that sale instance could the basis for determination of reasonable market value of the acquired property. The acquired property was already facing the acquisition proceedings in view of the fact that notification under section 4 of the LA Act was issued in the year 1992. The acquired property i.e. “Pednekar Godown” was under occupation of the Rationing Office. The godown premises were requisitioned in or about 1966. It was but natural that getting vacant possession of the godown premises was highly improbable as on the date of agreement of sale. The rest of the property was being occupied by 14 tenants. The tenancies were governed by the provisions of Bombay Rents Act. The tenants were likely to get apportionment of compensation if the remaining property would have been acquired. Obviously, the transaction under the agreement of sale dated 26 th February, 1993 as between Mistry Brothers Ast 11 app669.05.sxw and the claimants was a speculative one. The claimants had taken a risk. It was a kind of distress sale. Needless to say, the market value of the remaining part of the same property i.e. C.S.No.1461 by itself could not be determinative factor. 7. The Apex Court in “Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona and Anr.(1988) 3 SCC 751” held that the market value of the property should be determined assuming that the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay reasonable price as on that date. It is well settled that market value needs to be determined on hypothetical basis. There is no mathematical precesion expected in the process of such valuation. The comparable sale instances are required to be considered in order to eliminate the speculation. The main features to be examined in comparable sales are (a) it must be within reasonable time of notification under section 4; (b) it should be a bonafide transaction; (c) it must be a sale of land or of the land in the proximity of the acquired land; Ast 12 app669.05.sxw and (d) it must possess similar advantages. The acquisition proceedings were started in 1992 but were stopped in the midst. It has come on record that the claimants approached this Court by filing Writ Petition No. 1276 of 1998 for direction to the State Government to forthwith declare the award. It is significant to note that the second notification issued under section 4 was published in the Government Gazette on 3 rd April, 1997. The SLAO was required to consider the juxta position of the market value, which the acquired property could have fetch, if a hypothetical buyer would have willingly purchased the same in April, 1997. It goes without saying that the speculative nature of the transaction in respect of the entire property bearing CS No.1461 could not have been the basis for determination of the market value of the acquired property. For, the claimants purchased the said property without possession in respect of most of the area which was occupied by the tenants including the acquired property. We find, therefore, that the acquired property or the remaining part of the CS No.1461 was not immediately available for any development purpose at that time. This fact situation continued to Ast 13 app669.05.sxw exists even when the second notification under section 4 was issued on 3 rd April, 1997. In the meanwhile, the market value of the property must have increased to certain extent due to passage of approximately 4 years between the issuance of first notification in 1992 and the second notification in 1997. The peculiar nature of the transaction of sale, which was indicated in the agreement dated 26 th February, 1993 therefore makes it clear that the said sale transaction was a non-comparable instance. In our opinion, the learned Single Judge rightly held that the value for which the remaining part of the property out of C.S.No.1461 was purchased, could not be the significant relevant factor for determination of the market value of the acquired property. 8. So far as the contention that an area of the acquired property is wrongly determined as 2916.39 is concerned, it appears that the valuer’s report(Exh.A) unmistakably shows that the mezzanine floor is constructed over the round M.S.Columns with teak wood rafters and purlins. The version of C.W.-Maniar purports to show that it is a very Ast 14 app669.05.sxw strong structure and could have long life in case of appropriate maintenance thereof. The learned Single Judge noticed that though the ground floor area is of 1901.06 sq.ft., yet the mezzanine floor area is one of 1523 sq.ft. Therefore, 2/3 factor was applied. After deduction of 1/3 area out of the actual area of mezzanine floor, it is noticed that the acquired area of the mezzanine floor comprises of 1015.33 sq.ft. apart from the ground floor. Counsel for the Appellants would submit that the mezzanine floor cannot be regarded as “land” for the purpose of determination of the market value under section 23 of the LA Act. We find it difficult to countenance the argument in view of the inclusive definition of the expression “land” as used in Section 3(a) of the LA Act. The relevant provision reads as follows: “(a) the expression “land” includes benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth; 9. Perusal of the above provision would show that the structure of the mezzanine floor could be considered as the acquired land. Needless to Ast 15 app669.05.sxw say, there is no error committed by the learned Single Judge while calculating the acquired area of the land for the purpose of awarding the compensation. Though C.W.Maniar, the expert valuer, relied upon the two sale instances, pertaining to the sale transactions in respect of “Daulat Mansion” and “Prasad Chambers”, which are the properties situated in the same area, yet the learned Single Judge analysed the report with reference to the similarities between the said sale instances and the acquired property. It is pertinent to notice that the learned Single Judge assigned cogent reasons while partly accepting the report to the extent of comparison of the acquired property with the property called “Daulat Mansion” and rejecting another sale instance pertaining to “Prasad Chambers”. We have also noticed that even while holding that to some extent, the sale instance of “Daulat Mansion” is comparable with the probable market value which the acquired property could have fetched at the relevant time, evenso the substantial part of the report of C.W. Maniar in this behalf is discarded by the learned Single Judge. The learned Single Judge duly considered the factors like frontage user and Ast 16 app669.05.sxw condition of the structure for the purpose of comparison. The total plus factors found in favour of the acquired property have been held upto 33% only though C.W.Maniar worked out the same as 225%. We do not find any patent error committed by the learned Single Judge while analysing the plus and minus factors when such sale instance is compared with the acquired property. The acquired property has frontage of 45.5 inches abutting to J.S.S.Road. However, “Daulat Mansion” has frontage of 21 ft. on Babasaheb Jaikar Marg. The learned Single Judge discounted the cost of renovation which could be contemplated if the acquired structure was rebuilt/renovated. The sale instance in relation to “Daulat Mansion” is in the proximity of the period of acquisition. The property was partly vacant and partly occupied by tenants. The conveyance deed(Exh.B) dated 2 nd June, 1994 shows that the sale was effected for total consideration of Rs. 1,07,00,000/-. It is obvious that the said property might have fetched more value in the month of April, 1997, of which period the comparison is necessary. Considering the elaborate analysis made by the learned Single Judge, in our opinion, finding in this context Ast 17 app669.05.sxw does not suffer from any illegality, inaccuracy or impropriety. 10. Counsel appearing for the Appellants would submit that the structure of the building of the godown is about 70 years old and therefore, the balance life of the said structure is nil. He would submit that the evaluation of the cost of the structure ought to have been reasonably made by giving deduction of 25% on this count. It is difficult to countenance the argument of the learned Counsel. The material aspect of the matter is that the FSI available to the old structure is much more than it would be available if the structure is razed for the purpose of construction of a new building at the same place. One cannot be oblivious of the fact that the acquired property is situated in the prime locality of the metro city. It is easily accessible to the members of public. We have duly considered the reasons ascribed by the learned Single Judge in support of the impugned Judgment. We find ourselves in agreement with the findings recorded by him. It goes without saying that the appeal and the cross objection are without any merit. Ast 18 app669.05.sxw 11. Accordingly, we do not find any infirmity or illegality in the impugned Judgment. We also find no substance in the cross-objection preferred by the claimants seeking further enhancement of the compensation amount. The Appeal and the Cross-objection are therefore, dismissed with no order as to cost. [D.K.DESHMUKH,J] [ V.R.KINGAONKAR, J ]