IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON'BLE SRI JUSTICE GHULAM MOHAMMED and THE HON'BLE SRI JUSTICE G.BHAVANI PRASAD L.A.A.S.No. 440 of 2008 DATE: 03.02.2010 Between: The Project Officer, Singareni Collieries Company Limited, Bhupalpalli (Projects) Area, Bhoopalpalli,Warangal District ..... APPELLANT AND Nagapuri Poshamallu and others .....RESPONDENTS Counsel for the Petitioner: Counsel for the Respondents: The Court made the following : THE HON'BLE SRI JUSTICE GHULAM MOHAMMED and THE HON'BLE SRI JUSTICE G.BHAVANI PRASAD L.A.A.S No. 440 of 2008 JUDGMENT: (per Hon'ble Sri Justice Gulam Mohammed) 1. Heard, L.A.A.S.M.P.No.26 of 2010 ordered. 2. This is an appeal preferred under Section 54 of the Land Acquisition Act, 1894 ( henceforth referred to as ‘the Act’) by the Singareni Colleries Company Limited 2nd respondent in O.P.No.144 of 1990 on the file of the court of the Principal Senior Civil Judge, Warangal. 3. Brief facts of the case are that the appellant-Company made a requisition on 12-6-1986 for acquisition of land to an extent of Ac.60-38 guntas (Ac.1-22 guntas Wet land and Ac.59-16 guntas dry land) at Jangedu Village, Bhupalpally Mandal, Warangal District for opening of new mines, Magazine for storing of explosives. Draft notification in the present case was published on 25-2-1988 and draft declaration was published on 5-3-1988. On consideration of the material on record, the Land Acquisition Officer divided the lands into three blocks 1) Block I – Comprising of SurveyNo.286 measuring Ac.1.22 guntas, 2) Block II – comprising of Survey Nos.86 to 88, 91 to 98, 111, 113 and 138/2 measuring Ac.56.11 guntas, and Block III – comprising of Survey Nos.287/2, 287/4, 287/5 and 287/6 measuring Ac.3-05 guntas respectively. The Land Acquisition Officer determined value of the land, in Block I, being wet land at Rs.12,000/- per acre and for Blcok II and Block III, which are dry lands, at Rs.2,800/- per acre. Aggrieved by the award passed by the Land Acquisition Officer, the claimants sought for reference to the Civil Court seeking enhancement of the compensation and thus, the present O.P. was referred by the Land Acquisition Officer, Mulugu under section 18 of the Act on the application of the awardees for enhancement of compensation amount for the land acquired for opening of new mines and magazine at Jangedu village of Bhupalpally Mandal. 4. After consideration of the material on record, the then I Additional Senior Civil Judge, Warangal at earlier point of time, fixed the market value of the dry land at Rs.25,000/- per acre and for the wet land at Rs.30,000/- per acre with 30% solatium and 12 % additional amount from 15-3-1988 till 03.06.1988. The appellant- company preferred Writ Petition Nos.18504 and 19287 of 1999 before this Court and this Court by its order dated 31-3-2004 set aside the awards passed in O.P.No.144 of 1990 and 141 of 1993 with a direction to hear and decide the said references after affording an opportunity of being heard to the appellant-company. 5. Pursuant to the directions of this Court, before the trial Court on behalf of the claimants P.Ws. 1 to 10 were examined, and Exs. A.1 to A.21 were marked. On behalf of the respondents R.Ws.1 to 3 were examined and Exs.B.1 and B.2 were marked. R.W.1-A Sri G. Anjaneyulu, Revenue Divisional Officer, Mulugu, was also examined. 6. The Reference Court on consideration of the evidence on record, keeping in view the fertility and classification of lands located in the limits of Jangedu village and the lands located in the limits of Bhupalpally village, enhanced the compensation of the lands at Rs.36,000/- per acre irrespective of classification of land. Hence, this appeal by the appellant-Company. 7. Heard the learned counsel on either side. 8. During the course of arguments we have ordered LAASMP No.26 of 2010 seeking to receive the sale deeds as Exs. B.3 and B.4. 9. It is the contention of the appellant counsel Sri N.Subba Reddy that the claimants did not challenge the validity of sale deed bearing No.1231 dated 18-9-1987 admeasuring Ac.1.29 guntas in Survey No.88 and Sale deed bearing No.1232 dated 18-09-1987 admeasuring Ac.1.00 in Survey No.88 of Jangedu Village and that basing on the sale transactions took place in the above sale deed the award passed by the Land Acquisition Officer is just and proper and that the Reference Court ought not to have enhanced the compensation to Rs.36,000/- per acre for both categories of dry and wet lands. It is also contended by Sri N.Subba Reddy, learned counsel for the claimants that when a large extent of land was acquired learned Judge ought not to have relied upon small extent of land so as to determine the market value and that small bits of land can’t be the pointer so as to determine the market value of the land unless proper deductions are given and that Exs. A-1 to A-8 are not comparable sale and they cannot be made basis for determination of compensation, since the land in the present case was acquired for excavation of coal. He submits that the claimants are aware of the land acquisition proceedings, which was initiated in the year 1986, and they have brought up the sale deeds so as to claim higher compensation and the same cannot be made criteria for determination of compensation and that Land Acquisition Officer has rightly fixed compensation by relying upon the same statistics in Item Nos.7,8,9 and there is no justification in ignoring the sale transactions by the Reference Court and that the learned Judge abnormally enhanced the compensation without any justifiable criteria. It is further contended that sale deeds relied upon by the claimants are situated far away from the acquired lands. In support of his contention, learned counsel relied upon a decisions reported in UNION OF INDIA VS. RAM PHOOL[1], THE DOLLAR COMPANY, MADRAS VS. COLLECTOR OF MADRAS[2], SHAKUNTALABAI VS. STATE Of MAHARASHTRA[3], V.M.SALGAOAR AND BROTHERS PRIVATE LIMITED VS. UNION Of INDIA[4]. In Ram Phool’s case (1 supra) it was held by the Supreme Court that: “6. ON behalf of the Union of India it is contended that Exhibit A-1, which is a sale transaction in respect of a small bit of land measuring one bigha, could not be the basis for determination of the market value of a vast stretch of land measuring 5484 bighas and if that is taken out of consideration, then there is no residue of evidence on which the determination made by the High Court could be sustained. Mr Dinesh Dwivedi, learned Senior Counsel appearing for the respondents on the other hand contended that though the reference Court and the High Court had rejected several sale transactions on the ground that the sale transactions do not inspire any confidence but have not indicated any reasons. He further contended that in respect of the same village there has been an award which had culminated in the judgment of the High Court awarding higher compensation and that should be looked into for the purpose of disposal of these appeals. That award had not been produced before the High Court in the case in hand nor was it before the reference Court also; though an application for taking award no doubt is a useful guide for every court to determine the market value but that award must be taken into evidence in accordance with law by giving an opportunity to the other side for rebutting the same and that had not been done in the case in hand. It is not possible to look into the additional evidence for coming to any conclusion as to whether the market value as determined by the High Court is sustainable or not. Leaving aside the so-called award, if we examine the impugned judgment of the High Court, we have no other evidence other than Exhibit A-1 which was a sale transaction of 10-9-1981 in respect of one bigha of land and the price therein was Rs.30,000 per bigha. It has been held in a catena of decisions of this Court that the sale price in respect of a small bit of transaction would not be the determinative factor for deciding the market value of a vast stretch of land. As has been stated earlier, the extent of land acquired in the case in hand i.e.5484 bighas. In that view of the matter, we have no hesitation to come to the conclusion that the High Court has wholly erred in relying upon Exhibit A-1 in determining the market value of the acquired land extending to 5484 bighas. Since the onus is on the claimant to lead evidence on the determination of market value and if Exhibit A-1 is taken out of consideration, then there is no residue of evidence on which the determination made by the High Court enhancing the compensation awarded by the Reference Court could be sustained. We, therefore, set aside the impugned judgment of the High Court and affirm the market value as determined by the Reference Court. These appeals are allowed. Cross-appeals filed by the claimants are dismissed.” In Dollar Company, Madras’s case (2 supra) it was held by Supreme Court that: “ 8. Appreciating this lethal consequence, Sri Natesan, learned counsel, suggested rather obscurely that there might have been peculiar possibilities why this land was sold to his client at a low price. But the reasoning breaks down because the claimant has not even hinted in his pleading or cared to testify what special circumstances played upon the transaction by which he got this identical land at the price he paid. We cannot be swayed by surmises floating in mid-air, particularly where the party who urges these feathery likelihoods stood mute at the trial stage. He failed to speak only to become a martyr for silence.” “ 12. The other argument that prices must have inexorably risen from 1949 to 1959 is no axiomatic proposition. True, generally speaking, there has been an inflationary spiral in India which has not spared realty. But there is evidence in the present case to show that between 1949 and 1952 lands in this very area stood stationary in their prices. Various geo-economic factors have affected land prices, some to boost them, others to slump them. Therefore we cannot be persuaded to hold that a relentless rise in land prices has come to stay. Take but one example: If a land adjoins a factory which needs to be expanded further, a higher price may be offered by that factory owner. Likewise, if a heavy tax on construction of buildings or ceiling on vacant urban land is in the offing, prices of building sites may come down. It may even be said that such a factor as the application of the MISA to smugglers may depress prices of many items, including land and foreign cars, in certain places, Another exotic example. In some American cities the influx of certain coloured races into the downtown area brings down the market value of real estate, under current social conditions.” In Shakuntalabai’s case (3 supra) it was held by Supreme Court that: “4. THE question, therefore, is whether the High Court has committed any manifest error of law or had applied any wrong principle of law in determining the compensation and whether its failure to consider Exs. 38 and 44 does make any difference. Having given our consideration to the contention of Shri Mohta, we think that the High Court had not committed any manifest error of law or omitted to apply any correct principle of law. It is seen that 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. The need to take into consideration the value of the lands adjacent to the acquired land or near about the area which possessed same potentiality to work out the prices fetched therein for determination of market value of the acquired land. In a case where evidence of the value of the acquired land itself is available on record, it is unnecessary to travel beyond that evidence and consider the market value prevailing in the adjacent lands. As stated earlier, though Exs. 38 and 44 might command different market value to the land situated in approved layouts, since the appellant himself had purchased the selfsame acquired land in 1957 at Rs.10,000.00 for the entire 20 acres of land, the High Court was right in its view to consider the very same evidence to determine the compensation to the acquired land. On the assessment of the increase in the value by 10 times, the High Court had accepted that assessment of the appellant himself as Public Witness 9 and upheld the award of the Land Acquisition Collector since it reflects the same price as granted in the award under Section.11. 5. IT is seen that the reference court blissfully overlooked the admission of the owner on the surmise that it is an estimate made by the claimant and the evidence of the sale deeds under Exs.38 and 44 being prevailing prices, it acted thereon and determined the compensation. The approach of the reference court is clearly illegal and that of the High Court is quite correct and it was the only way in which the market value could be determined on the fact of the evidence on record. The reference court committed manifest error in determining the compensation on the basis of sq. ft. When lands of an extent of 20 acres are offered for sale in an open market, no willing and prudent purchaser would come forward to purchase that vast extent of land on sq. ft. basis. Therefore, the reference court has to consider the valuation sitting on the armchair of a willing prudent hypothetical vendee and to put a question to itself whether in given circumstances, he would agree to purchase the land on sq. ft. basis. No feat of imagination is necessary to reach the conclusion. The answer is obviously no. This aspect of the matter was totally ignored by the reference court and mechanically accepted the two sale deeds to enhance the compensation at a value of nearly Rs.35,000.00 per acre. In State of M.P.V.Shantabhai and V.M.Salgoacar and Brother Ltd. v. Union of India, this Court had accepted the principle that when the owner himself has purchased the land under acquisition, the consideration mentioned in the sale deed would form the basis to determine the market value. Though the High Court has relied on the sale deeds under Exs.65 and 66 relating to the lands in Nityanand Nagar Colony, it is also necessary to go into that aspect of the matter in the view we have stated above.” In V.M.Salgaoar and Brothers Private Limited’s case (4 supra) it was held by Supreme Court that: “3. HAVING given our anxious consideration to the respective considerations, the question that would arise for consideration is whether the High Court was right in determining the market value @ Rs.5.00 per sq. yd. Indisputably, the appellant had purchased the very land in 1965 for a total consideration of Rs.60,000.00. He intended to use this property for the purpose of construction of staff quarters and for his own use. The Land Acquisition Officer has taken that factor as a base and then considered to what extent the appellant is entitled to the determination of the compensation. We think that the Land Acquisition Officer is right instating with that premise and then to determine the market value. It is also an admitted fact that till April 1969 there was a freeze in the sale of the land for any purpose. No doubt, the ground on which the freeze was imposed is not available from the record but it is common knowledge and that the fact is on record that in 1969 itself there was one notification issued for the same purpose which was later withdrawn and a fresh notification on 6/1/1970 was published in the Gazette. It is common knowledge that finalisation of the proposal for acquisition for public purpose would take long time, at different levels of the government, to take a final shape. The government issued a stay order freezing the developmental activities which was vacated in April 1969. Between April 1969 to the date of the notification in January 1970, there was some escalation in the market value. It is found from the record that the lands are situated 1 km away from the Airport and 500 metres away from the Airport road. It would also be clear from the record that the High School was not established at the relevant time. Only three units have come up in the lands of the cooperative housing society. In other words till the date of the notification there was no appreciation in the value of the land except only a small area where private parties were permitted to set up residential units. Keeping these factors into consideration, the question arises whether the appellant is entitled to the market value at Rs.50.00 per sq. m. on the basis of small sale transactions as determined by the District Judge. Taking all the above facts into consideration, we think that the District Judge has taken totally erroneous view in the matter. It is not the case of the appellant that he purchased the property with a view to sell to the third parties. It was purchased for construction of staff quarters. Therefore, the sale instances and the prices indicated therein are absolutely irrelevant for the purpose of determination of compensation to the acquired lands. As stated earlier, the appellant himself estimated the market value for the entire land at Rs.60,000.00 when he purchased the property in the year 1965. In the year it worked out @ Rs.3.49 per sq. m. There is evidence on record that in 1967, the notification under Section 4 (1) was published in the Gazette on 26/10/1967 acquiring a large extent of the land in LRC No.28 of 1981 etc. In that case, ultimately, the High Court in FCA No.27 of 1980 by its judgment and decree dated 4/9/1984 determined the compensation @ Rs.3.00 per sq. yd. The lands under acquisition are adjacent to the lands acquired in 1967. When the High Court determined the market value of the adjacent lands acquired in 1967 at Rs.3.00 per sq. yd., the District Judge committed palpable error of law in recording a finding that the above determination is irrelevant. The Land Acquisition Officer has rightly applied the principle of interest at compounded rate and then increased another Rs.1.25 per sq. m. for determining the compensation and worked out at round figure of Rs.5.00 per sq. m. The High Court, therefore, had rightly concluded that the market value would approximate to be Rs.5.00 per sq. m. and the District Judge committed, gross error of law in determining the market value on the basis of sale instances and fixed at Rs.50.00 per sq. m. It is true that in an appropriate case, the potential value of the land as on the date of the notification, realized or realizable price would form the base and would be taken into consideration for determining the compensation. But it is to be considered in the light of the facts and circumstances of each case. Even his plan for construction of staff quarters was not approved. In view of the facts and circumstances of the present case, the potential value of the land bears no relevance.” 10. On the other hand the learned counsel for the respondents vehemently contended that the claimants have been deprived of their livelihood because of acquisition of the lands by the government and that the claimants are small farmers and that by virtue of the acquisition they loss their avocation. Learned counsel relied upon copies of Ex.A-1- Sale deed dated 20.11.1987 executed by one D.Ramaiah, Ex.A-2-the Award proceedings dated 03.06.1988 relating to lands of Bhupalpally village, Ex.A-3-registration extract of document No.2252/1987 sale deed dated 18.12.1987 wherein 15 guntas of dry land was sold at Rs.15,000/- in Sy.No.399 of Bhupalpally village, and Exs.A-4, A-7, A-8, A-10 and contends that the trial Court has not committed any error in determining adequacy or otherwise of compensation and no interference is warranted in this appeal. To justify his contentions, he relied upon the Supreme Court judgment reported in RAVINDER NARAIN AND ANOTHER VS. UNION OF INDIA[5], wherein, the Supreme Court at paragraphs 6 and 7 held as under; “6. Where large area is the subject matter of acquisition, rate at which small plots are sold cannot be said to be a safe criteria. Reference in this context may be made to three decisions of this Court in The Collector of Lakhimpur V. Bhuban Chandra Dutta (AIR 1971 SC 2015). Prithvi Raj Taneja (dead) by LRs. V. The State of Madhya Pradesh and another (AIR (1977 SC 1560) and Smt. Kausalya Devi Bogra and others etc v. Land Acquisition Officer, Aurangabad and another (AIR 1984 SC 892). 7. It cannot, however, be laid down a an absolute proposition that the rates fixed for the small plots cannot be the basis for fixation of the rate. For example, where there is no other material it may in appropriate cases be open to the adjudicating Court to make comparison of the prices paid for small plots of land. However, in such cases necessary deductions/adjustments have to be made while determining the prices.” He further relied upon the judgment in LUCKNOW DEVELOPMENT AUTHORITY VS. KRISHNA GOPAL LAHORI AND OTHERS[6]. The relevant portion of the judgment is at paragraphs 15,16 and 22, which reads as under: “15. Where large area is the subject matter of acquisition, rate at which small plots are sold cannot be said to be a safe criteria. Reference in this context may be made to three decisions of this Court in The Collector of Lakhimpur V. Bhuban Chandra Dutta (AIR 1971 SC 2015). Prithvi Raj Taneja (dead) by LRs. V. The State of Madhya Pradesh and another (AIR (1977 SC 1560) and Smt. Kausalya Devi Bogra and others etc v. Land Acquisition Officer, Aurangabad and another (AIR 1984 SC 892). 16. It cannot, however, be laid down a an absolute proposition that the rates fixed for the small plots cannot be the basis for fixation of the rate. For example, where there is no other material it may in appropriate cases be open to the adjudicating Court to make comparison of the prices paid for small plots of land. However, in such cases necessary deductions/adjustments have to be made while determining the prices.” 21. It is well settled that in respect of agricultural land or undeveloped land which has potential value for housing or commercial purposes, normally 1/3rd amount of compensation has to be deducted out of the amount of compensation payable on the acquired land subject to certain variations depending on its nature, location, extent of expenditure involved for development and the area required for roads and other civic amenities to develop the land so as to make the plots for residential or commercial purposes. A land maybe plain or uneven, the soil of the land may be soft or hard bearing on the foundation for the purpose of making construction; may be the land is situated in the midst of a developed area all around but that land may have a hillock or may be low-lying or may be having deep ditches. So the amount of expenses that may be incurred in developing the area also varies. A claimant who claims that his land is fully developed and nothing more is required to be done for developmental purposes, must show on the basis of evidence that it is such a land and it is so located. In the absence of such evidence, merely saying that the area adjoining his land is a developed area, is not enough particularly when the extent of the acquired land is large and even if a small portion of the land