HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE RAJA ELANGO DT. 06 -10-2010 CCCA NO.148/2003 and Cross Objections (SR) Nos.41633/2003, 41994/2003, 42001/2003 and 9156/2009 and CCCAMP No.296/2010 CCCA NO.148/2003 Land Acquisition Officer/Referring Officer, Hyderabad Urban Development Authority, A-108, Matrusri Apartments, Hyderguda, Hyderabad. …Appellant V. 1. B. Yadgir Reddy, (died) and his LRs R-37 to 39 and others. ..Respondents The Court made the following: HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE RAJA ELGNAO CCCA NO.148/2003 and Cross Objections (SR) Nos.41633/2003, 41994/2003, 42001/2003 and 9156/2009 and CCCAMP No.296/2010 COMMON JUDGMENT: (Per the Hon’ble Sri Justice A. Gopal Reddy) This appeal by the Land Acquisition Officer, Hyderabad Urban Development Authority, Hyderabad and the cross-objections by the claimant Nos.1; 7,8,9,33 to 36; 4, 29,30,31,32 and 2,28 and 5, are filed aggrieved by the order and decree of the I Senior Civil Judge, City Civil Court, Hyderabad dt. 7- 8-2002 passed in O.P.No.107/1984 questioning the enhancement of compensation and seeking further enhancement respectively. The brief facts that led to the filing of the appeals and cross- objections are as follows: An extent of Ac.65-07 guntas comprising in S.Nos.320/1/A, 320/1/AA, 321, 324, 326/1 and 326/2 situated in Shaikpet village, Hyderabad Urban was acquired for the purpose of construction of residential complex for Non-resident Indians by issuing a notification under Sec.4(1) of the Land Acquisition Act, 1894 (for short “the Act”), which was published in the A.P.Gazette on 13-11- 1980. Possession of the land was taken on 15-5-1982 by the Hyderabad Urban Development Authority (HUDA). The Land Acquisition Officer after complying with all formalities passed an award on 5-5-1982 covered under Ex.B-2 awarding compensation at Rs.14,500/- per acre. As there were rival claims between the claimants, the matter was referred to the Civil Court (IV Additional Judge, City Civil Court, Hyderabad) under Section 30 of the Act, where it was numbered as OP No.376/82 and the same was ended in compromise and a compromise decree was passed on 9-4-1987 covered under Ex.A-2. Further, the claimants after receiving the compensation under protest sought for a reference under Se.18 of the Act to I Senior Civil Judge, City Civil Court, Hyderabad (Reference Court). After receiving the reference, the reference court numbered it as OP No.107/1984 and issued notice to the claimants, who appeared before the reference court pursuant to the notice and filed their respective claim statements claiming compensation at Rs.1 lakh per acre. Before the reference court, the claimants examined P.Ws.1 to 10 and marked Exs.A-1 to A-14. On behalf of the Referring Officer, R.Ws.1 and 2 were examined and Exs.B-1 to B-17 were marked. Taking into consideration the evidence, oral and documentary, adduced by the parties, the reference court by order dt. 16-11-1993 enhanced the compensation for the acquired land at Rs.27,550/- per acre. Aggrieved by the same, the claimants as well as HUDA filed CCCA Nos.89,103,201 and 202 of 1994 and 13 and 14 of 1995 and 95 of 1996. A learned Division Bench of this Court while setting aside the order remitted the matter to the trial court with a direction to dispose of the reference within six months from the date of order by giving an opportunity to adduce further oral and documentary evidence. The claimants as well as HUDA did not adduce either any oral evidence or file documents after remanding the matter. The reference court after considering the matter afresh in the light of the observation made in the remand order, and after considering the evidence adduced by the parties in detail, fixed the market for the acquired land at Rs.57000/- per acre as against Rs.14,500/- as awarded by the Land Acquisition Officer, with statutory solatium interest, and additional market value under Sec. 23(1) of the Act. Questioning the enhancement, HUDA filed CCCA No.148/2003 and claimant Nos.1; 7,8,9,33 to 36; 4, 29,30,31,32 and 2,28 and 5 filed Cross Objections (SR) Nos.41633/2003, 41994/2003, 42001/2003 and 9156/2009 respectively. Sri S. Satyanarayana Prasad, learned counsel for the appellant-HUDA contended that Ex.A-4 has been discarded by the reference court as it is a post- notification sale; that Exs.A-8, A9 and A-10 are sale deeds pertain to small extents of 249 sq.yards, 980 sq.yards and 460 sq.yards and the said land was sold at Rs.30, 40 and 25/- per sq.yard respectively; and the trial court mainly relied upon Ex.A-11 judgment dt. 23-12-1985, whereunder land pertaining to S.Nos.352, 354 was acquired in the year 1971 and compensation was fixed at Rs.10/- per sq.yard. He further contended that in the absence of any evidence adduced by the claimants with regard to the proximity of the land covered by Ex.A-11 with that of the acquired land and also similarity, the reference court is not justified in taking it as a basis for fixation of market value and same cannot form the basis for fixation of market value. When agreement of sale covered under Ex.A-13 entered into by respondent-claimant No.14, wherein one of the claimants agreed to sell the property at Rs.20000/- per acre, the reference court wrongly discarded the said document, which admittedly reflects the true market value. Further, awarding escalation at 10% by the reference court is not at all justified, and escalation should not be more than 7.5%. In support of the said submission, a strong reliance is placed on the following judgments: 1. GIAN CHAND V. UNION OF INDIA[1] 2. CHIMANLAL HARGOVINDDAS V. SPECIAL LAND ACQUISION OFFICER[2] 3. ATTAR SINGH V. UNION OF INDIA[3] Sri D. Jagan Mohan Reddy, learned counsel for the claimant No.14 submitted that though the original claim is at Rs.1 lakh per acre, on remand by this court, they claimed compensation at Rs.100/- per sq.yard and they have not led any evidence to claim such an exorbitant compensation. He relied upon the judgment of the Supreme Court in ONGC LTD. V. RAMESHBHAI JIVANBHAI PATEL[4] for calculation of escalation. Land under Ex.A-3 is not similar and the same cannot be taken into consideration. When the larger area of the land is acquired, sale deeds covered under Exs.A-3,A-5, A8, A9 and A-10 cannot be taken into consideration for fixation of the market value. In support of his contentions, he placed reliance on the following judgments: 1. GAFAR V. MORADABAD DEVELOPMENT AUTHORITY [5]; 2. RANVIR SINGH V. UNION OF INDIA[6] Sri D. Prakash Reddy, learned Senior Counsel appearing for the claimants 2,5 and 28 contended that through the evidence of P.W.9, proximity of the land has already been established, and in the absence of any cross- examination on the point of distance and proximity, it is not open for the appellant to contend that the claimants failed to establish proximity to the acquired land. When the land acquired under Ex.A-11 is a vast extent ie., Ac.46-25 guntas, the same can definitely take into consideration for fixation of the market value after due escalation on passage of time, which is evident from sale transaction covered under Ex.A-8. The claimants restricted their claim in the cross-appeal at Rs.1 lakh per acre but even if the escalation at 10% for each year is calculated, the market value comes to Rs.1,24,840/-. Though the reference court rightly discarded agreement of sale entered into by one of the claimants (D.Yadgir Reddy) in favour of claimant No.14 under Ex.A-13 and it cannot form basis for fixation of market value as it is not certain whether vendor is having any share in the property at the time when he entered into an agreement and same is pending under Sec. 30 of the Act, it is possible for him to enter into an agreement and therefore mere entering into agreement, it cannot be presumed that value reflected under Ex.A-13 is not true market value. In the absence of any cross-examination on Ex.A-12, additional evidence produced by the appellant cannot be received. In the light of the above submissions, the point that arises for consideration in this appeal and X objections is: “What is the true market value for which the claimants are entitled to” The Supreme Court in CHIMANLAL HARGOVINDDAS v. SPECIAL LAND ACQUISITION OFFICER (2 supra) laid down the factors, which must be etched on the mental screen of the judges to determine the market value, which reads as under: “(1) A reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the court cannot take into account the material relied upon by the Land Acquisition Officer in his award unless the same material is produced and proved before the court. (2) So also the award of the Land Acquisition Officer is not to be treated as a judgment of the trial court open or exposed to challenge before the court hearing the reference. It is merely an offer made by the Land Acquisition Officer and the material utilised by him for making his valuation cannot be utilised by the court unless produced and proved before it. It is not the function of the court to sit in appeal against the award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate court. (3) The court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant). (6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price. (7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance which provides the index of market value. (8) Only genuine instances have to be taken into account. (Sometimes instances are rigged up in anticipation of acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations: (i) proximity from time angle, (ii) proximity from situation angle. (11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-à-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors: Plus factors 1. smallness of size Minus factors 1. largeness of area 2. proximity to a road 2. situation in the interior at a distance from the road 3. frontage on a road 3. narrow strip of land with very small frontage compared to depth 4. nearness to developed area 4. lower level requiring the depressed portion to be filled up 5. regular shape 5. remoteness from developed locality 6. level vis-à-vis land under acquisition 6. some special disadvantageous factor which would deter a purchaser 7. special value for an owner of an adjoining property to whom it may have some very special advantage (15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds cannot be compared with a large tract or block of land of say 10000 eq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction byway of an allowance at an appropriate rate ranging approx. between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards. (16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself. (17) These are general guidelines to be applied with understanding informed with common sense.” In M/s. PRINTERS HOUSE PRIVATE LIMITED V. MST. SAIYADAN[7] the Supreme Court while observing that while fixing the market value of the acquired land, Comparable Sales Method of valuation is preferred than other methods of valuation of land such as Capitalization of Net Income Method or Expert Opinion Method, held as under: “ If 'comparable Sales Method of Valuation of Land is adopted for determining the market-value of an acquired plot of land, it generally holds good for determination of the market-value of several acquired plots of land if acquisition of all such plots of land is made pursuant to the same preliminary notification. But, if any of the factors, such as, location, shape, size, potentiality or tenure of one plot of acquired land widely differs from the other plot (s) of acquired land (s), then the market-value of each plot of land acquired has to be determined independently of the other (s) even if all of them had been acquired pursuant to the same preliminary notification. The reason is not far to seek since the differential factors relating to different acquired plots greatly affect their value. Hence, if any salient factor of different acquired plots of land, which greatly affects their value is ignored or is not taken into consideration by the Court while determining the market- value of acquired lands, it will have failed to apply the correct principle of valuation adoptable in valuation of different types of acquired lands (para 8). On point No.2, namely, Did the High Court apply the correct principle of valuation of land in determining the market value of the acquired plots of land by fixing their unit rate by averaging the market value fetched for different lands under the sale deeds and previous awards?, the Supreme Court held thus: “This point relates to making the choice of sales when market value of the acquired land has to be determined by 'comparable Sales Method'. If a land sold under a sale-deed is comparable with the acquired land, then the courts will have, ordinarily, recourse to 'comparable Sales Method of Valuation' to determine the market value of the acquired land, cannot be doubted. What is done under the 'comparable Sales Method' of valuation of land is to find out the price fetched for sale of land under the sale-deed claimed to be comparable sale and take that price as that which the acquired land would have fetched, if its sale had been effected in the open market and determine the market value of the acquired land accordingly. The 'comparable Sales Method of Valuation' of land is preferred to other known methods of valuation of land since the variety of factors appertaining to the land, which require adjustment by the Court (valuer) in determining the market value of the acquired land, would be the least. Where, however, certain factors appertaining to the land in a comparable sale has to be adjusted, it is done by varying the price of the land covered by the sale, i. e. by adding certain amount to the price fetched for the land sold or by deducting a certain amount in such price, depending on the nature of the factor concerned being a plus factor or a minus factor. Whatever it be, the genuineness or authenticity of the sale is a factor which permits no adjustment in price. (para 14) In BANGARU NARASINGHA RAO NAIDU V. REVENUE DIVISIONAL OFFIER[8], Justice O.Chinnappa Reddy speaking for the Bench held that there cannot be any doubt that the best evidence of the market value of the acquired land is afforded by transactions of sale in respect of the very acquired land, provided of course there is nothing to doubt the authenticity of the transactions and accordingly set-aside the judgment of the High Court where it interfered with the award of compensation made by the reference court on the basis of the transactions of sale in respect of the very acquired land and restored the judgment of the reference court fixing the market value based upon the said sale transactions. In SPECIAL TAHSILDAR LAND ACQUISITION V. MANGALA GOWRI[9], the Supreme Court held that for ascertaining the market rate, the court can rely upon such transactions which would offer a reasonable basis to fix the price. The price paid in the sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence. In its absence the price paid for a land possessing similar advantages to the land in the neighbourhood of the land acquired in or about the time of the notification would supply the date to assess the market value. But exclusion of bona fide and genuine sale transactions in respect of the same land under acquisition and to place reliance on the award of some other land is obviously illegal. It is now fairly well-settled that judgments determining the market value of the land rendered can be admitted in evidence for determining the market value. (See BHAG SINGH VS. UNION TERRITORY CHANDIGARH=AIR 1993 SC 222 and LAND ACQUISITION OFFICER, city IMPROVEMENT TRUST BOARD v H. NARAYANAIAH=AIR 1976 SC 2403). When no comparable sales are available, judgments and awards can form basis for fixation of the market value. (See G. M., O. N. G. C. LTD. v. SENDHABHAI VASTRAM PATEL=(2005) 6 SCC 454. Price escalation is also to be borne in mind when the award and judgments are not proximate to the notification issued for the acquired land. Added interest compounding for the subsequent years towards price escalation is one of the method in fixing the market value. The land located in the same village will not fetch same market value unless they are similarly located or identical nature and having similar advantages. The land which is situated in the interior in the midst of large blocks of undeveloped land will not fetch the same value as the land which is nearer to the developed area and nearer to the road. A hypothetical purchaser would not offer the same market value for the two kinds of lands. The development of lands which are nearer to the developed area and nearer to the road can reasonably be expected to take place much earlier. Only after such lands are developed and construction comes up, the development would proceed further in the interior. If a hypothetical purchaser opts to purchase the land situated in the interior in the midst of an undeveloped area, he would doubtless take into account the factor pertaining to the estimated time for development to reach the land in the interior. However, all these facts are incapable of precise or scientific evaluation. The valuer has to indulge in some amount of guesswork and make the best of the situation. The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence. In its absence, the price paid for a land possessing similar advantages to the land in the neighbourhood of the land acquired in or about the time of the notification would supply the data to assess the market value. In the absence of any detailed particulars showing the similarity of the land and/or the respective advantages and disadvantages pertaining thereto, market value determined in the earlier awards cannot form the basis for determining the market value.(See: GIAN CHAND (1 supra); CHIMANLAL HARGOVINDDAS (2 supra); T.S.RAMACHANDRA SHETTY V. KARNATAKA HOUSING BOARD= (2009) 14 SCC 334; and ATTAR SINGH (3 supra). Keeping the above principles in mind now, we have to analyze the evidence adduced by the parties for fixation of the market value. Before the reference court, the claimants relied upon five sale deeds, Exs.A-3, A-4, A-8 to A-10, of which A-4 is a post notification sale deed, and the same cannot form the basis for fixation of the market value, except to know the market trend of escalation of price from the date of notification till the sale deed covered under Ex.A-4. But the land covered under those sale deeds is small extents. The reference court relied upon the award (Ex.A-11) passed earlier by the reference court, in which acquisition was made 10 years prior to the present notification and granted escalation for all the 10 years. When sale deeds, which have proximity of the acquisition, are available, the same should be taken as the basis for fixation of the market value. When the sale deeds which have proximity are not available, the reference court can fix the market value based on the award as a base year by granting escalation, if there is evidence with regard to price rise between the date of the earlier award and the date of acquisition. Ex.A-3 is the sale deed dt. 20-12-1979, under which, 300 sq.yards of land at Rethi Bowli, near Mehdipatnam, Hyderabad, (Shaikpet village), was sold for a consideration of Rs.24,000/-, which works out to Rs.80/- per sq.yard. The land covered under Ex.A-3 is adjacent to the developed area and the same cannot form the basis for fixation of the market value. Ex.A-4 is the post notification sale deed dt. 19-6-1981, under which 300 sq.yards of land was sold for a consideration of Rs.30,000/-, which works out to Rs.100/- per sq.yard. As already stated, the same cannot form the basis for fixation of the market value. Ex.A-8 is the registration extract of sale deed dt. 30-5-1979, under which 240 sq.yards of land, in the layout in S.Nos.141,142, and 143, situated at Muneer Bagh, Shaikpet village, Ward No.9 of Municipal Corporation of Hyderabad, was sold at Rs.30/- per sq.yard. Under Ex.A-9-registration extract of sale deed dt. 30- 1-1980, 930 sq.yards of land in Municipal No.8-2-468/A/13 situated at Road No.5 Banjara Hills, Hyderabad was sold at Rs.45000/-, which works out to Rs. 48/- per sq.yard.