IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. RFA No.145/2003 and RFA No.194/2003 Reserved on:10.7.2008 Decided on:11.9.2008 RFA No. 145/2003: Kala Pant. …Appellant. Versus The Land Acquisition Collector and another. …Respondents RFA No.194/2003: Sant Ram and others. Versus The Land Acquisition Collector and another. …Respondents Coram The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting ?1.yes. For the Appellants : Mr. K.R. Thakur, Advocate. (in both the appeals) For the Respondents : Mr. Rajinder Dogra, Additional Advocate General (in both the appeals) Rajiv Sharma, J. Since both the appeals are directed against the common award dated 17.5.2003 passed by the District Judge, Shimla in Land Reference 1 Whether the reporters of Local Papers may be allowed to see the judgment? yes. 2 No. 38-S/4 of 1999 and Land Reference No. 37-S/4 of 1999 as such both these appeals are being disposed of by this common judgment. The brief facts necessary for the adjudication of these appeals are that total 11-14 bighas of land situated at Mauza Bhajyad, Tehsil and District Shimla was acquired by the Public Works Department for construction of Dhami-Bans road. A notification under section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as ‘the Act’ for brevity sake) was published on 10.8.1996. Another notification under section 6 read with section 7 of the Act was published in the official gazette on 20.9.1997. The land was measured, classified and thereafter an inquiry under section 9 of the Act was conducted on 13.8.1999, after issuing notice to the interested persons. After concluding inquiry, the Land Acquisition Collector has awarded the compensation to the land owners as under as per the classification of the land: Variety of land Rate per bigha Kiar Doyam Rs. 30130.43 paise Bakhal Aval Rs. 22521.74 paise Bakhal Doem Rs. 15217.39 paise Bakhal Soyam Rs. 7608.70 paise Ghasni Rs. 1826.09 paise Banjar Rs. 913.05 paise The appellant-claimant Kala Pant filed land reference petition No. 38-S/4 of 1999 before the Land Acquisition Collector for enhancement of the compensation on the plea that the market value of the acquired land has not been correctly assessed by the Land Acquisition Collector and the market value of the acquired land was not less than Rs. 2,00,000/- per bigha. Similar land reference petition No. 37-S/4 of 1999 was filed by 3 appellants-claimants Sant Ram and others before the Land Acquisition Collector for the enhancement of the compensation in respect of their acquired land. The learned District Judge has framed the following issues: 1. Whether the compensation assessed by the Land Acquisition Collector is inadequate, if so what is the just and adequate compensation? OPP 2. Relief. The learned District Judge has recorded the following findings on the aforesaid issues: Issue No.1: Discussed and decided as below. Relief: The petitioners are awarded enhanced compensation as per operative portion of the award. The District Judge has awarded a sum of Rs. 30,130.43 paise per bigha in reference No. 37-S/4 of 1999 and 38-S/4 of 1999 vide award dated 17.5.2003. The claimants were also held entitled to statutory benefits available under the Act. These appeals have been filed against the award dated 17.5.2003 seeking higher compensation @ Rs. 2,00,000/- per bigha. Mr. K.R. Thakur, Advocate had strenuously argued that his clients were entitled to Rs. 2,00,000/- per bigha instead of Rs. 30,130.43 paise as awarded by the learned District Judge vide award dated 17.5.2003. He has strongly relied upon Ex.P-3 and P-4 to substantiate that the market value of the land was higher and the compensation awarded by the learned District Judge was inadequate. Mr. Rajinder Dogra, Additional Advocate General has supported the award dated 17.5.2003. I have heard the learned counsel for the parties and perused the record carefully. 4 PW-1 Sh. Ramesh Pant has deposed that the acquired land is at a distance of 100 yards from Dhami Bazar. There is a Rest House close to the acquired land. There is also a Sub Divisional Office, Primary Health Centre, Veterinary Hospital and one patwarkhana situated in the vicinity of the acquired land. The Government Senior Secondary School, several other Government offices like Telephone Exchange and Post Office etc. are also located near the acquired land. Village Dhami is at a distance of 22 KMs from Shimla. He has further deposed that one Sh. Bhoop Ram (PW-3) has sold the land which is situated at a distance of 20 meters from his acquired land. His land has fetched Rs. two lakhs per bigha. One Sant Ram (PW-2) has also sold land at a distance of 1 ½ kms from the acquired land @ Rs. 5,000/- per biswa. The sale has taken place in the year 1995. The claimant had mortgaged her land to the bank to raise loan. The bank had assessed its value as Rs. ten lakhs approximately. Ramesh Pant has admitted in his cross-examination that the nature of the land is Ghasani. He has denied the suggestion that Dhami Bazar is at a distance of 1 KM from the acquired land. He has reiterated that the land is situated only at a distance of 100 meters. He has also denied that the land which fetched the price of Rs. two lakhs per bigha is situated close to the Bazar. PW-2 Sant Ram has stated that the acquired land was at a distance of 50-60 feet from Dhami Bazar. He has further deposed that the compensation awarded was grossly low. He then deposed that the rates of the land having similar location as that of acquired land was not less than Rs. four lakhs per bigha. He has also admitted in his cross- examination that the land was Ghasani. He has admitted that the acquired land was situated at the lower level than the Bazar of Dhami. PW-3 Bhoop Ram has deposed that he has sold 0-2 biswa land to Mast Ram for Rs. 20,000/- vide sale deed Ex.P-3. He has deposed that the 5 land was situated close to Bazar of Dhami, which he sold to Mast Ram. In his cross-examination, he has admitted that Mast Ram purchased the land for the construction of a shop. He has denied that the land sold to Mast Ram was of better quality and better location compared to the acquired land. PW-4 Sant Ram has deposed that Mangru was his father. He and Chamku sold 0-9 biswa land to Brij Mohan vide sale deed Ex.P-4. He has testified that the acquired land was situated close to the Bazar of Dhami. He then deposed that the land which his father and Chamku sold is ½ KM away from the Bazar. He has denied the suggestion that the acquired property is situated 1 KM away from the Bazar. RW-1 Paras Ram, Patwari has produced Exs. R-1 and R-2 photostat copies of the statement of average market value of the land and letter regarding approval of rates of the land issued by the Deputy Commissioner. In his cross-examination, he could not tell where the land referred in the statement Ex.R-1 is situated. The learned District Judge has ignored the oral as well as documentary evidence placed on record by the claimants for the enhancement of the amount. The District Judge has relied upon the market value of the acquired land as determined by the Land Acquisition Collector. The Court has to treat the reference as original proceedings before it and determine the market value afresh on the basis of the material placed before it. It has come in the statement of PW-1, as discussed hereinabove, that the acquired land is at a distance of 100 yards from Dhami Bazar. Dhami village is up-coming town and is at a distance of 22 KMs from Shimla. It is well connected and the offices of Sub Divisional Officer, Primary Health Centre, Veterinary Dispensary and Patwar Khana are also situated at Dhami. The Government Senior Secondary School is also situated in the vicinity of the acquired land. The 6 Telephone Exchange and Post Office are also there. PW-2 has deposed that the acquired land is at a distance of 50-60 feet from Dhami Bazar. PW-3 has also stated that the land measuring 0-2 biswa was sold by him for Rs. 20,000/- vide sale deed Ex.P-3. PW-4 has stated that his father and Chamku have sold 0-9 biswas of land to Brij Mohan vide sale deed Ex.P-4. According to him, the land which his father and Chamku has sold is ½ kms away from the Bazar. Ex.P-3 is dated 28.3.1995. Ex.P-4 is dated 29.3.1995. The land which has been sold by PW-3 to Sh. Mast Ram measuring 0-2 biswas was for the purpose of construction of a shop. It is a small piece of land and has been sold for commercial purpose. So far as Ex.P-4 is concerned, the total land sold by the father of PW-4 and Sh. Chamku is 0-9 biswas. This land has been sold for Rs. 45,000/-. As per Ex.P-4, the total value of the land per bigha would be Rs. one lakhs. The learned District Judge has erred in law by ignoring Ex.P-4 read with statements of PW-1 and PW-4. In addition to this, judicial notice could be taken of the fact that Dhami is an up-coming town. The land of the claimants may be in a different mauza but it is in proximity to the main Bazar as discussed hereinabove. The respondents have not produced any evidence except two documents Ex.R-1 and R-2. These are merely Photostat copies of the statement of average market value of land and letter regarding approval of rates of land issued by the Deputy Commissioner. Though the notification under section 4 of the Act has been published on 10.8.1996, however, the sale deeds are of the year 1995. These could not be discarded altogether by the learned District Judge. The sale deeds are in close proximity to the date of issuance of the notification under section 4 of the Act. Their Lordships of the Hon’ble Supreme Court in Chimanlal Hargovinddas versus Special Land Acquisition officer, Poona and 7 another, AIR 1988 SC 1652 have laid down the factors which are required to be kept in view while determining the market value of the land. Their Lordships have held as under: “Before tackling the problem of valuation of the land under acquisition it is necessary to make some general observations. The compulsion to do so has arisen as the Trial Court has virtually treated the award rendered by the Land Acquisition Officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to some extent. The true position therefore requires to be capsulized. The following factors must be etched on the mental screen : (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 8 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 S. 4 of the Land Acquisition Act (dates of Notifications under Ss. 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 S. 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-a-vis 9 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 beevaluated interms 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 Minus factors 1. Smallness of size. 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-a-vis land under acquisition. 6. Some special dis- advantageous factor which would deter a purchaser. 7. Special value for an owner of an adjoining property to whom it may have some very special 10 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.” Dhami is a semi-urban area. The development is fast in urban or semi-urban areas. The demand for land is higher. The prices of the land have escalated in urban/semi-urban areas. The normal method of determining the market value is by providing appropriate escalation over the proved market value of nearby land in the previous years. This method is safe if there is only few years gap. In the present case the sale deed Ex.P-4 is dated 29.3.1995 and the notification under section 4 is dated 10.8.1996 as such there is not much gap. Their Lordships of the Hon’ble Supreme Court in Gafar and others versus Moradabad Development Authority and another, (2007) 7 SCC 614 have held that distant lands can be taken into consideration by making adjustments. Their Lordships have further held that merely because of distance those sale deeds could not be brushed aside. Their Lordships have held as under: “While passing the award, the Awarding Officer scrutinised the various sale deeds from the concerned Sub-Registry covering a period of three years upto the date of the notification under Section 4(1) of the Act. It was found that 19 sale deeds have been registered in respect of lands in that area. Of these, the sales were mostly in acres and not in square yards or square meters. In other words, the prices were reckoned on the basis of acres and not on the basis of square meters. The Awarding Officer found that the per square meter rate in 12 sale deeds were very less. Giving the reason that they relate to lands located at a distance, but without specifying how distant, the Land Acquisition 11 Officer brushed aside these sale deeds on the ground that the lands were situated at quite a far distance from the acquired lands. Regarding certain other sale deeds which were proximate to the date of notification, the Awarding Officer found that the rates ranged between Rs. 1.83 per square meter to Rs. 28.39 per square meter and that in one sale deed, the value was shown at Rs. 17 per square meter. It was conceded that these lands were not at a far distance from the acquired lands. But it was stated by the Awarding Officer that it did not appear justifiable for him to adopt these rates. For what reason, it was not disclosed.” Their Lordships of the Hon’ble Supreme Court in the General Manager, Oil and Natural Gas Corporation Limited versus Rameshbhai Jivanbhai Patel and another, 2008 (11) Scale 637 have laid down the following factors to be considered while determining the market value: “Primarily, the increase in land prices depends on four factors -situation of the land, nature of development in surrounding area, availability of land for development in the area, and the demand for land in the area. In rural areas unless there is any prospect of development in the vicinity, increase in prices would be slow, steady and gradual, without any sudden spurts or jumps. On the other hand, in urban or semi-urban areas, where the development is faster, where the demand for land is high and where there is construction activity all around, the escalation in market price is at a much higher rate, as compared to rural areas. In some pockets in big cities, due to rapid development and high demand for land, the escalations in prices have touched even 30% to 50% or more per year, during the nineties. On the other extreme, in remote rural areas where there was no chance of any development and hardly any buyers, the prices stagnated for years or rose marginally at a 12 nominal rate of 1% or 2% per annum. There is thus a significant difference in increases in market value of lands in urban/semi-urban areas and increases in market value of lands in the rural areas. Therefore if the increase in market value in urban/semi-urban areas is about 10% to 15% per annum, the corresponding increases in rural areas would at best be only around half of it, that is about 5% to 7.5% per annum. This rule of thumb refers to the general trend in the nineties, to be adopted in the absence of clear and specific evidence relating to increase in prices. Where there are special reasons for applying a higher rate of increase, or any specific evidence relating to the actual increase in prices, then the increase to be applied would depend upon the same. Normally, recourse is taken to the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years (as evidenced by sale transactions or acquisition), where there is no evidence of any contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood. The said method is reasonably safe where the relied-on-sale transactions/acquisitions precedes the subject acquisition by only a few years, that is upto four to five years. Beyond that it may be unsafe, even if it relates to a neighbouring land. What may be a reliable standard if the gap is only a few years, may become unsafe and unreliable standard where the gap is larger. For example, for determining the market value of a land acquired in 1992, adopting the annual increase method with reference to a sale or acquisition in 1970 or 1980 may have many pitfalls. This is because, over the course of years, the `rate' of annual increase may itself undergo drastic change apart from the likelihood of occurrence of varying periods of stagnation in prices or sudden spurts in prices affecting the very standard of increase. 13 Much more unsafe is the recent trend to determine the market value of acquired lands with reference to future sale transactions or acquisitions. To illustrate, if the market value of a land acquired in 1992 has to be determined and if there are no sale transactions/acquisitions of 1991 or 1992 (prior to the date of preliminary notification), the statistics relating to sales/acquisitions in future, say of the years 1994-95 or 1995-96 are taken as the base price and the market value in 1992 is worked back by making deductions at the rate of 10% to 15% per annum. How far is this safe? One of the fundamental principles of valuation is that the transactions subsequent to the acquisition should be ignored for determining the market value of acquired lands, as the very acquisition and the consequential development would accelerate the overall development of the surrounding areas resulting in a sudden or steep spurt in the prices. Let us illustrate. Let us assume there was no development activity in a particular area. The appreciation in market price in such area would be slow and minimal. But if some lands in that area are acquired for a residential/commercial/industrial layout, there will be all round development and improvement in the infrastructure/amenities/facilities in the next one or two years, as a result of which the surrounding lands will become more valuable. Even if there is no actual improvement in infrastructure, the potential and possibility of improvement on account of the proposed residential/commercial/ industrial layout will result in a higher rate of escalation in prices. As a result, if the annual increase in market value was around 10% per annum before the acquisition, the annual increase of market value of lands in the areas neighbouring the acquired land, will become much more, say 20% to 30%, or even more on account of the development/proposed development. Therefore, if the percentage to be added with reference to previous acquisitions/sale 14 transactions is 10% per annum, the percentage to be deducted to arrive at a market value with reference to future acquisitions/sale transactions should not be 10% per annum, but much more. The percentage of standard increase becomes unreliable. Courts should therefore avoid determination of market value with reference to subsequent/future transactions. Even if it becomes inevitable, there should be greater caution in applying the prices fetched for transactions in future. Be that as it may.” In view of the evidence led by the parties and the definite law laid down by their Lordships of the Hon’ble Supreme Court, the market value of the land is assessed @ Rs. 1,00,000/- per bigha. Consequently, these appeals are allowed. The claimants are held entitled to Rs. 1,00,000/- per bigha for the acquired land corresponding with statutory benefits under the Land Acquisition Act, 1894. There shall be no order as to costs. 11.9.2008 (Rajiv Sharma ), J. *awasthi*