IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.04.2010 CORAM : THE HONOURABLE Mrs.JUSTICE R.BANUMATHI and THE HONOURABLE Mr.JUSTICE M.VENUGOPAL Appeal Suit Nos.1003 to 1005 of 2004, 333 to 335 of 2005 and 6 of 2006 & CMP.No.1694/2009 in A.S.No.1003/2004; 1695/2009 in A.S.No.1004/2004; 1696/2009 in A.S.No.1005/2004; 1715/2009 in A.S.No.333/2005; 1679/2009 in A.S.No.334/2005 and 1716/2009 in A.S.No.6/2006: A. S.Nos.1003 to 1005 of 2004, 333 to 335 of 2005 and 6 of 2006: 1.Special Tahsildar (Land Acquisition) Namakkal 2.Divisional Engineer, National Highways, Salem. 3.National Highways Authorities of India Ministry of Shipping, Road Transport and Highways represented by its Project Director and General Manager (Technical) ....Appellants/ (Impleaded the 3rd Appellant vide Referring officer order of court dated 23.12.2005, & Beneficiary 7.12.2005, 19.4.06, made in CMP No.20405 to 20423/05, 18398 to18403/05 6084 to 6087/06) vs. 1. V.S.Govindarajan ... Respondent in A.S.No.1003 of 2004 2.S.Shanmugam ... Respondent in A.S.No.1004 of 2004 3. G.Rajamani ... Respondent in A.S.No.1005 of 2004 4. M.Muthusamy ... Respondent in A.S.No.333 of 2005 5. Ponnammal ... Respondent in A.S.No.334 of 2005 6. K.Muthusamy ... Respondent in A.S.No.335 of 2005 7. Raldhamani ... Respondent in A.S.No.6 of 2006 https://hcservices.ecourts.gov.in/hcservices/ 1. Raldhamani 2. Shanthi .. Respondents in A.S.No.6 of 2006/ (Claimants) CMP.No.1694/2009 in A.S.No.1003/2004; 1695/2009 in A.S.No.1004/2004; 1696/2009 in A.S.No.1005/2004; 1715/2009 in A.S.No.333/2005; 1679/2009 in A.S.No.334/2005 and 1716/2009 in A.S.No.6/2006: National Highways Authority of India, rep. by its Project Director Ministry of Road Transport & Highways No.10, Kamadhenu Nagar, Karur. ... Petitioner/3rd Appellant. vs. 1. The Land Acquisition Officer and Special Tahsildar, Land Acquisition, Bye-pass Road, Namakkal. 2. The Divisional Engineer, National Highways, Salem-5. 3.V.S.Govindarajan S.Shanmugam G.Rajamani M.Muthusamy Ponnammal K.Muthusamy Radhamani ... Respondents/Respondents Prayer: Appeals in A.s.Nos.1003 to 1005 of 2004, 333 to 335 of 2005 and 6 of 2006 are filed under Section 54 of the Land Acquisition Act against the Orders dated 31.1.2003 made in L.A.O.P.Nos.31 to 33 of 1996, 1, 18 and 20 of 1997 respectively on the file of the Subordinate Judge, Namakkal and Order dated 23.8.2004 in L.A.O.P.No.22 of 2002 on the file of Addl.District Court (Fast Track Court No.III), Namakkal respectively. Prayer: Petitions filed under Or.41, Rule 27 CPC praying to receive the documents filed along with the Petitions. For Appellant : Mr.Ravindran, in both Appeals Addl.Solicitor General of India assisted by M/s.P.Wilson Associates https://hcservices.ecourts.gov.in/hcservices/ For Respondent : Mr.Ravi,Spl.G.P.(A.S.) No.2 in A.S.No.Nos. 563 of 2006 and 238 of 2007 and for Respondent No.3 in A.S.No.238 of 2007 For Respondent : Mr.M.S.Krishnan, No.1 in all Sr.Counsel Appeals for M/s.Sarvabhauman Associates For 1st Respondent : Mr.R.Bharanidharan in A.S.No.6/2006 COMMON JUDGMENT R.BANUMATHI,J. Feeling aggrieved by the enhancement of compensation from 0.54 Paise to Rs.100/- per sq. ft in respect of the lands acquired in Mudalaipatti village for formation of bye-pass road to Namakkal town, the Special Tahsildar (Land Acquisition) and National Highways Authority of India have filed these appeals. Since all the appeals arise out of the common order and the points for consideration are one and the same, all the appeals were taken up together and disposed of by this common judgment. 2. The brief facts are that large extent of lands were acquired for formation of bye-pass road to Namakkal town to a stretch of about 8 km and an extent of 5.71.5 hectares of land in Mudalaipatti village in various sub-divisions comprised in Survey Nos.249, 250, 259, 260, 261, 262, 266, 267, 272 and 277. Section 4 (1) Notification was published in the Tamil Nadu Government Gazette dated 22.9.1993 and the same was also published in the two Tamil dailies viz., "Kumari Murasu" and "Makkal Kural" on 23.9.1993 respectively. The substance of the notification was also published in the village locally on 25.10.1993. The draft declaration under Section 6 of the Land Acquisition Act was published in Tamil Nadu Government Gazette dated 20.7.1994 and the notification was also published in two Tamil dailies viz., "Dinamalar" and "Vetrimalar" on 21.7.1994 respectively. The substance of the notification was also published in the locality on 8.8.1994. 3. To determine the market value of the lands, Land Acquisition Officer has taken the sales statistics for the period of three years prior to 4(1) notification in the locality i.e., from 25.10.1990 to 24.10.1993. During the said period, there were 82 sales in the said village. For fixing the market value of the Manavari dry lands and irrigated dry lands, the Land Acquisition Officer (LAO) considered the sales statistics. In respect of Manavari dry lands, in Sl.No.25 of sale statistics, an extent of https://hcservices.ecourts.gov.in/hcservices/ 0.58.0 hectares of land in S.No.205/3 of Mudalaipatti village was sold out for Rs.34,000/- as per sale deed dated 12.12.1991 [Document No.1238]. The said land was taken as the data land and the Land Acquisition Officer took the view that the said land is of same taram and quality and fixed the value of Manavari dry lands at Rs.58,620/- per hectare i.e., Rs.23,732/- per acre. 4. In respect of irrigated dry lands, in Sl.No.32 of sales statistics, an extent of 0.09.5 hectares in S.No.218/1C of Mudalaipatti village was sold for Rs.13,500/- under sale deed dated 26.6.1992 [Document No.764] and the LAO took the view that the said land is of same tharam and quality and taking the said land in S.No.218/1C as the data land, LAO fixed the value of irrigated dry land at RS.1,35,000/- per hectare i.e., Rs.54,655/- per acre. By fixing the above value for Manavari and irrigated dry lands, the LAO passed Award No.1/95 (27.7.1995) ordering 30 percent solatium and 12 percent additional market value on the compensation from 25.10.1993 to 7.8.1995 i.e., for a period of one year and 287 days. LAO has also fixed the appropriate value for trees in the acquired lands. 5. On objection raised by the land owners, references were made under Section 18 of the Land Acquisition Act. References were taken on file as LAOP Nos.31, 32, 33/1996; LAOP Nos.1, 18, 20/1997 and 22/2002. In the Reference Court, LAOP Nos.31 to 33/1996 and LAOP Nos.1, 18 and 20/1997 were taken up together and disposed on 31.1.2003 as one Batch. Applying the same rate of Rs.100/- per sq. ft., LAOP No.22/2002 was disposed on 27.8.2004. Before the Reference Court, Special Tahsildar (Land Acquisition) and Divisional Engineer, National Highways, Salem alone were the Respondents. The Beneficiary/Requisitioning Body viz., National Highways Authorities of India [NHAI] for which the lands were acquired, was not made as a party. 6. In the Reference Court, the Claimant in LAOP No.32/1996 was examined as CW1 and one Palanisamy, scribe of Ex.C1 was examined as CW2. Sale deed dated 10.5.1994 was marked as Ex.C1 and Judgment in LAOP No.3/1996 Batch was marked as Ex.C2 on the side of the Claimants. No witness was examined and document was marked on the side of the Respondent. In LAOP.No.22/2002, 1st Claimant Radhamani was examined as CW1. The decree and judgment in LAOP.No.32/1996 were marked as Exs.C1 and C2 respectively. No oral and documentary evidence on the side of Respondent. 7. In LAOP No.32/1996 Batch, Reference Court held that Ex.C1 sale deed dated 10.5.1994 is seven months subsequent to 4(1) notification and the value thereon i.e., Rs.290/- per sq. ft. cannot be taken as the market value. However, based upon Ex.C1-sale deed, Reference Court held that the acquired lands are very near to Namakkal and adjacent to Namakkal – Salem main road and the acquired lands are fit for formation of layout and being nearer to the existing National Highway, the acquired lands are in an advantageous position having potential for future development. Based upon common judgment in L.A.O.P.No.3 of 1996 batch, Reference https://hcservices.ecourts.gov.in/hcservices/ Court enhanced the compensation to Rs.100/- per sq. ft. Reference Court ordered (i) enhancement of compensation from 0.54 Paise to Rs.100/- per sq.ft. (ii) 12% additional market value from 22.09.1993 to 27.07.1995; (iii) 30% solatium on the enhanced market value; (iv) interest at the rate of 9% for one year period from the date of taking possession; and (v) interest at the rate of 15% p.a. thereafter till the date of realisation. 8. In LAOP No.22/2002, applying the Judgment and Decree in LAOP.No.32/1996, Reference Court has ordered:- (i) enhancement of compensation from 0.54 Paise to Rs.100/- per sq. ft. (ii) 12% additional market value from 22.09.1993 to 27.07.1995; (iii) 30% solatium on the enhanced market value; (iv) interest at the rate of 9% for one year period from the date of taking possession; and (v) interest at the rate of 15% p.a. thereafter till the date of realisation. 9. Challenging the enhancement of compensation, the LAO/Special Tahsildar [LA] and the Divisional Engineer, National Highways [not National Highways Authorities of India] have preferred these Appeals. In the Appeals, on Petition filed by the National Highways Authorities of India – Requisitioning Body, National Highways Authorities of India was impleaded as 3rd Appellant. 10. Main contention of learned Additional Solicitor General is that to determine just and proper compensation the Beneficiary – National Highways Authorities of India ought to have been made as a party. It was further submitted that though the Divisional Engineer, National Highways was one of the Respondent in the LAOPs, there was no representation for National Highways Authorities of India. Main plank of argument of the Appellants is that without proper and effective representation of NHAI, the compensation amount was enhanced prejudicially affecting the interest of National Highways Authorities of India/Union of India which has to bear the heavy compensation. 11. Drawing our attention to the additional documents filed in the C.M.Ps., Mr.M.Ravindran, learned Additional Solicitor General submitted that even from 1991, there were protests and demonstrations in and around Namakkal for forming bye-pass road to Namakkal town and that after knowing about the scheme for formation of bye-pass road, land owners have brought into existence the sale deeds boosting the land value and the consideration stated in Ex.C1-sale deed is fancy value to make a boosted claim for compensation. Taking us through the sales statistics and also the sale deeds infavour of Ashok Leyland Company in respect of the property in Vallipuram village, learned Additional Solicitor General has submitted that there was only slow increase in price of the lands and the sudden spurt in the value of the land in Mudalaipatti was boosted as it was after the grant of administrative sanction for formation of bye-pass road to Namakkal town. https://hcservices.ecourts.gov.in/hcservices/ 12. Learned Additional Solicitor General further argued that in these cases, Reference Court has adopted the value fixed in LAOP.No.3/1996 Batch. If the additional documents are received in evidence, it would be evident that Ex.C1-sale deed was brought into existence boosting the value by Ramalingam and Sekar. It was further argued that when large extent of land is acquired, there cannot be determination of market value on square feet basis and the enhancement of compensation at Rs.100/- per sq. ft. is not supported by any objective assessment. It was also urged that for formation of highways, National Highways Authorities of India has spent huge amount for laying road and developing it and while so, Reference Court erred in not making any deduction for development charges. 13. We have also heard Mr.V.Ravi, learned Special Government Pleader [AS] appearing for the Appellants 1 and 2, who submitted that LAO has taken the relevant sale deed which is prior to Sec.4 (1) notification and has rightly fixed the market value at 0.54 Paise per sq. ft. and while so, Court below erred in relying upon Ex.C1-sale deed and Ex.C2-Judgment in LAOP.No.3/1996 Batch without any basis. In support of his contention, learned Special Government Pleader placed reliance upon (1997) 9 SCC 330 [P.Rajan and another v. Kerala State Electricity Board and another] and AIR 1995 SC 1004 [M/s.Neyveli Lignite Corpn. Ltd., v. Special Tahsildar (Land Acquisition], Neyveli and others]. Placing reliance upon (1996) 6 SCC 41 [Special Deputy Collector and another v. Kurra Sambasiva Rao and others], the learned Special Government Pleader contended that it is the bounden duty of the Court to determine the market value on an objective assessment of the conditions prevailing in the open market and the value fixed by the Reference Court is exorbitant. 14. Onbehalf of the Claimants, Mr.M.S.Krishnan, learned Senior Counsel contended that unlike the other lands, the lands in Mudalaipatti village are very near to Namakkal situated very close to the then existing highways and unlike the other lands, Mudalaipatti has potential for future development. The learned Senior Counsel further contended that the acquired lands in Mudalaipatti being very closer to the then existing highways, Rs.100/- per sq. ft. fixed by the Reference Court is very reasonable. Placing reliance upon 2001 (9) SCC 584 [Thakarsibhai Devjibhai and others v. Executive Engineer, Gujarat and another], it was contended that if the Reference Court is not able to get the documents of the same village, Reference Court can refer to the documents of adjoining village and the same can be taken into consideration. In so far as deduction, placing reliance upon 2007 (9) SCC 447 [Nelson Fernandes and others v. Special Land Acquisition Officer, South Goa and others], the learned Senior Counsel for Claimants contended that when the acquired land is in the midst of developed area, there need not be any deduction and the value fixed by the Reference Court at Rs.100/- per sq. ft. without any deduction is correct and reasonable. Claimants have also filed CMP No.9206/2006 in A.S.No.1003/2004 under Or.41, Rule 27 CPC to receive additional documents. https://hcservices.ecourts.gov.in/hcservices/ 15. We have also heard Mr.R.Bharanidharan, appearing for some of the Respondents. The learned counsel reiterated the submissions of learned Senior Counsel. 16. We have carefully examined the submissions of learned Additional Solicitor General and learned Special Government Pleader and also the learned Senior Counsel for Claimants. 17. Land measuring 5.71.5 Hectares in Mudalaipatti village in various sub-divisions comprised in S.F.Nos.249, 250, 259, 260, 261, 262, 266, 267, 272 and 277 have been acquired for formation of bye- pass road to Namakkal town. To determine the market value of the lands under acquisition, sales statistics for the period of three years from 25.10.1990 to 24.10.1993 were gathered and there were totally 82 sales during the said period in the village. Upon careful analysis of the said sales, it is seen that under Serial No.25 – sale deed dated 12.12.1991 an extent of 0.58.0 Hectares of land in S.F.No.205/3 was sold by Karuppa Gounder infavour of Kandasamy for Rs.34,000/- i.e. Rs.58,620/- per hectare [0.54 Paise per sq. ft]. 18. Analysis of various sale deeds contained in the sales statistics would show that there was only slow increase in the value of the lands as is seen from the following:- Sl.N o Doc. No. and Date S.F.No. Exten t sold Name of Vendor Name of Vendee Sold at Rs. Rate per Hectar e/Per sq. ft. Rs. 14 571 13.06.19 91 290/2 1400 sq. ft. Veerappan and others Kaliyappan 16,900 /- 7.04 16 818 05.09.19 91 293/12 748½ sq.ft . Subramani and others Kandasamy 20,000 /- 12.35 20 900 24.09.19 1 260/2B 4360½ sq.ft . Sengoda Gounder and others Govindaran i 61,000 /- 13.99 26 1279 30.12.19 91 299/5 2000 sq.ft . Thangavelu Murugesan 28,000 /- 14.00 37 1377 11.09.19 92 291/1A, 1E 2121 sq.ft . Shanmugam Kandasamy 19,000 /- 8.96 https://hcservices.ecourts.gov.in/hcservices/ Sl.N o Doc. No. and Date S.F.No. Exten t sold Name of Vendor Name of Vendee Sold at Rs. Rate per Hectar e/Per sq. ft. Rs. 50 1400 15.09.19 92 291/1A, 1B 2000 sq.ft . Shanmugam Manickam 18,100 /- 9.05 67 584 15.03.19 93 288/3A 326 sq.ft . Palanisamy Gounder Arukkani 5,352/ - 16.42 75 1984 04.10.19 93 293/13 1565 sq.ft . Kolanda Gounder Sivagami Sundari 18,400 /- 11.75 80 569 25.02.19 93 277 255 sq.ft . Subramaniam Periyannan 4,400/ - 17.05 By analysis of the above sales, it is clear that there was only very slow increase in the value of the lands. Even it was stated that the lands were near to the highways, we find that none of the sale deeds were for more than Rs.14/- or 16.42 or Rs.17.05 per sq. ft. 19. The contention of the Claimants is that the acquired lands in Mudalaipatti village is very near to Namakkal and also to the then existing highways. To prove that the lands would fetch more market value and that they have potential for future development, Claimants have filed Ex.C1-sale deed [10.05.2004] executed by Ramalingam infavour of Sekar for Rs.43,500/- in which an extent of 150 sq. ft. in S.F.No.293/12 was sold i.e. Rs.290/- per sq. ft. To prove Ex.C1-sale deed, the scribe viz., Palanisamy was examined as CW2. In his evidence, CW2 has stated that the plot sold under Ex.C1 is just opposite to the acquired lands and that the acquired lands would have the same potential for future development. Ex.C1- sale deed dated 10.05.1994 is seven months after 4(1) notification. Before fixing the market value at Rs.100/- per sq. ft. based upon the Judgment in LAOP No.3/1996 Batch[Ex.C2], Reference Court observed that even though, Ex.C1-sale deed is after 4(1) notification, the same is within seven months after 4(1) notification and that Ex.C1 would show that the acquired lands have higher potential for future development. 20. The approach of the Reference Court in referring to Ex.C1- sale deed dated 10.05.1994 is per se erroneous. As per Sec.23 of Land Acquisition Act, Court shall taken into consideration the market value of the land on the date of publication of 4(1) notification. The market value of the land is required to be determined on the date of publication of 4(1) notification; it https://hcservices.ecourts.gov.in/hcservices/ cannot be determined with reference to any other date. Under Sec.23(1) of the Act, the Court has to determine the market value of the land. One of the methods of valuation is the price paid, within a reasonable time, in bonafide transactions of purchase of land acquired, or of the land adjacent to the land acquired having similar advantages. Such transactions of sale indicate the price of the land acquired on the date of the notification. The Court has to consider whether or not any particular transaction of sale affords a fair criterion of the market value of the land acquired. 21. In estimating the market value of property compulsorily acquired under the provisions of the Land Acquisition Act, 1894, it cannot be laid down as a general rule that post-notification transactions should necessarily be ignored altogether. All transactions are relevant which can fairly be said to afford a fair criterion of the value of the property as on the date of the notification. If any considerable interval has elapsed the Court will naturally attach little or no value to subsequent sales, just as transactions long prior to the notification will usually be discarded. The approach of the Reference Court referring to Ex.C1- sale deed dated 10.05.1994 to hold that the acquired lands have potential for future development is per se erroneous and cannot be countenanced. 22. Learned Senior Counsel for Claimants contended that Mudalaipatti village is in an advantageous position than the other villages and the acquired lands in Mudalaipatti village would fetch more value than the lands in Vallipuram village. Learned Senior Counsel contended that the acquired lands are surrounded by School, Lorry building workshop, Tea shops, Hotels and Banks and layouts are formed nearby. Contention of the Claimants is that the acquired lands being very close to the then existing highways, Mudalaipatti is in advantageous position and the compensation fixed at Rs.100/- per sq. ft. by the Reference Court is very reasonable. 23. Under Section 23(1) of the Act, the Court has to determine the market value of the land. One of the methods of valuation is the price paid, within a reasonable time, in bonafide transactions of purchase of land acquired, or of the land adjacent to the land acquired having similar advantages. Such transactions of sale indicate the price of the land acquired on the date of the notification. The Court has to consider whether or not any particular transaction of sale affords a fair criterion of the market value of the land acquired. 24. By perusal of documents now filed as additional documents, there had been protests and demonstrations even from 1991 for forming bye-pass road to Namakkal town. Administrative sanction was granted vide Proceedings C.No.45/93/JDO dated 09.01.1993. Ex.C1-sale deed is after the administrative sanction. Reference Court was swayed by Ex.C1-sale deed and does not appear to have carefully examined Ex.C1-sale deed which are not compatible with the trend of slow increase of the land value. https://hcservices.ecourts.gov.in/hcservices/ 25. Viewed from any angle, the value fixed by the Reference Court at Rs.100/- per sq. ft. is exorbitant and very much on the higher side. The various aspects like demonstration for formation of bye-pass road to Namakkal town from 1991 and other relevant aspects would have been brought forth before the Reference Court had the Beneficiary/Requisitioning Body - National Highways Authorities of India been was impleaded. Without impleading the National Highways Authorities of India in the LAOPs and without any basis, Reference Court had fixed the market value of the acquired lands on the higher side unmindful of financial implications. 26. Yet another material aspect is relevant to be noted. When large extent of lands were acquired for formation of bye-pass road to Namakkal town and when the acquired lands are far away from Namakkal town, Reference Court erred in determining the value of the land per square feet. Holding that when large extent of lands are acquired, determination of value on the square feet basis is a wrong principle and market value could be fixed only per acreage or per cent, in (1997) 9 SCC 330 [P.Rajan and another v. Kerala State Electricity Board and another], the Supreme Court held as under:- "When a large extent of land is acquired, determination of compensation on the foot of a cent, square yard or square foot is a wrong principle. The principle of fixation on acreage basis would be the correct principle. If the land acquired is situated in a developed area and is converted into buildings in a colony after obtaining sanction from the competent authority or is situated in a well-developed area like in the heart of a commercial centre, determination of the compensation could be on square yard basis after giving due deduction according to law. Determination on square foot basis would be confined only to highly developed commercial land or land situated at a place in the heart of a city like Nariman Point in Bombay or Connaught Place in Delhi." 27. Yet another infirmity in the Judgment of Reference Court is also to be noted. Large block of land will have to be developed for formation of bye-pass road. Even though, Highways is a strip for which common space like roads, drainage and other common space may not be required yet like any other Housing scheme, huge amount will have to be spent for formation of road i.e. place has to be lifted and treated and side ways are to be formed and for forming Highways and developing proper infrastructure huge amount will have to be spent. This factor can be balanced only by making a deduction by way of allowance at an appropriate rate ranging approximately between 20% to 50% to account for the land required to be set apart for forming bye-pass road. As pointed out earlier, though the Reference Court has fixed the market value at Rs.100/- per sq. ft. no percentage of deduction for development charges was made. More over, we do not find that any development had taken place in the acquired land as on 4(1) notification. No piece of evidence has been produced by the Claimants showing that layout has https://hcservices.ecourts.gov.in/hcservices/ been approved by the competent authority and that the lands were converted as house sites prior to 4(1) notification. 28. Holding that the market value fixed at Rs.100/- per sq. ft. is exorbitant and very much on the higher side, by an elaborate Judgment, we have set aside the Judgment in LAOP.No.3/1996 Batch [A.S.No.751/2001 Batch] and remitted the matter back to the Reference Court. In this case also since