- 1 - - 1 - - 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, CIVIL JURISDICTION APPELLATE SIDE, CIVIL JURISDICTION APPELLATE SIDE, CIVIL JURISDICTION FIRST APPEAL NO.47 OF 1991 FIRST APPEAL NO.47 OF 1991 FIRST APPEAL NO.47 OF 1991 The State of Maharashtra (at the instance of the Special Land Acquisition Officer Raigad-Alibag)..... Appellant. Versus Prakash Vasudeo Deodhar (age 37 years, Occupation- Agriculturist, residing at plot no.22,Middle Class Housing Society,Panvel, Raigad). ..... Respondents Shri A.R.Patil, AGP for the Appellant. Sarvasri Rajendra Pai with S.M.Kamble, Advocates for Respondents. WITH WITH WITH FIRST APPEAL NO.120 OF 1991 FIRST APPEAL NO.120 OF 1991 FIRST APPEAL NO.120 OF 1991 Shri Prakash Vasudeo Deodhar (age 37 years, occupation- agriculturist, residing at plot No.22, Middle Class Housing Society Panvel, District-Raigad). ..... Appellant [Original Claimant] Versus Versus Versus The State of Maharashtra (at the instance of Special Land Acquisition Officer, Raigad,Alibag) ......Respondents. [Original Opponent] Sarvasri Rajendra V.Pai with S.M. Kamble, Advocates for Appellant. - 2 - - 2 - - 2 - Shri A.R. Patil, AGP for Respondents. CORAM: R.M.S.KHANDEPARKAR & CORAM: R.M.S.KHANDEPARKAR & CORAM: R.M.S.KHANDEPARKAR & V.M.KANADE,J V.M.KANADE,J V.M.KANADE,JJ. DATE :15TH SEPTEMBER 2005. DATE :15TH SEPTEMBER 2005. DATE :15TH SEPTEMBER 2005. ORAL JUDGEMENT (PER R.M.S.KHANDEPARKAR,J) ORAL JUDGEMENT (PER R.M.S.KHANDEPARKAR,J) ORAL JUDGEMENT (PER R.M.S.KHANDEPARKAR,J): 1. Since both the appeals arise from the same award passed by the Reference Court, and the matter involves common questions of law and facts, they were heard together and are being disposed off by this common Judgement. 2. First Appeal No.47 of 1991 is by the State of Maharashtra, whereas First Appeal No.120 of 1991 is by the claimant, both dis-satisfied by the award dated 30th September 1989 passed by the Civil Judge, Senior Division, Raigad at Alibag in Land Acquisition Reference No. 5 of 1986 have preferred these appeals. 3. The land in question was sought to be acquired,for the purpose of water supply arrangement for Nhava-Sheva Sub-region, by issuing Notification dated 13th December 1984 under Section 4 of the Land Acquisition Act, 1894,(hereinafter called as ‘‘the said Act’’). The declaration under section 6 was issued on 6th June 1985 - 3 - - 3 - - 3 - which was followed by necessary notice under Section 9 of the said Act. After hearing the parties, the award was declared by the Land Acquisition Officer under Section 11 on 25th September 1985. Pursuant to the communication of the award by the notice under Section 12(2) of the said Act which was served upon the claimant on 18th October 1985, the claimant sought reference under Section 18 of the said Act on the ground that compensation awarded was much below the market value of the land acquired. 4. The land acquired bears Gat No.66/2, 66/3, 66/4-A and 66/4-B and 92/O and admeasured 2 hectares and 19 ares out of which 30.9 ares was in relation to the Gat No.92 and remaining was in relation to Gat No.66. Under matric system of measurement, the acquired land admeasured 7590 sq.mtrs. and remaining land of claimant was 14350 sq.mtrs. The claim of compensation was not only in relation to the acquired land but also in relation to the remaining land on the ground of loss suffered on account of acquisition of part of land of the claimant and as being severance charges. The Land Acquisition Officer had awarded compensation at the rate of 3.65 per sq.mtr. for an area of 3400 square metres, Rs.0.02 paise per sq.mtr. for an area of 300 square metres, and Rs.3.20/- per sq.mtr. for an area of 3840 square metres and - 4 - - 4 - - 4 - remaining area at the rate of 0.02 paise. Thus, the total compensation which was awarded was of Rs.24,705/-. After deducting Nazrana charges, the amount which was offered as compensation was Rs.24,439/- for total area of 7590,excluding other statutory benefits. The claimant in the reference application had claimed sum of Rs.60/- per square metre as the market value for acquired area as well as severance charges in relation to balance area. The reference court awarded compensation at the rate of Rs.35/- per square metre in relation to acquired land as well as Rs.35/- per sq.mtr. as the severance charges in relation to balance area of claimant’s property, apart from other statutory benefits. 5. The challenge to the impugned award on behalf of the State is on the ground that the evidence led by the claimant does not justify the rate of compensation awarded by Reference Court and that the same has been granted completely ignoring the provisions of Section 24 of the said Act and the fact that the land was subjected to the restrictions under the Bombay Tenancy And Agricultural Act 1948, hereinafter called as ‘‘the Tenancy Act’’. The reference court failed to consider the fact that claimant did not produce any cogent evidence in the form of Sale Deed or any award of - 5 - - 5 - - 5 - reference court in relation to land in the vicinity which could be comparable with the land in question and enhancement is granted purely on surmises. The reference court failed to take into consideration statutory obligations and restrictions imposed upon by the reference court while evaluating the market value of land acquired under the said Act. 6. The impugned award is sought to be challenged by the claimant on the ground that reference court failed to take into consideration the well established criteria to be applied for the purpose of evaluating market value of the land acquired, ignoring material evidence placed on record by the claimant in support of his claim for Rs.60/-per square metre for the acquired land as well as towards the severance charges. The award in Land Acquisition Reference No.447 of 1987 placed on record at Exhibit 21 clearly discloses that the land in the neighbourhood was awarded Rs.35/- per square metre and the same was clearly comparable land with the land in question. Besides the said acquisition was hardly two years prior to the date of acquisition of the land in question. Taking the judicial notice of the fact that there is always upward trend in the land prices, besides that the land in question is near to the highway, the - 6 - - 6 - - 6 - reference court ought to have awarded at least Rs.50/- per sq.mtr. if not Rs.60/- while applying the same criteria in relation to severance charges. While considering the market value of the land, fullest exploitation of all the possible available potentialities of the land in question is to be considered and that is not only the statutory obligation of the reference court under the provisions of the said Act but also a mandate of Article 31.C of the Constitution of India. Section 32(G) encumbrance in terms of provisions of the Tenancy Act can not be of any assistance to the State to justify reduction in the value of the land as the valuation has to be based on consideration of potentialities of the land on the date of issuance of Notification under Section 4 and which could be exploited by a willing purchaser. Considering the same, merely because the land was originally subjected to use of agriculture, that by itself cannot be a criteria to decide the market value for the purpose of deciding the compensation under the said Act. Attention was sought to be drawn to the pleadings in the reference application as well as to the testimony of the claimant and his valuer while arguing that there has been no substantial challenge to the pleadings and the evidence led by the claimants through himself as well as through his valuer, clearly - 7 - - 7 - - 7 - establishes the market value of the land as claimed by the claimant. 7. Before considering rival contentions and the issue as regards the market value of the land, certain facts which are either undisputed and/or clearly disclosed and established from the records need to be recorded. The land in question which was acquired was purchased by the claimant under the two registered Sale Deeds dated 16th May 1981. The land bearing Gat No.66/4-B and 92/O alongwith Gat No.79/12 was purchased from one Laxman Mahadu Nigrose and the land bearing Gat No.66/4-A was purchased from Barku Laxman Sache . As regards land bearing Gat No.66/4-B and 92/O purchase was consequent to the permission granted by the Assistant Collector,Panvel under Section 43 of the Tenancy Act and Rule 25 (1)(i) of Bombay Tenancy Act and Agriculture Land Rules 1956 (hereinafter called as ‘‘the Tenancy Rules’’). As regards land bearing Gat NO.66/4-A permission under Section 43 of Tenancy Act read with the Tenancy Rules was granted on 31st January 1981 by the Assistant Collector, Panvel. The claimant under his application dated 2nd January 1985 applied for conversion of land to non agriculture use in relation to Gat No.92/O as well as other land bearing Gat No.66/2, 66/3, 66/4-A and 66/4-B. - 8 - - 8 - - 8 - Both these applications were allowed by the Tehsildar, Panvel on 8th April 1985. 8. In the facts and circumstances of the case and rival contentions sought to be advanced in the matter the first point which arises is whether the Reference Court while ascertaining the market value of an agricultural land acquired under the said Act has to take into consideration the provisions of the Tenancy Act and Tenancy Rules as applicable to such land on the date of issuance of Notification under Section 4 of the said Act. 9. Section 23 of the said Act enumerates the factors which are required to be considered for determining compensation whereas, Section 24 enumerates the factors which are not to be considered in determining the compensation. Perusal of Section 23 of the said Act, therefore, reveals that the damage spoken of is not of general in nature but in relation to specified items enumerated thereunder. It does not refer to any loss or damage in general which such person may likely to suffer after publication of declaration under Section 6 or any increase in the value of land which is likely to accrue from the use to which it could be put to after acquisition. Section 6(3) of the said Act specifically - 9 - - 9 - - 9 - provides that the declaration issued thereunder would be a conclusive evidence of the fact that land is needed for public purpose. Even otherwise, any improvement made or changes brought about in the land under acquisition subsequent to publication of Section 4 notification cannot be taken into consideration for the purpose of evaluating the market value of the land. 10. The Tenancy Act clearly provides that any transfer of agricultural land which is subject to the provisions of the Tenancy Act and/or is purchased by the tenant in terms of provisions of Tenancy Act, cannot be conveyed in favour of third person in any form without prior sanction of Collector and further that Collector is empowered to grant sanction subject to such conditions as are enumerated under various provisions of Tenancy Act and those as may be prescribed by the State Government. It specifically provides that, any transfer made without such sanction would be invalid. In fact Chapter III to Chapter V of Tenancy Act refer to various restrictions for such transfer of agricultural land, including change of use thereof. 11. In the case in hand it is not in dispute that the land was an agricultural land and was purchased by - 10 - - 10 - - 10 - claimant from the tenant thereof and that the same was subjected to the restrictions imposed under the Tenancy Act. The claimant had obtained sanction from the Collector for the said purchase under letters dated 3rd January 1981 which disclose conditions subject to which sanction was granted and they include the conditions to the effect that the applicant-purchaser should use the lands for agriculture purpose only, that that that applicant-purchaser should not transfer sale, gift, exchange, mortgage,lease or assignment disposed off lands or part thereof without previous permission of Assistant Collector, Panvel, District Panvel, and that the breach of any of the conditions would result in cancellation of this permission and action would be taken in accordance with the provisions contained in Section 84 (CC) of Bombay Tenancy & Agricultural Lands Act 1948. The fact of purchase being made consequent to the sanction granted under Section 43 has also been recorded in the sale deeds by which the land in question was purchased by the claimants. 12. It is the contentions of the learned advocate for the claimants that restrictions imposed under Tenancy Act would not be relevant for the purpose of determining market value of the land under the said Act. Undoubtedly - 11 - - 11 - - 11 - the reference court is guided by the provisions of Sections 23 and 24 of the said Act in the matter of fixation of market value of the land acquired. Though provisions comprised under Sections 23 and 24 may appear to be in the nature of guide-lines for evaluating market value, both the provisions mandate certain conditions which are necessarily to be considered for the purpose of calculating market value and at the same time certain things should not be allowed to influence such valuation of the land acquired. Section 24 clearly requires the Court to refrain itself from considering the factors like the improvements which the claimant may make or cause to make in the land after notification under Section 4 without the necessary sanction from competent authority, and damage which claimants may suffer after publication of declaration under Section 6, as also increase in value likely to accrue from the use to which the land could be put after acquisition. Further, the eighth clause of Section 24 specifically provides that, the reference court shall not take into consideration any increase to the value of the land acquired on account of its being put to any use which is forbidden by law or opposed to public policy, while fifth clause precludes the reference court from taking into consideration any increase to the value of the land likely to accrue from the use to which - 12 - - 12 - - 12 - it will be put when acquired. 13. The Tenancy Act is an agrarian reform as well as beneficial legislation to provide an effective measure to ensure security to the agricultural tenants, not only in respect of their obligation to pay the rent but also regarding ownership rights over the land under their cultivation, albeit subject to conditions and limitations. It is not transformation of mere ownership from one clan of people to others. It is essentially in the best interest of down trodden people. Simultaneously, it seeks to discourage activities harmful and injurious to the agricultural lands and the agriculture in general. The Section 43 and 63 of the Tenancy Act have been obviously enacted bearing in mind public policy involved in bringing into force tenancy legislation and for effective implementation of the principle of ‘‘ ‘‘ ‘‘land to the tiller.’’ ’’ ’’ It also reveals policy to discourage unmindful utilisation of agricultural land for non agricultural purposes. 14. Bearing in mind provisions of Tenancy Act, restrictions imposed against the use of land for any purpose other than agriculture to which provisions of Tenancy Act apply, the legislative intent and public - 13 - - 13 - - 13 - policy behind various provisions of Tenancy Act, statutory norms laid down under sections 23 and 24 for the purpose of evaluating market value of acquired land and the well established principles of law relating to assessment of market value of land to be acquired, inevitable conclusion to be drawn is that in cases where the land has been subjected to the provisions of Tenancy Act, unless conversion for the use of such land has been obtained prior to issuance of notification under Section 4, from the competent authority in due compliance of the provisions of the Tenancy Act while ensuring that such permission does not defeat the object of the Tenancy Act and is not contrary to public policy and unless this aspect is clearly established by the evidence led by the claimant, such lands are to be considered as the agriculture land for the purpose of calculating market value of such land as on the date of issuance of notification under section 4. It should not be understood that for the purpose of valuation invariably non agricultural potentialities of the land are to be totally ignored. However, while arriving at the market value of such land which is subject to the restrictions imposed under the Tenancy Act, the same being in force and in existence on the date of issuance of Section 4 notification, should not be ignored. - 14 - - 14 - - 14 - 15. The Apex Court in the case of Saraswati Devi and Saraswati Devi and Saraswati Devi and others Vs. U.P.Government and another reported in 1993 others Vs. U.P.Government and another reported in 1993 others Vs. U.P.Government and another reported in 1993 Supplement (1) Supreme Court Cases 569 Supplement (1) Supreme Court Cases 569 Supplement (1) Supreme Court Cases 569 has clearly held that the market value will be determined according to the use to which land was put on the date of notification under section 4 of the Act. Similarly, in State of H.P. State of H.P. State of H.P. versus Tarsem Singh & Others reported in (2001) 8 SCC versus Tarsem Singh & Others reported in (2001) 8 SCC versus Tarsem Singh & Others reported in (2001) 8 SCC 104, 104, 104, it has been held that the word ‘‘encumbrance’’means a burden or charge upon property or a claim or lien upon an estate or on the land. ‘‘Encumbrance’’ means burden of legal liability on property, and, therefore, when there is encumbrance on a land, it constitutes a burden on the title which diminishes the value of the land. A legal liability would be one which the courts recognize and can be enforced as between the parties. 16. The function of the court in awarding compensation under the said Act is to ascertain the market value of the land at the date of notification under section 4(1) of the said Act. The Apex Court as long back as in the year 1958 in the matter of The Special Land Acquisition The Special Land Acquisition The Special Land Acquisition Officer, Bangalore versus T. Adinarayan Setty reported Officer, Bangalore versus T. Adinarayan Setty reported Officer, Bangalore versus T. Adinarayan Setty reported in A.I.R. 1959 Supreme Court 429 (V 46 C 53) in A.I.R. 1959 Supreme Court 429 (V 46 C 53) in A.I.R. 1959 Supreme Court 429 (V 46 C 53) had held that, the method for ascertaining market value of the - 15 - - 15 - - 15 - land which is the subject matter of acquisition under the said Act would include consideration of opinion of experts, price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and a number of years purchase of the actual or immediately prospective profits of the lands acquired but are ignored extensively. Considerations, such as purpose for which land is acquired, report of its authorities about suitability and unsuitability of the land for the purpose for which it is acquired and delay in putting the land for the use for which it is acquired, are of no consequence for the purpose of ascertaining market value of the land acquired. The most important point which is laid down for the purpose of evaluating market value is the profitability from the land in question through the interested person as on the day of issuance of notification under section 4 of the said Act and not any other day thereafter. The said law laid down on the point in issue holds the field till this day. 17. It is equally true that the potentialities of the land is one of the factors to be considered while ascertaining market value of the land. However, potentiality factor will have to be considered from both - 16 - - 16 - - 16 - aspects-factual as well as legal, and with reference to the date of issuance of notification under Section 4 of the said Act. While it would be necessary to ascertain the nature of land and various uses to which it is capable of being put to and to be exploited, at the same time one should not ignore factual and legal impediment attached to the land for such varied exploitation thereof. Ignoring such factual and legal impediment will lead to absurd conclusions in relation to the market value of such land. The very concept of the potential value implies evaluation of existing possibilities and not the consequences of future acts. In other words, the land has to be considered as capable to be used in future in the existing conditions, as was held by the Apex Court in State of Orissa Versus Brij Lal Mishra etc. reported State of Orissa Versus Brij Lal Mishra etc. reported State of Orissa Versus Brij Lal Mishra etc. reported in AIR 1996 SC 221. in AIR 1996 SC 221. in AIR 1996 SC 221. Evidently, the statute expressively enjoins to omit consideration of the future use of the land or potentialities of the neighbouring lands on account of the acquisition in determining compensation. 18. The market value of a land is the price which normally willing purchaser would prefer to offer for purchase of that land. Can it be believed, by any stretch of imagination, that a person would offer a price that is normally offered for a land suitable for - 17 - - 17 - - 17 - construction activity to a land which is subject to various statutory restrictions as regards its use for any purpose other than for agriculture ? Will it not be purely wishful thinking, far from reality ? 19. In Bhim Singh versus State of Haryana reported in In Bhim Singh versus State of Haryana reported in In Bhim Singh versus State of Haryana reported in AIR 2003 SC 4382 IR 2003 SC 4382 IR 2003 SC 4382 it was held that, ‘‘What price is fetched after full development cannot be the basis for fixing compensation in respect of land which was agricultural.’’ 20. In Kasturi and others versus State of Haryana In Kasturi and others versus State of Haryana In Kasturi and others versus State of Haryana reported in (2003)1 SCC 354 reported in (2003)1 SCC 354 reported in (2003)1 SCC 354 it was held that, ‘‘A land may be 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 - 18 - - 18 - - 18 - developed area, is not enough particularly when the extent of the acquired land is large and even if a small portion of the land is abutting the main road in the developed area, does