IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.01.2010 CORAM: THE HON'BLE MR.JUSTICE K.RAVIRAJA PANDIAN AND THE HON'BLE MR.JUSTICE M.M.SUNDRESH A.S.Nos.454 to 457 and 761 to 764 of 2008 and M.P.Nos.1 of 2008 The Special Tahsldar (L.A.) Cell-I, M.M.D.A., Egmore Chennai – 8. .... Appellants in all Appeals Vs. 1. Tmt.Kanniammal ...I Respondent/ Claimant 2. The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...2nd Respondent in A.S.No.454 of 2008 1.R.Velayutham 2.R.Deivasigamani 3.R.Purushothaman 4.R.Babu ...Respondents 1 to 4/ Claimants 2 to 5 5.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ... 5th Respondent in A.S.No.455 of 2008 1.C.Subramanian, ...I Respondent/ Claimant 2.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...2nd Respondent in A.S.No.456 of 2008 1.K.Mohamed Yaseen ...I Respondent/ Claimant https://hcservices.ecourts.gov.in/hcservices/ 2.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...2nd Respondent in A.S.No.457 of 2008 1. Leela Bai 2. Kasturi 3. Satyakumari ...Respondents 1 to 3/ Claimants 2 to 4 4. The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...4th Respondent in A.S.No.761 of 2008 1.N.Kuppammal 2.N.Rajeswaran 3.P.Ponniammal 4.M.Pachaiammal ...Respondents 1 to 4/ Claimants 2 to 5 5.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...5th Respondent in A.S.No.762 of 2008 1.Thulasibai 2.C.Jayakumar 3.C.Kovarhan 4.C.Varadharajan 5.R.Vanitha ...Respondents 1 to 5/ Claimants 2 to 6 6.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ... 6th Respondent in A.S.No.763 of 2008 1.D.Vanathachi 2.J.Devaki 3.D.Ulaganathan 4.D.Shanmugam 5.D.Anandhan 6.D.Chandrasekaran 7.D.Dhsanasekaran ...Respondents 1 to 7/ Claimants 2 to 8 https://hcservices.ecourts.gov.in/hcservices/ 8.The Chairman Tamil Nadu Housing Board Nandanam Chennai – 600 035. ...8th Respondent in A.S.No.764 of 2008 Prayer: Appeal Suits in A.S.Nos.454 to 457 and 761 to 764 of 2008 are filed under Section 54 of the Land Acquisition Act against the judgment and decree made in L.A.O.P.Nos.102 to 105 of 1992 106 to 108/92 and 391/93 respectively dated 31.1.2007 on the file of the Subordinate Judge, Poonamallee. For Appellant : Mr.V.Ravi,Spl.G.P. For Respondents : Mr.R.Vijayaraghavan for in A.S.454,455,761 to 764/08 Mr.S. Palanivelayutham in A.S.456, 457/08 Mr.D.Veerasekaran for Tamilnadu Housing Board JUDGMENT (Judgment of the Court was made by M.M.SUNDRESH,J.) All these appeals have been preferred against the common award passed in L.A.O.P.Nos.102 to 108 of 1992 and 391 of 1993 respectively dated 31.1.2007 on the file of the Subordinate Judge, Poonamallee, wherein the reference Court has fixed the compensation at Rs.8,500/- per cent. 2.The lands situated in Ayyappakkam village, Mogappair Division had been acquired by the appellant for the purpose of implementation of House Sites and Services Scheme, Ambattur through the World Bank Project. The Notification under Section 4(1) of the Land Acquisition Act, 1894 was published on 29.11.1988. The substance of the 4(1) notification was published locally at conspicuous places on 21.12.1988. Thereafter the award was passed in award No.1/91 dated 11.10.1991 fixing the amount of compensation at Rs.149/- per cent. Not satisfied with the award, the respondents herein, being the claimants, sought for reference and the reference Court has enhanced the amount of compensation from Rs.149/- to Rs.8,500/- per cent. Challenging the same, the present appeals have been filed. 3. Learned Government Pleader appearing for the appellants in all the appeals submitted that the reference Court has committed an error in not fixing the value of the land based on the data sale deeds produced by the appellants. It is further submitted by the https://hcservices.ecourts.gov.in/hcservices/ learned Government Pleader that the sale deeds relied upon by the claimants are all for smaller extents of lands and therefore the said sale deeds, which are for house sites, cannot be the basis for fixing the valuation of the lands, which were acquired as agricultural lands. According to the learned Government Pleader, the reference Court has also not made suitable deduction towards development charges. It is further submitted that there is no agricultural operation in the acquired land and the lands are not having commercial value and therefore the appeals filed will have to be allowed. 4. Learned counsel appearing for the respondents submitted that the reference Court had come to the conclusion on the ground that the acquired lands are having huge potential. The lands acquired are covered by house sites such as Rajammal Nagar and Ganapathy Nagar. Further, the acquired lands are nearer to Annanoor village and the Annanoor railway station is situated about 0.5 k.m, from the acquired land. Moreover, the developed area of Reddipalayam and Avadi Municipality townships are also situated within 0.5 k.m. on the western side of the acquired lands. Hence, the reference Court has taken into consideration of the potential value of the lands acquired and fixed the valuation correctly. 5. We have considered the argument of the learned Government Pleader appearing for the appellant, the learned counsel appearing for the Housing Board and the learned counsel appearing for the respondents/claimants. 6. Admittedly, the sale deeds relied upon by the claimants are all for house sites. In the case on hand, the lands acquired are all agricultural lands. The said fact has also been not disputed by the learned counsel for the claimants. Hence, the reference Court has committed error in fixing the valuation of the land at Rs.8,500/- per cent without any basis. The potentiality of the acquired land by itself cannot be a ground to fix the value at Rs.8,500/- per cent. Moreover, the reference Court has not made any deduction for relying upon the sale deeds of the claimants, which are for smaller plots and also in not deducting any amount towards development charges. 7. The Division Bench of this Court in the case of THAYARAMMAL VS. SPECIAL TAHSILDAR, LAND ACQUISTIION, ERODE reported 2009(1) CTC 467 has taken a view that in a case where large extents of agricultural lands have been acquired, deduction should be made while relying upon the sale deeds for house sites and towards development charges. In a recent judgment, the Honourable Supreme Court in the case of SUBH RAM AND OTHERS VS. HARYANA STATE AND ANOTHER reported in (2009) 8 MLJ 979 has also taken the view that while acquiring the agricultural lands, which are undeveloped and https://hcservices.ecourts.gov.in/hcservices/ for relying upon the sale deeds, which are for smaller extents of lands, suitable deductions will have to be made based upon the facts of the case. 8. In the case on hand, R.W.1 has admitted in evidence about the potential value of the land. Therefore, we are not inclined to go into the value fixed by the reference Court. However, the reference Court has committed an error in not making the deduction towards the development charges. Admittedly, the lands acquired are undeveloped agricultural lands. Similarly the sale deeds relied upon by the respondents/claimants are house plots, which are surrounded by well developed houses. Therefore, the reference Court ought to have taken into consideration of the above said factors while fixing the valuation. 9. While fixing the valuation of a undeveloped agricultural land containing larger extent, by taking into consideration of a small well developed plot, the same valuation fixed for the said plots cannot be accepted in toto. The deductions will have to be made towards fixing of the value of the acquired undeveloped agricultural land. Such deductions would include the provisions of road, common amenities for the developed layout such as drains, parks, play grounds and community arrears and the amount spent for developing a larger extent of undeveloped land into either house sites or commercial plots. Similarly, the other factors such as electricity service connection, water connection, drainage for rain water and the amounts spent on the services of surveyors, engineers and developers also will have to be taken into consideration. While developing the land, certain amount of land will have to be earmarked for public purposes. After fixing the valuation for the above said purposes, and on deducting the same from the valuation fixed for the acquired land, which is an undeveloped agricultural land, the correct compensation will have to be arrived at. The said method has not been adopted by the reference Court. In the case on hand, as observed earlier, there are no roads within the acquired lands and the common amenities have not been provided. The Honourable Supreme Court in the judgment referred above has considered the issue of development charges and held that an undeveloped agricultural land will have to be treated as wholesale price as against the developed plot as retail price. The Apex Court in the above said judgment has observed as follows: "...7. What is the concept of deduction of development cost to arrive at market value? If the market value of a large tract of agricultural and or undeveloped non-agricultural land possessing potential for development is to be determined with reference to the market value of a small residential plot situated in a neighbouring residential layout, it becomes necessary to work back the market value of the large tract of https://hcservices.ecourts.gov.in/hcservices/ undeveloped land from the market value of the small residential plot. This is because the value of one square yard of undeveloped land is not the same as one square yard of developed residential plot. If there is a large tract of agricultural or undeveloped land, obviously the entire extent cannot be sold as residential plots, it is first necessary to make a layout of plots in such land. This would mean that a provision will have to be made for roads to provide access to each plot in the layout. In a standard layout with plots measuring say 2500 sq.ft. (50'x50') each, to provide road access to each plot, it will be necessary to provide a road after every two rows of plots. If the depth of each plot is 50', and if the road width is 25 feet, then for every two strips of plots, there will have to be a strip of road of25 feet. This means a minimum of 25% of, the total land area will be utilised for roads. A typical layout will also have cross-roads, and areas earmarked for park, and/or community areas. Consequently, non-saleable area (area which cannot be sold as plots) would be around 30% to 40% of the total area. Therefore, in the hypothetical layout method of determination of market value as a first step, the areas that will be used up for roads, drains, parks/playgrounds and community areas, will have to be excluded from the total extent of the acquired land. The standard deduction in this behalf is one-third (33%). But, merely deducting the areas required for roads, drains, parks and community areas, will not convert a large tract of agricultural or undeveloped land into a developed residential layout. For that, considerable financial outlay has to be made. The land will have to be levelled. The land will have to be converted from agricultural use to non-agricultural residential use by paying necessary fees/fine to the Revenue/development authorities. Then the roads will have to be asphalted or concreted. Drains will have to be dug and lined with reinforced cement concrete or stone, for drainage of rain water, Electricity, water, and sewage lines will have to be laid. Deposits will have to be made to the Authorities dealing with electricity, water, sewage removal. The development will also involve the service of surveyors, engineers and developers. All these involve considerable expenditure. Further, as there will be a time gap between the expenditure for development and the actual sale of plots, the cost of development will also have an element of interest on investment. The developer who undertakes the development and invests the monies for development would also expect a reasonable https://hcservices.ecourts.gov.in/hcservices/ profit when the plots are sold. All these expenditure and factors are standardised into another one-third (33%) deduction, towards expenses of development. Thus, if the valuation of a large extent of agricultural or undeveloped land is to be based on the sale price of a small developed plot in a private lay-out, then the standard deductions should be one-third (for roads etc.) plus one third (for expenditure of development) in all two thirds (for 67%), as 'development cost' from the value of small plot. The percentage of deduction may however vary between 20% to 75% depending on several circumstances (see: Lal Chad v. Union of India 2009 (11) SCALE 627, paras 8 and 9 for illustrations of such circumstances). 8. Therefore, when deduction is made from the value of a small residential plot towards the development cost, to arrive at the value of a large tract of agricultural or undeveloped land with development potential, the deduction has nothing to do with the purpose for which the land is acquired. The deduction is with reference to the price of the small residential plot, to work back the value of the large tract of undeveloped land. On the other hand, where the value of acquired agricultural land is determined with reference to the sale price of a neighbouring agricultural land, no deduction need be made towards 'development cost'. 9. It is no doubt true that this Court in some decisions has observed that purpose of acquisition will also be relevant. But, it is made in a different context. The Land Acquisition Collectors in some cases adopt belting methods for valuation of land, with reference to a focal point,that is either with reference to the distance from the main road, or distance from a developed area. Lands that adjoin a developed area or a main road is given a higher value than a land farther away from the road or the developed area. The Land Acquisition Collectors also award different compensation depending upon whether the acquired land is a dry land or wet/irrigated land. When different categories of lands (or lands with different situational advantages) are acquired for the same purpose, say for forming of a residential layout, Courts have some times felt that determination of their value with reference to previous status or situation should be avoided and a uniform rate of compensation should be awarded for all lands acquired under the same notification. The logic employed by the Court is that categorising the lands acquired for a common purpose, say for a residential colony, into https://hcservices.ecourts.gov.in/hcservices/ high value irrigated land and low value dry lands is meaningless, as all lands are to be levelled and used for the same purpose that is for formation of a residential layout and once the layout is formed, it makes no difference whether the land was previously a land with irrigation facilities or a dry land. It is in this context, in some cases, to avoid the need to differentiate the lands acquired under a common notification for a common purpose, and to extend the benefit of a uniform compensation, Courts have observed that the purpose of acquisition is also a relevant factor. The said observation may not apply in all cases and all circumstances as the general rule is that the land owner is being compensated for what he has lost and not with reference to the purpose of acquisition. 10. The purpose of acquisition can never be a factor to increase the market value of the acquired land. We may give two examples. Where irrigated land belonging to 'A' and dry land of 'B' and wasteland of 'C' are acquired for purpose of submergence in a dam project, neither 'B' nor 'C' can contend that they are entitled to the same higher compensation which was awarded for the irrigated land, on the ground that all the lands were acquired for the same purpose. Nor can the Land Acquisition Collector hold that in case of acquisition for submergence in a dam project, irrigated land should be awarded lesser compensation equal to the value of waste land, on the ground that purpose of acquisition is the same in regard to both. The principle is that the quality (class) of land, the situation of the land, the access to the land are all relevant factors for determination of the market value. But, in certain acquisitions, in certain circumstances, for lack, of detailed or clear evidence, Courts have chosen to ignore the difference in the quality/situational advantages and treat all lands equally for awarding uniform compensation having regard to the common purpose of acquisition. How far such a course, is proper or valid may be debatable. Whether such a procedure is legally valid or proper or not, may have to be decided in the context of the respective acquisitions. All that has to be noticed in the context of the issue before us, is that the use to which the acquired land may be put, can have no bearing upon the deduction to be made towards development cost. Nor can the purpose of acquisition be used to increase the compensation awardable with reference to the expected profits from the future user. The observation that purpose of acquisition is a relevant factor, unless properly https://hcservices.ecourts.gov.in/hcservices/ understood and carefully applied with reference to special circumstances, may lead to absurd or unjust results. It is accepted generally that residential plots are costlier than industrial plots, and commercial plots are costlier and residential plots. If the purpose of acquisition is a relevant factor in determining compensation, then it would lead to the absurd and unjust situation, that the compensation payable for the same land will be different, depending upon the purpose of the acquisition; and that compensation will be less if the acquisition is for a sewage treatment plant, more if the acquisition is for an industrial layout, much more if acquisition is for residential layout and highest if the acquisition is for commercial value. The purpose of acquisition cannot therefore be a factor to increase the compensation. 11. Deduction of 'development cost' is the concept used to derive the 'wholesale price' of a large undeveloped land with reference to the 'retail price' of a small developed plot. The difference between the value of a small developed plot and the value of a large undeveloped land is the 'development cost'. Two factors have a bearing on the quantum (or percentage) of deduction in the 'retail price' as development cost. Firstly, the percentage of deduction is decided with reference to the extent and nature of development of the area/layout in which the small developed plot is situated. Secondly, the condition of the acquired land as on the date of preliminary notification, whether it was undeveloped, or partly developed, is considered and appropriate adjustment is made in the percentage of deduction to take note of the developed status of the acquired land. The percentage of deduction (development cost factor) will be applied fully where the acquired land has no development. But, where the acquired land can be considered to be partly developed (say – for example, having good road access or having the amenity of electricity, water etc.),then the development cost (that is percentage of deduction) will be modulated with reference to the extent of development of the acquired land as on the date of acquisition. But, under no circumstances, the future use or purpose of acquisition will play a role in determining the percentage of deduction towards development cost. 10. The Honourable Supreme Court by taking into consideration of the facts involved therein has fixed a deduction of 40 percent towards development charges even though the development charges in the normal circumstances would be higher. In view of the fact that https://hcservices.ecourts.gov.in/hcservices/ in the present case the lands acquired are having proximity to the developed area and also in view of the admission made by R.W.1 to that effect, we are of the opinion that 40 percent deduction would be just and proper in the present case. The reference Court has fixed the award at Rs.8,500/- per cent. By deducting 40 percent towards development charges, a sum of Rs.5,100/- per cent has been fixed by us. 11. In the result, the award passed by the reference Court is hereby modified by fixing the market value of the land at Rs.5,100/- per cent instead of Rs.8,500/- per cent. We make it clear that the claimants are entitled for all statutory benefits as provided under the Act. The appeals are allowed accordingly. The Government Pleader appearing for the Land Acquisition Officer as well as the counsel for the Housing Board are entitled to individual fees in respect of each case as of now. Consequently, the connected miscellaneous petitions are closed. No costs. 12. It is submitted by Mr.Veerasekaran, learned counsel appearing for the requisitioning body- Housing Board that the entire amount as awarded by the reference Court has been deposited and the claimants have in fact withdrawn 50 percent of the said amount. The claimants are entitled to withdraw the amount in accordance with the judgment passed today by modifying the award passed by the reference Court and the remaining amount is permitted to be withdrawn by the requisitioning body – Housing Board. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. Copy to: 1. The Subordinate Judge, Poonamallee. (with records) 2. The Section Officer VR Section,High Court, Madras 2 ccs to Mr.D. Veerasekaran, Advocate, SR. 714, 713 1 cc to Government Pleader, SR. 521 6 ccs to Mr.R. Vijayaraghavan, Advocate, SR 1001 2 ccs to Mr.S. Palanivelayutham, Advocate, SR. 1247, 1248 4 cc to Mr.S. Swaminathan, Advocate, SR. 1004, 1005 A.S.Nos.454 to 457 of 2008 etc., PVR (CO) kk 5/2 https://hcservices.ecourts.gov.in/hcservices/