{1} fa60094.odt IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD FIRST APPEAL NO.600 OF 1994 Mohd. Abdul Bari Siddiqui, s/o Mohd. Abdul Karim Siddiqui, age: 30 years, Occ: Agri., R/o Vishnupuri, Tq. & District Nanded. Appellant Versus 1 The State of Maharashtra, through Collector, Nanded. 2 The Special Land Acquisition Officer, Nanded, Vishnupuri Project, Land Acquisition Officer, Janta Market, Nanded. Respondents WITH FIRST APPEAL NO.670 OF 1994 1 Nirmalsingh s/o Shamsingh, age: 55 years, Occ: Agri., R/o Vishnupuri, Tq. And District Nanded. 2 Surjit Singh s/o Nirmal Singh, age: 25 years, Occ: Agri., R/o as above. 3 Birendra Singh s/o Nirmal Singh, age: 20 years, Occ: Agri., R/o as above. Appellants Versus 1 The State of Maharashtra, through Collector, Nanded. {2} fa60094.odt 2 The Special Land Acquisition Officer, Nanded, Vishnupuri Project, , Nanded. 3 Jitendra Singh s/o Kundan Singh, age: 25 years, Occ: Agri., R/o Vishnupuri, Tq. And District Nanded. 4 Harmahendra Singh s/o Kundan Singh, age: 20 years, Occ: and R/o as above. 5 Devendra Singh s/o Babu Singh, age: 20 years, Occ: and R/o as above. Respondents WITH FIRST APPEAL NO.1008 OF 2002 1 Dattaram s/o Vithoba Hambarde, age: 74 years, Occ: Agriculture, R/o Vishnupuri, Tq. And District Nanded. 2 Madhavrao Manikrao Hambarde, age: 40 years, Occ: Agriculture, R/o Vishnupuri, Tq. And District Nanded. Appellants Versus 1 The State of Maharashtra, through Collector, Nanded. 2 The Special Land Acquisition Officer, Nanded, Vishnupuri Project, Land Acquisition Officer, Janta Market, Nanded. Respondents {3} fa60094.odt Mr.P.V.Mandlik, Senior Counsel i/by Mr.Amol Gandhi, advocate for the appellant/s. Mrs.V.A.Shinde, Assistant Government Pleader for respondents-State. CORAM : R.M.BORDE, J. Reserved on : 30th August, 2011. Pronounced on : 9 th September, 2011. JUDGMENT: 1 These are the appeals presented by the claimants taking exception to the judgments and awards dated 30.12.1993, passed by Civil Judge, Senior Division, Nanded in L.A.R. Nos.111, 112 and 113/91. 2 Agricultural lands belonging to the claimants out of G.Nos. 7, 79 and 462 of village Vishnupuri came to be acquired for Lift Irrigation Project. The notification under Section 4 of the Land Acquisition Act was published on 25.12.1982 and after following procedure prescribed under Land Acquisition Act, award came to be passed on 07.05.1990. The Land Acquisition Officer awarded meager amount of compensation, which was not acceptable to the claimants, as such, they tendered applications to the Collector seeking reference of the matters. The Reference Applications tendered by the claimants were referred for decision to the Civil Court. 3 The claimants claimed compensation @ Rs.10/- per square feet. The Reference Court, however, after considering the evidence placed on record, awarded compensation @ Rs.1/- per square feet. In all the three First Appeals, common evidence was led by the claimants, which consist of statements of claimants, as well as documentary evidence {4} fa60094.odt placed on record in respect of comparable sale instances. From the pleadings as well as documents placed on record, it is clear that the adjacent areas belonging to the claimants have been purchased by several purchasers for residential purpose. The claimants have alienated different portions out of G.No.7 by making division of the larger area into smaller plots. The claimant himself deposed that in the year 1982, he appointed a person by name Abdl Salim, who had divided the land into smaller plots and sold them to 15 to 20 purchasers. The claimants also placed on record copies of about 24 sale instances at Exhibit-20. The contents of the sale deeds show that the plots have been sold @ Rs.1/- or 2/- per square feet. Considering the evidence in the form of comparable sale instances which are in respect of adjacent property and the transactions having been effected by the claimants themselves, the Court has placed reliance on the evidence of the claimants and awarded them compensation @ Rs.1/- per square feet. 4 I have perused the judgments and awards passed by the Reference Court and heard arguments advanced by Shri Mandlik, learned Senior Counsel, appearing for appellants. 5 Exhibit-19 placed on record is the copy of power of attorney executed by claimant Mohd. Abdul Bari in favour of one Abdul Salim. The power of attorney holder has been authorised to divide G.No.7 belonging to the claimants in small plots and to secure permission for conversion to non agricultural use and also to sell plots at market rate. There are sale instances executed by the power of attorney holder on behalf of claimant Mohd.Abdul Bari, copies of which (24 in number) are placed on record at Exhibit-20. There are certain sale instances {5} fa60094.odt depicting alienation of small plots admeasuring 1000 square feet @ Rs. 1/- or Rs.2/- per square feet. There is one sale instance placed on record in respect of alienation of plot no.70 admeasuring 1000 square feet in favour of one Sk.Faizuddin s/o Sk. Bademiya on 10.11.1986, for consideration of Rs.5,000/-. It is not disputed that the alienation made in favour of Sk.Faizuddin is out of G.No.7, which is the property adjacent to the acquired land and alienation has been made by power of attorney holder of claimant Mohd. Abdul Bari. The sale instance at Exhibit-33 executed in favour of Sk.Faizuddin shows market price of the plot sold by the claimant on 10.11.1986 @ Rs.5/- per square feet. The claimants, considering the documentary evidence placed on record, shall be entitled to receive market rate of the acquired property between Rs.2/- to Rs.5/- per square feet. 6 It is not disputed that a larger area has been acquired for public purpose by the State Government. It also cannot be controverted that the sale instances in respect of smaller plots can also be taken into consideration, however, some deductions are required to be made on account of smallness of size of the plots, which are required to be compared with the larger area. In this regard, reliance can be placed on the judgment of the Apex Court in the matter of Lucknow Development Authority Vs. Krishna Gopal Lahori & others, reported in AIR 2008 SC 399 and in the case of Administrator General of West Bengal vs. Collector, Varanasi reported in 1988(2) Supreme Court 150. In paragraph no. 6 of the judgment in the case of Administrator General of West Bengal, the Apex Court has observed thus : {6} fa60094.odt “6 It is trite proposition that prices fetched for small plots cannot form safe bases for valuation of large tracts of land as the two are not comparable properties. ( See Collector of Lakhimpur vs. B.C. Dutta AIR 1971 SC 2015, Mirza nausherwan Khan v. Collector ( Land Acquisition), Hyderabad, (1975) 2 SCR 194 : (AIR 1974 SC 2247); Padma Uppal v. State of Punjab, (1977) 1 SCR 329 : ( AIR 1977 SC 580 ), Smt. Kaushalya Devi Bogra v. Land Acquisition Officer, Aurangabad, (1984) 2 SCR 900 : (AIR 1984 SC 892). The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing large extents of land has to be understood in its proper perspective. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. However, if it is shown that the large extent to be valued does admit of and is ripe for use for building purposes; that building lots that could be laid out on the land would be good selling propositions and that valuation on the basis of the method of a hypothetical lay-out could with justification be adopted, then in valuing such small, laid-out sites the valuation indicated by sale of comparable small sites in the are at or about the time of the notification would be relevant. In such a case, necessary deductions for the extent of land required for the formation of roads and other civic amenities; expenses of development of the sites by laying-out roads, drains, sewers, water and electricity lines, and the interest on the outlays for the period of deferment of the realisation of the price; the profits on the venture etc. are to be made. In Brig. Sahib Singh Kalha v. Amritsar Improvement Trust, (See (1982) 1 SCC 419 : (AIR 1982 SC 940)) this Court indicated that deductions for land required for roads and other development expenses, can, together, come up to as much as 53%. But the prices fetched for small plots cannot directly be applied in the case of large areas for the reason that the former reflects the ‘retail’ price of land and the latter the ‘wholesale’ price.” {7} fa60094.odt 7 Taking into consideration ratio laid down by the Apex Court in the judgment cited supra, the sale instances placed on record by the claimants, which relate to the adjoining property and in respect of transactions executed by the claimant himself, can be taken into account. However, when sale instances in relation to smaller area are taken into account while prescribing price of the larger area, a reasonable deduction on that count shall have to be directed. I, therefore, deem it appropriate to direct 50% of the deduction on account of smallness of size of the plots. The rate of the larger area, which has been acquired by the State Government, shall have to be drawn @ Rs. 2.50 per square feet. The sale instances placed on record pertain to the year 1986, whereas, notification under Section 4, in the instant matters, has been issued in the year 1987. Considering approximate 10% rise per year, price of the property acquired by the State would come to Rs.2.75 per square feet. 8 It is also to be taken note of that when larger area is acquired by the State and compensation is payable on square feet basis treating the lands having non agricultural potential, appropriate deduction towards development charges is required to be made. In view of the decision of the Apex Court in the matter of Chimanlal Hargovinddas Vs. Special Land Acquisition Officer and another, reported in (1988) 3 SCC 751, the deduction to the extent of 30% shall have to be directed. The observations made by the Apex Court, in the above referred judgment, would be a guiding factor for determination of value of the land. The Apex Court observed thus: {8} fa60094.odt “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. (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 utilized by him for making his valuation cannot be utilized by the Court unless produced and proved before it. It is not the function of the Court to sit in appeal against the Award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an Appellate Court. (3) The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. {9} fa60094.odt (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under section 4 of the Land Acquisition Act ( dates of Notifications under sections 6 and 9 are irrelevant ). (6) The determination has to be made standing on the date line of valuation ( date of publication of notification under section 4 ) as if the valuer is a hypothetical purchaser wiling to purchase land from the open market and it 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 provided 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 {10} fa60094.odt vis-a-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicated in Clauses (11) to (13) has to be undertaken in a common sense manner a a prudent man of the world of business would do. We may illustrate some such illustrative ( not exhaustive ) 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 disadvantageous factor which would deter a purchaser. 7 special value for an owner of an adjoining property to whom it may have some very special advantage. (15) The evaluation of these factors of course depends on the facts of each case. There cannot be {11} fa60094.odt any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds cannot be compared with a large tract or block of land of say 1000 sq. yds or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers ( meanwhile the invested money will be blocked up ) and the hazards of an entrepreneur. The factor can e discounted by making a deduction by way of an allowance at an appropriate rate ranging approx. between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.” 9 Considering the principles laid down by the Apex Court in the judgment cited supra, while prescribing market value of the larger area on considering non agricultural potential, appropriate deduction towards development charges shall have to be directed. I, therefore, direct 30% deduction from the rate arrived at by me i.e. Rs.2.75 per square feet. The market rate of the acquired property per square feet thus comes to Rs.1.92, which is rounded off to Rs.2/-. 10 The claimants have placed reliance on the judgment in the matter of State of Maharashtra Vs. Mohd. Isaq (in First Appeal No. 104/98 decided by this Court on 7 th July, 2006) and contended that this Court has arrived at market rate of Rs.5/- per square feet for the adjoining property situate at Vishnupuri. However, notification under {12} fa60094.odt Section 4 of the Act, in respect of the acquired lands, in the judgment cited, was issued on 06.07.1989. There is also trend in rise in prices as a result of acquisition for University Sub-Centre, Medical College in the nearby vicinity, which is evident from the judgment itself. On the face of the evidence in the form of sale instances in respect of adjoining property and relating to the transactions entered into by the claimant himself, reliance sought to be placed on the judgment in First Appeal No.104/98, is misplaced. 11 For the reasons recorded above, the appeals presented by the appellants deserve to be allowed and same are accordingly allowed. The claimants / appellants herein shall be entitled to receive compensation @ Rs.2/- per square feet. The claimants shall also be paid all the benefits receivable under the provisions of Land Acquisition Act relating to solatium and interest under Section 28 and component payable under Section 23 (1A) of the Act. The claimants shall also be entitled to receive proportionate costs of the appeals. R.M.BORDE JUDGE adb/fa60094