[1] IN THE HIGH COURTOF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 213 OF 2000 FROM LAND ACQUISITION REFERENCE NO 94 OF 1987 The Wallace Flour Mills Company Ltd. ... Appellants. [Orig. Claimants] Versus. (1) Special Land Acquisition Officer (3) (2) Union of India, Ministry of Defence through Defence Estate Officer, Mumbai. ... Respondents. [Acquiring Body.] Mr. C.M.Korde Sr. Advocate with J. Chandran i/b. A.H.Parpia & Co. for the Appellants. Mr. S.R.Rajguru with Mr. Y.N.Pandhe for respondent No.2. CORAM CORAM CORAM : D.K.Deshmukh and : D.K.Deshmukh and : D.K.Deshmukh and A.A.Sayed, A.A.Sayed, A.A.Sayed, JJ. JJ. JJ. DATE DATE DATE : January 29, 2009. : January 29, 2009. : January 29, 2009. [2] P.C. 1. By this appeal, the appellant challenges the order dated 26th November, 4th December and 10th December, 1999 passed by the learned Single Judge of this Court in Land Acquisition Reference No 94 of 1987. By that order the learned Single Judge has dismissed the reference, holding that no enhancement in the compensation determined by the Land Acquisition Officer is required. 2. The relevant facts are that the notification under Section 4 of the Land Acquisition Act, was issued on 5th October, 1982 for acquisition of plot No 8-A of Worli Scheme No. 52, i.e. the land comprised in C.S.No.733-A of Worli Division. Thereafter, under Sec. 6 of the Act notification was issued on 14.2.1984 acquiring the land. Proceedings were thereafter started for determination of the compensation of the land. The Special Land Acquisition Officer made his Award dated 23rd September, 1986, determining the compensation of the land. The appellant was not satisfied with the compensation fixed by the SLAO and therefore submitted an application under Section 18 of the Land Acquisition Act. The SLAO referred the matter [3] to this Court which was registered as Land Acquisition Reference NO. 94 of 1987. Before the learned Single Judge, the appellant was claiming the enhancement in the compensation fixed by the SLAO, mainly relying on a transaction relating to plot No. 63 of Worli Scheme. That transaction was a development agreement entered into by the lessee of that plot in favour of the developer, dated 23rd December, 1981. The case of the petitioner was that though it is a development agreement, it is a comparable instance considering the date with reference to which the compensation was being fixed for the suit plot. The learned Single Judge, however, did not accept the case of the appellant and held that it being a development agreement, cannot be termed as comparable instance. The learned Single Judge thereafter considered other sale instances and came to the conclusion that compensation determined by the SLAO cannot be faulted. The petitioner therefore came in Appeal against that Judgment of the learned Single Judge. 3. It is common ground before us that if we do not agree with the finding of the learned Single Judge that the instance in relation to plot No. 63 cannot be accepted as a comparable instance by us then it would [4] be necessary for us to go into other aspects of the matter. On the contrary, if we agree with the findings of the learned Single Judge that the development agreement in relation to the plot No. 63 cannot be accepted as a comparable instance, then it is not necessary for us to consider other sale instances, which are taken into consideration by the learned Single Judge for holding that price determined by the SLAO is proper. 4. Perusal of the Judgment of the learned Single Judge shows that the learned Single Judge has discussed the instances in relation to plot No. 63 in paragraph No. 17 of the Judgement in following terms :- " 17. .... The only issue which arises is as to whether the valuation ought to be done only on the basis of the price paid for plot No. 63 or whether it is to be calculated as suggested by Ms. Shastri by taking into account the rise factor between the year 1978 to the relevant date i.e. 25.11.1982. I am unable to agree with the submissions of Mr. Korde to the effect that plot NO. 63 can be treated to be a comparable instance. It is not disputed by [5] any;body that the agreement entered into with regard to plot No. 63 was a development agreement. It has been admitted by P.W.1, the builder, that the firm had entered into the transaction as a commercial venture. The object of the firm was to make a profit in the transaction. The firm had satisfied themselves that the terms were reasonable from commercial stand point. He has given details from the agreement entered into between the builder and Rama Krishna Mission. A perusal of the Agreement clearly shows that this is a Development Agreement. It is a development agreement, then it cannot be said to be a sale instance. Under Land Acquisition Act, the Court whilst fixing compensation, has to take into consideration instances of sale of similar land. It is a settled proposition of law that a development agreement cannot be said to be an agreement for sale of the land. It is a settled proposition of law that a development agreement cannot be said to be an agreement for sale of the land. It is a sale of the FSI. The builder is entitled to exploit the FSI. In the usual development agreement provisions are [6] made for compensating the owners of the land by providing alternate accommodation usually free of any consideration. Therefore, in my view, whatever has been stated with regard to plot No. 63 and the method of valuation on the aforesaid basis has no relevant whatsoever for determination of this relevance. 5. The learned Counsel appearing for the appellant took us through the development agreement in relation to plot No. 63. He also took us through the oral deposition of a partner of the firm, who was the developer, in relation to the plot No. 63. The learned Counsel submitted that in Bombay the development agreements are commonly entered into. The learned Counsel submitted that perusal of the development agreement shows that there are several onerous conditions imposed on the developer under the development agreement. The learned Counsel submitted that if after accepting those onerous conditions, if the developer has agreed to pay the amount which is mentioned in the development agreement to the owner and also agreed to handover 5000 sq.ft. constructed area to the owner. This, according to the learned Counsel, [7] is a matter of common sense that had it been an out right sale, the purchaser would have paid more amount than what has been paid by the developer in the instant case. In the submission of the learned Counsel, though it is a development agreement and not a sale transaction, it is a comparable instance because according to the learned Counsel, development agreement is a mode adopted commonly in Bombay for conveying the properties. 6. The learned Counsel appearing for Union of India, on the other hand, supports the findings recorded by the learned Single Judge and submits that a development agreement and sale deed are in two different classes and, therefore they are not comparable. The learned Counsel submits that the Court cannot assume that instead of entering into development agreement if the owner had sold out the land, what price the property would have fetched. According to the learned Counsel this will be in the realm of only conjuncture and, therefore it would not be proper for the Court to enter into that arena. 7. In the light of rival submissions, if the record is perused, it becomes clear that the only [8] question we have to consider is whether the transaction in relation to plot No. 63 can be treated as a comparable transaction for the purpose of determining the market price of the suit plot. In our opinion, for that purpose, we have to see what is the nature of the transaction entered into in relation to plot No. 63. The development agreement dated 23rd December, 1981 entered into between Rama Krishna Mission, which was the lessee of the plot and the developer - Shree Laxmi Construction Company, is on record. Perusal of that agreement shows that the land is owned by the Bombay Municipal Corporation. It was given on lease to one Kavi Ranjan Prasad. Kavi Ranjan Prasad by deed of irrevocable nomination, dated 25th August, 1978. assigned his rights in the land to Rama Krishna Mission for charitable purpose. It is thus clear that there was obligation for the Rama Krishna Mission to use the land for charitable purpose only. 8. In the recital part of the development agreement, it is stated that "the said Mission is desirous of developing the aforesaid plot of land in consonance with the objective of the aforesaid irrevocable deed of nomination made for charitable purpose by the said Kavi Ranjan Prasad". Thus it is [9] the purpose of the aforesaid deed of irrevocable nomination executed by said Kavi Ranjan Prasad can be better fulfilled by having the said land developed and thereby obtaining larger income and applying such income for those purposes. Thus it is clear that there was restriction on the Rama Krishna Mission that it could not sell the land, however, it could develop the land and that too for charitable purpose. Then in the recital part the purpose for development agreement is also specified. It says " the said Nominee, the Mission, is not in a position to devote its whole attention in itself developing the said plot of land for reason of its other activities and for that reason the said Mission is desirous of having the said land developed through a reliable agency to act as the Developer on the Mission’s behalf in respect of the said land." It is thus clear that by this development agreement what the Mission was doing is that it was appointing the developer as its agent for developing the land. One reason why development was entrusted by the Mission to Shree Laxmi Construction Company was that the mission found that party to be reliable for carrying out the work as agent of the Mission. Perusal of the agreement further shows that developer was to pay amount of Rs. 65 lac to the Mission and in [10] consideration thereof, he was to get the right to sell constructed portion of the land excluding the area of 5000 sq.ft. Thus the consideration for permitting the developer to sell the constructed portion, excluding 5000 sq.ft. was the cost of construction that the developer was to incur. What is further to be seen is that the developer could not submit the building plan for sanction without getting it approved by the Mission. The Mission was also exempted from payment of ground rent after the building has been constructed. It was also provided that the building material that the developer will be using for construction should be of highest quality and it will be approved by the Mission. Perusal of these various clauses of the agreement thus show that the development was to be carried out by the developer as agent of the Mission and the construction activity including sanction, approval to the building plan, use of construction material were all under the control of the Mission. The developer was also under an obligation to complete the development within stipulated period, if the development is not completed within the stipulated period there was a provision made for termination of the agreement. Thus, till the construction of the building is complete, all the rights were to be with [11] the Mission. Therefore, a transaction of such a nature is in totally different class than a simple sale transaction. When sale takes place, owner ceases to have any link with the land, any control over the land and it is for the purchaser to decide what he wants to do with the land. Sale is more akin to an instance where the land is compulsorily acquired. Therefore, what is found to be comparable with acquisition is an outright sale of the land. In our opinion, the submission of the learned Counsel that as the developer has paid the price considering all the restrictions, had it been an outright sale, it would have fetched more price, cannot be accepted. Because, in our opinion when the transaction of the nature which we have described above in relation to plot No. 63 is totally a different class of transaction than a sale transaction. In our opinion, it is not possible to compare it for the purpose of determination of compensation or market price with the land acquired. What can be compared is comparable instances. In both the instances, the transaction must be in the same class. Transactions which are in a two different classes, in our opinion, cannot be compared. In our opinion, the learned Counsel appearing for the Union of India was right in submitting that an attempt is made [12] to convert an agreement to develop into sale agreement which will be in the realm of conjuncture and, therefore, the Court would not be justified in doing so. In any case, we find that the reason that has been given by the learned Single Judge for not accepting the transaction in relation to plot No.63 as a comparable transaction is a possible view and, therefore, in our opinion no interference in the impugned order at the hands of this Court is called for. 9. In the result therefore the appeal fails and is dismissed. .... [D.K.Deshmukh, [D.K.Deshmukh, [D.K.Deshmukh, J.] J.] J.] [A.A.Sayed, [A.A.Sayed, [A.A.Sayed, J.] J.] J.]