IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 6.4.2010 CORAM : THE HONOURABLE Mrs.JUSTICE R.BANUMATHI and THE HONOURABLE Mr.JUSTICE M.VENUGOPAL Appeal Suit Nos.563 of 2006 and 238 of 2007 National Highways Authority of India (Ministry of Shipping, Road Transport and Highways) represented by its Project Director and Manager (Technical) II Floor, "Sethuram" No.14, Sundaresa Iyer Layout, Trichy Road, Coimbatore-18 ... Appellant in both Appeals/ III Party vs. 1. G.Marimuthu Gounder ... Respondent No.1 in A.S.No.563 of 2006/ Claimant K.S.Kuppusamy ... Respondent No.1 in A.S.No.238 of 2007/ Claimant The Land Acquisition Officer and Special Tahsidlar (Land Acquisition) Bye-pass Road, Namakkal. ... Respondent No.2 in both Appeals/ Respondent 3.The Divisional Engineer National Highways, Salem. ... Respondent No.3 in A.S.No.238 of 2007/ Respondent Prayer: Appeals in A.s.Nos.563 of 2006 and 238 of 2007 are filed under Section 54 of the Land Acquisition Act against the Orders dated 26.8.2003 made in L.A.O.P.No.43 of 2002 and dated 9.3.2004 made in L.A.O.P.No.15 of 2002 respectively on the file of the Fast Track Court No.3, Namakkal. For Appellant : Mr.Ravindran, in both Appeals Addl.Solicitor General of India assisted by Mr.P.Wilson, Asst.Solicitor General 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 both Sr.Counsel Appeals JUDGMENT R.BANUMATHI,J. Feeling aggrieved by the enhancement of compensation to Rs.4,250/- per cent in L.A.O.P.No.43 of 2002 on the file of Fast Track Court No.3, Namakkal, for the lands acquired in Ayyampalayam Agraharam village for the formation of Bye-pass road to Namakkal town at N.H.7, National Highways Authority of India (in short, NHAI) has preferred A.S.No.563 of 2006. Challenging the enhancement of compensation by very same reference Court in L.A.O.P.No.15 of 2002 for the lands acquired in Thummankurichi for formation of Bye-pass road to Namakkal – N.H.7, NHAI has preferred appeal A.S.No.238 of 2007. 2. Since based on Exs.A.1 and A.2 filed in L.A.O.P.No.43 of 2002, reference Court has enhanced the market value at Rs.4,250/- per cent in both the L.A.O.Ps and since common points arise for determination in both appeals, even though these appeals are arising out of different awards, both the appeals were heard together and shall stand disposed by this common judgment. 3. A.S.No.563 of 2006 – Agraharam Ayyampalayam : Lands measuring 5.65.0 hectares in S.No.337/2B2 etc. of Ayyampalayam village, Namakkal Taluk were acquired for formation of Bye-pass road at N.H.7. Draft notification under Section 4(1) of the Land Acquisition Act was approved in G.O.Ms.No.1629, PWD, dated 23.11.1993 and published in Gazette dated 22.12.1993. The contents of the notification under Section 4(1) of the Land Acquisition Act was also published in dailies Malaimalar and Makkalkural dated 25.12.1993 and 26.12.1993 respectively. The contents of the notification was published in the locality on 23.3.1994. Enquiry under Section 5-A of the Land Acquisition Act was held on 1.6.1994. Section 6 declaration was published in the Gazette on 17.8.1994 and in local dailies on 18.8.1994 and the substance of the notification was published in the locality on 14.9.1994. 4. For determining the market value of the lands acquired, sales statistics for the period of 3 years prior to the publication https://hcservices.ecourts.gov.in/hcservices/ of notification under Section 4(1) of the Land Acquisition Act on 28.3.1994 ie., from 28.3.1991 to 27.3.1994 were gathered from Joint Sub-Registrar's Office-I, Namakkal. There were 65 sales occurred during the said period. For fixing market value of the lands, Land Acquisition Officer examined the sales by classifying the lands into three different classifications – (i) Manavari dry lands; (ii) irrigated dry lands and (iii) dry land - house site plots. Insofar as Manavari dry lands, 0.11.5 hectares in S.No.341/2 of Ayyampalayam village was sold for Rs.6,400 in document No.2091 dated 17.11.1992. According to the said sale, rate per hectare works out to Rs.54,783 i.e., Rs.22,179/- per acre. 5. For irrigated dry land, document No.1463 dated 29.6.1993 of Joint Registrar's Office, Namakkal District was taken under which an extent of 1.07.5 hectares in S.No.241/3, 4, 7 of Thummankurichi village was sold for Rs.35,000/-. According to te said sale deed, rate per hectare works out to Rs.88,372/-i.e., Rs.35,778 per acre i.e., Rs.357.78 per cent. The said lands in S.No.241//3, 4 and 7 were taken as data lands and the Land Acquisition Officer fixed the market value of the land at Rs.88,372/- per hectare for wet lands. Insofar as house site plots, in Sl.No.3 of Ex.R.3 - Sales Statistics, an extent of 3,024 sq.ft in S.No.350/7 of Ag.Ayyampalayam village was sold for Rs.7,500/-, which was taken as the data land and based on which the Land Acquisition Officer fixed the market value of the house site plots at Re.1.38ps per sq.ft.. The Land Acquisition Officer fixing the market value for Manavari dry land at Rs.54,783/- per hectare and at Rs.88,372/- for irrigated dry land and at Rs.1.38 per sq.ft for house site plots has passed the award in Award No.1 of 1997 dated 28.7.1997. Land Acquisition Officer also awarded 30 percent solatium and 12 percent additional market value on the compensation from 28.3.1991 to 23.10.1994 and from 12.10.1996 to 31.7.1997 (i.e., for one year 137 days.) 6. On objection raised by land owners, Section 18 reference was made and taken on file in L.A.O.P.No.43 of 2002. In the reference Court, land owner – claimant – Marimuthu was examined as C.W.1. Venkatesan - Tahsildar was examined as R.W.1. On the side of Claimants, Exs.C.1 and C.2 were marked. On the side of Respondents, Exs.R.1 to R.3 were marked. Based upon Exs.C.1 and C.2, the reference Court enhanced the value to Rs.4,250/- per cent. Reference Court passed the order (i) enhancing the market value for Rs.4,250/- per cent; (ii) 12 percent additional market value on the enhanced compensation from 28.3.1991 to 23.10.1994 and from 12.10.1996 to 31.7.1997 (i.e., for one year 137 days.); (iii) 30 percent solatium on the enhanced compensation; (iv) interest at the rate of 9 percent for a period of one year from the date of taking possession; (v) thereafter interest at the rate of 15 percent per annum till the date of realisation. 7. A.S.No.238 of 2007 - Thummankurichi – https://hcservices.ecourts.gov.in/hcservices/ The lands measuring 5-91-0 hectares in Thummankurichi and Melapatti Melmugam villages, Namakkal Taluk were acquired for formation of Bye Pass Road to N.H.7. The Draft notification under Section 4(1) of the Land Acquisition Act was approved in G.O.Ms.No.1223 P.W.D. (H.P.1) dated 19.8.1993 and published in Tamilnadu Government Gazette dated 22.9.1993. The notification was also published in the two daily news papers in Tamil viz., Vetrimalai dated 23.9.1993 and Dinathoothu dated 23.9.1993. The substance of the notification was published in the locality on 25.10.1993. The draft declaration under Section 6 of the Land Acquisition Act was approved in G.O.Ms.No.615 P.W.D. H.P.1 dated 22.6.1994 and published in Government Gazettee dated 20.7.1994. The substance of the notification was published in the locality on 8.8.1994. 8. To determine the market value of the property, sales statistics for a period of three years prior to the date of notification under Section 4(1) of the Land Acquisition Act i.e., from 25.10.1990 to 24.10.1993 were collected from Sub-Registrar Office, Namakkal. There were 68 sales took place during the said period. For fixing the market value, the Land Acquisition Officer has examined those sales statistics (Ex.R.3). In Sl.No.27 of the sales statistics, an extent of 1-07-5 hectares of land in S.No.241/3, 7, 4 of Thummankurichi village was sold for Rs.95,000/- by document No.1463 dated 20.6.1993 which works out to Rs.88,373/- per hectares i.e., Rs.35,778/- per acre i.e., at Rs.0.82ps per sq.ft. The lands were irrigated dry lands. The Land Acquisition Officer had taken the said land as data land for the irrigated dry land under acquisition and accordingly fixed Rs.88,372 per hectare as market value for the irrigated dry lands under acquisition. In Sl.No.7 of the sales statistics, an extent of 0-06-0 hectres of land in S.No.274/1D of Thummankurichi village was sold out for Rs.2,500/- in Document No.1181 dated 3.12.1991 of Sub Registrar, Namakkal, which works out to Rs.41,666/- per hectare ie., Rs.16,868/- per acre i.e., Rs.0.38ps. per sq.ft. Fixing the market value at Rs.88,372/- per hectare for irrigated dry lands and Rs.41,666/- per hectare for the dry lands, the Land Acquisition Officer passed the award in award No.4 of 1995 dated 22.11.2005. The Land Acquisition Officer also awarded 30 percent solatium and 12 percent additional amount on the market value from 25.10.1993 to 26.12.1995 (792 days). 9. On objection raised by the land owners, reference under Section 18 of the Land Acquisition Act was made to the District Court, Namakkal and the matter was tried by Fast Track Court No.3, Namakkal. The claimant was examined as C.W.1 and one Venkatesan – Tahsildar was examined as R.W.1. On the side of the Claimants Exs.C.1 and C.2 - judgment and decree passed in L.A.O.P.No.43 of 2002 were marked. On the side of Respondents, Exs.R.1 to R.3 were marked. https://hcservices.ecourts.gov.in/hcservices/ 10. Referring to the enhancement of compensation in L.A.O.P.No.43 of 2002 at Rs.4,250/ per cent for the lands acquired in Thummankurichi village also, the market value of the subject land was enhanced to Rs.4,250/- per cent and the reference Court passed the order in L.A.O.P.No.15 of 2002 (i) enhancing the market value for Rs.4,250/- per cent; (ii) 12 percent additional market value on the enhanced compensation from 25.10.1993 to 26.12.1995 ( 792 days); (iii) 30 percent solatium on the enhanced compensation; (iv) interest at the rate of 9 percent for a period of one year from the date of taking possession; (v) thereafter interest at the rate of 15 percent per annum till the date of realisation. 11. The learned Additional Solicitor General Mr.Ravindran submitted that the enhancement of compensation awarded by the reference Court is very much on the higher side. Drawing our attention to Ex.C.2, the learned Additional Solicitor General submitted that under Ex.C.2, item No.4 in S.No.348 and measuring 1,044 sq.ft. was sold for Rs.6,264/-, which works out to Rs.6/- per sq.ft., which was not kept in view by the Reference Court and the Reference Court erred in taking item No.3, which is a sale of house plot. 12. The learned Additional Solicitor General would further submit that large stretch of land measuring 5.65.0 hectares in S.No.337/2B2 was acquired and while so there is no justifiable reason to enhance the compensation based upon the sale deeds for smaller extent and fixing the market value on square feet basis. It was further submitted that the data lands chosen by the Land Acquisition Officer were of same tharam and quality and the enhancement made by the reference Court is very much on the higher side. Insofar as A.s.No.238 of 2007, the learned Additional Solicitor General would submit that reference Court erred in following the value fixed for Ayyampalayam village. 13. We have heard Mr.M.S.Krishnan, learned Senior Counsel appearing for the claimants, who submitted that the acquired lands are situated adjacent to Namakkal – Tiruchi main road and nearby to Namakkal and situated in the midst of developed area. The acquired lands have potential for future development and the enhancement made by the reference Court is very less warranting no interference. 14. Principles for determination of market value:- For determining the amount of compensation payable in respect of the lands acquired by the State, market value thereof is to be ascertained. The expression 'market value' has been the subject matter of consideration by the Supreme Court in several cases. Market value is the price that the willing purchaser would pay to the willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities. In considering the 'market value' the https://hcservices.ecourts.gov.in/hcservices/ guiding factor would be the conduct of hypothetical willing vendor who would offer the land and a purchaser in normal human conduct would be willing to buy as a prudent man in normal market conditions. For ascertaining the market value of the land, the area of the land, nature thereof and advantages and disadvantages occurring therein amongst others would be relevant factor for determining the actual market value of the property. That apart, potentiality of the acquired land should also be taken into consideration. 15. In a catena of decisions, the Supreme Court has laid down the governing principles for determination of amount of compensation. The positive as well as negative factors to be taken into consideration for arriving at the correct market value. In (2005) 4 SCC 789 [Viluben Jhalejar Contractor v. State of Gujarat], the Supreme Court held as under:- "18. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefor. It is beyond any cavil that the price of the land which a willing and informed buyer would offer would be different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not. 19. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered. 20. The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-a-vis the land under acquisition by placing the two in juxtaposition. The positive and negative factors are as under:- Positive factors Negative factors (i) smallness of size (i) largeness of area (ii) proximity to a road distance (ii) situation in the interior at a from the road (iii) frontage on a road (iii) narrow strip of land with very small frontage compared to depth https://hcservices.ecourts.gov.in/hcservices/ Positive factors Negative factors (iv) nearness to developed area (iv) lower level requiring the depressed portion to be filled up (v) regular shape (v) remoteness from developed locality (vi) level vis-a-vis land under (vi) some special disadvantageous acquisition factors which would deter a purchaser (vii) special value for an owner of an adjoining property to whom it may have some very special advantage 21. Whereas a smaller plot may be within the reach of many, a large block of land will have to be developed preparing a layout plan, carving out roads, leaving open spaces, plotting out smaller plots,waiting for purchasers and the hazards of an entrepreneur. Such development charges may range between 20% and 50% of the total price. 16. A.S.No.563 of 2006: Applying the above principles governing the determination of market value, we have considered the submissions and the evidence on record pertaining to Ayyampalayam village. By perusal of topo sketch Ex.R.2, it is seen that S.No.341/2 - the data land for Manavari land; S.No.241/3, 4 and 7 – data land for irrigated dry land; S.No.350/7 – data land for house site are situated nearby the acquired lands. For taking the above said lands as data lands in the award, Land Acquisition Officer (LAO) has expressed his opinion that the data lands are of same tharam and quality as that of the subject lands. 17. The details of sale deeds contained in the sales statistics are as under:- Sl. No. (1) Document No. & Date (2) S.No. (3) Extent sold (4) Sale Consideratio n Rupees (5) Value per Hectare/ per sq.ft Rupees (6) 8 306 2.9.91 321/1 330/8 330/2 331/3 330/1 0.05.0 0.02.5 0.01.0 0.00.5 0.01.0 -------- 0.10.5 ------- 10000/- 100000/- https://hcservices.ecourts.gov.in/hcservices/ Sl. No. (1) Document No. & Date (2) S.No. (3) Extent sold (4) Sale Consideratio n Rupees (5) Value per Hectare/ per sq.ft Rupees (6) 11 861 16.9.91 347/1 347/2 342/5 2400 sq.ft. 24000/- 10/- 14 1127 20.11.91 347/1 247/2 347/5 900 sq.ft. 9000/- 10/- 19 319 13.3.92 347/1 347/2 347/5 1800 sq.ft. 18000/- 10/- 24 807 7.7.92 Village site 348 1044 sq.ft. 46000/- 44.06 40 1754 25.8.1993 347/5 1800 sq.ft. 20000/- 11.11 41 1755 25.8.93 347/5 1800 sq.ft. 20000/- 11.11 42 1756 25.8.93 350/7 1800 sq.ft. 20000/- 11.11 43 1771 27.8.1993 319/4 4031 1/4sq.ft 45000/- 11.16 18. Upon analysis of sales statistics, it is amply made clear that even before 4(1) notification, lay outs were formed in the nearby areas and that the lands were sold as house plots for prices ranging from Rs.10/- to Rs.11.11 per sq.ft.. In fact, in Sl.No.24, the extent of 1044 sq.ft was sold for Rs.46,000/- i.e., Rs.44.06 per sq.ft. When the surrounding area was developed to certain extent and sold for Rs.10/- per sq.ft, the Land Acquisition Officer was not justified in fixing Rs.1.38ps per sq.ft. for the house plots. Likewise, the value fixed for Manavari dry land and dry irrigated land appears to be very low. On further analysis of sales statistics it is seen that there has been slow and steady increase in value of land from Rs.4/- to Rs.11.16 per sq.ft.. While so the value fixed by the Land Acquisition Officer for manavari dry land at Rs.54,783/- per hectare i.e., Rs.22,139/- per acre and the irrigated dry land at Rs.88,372/- per hectare i.e., Rs.35,778/- per acre is very low. 19. In their evidence, Claimants have stated that the acquired lands are situated near Namakkal – Tiruchi main road. In his evidence, Claimant has also stated that within short distance the acquired lands, there is a Kalyanamandapam, Revenue Inspector's Office and also Panchayat Office and other Co-operative buildings https://hcservices.ecourts.gov.in/hcservices/ and fair price shop. P.W.1 has also stated that lay outs were formed nearby the acquired lands and the lands were sold as house plots. In his evidence, R.W.1 has also stated that the acquired lands are without any access and the lands have no potential for future development. R.W.1 has not specifically denied the existence of Kalyana Mandapam near the acquired land. Likewise, R.W.1 has also denied having knowledge about the forming of layouts and the lands sold as plots. It is brought in evidence of the claimants that the acquired lands are nearer to other offices and developed area. While so, the Land Acquisition Officer was not justified in taking the market value at Rs.54,783/- for Manavari dry land and Rs.88,372/- for irrigated dry lands and Rs.1.38ps. for the house plots and the value so taken is very meagre. 20. Coming to the documentary evidence, the claimants have produced Exs.C.1 and C.2, the details of which are as under: Document & Date S.No. and extent Sold for Rs. Per Cent Rs. Per Sq.ft. Rs. Ex.C.1 dt.28.2.1994 347 1800 sq.ft. 22500/- 5,450/- 12-50 Ex.C.2 dt.6.7.1992 129 761 1/4 sq.ft 9897/- 5,668/- 13-00 Under Exs.C.1 and C.2, the land was sold as plots at the value of Rs.12.50 per sq.ft. and at Rs.13/- per sq.ft. The reference Court has taken Exs.C.1 and C.2 as comparable sales and fixed the value at Rs.4,250/- per cent, which comes to Rs.9.73/- per sq.ft. 21. Drawing our attention to Ex.C.1, learned Additional Solicitor General submitted that Ex.C.1 - document No.279 dated 29.2.1994 executed in favour of Mani by one Nagaratnam and Ex.C.1 sale deed is subsequent to Section 4(1) notification and the same ought not to have been taken as the comparable instance for fixing the market value. As rightly contended by the Additional Solicitor General, Ex.C.1 - sale deed dated 28.2.1994 is subsequent to the 4 (1) notification dated 22.12.1993. Of course, reference Court ought not to have made reference to Ex.C.1. However, the value under Ex.C.1 was only Rs.12.50 per sq.ft., whereas for item No.3, in Ex.C.2, Sl.No.129, plot measuring 761 ¼ sq.ft was sold for Rs.9,897/- and one sq.ft. comes around Rs.13/- and per cent works out to Rs.5,668/-. While so, it cannot be contended that the reference Court erred in fixing the market value at Rs.4,250/- which is far less than the value under Ex.C.2 sale deed. 22. The learned Additional Solicitor General contended that under Ex.C.2, item No.4 of the property in S.No.348, measuring 1,044 sq.ft. was sold to Rs.6,264/- which works out to Rs.6/- per sq.ft., and while so, the reference Court was not right in taking Rs.12.50 ps and Rs.13.00 per sq.ft., and enhancing the market value https://hcservices.ecourts.gov.in/hcservices/ at Rs.4,250/- per cent, which comes to Rs.9.73 per sq.ft. The contention of the Appellant is that reference Court was not justified in ignoring the sale in item No.4 in Ex.C.2, which works out to Rs.6/- per sq.ft. 23. As we pointed out earlier, by analysis of sale statistics, even in 1991, the house plots were sold for market value of Rs.10/- per sq.ft. In Sl.No.24, sale deed under document No.807 dated 7.7.1992, the plot of an extant of 1044 sq.ft was sold for Rs.46,000/- ie., at Rs.44.06ps per sq.ft. It is seen from Sl.No.35 that the house plot of an extent of 3706 sq.ft in S.No.315/10A was sold for Rs.32,000/- i.e., Rs.8.63 per sq.ft. In S.Nos.40 to 42, under document Nos.1754 dated 25.8.1993, 1755, dated 25.8.1993 and 1756 dated 27.8.1993, the plots were sold at the rate of Rs.11.11 per sq.ft. 24. For taking the land as comparable instance, in Lucknow Development Authority v. Krishna Gopal Lahoti,(2008) 1 SCC 554 = AIR 2008 SC 399, the Supreme Court has laid down the principles of fixation of market value with reference to comparable sales, which reads thus: "9. ...... (i) when sale is within a reasonable time of the date of notification under Section 4(1); (ii) it should be a bona fide transaction; (iii) it should be of the land acquired or of the land adjacent to the land acquired; and (iv) it should possess similar advantages. 10. It is only when these factors are present, it can merit a consideration as a comparable case (see Special Land Acquisition Officer v. T. Adinarayan Setty (AIR 1959 SC 420).” These aspects have been highlighted in Ravinder Narain v. Union of India (AIR 2003 SC 1987) ..... ” Applying the ratio of the above decision, in our considered view, Ex.C.2 - sale deed dated 6.7.1992, which is having proximity from time angle and proximity from situation angle, was rightly taken as comparable instance. The value taken by the reference Court at Rs.4,250/- per sq.ft. cannot be said to be exorbitant or on the higher side. 25. Deduction towards development charges: Learned Additional Solicitor General Mr.Ravindran nextly contended that no deduction was made for development cost and that having regard to the nature of small size of plots taken into consideration by the reference Court, atleast 50 percent deduction ought to have been made by the reference Court for development charges. https://hcservices.ecourts.gov.in/hcservices/ 26. After fixing the value at Rs.4,250/- per cent, the reference Court has not made any deduction for development charges i.e., for levelling and for filling up kuttai and other development charges and also for taking small extent as comparable instance. While fixing the market value, necessary repairs are to be made towards development charges. The extent of deduction cannot be put in a straight jacket formula and it varies from case to case. In respect of agricultural land or undeveloped land, normally 1/3rd amount of compensation has to be deducted out of the amount of compensation payable on the acquired land. 27. In 2008 (13) SCALE 202 (NAGANATH (DEAD) BY LRS. VS. ASSISTANT COMMISSIONER AND LAND ACQUISTIION OFFICER AND ANOTHER), the Supreme Court observed that the trend of the various Judgments of the Supreme Court indicates deduction on account of development charges in the range of 1/6th to 33%. 28. The fact that area is developed or adjacent to a developed area will not ipso facto make over the land situated in the area also developed to be valued as a site or plot, particularly when the large stacks are acquired. As discussed earlier, taking Ex.C.2 as the