Case: The Special Land Acquisition Officer, Bangalore Vs. T. Adinarayan Setty

of the enquiry before them when they imported these considerations into the question of valuation.We further think that the High Court committed an error of principle in arriving at the figure Rs. 13-8 and the error was committed by adopting a wrong method in ascertaining the market value of the land at the relevant time.It is not disputed that the function of the court in awarding compensation under the Act is to ascertain in the market value of the land at the date of the notification under S. 4 (1) and the methods of valuation may be (1) opinion of experts, the (2) the 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 (3) a number of years purchase of the actual or immediately prospective profits of the lands acquired. In the case under our consideration the High Court adopted the second method, but in doing so committed two serious errors. There were altogether seven transactions of alienation made y the respondent. One was a gift which must necessarily be excluded. The earliest of the sales was in favour of Munirathnam which was made on May 15, 1945. Another was made on July 18, 1945 This was in favour of Venugopal who was the husband of a grand-daughter of the respondent. Four other transactions in favour of Kapinapathy, Puttananjappa, Shamanna and Rajagopal Naidu were made in August 1945. The notification under S. 4 of the Land Acquisition Act was made on October 4, 1945. What the learned Judges of the High Court did was to take only four out of the aforesaid six transactions into consideration and then to draw an average price therefrom. The learned Judges gave no sufficient reason why two of the transactions were left out. In one part of their Judgment they said :"The evidence discloses that the appellant has effected four sales about a couple of months prior to the date of preliminary notification and the rates secured by him are Rs. 12,15,14 and 7-8 which on calculation give an average of Rs. 12-2 per sq. yard" . Why the transaction of 15th May 1945 which was at a rate of Rs. 6-8 per sq. yard only was left out it is difficult to understand. Similarly, the transaction of 18th July 1945 was at the rate of Rs. 10 per sq. yard. That also was left out. We are of the view that this arbitrary selection of four transactions only out of six has vitiated the finding of the High Court. If all the six transactions of sale are taken into consideration the average rate comes to about its. 10-13 per sq. yard only. Having arbitrarily discarded two of the transactions, the learned Judges of the High Court committed another error in taking a second average. Having arrived at an average of Rs.12-2 per sq. yard from the four transactions referred to above, they again took a second average between Rs. 15, which was the maximum price obtained by the respondent, and Rs. 12-2. Having struck this second average, the learned Judges of the High Court arrived at the figure of Rs. 13-8. No sound reasons have been given why this second average was struck except the extraneous reasons to which we have already made a reference. It is obvious that the maximum price Rs. 15 per sq. yard had already gone into the average when an average was drawn from the four transactions. It is difficult to understand why it should be utilised again for arriving at the market value of the land in question. We are of the view that if the aforesaid two errors are eliminated, then the proper market value of the land in question is Rs. 11 only. Learned counsel for the appellant has drawn our attention to the claim made by the respondent himself before the Land Acquisition Officer (Ex. II). The respondent had therein said :"Hence, under the standing orders compensation has to be paid at rates for building land in the neighbourhood. This rate ranges from Rs.10 to Rs. 12, an average of Rs. 10 a sq. yard, as could be verified from entries in the local sub-Registrars Office and Bangalore City Municipal Office. At any rate, I myself have sold in the course of this year some six sites out of the land proposed to be acquired for rates ranging from Rs. 7 to Rs.15 or on an average of Rs. 10 per sq. yard. At this rate the compensation amounts will be Rs. 5,12,430 and adding the statutory allowance of Rs. 76,860 at 15 per cent on the compensation amount on account of the compulsory nature of the acquisition, the total cost at the land will be Rs. 5,89,290 or nearly six lakhs of rupees." The learned Judges of the High Court took the aforesaid claim to mean that the average rate was Rs. 10 per sq. yard, only if the entire area was taken into consideration; but the rate would be different if small building sites were sold according to a layout scheme. It is worthy of note, however, that in his claim the respondent clearly stated that even as building land the average rate in the neighbourhood ranged from Rs. 10 to Rs. 12 per sq. yard and he had himself sold six building sites at an average rate of about Rs. 10 per sq. yard. It is worthy of note that the six transactions to which the respondent referred were sales of small building sites. It appears to us, therefore, that the High Court had in effect given the respondent a rate more favourable than what he had himself claimed. 10. We consider, therefore, that on a proper consideration of the materials in the record and after eliminating the two errors which the High Court had committed, the proper value of the land, in question should be Rs. 11 per sq. yard.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. In view of the facts of this case and the opinion which we have formed after hearing learned counsel for both parties, we do not think it necessary to make any final pronouncement as to the practice which this Court should adopt in a valuation case where two courts have differed. We are content to proceed in this case on the footing that we should not interfere unless there is something to show, not merely that on the balance of evidence it is possible to reach a different conclusion, but that the judgment cannot be supported by reason of a wrong application of principle or because some important point affecting valuation has been overlooked or misapplied7. We are satisfied that there is no error of principle or otherwise in the findings of the High Court as to the first two points urged in support of the appeal. As to the construction of the building for which a compensation of Rs. 7,000 has been awarded, the clear finding of the High Court is that it was constructed prior to the preliminary notification. It has been further stated before us that the building is in actual occupation of the medical department. Learned counsel for the appellant has taken us through the evidence on the question of construction of the house and the application for a licence for building the said house which was made by the respondent to the Bangalore Municipality. We are unable to hold that that evidence has the effect of displacing the clear finding of the High Court8. As to the low-lying land, we consider that the High Court has given very good reasons for its finding. Admittedly, the area of the low-lying land (halla) is about 3,000 sq. yards. The Land Acquisition Officer valued it at Rs. 3 per sq. yard. A sum of Rs. 15,000 has been deducted from the compensation payable to the respondent on the ground that that amount will be required for filling up the low-lying land and converting it into building sites. Therefore; the position is that the respondent has not only been made to part with 3,000 sq. yards of land at Rs. 3 per sq. yard, but he has also been made to pay Rs. 15,000 for filling up the land. If these two figures are added, even then the market value of the land comes to about Rs. 8 per sq. yard. This is so even if we do not follow the method adopted by the High Court that the sum of Rs. 15,000 for 3,000 sq. yards gives an average of Rs. 5 per sq. yard and that amount should be deducted from the rate of Rs. 13-B per sq. yard fixed as the proper compensation for the remaining land. We are of the opinion that on the materials before us the value per sq. yard fixed by the High Court for the low-lying land is fully justified even on adoption of the method suggested by learned counsel for the appellant. Learned counsel for the respondent has referred us to the circumstance that some of the sales of building sites which the respondent had made appertained to the low-lying land and he has further emphasised the circumstance that just opposite the low-lying land which is at the eastern end of the entire area, some houses had been built. We have taken these circumstances into consideration, but do not think that the conclusion which learned counsel for the respondent wishes us to draw follows therefrom. First of all, it is by no means clear that the sales of the building sites at the low rate of Rs. 6-8 or thereabout appertained to the low-lying land only, and, secondly, the mere circumstance that some buildings have been made on land opposite the low-lying lands but on the other side of the road, does not necessarily mean that the low-lying lands are as valuable as the other land in the area. We are therefore of the view that the compensation fixed by the High Court for the low-lying land is not vitiated by and error of the kind which will justify our interference with it9. We now proceed to consider the third and main point urged on behalf of the appellant, namely, the rate of 13-8 per sq. yard for the other land in the area. Learned counsel for the appellant has submitted before us that the High Court has committed two fundamental errors in arriving at this finding.Furthermore, the High Court has been influenced by extraneous considerations such as the purpose for which the land was acquired, the report of certain medical authorities as to the unsuitability of the land for the purpose for which it was acquired, and the delay in putting the land to the use for which it was acquired. We agree with learned counsel for the appellant that these were extraneous considerations which had no bearing on the question of valuation and the learned Judges of the High Court misdirected themselves as to the scope of the enquiry before them when they imported these considerations into the question of valuation.We further think that the High Court committed an error of principle in arriving at the figure Rs. 13-8 and the error was committed by adopting a wrong method in ascertaining the market value of the land at the relevant time.It is not disputed that the function of the court in awarding compensation under the Act is to ascertain in the market value of the land at the date of the notification under S. 4 (1) and the methods of valuation may be (1) opinion of experts, the (2) the 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 (3) a number of years purchase of the actual or immediately prospective profits of the lands acquired. In the case under our consideration the High Court adopted the second method, but in doing so committed two serious errors. There were altogether seven transactions of alienation made y the respondent. One was a gift which must necessarily be excluded. The earliest of the sales was in favour of Munirathnam which was made on May 15, 1945. Another was made on July 18, 1945 This was in favour of Venugopal who was the husband of a grand-daughter of the respondent. Four other transactions in favour of Kapinapathy, Puttananjappa, Shamanna and Rajagopal Naidu were made in August 1945. The notification under S. 4 of the Land Acquisition Act was made on October 4, 1945Why the transaction of 15th May 1945 which was at a rate of Rs. 6-8 per sq. yard only was left out it is difficult to understand. Similarly, the transaction of 18th July 1945 was at the rate of Rs. 10 per sq. yard. That also was left out. We are of the view that this arbitrary selection of four transactions only out of six has vitiated the finding of the High Court. If all the six transactions of sale are taken into consideration the average rate comes to about its. 10-13 per sq. yard only. Having arbitrarily discarded two of the transactions, the learned Judges of the High Court committed another error in taking a second average. Having arrived at an average of Rs.12-2 per sq. yard from the four transactions referred to above, they again took a second average between Rs. 15, which was the maximum price obtained by the respondent, and Rs. 12-2. Having struck this second average, the learned Judges of the High Court arrived at the figure of Rs. 13-8. No sound reasons have been given why this second average was struck except the extraneous reasons to which we have already made a reference. It is obvious that the maximum price Rs. 15 per sq. yard had already gone into the average when an average was drawn from the four transactions. It is difficult to understand why it should be utilised again for arriving at the market value of the land in question. We are of the view that if the aforesaid two errors are eliminated, then the proper market value of the land in question is Rs. 11 only. Learned counsel for the appellant has drawn our attention to the claim made by the respondent himself before the Land Acquisition Officer (Ex. II).The learned Judges of the High Court took the aforesaid claim to mean that the average rate was Rs. 10 per sq. yard, only if the entire area was taken into consideration; but the rate would be different if small building sites were sold according to a layout scheme. It is worthy of note, however, that in his claim the respondent clearly stated that even as building land the average rate in the neighbourhood ranged from Rs. 10 to Rs. 12 per sq. yard and he had himself sold six building sites at an average rate of about Rs. 10 per sq. yard. It is worthy of note that the six transactions to which the respondent referred were sales of small building sites. It appears to us, therefore, that the High Court had in effect given the respondent a rate more favourable than what he had himself claimed10. We consider, therefore, that on a proper consideration of the materials in the record and after eliminating the two errors which the High Court had committed, the proper value of the land, in question should be Rs. 11 per sq. yard.