Case: Ramesh Kumar And Ors Vs. Bhatinda Integrated Cooperative  Cotton Spinning Mill and Ors

Now so far as the submission on behalf of the land owners that while considering the annual increase at the rate of 12%, the High Court ought to have applied the cumulative rate and reliance placed upon the decision of this Court in Rameshbhai Jivanbhai Patel (Supra) and in the case of Ashok Kumar (Supra) are concerned, it is true that as held by this Court in aforesaid two decisions increase in the market value should be at a cumulative rate and not at a flat rate. In the case of Rameshbhai Jivanbhai Patel (Supra) in paragraph 18, it is specifically observed and held that when market value is sought to be ascertained with reference to transactions which took place before the acquisition, the law adopted is to collect the year to year increase. It is further observed and held that as the percentage of increase is always with reference to the previous years market value, the appropriate method is to adopt the increase cumulatively and not applying a flat rate. However, at the same time it is also observed and held in the said decision that it is reasonably safe to determine the market value by providing appropriate escalation over the approved market value of nearby lands in the previous years, when relied on sale transactions/acquisitions precede the subject acquisition by only a few years, i.e., upto 4-5 years. It is further observed in the said decision in para 15 that beyond that it may be unsafe, even if it relates to a neighbouring land. In para 15 it is observed and held as under: Normally, recourse is taken to the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years (as evidenced by sale transactions or acquisition), where there is no evidence of any contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood. The said method is reasonably safe where the relied-on-sale transactions/acquisitions precedes the subject acquisition by only a few years, that is upto four to five years. Beyond that it may be unsafe, even if it relates to a neighbouring land. What may be a reliable standard if the gap is only a few years, may become unsafe and unreliable standard where the gap is larger. For example, for determining the market value of a land acquired in 1992, adopting the annual increase method with reference to a sale or acquisition in 1970 or 1980 may have many pitfalls. This is because, over the course of years, the `rate of annual increase may itself undergo drastic change apart from the likelihood of occurrence of varying periods of stagnation in prices or sudden spurts in prices affecting the very standard of increase. In the present case both, the Reference Court as well as the High Court, have determined the value of the land considering the Sale Deed dated 24.05.1979 which is more than 9 years before the notification of the acquisition. Therefore, considering the observations made by this Court in para 15 in the case of Rameshbhai Jivanbhai Patel (Supra) reproduced hereinabove and considering the fact that time gap between the sale deed relied upon and the date of notification of acquisition is more than 9 years, the courts below ought to have been very cautious in relying upon the Sale Deed dated 24.05.1979. Be that it may and assuming that the Sale Deed dated 24.05.1979 was the best evidence available to determine the value of land acquired in that case also taking annual increase at the rate of 12% is not justified. We are of the opinion that, in the facts and circumstances of the case the annual increase/escalation ought to have been at the rate of 10% maximum. Even otherwise, it is required to be noted that State of Punjab suffered due to militancy from 1979 onwards till 1992 and because of that the prices would have crashed. Therefore, to grant the escalation/price rise at the rate of 12% would not be justified at all. After considering the case of Rameshbhai Jivanbhai Patel (Supra), it is observed and held by this Court in the case of Lal Chand (Supra) that even if the transaction is 2 to 3 years prior to the acquisition, the Court should, before adopting a standard escalation satisfy itself that there were no adverse circumstances. It is further observed and held that the question is therefore, necessary before increasing the price with reference to the old transactions. Therefore, assuming that the appellants are right in submitting that the increase in land value should have been adopted on cumulative basis, in the peculiar facts and circumstances of the case noted hereinabove, we see no reason to interfere with the impugned judgment and order passed by the High Court. 6.4 Now so far as the submission on behalf of the appellants of not taking into consideration the other sale deeds, it is required to be noted that those sale deeds are with respect to small portions of land and thereafter rightly discarded. 6.5 Now so far as the deduction at the rate of 15% towards the development charges, it also does not call for any interference of this Court considering the fact that the land in question at the relevant time was an agricultural land. However, taking into consideration the fact that the sale instance dated 24.07.1979 relied upon was a quite big chunk of land and the location of the acquired land and the land was acquired for spinning mill, the High Court has rightly adopted 15% cut, which in the facts and circumstances of the case is not required to be interfered with. 7. At this stage, it is also required to be noted that though the land was acquired in the year 1988, the same was made operational only in the year 1992 and therefore, has gone into liquidation in the year 2003. The entire amount of compensation as determined by the High Court has been paid.

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

Explanation:
0[ds]6.1 In the present case the Notification under Section 4 of the Act has been issued on 06.06.1988. The land in question was acquired for the public purpose for establishing Bhatinda Integrated Cooperative Cotton Spinning and Ginning Mills Ltd. The Land Acquisition Officer, Bhatinda awarded the compensation considering the value of the land at the rate of Rs.25,000/- per acre. The Reference Court relying upon the sale deed dated 24.05.1979 as Ex. AW6/C by which the land admeasuring 43 kanals 13 marlas out of the acquired land was purchased by Shri Sudarshan Kumar and Mrs. Surinder Anand at the rate of Rs.50,000/- per acre and thereafter adding 12% per acre and thereafter adopting the cut of 25% determined the compensation at Rs.1,12,000/- per acre. Thereafter the High Court by the impugned common Judgment and Order has allowed the appeals preferred by the spinning mills and dismissed the appeals preferred by the land owners, by determining the value at Rs.88,400/- per acre after adopting cut of 15%.6.3 Now so far as the submission on behalf of the land owners that while considering the annual increase at the rate of 12%, the High Court ought to have applied the cumulative rate and reliance placed upon the decision of this Court in Rameshbhai Jivanbhai Patel (Supra) and in the case of Ashok Kumar (Supra) are concerned, it is true that as held by this Court in aforesaid two decisions increase in the market value should be at a cumulative rate and not at a flat rate. In the case of Rameshbhai Jivanbhai Patel (Supra) in paragraph 18, it is specifically observed and held that when market value is sought to be ascertained with reference to transactions which took place before the acquisition, the law adopted is to collect the year to year increase. It is further observed and held that as the percentage of increase is always with reference to the previous years market value, the appropriate method is to adopt the increase cumulatively and not applying a flat rate. However, at the same time it is also observed and held in the said decision that it is reasonably safe to determine the market value by providing appropriate escalation over the approved market value of nearby lands in the previous years, when relied on sale transactions/acquisitions precede the subject acquisition by only a few years, i.e., upto 4-5 years. It is further observed in the said decision in para 15 that beyond that it may be unsafe, even if it relates to a neighbouring land. In para 15 it is observed and held as under:Normally, recourse is taken to the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years (as evidenced by sale transactions or acquisition), where there is no evidence of any contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood. The said method is reasonably safe where the relied-on-sale transactions/acquisitions precedes the subject acquisition by only a few years, that is upto four to five years. Beyond that it may be unsafe, even if it relates to a neighbouring land. What may be a reliable standard if the gap is only a few years, may become unsafe and unreliable standard where the gap is larger. For example, for determining the market value of a land acquired in 1992, adopting the annual increase method with reference to a sale or acquisition in 1970 or 1980 may have many pitfalls. This is because, over the course of years, the `rate of annual increase may itself undergo drastic change apart from the likelihood of occurrence of varying periods of stagnation in prices or sudden spurts in prices affecting the very standard of increase.In the present case both, the Reference Court as well as the High Court, have determined the value of the land considering the Sale Deed dated 24.05.1979 which is more than 9 years before the notification of the acquisition. Therefore, considering the observations made by this Court in para 15 in the case of Rameshbhai Jivanbhai Patel (Supra) reproduced hereinabove and considering the fact that time gap between the sale deed relied upon and the date of notification of acquisition is more than 9 years, the courts below ought to have been very cautious in relying upon the Sale Deed dated 24.05.1979. Be that it may and assuming that the Sale Deed dated 24.05.1979 was the best evidence available to determine the value of land acquired in that case also taking annual increase at the rate of 12% is not justified. We are of the opinion that, in the facts and circumstances of the case the annual increase/escalation ought to have been at the rate of 10% maximum. Even otherwise, it is required to be noted that State of Punjab suffered due to militancy from 1979 onwards till 1992 and because of that the prices would have crashed. Therefore, to grant the escalation/price rise at the rate of 12% would not be justified at all. After considering the case of Rameshbhai Jivanbhai Patel (Supra), it is observed and held by this Court in the case of Lal Chand (Supra) that even if the transaction is 2 to 3 years prior to the acquisition, the Court should, before adopting a standard escalation satisfy itself that there were no adverse circumstances. It is further observed and held that the question is therefore, necessary before increasing the price with reference to the old transactions. Therefore, assuming that the appellants are right in submitting that the increase in land value should have been adopted on cumulative basis, in the peculiar facts and circumstances of the case noted hereinabove, we see no reason to interfere with the impugned judgment and order passed by the High Court.6.4 Now so far as the submission on behalf of the appellants of not taking into consideration the other sale deeds, it is required to be noted that those sale deeds are with respect to small portions of land and thereafter rightly discarded.6.5 Now so far as the deduction at the rate of 15% towards the development charges, it also does not call for any interference of this Court considering the fact that the land in question at the relevant time was an agricultural land. However, taking into consideration the fact that the sale instance dated 24.07.1979 relied upon was a quite big chunk of land and the location of the acquired land and the land was acquired for spinning mill, the High Court has rightly adopted 15% cut, which in the facts and circumstances of the case is not required to be interfered with.7. At this stage, it is also required to be noted that though the land was acquired in the year 1988, the same was made operational only in the year 1992 and therefore, has gone into liquidation in the year 2003. The entire amount of compensation as determined by the High Court has been paid.