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MEHTA RAVINDRARAI AJITRAI (DECEASED) THROUGH

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HIS HEIRS AND LEGAL REPRESENTATIVES & ORS.

STATE OF GUJARAT

AUGUST 8, 1989 B

[M.H. KANIA AND KULDIP SINGH, JJ.]

Land Acquisition Act, 1894: ss. 4 & • .23-Compensation for acquired. land-Market value-Determination. of-Post-acquisition _instances-Admissibility of-Prices fetched for similar lands at or about

• the time of preliminary notification the best evidence of market value.

Certain lands situated on the outskirts of a large city were acquired by the respondent-State after issuing preliminary notification under s. 4(1) of the Land Acquisition Act, 1894 on August 6, 1956 for construction of an industrial estate. ,

D The appellants chiimed compensation at the rate of Rs.3 per sq. yard and cited in support thereof an agreement of sale dated January .. 21, 1957 and a conveyance dated April 2, 1957 pertaining to a piece of land adjoining the acquired land showing the sale price at the rate of' Rs-3 per sq_ yard. The respondent-State relied on an auction sale dated February 23, 1953 at about 4lp. per sq_ yard, evidenced by Ex. ll2, E and the instance evidenced by Exll8 pertaining to sale to a miitor, transacted by his f'lther.

The Land Acquisition Officer classified the land as superior agricultural land and awarded the compensation at the rate of Rs-2200 per acre, i.e., about 4Sp. per sq. yard.

In the reference, the Civil Judge did not rely upon any of the instances proved before him, but considering the general situation of the land and its considerable building potentiality fixed the rate of compensation at Rs.4400 per acre, i.e., about 90p. per sq. yard.

Dismissing the appeal, the High Court took the view that the valuation fixed by the Civil Judge was justified. It held that a postacquisition sale could not be. regarded as a comparable instance at all, since the acquisition for construction of the industrial estate was bound to have pushed up the prices in the surrounding area_ It placed reliance

on the evidence furnished by the instance at Ex.ll2, over a year prior to; H

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A the date of s. 4 notification, but discarded tbe instance evidence by Ex. ~"'° I I8 relied on by the State.

Allowing the claimants' appeal by special leave, the Court,

HELD: The market value or a piece of property for purposes of B s. 23 of the Land Acquisition Act, is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arm's length. Prices fetched for similar lands with similar advantages lmd potentialities under bona fide transactions of sale at or aoout till' time of the preliminary notification are the usual and, indeed, the best, evidence of market value. [747C] c Administrator General of West Bengal v. Collector, Varanasi, [I988] 2 SCC ISO, referred to.

In the instant case, the instance evidenced by Ex. 112 pertaining to sale of land in government auction relied on by the High Court was a O distress sale. There were execution proceedings pending against the vendor. It could, thus, hardly furnish any reliable evidence for estimating the market value of the land in question. The instance evidenced by Ex. I I8 was rightly discarded by the High Court. Only a certified copy of the sale deed pertaining thereto was produced in the trial court. The evidence of the purchaser, who was minor at the time when the sale E deed was executed, had no evidentlary value as he bad no personal information regarding the sale. No other person conversant with the sale wa5 examined by the State. [748AB, CF]

The only comparable instance on the basis of which the market value at the time of the s. 4 notification in respect of the acquired land F could be determined was, therefore, the sale proved by the sale deed dated April 2, 1957 and the preceding agreement of sale dated January 2I, 1957. Though entered into about five months after the notification It could be fairly regarded as reasonably proximate to the acquisition.

The price fixed under the said agreement was Rs.3 per sq. yard. However, there seems to have been some rise in the price of land on account G of the acquisition of the land in question for purposes of con rtructing the industrial estate. Further, the land proposed to be purchased under the agreement was adjoining the land of the purchaser and the purchaser might have paid some extra amount for the convenience of getting the neighbouring land. These factors have to be taken into account and appropriate deductions made from the rate disclosed in the agree- H ment in estimating the market value. Considering these together with

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M.R. AJ!TRAI >. STATE OF GUJARAT [KANIA, J.J 745

the situation and potentialities of the acquired land, it would be proper A to nx its market value al Rs.8800 per acre, which comes to about Rs. l.80p. per sq. yard. The aecree passed by the Civil Judge to be amended accordingly. [748G, 747E)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2169 B of 1970. '

From the Judgment arid Order dated 12.8.68 of the Gujarat High Court in F.A. No. 233 <if 1963.

~~ B.K. Mehta, U.A. Rana, Bhushan B. Oza and K.L. Hathi for the Appellants.

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G , A. Shah and M.N. Shroff for the Respondent.

The Judgment of the Court was delivered by

KANIA, J. This is an apeal by special leave giated by this D Court under Article 136 of ihe Constitution. The appeal arises out of land acquisition proceedings.

The appellants before us are the heirs and legal representatives of the original claimants. Appellants Nos. l(a) to l(c) are the heirs and legal representatives of original claimant No. 1 and appellants Nos. E 2(i) to 2(ii) are the heirs and legal representatives of original claimant No.2.

The acquisition was in respect of an area admeasuring 15 acres and 1 guntha belonging to claimant No. 1 (Original) and area admeasuring 6 acres and 25 gunthas belonging to claimant Nos. 1 and 2 F (Original).' The lands are situated in the Bliavnagar District and are on the outskirts of the Bhavnagar City and adjoining the Bhavnasar-

Raikot Road, The acquisition forms part of a larger acquisition for the construction of an industrial estate at Bhavnagar. The preliminary notification under section 4( 1) of the Land Acquisition Act, 1894 was published on August 6, 1956. The claimants made their claims before G the Land Acquisition Officer who classified the lands as superior of Bagayat type of agricultural land and awarded compensation at the rate of Rs.2200 per acre which would come to about 0.48 p. per sq. yard. This award was not accepted by the claimants and they made a reference which came up for hearing before the learned Civil Judge, Senior Division, Bhavnagar. The evidence of some instances of sale H

A was led before the learnell Civil Judge by the respective parties but he did not rely upon any of the instances proved before him. He considered the general situation of the lands and held that on the evidence it was shown that the lands had a considerable building potentiality

and the Land Acquisition Officer was in error in so far as he did not take that potentiality into account. The learned Civil Judge considered B the general situation of the land under acquisition and the potential value of the same for building purposes and fixed the rate of compensation at Rs.4,400 per acre which had come to about 0.90p. per sq. yard. Being dissatisfied, the claimants preferred an appeal against the f decision of the learned Civil Judge, Bhavnagar to the High Court of~ Gujarat: The Division Bench of the High Court, which disposed of the C appeal, took the view that the valuation fixed by the learned Civil

Judge was justified and dismissed the appeal. This appeal is directed against the said decision of the High Court.

We do not feel called upon to enter into a detailed scrutiny of the evidence led by the parties before the learned Civil Judge. The main D instance relied upon by the claimants was by way' of an agreement to sell dated January 21, 1957 and a sale deed dated April 2, 1957. in respect of the sale of 42552 square yards of land out of survey No. 333/2 which is adjoining the land with which we are concerned which ) forms part of survey No. 331. The land sold under this instance was known as "Kesarbagh" and was sold to Mahalaxmi Mills Limited by E Prince Nirrnalkumarsinghji. The rate at which it was sold works out to Rs.3 per sq. yard. On the basis of this instance, the claimants had made their claim at Rs.3 per sq. yard before the Land Acquisition Officer. The High Court inter a/ia rejected this instance on the basis that th~ cantents of the sale dee!i were not properly proved. However, after an order for remand made by this Courut on August 25, 1981 ) F evidence has been led regarding this sale and the. sale deed has been duly proved by the evidence of one Dharamdas, a director of Mahalaxmi Mills Limited, the purchaser, and the vendor Prince Nirmalkumatsinghji.It was marked originally as Exhibit 87 and after the evidence on remand as Exhibit 152. The evidence shows that this land was just adjacent to the land of the purchaser, Mahalaxmi Mills G Limited. The agreement of sale is dated January 21, 1957 and the conveyance or sale-deed is dated April 2, 1957 as aforestated. The ,,. price has been fixedunder the agreement of sale. This agreement of sale was entered into about five months after the publication of section 4 notification in the case before us. The High Court rejected. the said instance on the ground that the <"ntents of the sale-deed were not H proved although the execution was hereof duly proved. In view of the

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M.R. AJITRAh. STATE OF GYJARAT (KANIA, J.( 747

evidence led after remand, it cannot be disputed that this agreement of. A sale as well as the sale deed have been duly proved and they have been duly marked as exhibits. The High Court further took the view that in any event, no reliance could be placed on this instance of sale because the acquisition of the land in question before us was for the construction of an industrial estate at Bhavnagar and such construction was~ bound_ to have.pushed up the price of land in the surrounding area.

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There is, however, nothing in the evidence to show that there was any sharp or speculative rise in the price of the land after the acquisition and this .has been notjced by the High Court. It appears 'that under these circumstances, the High Court was not justified in not taking this instance into account at all as it has done on the ground that it was a post-acquisition sale and could not be regarded as a comparable C instance at all. The market value of a piece of property for purposes of section 23 of the Land Acquisition Act is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at. or about the time of the preliminary notification are D the usual and, indeed the best, evidences of -market value. (See: Administrator. General of West Bengal v. Collector, Varanasi, [ 1988] 2 SCC.J50atpara8.), .. , '

 Keeping these factors in mind, we feel that although the instance reflected in the sale deed (Exhibit 152) and the agreemenl:for.sale in E connection with that land, pertains to a sale after the acquisition, it can be fairly regarded as reasonably proximate to the acquisition and, in the absence of any evidence to show that there was any speculative or sharp rise in the prices after the acquisition the agreement to sell dated January 21, 1957. must be regarded as furnishing some light on the market value of the land on the date of publication of section 4 notifi- F cation. However, certain factors ha_ve to be taken into account and appropriate deductions made from the rate disclosed in the said agreement to sell in estimating the market value of the land with which we are concerned at the date of the acquisition. One of these factors is that there seems to have been some rise. in the price of land on account of the acquisition of the land in question before us for purposes of G constructing an industrial estate. Another factor is that the land proposed to be purchased under the said agreement to sell was ad joining the land of the purchaser and the purchaser might have paid some

etra amount for the C\)nvenience of getting the neighbouring land.

We find that the High Court placed reliance on the •evidence

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A furnished by the instances at Exhibit 112 relied on by the State. By.

Exhibit 112 land admeasuring 4 acres ( 19 ,360 sq. yard) was sold from Survey No. 384 for Rs.8,000. This sale deed is dated February 23, 1953, that is, over a year prior to the date of the section 4 notification in the case before us. The purchaser stated in the witness box that apart from Rs.8,000 mentioned as the consideration in the sale deed, he had to pay an extra amount of Rs.4,000. Although the High Court has not relied upon this statement, it cannot be altogether ignored.

The land was sold at a Government auction which means that it was a distress sale. There were execution applications pending against the vendor. Under these circumstan.ces, there is a little doubt that it was a distress sale and it hardly furnishes any reliable evidence for estimating C the market value of the land. Therefore, although the price of the land appearing in that instance comes to about 0.62p. per sq. yard, it furnishes no reliable guidance regarding the market price of the land.

As far as the sale instance evidenced by Exhibit 118 is concerned, it has been discarded by the High Court and, in our view, rightly so. In the Trial Court neither the vendor nor the purchaser nor any person D conversant with the sale was examined. Not the original but only a certified copy of the sale deed was produced. After the remand the situation appears to be hardly any better. The State examined one Virbhadrasingh on whose behalf the land was purchased under the said sale deed. He was a minor at the time when the sale deed (Exhibit 118) was executed. Virbhadrasingh's father had purchased the land in Vir- E bhadrasingh's name as Virbhadrasingh was a minor only about 12 years old at that time.

The evidence of Virbhadrasingh has no evidentiary value as he has no personal information regarding the sale under Exhibit 118. One

Ratilal who prepared the said document gave evidence in court but he j f did not have any personal knowledge about the transaction either.

Under these circumstances, no reliance can be placed on Exhibit 118.

In our view, the only comparable instance on the basis of which the market value at the time of the section 4 nqtification in respect of the acquired land can be determined is the sale proved by the sale- G deed (Exhibit 152) and the preceding agreement for sale in respect of the land sold which was entered into about five months after the notification. The price thereunder is Rs.3 per sq. yard. From that price certain deductions have to be made on account of the various factors which have been enumerated earlier such as the rise in prices of land after the acquisition and so on. Taking into account all these factors H including the situation and potentialities of the acquired land, it ap-

( M.R. AJITRAI v. STATE OF GUJARAT [KANIA, J.] 749 --,...(

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pears to us that it would be proper to fix the market value of the A acquired land at Rs.8,800 per acre which come, s to about Rs.1.80 per sq. yard and we direct accordingly. The decree passed by the Civil Judge, Senior Division, Bhavnagar will be amended accordingly:

The respondent will pay to the appellants one half of the costs of the appeal in this Court. There will be no change as far as the rest of the order is concerned.

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