BHAGAWATHULLA SAMANNA AND ORS.

SPECIAL TAHSILDAR AND LAND ACQUISmON OFFICER

VISAKHAPATNAM MUNICIPALITY, VISAKHAPATNAM

SEPTEMBER 18, 1991

( N.M KASLIWAL AND M .. FATHIMA BEEVI, JJ. ]

Land Acquisition Act, 1894:

Section 24-Compensation-Award of:-£xpenses required for C development of the land-Deduction of one-third value thereof-Whether

and when justified. '

The appellants' lands were acquired under the Land Acquisition Act.

The appellants claimed land value at the rate of Rs. 10 per sq. yard, '1ut the Land Acquisition Officer awarded compensation at the rate of Rs.0.88 per D sq. yard. On a reference the Sub'-Judge determined the market value at Rs.11 i)er sq. yard on th~ basis , of'certain cmparable transactions, but granted the compenstion at'the rate ofRsio as the appellants themselves 'r had claimed only at that rate. o~' an appeal preferred by the Respondent-State, the High Court determined the market value of the E lands at the rate of Rs. 6.50 per sq. yard and reduced the total

conipensation, following the decision of this Court in Tribeni Devi v.

Collector, Ranch~ AIR 1972 SC 141 that a deduction of 1/3 of the value is to be made when large extent of land is acquired under housing scheme.

Aggrieved by the High Court's decision, the appellants preferred the F present appeals, contending that the High Court had erroneously applied the principle laid down in Tribeni Devi's case without properly appreciating the nature of the land in question and the purpose for which it had been acquired. It was further contended that there was no justification for making any deduction since the land in question was fully G developed and eminently suitable for being used as house sites. Even in respect of the land acquired for the purpose of formation of the road, it was argued, the High Court wrongly proceeded on the basis that expenses have to be incurred for development.

On belralf of the Respondets, it was contended that the appellants' H lands form part of large tract acquired for the purpose of construction of 172

BHAGAWA1HUU.A v. lAND ACQUISIDON OFFICER 173

houses, that the other transaction based on which compensation was decided by the Sub-Judge, related to small plots of land which were fully developed and while comparing the transactions, it was necessary to take . into account the development that is required to be made for bringing the

acquired land suitable for the purpose of construction and that 1/3 of the value was rightly deducted.

Allowing the appeals, this Court,

~-- HELD 1. The principle of deduction in the land value covered by

the compl'trable sale is adopted in order to arrive at the market value of the acquired land. In applying the principle it is necessary to consider all C relevant facts. It is not the extent of the area covered under the acquisition, the only relevant factor. Even in the vast area there may be land which is fully developed having all amenities and situated in an advantageous positi.on. If smaller area within the large tract is already developed and suitable for building purposes and have in its vicinity roads, drainage, electricity, communications etc. then the principle of D --(' deduction simply for the reason that it is part of the large tract acquired, may not be justified. (177-D].

Tribeni Devi v; Coll<:ctor, Ranchi, AIR 1972 SC 1417, distinguished.

Kousholyo Devi v •. Lo11d Acquisitio11 Officer, (1984] 2 SCR 900; Admi11istrator Ge11erol of West Be11gal v. Collector, Varanasi, AIR 1988 SC

943; Special Tahsildar, Land Acquisition, Vishakapat11am v. Smt. A. Mango/a Gowri, 1991 (2) Scale 301, relied on.

2 In the instant case, the lands involved are of even level and fit for construction without the necessity for levelling or reclamation. Having F fou, nd that the land is to be valued only as building sites and stated the advantageous position in which the land in question lies though forming part of the larger area, the High Court should not have applied the principles of deduction. (177 F-H).

3. The proposition that large area of land cannot possibly fetch a price at the same rate at which small plots are sold is not absolute proposition and in given circumstances it would be permissible to take into account the price fetched by the small plots of land. If the larger tract of land because of advantageous position is capable of being used for the purpose for which the smaller plots are used and. is also situated in a

A developed area with' little or no requirement of further development, the principle or deduction of the value for purpose of comparison is not warranted. With regard to the nature of the plots involved in these two. cases, it has been satisfactorily shown on the evidence on record that the land has facilities of road and other amenities and is adjacent to a B developed colony and in uch circumstances it is possible to utilse the entire area in question as house sites. In respect of the land acquired for the road, te same advantages are available and it did not require any further development. (178-B, C).

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1221 & C 1222of1977. ·

From the Judgment dated 20;1.1976 of the Andhra Pradesh High Court in Appeal Nos. 758 and 632of1975.

Mrs. Shyamala Pappu and Ms. Indira Sawhney. for the Appellants.

D T.V.S.N. Chari for the Respondent.

The Judgment of the Court was delivered by

FATHIMA BEEVI, J. The appellants are aggrieved that the High Court by the common judgment dated 20.1.1976 in two cases had substan- E tially reduced on erroneous grounds the enhanced compensation allowed by the Subordinate Judge on reference under Section 18 of the Land Acquisition Act (for short the Act).

Civil Appeal No. 1222 of 1977 relates to acquisition of Ac. 8.33 cents >- of land in Survey No. 2/1 of Dondaparthi village in pursuance to Notifica- F tion under Section 4(1) of the Act published on 7.7.1966 for construction of quarters for the staff of Port Trust .

. Civil Appeal No. 1221 of 1977 relates to acquisition of Ac.1.68 cents of land in Survey No. 2/2A of the same village in pursuance to the Notification published on 1.8.1968 for the purpose of formation of the national G highway diversion rad.

The appellants claimed land value at the rate of Rs. 10 per sq. yard since the Land Acquisition Officer awarded only 0.88 paise per sq. yard.

The learned Subordinate Judge determined the , market value of the land at the rate of Rs; 11 per sq. yard accepting as basis the value of land under the H transactions evidenced by Exhibits A-1 to A-4, but granted the compensa-

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BHAGAWA1HUUA v. LAND AOOUISillON OFF1CER[FA1HIMABEEVI, J.) 175

tion at the rate of, Rs. 10 per sq; yard as the claimants themselves had A claimed compensation at the rate of Rs. 10 per sq. yard. The State preferred appeal against the said judgment of the Subordinate Judge to the High Court of Ari.dhra Pradesh. The High Court accepted Exhibits A-1 to A-4 as reflecting the value of land in the neighbourhood. It however following the decision of this Court in Tribeni Devi v. Collector, Ranchi, AIR 19n SC 1417, that a deduction of 1/3 of the value is to be made whn large B extent of land is acquired under housing scheme, determined the market value of the appellants land at the rate of Rs. 650 paise per sq. yard and accordingly reduced the total compensation allowed by the Subordinate Judge.

The learned counsel for the appellants contended before us that the C High Court had erroneously applied the principle laid down in Tribeni Devi's case (supra) without properly appreciating the nature of the land in question and the purpose for which it had been acquired. It was submitted that the land in question was fully developed and eminently suitable for being used as house sites and, therefore, there was no justification for making any deduction. It is also pointed out that even in respect of the D land acquired for the purpose of formation of the road, the High Court wrongly proceeded on the basis that expenses have . to be incurred for development and thus in awarding the compensation, the High Court wrongly applied principles of deduction of 1/3 of the value. The learned counsel has taken us through the relevant evidence and maintained that the learned Subordinate Judge had reduced the land value to Rs. 10 per sq. E yard though the market value was higher at Rs. 11 per sq. yard only because the appellants had themselves limited the claim to Rs. 10 per sq. yard. ·

The learned counsel for the respondent maintained that the appellants' land forms part of large tract acquired for the purpose of con- F struction of houses, that the sale deed Exhibits A-1 to A-4 relate to small plo:s which are fully developed 'and when the transaction is compared, it is necessary to take into account the development that is required to be made for bringing the acquired land suitable for the purpose of construction and that the High Court was right in making the deduction of 1/3 of the value in the facts and circumstances of the case.

In awarding compensation in acquisition proceedings, the Court has necessarily to determine the market value of the land as on the date of the relevant Notification. It is useful to consider the value paid for similar land at the material time under genuine transactions. The market value envisages the price which a willing purchaser may pay under bona fide trans- H

A fer to a willing seller. The land value can differ depending upon the extent and nature of the land sold. A fully developed small plot in an important locality may fetch a higher value than a larger area in an undeveloped condition and situated in a remote locality. By comparing the price shown in the transactions all variables have to be taken into consideration. The transaction in regard to smaller property ca'nnot, therefore, be taken as a B real basis for fixing the compensation for larger tracts of property. In fixing the market value of a large property on the basis of a sale transaction for smaller property, generally a deduction is given taking into consideration the expenses required for development of the larger tract to make smaller plots within that area in order to compare with the small plots dealt with under the sale transaction. This principle has been stated by C this Court in Tribeni Devi's case (supra).

In Koushalya Devi v. Land Acquisition Officer, (1984] 2 SCR 900, this Court observed at pages 912-913 as undr:

"When large tracts are acquired, the transaction in respect of small properties do not offer a proper guideline ....................... .

In certain other cases this Court indicated that for determining the market value of a large property on the basis of a sale transaction for smaller property a deduction should be given."

We shall also refer to the observations of this Court in Administrator General of West Bengal v. Collector, Varanasi, AIR 1988 SC 943: -

"The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing large extents of land has to be understood in its proper perspective. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. However, if it is shown that the large extent to be valued does admit of and is ripe for use for building purposes; that building fots that could be laid-out on the land would be good selling propositions and that valuation on the basis of the method of a hypothetical lay-out could with justification be adopted, then in valuing such small, laid-out sites the valuation indicated by sale of comparable sniall sites in the area at or about the time of the notification would be relevant. In such a case, necessary deductions for the extent of land required for the formation of roads and other civic amenities; expenses of development of the sites by laying-out roads, drains sewers, water and electricity lines; and the interest on the outlays for the period of deferment of the realisation of the price; the profits on the venture etc. are to be made. "

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BHAGAWATIIUU.A v. 1AND ACQUISmON 0Ff1CER[FA1HIMABEEVl, J.]l77

This Court has in a recent decision in Special Tahsildtzr Land Ac- A quisition, Vishakapatnam v. Smt. A. Mangala Gowri, 1991(2) Scale 301, following Tribeni Devi's case pointed out as under: -

"It is to be noted that in building Regulations setting apart the lands f qr development of road&'; drainage and other amenities like electricity etc. are condition precedent to approve lay out for building colonies. Therefore, based upon the. situation of B the land and the need for development the deduction shall be made. Where acquired land is in the midst of already developed land with amenities of roads, drainage, electricity etc. then deduction of 1/3 would not be justified. In the rural areas housing schemes lielating to weaker sections deduction Qf 1/4 may be justified." C

The principle of deduction in the land value covered by the comparable sale is thus adopted in order to arrive at the market value of the acquired land. In applying the principle it is necessary to consider all relevant facts. It is not the eXtent of the area covered under the acquisition, the only relevant factor. Even in the vast area there may be land which is fully developed having all amenities and situated in an ad- D vantageous position. If smaller area within the large tract is already developed and suitable for building purposes and have in its vicinity roads, drainage, electricity, communications etc. then the principle of deduction simply for the reason that it is part of the large tract acquired, may not be justified.

The national highway runs very near to the proposed Port-trust colony. The lands acquired already for the South Eastern Railway Staff Quarters lie to the southern side of the land under acquisition. The town planning trust road runs on the northern side of the land under acquisition.

The colony is in the fast developing part of the municipal town. The plot

of Ac. 1.68 cents in Survey No. 2/2A acquired for the formation of the diver- F sion road is adjacent to built-in-area. The land involved in these cases is of even level and fit for construction without the necessity for levelling or reclamation. The. High cOilrt has itself concluded on the evidence that the lands covered by the acquisition are located by the side of the National Highway and the southern railway staff quarters with the town planning trust road on the north. The neighbouring areas are already developed G ones and houses have been constructed, and the land has potential value for being used as building sites. Having found that the land is to be valued only as building sites and stated the advantageous position in which the land in question lies though forming part of the larger area, the High Court should not have applied the principles of deduction. It is not in every case that such deduction is to be allowed. Where the acquired land is in the H

A midst of already developed land with amenities of roads, electricity etc., the deduction in the value of the comparable land is not warranted.

. The proposition that large area of land cannot possibly fetch a price at the same rate at which small plots are sold is not absolute proposition and in given circumstances it would be permissible to take into account the B price fetched by the small plots of land. If the larger tract of land because of advantageous position is capable of being used for the purpose for which the smaller plots are used and is also situated in a developed area with little or norequirement of further development, the principle of eduction 'of the value for purpose of comparison is not warranted. With tegard to the nature of the plots involved in these two cases, it has been satisfactorily C shown on the evidence on record that the land has facilities of r9ad and other amenities and is adjacent to a developed colony and in such circumstances it is possible to utilise the entire area in question as house sites . .In respect of the land acquired for the road, the same advantages are available and it did not require any further development. We are; therefore, of the view that the High Court has erred in applying the principle of D deduction; and reducingthe fair market value of land from Rs. 10 per sq . . yard to Rs. 6.50 paise per sq. yard. In our opinion, no such deduction is justified in the facts and circumstances of these cases. The appellants, therefore, succeed.

 In the result, the appeals are allowed and the respondent is directed E to pay the compensation as determined by the learned Subordinate Judge with interest and solatium in accordance with law. In the circumstances of the case, we make no order as to costs.

G.N.

Appeals allowed.