AS/2571/2003 of LAO Vs G.Bhanumathi on 31 December 2014

HON’BLE SRI JUSTICE R. SUBHASH REDDYAND

HON’BLE SRI JUSTICE A. SHANKAR NARAYANA

A.S. Nos.2571 OF 2003 AND 3687 OF 2004

COMMON JUDGMENT:(Per Hon’ble Sri Justice A. ShankarNarayana)

Both these appeals are preferred under Section 54of the Land Acquisition Act, 1894, against the order and decree,dated 18-04-2003 in O.P. No.74 of 1995, passed by the learnedPrincipal Senior Civil Judge, Vishakapatnam,

2. Former appeal is preferred by the LandAcquisition Officer aggrieved of the fixation of marketvalue of the acquired land by the reference Court atRs.394/- per square yard as against Rs.183/- fixed byhim. Latter appeal is preferred by claimants 1 to 3 and 5 and 6 dissatisfied with the market value fixed by thereference Court seeking enhancement of the same toRs.600/- per square yard.

3. The Government, through the Land AcquisitionOfficer, represented by its Special Deputy Collector,Vishakapatnam Urban Development Authority,Vishakapatnam, by publication of notification under Section 4(1) of the Land Acquisition Act, 1894 (for short,“the Act”), an extent of Acs.2-01 cent of land comprised inSurvey No.27/3A2 in Buchirajupalam Village,Vishakapatnam Urban Mandal, was acquired for sites andservices of scheme.

4. The Land Acquisition Officer having conducteddue enquiry passed award No.6/94, dated 08-07-1994,fixing the market value for the acquired land at Rs.180/-per square yard. Protesting the same, claimants made a request to the Land Acquisition Officerto refer the matter to the Civil Court. Accordingly, the LandAcquisition Officer, referred the matter under Section 18 ofthe Act to the Principal Senior Civil Judge,Vishakapatnam, for adjudicating upon the issue.

5. In their claim statement, before the referenceCourt, claimants, contending that the market value of theacquired land was more than Rs.1,000/- per square yardeven on the date of notification under Section 4(1) of theAct and in 1982 itself, they were offered Rs.600/- persquare yard, as the acquired land is situate in a commercial area and within the Municipal CorporationLimits, still, the Land Acquisition Officer arrived the marketvalue at Rs.275/- per square yard, but, deducted Rs.92/-per square yards towards development charges, and, itwas difficult for them to reinvest the compensation amountin the alternative land, and, thereby, requested the reference Court to fix the market value at Rs.1,000/- persquare yard.

6. The 4[th] claimant has filed separate claimstatement contending that the Land Acquisition Officer didnot enclose the plan to show the nearness of the acquiredland to the National High Way and sought Rs.1,000/- persquare yard.

7. To substantiate their stand, claimants examined the 4[th] claimant as PW.4; husband of the 1[st] claimant -Garuda Venkata Raju as PW.1, one P.V. Subba Rao, whois ancestor of the claimants, as PW.2 and purchaserunder Ex.A-6 Thota Venakteswarulu as PW.3, andmarked Exs.A-1 to A-6, among which, Exs.A-3 to A-6 arethe certified copies of sale deeds, dated 07-07-1989, 18-06-1991, 29-01-1992 and 12-03-1991 respectively. On behalf ofthe referring officer, no witnesses were examined, butcertified copy of the plan showing the area ofButchirajpalem is marked as Ex.B-1, the statement ofPW.4, dated 16-04-1994, made before the LandAcquisition Officer is exhibited as Ex.B-2 and the award,dated 08-07-1994, is marked as Ex.B-3.

8. The reference Court, on appreciation of

evidence, both, oral and documentary, let in by therespective parties in determining the market value of theacquired land, scrutinised the sale transactions coveredby Exs.A-3 to A-6. Concerning Ex.A-3, observing that theproperty purchased thereunder was not a vacant site andit includes terraced house, discarded Ex.A-3. Concerningthe sale transaction under Ex.A-4, the reference Courtobserving that the sale transaction therein transpiredwithin six months next before the issue of notificationunder Section 4(1) of the Act, did not rely on it. So far asEx.A-5 sale transaction is concerned, observing that thesale price was Rs.600/- per square yard and the extentbeing 150 square yards in Survey No.12/1C, and sincethe said survey number is abutting National High Wayroad and whereas the land under acquisition wasnotabutting National Highway – 5, did not consider the saleprice shown thereunder. So far as Ex.A-6 is concerned,which took place on 12-03-1991, observing that the saidsale transaction had taken place long (one year) prior tonotification under Section 4(1) of the Act, refused toconsider it as comparable sale. The reference Courtagain, strangely, observing that the acquired land hashigh potentiality since it is located adjacent to the landacquired by the Railways and there was demand for theland as reflected from the sale statistics collected by theLand Acquisition Officer and that it is situated within theMunicipal limits and 80 Meters away from the road, even as per the Land Acquisition Officer, again relied on Exs.A-3 to A-6 and taken the aggregate price at Rs.525/- persquare yard placing reliance on the decisions of theHon’ble Supreme Court and this Court, referred to at pageNo.8 of the order under challenge, and fixed the marketvalue at Rs.525/- per square yard. The reference Courtalso deducted 1/4[th] there-from observing that 1/3[rd]deduction made by the Land Acquisition Officer, in itsopinion, somewhat excessive and deducted Rs.131/-towards 1/4[th] value, and, thus, fixed the market value at Rs.394/- per square yard and alsoawarded statutory benefits.

9. Aggrieved of the enhancement in market valuefixed by the reference Court, the Government, through theLand Acquisition Officer, preferred the former appealagitating in the grounds of appeal that the reference Courtought not to have enhanced the compensation despitethe fact that Exs.A-1 and A-2 are not proved, which areonly letters addressed by the firms offering to purchasethe subject lands at Rs.600/- and Rs.800/-, respectively, in1982 and 1989, more particularly, when the referenceCourt rejected these documents on the ground that theywere not proved and that too when both the firms were notin existence. It is further stated that despite rejecting Ex.A-3 on the ground that it includes terraced building,electricity, well etc., and also Ex.A-4 on the ground that itwas abutting NH - 5 road and further observing thatExs.A-4 to A-6 cannot be relied upon as mischief ofcreating evidence for higher value after the requisitioncannot be ruled out, ought not to have enhanced themarket value.

It is, still, further stated that the reference Court was notright in applying 1/4[th] deduction as against 1/3[rd]deduction adopted by the Land Acquisition Officertowards development cost, and, therefore, sought to setaside the award and decree and to confirm the marketvalue fixed by the Land Acquisition Officer.

10. Dissatisfied with the market value fixed by thereference Court, claimants 1 to 3, 5 and 6 preferred thelatter appeal mentioning in the grounds of appeal that thereference Court ought to have fixed a minimum of Rs.800/- per square yard, in view of thecomparable sales filed by them; it is stated that thereference Court was not right in rejecting the sale price ineach of the sale deeds marked as Exs.A-3 to A-6, as thereasons assigned for refusing to consider them are notconvincing. It is also stated that the reference Court wasnot right in applying 1/4[th] deduction since there is noprovision for reducing the market rate for developmentwhen the acquired land was fully developed. Thus, contending that the sale transaction covered by Ex.A-6,since proved true, examination of PW.3, who waspurchaser thereunder, at Rs.900/- per square yard, thereference Court ought to have taken it as comparable saleas nothing was brought out in the cross-examination ofPW.3 to discard the sale price thereunder. The claimants,therefore, sought to fix the market value at Rs.600/- persquare yard by way of enhancement.

11. It is contended by the learned GovernmentPleader for Appeals, the evidence on record, definitely,indicates that the extents covered by Exs.A-3 to A-6 areneither abutting nor situated nearby the acquired landand, on the other hand, the evidence of claimants,definitely, indicates that the sale deeds relied on by theLand Acquisition Officer which extents are situated inSurvey No.28/2B, admeasuring 300 square yards, 150square yards and 150 square yards, respectively, for aconsideration of Rs.82,500/-, Rs.41,250/- and Rs.41,250/-respectively, which works out to Rs.275/- per square yardfinding place in the sale statistics as item Nos.29, 57 and58 respectively, are abutting the acquired land and, infact, the said sale instances are actually situated on theVisakhapatnam – Simhachalam Road, while the acquiredlands are situated at a distance of 80 metres away fromthe site and, therefore, the fixation of market value atRs.275/- per square yard for the acquired land and deduction of 1/3[rd] there-from towards development costcannot at all be faulted with. It is also his contention thatthe approach of the reference Court in adoption ofaverage price method is impermissible. Therefore, it is hissubmission to set aside the award and decree passed bythe reference Court and to confirm the market value fixedby the Land Acquisition Officer.

12. The learned counsel for the Claimants, interalia, contends that Exs.A-3 to A-6 cannot be brushedaside and the reference Court rightly relied on Exs.A-3 toA-6, though, certain observations were made in the awardpassed by the reference Court contra to the finding finallytendered and, of course, the adoption of average pricemethod is not right and the reference Court ought to haveresorted to placing reliance on the highest bona fideexemplar and, therefore, the sale price under Exs.A-4 andA-5 at Rs.600/- per square yard ought to have adopted byaccepting and acting upon Exs.A-4 and A-5 sale prices. Itis, therefore, his submission that not only the evidence ofPWs.1 and 4 supported by Exs.A-1 and A-2 would showthat even long prior to the date of issue of notification,there was an offer by the Corporations to pay Rs.600/- persquare yard and, therefore, contends that the claimantsare entitled to Rs.600/- per square yard and, accordingly,to fix the market value. He has also placed reliance onthe decision of this Court rendered by us in Boya Pesala Chinna Yellappa and others v. Special Deputy l[[1]]Collector, Land Acquisition, Nandyain support ofhis argument that though, the parties to Exs.A-3 to A-6were not examined, still, Exs.A-3 to A-6 cannot beexcluded on that ground, in view of the underlyingprinciple enacted by the provisions of Section 51-A of theAct. It is, thus, his submission that to fix the market valueat the rate of Rs.600/- per square yard by enhancing itfrom Rs.394/- without any deduction as the surroundingarea was already developed area.

13. In view of the afore-referred contentions raisedby both sides, the points that arise for consideration are:

1) Whether the award and decree under challengeare sustainable?are sustainable?

2) Whether the claimants are entitled toenhancement of compensation?enhancement of compensation?

POINT Nos.1 & 2

14. Amongst witnesses examined by the claimants,PW.1 – Garuda Venkata Raju is the husband of the firstclaimant.

The 1[st] claimant is entitled to a portion of the acquiredland according to her share. Exs.A-3 to A-6 are saledeeds exhibited through PW.1, in an attempt to claim enhanced compensation over and above the marketvalue fixed by the Land Acquisition Officer. Ex.A-3 iscertified copy of sale deed, dated 07-07-1989 executedby one

E. Appa Rao in favour of B.V. Radha at the rate ofRs.696/- per square yard for an extent of 85 square yardsin Survey No.38/5. Ex.A-4 is certified copy of sale deed,dated 18-06-1991 executed by one C. Papa Rao in favourof L. Jyothi at the rate of Rs.600/- per square yard for anextent of 266 square yards in Survey No.31/5B. Ex.A-5 iscertified copy of sale deed, dated 29-01-1992 executedby one G.P. Venkanna in favour of R. Jaya at the rate ofRs.600/- per square yard for an extent of 150 squareyards in Survey No.12/1C. Ex.A-6 is certified copy of saledeed, dated 12-03-1991 executed by one P. Kotaiah infavour of P. Rajeswari at the rate of Rs.400/- per squareyard for an extent of 200 square yards in SurveyNo.23/1/D1. Though, in his chief examination, PW.1refers to the documentary evidence Exs.A-1 to A-6 andmarked as such, but in his cross-examination, he makes certain admissions whichstand adverse to the claim made by them. He admits, inhis cross-examination, that the acquired land was neverdeveloped and no lay out was made making it into plots,and Exs.A-1 and A-2 letters were addressed to his father-in-law but not to him and that he does not know thecontents mentioned therein. Concerning Exs.A-3 to A-6,

he admits that he does not know the Vendors andVendees of Exs.A-3 to A-6. He makes a definite answerthat the Land Acquisition Officer has awardedcompensation basing on the sale deeds relating to theadjoining land of the acquired land which is in SurveyNo.28.

15. Concerning Exs.A-1 and A-2, the evidence ofPW.2 –

P.V. Subba Rao is material, who is no other than thefather of claimants. A perusal of his cross-examinationwould reveal that he has not filed Exs.A-1 and A-2 at thetime of award enquiry and he does not know the names ofthe persons, who have addressed Exs.A-1 and A-2 andhe received them by post and he has not preserved thepostal covers under which he has received them. So, hestated that the Firms referred to under Exs.A-1 and A-2were not in existence as on the date of acquisitionproceedings, but he also states that except his oralstatement, there is nothing in writing to show that theFirms referred under Exs.A-1 and A-2 were not inexistence. Be that as it may, the very circumstances thatit was only a proposal and further the authors there-ofwere not examined to prove the contents there-of. In suchan event, no reliance can be placed on Exs.A-1 and A-2. Therefore, the finding recorded by the reference Court inexcluding Exs.A-1 and A-2 cannot be faulted with. PW.2’s evidence would show that he has not filed anydocumentary proof to show that prevailing market value atthe time of issue of notification was Rs.1,000/- per squareyard for the acquired land.

16. PW.3 is one Thota Venkateswarlu. He is apurchaser in the name of his wife Rajeswari under Ex.A-6at the rate of Rs.400/- per square yard. The extent being200 square yards. Even, in his chief examination, heasserts that the site covered by Ex.A-6 is situated at a distance of half kilometre from N.A.D. Junction. Though,he states that he purchased the land at the rate ofRs.900/- per square yard, but the registration was adoptedat the rate of Rs.400/- per square yard. However, thatstatement of fact cannot be accepted in view of theembargo contained in Section 92 of the Indian EvidenceAct, more particularly, when sale agreement precedingEx.A-6 original sale deed is not filed. Concerning theacquired land, his evidence is of no use, since heexpresses his ignorance that he does not know thecondition of the land at the time of acquisition and he doesnot know the acquired land.

17. PW.4 is the 4[th] claimant. He, though, asserts inhis chief examination that the market value wasRs.1,500/- per square yard on the date of acquisition,except the acquired land, there was no other landavailable for acquisition. He asserts, in his cross- examination, that they have not developed the acquiredland from the inception i.e., 1921. He also states that they have not filed recordedproof evidencing the then prevailing market value as onthe date of acquisition was Rs.1,000/- per square yard.

18. Thus, when the evidence, both, oral anddocumentary referred to above, is analysed, certainly,Ex.A-3 cannot be relied on for the reason that what wassold under Ex.A-3 was not just the vacant site, but itconsists of a house. Hence, we have no hesitation inexcluding Ex.A-3. Ex.A-4 is, of course, for 266 squareyards, situated in Survey No.31/5B and the rate works outto Rs.600/- per square yard. We would like to refer to italong with Ex.A-6 sale, after examining whether Ex.A-5 sale instance would assistthe claimants.

19. Ex.A-5 consists of 150 square yards located in Survey No.12/1C. The sale price works out to Rs.600/-per square yard. Admittedly, it is abutting the NationalHigh-way. Even, in his chief examination, PW.1 statesthat the acquired land is situated near NAD KotharoadJunction and nearer to the main road. PW.1’s evidencewould prove the same indicating that the acquired land issituated away from the National Highway. Ex.B-3, whichis copy of award, shows that the acquired land is situated at a distance of 80 metres away from Visakhapatnam –Simhachalam Road. Thus, it is abundantly clear that theacquired land is not at all nearby National High-way, so asto possess high potentiality. Therefore, Ex.A-5, saledeed, cannot be taken as sale exemplar so as to arrive atthe market value for the acquired land.

20. The reference Court, though, while consideringthe sale deeds Exs.A-3 to A-6, made an attempt toexclude them on one ground or the other, but strangely,while tendering finding resorted to adoption of averageprice method and arrived the market value at Rs.525/- persquare yard basing on Exs.A-3 to A-6 prices and hasgiven 1/4[th] deduction towards development cost and,thus, fixed the market value at Rs.394/- per square yard. There is substance in the submission of the learnedGovernment Pleader that the adoption of average pricemethod instead of highest bona fide exemplar isimpermissible, in view of the decision of the Hon’bleSupreme Court in Mehrawal Khewaji Trust (Registered), Faridkot and others v. State of Punjab and others[[2]]. Itwould be apt to refer to the observations made by theHon’ble Supreme Court contained in paragraph ‘17’,which are as under:

“17. It is clear that when there are severalexemplars with reference to similar lands, it is the general rule that the highest of theexemplars, if it is satisfied that it is a bona fidetransaction, has to be considered andaccepted. When the land is beingcompulsorily taken away from a person, he isentitled to the highest value which similar landin the locality is shown to have fetched in abona fide transaction entered into between awilling purchaser and a willing seller nearabout the time of the acquisition. In our view,it seems to be only fair that where sale deedspertaining to different transactions are reliedon behalf of the Government, the transactionrepresenting the highest value should bepreferred to the rest unless there are strongcircumstances justifying a different course. Itis not desirable to take an average of varioussale deeds placed before the authority/courtfor fixing fair compensation.”

21. Now, the question is which of the sale deedsbetween Exs.A-4 and A-6 has to be preferred indetermining the market value of the acquired land. Thelearned counsel for the claimants placing reliance on thejudgment of this Court in Boya Pesala ChinnaYellappa’s Case (Supra 1) rendered by us, contends thatnon-examination of Vendee or Vendor to Ex.A-4 wouldnot make any difference in view of the provisions ofSection 51-A of the Act and, therefore, requests to takeinto consideration the sale price contained in Ex.A-4. Inthe said decision, we placed reliance in CementCorporation of India Limited v. Purya and others[[3]]rendered by the Hon’ble Supreme Court explaining

meaning of the term ‘acceptance of evidence’ occurringin Section 51-A of the Act and use of the word ‘may’. Wemade a definite observation that the contents oftransaction as evidenced by the registered sale deedneed not be automatically be accepted and a discretionhas been conferred upon the Court to be exercisedjudicially by taking into consideration the relevant factors. That has been the finding recorded by us havingextracted the observations of the Hon’ble Supreme Courtcontained in paragraph- ‘27’ in Cement Corporation ofIndia Limited’s Case (Supra 3).

22. Thus, it is clear from the evidence on record thatnothing is brought out in the cross-examination of PWs.1to 3 that Ex.A-4 is brought into existence for the purposeof claiming enhanced compensation. Ex.A-4 is dated 18-06-1991 for an extent of 266 square yards. Admittedly, itis a bit sale. Therefore, a deduction has to be made onthat count when it is construed as a comparable sale asper the decisions of the Hon’ble Supreme Court in Ahsanul Hoda v. State of Bihar[[4]]and HaridwarDevelopment Authority v. Raghubir Singh andothers[[5]]. Even, as per the evidence of PW.1, theacquired land is not a developed land. He made acategorical admission, in his cross-examination, that it isnot divided into plots and no lay out was made. When it is an undeveloped land, towards development cost,certainly, further deduction has to be made.

23. Now, the next question that requires forconsideration is, when larger extent of agricultural land, ifrequired to be determined with reference to the pricefetched for small residential plot, what would be the appropriate deduction towardsdevelopment charges?

24. In the context of percentage of deduction, weare of the view, that it would be apt to refer to the decisionof the Hon’ble Supreme Court in Ahsanul Hoda’s Case(Supra 4). While answering the question relating to thevalue of larger extent of agricultural land, if required to bedetermined with reference to the price fixed for smallresidential plot, the Hon’ble Supreme Court referred to theearlier decision in Haridwar Development Authority’sCase (Supra 5), and extracted the principle, which is thus:

“When the value of a larger extent ofagricultural land has to be determinedwith reference to the price fetched bysale of a small residential plot, it isnecessary to make an appropriatededuction towards the developmentcost, to arrive at the value of the largetract of land. The deduction towardsdevelopment cost may vary from 20% to75% depending upon various factors. Even if the acquired lands have situational advantages, the minimumdeduction from the market value of asmall residential plot, to arrive at themarket value of a larger agricultural land,in the usual course, will be in the rangeof 20% to 25%. In this case, theCollector has himself adopted a 25%deduction which has been affirmed bythe Reference Court and the High Court.We, therefore, do not propose to alter it.”

25. So, keeping in view the above principles, weare of the considered view, that a comprehensivededuction at 50% would be just and reasonable. Therefore, while accepting the sale price at Rs.600/- persquare yard basing on Ex.A-4, sale exemplar, and havinggiven deduction at 50%, we fix the market value at therate of Rs.300/- (Rupees three hundred only) per squareyard reducing the market value fixed by the reference Court at Rs.394/-per square yard.

26. Accordingly, appeal in A.S. No.2571 of 2003filed by the Land Acquisition Officer, is allowed in part,fixing the market value at the rate of Rs.300/- (Rupeesthree hundred only) per square yard for the acquired landby reducing the market value fixed by the reference Courtat Rs.394/- per square yard. Consequently, the appeal in A.S. No.3687 of 2004 filed by the claimants is dismissed.

It is needless to mention that the claimants are entitled toall statutory benefits as per the amended Act on themarket value fixed by this Court. Concerning interest onsolatium, the claimants are entitled to the same from thedate of judgment rendered by the Hon’ble Supreme Court in Sunder v. Union of India[[6]]i.e., 19-09-2001.

27. Accordingly, appeal in A.S. No.2571 of 2003 ispartly allowed and A.S. No.3687 of 2004 is dismissed. We make no order as to costs.

28. As a sequel thereto, MiscellaneousApplications, if any, pending in both these appeals, standdisposed of.

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R. SUBHASH REDDY, J

December 31, 2014.PV/Mgr

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A. SHANKAR NARAYANA, J

[1]. 2014 (6) ALT 137 (DB)

[2]. (2012) 5 SCC 432[3]. (2004) 8 SCC 270

[4]4. AIR 2013 SC 3463

[5]. (2010) 11 SCC 581

[6].(2001) 7 SCC 211