BHARAT SANCHAR NIGAM LIMITED versus M/S. NEMICHAND DAMODARDAS & ANR. on 11 July 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Judicature at Bombay at NagpurBench in First Appeal No.1302 of 2009 by which the High Court hasBpartly allowed the said appeal preferred by the original owners/originalclaimants and has enhanced the amount of compensation for the landsacquired mainly relying upon the prevailing Ready Reckoner rates ofthe land, the Bharat Sanchar Nigam Limited (BSNL) has preferred thepresent appeal.C

2. That the lands owned by the respondents herein – originallandowners situated at Yavatmal, Maharashtra were acquired by theState Government under the provisions of the Land Acquisition Act forBSNL. The Land Acquisition Officer declared the award determiningthe total compensation @ Rs.14,33,703/- (at Rs.13.32 per sq. ft.). At theDinstance of the landowners, a reference was made to the ReferenceCourt. The Reference Court enhanced the amount of compensation toRs.21/- per sq. ft.

2.1 In a further appeal to the High Court at the instance of theoriginal claimants, by the impugned judgment and order, the High CourtEhas enhanced the amount of compensation to Rs.174/- per sq. ft. (morethan 800% of the Reference Court compensation and about 1300% ofthe compensation awarded by the Land Acquisition Officer).

2.2 Feeling aggrieved and dissatisfied with the impugned judgmentFand order passed by the High Court enhancing the amount of compensationto Rs.174/- per sq. ft., BSNL has preferred the present appeal.

3. Shri R.D. Agrawala, learned Senior Advocate appearing onbehalf of BSNL has vehemently submitted that the High Court hasseriously erred in enhancing the amount of compensation solely relyingGupon the prevailing Ready Reckoner rates. It is submitted that the solebasis for more than 800% increase by the High Court is the prevailingReady Reckoner rates of land, which as such is not permissible as heldby this Court in the case of Jawajee Nagnatham Vs. RevenueDivisional Officer, Adilabad, A.P. and Ors., (1994) 4 SCC 595 and H

BHARAT SANCHAR NIGAM LIMITED v. M/S. NEMICHANDDAMODARDAS & ANR. [M. R. SHAH, J.]

Krishi Utpadan Mandi Samiti, Sahaswan Vs. Bipin Kumar, (2004)2 SCC 283.

3.1 Learned Senior Advocate appearing on behalf of the appellant– BSNL has further submitted that in the facts and circumstances of thecase, no reliance could have been placed on the Ready Reckoner asPW3 – a Government Officer specifically admitted that the actual ratesof transaction of sales in market are different from the rates mentionedin the Ready Reckoner and that the correct market price is not reflectedfrom the Ready Reckoner. It is submitted that PW3 further specificallyadmitted that the Ready Reckoner was prepared only for collecting stampduty. It is submitted that therefore, the High Court has seriously erred inenhancing the amount of compensation solely relying upon the ReadyReckoner prices of the area in question.

3.2 It is further submitted by the learned Senior Advocate appearingon behalf of the appellant – BSNL that in the present case, the HighCourt has relied upon and/or considered the Full Bench decision of theBombay High Court in the case of Shalini Vaman Godbole Vs. SpecialLand Acquisition Officer, Special Unit, Solapur and Ors., (2009)5 Mah LJ 884 rather than not following the decisions of this Hon’bleCourt in the case of Jawajee Nagnatham (supra) and Krishi UtpadanMandi Samiti, Sahaswan (supra), which are binding on all Courts ofthe country under Article 141 of the Constitution of India.

3.3 Making above submissions and relying upon the abovedecisions, it is prayed to allow the present appeal.

4. Shri Sachin Patil, learned counsel appearing on behalf of theState has adopted the submissions made by the learned Senior Advocateappearing on behalf of the appellant – BSNL and submitted that theHigh Court has committed a serious error in awarding such an exorbitantcompensation.

5. Present appeal is vehemently opposed by Mrs. Kiran Suri,learned Senior Advocate appearing on behalf of original claimants.Mrs. Suri, learned Senior Advocate appearing on behalf of the originalclaimants has vehemently submitted that in the present case whileenhancing the compensation amount to Rs. 174/- per sq. ft., the HighCourt has rightly relied upon the Government Resolution and the Ready A

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AReckoner. It is contended that the value of the land mentioned in theReady Reckoner is a statutory cost and even the Government has issueda Resolution that while determining the amount of compensation, theprice/value mentioned in the Ready Reckoner is required to be takeninto consideration.

B5.1 It is submitted that in the present case, the original claimantshave relied upon the Government Resolution dated 31.10.1994 as wellas the Ready Reckoner rates by examining the Assistant Town Planneras PW-4.

5.2 It is submitted that the Government Resolution dated 31.10.1994Cmakes it obligatory that on the date of the notification under Section 4 ofthe Land Acquisition Act, wherever, necessary, the capitalization methodand/or the valuation as per the Ready Reckoner, whichever is higher,should be done at the time of market selection. It is submitted that theaforesaid Government Resolution provided the basis for the calculationDof the market value for Ready Reckoner. It is submitted that ReadyReckoner is prepared after taking into consideration the geographicalconditions of each area, major roads, railways, etc., as well as byinspecting the information of buying and selling transactions.

5.3 It is submitted that the Ready Reckoner is used for registeringEdocuments. The sale transactions cannot be for a lesser amount thanthe market price. It is submitted that however, the value of the land inthe documents may be higher than the value proposed by the ReadyReckoner. It is submitted that a policy decision by the Government thatthe value/price mentioned in the Ready Reckoner can be considered forFthe purpose of determining the compensation for the lands acquired underthe Land Acquisition Act is beyond the judicial review, more particularly,when the same is not under challenge.

5.4 It is submitted that the prices mentioned in the Ready Reckonerare after following the procedure as required under the MaharashtraGStamp (Determination of True Market Value of property) Rules, 1995.Relying upon the decision of this Court in the case of Lal Chand Vs.Union of India and Anr., (2009) 15 SCC 769 (para 41), it is submittedthat as observed and held by this Court, the procedure adopted by theExpert Committee constituted under the Stamp Act, law is a scientificHand methodical assessment of market value, and, therefore, there is no reason why such rates should not be a relevant piece of evidence fordetermination of the market value.

5.5 Making the above submissions and relying upon the decisionof the Bombay High Court in the case of Shalini Vaman Godbole(supra), it is prayed to dismiss the present appeal.

6. Heard the learned counsel appearing for the respective partiesat length.

7. At the outset, it is required to be noted that by the impugnedjudgment and order, the High Court relying upon the Ready Reckonerland prices of the area has enhanced the amount of compensation by800% from Rs.21/- per sq. ft. to Rs. 174/- per sq. ft. The High Courthas heavily relied upon the Government Resolution dated 31.10.1994 aswell as the Ready Reckoner prices and the decision of the High Court inthe case of Shalini Vaman Godbole (supra). However, when decisionof this Court in the case of Jawajee Nagnatham (supra) and KrishiUtpadan Mandi Samiti, Sahaswan (supra), which were binding, onwhether while determining the compensation for the lands acquired underthe Land Acquisition Act, the Ready Reckoner prices, which are fordetermination of the stamp duty can be considered or not, the High Courthas not followed the aforesaid decisions of this Court, which were bindingon the High Court under Article 141 of the Constitution of India.Therefore, High Court has seriously erred in not following the twodecisions of this Court in the case of Jawajee Nagnatham (supra) andKrishi Utpadan Mandi Samiti, Sahaswan (supra).

8. Whether the prices mentioned in the Ready Reckoner can bethe basis for determining the compensation for the lands acquired underthe Land Acquisition Act has been dealt with by this Court in the twodecisions of this Court in the case of Jawajee Nagnatham (supra) andKrishi Utpadan Mandi Samiti, Sahaswan (supra). In the case ofJawajee Nagnatham (supra), this Court has observed and held thatthe amount of compensation for the lands under the Land AcquisitionAct is determined by adopting the method of valuation namely, (1) opinionof experts; (2) the price paid within a reasonable time in bona fidetransactions of purchase of the lands acquired or the lands adjacent tothe lands acquired and possessing similar advantages; and (3) a numberof years purchase of the actual or immediately prospective profits of the A

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Alands acquired. It is observed that in determining the market value, theCourt has to take into account either one or the other of the three methodsto determine market value of the lands appropriate to the facts of agiven case to determine the market value. Thereafter, this Courtconsidered whether the Basic Valuation Register would form theBfoundation to determine the market value. While negating the same andaccepting the view taken by the High Court that the entries under theBasic Valuation Register cannot form the basis to enhance the marketvalue, it is observed and held in paragraph 5 as under:- “5. The question, therefore, is whether the Basic ValuationCRegister is evidence to determine the market value. This Courtin Special Land Acquisition Officer v. T. AdhinarayanSetty [AIR 1959 SC 429] in paragraph 9 held that the function ofthe Court in awarding compensation under the Act is to ascertainthe market value of the land at the date of the notification underDSection 4(1). The methods of valuation may be (1) opinion ofexperts (2) the price paid within a reasonable time in bona fidetransactions of purchase of the lands acquired or the lands adjacentto the lands acquired and possessing similar advantages; and (3)a number of years purchase of the actual or immediatelyprospective profits of the lands acquired. Same was the viewEin Tribeni Devi v. Collector of Ranchi [(1972) 1 SCC 480]. Itwas reiterated in catena of decisions, vide, Periyar andPareekanni Rubbers Ltd. v. State of Kerala [(1991) 4 SCC 195].Therefore, it is settled law that in determining the market value,the Court has to take into account either one or the other threeFmethods to determine market value of the lands appropriate onthe facts of a given case to determine the market value. Generallythe second method of valuation is accepted as the best. Thequestion, therefore, is whether the Basic Valuation Register wouldform foundation to determine the market value. The Indian StampGAct, 1899 provides the power to prescribe stamp duty oninstruments, etc. Entry 44 of List III, Concurrent List, of the VIIthSchedule read with Article 254 of the Constitution empowers theState Legislature to amend the Indian Stamp Act, 1899. In exercisethereof all the State Legislatures including the Legislature of A.P.amended the Act and enacted Section 47-A empowering the H

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registering officer to levy stamp duty on instruments of conveyance,etc., if the registering officer has reason to believe that the marketvalue of the property, covered by the conveyance, exchange, gift,release of right or settlement, has not been truly set forth in theinstrument, he may refuse registering such instrument and referthe same to the Collector for determination of the market value ofsuch property and the proper duty payable thereon. On receipt ofsuch opinion, he may call upon the vendor as per the rulesprescribed, to pay the additional duty thereon. If the vendor isdissatisfied, he has been given the right to file an appeal and furthergetting reference made to the High Court for decision in thatbehalf. Section 47-A would thus clearly show that the exercise ofthe power thereunder is with reference to a particular land coveredby the instrument brought for registration. When he has reasonsto believe it to be undervalued, he should get verified whether themarket value was truly reflected in the instrument for the purposeof stamp duty; the Collector on reference could determine thesame on the basis of the prevailing market value. Section 47-Aconferred no express power to the Government to determine themarket value of the lands prevailing in a particular area, village,block, district or the region and to maintain Basic Valuation Registerfor levy of stamp duty for registration of an instrument, etc. Noother statutory provision or rule having statutory force has beenbrought to our notice in support thereof. Whether an instrument isliable for higher stamp duty on the basis of valuation maintained inthe Basic Valuation Register, came up for consideration in SagarCements Ltd. v. State of A.P. [(1989) 3 Andh LT 677] B.P. JeevanReddy, J., as he then was, considered the question and held thatthe Government has unilaterally fixed the valuation of the lands,the Basic Valuation Register had no statutory foundation andtherefore it does not bind the parties. Neither the Registrar northe vendor is bound by it. The market value of the land for properstamp duty has to be determined as per the law under Section47-A itself. That view was followed by another learned SingleJudge in P. Sasidar v. Sub-Registrar [(1992) 1 Andh LT 49]. Itis, therefore, clear that the Basic Valuation Register prepared andmaintained for the purpose of collecting stamp duty has no statutory A

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base or force. It cannot form a foundation to determine the marketvalue mentioned thereunder in instrument brought for registration.Equally it would not be a basis to determine the market valueunder Section 23 of the Act, of the lands acquired in that area ortown or the locality or the taluk etc. Evidence of bona fide salesbetween willing prudent vendor and prudent vendee of the landsacquired or situated near about that land possessing same or similaradvantageous features would furnish basis to determine marketvalue. The Division Bench followed, in support of its view a decisionof another Division Bench in Land Acquisition Officer v.Venkateswara Prasad [A.S. No. 880 of 1980, decided on 11-11-1981] which also decided that Basic Valuation Register cannot berelied on to determine the market value. It would appear thatin Govt. of A.P. v. Sohan Lal [(1988) 2 Andh LT 306] a DivisionBench of that High Court, without noticing these two bindingdecisions, held that the Basic Valuation Register would formfoundation to determine the market value and directed to determinethe compensation on that basis. The entire controversy wasconsidered by yet another Division Bench in Vasireddi BharataRao v. Revenue Divisional Officer [(1992) 1 Andh LT 591]. TheDivision Bench, after considering the case law disagreeingwith Sohan Lal [(1988) 2 Andh LT 306] view as per incuriam,also reiterated that the Basic Valuation Register maintained bythe registering authority has no statutory foundation to determinethe market value and cannot form the base under Section 23(1) todetermine the market value. This Court in Gulzara Singh v. Stateof Punjab [(1993) 4 SCC 245] held that mutation entries of theland transactions in the revenue records are not evidence unlessthe parties to the transactions have been examined in proof ofdocuments. In Director of Survey-cum-LAO v. Mohd. Ghouse[(1985) 1 MLJ 116] relied on by Mr Ganguli, the Division Benchof Madras High Court, relying upon the instructions issued by theGovernment to determine the market value for the purpose ofregistration of the instrument under Section 47-A, held that it wouldform basis to determine the market value under Section 23 in anappropriate case, subject to proof of the market value. What werethe instructions issued by the Government and whether they hadany statutory foundation, have not been stated by the Division Bench. If the broad proposition of law that under Section 47-A ofStamp Act such instructions could be issued, as contended for theappellant herein, as appears to be the view of the High Court, it isnot correct law. As we have already noted, Section 47-A beinglocal amendment, made by each State Legislature did not findany such statutory basis. Like A.P. Act, Tamil Nadu Act is alsoreferable to transactions intra vivos and not as general guidelines.If they are based on evidence inter partes it would be consistentwith Section 47-A. Accordingly we hold that the basic value ofregistration has no statutory base. It cannot form any basis todetermine the market value of the acquired lands under Section23 of the Act. The burden of proof is always on the claimant toprove, in each case the prevailing market value as on the date ofnotification published in the State Gazette under Section 4(1) ofthe Act with reference to the sale deeds of the same lands orneighbour’s lands possessed of same or similar advantages andfeatures executed between willing vendor and willing vendee orother relevant evidence in the reference court. The State did notfile any appeal against the award of the reference court whichitself is a matter gone in favour of the appellant. We do not findany justification to further enhance the market value.”

9. The aforesaid decision in the case of Jawajee Nagnatham(supra) has been subsequently followed in a subsequent decision of thisCourt in the case of Lal Chand (supra) and it is observed that themarket value of the land under Section 23 of the Land Acquisition Actcannot be fixed on the basis of the rates mentioned in the Basic ValuationRegisters’ maintained for the purpose of collection of proper stamp duty.In that case, as the Reference Court determined the amount ofcompensation on the value of the land fixed by the District Magistratefor stamp duty purposes, this court has observed and held that the samewas erroneous.

As such, we are in complete agreement with the view taken inthe aforesaid two decisions that the prices mentioned in the ReadyReckoner for the purpose of calculation of the stamp duty, which arefixed for the entire area, cannot be the basis for determination of thecompensation under the Land Acquisition Act. It is required to be notedthat in the present case, the Reference Court did consider the submission A

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Aon behalf of the claimants to determine the market value on the basis ofthe Ready Reckoner. The Reference Court specifically refused to acceptthe same on appreciation of the deposition of PW-3. PW-3, a GovernmentOfficer specifically admitted that the Ready Reckoner was preparedfor recovery of the proper stamp duty and the registration charges andthat the actual rates of transaction of sales in market are different thanBthe rates mentioned in the Ready Reckoner and that correct marketprices cannot be reflected from the Ready Reckoner. Even PW-4 alsospecifically admitted in his deposition that the Ready Reckoner is preparedonly for collecting stamp duty. The Refence court, therefore, rightly reliedupon and followed the decisions of this Court in the case of JawajeeCNagnatham (supra) and Krishi Utpadan Mandi Samiti, Sahaswan(supra).

10. Why the prices mentioned in the Ready Reckoner, which isbasically for the purpose of collecting proper stamp duty and registrationDcharges shall not be the basis for determination of the compensation forthe lands acquired under the Land Acquisition Act is required to beconsidered from another angle also. It cannot be disputed that the ratesmentioned in the Ready Reckoner are for the lands of the entire areaand the uniform rates are determined with respect to different lands. Inthe case of Chimanlal Hargovinddas Vs. Special Land AcquisitionEOfficer, Poona and Anr., (1988) 3 SCC 751, this Court has laid downthe broad principles to be followed in the case of determination ofcompensation, which are as under:- “4. The following factors must be etched on the mental screen:

(1) A reference under Section 18 of the Land AcquisitionAct is not an appeal against the award and the court cannot takeinto account the material relied upon by the Land AcquisitionOfficer in his award unless the same material is produced andproved before the court.

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(2) So also the award of the Land Acquisition Officer is notto be treated as a judgment of the trial court open or exposed tochallenge before the court hearing the reference. It is merely anoffer made by the Land Acquisition Officer and the material utilisedby him for making his valuation cannot be utilised by the courtunless produced and proved before it. It is not the function of the G

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court to sit in appeal against the award, approve or disapprove itsreasoning, or correct its error or affirm, modify or reverse theconclusion reached by the Land Acquisition Officer, as if it werean appellate court.

(3) The court has to treat the reference as an originalproceeding before it and determine the market value afresh onthe basis of the material produced before it.

(4) The claimant is in the position of a plaintiff who has toshow that the price offered for his land in the award is inadequateon the basis of the materials produced in the court. Of course thematerials placed and proved by the other side can also be takeninto account for this purpose.

(5) The market value of land under acquisition has to bedetermined as on the crucial date of publication of the notificationunder Section 4 of the Land Acquisition Act (dates of notificationsunder Sections 6 and 9 are irrelevant).

(6) The determination has to be made standing on the dateline of valuation (date of publication of notification under Section4) as if the valuer is a hypothetical purchaser willing to purchaseland from the open market and is prepared to pay a reasonableprice as on that day. It has also to be assumed that the vendor iswilling to sell the land at a reasonable price.

(7) In doing so by the instances method, the court has tocorrelate the market value reflected in the most comparableinstance, which provides the index of market value.

(8) Only genuine instances have to be taken into account.(Sometimes instances are rigged up in anticipation of acquisitionof land.)

(9) Even post-notification instances can be taken into account(1) if they are very proximate, (2) genuine, and (3) the acquisitionitself has not motivated the purchaser to pay a higher price onaccount of the resultant improvement in development prospects.

(10) The most comparable instances out of the genuineinstances have to be identified on the following considerations:

(i) proximity from time angle,

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(ii) proximity from situation angle.

(11) Having identified the instances which provide the indexof market value, the price reflected therein may be taken as thenorm and the market value of the land under acquisition may bededuced by making suitable adjustments for the plus and minusfactors vis-à-vis land under acquisition by placing the two injuxtaposition.

(12) A balance sheet of plus and minus factors may bedrawn for this purpose and the relevant factors may be evaluatedin terms of price variation as a prudent purchaser would do.

(13) The market value of the land under acquisition hasthereafter to be deduced by loading the price reflected in theinstance taken as norm for plus factors and unloading it for minusfactors.

(14) The exercise indicated in clauses (11) to (13) has to beundertaken in a common sense manner, as a prudent man of theworld of business would do. We may illustrate some such illustrative(not exhaustive) factors:

7. special value for an

owner of an adjoiningproperty to whom itmay have some veryspecial advantage XXXXXXXXXX”

11. Thus, there may be various factors, which are required to beconsidered for determining the market value of the land. The marketvalue of the land depends upon the location of the land; area of the land;whether the land is in a developed area or not; whether the acquisition isof a small plot of land or a big chunk of land and number of otheradvantageous and disadvantageous factors are required to be considered.Therefore, there cannot be the same market value for the different landswhile determining the compensation for the lands acquired under theLand Acquisition Act. Therefore, the rates mentioned in the ReadyReckoner, which are basically for the purpose of collection of stampduty and as observed hereinabove, which are the uniform rates for allthe lands in the area, cannot be the basis for determination of thecompensation for the lands acquired under the Land Acquisition Act.Therefore, the High Court has committed a serious error in enhancingthe amount of compensation by 800% from Rs. 21/- per sq. ft. to Rs.174/- per sq. ft. relying upon and/or considering the rates mentioned inthe Ready Reckoner.

12. Now, so far as the reliance placed upon the GovernmentResolution dated 31.10.1994 by the claimants as well as the High Courtis concerned, apart from the fact that the same is contrary to the lawlaid down by this Court in the aforesaid two decisions, what is mentionedin the said Government Resolution is that the Ready Reckoner isscientifically prepared by taking into account the geographical conditionsof each area, major roads, railways, etc., as well as by inspecting theinformation of buying and selling transactions and that the ReadyReckoner rates are based on the talukas in rural areas and the urbanareas in different parts of the city.

As observed hereinabove, there cannot be a uniform market valueof the land for the purpose of determination of the compensation for thelands acquired under the Land Acquisition Act. As observed herein above, A

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Athe market value of the different lands vary from place to place and itdepends upon various factors as observed hereinabove.

13. In view of the above and for the reasons stated above, presentappeal succeeds. The impugned judgment and order passed by the HighCourt is hereby quashed and set aside and the judgment and order passedBby the Reference Court determining the compensation @ Rs.21/- persq. ft. is hereby restored.

Present Appeal is Allowed accordingly. However, in the factsand circumstances of the case, there shall be no order as to costs.

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Nidhi Jain

Appeal allowed.

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