Karnataka High Court
Divisional Controller vs The Special Land Acquisition Officer on 27 September, 2022
Author: B.Veerappa
Bench: B.Veerappa
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MFA No.7537 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF SEPTEMBER, 2022
PRESENT
THE HON'BLE MR. JUSTICE B.VEERAPPA
AND
THE HON'BLE MRS. JUSTICE K.S.HEMALEKHA
MISCELLANEOUS FIRST APPEAL No.7537 OF 2015 (LAC)
BETWEEN:
1. DIVISIONAL CONTROLLER,
KARNATAKA STATE ROAD
TRANSPORT CORPORATION,
BANGALORE CENTRAL DIVISION,
SHANTINAGAR, BANGALORE-560026.
REPRESENTED BY ITS
CHIEF LAW OFFICER,
CENTRAL OFFICES,
KSRTC, K H ROAD,
BANGALORE-560026.
...APPELLANT
(BY SRI. P. D. SURANA., ADVOCATE)
AND:
1. THE SPECIAL LAND ACQUISITION OFFICER,
RAMANAGARA DIVISION,
RAMANAGARA,
HAVING ITS OFFICE AT
Digitally signed KANDAYA BHAVAN,
by MALATESH K
C RAMANAGARA-562159.
Location: High
Court of 2. SRI PRABHU DEV,
Karnataka S/O SRI PAPANNA,
AGED ABOUT 46 YEARS
RESIDING AT BIDADI,
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MFA No.7537 of 2015
BIDADI HOBLI,
RAMANAGARA TALUK,
RAMANAGARA DISTRICT-562159.
...RESPONDENTS
(BY SRI LAXMINARAYAN, ADDITIONAL GOVERNMENT
ADVOCATE FOR R1; SRI M.H. PRAKASH, ADVOCATE FOR R2)
*****
THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER
SECTION 54(1) OF THE LAND ACQUISITION ACT, PRAYING TO
SET ASIDE THE JUDGMENT AND AWARD DATED 28.02.2015
PASSED IN LAC No.59/2012 ON THE FILE OF THE PRINCIPAL
SENIOR CIVIL JUDGE, CJM, RAMANAGARA.
THIS MISCELLANEOUS FIRST APPEAL COMING ON FOR
HEARING THIS DAY, B. VEERAPPA J., DELIVERED THE
FOLLOWING:
JUDGMENT
The appellant-Divisional Commissioner, Karnataka State Road Transport Corporation, filed the present Miscellaneous First Appeal against the judgment and award dated 28.02.2015 made in LAC No.59/2012 on the file of the Principal Senior Civil Judge and CJM, Ramanagara, fixing the market value of the acquired land at Rs.275/- per sq.ft. instead of Rs.6,48,215/-
per acre, with all statutory benefits.
2. The preliminary notification dated 20.07.2006 was issued for acquiring 1 acre 30 guntas of land in Sy.No.23/2 in Bidadi village owned by respondent No.2 for the purpose of -3- MFA No.7537 of 2015 constructing Satellite Bus Stand. On 23.05.2007, final notification was issued. The Special Land Acquisition Officer passed the award dated 24.07.2007 awarding compensation of Rs.6,48,212/- per acre i.e., approximately Rs.18/- per sq.ft.
Being aggrieved by the same, the land loser preferred reference in LAC No.59/2012 under Section 18(1) of the Land Acquisition Act for adjudicating the correct market value of the acquired land. In the said matter, the reference Court permitted the parties to adduce both oral and documentary evidence.
3. In order to prove his case, the claimant/land lord examined himself as P.W.1 and marked Exs.P.1 to P.15. The respondents neither adduced any evidence nor produced any documents.
4. The reference Court, based on the pleadings of the parties, by the judgment and award dated 28.02.2015, came to conclusion that the claimant is entitled to compensation at the rate of Rs.275/- per sq.ft. Hence, the present Miscellaneous First Appeal is filed by the KSRTC. The claimant has not filed any Appeal against the impugned judgment and award.
-4- MFA No.7537 of 20155. We have heard the learned counsel for the parties to the lis.
6. Sri P.D.Surana, learned counsel for the appellant/ KSRTC contended with vehemence that the impugned award passed by the Reference Court fixing market value of the acquired land at Rs.275/- per sq.ft. is without any basis and contrary to the material on record. Ex.P.6 is the gazette notification relating to the fixation of guidance value. The said notification prescribes the guidance value for the converted lands for residential use which are yet to be developed as per the plan approved by the competent Planning Authority. Thereby, the Reference Court proceeded to fix the market value of the acquired lands at Rs.275/- ignoring the value of the property. If the land is converted for residential purposes and yet to be developed and not approved by the competent Planning Authority for layout, the value of the property has to be fixed at 50% more than the corresponding agricultural land value. He further contended that the land in question is not part and parcel of Bidadi Gramatana area. Therefore, adopting the value prescribed for Gramatana Area as Rs.300/- per sq.ft. is not sustainable.
-5- MFA No.7537 of 20157. Learned counsel further contended that while fixing Rs.300/- per sq.ft. the Reference Court has not deducted the developmental charges. The sketch-Ex.P.4 clearly depicts that the land is located at Storm Water Valley and the Reference Court could not have held that the bus stand should be established without incurring any expenses. The Reference Court has not noticed the project report prepared by the claimant produced as per Ex.P.13, where, various expenses are shown for development of land. The claimant himself has estimated the cost of the land at Rs.3,50,000/- per acre. He further contended that the Reference Court has not deducted the land that would be utilized for any of the amenities.
Thereby, the impugned judgment and award passed by the Reference Court is contrary to the material on record and therefore, sought to allow the Miscellaneous First Appeal.
8. In support of his contentions, learned counsel for the appellant relied upon the following dictums:
(i) K.S.Shivadevamma and others vs. Assistant Commissioner and Land Acquisition Officer and another reported in (1996)2 SCC 62.-6- MFA No.7537 of 2015
(ii) Pitambar Hemlal Badgujar (dead) by LRs and others vs. Sub Divisional Officer, Dhule and another reported in AIR 1996 SC 3117.
(iii) Chandrashekar (D) by LRs and others vs. Land Acquisition Officer and Anr Basappa (D) by LRs and others vs. Special Land Acquisition Officer, Gulbarga and another reported in AIR 2012 SC 446.
9. Per contra, Sri M.H.Prakash, learned counsel for the respondent/claimant/land lord, while justifying the impugned judgment and award passed by the Reference Court, contended that Ex.P.6-gazette notification contained the guidelines in respect of dry lands, wet lands as well as garden lands.
Admittedly, the land in question is a converted land as on the date of acquisition and thereby taking into consideration the potentiality of the land the Reference Court rightly fixed Rs.275/- per sq.ft. Thereby, the judgment and award is just and proper and therefore, sought to dismiss the Miscellaneous First Appeal filed by the Corporation.
10. In view of the rival contentions urged by the learned counsel for the parties, the only point that arises for our consideration is:
-7- MFA No.7537 of 2015"Whether the Reference Court is justified in fixing the market value of the acquired land which is a converted land at Rs.275/- per sq.ft. as against Rs.18/- awarded by the Land Acquisition Officer acquired for the purpose of establishing a bus stand, in the facts and circumstances of the present case?"
11. It is not in dispute that preliminary notification was issued for acquiring land for establishment of a bus stand and the Land Acquisition Officer passed the award fixing the market value of the acquired land at Rs.18/- per sq.ft. On the reference made by the claimant, the Reference Court permitted the parties to adduce both oral and documentary evidence. In order to prove his case, the claimant examined himself as P.W.1 and produced the documents as per Exs.P.1 to 15. No evidence was adduced on behalf of the respondents and no documents were produced.
12. The Reference Court, based on the oral and documentary evidence, proceeded to fix the market value of the acquired land at Rs.275/- per sq.ft., mainly on the basis of the Gazette Notification dated 13.11.2006-Ex.P.6, wherein, the Central Valuation Committee published the guideline market value, -8- MFA No.7537 of 2015 exercising powers under Section 45(B) of the Karnataka Stamp Act, 1957 r/w Rule 7(3) of the Karnataka Stamp (Constitution of Central Valuation Committee for estimation, publication and revision of Market Value guidelines of properties) Rules, 2003.
In the said gazette notification, at Sl.No.32, the market price per acre in respect of certain survey numbers situated at Bidadi village, Bidadi Hobli, Ramanagara Taluk is mentioned and admittedly, Sy.No.23/2 measuring 1 acre 30 guntas has not been shown therein. After Sl.No.32(a) and (b), a Note is given wherein it is mentioned as under:
¸ÀÆZÀ£É:
a. ¥ÁæAwÃAiÀÄ ºÉzÁÝjUÉ ºÉÆA¢PÉÆAqÀ d«ÄãÀÄ, b. UÁæªÀÄ ªÀÄvÀÄÛ gÀ¸ÉÛUÉ ºÉÆA¢PÉÆAqÀ d«ÄãÀÄ 1£Éà ºÀAvÀ, c. UÁæªÀÄ ªÀÄvÀÄÛ gÀ¸ÉÛUÉ ºÉÆA¢PÉÆAqÀ d«ÄãÀÄ 2£Éà ºÀAvÀ, d 3£Éà ºÀAvÀzÀ d«ÄãÀÄ.
At Sl.No.32(e), the market value of the converted sites is mentioned as Rs.300/- per sq.ft.
13. Thereby, the Reference Court proceeded to hold that the land acquired in the present case is essentially converted land at Bidadi village and the State Government acquired it for the purpose of establishing a satellite bus stand and further -9- MFA No.7537 of 2015 recorded a finding that the State Government and the acquired land of the claimant is situated abutting Bengaluru Mysuru State Highway.
14. The Reference Court, without considering the potentiality of the land and the prevailing market value and the fact that the land is situated in prime locality, has awarded meagre compensation of Rs.6,48,215/- per acre, but has not deducted towards developmental charges.
15. The dictum of the Hon'ble Supreme Court relied upon by the learned counsel for the appellant in the case of K.S.Shivadevamma and others vs. Assistant Commissioner and Land Acquisition Officer and another reported in (1996)2 SCC 62 is a case where, as on the date of the notification, no development had taken place. The land possessed potential value for building purposes. Thereby, the Hon'ble Supreme Court took 53% for developmental charges. The said judgment has no application to the facts and circumstances of the present case.
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MFA No.7537 of 201516. Another judgment relied upon by the learned counsel for the appellant in the case of Pitambar Hemlal Badgujar (dead) by LRs and others vs. Sub Divisional Officer, Dhule and another reported in AIR 1996 SC 3117 is a case where no sale deeds were produced. Mere oral evidence of witnesses stating the market value cannot be relied upon for enhancement. The said judgment has no application to the facts and circumstances of the present case.
17. Yet another case relied upon by the learned counsel for the appellant in the case of Chandrashekar (D) by LRs and others vs. Land Acquisition Officer and Anr Basappa (D) by LRs and others vs. Special Land Acquisition Officer, Gulbarga and another reported in AIR 2012 SC 446 is a case where the Hon'ble Supreme Court held that quantum of deduction should be divided into two components viz., (i) for keeping aside area/space for providing infrastructure, (ii) for developmental expenditure, should cumulatively be up to 67%, which is the upper benchmark. The said judgment has no application to the facts and circumstances of the present case.
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MFA No.7537 of 201518. At this stage, it is relevant to consider the dictum of the Hon'ble Supreme Court in the case of Maya Devi v. State of Haryana reported in (2018) 2 SCC 474, is a case where small extent of land acquired and has developed for construction and were housed. It is appropriate to apply 1/3rd deduction and at paragraphs-6 to 11, it is held as under:
"6. So far as the contention regarding deduction at the rate of 67.5% for development charges is concerned, the exemplar relied upon by the High Court dated 26-5-1983 was for a small extent of land of 9 marlas which was sold for Rs 25,500. The transaction relates to the period which is about 56 months prior to the notification under Section 4 of the Act and the High Court adopted the rate of escalation at 10% and calculated the value at Rs 6,64,887. Considering the fact that the acquired land required for development and that the property covered under the exemplar was for a small extent of 9 marlas of land, the High Court applied maximum deduction at 67.5% and calculated the compensation to be paid at Rs 2,19,413 per acre.
7. In Haryana State Agricultural Market Board v. Krishan Kumar [Haryana State Agricultural Market Board v. Krishan Kumar, (2011) 15 SCC 297 :
- 12 -MFA No.7537 of 2015
(2014) 2 SCC (Civ) 461] , this Court has held that :
(SCC p. 299, para 10) "10. ... if the value of small developed plots should be the basis, appropriate deductions will have to be made therefrom towards the area to be used for roads, drains, and common facilities like park, open space, etc. Thereafter, further deduction will have to be made towards the cost of development, that is, the cost of levelling the land, cost of laying roads and drains, and the cost of drawing electrical, water and sewer lines."
(emphasis supplied)
8. Observing that the development charges for development of particular plot of land could range from 20% to 75%, in Lal Chand v. Union of India [Lal Chand v. Union of India, (2009) 15 SCC 769 :
(2009) 5 SCC (Civ) 766] SCC in paras 13, 14 and 20, this Court held as under : (SCC pp. 779-80) "13. The percentage of "deduction for development" to be made to arrive at the market value of large tracts of undeveloped agricultural land (with potential for development), with reference
- 13 -MFA No.7537 of 2015
to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated.
14. The "deduction for development"
consists of two components. The first is with reference to the area required to be utilised for developmental works and the second is the cost of the development works.
***
20. Therefore the deduction for the "development factor" to be made with reference to the price of a small plot in a developed layout, to arrive at the cost of undeveloped land, will be for more than the deduction with reference to the price of a small plot in an unauthorised private layout or an industrial layout. It is also well known that the development cost incurred by statutory agencies is much higher than the cost incurred by private developers, having regard to higher overheads and expenditure."
(emphasis supplied)
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MFA No.7537 of 2015The same principle was reiterated in A.P. Housing Board v. K. Manohar Reddy [A.P. Housing Board v. K. Manohar Reddy, (2010) 12 SCC 707 : (2010) 4 SCC (Civ) 711] .
9. In a catena of judgments, this Court has taken the view to apply one-third deduction towards the development charges. After referring to various case laws on the question of deduction for development, in Kapil Mehra v. Union of India [Kapil Mehra v. Union of India, (2015) 2 SCC 262 : (2015) 2 SCC (Civ) 76] this Court held as under : (SCC pp. 280-81, paras 35-38) "35. Reiterating the rule of one-third deduction towards development, in Sabhia Mohammed Yusuf Abdul Hamid Mulla v. LAO [Sabhia Mohammed Yusuf Abdul Hamid Mulla v. LAO, (2012) 7 SCC 595 : (2012) 4 SCC (Civ) 290] , this Court in para 19 held as under : (SCC pp. 606-07) '19. In fixing the market value of the acquired land, which is undeveloped or underdeveloped, the courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made
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MFA No.7537 of 2015for implementation of the public purpose for which land is acquired. In Kasturi v. State of Haryana [Kasturi v. State of Haryana, (2003) 1 SCC 354] the Court held : (SCC pp. 359- 60, para 7) "7. ... It is well settled that in respect of agricultural land or undeveloped land which has potential value for housing or commercial purposes, normally 1/3rd amount of compensation has to be deducted out of the amount of compensation payable on the acquired land subject to certain variations depending on its nature, location, extent of expenditure involved for development and the area required for road and other civic amenities to develop the land so as to make the plots for residential or commercial purposes. A land may be plain or uneven, the soil of the land may be soft or hard bearing on the foundation for the purpose of making construction; maybe the land is situated in the midst of a
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MFA No.7537 of 2015developed area all around but that land may have a hillock or may be low-lying or may be having deep ditches. So the amount of expenses that may be incurred in developing the area also varies. ... There may be various factual factors which may have to be taken into consideration while applying the cut in payment of compensation towards developmental charges, maybe in some cases it is more than 1/3rd and in some cases less than 1/3rd.
It must be remembered that there is difference between a developed area and an area having potential value, which is yet to be developed. The fact that an area is developed or adjacent to a developed area will not ipso facto make every land situated in the area also developed to be valued as a building site or plot, particularly when vast tracts are acquired, as in this case, for development purpose."
The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v. State of
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MFA No.7537 of 2015U.P. [Tejumal Bhojwani v. State of U.P., (2003) 10 SCC 525] , V. Hanumantha Reddy v. LAO [V. Hanumantha Reddy v.
LAO, (2003) 12 SCC 642] , H.P. Housing Board v. Bharat S. Negi [H.P. Housing Board v. Bharat S. Negi, (2004) 2 SCC 184] and Kiran Tandon v. Allahabad Dev. Authority [Kiran Tandon v. Allahabad Dev. Authority, (2004) 10 SCC 745] .' (emphasis in original)
36. While determining the market value of the acquired land, normally one-third deduction i.e. 33⅓% towards development charges is allowed. One- third deduction towards development was allowed in LAO v. A. Mangala Gowri [LAO v. A. Mangala Gowri, (1991) 4 SCC 218] , Gulzara Singh v. State of Punjab [Gulzara Singh v. State of Punjab, (1993) 4 SCC 245] , Santosh Kumari v. State of Haryana [Santosh Kumari v. State of Haryana, (1996) 10 SCC 631] , LAO v.
Azam Saheb [LAO v. Azam Saheb, (2009) 4 SCC 395 : (2009) 2 SCC (Civ) 182] , A.P. Housing Board v. K. Manohar Reddy [A.P. Housing Board v. K. Manohar Reddy, (2010) 12 SCC 707 : (2010) 4
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MFA No.7537 of 2015SCC (Civ) 711] , Ashrafi v. State of Haryana [Ashrafi v. State of Haryana, (2013) 5 SCC 527 : (2013) 3 SCC (Civ) 169] and Kashmir Singh v. State of Haryana [Kashmir Singh v. State of Haryana, (2014) 2 SCC 165 : (2014) 1 SCC (Civ) 672] .
37. Depending on the nature and location of the acquired land, extent of land required to be set apart and expenses involved for development, 30% to 50% deduction towards development was allowed in Haryana State Agricultural Market Board v. Krishan Kumar [Haryana State Agricultural Market Board v.
Krishan Kumar, (2011) 15 SCC 297 :
(2014) 2 SCC (Civ) 461] , LAO v. Malla Atchinaidu [LAO v. Malla Atchinaidu, (2006) 12 SCC 87] , Mummidi Apparao v.
Nagarjuna Fertilizers & Chemicals Ltd.
[Mummidi Apparao v. Nagarjuna Fertilizers & Chemicals Ltd., (2009) 4 SCC 402 : (2009) 2 SCC (Civ) 190] and Lal Chand v. Union of India [Lal Chand v. Union of India, (2009) 15 SCC 769 :
(2009) 5 SCC (Civ) 766] .
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MFA No.7537 of 201538. In few other cases, deduction of more than 50% was upheld. In the facts and circumstances of the case in Basavva v. LAO [Basavva v. LAO, (1996) 9 SCC 640] , this Court upheld the deduction of 65%. In Kanta Devi v. State of Haryana [Kanta Devi v. State of Haryana, (2008) 15 SCC 201] , deduction of 60% towards development charges was held to be legal. This Court in Subh Ram v. State of Haryana [Subh Ram v. State of Haryana, (2010) 1 SCC 444 : (2010) 1 SCC (Civ) 138] held that deduction of 67% amount was not improper. Similarly, in Chandrashekar v. LAO [Chandrashekar v.
LAO, (2012) 1 SCC 390 : (2012) 1 SCC
(Civ) 259] deduction of 70% was
upheld."
10. In Subh Ram v. State of Haryana [Subh Ram v. State of Haryana, (2010) 1 SCC 444 : (2010) 1 SCC (Civ) 138] the deduction of 67% was held to be not improper. In the case in hand, the High Court applied deduction at 67.5% which in our considered view is on the higher side. In the facts and circumstances of the present case and considering that the exemplar dated 26-5-1983 was for a small extent of land and that the acquired land has to be developed for
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MFA No.7537 of 2015construction of warehouse, we deem it appropriate to apply one-third deduction and deducting one-third that is Rs 2,21,629 from Rs 6,64,887, the compensation to be awarded is arrived at Rs 4,43,258 per acre.
11. The impugned judgment is modified and the appellant claimants are entitled to get enhanced compensation of Rs 4,43,258 payable with all statutory benefits. The appeals are partly allowed. It is made clear that the appellant claimants shall not be entitled to claim interest for the period of delay in preferring the appeals from the review.
19. Further, the Hon'ble Supreme Court, in the case of Kapil Mehra v. Union of India reported in (2015) 2 SCC 262 while considering the provisions of Sections 28 and 34 of the Land Acquisition Act, 1894, held that considering the extent of land acquired and development in and around acquired land, 35% deduction for first component and further deduction of 25% under second component was allowed. At paragraph 29 to 41 of the said judgment, it is held as under:
29. The High Court has deducted 40% from the average price to equalise the factor of the market value of a small plot of land as compared to large
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area of land acquired and the figure works out to Rs. 22,460.25p. The High Court has also deducted one- third towards development cost and determined the market value of the acquired land at Rs.14,974 per square yard.
30. The appellants contend that the rate of deduction as applied by the High Court was highly excessive as the acquired lands are situated in the area already developed and have all potential for development. It is submitted that the Court repeatedly held that in assessing the compensation payable in respect of lands which had the potential for housing or commercial purposes, normally 20% of the assessed value of the land is deducted, depending on the nature of the land, its location, extent of expenditure involved for development and the land required for roads and other civic amenities, etc. and while so, thumb rule of 33 1/3% or one-third cut on development cost cannot be used in a situation when the exact development cost has been established through evidence. The appellants rely upon the documents issued by Executive Engineer (Annexure P-5) to contend that the cost of development of Vasant Kunj is only Rs 330 per square yard.
31. Mr Amarendra Sharan, learned Senior Counsel appearing for the respondents contended that in
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MFA No.7537 of 2015forming a layout by the Delhi Development Authority or any statutory authority, 40% of the land area is to be deducted for formation of roads, drains, parks and other civic amenities and further 35% is to be deducted towards development cost for forming the layout, levelling the road, construction of drainage and erection of electricity lines, etc. It was submitted that deduction for development on both the components worked out to 70-75% and the High Court was not justified in making standard deduction of one-third. It was further submitted that if a suitable deduction is made, the compensation awarded by the High Court seems to be excessive and prayer for suitable reduction of the award is made.
32. While making one-third deduction towards development cost, the learned Single Judge did not keep in view the two essential components of deduction for development. Deduction for development consists of two components : firstly, appropriate deduction to be made towards the area required to be utilised for roads, drains and common facilities like parks, etc.; secondly, further deduction to be made towards the cost of development, that is cost of levelling the land, cost of laying roads and drains, erection of electrical poles and water lines, etc. For deduction of development towards land and
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MFA No.7537 of 2015development charges, the nature of development, conditions and nature of the land, the land required to be set apart under the Building Rules for roads, sewerage, electricity, parks, water supply, etc. and other relevant circumstances involved are required to be considered.
33. In Haryana State Agricultural Market Board v. Krishan Kumar [(2011) 15 SCC 297 : (2014) 2 SCC (Civ) 461] , it was held as under : (SCC p. 299, para
10) "10. It is now well settled that if the value of small developed plots should be the basis, appropriate deductions will have to be made therefrom towards the area to be used for roads, drains and common facilities like park, open space, etc. Thereafter, further deduction will have to be made towards the cost of development, that is, the cost of levelling the land, cost of laying roads and drains, and the cost of drawing electrical, water and sewer lines."
34. Consistent view taken by this Court is that one- third deduction is made towards the area to be used for roads, drains, and other facilities, subject to certain variations depending upon its nature,
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MFA No.7537 of 2015location, extent and development around the area. Further, appropriate deduction needs to be made for development cost, laying roads, erection of electricity lines depending upon the location of the acquired land and the development that has taken place around the area.
35. Reiterating the rule of one-third deduction towards development, in Sabhia Mohammed Yusuf Abdul Hamid Mulla v. Land Acquisition Officer [(2012) 7 SCC 595 : (2012) 4 SCC (Civ) 290] , this Court in para 19 held as under : (SCC pp. 606-07) "19. In fixing the market value of the acquired land, which is undeveloped or underdeveloped, the courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made for implementation of the public purpose for which land is acquired. In Kasturi v. State of Haryana [(2003) 1 SCC 354] the Court held :
(SCC pp. 359-60, para 7) '7. ... It is well settled that in respect of agricultural land or undeveloped land which has potential value for housing or commercial purposes, normally 1/3rd amount of
- 25 -MFA No.7537 of 2015
compensation has to be deducted out of the amount of compensation payable on the acquired land subject to certain variations depending on its nature, location, extent of expenditure involved for development and the area required for road and other civic amenities to develop the land so as to make the plots for residential or commercial purposes. A land may be plain or uneven, the soil of the land may be soft or hard bearing on the foundation for the purpose of making construction; maybe the land is situated in the midst of a developed area all around but that land may have a hillock or may be low- lying or may be having deep ditches. So the amount of expenses that may be incurred in developing the area also varies. A claimant who claims that his land is fully developed and nothing more is required to be done for developmental purposes, must show on the basis of evidence that it is such a land and it is so located. In the absence of such evidence, merely saying that the area adjoining his land is a developed area, is not enough, particularly when the extent of the acquired land is large and even if a small portion of the land is abutting the main road
- 26 -MFA No.7537 of 2015
in the developed area, does not give the land the character or a developed area. In 84 acres of land acquired even if one portion on one side abuts the main road, the remaining large area where planned development is required, needs laying of internal roads, drainage, sewer, water, electricity lines, providing civic amenities, etc. However, in cases of some land where there are certain advantages by virtue of the developed area around, it may help in reducing the percentage of cut to be applied, as the developmental charges required may be less on that account. There may be various factual factors which may have to be taken into consideration while applying the cut in payment of compensation towards developmental charges, maybe in some cases it is more than 1/3rd and in some cases less than 1/3rd. It must be remembered that there is difference between a developed area and an area having potential value, which is yet to be developed. The fact that an area is developed or adjacent to a developed area will not ipso facto make every land situated in the area also developed to be valued as a building site or plot, particularly when vast
- 27 -MFA No.7537 of 2015
tracts are acquired, as in this case, for development purpose.' The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v. State of U.P. [(2003) 10 SCC 525] , V. Hanumantha Reddy v. Land Acquisition Officer [(2003) 12 SCC 642] , H.P. Housing Board v. Bharat S. Negi [(2004) 2 SCC 184] and Kiran Tandon v. Allahabad Development Authority [(2004) 10 SCC 745] ."
(emphasis in original)
36. While determining the market value of the acquired land, normally one-third deduction i.e. 33 1/3% towards development charges is allowed. One-
third deduction towards development was allowed in Tehsildar (LA) v. A. Mangala Gowri [(1991) 4 SCC 218] , Gulzara Singh v. State of Punjab [(1993) 4 SCC 245 : (1993) 3 SCR 645] , Santosh Kumari v. State of Haryana [(1996) 10 SCC 631] , Revenue Divl. Officer and LAO v. Sk. Azam Saheb [(2009) 4 SCC 395 : (2009) 2 SCC (Civ) 182] , A.P. Housing Board v. K. Manohar Reddy [(2010) 12 SCC 707 :
(2010) 4 SCC (Civ) 711] , Ashrafi v. State of Haryana [(2013) 5 SCC 527 : (2013) 3 SCC (Civ) 169] and Kashmir Singh v. State of Haryana [(2014) 2 SCC 165 : (2014) 1 SCC (Civ) 672] .
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MFA No.7537 of 201537. Depending on the nature and location of the acquired land, extent of land required to be set apart and expenses involved for development, 30% to 50% deduction towards development was allowed in Haryana State Agricultural Market Board v. Krishan Kumar [(2011) 15 SCC 297 : (2014) 2 SCC (Civ) 461] , Director, Land Acquisition v. Malla Atchinaidu [(2006) 12 SCC 87 : AIR 2007 SC 740] , Mummidi Apparao v. Nagarjuna Fertilizers & Chemicals Ltd. [(2009) 4 SCC 402 : (2009) 2 SCC (Civ) 190 : AIR 2009 SC 1506] and Lal Chand v. Union of India [Lal Chand v. Union of India, (2009) 15 SCC 769 : (2009) 5 SCC (Civ) 766] .
38. In few other cases, deduction of more than 50% was upheld. In the facts and circumstances of the case in Basavva v. Land Acquisition Officer [(1996) 9 SCC 640] , this Court upheld the deduction of 65%. In Kanta Devi v. State of Haryana [(2008) 15 SCC 201] , deduction of 60% towards development charges was held to be legal. This Court in Subh Ram v. State of Haryana [(2010) 1 SCC 444 : (2010) 1 SCC (Civ) 138] , held that deduction of 67% amount was not improper. Similarly, in Chandrashekar v. Land Acquisition Officer [(2012) 1 SCC 390 : (2012) 1 SCC (Civ) 259] , deduction of 70% was upheld.
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MFA No.7537 of 201539. We have referred to various decisions of this Court on deduction towards development to stress upon the point that deduction towards development depends upon the nature and location of the acquired land. The deduction includes components of land required to be set apart under the building rules for roads, sewage, electricity, parks and other common facilities and also deduction towards development charges like laying of roads, construction of sewerage.
40. Rule of one-third deduction towards development appears to be the general rule. But so far as the Delhi Development Authority is concerned, or similar statutory authorities, where well-planned layouts are put in place, larger land area may be utilised for forming layout, roads, parks and other common amenities. Percentage of deduction for development of land to be made in DDA or similar statutory authorities with reference to various types of layout was succinctly considered by this Court in Lal Chand v. Union of India [Lal Chand v. Union of India, (2009) 15 SCC 769 : (2009) 5 SCC (Civ) 766] and observing that the deduction towards the development range from 20% to 75% of the price of the plots, in paras 13 to 22, this Court held as under
: (SCC pp. 779-80)
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"13. The percentage of 'deduction for development' to be made to arrive at the market value of large tracts of undeveloped agricultural land (with potential for development), with reference to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated.
14. The 'deduction for development' consists of two components. The first is with reference to the area required to be utilised for developmental works and the second is the cost of the development works. For example, if a residential layout is formed by DDA or similar statutory authority, it may utilise around 40% of the land area in the layout, for roads, drains, parks, playgrounds and civic amenities (community facilities), etc.
15. The development authority will also incur considerable expenditure for development of undeveloped land into a developed layout, which includes the cost of levelling the land, cost of providing roads, underground drainage and sewage facilities, laying water
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lines, electricity lines and developing parks and civic amenities, which would be about 35% of the value of the developed plot. The two factors taken together would be the 'deduction for development' and can account for as much as 75% of the cost of the developed plot.
16. On the other hand, if the residential plot is in an unauthorised private residential layout, the percentage of 'deduction for development' may be far less. This is because in an unauthorised layout, usually no land will be set apart for parks, playgrounds and community facilities. Even if any land is set apart, it is likely to be minimal. The roads and drains will also be narrower, just adequate for movement of vehicles. The amount spent on development work would also be comparatively less and minimal. Thus the deduction on account of the two factors in respect of plots in unauthorised layouts, would be only about 20% plus 20% in all 40% as against 75% in regard to DDA plots.
17. The 'deduction for development' with reference to prices of plots in authorised private residential layouts may range between
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50% to 65% depending upon the standards and quality of the layout.
18. The position with reference to industrial layouts will be different. As the industrial plots will be large (say of the size of one or two acres or more as contrasted with the size of residential plots measuring 100 sq m to 200 sq m), and as there will be very limited civic amenities and no playgrounds, the area to be set apart for development (for roads, parks, playgrounds and civic amenities) will be far less; and the cost to be incurred for development will also be marginally less, with the result the deduction to be made from the cost of an industrial plot may range only between 45% to 55% as contrasted from 65% to 75% for residential plots.
19. If the acquired land is in a semi-developed urban area, and not an undeveloped rural area, then the deduction for development may be as much less, that is, as little as 25% to 40%, as some basic infrastructure will already be available. (Note : The percentages mentioned above are tentative standards and subject to proof to the contrary.)
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20. Therefore the deduction for the 'development factor' to be made with reference to the price of a small plot in a developed layout, to arrive at the cost of undeveloped land, will be far more than the deduction with reference to the price of a small plot in an unauthorised private layout or an industrial layout. It is also well known that the development cost incurred by statutory agencies is much higher than the cost incurred by private developers, having regard to higher overheads and expenditure.
21. Even among the layouts formed by DDA, the percentage of land utilised for roads, civic amenities, parks and playgrounds may vary with reference to the nature of layout-- whether it is residential, residential-cum- commercial or industrial; and even among residential layouts, the percentage will differ having regard to the size of the plots, width of the roads, extent of community facilities, parks and playgrounds provided.
22. Some of the layouts formed by the statutory development authorities may have large areas earmarked for water/sewage treatment plants, water tanks, electrical
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substations, etc. in addition to the usual areas earmarked for roads, drains, parks, playgrounds and community/civic amenities. The purpose of the aforesaid examples is only to show that the 'deduction for development' factor is a variable percentage and the range of percentage itself being very wide from 20% to 75%."
Lal Chand case [Lal Chand v. Union of India, (2009) 15 SCC 769 : (2009) 5 SCC (Civ) 766] deals with acquisition of lands by DDA under the Rohini Residential Housing Scheme where 40% deduction was made towards the land area to be utilised for laying down of roads, drains, etc. Further deduction of 35% of the value of the developed plot towards cost of levelling the land, cost of providing roads, underground drainage, laying down water lines, electricity lines was made.
41. In the instant case, having regard to the extent of the land acquired and the development in and around Vasant Kunj area, in our view, it is appropriate to make 35% deduction towards utilisation of the land area in the layout for roads, drains, parks, playgrounds and civic amenities. So far as the expenditure for development of the large
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MFA No.7537 of 2015extent of land into a developed area by construction of proper roads, underground drainage, sewerage and erection of electricity lines, it is appropriate to make further deduction of 25%, though 35% of the value was deducted in Lal Chand case [Lal Chand v. Union of India, (2009) 15 SCC 769 : (2009) 5 SCC (Civ) 766] towards development charges. Two components taken together, the total deduction to be made would be 60%. 60% of Rs 35,937 works out to Rs 21,562 and deducting the same, the value of the land would be Rs 14,375 per square yard. What was awarded by the High Court was Rs 14,974 per square yard. Since SLP (Civil) No. 15272 of 2011 filed by DDA was dismissed by this Court on 12-5-2011 [DDA v. Kapil Mehra, (2015) 2 SCC 289] and the sale has become final as against the appellants, we are not inclined to further reduce the value of the acquired land from Rs 14,974 per square yard as determined by the High Court and the compensation awarded by the High Court at Rs 14,974 per square yard is maintained.
20. Admittedly, in the present case, the Reference Court has not applied the deductions stated by the Hon'ble Supreme Court under Ex.P.6. It is a converted land. The Reference Court has to deduct some percentage, at least 30%
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MFA No.7537 of 2015developmental charges or 1/3rd as stated by the Hon'ble Supreme Court. The same is not done. Therefore, said exercise has to be done by the Reference Court after reconsidering the material already available on record.
21. The Reference Court shall decide the matter keeping in view the dictum of the Hon'ble Supreme Court in the case of U.P. Awas Evam Vikash Parishad vs. Asha Ram (D) Thr.
Lrs and Others reported in 2021 SCC Online SC 250, wherein at paragraph-30, it is held as under:
"30. The potentiality of the acquired land is one of the primary factors to be taken into consideration to determine the market value of the land. Potentiality refers to the capacity or possibility for changing or developing into the state of actuality. The market value of a property has to be determined while having due regard to its existing conditions with all the existing advantages and its potential possibility when led out in its most advantageous manner. The question whether a land has potential value or not primarily depends upon its condition, situation, use to which it is put or its reasonable capability of being put and also its proximity to residential, commercial or industrial areas/institutions. The existing
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amenities like water, electricity as well as the possibility of their further extension, for instance whether near about town is developing or has prospects of development have to be taken into consideration. It also depends upon the connectivity and the overall development of the area."
22. In view of the above, the matter requires reconsideration based on the evidence of P.W.1 and the material documents Exs.P.1 to P.15. It is made clear that the matter is remanded only for the purpose of reconsideration of the oral and documentary evidence on record and to award just compensation in accordance with law. Accordingly, the point raised for consideration is answered.
23. In view of the above, we pass the following:
ORDER
(i) The Miscellaneous First Appeal is allowed.
(ii) The impugned judgment and award passed by the Reference Court is hereby set-aside.
(iii) The matter is remanded to the Reference Court to reconsider the evidence of P.W.1 and Exs.P.1 to 15 and award just compensation,
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strictly in accordance with law as per the dictums of the Hon'ble Supreme Court stated supra and pass Orders within a period of three months from the date of receipt of certified copy of this Judgment.
(iv) Parties to appear before the Reference Court on 20.10.2022.
(v) The appellant is entitled for refund of Court fee as contemplated under Section 64 of the Karnataka Court Fee and Suits Valuation Act.
Sd/-
JUDGE Sd/-
JUDGE kcm