Madhya Pradesh High Court
State Of M.P. And Anr. vs Buddhasen on 11 July, 2005
Equivalent citations: 2005(4)MPHT293
Author: Dipak Misra
Bench: Dipak Misra
JUDGMENT Dipak Misra, J.
1. In this batch of First Appeals preferred under Section 54 of the Land Acquisition Act, 1894 (for brevity 'the Act'), the State of M.P. and its functionaries have called in question the defensibility of the award passed by learned III Additional District Judge, Rewa in References. In number of reference cases, the appeals being inter-linked and inter-connected and relatable to said notification, they were heard analogously and are disposed of by this common judgment.
2. The facts which are requisite to be adumbrated for the purpose of disposal of the appeals are-- a notification was issued under Section 4 and Section 17(1) of the Act on 17-10-1982, published in M.P. Rajpatra. The notification was for acquisition of total area of land admeasuring 134.913 hectares situate in Village Babupur, Nipania, Dohi and Khobhar in Tehsil Huzur, District Rewa for establishment of an 'industrial area' which was treated to be public purpose. After issue of the said notification, 'a declaration under Section 6 of the Act was published in M.P. Rajpatra on 31-12-1982. The requisite notice under Section 9 of the Act was issued to the persons interested to submit their separate claims for compensation. The possession of the land so acquired was taken over by the Land Acquisition Officer on 9-6-1983.
3. The concerned Land Acquisition Officer, Rewa, after holding enquiry passed the award under Section 11 of the Act granting the compensation. The land owners were dissatisfied with the award passed by the Collector and accordingly, filed applications under Section 18 of the Act praying for referring the matter to the Civil Court.
4. Before the Reference Court, it was put forth by the land owners that the lands are situate within the township of Rewa; that the lands are in proximity of the National Highway No. 7; that number of factories are situated around the acquired land and hence the potential value of the land is extremely high; and that they are entitled to Rs. 90,000/- per acre.
5. The State Government combated the claims put forth by the land owners on the foundation that the land in question was agricultural land; that they are situated quite away from the National Highway; that the land value has to be computed on the date of acquisition and that by that time there was no much development; and that the amount awarded by the Land Acquisition Officer is absolutely correct and sound.
6. The Reference Court framed as many as four issues but basically the cavil hinged on two fundamental aspects whether the Land Acquisition Officer has granted a proper compensation and if not, what compensation the land owners were entitled to. Before the Reference Court, the land owners adduced evidence about the proximity of the land, potential value and placed reliance on certain documents whereby compensation had been granted on acreage basis fixing the price per acre at Rs. 25,000/-. That apart, the Reference Court granted 12% interest per annum from 17-10-1982 from the date of notification till date of faking over possession, i.e., 9-6-1983 and thereafter at the rate of 9% per annum. The Reference Court also granted 30% solatium. The Reference Court placed reliance on number of Apex Court judgments and the judgment rendered by Division Bench of this Court in F.A. No. 18 of 1990 (State of M.P. and Anr. v. Ramsunder) and connected appeals.
7. Before I advert to the factual scenario and the judgment rendered by this Court in the previous appeals, it is thought appropriate to refer to certain decisions in the field.
In the case of Ahmedabad Municipal Corporation v. Shardaben, , the Apex Court expressed the view that the burden is always on the claimants to prove by adducing reliable evidence that the compensation offered by the Land Acquisition Officer is inadequate and the lands are capable of fetching higher market value. It is the duty of the Court to closely scrutinize the evidence, apply the test of prudent and willing purchaser, i.e., whether he would be willing to purchase in open and normal market conditions of the acquired lands and then determine just and adequate compensation.
8. In the case of Hookiyar Singh v. Special Land Acquisition Officer, , it was held that the Court must not indulge in the feats of imagination but, sit in the armchair of a prudent purchaser in open market and to put a question to itself whether as a prudent purchaser it would offer the same price in the open market as is to be determined ? This should be the acid test.
9. In this contest it is worthwhile to note that in the case of State of U.P. v. Ram Kumari Devi, , the Apex Court ruled that when 13.75 acres of land was offered for sale in an open market, no prudent man would have credulity to purchase that land on square foot basis.
10. In the case of Gujarat Industrial Development Corporation v. Narottambhai Morarbhai, , the Apex Court observed that no prudent purchaser would purchase large extent of land on the basis of sale of a small extent of land in the open market. The crucial test the Court should always adopt in determining market value in the matter of compulsory acquisition would be to eschew figment of imagination and consider the price likely to be offered by the willing vendee.
11. In the case of G. Narayan Rao v. Land Acquisition Officer, , it was ruled that it must be established, as a fact, that the potential purpose does exist on the date of notification, the prevailing conditions in the market, the existence of the construction of building activities in the neighbourhood and that other lands in the neighbourhood possessed similar conditions.
12. In the case of Kanwar Singh v. Union of India, , it has been held that the amount of compensation for the land acquired depends on the market value of land on the date immediately before the notification under Section 4 of the Act or when same land is acquired and offer of compensation is made through an award. The market value has to be determined on the basis of evidence produced before the Court. It was further held that the consideration in terms of price received for land under bona fide transactions on the date or preceding the date of notification issued under Section 4 of the Act generally shows the market value of the acquired land and the market value of the acquired is land to be assessed in terms of those transactions. It is also noteworthy to state here that in the case of Hansali Walichand v. State of Maharashtra, , Their Lordships held that the land having future potential on account of its location can not be ignored and realized potential is not the sole pivotal factor.
13. In this regard it is noteworthy to refer to the decision rendered in the case of Land Acquisition Officer, Revenue Divisional Officer v. L. Kamalamma, , wherein it has been held by Their Lordships that when no sales of comparable land were available where large chunks of land had been sold, even land transactions in respect of small extent of land could be taken note of as indicating the price that it may fetch in respect of large tracts of land by making appropriate deductions such as for development of the land by providing enough space for roads, sewers, drains, expenses involved in formation of a layout, lump sum payment as also the waiting period required for selling the sits that would be formed.
14. In this case we may also refer to the decision rendered in the case of Union of India v. Mangat (Dead) by L.Rs. and Ors., , wherein Their Lordships held in Para 8 as under :--
"8. Even if one was to disregard the quality of the land, i.e., irrigated, semi-irrigated or barren, one can not be oblivious of the fact that the market value of land which abuts on the national highway would be much more than the land which is away from it. A price of the land which is landlocked and which is farther away from the national highway can not be the same as that which abuts on the national highway. The formula which had been applied by the High Court, however, seems to indicate that the price of the entire land irrespective of the location of different parcels of land is the same. The formula which was applied by the learned Single Judge of the High Court is obviously incorrect."
15. In this regard we may profitable refer to the decision rendered in the case of Kasturi v. State of Haryana, , wherein it was held when there is difference between a developed area and an area having potential value though yet to be developed deduction of 20% towards development charges as against the normal 1/3rd, from the amount of compensation was treated to be justified in the facts and circumstance of the case.
16. In this regard it is worth referring to the decision rendered in the case of Land Acquisition Officer v. B. Vijender Reddy and Ors., . In the aforesaid case a two Judge Bench of the Apex Court held as under:--
"13. ... It is true, in the fixation of rate of compensation under the Land Acquisition Act, there is always some element of guess-work. But that has to be based on some foundation. It must spring from the totality of evidence, the pattern of rate, the pattern of escalation and escalation of price in the years preceding and succeeding Section 4 notification etc. In other words, the guess-work could reasonably be inferable from it. It is always possible to assess the rate within this realm. In the present cases, we find there are three exemplars, i.e., Exhibits A-1 and A-2 which are three years preceding the date of notification and Exhibit A-3 which is of the same point of time when Section 4 notification was issued."
17. In the case of Ram Sunder (supra), this Court referred to the various submissions and eventually in Paragraphs 7 arid 8 held as under :--
"7. It is not in dispute that the lands acquired are agricultural lands situated in different villages in Tehsil Huzur within the limits of Municipal Corporation, Rewa. The lands were acquired for the establishment of industrial area. The land has got potential value as that of an urban land. However, for determining the market value of land on the crucial date of publication of notification under Section 4(1) some mental exercise considering the relevant factors, i.e., speculative advantage, potentialities, size, shape and frontage, as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day, has to be done. It has also to be assumed that the vendor is willing to sell the land at a reasonable price. In doing so by the instances method, the Court has to correlate the market value reflected in the most comparable instances which provide the index of market value. Only genuine instances have to be taken into account. Sometimes instances are rigged up in anticipation of acquisition of land. Even post notification instances can be taken into account, if they are genuine, proximate and the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. The most comparable instances out of the genuine instances have to be identified on the consideration, (i) proximity from time angle, and (ii) proximity from situation angle. Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxta-position. A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors evaluated in terms of price variation as a prudent purchaser would do. The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors [See the decision of the Supreme Court in Chimanlal's case, (supra)].
8. In view of the recent decision of the Supreme Court in case of Municipal Committee, Bhatinda v. Balwant Singh (supra), we are of the view that though the lands are agricultural lands and are situated within the limits of Municipal Corporation and the built up area, therefore, the lands certainly possessed of potential value for residential or commercial purposes. The reference Court on the evidence adduced also found that the land has obtained potentiality for being put to residential, commercial or industrial uses and is within the urban area of the town. In such situation, though number of sales are not available, but Ex. P-3 is a bona fide sale of a big area purchased by a corporate body, which reflects the market value at the rate of Rs. 40,000/- per acre. However, there is no evidence that whether the land so sold vide Ex. P-3 is in proximate with situation angle. Likewise, no evidence has been led by the land owners that the lands so acquired have the same potentiality as that of the land purchased by Ex. P-3. But, certainly Ex. P-3 reflects the near about market price as on the day in the vicinity. The price for determining the compensation should be fair and reasonable. Therefore, taking into consideration Ex. P-3 and the oral evidence of P.W. 1 and P.W. 2, giving an allowance of various factor, such as, loss of lands required out of the acquired land to be used for roads, drains, parks, the expenditure involved in forming the lay out, the reasonable market value of the land should be determined at Rs. 30,000.00 per acre. On that each of the land owners would be entitled in respect of his land 30 per centum solatium and interest at the rate of 9% per annum under Section 28 of the Act on the excess amount as awarded by us from the date on which the possession of the land was taken over to the payment of such excess. Besides, twelve per centum under Section 23(1A) of the Act which is statutorily provided and was not awarded either by the L.A.O. or by the Reference Court. Though an objection was raised by the learned Dy. Advocate General that in the absence of cross-objection or cross-appeal this amount can not be awarded, but, in view of the fact that it is the mandate of law under Section 23(1A) to award in addition to market value of the land an amount calculated at the rate of twelve per centum per annum on the market value for the period commencing on and from the date of publication of the notification under Section 4(1) to the date of the award passed by L.A.O. or the date of taking over possession of the land, whichever is earlier, therefore, there is no discretion left with this Court but to award the same amount by supplying the omission in the award passed by the Reference Court."
18. It is urged by Shri T.K. Modh, learned Deputy Advocate General appearing for the State that the Reference Court has grossly erred by granting Rs. 25,000/- per acre. Though the land in question is quite away from the land which was the subject- matter of issue in the case of Ram Sunder (supra) but the learned Trial Judge did not appreciate the said facet in proper perspective. It is contended by him that the evidence adduced by the land owners is scanty and sketchy as far as the potential value of the land is concerned and hence the same should have been ignored. It is propounded by him that the Reference Court should not have applied the concept of guess work in such manner by which a serious prejudice was caused to the State Government in determination of the valuation.
19. Learned Counsel for the respondents in each case has contended that the Court below has rightly passed the award inasmuch as there is some distance between the lands involved in the case of Ram Sunder (supra) and in the case at hand. The reference before the Trial Court, submits the learned Counsel, can not be found faulty and erroneous and there is no perversity of approach. It is put forth by him that this Court while granting compensation at Rs. 30,000/- per acre has also taken into consideration the concept of expenditure involved in forming the lay out, the reasonable market value to be determined and certain other essential factors and when in the present case, the land owners have been able to establish all aspects, the Reference Court has applied the concept of guess work in proper perspective taking into consideration the contemporaneous factors and the delineation by this Court in respect of self same area. It is proponed by him that there can not be a dispute that the land is away from the land that was the subject matter in case of Ram Sunder and Ors. (supra) and keeping that in view, the valuation has been reduced and therefore, the same does not warrant interference by this Court. Learned Counsel submitted that the Court below has not granted interest on solatium but has granted interest on compensation. The solatium is to be granted as per law and, therefore, the same becomes entitlement of the respondents and should be granted as it is a statutory requirement.
20. In view of the aforesaid and taking into consideration that there has been distances from the land acquired in the case of Ram Sunder and the evidence brought on record, we are disposed to think the valuation per acre should be fixed at Rs. 20,000/- (Twenty thousand) inasmuch as the evidence has come with regard to proximity with the National Highway. The effect of potential value can not be totally marginalised. In our considered opinion, grant of compensation of Rs. 20,000/- per acre would be in tune with the various decisions of the Apex Court and the finding recorded in the case of Ram Sunder (supra). At this juncture, we would fruitfully refer to the decision rendered in the case of Sunder v. Union of India, , wherein it has been held as under :--
"26. We think it useful to quote the reasoning advanced by the Chief Justice S.S. Sandhawalia of the Division Bench of the Punjab and Haryana High Court in State of Haryana v. Kailashwati:--
'Once it is held as it inevitably must be that the solatium provided for under Section 23(2) of the Act forms an integral and statutory part of the compensation awarded to a landowner, then from the plain terms of Section 28 of the Act, it would be evident that the interest is payable on the compensation awarded and not merely on the market value of the land. Indeed the language of Section 28 does not even remotely refer to market value alone and in terms talks of compensation or the sum equivalent thereto. The interest awardable under Section 28 therefore would include within its ambit both the market value and the statutory solatium. It would be thus evident that the provisions of Section 28 in terms warrant and authorize the grant of interest on solatium as well.'
27. In our view the aforesaid statement of law is in accord with the sound principles of interpretation. Hence the person entitled to the compensation awarded is also entitled to get interest on the aggregate amount including solatium."
21. In view of the aforesaid, the claimants would be entitled to interest at the rate of 9% which is payable on solatium as well as the amount awarded under the other provisions of the Act. We may hasten to add, we have granted the aforesaid relief to the claimants as they would be entitled to the aforesaid as it is statutorily provided.
22. The First Appeals are allowed in the above terms, without any order as to costs.