Karnataka High Court
Union Of India vs Suryakanth And Ors on 15 October, 2020
Bench: G.Narendar, M.Nagaprasanna
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IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH
DATED THIS THE 15TH DAY OF OCTOBER 2020
PRESENT
THE HON'BLE MR. JUSTICE G.NARENDAR
AND
THE HON'BLE MR. JUSTICE M.NAGAPRASANNA
M.F.A. NO.201772 OF 2019 (LAC) C/W
M.F.A. NO.201006 OF 2019(LAC)
M.F.A. NO.201323 OF 2018(LAC)
M.F.A. CROB NO.200053 OF 2019
IN M.F.A. No. 201772 OF 2019 (LAC)
BETWEEN:
UNION OF INDIA
THROUGH DEPUTY CHIEF ENGINEER
CONSTRUCTION, SOUTH CENTRAL
RAILWAYS, SECUNDRABAD
(ANDHRA PRADESH) REPRESENTED BY
SENIOR SECTION ENGINEER,
CONSTRUCTION, S.C.RAILWAY, SECUNDRABAD.
... APPELLANT
(BY SRI MANVENDRA REDDY, ADV.)
AND:
1. SURYAKANTH
S/O KASHIRAYA
KORALLI, AGE: MAJOR,
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OCC: AGRICULTURE,
R/O PALLAPUR,
TQ. & DIST. KALABURAGI - 585 105.
2. THE STATE OF KARNATAKA
THROUGH THE ASST.
COMMISSIONER AND
LAND ACQUISITION OFFICER,
GULBARGA - 585 102.
3. THE DEPUTY COMMISSIONER
KALABURAGI - 585 102.
... RESPONDENTS
(BY SRI SHIVAKUMAR TENGLI, ADV. FOR R1;
SMT.ARCHANA P.TIWARI, AGA FOR R2 & R3).
THIS MFA IS FILED U/S 54(1) OF L.A. ACT, PRAYING
TO i) CALL FOR THE RECORDS IN LAC NO.388/2010 ON
THE FILE OF THE II ADDL. SENIOR CIVIL JUDGE,
KALABURAGI.
ii) ALLOW THE APPEAL BY SETTING ASIDE THE JUDGMENT
AND AWARD DATED 25.03.2019 PASSED BY LEARNED II
ADDL. SENIOR CIVIL JUDGE, KALABURAGI IN LAC
NO.388/2010, IN THE INTEREST OF JUSTICE AND EQUITY.
IN M.F.A. NO.201006 OF 2019(LAC)
BETWEEN:
UNION OF INDIA
THROUGH DEPUTY CHIEF ENGINEER
CONSTRUCTION, SOUTH CENTRAL
RAILWAYS, SECUNDRABAD
(ANDHRA PRADESH) REPRESENTED BY
SENIOR SECTION ENGINEER WORKS
CONSTRUCTION, S.C.RAILWAY, SECUNDRABAD.
... APPELLANT
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(BY SRI MANVENDRA REDDY, ADVOCATE)
AND:
1. BASAWARAJ
S/O SANGAPPA,
AGE: 48 YEARS,
OCC: AGRICULTURE,
R/O GULBARGA - 585 102.
2. THE STATE OF KARNATAKA
THROUGH THE ASST.
COMMISSIONER AND
L.A.O., KALABURAGI - 585 102.
3. THE DEPUTY COMMISSIONER
KALABURAGI - 585 102.
... RESPONDENTS
(BY SRI HARSHAVARDHAN R. MALIPATIL, ADV. FOR R1;
SMT.ARCHANA P.TIWARI, AGA FOR R2 & R3)
THIS MFA IS FILED U/S 54(1) OF L.A. ACT, PRAYING
TO i) CALL FOR THE RECORDS IN LAC NO.401/2010 ON
THE FILE OF THE I ADDL. SENIOR CIVIL JUDGE,
KALABURAGI.
ii) ALLOW THE APPEAL BY SETTING ASIDE THE JUDGMENT
AND AWARD DATED 20.12.2018 PASSED BY THE LEARNED
I ADDL. SENIOR CIVIL JUDGE, KALABURAGI IN LAC
NO.401/2010, IN THE INTEREST OF JUSTICE AND EQUITY.
IN M.F.A. No.201323 OF 2018 (LAC)
BETWEEN:
UNION OF INDIA
THROUGH DEPUTY CHIEF ENGINEER
CONSTRUCTION, SOUTH CENTRAL
RAILWAYS, SECUNDRABAD
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(ANDHRA PRADESH) REPRESENTED BY
SENIOR EXECUTIVE ENGINEER
CONSTRUCTION, S.C.RAILWAY, GULBARGA.
... APPELLANT
(BY SRI MANVENDRA REDDY, ADV.)
AND:
1. KRISHNA
S/O NARAYAN RAO,
AGE: MAJOR,
OCC: AGRICULTURE,
R/O PALLAPUR,
TQ. & DIST. KALABURAGI - 585 105.
2. THE STATE OF KARNATAKA
THROUGH THE ASST.
COMMISSIONER AND
LAND ACQUISITION OFFICER,
GULBARGA - 585 102.
3. THE DEPUTY COMMISSIONER
KALABURAGI - 585 102.
... RESPONDENTS
(BY SRI HARSHAVARDHAN R. MALIPATIL, ADV. FOR R1;
SMT.ARCHANA P.TIWARI, AGA FOR R2 & R3)
THIS MFA IS FILED U/S 54(1) OF L.A. ACT, PRAYING
TO CALL FOR RECORDS IN LAC NO.618/2012 ON THE FILE
OF III ADDL. SENIOR CIVIL JUDGE, KALABURAGI.
ALLOW THE APPEAL BY SETTING ASIDE THE
JUDGMENT AND AWARD DATED 08.03.2018 PASSED BY
THE LEARNED III ADDL. SENIOR CIVIL JUDGE,
KALABURAGI, IN LAC NO.618/2012, IN THE INTEREST OF
JUSTICE AND EQUITY.
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IN M.F.A. CROB NO.200053 OF 2019(LAC)
BETWEEN:
KRISHNA
S/O NARAYAN RAO,
OCCU: AGRICULTURE,
R/O PALLAPUR, KALABURAGI.
... CROSS OBJECTOR
(BY SRI HARSHAVARDHAN R. MALIPATIL, ADV.)
AND:
1. THE DEPUTY CHIEF ENGINEER
CONSTRUCTION, SOUTH CENTRAL RAILWAY,
RAILWAY NILAYA BUILDING,
SECUNDRABAD (ANDHRA PRADESH).
2. THE ASST. COMMISSIONER
AND LAND ACQUISITION OFFICER,
KALABURAGI.
3. THE DEPUTY COMMISSIONER
KALABURAGI.
... RESPONDENTS
THIS MFA CROB. FILED U/S 41 RULE 22 OF CPC,
PRAYING TO ALLOW THIS APPEAL WITH COSTS AND
MODIFY THE JUDGMENT AND AWARD PASSED BY THE III
ADDL. SENIOR CIVIL JUDGE, KALABURAGI DATED
08.03.2018 IN LAC NO.618/2012 AND FIX MARKET VALUE
FOR LAND ACQUIRED AT THE RATTE OF RS.175/- PER
SQ.FT. AND AWARD ALL STATUTORY BENEFITS AND
GRANT THE ANY OTHER RELIEF, WHICH THIS COURT
DEEMS FIT IN THE CIRCUMSTANCES OF THE CASE, IN THE
INTEREST OF JUSTICE AND EQUITY.
THESE MFAs AND MFA CROB HAVING BEEN HEARD
AND RESERVED FOR JUDGMENT ON 24.02.2020 COMING
ON THIS DAY, G. NARENDAR J., PRONOUNCED THE
FOLLOWING:-
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JUDGMENT
The appeals are filed by the Union of India through the Department of Railways, the beneficiary of the acquisition and cross-objection is filed by the claimant, challenging the awards passed by the Reference Court, wherein, granting enhancement of compensation on the ground that the lands involved in these appeals are non-agricultural potential (N.A. potential). MFA.No.201772/2019 is filed against the order of the Reference Court in LAC.No.388/2010 dated 25.03.2019, MFA.No.201006/2019 is filed against the order of the Reference Court in LAC.No.401/2010 dated 20.12.2018, MFA.No.201323/2018 and MFA.Crob.No.200053/2019 are filed against the order of the Reference Court in LAC No.618/2012 dated 08.03.2018.
2. One common feature in all these appeals are that, the lands of the claimants were acquired for the purposes of construction of a Broad-Gauge Railway -7- Line between Bidar-Gulbarga. The notifications of the acquisition under Section 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act' for short), are different in all these cases. Hence, brief facts giving rise to filing of these subject appeals and cross-objection are independently considered.
3. MFA.No.201772/2019 is filed against the order of the Reference Court in LAC.No.388/2010. The land acquired for the project in the subject case was 2 acres 30 guntas in survey No.6 (6/2) situated at Pallpapur Village. A notification under Section 4(1) of the Act was issued on 19.05.2005 and an award was passed by the Special Land Acquisition Officer fixing the market value of the land at Rs.21,500/- per acre. The claimant on filing a protest petition on the ground that the compensation granted for the land acquired was inadequate and sought reference before the Reference Court seeking enhancement of compensation. The Reference Court by its order dated -8- 25.03.2019, enhanced the compensation from Rs.21,500/- per acre to Rs.150/- per sq.ft. with all statutory benefits. The beneficiary to the acquisition, the Department of Railways has filed the subject appeal against the order of the Reference Court on the ground that the compensation awarded is highly excessive and without any basis.
4. MFA.No.201006/2019 is filed against LAC.No.401/2010. The land acquired for the purpose of the said project in the subject case was 3 acres and 3 guntas in survey No.26/2 situated at Pallapur Village. A notification under Section 4(1) of the Act was issued on 19.05.2005 and an award was passed by the Special Land Acquisition Officer fixing the market value of the land at Rs.21,500/- per acre. The claimant on filing a protest petition on the ground that the compensation granted for the land acquired was inadequate and sought reference before the Reference Court seeking enhancement of -9- compensation. The Reference Court by its order dated 20.12.2018 enhanced the compensation from Rs.21,500/- per acre to Rs.129.95/- per sq.ft. with all statutory benefits. The beneficiary to the acquisition, the Department of Railways has filed the subject appeal against the order of the Reference Court on the ground that the compensation awarded is highly excessive and without any basis.
5. MFA.No.201323/2018 is filed against LAC No.618/2012. The Land Acquisition Officer of the State Government issued a notification under Section 4(1) of the Act, dated 22.03.2007 seeking to acquire lands for the purpose of the project - Bidar-Gulbarga New Broad Gauge Railway Line Project. The land of the claimant measuring 7 guntas of survey No.24/2 situated at Pallapur Village, was acquired for the said project. The Land Acquisition Officer fixed the market value of the land of the claimant at Rs.29,000/- per acre. The claimant on filing a protest petition on the
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ground that the compensation granted for the acquisition of the land measuring 7 guntas was inadequate and sought reference before the Reference Court seeking enhancement of compensation. The Reference Court by its order dated 08.03.2018 enhanced the compensation from Rs.29,000/- per acre to Rs.150/- per sq.ft. with all statutory benefits. The beneficiary to the acquisition, the Department of Railways has filed the subject appeal against the order of the Reference Court on the ground that the compensation awarded is highly excessive and without any basis.
6. MFA.Crob.No.200053/2019 is filed by the claimant as cross-objections to MFA.No.201323/2018 which arose out of LAC.No.618/2012 and have sought enhancement of compensation on the ground that the Reference Court has fallen in error in fixing the market value of the land at Rs.150/- per sq.ft. which ought to have fixed at Rs.175/- per sq. ft.
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7. Heard Sri Manvendra Reddy, learned counsel for the appellant - Department of Railways, Smt.Archana P. Tiwari, learned Additional Government Advocate for the State and Sri Harshavardhan R. Malipatil, learned counsel for claimants.
8. The learned counsel for the appellant - Department of Railways would contend that the Reference Court has grossly erred in not appreciating the evidence of the appellant both oral and documentary and without any basis fixed the market value at Rs.150/- and Rs.129.95/- respectively.
9. The Reference Court has again without any basis held that the acquired lands come within the Gulbarga City limits or Gulbarga Local Planning Area relying upon Ex.P.18, though in terms of Ex.P.18, there was no development in the lands acquired or thereabouts and the Reference Court has blindly held
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that the lands of the claimants has non-agricultural potential.
10. The Reference Court has placed total reliance upon Exs.P.6 and P.7 - the conversion orders, which declare the status as N.A. potential in respect of lands that were acquired long after present notification for acquisition. The Exs.P.6 and P.7 were acquired on 03.09.2012 and 06.09.2012 whereas, the notifications for the lands concerning the subject appeals were issued in the years 2005 and 2007. The map produced by the claimants at Exs.P.9 and P.10 were of Shaik Roza and Zafrabad villages and the Reference Court relies on these documents to hold that the claimants are entitled to a huge amount.
11. The learned counsel for the appellant - Department of Railways would further contend that the Reference Court was of serious error by relying on Ex.P.18, a sale deed of the year 2003 of a commercial
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auction plot measuring 12" x 25" sq.ft. executed by Gulbarga Development Authority and which is within Gulbarga. Likewise, the Reference Court has committed several errors to arrive at a finding that the claimants were entitled to Rs.150/- and Rs.129.95/- per sq. ft. respectively, without even looking into comparative nature of the lands that were acquired in the impugned notifications.
12. On the other hand, learned counsel for the claimants would support the order passed by the Reference Court and insofar as the order of the Reference Court in LAC.No.618/2012, the claimants would contend that the compensation that is granted by the Reference Court is also on the lower side and have sought enhancement of the same on the ground that the lands situated in and around Shaik Roza village is having a market value of Rs.175/- per sq.ft. and the Reference Court has under valued the amount of compensation.
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13. We have given our anxious consideration to the contentions of the learned counsel appearing for both the parties and perused the material on record.
14. Admittedly, the impugned notifications for acquisition under Section 4(1) of the Act were issued on 19.05.2005 and 22.03.2007 respectively, in respect of the lands of the claimants. The project for which the lands were acquired remains the same in all these cases i.e., a project for construction of a Broad- Gauge Railway Line between Bidar-Gulbarga. The Special Land Acquisition Officer fixed the market value of the lands of the claimants at Rs.21,500/- and Rs.29,000/- respectively. The Reference Court has increased it to Rs.150/- and Rs.129.95/- per sq. ft., by placing reliance on the following documents, Exs.P.6 to P.10, P.20 and P.21. It is germane to consider the content of these documents.
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15. Ex.P.6 is a sketch showing the proposed non-agricultural land for residential purposes situated in survey No.24/1 of Pallapur village. Ex.P.7 is the conversion of the said land into non-agricultural purposes. Both these documents are of the year 2012. The notification in the subject appeals were issued in the years 2005 and 2007, long before Exs.P.6 and P.7 came into existence. Thus, the Reference Court has grossly erred in drawing a parallel to the conversion certificate made in the year 2012 to that of Section 4(1) notifications issued in the years 2005 and 2007. Further, the award is bereft any details of development pursuant to the orders of conversion.
16. Exs.P.8 to P.10, on which the Reference Court places much reliance upon are the village maps of Zafrabad, Shaik Roza and Taj Sultan villages. The Reference Court relying on the village maps of the aforesaid villages, equates the lands of the claimants
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to that of the lands situated in aforementioned three villages. Without considering or analyzing whether there is similarity of the lands of the claimants or the lands acquired within the lands in the aforesaid three villages. The theory of abutting village cannot apply to a project like that of the Railways, more particularly to projects involving laying of "Railway Lines". It is common knowledge that lines are laid from Jammu (J&K) in the North to Kanyakumari in the South of the country and the lines pass through Metros, Cities, villages and even the Chambal Ravines. If the theory of abutting or neighbouring village or land is taken then the lands in Jammu & Kanyakujmari would have to be paid the market value of the lands acquired in Delhi, as the lines are laid on contiguous strips of lands, starting in Jammu and ending in Kanyakumari. Such an approach in our considered opinion, would be in the teeth of the law laid down by the Hon'ble Apex Court in the case of Chimanlal Hargovinddas supra.
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Hence, the market value of every acquisition on every piece of land has to be determined independently. The courts would have to take into consideration not merely the fact that the land is abutting in other piece of land acquired earlier for subsequent to determine the market value. In our opinion, principle of comparative values would not apply where the project is extended over hundreds or thousands of Kilometers and that the market value of the lands were acquired for such projects have to be assessed independently having regard to the parameters settled by the Hon'ble Apex Court in the case noted supra.
17. The comparative value or value of neighbouring lands can be made applicable if the lands acquired are for projects like housing colonies or industrial hubs. We are of the firm opinion that reference courts cannot adopt the methodology of placing reliance on the market value of acquisitions for project like housing or industrial hubs for the purposes
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of determining the market value of the lands acquired for the purpose of executing water-ways, canals, railway lanes etc. which involves acquisition of small tracts of land over a long distances measuring from few Kilometers to more than thousand Kilometers as noted supra. In projects involving acquisition of lands over long stretches, the nature of the lands, developments around the lands, the potential of the lands shall certainly varying. As pointed-out by the learned counsel for the appellants/beneficiaries the lands which are situated admittedly in a different village. On a close scrutiny of the award by the reference court, we find no reference to any of the parameters for arriving at the determination as done by the reference court. There is not even a whisper about the nature of the lands or the potential of the lands acquired and those of the lands of the neighbouring villages. The reference court has also fallen in error in not distinguishing the Gulbarga Town
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Planning Area and the boundaries of the Gulbarga City. The reliance on Union of India Vs. Harindar Pal Singh & Others in the instant case, in our opinion is misplaced. There is not even a whisper with regard to the developments in the area. Non- agricultural potentiality has to be gauged only with reference to the developments in the vicinity of the land and that cannot be a matter of assumption, but has to be a matter of proof. The maps which have been relied upon do not even disclose nor demonstrate developments in the vicinity of the land. Distance from the city can only be one factor. Merely because a land has been converted for the purposes of housing not by itself be indicator of enhanced value of surrounding agricultural lands. More so, when the conversion to housing purpose is after the passage of longer time after the acquisition. In fact, the presence of a railway lane can be considered a negative factor for development of housing colonies as it is common
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knowledge that the running trains not only cause huge noise but also cause vibrations and which are not favourably considered.
18. The claimants apart from placing on record the maps and sketches have neither narrated nor proved a single incident of developments around the acquired lands. In fact, the Hon'ble Apex Court has clearly held that the reference court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. This mandate has virtually being given a goby. Further, the reasoning to ignore are not taking into consideration the material produced by the respondent reeks of perversity.
19. The Reference Court again relies on Ex.P.20, a judgment passed in LAC.546/2010 dated 19.03.2012 and Ex.P.21, a judgment passed in LAC.100/2008 dated 13.12.2012, which were all
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concerning to the acquisition of the lands in Shaik Roza village. Notwithstanding the fact that the claimant in LAC No.618/2012 had himself sold a site measuring 40" x 60" sq.ft. for Rs.84,000/- in survey No.31 belonging to the claimant. In these circumstances, placing reliance upon the lands acquired in the Shaik Roza village of the survey No.31 and fixing the market value at Rs.150/- is per se erroneous. The lands acquired in different survey numbers and compensation determined in the different judgments of land acquisition cases are equated notwithstanding the fact that they are not of comparable level. The Reference Court has considered the entire village i.e., Pallapur village as one unit and has determined compensation for the entire village notwithstanding the requirement of law that the market value prevailing at the time when Section 4(1) notifications were issued and not
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subsequent determination of compensation in subsequent acquisitions.
20. Since the issue is with regard to the method of determination of compensation, it is apposite to refer to the judgment of the Hon'ble Supreme Court which has laid down postulates for determination of market value of lands acquired to be followed by the Reference Court. The Hon'ble Supreme Court in the case of CHIMANLAL HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER reported in (1988) 3 SCC 751, was pleased to hold as follows:
"3. Before tackling the problem of valuation of the land under acquisition, it is necessary to make some general observations. The compulsion to do so has arisen as the trial Court has virtually treated the award rendered by the Land Acquisition Officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to same extent. The true position therefore requires to be capsulized.
15. The following factors must be etched on the mental screen:
"(1) A Reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the court cannot take into account the
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material relied upon by the Land Acquisition Officer in his award unless the same material is produced and proved before the court. (2) So also the award of the Land Acquisition Officer is not to be treated as a judgment of the trial court open or exposed to challenge before the court hearing the Reference. It is merely an offer made by the Land Acquisition Officer and the material utilised by him for making his valuation cannot be utilised by the court unless produced and proved before it. It is not the function of the court to sit in appeal against the award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate court. (3) The court has to treat the Reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it.
(4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant).
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(6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) 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. It has also to be assumed that the vendor is willing to sell the land at a reasonable price.
(7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance 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 acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects.
(10) The most comparable instances out of the genuine instances have to be identified on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) Having identified the instances which provide the index of market value the price
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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-à-vis land under acquisition by placing the two in juxtaposition.
(12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) 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.
(14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:
Plus factors Minus factors
1. Smallness of size 1. largeness of area
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2. proximity to a road 2. situation in the interior at a
distance from the road
3. frontage on a road 3. narrow strip of land with
very small frontage
compared to depth
4. nearness to developed area 4. lower level requiring the
depressed portion to be
filled up
5. regular shape 5. remoteness from developed
locality
6. level vis-à-vis land under 6. some special
acquisition disadvantageous factor
which would deter a
purchaser
7. special value for an owner of an
adjoining property to whom
it may have some very
special advantage
(15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot be compared with a large tract or block of land of say 10,000 sq. yds. or more. Firstly while a smaller plot is within the reach of many, a large
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block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.
(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the judge must place himself.
(17) These are general guidelines to be applied with understanding informed with common sense.
21. The afore-extracted judgment of the Hon'ble Supreme Court is again reiterated in the year 2018 in the case of UNION OF INDIA Vs. DYAGALA
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DEVAMMA reported in (2018) 8 SCC 485 wherein the Hon'ble Supreme Court has held as follows:
15. Before we examine the facts of this case, it is necessary to take note of the general principles of law on the subject in question which are laid down by this Court in several cases and some of which were also cited at the Bar by the learned counsel for the parties.
Indeed, if we may say so, the law on the several issues urged herein by the learned counsel for the parties is already settled by this Court and what has varied in its application depends on the facts of each case.
16. In Chimanla Hargovinddas v. LAO [Chimanlal Hargovinddas vs. LAO, (1988) 3 SCC 751] , this Court dealt with the question as to how the Court should determine the valuation of the lands under acquisition and what broad principle of law relating to acquisition of land under the Act should be kept in consideration to determine the proper market value of the acquired land.
17. In para 4 of the judgment, this Court laid down as many as 17 principles, which are reproduced below for perusal: (Chimanlal Hargovinddas case [Chimanlal Hargovinddas v. LAO, (1988) 3 SCC 751] , SCC pp. 754-56, para 4) "(1)-(4)***
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(5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act (dates of notifications under Sections 6 and 9 are irrelevant).
(6) The determination has to be made standing on the date line of valuation (date of publication of notification under Section 4) 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. It has also to be assumed that the vendor is willing to sell the land at a reasonable price.
(7) In doing so by the instances method, the court has to correlate the market value reflected in the most comparable instance 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 acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they
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are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects.
(10) The most comparable instances out of the genuine instances have to be identified on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) 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-à-vis land under acquisition by placing the two in juxtaposition.
(12) A balance sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do.
(13) The market value of the land under acquisition has thereafter to be
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deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors.
(14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors:
Plus factors Minus factors
1. smallness of size 1. largeness of area
2. proximity to a road 2. situation in the interior at a
distance from the road
3. Frontage on a road 3. narrow strip of land with very
small frontage compared to depth
4. Nearness to developed 4. lower level requiring the depressed
area portion to be filled up
5. regular shape 5. remoteness from developed
locality
6. level vis-à-vis land 6. some special disadvantageous
under acquisition factor which would deter a
purchaser
7. special value for an
owner of an adjoining
property to whom it may
have some very special
advantage
(15) The evaluation of these
factors of course depends on the facts of each case. There cannot be any hard-and-fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor
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regarding the size. A building plot of land say 500 to 1000 sq yd cannot be compared with a large tract or block of land of say 10,000 sq yd or more.
Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a layout, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur.
The factor can be discounted by making a deduction by way of an allowance at an appropriate rate
ranging approximately between 20 per cent to 50 per cent to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards.
(16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself.
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(17) These are general guidelines to be applied with understanding informed with common sense."
18. These principles are invariably kept in mind by the courts while determining the market value of the acquired lands (also see Union of India v. Raj Kumar Baghal Singh [Union of India v. Raj Kumar Baghal Singh, (2014) 10 SCC 422 : (2015) 1 SCC (Civ) 17] ).
19. In addition to these principles, this Court in several cases have laid down that while determining the true market value of the acquired land especially when the acquired land is a large chunk of undeveloped land, it is just and reasonable to make appropriate deduction towards expenses for development of acquired land. It has also been consistently held that at what percentage the deduction should be made varies from 10% to 86% and, therefore, the deduction should be made keeping in mind the nature of the land, area under acquisition, whether the land is developed or not and, if so, to what extent, the purpose of acquisition, etc. It has also been held that while determining the market value of the large chunk of land, the value of smaller pieces of land can be taken into consideration after making proper deduction in the value of lands especially when sale deeds of larger parcel of land are not available. This Court has also laid down that the court should also take into consideration the potentiality of the acquired land apart from other relevant considerations. This Court has also recognised that the courts
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can always apply reasonable amount of guesswork to balance the equities in order to fix a just and fair market value in terms of parameters specified under Section 23 of the Act.
(See Trishala Jain v. State of Uttaranchal [Trishala Jain v. State of Uttaranchal, (2011) 6 SCC 47 : (2011) 3 SCC (Civ) 178] and Vithal Rao v. LAO [Vithal Rao v. LAO, (2017) 8 SCC 558 : (2017) 4 SCC (Civ) 155] .) The law declared by the Hon'ble Supreme Court in the afore-extracted judgments are the guiding principles as to how the market value has to be determined for the lands acquired when Reference is sought under Section 18(1) of the Act.
22. The Reference Court has failed to consider any of the parameters laid down by the Apex Court in the afore-extracted judgment and the impugned order completely falls foul of the law declared by the Apex Court insofar as it pertains to determination of market value of the land that is acquired, in the present case the land of the claimants acquired for the purpose of formation of new railway line.
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23. The Reference Court has further erred in placing blind reliance on the consent awards passed in identical acquisitions. Placing blind reliance on an earlier order of the Reference Court or an earlier award which has become final and determining the compensation without there being analysis of any other evidence, is also contrary to law, in the light of the law laid down by the Apex Court in the case of Manoj Kumar and Others V. State of Haryana and Others reported in (2018) 13 SCC 96, wherein the Apex Court at paragraphs 11 to 16 has held has follows:
"11. In our opinion, the High Court could not have placed an outright reliance on Swaran Singh case [Swaran Singh v. State of Haryana, 2012 SCC OnLine P&H 19044] , without considering the nature of transaction relied upon in the said decision. The decision could not have been applied ipso facto to the facts of the instant case. In such cases, where such judgments/awards are relied on as evidence, though they are relevant, but cannot be said to be binding with respect to the determination of the price, that has to depend on the evidence adduced in the case. However, in the instant case, it appears that the land in Swaran Singh case [Swaran Singh v. State of Haryana,
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2012 SCC OnLine P&H 19044] was situated just across the road as observed by the High Court as such it is relevant evidence but not binding. As such it could have been taken into consideration due to the nearness of the area, but at the same time what was the nature of the transaction relied upon in the said case was also required to be looked into in an objective manner. Such decisions in other cases cannot be adopted without examining the basis for determining compensation whether sale transaction referred to therein can be relied upon or not and what was the distance, size and also bona fide nature of transaction before such judgments/awards are relied on for deciding the subsequent cases. It is not open to accepting determination in a mechanical manner without considering the merit. Such determination cannot be said to be binding.
12. We have come across several decisions where the High Court is adopting the previous decisions as binding. The determination of compensation in each case depends upon the nature of land and what is the evidence adduced in each case, may be that better evidence has been adduced in later case regarding the actual value of property and subsequent sale deeds after the award and before preliminary notification under Section 4 are also to be considered, if filed. It is not proper to ignore the evidence adduced in the case at hand. The compensation cannot be determined by blindly following the previous award/judgment. It has to be considered only a
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piece of evidence, not beyond that. The court has to apply the judicial mind and is supposed not to follow the previous awards without due consideration of the facts and circumstances and evidence adduced in the case in question. The current value reflected by comparable sale deeds is more reliable and binding for determination of compensation in such cases award/judgment relating to an acquisition made before 5 to 10 years cannot form the safe basis for determining compensation.
13. The awards and judgment in the cases of others not being inter parties are not binding as precedents. Recently, we have seen the trend of the courts to follow them blindly probably under the misconception of the concept of equality and fair treatment. The courts are being swayed away and this approach in the absence of and similar nature and situation of land is causing more injustice and tantamount to giving equal treatment in the case of unequals. As per situation of a village, nature of land, its value differ from distance to distance, even two to three kilometre distance may also make the material difference in value. Land abutting highway may fetch higher value but not land situated in interior villages.
14. The previous awards/judgments are the only piece of evidence on a par with comparative sale transactions. The similarity of the land covered by previous judgment/award is required to be proved like any other comparative exemplar. In case previous award/judgment is based on
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exemplar, which is not similar or acceptable, previous award/judgment of court cannot be said to be binding. Such determination has to be outrightly rejected. In case some mistake has been done in awarding compensation, it cannot be followed; on the ground of parity an illegality cannot be perpetuated. Such award/judgment would be wholly irrelevant.
15. There is yet another serious infirmity seen in following the judgment or award passed in acquisition made before 10 to 12 years and price is being determined on that basis by giving either flat increase or cumulative increase as per the choice of individual Judge without going into the factual scenario. The said method of determining compensation is available only when there is absence of sale transaction before issuance of notification under Section 4 of the Act and for giving annual increase, evidence should reflect that price of land had appreciated regularly and did not remain static. The recent trend for last several years indicates that price of land is more or less static if it has not gone down. At present, there is no appreciation of value. Thus, in our opinion, it is not a very safe method of determining compensation.
16. To base determination of compensation on a previous award/judgment, the evidence considered in the previous judgment/award and its acceptability on judicial parameters has to be necessarily gone into, otherwise, gross injustice may be caused to any of the parties. In case some
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gross mistake or illegality has been committed in previous award/judgment of not making deduction, etc. and/or sufficient evidence had not been adduced and better evidence is adduced in case at hand, previous award/judgment being not inter partes cannot be followed and if land is not similar in nature in all aspects it has to be outrightly rejected as done in the case of comparative exemplars. Sale deeds are on a par for evidentiary value with such awards of the court as court bases its conclusions on such transaction only, to ultimately determine the value of the property."
In terms of the law declared by the Hon'ble Supreme Court in the above extracted judgments placing reliance on the earlier judgments/award without considering the facts of the cases on hand would be committing an error in law and the Reference court has placed blind reliance on the consent awards, without considering the facts and evidence in the cases before it.
24. Perusal of the impugned orders in all these appeals, clearly show that the compensation has been determined without complying with principles laid
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down in Section 23 of the said Act of 1894 and the judgments of the Hon'ble Supreme Court in cases of Hargovinddas (Supra), Dyagala Devamma (Supra) and Manoj Kumar (Supra).
25. In the circumstances, without going into the merits of the claim of the appellant railways and that of the claimants in their respective appeals filed by them, we deem it appropriate to set aside the award of the Reference Court and remit the matter back to the Reference Court for a fresh determination strictly in consonance with the law declared in the judgments of the Hon'ble Supreme Court in cases of HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER reported in (1988) 3 SCC 751, UNION OF INDIA Vs. DYAGALA DEVAMMA reported in (2018) 8 SCC 485 and MANOJ KUMAR AND OTHERS Vs. STATE OF HARYANA AND OTHERS reported in (2018) 13 SCC
96.
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26. For the aforementioned reasons and in the light of the reasoning set-out by us while disposing off a batch of appeals in MFA Nos.200777/2015 (LAC), we pass the following:
ORDER (1) MFA Nos.201772/2019, 201006/2019 and 201323/2018 are allowed and the orders of the Reference Court in LAC Nos.388/2010, 401/2010 and 618/2012 are set aside.
(2) MFA.Crob.No.200053/2019 is dismissed. (3) The matters are remitted back to the Reference Court for a decision afresh strictly in consonance with the principles laid down by the Hon'ble Supreme Court in the cases of HARGOVINDDAS Vs. SPECIAL LAND ACQUISITION OFFICER, reported in (1988) 3 SCC 751, UNION OF INDIA Vs. DYAGALA DEVAMMA reported in (2018) 8 SCC 485 and MANOJ KUMAR AND OTHERS Vs. STATE OF HARYANA AND OTHERS reported in (2018) 13 SCC 96 within a period of six months from the date of receipt of the copy of the order.
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(4) The Registry is directed to circulate this order to all the Presiding Officers of the Reference Courts for its strict adherence. (5) The records shall be retransmitted forthwith to the Reference Court.
(6) In view of the appeals being allowed & remanded, the appellants are entitled to refund of court fee in accordance with law.
(7) There shall be no order as to costs.
In view of the disposal of all the appeals, pending I.As. in respective appeals are also disposed off as they do not survive for consideration. They are disposed of accordingly.
Sd/-
JUDGE Sd/-
JUDGE nvj CT:MJ