Madras High Court
The Chairman vs The Land Acquisition Officer on 2 September, 2010
Author: R.Banumathi
Bench: R.Banumathi, G.M.Akbar Ali
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 02.09.2010 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MR. JUSTICE G.M.AKBAR ALI A.S.No.727 of 2005 The Chairman, V.L.B. Trust, No.60, Kuniamuthur, Coimbatore. .. Appellant Vs. 1. The Land Acquisition Officer- cum-District Revenue Officer, Coimbatore. 2. Vijayaraghavan. .. Respondents Appeal filed under Section 54 of Land Acquisition Act against the judgment and decree dated 05.01.2005 made in L.A.O.P.No.228 of 1996 on the file of I Additional Sub-Court, Coimbatore. For Appellant .. Mr.K.Ravichandrababu For Respondents .. Mr.V.Ravi - R1 Spl. Government Pleader(AS) Ms.R.Gowri - R2 JUDGMENT
R.BANUMATHI, J Feeling aggrieved by enhancement of compensation of Rs.1400/- per cent from Rs.150/- per cent fixed by the Land Acquisition Officer [LAO] in respect of the land in S.F.No.43/1 2.18 acres acquired in Kuniamuthur village, Coimbatore South Taluk for construction of buildings for Polytechnic, Girls High School etc., Beneficiary/Requisitioning Body V.L.B. Trust has filed this Appeal.
2. Pursuant to the requisition from Appellant-VLB Trust for construction of buildings for Polytechnic and Girls High School etc., the land in S.F.No.43/1A measuring an extent of 2.18 acres and other lands were sought to be acquired.
3. Brief facts are that large extent of 104.00 acres of lands in Narasimhapuram and Kuniamuthur villages were acquired for construction of buildings for Polytechnic and Girls High School etc. Section 4(1) notification was approved in G.O.No.1382 Education Department dated 20.10.1984 and published as Notification No.II(2) EDU/6402/84 in the Gazette on 21.11.1984. Sec. 4(1) notification was also published in Tamil and English dailies viz., "Thinathanthi" and "The Hindu" on 20.11.1984 and 13.11.1985 respectively and the substance of Sec.4(1) notification was also published in the locality on 29.11.1985. Section 5-A enquiry was conducted on 28.4.1986 and 22.9.1986 respectively. Section 6 notification was approved by the Government in their order Ms.No.1857 Education Department dated 18.11.1986 and substance of the declaration was also published in the locality on 28.11.1986.
4. Award enquiry was held on 16.11.1988; 17.11.1988 and on 18.11.1988 respectively. For the purpose of valuation of the acquired land and other lands under acquisition, statistics of sales in the vicinity of the lands under acquisition which were effected during the period from 01.11.1984 to 30.11.1985 i.e. one year prior to the date of publication of Section 4(1) notification were gathered from the Sub Registrar's Office, Coimbatore. There were 36 sales. Of which a sale effected in S.F.No.243/B [Ex.R3] measuring an extent of 0.71 acres of land for Rs.10,650/- as per Document No.3589 dated 12.09.1985 was taken for fixation of valuation of the lands under acquisition. As per the said sale deed [Ex.R3], rate per acre works out to Rs.15,000/-. LAO was of the view that the land in S.F.No.243/B is identical and of same tharam of the lands under acquisition and taken the said sale deed [12.09.1985] as basis and fixed the market value of the acquired lands at Rs.150/- per cent i.e. Rs.15,000/- per acre. Buildings and Wells in the acquired lands were valued separately.
5. On objection raised by the land owner-Claimant [2nd Respondent], reference under Sec.18 of Land Acquisition Act was made which was taken on file in LAOP.No.228/1996 on the file of I Additional Sub-Court, Coimbatore. In the Reference Court, Claimant was examined as CW1. One Pichiaya-Consultant Civil Engineer, who prepared valuation report of buildings [Ex.C6] was examined as CW2. To show that the acquired land would fetch higher value, in the Reference Court, Claimant has produced Exs.C1 to C6. Onbehalf of Land Acquisition Officer, one Narayanamurthy, the then LAO was examined as RW1. One Murugananthan, Administrative Officer of Appellant-Beneficiary Trust was examined as RW2. Exs.R1 to R4 were marked.
6. Ex.C4 [14.6.1982] is the sale deed under which an extent of 0.05 cents 6 sq.ft. in S.F.No.244 was sold for Rs.3500/- i.e. Rs.700/- per cent. Under Ex.C5 [31.8.1984], an extent of 0.02 cent 35 sq.ft. in S.F.No.244 was sold for Rs.3000/- and the market value has been mentioned as Rs.4162/- i.e. Rs.2081/- per cent rounded to Rs.2100/- per cent. Reference Court has calculated average under Exs.C4 and C5-sale deeds and fixed the market value at Rs.1400/- per cent [Rs.700 + 2100 = Rs.2800 2]. Fixing the market value at Rs.1400/- per cent, Reference Court has ordered 12% Additional market value i.e. Rs.2,51,614.84; 30% solatium on the enhanced market value; 9% interest for one year from 29.11.1985 on the above said amount and thereafter 15% interest till the date of deposit excluding the stay period from 24.11.1988 to 15.9.1991.
7. Challenging the enhancement of compensation, Mr.Ravichandrababu, learned counsel for Appellant submitted that Reference Court over looked the fact that the lands covered under Exs.C4 and C5-sale deeds are highly developed and are having more locational advantages than the acquired lands. It was further submitted that the acquired land is undeveloped and to make it suitable for construction of buildings, necessary roads have to be formed and drainage are to be provided and while so, Reference Court should not have taken into consideration the value under Exs.C4 and C5. It was further submitted that in the acquired land within the distance of 15 feet there is High Tension Wire existing over the land and vast strip of land underneath the High Tension Wire and adjacent portion has to be left, as it is unusable because of the existence of High Tension Wire which was not kept in view by the Reference Court. It was also submitted that as per the rulings of the Supreme Court, deduction for improvements should be made between 20% to 33% of the acquired lands and Reference Court failed to consider even the vital aspects and erred in determining the compensation without making any deduction for improvement of the acquired land.
8. Laying emphasis upon Exs.C4 and C5-sale deeds Ms.Gowri, learned counsel for Claimant contended that under Exs.C4 and C5, the lands were sold at the rate of Rs.700/- and Rs.2100/- per cent respectively and Reference Court has rightly taken the average value. Drawing our attention to the evidence, learned counsel for Claimant submitted that the acquired lands are adjacent to Coimbatore-Palakad main road and in the midst of developed area and the amount of Rs.1400/- per cent fixed by the Reference Court is in fact very much low. Learned counsel for Claimant would further submit that in so far as, buildings the value fixed by the LAO was very low and Reference Court has not enhanced the same. It was further argued that since the acquired land with house and building is in the midst of developed area, there is no need for making any deduction.
9. We have also heard Mr.V.Ravi, learned Special Government Pleader [AS] appearing for 1st Respondent/LAO who submitted that LAO has taken the relevant sale deed which is prior to Sec. 4(1) notification and has rightly fixed the market value at Rs.150/- per cent and while so, Reference Court erred in relying upon Exs.C4 and C5-sale deeds without any basis.
10. Determination of market value - Determination of market value of a land acquired in terms of the provisions of Land Acquisition Act depends upon a large number of factors, the first being the nature and quality of the land. The area of the land, the nature thereof, advantages and disadvantages occurring thereof amongst others would be relevant factors. Apart from nature and quality of land in the event agricultural lands are acquired the other factors relevant therefor are also required to be considered, viz., as to whether they are irrigated or non-irrigated, extent of facilities available for irrigation, location of the land, closeness thereof from any road of highway, the evenness of land, its position in different seasons particularly in rainy season, existence of any building or structure as also the development in and around the area. Potentiality of the land for future development will also to be taken note of. A host of other factors will also have a bearing on determining the valuation of land.
11. Considering the factor whether the land has got potential value, in (2008) 3 MLJ 806 (SC) [Atma Singh (died) through LRs and others v. State of Haryana and another], the Supreme Court held as under:-
"5. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. It is well settled that market value of a property has to be determined having due regard to its existing condition with all its existing advantages and its potential possibility when led out in its most advantageous manner. The question whether a land has potential value or not, is primarily one of fact depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like, water, electricity, possibility of their further extension, whether near about Town is developing or has prospect of development have to be taken into consideration. See Collector Raigarh v. Hari Singh Thakur, AIR 1979 SC 472, Raghubans Narain v. State of U.P., AIR 1969 SC 465 and Administrator General, W.B. v. Collector Varanasi (supra). It has been held in Kaushalya Devi v. L.A.O. Aurangabad, AIR 1984 SC 892 and Suresh Kumar v. T.I.Trust, AIR 1980 SC 1222 that failing to consider potential value of the acquired land is an error of principle."
12. Market value of the acquired land as on the date of Section 4 (1) notification i.e. 20.10.1984 is to be ascertained. According to LAO, the data land in S.F.No.243/B is of same tharam and quality. As pointed out earlier, an extent of 0.71 cents in S.F.No.243/B was sold under Ex.R3-sale deed dated 12.09.1985 for Rs.10,650/-. As per this sale deed [Ex.R3], rate per acre works out to Rs.15,000/-. LAO was of the view that the acquired land is of same soil, tharam and quality of the land under Ex.R3-sale deed i.e. S.F.No.243/B and both the lands are one and the same and fixed the market value at Rs.150/- per cent.
13. In his evidence, CW1-Vijayaraghavan has stated that the acquired land is situated on the eastern side of Palakad main road and that in the acquired land he has put up shed with tin sheet and running a Saw Mill. He has further stated that one Martin and Company was his tenant. In support of his contention, CW1 has produced Ex.C2-rental receipt. CW1 has further stated that on the southern side, he has constructed a house from which he was getting the monthly rent of Rs.300/- per month. He has further deposed that on the southern side of the acquired land, there is Suryaprabha Spinning Mill and on the western side Kasthuri Engineering Company is situated. CW1 has further stated that near the acquired land, there is a factory manufacturing Hollow blocks and also Vijayalakshmi Mill is situated. CW1 has further deposed that opposite to the acquired land there is Kovaipudur road where there are cluster of factories and also VLB Janakiammal College and the acquired land is situated in the midst of well developed area.
14. One Pichaya who was a Consulting Civil Engineer was examined as CW2 to prove the value of industrial shed, house and Wells in the acquired land. In his evidence CW2 has stated that he has inspected the acquired land and the industrial shed, house and Wells thereon and estimated the value at Rs.6,33,951/- and given his report Ex.C6. In his evidence CW2 has stated that the acquired land would fetch higher value and the value fixed by the LAO at Rs.150/- is very low.
15. During cross-examination, RW1-LAO has stated that the acquired land S.F.No.43 is just adjacent to the road. He has also stated that near the acquired land, there are residential houses and commercial complex are situated. RW1 has also stated that opposite to the acquired land, there is Kovai-Sundakkamuthur road from where there is a road proceeding to Kovaipudur where C.P.M. College, Police Quarters, Training Centres are situated. In his cross-examination, RW1 has further stated that on the western side of acquired land Kothari Industries is situated and the acquired land is situated on Coimbatore-Palakad main road. The relevant portion of evidence of RW1 reads as follows:-
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16. Coming to the documentary evidence, Claimant has produced Exs.C3, C4 and C5. The details of Exs.C3 to C4 are as follows:-
Exhibits No. S.No. and Extent Sale Value in Rupees Per cent value in Rupees Ex.C3 dt. 26.11.1981 S.No.244 2208 sq. ft.
Rs.2533/-
Rs.500/-
Ex.C4 dt. 14.06.1982 S.No.244 0.05 cent; 6 sq. ft.
Rs.3500/-
Rs.700/-
Ex.C5 dt. 31.08.1984 S.No.244 0.02 cent; 35 sq.ft.
Rs.3000/- Market value mentioned as Rs.4162/-
Rs.2081/- (or) Rs.2100/-
17. Under Ex.C4-sale deed [14.06.1982], 0.05 cent was sold for Rs.3500/- and under Ex.C5-sale deed [31.08.1984], 0.02 cent was sold for Rs.3000/-. On perusal of Ex.C5-sale deed, market value of the land was stated as Rs.4162/- and Reference Court has also taken the value of one cent at Rs.2100/-. Since, the market value of the land sold under Ex.C5-sale deed was mentioned as Rs.4162/-, the same is taken for determination and rounded off to Rs.4200/-. Exs.C4 and C5 were taken as comparable sales by the Reference Court and the Reference Court has taken the average of Exs.C4 and C5 i.e. Rs.700/- plus Rs.2100/- and calculated average at Rs.1400/- per cent i.e. Rs.2800 2]. By perusal of Topo sketch, we find that the lands purchased under Exs.C4 and C4 [S.F.No.244] are situated on the western side of the acquired land in S.F.No.43/1A.
18. Comparable instances have to be identified on the following considerations:- (i) proximity from time angle and (ii) proximity from situation angle. In our considered view, Exs.C4 and C5 being the sale deeds having proximity from time angle and proximity from situation angle cannot be said to be exorbitant or on the higher side. Since the land acquired is in the midst of developed area and abutting Palakad main road, the land acquired has potential for future development. Even though, the Beneficiary/Requisitioning Body has contended that there are High Tension Wire lines, having regard to the potential of the acquired land and keeping in view, the value of the lands sold under Exs.C4 and C5-sale deeds, it cannot be said that the value of Rs.1400/- per cent fixed by the Reference Court is exorbitant or on the higher side.
19. In so far as deduction, normal rule in fixing the compensation for large extent of land with reference to the value shown in the sale document of lesser extent is that there must be suitable deduction. While fixing the market value, development charges have to be deducted depending upon the nature of land. Large extent of land acquired, rate of small plot cannot be the basis. Where large area is the subject matter of acquisition, rate at which small plots are sold cannot be said to be a safe criteria. In this context, reference may be made to the decisions of the Supreme Court in AIR 1971 SC 2015 [The Collector of Lakhimpur v. Bhuban Chandra Dutta]; AIR 1977 SC 1560 [Prithvi Raj Taneja (dead) by LRs. v. The State of Madhya Pradesh and another]; AIR 1984 SC 892 [Kausalya Devi Bogra and others v. Land Acquisition Officer, Aurangabad and another] and (2008) 2 SCC 568 [Atma Singh v. State of Haryana].
20. It cannot, however, be laid down as an absolute proposition that the rates fixed for the small plots cannot be the basis for fixation of the rate. For example, where there is no other material it may in appropriate cases be open to the adjudicating Court to make comparison of the prices paid for small plots of land. However, in such cases necessary deductions/adjustments have to be made while determining the prices [Vide AIR 2008 SC 399 (Lucknow Development Authority v. Krishna Gopal Lahori and others].
21. Contending that no appropriate deduction was made for comparing with less extent and also for deduction of development costs, the learned counsel for Appellant placed reliance upon (2010) 1 SCC 444 [Subh Ram and others v. State of Haryana and another]. Learned counsel for Appellant also contended that when large tracts of lands are acquired, it is necessary to make appropriate deduction towards development cost.
22. Countering the arguments of learned counsel for Appellant, learned counsel for Claimant submitted that no deduction need be made towards development cost as the acquired land is already a developed land. It was further submitted that even the Claimant himself has put up tin sheet shed and also constructed house and the land being abutting Palakad main road, potential for future development has not been kept in view and in this circumstances, no further deduction need be made for development costs.
23. Reference Court has not chosen to make any deduction. In (2010) 1 SCC 444 [Subh Ram and others v. State of Haryana and another], the Supreme Court considered the aspect of deduction for development cost. Referring to Atma Singh's case, the Supreme Court held as under:-
"30. In Atma Singh v. State of Haryana (2008) 2 SCC 568, this Court reiterated the settled principles regarding deductions thus:
"14. The reasons given for the principle that price fetched for small plots cannot form safe basis for valuation of large tracts of land, according to cases referred to above, are that substantial area is used for development of sites like laying out roads, drains, sewers, water and electricity lines and other civic amenities. Expenses are also incurred in providing these basic amenities. That apart it takes considerable period in carving out the roads making sewers and drains and waiting for the purchasers. Meanwhile the invested money is blocked up and the return on the investment flows after a considerable period of time. In order to make up for the area of land which is used in providing civic amenities and the waiting period during which the capital of the entrepreneur gets locked up a deduction from 20% onward, depending upon the facts of each case, is made."
24. In Chimanlal Hargovinddas v. Special Land Acquisition Officer, AIR 1988 SC 1652 : 1988 (3) SCC 751, the Supreme Court held as under:-
" ..... a large 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 enterpreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approximately, between 20% to 50% 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 entrepreneur would be locked up, will be longer or shorter and the attendant hazards."
It should be noted that deduction of 20% to 50% referred to therein is only in regard to the land to be earmarked for roads, community areas, etc. and does not refer to the further deduction towards the expenses of development.
The same principle was reiterated in (1982) 1 SCC 419 [Brig. Sahib Singh Kalha v. Amritsar Improvement Trust]; (1988) 3 SCC 751 [Chimanlal Hargovinddas v. Special Land Acquisition Officer] and (1996) 2 SCC 62 [K.S.Shivadevamma v. Assistant Commissioner and Land Acquisition Officer].
25. The point falling for our consideration is what is the appropriate deduction to be made towards comparison with less extent and also for development costs. The land was acquired for construction of Polytechnic and Girls High School etc. When we are considering the deduction, we have to consider the situation of the land, development already made and relevant facts as on the date of Sec.4(1) notification. As pointed out earlier, acquired land is in the midst of developed area. In fact, under Ex.C5-sale deed [31.8.1984], market value of two cent and 18 sq. ft. was mentioned as for Rs.4162/- i.e. Rs.2081/- (or) Rs.2100/- per cent. Ex.C5 was also prior to Sec.4 (1) notification. But the Reference Court has chosen to fix the value of the acquired land under Exs.C4 and C5-sale deeds and arrived at average. Claimant himself put up shed in the acquired land. The house constructed by him was rented for Rs.300/- per month. Acquired land is just abutting Coimbatore-Palakad main road. In his evidence, LAO [RW1] has stated that the acquired land [S.F.No.43/1] is situated in Coimbatore-Palakad main road and in and around the acquired land, there are number of factories, college, petrol bunk are there. Like wise, the Administrative Officer of Appellant who was examined as RW2 has also stated that it is not possible to compare the acquired land with the data land. In his evidence, RW2 has stated that in and around the acquired land, there are number of shops and residential houses and also petrol bunk situate. Having regard to the fact that the acquired land was already developed and also in the midst of developed area, it would be appropriate to deduct 10% towards comparison with small extent and another 10% for development cost. Deducting totally 20% i.e. Rs.140/-, value of the acquired land is fixed at Rs.1260/- per cent.
26. Land Acquisition Officer has fixed value of 40 feet depth square well at Rs.84,192/-; 30 feet depth draw well at Rs.59,276/-; tiled residential house at Rs.57,528/-; one big shed tin roofed at Rs.1,90,281/- and one iron gate, stone pillars 21 with barbed wire at Rs.3,500/- and trees at Rs.900/-. Reference Court has not interfered with the value of building, wells and other structures fixed by LAO and the same are maintained.
27. Reference Court has ordered 12% per annum additional market value for 2 years, 11 months and 27 days leaving the Stay period from 24.11.1988 to 15.09.1991. In the decreetal order, specific dates on which 12% per annum additional market value was given is not indicated. As per Section 23 (1-A) of Land Acquisition Act, additional market vale at 12% per annum is payable from the date of notification under Section 4 (1) of the Act to the date of Award of Collector or the date of taking possession of the land whichever is earlier. Section 23 (1-A) of Land Acquisition Act reads as under:-
"23 (1-A) - In addition to the market value of the land, as above provided, the Court shall, in every case, award an amount calculated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publication of the notification under section 4, sub-section (1), in respect of such land to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier.
Explanation. - In computing the period referred to in this sub-section, any period or periods during which the proceedings for the acquisition of the land were held up on account of any stay or injunction by the order of any Court shall be excluded.
(2) In addition to the market value of the land, as above provided, the Court shall, in every case, award a sum of [thirty per centum] on such market value, in consideration of the compulsory nature of the acquisition." [underlining added]
28. Twelve per cent per annum of such additional market value is payable from the date of Section 4(1) notification i.e. from 20.10.1984 till the date of Award i.e. 17.09.1991. Direction of the Reference Court as to payment of 12% per annum additional market value is not clear. 12% per annum additional market value on the enhanced compensation is payable from 20.10.1984 [Sec.4(1) notification] to 17.09.1991 [date of Award] less the Stay period from 24.11.1988 to 15.09.1991. Even though Claimant has not preferred any Cross Appeal/Cross Objection, to make the Award in accordance with the statutory provisions, direction of the Reference Court in so far as payment of 12% per annum additional market value is modified as above. In so far as awarding of 30% solatium is concerned, the same is maintained.
29. Interest Reference Court has ordered interest at the rate of 9% for one year from 29.11.1985 and thereafter at 15% p.a. less Stay period from 24.11.1988 to 15.09.1991. As per Section 34 of Land Acquisition Act, interest is payable from the time of taking possession till it is paid or deposited. Section 34 of Land Acquisition Act reads as under:-
"34. Payment of interest. - When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of [nine per centum] per annum from the time of so taking possession until it shall have been so paid or deposited.
Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry."
The date of taking possession is on 10.09.1992. Interest is payable only from the date of taking possession i.e. 10.09.1992 at the rate of 9% for the period of one year and thereafter at the rate of 15% p.a. till the date of deposit. Direction of the Reference Court as to the payment of interest is also modified as above.
30. In the result fixing the market value of the acquired land at Rs.1260/- per cent, the decree and judgment of the Reference Court in L.A.O.P.No.228 of 1996 dated 05.01.2005 is modified and this Appeal is allowed in part. Claimant is entitled to an additional amount of 12% per annum from the date of Section 4(1) notification [20.10.1984] till the date of Award [17.09.1991] less the Stay period from 24.11.1988 to 15.09.1991. Claimant is entitled to 30% solatium on the enhanced compensation. Claimant is also entitled 9% interest for one year from 10.09.1992 and thereafter 15% for every subsequent year, on the amount calculated as market value till the date of deposit.
Appellant is said to have deposited 50% of the enhanced compensation. Appellant is directed to deposit balance compensation amount along with 30% solatium on the enhanced compensation, 12% per annum additional market value and interest as stated in Paragraph [28] within a period of eight weeks from the date of receipt of copy of this Judgment. On such deposit, Claimant is permitted to withdraw the same.
Consequently, connected M.Ps. are closed. In the circumstances of the case, there is no order as to costs.
[R.B.I.,J] [G.M.A.,J]
02.09.2010
bbr
Index: Yes/No
Internet: Yes/No
To
The I Addl. Sub-Court, Coimbatore.
R.BANUMATHI,J and G.M.AKBAR ALI,J
bbr
Judgment in
A.S.No.727/2005
02.09.2010