Suresh
Kumar Vs. Town Improvement Trust, Bhopal [1989] INSC 74 (3
March 1989)
Saikia,
K.N. (J) Saikia, K.N. (J) Oza, G.L. (J)
CITATION:
1989 AIR 1222 1989 SCR (1) 908 1989 SCC (2) 329 JT 1989 (1) 439 1989 SCALE
(1)534
CITATOR
INFO : F 1989 SC1228 (1) F 1989 SC1229 (1)
ACT:
Madhya Pradesh Town Improvement Trust--Section 68-Land
acquired--Compensation for such land--Determine market value taking into
account its special value.
Constitution
of India, 1950:--Art. 136--Appeal involving
question of valuation of acquired land-interference with award--Only when
erroneous principle invoked or important piece of evidence overlooked or
misapplied.
Land
Acquisition Act, 1894--Sections, 4, 23-25--Compen- sation for land
acquired--Principles for determination--Determine market value of land taking
into consideration its special value.
HEAD NOTE:
Respondent--Town
Improvement Trust Bhopal acquired 152 acres of land in village Jamalpura under
section 68 of the Madhya Pradesh Town Improvement Trust Act within the munici-
pal limits of Bhopal. That land included 12.62 acres of
land belonging to the appellant on which stood a house, a well and some trees.
The appellant being not satisfied with the amount of compensation offered to
him by the Trust, made a Reference to the Compensation Tribunal. The Tribunal
awarded compensation at the rate of Rs.6,000 per acre for the land, Rs.5,000
for the building, Rs.3,000 for the well and Rs.815 for the trees. Thus the
Tribunal awarded a total sum of Rs.1,20,000 as compensation as against a claim
of Rs.13,39,560 made by the appellant. On appeal, the High Court, maintained
the award in respect of the building, well and the trees but enhanced the same
so far as the land is concerned by determining the market value of Rs.12,000
per acre. Working or this basis, including 15% solatium, the total amount of
compensation awarded worked out to he Rs. 1,84,923.
Being
dissatisfied with the Order of the High Court, he has come up to this Court
after obtaining special leave.
The
main contentions urged by the appellant are (i) that the house and well are
undervalued; (ii) that the land ought to have been treated as urbanised
developed land; (iii) that potential value of the land has not 909 been taken
into consideration while determining compensa- tion; (iv) that the value of the
sales of similar plots has wrongly been rejected.
Partly
allowing the appeal, this Court,
HELD:
In determining market value, where there was no sufficient direct evidence of
market price, the Court is required to ascertain as best as possible from the
materials before it, what a willing vendor would reasonably have expected to
obtain from a willing purchaser from the land in its particular position and
with its particular potentiali- ty. [914C-D] A land which is certainly or
likely to be used in the immediate or reasonably near future for building
purposes but which at the valuation date is waste land or has been used for
agricultural purposes, the owner, however, willing a vendor he is, is not
likely to be content to sell the land for its value as waste or agricultural
land as the case may be. The possibility of its being used for building
purposes would have to be taken into account. However, it must not be valued as
though it had already been built upon. It is the possibilities of the land and
not its realised possibilities that must be taken into consideration. [914E-F]
In estimating the market value of the land, all the capabilities of the land
and all its legitimate purposes to which it may be applied, or for which it may
be adapted are to be considered and not merely the condition it is in and the
use to which it is put at the time applied by the owner.
The
proper principle is to ascertain the market value of the land taking into
consideration the special value which ought to be attached to the special
advantage possessed by the land; namely, its proximity to developed urbanised
areas.
[915A-B]
The value of the potentiality has to be determined on such materials as are
available and without indulgence in fits of imagination. [915B-C] A court of
appeal interferes not when the judgment under attack is not right, but only
when it is shown to be wrong.
[912E]
In an appeal under Art. 136 of the Constitution of India involving the question
of valuation of acquired land, the Supreme Court will not interfere with the
award unless some erroneous principle has been invoked or some important piece
of evidence has been overlooked or misapplied [912B-C] 910 When the willing
vendor had agreed to sell land at 14 annas per sq. feet after development and
the development charge was to be paid by the willing purchaser it could be
reasonable to deduct only 50% on account of the land to be set apart for roads,
drains etc. and not beyond that. Con- sidering this aspect of the matter and
the potential value of the land as urban developed area the Court took the view
that the compensation may justly be enhanced by 1/6th i.e. to Rs.14,000 per
acre. Solatium 15% was maintained but the rate of interest was raised to 9% on
the enhanced compensa- tion till payment. [918F-G ] Atmaram Bhagwant v.
Collector of Nagpur, A.I.R. 1929 P.C.
92,
followed; Dollar Company Madras v. Collector of Madras, [1975] Suppl. S.C.R.
403; Gajapatiraju v. Rev. Divisional Officer, A.I.R. 1939 P.C. 98; Mahabir
Prasad Santuka v. Collector, Cuttack,
[1987] 1 S.C.C. 587 and U.P. Government v.H.S. Gupta, A.I.R. 1957 S.C. 202.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 2931 (N) of 1981.
From
the Judgment and Order dated 7.10.1980 of the Madhya Pradesh High Court in
Miscellaneous First Appeal No. 78 of 1974.
L.M. Singhvi,
D. Bhandari and A.K. Sanghi for the Appellant.
T.S.
Krishnamurthy Iyer and S.K. Gambhir for the Respondent.
The
Judgment of the Court was delivered by K.N. SAIKIA, J. This Civil Appeal by
special leave is from the order dated 7.10.1980 of the High Court of Madhya
Pradesh, Jabalpur in Misc (F) Appeal No. 78 of 1974, allow- ing the appeal and
enhancing compensation for land acquired by the Improvement Trust, Bhopal.
The
Improvement Trust, Bhopal, hereinafter referred to as 'the Trust', acquired 152
acres of land of Village Jamal- pura by Notification dated 30th April, 1965
issued under Section 68 of the Madhya Pradesh Town Improvement Trust Act, 1960,
hereinafter referred to as 'the Act', and took posses- sion of the land
sometimes in June, 1967. Out of these acquired land the instant appellant owned
12.62 acres where- upon stood a house, a well and some trees. The whole of the
acquired land including that of the appellant was within the limits of Bhopal
Municipal Corporation. On 25.3.1966 Notifi- cation under Section 71 of 911 the
Act was issued vesting the land in the Trust. The Trust offered compensation at
the rate of Rs.950 per acre (@ 14 paise per sq. ft.) amounting to Rs.11,997.00;
for the well Rs.3,108; and for the trees Rs.815 and for compulsory acqui- sition
15% amounting to Rs.2,400. The appellant made refer- ence, No. 8 of 1970 to the
Compensation Tribunal under Section 72(3) of the Act. The Tribunal awarded
compensation at the rate of Rs.6,000 per acre (Rs.0.28 Paise per sqr. ft.) for
the land, Rs.5,000 for the building, Rs.3,000 for the well and Rs.815 for the
trees. Thus the Tribunal by its award dated 25th November, 1972 awarded a total
sum of Rs.1,20,060 inclusive of interest as compensation to the appellant, as
against his claim at the rate of Rs.20,000 per acre for the land, Rs.20,000 for
the building, Rs.5,000 for the well, Rs.2,500 for the trees and Rs. 10,000 for
loss of business and earnings, his total claim amounting to Rs. 13,39,560. On
appeal, being Misc. (F) Appeal No. 78 of 1974, the High Court maintained the
award in respect of the Build- ing, well and the trees, but enhanced the
compensation in respect of the land determining the market value at Rs. 12,000
per acre and the total area being 12.62 acres the total compensation inclusive
of that allowed for the house etc. and 15% solatium worked out to Rs. 1,84,293.
Dissatis- fied, the appellant obtained leave and filed this appeal.
Dr.
L.M. Singhvi learned counsel for the appellant submits, inter alia, that the
house and the well were gross- ly undervalued; that both the Tribunal as well
as the High Court misdirected themselves in treating the land as agri- cultural
land but not as urbanised developed land on the erroneous ground that there was
no building activity of substantial nature at the time of acquisition in spite
of the fact that a part of the land was already converted to Abadi, that both
the Tribunal as well as the High Court failed to take into consideration the
potential value of the land; and that evidence of sales of similar plots was
not accepted on the ground that those pertained to small plots; and that the
High Court committed an error when it deducted the development charge from the
agreed price instead of adding it to the agreed price while calculating the
market value.
Mr. Krishnamurthi
learned counsel for the respondent Trust submits that the house and the well
were properly valued; that it was not correct that the Tribunal did not
correctly consider the question of the nature of the land which it held to be
agricultural because it did not find therein any building activity of
substantial nature. At any rate, counsel submits, the High Court took into considera-
tion the potential value of the land and as such there was no omission to
consider any 912 relevant material or misdirection in this regard. Counsel,
however, fails to explain the reason of deducting the devel- opment charge from
the agreed price, instead of adding it, while calculating market value of the
lands on the basis of evidence produced by the claimant. This, however,
according to counsel, is not a sufficient ground for our interference in this
appeal under Article 136 of the Constitution of India.
In an
appeal under Article 136 of the Constitution of India involving the question of
valuation of acquired land, this Court will not interfere with the award unless
some erroneous principle has been invoked or some important piece of evidence
has been overlooked or misapplied, as was held in Atmaram Bhagwant v. Collector
of Nagpur, A.I.R. 1929 P.C.
92. In
Dollar Company, Madras v. Collector of Madras, 1975 Suppl. S.C.R. 403 the Land
Acquisition Officer awarded Rs. 800 per ground as compensation and the City
Civil Court on reference awarded at the rate of Rs. 1,000 pet ground, and the
High Court on appeal awarded Rs.1800 per ground. The appellant himself
purchased the suit land about 10 months before the Notification under Section 4
was made at a price of Rs.410 per ground whereafter the appellant has spent a
little money on filling up a pond. Dismissing the appeal it was observed that
this Court interferes with the judgment of the High Court only if the High
Court applies a principle wrongly or because some important point affecting
valuation has been overlooked or misapplied. A Court of appeal inter- feres not
when the judgment under attack is not right, but only when it is shown to be
wrong. As there was no error in principle in the High Court judgment nor had
any of the limited grounds on which that Court's jurisdiction could be
legitimately exercised was made out, the appeal was dis- missed. Therefore, it
is for the the appellant to show that there is ground for interference in this
case.
As
regards the value of the house, the Land Compensation Tribunal clearly observed
that it visited the spot and found that the house 'was in extremely dilapidated
condition having big cracks in foundation, walls and pillars. The foundation
was getting-loose. The roof of asbestos sheets was sagging, indicating that the
wood rafters had been badly damaged. Doors and windows were in bad condition.
The two verandahs of the house were temporary, with roof of asbestos sheets.'
The house, according to the Tribunal might be 20 to 25 years old and
depreciation would be 5% per year. Considering the above factors 913 we are of
the view that the compensation awarded, namely, Rs.5,000 is reasonable. Also
from evidence we find that Rs.3,000 for the well was reasonable. There was no
error of principle and hence there can be no grievance on these counts.
Regarding
nature of the land the Tribunal noted that the claimants in most of the
references asserted that the ac- quired land should be valued as urban house
site because of alleged potential value and had claimed compensation between
the Rs.3 to Rs. 1 per sqr. ft. The Trust disputed the claim and urged that the
lands at the time of acquisition, were either agricultural or- merely fallow
land and they had absolutely no urban site value. The claimants also urged that
the lands were situated within Corporation limits and lands of some of the
claimants were already diverted (con- verted). We agree with Mr. Krishnamurthi
that though the Tribunal treated it as agricultural, the High Court proceed- ed
on the principle of developed land.
It is
true that the market value of the land acquired has to be correctly determined
and paid so that there is neither unjust enrichment on the part of the acquirer
nor undue deprivation on the part of the owner. Dr. Singhvi argues that failing
to consider potential value is an error of principle. It is an accepted
principle as was laid down in Gajapatiraju v. Rev. Divisional Officer, A.I.R.
1939 P.C.
98
that the compensation must be determined by reference to the price which a
willing vendor might reasonably expect to obtain from willing purchaser. The
disinclination of the vendor to part with his land and the urgent necessity of
the purchaser to buy it must alike be disregarded. Neither must be considered
as acting under compulsion. The value of the land is not to be estimated at its
value to the purchaser but this does not mean that the fact that some
particular purchaser might desire the land more than others is to be
disregarded. The wish of a particular purchaser, though not his compulsion, may
always be taken into consideration for what it is worth. Any sentimental value
for the vendor need not be taken into account. The vendor is to be treated as a
vendor willing to sell at the market price. Section 23 of the Land Acquisition
Act, 1894, enumerates the matters to be considered in determining compensation-
The first to be taken into consideration is the market value of the land on the
date of the publication of the Notification under Sec- tion 4(1). Market value
is that of a willing vendor and a willing purchaser. A willing vendor would
naturally take into consideration such factors as would contribute to the value
of his land including its unearned increment. A will- ing purchaser would also
consider more or less the same factors. There may be many ponder- 914 able and
imponderable factors in such estimation or guess work. Section 24 of the Act
enumerates the matters which the Court shall not take into consideration in
determining compensation. Section 25 provides that the amount of compen- sation
awarded by the Court shall not be less than the amount awarded by the Collector
under Section 11. As was observed in Gajapatiraju (supra) sometimes, it happens
that the land to be valued possesses some unusual, and it may be, unique
features, as regards its position or its potentiali- ty. In such a case the
court has to ascertain as best as possible from the materials before it what a
willing vendor might reasonably expect to obtain from a willing purchaser, for
the land in that particular position and with that particular potentiality. In
the instant case also the ac- quired land possesses Some important features
being located within the Corporation area and its potentiality for being
developed as a residential area. In such a situation in determining its market
value, where there was no sufficient direct evidence of market price, the Court
was required to ascertain as best as possible from the materials before it,
what a willing vendor would reasonably have expected to obtain from a willing
purchaser from the land in this par- ticular position and with this particular
potentiality. It is an accepted principle that the land is not to be valued,
merely by reference to the use to which it has been put at the time at which
its value has to be determined, that is, the date of the notification under
Section 4, but also by reference to the use to which it is reasonably capable
of being put in the future. A land which is certainly or likely to be used in
the immediate or reasonably near future for building purposes but which at the
valuation date is waste land or has been used for agricultural purposes, the
owner, however willing a vendor he is. is not likely to be content to sell the
land for its value as waste or agricultural land as the case may be. The
possibility of its being used for building purposes would have to be taken into
account.
However,
it must not be valued as though it had already been built upon. It is the
possibilities of the land and not its realised possibilities that must be taken
into considera- tion, In other words, the value of the land should be deter-
mined not necessarily according to its present disposition but laid out in its
lucrative and advantageous way in which the owner can dispose it of. It is well
established that the special, though natural, adaptability of the land for the
purpose for which it is taken, is an important element to be taken into
consideration in determining the market value of the land. In such a situation
the land might have already been valued at more than its value as agricultural
land, if it had any other capabilities. However, only rea- sonable and fair
capabilities but not far-fetched and hypo- thetical capabilities are to be
taken into consideration. In sum, in estimating 915 the market value of the
land all of the capabilities of the land, and all its legitimate purposes to
which it may be applied or for which it may be adapted are to be considered and
not merely the condition it is in and the use to which it is at the time
applied by the owner. The proper principle is to ascertain the market value of
the land taking into consideration the special value which ought to be attached
to the special advantage possessed by the land; namely, its proximity to
developed urbanised areas.
The
value of the potentiality has to be determined on such materials as are
available and without indulgence in fits of the imagination. In Mahabir Prasad Santuka
v. Col- lector, Cuttack, [1987] 1 S.C.C. 587 the evidence on record was that
the land was being used for agricultural purposes but it was fit for non-agricultural
purposes and it had potentiality for future use as factory or building site and
that on industrialisation of the neighbouring areas the prices increased
tremendously, and that aspect, it was held, could not be ignored in determining
compensation.
On the
question as to whether the land was urbanised developed land or not we find
that the Tribunal consolidated all the 15 references arising out of the
acquisition for the purpose of recording evidence and, that is, how it came to
consider the Exts. P-1, P-2, P-3, and P-8 being agreements of sale executed by Phool
Chand Gupta who was father of the claimant in reference No. 1 of 1970 while the
petitioners reference was No. 8 of 1970. Similarly the Ext. D-1 to D-6 also
pertained to small plots of land out of land in refer- ence No. 1 of 1970. The
High Court rightly held that the Exts. P-1, P-2, P-3 and P-8 and the sale deeds
Exts. D-1 to D-6 furnished a more reliable data for working out the market
value. If those lands were the urban developed house site lands, their prices
would have reflected the same. It cannot, therefore be said that High Court was
in error in taking the above Exts. into consideration. However, poten- tial
value was not separately considered. Exts. P-1, P-2, P-3 and P-8 were agreements
of sale executed on 29th July, 1961 in respect of small parcels of land wherein
the vendor agreed to sell the land at that time at the rate of 14 annas per sqr.
ft. to Rs. 1 per sqr. ft. It was further agreed that the vendees would pay
development charges at the rate of 4 annas per sqr. ft. The vendor and the
respective vend- ees were examined- It should be noted that the Exts. were
agreements to sell and not sales. The High Court observed.
that
the idea behind those transactions was that the vendor would apply to the
revenue authority for diversion and the town planning authority for sanction of
lay-out plan and the sale deeds would be executed after the land was developed.
The
High Court also noted that 916 there was nothing to show that the agreements
were prepared only to be used later as evidence of market value. In Decem- ber
1960 Phool Chand Gupta applied for diversion of his land to the Sub-Divisional
Officer. In January 1961 application was also made to the Town Planning
Authority for sanction of the lay-out plan but in the meantime the land was
notified for acquisition under the Land Acquisition Act sometimes in 1962 and Phool
Chand Gupta tried to extricate his land from acquisition which, however, did
not materialise and, as already noted, on 30.4.65 the instant notification to
ac- quire under Section 68 of the Act was issued. Rejecting the contention that
the agreements were spurious, the High Court observed that the very fact that
applications were made for diversion and for sanction of lay-out plan went to
show that the owner was interested in the development in the land and in
selling it after dividing it into plots. Thus, the High Court, rightly took
into consideration the above Exts, which pertained to a part of the acquired
land of 152 acres.
The
High Court also considered the sale deeds Exts. D-1 to D-6 which pertained to
small plots of lands out of land in reference No. 1 of 1970. Those sale deeds
were registered in 1966-67, but the agreements to sale were entered into in
1959-62. The respective purchasers and the vendors were examined. The market
value on the basis of Ext. D-2 made in the sale deed of 1962 selling only to
12.50 sqr. ft. for Rs.260 which worked out to Rs.8712 per acre. The High Court
did not say that these Exts. were rejected. By Ext. P-5, P-6 and P-32 small
parcels of land, at Kumharpura were sold.
Kumharpura
was noted to be two to three furlongs away from the acquired land. The market
rate according to these Exts. ranged from Rs. 1.88 to 2.34 per sqr. ft. The
High Court observed that these sales could not be a useful guide for
determining the market value of land acquired. We are of the view that compared
to Exts. P-1, P-2, P-3 and P-8 Exts. P-5 and P-6 and P-32 were less indicative
of the market value of the acquired land. We feel that the appellant should
have no grievance for rejection of these sales of Kumharpura. We find force in
the contention of Dr. Singhvi that potential value was not taken into account
in this case to the extent it should have been done. From the award dated
25.11.1972 it appears that the acquired land was situated at Village Nissatpura,
within Corporation limits of Bhopal Town and consisting of Khasra No. 190/ 73,
136/74, 178/74, 135/75-76, the total area being 12.62 acres. The High Court found
that the land was bounded on three sides by three roads: towards the eastern
side by Berasia road; towards the western side by Sultania road; and towards
the northern side by P.G.B.T.
College Road.
Southern boundary of the land was a Nala. The High 917 Court also noticed that
the land abutted to roads, namely, Berasia road and P.G.B.T. College road and
the claimant had a house on the land and that the claimant had stated that he
had obtained water and electricity connection from the Corporation and the electricity
Board.: 7.60 acres of land out of 12.62 acres had been diverted and the land
was even.
At
paragraph 14 of the special leave petition it is stated that the land is
approachable from two different and important localities of Bhopal Town. From Bajaria
Chowk Shahjanabad, a road, called Sultania Infantry road, proceeds Military
Lines called Sultania Infantry lines. On both sides of this road, there is the
thickly habited locality of Shahjahanabad, till about two furlongs. Slightly
ahead is the enterance porch gate of the Military lines. Just before the gate,
a tarred road bifurcates on the right hand side and it enters the acquired land of Swatantra Kumar Ref. No. 1/70. This tarred road was constructed by the Trust after
acquisition of the lands. It goes on all sides of village Jamalpura, which is
surrounded on all sides by the lands of Ref. No. 1/70. A part of land of Ref.
No. 1/70 was developed after acquisition, and the tarred road reaches the
developed plots. We have to note that such detail evidence was not there before
the Tribunal and no benefit of development pursuant to and after the
acquisition can be taken into consideration. Even so, from the map and
juxtaposition we have no doubt that the acquired land had potentialities which
deserved to be counted.
In
U.P. Government v.H.S. Gupta, A.I.R. 1957 S.C. 202 where in computing
compensation for acquisition of an estate outside the Municipal area the High
Court had given valid and weighty reasons for adopting the principle that the
valuation should be on plot-wise though there was certain advantages in
computing the value at the block rate where vast area of land was acquired,
this Court held that in the circumstances of that case the proper mode of
valuation was plot rate basis. In the instant case the application of the
principle that if the land has to be sold in one block consisting of a large
area, the rate likely to be fixed per sq. ft. would be lower than if an equal
extent of land is parcelled out into smaller bits and sold to different pur-
chasers could not be found fault with. The price fetched for smaller extent of
land similarly situated with the same kind of advantages and drawbacks can also
be applied to a large area valued plot-wise instead of block-wise.
In the
instant case relying on Exts. P-1, P-2, P-3 and P~8 and considering the fact that
applications were made for diversion and for sanction of a lay-out plan the
High Court found that it went to show that the owner was interested in
developing the land and in selling it by 918 dividing it into plots. The lowest
rate of price in these agreements was 14 annas per sqr. ft. and the agreements
mentioned that 4 annas per sqr. ft. Would be needed for developing the land.
This charge was to be paid by the purchaser. So the price of developed land
would be Rs. 1/2 per sqr. ft. The evidence of M.P. Jain (D.W. 9), Senior
Draftsman of the Improvement Trust went to show that ex- penses for improvement
of land ranged from Rs. 1.50 to 2 per sqr. ft. The statement of Shri Jain was
recorded in 1972.
Making
some allowance for the increase in the rate the High Court considered it proper
to hold that in 1965 when this land was acquired the charges for improvement
would have worked at 75 paise (12 annas) per sqr. ft. It had also come in the
evidence of Shri Jain that 50 to 60 per cent of the land had to be left for
roads, drainage, gardens, school etc. and it was only then that the lay-out
plan was sanc- tioned. High Court, accordingly, deducted improvement charges at
the rate of 12 annas per sqr. ft., and the market rate for unimproved land in
the light of these agreements worked out to 6 annas per sqr. ft. As 50% of the
land at least had to be left out for roads etc; so the market rate of 3 annas
per sqr. ft. was applied for the entire unde- veloped land. Market rate thus
worked out to Rs.8,000 per acre approximately. However, the High Court awarded Rs.
12,000 per acre. There was an additional factors in the calculation. Mr. Krishnamurthi
therefore submitted that the High Court took into consideration the potential
value of the land as a developed area but while making calculation it may have
committed mistake. To our mind the error was in wholly overlooking the basic
price agreed to be paid by the purchaser and the standard of development they visualised.
The
whole of the basic price could not be expected to be eaten up by the
development of the land to the standard contemplated by the vendor and
purchaser. When the willing vendor has agreed to sell land at 14 annas per sqr.
ft. after development and the development charge was to be paid by the willing
purchaser, it could be reasonable to deduct only 50% on account of the land to
be set apart for roads, drains etc. and not beyond that. Considering this
aspect of the matter and the potential value of the land as urban developed
area we are of the view that the compensation may justly be enhanced by 1/6th
to Rs. 14,000 per acre and we do so. We maintain 15% solatium but raise the
rate of interest to 9% on the enhanced compensation from today till payment.
We
leave it open for the appellant to move for higher inter- est and solatium if
entitled by virtue of subsequent judg- ment of this Court, if any.
In the
result, this appeal is allowed as above. We make no order as to costs.
Y.L.
Appeal allowed.
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