M/S. Hasanali
Khanbhai & Sons & Ors Vs. State of Gujarat [1995] INSC 333 (26
July 1995)
Ramaswamy,
K. Ramaswamy, K. Paripoornan, K.S.(J)
CITATION:
1995 SCC (5) 422 JT 1995 (6) 92 1995 SCALE (4)786
ACT:
HEAD NOTE:
O R D
E R
Notification
under Section 4 [1] of the Land Acquisition Act, 1894 [for short, `the Act']
was published in the State Gazette of Gujarat on March 17, 1960, acquiring 7
acres and 28 gunthas of land to establish orphanage at the outskirts of Rajkot
Municipality. The Land Acquisition Collector awarded compensation by his award
dated 30th July, 1962 at the rate of Rs. 1.25 per sq.
yard as against the claim of Rs. 18/- per sq. yard. Dissatisfied therewith, on apapellants'
reference Civil Court by its award and incree dated 31st July,1973 determined
the compensation at the rate of Rs. 2.05 per sq. yard. On appeal to the High
Court under Section 54 of the Act, Gujarat High Court by its judgment dated 1st
July, 1975 in First Appeal No.242/1973, while holding that the lands under
acquisition are capable to fetch market value at the rate of Rs.10.00 per sq.
yard, determined the compensation after 60% deduction, at the rate of Rs.4/-
per sq. yard. In appeal by special leave under Article 136 of the Constitution,
appellants challenges the corretness of the deduction at do% of the price determinaed
to the lands under acquisition.
Shri Dholakia,
learned senior counsel for the appellant strenuously contended that the
reasoning of the Division Bench in giving deduction of 60% price are fallacious
and legally unsustainable. It is contended that having accepted the sale
transactions in survey Nos. 334 and 335 to be genuine and offer to be
comparable sales to determine the compensation, would indicate that in the year
1960 the market value was ranging between Rs. 12 to 13 per sq. yard which were
sold again in 1961 at the rates varying between Rs. 13 to 18 per sq. yard. The
same would indicate that a prudent willing purchaser would offer to purchase
the lands at the rate of Rs. 12-18 per sq. yard. Therefore, having determined
the compensation at the rate of Rs. 10/- per sq. yard, the High Court was not
justified in reducing 60% and wrongly fixed compensation at the rate of Rs. 4/-
per sq. yard. He also further contended that the restrictive conditions which, in
future, may be imposed by the appropriate authority on the development of the
land were not a relevant circumstance to peg down the prevailing price. He also
contended that the size of the land acquired and the location are not relevant
since there is an indication that there was already steady development in the
area and buildings were already constructed in the neighbourhood and that,
therefore, the deductions were illegal. In support thereof, he placed strong
reliance on Chimanlal Hargovingdas vs. Special land Acquisition Officer, Poona
& Ors. [(1988) 3 SCC 751] and Bhagwathula Samana & Ors. vs. Special Tehsildar
& Land Acquisition Officer, Vishakapatnam Municipality [AIR 1992 SC 2298].
The
learned counsel for the State strongly resisted the contention of Shri Dholakia.
The question, therefore, is whether the High Court was right in deducting 60%
of the price in determining the compensation. Since the State had not come in
appeal against the determination of the compensation at Rs.10/- per sq. yard,
the need to go into its correctness is obviated. But suffice it to state that
the High Court has rested its conclusion on diverse facts.
The
first, in our view, rightly is that the lands are situated far away from the
municipal limits so as to use for building purpose; secondly, possibility of
the restrictions to be imposed by the State under Section 74 of the Highways
Act is always imminent. Thirdly, the vast extent of lands acquired. Lastly, the
comparative extent of land under acquisition and the smallness of the lands
covered by the sales in Survey Nos. 334 and 335. It had held that sales of
small extent do not offer as a comparable instance in determination of the
compensation of vast lands. The question is whether these principles are not
relevant and germane to adjudge the market value ultimately to be fixed by the
Court. It is true, as contended by Mr. Dholakia, that the counsel appearing for
the State in the Reference
Court had not
adverted in the cross-examination to the relevant factors to be elicited in the
cross-examination of the witness examined on behalf of the appellant. But it is
settled law by series of judgments of this Court that the court is not like an
umpire but is required to determine the correct market value after taking all
the relevant circumstances, evinces active participation in adduction of
evidence; calls to his aid his judicial experience; he evalutae the relevant
facts from the evidence on record applying correct principles of law which
would be just and proper for the land under acquisition. It is its
constitutional, statutory and social duty. The court should eschew aside feats
of imagination but occupy the arm-chair of a prudent willing but not too
anxious purchaser and always ask the question as to what are the prevailing conditions
and whether a willing purchaser would as a prudent man in the normal market
conditions offer to purchase the acquired land at the rates mentioned in the
sale deeds. After due evaluation taking all relevant and germane facts into
consideration, the Court must answer as to what would be the just and fair
market value. These principles were enunciated by this Court in, all decisions
including the one relied on by Mr. Dholakia which needs no reiteration. It is a
question of fact in each case to consider whether the land under acquisition is
possessed of such value which includes potential value, if any, as comparable
with reference to the evidence on record. It is seen that the sale instances
referred and relied on by the High Court in Survey Nos. 334 and 335 are small
pieces of land; they do not offer as comparable sales. This Court in
Administrator General of West Bengal vs. Collector, Varanasi [AIR 1988 SC 943]
has settled the law that when sales of small lands are found to be germane
sales in developed area between willing purchaser and willing vendor but not
too anxious buyer the value of small developed plots cannot directly be adopted
in fixing the price for large extent and is not a safe guide in valuing large
extent of lands.
However,
if it is found that large extent to be valued admits of and is ripe for use of
building purposes, that building lots could be laid out on the land could be
good selling proposition and that valuation on the basis of method of
hypothetical layout could with justification be adopted. Then in valuing such
small layout any such valuation as included in the sales comparably small sites
in some area at the time of notification would be relevant in such cases.
Necessary deduction for the extent of the land required for the formation of
the roads and other civic amenities requires to be made. In that case 50% was
deducted.
The
facts in Bhagwathula Samana's case [supra] were that the lands were situated in
already developed area and that, therefore, this Court had held that no
deduction towards developmental charges could be made. The ratio therein is of
little assisance. When the lands are sought to be used for building purposes,
admittedly the entire land cannot be used for building purposes without
providing roads, drainage, electricity and other civic amenities for which
necessary deduction of 1/3rd should also be made as held in a catena of
decisions of this Court.
It is
seen that when a large track of land of 7 acres and 28 gunthas was purchased by
the claimant owners in 1956 at Rs.251 per acre, in 1960 when the notification
was issued what would be the reasonable and probable price which a reasonable
prudent purchaser would offer when a large track of land is offered for sale in
open market. In this case, neighbouring land was sold at the rate of Rs.960/-
per acre in 1960 as against the price which is paid in 1956 at the rate of
Rs.251/- per acre. In 1956, he himself valued and assessed the land that it has
potentiality at the rate of Rs. 251/- per acre. It is settled law that instead
of proceeding on the feats of imagination the Court has to sit in the arm-chair
of a prudent purchaser and then consider whether a prudent purchaser would be
willing to purchase such a large extent of land and if so at what price. In
this case, having considered the situation of the land being far away from the
outer minicipal limits though situated near about the railway line, that itself
would be a factor to be taken into consideration in determing the market value.
Added
to that, there is a possibility to impose statutory restrictions to develop the
lands for buildig purposes. No prudent purchaser would hazard to purchase such
large extent of land at the rates when small extents of lands are sold in
plots. True that the purchasers hazarded to purchase lands in the neighbouirng
survey numbers and have taken grave risk. But it would not be safe guide to
adopt the same price offered by them. Considered from this perspective and fromthe
totality of facts on record, we are of the view that the High Court was well
justified in deducting 60% of the value and giving Rs. 4/- per sq. yard.
Accordingly, we do not find any justification warranting interference. The
appeal is dismissed but in the circumstances, with no costs.
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