Appropriate
Authority & Anr Vs. Kailash Suneja & Anr [2001] Insc 371 (7 August 2001)
S. Rajendra
Babu & K.G. Balakrishnan Rajendra Babu, J. :
The
property comprised in No. G-4(Old No.C-62), Maharani Bagh, New Delhi on a plot measuring about 800 sq.
yards was agreed to be sold pursuant to an agreement dated July 1, 1993 for a sale consideration of Rs.79 lakhs.
The property consists of two floors - ground and the first - and is in
occupation of the tenants. The agreement provided for symbolic delivery of the
possession while it was open to the purchaser to make use of the portion over
the roof on the first floor. An application in Form 37(I) was filed on
9.7.1993. The Appropriate Authority worked out the fair market value of the
property and the apparent consideration fell short by 24 per cent of the fair
market value. The Appropriate Authority compared the property in question with
three different properties as sale instances to arrive at the correct market
value of the value of the property in question :
(1)
G-8, Maharani Bagh,
(2)
D-18, Maharani Bagh, and
(3)
N-62, Panchsheel Park.
The
High Court went into the mode of calculation of fair market value adopted by
the Appropriate Authority and stated that in respect of property comprised in
D-18, Maharani Bagh the agreement had been entered into on 25.6.1991 and on
account of the time gap of 24 months, the adjustment of plus 24 per cent was to
be made and in respect of property comprised in G-8, Maharani Bagh, there was
basement potential and, therefore, adjustment of minus 10 per cent was to be
made by the Appropriate Authority on that count. This basis is termed to be
perverse. In identical circumstances when the valuation adopted by the
Appropriate Authority was challenged in Appropriate Authority & Anr. vs. Sudha
Patil (Smt.) & Anr., 1998 (8) SCC 237, this Court after examining the
decision in C.B.Gautam vs. Union of India, 1993 (1) SCC 78 and the absence of
provision of filing an appeal against the order made by the Appropriate
Authority, had stated that the conclusion of the Appropriate Authority
regarding the fair market value in a matter of compulsory acquisition of
immovable property after considering all the germane and relevant materials
should be accepted and the same should not be made a subject matter of the
examination as if it is an appeal. Reasons set forth by the Appropriate
Authority are as follows :
Subject
property Ist sale instance Sale agreement 9.7.93 Apparent sale consideration
Declared land rate works out at Rs.21,821 per sq. mt. Value to be increased at
1% per month for 24 months 24% Sale deed dated 25.6.91, 24 months earlier sale
agreement Has no basement 10% to be deducted Thus value to be added is 14%
(24%-10%) if 14% is added the land rate of subject property would come to
Rs.21,821 x 14% Rs.24,875 or Rs.25,000 per sq.mt.
Value
of land Rs.1.30 crores Depreciated value of the structure Rs.9,35,758 Total
value of the subject property Rs.1,39,33,758 The property is tenanted
Depreciated value for 6 years at 8% is calculated at : Rs.87,78,267
(Rs.1,39,33,758 x .63) (a) Thus the value of the subject property is
Rs.87,78,267 (b) To this rent for 6 years is added Rs.1,42,092 Has barsati
potential of the area is 149.90 sq. mts.
Has no
barsati potential Rs.37,27,500 (c) This is to be added.
The
value of the subject property is fixed at Rs.1,26,42,859 Or Rs.1,26,45,000 This
is 58% more than the apparent considerat- ion of the subject property
(Rs.79,99,390) Subject property D-18 (known as I-15), Maharani Bagh 2nd sale
instance Sale agreement Sale deed dated 1.12.1992 Rs.1.11 crores Adjusted
declared land rate works out at Rs.29,587 per sq. mt.
Value
to be increased at 1% per month 7 months earlier to sale agreement For 7 months
+ 7% FAR (not so much as the 2nd instance) FAR (140-100) - 28% Side open (not
available/ which is available in 2nd instance) - 5% Has no basement potential -
10 7% - 43% - 36% Declared land rate deducting 36% 29,587 x .64 = Rs.18,950 per
sq. mt.
Value
of the land of the subject property Depreciated value of the structure 52 x
18,950 Rs.98,54,000 9,33,758 Rs.1,07,87,758 Tenanted Depreciated value at the
rate of 8% Rs.67,96,287 (Rs.1,07,87,758 x .63) Rental increase for 6 years
Rs.1,42,092.00 = Rs.28,21,655 Barsati potential 148.90 sq.mt. x 18,950 Total
value of the subject property Rs.97,60,034 22% higher than to AC Subject
property Sale agreement 9.7.1993 3rd sale instance N-62, Panchsheel Park 800 sq.yds.
having FAR Land rate declared works out at Rs.28,455 per sq.mt.
If the
rate of increase of 1% per month 4 months + 4% time gap 29.4.1993 sale
agreement consid eration Rs.1,56,00,000 Rs.35,02,220 Rs.1,91,02,220 No open
area Falling open area -5% No basement potential Basement available 10% 4% -
15% = -11% The land rate works out at Rs.25,333 (28,455 x .89) Depreciated
value of the structure Land rate of subject property (ground floor , 1st floor)
520 sq. mts. = 25,333 x 520 = Rs.131,73,160 = 1,31,73,160.00 =9,33,758.00
-------------------------- Rs.1,41,06,918.00 -------------------------- The
Appropriate Authority added one per cent every month. The basement and barsati
potential was also taken into account. The Appropriate Authority took into
account the subject property was tenanted and made certain calculations such as
6 years deferred value at 8 per cent and 6 years rent was added to the value
arrived at by the above process.
The
High Court disapproved this process of arriving at the figures and that the
apparent consideration fell short of the fair market value by more than 15 per
cent and, therefore, the High Court held that the action is incorrect.
The
Department contends that the learned Judges of the High Court could not have
sit on judgment over the manner of calculations made by the Appropriate
Authority. If any of the factors set out therein had been ignored in the matter
of arrival of fair market value, the same would have affected the consideration
made by the Appropriate Authority. There are several methods of arriving at
fair market value such as comparative sale method or the capitalisation of the
rent, i.e., yield method or any other appropriate method. But when the
Appropriate Authority adopted one or the other method and in that process there
is no inherent error or the factors taken note of by the Appropriate Authority
being relevant, it is submitted that it is not open to the High Court to have
interfered with such a matter. This Court in Sudha Patils case [supra] has
stated that when the Appropriate Authority comes to the conclusion one way or
the other after giving due opportunity to the parties concerned and there has
been under-valuation on that basis by more than 15 per cent of the fair market
value, the Appropriate Authority had jurisdiction to interfere with the same.
The
High Court took the view that there is nothing on record to suggest as to what
were the special reasons for making a purchase order in respect of wholly
tenanted property. Even assuming that there was some justification for the
authority to initiate proceedings for the pre- emptive purchase of the property
under Chapter XX-C of the Act, the method of valuation of the fair market value
had to be just and reasonable. The authority has compared the values of
incomparable properties. While considering comparable instances, the instances
of tenanted properties had to be taken into consideration and not vacant
properties by discounting without any factual or legal basis. While the
agreement in relation to property at Maharani Bagh had been entered into in
June 1991, the agreement for the property in question was entered into on July 1, 1993. Therefore, there is no basis for
adding 24% on the hypothetical basis that there would be increase of 1 per cent
every month.
In
respect of tenancy, the plea taken before the High Court is that the purchaser
had mutual terms to get the property vacated from the tenant. While the ground
floor tenancy was from the year 1979 and the first floor tenancy was from the
year 1967, there is hardly any justification to presume that the tenants would
vacate in 5/6 years. The sale instance in respect of property comprises in
S-39-A, Panchsheel Park, which was substantially tenanted without any
justification, was not taken into consideration, though rent capitalisation
method was applied in that case. Why in respect of one tenanted property rent capitalisation
method was applied to work out the fair market value and in the other case land
and building method was applied is not clear. It is on this basis the High
Court allowed the writ petition before it.
It is
no doubt true that the scope of interference under Article 226 of the
Constitution is very limited, but that is only in the nature of a judicial
review of the proceedings and not by way of appeal or revision where the scope
of interference is much wider. In cases of the present nature where several
methods are available for finding out the value of the property and if one or
the other method is adopted by the Department and that may be reasonable, it
may not call for any interference. However, if there are loopholes or lacunae
in the process of reasoning adopted by that authority in reaching the
conclusion as in the present case that the tenanted property would be vacated
soon or that the property is close to the vicinity of the situation of the
subject property if compared, adopting different methods of valuation, then the
parties who appear before the authorities will definitely have a reason to have
a heart burn. If one method of valuation is adopted and benefit is given to one
party and why that method is not adopted in the other case to reach the
conclusion the other way is not clear and in our opinion it is unjustifiable.
If in this background the High Court examined the matter and arrived at a
conclusion one way or the other, we do not think it is necessary for us to
interfere with that finding in a proceeding arising under Article 136 of the
Constitution.
Hence
these appeals shall stand dismissed. No costs.
...J.
[ S.
RAJENDRA BABU ] ...J.
[K.G.
BALAKRISHNAN] August
07, 2001.
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