Kasturi
& Ors Vs. State of Haryana [2002] Insc 463 (12 November 2002)
Doraiswamy
Raju & Shivaraj V. Patil. Shivaraj V. Patil J.
WITH
(C.A. Nos. 7140/2001, 7143/2001, 7142/2001, 7141/2001, 7171/2001 7145-67/2001,
7144/2001, 7168/2001, 8206/2001, SLP (C) Nos. 17711/2001, 2107-08/2002,
2111-2112/2002, 2113-2114/2002 & C.A. Nos. 5777/2002, 5610/2002 &
SLP(C) Nos. 17717/2001 13563/2001, 21250/2001, & 2109-2110/2002)
Since
common question of law arises for consideration on similar facts, these appeals
and special leave petitions are disposed of by this judgment.
A
large area of 84.23 acres of land was acquired by the State of Haryana for development of residential and
commercial area of Sector 13 and 23 in Bhiwani. A preliminary notification
under Section 4 of the Land Acquisition Act, 1894 (for short 'the Act') was
issued on 4th June, 1986 under Section 6, declaration was made on 15.4.1987 and
two awards were passed covering the entire area on 10.11.1987 and 31.3.1988
awarding a sum of Rs. 57,500/- per acre and Rs. 55,200/- per acre respectively.
The claimants, not being satisfied with the award-amount, sought reference
under Section 18 of the Act. In all, 151 references were made; the learned
District Judge disposed of all these references by awarding uniform rate of
compensation @ Rs. 125/- per square yard as against Rs. 11.81 paise per square
yard awarded by the Land Acquisition Collector. In all, 251 Regular First
Appeals were filed in the High Court by the claimants as well as the State of Haryana against the judgment of the Reference Court. In the said appeals, claimants
prayed for enhancement of compensation to Rs.500/- per square yard while the
State sought for reduction of the compensation amount to Rs.11.81 per square
yard as awarded by the Collector. The learned Single Judge, having reviewed and
re- appreciated the entire evidence, keeping in view the contention of the
parties, for the reasons stated in the judgment, reduced the amount of
compensation to Rs.79.98 per square yard. In doing so, the learned Single Judge
applied cut of 20% towards development charges. In the result, the learned
Single Judge partly allowed the appeals filed by the State and dismissed the
appeals filed by the claimants. The claimants, aggrieved by the order of the
learned Single Judge, filed Letters Patent Appeals before the Division Bench of
the High Court. The Division Bench dismissed the appeals, affirming the
judgment and order of the learned Single Judge. Hence, these appeals are filed
by the claimants.
Learned
counsel representing the appellants strongly contended that applying cut of 20%
on the rate of compensation arrived at on the basis of the sale instances is
neither justified nor tenable; the High Court was not right in reducing the
rate of compensation from Rs.125/- per square yard to Rs.79.98 per square yard;
the HUDA in pursuance of the award of the District Judge raised the rate of
allotment of the land to Rs.536/- per square yard as a result of which total
rate of allotment of land worked out to more than Rs.1100/- per square yard,
and as such there was no loss to the State or the HUDA so as to ask the
appellant to pay back 20% of the amount of compensation already received;
according to the learned counsel, if refund is to be made by the appellants, it
amounts to unjust enrichment for the HUDA which has already received more money
by way of increase in the rate of land from the allottees. The learned counsel
finally submitted that having regard to the facts and circumstances of the
case, if the appellants have to make refund now, of the 20% of the compensation
amount already received by them, it would result in great hardship to them.
Opposing
the submissions of the learned counsel for the appellants, the learned counsel
for the respondent-State argued supporting and justifying the impugned
judgment, stating that the learned Single Judge of the High Court did consider
the entire material placed before him objectively and has applied 20% cut on
the rate of compensation determined following the principles stated by this
Court in that regard. He submitted that the judgment of the learned Single
Judge is based on the finding of facts, which the Division Bench of the High
Court has affirmed and as such the impugned order does not call for any
interference at the hands of this Court.
The
emphasis and thrust of the argument made on behalf of the appellants was that
the cut of 20% on the amount of compensation was not at all justified having
regard to the fact that the acquired land was in a fully developed area.
The
learned Single Judge, dealing with the question of location and potentiality of
the acquired land, has observed that there is really not much dispute between
the parties in that regard; documents clearly show that the land in question is
adjacent to the land already acquired for developing Sectors 13 and 23; on one
side of the acquired land, there is a city railway station while on the other,
there is 100 ft. wide road; there is overwhelming documentary evidence to show
that the land in question is surrounded by developed areas and the land has a
commercial and residential potentiality. The learned counsel for the
appellants, pointing out to these observations urged that there was no need to
apply any cut on the amount of compensation based on the market value. In support
of this submission, they heavily relied on the decision of this Court in Bhagwathula
Samanna & Ors. vs. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality, Visakhapatnam [(1991) 4 SCC 506]. The learned
Single Judge, after considering evidence placed reliance on Exbt. P-7 as the
very foundation for giving the claimants amount of compensation for the
acquired land. The Division Bench of the High Court in the impugned judgment
noticed that the learned Single Judge adopted the cut of 20% on the cumulative
effect of various factors enumerated in the judgment. Inter alia, on the ground
that Exbt. P.7 relates to sale transaction between two individuals in respect
of plot of 3 canals (nearly 1800 square yards) located on the main road itself
with 100 feet wide face touching the main road. It has greater commercial
potential value in comparison to other area and it would be difficult to place
it at par with the land at considerable distance from the main road.
Whereas
the land acquired is a large area of 84 acres, which has been acquired for
development of residential and commercial areas of Sectors 13 and 23 in Bhiwani.
Further, the sale instance Exbt. P-7 is of the land after the same had been
developed; whereas in respect of the land in question, the State has to carry
out and incur heavy expenditure for developing it. After noticing the
observations made in the judgment of the learned Single Judge, the Division
Bench concurred with the findings recorded therein and upheld the 20% cut applied
by the learned Single Judge on the compensation amount payable to the
claimants. The learned Single Judge had taken into consideration yet another
ground that the value of the land of claimants have been enhanced considerably
because of the activities carried out by the State or its instrumentalities;
but for the development of the project by the Haryana Urban Development
Authority (HUDA), the prices of the acquired land would not have shot up that
high as shown in Exbt. P-7. The land for the development of the project was
acquired by the State on earlier occasions in the year 1974, and thereafter in
1985. The State has to carry out and incur heavy expenditure for developing the
land which has now been acquired and as such, there was justification to apply
20% cut. The learned Single Judge following the earlier decisions of this Court
and of the same High Court, determined the market value of the acquired land
having regard to the evidence placed on record and applied 20% cut in arriving
at the amount of compensation to be paid to the claimants.
It is
not debated that sale transaction covered by Exbt. P-7 relates to a small plot
and the land in question acquired is about 84 acre. This land comprising of
large area is not developed although it has potential value for residential and
commercial purposes. In order to develop this land, roads were to be laid,
provisions for drainage was to be made and certain area was to be earmarked for
other civic amenities. Thus, after leaving the area in the land required for
the purposes mentioned above, plots were to be made for residential and
commercial purposes by incurring expenditure for other developmental works,
such as providing electricity, water, etc. The acquired land is not small plot
located in such a way that no other development was required at all and it
could be utilized as it is as a developed building site. It is well-settled
that in respect of agricultural land or undeveloped land which has potential
value for housing or commercial purposes, normally 1/3 amount of compensation
has to be deducted out of the amount of compensation payable on the acquired
land subject to certain variations depending on its nature, location, extent of
expenditure involved for development and the area required for roads and other
civic amenities to develop the land so as to make the plots for the residential
or commercial purposes. A land may be plain or uneven, the soil of the land may
be soft or hard bearing on the foundation for the purpose of making
construction; may be the land is situated in the midst of a developed area all
around but that land may have a hillock or may be low-lying or may be having
deep ditches. So the amount of expenses that may be incurred in developing the
area also varies.
A
claimant who claims that his land is fully developed and nothing more is
required to be done for developmental purposes, must show on the basis of
evidence that it is such a land and it is so located. In the absence of such
evidence, merely saying that area adjoining his land is developed area, is not
enough particularly when the extent of the acquired land is large and even if a
small portion of the land is abutting the main road in the developed area, does
not give the land character of a developed area. In 84 acres of land acquired
even if one portion on one side abuts the main road, the remaining large area
where planned development is required, needs laying of internal roads,
drainage, sewer, water, electricity lines, providing civic amenities etc.
However, in cases of some land where there are certain advantages by virtue of
the developed area around, may help in reducing the percentage of cut to be
applied, as the developmental charges required may be less on that account.
There may be various factual factors which may have to be taken into
consideration while applying the cut in payment of compensation towards
developmental charges, may be in some cases it is more than 1/3 and in some
cases less than 1/3.
It
must be remembered that there is difference between a developed area and an
area having potential value, which is yet to be developed. The fact that an
area is developed or adjacent to a developed area will not ipso facto make
every land situated in the area also developed to be valued as a building site
or plot, particularly when vast tracts are acquired, as in this case, for
development purpose.
This
Court in Administrator General of West Bengal vs. Collector, Varansi [(1988) 2
SCC 150] referring to earlier decisions has held that prices fetched for small
plots cannot form basis for valuation of large tracts of land as the two are
not comparable properties. Para 12 of the said judgment reads:_ "It is
trite proposition that prices fetched for small plots cannot form safe bases
for valuation of large tracts of land as the two are not comparable properties.
(See Collector of Lakhimpur v. B.C. Dutta [(1972) 4 SCC 236]; Mirza Naushervan
Khan v. Collector (Land Acquisition), Hyderabad [(1975) 2 SCR 184]; Padma Uppal
v. State of Punjab [(1977) 1 SCR 329]; Smt. Kaushlya Devi
Bogra v. Land Acquisition Officer, Aurangabad [(1984) 2 SCR 900]). The principle that evidence of market value of
sales of small, developed plots is not a safe guide in valuing large extents of
land has to be understood in its proper perspective.
The
principle requires that prices fetched for small developed plots cannot
directly be adopted in valuing large extents. However, if it is shown that the
large extent to be valued does not admit of and is ripe for use for building
purposes; that building lots that could be laid out on the land would be good
selling propositions and that valuation on the basis of the method of
hypothetical lay out could with justification be adopted, then in valuing such
small laid out sites the valuation indicated by sale of comparable small sites
in the area at or about the time of the notification would be relevant. In such
a case, necessary deductions for the extent of land required for the formation
of roads and other civil amenities;
expenses
of development of the sites by laying out roads, drains, sewers, water and
electricity lines, and the interest on the outlays for the period of deferment
of the realization of the price; the profits on the venture etc. are to be
made. In Sahib Singh Kalha v. Amritsar Improvement Trust [(1982) 1 SCC 419],
this Court indicated that deductions for land required for roads and other
developmental expenses can, together, come up to as much as 53 per cent.
But
the prices fetched for small plots cannot directly be applied in the case of
large areas, for the reason that the former reflects the `retail' price of the
land the latter the `wholesale' price." In Gulzar Singh & Ors. vs.
State of Punjab & Ors. [(1993) 4 SCC 245], referring to the case of
Administrator of West Bengal (supra) and other cases, this Court upheld the
deduction of 1/3 of the undeveloped land towards developmental charges. In that
case, 90 acres of undeveloped land was acquired which required development by
laying road, parks, drainage, lighting and other civic amenities. It may also
be noted that in the said judgment, this Court distinguished the case of Bhagwathula
Samanna (supra) on which the appellants strongly relied.
Yet
again in K. Vasundara Devi vs. Revenue Divisional Officer (LAO) [(1995) 5 SCC
426], this Court reiterated that when genuine and reliable sale deeds of small
extents were considered to determine market value, the same will not form sole
basis to determine market value of large tracts of land. Sufficient deduction
should be made to arrive at a just and fair market value of large tracts of
land. Again, in this case also Bhagwathula Samanna (supra) was distinguished
while upholding the deduction as to developmental charges.
This
Court again in Special Land Acquisition Officer, Bangalore vs. V.T. Velu & Ors. [(1996) 2 SCC 538] in a similar
situation as in the case on hand has held that at least 1/3 of the land
acquired is to be set apart for road purpose, developmental purpose and other
civic amenities. It is also observed, "the mere fact that there is a
connecting road to the lands, by itself is not a correct principle of law in
refusing to deduct towards developmental charges".
(emphasis
supplied) Kalra Properties (P) Ltd. Lucknow & Ors. [(1996) 3 SCC 124] this Court has stated thus:-
"Therefore, it should be determined only on the basis of yardage. If the
principle of determination of compensation on yardage basis is adopted, it is
equally settled law that at least 1/3rd of the land required should be deducted
towards developmental purposes, namely, providing roads, electricity, drainage
facilities and other betterment development." A Bench of three learned
Judges of this Court, in similar circumstances in U.P. Avas Evam Vikas Parishad
vs. Jainul Islam & Anr. [(1998) 2 SCC 467] upheld the deduction of 1/3 of
the price towards cost of development for the housing scheme involving
construction of roads and other amenities after agreeing with the earlier
decisions of this Court even after referring to the case of Bhagwathula Samanna
aforementioned. In the said judgment, it is observed that "The High Court
has also held that the exemplar submitted by the Parishad could not be accepted
for the reason that therein it was categorically provided that the purchaser
would take the risk of statutory prohibitions, if any, on the transfer and that
the vendor would not be responsible and that for covering the risk, the
purchaser will normally demand reduction in the rate. Referring to the
exemplars produced by the landowners the High Court observed that in respect of
land covered in most of the exemplars no evidence of any deficiency had been
brought to its notice. The High Court has pointed out that admittedly, the
acquired land was not developed and it may only have the potentiality of
development to be used as building sites and while facilities for drainage,
electricity supply, water supply and pucca road are available in those
developed areas, the land which is acquired measuring more than 200 acres does
not have such advantages. The High Court was however, of the view that as the
acquired land is within the municipal limits and is surrounded by developed
area with buildings and pucca roads and other facilities and has the advantage
of road passing by the side, it has potentiality of developing though it cannot
be treated to have similar advantages as the land in the developed areas. The
High Court has also taken note of the fact that the entire acquired area was
used for the purpose of agriculture even in 1983 when the surrounding areas had
already developed. In the light of the aforesaid circumstances, the High Court
held that the rates available for land in developed area could not be adopted
for determination of market value of the acquired land though they can be used
for guidance to determine the market value by taking note of other circumstances
as available on record." On facts and in the light of the legal position
emerging from the various decisions referred to above, it is not possible for
us to say that cut of 20% adopted by the learned Single Judge as affirmed by
the Division Bench in the impugned judgment is wrong or unsustainable. It
appears to us having regard to facts and circumstances of the case that the
High Court has applied cut of 20% as against the normal 1/3 deduction. We find
that the High Court was right and justified in doing so.
The
decision of Bhagwathula Samanna (supra) does not help the appellants as the
said decision was rendered on the facts of that case. As already noticed above,
the said decision was referred to in earlier decisions of this Court and
distinguished.
That
was a case of a fully developed land having all amenities and situated in an
advantageous position. In the context of the facts of that case, in para 11, it
is stated thus:- "The principle of deduction in the land value covered by
the comparable sale is thus adopted in order to arrive at the market value of
the acquired land. In applying the principle it is necessary to consider all
relevant facts. It is not the extent of the area covered under the acquisition
which is the only relevant factor.
Even
in the vast area there may be land which is fully developed having all
amenities and situated in an advantageous position. If smaller area within the
large tract is already developed and suitable for building purposes and have in
its vicinity roads, drainage, electricity, communications etc. then the
principle of deduction simply for the reason that it is part of the large tract
acquired, may not be justified." (emphasis supplied) In that case
deduction was not given on the ground that even in the vast area there may be
land, which is fully developed having all amenities and situated in an
advantageous position; if smaller area within the large tract is already
developed and suitable for building purposes and have in its vicinity roads,
drainage, electricity, communication, etc., then the principle of deduction
simply for the reason that it is part of the large tract acquired, may not be
justified.
In the
present case the situation is entirely different.
The
area acquired is not a small area; it was not developed; may be it had some
advantages; a small portion of the large tract was abutting the main road; it
was also not the case that any smaller area within the large tract of land
acquired was fully developed having all facilities as in the case of Bhagwathula
Samanna (supra). The appellants herein did not establish that the entire area
of 84 acres of land acquired was fully developed having all the facilities such
as roads, drains, sewers, water, electricity lines and civic amenities. In
order to convert the land into plots for the purpose of construction of
residential and commercial buildings certain area was to be earmarked for the
abovementioned purposes in accordance with the law governing in the matter of
creating layouts in addition to incurring of expenditure for the development
area. Hence the claim of the appellants that there should have been no
deduction out of the compensation amount determined for the entire area
acquired is unsustainable. May be the acquired land with potentiality for construction
of residential and commercial buildings had some advantages, which aspect is
taken note of by the High Court in giving cut of only 20% as against 1/3 normal
deduction.
We do
not find any force in the contention that the HUDA has made unjust enrichment
by collecting more money from the allottees after the compensation amount was
enhanced by the District Judge and that neither the State nor the HUDA will be
put to any loss as they have collected money from the allottees. It is not the
case where collection of any tax is involved to bring in the theory of unjust
enrichment. Be that as it may, we are not concerned in these cases as to what
happened between the HUDA and the allottees. The question for consideration is
as to the determination of amount of compensation for the acquired land.
Once
the proper amount of compensation is finally determined, the land owners will
be entitled only to that amount.
Having
regard to all these aspects, we find no merit in these appeals. Hence, the
appeals as well as the special leave petitions are dismissed. Parties to bear
their own costs.
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