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PETITIONER:

K.POSAYYA & ORS.

Vs.

RESPONDENT:

SPECIAL TAHSILDAR

DATE OF JUDGMENT10/05/1995

BENCH:

RAMASWAMY, K.

BENCH:

RAMASWAMY, K.

VENKATACHALA N. (J)

CITATION:

1995 AIR 1641 1995 SCC (5) 233

JT 1995 (5) 174 1995 SCALE (3)683

ACT:

HEADNOTE:

JUDGMENT:

THE 10TH DAY OF MAY,1995

Present:

Hon'ble Mr.Justice K.Ramaswamy

Hon'ble Mr.Justice N.Venkatachala

Mr.P.P. Rao, Sr. Adv. Mr. Naramimha P.S. and Mr. V.G.

Pragasam, Advs. with him for the Appellants

Mr. Guntur Prabhakar, Adv. for the Respondent

J U D G M E N T

The following Judgment of the Court was delivered:

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 5568-5571..........OF 1995

(Arising out of SLP Nos.17933-36/94)

K. POSAYYA & ORS. ...APPELLANTS

VERSUS

SPECIAL TAHSILDAR ...RESPONDENT

W I T H

CIVIL APPEAL NOS 5572-5574 OF 1995

(Arising out of SLP Nos.19266-68/94)

J U D G M E N T

K. RAMASWAMY. J.

Leave granted.

Jelluru and Yerrakaluva Reservoir to prevent

inundation of agricultural lands and to control floods, was

taken out and 500 acres of land was acquired as a part of

Vengalrayasagar project for submersion. Notification under

s. 4(1) of the Land Acquisition Act, 1894, (for short, `the

Act') was published on March 22, 1979. 400 acres of land, as

a part of that Scheme situated in Alivelu village in

Polavaram Mandal in West Godavari District of Andhra Pradesh

was acquired, out of which, we are concerned with about

163.80 acres in these appeals. The Land Acquisition Officer

in his award dated July 31, 1980, fixed the market value of

the lands at Rs. 400/- per acre. The lands are rain-fed in

which dry crops were raised prior to acquisition. On

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reference under s.18, the Subordinate Judge enhanced the

compensation to Rs. 22,000/- per acre. The High Court in the

impugned judgment in Appeal No. 1341 and batch of 1992

reduced the compensation to Rs.400/- per acre. Thus these

appeals by special leave.

Shri PP Rao, learned senior counsel for the appellants,

contended that Alivelu village is situated in notified

tribal area in which the Scheduled Areas Land Transfer

Regulation Act, 1970 is in force which prohibits sale of the

lands by the tribals to the non-tribals. The appellants

being tribals could not secure any sale deed. In the

neighbouring village under Ex.A-1 dated October 12, 1980

when one acre of land was sold for a sum of Rs. 20,000/-,

the High Court was not justified in refusing to act upon the

same. Equally, it is contended that in another judgment and

decree of the High Court, in relation to lands acquired for

Vengalrayasagar project, determined the compensation at the

rate of Rs.20,000/- per acre, the appellants are entitled to

at least to Rs.22,000/- per acre. Being the tribal, they

cannot afford to purchase the lands elsewhere. The court,

therefore, should grant compensation at "reinstatement

value" for rehabilitation of the tribals under Ex.A-5 and A-

6, the awards made by the reference court in OP No. 17-

18/80, the Subordinate Judge awarded at the rate of

Rs.22,000/- per acre which became final. The High Court

misapplied the principle laid by this Court in Administrator

General of West Bengal v. Collector, Varanasi, AIR 1988 SC

943, in reducing the price applying the principle of

deduction of 50% to the agricultural lands. The High Court,

therefore, erred in wrong application of the principles of

law in determining the compensation to the agricultural

land.

The question, therefore, is, what is the correct

principle of law to be applied in determining the market

value of vast extent of lands were acquired for a project.

Admittedly, Ex.A-1 dated December 31, 1980 is the torch

light for the claimants to lay higher claim. It is a post

notification sale of the land situated in Chakradevarapalli.

According to the claimants, it is situated at a distance of

3 to 4 kilometers from the village Alivelu. According to

Land Acquisition Officer, the distance between the two

villages is 30 Kms. Possession of these lands, admittedly,

was taken between April 15, 1977 i.e. prior to the

notification under s.4(1) and July 14, 1980, shortly after

the notification under s.4(1). It would, thus, be clear that

the sale deed was brought into existence after the

notification and possession was taken of the lands. This is

the notorious document relied in all the references running

into 302. Only the attestor was examined in proof of the

documents. It would be obvious that it was a brought up

document to inflate the market value of the lands under

acquisition not only in this village but in the surrounding

villages. The High Court, therefore, was right in rejecting

the said document and refuse to place reliance for

determination of the compensation. Exhibit A-2, judgment of

the single Judge of the High Court in AS No.2500/86 arising

out of OP No.49/84 of the same reference court. The lands

therein were acquired for Vengalrayasagar project. They are

the wet lands. Since the counsel for the Government did not

appear and no material was placed on record and since in

earlier cases, award was confirmed for a sum of Rs.22,000/-

per acre, the single Judge enhanced the compensation to

Rs.22,000/-. That is obviously illegal approach adopted by

the High Court in determining the market value of project

area, large tracts of lands covered by the project. It would

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appear that the learned Judge was not brought to the notice

of other references. Therefore, it cannot be formed the

basis to fix the market value at a higher rate, though the

judgment may be wrong.

Equally the judgment in Ex.A-3 dated February 14, 1985

in AS No. 232/82 and batch arising out of OP No. 111/80 and

batch of the Band situated in Tadavai village, the Division

Bench determined market value at the rate of Rs. 20,000/-

per acre. The foundation for the said determination was the

notorious sale-deed Ex.A-1 which was marked therein as A-3.

Equally, Ex. A-4 in OP No. 57/84 of the reference court is

founded upon the earlier decision. Ex.A-5 and A-6, namely,

OP Nos.17-18/89 dated November 29, 1990 were founded on the

judgments-Ex. A-2 etc. in which Subordinate Judge granted at

the rate of Rs. 22,000/- per acre. Since the very basis of

determination of the compensation is clearly erroneous,

Ex.A-5 and A-6 cannot form any basis for determination of

the compensation. The Division Bench of the High Court in

this appeal, placing reliance on Ex.A-5 and A-6 which arose

from the same village Alivelu, reduced the market value to

Rs.12,000/- per acre on the ratio in Administrator General

of West Bengal's case. It is true, as rightly contended by

Shri Rao, that the ratio therein relates to the urban lands

fit for building purpose and the same principle cannot be

applied in determination of the market value of agricultural

land. The contention that the doctrine of reinstatement

value in determination of the market value to the lands of

depressed value due to operation of the Andhra Pradesh

Scheduled Areas Land Transfer Regulation Act, 1970

prohibiting alienation of the land between the tribals and

non-tribals, though, prima facie appears to be alluring but

on deeper consideration, it cannot to commend acceptance.

What is relevant in fixation of the market value of the land

under s.23(1) is prevailing price as on the date of

notification under s.4(1). The reasoning of the High Court

that since the tribals have no capacity to purchase the land

and the lands, therefore, are not possessed of market value

also is not a correct approach.

It is settled law that market value is to be determined

either on the basis of the prevailing prices of sale and

purchase between willing vendor and willing vendee or value

of the crops realised applying suitable 10 years multi-plier

or in case of land valued of expert valuer like urban

properties could be considered for determination of the

compensation. Market value cannot be fixed with mathematical

precision but must be based on sound discretion exercised by

the reference court in arriving at just and reasonable

price. It should not be based on feats of imagination or

flight of fancy. Determination of compensation for

compulsory acquisition involves consideration of the price

which a typothical willing purchaser can be expected to pay

for the lands in the existing use as well as relatable

potentialities. The acid test is the arm chair of the

willing vendor would offer and a prudent willing buyer,

taking all relevant prevailing conditions of the normal

market, fertility of the land, location, suitability of the

purpose it was purchased, its existing potentialities and

likely use to which the land is capable of being put in the

same condition would offer to pay the price, as on the date

of the notification. In case of acquisition of large tracts

of lands for projects situated in several villages, stray

sale-deed of small extent here and there would not form the

basis to determine the compensation. The reference court

should be circumspect, pragmatic and careful in analysing

the evidence and arriving at just and fair market value of

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the lands under acquisition which could be fetched on the

date of the notification. The nature of the land, the crops

raised and the nature of the income likely to be derived

from the lands, the expenditure to be incurred for raising

the crops and the net profits etc. would be the relevant

factors in arriving at the net market value and if evidence

is produced in that behalf on its basis applying the

suitable 10 years multi-plier, the market value need to be

determined. The owner or claimant should not be put to loss

by under valuation. But, at the same time public exchequer

should not be put to undue burden by excess valuation. It is

the statutory duty of the Court to maintain the balance

between diverse interests.

Claimant stands in the position of plaintiff and the

onus is on him to adduce necessary and relevant evidence in

proof of the objection for higher compensation. The court is

also enjoined to carefully scrutinise and analyse the

evidence and applying the arm chair test of a prudent

purchaser and a willing vendor or the realised income on the

crops, the true, correct and fair market value should be

arrived at. The reference court has absolutely failed to

apply these tests in determining the compensation. Rejecting

the evidence relied on by the claimants under Ex. A-1 to A-

6, there is no other evidence to enhance the compensation.

The doctrine of reinstatement value cannot be applied in

determining the market value under s.23(1) of the Act. The

reason is obvious. There will always be a gap between the

date of the notification and the date of payment. To

recompensate the loss, payment of interest under s.28,

solatium under s.23(2) and appropriate cases after the

Amendment Act 68/84 has come into force, 12% per annum of

the additional amount under s.23(1-A) are provided for. It

would, therefore, be illogical and unrealistic to apply the

doctrine of reinstatement value in determination of the

compensation under s.23(1).

In this view, though the High Court has applied wrong

principle but the conclusion reached by the High Court in

determining the compensation at Rs.12,000/- per acre cannot

be said to be illegal warranting interference. Before

parting with the case, we express hope that the State

Government should settle all the claims in a Lok Adalat as

was done in respect of acquisition of lands for Srisailam

Project and Vishakhapatnam Steel Project. The appeals are

accordingly dismissed. No costs.