http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4

CASE NO.:

Appeal (civil) 9205-07 of 2003

Special Leave Petition (civil) 7407-09 of 2003

PETITIONER:

The Land Acquisition Officer, Nizamabad, District, Andhra Pradesh

RESPONDENT:

Nookala Rajamallu and Ors.

DATE OF JUDGMENT: 21/11/2003

BENCH:

DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT:

J U D G M E N T

ARIJIT PASAYAT,J

Leave granted.

Lands of the respondents (hereinafter referred to as the

'claimants') measuring 11.33 acres situated in Kammarpally village,

Nizamabad District were acquired by the Government for providing house

sites to weaker sections of people. The Notification under Section 4(1)

of the Land Acquisition Act, 1894 (for short the 'Act) was gazetted on

4.6.1988. The claimants owned small extent of lands situated in

different survey numbers. The Land Acquisition Officer (in short the

'LAO') passed an award fixing the market value of the acquired land at

Rs.12,325 per acre. Not accepting the compensation awarded by the LAO

claimants sought for reference under Section 18 of the Act for

enhancement. The Reference Court after considering the evidence, both

oral and documentary, awarded compensation at the rate of Rs.10/- per

sq. yard besides awarding the statutory benefits available. Before the

Reference Court, several instances of sales were pressed into by the

claimants. Ex.B/2 dated 18.6.1986 was for an extent of land measuring

170 sq.yards. The Ex.B/3 related to an award of the year 1981 whereunder

Rs.9/- was awarded as compensation per square yard. Ex.B/4 is the sale

deed dated 23.1.1988 where extent of land was 162 square yards, and the

rate of consideration was Rs.82/- per sq. yard. Ex.B/5 is in respect of

sale deed of 9.9.1985 where the extent of land was 127.5 square yards,

and the sale consideration was Rs.109/- per sq. yard. Claimants being

still not satisfied with the enhanced compensation filed an appeal

before the Andhra Pradesh High Court. A Division Bench of the said Court

by the impugned judgment held that the market value payable to the

claimants was to be taken at Rs.55/- per sq. yard.

Taking into account the extent of land covered by the exemplar

sale deeds and the award made in respect of acquisition during the year

1981 the High Court was of the view that the instances of sales were

comparable sales in respect of the lands under acquisition. Focusing of

the sale consideration of the instance covered by Ex.B/4, and making

1/3rd deduction for development, the value was fixed at Rs.54/- per sq.

yard. As there was time gap of five months between Ex. B/4 and the

notification, the escalation was taken to be Rs.1/- per sq. yard.

Accordingly, the rate of Rs.55/- per sq. yard was fixed and the

statutory entitlements were also directed to be paid.

Learned counsel for the appellant submitted that the High Court

did not take note of the relevant aspects like the extent of land

covered by the Exhibits, and the proximity between the dates of sales

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4

and the date of acquisition, and more importantly the fixation of rates

per square yard in respect of acquisition in 1981. According to him, had

these factors been considered, the rate could not have been as high as

fixed by the High Court.

Per contra, Mrs. K. Amreshwari, learned senior counsel appearing

for the respondents-claimants submitted that the High Court has adopted

a right approach in fixing the rates. The instances of sales related to

lands which were situated at a close proximity to the acquired land. The

instance of award cited by the appellant related to an interior small

village and did not have the advantages which the acquired lands have.

Where large area is the subject matter of acquisition, rate at

which small plots are sold cannot be said to be a safe criteria.

Reference in this context may be made to few decisions of this Court in

The Collector of Lakhimpur v. Bhuban Chandra Dutta (AIR 1971 SC 2015),

Prithvi Raj Taneja (dead) by Lrs. v. The State of Madhya Pradesh and

Anr. (AIR 1977 SC 1560) and Smt. Kausalya Devi Bogra and Ors. etc. v.

Land Acquisition Officer, Aurangabad and Anr. (AIR 1984 SC 892).

It cannot, however, be laid down as an absolute proposition that

the rates fixed for the small plots cannot be the basis for fixation of

the rate. For example, where there is no other material it may in

appropriate cases be open to the adjudicating Court to make comparison

of the prices paid for small plots of land. However, in such cases

necessary deductions/adjustments have to be made while determining the

prices.

In the case of Suresh Kumar v. Town Improvement Trust, Bhopal

(AIR 1989 SC 1222) in a case under the Madhya Pradesh Town Improvement

Trust Act, 1960 this Court held that the rates paid for small parcels of

land do not provide a useful guide for determining the market value of

the land acquired. While determining the market value of the land

acquired it 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. It is an accepted principle as

laid down in the case of Vyricherla Narayana Gajapatiraju v. Revenue

Divisional Officer, Vizagapatam (AIR 1939 P.C. 98) that the compensation

must be determined by reference to the price which a willing vendor

might reasonably expect to receive from the willing purchaser. While

considering the market value 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 any

compulsion. The value of the land is not to be estimated as its value to

the purchaser. But similarly 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.

Section 23 of the Act enumerates the matters to be considered in

determining compensation. The first criteria to be taken into

consideration is the market value of the land on the date of the

publication of the notification under Section 4(1). Similarly, Section

24 of the Act enumerates the matters which the Court shall not take into

consideration in determining the compensation. A safeguard is provided

in Section 25 of the Act that the amount of compensation to be awarded

by the Court shall not be less than the amount awarded by the Collector

under Section 11. Value of the potentiality is to be determined on such

materials as are available and without indulgence in any fits of

imagination. Impracticability of determining the potential value is writ

large in almost all cases. There is bound to be some amount of guess

work involved while determining the potentiality.

It can be broadly stated that the element of speculation is

reduced to minimum if the underlying principles of fixation of market

value with reference to comparable sales are made:

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4

(i) when sale is within a reasonable time of the

date of notification under Section 4(1);

(ii) it should be a bona fide transaction;

(iii)it should be of the land acquired or of the land

adjacent to the land acquired; and

(iv) it should possess similar advantages.

It is only when these factors are present, it can merit a

consideration as a comparable case (See The Special Land Acquisition

Officer, Bangalore v. T. Adinarayan Setty (AIR 1959 SC 429).

The evidence of record shows that the acquired lands were

agricultural lands. Obviously, their valuation would differ to a

considerable extent from the land used for house sites. In such a case,

necessary deductions for the extent of land acquired for the formation

of roads and other civic 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. (See Administrator General of West Bengal v. Collector, Varanasi

(1988 (2) SCC 150). In Brig. Sahib Singh Kalha and Ors. v. Amritsar

Improvement Trust and Ors. (1982 (1) SCC 419) the deduction for such

development was taken as 53%.

In K.S. Shivadevamma and Ors. v. Assistant Commissioner and Land

Acquisition Officer and Anr. (1996 (2) SCC 62) this Court held as

follows:

"it is then contended that 53% is not automatic but

depends upon the nature of the development and the

stage of development. We are inclined to agree with

the learned counsel that the extent of deduction

depends upon development need in each case. Under the

Building Rules 53% of land is required to be left

out. This Court has laid as a general rule that for

laying the roads and other amenities 33-1/3% is

required to be deducted. Where the development has

already taken place, appropriate deduction needs to

be made. In this case, we do not find any development

had taken place as on that date. When we are

determining compensation under Section 23(1), as on

the date of notification under Section 4(1), we have

to consider the situation of the land development, if

already made, and other relevant facts as on that

date. No doubt, the land possessed potential value,

but no development had taken place as on the date. In

view of the obligation on the part of the owner to

hand over the land to the City Improvement Trust for

roads and for other amenities and his requirement to

expend money for laying the roads, water supply

mains, electricity etc., the deduction of 53% and

further deduction towards development charges @33-

1/3%, ordered by the High Court, was not illegal".

On applying the principles of law as set out in various decisions

referred to above to the facts of the case we feel that deduction at the

rate of 53% from the value indicated in Ex.B/4 would bring the rate per

square yard to be around Rs.40/-. The rate is accordingly fixed. The

claimants shall be entitled to compensation at the rate of Rs.40/- per

sq. yard along with statutory entitlements including interest on

solatium. The appeals are allowed to the aforesaid extent. Costs made

easy.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4