K. S. SHIVADEVAMMA AND ORS. ETC.versusASSISTANT COMMISSIONER AND LAND ACQUISITION OFFICER AND ANR.

A                 K.S. SHIVADEVAMMA AND ORS. ETC.
                                        v.
        ASSISTANT COMMISSIONER AND LAND ACQUISITION
                     OFFICER AND ANR.

                              DECEMBER 8, 1995
B
               [K. RAMASWAMY AND B.L. HANSARIA, JJ.]


        Land Acquisition Act, 189~Sections 4(1) and 23(1) Indian Stamp
  Act, 1899-Section 47A--Compensation-Detennination of-Acquisition of
C Agricultural laJtd for building Bus Stand-Stamp Act and Commissioner's
  Assessment-Reliance for detennining market value-Detemiination by High
  Cowt after 53% deduction as developmental charges-Held : Deduction of
  53% under Building Rules and 33 113 under General Rules required-Stamp
  Act and Commissioner's assessment cannot f01m the basis for detennination
D of compensation-Hence, deduction not illegal.

        5 acres and 10 guntas of agricultural land abutting national Highway
  within the limits of Municipality was acquired by a Notification under
  Section 4(1) for establishment of Bus Stand. Sanction for conversion of
  two acres into non-agricultural land was obtained two years prior to the
E Notification.

         The Land Acquisition Officer awarded Rs. 5,000 per acre with the
  finding that the lands are situated in aeveloping area, though at the point
  of time, the land was agricultural, it possessed potential value for building
F purposes, but are not capable of immediately realising the price as build·
  ing sites, No steps were taken to have the non-agricultural lands developed
  as building plots.

        On reference, Civil Court determined the compensation @ 30,000
  per acre. In appeal to High Court the appellants placed the sale· deed
G which fetched consideration of Rs. 41,000 and relied on Government
  circular determining the value of the lands for the purpose of fixing stamp
  duty and Registration fee and also placed commissioner's report regarding
  the valuation assessed by him. The Court rejecting them, determined the
  compensation Rs. 18 per Sq. yd. after deducting 53% as developmenta)
H charges and concurred with the finding of the land acquisition officer.
                                      364
                  KS. SHIVADEYAMMA v. ASSTI. COMMNR.                         365

          In appeal to this court, the appellant contented that in MFA No. A
    670/71 for expansion for Hospital, compensation of Rs 35 per Sq. yd. was
    awarded by High Court and that in view of the situation of the land and
    having regard to establishment of bus stand, compensation determined by
    High Court was illegal.

          Dismissing the appeal, this Court                                         B

           HELD : 1. The circular issued by the Government under Section 47A
    of the Stamp Act for fixation of Stamp duty and the Registration fee would
    not form basis to determine the compensation unless evidence is adduced
    as regards the prevailing m.irket value of the land in the locality possessed   C
    of similar advantageous features. Even Commissioner's assessment is his
    "best judgment assessment." Therefore, it cannot form the basis to deter-
    mine the market value. [368-C-D]

          2. The approach adopted by High Court in judgment in MFA 670/71,
    is not a sound principle of law, to form basis for determination of com-        D
    pensation in this case. The lands concerned therein was for expansion of
    the Civil Hospital which was already in existence and in a developed area.
    Lands CO\'ered in other appeals are already in developed area and far away
    from the acquired land. (368-E-F)
                                                                                    E
          3. The sale-deed relied on by the appellants is a small piece of land
    which could never form the basis for determining the compensation for a
    large extent of land measuring 9 acre 10 guntas. (368-G]

          4. If the lands are to be used for building purposes necessarily under
    Building Rules the land owner has to leave out 53% area for roads, open         F
    space & other amenities. In addition, the owner is required to expend
    money for development & construction of the roads, water supply mains
    and electrical lines etc. and that this requires considerable expansion and
    improvement. If the compensation is determined on the basis of yardage,
    the owner cannot put the entire land to use unless he leaves out land for       G
    the above purposes and also expend money for developmental purposes.
    Merely because land is acquired for establishment of bus stand, that use
    is irrelevant in determining market value. (369-C-DJ

         5. The principle is not for what purpose the land was acquired. If


-   the owner sold the land in the open market as house sites, whether he           H
    366                    SUPREME COURT REPORTS [1995) SUPP. 6 S.C.R.

A would be entitled to use the entire land for building purpose would be the
    yardstick. (369-F)

        Revenue Divisional Officer v. Dasari Ganga Raju & Ors., (1992) Suppl.
    ALA Cases 403, distinguished.

B          6. The extent of deduction depends upon development need in each
    case. Under the building Rules 53% of land is required to be left out. The
    general rule is 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. While determining compensation
C   under Section 23(1), as on the date of notification under Section 4(1),
    situation of the land development, if already made, and other relevant
    facts, as on that date, are to be considered. In view of the obligation on the
    part of the owner to handover 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%
D   and further deduction towards development charges @ 33 1/3, was not
    illegal. (369-H, 370-A-C]

          CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 12116-18
    of 1995 Etc.

E        From the Judgment and Order dated 19.8.92 of the Karnataka High
    Court in M.F.A. No. 58, 68 and 593 of 1986.

          S.S. Javali and M.T. George for the Appellants.

          G.L. Sanghi, K.R. Nagaraja and M. Veerappa for the Respondents.
F
          The following Order of the Court was delivered :

          Leave granted.

          Notification under Section 4(1) of the Land Acquisition Act, 1894
G (for short, 'the Act'), was published on January 12, 1978 acquiring 9 acres
  10 guntas of land situated in survey Nos. 118/4, 118/SA and SB situated in
  Nituvalli village, Davanagere. The Land Acquisition Officer by his order
  dated May 17, 1979 awarded a sum of Rs. 5,000 per acre. On reference,
  the civil court by its award and decree dated October 30, 1984 determined
H the compensation @ Rs. 30,000 per acre. On appeal, the High Court
                K.S. SHNADEY AMMA v. ASSTI. COMMNR.                        367

 determined compensation after giving deductions of 53%, @ Rs. 18 per sq.         A
 yd. by judgment and decree dated August 19, 1992. Thus, this appeal by
 special leave has been filed by the cbimants.

        The State has not filed any apveal against the enhanced award of the
 High Court. Shri Javali, 'learned senior counsel appearing for the claimants,    B
 contended that in a notification issued in 1967 acquiring 1 acre 32 guntas
 of land covered in MFA No. 670/71, MFA No. 7/72 for expansion of the
 hospital, the High Court awarded @ Rs. 35 per sq. yd. after giving
 deductions. In another notification December 21, 1972, acquiring lands for
 the Police Parade Ground covered in MFA No. 1426 of 1987, by judgment
 and decree dated June 12, 1993 the Division Bench of the High Court              C
 enhanced the compensation to Rs. 80 per sq. yd. after giving deductions
 for establishment of Employees State Insurance Hospital; and this Court
 in appeals @ SLP (c) Nos. 11908-11909/95 by order dated November 10,
 1995, confirmed the said market value of the agricultural lands and Rs. 115
 per sq. yd. fer converted lands. In view of the fact that the lands are          D
 situated abu:ting the national Highway and having regard to the estab-
 lishment of bus stand, the High Court committed grievous error of law in
 determining the compensation @ Rs. 18 per sq. yd. which is unjust and
 illegal. Shri Sanghi, the learned senior counsel for the respondents, has
 contended that the High Court has considered all the relevant facts and
 having regard to same, it was justified in determining the compensation at       E
 the rate of Rs. 18 per sq. yd.


         Having heard the learned counsel for the parties, the question emer-
  ges is : What would be the reasonable market value which the lands are
  capable to fetch ? It is seen that in the award of the Collector, he accepted   F
  the statement made by the parties regarding the situation of the lands. It
  is stated that the lands are situated in the heart of the industrial area of
  Davanagere City which lies within the limits of the Municipality. They arc
  near the Cotton Mills, Ganesh Textile Mill, Davangere Cotton Mill, Rice
  Mill Davengere Regional Grave Yard, Fire Station, Oil Mill and another          G
  fast growing industries. This situation of the lands was also accepted by the
  Reference Court as well as by the High Court. Ultimately, the High Court
· recorded a finding that the lands possessed of potential value, though at
  the relevant time, fhey were agricultural lands and 2 acres and odd, were
  converted into non-agricultural use. No steps have been taken to develop
  the lands and other amenities have not been provided.                           H
    368                  SUPREME COURT REPORTS (1995] SUPP. 6 S.C.R.

A          From this, the question is what would be the reasonable market value
    that the lands would command in open market. The appellants themselves
    have placed on record the sale deed of an extent of 133' x 99' under Ex.P-18
    dated May 30, 1974 which fetched of consideration of Rs. 41,000 per acre.
    The High Court was not inclined to accept in to this sale deed. But it held
B   that it provides guidance in determination of the market value. Though the
    appellants have relied upon the Government Circular determining the
    value of the lands for the purpose of fixing Stamp Duty and Registration
    Fee and also the Commissioner's Report regarding the valuation assessed
    by him, the High Court rightly has not accepted them. This Court also had
    held that the circulars issued by the Government under Section 47A of the
C   Stamp Act for fixation of Stamp Duty and the Registration fee would not
    form basis to determine the compensation unless evidence is adduced as
    regards the prevailing market value of the land in the locality possessed of
    similar advantageous features. Even Commissioner's assessment is his "best
    judgment assessment". Therefore, it cannot form the basis to determine the
D   market value.

          We have seen the judgment in MFA No. 670/71 rendered by the High
    Court on September 12, 1973. The learned Judges had proceeded on the
    footing of averaging the prices and accepted the average price at Rs. 71
    and odd. After giving deduction of 33 1/3% determined market value @
E   Rs. 35 per sq. yd. It is not necessary to go into the correctness of the above
    judgment since that is not the subject matter here. Suffice it to state that
    the approach adopted by the Court is not a sound principle of law, to form
    basis for determination of compensation in this case. It is also to be noted
    that the lands concerned therein was for expansion of the Civil Hospital
F   which was already in existence and in a developed area. Lands covered in
    other appeals are situated in already developed area and far away from the
    acquired land. Under those circumstances, it is not safe to rely on them to
    provide basis to determine compensation in this case. It is seen that the
    sale deed relied on by the appellants is a small piece of land which could
    never form the basis for determining the compensation for a large extent
G   of land measuring 9 acres 10 guntas of land.

        Having rejected these sale deed, what could be the basis that would
  form foundation for determination of the compensation. It is seen that both
  the courts have considered potential value as basis to determine the
H compensation. In view of the finding by the Land Acquisition Officer
              K.S. SHIVADEYAMMA v. ASSTI. COMMNR.                      369

himself that the lands are situated in a developing area, though at that point A
of time the major part of the land was agricultural, the lands are possessed
of potential value for building purposes. But they are not immediately
capable to realise the price as building sites. Though sanction for conver-
sion of two ·acres into non-agricultural land was obtained two years prior
to Section 4(1) notification the fact that no steps were taken to have them B
developed as plotted lands would itself furnish intrinsic evidence that the
lands were not capable to put immediate use for building purpose.

       Shri J avali contended that since acquisition was only for the purpose
of bus stand, the High Court has committed grievous error in deducting
53% for developmental charges. The High Court has noted that if the lands C
are to be used for building purposes necessarily under the Building Rules
the land owner has to leave our 53% area for roads, open space and other
public amenities. In addition, the owner is required to expend money for
development and construction of the roads, water supply mains and eiectri-
cal lines etc. and that this requires considerable expansion and improve- D
ment. If the compensation is determined on the basis of yardage, the owner
cannot put the entire land to use unless he leave out land for the above
purposes and also expend money for developmental purpose. Merely be-
cause land is acquired for establishment of bus stand, that use is irrelevant
in determining market value.
                                                                              E
      The judgment of the A.P. High Court in Revenue Divisional Officer
v. Dasari Ganga Raju & Ors., (1992) Suppl. ALA cases 403, relied on by
the counse~ proceeded on a wrong assumption of law and directed not to
deduct any amount towards any developmental charges since the land was
acquired for bus stand purpose. As stated above the principle is not for      p
what purpose the land was acquired. Had the owner sold the land in open
market as house sites, would he be entitled to use the entire land for
building purpose ? That would be the yardstick. Therefore, the ratio
therein is not correct in law.

      It is then contended that 53% is not automatic but depends upon the    G
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. H
    370                   SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R.

A 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
B   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 handover the land to the City
    Improvement Trust for roads and for other amenities and his requirement
    to expand money for laying the roads, water supply mains, ~lectricity etc.,
    the deduction of 53% and further deduction towards development charges
C   @ 33 1/3, as ordered by the High Court, was not illegal.

           Considering these facts and also the situation of the land as noted by
    the Land Acquisition Officer and courts below, we think that Rs. 20 per
    sq. yd. would be the just compensation. The appeal, are accordingly
    allowed Jnd compensation @ Rs. 20 per sq. yd. is fixed being just and
D   proper. The appellants are entitled to the solatium at 30% un enhanced
    compensation. The appellants are entitled to interest at the rate of 9% for
    one year from the date of taking possession and 15% thereafter till date of
    Jeposit. The claimants are not entitled to the additional amount under
    Section 23(1-A) since the Collector made the award on May 17, 1979. No
E   costs.

    K.K.T.                                                    Appeal dismissed.