PERIYAR AND PAREEKANNI RUBBERS LTD.versusSTATE OF KERALA

                 PERIYAR AND PAREEKANNI RUBBERS LTD.
     A
                                  v.
                           STATE OF KERALA

                                 SEPTEMBER 6, 1990

     B             [L.M. SHARMA AND K. RAMASWAMY, JJ.]

               Kera/a Land Acquisition Regulation, 1089: Sections 22( 1), 22(2)
         and 25(3)/Land Acquisition Act, 1894: Sections 23(1), 23(2) & 28:
         Compulsory acquisition of Land-Payment of compensation-Market
         value-Determination of-Principles to be followed-Interest on
         solatium-Entitlement to.
     c
               The respondent State had acqnired a large extent of land out of
         the appellant's estate under the Kerala Land Acquisition Regulation,
         1089 for river valley irrigation project and to establish an industrial
         project. The notification under Section 4(1) of the Regulation was pub-
     0   Iished on October 31, 1961. This was followed by the declaration under
         Section 6(1) pnblished on February 22, 1962.

               The Collector by his awards dated March 29, 1962 determined the
         market value under Section 22(1) of the Regulation at Re.0.04 per cent
         for certain lands, Re.0.12 per cent for certain other lands, and Rs.30
     E   per cent for the wet lands as against the claim of Rs.40 and 50 per cent.
         Compensation for the trees at timber value was also given. The total
         compensation fixed was Rs.4.84 lakhs.

               Dissatisfied therewith the appellant sought reference under Sec-
         tion 18 of the Regulation. They also claimed separate value for fruit
     F   bearing trees on potential value and charges for severence and injurious
         effects on the remaining lands. In support of the claim they relied on
         Ex. P. 7 dated March 9, 1951 a11.d Ex. P. 9 dated April 4, 1957 which
         worked ont at Rs.52.50 and Rs.43.50 per cent respectively, and the
         acquisition forming subject matter of Ex. P. 10 pertaining to the land in
         the vicinity of the industrial project awarded at the rate of Rs.SO per
     G   cent for paddy lands and Rs.43 for dry land. The Govermnent pleader
         stated before the civil court that Ex. P. 9 could form the basis for
         determining the market value. The court enhanced the market value @
         Rs.40-50 per cent as claimed in addition to a sum of Rs.30 to 38 per
         cent. It awarded in all Rs.20.20 lakhs on all counts including severence
         and injurious effects, 15 per cent solatium and also 6 per cent interest
     H   on additional compensation from the date of taking possession till date
         of payment.
                                            362


-~
                      PERIYAR v. STATE OF KERALA                        363

       The High Court found that the lands covered by Ex. P. 7 and             A
 Ex. P. 9 were paddy lands cultivated by irrigation sources and situated
 about four miles away from the acquired lands which were not irrigated
 and therefore held that these could not form the basis for determining
 market value. Similarly, it found Ex;P. 10 could not form a base to rix
 the market value. The High Court did not accept the evidence adduced
                                                                               B
 by the State, which was rejected by the civil court as well. The state-
 ment made by the State Advocate General across the bar that the
 market value could be fixed at Rs.18 per cent was also not taken into
 account. Consequently, it reversed the awards and decrees of the civil
 court.

       In these appeals by special leave it was contended for the appel-       c
 lant that having rejected the documents produced by the State the High
 Court ought to have relied upon the documents produced by the appel-
 lant as comparable sales and confirmed the compensation awarded by
 the civil court, that Ex. P. 7, 9 and 10 furnished the best material, that
 the Government pleader had conceded before the trial court that Ex.
                                                                               D
 P. 9 could form the basis for determining the market value, that they had
 incurred huge expenditure on civil works for protection of the rest of
 the estate from injurious effects for which they should be recom-
 pensated, that the potential value of the trees had to be taken into
 account in determining the market value, that' they were entitled to
 compensation for severeace due to submersion of the lands and that
 they were also entitled to payment of interest on solatium.                   E

       Allowing the appeals partly, the Court,

        HELD: 1.1 When the Courts are called upon to fix the market
  value of the land in compulsory acquisition, the best evidence of the
                                                                               F
  value of property is the sale of the acquired land to which the claimant
- himself is a party, in its absence the sales of the neighbouring lands
  possessed of similar potentiality or fertility or other advantageous
  features made within a reasonable time of the date of notification in
  bona fide transactions on the hypothesis of a willing seller and a willing
  purchaser but not too anxious a buyer, dealing at arms length nor
  facade of sale or fictitious and unreal transactions of speculative nature   G
  brought into existence in quick succession or otherwise to inflate the
  market value, This, however, does not preclude the Court from taking
  any other special circumstances into consideration, the requirement
  being always to arrive at as nearly as possible an estimate of the market
  value judged by an objective standard. [181C-182D]
                                                                               H


                                                                                   /
                                                                               /
    364            SUPREME COURT REPORTS             [ 1990] Supp. I S.C.R.

           Gajapati Raju v. Revenue Divisional Officer, A.I.R. 1939 P.C.
A   98; Special Land Acquisition Officer v. Adinarayana Setty, [1959]
    Suppl. l S.C.R. 404; Tribeni Devi & Ors. v. Collector of Ranchi, [1972]
    3 S.C.R. 208; Dollar Co. Madras v. Collector of Madras, [1975] Suppl.
    S.C.R. 403; Chandra Bansi Singh & Ors. etc v. Stat'e of Bihar & Ors.
    etc., [1985] 1 S.C.R. 579; Tahsildar, Land Acquisition Visakhapatnam
B   v.P. Narasingh Rao & Ors., [1985] l A.P.L.J. 99; Collector, Raigarh v.
    Hari Singh Thakur & Anr., [1979] 2 S.C.R. 183; Administrator
    General of West Bengal v. Collector, Varanasi, [1988] 2 S.C.R. 1025;
    Mehta Ravindrarai Ajitrai v. State of Gujarat, A.I.R. 1989 S.C. 2051
    and Hindustan Oil Co. Ltd. v. Special Duty Collector (Land Acquisi-
    tion), [1990) l S.C.R. 59, referred to.
          ,
c          1.2 The prices fetched for smaller plots cannot form basis for
    valuation of large tracts of land as the two are not comparable proper-
    ties. Smaller plots always would have special features like the urgent
    need of the buyer, the advantageous situation, the like of the buyer etc.
    Similarly, the land situated on the frontage have special advantage and
D   the land situated in the interior undeveloped area will not have the value
    at par since the latter will have lower value then the former. So is the
    case with orchard land and agricultural land, the former being superior
    in quality as compared to the latter. If such sales are relied upon
    reasonable reduction should be given. [1828-C]

E         Smt. Kaushalya Devi Bogra & Ors. etc. v. The Land Acquisition
    Officer, Aurangabad & Anr., [1984] 2 S.C.R. 900; Pridviraj v. State of
    Madhya Pradesh, [1977) 2 S.C.R. 633; Padma Uppal etc. v. State of
    Punjab & Ors., [1977] 1 S.C.R. 329; Chimanlal Hargovinddas v.
    Special Land Acquisition Officer, Poona & Anr., [1988] 3 S.C.C. 751
    and Mantaben Manibhai v. Special Land Acquisition Officer, Baroda,
F   A.LR. 1990 S.C. 103, referred to.

              I.3 In some cases for lack of comparable sales it may not be
    possible to adduce evidence of sale of the neighbouring lands possessed
    of same or similar quality. So, insistence on adduction of precise or
    scientific evidence would cause disadvantage to claimants in not getting
G   the reasonable and proper market value. The courts of facts should,
    therefore, keep before them always the even scales to adopt pragmatic
    approach without indulging in facts of imagination and assess the
    market value which is capable to fetch reasonable compensation. They
    may in that process sometimes trench on the border of the guess work
    but mechanical assessment should be eschewed. Misplaced sympathies
H   or undue emphasis solely on the claimants' right to compensation would
                    PEJlJY AR v. STATE OF KERALA                      365

place heavy burden on.the public·exchequer to which everyone contri-
butes by direct or indirecttaxes. [1850-G; 184F-G I

       1.4 In the instant case1 the High Court found that Ex. P. 7 and J',
9 relied on by the civil court were not applicable as the lands covered by
them were paddy fields cultivated by irrigation sources and situated
four miles away .from the acquired unirrigated landsi Similarly, it ais9
found that Ex, P. JO could not be relied on. The High Court, therefore,
could not be said to be unjustified in reversing the awards and !lecrees
of the civil court. [186B-D]

      2. The amount awarded by the Land Acquisition Collector forms
an offer. It is for the claimants to adduce relevant and material
evidence to establish that the acquired lands were capable of fetch-         c
ing higher market value and the amount offered by the Land Ac-
quisition Collector was inadequate and he proceeded on a wrong pre-
mise or principle. It is also the duty of the State to adduce evidence in
rebuttal. [183B, GI
                                                                             D
      Ezr.a v. Secretary of State for India, I.L.R. 32 Cal. 605 (P.C.);
Raja Barish Chandra v. Dy. Land Acquisition Officer, [1962] 2 S.C.R.
676; Khorshed Shapoor Chenai, etc. v. Assistant Controller of Estate
Duty, {1980] 2 S.C.R. 315; Dr. G.H. Grant v. State of Bihar, [1965] 3
S.C.R. 576; Asstt. Development Officer v. Tayaballi, AIR 1933 Bomb.
361; Tahsildar, Land Acquisition, Visakhapatnam v. P. NarasinghRao           E
& Ors., [1985] 1 A.P.L.J. 99; T. W. Higgins-claimant v. Secretary of
State, AIR 1919 Cal. 1008; Naresh Chandra Bose v. State of West
Bengal & Ors., AIR 1955 Cal. 398; Smt. Kusumgauri Ramray Munshi
& Ors. v. The Special Land Acquisition Officer, Ahmedabad, AIR
1963 Gujarat 92; Maharao Shri Madansinhji v. State of Gujarat, AIR
1969 Gujarat 270 and Chaturbhuj Panda & Ors. v. Collector, Raigarh,          F
[1969] l S.C.R. 412, referred to.

     2.2 In the instant case the evidence procb1ced by the appellant
was found untrustworthy by the High Court. It also did not accept the
evidence adduced by the State. [186E-F]
                                                                             G
      3.1 The Appellate Court after rejecting the evidence may have to
find whether there are any circumstantial or other material evidence on
record to fix reasonable market value. The State Advocate General
having stated across the bar in the High Court that the market value
can be fixed at Rs.18 per cent, a concession made by him with all
responsibility on behalf of the State, the High Coon was not justified in    ij
    366         SUPREME COURT REPORTS                 [ 1990] Supp. I S.C.R.

    not taking into account this submission. ·[186G-187B I
A
          3.2 Any concession made by the Government pleader in the trial
    court cannot bind the Government as it is always unsafe to rely on the
    wrong or erroneous or wanton conceiision made by the counsel appear-
    ing for the State unless it is in writing on instructions from the responsi-
B   ble officer. Otherwise it would place undue and needless heavy burden·
    on the public exchequer. [187C]

         3.3 The claimants are, therefore, entitled to the market value@
    Rs.18 per cent to the lands other than those to which the Collector
    awarded @ Rs.30 per cent, as the reference court shall not reduce the
    market value to less than that awarded by the Collector as enjoined
c   under the statute. From the very nature of compulsory acquisition, JS
    per cent solatinm as additional compensation was statutorily fixed.
    Therefore, determination of additional market value is unwarranted. [187E]

           3.4 Section 25(3) of the Regulation contemplates payment of in-
D   terest on solatinm to recompensate the owner of the land for loss of user
    of the land from the date of taking possession till date of payment into
    court. The claimants are, therefore, entitled to interest on solatinm. It
    is fixed at 6 per cent on the excess market value determined under the
    judgment including solatium from the date of taking possession till the
    date of payment. In other respects judgment of the High Court is
E   confirmed. [189G~l90B]

          Union of India v. Shri Ram Mehar & Anr., [1973] 2 S.C.R. 720,
    referred to.

           4. The Commissioner who collected the evidence in respect of the
F    injurious effects on the remaining lands of the claimants admitted in the
     cross examination that the appellant did not expend any money on civil
     works. Though from the date of the acquisition till the date of evidence
     more than six years had passed by the appellant had not produced any
     material or account books of the estate to establish that they have
     expended any money in this regard. Both the engineers examined on
G    behalf of the State and also appellant's witnesses admitted that the road
     passing through the lands was being used by the appellant to carry its
     forest produce etc. Though during rainy season that too for a short
     period, !lt some places the water gets stagnated on the roads at lower
     levels but that stand no impediment for the carriage of the goods. This
     phenomena was prevalent even before acquisition. The value of the land
H   ·of the apJ,lllllant had not been injuriously effected due to acquisition. No
          PERIYAR v. STATE .OF KERALA [K. RAMASWAMY, J.[               367

 damage due to severence was caused. Under these circumsiances, the
 appellant was.not entitled to compensation in this regard. [187F-188D]
                                                                              A

       5. The Sub-Judge appears to be too anxious to award whatever is
 asked for on mechanical appreciation without subjecting the evidence to
 legal and critical scrutiny and analysis. In such a case, even if.the
 assessment of valuation is modified or aftlnned in an appeal as a part of    B
 the judicial process, the conduct of the judicial officer, drawable from
 an overall picture of the matter would yet be available to be looked into.
 In approprfute cllSes it may be opened to draw inferences even from
 judicial acts of the misconduct. The person concerned shall not, there-
 fore, camouflage the official act to a hidden conduct in the function of
 fixing arbitrary or unreasonable compensation to the acquired land.
                                                                              c
       V.R. Katarkiv. State of Karnataka & Ors., Civil Appeal No. 4392
 of 1986 decided on March 22, 1990, referred to.

       CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 543
 to 570 of 1974..                                                             D

       From the Judgment and Order dated 22.1.1973 of the Kerala
 High Court in A.S. Nos. 487, 488, 489, 490, 491, 492, 493, 495, 497,
 498, 499, 500, 501, 502, 503, 504, 505, 506, 507, 509, 510, Sil; 512,
 513, 514, 515, 52_1 and 523 of 1969.
                                                                              E
       G .L. Sanghi and Ms. Lily Thomas for the Appellant.

     A.S. Nambiar, K.R. Nambiar and T.T. Kunhikannan for the
 Respondent.                ·

       The Judgment of the.Court was delivered by                             F

        K. RAMASWAMY, J. l. This batch of 28 Appeals are against
  the common judgment _and decrees of the Kerala High Court in A.S.
  No. 487 of 1969 etc. dated January 22, 1973 and leave under Art. 136
  was granted by this Court on March 14, 1971\. The High Court reversed
  the awards and decrees of land acquisition, Sub·Court, Emakulam 3.l)d       G
  confirmed the separate awards of the Collector dated March 29, 1962.
  The notification under section 4(1) of the Kerala Land Acquisitidn
  1089 for short "the Regulation" was published on October 31, 1961
  and the decl~rations which are the relevant dates for determining the
· market value by operation of Section 22(1) was published on October
  31, 1961 and February 22, 1962. The land acquired was 190.37 acres          H
    368         SUPREME COURT REPORTS               [ 1990] Supp. 1 S.C.R.

    and 15 .48 acres for Periyar Valley Irrigation Project and Phyto-
A   Chemicals Project both being public purposes. The Collector deter-
    mined the market value at Re.0.04 per cent for certain lands and
    Re.0.12 per cent for certain other lands, Rs.30 per cent to the wet
    lands as against the claim of Rs.40 and 50 per cent and Compensation
    to the trees as timber value was given. The total Compensation fixed
B   was Rs.4.84 Iakhs. Dissatisfied therewith the appellant sought refe-
    rence under section 18 thereof. They also claimed. separate value as
    fruit bearing trees on potential value. They also claimed charges for
    severence and injurious effects on the remaining land. The Civil Court
    after adduction of evidence and on consideration thereof enhanced the
    market value to the lands @Rs .40-50 as claimed in addition to a sum of
    Rs.30 to 38 per cent. It awarded in all Rs.20.20 lakhs on all counts
c   including severence and injurious effects and 15 per cent solatium and
    also 6 per cent interest on additional compensation from the date of
    taking possession till date of payment vide page 3 of short notes of the
    appellant. On appeals by the State, by common judgment dated
    January i2, 1973, the High Court reversed the award of the Civil Court
D   and confirmed that of the Land Acquisition Collector.

          Mr Sanghi, learned Sr. counsel for the appellants with his usual
    vehemence contended that the High Court committed manifest error
    of law in reversing the awards and decrees of the Civil Court which had
    the advantage of seeing the demeanour of the witnesses and exten-
E   sively considered the evidence in particular the unimpeachable docu-
    ments Ex. p.7, p.9 and p.10. The appellant, on account of the acquisi-
    tion, had to incur huge expenditure to construct Kayallas, Pathways,
    culverts etc. for protection of the rest of the Estate. The amount
    expended was to prevent injurious effects to the Estate and is to be
    recompensated. It is further contended that the potential value of the
F   trees have to be taken into account in determining the market value.
    The appellant also is entitled to compensation for severence due to
    submersion of the lands when the Periyar Canal passes through the
    rubber. estate of the appellant. Therefore, the appellant is entitled to
    the compensation in full measure with interest on solatium. The High
    Court was unjustified in teversing the awards and the decrees of the
G   Civil Court.

           2. The first question, therefore, is whether the High Court is
    justified in reversing the awards and decrees of the Civil Court.
    Admittedly 190.37 and 15.48 cents of land is part of the extensive
    Periyar Estate of 879 .37 acres stretching over seven miles long on the
H   banks of the Periyar River. It had a road of 14 feet width by name
         PERIYAR v. STAtE OF KERALA JK. RAMASWAMY, J.]                 369

Alwaye Mulinar Highway running through middle of the Estate, the
lands were acquired for submersion due to Periyar River Vailey Irriga-
                                                                              A
tion Project artd to estabiish Phyto-Chemical Project. Shri Sanghi,
repeatediy reiterated that in determining the market value an element
of some guesswork is involved. But in determining the market value
the Court has to eschew arbitrary fixation keeping in view the settled
principles of law in evaluating market value in. compulsory acquisition       B
oil the hypothesis of a willing vendor and a willing vendee. Therefore,
let us glance tliroligh the seitled principles of law in this regard.

       3. in Gajapaii Raju v. Revenue Divisional Officer; A.LR. 1939
P.C. 98 popularly known as Vijji's case; the judicial committee of the
Privy Council held that compensation for compulsory acquisition gov-
erned by Section 23( 1) of the Land Acquisition Act, 1894 is the market       c
value of the land at the date of the publication of the notification under
sub-sec. (1) of the Section 4 of the Act "what a willing vendor might
reasonably except to obtain from willing purchaser''. The function of
!he Court in awarding compensation under the Act is lb ascertain the
tnarRet value of the land at the date of notification under section 4(1)
of the Act (in this case under section 6(1) of the Regulation) and the
evaluation may be as pointed out by this Court in Special Land Acqui-
siiioii Officer v. Adinarayana Setty, [1959] Suppl. 1 S.C.R. 404 at 412
( 1) Opinion of experts; (2) The price paid within a reasonable time in
bona fide transactions of purchase of ilie land acqliited or the land
adjacent to the acquired land and possessing similar advantages; (3)
Nlimbet of years of purchase of the actuai or immediately perspective
profits of the land acquired. In that case while adopting ilie second
method the High Ccilirt afuved at average price of four tiatisactions
excluding two sales arid separate average was arrived fixed tlie market
value of Rs.13.80. This Court calclilatirtg the average of six sale trans-
actions fixed the market rate at Rs. t 1.

       In Ttibeni Devi & Ors. v. Collector of Ranchi, 11972] 3 S.C.R.
20S at 212 this Court held that for determining corripeiisation payalile
to the owner of the land, the market vaiue is to be deietriiined by
reference to the price which may reasotiabiy to obtain frotii willing
j)tirchasers but since it may itot be possible to ascertain ihis witii ariy
a!Ilount of precision tlie authority charged witli the diity lo award
compensation is bound to make aII estimate judged by an objective
standard. Whifo reiterating the three tests laid down in S.L.A. tiffi'
cer's case, it was further emphasised that these metiiods, liowevef, do
not preclude the Court from taking ariy otlier special citctiiiisiances
into consideration, the requirement lieing always to arrive at as riearty     H
    370         SUPREME COURT REPORTS                 [1990] Supp. 1 S.C.R.

    as possible at an estimate of the market value. In arriving at a reason-
A   able correct market value it may be necessary to take even two or all
    these methods into account inasmuch as the exact evaluation is not
    always possible as no two lands may be the same either in respect of
    the situation or the extent or potentiality nor is it possible in all cases
    to have reliable material from which the valuation cao be accurately
B   determined. This Court rejected the sale deeds of the laods situated
    farther away from the lands acquired and also disallowed 10 per cent
    additional compensation over market rate fixed.

            In Dollar Co., Madras v. Collector of Madras, [1975] Suppl.
    SCR. 403 this Court held that "we may even say that the best evidence
    of the value of the property is the value of the sale in the very property
c   to which the claimants are the party. If the sale is of recent date and all
    that need normally be proved is that the sale was between a willing
    purchaser and willing seller, that there has not been any appreciable
    rise or falls since and that nothing has b~en done on the laod during the
    interval to-raise the value. But if the sale was long ago, may be the
D   court would examine more recent sales of comparable lands as throw-
    ing better light on current land value. This Court further emphasised
    the fact that because the appellant therein himself purchased the land
    which is 10 months prior to the date of notification under section 4, at
    a price of Rs.410 per ground, that would be the measure of prevailing
    market value. The High Court enhanced the market value to Rs.1800
E   per ground and on appeal was filed by the State. Though the appellant
    still claimed higher value, this Court negatived further enhancement.

          4. In Smt. Kaushalya Devi Bogra & Ors. etc. v. The Land
    Acquisition Officer, Aurangabad & Anr., [1984] 2 SCR. 900 the trans-
    action in respect of small properties do not offer proper guidelines
F   and, therefore, the price fetched therein cannot be taken as real basis
    for determining compensation for large tracts of property. This was
    also the view in Pridvirajv. State of Madhya Pradesh, [1977] 2 SCR 633
    and Padma Uppal Etc. v. State of Punjab & Ors., [1977] l SCR 329. If
    they are relied upon reasonable reduction should be given. Accord-
    ingly, this Court has fixed the market value in the light of the develop-
G   ment of the land in the neighbour-hood of the township etc.

          In Chandra Bansi :lingh & Ors. etc. v. State of Bihar & Ors. etc.,
    [ 1985] 1 S_CR 579 notification under section 4(1) was issued for acquir-
    ing 1034 acres of land for housing construction by the Housing Board.
    This Court held that compensation shou~ be paid as per the value of
H   the land prevailing as on the date of the notification but not on the
    date of taking over possession.
         PERIYAR v, STATE OF KERALA [K. RAMASWAMY. J.]                  371

      5. In Tahsi/dar, Land Acquisition, Visakhapatnam v. P. Nara.
                                                                               A
singh Rao and Ors., [1985] 1 A.P.L.J. 99 a Division Bench of the
Andhra Pradesh High Court to which one of us (K. Ramaswamy, J)
was a member while reiterating the principles referred to above held
that the object of determining the compensation with reference to
comparable sales of the land adjacent to th.e land acquired is to find
the fertility, quality, the probable price of the lane! und~r acquisition is   B
likely to fetch and the actual price paid by the vendee to the vendor
under those transactions as a prudent vendee and is not actuated with
any other speculative features. It is to ascertain these facts, the sale
deeds are insisted to be produced. The market value fixed must be
reasonable and fair to the owner as well as to avoid undue burden to
the exchequer. Therefore, the transaction relating to the acquired land
of recent dates or in the neighbour-hood lands that possessed of simi-         c
lar potenti~lity or fertility or other advantageous features are relevant
pieces of evidence. When the Courts are called upon to fix the market
value of the land in compulsory acquisition, the best evidence of the
value of property is the sale of Ille acquired land to which the claimant
himself is a party, in its absence the sales of the neighbouring lands. In     D
proof of the sale transaction, the relationship of the parties to the
transaction, the market conditions, the terms of the sale and the date
of the sale are to be looked into. These features would be established
by examining either the vendor or vendee and if they are not available,
the attesting witnesses who have personal }<nowledge 9f tl!e transac-
tion etc. The original sale deed or certified copy thereof should be           E
tendered as evidence. The underlying principles to fix a fair market
value with reference to comparable sales is to reciuce the element of
speculation. In a comparable sales the features are: (1) it must be
within a reasonable time of the date of the notification; (2) it should be
a bona fide transaction; (3) it should be a sale of the land acqµired or
land adjacent to· the land aequired and (4) it should possess similar          F
advantages. These sliould be established by adduction of material evi-
dence by examining as stated above the parties (o the sale or persons
having personal knowledge of the sale transactions. The proof also
would focus on the fact whether the transactions are genuine and bona
fide transactions. As held py this Court in Collector, Raigarh v. Hari
Singh Thakur & Anr., [1979] 2 SCR 183 that fictitious and unreal
transactions of speculative nature brought into existence in quick
succession should be rejected. In that case it was found by majority
that.these sale deeds are brought up sales. In Administrator General of
West Bengal v. Collector, Varanasi, I 1988] 2 SCR 1025 that the price
at which the property fetches would be by a willing seller to a willing
purchaser but not too anxious a buyer, dealing at aim's length. The            H
         372         SUPREME COURT REPORTS                 [ 1990] Supp. 1 S.CR.

         prices fetched for similar lands with similar advantages and potentiali-
     A   ties and the bona fide transactions of the sale at time of preliminary
         notification are the usual, and indeed the best, evidence of the market
         value. Other meihods of valuation arc resorted to if the evidence of
         sale of similar land is not available. The prices fetched for smaller plots
.,       cannot form basis for valuation of large tracts of land as the two are
     B   not comparable properties. Smaller plots always would have special
         features like the urgent need of the buyer, the advantageous situation,
         the like of the buyer etc.

               6. In Chimanlal Hargovinddas v. Special Land Acquisition
         Officer, Poona & Anr., [1988] 3 SCC 751 this Court held that the land
         situated on the frontage have special advantage and the land situated
     t   in the interior uridev7loped area will not have the value at par since the
         latter will have lower value than land situated near developed area.
         Some guesswork is permissible in determining the value and on this
         basis this Court did not interfere with fixation of market value by the
         High Court.
     D
               In Mehta Ravindrarai Ajitrai v. State of Gujarat, AIR 1989 SC
         2051 this Court reiterated the ratio in West Bengal Administrator
         General's case that the persons to prove the fair transaction are either
         the vendor and the vendee or the person conversant with the sale and
       . they are to be examined. The original sale deed or the certified copy of
     E the sale deed are to be produced. The same is the view in Dr. Hari
         Singh Thakur's case. This was also the view of the Andhra Pradesh
         High Court in Narasingh Rao's case.

              7. In Mantaben Manibhai v. Special Land Acquisition Officer,
         Baroda, AIR 1990 SC 103 to which one of us (L.M. Sharma, J) was a
     F   member, this Court held that when the quality of the lands are diffe-
         rent (bagayat land and jiryat land). Bagayat land is superior in quality
         and to what percentage of superiority was not established by the clai-
         mants. Th_is Court held that addition of 25 per cent of the value of the
         J iryat land was held to be proper valuation.

     G         In Hindustan Oil Co. Ltd. v. Special Duty Collector (Land
         Acquisition), [1990] 1SCR59 this Court held that cumulative effect of
         all the facts and circumstances should be taken into consideration in
         arriving at a reasonable and fair market value.

               8. in the light of these principles, the further contention that hav-
     H   ing rejected the documents produced by the State, the High Court
         PERIYAR '· STATE OF KERALA [K. RAMASWAMY. J.]               373

ought w iiave d!lied upciil' the docintients produced by the appdiafit as
compa{able safe· and would have confirmed the coinpeilsaiion awarded
l:iy ihe civil towri does noi impress \ls as weli founded. Ii is weli
settled law thai tlie ammini awarded by the Laiid ACijuiSiiion Col-
lector form an offer aiid that ii is for the claimanis to adduce relevant
and material' evidence to establish that the acquired 1and are capable
of fetching higlief m·arket value and the amou·nt offered by the Land
Acquisition Collecior was inadequate and he proeeeded on a w'.ong
premise or principle. In Ezra v. Secretary of Siaie for India, I.L.R. 32
Cal. 605 (P.C.) ii was i1eld that the amount awarded by tlie Collettcir
forms an offer. lt was reiterated by this Court in Raja Harish Chandra
v. Dy. Land Acquisition Officer, [ 1962] 2 SCR 676; Khorshed Shdpoiir
Chenai, i!tt. v. Assisldnt Controller of EState Duty, [ 1980] 2 SCR 315
and Dr. C.H. Grdnl v. State of Bihar, [ f965] 3 SCR 576. In Hari            t
Singh'S case, A.P. Sen, J. held (arid majority ditl not disagree} at
p. 191CtoEthat:

            "hi a reference under s. JS of the Act, the. burden of
            proving that the amount of compensation awarded by the          b
            Collector is in-adequate lies upon the claimant, and he
            must show affirmatively that the Collector had proceeded
            upon a· wrong basis. The nature and the burden of estab-
            lishing thai he was wrong, depend on the nature of the
            enquiry held by him ..... .
                                                                            E
            It is equally well-settled that where the claimani leads n·o
            evidence to show that the conclusions reached in the award
            were inadequate, or, that it offered unsatisfactory compen-
            sation, the award has to be confiqned."

In that case it was held that the evidence produced was iiiitrusiWorthy.    J'i
Same is the view of Bombay High Court in Asstt. Development Officer
v. Tayaba/li, AIR 1933 Bombay 361 at 361 D.B. and of A.P. High
Court in Narsing Rao's case and T. W. Higgins-claimant v. Secretary of
State, AIR 1919 Cal. 1008; Naresh Chandra Bose v. State of West Bengal
& Ors .. AIR 1955 Cal. 398 at 399; Smt. Kusumgauri Ramray Munshi
& Ors. v. The Special Land Acquisition Officer, Ahmedabad, AIR              (J
1963 Gujarat 92 at 94, 95 and Maharao Shri Madansinhji v. State of
Gujarat, A!R !'969 Gujarat 270. It is also the. duty of the Staie to
adduce evidence ih rebuttal.

       This Court in Chaturbhuj Panda & Ors. v. Collector; fiaigarh,
[ f969] I SCR 412 at 414 has rightly pointed out ihat:                      #
    374          SUPREME COURT REPORTS                 I1990] ~upp. 1 ~.C.R.
                "It is )rue that the witnesses examined on behalf of the
A
                appellants have not been effectively cross-examined. It is
                also true that the Collector had not adduced any evidence
                in rebuttal; but that does not mean that the court is bound
                to accept their evidence. The Judges are not computers. In
                assessing the value to be attached to oral evidence, they are
B               bound to call into aid their experience of life. As Judges of
                fact, it was open to the appellate Judges to test the evi-
                dence placed before them on the basis of probabilities."

           In Narasingh Rao's case. I have dealt with in paragraph 8 thus:
    "The object of the inquiry is to bring on record the Price fetched or
    capable of fetching, the relative situation of the land acquired and the
c   subject of the sale transaction, their fertility, suitability, nature of the
    use to which they are put to, income derive or other special distinctive
    features possessed of by the respective lands either single of some or
    all relevant to the facts in issue. In this process the courts ar!' µpt mere
    umpires but to take intelligent paqicipation and to see wheth!!r \he
D   counsel on either side are directing towards this goal or the court itself
    to intervene in this regard." Therefpre, it is the paramol\nt dµty of the
    courts of facts to subject the evidence to close scrµtiny, objectively
    assess the evidence tendered by the parties cm proper consideration
    thereof in correct perspective to qrrive at reasonable market value.
    The attending facts and circumstances in each case would furnish
E   guidance to arrive at the market value of the acquired lands. The
    neig!ibour,hopq lands Possessec:l of similar potentialities or same
    advantageous features or any advantageous special circmns\ances
    availabl¢ in each case also are to be taken into account. Thus, the
    object of the assessment of the evidence is to arrive at a fair and
    reasonable market value of the lands and in that process sometimes
F   trench on the border of the guesswork but mechanical assessment has
    to be eschewed. The Judges are to draw from their experience and the
    normal human conduct of parties in bona fide and genuine sale trans-
    actions is the guiding star in eyaluating evidence. Misplaced sym-
    pathies or undue emphasises solely on the claimants' right to compensa-
    tion wpuld place heavy burden on the public exchequer to which
G   everyone contributes by direct or indirect taxes.

         In V.R. Katarki v. State of Karnataka & Ors., C.A. No. 4392/86
    dated March 22, 1990 decidec:l by Bench of this Court to which one of
    us (K. Ramaswamy, J.) is a member, the appellant apart from other
    charges, was imputed with misconduct of fixing, in his capacity as Civil
H   Judge at Bagalkot. "higher valuation than was legitimate of the
         PERIYAR v. STATE OF KERALA [K. RAMASWAMY, J.[                  375

 lands,;, After cohducting enquiry he was dismissed from service and
                                                                               A
when he challenged it; the High Court upheld it on the judicial side.
 On furihfr appeal, since ihe appeals against higher valuation were
 pending in the High Court, without going into that question, while
 confirming the disinissal laid the rule thus: "We would like to make a
speciai rriention of the position that everi if the assessment <if valuation
 is modified or affirmed in an appeal as a part of the judicial process,
 the c;nduct of the judicial officer drawable from an overall picture of
the nialter would yei be available to be looked into. In appropriate
cases Ii may be opened to draw inferences even from judicial acts" <lf
the misconduct. The rule of conduct spurned by this Court squarely
 put the nail on the official act as a refuge to fix arbitrary and unreason-
able market value and the person concerned shall not camaflouge the
official act to a hidden conduct in ihe function of fixing arbitrary or        c
 unreasonable compensation to the acquired land. Equally it is saltitofy
io note thili the claimant has legal and legitimate right to a fair and
reasonable compensation to the land he is deprived of by legal process.
The claimant has to be recompensated for rehabilitation or to pur'
chase similar lands elsewhere. In some cases for iatk of comparable            D
sales it may not be possible to adduce evidence of sale transa€tions of
the neighbouring lands possessed of same of similar quality. 86 inslst    0



ence of adduction of precise or scientific evidence would cause disad-
vantage to the daimants in not getting the reasonable and proper
market value prevailing on the date of notification under section 4(1).
Therefore, it is the paramount duty of the Land Acquisition Judge              E
authority to keep before him always the even scales to adopt pragmatic
approach without indulging in "facts of imagination" and assess the
market value which is reasonably capable to fetch reasonable market
value. What is fair and reasonable market value is always aq·uestion of
fact depending on the nature of the evidence, circumstances and prob-
abilities in each case. The guiding star would be the conduct of a             F
hypothetical willing vendor would offer the lands and a willing pur·
chaser in normal human conduct would be willing to buy as a prudent
man in normal market condition as on the date of the notification
under section 4( 1) but not an anxious buyer dealing at arm's length nor
facade of sale or fictitious sales brought about in quick succession 01
otherwise to inflate the market value.                                         G

      9. Let us consider the evidence on record from the above pers-
pective and evaluate the circumstances on record. Shri Sanghi repea-
tedly s,tressed that an element of guesswork is,inescapabk and Ex. P. 7,
8, 9 & 10 furnish the best material. Though he relied on Ex. P.. 1 to
P. 3, in fa'itness, he did not press for consideration in our view quite       H
    376          SUPREME COURT REPORTS                  [ 1990] Supp. 1 S.C.R.

     rightly as they are very small extents of 2-1/2; 4 and 3 cents respec-
    tively. They arc situated in residential and commercial areas. So they
    cannot be ~lied on. But he strongly relied on Ex. P. 7 dated March 9.
     1951. The extent is Ac. 3-4 cents for Rs.19,000. Jt worked out at
     Rs.52.50 per cent. The High Court held that the lands covered by
     Ex. P. 7 are situated by the side of irrigation channel and paddy culti-
B   vation was carried on. Under those circumstances, the evidence of
     P. W. 6, the vendor was not accepted and in our opinion quite rightly
     and Ex, P. 7 was rightly not relied as lands in question are not
    irrigated lands whereas the lands under Ex. P. 7 are paddy lands
    cultivated by irrigation sources and is situated four miles away from
    the acquired lands. Similarly Ex. P. 9 is dated April 4, 1957. The
    extent is Ac. 1.38 cents for Rs.6.000. PW. 5 is the vendor. It worked
c   out at Rs.43.50 per cent. It is also four miles away from the acquired
    lands. It is also not of any assistance to the appellant as this land also is
    a paddy land irrigated by irrigation sources. It is udoubted that in
    Ex. P. 10, the judgment of the Sub Court. Ernakulam in Land Acquisi-
    tion Case No. 298 of 1963 etc. relate to the land in the vicinity of
D   Phyto-Chemical Project and the Land Acquisition Court awarded ©
    Rs.80 per cent for the paddy lands and Rs.43 per cent for dry land. The
    High Court has pointed out that on the basis of the evidence adduced
    in that case, namely, comparable sales, the determination of the
    market value is correct. It was held that it cannot form the basis for
    determining the market value of the lands in this case. We have been
E   taken through the entire judgment under Ex. P. JO and after carefully
    scanning the evidence, we are not persuaded to take a different view
    from that of the High Court. Which has correctly appreciated the
                                                                                    •
    evidence. Accordingly Ex. P. 10 also would not form a base to fix the
    market value. It is undoubtedly true that the High Court did not accept
    the evidence adduced by the State. It was rejected both by the Civil
F   Court as well as by the High Court. The Sub Judge appears to be too
    anxious to award whatever is asked for on mechanical appreciation
    without subjecting the evidence to legal and critical scrutiny and
    analysis. The appellate Court after rejecting the evidence may have to
    find whether there are any circumstantial or other material evidence
    on record to fix reasonable market value. We are relieved to under-
G   take that exercise in view of fair stand taken by the Learned Advocate
    General, Kerala, who appeared in the High Court. It is clear from the
    judgment that the Learned Advocate General while arguing the case
    had stated across the bar, obviously on instructions or in fairness from
    record, that the market value can be fixed at Rs. 18 per cent. This is,
    therefore, a concession made by the Learned Advocate General on
H   behalf of the State. The High Court. therefore, was not justified in not
             PER!'!'AR 1· STATE OF KERALA IK: RAMASWAMY, J.l            . 377

    !~~ing into accouµt this submissi()n of the Advocate General. It is          '\
    uµdpubted that the High Court having rejected the evidenq: of the
    claimants has to confirm the offer made by the Collector in the award
    p~ovid~ci if there \~ npother evidence on record. But .in view of!pe
    \:oncessipn made by the Learned Advocate General, we are of tne
    definite view that the claimants are entitled to the market value@
i   Rs'. is 'per cent io the lands other than those to ~hi~h the Collector ~
    ~;yarded @' Rs.30 per cent as the referen~e ~ourt shall n0t reduce ihe
    !llqrket v~l4e to less than awarded by the Collector as enjoined under
    \he statute. As a limb of the argunient Shri Sanghi has placed reliance
    P,11 )he C()l1C!'SSion maf!e by the government pleader in the Trial Court .
    !hat Ex. P. 9 would form the basis for determination of the market
    value which worked out@ Rs.43.50 per cent. We are unable to accept
    !he sµbmission of the learned counsel. Any concession made by the c
    gpyenme11t ple~der in the Trial Court cannot bind the Government as
    H is obviously, always, unsafe to rely on the wrong or erroneous or
    \V'\n!on concessio11 m3de by the coµnsel appearing for the State unless

I   jt is in writi11g on instructions from the responsible office\. Otherwise it
    \Vould place und\Je and needless heavy bµrpen on the pu!Jlic ex.che- p
    q uer. But the sa!T\e yardstick cannot be applied when the Advocate
    (i~neral nas m~Pe a ~\atemen\ accros~ the bar since· the Advocate
    General ma~e~ )he ~ta\ement with all responsibility. In those circum-
    stances we have no hesitation to accepi the statement of Learned
    Advocate General and hold that the market value of the lands would
    pe fixed at Rs.18 pe; ~ent. Frorr\ \he very nature of compu]sory acquisi- ~
     Hor 15 Per cent so!atiurn as addit\o.n~l compensat\on was statutorily            1




    fixed. Therefore, determination of additional market value is
    µri~'!ff~~ted'.- ,, . .  ,..... , .. , - ,·., . .a· . .. - ,, .• _..,.


          10. It is next contended that the claimants are entitled to the
    severence ch~rges and injurioti~ 'effe~i~ Olj \he remaining lands of the     E
    claimant. From the evidence it is clear tha) tpe Commissioner who
    collected the evidence in this regard has admitted in the cross-
    examination that the appellant did. n()t _expenq any money jn erecting
    boundary walls, bridges, projects etc. It is an admitted fact that though
    from the date of the acquisitiqµ till date of evidepce more than sj~
    years h_av:e passed by, the appella11t has rot proqljced aqy mate.rial or    g
    account books of the Estate to establish th~i they have expended any
    money in this regard. It is also admitted by both the .engineers
    .examined on behalf of the Sta)e and ~lso appell~nt's witnesses that the
    road passing throug!t the lands is being used by t\le appellant to carry
    his goods i.e. his forest produce etc. Though !'!'!ring ra'j~y~@~sP!l ih~r
    ~oo for a shor~ peripp at somt; pl~t~s the ~~F~f ~¢F sF~~n~tt'~ RR Fht       H
    378.         SUPREME COURT REPORTS               [1990] Supp. 1 S.C.R.
                                                                                 ..
    roads at lower levels but that stand no impediment for the carriage of
A
    the goods as admitted by the witnesses ..This phenomena was prevalent
    even before acquisition. In these circumstances we entirely agree with
    the High Court in its finding that the appellant has not established that
    they have expended any money for erection of retaining walls.
    culverts, bridges etc. There is no damage. due to acquisition of the
B   land of the appellant and, therefore, the award of severence charges is
    unwarranted. Both the counsel havr taken us through the material
    evidence of PW. 7, 8 & 9: C.P.W. 1 and C.P.W. 2 examined on behalf
    of the State. We have once again carefully scanned the evidence and
    we are satisfied that the High Court has thoroughly considered the
    evidence of all the witnesses and reports of the Commissioners. The
    High Court is well justified in arriving at the finding that the appellant
c   has not expended any money for either constructing any boundary
    walls, culverts. bridges or roads etc. The value of the land of the
    appellant has· not been injuriously effected due to acquisition. No
    damage due to severence was caused. Under these circumstances the
    appellant is not entitled to compensation in this regard. When we have
D   pointed out that the appellant is not entitled separately to the value of
    the land and the trees as potential value as fruit bearing one. The
    counsel agreed, on instructions, that they would confine to fix market
    value of the lands.

          11. The only question then remains is whether the appellant is
E   entitled to payment of interest on solatium. The High Court relied on
    Union of India v. Shri Ram Mehar & Anr., [1973] 2 SCR 720 and
    rejected
           ;
             the claim for interest.

           Section 25(3) of the Regulation reads thus:

F         "If the sum in the opinion of the court, the Division Peishkar
    ought to have awar4ed as compensation is in excess of the sum which
    the Division Peishkar did not award as compensation, the award of the
    court )Tlay direct that the government shall pay interest on such excess
    @ Rs.6 per centum per annum from the date on which the Division
    Peishkar took possession of the land to the date of payment of such
G   excess in Court." A reading thereof does postulate that in the opinion
    of the Court the Land Acquisition Officer ought to have awarded
    compensation in excess as found by the court. then the court may
    direct that the government shall pay interest @ 6 per centum per
    annum on the excess amount so found as compensation. The payment
    should be from the date, the land was taken possession by the Division
H   Peishkar till the date of the payment of the excess amount into court.
                PERIYAR v. STATE OF KiiRALA IK. RAMASWAMY. J.]             379

       The question, therefore. is whether'"interest" is an integral part oft~c
       word "compensation" under sub-section (3) of Section 25 of the             A
       Regulation.

              12. Jn Shri Ram Mehar's case, the question came up for consi-
       deration was whether the words "interest on market value" in Section
       4(3) of the Land Acquisition (Amendment and Validation Act, 1967)          B
       would include payment of interest on solatium. Additional 15 per cent
       solatiu(Tl undersection (2) of Section 23 certainly forms part of com-
       pensation as under section 23 the market value of the land would
       'nclude solatium. Hut market value and compensation are distinct
       expressions and have been used as such in the Land Acquisition Act.
       The key to the meaning of the word "compensation" is to be found in
       Section 23(1) which consists of market value and solatium on the           c
       market value which is stated to be compensation. Therefore, this
       Court held that the term market value has acquired a definite connota-
       tion in judicial decision. If the word market value and compensation
       were intended by the legislature to have the same meaning, it is difc
       ficult to comprehend why the word compensation in ss. 28(a) and 34         D
       and nor market value was used. So market value cannot be equated to
       comrensation. The market value is, therefore, only one of the compo-
       nents in the determination of the amount of compensation, if the legis-
       lature has used the word "market value" in Section 4(3) of the Amend-
       ing Act, it must be held that it was done deliberately and what was
       intended was that interest should be payable on the market value of        E
       the land and not on the amount of compensation. Otherwise, there is
       no reason why the Parliament should not have employed the word
       compensation in the aforesaid provision of the amended Act. Webster
       Comparative Dictionary at p. 267, the word compensation defined (1)
       the act of compensating or (2) that which compensates payment.
                                                                                  F
              In Stroud's Judicial Dictionary, Fourth Edition, Volume-I at
       p. 523 compensation defined (Defence Act 1842 (c. 94), s. 19) includes
       not only the value of the land taken but also damage for severence or
       injuriously effecting other lands belonging to the owner of the land
       taken, although the Act contained no such clause as Land Clauses
       Consolidation Act, 1845. The word compensation is used to recom-           G
•·'.   pensate or reparation to the loss caused to the owner of the land.
       Therefore, we have no hesitation to hold that Section 25(3) contemp-
       lates payment of interests on solatium to recompensate the owner of
       the land for loss of user of the land from the date of taking possession
       till date of payment into court. The word compensation has been
       advisedly used by the iegislature. Accordingly we hold that the appcl-.    H
    380         SUPREME COURT REPORTS               [1990] Supp. 1 S.C.R.

A   !ant is entitled to interest on solatium.

          13. We allow the appeals to the extent indicated above. The
    market value is fixed at Rs. 18 per cent and confirm the market value at
    Rs.30 per cent for wet lands awarded by the Collector. Solatium at
    Rs.15 per cent and interest at 6 per cent on the excess market value
B   determined under the judgment including solatium from the date of
    taking possession till the date of payment. Jn other respects the judg-
    ment of the High Court is confirmed and in the circumstances, the
    parties are directed to bear their own costs throughout.

    P.S.S.                                                Appeals allowed.