THE AGRICULTURAL PRODUCE MARKET COMMITTEE BY ITS SECRETARY ETC.versusTHE LAND ACQUISITION OFFICER AND ASSISTANT COMMISSIONER AND ANR. ETC.

A .       THE AGRICULTURAL PRODUCE MARKET COMMITTEE
                      BY ITS SECRETARY ETC.
                                           v.
            THE LAND ACQUISITION OFFICER AND ASSISTANT
                   COMMISSIONER AND ANR. ETC.
B
                               SEPTEMBER 23, 1996

                 [K. RAMASWAMY AND G.B. PATTANAIK, JJ.]

            Land Acquisition Act, 1894 :
c
             Compensation-Awarded by Land Acquisition Office1~Enhanced by
      Reference Cowt-Reduced by High Cowt-On appeal held, no prudent pur-
      chaser in open market would offer to purchase the land on Sq. ft. basis that
      too on the basis of few small sale transactions-Small extents of land would
D     always fetch higher market value-Large eJ.1ent of land would never command
      such high p1ice-Such instances of sale of small extent not comparable
      sa/e3~Awards and decrees of the Reference Cowt and High Cowt set
      aside-Matter remitted to civil cowt for decision afresh after giving oppor-
      tunity to the pa1ties and then to decide the market value-Additional amount
      under S.23 ( 1-A) awarded by High Cowt also set aside since land Acquisition
E     Officer made the award before the Amendment Act came into f 01:ce.

           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 12883 of
      1996 Etc,

           From the Judgment and Order dated 7.10.92 of the Karnataka High
F     Court in M.FA. No. 837 of 1987.

            KM. Reddy, N.D.B. Raju, G. Prakbhakar and M. Veerappa for the
      appellants.

G           Ranjit Kumar, P. Mahale and K.K. Gupta for the Respondents.

            The following Order of the IS:ourt was delivered :

            Leave granted.

H           We have heard learned counsel on both sides.
                                      662
   AGRICULTURALPRODUCEMKf. COMMITIEE v. lAND AQSN. OFFlCER 663

       Notification under Section 4(1) of the Land Acquisition Act, 1894 A
(for short, the 'Act') was published on April 14, 1977 acquiring an extent
of 3 acres 34 gunthas, 1 acre 2 gunthas for extension of Agricultural
Produce Marketing Committee, Gadag in Dharwad District ,of Karnataka
State. The Land Acquisition Officer (LAO) by his award dated January
23, 1982 determine the compensation of the rate of Rs. 0.76 per sq. ft. On
                                                                           B
reference, the Civil Judge, Gadag in his award dated November 29, 1982
enhanced the compensation to Rs. 8.50 per sq. ft. On appeal under Section
54, in the impugned judgment dated October 7, 1992 and November 4, 1992
in MFA No. 837/87 and MFA No. 1962/87 respectively, the High Court of
Karnataka reduced the compensation to Rs. 7 per sq. ft. Thus, these
appeals by special leave.                                                 c
       The reference Court and the High Court relied on three sale instan-
ces of an extent of 38. 4 sq. ft. and 87.35 sq. ft. which worked out at the
rate of Rs. 8 and Rs. 19.98 per sq. ft.; another sale deed of 78 sq. ft. was
worked out at the rate of Rs. 31.25 per sq. ft. The question is whether the D
principle adopted by the courts below is correct in law? It is now settled
legal position by catena of decisions of this Court that the Civil Court has
to sit in the arm chair of a willing prudent purchaser and put a question
to itself and answer whether such a willing prudent purchase would offer
to purchase in the open market at the rate Court proposed to determine
as compensation. When a total extent of 7 acres and odd is sought to be E
acquired no prudent purchaser in open market would offer to purchase
the open land on sq. ft. basis that to·o on the basis of few small sale
transactions and small extents would always fetch higher market value and
the same will never command such price in respect of large extent. This
Court had always rejected such instances as being not comparable sales. F
Therefore, the Civil Judge adopted feats of imagination and determined
the compensation on the basis thereof. Unfortunately, the High Court ·a1so
fell into the same grave error in determining the compensation on the same
basis but deducted l/3rd towards developmental charges. The principle
adopted by the courts below is obviously erroneous and, therefore, it G
cannot be sustained on that basis. However, when we asked t)le learned
counsel for the parties to produce the evidence, the appellant has produced
certain .documents indicating therein that for the same purpose they ap-
peared to have negotiated and purchased the properties for others at the
rate of Rs. 9,000 per acre and registered sale deed came to be executed.
They are produced for the first time. Shri Ranjit Kumar, learned counsel H
    664                  SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R.

A for the respondents, contended that the documents were not placed either '
  in the reference Court or in the High Court. He also says that location of
  the lands are different. Under these circumstances, we cannot decide for
  the first time the value of the land on the basis thereof without giving an
  opportunity to either of the parties for adducing evidence and without
B consideration thereof by the reference Court. Accordingly, the awards and
  decrees of the reference Court and that of the High Court stand set aside.
  The cases are remitted to the civil Court for decision afresh after giving an
  opportunity to the parties to adduce evidence afresh and then decide the
  market value according to law. Pend~ng these appeals since the respon-
  .dents have withdrawn the amount as per the interim direction passed by
C this Court, the same may not be disturbed and the amount withdrawn will
  be adjusted when the award was passed by the reference Court.

        The appeals are accordingly disposed of. The judgment of the High
  Court to the extent of awarding additional amount under Section 23(1-A)
  of the Act stands set aside since the LAO had made his award before the
D Amendment Act came into force. No costs.
    G.N.                                                 Appeals disposed of.