THE LAND ACQUISITION OFFICER, KAMMARAPALLY VILLAGE, NIZAMABAD DISTRICT, ANDHRA PRADESHversusNOOKALA RAJAMALLU AND ORS.

     THE LAND ACQUISITION' OFFICER, KAMMARAPALLY                            A
     VILLAGE, NIZAMABAD bJS;fRICT, ANl)HRA PRADESH
                                    V.tq

                NOOK.ALA RAJAMALLU AND ORS.

                         NOVEMBER 21, 2003
                                                                            B
       [DOORAISWAMY RAJU AND ARIJIT PASAYAT, JJ.]

     Land Acquisition Act, 1894 :

      Section 23-Land acquisition-Compensation-Awarding of-
Relevant factors to be considered-Held: Where large area was acquired, C
rate at which small plots were sold not a safe criterion to fix compensation-
However, where there was no. material to determine marke/ value, prices
paid for small plots maybe taken as compensation to fix market value of
the land acquired-Market value of the land on the date of acquisition a
relevant factor-Necessary deductions for the formation ofroads and other D
civic amenities, laying out roads, drains, sewers, water and electricity lines
to be made while fixing the market value.

     The appellant acquired the lands belonging to the respondents for
providing house sites to the weaker sections of people. The Notification
under Section 4(1) of the Land Acquisition Act, 1894 was duly gazetted. E
The appellant awarded a certain compensation to the respondents,
which was enhanced by the Reference Court under Section 18 of the
Act. The High Court further enhanced the said compensation. Hence
this appeal.

     Allowing the appeal in part, the Court
                                                                            F

     HELD: 1.1. Where large area is the subject matter of acquisition,
rate at which small plots are sold cannot be said to be a safe criterion.
                                                                   (71-D]
                                    t••i (
                                                                            G
     The Collector of Lakhimpur v. Bhuban Chandra Dutta, AIR (1971)
SC 2015; Prithivi Raj Taneja v. State of MP., AIR (1977) SC 1560 and
Smt. Kausalya Devi Bogra v. Land Acquisition Officer, AIR (1984) SC
892, relied on.

     1.2. It cannot, however, be laid down as an absolute proposition H
                                    67
    68                SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A   that the rates fixed for the small plots cannot be the basis for fixation
    of the rate. For example, where there is no othf'r material it may in
    appropriate cases be open to the adjudicating Court to make compari-
    son of the prices paid for small plots of land. However, in such cases
    necessary deductions/adjustments have to be made while determining
B   the prices. [71-E-FJ

         2.1. 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
C   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. The first criterion to be taken into
D   consideration under Section 23 of the Land Acquisition Act, 1894 is the
    market value of the land on the date of the publication of the
    notification under Section 4(1) of the Act. (72-A-C)

         Suresh Kumar v. Town Improvement Trust, AIR (1989) SC 1222 and
E   Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, AIR
    (1939) PC 98, referred to.

         2.2. Value of the potentiality is to be determined on such materials
    as are available and without indulgence· in any fits of imagination.
F   Impracticability of determining the potential value is writ large in
    almost all cases. There is bound to be some amount of guesswork
    involved while determining the potentiality. (72-D-E]

        3.1. It can be broadly stated that the element of speculation is
G   reduced to a minimum if the underlying principles of fixation of
    market value with reference to comparable sales are made:

          (i) when the sale is within a reasonable time of the date of
    notification under Section 4(1);

H        (ii) it should be a bona fide transaction;
     LAND ACQUISITION OFFICER v. NOOKALA RAJAMALLU                   69

     (iii) it should be of the land acquired or of the land adjacent to A
the land acquired; and

     (iv) it should possess similar advantages. [72-E-G)

     3.2. It is only when the above factors are present, it can merit a B
consideration as a comparable case. (72-H)

     The Special Land Acquisition Officer v. T Adinarayan Setty, AIR
(1959) SC 429, relied on.

     4. The evidence on record shows that the acquired lands were C
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 D
intetest on the outlays for the period of deferment of the realization
of the price, the profits on the venture etc. are to be made. (73-A-C)

    Administrator General of West Bengal v. Collector, Varanasi, (1988)
2 SCC 150; Brig. Sahib Ka/ha v. Amritsar Improvement Trust, (1982) I E
SCC 419 and KS Shivadevamma v. Assistant Commissioner and Land
Acquisition Officer, (1996) 2 SCC 62, relied on.

    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 9205-
9207 of 2003.
                                                                          F
     From the Judgment and Order dated 24.4.2001 and 14.2.2002 of the
Andhra Pradesh High Court in A. No. 2861199 and A.SR.No. 69659/2001
and C.M.P. No. 2748 of 2002.

     Guntur Prabhakar and Ms. T. Anamika for the Appellant.               G

     Ms. K. Amareswari, P. Venkat Reddy, B. Rahana Murthy and B.
Sunil Kumar for Anil Kumar Tandale for the Respondents.

     The Judgment of the Court were delivered by                          H
    70                 SUPREME COURT REPORTS [2003) SUPP. 6 S.C.R.
                                                                                   ·+
A        ARIJIT PASAYAT, J. Leave granted.

          Lands of the respondents (hereinafter referred to as the 'claimants')
    measuring 11.33 acres situated in Karnmarpally village, Nizamabad District
    were a·cquired by the Gov.::rnment for providing house sites to weaker
    sections of people. The Notification under Section 4(1) of the Land
B
    Acquisition Act, 1894 (for short the 'Act') was gazetted on 4.6.1988. The
    claimants owned small extent oflands situated in different survey numbers.       .
                                                                                     .
    The Land Acquisition Officer (in shmt the 'LAO') passed an award fixing
    the market value of the acquired land at Rs. 12,325 per acre. Not accepting

c   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
D   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. l.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 of9.9 .1985 where the extent ofland was 127.5
E   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.
F
          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
G   consideration of the instance covered by Ex. B/4, and making I/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 Re. 1 per sq. yard. Accordingly, the rate of
    Rs. 55 per sq. yard was fixed and the statutory entitlements were also
                                                                                   ...
H   directed to be paid.
    LAND ACQUISITION OFFICER v. NOOK.ALA RAJAMALLU [PASA YAT, J.]         71

      Learned counsel for the appellant submitted that the High Court did A
not take note of the relevant aspects Iike the extent of land covered by the
Exhibits, and the proximity between the dates of sales 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 B
Coutt.

      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     C
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 D
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. Kaus a/ya Devi Bogra and Ors. etc. v. Land
Acquisition Officer, Aurangabad and Anr., AIR (1984) SC 892.
                                                                                E
      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 Couit to make comparison of the prices paid
for small plots of land. However, in such cases necessary deductions'           p
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 Prade:;h Town Improvement
Trust A?t, 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 G
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 patt 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, H
    72                  SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A   Viwgapatam, 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
B considered as acting under any compulsion. The value of the land is not
    to ~e estimated as its vaiue 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 ltis compulsion may always be taken into consideration for what it is
    worth. Section 23 of the Act enumerates the matters to be considered in
c   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( I). 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
D the amount of compensation to be awarded by the Court shall not be less
    t~an 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 ofimagination. Impracticability of determining
    the potential value is writ large in almost all cases. There is bound to be
E 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 :

F            (i) when sale is within a reasonable time of the date ofnotification
             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 tu·
G            the land acquired ; and

             (iv) it should possess similar advantages.

         It is only when these factors are present, it can merit a consideration
H as a comparable case [see The Special Land Acquisition Officer, Bangalore
                                            I
    LAND ACQUISITION OFFICER v. NOOKALA RAJAMALLU [PASA YAT, J.]        73

v. T. Adinarayan Setty, AIR (1959) SC 429].                                  A
      The evidence ofrecord shows that the acquired lands were agricultural
lands. Obviously, their valuation would differ to a considerable extent from
the land used for house cites. In such a case, necessary deductions for the
exten.t ofland acquired for the formation of roads and other civic amenities, B
expenses of development of the sites by laying out roads, drains, sewers,
water and electricity Jines, 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. C
Amritsar Improvement Trust and Ors., [ 1982] I 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 sec 62 this Court held as D
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 th~ learned counsel that the extent of
         deduction depends upon development need in ~ach case. Under E .
         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 33-113% 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 F
         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 G
         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 H
    74                 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A            towards development charges @33-1/3%, ordered by the High
             Cou11, 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
B   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.

    v.s.s.                                             Appeals partly allowed.