Tribeni Devi and Ors. v. Collector of Ranchi

P. Jaganmoltan Reddy, J. These appeals arc by certificate against the judgment of tile Patna High Court in land acquisition appea]s. Two notifications dated 7-7-1954 under section 4 of the Land Acquisition Act 1894 (Act l of 1894) (hereinafter called 'the Act'), were issued one in respect of a portion of Plot Nos. 178 and 1784 admeasuring 2.65 acres and the other in res­ pect of the whole of the plot No. 1783 admeasuring 2 acres situated in Ward No. 3 of Ranchi Municipality. Section 6 notification in respect of these lands was published on 7-9-1954 MJd poswsion was taken on 23-9-1954 under section 17(1) after making a declaration under section 17 ( 4) tha•t !he provisions of section SA shall not apply. The Col!ector awarded compensa­ tion of Rs. 1.20,419-6-11 in respect of the first acquisition and Rs. 47,648-13-6 in respect of the second. Thereafter, at the instance of 'the claimant, a reference under section 18 of the Act was made to the Judicial Commissioner of Chhota Nagpur, Ranchi who. while maintaining the market value of the land, awarded by the Collector, gave further compensation for severance at the rate of 5% and .10% in respect of potential value of the land. The Judicial Commissioner. however, did not grant the 15% sclatium under section 23(2) of the Act. Being dissatis­ fied, the claimants preferred appeals to the High Court. The Hi.e;h Court revised the compensation and awarded Rs. 90,000/­ per acre and 15% as solatium on the market value under section 23(2) of the Act bui did not ·g.rant them •the 5% '.owards sever· ancc. Interest at 6% per annum on the amount of enhanced compensation from 23-9-1954 together with costs was also de­ creed. Against 'the judgment and decree, the claimants have filed Civil Appeals 661 & 1380/67 while the State has filed Civit Appeals 1885-86/67. The lands in question which have been acquil"..d were earlier leased on 22-9-1944 to the Military authorities on a rem of Rs'. 600/- per montli for a period of 6 months under a registered deed with option 'to renew for a maximum period of 10 yeari<. ,210 SUPREME COURT REPORTS [1972] 3 S.C.L which period expired on 21-9-1954. One of ·!he conditions of the lease was that on the termination of the lease, the lessor would exercise the option given under the lease to purchase all buildings, structures, gardens and any other strudtures constructed by the lessee during their occupation of the leased property, at 75 per cent of the valuation that would be determined b)< the Superintending Engineer, Chhota Nagpur Circle; and in case the lessors refused to purchase, the lessee was entitled to dismantle and take away the materials. Towards the end of !he lease period, the Govern­ ment of Bihar decided to acquire the property for the State Sol­ diers, Sailors and Airmen's Board and initiated proceedings as aforesaid. In these appeals the only question ithat has !o be determined is : What. is the market value of the property as on the date of . section 4 nQtification? In the yaluation report given by the Land Acquisition Officer, Ranchi, Ex-1, the principle of capitalisajion on the basis of 20 times the annual rental of Rs. 7,200/- at the rate of Rs. 600/- p.m. was adopted as the price of the lands. In D that report it was also pointed out thart the sale price of 1.085 acres out of the premises of the Ranchi Club as per registered sale-deed, Ex. C-1 dated 1-4-1953, was Rs. 41,470/- per actt, which was not fair. Apart from these 25 other sale transactions · in respect of portions of Plot No. 1789 between 1952 and 1953 were also referred in that report. Some of those lands were g situated opposite to the Ranchi Club and ·the sale price came .to 'Rs. 1092/- per katha, which is about Rs .. 60,000/- per acre. I! was further pQinted out that some,other lands a little further away from rthe main road but belonltiog to the same Plot No. P89 were sold at !he rates between Rs. 250/- to Rs. 800/- per ka .. tha. This report formed the basis of the award.made by the Coll~tor. 1,. The High Court took judicial notice, and in our view !ightly,,1io, that after .the termination of the Second World War in 1945 <;here was a rise in land values due to the increased demand of hOme­ stead lands for building purposes. It also considered various sale-deeds produced and proved O!l behalf of the .claimants along with the oral evidence to determine the market value of the land. The o)>jections from ·both the appellant .and the respondent were G ·taken into account in respect of each oJ these and most 'of - were considered as not fumishin11; a proper or adequate valu~ljoli -either havin.e; regard. to the distance of .the lands· wl)ich were ~ subject-matter of the sale or the inadequacy of ~··infonilallan ·pertaining thereto. The Hildi Court, however, adopted ~-price in the sale deedEic.C-1 executed on 6;5·1953 by .thelbJlcbi.Oub tl Ltd., in favour of ~ Presideni of: India in riSpec~ :.Of LOSS lcrllf 3 bighas 5 kathM 10 chhataks in Plot No •. l·:n 1 for Rs .. 4f 111tJ/:. as the basis for .amving at the market v~ue of the acquired tat TRIBENI DEVI v. COLLECTOR RANCHI (laganmohan.Reddy, J:) 21 )J Though the land in question was situated on the main Ranchi­ Chaibasa Road, a strong objection was taken against adopting the price as a basis because it was not only t mile away from the land under acquisition but what was sold was only the leasehold right in the land. These objections were rejected on the ground that for all practical purposes the interest that was held or sold B . by the Ranchi Club under Ex.C-1 was not inferior to an. absolute title. The area of the land, the subject matter of the sale, was considered .to be fairly large being more than 1 acre and the situ­ ation was also the same as the land under acquisition except that it was farther away from it. In these circumstances, the High Court thouii;ht, after a proper allowance is made for the difference ·E ii in distance, the transaction yields a more acceptable guide for determining the market value of the land under acquisition and accordingly, it adopted twice the price as charged for the land in Ext.C-1 as indicating a fair market value of the land in ques­ tion. The Hi.gh Court further added Rs. 7060/- per acre as the difference between tenure rights and lease-hold rights that were held by the. President of India and awarded Rs. 90,000/- per acre. This, it did notwithstanding the fact that it was conscious that there was no definit!l data for the two additions that have been made, because in its view, in cases of this nature a certain amount of estimate has to be made which may even be arbitrary. Accordingly, it awarded compensation for the 4.65 acres of land which was acquired by the Government at Rs. 90,000/ per acre together with 1 S % solatium payable under clause ( 2) of section 23 of the Act. 5% compensation for severance of land fro1;11. the claimants' other portion of. the land tltat remained with them after acquisition, ~ch wQ awarded. by the Judicial Commis~ioncr, Chhota Na~yr, was disallowed on the ground (hat there wu an entrance to the back portion of the •land which was left with the t>wners and also because there was no evidence to show that in fact there had been any depreciation in he value of the remain­ ing area anciif sc>, to What ex~nt: On the othet'hand, it l!lain­ tained the 10% on the lharket, value of the land awlirded by the Land Accririsitiori· Court on· aecou,nt of' the' inerease in the). l!Oten­ tialities of !Ile land. Tue basis adopted by the Jligh Court iS challen~ on the ground that they ·are ,contrary to the well es- tablished principles appliciible for determining the value of landS acquired under the Act. · The 11eneral principles for determining compensation have been set out in sections .. 23 & 24 of. the Act. The compensation payable to :the ·owner of the ·landr is. the market value which is determined by ~f.erence to the price ·which a seller might reason­ ab)'y expect to_obtain from a·willin1!;"purclwer, bat as this may not' be possible to ascertain with any .amount 1lf ~on, the Dlltho­ ritv charged with the duty to award compensaion is bound to 212 SUPREME COURT REPORTS (1972] 3 S.C.R .make an estimate judged by an objective standard. The land A .acquired has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act but its potential value also must be taken into account. The sale-deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of compnting the market value. This, however, is ·i!Ot the B only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands' of similar nature are fetchlng can be taken into a,ccount by capi­ .talising the rent which according to the present prevailinl!l rate of interest is 20 times the annual rent. But this also is not a conclusive method. This Court had in Special Land Acquisition c Officer, Bang!J.lore v. T. Adinarayan Setty('), indicated at page 412 the methods of valuwtion to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) which are: (i) opinion of experts, (ii) the price paid within a reasonable time in bona fide transactions of purchase .of 'the )ands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years' D purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstances into consi­ deration, ~he requirement bein111 always to arrive as near as possi- ble an estimate of the market value. In arriving to a reasonably correct market value, it may be necessary to take even two or all E of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in Tespect of the situation or the extent or the potentially nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. Bearin1t 'these principles in. mind, we do not think that the High Court was justified in adopting the registered sale-deed, Ex.C-1 executed by ihe Ranchi Club, in favour of 1J.e President of India, bec<iuse that land is farther away not only from the land acquired but from the town though it is on the main Ranchi­ Chaibasa Road. Even the High Court recognised that there was G no definite data for the two additions that have been made and in our view it-would not be a proper melthod of ascertaining the value of the land 'acquired. The only two docu.ments that may be considered are Ex.10 and Ex·ll which are in respect of the lands situated in i:he vicinity and on either side of the land ac­ quired. The other sale deeds are of smaller areas and do not furnish a proper basis for ascertainin1t the market value and have H been quite properly not relied upon by the learned Advocate for (1) (19S9) (Suppl. I) S.C.R. 404."! TR!BENI DEV! v. COLLECTOR RANCHI (Jagunmohan Reddy, J.) 213 A lhe claimants. The annual rental value of the land acquired, namely, Rs. 7,200/- will also not furnish a proper method of computation because that was a rent fixed in 1944 when that land was not of such grea! value as it had acquired at the 1time when sec. 4 notification was issued. A perusal of the c:Jrrespondence between the owners of the land and the Depuety Commissioner B of Ranchi would show tha!t the land owners had given it at con­ sessional rate to the Military authorities having regard to the purpose for which it was being put to use. On bel1alf of the claimants grea•t reliance is placed on Ex. I I which is a sale-deed executed on 16-12-1946 by the claimants the Ranchi Automo­ biles of an area of 1 biid1a 17 kathas equal to .617 acres for Rs. 1,45,000/ .. After deducting Rs. 15,403/- the price of the C structures according 1to the Engineer's report in 1959 (Ex.25), the net value of the land is Rs. 1,29,697 /-. This value would work out to Rs. 2,08,135.70 per acre. The High Court rejected this compu!_ation on the ground tha't though the knd was conti­ guous to the land under acquisition, neither the \alue of the pump an!l the other stru~tures belonging to Bunnah Shell nor the D value of the structures that might have been on the land on the date of the sale which were built by the vendees as lcsr.ees could be ascertained either from the sale-deed or the evid~n~e. Ex.10 is a lease in respect of 1/3 acre granted by the owners to Thakur Chandra Bali Shah and others executed on 20-2-1950 on a monthly rent of Rs. 157/-. The High Court calculated the E monthly rental of the land under acquisition at that rate to be not le~ than Rs. 2,000/- per month or Rs. 24,000/- per y~ar. On the basis of 20 times the annual rent ii computed R1. 4,80,000/­ as the market value which works out at Rs. 1,03,226/­ per acre. It is, however, pointed out on behalf of the claimants tha~ the High Court made a mistake in thinking that the rent for the land leased under Ex.10 was Rs. 157/- p:in. and on that F basis it calculated the annual rental value of 4.65 acres of the acquired land. We have checked the figures from the original lease and find that in fact !he rent is Rs. 175/- and na~ Rs. 157 /-. On this basis the rate per acre of 20 times annual rental value would come to Rs. 1,26,000/-. Even if Ex.11 is t1 be taken as the basis and it.he value of the s~ructures as given by the En.zineet G in Ex.25 is_ to be accepted that cannot furnish a proper basis because the land in question is a small area of .617 acres or just over t an acre. A smaller area such as this on a main road would certainly fetch a higher price compared to a larger un­ developed area even though it may have a frontage on the main road. In order to develop that area atleast the value of 1/3 of H the land will have '.O be deducted for roads, draina,!!'e and other amenities. On this basis, ~he value of the land at Rs. 2,08,135.70 per acre would, after deduction of 1/3 come to Rs. 1,38,757/­ per acre. On :he basis of the rental of Rs. 175/- p.m. in Ex.HJ, the villue ~. 20 times the rental will work out as already seen at A Rs. 1,26,000/-. Allowing for an incre$e in rents from 1950 to 1954, the date of section 4 notification, say at 5% the value per acre may be Rs. 1,33,000/- or thereabout. If we take the average Qf Ex.10 and Ex.11 as computed by us the value pet · acre would come to about Rs. 1,35,878/-. In our view, Rs. 1,35,000/- per acre would be a reasonable rate at which B compensation could ·be awarded to the claimants. The High Court was not justified in giving 10% towards potential value because that element is inherent in the fixation of the market value of the land and couJd not be assessed separately. The High Court was illso not justified in disallowing 5% awarded by the Judicial Commissioner, Chhotanagpur as compensation for severance merely because there was an en~ce to the land. When a por- · C tion left out there would be a diminution in the value of the land that is left out .for which some compensation has to be allowed. The 5% allowed by the Judicial Commissioner, Chhotanagpur is reasonable. In this view, the claimants would be entitled to a decree as follows in respect ot the lands acquired :- (1) At the rate of Rs. 1,35,000 per acre for 4.65 acreS; (2) 5% severence and 15% solatium on the market villue computed as in (1 ) ; ( 3) Interest at 6 % from the date of taking posses. sion. The appeals of the claimants are· allowed to the extent of the variation and those by the ~ent are dismissed with costs. The claimants will be enti:led to proportionate costs on the difference between the amounts decreed and those that are now awarded in.each of the two appeals filed by them. K.B.N. 864Su!ICI/72·2S0()-17-4-73-0IPF. '