- (1.) The property comprised in No. G-4 (Old No. C-62), Maharani Bagh, New Delhi on a plot measuring about 800 Sq. yards was agreed to be sold pursuant to an agreement dated July 1, 1993 for a sale consideration of Rs. 79 lakhs. The property consists of two floors ground and the first and is in occupation of the tenants.The agreement provided for symbolic delivery of the possession while it was open to the purchaser to make use of the portion over the roof on the first floor. An application in Form 37 (1) was filed on 9-7-1993. The Appropriate Authority worked out the fair market value of the property and the apparent consideration fell short by 24 per cent of the fair market value. The Appropriate Authority compared the property in question with three different properties as sale instances to arrive at the correct market value of the property in question : (1) G-8, Maharani Bagh, (2) D-18, Maharani Bagh, and (3) N-62, Panchsheel Park.The High Court went into the mode of calculation of fair market value adopted by the Appropriate Authority and stated that in respect of property comprised in D-18, Maharani Bagh the agreement had been entered into on 25-6-1991 and on account of the time gap of 24 months, the adjustment of plus 24 per cent was to be made and in respect of property comprised in G-8, Maharani Bagh, there was basement potential and, therefore, adjustment of minus 10 per cent was to be made by the Appropriate Authority on that Count. This basis is termed to be perverse. In identical circumstances when the valuation adopted by the Appropriate Authority was challenged in Appropriate Authority v. Sudha Patil (Smt.), (1998) 8 SCC 237 : (1998 AIR SCW 3541 : AIR 1999 SC 181 : 1998 Tax LR 1084), this Court after examining the decision in C. B. Gautam v. Union of India, (1993) 1 SCC 78 and the absence of provision of filing an appeal against the order made by the Appropriate Authority, had stated that the conclusion of Appropriate Authority regarding the fair market value in a matter of compulsory acquisition of immovable property after considering all the germane and relevant materials should be accepted and the same should not be made a subject matter of the examination as if it is an appeal. Reasons set forth by the Appropriate Authority are as follows : Subject Property 1st sale Instance Sale agreement 9-7-93 Apparent sale Consideration Declared land rate works out at Rs. 21, 821 per sq. mt. Value to be increased by 1 % per month for 24 months 24% Sale deed dated 25-6-91, 24 months earlier sale agreement Has no basement 10% to be deducted Thus Value to be added is 14%(24% -10%) if 14% is added the land rate of subject property would come to Rs. 21,821 x 14% Rs. 24,875 or Rs. 25,000 per sq.mt. Value of land Rs. 1.30 Crores Depreciated value of the structure Rs. 9,35,758 Total value of the subject property Rs. 1,39,33,758 The property is tenanted Depreciated value for 6 years at 8% is calculated at : Rs. 87,78,267 (Rs. 1,39,33,758 x .63) (a) Thus the value of the subject property is Rs. 87,78,267 (b) To this rent for 6 years is added Rs. 1,42,092 Has barsati potential of the area is 149.90 sq.mts. Has no barsati potential Rs. 37,27,500 (c)This is to be added. The value of the subject property is fixed at Rs. 1,26,42,859 or Rs. 1,26,45,000 This is 58% more than the apparent consideration of the subject property (Rs. 79,99,390) Subject Property D-18(known as 1-15), Maharani Bagh 2nd sale instance Sale agreement Sale deed dated 1-12-1992 Rs. 1.11 crores Adjusted declared land rate works out at Rs. 29,587 per sq. mt. Value to be increased at 1% per month for 7 months earlier to sale agreement For 7 months +7% (1) (2) (3) (4) FAR (not so much as the 2nd instance) FAR (140-100)-28% Side open (not available/which is available in 2nd instance) -5% Has no basement potential -10% +7% -43% -36% Declared land rate deducted -36% 29,587 x .64 =Rs. 18,950 per sq.mt. Value of the land of the subject property 52 x 18,950 Rs. 98,54,000 Depreciated value of the structure 9,33,758 Rs. 1,07,87,758 Tenanted Depreciated value at the rate of 8 % Rs. 67,96,287 (Rs.1,07,87,758x63) Rental increase for 6 years Rs.1,42,092.00 = Rs.28,21,655 Barsati Potential 148,90 sq.mt.x 18,950 Total Value of the subject property Rs. 97,60,034 22% higher than to AC Subject property 3rd sale instance State agreement 9-7-1993 N-62, Panchasheel Part 800 Sq.yds. having FAR Land rate declared works out at Rs. 28,455 per sq.mt. 29-4-1993 sale agreement consideration Rs. 1,56,00,000 If the rate of increase of 1 % per month Rs. 35,02,220 4 months + 4% time gap Rs. 1,91,02,220 No open area Falling open area -5% No basement potential Basement available 10% +4%-15% = -11% The land rate works out at Rs. 25,333 (28,455 x .89) Land rate of subject property (ground floor, 1st floor) 520 sq.mts.= 25,333 x 520= Rs. 131,73,160 =1,31,73,160.00 Depreciated value of the structure =9,33,758.00 Rs. 1,41,06,918.00
(2.) The High Court disapproved this process of arriving at the figures and that the apparent consideration fell short of the fair market value by more than 15 per cent and, therefore, the High Court held that the action is incorrect.
(3.) The Department contends that the learned Judges of the High Court could not have sat on judgment over the manner of calculations made by the Appropriate Authority. If any of the factors set out therein had been ignored in the matter of arrival of fair market value, the same would have affected the consideration made by the Appropriate Authority. There are several methods of arriving at fair market value such as comparative sale method or the capitalisation of the rent, i.e. yield method or any other appropriate method. But when the Appropriate Authority adopted one or the other method and in that process there is no inherent error or the factors taken note of by the Appropriate Authority being relevant, it is submitted that it is not open to the High Court to have interfered with such a matter. This Court in Sudha Patil's case (supra) has stated that when the Appropriate Authority comes to the conclusion one way or the other after giving due opportunity to the parties concerned and there has been under-valuation on that basis by more than 15 per cent of the fair market value, the Appropriate Authority had jurisdiction to interfere with the same.;