M.P.THAKKAR - (1.) CONTROVERSY is centred on the question of valuation of the lands under acquisition. The trial Court had correctly valued the lands and the High Court had erroneously revised the valuation downwards - complains the original owner of the land who is the appellant in these two allied appeals [By Certificate under Article 133(1)(a) of the Constitution of India as it existed at the material time.].
(2.) THE lands in question situated in a locality known as 'Tigris Camp' within the city limits of Poona in Maharashtra, admeasuring 15 acres and 17 Gunthas, comprised in Survey Nos. 85 and 86, were placed under acquisition pursuant to a Notification under Section 4 of the Land Acquisition Act published on 8/03/1956. THE acquisition was a part of the total acquisition of 101 acres 33 Gunthas made for a public purpose viz. for construction of the Headquarters, Poona Rural Police Charge. THE appellant was not satisfied with the compensation offered by the Land Acquisition Officer in respect of his parcel of 15 Acres 7 Gunthas and applied for a reference being made under Section 18 of the Land Acquisition Act. Two references were made to a Civil Court under Section 18 of the Land Acquisition Act for determining the market value of the lands for the purpose of awarding compensation to the appellants. THE Trial Court determined the market value of 2 1/4 acres forming part of Survey Nos. 85 and 86 at Rs. 15,100.00 per acre. Market value in respect of the remaining 13 acres and 7 Gunthas was determined at Rs. 8692.00 per acre. THE present dispute is confined to valuation of 13 Acres 7 Gunthas forming part of Survey No. 85. THE High Court has reduced the total compensation payable in respect of the land in question from Rs. 1,14,517.00, computed at Rs. 8692.00 per acre to Rs. 63,846.00 (which works out at Rs. 4845.87 per acre) thereby reducing the compensation awarded to the appellant by Rs. 50,554.00 in respect of this parcel of land. Before tackling the problem of valuation of the land under acquisition it is necessary to make some general observations. The compulsion to do so has arisen as the Trial Court has virtually treated the award rendered by the Land Acquisition Officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to some extent. The true position therefore requires to be capsulized. The following factors must be etched on the mental screen : (1) A reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the Court cannot take into account the material relied upon by the Land Acquisition Officer in his Award unless the same material is produced and proved before the Court. (2) So also the Award of the Land Acquisition Officer is not to be treated as a judgment of the trial Court open or exposed to challenge before the court hearing the Reference. It is merely an offer made by the Land Acquisition Officer and the material utilised by him for making his valuation cannot be utilised by the Court unless produced and proved before it. It is not the function of the court to sit in appeal against the Award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate Court. (3) The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under S. 4 of the Land Acquisition Act (dates of Notifications under Ss. 6 and 9 are irrelevant). (6) The determination has to be made standing on the date line of valuation (date of publication of notification under S. 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price. (7) In doing so by the instances method, the Court has to correlate the market value reflected in the most comparable instance which provides the index of market value. (8) Only genuine instances have to be taken into account. (Sometimes instances are rigged up in anticipation of Acquisition of land.) (9) Even post-notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations : (i) proximity from time angle (ii) proximity from situation angle. (11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may beevaluated interms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicated in clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such illustrative (not exhaustive) factors :- JUDGEMENT_751_3_1988Html1.htm (15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds cannot be compared with a large tract or block of land of say 10000 eq. yds. or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction byway of an allowance at an appropriate rate ranging approx. between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be locked up, will be longer or shorter and the attendant hazards. (16) Every case must be dealt with on its own fact pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself. (17) These are general guidelines to be applied with understanding informed with common sense.
(3.) THE problem which has surfaced in the present appeals needs to be recapitulated. THE question is whether in scaling down the total compensation payable to the appellant from Rs. 1,14,517 to Rs. 63,846, the High Court has violated any principle of valuation or adopted any faulty methodology. The formula evolved by the High Court may be briefly outlined. The High Court has taken into account the market value reflected in the instances pertaining to small parcels of land cited by the parties which on the analysis of the evidence have been considered as comparable subject to factors of differentiation. The High Court has valued the land having best situation admeasuring 9 acres comprised in Survey No. 86 which abuts on the Ganeshkhind Road at Rs. 20,000 per acre. Having done so the market value reflected therein has been unloaded to account for the minus factors pertaining to the rest of the lands including the land in question. The lands comprised in Survey No. 86 situated in the interior were valued at Rs. 16,000 per acre, whereas lands abutting on Pashan Road were valued at Rs. 12,000 per acre.;