1. Land acquisition for a project under the Land Acquisition Act, 1894 — Dispute over the determination of market value for agricultural lands in a tribal area. (Para 1 )
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1995 Supreme(SC) 680
SUPREME COURT OF INDIA
K. RAMASWAMY AND N. VENKATACHALA, JJ.
K. Posayya and others, Appellants
Versus
Special Tahsildar, Respondents.
Civil Appeal Nos. 5568-5571 with 5572-5574 of 1995 (arising out of SLP Nos. 17933-36 with 19266-68 of 1994),
Decided on 10-5-1995.
Advocates:
Guntur Prabhakar, P.P.Rao, P.S.NARASIMHA, V.G.PRAGASAM
Guntur Prabhakar, P.P.Rao, P.S.NARASIMHA, V.G.PRAGASAM
Market value for large land acquisitions is determined via the "willing vendor-willing purchaser" test or crop-based valuation. The "doctrine of reinstatement value" is inapplicable under Section 23(1) of the Land Acquisition Act, and isolated sale deeds of small extents are insufficient to determine compensation for large project areas.
Headnote:
Land Acqisition Act, 1894 - Section, 4(1) - Land Acqisition Act, 1894 – Section, 4(1) - Enhance compensation - Lands for Srisailam Project and Vishakhapatnam Steel Project - Court therefore should grant compensation at reinstatement value for rehabilitation of tribal’s awards made by reference Court in Subordinate Judge awarded at rate per acre which became final - High Court misapplied principle laid by this Court in Administrator General of West Bengal – Collector Varanasi AIR reducing price applying principle of deduction agricultural lands - High Court therefore erred in wrong application of principles of law in determining compensation to agricultural land – Held, Acid test is arm chair of willing vendor would offer and prudent willing buy retaking all relevant prevailing conditions of normal market fertility of land location suitability of purpose it was purchased, its existing potentialities and likely use to which land is capable of being put in same condition would offer to pay prices on date of notification - In case of acquisition of large tracts of lands for projects situated in several villages stray sale deed of small extent here and there would not form basis to determine compensation - Reference court should be circumspect pragmatic and careful in analyzing evidence and arriving at just and fair market value of lands acquisition which could be fetched on date of notification - Nature of land crops raised and nature of income likely to be derived from lands expenditure to be incurred for raising crops and net profits etc - Would be relevant factors in arriving at net market value and if evidence is produced in that behalf on its basis applying suitable years multiplier market value need to be determined - Owner or claimant should not be put to loss by undervaluation – But at same time public exchequer should not be put to undue burden by excess valuation - It is statutory duty of Court to maintain balance between diverse interests - Claimant stands in position of plaintiff and onus is on him to adduce necessary and relevant evidence in proof of objection for higher compensation - Court is also enjoined to carefully and analyze evidence and applying arm chair test prudent purchaser and willing vendor or realized income on crops true correct and fair market value should be arrived at - Reference Court has absolutely failed to apply these tests in determining compensation - Rejecting evidence relied on by claimants there is no other evidence to enhance compensation - doctrine of reinstatement value cannot be applied in determining market value Act - Reason is obvious - There will always be gap between date of notification and date of payment - To decompensate loss payment of interest under S –solarium and appropriate cases after Amendment Act has come into force per annum of additional amount are provided for - It would therefore be illogical and unrealistic to apply doctrine of reinstatement value in determination of compensation - Appeals dismissed
Legal Category Hierarchy
Table of Contents
2. Rejection of post-notification sale deeds as inflated — Application of the willing vendor-willing vendee and arm chair tests — Inapplicability of urban land deduction principles to agricultural land. (Para 3 , 4 , 5 , 6 )
3. Market value of agricultural land is determined by prevailing prices, crop yields with a multiplier, or the arm chair test, excluding reinstatement value and urban land principles. (Para 5 , 6 )
4. Appeals dismissed — Compensation maintained at the rate determined by the High Court. (Para 7 )
5. How is the market value of agricultural land determined in compulsory acquisitions?
Market value is determined based on prevailing prices between a willing vendor and vendee, the value of crops realized using a suitable 10-year multiplier, or through the arm chair test considering the land's existing use and relatable potentialities. (Para 5 )
6. Can the doctrine of reinstatement value be applied to determine market value under Section 23(1) of the Land Acquisition Act?
No. The doctrine of reinstatement value is inapplicable because the Act already provides for interest under Section 28, solatium under Section 23(2), and additional amounts under Section 23(1-A) to compensate for the time gap between notification and payment. (Para 6 )
7. What is the evidentiary value of a few sale deeds when large tracts of land are acquired for a project?
Stray sale deeds of small extents cannot form the basis for determining compensation for large tracts of land acquired for projects across several villages; the reference court must be circumspect and pragmatic in analyzing such evidence. (Para 5 )
8. Can valuation principles for urban lands be applied to agricultural lands?
No. Principles relating to urban lands fit for building purposes, such as the application of specific percentage deductions, cannot be applied to the determination of the market value of agricultural land. (Para 4 )
JUDGMENT
K. RAMASWAMY, J.:—Leave granted.
2. Jelluru and Yerrakaluva Reservoir to prevent inundation of agricultural lands and to control floods, was taken out and 50 acres of land was acquired as a part of Vengalrayasagar project for submersion. Notification under S. 4(1) of the Land Acqisition Act, 1894, (for short, the Act) was published on March 22, 1979, 400 acres of land, as a part of that Scheme situated in Alivelu village in Polavaram Mandal in West Godavari District of Andhra Pradesh was acquired, out of which, we are concerned with about 163.80 acres in these appeals. The Land Acquisition Officer in his award dated July 31, 1980, fixed the market value of the lands at Rs. 400/- per acre. The lands are rain-fed in which dry crops were raised prior to acquisition. On reference under S. 18, the Subordinate Judge enhanced the compensation to Rs 22,000/- per acre. The High Court in the impugned judgment in Appeal No. 1341 and batch of 1992 reduced the compensation to Rs. 400/- per acre. Thus these appeals by special leave.
2A. Shri P. P. Rao, learned senior counsel for the appellants, contended that Alivelu village is situated in notified tribal area in which the Scheduled Areas Land Transfer Regulation Act, 1970 is in force which prohibits sale of the lands by the tribals to the non-tribals. The appellants being tribals could not secure any sale deed. In the neighbouring village under Ex. A-1 dated October 12, 1980 when one acre of land was sold for a sum of Rs. 20,000/-, the High Court was not justified in refusing to act upon the same. Equally, it is contended that in another judgment and decree of the High Court, in relation to lands acquired for Vengalrayasagar project, determined the compensation at the rate of Rupees 20,000/- per acre, the appellants are entitled at least to Rs. 22,000/- per acre. Being the tribal, they cannot afford to purchase the lands, elsewhere. The Court, therefore, should grant compensation at "reinstatement value" for rehabilitation of the tribals under Ex. A-5 and A-6, the awards made by the reference Court in OP No. 17-18/80, the Subordinate Judge awarded at the rate of Rs. 22,000/- per acre which became final. The High Court misapplied the principle laid by this Court in Administrator General of West Bengal v. Collector, Varanasi, AIR 1988 SC 943, in reducing the price applying the principle of deduction of 50% to the agricultural lands. The High Court, therefore, erred in wrong application of the principles of law in determining the compensation to the agricultural land.
3. The question, therefore, is, what is the correct principle of law to be applied in determining the market value of vast extent of lands were acquired for a project. Admittedly, Ex. A-1 dated December 31, 1980 is the torch light for the claimants to lay higher claim. It is a post notification sale of the land situated in Chakradevarapalli. According to the claimants, it is situated at a distance of 3 to 4 kilometers from the village Alivelu. According to Land Acquisition Officer, the distance between the two villages is 30 Ks. Possession of these lands, admittedly, was taken between April 15, 1977 i.e. prior to the notification under S. 4(1) and July 14, 1980, shortly after the notification under S. 4(1). It would, thus, be clear that the sale deed was brought into existence after the notification and possession was taken of the lands. This is the notorious document relied in all the references running into 302. Only the attestor was examined in proof of the documents. It would be obvious that it was a brought up document to inflate the market value of the land under acquisition not only in this village but in the surrounding villages. The High Court, therefore, was right in rejecting the said document and refuse to place reliance for determination of the compensation. Exhibit A-2, judgment of the single Judge of the High Court in AS No. 2500/86 arising out of OP No. 49/84 of the same reference court. The lands therein w
