Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(SC) 719

2009(3) Supreme 712
SUPREME COURT OF INDIA
(From Karnataka High Court)
Dr. Arijit Pasayat, Lokeshwar Singh Panta and P. Sathasivam, JJ.
Karnataka Urban Water Supply and Drainage board, etc. — Appellants
versus
K.S. Gangadharappa & Anr. etc. — Respondents
Civil Appeal Nos. 2549-2553 of 2009
(Arising out of SLP (C) Nos.12860-12864 of 2007)
Decided on : 15-04-2009

Advocates appeared:
For the Appellant :P.R. Ramesh, Advocate.
For the Respondents:S.S. Javali, Sr. Adv., Arjun Krishnan, Chiraranjan Addey, Ms. Anitha Shenoy, Gaurav Kejriwal, Advocates.

IMPORTANT POINT
Selling rate of small plots can be used for fixing market price of large plots in certain conditions and subject to justifiable deductions.

Headnote:(a) Land Acquisition Act, 1894 – Section 11 – Prices fetched for small plots cannot directly be applied in the case of large areas – Former reflects the “retail” price of land and the latter the “wholesale” price – However, if it is shown that the large extent to be valued does not admit of and is ripe for use for building purposes; that building lots that could be laid out on the land would be good selling propositions and that valuation on the basis of the method of hypothetical lay out could with justification be adopted, then in valuing such small, laid out sites the valuation indicated by sale of comparable small sites in the area at or about the time of the notification would be relevant – In such a case, necessary deductions for the extent of land required for the formation of roads and other civil amenities; expenses of development of the sites by laying out roads, drains, sewers, water and electricity lines, and the interest on the outlays for the period of deferment of the realisation of the price; the profits on the venture etc. are to be made – These may work out to as much as 53%. (Para 6)
        (1982)1 SCC 419 – Relied upon.
        AIR 1926 Bom 420 – Cited with approval.
        (b) Land Acquisition Act, 1894 – Section 11 – Where a large area is being acquired, selling rate of small plots cannot be said to be a safe criteria. (Para 8)
        AIR 1971 SC 2015; AIR 1977 SC 1560; AIR 1984 SC 892 – Relied upon.
        (c) Land Acquisition Act, 1894 – Section 11 – Compensation must be determined by reference to the price which a willing vendor might reasonably expect to receive from the willing purchaser. (Para 10)
        1989 (1) SVLR (C) 399; AIR 1939 P.C. 98 – Relied upon.
        (d) Land Acquisition Act, 1894 – Section 11 – Principles for fixation of market price stated. (Para 11)
        AIR 1959 SC 429; (2003)4 SCC 481 – Relied upon.
       Facts of the case :
        1. On 15.5.1985 the Govt. of Karnataka issued a preliminary notification under Section 4 of the Act in respect of land situated in the city of Shimoga for the purpose of underground drainage scheme for the city.
        2. On 24.9.1986 the final notification under Section 6 of the Act was issued.
        3. On 9.2.1988 the Land Acquisition Officer determined compensation @ Rs.12,500 per acre.
        4. On 29.10.2001, Civil Court enhanced the compensation to Rs.54,500/- per acre and the same was set aside by the High Court in MFA No.750 of 1999 and the matters were remanded to the Civil Court.
        5. On 31.10.2002 the Principal Judge, Senior Division, Shimoga, determined the compensation payable in respect of land in Survey No.24 measuring 5 acres 5 guntas at Rs.1,35,000/- per acre
        6. High Court dismissed the appeal filed by the appellant.
       Finding of the Court :
        High Court abruptly came to conclude the market price.
       Result : Matter remitted back.

JUDGMENT

Dr. Arijit Pasayat, J.—

1. Leave granted.

1. Challenge in these appeals is to the judgment of a Division Bench of the Karnataka High Court dismissing the appeals filed by the appellant, while allowing the appeals filed by the respondents. While the appellants had questioned the correctness of the Award made by the Reference Court in proceedings under the Land Acquisition Act, 1894 (in short the ‘Act’), the land owners i.e. respondents herein filed the appeals for enhancement of the compensation.

3. Background facts in a nutshell are as follows:

On 15.5.1985 the Govt. of Karnataka issued a preliminary notification under Section 4 of the Act in respect of land situated in the city of Shimoga for the purpose of underground drainage scheme for the city.

On 24.9.1986 the final notification under Section 6 of the Act was issued.

On 9.2.1988 the Land Acquisition Officer determined compensation @ Rs.12,500 per acre.

The claimants sought reference under Section 18 of the Act for determination of compensation by the Civil Court.

On 29.10.2001, Civil Court enhanced the compensation to Rs.54,500/- per acre and the same was set aside by the High Court in MFA No.750 of 1999 and the matters were remanded to the Civil Court.

On 31.10.2002 the Principal Judge, Senior Division, Shimoga, after remand in LAC No.10 of 1989, determined the compensation payable in respect of land in Survey No.24 measuring 5 acres 5 guntas at Rs.1,35,000/- per acre on the following findings:

(a) the land was agricultural land at the time of notification;

(b) P3, P4 and P5, which were the sale deeds of municipal sites in Survey No. 13 cannot be taken into consideration while determining the compensation of a larger area;

It is to be noted that the learned Civil Judge permitted the production of the judgment of the High Court of Karnataka in MFA No. 348 of 1995 in respect of Survey No.77, wherein the compensation was determined at Rs.1,60,000/- per acre and placed reliance on the said judgment on the ground that the lands are similarly situated. In this view the Civil Judge determined the compensation at Rs.1,35,000/- per acre.

Feeling aggrieved by the said order, the claimants therein preferred Misc. First Appeal before the High Court of Karnataka in MFA No.1396 of 2003.

The Principal Judge, Senior Division, Shimoga in LAC No. 8 of 1989, dealing with the land in Survey No.23 to the extent of 3 acres 20 guntas determined the compensation at Rs.1,50,000/- per acre.

Feeling aggrieved by the said judgment the petitioner herein filed Misc. Appeal in MFA No. 658 of 2005 before the High Court of Karnataka. The claimant therein had filed cross objection in CROB No.211/06.

State of Karnataka filed Misc. Appeal in MFA No. 1339 of 2003 before the High Court from the judgment and decree in LAC No. 10 of 1989. All the Misc. Appeals and Cross Objections were heard and disposed of by a common judgment in the High Court of Karnataka.

4. The basic stand of the appellants is that no basis has been indicated by the High Court to determine the value at Rs.4,00,000/- per acre. It is pointed out that Exhs. P4 and P5 were small plots of land measuring about 30' x 50' and cannot provide a foundation for determination of the market value.

5. Learned counsel for the respondent on the other hand supported the judgment of the High Court contending that though the price paid in respect of small plots of land may not provide a foundation but it can be taken note of and after making adjustments for development the same can provide such a foundation.

6. It is a trite proposition that prices fetched for small plots cannot form safe bases for valuation of large tracts of land as the two are not comparable properties. The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing large extents of land has to be understood in its proper perspective. The principle

Click Here to Read the rest of this document

2009 Supreme(SC) 719

IMPORTANT POINT Selling rate of small plots can be used for fixing market price of large plots in certain conditions and subject to justifiable deductions.

Cases Referred (7)

IMPORTANT POINT
Selling rate of small plots can be used for fixing market price of large plots in certain conditions and subject to justifiable deductions.