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SUPREME COURT OF INDIA
M.P. Thakkar, B.C. Ray, JJ
Chimanlal Hargovinddas – Appellant
Versus
Special Land Acquisition Officer Poona – Respondent
Civil Appeals Nos. 2721 & 2722 (N) of 1972
For the Appellants/Petitioners: D.Y. Chandrachud, S. Dutt, P.H. Parekh
For the Respondents: A.M. Khanwilkar, Ajit S. Bhasme
Valuation of land for compensation should be based on comparable instances making adjustments for plus and minus factors. Once land is valued lower because of its interior location and development time-lag, further discounting for the waiting period is erroneous as it double-counts the minus factors.
Headnote:(A) Land Acquisition Act - Section 4, 18, 23(2), 28 - Determination of market value - Guidelines for valuation - Reference under Section 18 is an original proceeding to determine market value afresh - Court should identify most comparable instances, apply balance-sheet of plus/minus factors, and adopt common sense methodology - Deduction for largeness of area is a question of fact based on circumstances. (Paras 4-6, 15-16)
(B) Valuation - Methodology - Deduction of area for development (roads/open spaces) - Factors like size, proximity to road, and development potential affect valuation - Appraisal involves reasonable estimation and common sense - Where land is valued at a lower rate due to its interior location anticipating future development, further discounting for waiting period is erroneous and duplicative. (Paras 16, 21-23)
Facts of the case:
Parties sought enhanced compensation for land acquired in Poona. The trial court valued the land at Rs. 8692 per acre. The High Court reduced it to Rs. 4845.87 per acre based on a valuation methodology that deducted 25% for the largeness of the block and further discounted the value using tables to account for a 12-year development delay.
Findings of Court:
While the High Court’s 25% deduction for largeness of the block was permissible as a factual determination, the subsequent depression of the already lowered valuation (meant to adjust for the interior location) using discount tables for a 12-year lag was erroneous and amounted to double-counting.
Issues: Whether the High Court erred in its methodology for evaluating land compensation by applying excessive deductions and double-discounting based on development time-lags.
Ratio Decidendi: Valuation of acquired land must factor in its situation (interior vs. road-abutting) to account for development potential; however, once the land is valued at a lower rate specifically reflecting its inferior location, further discounting the ‘present value’ using interest tables creates an unrealistic, depressed valuation.
Result: Appeals partly allowed, compensation modified to Rs. 5,250 per acre.
ACT:
Land Acquisition Act-Challenging valuation and compensation in respect of land acquired under provisions of-Whether appellant whose land was acquired is entitled to benefit of Central Amending Act 68 of 1984.
HEADNOTE:
The appellant not being satisfied with the compensation offered by the Land Acquisition officer in respect of his land placed under acquisition under the Land Acquisition Act, applied for a reference to a civil court, for determining the market value of the land for awarding compensation to the appellant. The Trial Court determined the market value of the land in question at Rs.8692 per acre. The High Court reduced the amount of compensation payable to Rs.4845.87 from Rs.8692 per acre. The appellant moved this Court for relief, complaining that the High Court had erroneously revised downwards the valuation correctly arrived at by the Trial Court.
Allowing the appeal partly, the Court
HELD: The trial Court had virtually treated the award rendered by the Land Acquisition officer as a judgment under appeal. The Court laid down general guidelines to be followed in respect of methodology for valuation, in order to capsulize the true position. [534E] F
The valuation made by the High Court had been faulted on three grounds:
(1) The High Court should not have made a deduction of 25% in place of deduction made by the Trial Court at 20% to account for the factor pertaining to largeness of the block of land under acquisition. [539B]
(2) The High Court had grossly under-valued the land in determining the market value of the appellant’s land at Rs.7000 per acre as a block. [539B-C]
(3) There was no warrant for pushing down or depressing the market value of land as determined by the Trial Court in order to deduce the ’present value’ by reference to Miram’s Tables to account for the factor as regards the estimated time lag for development reaching the block of land in question which was situated in the interior. Besides, the time lag of 12 years as estimated by the High Court was excessive and unrealistic. [539C-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2721 & 2722 (N) of 1972.
From the Judgment and order dated 30.3.1972 of the Bombay High Court in First Appeal No. 440/62 and 577 of 1962.
Dr. D.Y. Chandrachud, S. Dutt and P.H. Parekh for the Appelant.
A.M. Khanwilkar and Ajit S. Bhasme for the Respondents.
The Judgment of the Court was delivered by
THAKKAR, J.
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.
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 1. By Certificate under Article 133( l)(a) of the Constitution of India as it existed at the material time. placed under acquisition pursuant to a Notification under section 4 of the Land Acquisition Act published on March 8, 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.15,00 per acre. Market value in respect of the remaining 13 acres and 7 Gunthas was determined at Rs.8692 per acre. The present dispute is confined to valuation of 13 Acres 7
