2009 (8) TMI 1248 - SC - Indian Laws

Determination of market value in regard to lands - acquisitions initiated by notifications issued u/s 4(1) of the Land Acquisition Act 1894 ( LA Act ) - acquired for (i) construction of a supplementary drain; (ii) construction of sewage treatment plant; (iii) re-modeling of drain; and (iv) planned development - awards of the reference court were challenged by the landowners - Whether valuation by the High Court is proper? - HELD THAT - On deduction of 40% from 50790/- per bigha which the market value of small plots the market value for the large tracts of lands acquired in December 1981 would be 30, 474/- (rounded off to 30500/-) per bigha. As the earlier three acquisitions were of the same year but were in February and March (that is on 13.2.1981 20.2.1981 and 13.3.1981) which are about 10 to 11 months earlier the compensation in regard to the three earlier acquisitions is determined as 28000/- per bigha. To this extent the award of the High Court requires to be modified. The reference court had after referring to several sale transactions determined the market value as 15, 700/- per bigha in one case and 18, 500/- per bigha in another case. On appeal by the claimants the High Court excluded several sale transactions relied upon by the reference court as not inspiring confidence and on the basis of a solitary transaction dated 10.9.1981 in regard to a small area of one bigha increased the market value to 30, 000/- per bigha. This Court held that the High Court erred in relying upon a single sale deed relating to a small extent of one bigha to determine the market value of a large extent of 5484 bighas. It further held that if that sale deed was excluded there was no other evidence to support the increase in compensation made by the High Court. Consequently this Court set aside the increase awarded by the High Court and restored the market value determined by the reference court. We accordingly increase the compensation in regard to acquisition dated 31.12.1981 from 27000/- to 30, 500/- per bigha. We also increase the compensation in regard to the acquisition dated 13.2.1981 20.2.1981 and 13.3.1981 from 25, 000/- to 28, 000/- per bigha. The statutory benefits and interest awarded are not disturbed. The appeals by the claimants are partly allowed increasing the compensation. As a consequence the cross objections by DDA seeking reduction of the compensation are rejected without going into the question whether such cross objections are maintainable.

Issues Involved:
1. Relevance of the DDA brochure as evidence.
2. Relevance of circle rates/guideline value rates in determining market value.
3. Relevance of the 1961 acquisition award.
4. Justification for rejecting certain sale deeds.
5. Effect of Section 51A of the Land Acquisition Act.
6. Relevance of undervalued sale deeds.
7. Proper valuation by the High Court.

Issue-Wise Detailed Analysis:

1. Relevance of the DDA brochure as evidence:
The DDA brochure from 1981, which indicated provisional rates for allotment of plots on leasehold basis, was argued by the appellants to reflect the ruling market price. However, the court held that such allotment rates could not form the basis for compensation for undeveloped lands. The reasons included the difference between large tracts of undeveloped agricultural lands and small plots in developed layouts, the varying rates adopted by development authorities based on the economic capacity of buyers, and the difference between freehold market value and leasehold allotment rates.

2. Relevance of circle rates/guideline value rates in determining market value:
The appellants contended that the circle rates issued by the Government of India should be considered as indicative of market value. However, the court noted that such rates, often used for stamp duty purposes, could not be the basis for determining market value under Section 23 of the Land Acquisition Act. The court referred to previous judgments which held that such rates lacked statutory basis and were not reliable indicators of market value for land acquisition purposes.

3. Relevance of the 1961 acquisition award:
The appellants argued that the market value for the 1981 acquisition should be determined by escalating the 1961 award value at a compounded rate. The court rejected this method, citing a recent decision which held that using old awards for determining current market value is unreliable due to potential changes in the rate of annual increase and market conditions over long periods.

4. Justification for rejecting certain sale deeds:
The High Court had rejected certain sale deeds on the grounds that they were post-notification sales or related to small plots. The court found that the reasons for rejecting these sale deeds were not sound, emphasizing that all sale deeds related to the village and were from the year of acquisition. The court noted the significant variation in values between the sale deeds presented by the appellants and respondents and concluded that the sale deeds showing lower values were either undervalued or distress sales.

5. Effect of Section 51A of the Land Acquisition Act:
Section 51A allows certified copies of registered sale deeds to be accepted as evidence without examining the vendor or vendee. The court clarified that while such sale deeds could be accepted as evidence, the court had the discretion to rely on them or reject them based on other evidence. The court emphasized that the contents of a sale deed do not automatically prove the transaction's genuineness and must be weighed against other evidence.

6. Relevance of undervalued sale deeds:
The court addressed the issue of undervalued sale deeds, noting that if satisfactory evidence shows a higher market value, sale deeds indicating lower values should be excluded as unreliable. The court cautioned against the practice of arbitrarily increasing the value shown in sale deeds based on assumptions of under-valuation, emphasizing that such assumptions lack legal basis and evidence.

7. Proper valuation by the High Court:
The court reviewed the High Court's valuation and found that the rejection of certain sale deeds was not justified. The court determined that the market value of small plots sold for residential or non-agricultural purposes should be averaged and adjusted for development costs. The court concluded that a 40% deduction for development was appropriate, resulting in a market value of Rs. 30,500 per bigha for the December 1981 acquisition and Rs. 28,000 per bigha for the February and March 1981 acquisitions.

Conclusion:
The Supreme Court increased the compensation for the December 1981 acquisition to Rs. 30,500 per bigha and for the February and March 1981 acquisitions to Rs. 28,000 per bigha. The statutory benefits and interest awarded were not disturbed. Cross-objections by the DDA seeking reduction of compensation were rejected.

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