2014 (10) TMI 1019 - SC - Indian Laws

Compensation for acquisition of land - HELD THAT - Consistent view taken by this Court is that one third deduction is made towards the area to be used for roads, drains, and other facilities, subject to certain variations depending upon its nature, location, extent and development around the area. Further, appropriate deduction needs to be made for development cost, laying roads, erection of electricity lines depending upon the location of the acquired land and the development that has taken place around the area. We have referred to various decisions of this Court on deduction towards development to stress upon the point that deduction towards development depends upon the nature and location of the acquired land. The deduction includes components of land required to be set apart under the building rules for roads, sewage, electricity, parks and other common facilities and also deduction towards development charges like laying of roads, construction of sewerage. In the instant case, having regard to the extent of the land acquired and the development in and around Vasant Kunj area, in our view, it is appropriate to make 35% deduction towards utilization of the land area in the layout for roads, drains, parks, playgrounds and civic amenities. So far as the expenditure for development of the large extent of land into a developed area by construction of proper roads, underground drainage, sewerage and erection of electricity lines, it is appropriate to make further deduction of 25%. Interest - HELD THAT - When the High Court enhanced the compensation, the High Court held that the appellants shall be paid interest in terms of Section 28 of the Act. On the enhanced compensation, High Court ordered payment of interest at the rate of 9% from 19.02.1997 to 18.2.1998 and thereafter at the rate of 15% per annum till the date of payment. The language of Section 27(1) is clear and very wide and it gives power to the courts to order costs to be paid by what persons and in what proportions they are to be paid. In making order for costs under Section 27(1), the court may have regard to the provisions of Section 35 C.P.C. Analysing sub-section (2) of Section 27, it appears to consist of three parts, viz., (i) When the award of the Collector is not upheld, the costs shall ordinarily be paid by the collector as directed by the Court; (ii) the court is not bound to do so in every case. If the court forms opinion that the claim of the claimant is extravagant or that he was so negligent in putting his case before the Collector, then the court may make a different order as regards costs and (iii) the court may in such cases direct, that some deduction be made from the costs of the claimant or that he should pay a part of the Collector s costs. Appeal dismissed.

Summary

Issues Involved:
1. Market Value of Acquired Land
2. Method of Determining Market Value
3. Freehold vs. Leasehold Price
4. Deduction for Competitive Bidding
5. Deduction Towards Development
6. Award of Interest
7. Award of Costs

Detailed Analysis:

1. Market Value of Acquired Land:
The primary issue was determining the reasonable market value of the acquired land. The Land Acquisition Collector initially assessed the market value at Rs. 205 per sq. yard, which was later contested by the appellants. The High Court fixed the market value at Rs. 14,974 per sq. yard after considering various factors and deductions.

2. Method of Determining Market Value:
The court emphasized the standard method of determining market value, which involves evaluating the land on the date of notification under Section 4(1) of the Land Acquisition Act. The High Court used the comparable sales method, taking the average of four perpetual lease deeds (Exs A7 to A10) and making necessary deductions for smallness of area and development costs. The Supreme Court found no error in this approach and upheld the High Court's method.

3. Freehold vs. Leasehold Price:
Appellants argued that the acquired land was freehold, which typically has a higher market value than leasehold property. The Supreme Court agreed that an addition of 20% should be made to the average price of the leasehold exemplars to account for the freehold nature of the acquired land. This adjustment increased the market value to Rs. 44,921 per sq. yard.

4. Deduction for Competitive Bidding:
The court considered the competitive nature of auction sales, which can inflate prices. It ruled that a 20% deduction should be made for competitive bidding, reducing the market value to Rs. 35,937 per sq. yard.

5. Deduction Towards Development:
The High Court had deducted 40% for the smallness of the plot area and one third for development costs. The Supreme Court clarified that deductions for development should consider two components: land area for common facilities and actual development costs. It concluded that a total deduction of 60% was appropriate, resulting in a final market value of Rs. 14,375 per sq. yard. However, since the Special Leave Petition filed by DDA was dismissed, the Supreme Court maintained the High Court's valuation of Rs. 14,974 per sq. yard.

6. Award of Interest:
The appellants contended that they were not awarded mandatory interest under Section 34 of the Act. The Supreme Court noted that both the reference court and the High Court had awarded interest in terms of Sections 34 and 28 of the Act. The High Court's judgment included interest at 9% per annum for the first year and 15% per annum thereafter until payment. The Supreme Court found no merit in the appellants' grievance regarding interest.

7. Award of Costs:
The appellants sought the inclusion of the entire court fees of Rs. 48 lakhs in the costs. The High Court had awarded proportionate costs over and above Rs. 20,000. The Supreme Court upheld the High Court's decision, stating that there was no improper exercise of discretion in awarding proportionate costs.

Conclusion:
The Supreme Court dismissed the appeals, maintaining the High Court's compensation award of Rs. 14,974 per sq. yard. It also upheld the High Court's decisions on interest and costs, finding no merit in the appellants' claims for higher compensation, additional interest, or full costs.