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TMI Blog2014 (10) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that the lease deeds of auction of a developed plot by a public authority are not a proper guide for determining the fair market value of the acquired lands and reference court discarded the exemplars- Exs A7 to A10 lease deeds and rejected the claim of the appellants for enhancement of compensation. 4. Aggrieved by the decision of the reference court, appellants filed Land Acquisition Appeal No.149/2007 before High Court of Delhi. The High Court had taken average of the exemplars- Exs A7 to A10 and deducted 40% from the average price towards smallness of the area and further deducted one third towards development of land and fixed the market value of the land at ₹ 14,974/- per sq. yard. High Court held that the appellants shall be entitled to 30% solatium on the above market value of the land under Section 23(2) of the Act and 12% of the additional amount under Section 23(1-A) of the Act. The High Court further ordered that in terms of Section 28 of the Act on the enhanced market value, the appellants shall be paid interest @ 9% per annum from 19.2.1997 i.e. date of notification under Section 4 of the Act till 18.2.1998 and thereafter @ 15% per annum till the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la and Anr. (2000) 6 SCC 359 and S. Gangadhara Palo vs. Revenue Divisional Officer and Anr., (2011) 4 SCC 602. 7. Without prejudice to the above contention, Mr. Amarendra Sharan, learned Senior Counsel appearing for the respondents submitted that the land acquired is 12 bigha which is almost 12096 sq. yards which is thousand times more than the area of the plots in Exs A7 to A10, that too, in fully developed commercial area and the sale price of such a small area cannot be taken as the value for arriving at the market value of large extent of area. It was submitted that it is not safe to rely upon the allotment rates/auction rates in regard to the commercial plots formed by DDA in a developed layout in determining the market value of the adjoining large extent of undeveloped land. It was further submitted that in case of Delhi Development Authority or any statutory authority, 40% of the land area is to be deducted for formation of roads, drains, parks and common amenities and further 35% deduction ought to have been made towards the cost of leveling the land, construction of sewerages, laying electricity lines etc. Learned Senior Counsel submitted that deduction for development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4(1) of the Act, acting as a hypothetical purchaser willing to purchase the land in open market at the prevailing price on that day, from a seller willing to sell such land at a reasonable price. Thus, the market value is determined with reference to the open market sale of comparable land in the neighbourhood, by a willing seller to a willing buyer, on or before the date of preliminary notification, as that would give a fair indication of the market value. 12. In Viluben Jhalejar Contractor v. State of Gujarat (2005) 4 SCC 789, this Court laid down the following principles for determination of market value of the acquired land: (SCC pp.796-97, paras 17-20) 17. Section 23 of the Act specifies the matters required to be considered in determining the compensation; the principal among which is the determination of the market value of the land on the date of the publication of the notification under sub-section (1) of Section 4. 18. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefor. It is beyond any cavil that the price of the land which a willing and informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It should be of the land acquired or of the land adjacent to the land acquired; and It should possess similar advantages. It is only when these factors are present, it can merit a consideration as a comparable case (See Special Land Acquisition Officer v. T. Adinarayan Setty (AIR 1959 SC 429) These aspects have been highlighted in Ravinder Narain v. Union of India (2003) 4 SCC 481. 15. Appellants have produced Exs A7 to A10-four perpetual lease deeds of residential plots in Pocket C of Vasant Kunj Area between September 1995 to December 1996, the details of which are as under: Exh. Sale Date Plot No. Size (Sq.Mtr.) Sale Price (Rs.) Rate (Rs. per sq.yd.) A-7 22.09.95 59C 218 5,75,05,000/- 28,719/- A-8 02.02.96 5C 220 96,55,000/- 36,695/- A-9 02.02.96 8C 231 1,01,61,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, if followed, could bring about a figure of price which may not at all be regarded as the price to be fetched by sale of acquired land. One should not have, ordinarily recourse to such method. It is well settled that genuine and bona fide sale transactions in respect of the land under acquisition or in its absence the bona fide sale transactions proximate to the point of acquisition of the lands situated in the neighbourhood of the acquired lands possessing similar value or utility taken place between a willing vendee and the willing vendor which could be expected to reflect the true value, as agreed between reasonable prudent persons acting in the normal market conditions are the real basis to determine the market value. 19. Referring to Hans Raj s case in Anjani Molu Dessai vs. State of Goa And Anr., (2010) 13 SCC 710, this Court held as under:- 20. The legal position is that even where there are several exemplars with reference to similar lands, usually the highest of the exemplars, which is a bonafide transaction, will be considered. Where however there are several sales of similar lands whose prices range in a narrow bandwidth, the average thereof can be taken, as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gap between freehold price and leasehold price. It is submitted that market value of freehold property is much higher than the value of leasehold property and this was not taken into consideration by the High Court. 22. In M.B. Gopala Krishna Ors. vs. Special Deputy Collector, Land Acquisition, (1996) 3 SCC 594, as relied upon by the appellants, it was held as under:- It is further contended by Shri Mudgal that value of the land does not get pegged down on account of the land being in occupation of a tenant and the circumstances in this behalf taken into account by the High Court, is irrelevant. We find no force in the contention. A freehold land and one burdened with encumbrances do make a big difference in attracting willing buyers. A freehold land normally commands higher compensation while the land burdened with encumbrances secures lesser price. The fact of a tenant in occupation would be an encumbrance and no willing purchaser would willingly offer the same price as would be offered for a freehold land. Under those circumstances, the High Court would be right in its conclusion that the land burdened with encumbrances takes lesser price than the freehold land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made for competitive bidding. 26. While considering the competition involved in auction sales of commercial/residential plots and observing that the element of competition in auction sales make them unsafe guides for determining the market value of the acquired lands, in Executive Engineer, Karnataka Housing Board v. Land Acquisition Officer, Gadag And Ors., (2011) 2 SCC 246 paras 6 7, this Court held as under:- 6. But auction-sales stand on a different footing. When purchasers start bidding for a property in an auction, an element of competition enters into the auction. Human ego, and desire to do better and excel over other competitors, leads to competitive bidding, each trying to outbid the others. Thus in a well advertised open auction-sale, where a large number of bidders participate, there is always a tendency for the price of the auctioned property to go up considerably. On the other hand, where the auction-sale is by banks or financial institutions, courts etc. to recover dues, there is an element of distress, a cloud regarding title, and a chance of litigation, which have the effect of dampening the enthusiasm of bidders and making them cautious, thereby depress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in Union of India vs. Mangatu Ram (1997) 6 SCC 59. That case related to acquisition of lands in the vicinity of the present properties. The ratio of that decision also supports the distinction made by the Awarding Officer and the High Court in the matter of fixing the land value for the lands in Satrod Khurd and Satrod Khas. 28. The general rule that the sale prices of the comparable sales should be relied upon for calculating the market value will not apply when the sale transactions relied upon are auction sales. As per the decision in Karnataka Housing Board s case (2011) 2 SCC 246, in our view, 20% deduction is to be made for competitive bidding. Deducting 20% i.e. ₹ 8,984/- from ₹ 44,921/-, balance arrived at ₹ 35,937/- per sq. yard is fixed as the value for the acquired land. 29. Deduction Towards the Development: The High Court has deducted 40% from the average price to equalize the factor of the market value of a small plot of land as compared to large area of land acquired and the figure works out to ₹ 22,460.25. High Court has also deducted one third towards development cost and determined the market value of the acquired land at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges, the nature of development, conditions and nature of the land, the land required to be set apart under the Building Rules for roads, sewerage, electricity, parks, water supply etc. and other relevant circumstances involved are required to be considered. 33. In Haryana State Agricultural Market Board And Anr. vs. Krishan Kumar And Ors., (2011) 15 SCC 297, it was held as under: 10. It is now well settled that if the value of small developed plots should be the basis, appropriate deductions will have to be made therefrom towards the area to be used for roads, drains, and common facilities like park, open space, etc. Thereafter, further deduction will have to be made towards the cost of development, that is, the cost of leveling the land, cost of laying roads and drains, and the cost of drawing electrical, water and sewer lines. 34. 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 el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricity lines, providing civic amenities, etc. However, in cases of some land where there are certain advantages by virtue of the developed area around, it may help in reducing the percentage of cut to be applied, as the developmental charges required may be less on that account. There may be various factual factors which may have to be taken into consideration while applying the cut in payment of compensation towards developmental charges, may be in some cases it is more than 1/3rd and in some cases less than 1/3rd. It must be remembered that there is difference between a developed area and an area having potential value, which is yet to be developed. The fact that an area is developed or adjacent to a developed area will not ipso facto make every land situated in the area also developed to be valued as a building site or plot, particularly when vast tracts are acquired, as in this case, for development purpose. (emphasis supplied) The rule of 1/3rd deduction was reiterated in Tejumal Bhojwani v. State of U.P. ((2003)10 SCC 525, V. Hanumantha Reddy v. Land Acquisition Officer, (2003) 12 SCC 642, H.P. Housing Board v. Bharat S. Negi (2004) 2 SCC 184 and Kiran Tandon v. Allahabad D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral rule. But so far as Delhi Development Authority is concerned, or similar statutory authorities, where well planned layouts are put in place, larger land area may be utilized for forming layout, roads, parks and other common amenities. Percentage of deduction for development of land to be made in DDA or similar statutory authorities with reference to various types of layout was succinctly considered by this Court in Lal Chand vs. Union of India Anr. (2009) 15 SCC 769 and observing that the deduction towards the development range from 20% to 75% of the price of the plots, in paras 13 to 22, this Court held as under:- 13. The percentage of deduction for development to be made to arrive at the market value of large tracts of undeveloped agricultural land (with potential for development), with reference to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which the exemplar plots are situated. 14. The deduction for development consists of two components. The first is with reference to the area required to be utilized for developmental works a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a semi-developed urban area, and not an undeveloped rural area, then the deduction for development may be as much less, that is, as little as 25% to 40%, as some basic infrastructure will already be available. (Note: The percentages mentioned above are tentative standards and subject to proof to the contrary. 20. Therefore the deduction for the development factor to be made with reference to the price of a small plot in a developed layout, to arrive at the cost of undeveloped land, will be far more than the deduction with reference to the price of a small plot in an unauthorized private layout or an industrial layout. It is also well known that the development cost incurred by statutory agencies is much higher than the cost incurred by private developers, having regard to higher overheads and expenditure. 21. Even among the layouts formed by DDA, the percentage of land utilized for roads, civic amenities, parks and playgrounds may vary with reference to the nature of layout-whether it is residential , residential- cum-commercial or industrial; and even among residential layouts, the percentage will differ having regard to the size of the plots, width of the roads, exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acing reliance upon Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF), (2009) 8 SCC 412, it is contended that the impugned judgment is silent on granting statutory interest under Section 34 of the Land Acquisition Act and the appellants pray for award of interest on the enhanced compensation. The appellants filed C.M. No.735/2011 before the High Court seeking review for payment of interest which according to the appellants was omitted to be included and the said application was dismissed by the High Court. 43. Land Acquisition Act, 1894, provides for payment of interest to the claimants either under Section 34 or under Section 28 of the Act. Section 34 of the Act fastens liability on the Collector to pay interest on the amount of compensation to be worked out in accordance with provisions of Section 23(1) and the sub-section thereof, at the rate of 9% per annum from the date of taking possession until the amount is paid or deposited. As per proviso to Section 34, if the compensation amount or any part thereof is not paid or deposited within a period of one year from the date of taking over possession, interest shall be payable at the rate of 15% per annum from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rates specified thereunder. The Court stated: [Prem Nath Kapur vs. National Fertilizers Corporation of India Ltd., (1996) 2 SCC 71, SCC p. 77, para 10] In other words, Sections 34 and 28 fasten the liability on the State to pay interest on the amount of compensation or on excess compensation under Section 28 from the date of the award and decree but the liability to pay interest on the excess amount of compensation determined by the Court relates back to the date of taking possession of the land to the date of the payment of such excess into the court . 45. The Court concluded: (Prem Nath Kapur case, SCC p. 78, para 12) 12. It is clear from the scheme of the Act and the express language used in Sections 23(1) and (2), 34 and 28 and now Section 23(1-A) of the Act that each component is a distinct and separate one. When compensation is determined under Section 23(1), its quantification, though made at different levels, the liability to pay interest thereon arises from the date on which the quantification was so made but, as stated earlier, it relates back to the date of taking possession of the land till the date of deposit of interest on such excess compensation into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as indicated already. That enhanced compensation would also bear interest on the enhanced portion of the compensation, when Section 28 is applied. The enhanced amount thus calculated will have to be deposited in addition to the amount awarded by the Reference Court if it had not already been deposited. 35. The fourth stage may be when the Supreme Court enhances the compensation and at that stage too, the same rule would apply. 48. By going through the judgment of reference court as well as the High Court, we find that the appellants were awarded interest in terms of Section 34 and Section 28 of the Act. Section 4(1) notification was issued on 19.02.1997. The reference court has not enhanced the compensation amount; but has only confirmed the award passed by the Collector. However, while dismissing the reference, reference court held that the appellant shall be entitled to get interest in terms of the provisions of the Act for the period from 19.02.1997 till the date of payment, meaning thereby that the statutory interest in terms of Section 34 of the Act is payable. 49. When the High Court enhanced the compensation, the High Court held that the appellants shall be paid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of entire court fees and the costs. 52. The learned Senior Counsel for respondents submitted that as per the well settled principle, the High Court has awarded proportionate costs and there is no improper exercise of discretion warranting interference by this Court. 53. Section 27 of the Act deals with costs. Section 27 reads as under: 27. Costs:- (1) Every such award shall also state the amount of costs incurred in the proceedings under this Part, and by what persons and in what proportions they are to be paid. (2) When the award of the Collector is not upheld, the costs shall ordinarily be paid by the Collector, unless the court shall be of opinion that the claim of the applicant was so extravagant or that he was so negligent in putting his case before the Collector that some deduction from his costs should be made or that he should pay a part of the Collector s costs. 54. 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. Analysin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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