PETITIONER: DOLLAR COMPANY, MADRAS Vs. RESPONDENT: COLLECTOR OF MADRAS DATE OF JUDGMENT01/05/1975 BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH GUPTA, A.C. CITATION: 1975 AIR 1670 1975 SCR 403 CITATOR INFO : R 1977 SC 580 (9) R 1989 SC1222 (5) RF 1992 SC 666 (3) RF 1992 SC1406 (14) ACT: Land Acquisition Act--Section 23-Market Value--Principle on which Appellate Court interferes. HEADNOTE: The suit land was acquired under the Land Acquisition Act. The Land Acquisition Officer awarded Rs. 800 per ground as compensation. The City Civil Court awarded at the rate of Rs. 1000/- per ground. The High Court on appeal awarded Rs. 1800 per ground. The appellant himself purchased the suit land about 10 months before the notification under s. 4 was made at a price of Rs. 410 per ground. The appellant spent a little money on filling up the pond. HELD : Dismissing the appeal, This Court interferes with the judgment of the High Court only if the High Court applies a principle wrongly or because some important point affecting valuation has been overlooked or misapplied. A court of appeal interferes not when the judgment under attack is not right, but only when it is shown to be wrong. [404 E-FG] HELD FURTHER-Market value is what a willing purchaser will pay a willing vendor. The best evidence of the value of property is the sale of the very property to which the claimant is a party. If the sale was long ago, the Court would examine more recent sales of comparable lands a,% throwing better light on current land value. In the present case, the appellant himself purchased the land at the rate of Rs. 410 per ground. [404 H. 405 A.B] HELD-There is no error in principle in the High Court judgment nor has any of the limited grounds on which these Court's jurisdiction can be legitimately exercised been made out. [408-CD] JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 667 of 1968.
From the judgment and order dated 31st January, 1967 of the
Madras High Court in Appeal No. 412 of 1962.
N. Natesan, K. Jayaram and R. Chandrasekher, for the
appellant
Govind Swaminathan, N. S. Sivam, A. Y. Rangam and A. Subha-
shini, for the respondent.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-This is a pedestrian appeal by a land-owner
whose property, having been acquired compulsorily by the
State, asks for more compensation, probably appetised by
increases over the Collector’s award granted by the City
Civil Court and the High Court. The grounds urged are
conventional, based on comparison of prices shown in land
sales in the neighborhood and the general escalation of
urban land values in the country.
404
127 odd ‘grounds’ (a ground is around 5-1/2 cents; actually-
2,400 sq. ft) were acquired in 1959 for the construction of
a Housing Colony for the Madras Port Trust employees by the
then Madras State. They comprise R. S. No. 4032/1 and other
items with which we are not concerned, since the owners of
those items have not come up in appeal to this Court. The
relevant notification under s. 4( 1) was made on August 12,
1959 and so the compensation has to be pegged to the market
value as on that date. Of course, 16 years have rolled by
since, thanks to delay which has come to stay in the
administrative and forensic processes of our land. That is
by the way. The Land Acquisition Officer awarded Rs. 800/-
per ground. The City Civil Court, approaching the problem
of valuation plot-wise, as for a housing colony, made the
necessary deductions involved in that process and awarded at
the rate of Rs. 1,000/- per ground. The High Court, on
appeal, made an upward revision, discarding the trial
court’s approach and awarded Rs. 1,800/- per ground. The
State has not come up in appeal, but the unquenched claimant
asks for more in appeal, demanding at least Rs. 2,200/- per
ground.
Generally speaking, a cardinal component in the escalation
of prices of urban realty which does not find sufficient
expression in the ancient Land Acquisition Act, 1894 is the
developmental operations inevitable in a rapidly
industrialising society for which the individual owner makes
no social contribution. Be that as it may, courts have to
apply the legislation as extant, it being left to the law-
makers to harmonize social justice which individual rights
by appropriate reforms. We have to proceed to determine the
compensation according to the canons crystallized in s. 23
of the Act.
At the outset, we must warn ourselves of the broad guideline
that in an appeal from an award granting compensation this
Court will not interiere unless there is something to show
not merely that on the balance of evidence it is possible to
reach a different conclusion but that the judgment cannot be
supported by reason of a wrong application or principle or
because some important point affecting valuation has been
overlooked or misapplied. Moreover, there is a prudent
condition to which the appellate power, generally speaking,
is subject. A court,of appeal interferes not when the
judgment under attack is not right but only when it is shown
to be wrong. These twin principles serve as backdrop to our
approach to the rival contentions in the case.
It is true that compensation for compulsory acquisition, as
governed by s. 23, gives high priority to the market value
of the land at the date of the publication of the
notification under s. 4, sub-s. (1). But what is market
value ? It is a common place of this branch of jurisprudence
that the main criterion is what a willing purchaser would
pay a willing vendor. Ordinarily a party will be entitled
to get the amount that he actually and willingly paid for a
particular property, provided the transaction be bona fide
and entered into with due regard to the prevalent market
conditions and is proximate in time to the relevant date
under S. 23. We may even say that the best evidence of the
value of property is the sale of the very property to which
405
the claimant is a party. If the sale is of recent date,
then all that need normally be proved is that the sale was
between a willing purchaser and willing seller, that there
has not been any appreciable rise or fall since and that
nothing has been done on the land during the short interval
to raise its value (See Parks ‘Principles & Practice of
Valuations’ p. 29-Eastern Law House-Calcutta,-IV Edition
1970). But if the sale was long ago, may be the Court would
examine more recent sales of comparable lands as throwing
better light on current land value. We emphasize this facet
because the appellant himself purchased the land in question
just ten months before the notification under s. 4(1), at a
price of Rs. 410 per ground. There was a pond in the pot,
the filling up of which is alleged to have cost some extra
money according to the appellant, but he gave no evidence
before the court on this matter with the result that we are
left with the estimate made by the Public Works Department
for the filling up of the pond which works out at a much
lesser figure. In short, less than a year before the date
of commencement of acquisition proceedings, the appellant
himself had purchased this land at a price around Rs. 450
(making allowance for the pond which he had filled up) and
he has been awarded Rs. 1,800 per ground by the High Court
Instead of wandering around neighboring lands or guessing as
to what the price of the disputed land might have been, we
have before us the actual purchase of the suit property by
the appellant himself and he has not set up any case of.
special features or circumstances depressing the land value
or affecting the particular transaction so that one could
ignore that sale as the product of artificial circumstances.
We have thus a situation where the law should express a
judgment from the experience of the appellant himself as
against a judgment from speculation based on other
transactions.
Clinching evidence to correct uncertain prophesy is
furnished here by the claimant’s conduct. An actual
transaction with respect to the specific land of recent date
is a guide-book that courts may not neglect when called upon
to fix the precise compensation. Viewed from a slightly
different aspect it is but fair that compulsory land-
acquisition while assuring a just equivalent should not be
converted into an avaricious windfall. Can an owner who
brought the land at Rs. 400 per ground and laid out a little
more money on it, grouse: on the score of inadequate or
unjust recompense, if within a year after his own purchase
he is paid by the State 400 per cent of what he spent for
the identical land ? Neither morality nor legality is viola-
ted in such a case; for even a black marketeer’s bosom may
not be uneasy at the prospect of such a fortune which he
could not have bargained for when he became the owner of the
land some months before. ‘It is the duty of the state or
federal government, in the conduct of the inquest by which
compensation is ascertained, to see that it is just, not
merely to the individual whose property is taken, but to the
public which is to pay for it’ (See 27 Am Jur 2nd paragraph
266, p. 53 of Vol. 27). All things considered, the
appellant stands self-condemned by his own deed of purchase.
Property. valuation as a practiced art is greatly influenced
by legal and economic constraints. But, in this case, we do
not have any
406
complex considerations since helpful indicators are
available. Price paid-by the owner recently represents an
expression of market value, as bow fide evidence of value,
subject,to such matters as (a) the relationship of the
parties; (b) the market conditions and the terms of sale and
(c) the date of gale. It may not end the enquiry but goes a
long way to solve the problem. In this collection it may be
useful to refer to the decision of this Court in S. L. A.
Officer v. T.A. Setty(1) where it was observed :
“It is not disputed that the function of the
court in awarding compensation under the Act
is to ascertain the market value of the land
at the date of the notification under S. 4(1)
and the methods of valuation may be (1)
opinion of experts, (2) the price paid within
a reasonable time in bone fide transactions of
purchase of the lands acquired or the lands
adjacent to the lands acquired and possessing
similar advantages and (3) a number of years
purchase of the actual or immediately
prospective profits of the lands acquired”.
(p. 432, para 9-emphasis, ours)
Appreciating this lethal consequence, Sri Natesan, learned
counsel, suggested rather obscurely that there might have
been peculiar possibilities why this land was sold to his
client at a low price. But the reasoning breaks down
because the claimant has not even hinted in his pleading or
cared to testify what special circumstances played upon the
transaction by which he got this identical land at the price
he paid. We cannot be swayed by surmises floating in mid-
air, particularly where the party who urges these feathery
likelihoods stood mute at the trial stage. He failed to
speak only to become a martyr for silence.
Sri Natesan switched on to the prices of other lands in the
locality to overcome the self-created obstacle of his
client’s purchase. This is specious logic. When decisive
evidence of the market value of the land compulsorily
acquired is unavailable you seek light from comparable
neighborhood. Such is not the case here. Even so, we
traveled with counsel on to other lands, to gather whether
any grave error had crept into the High Court’s assessment.
The discovery made was that lands in the near neighborhood
were sold sometime earlier at prices ranging from Rs. 300 to
Rs. 400 and in one case Rs. 900 (Ex. R2 to R7) while
distant neighbors like that covered by Ex. C11 were valued
by court at around Rs. 2,200 or Rs. 2,400 per ground. This
wide disparity may be a trifle mystifying. Even so, we go
by lands close by and not by one a mile-and-half away as Ed-
C11 plot. In an industrial area, land prices are sensitive
to an intricate variety of factors.
Propinquity to highway or ports and many industrial and
social imponderables enter the verdict of evaluation. So
much so we cannot automatically assert, with reference to a
piece of land a mile-and-half
(1) A.I.R. 1959 S.C. 429.
407
away, that it serves as a guide for fixing the price of. the
suit plot. What. the High Court has done is to have at the
back of its mind the various sales, Exhibits R2 to R7, which
fall far below the value demanded by the claimant and the
high prices awarded by the same High Court in regard to
other lands distances away, have regard to the then growing
industrial potential and make an intelligent guess. May be
as the learned Advocate General has pointed out, in the
light of evidence regarding the precise land and the
particular owner, there was no justification for awarding
such a high price as has been done but the State has not
bothered to come up in appeal and we cannot hold that the
High Court was in error in making out of the totality of
materials available, a best judgment assessment of the
market value. No serious flaw in principle, no omission to
consider important material or like infirmity has been
pointed out to fault the judges on the appraisal.
Nevertheless, Shri Natesan contended strenuously that the
sales showing low prices were not reliable for two reasons.
They were ‘distress’ sales and prices had gone up from the
dates of those deeds which were’ of 1949-50. Neither
argument is conclusive. True, a few of the sales suggest
some pressure inducing the vendors to dispose of their land.
But there are other deeds which are unblemished by any such
depressant. Having gone through the documents in question
we are satisfied that none of the sales bear marks of throw
away prices.
The other argument that prices must have inexorably risen
from 1949 to 1959 is no axiomatic proposition. True,
generally speaking, there has been an inflationary spiral in
India which has not spared really. But there is evidence in
the present case to show that between 1949 and 1952 lands in
this very area stood stationary in their prices. Various
geo-economic factors have affected land prices, some to
boost them, others to slump them. Therefore we cannot be
persuaded to hold that a relentless rise in land prices has
come to stay. Take but one example : If a land adjoins a
factory which needs to be expanded further, a higher price
may be offered by that factory owner. Likewise, if a heavy
tax on construction of buildings or ceiling on vacant urban
land is in the offing, prices of building sites may come
down. It may even be said that such a factor as the
application of the MISA to smugglers may depress prices of
many items, including land and foreign cars, in certain
places. Another exotic example. In some American cities
the influx of certain colored races into the downtown area
brings down the market value of real estate, under current
social conditions.
While it is true that the area we are concerned with is an
industrial belt, we cannot forget that there are housing
colonies also as adjuncts so that some lands may be less
suitable for industrial buildings but may still be useful
for workers’ houses. It is in evidence that the plots
acquired here had ponds, the appellant himself having filled
up the pond in his plot: This shows incidentally that high-
rising constructions may require pile-driving at high cost.
We need not guess at the various chancy factors except to
state that having
10 SC/ 75-27
408
due regard to the conspectus of circumstances, including the
appellant’s own cost price, the Court has made a sound
judgment. In this view, we do not think there is need for
further discussion of the facts pressed before us by the
appellant. We agree with him that the purpose for which the
land is acquired has no bearing on the value to determined
by the Court but our conclusion remains unaltered.
We see no reason, no law nor justice, to interfere with the
judgment under appeal. Maybe, the appellant is aggrieved
that slightly inferior lands acquired simultaneously and
adjoining his plot have been given the same value as has
been awarded to him. It may also be that each court he has
approached has improved upon the price awarded by he earlier
one and therefore he might have obtained certificate
hopefully. And looking at his lost land now, years later,
when real estate has risen in price much more, he may sigh
at what is fixed and strive to yet more. But a closer
examination has disclosed no error in principle ,a the High
Court’s judgment nor has any of the limited ground on which
this Court’s jurisdiction can be legitimately exercised been
made out.
The appeal is dismissed but, in the circumstances, without
costs.
P.H.P. Appeal dismissed
409