JUDGMENT
Tirath Singh Thakur, J.
1. These appeals arise out of an order made by the III Additional Civil Judge, Bijapur, in a reference under Section 18 of the Land Acquisition Act, enhancing compensation payable to the landowners from Rs. 7,500/-per acre to Rs. 7 per sq. foot. The controversy arises in the following circumstances.-
2. Land measuring 6 acres and 36 guntas situate in Sy. No. 269/1A of Talikote in Muddebihal Taluk of Bijapur District, was notified for acquisition under Section 4(1) of the Land Acquisition Act, in terms of a notification dated 15th of December, 1983. Yet, another notification meant to correct certain errors in the description of the land was issued a few months later on 9th of August, 1984. The acquisition was for the benefit of the Agricultural Produce Marketing Committee, Talikote. An Award was in due course made by the Land Acquisition Officer concerned on 11th of October, 1985, determining a sum of Rs. 7,500/- per acre towards compensation payable to the owners. Not satisfied with the said Award, the owners sought a reference in terms of Section 18 of the Act, to the Civil Court, who has in terms of the impugned judgment and order enhanced the compensation to Rs. 7 per sq. foot. Aggrieved by the said enhancement, the beneficiary of the acquisition, namely the A.P.M.C., Talikote and the Assistant Commissioner, Land Acquisition Officer have filed M.F.A. Nos. 1207 and 847 of 1996 respectively. The claimants have also at the same time assailed the order made by the Reference Court, to the extent the same granted enhancement only upto Rs. 7 per sq. foot. In M.F.A. No. 1216 of 1996, they have claimed enhanced compensation at the rate of Rs. 9.35 ps. per sq. foot, as against Rs. 7 awarded by the Reference Court.
3. Appearing for the appellant owners, Mr. B.S. Patil, strenuously argued that the Reference Court was not justified in limiting the enhancement to Rs. 7 per sq. foot only. He submitted that the material produced by the owners in support of their claim for higher compensation sufficiently established that the market value of the land in question as on the date of the publication of the notification under Section 4(1) of the Land Acquisition Act, was not less than Rs. 9.35 per sq. foot. He urged that the owners had apart from the other material produced evidence to show that the A.P.M.C. had itself sold in favour of Talikote Merchants’ Ahrat Association, a piece of land measuring 24′ x 54′ for a consideration of Rs. 29,920/-. This sale was effected on 18th of October, 1984 which was proximate in point of time to the notification issued under Section 4(1) of the Act. He contended that the said transaction was not only genuine but clearly indicative of the prevailing market price of the lands in the vicinity of the A.P.M.C. yard at Talikote and could therefore have been taken as a safe basis for determining the compensation payable to the owners. He urged that while the Reference Court had rightly proceeded to determine the compensation awardable to the owners, on the basis of the said transaction it fell in error in
deducting 65% of the value of the land on account of development charges. Deductions to the extent of 65% were not according to the learned Counsel, warranted having regard to the fact that the entire area in the neighbourhood of the land under acquisition had been fully developed and the land had become on that account ripe for being used for non-agricultural purposes. He urged that the deduction of 12% over and above 53% authorised by some of the decisions of the Supreme Court on account of the waiting period, was wholly untenable and hence liable to set aside. He argued that having regard to the nature of the evidence produced by the appellant which remained unrebutted, the least which the owners were entitled to was to a sum of Rs. 9.35 per sq. foot and that the order passed by the Reference Court could to that extent be modified suitably. He further argued that neither the Assistant Commissioner nor the A.P.M.C. could find fault with the enhancement allowed by the Reference Court having regard to the fact that the said Court had while disposing of L.A.C. No. 85 of 1991 by its order dated 16th of April, 1997 granted enhanced compensation by placing reliance upon the judgment impugned in this appeal. He argued that M.F.A. No. 2843 of 1997 preferred against the said enhancement by the A.P.M.C. was dismissed by this Court as withdrawn on 6th of June, 2001. This according to Mr. Patil, implied that the beneficiary of the acquisition had accepted the basis of the enhancement awarded by the Reference Court to be sound. Since the said basis was provided by the judgment impugned in the present appeal, it was not open to either the Assistant Commissioner or the A.P.M.C. to question the correctness thereof in the cross appeals filed by them. The withdrawal of the appeals against the judgment in L.A.C. No. 85 of 1991 contended Mr. Patil, was sufficient to estop the acquiring authority as also beneficiary from challenging the enhancement awarded in favour of the owners.
4. M/s. Sridharan and K.P. Ashok Kumar, learned Counsels appearing for the beneficiary and the Land Acquisition Officer, on the other hand argued that the Reference Court had fallen in error in placing reliance upon the sale transaction evidenced by Ext. P. 7 which admittedly related to a small piece of land situate within the A.P.M.C. yard. They submitted that the land acquired from the owners was agricultural land on the date of the issue of the notification under Section 4(1) and that compensation for any such land had to be determined on the basis of and by reference to comparable sales proximate in point of time. The deductions made by the Reference Court were according to the learned Counsel on the lower side and ought to be raised suitably to arrive at a correct figure representing the market value at the relevant point of time. It was also argued that the transaction represented by the sale deed executed between the A.P.M.C., Talikote and the Association referred to earlier had not been proved in accordance with law and that the contents of the document could not be looked into for purposes of determining the compensation payable to the owners.
5. Sections 23 and 24 of the Land Acquisition Act, stipulate factors, that need to be considered and those that need to be ignored while determining a just compensation payable to the landowners. Decisions
of the Supreme Court over the past three decades have in addition evolved norms for determination of compensation for property compulsorily acquired under the Act. One of the principles which is now fairly well-settled on account of the said pronouncements is that while determining compensation for larger transactions in respect of smaller parcels of land do not provide an absolutely safe or dependable basis. All the same, in the absence of any better evidence forthcoming at the trial, such transactions become relevant for purposes of determining the amount of compensation. The juristic basis for taking into consideration such transactions and arriving at a figure that would most suitably represent the true market value of the land during the relevant period is succinctly stated by the Supreme Court in Administrator General of West Bengal v. Collector, Varanasi, in the following words.-
“The determination of market value of a piece of land with potentialities for urban use is an intricate exercise which calls for collection and collation of diverse economic criteria. The market value of a piece of property, for purposes of Section 23 of the Act, is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. The determination of market value, as one author put it, is the prediction of an economic event, viz., the price-outcome of a hypothetical sale, expressed in terms of probabilities. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual, and indeed the best, evidences of market value. Other methods of valuation are resorted to if the evidence of sale of similar lands is not available”.
6. The Court declared that in cases where the price fetched by smaller plots of land are made a basis for determining compensation for larger tracts, it shall have to provide for appropriate deductions on account of development of the sites in the nature of formation and laying of roads, provision for civic amenities, like drainages, sewers, water and electricity lines etc. The following passage is in this regard apposite.-
“It is trite proposition that prices fetched for small plots cannot form safe bases for valuation of large tracts of land as the two are not comparable properties (See Collector of Lakhimpur v. Bhuban Chandra Dutta; Mirza Nausherwan Khan v. The Collector (Land Acquisition), Hyderabad; Padma Uppal v. State of Punjab; Kaushalya Devi Bogra v. Land Acquisition Officer, Aurangabad). The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing large extents
of land has to be understood in its proper perspective. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. However, if it is shown that the large extent to be valued does admit of and is ripe for use for building purposes; that building lots that could be laid out on the land would be good selling propositions and that valuation on the basis of the method of a hypothetical layout could with justification be adopted, then in valuing such small, laid out sites the valuation indicated by sale of comparable small sites in the area at or about the time of the notification would be relevant. In such a case, necessary deductions for the extent of land required for the formation of roads and other civic amenities; expenses of development of the sites by laying out roads, drains, sewers, water and electricity lines, and the interest on the outlays for the period of deferment of the realisation of the price; the profits on the venture etc., are to be made”.
7. The Supreme Court had in the process of evolving the above principles placed reliance upon two earlier decisions of the said Court in Brig. Sahib Singh Kalha v. Amritsar Improvement Trust and Ors. and Tribeni Devi and Ors. v. The Collector, Ranchi. In the former case, one of the issues that arose for consideration was whether the Reference Court was justified in permitting deduction of 20% towards the development charges in one case while allowing deduction of 33 1/3% towards such expenses in another. The Court held that development involves the process of bringing the undeveloped land on par with developed lands. An extent of 20% of the total land acquired is normally taken as a reasonable deduction for the space required for the Roads. Apart from that the cost of laying the Roads and the cost of providing other amenities like electricity, water, underground drainage etc., could go up to 33 1/3%. The cost of development observed the Court may range from 22 to 33% depending upon the nature of land, its situation and the stage of development etc. The Court held:
“It is well-settled principle of valuation that where there is a large area of undeveloped land under acquisition, provision has to be made for providing the minimum amenities of town life such as water connections, well laid out roads, drainage facility, electric connections etc. The process necessarily involves deductions of the cost of factors required to bring the undeveloped lands on par with the developed lands. An extent of 20 per cent of the total land acquired is normally taken as a reasonable deduction for the space required for roads. This is apart from the cost of laying roads themselves and the cost of providing other amenities like electricity, water, underground drainage etc. In Tribeni Devi’s case, supra, the Court allowed a deduction of 33 1/3 per cent towards the cost of development. The cost of development may range from 20 to 33
per cent depending on the nature of the land, its situation and the nature of the land, its situation and the stage of development etc”.
(emphasis supplied)
8. It is on the above basis that Venkatachaliah, J., had speaking for the Court in Administrator General of West Bengal’s case, supra, held that the deduction for land required for roads and other development expenses would together go upto as much as 53%. The later decisions reiterate that position. We may in this regard refer to the decisions of the Supreme Court in Hasanali Khanbhai and Sons and Ors. v. State of Gujarat, where the Court while dealing with the extent of the deduction to be made for roads, drainage and other civic amenities, observed that the High Court was justified in permitting a deduction of 60% of the value of land on account of the expenses to be incurred on its development. To the same effect is the decision of the Supreme Court in Basavva and Ors. v. Special Land Acquisition Officer and Ors. , where the Court upheld deduction on account of development charges at 65% of the cost of the land was justified having regard to the prevailing state of the land and the fact that any development of the same would have taken a few years, Reference can also be made to the decision of the Supreme Court in Ratanlal Gupta and Ors. v. Union of India and K. Vasundara Devi v. Revenue Divisional Officer (LAO), in which their Lordships upheld deductions towards developmental charges, relying upon its earlier decision in M/s. Hasanali Khanbhai and Sons case, supra.
9. In K.S. Shivadevamma and Ors. v. Assistant Commissioner and Land Acquisition Officer and Anr., question regarding the extent of deductions legally permissible arose once again. That was a case where the Court was dealing with acquisition of land which under the relevant Building Rules, could have been utilised for building purposes only provided 53% of the land was left out. The Court held that as a general rule, 33 1/3% was required to be left out for roads and other amenities and that the total extent of deduction to the extent of 53% on account of development was justified. To almost same effect is the decision of the Supreme Court in Uttar Pradesh Avas Evam Vikas Parishad v. Jainul Islam and Anr.
10. It would appear from a conspectus of the above pronouncements that the extent of permissible deductions on account of development of land which was on the date of the notification undeveloped has been to the extent of 20% on account of the land to be set apart for roads and drainage etc., and 20% to 33% on account of expenditure to be incurred on the laying of the roads, drainages, sewers, electricity and water lines
etc. It is also evident that in certain situations where the land under acquisition has not been found to be developed or in the vicinity of a developed area, certain additional deductions to the extent of 12% have been permitted on account of the time that such development would take to bring the acquired area at par with the land covered by the comparable sale transaction. Suffice it to say that the rule judicially evolved for deductions on account of development of lands to equate a site sold in the developed area with the land under acquisition have gone up to 65% depending upon the facts and circumstances of each case.
11. We may at this stage refer to a Full Bench decision of this Court in Assistant Commissioner and Land Acquisition Officer, Karwar v. Kamalabai Kom Laxman Metri. That also was a case where the question regarding the extent of deductions permissible on account of the development charges arose for consideration. A Single Bench of this Court was of the opinion that the view taken in Brig, Sahib Singh Kalha’s case, supra, had been wrongly interpreted and applied by a Division Bench of this Court in Assistant Commissioner v. Sarasubai Ratnabai. A reference was accordingly made to the Full Bench on the following two aspects.-
“(1) Whether in respect of costs of development, deduction can be made to the extent of 53% or to the extent ranging between 20% to 33% of the cost or price of land and not more under the law laid down by the Supreme Court in Brig. Sahib Singh’s case, supra?
(2) Whether the Division Bench in its decision of Sarasubai’s case, supra, was correct and justified in reading and laying down that the Supreme Court’s decision has laid down the law to the effect that to arrive at a market value of the larger tracts of land at least 53% of the price fetched for smaller site shall be deducted towards development charges?”
12. The Full Bench examined the issue regarding the extent of permissible deductions on account of development charges and came to the conclusion that the decision in Brig. Sahib Singh’s case, supra, prescribed an upper limit of permissible deduction at 33% only. The Court was of the view that the decision in Brig. Sahib Singh’s case, supra, had not been correctly appreciated by the Division Bench of this Court ,who disposed of miscellaneous first appeal referred to earlier and that there was an arithmetical mistake in the judgment delivered by the Supreme Court in Administrator General of West Bengal’s case, supra. The Court observed.-
“From the above analysis, it is clear that in Brig. Sahib Singh’s case, supra, the Supreme Court has held that the deduction on account of development cost can range between 20% to 33% depending on the situational factors pertaining to the land acquired. But, with due respect, it will be a clear misreading of the judg-
ment if it is to be held that the Supreme Court in the said case has upheld deduction of 53% (i.e., 20% + 33%).
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On reading of the above said paragraph, with great respect we may venture to point out that it is not only that the Division Bench of this Court has committed the said mistake of reading 53% as permissible deduction by way of development cost in Brig. Sahib Singh’s case, supra, but we may dare to observe that even the Supreme Court also appears to have caused a similar arithmetical error in case of the Administrator General of West Bengal, supra……”.
13. On the basis of the above the Full Bench concluded that the optimum deduction that was legally permissible on account of the development of the land could not go beyond 33%.
14. The issue arose once again before a Single Bench of this Court in Saibanna v. The Assistant Commissioner and Land Acquisition Officer of Gulbarga, Gulbarga District. The decision of the Full Bench was it appears relied upon in support of the proposition that the permissible deductions could not on account of development charges exceed 33 1/3%. The Single Judge however found that the view taken by the Full Bench was not in consonance with the decisions of the Supreme Court, delivered after the year 1993. Relying upon the decisions of the Supreme Court in M/s. Hasanali Khanbhai and Sons case, supra; Smt. Basavva’s case, supra and Ratanlal Gupta’s case, supra, the Single Judge held that deductions were in the light of the said subsequent decisions permissible upto 53% of the value of the land in question. Although the Single Bench did not in so many words say so, yet the decision of the Full Bench was in the light of the subsequent pronouncement of the Supreme Court ignored as being per incuriam. We entirely agree with the view expressed by the learned Single Judge that deductions on account of development of the land under acquisition need not be limited to 33% only as has been declared by the Full Bench. In our view, the decision of the Supreme Court in Brig. Sahib Singh’s case, supra and that delivered in Administrator General of West Bengal’s case, supra, do not suffer from any arithmetical or other mistakes insofar as the same held that deductions could go upto 53% of the value of the land. With respect we wish to point out that the Full Bench does not appear to have noticed the distinction between deduction required to be given on account of setting apart of the land for roads and drainages and expenses to be incurred for development of such roads and drainage and other amenities. While deductions on account of setting apart of land could go upto 20% the expenses for development of roads and drainage system and other amenities could range between 22% to 33%. It is for that reason that the Supreme Court had in Administrator General of West Bengal’s case, supra, held that the deductions on account of development of undeveloped lands under acquisition could go upto 56%. That position is in our opinion amply reiterated by the subsequent decisions of the Supreme Court to which we have referred in the earlier paras of this judgment.
15. We have therefore no hesitation in holding that the limit of deductions on account of development of undeveloped land under acquisition need not be restricted to 33 1/3 per cent only. We must in fairness to Mr. Patil, Counsel appearing for the appellant mention that he did not dispute the above proposition. He fairly conceded that the view taken by the Full Bench was in ignorance of the subsequent decisions of the Supreme Court, apart from the fact that the view did not represent a correct understanding of the decision in Brig. Sahib Singh’s case, supra and that given in Administrator General of West Bengal’s case, supra.
16. The next question then is as to what should be the extent of deductions in the instant case. The basis on which the claimants stake their claim for higher compensation, admittedly is a transaction that had taken place between the A.P.M.C. on the one hand and the Merchants Association on the other. This transaction is represented by a document which has been produced and marked as Ext. P. 7. It was feebly argued by Mr. Sridharan, that the document had not been properly proved and could not therefore be relied upon. That submission needs notice only to be rejected. We say so for more than one reason. In the first place, the document had been produced in the course of the proceedings before the Reference Court. The A.P.M.C. which is the seller as per the said document did not choose to deny the execution of the document as it ought to have done if it really disowned the transaction. That apart, the documentary evidence produced by the claimants in the form of the resolution passed by the A.P.M.C. and the correspondence that has been exchanged between the purchaser, Talikote Arhat Merchants Association and the A.P.M.C. as also the order passed by the Chief Marketing Officer, Bangalore, granting permission to the A.P.M.C. to transfer the site covered by the said deed at Es. 20 per sq. foot, sufficiently shows that the transaction had taken place and that the same was genuine. The fact that the A.P.M.C. for whose benefit the lands under acquisition have been notified and acquired had itself sold a parcel of the land within the A.P.M.C. yard as per the above documents leaves no manner of doubt that the said transaction was based on the market value of the property transferred by it. Indeed Mr. Sridharan, did not contend that the transaction represented an inflated price or that the same was not a genuine transaction. What he argued was that the price may have been exaggerated on account of the special interest which the Association had in acquiring the land in question for its office. That submission may have carried conviction if only the beneficiary A.P.M.C. had stepped into the witness-box and explained the circumstances in which and the basis on which the price of Rs. 20/- per sq. foot had been determined by it. It is noteworthy that neither the A.P.M.C. nor the Land Acquisition Officer chose to adduce any evidence before the Reference Court. It is also significant to note that the execution of the document
or the genuineness of the transaction has not been assailed even in the Memo of Appeal by either the A.P.M.C. or the Land Acquisition Officer. In the circumstances, we have no hesitation in holding that the transaction between the A.P.M.C. and the Merchants Association in relation to the piece of land referred to earlier was a genuine transaction and represented the price which would normally be fetched by the land transferred thereby. The said transaction can therefore constitute a reference point for purposes of determining compensation for the land under acquisition.
17. That brings us to the question as to the extent of deductions that should be permitted by reason of the transaction in question being in respect of a smaller parcel of land and the issue regarding the determination of compensation being qua a much larger area. As noticed earlier the deductions are broadly speaking on two accounts, namely (1) the deduction on account of the land required for roads and drainage etc.; and (2) deductions on account of the expenses required for development of such roads and amenities. Insofar as deductions on account of provision for space for road and drainage is concerned, the same has been almost uniformly at the rate of 20%. As regards deductions on account of development expenses of such Roads, drainages and other amenities is concerned, the same has ranged between 22% to 33 1/3%. Super-added to these are deductions which the Supreme Court has in certain cases permitted to the tune of 12% or so on account of the distance between the land which formed the reference point and the land under acquisition. In all therefore the deductions could reasonably be from 53% onwards till 65% or so. The Court below has after deducting 53% granted a further deduction of 12% towards waiting period for development of the land. It has in the process determined the total percentage of deduction at 65% and awarded Rs. 7 per sq. foot on that basis. That amount more or less represents the true market value of the land in question at the relevant point of time. We however feel that having regard to the fact that the land under acquisition was in the close proximity of the A.P.M.C. yard itself where the sale in favour of the Merchant Association had taken effect as also the fact that the entire area surrounding the land in question had already been developed and institutions like a College, a High School and a Hospital had already been set up, deduction of 65% may not be wholly justified. In our opinion, the deduction could be fairly limited to 60% of Rs. 20 per sq. foot at which the A.P.M.C. had sold the land. This would mean that the owners would be entitled to compensation at the rate of Rs. 8 per sq. foot instead of Rs. 7 per sq. foot awarded by the Reference Court. The appeal filed by the claimant would therefore succeed but only in part and to the said extent. The cross-appeals filed by the beneficiary A.P.M.C. as also the Land Acquisition Officer shall have in consequence of what we have said above to fail.
18. In the result M.F.A. No. 1216 of 1996 is partly allowed and the amount of compensation awarded by the Reference Court enhanced to Rs. 8 per sq. foot with all consequential statutory benefits and proportionate
costs. M.F.A. Nos. 847 and 1207 of 1996, however fail and are hereby dismissed but in the circumstances without any orders as to costs.