Holding

Certified copies of sale deeds are admissible as secondary evidence but cannot be relied upon to determine market value unless the vendor or vendee is examined as a witness; therefore the compensation fixed by the Subordinate Judge is upheld.

Summary

The Supreme Court examined an appeal by Kummari Veeraiah and others challenging the compensation awarded for 69 acres and 25 gunthas of land acquired by the State of Andhra Pradesh for house‑sites. The petitioners relied on certified copies of several sale deeds, claiming a market value of Rs.40 per square yard, while the Subordinate Judge had fixed compensation at Rs.7 per square yard after a deduction of Rs.3 for developmental expenditure. The Court held that although certified copies of sale deeds are admissible as secondary evidence under s.51A of the Land Acquisition Act, they cannot be used to determine market value unless the vendor or vendee is examined as a witness to explain the consideration and circumstances of the sale. Moreover, the sale deeds presented were executed shortly before the notification under s.4(1) and involved only small parcels, rendering them unreliable for valuing the large acquisition. Consequently, the Court affirmed the Subordinate Judge’s award as fair and reasonable and dismissed the petition.

Issues considered

Whether certified copies of sale deeds can be relied upon to determine market value of land acquired under the Land Acquisition Act.
Whether sale deeds executed shortly before the notification under s.4(1) are admissible for fixing compensation.
Whether a deduction can be made from sale deed values to arrive at appropriate compensation.
Whether the compensation fixed by the Subordinate Judge (Rs.7 per sq. yd.) is reasonable and lawful.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 23(1), s. 4(1), s. 51A, s. 5-A

Subjects

Land acquisitionCompensationMarket valueSecondary evidenceSale deedsDeductionComparable salesSection 4(1) Land Acquisition Act

Judgment

I
KUMMARI VEERAIAH AND ORS. A
.,. v.
( STATE OF ANDHRA PRADESH

FEBRUARY 28, 1995

[K RAMASWAMY AND B.L. HANSARIA, JJ.) B

Land Acquisition Act, 1894-Sections 4(1) & 23(1)-Notijication u/s
r- 4(1}-Detennination of compensation-Comparable sales-Certified copies
of sale deed-Admissible in evidence as secondary evidence-Vendor or ven-
J,1 dee to be examined as witness-Nature and situation of respective lands are c
~levanl-When suitable deduction to be made.

~ertain land to the extent of 69 acres and 25 gunthas was acquired
to provide ho-use-sites. Notification u/s 4(1) of the Land Acquisition Act
was published on March 4, 1985 and possession was taken dispensing With
the inquiry u/s S·A. The Land Acquisition Officer determined compensa- D
tion between Rs. 6000 to Rs. 10,000 per acre. Petitioners claimed compen·
-)- sation at the rate of Rs. 40 per Sq. yd. On reference u/s 18, the Subordinate
Judge determining compensation at Rs. 10 per sq. yd. d~ducted Rs. 3
towards developmental expenditure ~nd then fixed the market value at Rs.
7 per sq. yd. Dissatisfied, the petitioner as ftll as the State filed the E
appeals in the High Court. The High Court dismissed both the appeals
and held that raxation of compensation by the reference court was fair and
reasonable and that the certified copies of the sale deeds brought as
evidence on record did not reflect the true and correct market value.

,-\ In this appeal the petitione~ admitted that all the sale deeds ad- F
duced were of small extents as the lands were situated within the municipal
limits, but those sale transactions furnished the basis to determine the
-< compensation of Rs. 40 per sq. yd. and they could not be rejected as being
of small extents.

Dismissing the petition, this Court
G

-- HELD: 1. It is true that certified copies of the sale deeds are
admissible in evidence as secondary evidence under s.51A of the Land
Acquisition Act since owners would be reluctant to part with their original
sale deeds. But unless the vendor or vendee has been examined as a witness H
379
380 SUPREME COURT REPORTS (1995] 2 S.C.R.

A to testify to the consideration paid, their specific knowledge and the
circumstances in which the sale deed came to be executed, nearness to the
lands etc., the sale deeds cannot be relied on to determine market value of
the acquired lands. The true nature and situation of the respective- lands
. are relevant and germane as comparable sales for determination of the
compensation and are required to be brought on record through admis-
B sible evidence and tested on the anvil of common experience. The High
Court was right in its finding that Ex.A-2, ihough related to the same land,
was brought into existence just few days prior to the date of tlie publication -)
r
of the notification under s.4(1) and other similar documents also came to - I
be registered during the said period to boost up the prices. (383-E-HJ v/
c
2. Suitable deduction may be made to the value based on the sale
deeds and compensation may be determined on that basis. But, first it is
to be ascertained whether the document is genuine. Then, under what
circumstances it came to be executed and the special advantageous feature
for which the sale came to be made. if the documents are genuine and the •
D acquired land possessed of the same or similar special· advantageous
features, then reasonable price is required to be determined. Similarly, it
must be shown that land is situated in a developing area etc. When such
evidence is adduced, it is required to be considered on the touchstone of _
potentiality of the land, human conduct and probabilities. If the court
E finds that the land possessed those potentialities and could be purchased
as house site, then only suitable deduction needs to be made considering
the relative extent of the land covered by the sale/sales and the land under
acquisition. True market value is required to be determined, it must not
be on feats of imagination. Since such evidence was not brought on record,
F the evidence of sale transactions render little assistance in determining the
market value of the acquired lands. Moreover, as the two colonies were in
slum area, but for the acquisition, there would be no scope for develop-
ment. (384-D-H, 385-A]

CIVIL APPELLATE JURISDICTION: Special Leave Petition (C)
G No. 4021 of 1995.
.r--
From the Judgment and Order dated 20.12.93 of the Andhra Pradesh
High Court in A.No. 2698 of 1987.

H D. Prakash Reddy and Mrs. D. Bharathi Reddy for die~"
I
K VEERAIAH v. STATE OF AP. 381

The following Order of the Court was delivered : A
This petition arises from the judgment and decree of the High Court
of Andhra Pradesh dated December 20, 1993, in Appeal No. 2698/87 and
the counter appeal filed by the State. The land to the extent of 69 acres
and 25 gunthas situated in Bhongir municipality in Nalgonda district of
Andhra Pradesh, was acquired to provide house-sites. The notification B
under s.4(1) of the Land Acquisition Act 1 of 1894 (for short, 'the Act')
was published in the district gazette, as amended by the local amendment
on March 4, 1985. The possession thereof was taken on March 27, 1985
dispensing with the inquiry under s.5-A. The Land Acquisition Officer (for
short, 'the LAO') in his award dated March 27, 1985, determined the C
compensation to the lands varying between Rs. 6000 to Rs. 10,000 per acre.
Though petitioners claimed at the rate of Rs. 40 per sq. yd., on reference
under s.18, the Subordinate Judge, Bhongir, determined the compensation
at Rs. 10 per sq. yd., deducted Rs. 3 towards developmental expenditure,
and fixed the market value at Rs. 7 per sq. yd. Dissatisfied therewith, the
petitioner as also the State filed the appeals in the High Court. D
1' The High Court after appreciation of documentary sale deeds and
oral evidence relied on by the petitioners held that fixation of compensa-
tion by the reference court was fair and reasonable. Accordingly, dismissed
both the appeals of the claimants as well as the State. E
Learned counsel, Sri Prakash Reddy, in his usual thorough prepara-
tion and persuasive advocacy contended that though all the sale deeds are
of small extents, since the lands are situated within the municipal limits,
the sale transaction furnish the basis to determine the compensation as
claimed at Rs. 40 per sq. yd. and they cannot be rejected as being of small F
extents. He placed strong reliance on Ex.A-2, sale deed relating to the land
-'( in question dated February 12, 1985 and sale deeds, Ex.A-9, A-11 and A-17
etc., relating to the lands in the neighbourhood. The High Court after
consideration of the entire evidence held thus :

"Ex.A-2, which was strongly relied on by Sri Pratap Reddy, is dated G
12.2.1985 in respect of 400 sq. yds. situated in one of the acquired
survey numbers. The sale consideration is Rs. 16,000 and it works
out to Rs. 40 per sq. yd. It was pointed out by Sri Krishna
Koundinya that the vendor of the land covered by Ex.A-2 is none
else than the 5th claimant and the sale wls on 12.2.85, which was H
382 SUPREME COURT REPORTS [1995] 2 S.C.R.

A just a few days prior to the publication of the notification under
s.4(1) of the Act on 4.3.85. Therefore, the said sale cannot form
the basis for fixing the market value of a large extent of the land
in question. Ex.A-4, which is a sale deed dated 13.12.82, is in
respect of a very small extent of 140 sq. yds. of land sold for Rs.
7,000. Neither the vendor nor the vendee has been ex<>.mined.
B Ex.A-5 sale deed covers an extent of 700 sq. yds. sold for Rs.
15,000. The sale transaction took place on 23.2.85, which was a few
days prior to the notification. Ex.A-6 relates to the land situated
i.µ S.No. 1063 and the sale was on 28.2.85 just prior to the notifica-
tion. Ex.A-7 relates to a small extent of 167 sq. yds. of land situated
c in S.Nos. 121 and 123 and pertains to Ward No. 1 in Hasnabad
area. Exs. A-9 to A-11 relate ~o S.Nos. 1041, 1075 and 1056 and
they do not form part of the survey numbers of the acquired land
and are situated in Hasnabad area and they too do not provide
any useful guidelines for fixing the market value of the lands in
D question. Exs. A-13 and A-14 also telate to the sale of small extents
of lands in Kisan Nagar and there is no evidence to show the
distance between Kisan Nagar and the acquired lands. An extent
of 35 sq. yds. was sold under Ex. A-17 and the sale was on 13.3.85,
just prior to the notification. The sale included a small extent of
35 sq. yds. with basement for Rs. 40,000 and it is not possible to
E
rely on this document, as there is nothing to show as to the value
of the basement. The sales of lands in Gunj area under Ex.A-8 a
small extent of 300 sq. yrd. situated behind the club under and a
small extent of 300 sq. yds. situated behind the club under Ex.A-11,
cannot form the basis for fixing the market value of a large extent
F of land situated far away from the said plots. Ex.A-15 is the
judgment in OP No. 218/83 dated 19.4.84 relating to survey number
137 situated in Hasnabad. Ex.A- 16 is the award dated 14.8.82 and
it relates to survey Nos. 97 and 100. These documents are of no
help in arriving at the market value of the acquired lands. We have
G examined the documents produced by the claimants. Most of the
sales covered by the said documents are effected a few days prior
to the notification under s.4(1) of the Act, and they relate to small
extents. Applying the 'minus factors' mentioned in the decision of
the Supreme Court referred to above, the largeness of the area
H under acquisition has to be considered as a 'minus factor'. The
K VEERAIAH v. STATE OF AP. 383

land acquired is a large extent of 69 acres and 25 guntas. The A
original claimants are six in number. It will not be possible for the
claimants to find purchaser if such a large extent of land situated
in town, even if they are made into plots and sold. The entire land
is at a distance from the road without proper approach roads. The
land is uneven and requires filling-up. It is also remote from the B
developed localities like Gunj and market place. The acquired land
cannot be compared to small bits of land situated near the Gunj
and behind the club as evidenced by Exs.A-8, A-11 and A-17. The
sites covered by Exs. A-15 and A-16 are near business localities
and the entire land is contiguous to Ambedkar Nagar and Sriram
Nagar, which are slum areas, and cannot fetch the same value C
covered by the sale deeds produced by the claimants. Excepting
Ex.A-2, no other sale deeds covering the lands adjacent to the
acquired lands, are produced. As observed earlier, under Ex.A-2
the vendor is claimant No. 5, and as such, no reliance can be placed
on the said document".
D
On the basis of the above consideration and finding it was concluded
that the sale deeds do not reflect the true and correct market value and
the compensation determined by the Subordinate Judge, therefore, was
found to be proper and reasonable.
E
It is true that the certified copies of the sale deeds are admissible in
evidence as secondary evidence under s.51A of the Act since owners would
be reluctant to part with their original sale-deeds. But unless either the
vendor or the vendee has been examined as witness to testify not only the
consideration paid but also their specific knowledge and the circumstances p
in which the sale deed came to be executed nearness to the lands etc., the
sale deeds cannot be relied on to determine market value of the acquired
lands. The true nature and situation of the respective lands are relevant
and germane as comparable sales for determination Qf the compensation
and are required to be brought on record through admissible evidence and G
tested on the anvil of common experience. Therefore, by mere marking the
documents Exs. A-3, A-4, A-8 and A-10 by themselves do not amount to
proof of the afore-mentioned factors. The High Court rightly held that the
documents cannot be relied upon. The High Court is also right in its
finding that Ex.A-2 though relates to the same land, it was brought into
existence just few days prior to the date of the publication of the notifica- H
\

384 SUPREME COURT REPORTS [1995] 2 S.C.R.

A tion under s.4(1) to boost up the prices and other similar documents also
'
came to be registered during the said period.

It is common knowledge and experience that the proposal for ac-
quisition take long time for arriving at a decision. In the mean time, it
would be an open cards and known to everyone, in particular, to the owners
B of the land and persons in the neighbourhood. Therefore, it is not uncom-
mon to have sale deeds executed and registered in the interregnum so as
to boost the value of the acquired lands. The High Court had, therefore,
rightly excluded the documents. It is true that Ex.A-4 was executed as early
as December 19,1982 for an extent of nearly 700 sq. yds. which considera-
C tion worked out at Rs. 40 per sq. yd., but neither vendor nor vendee was
examined. The lands are situated at a distance of 1 k.m. Whether a willing
buyer would offer the same price when a large extent of land is offered for
sale in an open market on a free bargain, either in one lot or different lots,
in comparison with small piece or pieces of land? The answer obviously is
D no.

It is then contended that suitable deduction may be made to the value
determined on the basis of Ex.A-4 and compensation be determined on
that basis. We find the application of that principle also would be fraught
with injustice and needless burden on the State exchequer. First, it is to be
E ascertained whether the document is a genuine document If it is found to
be so it is required to be examined under what circumstances the document
came to be executed and the special advantageous feature for which the
sale came to be made. Whether the land under acquisition possess the
same special advantages? In case it is found that the documents are
F genuine and the acquired land possessed of the same or similar special
advantageous features, then reasonable price is required to be determined
by giving suitable deduction depending upon the extent of land covered by
-~
the sale transaction and the acquired land. When a large extent of land is
available for house sites and commands market for sale in bits, then a
prudent owner as a part of normal human conduct, he would get a layout
G prepared and sanction obtained from the competent authority and would
offer the plots for sale. Similarly, it must be shown that land is situated in
a developing area etc. When such evidence is adduced, it is required to be
considered on the touchstone of potentiality of the land, human conduct
and probabilities. If the court finds that the land possessed those poten~
H tialities and could be purchased as house site, then only suitable deduction -
I
K VEERAIAH v. SfATEOF AP. 385

need to be made considering the relative extent of the land covered by the A
sale/sales and the land under acquisition. True market value is required to
be determined, then it must not be on feats of imagination. Since such
evidence was not brought on record, the evidence of sale transactions
render little assistance to determine market value of the acquired lands.
Moreover, the two colonies are· in slum area. So, but for the acquisition,
there would be no scope for development.
B

It being a pure appreciation of evidence-on-record, we do not find
any error of law committed by the Subordinate Judge or the High Court
in not relying upon sale deeds. It is next contended that the witness has
stated that the land purchased under Ex.A-14 is by the side of the acquired C
land and the Subordinate Judge and High Court were not right in their
conclusion that the witness did not mention the nearness of the land. So,
the error is required to be corrected. It is true that the witness has stated
that the lands are nearer to the land under acquisition. But the witness has
not specifically stated the distance between the two lands as pointed out
by the Subordinate Judge and the High Court. It also being a fact based D
on appreciation of evidence, we find no error of law in that behalf. The
High Court, therefore, was right in confirming the determination of the
compensation by tlle subordinate court. As seen the LAO had determined
the compensation at the rates ranging between Rs. 6,000 to Rs. 10,000 per
acre. The subordinate judge has increased to Rs. 7 per sq. yd. In other E
words, nearly Rs. 34,000 per acre.

In that fact-situation, determination of the compensation by the High
Court or Subordinate judge cannot be held to be illegal or arbitrary
warranting interference. The petition is accordingly dismissed.

AG. Petition dismissed.

-.,