SPECIAL DEPUTY COLLECTOR AND ANR. ETC.versusKURRA SAMBASIVA RAO AND ORS. ETC.

         SPECIAL DEPUTY COLLECTOR AND ANR. ETC.                               A
                                     v.
             KURRA SAMBASIVA RAO AND ORS. ETC.

                             APRIL 29, 1997

           [K. RAMASWAMY, S. SAGHIR AHMAD AND                                 B
                    G.B. PATTANAIK, JJ.]

      Land Acquisition Act, 1894 :

       S. 18, s. 23(1), 23(1-A); and 30(1)(a) of the amendment Act-Com- C
pensation-Acquisition of 97 acres of agricultural land-Possession taken on
20.6.1981-Award made by Land Acquisition Officer on 19.6.1982 awarding
compensation @ Rs. 22, 940 per acre-Reference Court enhanced compensa-
tion to Rs. 1,00,000 per acre-High Court further enhanced compensation to
Rs. 23.50 per sq. yd. relying on a sale deed for 250 sq. yd. of land-Held, High
Court erred in determining compensation-Claimants are entitled to compen- D
sation @ Rs. 50, 000 per acre-Burden of proof is on the claimant to establish
before reference court that land was capable offetching higher market value
than awarded by Land Acquisition Officer-Factors relevant to assessment of
compensation-Explained-Transitional provisions of s. 30(1)(a) of the
amendment Act applicable-Claimants entitled to benefit of S. 23(1-A).           E
      KS. Paripooman v. State of Kera/a & Ors., [1994) 5 SCC 593, followed.

      Periyar and Pareekanni Rubbers Ltd. v. State of Kera/a, [1991) 4 &CC
195; Basant Kumar & Ors v. Union of India & Ors., [1996) 11 SCC 542;
Special Land Acquisition Officer, Dharwad v. Tajar Hanifabi (Smt), [1996)     F
10 SCC 627; Agn'cultura/ Produce Market Committee v. Land Acquisition
Officer and Asstt. Commissioner & Anr., [1996) 10 SCC 629; Special Tahsil-
dar (LA) P. W.D. Schemes, Vijaywada v. MA. Jabbar, [1995 2 SCC 142 and
Khanna Improvement Trust v. Land Acquisition Tribunal & Ors., (1995 2
sec 557, relied on.                                                           G
     CIVIL .APPELLATE JURISDICTION : Civil Appeal Nos. 3697-
3794 of 1997 Etc.

      From the Judgment and Order dated 233.94 of the Andhra Pradesh High
Court in AS. Nos. 1385-90, 1439-1444, 1449-80, 1505-57 and 2331of1991.    H
                                   1107
    1108                    SUPREME COURT REPORTS                (1997] 3 S.C.R.

A         P.P. Rao, Sudhir Chandra Agarwal, K. Amreshwari, D. Prakash
    Reddy, Guntur Prabhakar, G.N. Reddy, Nindini Gore, A. Venkateswar
    Rao, G. Venkatesh, N. Annapoorni, P.N. Niroop, S. Muralidhar, Sanjay
    Parikh, V.G. Pragasam, Tara Chandra Sharma, Rajani K. Prasad and G.
    Prabhakar for the appearing parties.

B          The following Order of the Court was delivered :

           Delay condoned.

           Substitution ordered.

c          Leave granted.

           This batch of appeals relates to the acquisition of the lands of 97
    acres 42 cents of land situated in the outskirts of the Tenali town of Guntur
    District in the State of Andhra Pradesh. The lands were acquired for the
D   development of the colony for the weaker sections - middle income group
    persons - etc. The notification under Section 4(1) of the Land Acquisition
    Act was published on December 9, 1980. The Land Acquisition Officer
    awarded compensation @ Rs. 22,940 per acre for levelled up land and Rs.
    21, 700 per acre for unlevellcd land. On reference, the Subordinate Judge,
    Tenali by his award and decree, dated February 26, 1991 award uniform
E   compensation at the rate of Rs. 1,00,000 per acre. On appeal by the
    appellants as well as the claimants - respondents, the High Court by
    judgment and decree dated March 23, 1994, further enhanced the compen-
    sation to Rs. 23.50 per sq. yard; thus it allowed the appeals of the respon-
    dent-claimants and dismissed those of the appellants. Thus, these appeals
F   by special leave and cross appeals by the respondent-claimants for further
    enhancement of compensation. They are disposed of by common order.

        The High Court, after rejecting the entire evidence adduced by the
  claimants relied only on a sale deed, Ex. A-12 dated May 19, 1978 relating
  to a piece of land of an extent of 250 sq. yard with a thatched house. It
G worked out compensation at the rate of Rs. 48 per sq. yard; on that basis,
  it gave margin of deduction of 50% of the awarded compensation, namely,
  at the rate of Rs. 23.50 per sq. yard. The question for consideration is :
  whether the principle laid down by the High Court is correct in law? The
  Land Acquisition Officer in his award had referred to the topographical
H features of the land thus.
     SPECIAL DEPUTY COLLECTOR v. K.S. RAO                        1109

"The lands under acquisition form a compact block surrounded on          A
the north by Tenali-Guntur Railway Track, on the east by lands
owned by South Central Railways. On the south by lands which
abut the Tenali-Guntur Highway road and also built up area in
T.S. No. 22 (in the case for T.S. No. 27) and on the west by Agril
lands. T.S. No. 26 and 29 which fall in the compact block have
already been acquired. The beneficiaries have raised a few huts
                                                                         B
here and there. R.S. No. A-250 also forms part of the block and
it is under acquisition for house sites for weaker sections separately
under a separate scheme.

    All the lands in the block under acquisition barring a few I         C
veiled up fields are similar because of the following reasons.

(1) All the lands are more or less equally inaccessible from the
township.

(2) All the lands (excepting few levelled up fields) arc read as wet
                                                                         D
paddy fields similar in soil fertility and productivity.

(3) Excepting the few levelled on plots to level each of the under
acquisition, similar levelling up cost is required to be incurred
which works out to approximately Rs. 60,000 per acre in the most         E
conservative estimate. All the lands under acquisition have equal
potentiality or otherwise of being used as house sites.

   In between the block of lands under acquisition, there is chan-
nel running in North-South direction and it touches the Guntur           F
Narakodur Tenali Road. The channel is now not in use.

    A metal road has been formed along with the channel by the
side of TS. 15 to make across from truck road to the built up area
in T.S. Nos. 23 and 22.
                                                                         G
   T.S. No. 142 and T.S. Nos. 12, 13, 14 and 16 which are not
under acquisition field in between the lands under acquisition and
the Guntur-Narakodur Tenali Road. Unless these fields are
developed into Township, there is no prospect of the lands under
acquisition features of a township.                                      H
    1110                  SUPREME COURT REPORTS                  [1997) 3 S.C.R.

A                Only a few fields stand classified in accounts as semidry and
             all others stand classified as wet. Notwithstanding the variation in
             classification, all the lands under acquisition executing a few
             levelled up plots are wet paddy fields on ground. The few lands
             which were not grown with paddy were cultivated with dry crops
             like banana, Sugar and chillies. To make the lands under acquisi-
B            tion suitable for house sites, the levels have to be raised by about
             2 to 3 feet to make them fit for building purposes. There can be
             no two opinions about the difficulty that is presently being ex-
             perienced by persons who purchase Agricultural lands in Tenali
             Town in getting earth rooted to those lands for levelling them up.
c            From the experience of the Municipality which understood levell-
             ing work for provision of houses to weaker sections of the society,
             it can be said with certainty that the cost involved in levelling up
             these lands to make them fit for residential purposes would be not
             less than Rs. 60,000 per acre."

D
         On the basis of the above factual material collected, the Land
  Acquisition Officer passed his award. The question arises : whether the
  acquired lands possessed of potential value for being used as building sites?
  The High Court has found, as pointed out by the Shri Sudhir Chandra,
  learned senior counsel for the claimants, that the lands are possessed of
E potential value for being used for building purpose. It is well settled legal
  position that the claimants stand in the position of plaintiffs. Burden of
  proof is always on the claimants to prove by adduction of cogent and
  acceptable evidence that the lands are capable of fetching higher compen-
  sation than what is determined by the Land Acquisition Officer, which is
F only an offer. It the award is accepted without protest, it binds the parties.
  It is the bounden duty of the court to evaluate the evidence on the basis
  of the human conduct, even if no rebuttal evidence is produced by the Land
  Acquisition Officer, to assess the market value applying the relevant tests
  laid down by this Court in bead role of decisions. In Periyar and Pareekanni
  Rubbers Ltd. v. State of Kera/a, (1991] 4 SCC 195, this Court considered
G the entire case law as on that date, on the principle of determination of
  market value and the relevant test laid in that behalf. The burden of proof
  that the amount awarded by the Land Acquisition Officer/Collector is not
  adequate is always on the claimant. The burden is to adduce relevant and
  material evidence to establish that the acquired lands are capable of
H fetching higher market value than the amount awarded by the Land Ac,
             SPECIAL DEPUTY COLLECTOR v. K.S. RAO                      1111

quisition Officer/Collector or that the Land Acquisition Officer/Collector      A
proceeded on a wrong premise or applied a wrong principle of law. The
object of the enquiry in a reference under Section 18 of the Act is to bring
on record the price which the land under acquisition was capable of
fetching in the open market as on the date of the notification. The relative
situation of the acquired land which is the subject of the sale transaction,
the nature of the land, its suitability, nature of the use to which the lands
                                                                                B
are put to on the date of the notification, income derived or derivable from
or any other special distinctive feature which the land is possessed of and
the sale transactions in respect of lands covered by the same notification,
are all relevant factors to be taken into consideration in determining the
market value. It is, therefore, the paramount duty of the courts of facts to    c
subject the evidence to very close scrutiny, objectively assess the evidence
tendered by the parties on proper consideration thereof in correct perspec-
tive to arrive at adequate and reasonable market value. The attending facts
and circumstances in each case would furnish guidance to arrive at the
market value of the acquired lands. It is equally relevant to consider the      D
neighbourhood lands as are possessed of similar potentiality or any ad-
vantageous features or any special circumstances available in each case.
The Court is required to take into account all the relevant considerations.
The Court is required to keep at the back of its mind that the object of
assessment is to arrive at reasonable and adequate market value of the
lands. In that process, though some .guess work is involved, feats of im-       E
 agination should be eschewed and mechanical assessment of the evidence
should be avoided. Even in the absence of oral evidence adduced by the
 Land Acquisition Officer or the beneficiaries the judges are to draw from
 their experience the normal human conduct of the parties and bona fide
 and genuine sale transactions arc guiding star in evaluating the evidence.
                                                                                F
 Misplaced sympathies or undue emphasis solely on the claimants' right to
 compensation would place very heavy burden on the public exchequer to
 which other everyone contributes by direct or indirect taxes.

       Whether fair and reasonable and adequate market value is always a
question of fact depends on the evidence adduced, circumstantial evidence, G
and probabilities arising .in each case. The guiding star or the acid test
would be whether a hypothetical willing vendor would offer the lands and
a willing purchaser in norm_al human conduct would be willing to buy as a
prudent man in normal market conditions prevailing in the open market in
the locality in which the acquired lands are situated as on the date of the H
    1112                  SUPREME COURT REPORTS                  (1997] 3 S.C.R.

A notification under Section 4(1) of the Act; but not an anxious buyer dealing
    at arm's length with throw away price, nor facade of sale or fictitious sales
    brought about in quick succession or otherwise to inflate the market value.
    The judge should sit in the arm chair of the said willing buyer and seek an
    answer to the question whether in the given set of circumstances as a
    prudent buyer he would offer the same market value which the court
B   proposed to fix for the acquired lands in the available market conditions.
    The court is, therefore, enjoined with the bounden duty of public function
    and judicial dispensation in determination of the market value of the
    acquired land and compulsory acquisition.

C        The best evidence of the value of property arc the sale transaction
  in respect of the acquired land to which the claimant himself is a party;
  the time at which the property comes lo be sold; the purpose for which it
  is sold; nature of the consideration; and the manner in which the transac-
  tion came to be brought out. They are all relevant factors. In the absence
D of such a sale deed relating to the acquired land, the sale transactions
  relating to the neighbouring lands in the vicinity of the acquired land. In
  that case, the features required to be present are; it must be within a
  reasonable time of the date of the notification; it must be a bona fide.
  transaction; it should be a sale of land similar to the land acquired or land
  adjacent to the land acquired; and it should possess similar advantageous
E features. These are relevant features io be taken into consideration to
  prove the market value of the acquired land as on the date of the notifica-
  tion published under Section 4(1) of the Act. This would be established by
  examining either the vendor or the vendee. If it is proved that they are not
  available, the scribe of the document may also be examined in that behalf.
F Section 51-A of the Act only dispenses with the production of the original
  sale deed and directs to receive certified copy for the reason that parties
  to the sale transaction would be reluctant to part with the original sale deed
  since acquisition proceedings would take long time before award of the
  compensation attains finality and in the meanwhile the owner of the sale
  deed is precluded from using the same for other purposes vis-a-vis this
G land. The marking of the certified copy is per se is not admissible in
  evidence unless it is duly proved and the witnesses, viz., the vendor or the
  vendee, are examined. This principle has been repeated in a catena of
  subsequent decisions of this Court.

H          In Basant Kumar & Ors. V. Union of India & Ors., [1996) ll sec 542,
             SPECIAL DEPUTY COLLECTOR v. KS. RAO                       1113

this Court pointed out that doctrine of equality in determination of the A
payment of same compensation to all claimants covered by the same
notification, is not a good principle. Treating the entire village as one unit
and uniformly determining compensation on that basis not sustainable in
law. The Court must always determine market value prevailing as on the ·
date of notification under Section 4( 1) of the Act and not what was claimed
by the parties. Even estimate of claimant is not decisive. The ~talus of the
                                                                               B
claimant is irrelevant. It was reiterated that while determining the compen-
sation under Section 23(1), the Court should sit in the arm chair of a
prudent willing purchase in the open market and see whether he would be
willing to offer the same price as is proposed to be fixed by Land Acquisi-
tion Officer as Market value for the same or similar lands possessed of all    c
the advantageous features. This Test should always be kept in mind in
analysing the evidence and the Court should answer affirmatively taking
into consideration all the relevant factors. It feats of imagination are
allowed the sway, the Land Acquisition Officer/Collector would overstep
judicial . decisions/quasi-judicial orders and would land in misconduct D
amenable to disciplinary law. In that case, the compensation as fixed by the
Land Acq uisiticin Officer was reduced. In Special Land Acquisition Officer,
Dharwad v. Tajar Hanifabi (Smt.), (1996] 10 SCC 627, the question related
to determination of the market value in respect of 6 acres of land. When
the land in fact was used for agricultural purpose, no prudent and willing
vendee would offer the market value on square foot basis. Thus determina- E
tion of compensation on the basis of square foot basis on the foot of a small
sale transaction was held to be a wrong principle of law and accordingly
the determination of compensation was reduced from Rs. 1,96,20 per acre
to 45,000 per acre.
                                                                               F
       In Agricultural Produce Market Committee v. Land Acquisition Of-
ficer and Assist. Commissioner & Anr., [1996] 10 SCC 629, same view was
reiterated. It was held that when a total 7 acres and odd of land was sought
to be acquired no prudent purchaser in the open market would offer to
purchase the open land on square foot basis that too on the basis of a few
small sale transactions. This Court pointed out that such fixation of the      G
market value was illegal and accordingly reduced the market value.

      It would thus be settled law that the Court is enjoined to determine
the market value on an objective assessment of the conditions prevailing in
the open market; the nature of the user of the land to which the land was      H
    1114                  SUPREME COURT REPORTS                    (1997] 3 S.C.R.

A put on the date of the notification, the situation of the land, the income
    derived therefrom and all other relevant attending circumstances. The
    market value so determined should be just, adequate and reasonable. In
    other words, it must be just equivalent to what the land is capable of
    fetching in the open market from a willing and prudent buyer. Therefore,
    the court is required to sit in the arm chair of a bona fide willing and
B   prudent purchaser in the open market and seek an answer to the question
    whether in the conditions prevailing in the market he would offer the same
    market value as the court has proposed.

           The High Court has relied upon the oral evidence adduced by the
C claimants in support of the claim. It is not in dispute, as even pointed out
    by the Land Acquisition Officer, that there is colony and railway shed etc.
    near the acquired lands. But the question is : whether on the date of the
    notification, the lands possessed of potential value and were fit for use as
    building site? On the basis of the evidence adduced before the Land
D   Acquisition Officer and the contents of the award which is always part of
    the record and material evidence, it is difficult to accept the contention to
    Shri Sudhir Chandra that the lands possessed of potential value for being
    used for building purpose. Except a small fraction of land, the lands arc
    agricultural lands. To make them fit for construction, even according to the
    conservative estimate, an amount of Rs. 60,000 per acre would be required.
E   So, no prudent purchaser in open market would be willing to purchase the
    said lands at the rate of Rs. 2350 per sq. yard and then spend Rs. 60,000
                                    It
    per acre to level up the same. would be figment of imagination to bdicve
    that a prudent builder would do that. The High Court, therefore, is clearly
    in error in treating the lands as fit fur building purpose and on that basis
F   determining the compensation after giving the deduction.

           The question, therefore, arises : what is the market value the lands
     were capable to fetch? In a reference under Section 18, as held earlier, the
     burden of proof always is on the claimants to establish that the lands are
     possessed of advantageous features and are, therefore, capable of fetching
G    higher market value than what is determined by the Land Acquisition
     Officer in his award under Section 11. In view of the fact that the High
     Court itself has rejected all the sale deeds except Ex.,A-12 which we are
     now constrained to reject, and as no other evidence is available, we cannot       -
     allow the appeals and dismiss the reference. The Court, instead of indulg-
H    ing into feats of imagination, should sit in the arm chair of a prudent willing
              SPECIAL DEPUTY COLLECTOR v. K.S. RAO                        1115

purchaser in the normal conditions of the market and seek answer to the           A
question whether he would be willing to offer the amount proposed by the
court, after taking into consideration all the features of the land existing as
on the date of the notification. In view of the material collected by the Land
Acquisition Officer himself as referred in the award, we think that after
taking into consideration all the relevant factors, the reasonable compen-
sation should be Rs. 50,000 per acre. The compensation is accordingly
                                                                                  B
awarded.

      The question then is : whether the claimants are also entitled to
additional amount under Section 23(1-A)? The notification under Section
4(1) of the Act was issued on December 9, 1980. The possession was taken          C
on June 20, 1981. The Amendment Act 68 of 1984 was introduced on the
floor of the House on April 30, 1982. Thus it is clear that possession was
taken prior to the introduction of Amendment Act. However, award under
Section 11 was made on June 19, 1982, i.e., after the introduction of the
Bill but before the Act came into force. It would be beneficial to refer to
the transactional provisions contained in Section 30(1)(a) of the Amend-          D
ment Act which reads as under :

         "30. Transitional provisions. - (1) The provisions of sub-section
         (1-A) of Section 23 of the principal Act, as inserted by clause (a)
         of Section 15 of this Act, shall apply, and shall be deemed to have      E
         applied, also to, and in relation to, -

         (a) every proceeding for the acquisition of any land under the
             principle Act pending on the 30th day of April, 1982 (the date
             of introduction of the Land Acquisition (Amendment) Bill,
             1982 in the House of the People, in which no award has been          F
             make by the Collector before that date;"

      In S. K Paripooman v. State of Kera/a & Ors., [1994] 5 SCC 593 the
Constitution Bench considered the effect of the transitional provisions in
Section 30(1)(a). The right to additional amount @ 12 per cent per annum
on enhanced compensation was held to be part of the component of G
determination of compensation. If the proceedings were pending as on the ·
date the notification under Section 4(1) came into force, the provisions of
the Amendment Act 68 of 1984 would apply. By operation of the transi-
tional provisions in Section 30(1)(a), the claimant is entitled to additional
amount @ 12 per cent per annum to be paid from the date of the H
    1116                 SUPREME COURT REPORTS                  [1997) 3 S.C.R.

A notification under Section 4(1) till the date of deposit into court and where
    the possession was already taken, from the date of the notification till
    taking of possession. Similar view was reiterated in Special Tahsildar (LA)
    P.W.D. Schemes, Vijaywada v. M.A. Jabbar, [1995) 2 SCC 142 and Khanna
    Improvement Trost v. Land Acquisition Tribunal & Ors., [1995) 2 SCC 142.
B   Accordingly, the respondent-claimants are entitled to payment of addition-
    al amount @ 12 per cent per annum from the date of the notification till
    date of taking possession as mentioned hereinabove.

          Payment of additional amount under Section 23(1-A) is a substantive
    right. Under those circumstances, by operation of the transitional
C   provisions in Section 30(1)(a), the claimants are entitled to the additional
    amount at 12% per annum under Section 23(1-A) from the date of notifica-
    tion under Section 4(1) till the date of taking possession. Instead of Rs.
    1,00,000 per acre, they are entitled to compensation at the rate of Rs.
    50,000 per acre in respect of all acquired lands with solatium at 30% on
    the enhanced compensation and interest @ 9% for one year from June 20,
D   1981 and on expiry thereof, @ 15% till date of deposit into the court; and
    additional amount. Consequently, the award and decree of the reference
    Court stand modified. The judgment of the High Court stands set aside.

           The appeals are accordingly allowed. As a result, the cross appeals
E    of the respondent-claimants stand dismissed. No costs.

     R.P.                                                     Appeals allowed.