STATE OF UTTAR PRADESH ETC.versusSMT. RAM KUMARI DEVI ETC.

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                            STATE OF UTTAR PRADESH ETC.                                    A
                                                v.
                              SMT. RAM KUMARI DEVI ETC.

                                     FEBRUARY 15, 1996

                       [K. RAMASWAMY AND G.B. PATTANAIK, JJ.)                              B

                  Land Acquisition Act, 1894:

                Sections 4( I), 11, 23( 1-A), 23(2) and 28-Award of compensation-In
         matters of compulsory acquisition, it is the solemn duty of the Court to assess   C
         reasonable compensation and to avoid needless burden on public exche-
         que1~Sale deeds brought into existence to inflate market value-Not to be
         accepted-In view of the State agreeing to pay at the rate of Rs. 30, 000 per
         acre, compensation to be detennined accordingly-Claimants entitled to
         statutory solatium, interest till date of deposit of compensation and addition-
         al amount on enhanced compensation.                                               D
              CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3814 Of
         1996 Etc.

              From the Judgment and Order dated 16.11.94 of the Allahabad High             E
         Court in F.A. No. 603 of 1993.

                  AB. Rohtagi, K. Mishra, Sudhanshu and R.B. Misra for the Appel-
         lants.

               M.N. Krishnamani, P.K. Jain, R.C. Verma and Ashok K. Srivastava,
         for the Respondents
                                                                                           F

                  The following Order of the Court was delivered :

                  Leave granted. We have heard learned counsel on both sides.

               Notification under Section 4(1) of the Land Acquisition Act 1of1894         G
         (for short, the 'Act') was published on September 14, 1985 acquiring 13.75
         acres for setting up the Government Degree College at Lalitpur, State of
         U.P. The Land Acquisition Officer in his award dated September 1, 1988
         made under Section 11 of the Act determined the compensation at the rate
         of Rs. 11,887.78 per acre. On reference under section 18 of the Act, the          H
                                              749
     750                    SUPREME COURT REPORTS                    [1996] 2 S.C.R.

 A District Judge by his award and decree dated April 21, 1990 determined
     the compensation at tlie rate of Rs. 5 per sq. ft. On appeal by the
     appellants, the High Court reduced the compensation to Rs. 3.30 per sq.
     ft. by judgment and decree dated November 16, 1994 in First Appeal No.
     603/93 etc. Thus these appeals by special leave.
 B         It is contended by Shri AB. Rohtagi, learned senior counsel for the
     appellants that the whole approach adopted by the High Court and the
     reference Court is clearly illegal and erroneous. When 13.75 acres of land
     was acquired for public purpose, would a reasonable prudent purchaser
     offer to purchase the land at the square foot basis is the question posed
.C   and rightly posed by the learned counsel for the appellant. The reference
     Court relied on three sale deeds Ex. A2, A3 and Al. Ex.A2 relates to an
     extent of 60'x20' of land sold by the claimant himself on October 18, 1984
     for a sum of Rs. 6,000 which worked out at the rate of Rs. 5 per sq. ft. He
     also sold an extent of land of 40'x40' ft. for a sum of Rs. 8,000 under Ex.
 D   A3 on January 19, 1983. 1600 sq. ft. was sold for a sum of Rs. 8,000 on
     January 18, 1983 under Ex.Al. The reference Court relied upon these sale
     deeds and also the rates prescribed by the local administration for the
     purpose of stamp duty at Rs. 8 per sq. ft. for the road margins and Rs. 5
     per sq. ft. for the interior land. Relying thereon, the reference Court
     dettrmined the compensation at Rs. 5 per sq. ft. The High Court while
 E   accepting the same, deducted l/3rd towards developmental charges and
     determined the compensation at Rs. 3.30 per sq. ft.




F
            It is seen that small pieces of land of an extent of 60' x 20', 40' x 40'
     and 1600 sq. ft. were sold.by .the claimants, obviously on coming to know
     of the proposed acquisition. It is common knowledge that acquisition
     proposal would be made at an earlier point of time and finalisation of
                                                                                        -
     acquisition would take long time. In the process,on becoming aware of the
     acquisition, obviously, these sale deeds have been brought into existence to
     inflate the market value. It is laid down by this Court which is well settled
 G   principle that it is the duty of the court to assess reasonable compensation.
     Burden in on the owner to prove the prevailing market value. On adduction
     of evidence by the parties, the acid test which the Court has to adopt is
     that the court has to sit in the arm-chair of a prudent purchaser, eschew
     feats of imagination and consider whether a reasonable prudent purchaser
     in the open market would offer the same price which the Court is intending
 H   to fix the market value in respect of the acquired land. Since it is a
                     STATE v. RAM KUMAR! DEVI                          751

compulsory acquisition, it is but the solemn duty of the Court to assess A
reasonable compensation so as to allow the same to the owner of the land
whose property has been acquired by compulsory acquisition and also to
avoid needless burden on public exchequer. No feats of imagination would
require to bog the mind that when 13.75 acres of land was offered for sale
in an open market, no prudent man would have credulity to purchase that
                                                                            B
land on sq. ft. basis. The High Court as well as the district Judge have
committed a grave error in not applying the above acid test while consider-
ing the case. They merely proceeded by accepting the sale deeds which
were obviously brought into existence to inflate the market value and
determined the compensation on the price settled by them. Thus, we hold
that both the Courts have applied a wrong principle of law in determining C
the compensation.

      The question then is : what would be the reasonable market value?
In the synopsis of the case, the appellants themselves have indicated and
the counsel has reiterated that they are agreeable to pay at the rate of Rs.
30,000 per acre. In view of their admission, the market value is determined D
at Rs. 30,000 per acre.

      The claimants are entitled to statutory solatium under Section 23 (2)
and interest under Section 28 till date of deposit of compensation amount
and also additional amount under Section 23(1-A) on enhanced compen-
sation in respect of the land.
                                                                              E

       The appeals of the State are accordingly allowed. No Costs.

CA No. 3817 of 1996 (@ SLP (C) No. 11256 of 1995)

     This appeal being a cross-appeal by the claimant for further enhan-      F
cement of compensation, is dismissed. No costs.

G.N.                    State's appeal allowed and cross-appeal dismissed.