UNION OF INDIA AND ORS. ETC.versusSHRI CHAIN SINGH AND OR,S. ETC.

                          UNION OF INDIA AND ORS. ETC.                                A
                                       v.
                         SHRI CHAIN SINGH AND OR,S. ETC.

                                       MAY 8, 1997

                   [K. RAMASWAMY AND K.S. PARIPOORNAN, JJ.]                           B

                Jammu and Kashmir Requisition and Acquisition of Immovable
          Property Act, 1968:
     ,,
                S.8--Requisitioning and acquisition of land-1007 kanals of land ac-
          quired-Compensation-Determination of-Arbitrator and High Court
                                                                                      c
          awarded compensation @ Rs. 70,000 per kanaH'actors to be taken into
....      consideration-Explained--Compensation reduced to Rs. 30,000 per kanal.

               Union of India v. H<iri Knshan Khosla (dead) by Lrs., (1993] Supp. 2
          SCC 149 and Periyar & Pamkanni Rubbers Ltd. v. State of Kera/a, (1991] 4    D
          sec 207, relied on.
               CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3568 of
          1997 Etc.

               From the Judgment and Order dated 8.8.96 of the Jammu & Kashmir        E
          High Court in L.P.A. No. 20 of 1996.

                P.P. Malhotra, P.P. Rao, M.P. Shorawala, Anil Katiyar, R.P. Singh,
          A.K. Pandey, R.K. Khanna, Pankaj Kalra, U.A. Rana and Rajiv Tyagi for
          the appearing parties.
                                                                                      F
               The following Order of the. Court was delivered :

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

                The land to an extent of 1007 kanals and 6 marlas situated in village
          Sansoo in Tehsil and District Udhampur was initially requisitioned under
                                                                                      G
--        Section 6 of the Jammu and Kashmir Requisition and Acquisition of
          Immovable Property Act. On December 26, 1988, proceedings for acquisi-
          tion of the land were initiated. The compensation was determined under
          Section 8 of the Act by the Land Acquisition Officer at the rate of Rs.
          12,000, Rs. 10,000 and Rs. 9,000 per kanal to Warhal Changhi, Warhal H
                                              293
                                              .-
    294                   SUPREME COURT REPORTS [1997] SUPP. 1 S.C.R.

A Mandi and Banjar Kadeem lands respectively. Dissatisfied therewith, an
    application under Form 'G' seeking reference was filed. The Arbitrator was
    appointed under Rule 9 read with Section 8(1) of the Act. Thereafter the
    Arbitrator determined the compensation at the rate of Rs. 70,000 per
    kanal. On appeal, the learned single Judge confirmed the saine and the
B   Division Bench held that no Letters Patent Appeal would lie. Thus, this
    appeal by special leave.

        It is seen that the Land Acquisition Officer has adduced the oral as
  well as documentary evidence. The claimants also filed the documentary
  evidence as well as the oral evidence. On consideration of the evidence,
C the Arbitrator as well as the High Court have held that the lands are
  situated in a developed area and possessed of and commanded good
  market value for sale in the open market to a willing purchaser and,
  therefore, they are capable of fetching market value ranging from Rs. 1
  lakh to Rs. 2 lakhs per acre and in view of the fact that the sale deeds '
  relied on were in respect of small pieces of land they determined the
D compensation at the rate of Rs. 70,000 per acre.
           The question is : whether the view taken by the Arbitrator as well as
    by the High Court is correct in law? It is settled law that under Section
    8(3) of the Act, as amended by Act 6 of 1977, the compensation payable
E   for the acquired property under Section 7 shall, in the absence of an
    agreement, be the price which the requisitioned party would have fetched
    in the open market, if it had· remained in the same condition as it was at
    the time of the requisition, and been sold on the date of the acquisition in .
    the same condition. In other words, the principle required to be applied
    would be that the existing conditions as on the date of the acquisition (as
F   if existed in conditions) in which the land existed on the date of requisition,
    be the determining factor for fixing the compen~ation as per the market
    value prevailing as on the date of the acquisition and compensation has to
    be determined accordingly.

G         This Court in Union of India v. Hari Krishan Khosla (dead) by Lrs.,
    [1993) Supp. 2 SCC 149 at 166, para 611, considered the question under
    the Requisition and Acquisition of the Immovable Property Act, 1952
    which is pari materia to the Act, and held thus :

             "We are of the opinion that the amount of compensation can be
H            fixed by agreement under Section 8(1)(b). In the absence of such
                                        ..
                              V.O.l.v. CHAINSINGH                             295

              an agreement, it is left to the. discretion of the arbitrator. The     A
-f            arbitrator under Section 8(1)(e) is to hear the dispute. Thereafter
 I          · he is to determine the compensation which appears to him to be
              just. He must have regard to the circumstances of each case while
              applying the provisions of sub- section (3)(a) of Section 8 which
              reads as under :
                                                                                     B
             "8.(3) The compensation payable for the acquisition of any proper-
             ty under Section 7 shall be -

                 (a) the price which the requisitioned property would have
             fetched in the open market, if it has remained in the same condition    C
             as it was at the time of requisitioning and been sold on the date
             of acquisition, or

                 (b) •              •                •                *"
                                                            (emphasis supplied)      D
                In our view, the significant omission of solatium is indicative of
             the legislative intent necessitating stress on the expressions "just"
             and circumstances of each case" occurring in sub-section (l)(e)
             thereof.
                                                                                     E
             Yet another distinguishing feature is the expression "open market".
             The reason why solatium has not been provided is that "open
             market" contemplates a bargain between a free buyer and a free
             seller unfettered by the consideration of requisition and conse-
             quent acquisition."
                                                                                     F
            The principle for determination of market value has been laid down
     by this Court in a catena of decisions one of which is Penyar & Pareekanni
     Rubbers Ltd. v. State of Kera/a, [1991] 4 SCC at 207, para 18, which reads
     as under:

             "Equally it is statutory to note that the claimant has legal and G
             legitimate right to a fair and reasonable compensation to the land
             he is deprived of by legal process. The claimant has to be recom-
             pensated for rehabilitation or to purchase similar lands elsewhere.
             In some cases for lack of comparable sales it may not be possible
             to adduce evidence of sale transactions of the neighbo"uring lands H
    296                  SUPRI~ME COURT REPORTS          [1997) SUPP. l S.C.R.

A           possessed of same or similar quality. So insistence of adduction of
            precise or scientific evidence would cause disadvantage to the
            claimants in not getting the reasonable and proper market value
            prevailing on the date of notification under Section 4(1). There-
            fore, it is the paramount duty of the Land Acquisition
            Judge/authority to keep before him always the even scales to adopt
B           pragmatic approach without indulging in "facts of imagination; and
            assess the market value which is reasonably capable to fetch
            reasonable market value. What is fair and reasonable market value
            is always a question of fact depending on the nature of the
            evidence, circumstances and probabilities in each case. The guid-
c           ing star would be the conduct of a hypothetical willing vendor
            would offer the lands and a willing purchaser in normal human
            conduct would be willing to buy as a prudent man in normal market
            conditions as on the date of the notification under Section 4(1) but
            not an anxious buyer dealing at arm's length nor facade of sale or
            fictitious sales brought about in quick succession or otherwise to
D
            inflate the market value."

        Thus, it could be seen that endeavour of the court or the arbitrator
  should be to sit in the arm chair of a prudent willing purchaser; keep the
  consideration of the feats of imagination at bay; seek answer to the ques-
E tion whether a willing and prudent buyer would offer to purchase the land
  from the open market from a willing seller, at the same rate which is
  proposed to be determined by the Land Acquisition Officer/Court. All the
  relevant features, viz., the nature of the land, the quality of the land, the
  market conditions prevailing as on the date of the acquisition, the income
F derived from the land etc., should be taken into consideration. Thus, the        .
  question is : if the similar land remains in the same condition at the time
  of acquisition, would a prudent purchaser offer to purchase 1007 kanals at
  Rs. 70,000 per kanal? The Court is required to consider what will be the
                                                                                   [
  true market value in that behalf. The arbitrator and the High Court have
G thrown the tests laid by judicial decisions to winds. It is seen that in the
  acquisition proceedings, the Tehsildar had collected various documents
  which now have been proved through the witnesses as to the value as on
  June 30, 1987 and they have worked out the compensation at the rate of
  Rs. 12,000 per kanal for the Warhal Changhi, Rs. 10,000 for Warhan Mandi
  and Rs. 9,000 for banjar Kadeem. It is not disputed nor can it be disputed
H that the lands had developed in and around the land on account of the
                               U.0.1. v. CHAIN SINGH                         297
'.
     military estate established in that village. The present development has A
     been taken into consideration which is wrong in law. There is no doubt that
     the land owners are not having any other land except the small piece of
     land. But that would not be a consideration for totally ignoring the prevail-
     ing market value and fixing the compensation de hors the prevailing market
     value. The documents relied on by the claimants show in the map filed B
     before us, that the lands are situated far away froin the lands under
     acquisition. Equally, the lands in respect of which sale deeds were filed by
     the Government are situated in Sansoo village itself which is very near to
     the acquired lands. The market value fetched by the lands, i.e., small pieces
     of the extent of 4 and .S marlas respectively, between August 10, 1986 and
     April 27, 1987 hardly work out to minimum of Rs. 10,000 and the maximum C
     of Rs. 20,000. Even the sale deeds relied on by the claimants are of
     maximum of 8 marlas of land; though the house was constructed, it was
     sold for Rs. 32,000. Thus, the compensation worked out to Rs. 80,000 per
     kanal.

           Under these circumstances, considering the totality of the facts and     D
     circumstances and sitting in the arm chair of a willing purchaser, we think
     that the appropriate market value would be Rs. 30,000 per kanal and the
     High Court and the Arbitrator, therefore, have committed manifest error
     in determining the compensation.
                                                                                    E
           Accordingly, the appeal Viz C.A. 3568/97 is allowed. The claimants
     are entitled to interest as per the Act. With regard to the determination of
     the valm: of the trees, we are not inclined to disturb the determination
     made by the Arbitrator. It is open to the appellants to have the. excess
     amount recovered from the respective persons as per rule. No costs.
                                                                                    F
           CA No. 3569-70/97 [@ SLP (C) No. 11052-53/97 CC 3592-93/97) filed
     by the claimants stand dismissed. No costs.

     R.P.                                            C.A. Nos. 3568/97 allowed.
                                                C.A. Nos. 3569-70/97 dismissed.