AI Drafter 
TaxTMI 
TaxTMI 
2014 (10) TMI 1019
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....Kunj under the planned development scheme of Delhi. Land Acquisition Collector (LAC) by award No. 2/98-99 dated 18.9.1998 assessed the market value of the land @ Rs. 2,05,642.07 paise per bigha (Rs. 205/-per sq.yard), adding additional interest @ 12% per annum on the market value of land and the solatium @ 30% on the market value of land and the compensation was fixed @ Rs. 37,21,180.05 paise per bigha. 3. Aggrieved by the award, the appellants filed Reference Petition under Section 18 of the Act before the Additional District Judge (LAC), Delhi. In the reference court, the appellants produced four documents Exs A7 to A10-perpetual lease deeds of residential plots in Vasant Kunj, executed between September 1995 to December 1996 at the rates ranging from Rs. 28,719/- to Rs. 47,542/- per sq. yard. The reference court held that the lease deeds of auction of a developed plot by a public authority are not a proper guide for determining the fair market value of the acquired lands and reference court discarded the exemplars- Exs A7 to A10 lease deeds and rejected the claim of the appellants for enhancement of compensation. 4. Aggrieved by the decision of the reference court, appella....
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....o the largeness of the acquired lands are very much on the higher side. 6. The judgment of the High Court was challenged by DDA in Special Leave Petition (Civil) No.15272/2011 and the same was dismissed by the Order dated 12.5.2011. Mr. Amarendra Sharan, learned Senior Counsel appearing for the respondents submitted that in the Special Leave Petition (Civil) No.15272/2011, Maj. Gen. Kapil Mehra appeared in person and the said special leave petition was dismissed by a speaking order and the said order merges with the High Court order and the same is binding upon the appellant and in separate appeals, the appellants cannot challenge the adequacy of the compensation and the present appeals are not maintainable. Reliance was placed upon the judgment of this Court in Kunhayammed and Ors. vs. State of Kerala and Anr. (2000) 6 SCC 359 and S. Gangadhara Palo vs. Revenue Divisional Officer and Anr., (2011) 4 SCC 602. 7. Without prejudice to the above contention, Mr. Amarendra Sharan, learned Senior Counsel appearing for the respondents submitted that the land acquired is 12 bigha which is almost 12096 sq. yards which is thousand times more than the area of the plots in Exs A7 to A10, ....
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....its of the rival contentions. 10. Market Value: First question that emerges is what would be the reasonable market value which the acquired lands are capable of fetching. While fixing the market value of the acquired land, the Land Acquisition Officer is required to keep in mind the following factors:- (i) existing geographical situation of the land; (ii) existing use of the land; (iii) already available advantages, like proximity to National or State Highway or road and/or developed area and (iv) market value of other land situated in the same locality/village/area or adjacent or very near to the acquired land. 11. The standard method of determination of the market value of any acquired land is by the valuer evaluating the land on the date of valuation publication of notification under Section 4(1) of the Act, acting as a hypothetical purchaser willing to purchase the land in open market at the prevailing price on that day, from a seller willing to sell such land at a reasonable price. Thus, the market value is determined with reference to the open market sale of comparable land in the neighbourhood, by a willing seller to a willing buyer, on or before the date of preliminar....
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..... 14. While taking comparable sales method of valuation of land for fixing the market value of the acquired land, there are certain factors which are required to be satisfied and only on fulfillment of those factors, the compensation can be awarded according to the value of the land stated in the sale deeds. In Karnataka Urban Water Supply and Drainage Board and Ors. v. K.S. Gangadharappa & Anr., (2009) 11 SCC 164, factors which merit consideration as comparable sales are, interalia, laid down as under:- "It can be broadly stated that the element of speculation is reduced to minimum if the underlying principles of fixation of market value with reference to comparable sales are made: (i) when sale is within a reasonable time of the date of notification under Section 4(1); (ii) It should be a bona fide transaction; It should be of the land acquired or of the land adjacent to the land acquired; and It should possess similar advantages. It is only when these factors are present, it can merit a consideration as a comparable case (See Special Land Acquisition Officer v. T. Adinarayan Setty (AIR 1959 SC 429) These aspects have been highlight....
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....upra) it was held as under: "4. Having given our anxious consideration to the respective contentions, we are of the considered view that the learned Single Judge of the High Court committed a grave error in working out average price paid under the sale transactions to determine the market value of the acquired land on that basis. As the method of averaging the prices fetched by sales of different lands of different kinds at different times, for fixing the market value of the acquired land, if followed, could bring about a figure of price which may not at all be regarded as the price to be fetched by sale of acquired land. One should not have, ordinarily recourse to such method. It is well settled that genuine and bona fide sale transactions in respect of the land under acquisition or in its absence the bona fide sale transactions proximate to the point of acquisition of the lands situated in the neighbourhood of the acquired lands possessing similar value or utility taken place between a willing vendee and the willing vendor which could be expected to reflect the true value, as agreed between reasonable prudent persons acting in the normal market conditions are the real basis to de....
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....ual leasehold deeds and what was acquired was appellants' freehold property and freehold property has higher value than the leasehold plot and suitable addition should have been made. The appellant contends that the terms stipulated in perpetual leasehold are extremely stringent and in such cases, no sale is permitted without the permission of DDA and there are many other uncomfortable clauses in the terms of the perpetual lease deeds and all these 'stringent conditions' increase the gap between 'freehold' price and 'leasehold' price. It is submitted that market value of 'freehold property' is much higher than the value of 'leasehold property' and this was not taken into consideration by the High Court. 22. In M.B. Gopala Krishna & Ors. vs. Special Deputy Collector, Land Acquisition, (1996) 3 SCC 594, as relied upon by the appellants, it was held as under:- "It is further contended by Shri Mudgal that value of the land does not get pegged down on account of the land being in occupation of a tenant and the circumstances in this behalf taken into account by the High Court, is irrelevant. We find no force in the contention. A freehold land and one burdened with encumbrance....
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.... can never be equated to the value of large extent of agricultural land like the land acquired in the present case and those plots auctioned are developed plots on which the Government had spent a considerable amount. It is contended that the auction prices of commercial plots in exemplars are not true index of a fair market value of the land at the relevant time because elements of speculation and unfair competition in such auctions and suitable deduction ought to have been made for competitive bidding. 26. While considering the competition involved in auction sales of commercial/residential plots and observing that the element of competition in auction sales make them unsafe guides for determining the market value of the acquired lands, in Executive Engineer, Karnataka Housing Board v. Land Acquisition Officer, Gadag And Ors., (2011) 2 SCC 246 paras 6 & 7, this Court held as under:- "6. But auction-sales stand on a different footing. When purchasers start bidding for a property in an auction, an element of competition enters into the auction. Human ego, and desire to do better and excel over other competitors, leads to competitive bidding, each trying to outbid the ot....
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....ted that there was no general rule that such prices cannot be adopted. On considering the relevant facts disclosed, it cannot be said that the High Court has committed any error in discarding those auction-sales while determining the compensation payable. The element of competition in auction-sales does not make them safe guides. Similarly, the argument that when a compact piece of land is acquired there cannot be adoption of separate rates, cannot be accepted in the light of the decision of this Court in Union of India vs. Mangatu Ram (1997) 6 SCC 59. That case related to acquisition of lands in the vicinity of the present properties. The ratio of that decision also supports the distinction made by the Awarding Officer and the High Court in the matter of fixing the land value for the lands in Satrod Khurd and Satrod Khas." 28. The general rule that the sale prices of the comparable sales should be relied upon for calculating the market value will not apply when the sale transactions relied upon are auction sales. As per the decision in Karnataka Housing Board's case (2011) 2 SCC 246, in our view, 20% deduction is to be made for competitive bidding. Deducting 20% i.e. Rs. 8,984/....
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....duction for development. Deduction for development consists of two components:- firstly, appropriate deduction to be made towards the area required to be utilized for roads, drains and common facilities like parks etc.; secondly, further deduction to be made towards the cost of development, that is cost of levelling the land, cost of laying roads and drains, erection of electrical poles and water lines etc. For deduction of development towards land and development charges, the nature of development, conditions and nature of the land, the land required to be set apart under the Building Rules for roads, sewerage, electricity, parks, water supply etc. and other relevant circumstances involved are required to be considered. 33. In Haryana State Agricultural Market Board And Anr. vs. Krishan Kumar And Ors., (2011) 15 SCC 297, it was held as under: "10. It is now well settled that if the value of small developed plots should be the basis, appropriate deductions will have to be made therefrom towards the area to be used for roads, drains, and common facilities like park, open space, etc. Thereafter, further deduction will have to be made towards the cost of development, that is, the c....
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....at the area adjoining his land is a developed area, is not enough, particularly when the extent of the acquired land is large and even if a small portion of the land is abutting the main road in the developed area, does not give the land the character or a developed area. In 84 acres of land acquired even if one portion on one sides abuts the main road, the remaining large area where planned development is required, needs laying of internal roads, drainage, sewer, water, electricity lines, providing civic amenities, etc. However, in cases of some land where there are certain advantages by virtue of the developed area around, it may help in reducing the percentage of cut to be applied, as the developmental charges required may be less on that account. There may be various factual factors which may have to be taken into consideration while applying the cut in payment of compensation towards developmental charges, may be in some cases it is more than 1/3rd and in some cases less than 1/3rd. It must be remembered that there is difference between a developed area and an area having potential value, which is yet to be developed. The fact that an area is developed or adjacent to a develop....
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....on deduction towards development to stress upon the point that deduction towards development depends upon the nature and location of the acquired land. The deduction includes components of land required to be set apart under the building rules for roads, sewage, electricity, parks and other common facilities and also deduction towards development charges like laying of roads, construction of sewerage. 40. Rule of one third deduction towards development appears to be the general rule. But so far as Delhi Development Authority is concerned, or similar statutory authorities, where well planned layouts are put in place, larger land area may be utilized for forming layout, roads, parks and other common amenities. Percentage of deduction for development of land to be made in DDA or similar statutory authorities with reference to various types of layout was succinctly considered by this Court in Lal Chand vs. Union of India & Anr. (2009) 15 SCC 769 and observing that the deduction towards the development range from 20% to 75% of the price of the plots, in paras 13 to 22, this Court held as under:- "13. The percentage of "deduction for development" to be made to arrive at....
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....ted with the size of residential plots measuring 100 sq. m to 200 sq m), and as there will be very limited civic amenities and no playgrounds, the area to be set apart for development (for roads, parks, playgrounds and civic amenities) will be far less; and the cost to be incurred for development will also be marginally less, with the result the deduction to be made from the cost of an industrial plot may range only between 45% to 55% as contrasted from 65% to 75% for residential plots. 19. If the acquired land is in a semi-developed urban area, and not an undeveloped rural area, then the deduction for development may be as much less, that is, as little as 25% to 40%, as some basic infrastructure will already be available. (Note: The percentages mentioned above are tentative standards and subject to proof to the contrary. 20. Therefore the deduction for the "development factor" to be made with reference to the price of a small plot in a developed layout, to arrive at the cost of undeveloped land, will be far more than the deduction with reference to the price of a small plot in an unauthorized private layout or an industrial layout. It is also well known that the ....
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....(Civil) No.15272/2011 filed by DDA was dismissed by this Court on 12.5.2011 and the sale has become final as against the appellants, we are not inclined to further reduce the value of the acquired land from Rs. 14,974/- per sq. yard as determined by the High Court and the compensation awarded by the High Court at Rs. 14974/- per sq. yard is maintained. 42. INTEREST: Contention of the appellants is that on the enhanced compensation, the mandatory interest under Section 34 of the Act has not been awarded to them. Placing reliance upon Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF), (2009) 8 SCC 412, it is contended that the impugned judgment is silent on granting statutory interest under Section 34 of the Land Acquisition Act and the appellants pray for award of interest on the enhanced compensation. The appellants filed C.M. No.735/2011 before the High Court seeking review for payment of interest which according to the appellants was omitted to be included and the said application was dismissed by the High Court. 43. Land Acquisition Act, 1894, provides for payment of interest to the claimants either under Section 34 or under Section 28 of the Act. Section 34 of the....
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.... payment or deposit into the court to which reference under Section 18 would be made. On determination of the excess amount of compensation, Section 28 empowers the court, if it was enhancing the compensation awarded by the Collector, to award interest on the sum in excess of what the Collector had awarded as compensation. The award of the court may also direct the Collector to pay interest on such excess or part thereof from the date on which he took possession of the land to the date of payment of such excess into court at the rates specified thereunder. The Court stated: [Prem Nath Kapur vs. National Fertilizers Corporation of India Ltd., (1996) 2 SCC 71, SCC p. 77, para 10] "In other words, Sections 34 and 28 fasten the liability on the State to pay interest on the amount of compensation or on excess compensation under Section 28 from the date of the award and decree but the liability to pay interest on the excess amount of compensation determined by the Court relates back to the date of taking possession of the land to the date of the payment of such excess 'into the court'." 45. The Court concluded: (Prem Nath Kapur case, SCC p. 78, para 12) "12. It is clear from the schem....
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....the enhanced amount as provided in Section 28 of the Act and costs in terms of Section 27. The Collector has the duty to deposit these amounts pursuant to the deemed decree thus passed. This has nothing to do with the earlier deposit made or to be made under and after the award. If the deposit made, falls short of the enhancement decreed, there can arise the question of appropriation at that stage, in relation to the amount enhanced on the reference. 34. The third stage occurs, when in appeal, the High Court enhances the compensation as indicated already. That enhanced compensation would also bear interest on the enhanced portion of the compensation, when Section 28 is applied. The enhanced amount thus calculated will have to be deposited in addition to the amount awarded by the Reference Court if it had not already been deposited. 35. The fourth stage may be when the Supreme Court enhances the compensation and at that stage too, the same rule would apply." 48. By going through the judgment of reference court as well as the High Court, we find that the appellants were awarded interest in terms of Section 34 and Section 28 of the Act. Section 4(1) notification w....
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....over and above the sum of Rs. 20,000/-. 51. The appellant, party-in-person, contended that they have paid court fees of Rs. 48 lakhs and High Court ignored the mandatory provisions of law in awarding costs and that court fees is an integral part of costs. It was submitted that the impugned order dated 13.10.2011 awarding "grant of proportionate costs" is not in accordance with well settled principle of law. Appellants further contended that being partly successful before the High Court, they cannot be deprived of their claim of entire court fees and the costs. 52. The learned Senior Counsel for respondents submitted that as per the well settled principle, the High Court has awarded proportionate costs and there is no improper exercise of discretion warranting interference by this Court. 53. Section 27 of the Act deals with costs. Section 27 reads as under: "27. Costs:- (1) Every such award shall also state the amount of costs incurred in the proceedings under this Part, and by what persons and in what proportions they are to be paid. (2) When the award of the Collector is not upheld, the costs shall ordinarily be paid by the Collector, unless the court sh....