Ram Mohan Reddy, J.
1. M.F.A. 6795/2001 and 6797/2001 are filed by the State. MFA 6562/01 and MFA Cr.Ob. 217/2002 in MFA 6797/2001 are filed by the claimants. The appeals and cross objections are directed against the common judgment and award dated 5.9.2001 in LAC 30/1991; 14/91, 30/91 respectively on the file of the Addl. Civil Judge (Sr.Dn.) Raichur, (for short 'Civil Court'). By the impugned judgment and award, the Civil Court had determined the market value of acquired land at the rate of Rs. 29,100/- per acre.
2. Facts in brief are as follows:
The land measuring 9 acres 34 guntas comprised in S.No. 259/E and 259/A of Pothgal village, Raichur district, being a portion of the entire extent of land measuring 73 acres 20 guntas, was acquired by the State for the purpose of building houses by Karnataka Housing Board, by issuing Section 4(1) notification dated 11.9.1996 under the provisions of the Land Acquisition Act (for short the Act) in exercise of its 'eminent domain' power. The Land Acquisition Officer (for short the LAO) after conducting award enquiry determined the market value of the acquired land at Rs. 11,800/- per acre, placing reliance on sale statistics available during the relevant period. The land owners of the acquired land not being satisfied with the quantum of compensation awarded by the LAO, sought for enhancement of compensation by seeking reference under Section 18 of the Act and accordingly, their claim were referred to the Civil Court. The Civil Court placing reliance on Ex.P.-10 sale deed dated 5.9.1985 of a plot measuring 40'x 50' sold for Rs. 4,000/-, which works out to Rs. 2/-per sq. ft. or Rs. 40,946/- per acre, added 10% of the value towards appreciation in Market Value since there was a time gap of one year between the sale deed of 1985 and the acquisition in the year 1986. The Civil Court also placed reliance on Ex.P.11 Sale deed dated 15.7.1986 of a plot of land measuring 30' x 40' sold for Rs. 2,800/-which works out to Rs. 2.30 ps. Per Sq.ft or Rs. 47,771/- per acre. The market value of Rs. 40,946, per acre in accordance with Ex.P1 and Rs. 47,771/- per acre in accordance with Ex.P11 was deduced by deducting 53% towards development charges. The Civil Court took an average of the two values arrives at Rs. 46,372/- per acre. To this the Civil Court added Rs. 11,800/- the market value arrived at by the LAO, which totaled to Rs. 58,172/- and on dividing the same by two, arrived at Rs. 29,100/- per acre as the market value of the acquired lands. Being aggrieved by the said determination of the market value the LAO has preferred MFA 6795/2001 and MFA 6797/2001. The claimants not being satisfied with the market value, as inadequate, filed MFA 6562/01 and MFA Cross Objections 217/2002 in MFA 6797 /01
3. The learned Counsel appearing for the state sought to contend that the Civil Court ought not to have placed reliance on Ex.P10 and P11 Sale deeds, as the same were not in respect of Comparable lands, while they were small plots of lands sold in developed areas. He also contends that the Civil Court ought to have deducted 60% of the value towards development charges instead of 53% in which event the market value of the acquired lands would be less than Rs. 29,100/- per acre.
4. Sri Lokesh Malavalli, learned Counsel for the land owners, on the other hand would contend that the Civil Court had committed a grave error in adding Rs. 11,800/- per acre the market value arrived out by the LAO, to Rs. 46,372 per acre, the market value arrived at by the Civil Court and thereafter averaging the same to determine the market value at Rs. 29,100/- per acre. He contends that such a method adopted by the Civil Court is perverse. The learned Counsel pointed out that the LAO in his award had stated that the lands acquired were located at a distance of 2 K.M., from Raichur - Hyderabad Road, and 4 1/2 K.M., from Pothgal and also were adjacent to Engineering College, and RW in his deposition before the Civil Court had admitted that the lands acquired were suitable for construction, and therefore the lands had N.A. potential. He further submits that there is no hard and fast rule to deduct 60% towards development charges, uniformly in every case but the same can be varied depending on the facts of each case and in particular this case, he sought to sustain deduction of 53%. In view of the N.A. potentiality of the lands acquired he contends that they command a market value of Rs. 2,00,000/- per acre. He, however would fairly submit that the claimants had restricted their claim Rs. 40,000/- per acre.
5. Having heard the learned Counsel for the parties, the question that arised for decision making is, whether the market value determined by the Reference Court at the rate of Rs. 29,600/- per acre, is excessive as claimed by the State or inadequate as contended by the claimants.
6. Section 23 and 24 of the Act stipulate the factors to be taken into account in determining compensation payable to owner of acquired lands. Several judicial dicta of the Apex Court, this Court and other High Courts have formulated principles and norms for determination of compensation of lands acquired by the State in exercise of its 'Eminent domain' power under the Act. One such principle discernible from the pronouncements of the Apex Court is that while determining compensation for larger extent of land, price paid for or compensation determined by the Court for smaller parcels of land do not provide a safe and dependable basis. However in the absence of any better evidence even transactions involving conveyance of smaller extends of land or blocks of land which are comparable in time and location would become relevant.
7. The Supreme Court in ADMINISTRATOR GENERAL OF WEST BENGAL v. COLLECTOR, VARANASI : [1988]2SCR1025 observed thus.
'The determination of market value of a land with potentialities for urban use is an intricate exercise which calls for collection and collation of diverse economic criteria. The market value of a piece of property, for purposes of Section 23 is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. The determination of market value is the prediction of an economic event, viz. the price outcome of a hypothetical sale, expressed in terms of probabilities. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual, and indeed the best, evidence of market value. Other methods of valuation are restored to if the evidence of sale of similar lands is not available.'
8. A Division Bench of this Court in Smt. K.S. SHIVADEVAMMA v. ASSISTANT COMMISSIONER AND LAND ACQUISITION OFFICER AIR held thus;
'It is clear that, if reasonably the land acquired has a potentiality for urban use, said benefit should be extended to it while awarding compensation. Land in the outskirts of an expanding city has every tendency to become ripe for building use in course of time.'
9. The Apex Court in HASANALI WALIM CHAND (DEAD) BY LRS. v. STATE OF MAHARASHTRA 1988 SC 700 approved determination of market value on square feet basis, the relevant portion of the Judgment is extracted below:
'6. The High Court has noticed in the impugned judgment and order that the location of the land indicates that it has building potential but fell into an error in ignoring that factor by observing;
There is no record of any income being received by any of the land owners. These lands must, therefore, be valued as agricultural land with no potentiality whatsoever in the foreseeable future.
7. We are unable to find any justification for such observation and finding. The above finding of the High Court is contradictory to the earlier finding based on the location of the land. It is no doubt correct that the reference Court was influenced by sale transactions in respect of developed land and it failed to make any deduction for development of land while enhancing the compensation, but the High Court fell in error in ignoring the future potential of the land in question and instead resting its finding as realized potential only. The evidence on the record clearly establishes that the acquired land did have future potential on account of its location. It is not denied that the area around the city of Ahmednagar is fast developing and the land in question was located only at a short distance of about one and half miles from Ahmednagar town. The finding recorded by the High Court to the effect that there was no demand of any urban character in respect of the land in question is belied by the evidence on record. Indeed the land unlike the Housing Society Land was not developed and, therefore, proper course for the High Court would have been that it should have taken note of development charges, and made some suitable deduction for the same. The reference Court had made the Award based on the material on the record but had failed to notice that the acquired land was still undeveloped. It, therefore, appears appropriate to us to set aside the impugned judgment and order of the High Court and restore the award made by the reference Court with the modification that out of the amount fixed by the reference Court @ Rs. 1/- per square foot, deduction to the extent of 50 paise per square foot, towards development charges, shall be made and compensation calculated on the basis and shall be paid to the claimants in accordance with their holdings, along with the statutory benefits of solatium and interest.
10. The Claimants have established by legal evidence that the acquired lands and the lands covered by Ex.P.10 and P.11 are in Survey No. 238, situated nearby the lands acquired. The evidence of PW1 to PW 4 also establishes that the lands acquired are adjacent to an Engineering College, nearby the Hyderabad - Raichur highway and in a developing area, which the LAO in his award at Ex.P3 has observed too. In the cross examination of RW, the Executive Engineer of the Karnataka Housing Board testifies that the lands acquired are suitable for construction of houses. In this case the entire extent of land is acquired for building sites of the Karnataka Housing Board. Neither the lands covered under Ex.P.10 and P11 nor the acquired land, involve any development as such before they are put into the use for which they are acquired. The sites covered Ex.P.10 to P11 are not out of a developed layout but are a part of the number of sites carved out of a block of land in Sy.No. 238. The Civil Court was justified in holding that the transaction in Ex.P.10 to P11 are comparable transactions, capable being considered for fixing the market value of the acquired land. Therefore no exception can be taken to the Civil Court placing reliance on Ex.P.10 to P11.
11. The Supreme Court in LAND ACQUISITION OFFICER AND MANDAL REVENUE OFFICER, v. V. NARASAIAH : [2001]2SCR141 has held as under:
'It was in the wake of the aforesaid practical difficulties that the new Section 51A was introduced in the LA Act. The words 'may be accepted as evidence' in the Section indicate that there is no compulsion on the Court to accept such transaction as evidence. Merely accepting them as evidence does not mean that the Court is bound to treat them as reliable evidence. What is sought to be achieved is that the transactions recorded in the documents may be treated as evidence, just like any other evidence, and it is for the Court to weigh all the pros and cons to decide whether such transaction can be relied on for understanding the real price of the land concerned. It is open to the Court to act on the documents regarding the transaction recorded in such documents. However, this will not prevent any party who supports or opposes the said document or the transaction recorded therein to adduce other evidence to substantiate their stand regarding such transactions. But it is not possible to hold that even after the introduction of Section 51A the position would remain the same as before. Therefore certified copies of the sale deed can be considered without examining persons connected with the transaction mentioned therein.
12. The claimants produced Exhibits P10 to P11 which are certified copies of the sale transactions of plots of lands formed out of land in a Survey number, converted into Non-agricultural purpose. Though the vendor or vendee are not examined by the claimants, the said documents are relied upon by the Civil Court, as genuine, most comparable instances to correlate the market value and as an index of market value.
13. The claimants have shown that the price offered by the LAO at Rs. 11,800/- per acre in the award is inadequate, in view of the sale transactions at Ex.P10 to P11 the sale deed executed prior in time to the preliminary notification under Section 4(1) of the Act in respect of the acquired lands. The claimants have established that Ex.P.10 and P11 are the most comparable instances, which provide the index of market value with reference to proximity of time and location. That the lands acquired are abutting an Engineering College and residential sites and in close proximity to developed area is established by the evidence of the claimants and also the admissions of the LAO, as also the map Ex.P.12. The lands acquired were fit for conversion to non- agricultural residential purposes. The LAO has not adduced evidence much less disputed the aforesaid facts. The LAO has not placed any material to establish dissimilarities with the comparable lands.
14. In the instance case the Civil Court placing reliance on the sale transactions as at Exhibits P10 and P11 and on taking an average of the value of the transactions and on deducting 53% towards development charges calculated the value of one acre of acquired land at Rs. 46,372/-. Taking into account that the lands acquired had non-agricultural potentiality, the deduction of 53% towards development charges by the Civil Court is justified. The Civil Court did not stop at this calculation but to the value of Rs. 46,372/- added Rs. 11,800/-being the market value per acre of agricultural land as determined by the LAO and on taking an average calculated the value at Rs. 29,086/ - as market value per acre of the acquired lands. The method adopted by the Civil Court in adding Rs. 11,800/- is wholly perverse and deserves to be set aside. There is no justification for such an addition particularly in view of Ex. P. 10 and Ex.P11 being the transactions comparable both in time and location.
15. The value of one square feet of land conveyed under the instrument of sale Ex.P.10 amounts to Rs. 2 and that of sale transaction recorded in EX.P. 11 at Rs. 2.30 ps. The average of the two will amount to Rs. 2.15 ps. Therefore the value of one acre of land would be Rs. 93,654/-. Allowing a deduction of 53% towards development charges to be said sum, the value of one acre of land would be Rs. 44,017.38 ps. The contention of the LAO that 60% needs to be deducted is one devoid of merit and without any legally justifiable ground. The same is rejected.
16. In the result and for the foregoing reasons, the appeal and the cross-objection filed by the claimants are allowed with costs. The appeals filed by the LAO are dismissed without costs.
17. In modification of the award passed by the Civil Court, the market value of the acquired land is determined at Rs. 44,017.38 per acre but as the claimants have restricted their claim to Rs. 40,000/- per acre, the market value of the lands acquired is Rs. 40,000/-
18. The land owners of the acquired land are entitled to interest on solatium and additional market value together with all other statutory benefits in accordance with law.