K. Vasundara Devi v. Revenue Divisional Officer (Lao) ., Supreme Court Of India, Judgment, Law, casemine.com

Citation Codes

Neutral Citations

1995 INSC 424

Equivalent Citations

citation codes

Case Number

Civil Appeals Nos. 6808-10 of 1995 with Nos. 6811-13 of 1995, decided on July 27, 1995

Disposition

dismissed

Attorney(S)

K. Madhava Reddy, Senior Advocate (D. Ramakrishana Reddy and G. Prakash, Advocates, with him) for the Appellant;
G. Prabhakar, Advocate, for the Respondent.

Judges

Justice K. Ramaswamy
Justice K.S. Paripoornan

Acts

Section 4(1) of the Land Acquisition Act, 1894
the Act (Land Acquisition Act, 1894)

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Smart Summary

Factual and Procedural Background

These appeals arise out of land acquisition proceedings concerning 46 acres and 6 gunthas of land situated in Miryalaguda town in Nalgonda District, Andhra Pradesh. The land was acquired for planned development by the Andhra Pradesh Housing Board under the Land Acquisition Act, 1894.

Notification under Section 4(1) of the Land Acquisition Act was published in the State Gazette on 29-8-1980.
Possession of the acquired land was taken on 10-12-1980.
The Land Acquisition Officer passed an award on 18-8-1983 determining compensation at Rs 65,000 per acre and deducting 1/3rd of this amount towards developmental charges, thereby fixing the compensation at Rs 43,000 per acre, together with statutory benefits.
On reference, the Subordinate Judge, Suryapet, in OP No. 20 of 1984 enhanced the compensation to Rs 1,20,000 per acre and deducted 1/4th towards developmental charges, again with statutory benefits.
In appeals before the High Court (AS No. 1833 of 1985 and batch), the High Court:
- Upheld the market value at Rs 1,20,000 per acre,
- But deducted 40% of the value towards what it described as developmental charges,
- And based its fixation of market value on sale deeds Exs. X-1 to X-3 relating to very small extents of one guntha each.

The present appeals by special leave were filed before the Supreme Court challenging the High Court’s approach, particularly the 40% deduction from the determined market value.

Legal Issues Presented

Whether the High Court was justified in deducting 40% from the market value of Rs 1,20,000 per acre, determined on the basis of small-extent sale deeds (Exs. X-1 to X-3), instead of applying a uniform 1/3rd deduction towards developmental charges as claimed by the appellant.
Whether precedents where this Court upheld a 1/3rd deduction for developmental charges in respect of undeveloped large tracts of land controlled the present case, where the High Court made a larger deduction while relying on sales of much smaller plots to determine the market value of a large acquired area.

Arguments of the Parties

Appellant's Arguments

The learned Senior Counsel for the appellant, Shri K. Madhava Reddy, relied on the decisions in Vijay Kumar Moti Lal v. State of Maharashtra (1981) 2 SCC 719 and Special Tehsildar Land Acquisition v. A. Mangala Gowri (1991) 4 SCC 218.
On the strength of these authorities, it was contended that this Court had upheld a uniform deduction rate of 1/3rd towards developmental charges in land acquisition cases.
It was therefore argued that the High Court erred in deducting 40% of the value of the land towards developmental charges.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Vijay Kumar Moti Lal v. State of Maharashtra, (1981) 2 SCC 719	Cited by the appellant as authority that this Court upheld deduction of a uniform rate of 1/3rd towards developmental charges.	The Court noted that in this case the only question concerned deduction for developmental charges in respect of undeveloped large tracts of land. It held that the ratio did not assist in resolving the present issue involving additional deduction because the High Court relied on small-extent sale deeds to fix market value for a large area.
Special Tehsildar Land Acquisition v. A. Mangala Gowri, (1991) 4 SCC 218	Also relied upon by the appellant to support the proposition that a uniform 1/3rd deduction for developmental charges had been approved by this Court.	The Court treated this precedent similarly to Vijay Kumar Moti Lal, observing that it dealt only with deduction for developmental charges of undeveloped large extents and did not govern the situation where additional deductions are warranted due to reliance on sales of small plots for valuing large tracts.
Administrator General of West Bengal v. Collector, Varanasi, (1988) 2 SCC 150; AIR 1988 SC 943	The Court applied “twin tests” and held that a 50% deduction is reasonable when genuine sale transactions relating to smaller extents of land are relied upon to determine the market value of much larger tracts.	The Supreme Court used this decision as a primary basis to uphold the High Court’s approach, noting that a 40% deduction (though termed as toward developmental charges) was within the range recognised as reasonable when extrapolating from small-plot sales to large areas. It concluded that in light of this precedent and subsequent decisions, interference was not warranted.
Bhagwathula Samanna v. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality, (1991) 4 SCC 506; AIR 1992 SC 2298	Held that when lands are situated in a developed area, no deduction towards developmental charges should be made.	The Court referred to this precedent while distinguishing it from the present case, indicating that it dealt with situations where the acquired land is already in a developed area, whereas the present case involved both developmental requirements and adjustment from small-plot sales to large tracts.
Hasanali Khanbhai and Sons v. State of Gujarat, (1995) 5 SCC 422	Approved a 60% deduction made by the Gujarat High Court when determining the market value of large tracts of land on the basis of sales of smaller pieces of land.	The Court cited this case to reinforce that substantial deductions (up to 60%) have been upheld as reasonable where small-extent sale deeds are used to value large acquired areas, thereby supporting the reasonableness of the 40% deduction in the present case.

Court's Reasoning and Analysis

The Supreme Court rejected the appellant’s contention that the High Court was bound to confine the deduction to 1/3rd towards developmental charges.

The Court first recounted the High Court’s reasoning. The High Court had expressly noted that:
- The sale deeds Exs. X-1 to X-3 related to very small extents of one guntha each, whereas the acquired land comprised a large area.
- The acquisition was for a housing scheme of the Housing Board, necessitating development of the land.
- Accordingly, it was necessary to make deductions both:
  - For developmental charges, and
  - For the fact that the sale instances were of smaller plots, while the acquisition was of a much larger tract.
Building on this, the Supreme Court observed that the High Court’s 40% deduction, though described as “towards developmental charges”, in substance accounted for two distinct factors:
- The actual developmental expenditure needed for the housing scheme, and
- The adjustment required when using small-extent sale transactions (one guntha plots) to compute the market value of a large block of land.
The Court then referred to its earlier decision in Administrator General of West Bengal v. Collector, Varanasi, where:
- “Twin tests” had been applied in situations where genuine small-extent sales were used to assess the value of large tracts.
- A 50% deduction was held to be reasonable in that context.
In the present case, by comparison, the High Court had applied only a 40% deduction.
The Court further noted:
- In Bhagwathula Samanna, it had been held that when the land is in a developed area, no deduction for developmental charges is warranted, indicating that the deduction question is context-dependent.
- In Vijay Kumar Moti Lal and Mangala Gowri, the issue considered was solely the rate of deduction towards developmental charges in respect of undeveloped large extents of land. These cases did not address the additional deductions needed when extrapolating from small-plot sales to large tracts, and therefore did not directly govern the present situation.
- In Hasanali Khanbhai and Sons v. State of Gujarat, this Court had upheld a 60% deduction where the High Court relied on small-extent sale deeds to determine the market value of a large area.
From these authorities, the Court articulated a general approach that when:
- Genuine and reliable sale deeds of small extents are used to determine the market value of large tracts,
- Such sales cannot form the sole basis for valuation without substantial adjustment, and
- Sufficient deduction must be made to arrive at a just and fair market value for the larger area.
On this basis, the Court concluded that:
- The precedents relied upon by the appellant, which were confined to developmental charges on undeveloped large tracts, did not undermine the High Court’s methodology in making a higher deduction that also reflected the “small plot to large tract” adjustment.
- In view of Administrator General of West Bengal and subsequent decisions, the 40% deduction was within the range of permissible and reasonable deductions in such circumstances.
- Hence, this was not “a proper case for interference.”

Holding and Implications

Holding: The Supreme Court dismissed the appeals and declined to interfere with the High Court’s judgment and decree. The Court therefore effectively affirmed the High Court’s determination of market value at Rs 1,20,000 per acre with a 40% deduction, along with the associated statutory benefits. The appeals were dismissed with no order as to costs.

Implications: The immediate consequence is that the compensation as fixed by the High Court stands confirmed for the parties to these appeals. The Court applied existing principles regarding deductions when using small-extent sale instances to value large tracts of acquired land and did not announce any new rule beyond reinforcing that substantial deductions (such as 40%) may be reasonable in such circumstances. No broader implications or changes in legal doctrine are discussed in the opinion.

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K. Vasundara Devi v. Revenue Divisional Officer (Lao) .

Order

1. Leave granted.

2. These appeals are disposed of by common judgment since common question of law arises in this appeal. Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short “the Act”) was published in the State Gazette on 29-8-1980 acquiring an extent of 46 acres 6 gunthas of land in Miryalaguda town in Nalgonda District of A.P for planned development by the Andhra Pradesh Housing Board. Possession thereof was taken on 10-12-1980 and the award was made on 18-8-1983 determining the compensation at the rate of Rs 65,000 per acre and deducted 1/3rd towards developmental charges and fixed the compensation at Rs 43,000 per acre with statutory benefits. On reference, the Subordinate Judge, Suryapet in OP No. 20 of 1984 enhanced the compensation to Rs 1,20,000 per acre and deducted 1/4th towards developmental charges together with statutory benefits. On appeal to the High Court, while upholding the market value of the lands at Rs 1,20,000 per acre, it had deducted 40% of the value of the land for developmental charges and also that fixation of the market value was based on Exs. X-1 to X-3 sale deed of small extent of one guntha each. Thus, these appeals by special leave against the judgment and decree of the High Court in AS No. 1833 of 1985 dated 15-12-1992 and batch.

3. Shri K. Madhava Reddy, learned Senior Counsel for the appellant placing reliance on Vijay Kumar Moti Lal v. State of Maharashtra (1981) 2 SCC 719 and Special Tehsildar Land Acquisition v. A. Mangala Gowri (1991) 4 SCC 218, contended that this Court had upheld deduction of uniform rate of 1/3rd required for developmental charges. The High Court, therefore, was not right in deducting 40% of value towards developmental charges. We think that the contention is not well-founded. The High Court has noticed in its judgment thus:

“However, as the sales under Exs. X-1 to X-3 are for very small extents when compared to the lands under acquisition and the acquisition is meant for the housing scheme of housing board, necessary deduction will have to be given for developmental charges and also for taking into consideration the sales which are for smaller plots while considering the fixation of market value for the lands under acquisition which are in a large extent.”

4. In view of this finding, the High Court had taken into consideration not only the requirements towards developmental charges but also when reliance is placed by the court in Exs. X-1 to X-3, admittedly smaller extents of one guntha each which had fetched a market value at the rate of Rs 1,20,000 necessary deduction need to be given. Taking these two factors into consideration, ultimately it deducted 40%, though loosely termed as “towards developmental charges”. This Court in Administrator General of W.B v. Collector (1988) 2 SCC 150, AIR 1988 SC 943 has applied the twin tests and held that 50% of the deduction should be made when the sale transaction relates to smaller extent of the lands which were found to be genuine and relied on to determine the market value of a large tract of land and 50% deduction was found to be reasonable in that case. The State did not file appeal against enhanced compensation or deduction.

5. In Bhagwathula Samanna v. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality (1991) 4 SCC 506, AIR 1992 SC 2298 this Court had held that since lands are in developed area, no deduction towards developmental charges be made. In Vijay Kumar Moti Lal (1981) 2 SCC 719 and Mangala Gowri (1991) 4 SCC 218 cases, the only question was regarding deduction for developmental charges. Sales relating to smaller pieces of land when found to be germane Gujarat High Court deducted 60% of the value, this Court in Hasanali Khanbhai and Sons v. State of Gujarat (1995) 5 SCC 422 upheld the deduction of 60% by the High Court. When genuine and reliable sale deeds of small extents were considered to determine market value, the same will not form sole basis to determine market value of large tracts of land. Sufficient deduction should be made to arrive at the just and fair market value of large tracts of land. In that view of the law, we are of the considered opinion that ratio in the cases in which it was dealt with only about deduction of developmental charges of undeveloped large extent of land does not render any assistance in deciding the principle followed by the High Court in this matter. In view of the judgment of this Court in Administrator General of W.B case (1988) 2 SCC 150, AIR 1988 SC 943 and all subsequent decisions, we do not think that it is a proper case for interference.

6. The appeals are accordingly dismissed. No costs.

K. Vasundara Devi v. Revenue Divisional Officer (Lao) .

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

K. Vasundara Devi v. Revenue Divisional Officer (Lao) .

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