K. Ramaswamy, J.— We have heard the learned counsel on both sides in the contempt petition as well as in IA No. 3 of 1994 to review order passed in dismissing the appeal with directions and also the order dated 5-5-1994 passed in the review petition. In view of the facts that have been brought to our notice, we directed that the main matter should be disposed of on merits. Accordingly the review petition, interlocutory application, contempt petition and the civil appeal have been posted together. After hearing the counsel on both sides, we are satisfied that manifest errors of law have been committed in this case. Consequently, all the orders passed by this Court are set aside; contempt petition and the interlocutory applications are dismissed; and the main appeal is revived.
2. We have heard the counsel on both sides on merits. Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short “the Act”) and Section 17(4), dispensing with the enquiry under Section 5-A was published on 8-3-1973 acquiring land measuring 0.23 acres for setting up a pumping station to drain out flood water from low-lying areas of Buster Palace, Ziamou. The acquired lands bear Plots Nos. 97 to 100. Declaration under Section 6 was published on 9-10-1973. Possession of the land was taken on 5-7-1973 and no award came to be passed. M/s Kalra Properties (P) Ltd., the respondent in the main case, had purchased the acquired land by sale deed dated 3-2-1989 for a total consideration of Rs 60,000. He filed a writ petition in the High Court for mandamus commanding the appellants to pay compensation in respect of the lands in question on the basis of the market value fixed by the District Magistrate, Collector, Lucknow (Annexure 6) filed in the High Court. The Division Bench by order dated 17-11-1992, allowed the writ petition, issued mandamus and directed that the compensation should be paid to the respondents in accordance with the market value assessed by the Collector at the rate of Rs 200 per square foot with all consequential benefits of solatium and interest under the Act as amended by Amendment Act 68 of 1984.
3. The learned Attorney General for the appellants contended that after the judgment, it has come to light that in respect of the selfsame lands, the market value as per the guidelines issued by the Government was determined for stamp duty at Rs 80 per square yard in Ziamou area and the respondent himself had purchased the land for Rs 60,000 in 1989. The determination of the compensation by the Collector @ Rs 200 per square foot is an obvious error apparent on the face of the record and the directions issued by the Division Bench are vitiated by manifest error of law. Shri Gopal Subramaniam, learned Senior Counsel, who has sought for and granted 15 adjournments on the ground that matter is being settled, has informed the Court that the settlement has not been reached and it is under process. He has sought further extension of time. Since the case has been adjourned several times, we are not inclined to adjourn the case. In his usual fairness, he has stated that he does not stand on technicalities. The respondent has purchased the land in question. The acquisition covered about 10,000 square feet in addition, the respondent had purchased another 5000 square feet which was also taken possession of by the respondent under the notification but the same does not form part of the acquisition. He contended that since possession was taken before declaration under Section 6 was published, it was not validly taken. Admittedly, the award was not made even after two years of the coming into force of the Amendment Act. Therefore, the notification under Section 4(1) and the declaration under Section 6 shall stand lapsed by operation of Section 11-A of the Act. Thereby, the respondent is entitled to the compensation on the basis of prevailing market value. The District Collector had assessed the market value at Rs 200 per square foot and, therefore, there is no illegality in the order of the Division Bench in directing payment of the compensation @ Rs 200 per square foot and also the consequential solatium and interest. Having regard to the facts of this case, we were not inclined to further adjourn the case nor to remit the case for fresh consideration by the High Court. It is settled law that after the notification under Section 4(1) is published in the Gazette any encumbrance created by the owner does not bind the Government and the purchaser does not acquire any title to the property. In this case, notification under Section 4(1) was published on 24-3-1973, possession of the land admittedly was taken on 5-7-1973 and pumping station house was constructed. No doubt, declaration under Section 6 was published later on 8-7-1973. Admittedly power under Section 17(4) was exercised dispensing with the enquiry under Section 5-A and on service of the notice under Section 9 possession was taken, since urgency was acute, viz., pumping station house was to be constructed to drain out flood water. Consequently, the land stood vested in the State under Section 17(2) free from all encumbrances. It is further settled law that once possession is taken, by operation of Section 17(2), the land vests in the State free from all encumbrances unless a notification under Section 48(1) is published in the Gazette withdrawing from the acquisition. Section 11-A, as amended by Act 68 of 1984, therefore, does not apply and the acquisition does not lapse. The notification under Section 4(1) and the declaration under Section 6, therefore, remain valid. There is no other provision under the Act to have the acquired land divested, unless, as stated earlier, notification under Section 48(1) was published and the possession is surrendered pursuant thereto. That apart, since M/s Kalra Properties, respondent had purchased the land after the notification under Section 4(1) was published, its sale is void against the State and it acquired no right, title or interest in the land. Consequently, it is settled law that it cannot challenge the validity of the notification or the regularity in taking possession of the land before publication of the declaration under Section 6 was published.
4. The next question is: whether the respondent is entitled to compensation and, if so, from what date and at what rate? The original owner has the right to the compensation under Section 23(1) of the Act. Consequently, though the respondent acquired no title to the land, at best he would be entitled to step into the shoes of the owner and claim payment of the compensation, but according to the provisions of the Act. It is settled law that the price prevailing as on the date of the publication of the notification under Section 4(1) is the price to which the owner or person who has an interest in the land is entitled to. Therefore, the purchaser as a person interested in the compensation, since he steps into the shoes of erstwhile owner, is entitled to claim compensation.
5. This Court in Jawajee Nagnatham v. Revenue Divisional Officer (1994) 4 SCC 595 had considered whether market value of the acquired land would be determined on the basis of basic valuation register maintained by the Collector for the purpose of levy of stamp duty under the Stamps Act and the method of valuation on that basis is valid in law. This question was considered in extenso in the context of the power of the State under Section 47-A of the Stamps Act to fix the basic valuation for stamp duty. After elaborate survey of the amendments made by the State Legislature by local amendment to the Stamps Act under Section 47-A, this Court had held that the market value shall be determined only on the basis of the evidence adduced by the claimant and in rebuttal thereof by the State, as to the prevailing market value of that particular land. The basic valuation is only for the purpose of collecting the stamp duty and that, therefore, it cannot form foundation to determine the market value.
6. The finding of the Court that the concession that the market value determined by the Collector on the basis of basic valuation would be properly applied, is obviously illegal. Shri Gopal Subramaniam contended that the Government of U.P had issued three different circulars accepting the position that the basic valuation would form basis for determination of the compensation under Section 23(1) and that, therefore, the High Court was right in accepting the valuation made by the Collector and in directing to pay the compensation on that basis. After the judgment in Nagnatham case (1994) 4 SCC 595, the Division Bench of the High Court of Allahabad in State of U.P v. Shau Singh 1995 HVD Vol. 1 191 had held that the rates fixed for the collection of stamp duty cannot be relied upon to determine market value. Therefore, the instructions issued by the Government for determination of the market value on the basis of basic valuation register were held illegal. The Collector, therefore, was obviously wrong in determining the compensation under Section 23(1) on the basis of prevailing rates in 1992 as per basic valuation circulars.
7. In view of the settled legal position that the compensation should be determined on the basis of the market value of the acquired land prevailing as on March 1973, though the Attorney General repeatedly argued that the acquired land was not situated in a developed area, while Shri Gopal Subramaniam contended that it is at the corner of a developed area and that, therefore, the land commands higher market value. Even the contention of Gopal Subramaniam on the situation of the land is accepted. The admitted circumstance that can be taken into consideration is that the land was acquired to establish pump station to drain out flood water in the low-lying area. In other words, as in 1973, the lands were not in a developed condition and that the lands are near the submerged area and the acquisition is to set up pump station to drain out flood water. It would be obvious that in course of time, there would be development and as in 1992, the area might have been fully developed. But by operation of Section 24 of the Act, the subsequent development is irrelevant for determination of the compensation. Though the Attorney General repeatedly referred to the statistical data of the market value in 1980-82 at Rs 10 to 15 per square foot, it is equally settled law that the data is not evidence unless evidence is adduced. It is equally settled law that when a large extent of land is acquired, it cannot be determined on square foot basis. Therefore, it should be determined only on the basis of yardage. If the principle of determination of compensation on yardage basis is adopted, it is equally settled law that at least 1/3rd of the land required should be deducted towards developmental purposes, namely, providing roads, electricity, drainage facilities and other betterment developments. In 1989, when the respondent himself had purchased property, it had valued the market value at Rs 60,000. Therefore, it is further settled law that the same would form basis, provided the sale is a bona fide sale between willing parties in normal market conditions and it was not intended to inflate the market value of the land under acquisition. As found earlier, in 1973 there was no development since the very acquisition was for draining out flood water in that area. It obviously does not command large market value but in due course, neighbouring area might have developed. Considered from this perspective and in the facts and circumstances, we are of the considered view that no useful purpose would be served by remitting the case to the High Court or by directing the Land Acquisition Officer to determine compensation. We are of the view that the respondents would be entitled to a total compensation of Rs 25,000. The respondent is also entitled to interest @ 6% from the date of taking possession till the date of deposit of the amount in the Court. The respondent is also entitled to 15% solatium on Rs 25,000 determined as compensation. The appellant is directed to deposit the said amount within six months from the date of the receipt of this order. If possession of any land in excess of the land covered by Section 4(1) has been taken, our order would not cover it and appropriate action according to law should be taken.
8. The appeal is accordingly allowed and the writ petition stands disposed of but, in the circumstances, without costs.