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Smart Summary

Structured Summary of the Opinion — P. Ramachandra Raju, J.

Factual and Procedural Background

An extent of 0.18 acres (18 guntas; 2,178 sq. yards) in Survey No. 155/2, Bhuktapur village (part of Adilabad town) was acquired by the State for construction of a vegetable market by the Adilabad Municipality. A draft notification was dated 21-3-1975 and published in the gazette on 17-4-1975 (notification under section 4(1)); declaration under section 6 was published on 8-5-1975; possession was taken on 21-2-1976.

Before the Land Acquisition Officer (LAO) the appellant claimed compensation for land at Rs. 300 per sq. yard and separate amounts for a building (Rs. 70,000), compound wall (Rs. 9,000) and a well (Rs. 3,000), asserting those structures existed by the date of the draft notification. The LAO concluded the structures were erected after the draft notification, rejected their compensation, and fixed land value by capitalisation at Rs. 70,691.33, awarded interest at 4% from date of possession and an aggregate award of Rs. 90,689.03 (including solatium and interest).

The appellant sought a reference under section 18 to the civil court; the reference (O.P. No.108/79) was disposed of by the Additional District Judge (ADJ), Adilabad, on 31-12-1980. The ADJ rejected the capitalisation method, fixed market value at Rs. 75 per sq. yard, deducted 25% for amenities, enhanced compensation by Rs. 60,810.69, and held the house/compound wall/well were constructed after publication of the draft notification (but did not specify amounts awardable if structures were found to be pre-notification).

On appeal to this court, by order dated 4-3-1982 the court called for a specific finding on the amount payable for the building, compound wall and well, and remitted to the ADJ to consider additional documents and evidence to determine the time at which the structures were erected. The ADJ subsequently recorded a finding adopting the Revenue Divisional Officer's valuation of Rs. 65,000 for the structures.

Legal Issues Presented

  1. What is the correct market value of the acquired land per square yard on the date of the section 4(1) notification (17-4-1975)?
  2. Were the building, compound wall and well existing on the land prior to the date of the section 4(1) notification so as to attract compensation (and if so, what is their assessed value)?
  3. Whether a deduction (25%) should be made from market value to meet costs of providing roads and other amenities for this small, centrally located plot?
  4. What rate of interest is payable on the compensation award: 4% (state amendment) or 6% (statutory rate under section 34 of the Land Acquisition Act, 1894)?
  5. What evidence may properly be relied upon to fix market value (post-notification sales, market value registers, capitalisation of rental etc.)?

Arguments of the Parties

Appellant's Arguments (as advanced by Mr. G. V. L. Narasimha Rao)

  • The market value fixed at Rs. 75 per sq. yard is grossly low; the market value should be at least Rs. 300 per sq. yard.
  • Because the plot is fully developed and surrounded by roads on all four sides, there is no justification to deduct 25% towards amenities or road provision.
  • There is ample evidence that the building, compound wall and well existed by the date of the draft notification and the appellant is therefore entitled to compensation for those structures (he accepted the LAO/Revenue Divisional Officer valuation of Rs. 65,000 for them before this court).
  • The award of interest at 4% from the date possession was taken is illegal; interest should be awarded at 6% per annum.

Respondent / Government's Position

  • The learned Government Pleader supported the findings of the Additional District Judge (i.e., market value at Rs. 75 per sq. yard after deduction, structures raised post-notification, interest at 4%).
  • The Land Acquisition Officer had taken the view that the building, compound wall and well were constructed after the draft notification and thus not compensable; the LAO also rejected certain sales evidence and adopted a capitalisation method to fix market value.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in This Case
State of U.P. v. Jitender Kumar, AIR 1982 SC 876 Permissibility of relying on post-notification sales where there is no material to show market fluctuation between notification and sale; high court in that case relied on a 1951 sale to fix market value when there was no shown fluctuation between 1948 and 1951. The court distinguished the present facts: unlike Jitender Kumar there was evidence of rapid escalation and fluctuation in prices during 1974–75 and after the municipal market became a reality; consequently post-notification sales were not relied upon here.
Land Acquisition Officer v. Venkateswara Prasad, Appeal No. 880/80 (11-11-1981) (Division Bench of this Court) Market value registers (not based on comparative sales but on municipal/property tax assessment) are not a reliable basis for fixing market value. The court adopted the same view: market value registers are primarily based on municipal assessment and annual rental and do not reflect the price a willing purchaser pays a willing vendor; therefore such registers were not used to fix market value.
Mohammad Karimuddin v. Collector of Madras, (1965) 1 Mad LJ 66 Authority for the proposition that in the case of small plots situated in the heart of the city, no deduction need be made for providing roads or amenities (as applied by a Division Bench of the Madras High Court). The court found this view persuasive and held that for the small central plot here (2,178 sq. yards) no deduction towards cost of laying roads or providing amenities should be made; the 25% deduction was thus set aside.
Y. Venkannachowdary v. Special Deputy Collector, (1980) 1 APLJ (High Court) 419; (AIR 1981 Andh Pra 232) Issues concerning the appropriate rate of interest under section 34 where land is acquired for central government purposes (discussion of 4% v. 6% and review petitions subsequently allowing 6% in certain contexts). The court treated parts of the decision as obiter and reviewed the applicability: the present court held that the state amendment reducing rate to 4% applies to state acquisitions and does not bind acquisitions for central purposes; in this case the court held 4% (state position) applied.
Vajravelu v. Special Deputy Collector, AIR 1965 SC 1017 Supreme Court's observations that certain state amendments (Madras amendment 1961) discriminated and were vulnerable under Article 14 where they created unreasonable classification between acquisitions for different public purposes. The court observed that Vajravelu concerned the 1961 amendment and its reasoning cannot be transposed to the 1953 amendment; thus Vajravelu did not support treating the 1953 reduction to 4% as constitutionally invalid in the present context.
Special Land Acquisition Officer v. Abdul Basith, (1981) 3 SCC 125; (AIR 1981 SC 1482) Supreme Court corrected anomalous awards of differing interest rates in different cases and awarded 6% in that context to remove inconsistency where state amendments had produced disparity. The court held Basith does not establish that 6% is payable irrespective of whether acquisition is for state or central purposes; Basith corrected inconsistent awards, but here the court applied the state amendment and awarded 4%.

Court's Reasoning and Analysis

The court evaluated the factual matrix and the evidence on valuation, timing of construction, and applicable rate of interest. The principal strands of the analysis were:

  1. Market value evidence: The court examined offers, post-notification sales and the registration department / market value register entries. It found:
    • Offers given by parties closely connected to the appellant (e.g., R.W.5, a relative) were not given much weight.
    • Post-notification sale deeds produced (Exs. B-9, B-10, B-8) dated December 1976, April 1977 and October 1975 respectively were either post-notification, were influenced by the certainty/operation of the municipal vegetable market, or were not sufficiently supported by evidence of the purchasers; consequently the court declined to rely on them to establish market value on 17-4-1975.
    • Market value registers (Ex. B-7 and associated entries) reflected values based primarily on municipal property tax assessment, not comparative market sales, and therefore were not indicative of the price a willing buyer would pay a willing seller; accordingly the court rejected them as a basis for fixing market value.
    After reviewing the admissible materials and prior findings, the court concluded the appellant had not produced material to justify a market rate higher than Rs. 75 per sq. yard fixed by the ADJ, and therefore rejected the appellant's claim for Rs. 300 per sq. yard.
  2. Deduction for amenities/roads: The court assessed the location and size of the plot (2,178 sq. yards, surrounded by municipal roads on all four sides, in a developed and busy area with banks, markets and theatres nearby). On that basis, and relying on authority such as Mohammad Karimuddin, the court held that for a small, centrally located plot no deduction for providing roads or amenities was necessary. The earlier 25% deduction was set aside.
  3. Existence of structures before notification: The court conducted a careful review of the documentary and oral evidence as to whether the building, compound wall and well existed by the date of the section 4(1) notification (17-4-1975).
    • The LAO's refusal to award compensation was predicated on a finding that structures were raised after notification; the tahsildar (who inspected before notification) was not produced as a witness, though he had prepared a sketch and pre-valuation notes.
    • The tahsildar's pre-valuation notes (pre-valuation statement/notes) included an approximate value (about Rs. 60,000) which the court treated as a contemporaneous official recognition that compensation might be payable for the building — a circumstance inconsistent with the LAO's view that the structures were post-notification.
    • Further documentary evidence showed foundations of 50 x 60 dug by September 1974 (Ex. B-30) and estimates obtained in April 1973 (Exs. B-31, B-32). The municipal commissioner’s letter of 2-1-1976 (Ex. A-16) indicated construction was in progress and nearly complete by January 1976.
    • Oral evidence (R.W.2) stated the compound wall and well were sunk in 1974 and that the foundation, walls and roof were laid prior to notification, with only some plastering completed thereafter.
    Considering the positive evidence for pre-notification construction, the absence of cross-examination of the tahsildar, and the improbability that a businessman/income-tax assessee would commence costly construction after a public draft notification, the court accepted that the building, compound wall and well were raised before publication of the draft notification.
  4. Valuation of structures: The court accepted the Revenue Divisional Officer's valuation of Rs. 65,000 (and observed the appellant did not dispute that figure before the court), and held the appellant entitled to that amount for the building, compound wall and well.
  5. Rate of interest: The court examined the statutory position under section 34 of the Land Acquisition Act (statutory rate 6%), the Andhra Pradesh amendment (reducing rate to 4%) and relevant case law. After analysis the court held that in this State the rate of interest payable under section 34 is 4% per annum and that award of 4% was appropriate (rejecting the appellant’s submission for 6%).
  6. Computation and award: On the land component (entire area of 2,178 sq. yards) the ADJ’s rate of Rs. 75 per sq. yard was accepted but without the 25% deduction (i.e., full extent payable). The additional compensation for the site inclusive of 15% solatium was computed at Rs. 46,963.10. The compensation for the structures (Rs. 65,000) inclusive of 15% solatium amounted to Rs. 74,750.00. The court directed payment of the aggregate additional compensation of Rs. 1,21,713.10 and ordered interest at 4% on Rs. 46,963.10 from 21-2-1976 until payment and interest at 4% on Rs. 74,750 from date of taking possession of the building/structures until payment.
  7. Writ petition / possession: Because the court awarded compensation for the structures and possession had been taken on 21-2-1976, the court held that under section 16 of the Land Acquisition Act the property vested in the government free from encumbrances and the appellant had no right to continue in possession. Consequently the writ petition seeking to set aside municipal proceedings was dismissed and the appellant was given time until end of December 1982 to vacate.

Holding and Implications

Holding:

The appeal is ALLOWED IN PART and in that part the court directed the Land Acquisition Officer to pay to the appellant the additional compensation of Rs. 1,21,713.10, together with:

  • Interest at 4% p.a. on Rs. 46,963.10 from 21-2-1976 until date of payment; and
  • Interest at 4% p.a. on Rs. 74,750.00 from the date of taking possession of the house/compound wall/well until date of payment.

Payment was directed to be made within three months from the date of the judgment. The appeal in respect of other claims was dismissed. Each party was ordered to bear their respective costs in the appeal. The writ petition (W.P. No. 6031/79) was dismissed and the appellant was given time until the end of December 1982 to vacate the premises. Leave to appeal to the Supreme Court was refused.

Implications:

  • The direct effect is to increase the appellant’s compensation by Rs. 1,21,713.10 plus specified interest and to require payment within three months. Possession vests in the government and the petitioner must vacate accordingly.
  • The court applied existing principles regarding admissibility of post-notification sales and unreliability of market value registers in the factual matrix; it did not purport to lay down a new legal precedent of general application beyond the reasoning applied to the facts of this case.

    Jawajee Naganatham Etc. v. Revenue Divisional Officer, Adilabad And Etc.

    P.Ramachandra Raju, J.:-

    (1) An extent of ac. O. 18 guntas of land in s. No. 155/2 of bhuktapur village, part of abilabad town was acquired by the government for the construction of a vegetable market by the adilabad municipality. A draft notification dated 21 - 3 - 1975 was published in the gazette dated 17 - 4 - 1975. The declaration under section 6 was published in the gazette on 8 - 5 - 1975. Possession of the land was taken on 21 - 2 - 1976. Before the land acquisition officer the appellant claimed compensation at the rate of rs. 300. 00 per square yard. He further claimed rs. 70,000. 00 towards the cost of the building rs. 9,000. 00 towards the cost of the compound wall and rs. 3,000. 00 for a well. According to the appellant, the building, compound wall and well are existing by the date of the draft notification and he should be compensated for such building compound wall and well at the rates claimed by him. The land acquisition officer held that the appellant constructed the building well and compound wall after the publication of the draft notification and the appellant was, therefore not entitled to be compensated for those structures. The land acquisition officer felt that the values reflected by certain sales cannot be considered for the various reasons given by him in his award. He collected some particulars regarding the annual rental values of sites in that locality and adopted the capitalisation method and fixed the market value of the land at rs. 70,691 - 33 ps after making various deductions on different accounts he provided interest at 4% from the date of taking possession and ultimately awarded a sum of rs. 90. 689 - 03 which besides solatium also included the interest calculated till 12 - 1 - 1979. On an application by the appellant, the necessary reference under section 18 was made to the civil court. The said reference was numbered as o. P. No. 108/79 and was disposed of by the additional district judge, adilabad, by his order dated 31 - 12 - 1980. The additional district judge did not approve of the capitalisation method adopted by the land acquisition officer. He evaluated the evidence and held that the market value should be fixed at rs. 75. 00 per sq. Yard he deducted 25% towards the costs of amenities and enhanced the total additional compensation payable to the appellant by rs. 60,810 - 69 p. He held that the house compound wall and well were constructed after the date of publication of the draft notification and he rejected the claim made by the appellant for compensation in that behalf he did not however indicate in that judgment as to the amounts if any awardable to the appellant in case compensation became payable to the appellant on account of the cost of such building compound wall and well. The appeal was argued once before us. By order dated 4 - 3 - 1982 we called for a finding regarding the amount of compensation that may be payable to the appellant for the building, compound wall and well. As certain documents which were filed in the appeal were not filed earlier before the additional district judge we also directed the additional district judge to consider the claim of the appellant afresh in the light of those documents and in the light of any further evidence which the parties may adduce and determine afresh the point of time at which the building compound wall and the well have been erected or dug by the appellant. The learned additional district judge has recorded the following findings:

    "there were no constructions on the acquired site except foundations of 50 x 60 by the date of notification under section 4 (1). The claimant failed to adduce any positive evidence as regards the actual expenses incurred for the construction of the building compound wall and the well. However, since the revenue divisional officer has estimated the value of the building and the well in the p. V. Statement the same can be adopted as the value for the well and the building inclusive of the compound wall"
    .

    It may be noted that the value indicated by the revenue divisional officer is rs. 65,000. 00

    (2) Mr. Narasimha rao, the learned counsel appearing for the appellant has not disputed before us the correctness of the value of rs. 65,000 towards the building compound wall and the well. He has however made the following main submissions. (1) the fixation of the market value at rs. 75. 00 is grossly low. The market value should be fixed at not less than rs. 300. 00 per sq. Yard (2) the plot is surrounded on all the four sides by roads. It is a fully developed area. There is therefore no justification to deduct 25% or any amount towards the cost of providing amenities (3) there is abundant material to indicate that the building compound wall and well were existing by the date the draft notification was published. The appellant should therefore be compensated for such structures (4) award 4% from the date possession was taken is illegal. Interest at 6% per annum should be provided. The learned government pleader reiterated the correctness of all the findings recorded by the additional dist. Judge.

    (3) The ac. O - 18 guntas are located in ward no. 5 block no. 7 in adilabad yards. It is in the heart of adilabad town surrounded by residential houses. There are municipal roads on all the four sides of the site. The state bank of hyderabad and andhra bank are located on the eastern and western sides across the roads. Gandhi chowk market and ambedkar chowk market as also the national highway towards nagpur are each at a distance of 200 yards from the land. The cinema theatres are situated at a distance of 50 or 60 yards from the acquired site. Three lodging houses are also situated within a distance of 200 yards from the acquired site. The con - operative consumers stores is at a short distance of 10yeards from the acquired site. There is thus no dispute that the acquired site is in a busy and important area of adilabad municipality. Despite the fact that the land is still registered as agricultural land in the revenue accounts, it has gained the value of a potential building area and the appellant had even paid the required converting fee in november 1974 for converting the land from an agricultural to a non - agricultural purpose. There have not however been any recent sales of lands in the neighbourhood, vis - a - vis, the date of publication of the notification under section 4 (1) the appellant has however, let in evidence of certain offers he had for the land and of transactions which took place much later than the date of section 4 (1) notification and of the values adopted by the registration department for lands in this area. In his evidence as r. W. 2, the appellant gave out that one dattatreya, ganapth rao and kansibai offered to purchase the site at the rate of rs. 300. 00 per square yard and that even during 1979, people were offering to purchase the site at rs. 500. 00 per square yard. Dattatreya of them was examined as rw - 5. He runs a cloth stores. His son - in - law one triambak is the nephew of the appellant. Rw - 5, is therefore closely related to the appellant and not much importance need by given to his evidence. Ganapath rao and kasibai were however not examined. The acquired land was in fact notified under section 4 (1) once in the year 1941, but for some reason or other the further land acquisition proceedings were not held pursuant to such notification made in the year 1941 and the land was again renotified under sec. 4 (1) on 17 - 4 - 1975 as we will have occasion to point out, there have been proceedings between the appellant and the adilabad municipality regarding the right of the appellant to raise structures on a land so notified earlier in the year 1941 for the purposes of the very same municipal market. It is therefore improbable that anybody would have evinced interest in purchasing any part of the acquired land. This evidence of rw - 2 and rw - 5 regarding the alleged officer has not impressed us to be true. Rw - 5 who is a broker for sale transactions of sites gave evidence that during the year 1974 - 75, lands in the neighbourhood at a distance of 30 to 40 yards from the acquired land were sold at rates varying from rs. 30. 00 to rs. 50. 00 per square yard. None of the persons who acquired plots by utilising the services of r. W. 5 have been examined and the documents relevant to such alleged purchases have not either been filed. That apart, the additional district judge fixed the market value at rs. 75. 00 per square yard which is higher than the rates disclosed by r. W. 5. The evidence of r. W. 5 does not therefore assume any importance sivanna (r. W. 7) gave evidence of his purchase under ex. B - 9 dated 30 - 12 - 1976. He paid rs. 14,000. 00 for 50 sq. Yards. Likewise, kishan rao (r. D. 8) acquired title under ex. B - 10 dated 14 - 4 - 1977 in terms of which another extent of 50 sq. Yards was purchased by him for rs. 14,000. 00 these purchases reflect a market value of about rs. 300. 00 per sq. Yard for plots in the neighbourhood by the end of december, 1976 and april 1977. Possession of the acquired lnd was taken on 21 - 2 - 1976 and the vegetable market of the municipality was either functioning or became a certainty. The prices of lands in the neighbourhood of such market would have sky - rocketed. Exs. B - 9 and b - 10 have come into existence about two years after the draft notification was publiched in the gazette. We do not therefore feel persuaded to place any reliance on the values reflected by exs. B - 9 and b - 10 as indicating the market value of the acquired land on the date of section 4 91) notification the appellant also filed ex. B - 8 sale deed dated 24 - 10 - 1975 in terms of which 50 sq. Yards was sold for rs. 10. 000. 00 that document discloses the market value at rs. 200. 00 per sq. Yard none of the parties connected with ex. B - 6, have been examined further there is a time lag of 7 months between the date of ex. B - 6 and the date of sec. 4 (1) notification we do not feel persuaded to adopt the value reflected in ex. B - 8 sale deed for two reasons firstly, it is a post - notification sale and secondly litigation was pending regarding the acquired land between the municipality and the appellant from some years prior to 1975. Purchasers willing to pay a higher price for a land free from litigation would not be willing to pay at the same rate for any part of the acquired land.

    (4) Mr. Narasimha rao relied upon state of u. P v. Jitender kumar air 1982 supreme court 876 to submit that this is a proper case where we could rely on the values reflected in post notification sales. In that case, the high court enhanced the rate of compensation to rs. 2 - 12 - per sq. Yard as against the rate of rs. 1/0/7 fixed by the civil court. There were sale deeds pertaining to comparatively smaller areas reflecting the market value as varying from rs. 1 - 12 to rs. 5. 00 per sq. Yard. There was also a sale deed dated 11 - 7 - 1951 in terms of which the co - operative housing society itself for whose benefit the land was acquired, purchased another part of the land at the rate of rs. 2. 12 per sq. Yard section 4 (1) notification in that case was issued in january, 1948. The supreme court held that there was no other material to suggest that there was any fluctuation in the market rate during the period 1948 to 1951 and if so, to what extent. It was under those circumstances that the supreme court held that the market value was properly fixed by the high court at rs. 2. 12. 00 per sq. Yard basing itself on the sale deed ex. 21 of the year 1951. Such are not the facts in the present case. There is escalation of prices even during 1974 - 75, the rate varying from rs. 30. 00 to rs. 50. 00 per sq. Yard. The prices would have escalated further especially when the municipal vegetable market became a reality. We cannot, therefore place any reliance on the values reflected in the post - notification sales.

    (5) To curb the tendency on the part of persons to recite a low value in registering documents the government have prepared market value registers indicating the values of different lands in a particular area and made it obligatory on the parties to pay the stamp duty and registration expenses on the basis of such values. Ex. B - 7 is the market value register wherein the entry ex. B - 15 is relied upon to show that during the year 1975 a sq. Yard in ward no. 5, block no. 7 was directed to be valued at rs. 300. 00. It appears rs. 300. 00 rate relates to sites sold for shops but the rate is rs. 150. 00 per sq. Yard if the site is sold from residential purposes subsite is sold for residential purposes. Subsequently there was a representation that such rates as were noted in the market value register were too high and yielding to such representation the rates were correspondingly reduced to rs. 150. 00 or rs. 75. 00 sq. Yard depending upon whether the sites were sold for shops or for residential purposes. In his evidence as r. W. 3, the sub - registrar, adilabad, made it clear that the valuations noted in the market value register were not based on comparative sales and that such valuation was based on primarily the property tax assessments. Property tax assessment is naturally based on the annual rental value. If it is a shopping area, the annual rental value will be more and naturally the property tax assessment would also be at a higher level. As such values were based only on the municipal assessment, they do not reflect the market value obtaining in the locality and more so, when the values so noted in the market value register were not based on any comparative sales. In fixing the market value, the court has to take into account the price which a willing purchaser is prepared to pay to a willing vendor. The valuations noted in the market value register were not admittedly based on such consideration which a willing party was paying to a willing vendor. We can not, therefore fix the market value on the basis of the valuations noted in the market value register. This was also the view expressed by a division bench of this court in land acquisition officer v. Venkateswara prasad appeal no. 880/80 dated 11 - 11 - 1981.

    (6) The appellant has, therefore not placed before us any relevant material on the basis of which he can claim compensation at any rate exceeding the rate of rs. 75. 00 per sq. Yard fixed by the learned additional district judge we accordingly reject the first of the submissions made by mr. Narasimha rao.

    (7) We find force in the second of the submissions made by mr. Narasimha rao. The acquired land is less than half an acre being of the extent of 2,178 sq. Yards. We have earlier set out that the property is situated in the midst of a developed area and have the facility of municipal roads on all its four sides. There is no need for the appellant to invest any further amount for laying roads or providing other amenities. In respect of small area situated in such manner in the heart of the city, no deductions need be made to meet the expenses connected with laying of roads or providing other amenities. A similar view was taken by a division bench of the madras high court in mohammad karimuddin v. Collector of madras (1965) 1 mad lj 66. The appellant will, therefore be entitled to claim the market value without making any deductions therefrom towards roads or other amenities.

    (8) The appellants right to claim the amount of rs. 65,000. 00 as the market value of the building, compound wall and the well depends on the answer to the question whether such structures were existing by the date of publication of sec. 4 (1) notification viz. , 17 - 4 - 1975. The existence of such structures is, however not in dispute. The land acquisition officer refused to award compensation for such structures as according to him, those structures were raised after the publication of sec. 4 (1) notification. The land acquisition officer was examined in the enquiry as p. W. 1. His evidence would disclose that the acquired land was personally inspected by the tahsildar before the notification and that p. W. 1 himself never inspected it. P. W. 1 was also definite that the tahsildar prepared a sketch but that it was no longer available in the records. The tahsildar who made the inspection before the issue of the draft notification, was not examined the appellant has let in positive evidence that he constructed the house, compound wall and the well even by the time the draft notification was published. The additional district judge read the evidence in such a manner that the municipality obstructed the appellant while he was constructing a compound wall and the appellant was obliged to file the suit o. S. No. 30/75 on 28 - 10 - 1975 and according to the appellant he constructed the building after he constructed the compound wall and that such evidence would establish that the building compound wall and well would have been constructed after the publication of the draft notification. The correctness of this finding is seriously questioned on the basis of various documents but in particular on the basis of ex. B - 16 an enclosure to the tahsildars letter dated 4 - 6 - 1977. The matter, therefore requires careful scrutiny of the evidence and the background of the circumstances in which the appellant felt himself obliged to file o. S. No. 30/75 on the file of the district munsifs court, abilabad.

    (9) The disputes between the appellant and the municipality regarding the appellants right to raise some structures appear to have been going on from some years prior to 1968. The appellant initially applied for permission some time in august 1965 for constructing a wall. The municipality relying on the earlier notification made in the year 1941, obstructed the plaintiff from proceeding with the construction of the compound wall and this necessitated o. S. No. 16/68 on the file of the district judge adilabad, a certified copy of the judgment in which is filed as ex. B - 14 dated 12 - 3 - 1972. The municipality was restrained by a permanent injunction from interfering with the construction of the compound wall provided that it was not in contravention of the provisions of the district municipalities act or any rules or bye - laws made thereunder. This judgment was subsequently confirmed by the high court. There is clear indication afforded by ex. B - 30 that by september, 1974 the appellant dug foundations over an extent of 50 x 60 for the building. Earlier, he obtained the estimates under exs. B - 31 and b - 32 during april 1973 from an architect of nizamabad. We find from ex. A - 16 letter dated 2 - 1 - 1976 of the municipal commissioner addressed to the revenue divisional officer that the appellant was constructing the building and the construction was in progress and that it would be completed shortly. By january, 1976 therefore the building was in an advanced stage of construction. The tahsildar enclosed the pre - valuation statement together with the pre - valuation notes to his letter ex. A - 18. In such notes, we find the tahsildar also included an approximate value of rs. 60,000. 00 which may become payable to the appellant as compensation. It cannot be imagined that in making such a statement, the tahsildar did not know that compensation need not be paid for any constructions made after the publication of the draft notification. The circumstance that the provision was so made for payment of compensation on account of this building would indicate that the building was raised before the publication of the draft notification. If the government wanted to say that it was a mistake on the part of the then tahsildar to have prepared the prevaluation statement in that manner, the government should have examined the tahsildar to explain this mistake. The tahsildar was not examined. An inference has therefore, to be necessarily drawn that the structure was raised even before the publication of the draft notification. The positive evidence let in by the appellant that he raised the structure even before the publication of the notification under section 4 (1) has, therefore to be accepted. The circumstance, that the appellant did not obtain the prior permission of the municipality for raising the structure, has no relevance to the liability on the part of the government to pay the compensation for such structure. The appellant as r. W. 2 stated that he completed the construction of the building by the end of 1975 and the compound wall was constructed and the well was sunk even during 1974, in cross - examination, he stated:

    "i constructed the compound wall and later i constructed the building. It is not correct to say that the building was constructed after notification.

    The foundation walls and roof were constructed prior to notification. Plastering only was not done. This evidence has to be read as a whole and so reading the evidence it becomes clear that the foundation, walls and roof were laid even prior to the notification but that some plastering work which remained to be done was completed subsequent to the notification. The finding of the additional district judge that only foundations were dug prior to the notification but the structure was erected subsequent to the notification cannot therefore, be supported. That apart, we have to keep in view the probabilities also. The appellant who is a businessman and an income - tax assessee would not have taken the risk of raising the structure at a substantial cost subsequent to the publication of the draft notification. We accordingly hold that the building and compound wall were publication of the draft notification being so the appellant is entitled to be paid rs. 65,000. 00 towards the cost thereof.

    (10) The other major submission made on behalf of the appellant relates to the rate of interest. In terms of section 34 of the land acquisition act, 1894. The rate of interest is 6% by an amendment made by the land acquisition (andhra pradesh amendment) act, 12 of 1953, the rate of interest is reduced to 4% different states have modified the rate of interest by making local amendments applicable to acquisitions made for their state purposes. So far as this court is concerned it has uniformly been awarding 4% interest only under section 34 of the act as amended in this state.

    (11) In y. Venkannachowdary v. Special deputy collector (1980) 1 aplj (high court) 419: (air 1981 andh pra 232) , the lands were notified for the central government. Interest was, therefore, payable at 6% the award however granted interest only at 4% per annum and the same rate of interest was confirmed by this court in c. C. C. A. Numbers 51 and 55 of 1974 dated 7 - 2 - 1978. Thereafter four review petitions were filed before this court seeking provision for payment of interest at 6% and those review petitions were allowed. The grant of interest at 6% in cases of acquisition of land for the purpose of central government was in conformity with para 21 of the boards standing order 90 which was extracted at page 423 of the judgment. In the year 1962. However the government passed a g. O. Expressing its opinion:

    "the reduction of rate of interest on compensation from 6% to 4% made by virtue of madras act 12 of 1953 came into force from 8 - 7 - 1953, and it applies to all cases of acquisition of lands undertaken by the state government either for the state government or for the central government"
    .

    The bench construed the amending act of 1953 as providing for 4% interest irrespective of the question whether the acquisition of land was for the state purpose or for a central purpose. The bench then proceeded to state that the amending act of 1953 is violative of article 14 of the constitution and was therefore void. Having regard to the admitted fact that the acquisition in that case was for a central purpose it was unnecessary for the learned judges to have expressed themselves on the constitutional validity of the land acquisition (madras amendment) act, 1953 as was adopted by the state of andhra pradesh by the andhra pradesh adoptation of laws order, 1957. We, therefore, consider those observations to be obiter. That apart we fail to see how violation of article 14 of the constitution arises at all if some of the states, with reference to acquisitions made for state purposes have provided for a different rate of interest. There is no discrimination regarding the rate of interest so far s the acquisitions for the state purposes are concerned. The rate of interest at 6% as provided in section 34, remained unaffected only so far as the acquisitions were made for purposes of the central government the learned judges relied upon vajravelu v. Special deputy collector. Air 1965 supreme court 1017. In vajravelus case (supra) certain amendments made by the land acquisition (madras amendment) act no. 23 of 1961 to section 23 of the land acquisition act were questioned as violating art. 14 of the constitution. The supreme court observed: - on a comparative study of the land acquisition act, 1894 and the land acquisition (madras amendment) act (23 of 1961) , it becomes clear that if a land is acquired for housing scheme under the amending act, the claimant gets a lesser value than he would get for the same land if it is acquired for a public purpose like hospital under the principal act. The classification thus sought to be made by the land acquisition (madras amendment) act (23 of 1961) between persons whose lands are acquired for other public purposes has no reasonable relation to the object sought to be achieved. Discrimination is writ large on the amending act and it cannot be sustained on the principle of reasonable classification". Those observations made with reference to the madras amendment act, 1961, cannot be applied with reference to the amendment brought about by the land acquisition (madras amendment) act 1953. The interest payable after that amendment will be 4% where the acquisition is for the state purpose because the amendment made by the state cannot have any application to acquisitions made through the agency of the state government for central government purposes.

    (12) In special land acquisition officer v. Abdul basith (1981) 3 scc 125: (air 1981 supreme court 1482) the purpose for which the acquisition was made whether for a state purpose or a central purpose is not clear. Interest was however, awarded in one of the cases at 5% and another of th cases at 6% the supreme court held that there is no justification for such disparity and awarded 6% interest. Under the karnataka state amendment the rate of interest was reduced to 5% even assuming that the lands were there acquired for the state purpose the circumstances remains that interest was awarded at 6% to one of the claimants and only at 5% for another of the claimants. It was this anomaly that was corrected by the supreme court. The decision of the supreme court in basiths case (supra) cannot, therefore be construed as laying down that interest at 6% is payable irrespective of the question whether the land is acquired for a state government purpose or a central government purpose. We accordingly hold that interest is payable only at 4% and not at 6%.

    (13) The land acquisition officer has provided for the 15 % solatium in awarding the totals compensation on the basis of the market value as fixed by him. The additional district judge, in granting additional compensation, also took into consideration the 15% solatium payable on the market value. Mr. Narasimha rao is not therefore correct in stating that the court below did not provide for interest on the solatium component of the compensation. In the view we have taken that there need be no deduction made towards the cost of laying roads and providing amenities, the appellant will have to be paid compensation for the entire extent of 2178 sq. Yards. The additional compensation payable towards the value of the site inclusive of 15% solatium is rupees 46,963 - 10 ps. In the view we have taken, the appellant has also to be paid compensation for the house, compound wall and well whose market value, as already stated, is rs. 65,000. 00 the compensation amount inclusive of 155 solatium therefor is 74,750/ - the additional compensation payable to the appellant is therefore, rs. 1,21,713 - 10 ps. Possession of the land was taken on 21 - 2 - 1976. The house including the compound wall and the well have not yet been taken possession thereof was interdicted by a stay granted by this court in w. P. No. 6031 of 1979. We have therefore, provided for payment of interest at 4% on rupees 46,963 - 10 ps. From 21 - 2 - 1976 till date of payment and payment of 4% interest on rs. 74,750. 00 from the date of taking possession of the house till date of payment.

    (14) The appeal is accordingly allowed in part, directing the land acquisition officer to pay to the appellant the additional compensation of rs. 1,21,713 - 10 ps. With subsequent interest on rs. 46,963 - 10 ps. At 4% per annum from 21 - 2 - 1976 and interest at 4% per annum on rupees 74,750/ - from the date of taking possession of the building compound wall and well till date of payment. Three months time from this day is granted to the land acquisition officer for making such payment. The appeal as regards the rest is dismissed. Having regard to the exaggerated claim made by the appellant, we direct both the parties in the circumstances, to bear their respective costs in this appeal.

    (15) The additional grounds sought to be raised in c. M. P. No. 2008/82 have been considered. The said c. M. P. Is accordingly ordered.

    (16) In c. M. P. No. 2297 of 1982 the appellant requested this court for permission to amend the valuation to direct refund of rs. 609. 00 paid as excess court fee. In valuing the appeal, the appellant provided for a deduction of 25% but now he wants permission to plead that no such deduction need be made. We have considered this submission on merits while disposing of the main appeal. The amendment sought for is accordingly granted. The officer is directed to work out the court - fee payable and issue refund for the court fee paid in excess, if any.

    (17) The appellant in the above appeal is the petitioner in "w. P. No. 6031/79. He seeks a direction in the nature of a writ of mandamus directing the proceedings r. C. 3405/72/c1 dated 26 - 6 - 1979 of the municipal council, adilabad, the 2nd respondent in the writ petition, as void and illegal and to set aside the same. The state of andhra pradesh who is the 1st respondent in the writ petition as also the 2nd respondent have filed their counters. Excepting two submissions made on behalf of the petitioner the other submissions do not survive for consideration in view of the facts found in the appeal which we have disposed of today by this common judgment the building, compound wall and the well in relation to which the writ petition is filed, has been held by us to have been raised by the petitioner before the publication of the draft notification under section 4 (1) of the land acquisition act. It is on that basis that we have awarded in favour of the petitioner the compensation payable therefor in terms of the land acquisition act. The award under the act having been made and compensation for such structures having been provided by us in the appeal, the collector became entitled under s. 16 of the land acquisition act to take possession which shall thereupon vest absolutely in the government free from all encumbrances. As the land subject matter of acquisition and in which the structures exist, has already been taken possession on 21 - 2 - 1976, the petitioner has no longer any right to continue in possession of the building and other structures existing in that land.

    (18) The first submission made on behalf of the petitioner is that till the municipality paid the compensation the property does not vest in the municipal council and that without such vesting of the property in the council the commissioner is not competent to have issue (sic) the impugned proceedings. The provisions of section 42 of the a. P. Municipalities act have been relied on as supporting this submission. Sec 42 (1) provides for the procedure for acquisition of immoveable property under the land acquisition act if the municipal authority is authorised by the a. P. Municipalities act to so acquire the acquisition in question is not made by the municipalities act. It is an acquisition made by the state government for the purposes of the municipal authority. Being so the payment of the compensation by the municipality before the property vests in the counsil does not arise. The only other submission made before us is that it is not open to the municipality to evict the petitioner who is in possession of the property without filing a civil suit for that purpose. After the award is passed and possession of the land has been taken, the petitioner has ceased to have any title to continue in possession of the building existing in that site. He is an encroacher in the eye of law and it is competent for the 2nd respondent to obtain vacant possession of the property departmentally, especially when the petitioner has no semblance of bona fides in continuing to be in possession of the building. The writ petition is accordingly dismissed. No costs advocates fee rs. 150. 00 the writ petitioner is however given time till the end of december 1982 to vacate the premises.

    (19) On the pronouncement of the judgment sri g. V. L. Narasimha rao, learned counsel for the appellant, made an oral request for grant of leave to appeal to the supreme court. We are unable to certify that this case involves such substantial questions of law of general importance as require the consideration by the supreme court or that it is otherwise a fit case for grant of leave, leave refused.

    (20) Order accordingly.

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