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Case Number

Regular Appeal No. 147 of 1960, against judgment and decree of Dist. J., Bangalore, dated 11-8-1957

Advocates

G. R. Doreswamy
Bhimasenachari Ashrit High Court Govt. Pleader for Advocate General

Judges

A.R Somnath Iyer
D.M Chandrashekhar, JJ.

Acts

SECTION 4 LAND ACQUISITION ACT

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Smart Summary

Summary of Legal Opinion

Factual and Procedural Background

This is an appeal arising out of land acquisition proceedings. The claimant appealed because he was dissatisfied with the enhancement made by the Court below to the compensation originally awarded by the Land Acquisition Officer (LAO). The land acquired measured 884 square yards and was situated in an important locality inside the City of Bangalore, part of the claimant's bungalow compound and partially bounded by the Sampige Road. Acquisition was for laying out a new road, which resulted in two triangular portions being severed from the compound. The LAO awarded compensation at Rs. 10 per square yard; the District Judge enhanced that award to Rs. 12 per square yard. The claimant had initially claimed Rs. 40 per square yard before the LAO but, in this appeal, reduced his claim to Rs. 25 per square yard. The preliminary notification under section 4 of the Land Acquisition Act was dated December 21, 1956.

Legal Issues Presented

What was the correct market value of the acquired land on the date of the preliminary notification (December 21, 1956)?
Whether a subsequent sale transaction (Exhibit P-1) executed within a few months after the preliminary notification could be relied upon in assessing market value.
Whether the claimant was entitled to compensation for injurious severance caused by the acquisition dividing his property into two triangular bits.

Arguments of the Parties

Appellant's (Claimant's) Arguments — Mr. Doreswamy

The sale deed exhibited (Exhibit P-1) executed by the claimant in favour of C.W.1 (Venkata Gowd) demonstrates that the acquired property was worth not less than Rs. 21 per square yard; the claimant sought Rs. 25 per square yard in this appeal.
Evidence (from C.W.2 and C.W.3) suggested offers to buy parts of the property at Rs. 25–28 per square yard, supporting a higher valuation.
The claimant also argued entitlement to compensation for injurious severance, asserting the severance diminished the value of the main building and its grounds.

Respondent's (Land Acquisition/Government) Arguments — Mr. Ashrit, Government Pleader

Pointed out that Rs. 1,500 recorded in Exhibit P-1 related to stamping and registration expenses, so the true consideration for the sale was Rs. 28,500 (not Rs. 30,000).
Argued that the sale transaction in Exhibit P-1 was executed more than three months after the preliminary notification and therefore should be excluded from consideration in determining market value.
Contended that the building component of the sale might have been worth more than Rs. 13,000, affecting the deduction to arrive at site value.
Evidence elicited in cross-examination from LAO and Executive Engineer indicated sales of nearby sites at Rs. 10 per square yard and that some such sites were lower in level and did not enjoy the same contiguity to Sampige Road.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court undertook a fact-focused assessment of the evidence before it and applied the following reasoning steps, as reflected in the opinion:

Evaluation of witnesses:
- C.W.1 (Venkata Gowd) was accepted as a credible witness because his oral testimony as to the sale was corroborated by Exhibit P-1 (the sale deed). The deed recorded consideration of Rs. 30,000, and the court accepted an effective consideration of Rs. 28,500 after deducting Rs. 1,500 for stamping and registration expenses (as pointed out by the Government Pleader).
- The claimant's own evidence was examined. The court noted that C.W.2 and C.W.3 gave evidence of offers to buy parts of the land at higher rates, but the court found those offers insufficiently reliable because they were uncorroborated and the claimant did not refer to them when he gave evidence, making their acceptance problematic—particularly as timing of those offers was vague and likely pre-acquisition.
- Evidence for the LAO and the Executive Engineer showed sales of other sites beyond the acquired property at Rs. 10 per square yard; however, those sites were of inferior situation (lower level and not contiguous to the main road) compared to the acquired property.
On use of subsequent transactions:
- The court applied the principle (as stated in the opinion) that transactions of properties contiguous to the acquired property that took place not only before but also sufficiently proximate to the preliminary notification—even if subsequent to it—can guide determination of market value. The court rejected the submission that a bona fide subsequent sale must be excluded solely because it occurred after the preliminary notification.
- Nevertheless, the court recognized the need to be cautious about possible value enhancement attributable to the acquisition itself or to general market increases after the preliminary notification. Finding no evidence of a phenomenal or general rise in values after the notification, and noting that Exhibit P-1 was executed within four months of the notification, the court concluded that Exhibit P-1 could be relied upon without drastic adjustment.
Computation of site value:
- From Exhibit P-1 the court accepted Rs. 28,500 as the consideration. From that, it accepted Rs. 13,000 as the value attributable to the building (on C.W.1's unchallenged examination-in-chief) and therefore treated Rs. 15,500 as the value of the site that measured 884 square yards.
- On the basis of all circumstances and the foregoing calculations, the court determined a market value of Rs. 19 per square yard for the acquired property as of the date of the preliminary notification.
Relief and award:
- Applying Rs. 19 per square yard, the claimant was found entitled to compensation totaling Rs. 16,796. The court directed that to this amount be added the statutory allowance of fifteen percent and that interest at six percent per annum be payable on the aggregate amount from the date on which delivery of possession was taken until payment.
- The decree of the Court below was modified accordingly.
Claim for injurious severance:
- The court examined the allegation that severance had caused diminution in value of the remaining property. It found no evidence produced by the claimant to support that assertion.
- On perusal of the plan exhibited, the court concluded that the triangular bits severed by the acquisition had become more valuable because the new road now ran on the claimant's land; open space remained on two sides of the main building and there was no reason to think the value of the building was diminished. Accordingly, the injurious severance claim failed.
Costs:
- The court directed that the claimant should receive costs proportionate to his success in this Court and in the Court below; and that the opposite side should bear his own (as set out in the opinion).

Holding and Implications

The decree of the Court below is modified: the court fixed the market value of the acquired land at Rs. 19 per square yard and awarded the claimant compensation amounting to Rs. 16,796, to which the statutory allowance of fifteen percent and interest at six percent per annum from the date of delivery of possession until payment shall be added.

Direct consequences for the parties:

The claimant receives the enhanced award based on Rs. 19 per square yard (Rs. 16,796 plus 15% and interest at 6% from delivery of possession until payment).
The claim for compensation for injurious severance is rejected for lack of evidence; the court found that severance did not diminish the value of remaining property and may have increased value of the severed triangular bits.
Costs are awarded to the claimant proportionate to his success in this Court and in the Court below; the opposite side is to bear his own costs as indicated in the opinion.

Broader precedential impact: The opinion records the court's approach to (a) reliance on proximate subsequent transactions when assessing market value and (b) the necessity for corroboration when witnesses give evidence of private offers—however, the opinion did not cite or apply any reported precedents in support of these points.

Judges: Somnath Iyer, J.; Chandrashekhar J. (concurring).

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M.S Nanjappa, (Claimant) v. Special Land Acquisition Officer, City Improvement Trust Board, Bangalore, .

Somnath Iyer, J.:— This is an appeal arising out of land acquisition proceedings by the claimant who is dissatisfied with the enhancement made by the Court below of the compensation awarded by the Land Acquisition Officer.

2. The land which was acquired measured 884 square yards, and, as the Land Acquisition Officer himself stated in his award, it was situate in a very important locality inside the City of Bangalore. One part of the property was bounded by the Sampige Road which connects the Residency Road with the corporation building. The land was acquired for the purpose of laying out a new road connecting the Sampige Road with another road beyond. The acquired property formed part of the compound of the claimant's bungalow. By reason of the acquisition, two triangular bits were severed from the compound of the main building. The property acquired was a narrow strip, one part of which was bounded by the Sampige Road. The Land Acquisition Officer awarded compensation at Rs. 10 a square yard which was enhanced by the District Judge to Rs. 12. In this appeal, the claimant who claimed compensation at Rs. 40 a square yard before the Land Acquisition Officer has restricted his claim to compensation at Rs. 25 a square yard.

3. In support of his claim for enhanced compensation, the claimant examined himself and three witnesses. C.W 1 Venkata Gowd gave evidence that on April 5, 1957, he purchased a house belonging to the claimant for Rupees 30,000. According to his evidence, the building was worth Rs. 13,000 and the land Rupees 17,000. According to the evidence given by C.W 1, the building measured 13 squares or 1,300 square feet and the area of the land was 800 square yards. Exhibit P-1 is the sale deed executed by the claimant in favour of C.W 1, and, the argument constructed on the basis of this sale deed by Mr. Doreswamy the learned advocate for the claimant is that the acquired property was worth not less than Rs. 21 a square yard.

4. I should have mentioned that the date of the preliminary notification issued under section 4 of the Land Acquisition Act is December 21, 1956.

5. The next witness examined for the claimant is one Sanyasi according to whose evidence, he offered Rs. 25 a square yard for part of the acquired property whereas the claimant insisted on Rupees 30 a square yard. This witness did not state in his evidence very clearly as to when he made this offer. It is clear from the other part of his evidence that this offer, if true, was made by him before there was the acquisition in question. The witness stated that it was on one part of the very property which he wished to purchase from the claimant that the Corporation has laid the new road, and, this statement can have no other meaning than that the offer of C.W 2 if his evidence could be believed, was made before there was the acquisition.

6. C.W 3 is a certain Sundaram who is the manager of the Madras Woodlands Hotel and his evidence was that the management of the Woodlands Hotel wished to purchase part of the acquired property at Rs. 28 a square yard whereas the claimant demanded Rs. 30 a square yard.

7. Normally, we should have found little difficulty in depending upon the evidence of C.Ws 2 and 3 against whom nothing has been elicited in their cross-examination. But, Mr. Government Pleader has pointed out that the evidence of C.Ws 2 and 3 suffers from the gross infirmity that the evidence given by them was not corroborated and not even referred to by the claimant himself who gave evidence as C.W 4. One should have expected when C.Ws 2 and 3 gave evidence about their own offers, that the claimant would refer to those offers when he gave evidence. If the claimant himself did not refer to those offers and gave no evidence about it, it would not, in my opinion, be possible for us to depend upon the uncorroborated testimony of C.Ws 2 and 3, particularly, having regard to the fact that their evidence in regard to the exact point of time when they made their offers is somewhat vague.

8. On behalf of the Land Acquisition Officer, he examined himself and the Executive Engineer. What was elicited in the evidence of these witnesses in cross-examination was that sites which lay beyond the acquired property on the southern side farther away from the same road were sold at Rs. 10 a square yard. In his cross-examination, the Special Land Acquisition Officer admitted that area was lower in level than the land acquired. In his evidence, the Executive Engineer stated that although some of those sites were sold at Rs. 10 a square yard, it was proposed to sell the other sites at Rupees 15 a square yard. However that may be, it is clear that those sites did not enjoy the superior situation which the acquired property enjoyed on account of its contiguity to the main road, namely, the Sampige Road.

9. There is not, in my opinion, any reason why we should distrust the testimony of C.W 1 whose evidence stands corroborated by the sale deed exhibit P-1 according to which for the property purchased by him, he paid a consideration of Rs. 28,500. Mr. Doreswamy asks us to say that the consideration was Rs. 30,000. But Mr. Ashrit the learned Government Pleader has pointed out that Rs. 1,500 was paid towards the expenses of stamping the document and registering it. So, we should, in my opinion, say that the consideration paid for the sale was Rs. 28,500.

10. From this amount, Mr. Doreswamy asks us to subtract Rs. 13,000 towards the cost of the building. But Mr. Government Pleader asks us to say that the building was worth much more than Rs. 13,000. But this argument advanced by Mr. Government Pleader is unacceptable for the reasons that no question were put to C.W 1 when he was in the box with reference to the answer given by him in examination-in-chief that the value of the building was Rs. 13,000 on the date of the sale deed. That part of his evidence was not subjected to any cross-examination whatsoever.

11. We should, therefore, in my opinion, say that Rs. 15,500 after excluding Rs. 13,000 which was the value of the building, represented the value of the site which measured 884 square yards. It is on this basis that we should now proceed to assess the market value of the acquired property at the relevant point of time.

12. Mr. Ashrit advanced the argument that since Exhibit P-1 was executed by the claimant in favour of C.W 1 more than three months after the date of the preliminary notification, we should altogether exclude the sale transaction recorded in that sale deed from consideration. In advancing this argument, Mr. Ashrit overlooks the principle that for the determination of the market value of the acquired property, transactions relating to sales of properties contiguous to the acquired property which took place not only before the date of the preliminary notification but also sufficiently proximate to the preliminary notification even if the transactions are subsequent transactions, should constitute the guiding factor. No bona fide sale transaction can be excluded from consideration merely on the ground that the transaction was entered into subsequent to the date of the preliminary notification.

13. It is, of course, true that when depending upon a subsequent transaction, we should not overlook enhanced values attributable to the very acquisition or to a general increase in the market prices. But having regard to the fact that the sale recorded in Exhibit P-1 was made within four months from the date of the preliminary notification and also having regard to the fact that there is no evidence whatsoever on the basis of which we can say that there was any such phenomenal or other general increase in the value of building sites after the date of the preliminary notification, we should not be justified in saying that the data available from Exhibit P-1 should be subjected to any drastic variation.

14. Taking all the circumstances into consideration, it appears to me reasonable to say that the value of the acquired property was worth Rs. 19 a square yard on the date of the preliminary notification.

15. So computed, the claimant will be entitled to compensation amounting to Rs. 16,796. To this will be added the usual statutory allowance of fifteen per cent, and, on the aggregate amount, the claimant will be entitled to interest at six per cent per annum from the date on which delivery of possession was taken till date of payment.

16. The decree of the Court below will be modified accordingly.

17. Before concluding we should notice an argument advanced by Mr. Doreswamy which was to the effect that the claimant was entitled to some kind of compensation for injurious severance. The argument placed before us was that, by reason of the acquisition for a road which divided the property of the claimant into two small triangular bits, the lands were severed from the rest of the building and that the severance was injurious to the claimant and diminished the value of the main building and the grounds attached to it.

18. No evidence is produced on behalf of the claimant establishing the truth of the allegation that the severance of the property into two portions caused any diminution in the value of any part of the property belonging to the claimant which remained with him.

19. Mr. Doraiswamy placed before us a plan which was exhibited in the case delineating the portion acquired for the road and the portions which remained with the claimant after this acquisition. On a perusal of this plan it becomes clear that there can be no truth in the claimant's story that the value of the main building which remained with the claimant has become reduced by reason of the two triangular bits having been separated from that part of the property. On the contrary it appears to me that by reason of the acquisition for the road which now runs on the claimant's land, the two triangular bits of vacant sites have become more valuable and, far from causing any injury to the claimant, constitute a source of gain for him which he would not have derived had there been no acquisition. Likewise, there is plenty of open space on two sides of the main building and there is no reason to think that the value of the building became diminished by reason of the acquisition. The argument based on injurious severance cannot therefore succeed. In regard to costs, the direction should be that the claimant should receive costs proportionate to his success in this Court and in the Court below and the opposite side should bear his own.

20. Chandrashekhar J.: I agree.

JI/SG/R.G.D

Order accordingly.

M.S Nanjappa, (Claim... v. Special Land Acquisi...