PRABHAKAR RAGHUNATH PATIL & Ors. v. STATE OF MAHARASHTRA

Compensation - Valuation of structure - Held: Age of structure is relevant for valuation purpose - Expert could not state the age of structure when it was notified in 1983 for acquisition - The fine condition of structure and superior quality of material used for construction in the structure was G beyond doubt and never questioned - Schedule Rates cover costs of construction in the entire district - Cost of construction was for the first time introduced in 1991 - Cost of construction would admittedly be lower in 1983 than in 1991 - Besides, the cost of construction of ground floor is always on the higher 586 H PRABHAKAR RAGHUNATH PATIL v. STATE OF MAHARASHTRA 587 side while the cost of construction of first floor and second floor A is on the lower side - Depreciation also would have accrued to the structures owing to wear and tear over a period of 8 In the year 1991, cost of construction of residential years - building was Rs. 2, 800 per square meter for the ground floor and Rs. 2,200 per square meter for the second and the third B floors - A deduction of 60 per cent from the said valuation of the cost of construction in 1991 found appropriate - Accordingly, compensation fixed at Rs. 1700 per square meter for the structure - Thus, the valuation raised from Rs. 1,200 per square meter to Rs. 1700 per square meter. c 0 The acquisition proceedings were initiated under the Land Acquisition Act, 1894 in respect of the properties belonging to the claimants-appellants. Section 4 Notification was issued on 15.9.1983. The Land Acquisition Officer passed an award on 22.09.1986 and possession of the properties was taken on 18.10.1986. The claimants were not satisfied with the compensation amount. Before the reference court, they claimed compensation @ Rs.3501- sq. meter for the open land and @ Rs.2000/sq. meter for the structures. The reference E court considered the evidence of expert witness to be unreliable as he failed to state in his evidence, the details regarding the age of the building acquired under the notification. It relied on the sale instance and enhanced the compensation, determining the value of the open land F @ Rs.225/- sq. meter and @ Rs.1200/- sq. meter for the structure. The State and the claimants both challenged the order of the reference court before the High Court. The High Court allowed the appeals filed by the State G and dismissed those filed by the claimants. It held that justified in awarding the reference court was compensation @ Rs.225/- sq meter for open space. While coming to the said conclusion, the High Court considered the sale deed dated 11.12.1982 for an open space H 588 SUPREME COURT REPORTS (2010] 13 (ADDL.) S.C.R. A admeasuring 16' x 16' for which sale consideration of Rs. 8,000 was received. But, since the same related to a small plot of land as compared to the acquired land, the High Court made deduction from the exemplar value and on the basis thereof upheld the valuation of the reference B court fixed at Rs. 225 per square meter for the open space. The instant appeals were filed by the claimants challenging the order of the High court. Partly allowing the appeals, the Court C HELD: 1. When a large tract of land is acquired and the valuation thereof is sought to be determined on the basis of sale instances relating to small portion of land, the general trend of this Court is to deduct 33 per cent from the value of such small tract of land. Since a very D small portion of land was sold by the sale deed dated 11.12.1982 admeasuring 16' x 16', the same can be treated as a base guide only after proper deduction is made from the value fixed in such sale deed. Consequently, the plea for increase of compensation, in E so far as open space is concerned is rejected. [Para 6) [593-D-F]

2.1. For seeking an increase in the valuation of the structure, reliance was placed by the appellants on the evidence of the expert witness and also on the circular F dated 03.01.1991 issued by the Chief Engineer in respect of cost of construction. The expert had not given any specific evidence as to what was the age of the structure when it was notified for acquisition. The age of the structure is relevant factor for assessing the valuation. G Besides, the cost of construction of the ground floor is always on the higher side while the cost of construction of first floor and second floor is on the lower side. The expert also ignored the said fact which would go to the root of the valuation and for that also the evidence of the H .expert was not reliable. It is established from the records PRABHAKAR RAGHUNATH PATIL v. STATE OF MAHARASHTRA 589 that the practice of issuing circular by the Chief Engineer A with regard to the cost of construction was for the first time introduced in the year 1991 and no such practice was in existence in the year 1983. But there is at least some evidence indicating the District Schedule Rates for the standing structure in the year 1991. However, such B an exercise to determine the compensation with reference to future documents must be undertaken with great care and caution. The compensation as determined by the reference court for the plot containing the structures is on the lower side. The High Court, while c referring to the oral evidence adduced by the expert stated that the fine condition of the structures and the superior quality of materials used for construction of the the ambiguity surrounding the age of the structures, the condition and quality of the building was never called into question. Therefore, claimants are entitled to enhancement of compensation. [Paras 7, 9, 10, 11) (593-F-H; 594-E-G; 595- A-D; 596-G-H; 597-A-B] is beyond doubt. Despite 0

2.2. The margin of error in comparing Schedule rates E for construction of buildings in the same district would be lesser than in attempting to use future sale transactions as exemplars. The Schedule Rates cover costs of construction in the entire district, thus factoring any sudden spurt in increase of land prices owing to F acquisition in the area. Moreover, the quality of the structures stands testimony of the fact that the building possesses considerable value, notwithstanding the fact that its age was not correctly ascertained. Therefore, the cost of construction, which would be admittedly lower in G 1983 than in 1991, must also be juxtaposed with the depreciation that would have accrued to the structures owing to wear and tear over a period of 8 years. In the year 1991, the cost of construction of residential building was Rs. 2,800 per square meter for the ground floor and H 590 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R. B A Rs. 2,200 per square meter for the second and third floors. A deduction of 60 per cent (approximate) from the said valuation of the cost of construction in 1991 and compensation of Rs.1700 per square meter for the structure would be appropriate. The decision to deduct the said percentage of 60% is based on the Building Cost Index between 1983 and 1991 published by the Central Public Works Department, which reflects the rise in cost of construction over the said period of time. The valuation fixed with regard to the compensation payable in respect c of the structure which was acquired under the notification for acquisition is raised from Rs.1,200 per square meter to Rs. 1700 per square meter. The respondents would also be entitled to the statutory benefits as provided for under Section 23(1 ), 28 and 34 D of the Act. [Paras 11, 12, 13] [597-A-C; E-H; 598-A-C] Administrator General of West Bengal v. Collector, Varanasi (1988) 2 sec 150 - relied on. The General Manager, Oil & Natural Gas Corporation E Ltd. v. Rameshbhai Jivanbhai Patel and Anr. MANU/SC/ 7896/2008 - referred to.