The Special Tahsildar (LA) v. R. Sundaram (died)R. DuraisamyS. Nallasivam

3rd Respondent in AS.No.708/03, 728/03 729/03, 730/03 and 734/03 5th Respondent in AS.No.731/03 4th Respondent in AS.No.733/03R. Sundaram (died)R. DuraisamyS. Nallasivam ..Respondents 1,2,4,5S. Babu & 6 in AS.No.708/03S. Divya (Minor) and Appellants inrep. by Mother & Natural Cross Appeal No.453/08Guardian Jagadeeswari(Claimants & Beneficiary)1. Veerasamy ..Respondents 1 to 3 in 2. Selvaraj AS.No.727/03 and3. Mahesh Appellants in Cross Appeal No.444/08Shownthiram (died)ChidambaramJayalakshmiGowriammalAgilandamDevathaal ..Respondents 1,2,4 to 9 in AS.No.728/03 and Maragatham Nil, Appellants 1 to 7 in Cross Appeal No.Prabhakaran 451/08 (Claimants)RR4 to 9 impleaded asLRs of the deceasedfirst respondent videorder dated 21.09.2006made in CMP.No.8966 to8971/06.Ellachiappan @ Ellaiah Gounder ..Respondents 1 & 2 in AS.No.729/03 andAruchunan Appellants in Cross Appeal No.450/08 (Claimants) https://hcservices.ecourts.gov.in/hcservices/ Sivaprakasam ..Respondents 1 & 2 inAS.No.730/03 andChandran Appellants in AS.No. 459/08 (Claimants)Viswanatha Gounder ..Respondents 1 to 4 inAS.No.731/03 andThambana Gounder Appellants in Cross Appeal No.448/08 Valliyammal (Claimants)PalaniswamyChidambaram ..1st Respondent in AS.No.732/03 andAppellant in Cross Appeal No.447/08 (Claimant)Chinnasamy ..Respondents 1 to 3 in AS.No.733/03 andArukkani Appellants in Cross Appeal No.446/08Krishnamurthy (Claimants)Chinnasamy ..Respondents 1 & 2 in AS.No.734/03 andJagadeesan Appellants in Cross Appeal No.445/08 (Claimants)Nachimuthu ..1st Respondent in AS.No.544/05 Thangamuthu Gounder ..1st Respondent in AS.No.706/06 and (Claimant)Appeals against the judgment and decree of the learnedAdditional Subordinate Judge of Erode in L.A.O.P.Nos.26, 27, 32, 39,38, 37, 36, 35, 34, 33 of 2002 and L.A.O.P.Nos.11/2003, 3/2004respectively dated 27-11-2002. https://hcservices.ecourts.gov.in/hcservices/ For appellant : Mr. V. Ravi, Spl. G.P.(AS) in all the appealsFor respondents : Mr.P.S.Raman, Addl.Advocate General for Mr.K.Chelladurai Assisted by Mr.S.Kasikumar for TNHB in all cases. Mr. R. Gandhi, Senior Counsel for Mr. V.P. Sengottuvel for R1 in A.S.No.707 of 2003 for RR4 to 6 in A.S.No.708 of 2003 for RR1 to 3 in A.S.No.727 of 2003 for RR4 to 9 in A.S.No.728 of 2003 for RR1 & 2 in A.S.No.729 of 2003 for RR1 & 2 in A.S.No.730 of 2003 for RR1 to 4 in A.S.No.731 of 2003 for R1 in A.S.No.732 of 2003 for RR1 to 3 in A.S.No.733 of 2003 for RR1 & 2 in A.S.No.734 of 2003 for Appellants in A.S.Nos.444 to 453 of 2008Mr.M.M.Sundaresh for R.1 in A.S.No.544 of 2003 Mr.S.Rajagopal for R2 in A.S.No.708 of 2003 for R2 in A.S.No.728 of 2003 Mr.S.Dhanasekaran for R.1 in A.S.No.706 of 2006COMMON JUDGMENT K.K.SASIDHARAN, J These Land Acquisition appeals involving common questions offact and law were taken up for consideration together and are beingdisposed of by this common judgment. 2. These appeals relate to the Land Acquisition Proceedingsthat commenced as per Section 4(1) notification dated 17.1.1997 and https://hcservices.ecourts.gov.in/hcservices/

19.2.1997 and published in the Gazette on 12.2.1997 and 19.3.1997respectively. 3. The extent of property acquired as per the relevantnotifications are as follows: a) Notification dt.17.1.1997 -- 55.89 Acres b) Notification dt.19.2.1997 -- 51.75 Acres 4. The details of the land acquisition Original Petitions andthe related appeals and Cross Objections and the compensation awardedby the Land Acquisition Officer as well as by the Reference Courtand the findings recorded after remand are detailed in the tabularcolumns below.NOTIFICATION DATED 17.01.1997 ERODE HOUSING BOARD BATCH (LAOP)DISTRICT/TALUK – ERODEVILLAGE-ERODE 'C' VILLAGE (KASIPALAYAM)4(1) NOTIFICATION- APPROVED IN G.O.Ms.No. 25 Hg.&U.D.D. Dated 17.1.19974(1) NOTIFICATION PUBLISHED IN THE GAZETTE ON 12.2.1997AWARD No.1/2000 dt.3.3.2000Sl.No.A.S.No.CrossObjec-tion /AppealNo.LAOPNo.Date ofLAOPorderSurveyNo.Extentin Hec.& AcreAmountawardedby LAO(perAcre)Amountfixed byReferenceCourt(PerSq.ft.)Amountfixedafterremand (inSq.ft.)12 3456789101707/03452/0826/0227.11.02727/31.01.0Hec/2.50Ac50,000/-Rs.28/- persq.ft.Rs.19.28per sq.ft.2706/06Nil3/0424.03.05722/1,2,34.18.0Hec/10.33 Ac.50,000/-Rs.30/- persq.ft.Rs.19.28per sq.ft.3708/03453/0827/0227.11.02726/20.26.0Hec/0.64Ac50,000/-Rs.28/- persq.ft.Rs.19.28per sq.ft. https://hcservices.ecourts.gov.in/hcservices/ NOTIFICATION DATED 19.02.1997DISTRICT/TALUK – ERODEVILLAGE-ERODE 'C' VILLAGE (KASIPALAYAM)4(1) NOTIFICATION- APPROVED IN G.O.Ms.No. 73 Hg.&U.D.D. Dated 19.2.19974(1) NOTIFICATION PUBLISHED IN THE GAZETTE ON 19.3.1997AWARD No. 2 /2000 dt.31.6.2000Sl.No.A.S.No.CrossObject-ion/Appeal No.LAOPNo.Date ofLAOPorderSurveyNo.Extent inHec. &AcreAmountawardedby LAO(perAcre)Amountfixed byReferenceCourt(PerSq.ft.)Amountfixedafterremand(inSq.ft.)123456789101727/03444/0832/0229.11.02472/22.56.0Hec./6.33Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.2728/03451/0839/0229.11.02487/20.02.0Hec./0.05Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.3729/03450/0838/0229.11.02474/11.08.0Hec./2.66Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.4730/03449/0837/0229.11.02472/1B1.15.0Hec./2.84Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.5731/03448/0836/0229.11.02488/40.07.0Hec./0.17Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.6732/03447/0835/0229.11.02487/10.30.0Hec./0.74Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.7733/03446/0834/0229.11.02473/20.08.0Hec./0.20Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.8734/03445/0833/0229.11.02473/1B &474/21.62.0Hec./4.00Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft.9554/05nil11/0331.03.04487/10.62.0Hec./1.53Ac50,000/-Rs.28/-per sq.ft.Rs.19.28persq.ft. 5. The factual matrix as projected in L.A.O.P. No.32/2002corresponding to A.S.No.727/2003 is extracted below as backgroundfacts. A.S.No.727/99 (LAOP 32/02) At the instance of the Tamil Nadu Housing Board anextent of 6.33 acres of land was acquired from the claimants as https://hcservices.ecourts.gov.in/hcservices/ per Section 4(1) notification dated 19.2.1997. The acquisition wasfor the purpose of putting up residential houses for the Tamil NaduHousing Board. The Land Acquisition Officer, upon consideration ofdocuments, determined the market value of the property at Rs.50,000/-per acre even though the land owners have claimed a sum of Rs.50/-per sq.ft. Aggrieved by the award of the Land Acquisition Officer,proceedings under Section 18 of the Land Acquisition Act wasinitiated. Before the Reference Court the claimants contended thatthe acquired property is situated very near to Erode-Perundurai aswell as Sennimalai Road junction. It was further contended that theresidential colonies like Anna Nagar, Sri Nagar, Bharathi Nagar, RailNagar, Jeeva Nagar, Subramania Nagar, Kalaignar Karunanidhi Nagar,etc., are all in the vicinity. The property was having potentialvalue for housing as well as for business purposes. There are alsoArts Colleges, Women's College, Kongu Higher Secondary School,St.Joseph Clinic,hospitals and other infrastructural facilities inthe area. A sum of Rs.50/- per sq.ft was claimed as compensation. 6. In the counter filed by the Housing Board as well as bythe Land Acquisition Officer before the Reference Court, it wascontended that market value was arrived at on the basis of documentNo.2290/96 dated 5.7.1996, which showed the sale value at Rs.50,000/-per acre. According to the Land Acquisition Officer 64 documentsregistered during the relevant period was verified and document No.50alone was retained. It was only on the basis of the said documentthe market value was determined which according to them reflects thecorrect value as on the date on which Section 4(1) notification wasissued.7. Before the Reference Court, the claimants have markeddocuments relating to survey No.871/2 dated 23.1.1985 wherein anextent of 1344 sq.ft. of land was sold at the rate of Rs.17.11 Persq.ft., sale deed dated 14.12.1988 relating to the property having anextent of 1200 sq.ft. in survey Nos.732 and 733 which shows the valueat Rs.15/- per sq.ft., and another document dated 30/12/1988 executedby one M.Damodaran in favour of Mr.N.Ardhanareeswaran wherein anextent of 1200 sq.ft. was sold at the rate of Rs.10.67 per sq.ft.They have also marked the following documents in support of theirplea that the market rate was very high in the area during the timeof acquisition.Survey No.Document datedExtentsquare feetValue persquare feet733/206.03.19891700Rs.12/-735/1215.02.19901185Rs.22/-733/107.09.19901800Rs.25/-489/204.09.19901500Rs.20/- https://hcservices.ecourts.gov.in/hcservices/ Survey No.Document datedExtentsquare feetValue persquare feet733/1 & 308.02.19911200Rs.15/-733/115.07.19911800Rs.35/-733/1 & 323.1.19921200Rs.35/-806/202.04.19921085Rs.33/- -22.04.1992-Rs.35/-733/130.03.19931800Rs.14.50732/1 & 217.11.19931103Rs.41/-735/125.04.19941200Rs.40/-733/1 to 309.11.19941043Rs.47.72 -27.10.19942400Rs.65/-733/1230.01.1997900Rs.63.108. The witnesses examined on the side of the claimants have alsohighlighted the importance of the locality, the potential of theland, income which have they have been receiving from the land aswell as the locational advantages of the property.9. The Reference Court on a consideration of Ex.C.18 marked onthe side of the claimants was of the opinion that the value ofproperty in the area has gone up to Rs.65/- per sq.ft. The ReferenceCourt also rendered a factual finding that from 1985 onwards vacantsites were sold at a higher rate in the area and during the time ofthe relevant acquisition land value was in the range of Rs.65/- persq.ft. The Reference Court also found from the evidence tendered bythe claimants that the site was fit for using as house sites andobserved that the Government have not proved that the value wasboosted in the sale documents produced by the claimants. Thecontention of the Land Acquisition Officer that the documentsproduced by the claimants were all sale relating to smaller extentand as such no reliance could be placed on those documents, werenegatived by the Reference Court on the ground that the Governmentacquired several small extent of property from the claimants. TheReference Court, took note of the 1991 acquisition, wherein the LandAcquisition Officer has determined the market value at Rs.37,500/-per acre and opined that the valuation after six years of the saidacquisition would be much more in the area. Therefore the ReferenceCourt was of the opinion that 10% increase could be given every yearby fixing the valuation for the year 1991 as Bench Mark. 10. The Reference Court observed that even in the earlieracquisition initiated in 1991 market value was found to be Rs.30/-per sq.ft. and as such the market rate in 1997 would be a sum ofRs.53/- per sq.ft, if 10% increase is given every year. https://hcservices.ecourts.gov.in/hcservices/

11. The Reference Court also placed reliance on the documentdated 9.11.1994 produced by the claimants, evidencing market value atRs.47.72 per sq.ft. The Reference Court also observed that theproperty was in a developed area, where residential houses could beconstructed without spending any amount for development.Accordingly, the Reference Court arrived at a finding that on accountof the earlier acquisition the land value has increased considerablyin the area and accordingly the Court fixed the market rate atRs.42/- per sq.ft. and after giving deduction the market rate wasarrived at Rs.28/- per sq.ft.12. The award of the Reference Court was challenged by the LandAcquisition Officer as well as by the claimants and the matter wasremanded by this Court to the Reference Court to render its findingafter taking further evidence.13. Subsequent to the remand, the claimants have producedfurther evidence. In the evidence of the claimants tendered beforethe Reference Court they have reiterated the importance of thelocality, locational advantages of the property as well asinfrastructural facilities available in the area and accordingly theyhave claimed a sum of Rs.60/- per sq.ft. as market value. The LandAcquisition Officer has contended that the documents produced by theclaimants relate to property in a highly developed area and theextent was also very small. The Land Acquisition Officer furthercontended that in the connected land acquisition of the year 1991,only a sum of Rs.2,18,500/- per acre was awarded by the ReferenceCourt and considering the nature of the land and the necessity tospend considerable amount for development of the property, the valueas shown in the documents produced by the claimants cannot be reliedon for fixing the correct market rate. The Tamil Nadu Housing Boardalso produced documents in support of the contention that what wasawarded by the Land Acquisition Officer was actually the market rate. FINDINGS AFTER REMAND: 14. The Reference Court found that the property is situated ina covetable locality and it is suitable for construction ofresidential houses. The Court rejected the contention of the LandAcquisition Officer that considerable amount was necessary to bespent for development of the property. Similarly the contention thatthe value should be fixed only on acre basis was also rejected by theReference Court. The Reference Court was of the view that thedocuments collected by the Land Acquisition Officer and retained asdata land, were all situated far away from the acquired property andsome of the documents which were also part of the documents collectedby the Land Acquisition Officer showed that property was sold at therate of Rs.3,15,200/- per acre. The Reference Court found that thedocuments exhibited on the side of the claimants showed a sum ofRs.12 lakhs per acre and considering the small size of the site https://hcservices.ecourts.gov.in/hcservices/ involved in the basic documents produced by the claimants and theamount necessary for development, the Reference Court was of theopinion that 30% of the value has to be earmarked towards developmentcharges and accordingly market rate was fixed at Rs.27.55 per sq.ft.and after deducting the development charges, a sum of Rs.19.20 persq.ft. was arrived at as the market rate.SUBMISSIONS:15.The learned Senior Counsel appearing on behalf of theclaimants contended that there was a tremendous increase in the valueof the property in Erode and the value was increased substantiallyalso on account of the acquisition of the property by the HousingBoard in the year 1991. According to the learned Senior Counsel, theacquired property is located in a very covetable area surrounded byhousing colonies and the site is fit for construction of residentialhouses without incurring development charges. The learned Seniorcounsel also submitted that the documents exhibited on the side ofthe claimants clearly shows the value of the property in the area ason 1997 and as such the Reference Court was not justified in fixingthe lesser value and accordingly prayed for enhancing the value atRs.50/- per sq.ft. 16. The learned Special Government Pleader as well as learnedAdditional Advocate General appearing on behalf of the Tamil NaduHousing Board supported the award of the Land Acquisition Officer.According to the learned Government Pleader, the documents relied onby the claimants have nothing to do with the market rate prevailingin the area and those documents were all sales made up for thepurpose of getting enhanced compensation. According to the learnedAdditional Advocate General even the value fixed for the acquisitioninitiated in the year 1991 by the Reference Court was much than themarket rate and when the said award itself is a matter underchallenge, the claimants are not entitled to rely on the value asfixed by the Reference Court for the 1991 acquisition, for thepurpose of determining the value, relating to the property covered bythe later notification.CONCEPT OF MARKT VALUE: 17. There are well accepted norms for the purpose of fixingthe market rate. While fixing the market value, the Land AcquisitionOfficer is required to consider the location of the property, itsadvantages as well as the potential. Neither the documents showingan inflated rate nor the distress sale is relevant for the purpose offixing the land value. The Reference Court has to sit in the arm-chair of a willing seller and a willing purchaser and the marketrate has to be determined by taking into account all the positive andnegative factors. The purpose for which the property was acquired,the nature of the property, presence of roads, electricity, https://hcservices.ecourts.gov.in/hcservices/ educational institutions, hospital facilities and otherinfrastructural facilities available in the area are all relevant forthe purpose of arriving at the market value.LEGAL PRINCIPLES:18. The Honourable Supreme Court in STATE OF UTTAR PRADESH v.RAM KUMARI DEVI (AIR 1996 SC 3370) laid down the test to be adoptedfor the purpose of arriving at the market value in the followingwords:-"........It is laid down by this Courtwhich is well settled principle that it isthe duty of the Court to assess reasonablecompensation. Burden is on the owner toprove the prevailing market value. Onadduction of evidence by the parties, theacid test which the Court has to adopt isthat the Court has to sit in the arm-chairof a prudent purchaser, eschew feats ofimagination and consider whether areasonable prudent purchaser in the openmarket would offer the same price which theCourt is intending to fix the market valuein respect of the acquired land. Since it isthe compulsory acquisition, it is but thesolemn duty of the Court to assessreasonable compensation so as to allow thesame to the owner of the land whose propertyhas been acquired by compulsory acquisitionand also it avoid needless burden on publicexchequer. No feats of imagination wouldrequire to bog the mind that when 13.75acres of land was offered for sale in anopen market, no prudent man would havecredulity to purchase that land on sq.ft.basis."19. The positive as well as negative factors to be taken intoconsideration for arriving at the correct market value was consideredby the Honourable Supreme Court in Viluben Jhalejar Contractor v.State of Gujarat,(2005) 4 SCC 789, wherein it was held thus : "18. One of the principles fordetermination of the amount of compensationfor acquisition of land would be thewillingness of an informed buyer to offerthe price therefor. It is beyond any cavilthat the price of the land which a willingand informed buyer would offer would be https://hcservices.ecourts.gov.in/hcservices/ different in the cases where the owner isin possession and enjoyment of the propertyand in the cases where he is not. 19. Market value is ordinarily theprice the property may fetch in the openmarket if sold by a willing sellerunaffected by the special needs of aparticular purchase. Where definitematerial is not forthcoming either in theshape of sales of similar lands in theneighbourhood at or about the date ofnotification under Section 4(1) orotherwise, other sale instances as well asother evidences have to be considered. 20. The amount of compensation cannotbe ascertained with mathematical accuracy.A comparable instance has to be identifiedhaving regard to the proximity from timeangle as well as proximity from situationangle. For determining the market value ofthe land under acquisition, suitableadjustment has to be made having regard tovarious positive and negative factors vis-à-vis the land under acquisition by placingthe two in juxtaposition. The positive andnegative factors are as under:Positive factorsNegative factors(i) smallness of size (i) largeness of area(ii) proximity to a road (ii) situation in the interior at a distance from the road(iii) frontage on a road (iii)narrow strip of land with very small frontage compared to depth(iv) nearness to developed area (iv) lower level requiring the depressed portion to be filled up(v) regular shape (v) remoteness from developed locality(vi) level vis-à-vis land under (vi) some special disadvantageous acquisition factors which would deter a purchaser(vii)special value for an ownerof an adjoining property to whomit may have some very special advantage21. Whereas a smaller plot may bewithin the reach of many, a large block ofland will have to be developed preparing alayout plan, carving out roads, leaving https://hcservices.ecourts.gov.in/hcservices/ open spaces, plotting out smaller plots,waiting for purchasers and the hazards ofan entrepreneur. Such development chargesmay range between 20% and 50% of the totalprice."20. In Atma Singh v. State of Haryana,(2008) 2 SCC 568 = 2007(14) Scale 109, the Honourable Supreme Court reiterated the legalposition that in considering the market value, the guiding star wouldbe the conduct of hypothetical willing vendor and willing purchaserand not an anxious dealing at arms length.21. In a recent decision of a three Judge Bench of theHonourable Supreme Court in REVENUE DIVISIONAL OFFICER – cum- L.A.O.v. SHAIK AZAM SAHEB ETC. (2009(1) SCALE 545), the positive as well asnegative factors indicated in VILUBEN JHALEJAR CONTRACTOR v. STATE OFGUJARAT (2005) 4 SCC 789) as factors germane for consideration forthe purpose of determining the market value was re-iterated thus:-"11. Determination of market value ofa land acquired in terms of the provisionsof the said Act depends upon a largenumber of factors, the first being thenature and quality of the land, i.e.,whether agricultural land or homesteadland. Apart from nature and quality ofland in the event the agricultural landsare acquired the other factors relevanttherefor are also required to beconsidered, namely, as to whether they areirrigated or non-irrigated, extent offacilities available for irrigation,location of the land, closeness thereoffrom any road of highway, the evenness ofland, its position in different seasonsparticularly in rainy season, existence ofany building or structure as also thedevelopment in and around the area. Ahost of other factors will also have abearing on determining the valuation ofland.12. The mode and manner in whichdetermination of such valuation are to becarried out would also depend upon thefacts and circumstances of each case,namely, whether any deed of sale executedin respect of similarly situated land nearabout the date of issuance of notificationunder Section 4(1) of the Act is https://hcservices.ecourts.gov.in/hcservices/ available, or in absence of any suchexemplars whether the claim can bedetermined on yield basis or in case of anorchard on the basis of the number offruit bearing trees and the yieldtherefrom.13. One other important factor whichalso should be borne in mind is that itmay not be safe to rely only on an awardinvolving a neighbouring area irrespectiveof the nature and quality of the land. Fordetermination of market value again, thepositive and negative factors germanetherefor should be taken intoconsideration, as laid down by this Courtin VILUBEN JHALEJAR CONTRACTOR v. STATEOF GUJARAT (2005) 4 SCC 789)."22. The principles governing determination of market value withreference to the earlier decisions of the Supreme Court wasconsidered recently by a two Judge Bench of the Honourable SupremeCourt in FARIDABAD GAS POWER PROJECT, NTPC LTD. ETC. v. OM PRAKASH &ORS., ETC. reported in 2009(2)SCALE 219).MARKET VALUE – YEAR TO YEAR INCREASE BASIS: 23. The learned Senior Counsel for the claimants by relying onthe judgment of this Court in A.S.No.226 of 1991 contended that evenin the year 1985 the market value was Rs.17.11 per sq.ft. in thevery same locality and as such this Court has to fix the market rateby adding certain percentage of increase every year by taking thevaluation given in A.S.No.228 of 1991 as the basic value. Thequestion regarding calculation of market rate by adding certainpercentage with reference to the market value fixed earlier wasconsidered by the Honourable Supreme Court time and again and thelegal position was further reiterated in some of the recent decisions.24. In The General Manager, Oil & Natural Gas Corporation Ltd.v. Rameshbhai Jivanbhai Patel & Anr., 2008 (11) Scale 637, Hon'bleSupreme Court gave an illustration of the increase in the marketvalue and the percentage of increase to be made and the method ofcalculation of the increase thus :- "15.The increase in market value iscalculated with reference to the marketvalue during the immediate preceding year.When market value is sought to beascertained with reference to a transaction https://hcservices.ecourts.gov.in/hcservices/ which took place some years before theacquisition, the method adopted is tocalculate the year to year increase. As thepercentage of increase is always withreference to the previous year's marketvalue, the appropriate method is tocalculate the increase cumulatively and notapplying a flat rate. The differencebetween the two methods is shown by thefollowing illustration (with reference to a10% increase over a basic price of Rs.10/-per sq.m): Year By flat rate By cumulativeincrease method increase method1987 10.00 10.00(Base Year)1988 10 + 1=11.00 10.00 + 1.00 = 11.001989 11 + 1=12.00 11.00 + 1.10 = 12.101990 12 + 1=13.00 12.10 + 1.21 = 13.311991 13 + 1=14.00 13.31 + 1.33 = 14.641992 14 + 1=15.00 14.64 + 1.46 = 16.10 "16.We may also point out that application of aflat rate will lead to anomalous results. Thismay be demonstrated with further reference to theabove illustration. In regard to the saletransaction in 1987, where the price was Rs.10per sq.m, if the annual increase to be applied isa flat rate of 10%, the increase will be Rs.1 perannum during each of the five years 1988, 1989,1990, 1991 and 1992. If the price increase is tobe determined with reference to sale transactionof the year 1989 when the price was Rs.12 persq.m, the flat rate increase will be Rs.1.20 perannum, for the years 1990, 1991 and 1992. If theprice increase is determined with reference to asale transaction of the year 1990 when the pricewas Rs.13 per sq.m, then the flat rate increasewill be Rs.1.30 per annum for the years 1991 and1992. It will thus be seen that even if thepercentage of increase is constant, theapplication of a flat rate leads to differentamounts being added depending upon the marketvalue in the base year. On the other hand, thecumulative rate method will lead to consistencyand more realistic results. Whether the baseprice is Rs.10/- or Rs.12/10 or Rs.13/31, the https://hcservices.ecourts.gov.in/hcservices/ increase will lead to the same result. Thelogical, practical and appropriate method istherefore to apply the increase cumulatively andnot at a flat rate."25. We have perused the topo-sketch of the property produced bythe Land Acquisition Officer. It is found that the data land takenby the Land Acquisition Officer as the basis for fixing the marketrate is situated far away from the property acquired. Therefore thevaluation as shown in the said document cannot be relied on for thepurpose of arriving at the market rate. It is found from the evidenceas well as documents that there was a steady increase of propertyvalue in the area, consequent to the acquisition made by the TamilNadu Housing Board as per Section 4(1) notification issued in theyear 1991. On account of the development of property in theneighbour-hood consequent to the acquisition for construction ofresidential houses by the Housing Board, there was an all rounddevelopment in the area and it is also evident from the large numberof documents exhibited on the side of the claimants. In fact even inthe 1991 acquisition, the recommendation of the Land AcquisitionOfficer was for fixation of the market value at Rs.87,120/- per acre.26. On a perusal of the topo-sketch, we found that the propertycovered by the document in Ex.C.8 dated 8.2.1991 is situated verynear to the acquired property. The said property is in a housingcolony by name K.K.Nagar and the area is considered to be adeveloped area. Therefore we are of the opinion that the valuation asfound mentioned in Ex.C.8 could be taken as Bench Mark for thepurpose of fixing the market rate. In fact we have taken a documentof the year 1989 showing the market rate at Rs.20/- per sq.ft. forarriving at the market rate in respect of the property acquired asper the notification issued in the year 1991.27. Even though as per Ex.C.8 dated 8.2.1991 the property wassold at the rate of RS.30/- per sq.ft., the said transaction relatesto a smaller extent. However as per the subject notification largerextent of property was acquired and as such the value as shown inEx.C.8 cannot be taken in its entirety for arriving at the marketrate. The Housing Board has to develop the property for housingpurposes. It is in evidence that the acquired property was only anagricultural property and it has no potential as a housing site. Noevidence was placed on the side of the claimants to show that theyhave been getting substantial income from the property or it has gothigh potential as a house-site. Therefore we are of the view thatnecessary deduction has to be made towards development charges. https://hcservices.ecourts.gov.in/hcservices/ DEDUCTION TOWARDS DEVELOPMENT CHARGES :28. While fixing the market value, it is permissible for theLand Acquisition Officer to give necessary deduction towardsdevelopment charges. In such cases, the Land Acquisition Officer mustrecord reasons about the disadvantage of the land acquired and thepurpose for which the land was sought to be acquired as well as thepercentage of land necessary for providing developments likeprovision of roads, electricity, water and sewerage and otherfacilities. The extent of deduction cannot be put in a straitjacketformula and it varies from case to case. The Hon’ble Supreme courthad time and again indicated the factors to be considered by the LandAcquisition Officer for making deduction towards development chargesas well as percentage of deduction. Such deduction is also notautomatic unless there is a factual finding that deduction wasabsolutely necessary in the facts of the case by taking intoconsideration the ground situation. In case the property has alreadybeen developed, there would be no requirement of deduction towardsdevelopment.29. In Naganath (dead) by Lrs. v. Asst. Commissioner & LandAcquisition Officer and Anr., 2008(13) Scale 202, the HonourableSupreme Court observed that the trend of the various Judgments of theSupreme Court indicates deduction on account of development chargesin the range of 1/6th to 33%. 30. The Hon'ble Supreme Court in Atma Singh v. State ofHaryana,(2008) 2 SCC 568, (cited supra) referred to an earlierdecision relating to deduction towards development charges, inBhagwathula Samanna v. Special Tehsildar & Land Acquisition Officer,1991 (4) SCC 506, wherein it was held thus :- “In fixing the market value of a largeproperty on the basis of a sale transactionfor smaller property, generally a deductionis given taking into consideration theexpenses required for development of thelarger tract to make smaller plots withinthat area in order to compare with the smallplots dealt with under the sale transaction.However, in applying this principle ofdeduction it is necessary to consider allrelevant facts. It is not the extent of thearea covered under the acquisition which isthe only relevant factor. If smaller areawithin the large tract is already developedand situated in an advantageous positionsuitable for building purposes and have allamenities such as roads, drainage,electricity, communications, etc. then the https://hcservices.ecourts.gov.in/hcservices/ principle of deduction simply for the reasonthat it is part of the large tract acquired,may not be justified.In the present cases the lands covered bythe acquisition are located by the side ofthe National Highway and the SouthernRailway Staff Quarters with the TownPlanning Trust Road on the north. Theneighbouring areas are already developedones and houses have been constructed, andthe land has potential value for being usedas building sites. Having found that theland is to be valued only as building sitesand having stated the advantageous positionin which the land in question lies thoughforming part of the larger area, the HighCourt should not have applied the principlesof deduction. It is not in every case thatsuch deduction is to be allowed. Therefore,the High Court erred in making a deductionof one-third of the value of the comparablesale and thus reducing the fair market valueof land from Rs.10 per sq yd to Rs.6.50 persq. yd.”31. In Atma Singh v. State of Haryana,(2008) 2 SCC 568, theHon'ble Supreme Court also placed reliance on the Judgment inKasthuri vs. State of Haryana, 2003 (1) SCC 354 and indicated thepercentage of deduction towards development charges thus :-"10.Shri Varma has also referred toKasturi v. State of Haryana wherein it wasobserved that in cases of those lands wherethere are certain advantages by virtue ofthe developed area around, it may help inreducing the percentage of cut to beapplied, as the development chargesrequired may be less on that account. Theremay be various factual factors which mayhave to be taken into consideration whileapplying the cut in payment of compensationtowards development charges, may be in somecases it is more than 1/3rd and in somecases less than 1/3rd. Therefore, in thiscase taking into consideration thepotentiality of the acquired land forconstruction of residential and commercialbuildings, the deduction made was only 20%. https://hcservices.ecourts.gov.in/hcservices/

32. In Naganath (dead) by Lrs. v. Asst. Commissioner & LandAcquisiStion Officer and Anr., 2008(13) Scale 202, cited supra, theHon'ble Supreme Court indicated the percentage of deduction towardsdevelopment charges thus : "4.We find merit in the Civil Appeal onthe above three grounds. Firstly, we are ofthe view that deduction of 53% towardsdevelopment charges is on the higher side.No reason has been given for applying therate of 53% towards development charges.Generally, the trend of the variousjudgments of this Court indicates deductionin the range of 1/6th to 33%. In this case,the High Court has deducted the charges at53% which, in our view, appears to beexcessive."33. The Honourable Supreme Court in REVENUE DIVISIONAL OFFICER –cum- L.A.O. v. SHAIK AZAM SAHEB ETC. [2009(1) SCALE 545] cited supraindicated the extent of deduction taking into consideration thenature of land acquisition and the land involved in the subjectmatter of sale deed relied on for computing the market rate anddeducted one third towards development cost and observed thus:-"18. ...........It must be bear in mindthat the lands in question were agriculturallands whereas the lands which were thesubject matter of the said deed of sale wasa homestead land, thus, some amount,therefore, will have to be deducted towardsthe development cost.19. Indisputably while comparing themarket value of developed lands with that ofundeveloped lands, the court has to makesuitable deductions towards the cost ofdevelopment.We, however, may notice that this Court,at different times, has spoken in differentvoices.In P.S.Krishna and Co. Pvt.Ltd., v. TheLand Acquisition Officer, (Deputy Collector)Hyderabad (1991(2) SCALE 1186) this Courtrefused to interfere with the judgment ofthe High Court which had given a deductionof 20% towards development charges. https://hcservices.ecourts.gov.in/hcservices/ Recently, a Division Bench of this Court inMummidi Apparao v. Nagarajuna Fertilizersand Chemicals Ltd.(2008(16) SCALE 226) didnot interfere with the decision of the HighCourt which had given a direction fordeduction of 50% as development charges.However, we are not oblivious of the factthat this Court had observed in VILUBENJHALEJAR CONTRACTOR v. STATE OF GUJARAT(2005) 4 SCC 789):"28. In Hasanali Khanbhai &Sons v. State of Gujarat (1995(5)SCC 422) and Land AcquisitionOfficer v. Nookala Rajamallu{(2003) 12 SCC 334} = {(2003) 10SCALE 307] it has been noticedthat where lands are acquired forspecific purposes deduction byway of development charges ispermissible. 29. We are not, however,oblivious of the fact thatnormally one-third deduction offurther amount of compensationhas been directed in some cases.(See Kasturi v. State of Haryana[(2003) 1 SCC 354}, TejumalBhojwani v. State of U.P. {(2003)10 SCC 525}, V. Hanumantha Reddyv. Land Acquisition Officer &Mandal R.Officer {(2003) 12 SCC642} , H.P. Housing Board v.Bharat S. Negi {(2004(2) SCC 184}and Kiran Tandon v. AllahabadDevelopment Authority and anr.{(2004) 10 SCC 745}"34. The acquired property is a manwari land and even accordingto the claimants it was not a house-site developed by them. Theacquisition was only for construction of residential houses andtherefore necessarily the Housing Board has to spend considerableamount for development and to make it fit for construction ofresidential units. On the other hand, the property in Ex.C.8 is adeveloped site and the same was sold only as a house-site. Thereforeconsidering the advantages, development and potential of the propertyin Ex.C.8 vis-a-vis the disadvantages, undeveloped state and lack of https://hcservices.ecourts.gov.in/hcservices/ potential of the acquired property, we are of the view that deductionat the rate of 40% has to be given towards development charges.DOCUMENTS RELATING TO SMALLER EXTENT – DEDUCTION:35. While fixing the market rate, very often, documents ofsmaller extent would be taken as the basis. The normal rule in fixingcompensation for large extent of land with reference to the valueshown in the sale document of lesser extent is that there must besuitable deduction. It is common knowledge that larger extent ofproperty invariably fetch less when compared to smaller extent. Noprudent buyer would buy large extent of land by quoting the priceprevailing in the market for a small piece of land. 36. The Hon'ble Supreme Court in Atma Singh v. State ofHaryana,(2008) 2 SCC 568, by placing reliance on some of the earlierJudgments regarding deduction in the case of smaller extent whencompared to the larger extent acquired, explained the legal positionthus:- "11.In Chimanlal Hargovinddas v. SpecialLand Acquisition Officer it was held asfollows : “4. (15) … Firstly while a smaller plotis within the reach of many, a large blockof land will have to be developed bypreparing a layout, carving out roads,leaving open space, plotting out smallerplots, waiting for purchasers (meanwhilethe invested money will be blocked up) andthe hazards of an entrepreneur. The factorcan be discounted by making a deduction byway of an allowance at an appropriate rateranging approximately between 20 per centto 50 per cent to account for land requiredto be set apart for carving out lands andplotting out small plots. The discountingwill to some extent also depend on whetherit is a rural area or urban area, whetherbuilding activity is picking up, andwhether waiting period during which thecapital of the entrepreneur would be lockedup, will be longer or shorter and theattendant hazards.” 12. Shri Dwivedi has also referred toBasant Kumar v. Union of India, K. https://hcservices.ecourts.gov.in/hcservices/ Vasundara Devi v. Revenue DivisionalOfficer (LAO) and H.P. Housing Board v.Bharat S. Negi. In the first cited case,land was acquired for planned developmentof Delhi and in the other two cases forhousing boards and a deduction of 33% wasapplied. 13.The reasons given for the principlethat price fetched for small plots cannotform safe basis for valuation of largetracts of land, according to cases referredto above, are that substantial area is usedfor development of sites like laying outroads, drains, sewers, water andelectricity lines and other civicamenities. Expenses are also incurred inproviding these basic amenities. That apartit takes considerable period in carving outthe roads making sewers and drains andwaiting for the purchasers. Meanwhile theinvested money is blocked up and the returnon the investment flows after aconsiderable period of time. In order tomake up for the area of land which is usedin providing civic amenities and thewaiting period during which the capital ofthe entrepreneur gets locked up a deductionfrom 20% onward, depending upon the factsof each case, is made."37. The document in Ex.C.8 is in respect of a property havingonly 1200 sq.ft. However as per the present notification, largeextent of property was acquired. Therefore we are of the consideredopinion that necessary deduction on account of small size of theproperty retained for fixing the market value has to be given. On anoverall consideration of the matter, we fix the deduction on accountof small size of the plot taken as the basic document at 20%.38. Taking an overall view of the matter we are of the opinionthat 40% deduction should be made towards development costs and 20%on account of small size of the plot taken as the basis to arrive atthe market value. Accordingly, while retaining Ex.C.8 dated 8.2.1991(Rate Rs.30/- per sq.ft.) as the basic document for arriving at themarket rate, we deduct 40% by way of development charges and 20% byway of small size of the plot and arrive at the market rate atRs.5,22,720/- per acre. https://hcservices.ecourts.gov.in/hcservices/ TO SUM UP:39. In the result, all the appeals and cross appeals aredisposed of by re-fixing the land value at Rs.5,22,720/- per acre(Rs.12/- per sq.ft.). The claimants are also entitled to all thestatutory benefits. The learned Special Government Pleader and thelearned Counsel appearing on behalf of the Housing Board are entitledfor separate fees for each of the first appeals as well as crossappeals. Consequently the connected Mps are closed. No costs.sd/-Asst.Registrar/true copy/Sub Asst.RegistrarTr/To1. The Additional District Judge, (Fast Track Court No.I) Erode.2. The Section Officer, V.R. Section, High Court, Madras.+ 1 c.c. to Mr. K. Chelladurai, Advocate. S.R.No.7267.+ 1 c.c. to Mr. S. Dhanasekaran, Advocate. S.R.No.7271.+ 3 c.cs. to Mr. V.P. Sengottuvel, Advocate. S.R.No.7251.+ 1 c.c. to The Government Pleader. S.R.No.7282. JUDGMENT IN A.S.Nos.707 and 708 of 2003, 727 to 734 of 2003, 544 of 2005, 706 of 2006 444 to 453 of 2008KJI/RL (CO)GSK 31.03.2009.