HASANALI KHANBHAI & SONS Vs. STATE OF GUJRAT

JUDGEMENT

(1.) NOTIFICATION under section 4 (1) of the Land Acquisition Act, 1894 [for short, 'the Act'] was published in the State Gazette of Gujarat on March 17, 1960, acquiring 7 acres and 28 gunthas of land to establish orphanage at the outskirts of Rajkot Municipality. The Land Acquisition Collector awarded compensation by his award dated 30th July, 1962 at the rate of Rs. 1.25 per sq. yard as against the claim of Rs., 18/ - per sq. yard. Dissatisfied therewith, on reference at the instance of appellants, the civil Court by its award and decree dated 31st July, 1973 determined the compensation at the rate of Rs. 2.05 per sq. yard. On appeal to the High Court under section 54 of the Act, Gujarat High Court by its judgment dated 1st July, 1975 in First Appeal No. 242/1973, while holding that the lands under acquisition are capable to fetch market value at the rate of Rs. 10.00 per sq. yard, determined the compensation after 60% deduction, at the rate of Rs. 4/ - per sq. yard. In appeal by special leave under Article 136 of the Constitution, appellants challenge the correctness of the deduction at 60% of the price determined to the lands under acquisition.

(2.) SHRI Dholakia, learned senior counsel for the appellants strenuously contended that the reasoning of the Division Bench in giving deduction of 60% price is fallacious and legally unsustainable. It is contended that having accepted the sale transactions in survey nos. 334 and 335 to be genuine comparable sales to determine the compensation, which would indicate that in the year 1960 the market value was ranging between Rs. 12 to 13 per sq. yard which were sold again in 1961 at the rates varying between Rs. 13 to 18 per sq. yard. The same would indicate that a prudent willing purchaser would offer to purchase the lands at the rate of Rs. 12 -18 per sq. yard. Therefore, having determined the compensation at the rate of Rs. 10/ - per sq. yard, the High Court was not justified in reducing 60% and wrongly fixed compensation at the rate of Rs. 4/ - per sq. yard. He also further contended that the restrictive conditions which, in future, may be imposed by the appropriate authority on the development of the land were not a relevant circumstance to peg down the prevailing price. He also contended that the size of the land acquired and the location are not relevant since there is an indication that there was already steady development in the area and buildings were already constructed in the neighbourhood and that, therefore, the deductions were illegal. In support thereof, he placed strong reliance on Chimanlal Hargovingdas v. Special Land Acquisition Officer, Poona and Ors. [(1988) 3 SCC 751] and Bhagwathula Samana and Ors. v. Special Tehsildar and Land Acquisition Officer, Vishakapatnam Municipality [AIR 1992 SC 2298].

(3.) IT is seen that when a large track of land of 7 acres and 28 gunthas was purchased by the claimant owners in 1956 at Rs. 251 per acre, in 1960 when the notification was issued what would be the reasonable and probable price which a reasonable prudent purchaser would offer when a large track of land is offered for sale in open market. In this case, neighbouring land was sold at the rate of Rs. 960/ - per acre in 1960 as against the price which is paid in 1956 at the rate of Rs. 251/ - per acre. In 1956, he himself valued and assessed the land that it has potentiality at the rate of Rs. 251/ - per acre. It is settled law that instead of proceeding on the feats of imagination the Court has to sit in the arm -chair of a prudent purchaser and then consider whether a prudent purchaser would be willing to purchase such a large extent of land and if so at what price. In this case, having considered the situation of the land being far away from the outer municipal limits though situated near about the railway line, that itself would be a factor to be taken into consideration in determining the market value. Added to that, there is a possibility to impose statutory restrictions to develop the lands for building purposes. No prudent purchaser would ordinarily purchase such large extent of land, at the rate for which the small extents of lands are sold in plots. True that the purchasers hazarded to purchase lands in the neighbouring survey numbers and have taken grave risk. But it would not be a safe guide to adopt the same price offered by them. Considered from this perspective and from the totality of facts on record, we are of the view that the High Court was well justified in deducting 60% of the value and giving Rs. 4/ - per sq. yard. Accordingly, we do not find any justification warranting interference. The appeal is dismissed but in the circumstances, with no costs.