Gian Chand Aggarwal v. Union of India & Ors.

12. On careful consideration, we are of the view that such allotment rates of plots adopted by development authorities like DDA cannot form the basis for award of compensation for acquisition of undeveloped lands for several reasons. Firstly, market value has to be determined with reference to large tracts of undeveloped agricultural lands,in a rural area, whereas the allotment rates of development authorities are with reference to small plots in a developed layout falling within urban area. Secondly, DDA and other statutory -, authorities adopt/different rates for plots in the same area with reference to the economic capacity of the • • LA.App.No.656/2Q08 &connected matters Page 5 of18 S' buyer, making it difficult to ascertain the real market, value, whereas market. value, determination for acquisitions is uniform and does not depend upon the economic status of the land-loser. Thirdly, vye are,, concerned with market value of freehold land, whereas ^ the allotment "rates" in the DDA brochure refer to the initial premium payable on allotment of plots on leasehold basis. We may elaborate on these three factors. First factor

13. The percentage of "deduction for development" to be,made to arrive at the market value of large tracts • of undeveloped agricultural land (with potential for development), with reference.to the sale price of small developed plots, varies between 20% to 75% of the price of such developed plots, the percentage depending upon the nature of development of the layout in which th^ exemplar plots are situated.

14. The "deduction for development" consists of two components.. The first is with reference to the area required to be utilised for developmental works and the., second is the cost of the development works. For example, if a residential layout is formed by DDA-or similar statutory authority, it may utilise around,40% of ' the land area in the layout, for roads, drains, parks, ' playgrounds and civic amenities (community facilities), etc. 15.. The development authority will, also incur considerable expenditure for development of undeveloped land into a developed layout, which • includes the cost of levelling the land, cost of providing roads, underground drainage and,sewage facilities, - laying water lines, -electricity lines and developing parks and civil amenities, which would be about 35% of the value of the developed plot. The two factors taken - together would be the "deduction for development" and can account for as much as 75% of the cost of the. developed plot. LA.App.No.656/2008 &connected matters, Page 6 of18

16. On the other hand, if the residential plot is in an •unauthorised private residential layout/the percentage of "deduction for development" may be far less. This is,; because in an unauthorised layout, usually no land will be set apart for parks, playgrounds and comniunity facilities. Even if any land is set apart, it is likely to be minimal. The roads and drains will also be narrower, just adequate for movement of vehicles. The amount, spent on development work would also be comparatively less and. minimal. Thus the deduction on account of the two factors in respect of plots' in unauthorised layouts, would be only about 20% plus 20% in all 40% as against 75% in regard to DDA plots.

17. The "deduction for development" with reference to prices of plots in authorised private residential layouts may range between 50% to 65% deperiding upon the standards and quality of the layout. 18.' The position with reference to industrial layouts will be different. As the industrial plots will be large (say of the size of one or two acres or more as contrasted with the size of residential plots measuring 100 sq m to 200 sq m), and as there will be very limited civic amenities and no playgrounds>. the area to be, set apart for development (for roads, parks,, playgrounds and civic amenities) will' be far less; and the cost to be incurred for development will also, be marginally less, with the result the deduction to be made from the cost of an industrial- plot may range only between 45% to 55% as-contrasted from 65% to 75% for residential-plots. 19., If the acquired land is in a semi-developed urban area, and not an undeveloped rural area, then the deduction for development may be as much less, that is, as little.as 25% to 40%, as some basic, infrastructure will already be available. {Note\ The percentages mentioned above are,tentative standards and subject to proof to the contrary.) LA.App.No.656/2008 &connected matters • Page 7. of18 /t>

20. Therefore the deduction for the "development factor" to be made with reference to the price of a. small plot in a developed layout, to arrive at the cost of undeveloped land, will be far more than the deduction with reference to the price- of; a small plot in an unauthorised private layout or an industrial layout. It is also well known that the development cost incurred,by statutory agencies is much higher than the cost incurred by private developers, having regard to higher overheads and expenditure. •

21. Even among the layouts formed by DDA, the percentage of land utilised for roads, civic amenities, parks and playgrounds may vary with reference to the nature of layout—whether it is residential, residentialcum-commercial or industrial; and even ahiong residential layouts, the percentage will differ having regard to the size of the plots, width of the roads, extent of community'facilities, parks and playgrounds provided.. 22. Some of the layouts formed by the statutory ' development authorities may have large areas earmarked for water/sewage treatment plants, water tanks, electrical substations, etc. in addition to the usual areas earmarked for roads, drains, parks, playgrounds and community/civic amenities. •The purpose of the aforesaid examples is only to show that the "deduction for development" factor is a.variable, percentage and the range, of percentage itself beingvery wide from 20% to 75%. Second factor

23. DDA and other statutory development authorities adopt different rates for allotment of, plots in the same layout, dependi^ng upon the economic status of the allottees, classifying them as high income group, middle income group, low- income group, and economically weaker sections. As a consequence, in the. same layout, plots may be earmarked for persons belonging to economically weaker sections at a LA.App-No.656/2008&connected matters Page 8of18 II price/premium of Rs 100 sq m, whereas the price/premium charged may. be Rs 150 per square metre for members of low income group, Rs 200 per square metre for persons belonging to middle income group and Rs 250 per square metre for persons • belonging to high income groups.

24. The ratio of sites in a layout •reserved for HIG, MIG, LIG and EWS may also vary. All these varying factors reflect in the rates for allotment. It will be illogical to take the/average of the allotment rates, as • the "market value" of those plots does'not depend upon the cost incurred, by DDA statutory authority, but upon the paying capacity of. the applicants for. allotment. Third factor

25. Some development authorities allot plots on freehold basis, that is, by way of absolute sale. Some development authorities like DDA allot plots on leasehold basis. Some have premium which is almost equal to sale price, with, a nominal annual rent, whereas others have lesser premium, and more substantial'annual rent.

26. There are standard methods for determining the • annual rental value with reference to the value of a freehold property. There are also standard methods for determining the value of freehold (ownership) rights with reference to the annuarrehtal income in regular leases. But it is very difficult to arrive at the market value of a freehold property with reference to the premium for a leasehold plot allotted by DDA. As the period of lease is long, the rent is very nominal, " sometimes there is a tendency among the public to equ'ate the lease premium rate (allotment price) ' •charged by DDA,'as being equal to the market-value of the property. 27.' However, in view of the difficulties referred to above, it is not safe or advisable to rely upon the LA.App.No.656/2008 &connected matters, Page 9of18 tz allotment rates/auction rates in regard to the plots, formed by DDA in a developed layout, in determining the market value of the adjoining undeveloped freehold lands. The DDA brochure price has therefore, to be excluded as being not relevant,"

7. I had referred to the same material relied upon in the instant case pertaining tp Rohini Residential Housing Scheme in my decision dated 23.8.2011 in LA.App.No.266/2008 Sinah 1/5, (JO! & Anr. and with reference to the decision of the Supreme Court in La! Chands case (supra) had held that it would be neither safe nor advisable to determine fair market •value of subject lands on the basis of this inchoate evidence. I reiterate my reasoning therein which may be read as reasoning in the instant decision'as well and thus negate the.first plea urged..

8. Argument (b) and (c) are intertwined for the reason •justification to be paid the land price.in terms of Ex.PW-3/1 is by drawing attention to the plan Ex.PW-2/1 and the decision of • a Division Bench of this Court reported as 2006 (136) DLT 1 DDA i/5. LAC & Ors..,,

9. The site plan tx.PW-2/1 would reveal that the subject land -ad-measures 43.07 bigha. i.e. 43,700 square, yards. Ex.PW-8/1 i.e. the lay out plan of Rohini Residential Scheme jp. would reveal that on all, 4 sides of the subject land •development has. been carried out.

10. Land which formed, the subject matter of consideration.before the Division Bench in the decision reported as 2006 (136) DLT 1 DDA i/5. LAC & Ors ad-measured only 2,000 square yards and had been left out from the earlier acquisition. 'end by the time. said land was acquired, complete 'LA,App.Noi656/2008 &connected matters ' ' Page 10 of18 u development had taken place around the said 2,000 square yards of land. Now, virtually no development is required to exploit the 2,000 square yards of land if it is bounded by developed land all around. Thus, there can be no equivalence with respect to the principle to be adopted for a small parcel of land ad-measuring 2,000 square yards which is bounded on all 4 sides by developed lands and a parcel of land ad-measuring 43,700 square yards bounded on- all 4 sides by developed •lands for the reason if the purpose of acquisition is a housing scheme, lot of development wouid,have to be carried out on the 43,700 square yards ofjand. Roads, parks, space for utilities etc. would have to be left out. Expenditure would have to be incurred on main -roads, storm water drains, street lights and sewage lines and the same inchoateness will permeate the quality of evidence as was found in the decision in Lai •Chancfs case (supra). Thus, argument (b) and (c) as noted hereinabove cannot be accepted:

11. 1may only highlight that the Halqa Patwari of was examined as a witness in the references and his testimony brings out that there exists a nallali in the acquired land, which depreciates its price.. There was no,structure on the land and mere existence,of a road within the acquired land would not render the land a fully developed area, requiring no further development activity.

12. 1 may note that lands in, village Rithala have been acquired since 1961 on many occasions for Rohini Residential Scheme. Besides the lands situated in village Rithala, the lands in the adjoining villages, namely, Shahbad Daulatpur and •Pooth Kalan were also acquired earlier for the same Rohini LA.App.No.656/2008 &connected matters '. ' Page 11 of18 Residential Sclieme, whicin is one of tine largest residential schemes in Delhi. Certain lands situated in-village Shahbad Daulatpur was earlier acquired vide notification dated. 23 06 1989 for the said purpose of Rohini Residential Scheme. ADivision Bench of this Court, in RFA No.677/1994 titled inxmi Narain ptc. Union ofIndia, after exannining •similar evidence, in its decision dated 30.09.2008, determined the fair market value to be at ^89,620/- per bigha as of 23.6.1989 and rejected similar argument with regard to comparison witli developed land.

13 Imay also note that while assessing the fair market value of land acquired pursuant to the notifications issued in the year 1980-81, aDivision Bench of this court,' while adopting the DDA's brochure and the sale price of developed plots, assessed the fair market value at HB/- per sq.yds. While making such an assessment, the Division Bench also deducted 60»/o towards development charges. The nnain judgment was rendered in the decision reported as 95 (2002) DLT 605 iai I/, iinlnn ofIndia, which Imay refer to as JasRaUtl- Said decision was challenged before the.Supreme Court and was reversed in the decision reported as 2005 (12) SCC 59 Ranyeer.nH Another Vs.JJnioa^tMiS.- The reasoning of the Division Bench was found faulty and the matter was remanded • for fresh consideration.

14 On remand, aDivision Bench of this Court assessed the fair market value of the land at ?27lper sq.yds as against Rs 73 per sq.yds fixed earlier. The decision in remand is reported as. 130 (2006) DLT 700 toe Rath 1/5; UniorLOfMiS.- Irefer to the •bid decision as las_Rat!vU. Agafnst this decision. Leave to j ^ LA.App.No.'656/2008 &connected matters >3 It Appeal was granted by the Supreme Court and the final decision rendered was in La! Chands case (supra), in which fair market value was enhanced to 00.50 per square yards, but argument based upon fixing the land price with reference to the rate at which developed plots were transferred by DDA with suitable adjustments towards development was specifically rejected. '

15 In the decision reported as 1995 (2) SCC 305 P. Rani nr. 1/9. "nr, ArnuMtinn Officer, Hydej^bacLUrtm Authority. HyderabacLA^ it observed as under:-,. "11. Prices fetched by sales of building plots whi^ • may become available could be of buildmg plots in 'either afully developed layout of building plots or in Tn undeveloped layout of building plots, situated in ?he vidnfty of the acquired land with building potentiality. If the market value of the acquired land with building potentiality has to be ® basis of the evidence of the said prices, the first fhina required to be done is to prepare a • hypo^hSal layout of building plots of.. land: itself. Then, how much of land out or tne acquired land becomes available to be made into nbts similar to those in the developed layout o buildinq plots or in the undeveloped layout of • ' building plots has to be found out. '^the bu, ding • nlots which so become available, were to be sold at •t^he prices at which the building plots m the developed by out of building plots or undeveloped layout-of building plots couldliave f date envisaged in Section 4(1) of the Act, what would be the total amount of such prices v^nch could have been obtained has to be seen. Then S could have been' the losses su fered.o S^penses incurred for getting such tot^amount has to be found out. The marl<et value of the acquired land with building potentiality, can then be j ++ • LA.App.No.656/2008 &connected matters. • • regarded as the total amount of the prices of sales of, all the- building plots envisaged in the hypothetical layout of building plots in the acquired land.minus the losses which could have been suffered or expenses which could have beeri incurred in making the hypothetical l^Y^^ building, plots in the acquired land on par with the developed layout of building plots • or the undeveloped layout of building plots as the case may be. If losses to be suffered or expenses to be incurred for making a layout of building plots in the acquired land with building potentiality for purposes of selling such building plots at Pnces to be fetched by similar building plots in the developed layout of building plots or in the undeveloped layout of building plots are to be found out, the losses which might have been suffered or expenses which might have been incurred by the owners of the lands of either of a developed layout of building plots or of an undeveloped layout of building plots in making such lay outs, could, prove to be the best. evidence. The evidence of losses suffered or ' expenses incurred in having made a layout of building plots may relate to lands lost for laying roads, drain, sewerages, parks etc, costs incurred jn the making of roads, drains, sewerages, providing water supply, electric supply, losses on mvestn^nts and paying of. conversion charges, development charges etc. in a developed layout or an. •undeveloped layout in which building Pots had been laid and sold and which sales form the basis fc^ determining the market value of the acc^ired land. If evidence to be adduced in the said regard is of public authorities or local boards or. private developers, who will' have formed such layouts of building plots in the land in the neighbourhood of the acquired land and sold them, c^^'^ l3e of great value. No difficulty.arises when a! the materials needed to determine the market value of the acquired land with building P°t^ial^y on the basis of ahypothetical layout of^building P to ^ • formed in respect of it is made available to the Court, so as to enable it to,.find out the possible market value of the acquired land with reference to "pqrr0 of 18 'LA.App.No.656/2008 &coonected matters n the price to be fetched by sale of building plots to be made in such land. But, owners, of the acquired land with building potentiality, rarely, produce all the material or evidence needed for the Court to determine the market value of the acquired land with building potentiality on the basis of _a hypothetical layout of building plots to be- thought of by the Court in respect of such land, although they rely on the price fetched by sale of plots, in the, developed layout or an undeveloped layout for determining the market value of their lands with building potentiality in the vicinity of such layout I is where the Court may have to inevitably^fix the • market value of the ^acquired land with building ^ notentiality on the basis of the prices got in the sale transactions relating to the building plots in a developed or an undeveloped layout, relied upon by the owners of the land, if such transactions are found to be genuine. Asimple method, therefore is evolved by courts in determining'(he market value. of the acquired land with building potentiality with reference to the retail price to be, fetched by^sale o • plots in a fully developed layout as on the date of publication of Notification under Section 4(1) of the • Act. In Bombay Improvement Trust v. Manekji Mistry reported in AIR 1926 Bom_ ^2° ' the said'method is referred to by Macleod, C.J as that where the wholesale price of the acquired 'a^ with building potentiality could be-fixed at one-th\r[6] to. one half of the retail price fetched by sal^ of building plots in a developed layout of building plots depending upon the nature of developmen taken place in such layout. Thus, when it^becomes inevitable for the Court to fix the the acquired land with building potei^tiality on the basis of the price fetched by sale of a P'°t • in' a developed layout of building plots^ in the llinity it must, in our view, fix the wholesale: market value of the acquired '^nd/vith _ bui dm^^ potentiality at one-third to one half of the retaH price got by genuine sales of plots in a, Lyout'in the vicinity, by deducting twoone-half out of the retail prices of plots, as losses or • expenses involved in having made the land where LA.App.No.656/2008 &coimectedmatters.; Page 15 of18 n % the plots are formed as' developed; according to the degree of development. For instance, if the retail price of plot is n[2] per square yard, the wholesale price of the acquired land with building potentiality could be fixed at rupees varying between ^4 and ?6 depending upon the nature of development found in the layout of the plot sold i.n retail. Coming to fixation of the. wholesale price, of the acquired land • with building potentiality on the basis of retail price of a building plot sold out of an undeveloped layout of building plots, such wholesale price ought to be fixed by deducting at least one-third of the retail ' price of the building^ plot in such layout, because such would be the least loss to be suffered in ' forming a layout of building plots in the acquired land with building potentiality, after leaving out land for roads, drains etc. by obtaining the_ needed permissions from public authorities for making such layout. Therefore, the wholesale price of the acquired land could be fixed at^8 per square yard if the. price fetched or to be fetched by sale of building plot in an undeveloped.layout is ?12. However, in either of the said cases whether It be the.determination of the market value of the acquired land with building potentiality with • •reference to the price fetched by sale of plots in a •well developed layout,in the neighbourhood or • whether it be the determination ofthe market value • of the acquired land with building potentiality with reference to the price fetched by sale of building plots in an undeveloped layout of building plots in the neighbourhood, it becomes inevitable for the Court to find out what will be the price fetched or to be fetched by the sales of plots in the layouts, relied upon by any of the parties, with reference to „ the price which the plotS' could have fetched if sold on the date of the publication of the preliminary notification under Section 4(1) ofthe Act. Further where no evidence of price fetched by the sales of the plots in layouts of building plots in the neighbourhood of the acquired lapds becomes available, then what could be done is to find outthe.market value of the acquired land with reference to the relevant date of publication under Section 4(1) LA.App.No.656/2008 &connectedmatters • • Page 16 of18 of,the LA Act, according to the actual use to which it -was. put.and increase its value by a small. percentage having regard to the degree of its building potentiality ascertained on the basis of evidence to be made available in that regard; A small percentage increase to be given shall not exceed 1/5'^'' of the market value of the land found out according to its actual user since resort to the method of giving increased value for such building potentiality arises only when, there is ho evidence of sales of building plots in the neighbourhood of the acquired land indicating that there was no, immediate demand, as such, for building plots even. if formed in the acquired land."

16. Considering the fact that the subject lands ad-measure 43,700 sq'uare yards i.e. a mid-segment,area; neither too small (akin to 2,000 square yards) or too large for a housing residential scheme where normally, acquired lands range between 300 bigha to 7000 bigha i.e. 3,02,400 square yards to 70,56,000 square yards, considering„further that it is'bounded on.all 4 sides by developed land on which colonization has. been affected, in view of the observations in P.Ram.ReddVs case (supra), the subject lands, qua which evidence of potentiality translating into money value as.required has not been led, and indeed I find'is not being led in any case where such an argument is advanced; for it would be very difficult to translate the development cost of the developed land into a definite value qua potential. But, considering, the- mid-size segment of land, I am.of the opinion that as held in said, decision a percentage increase not exceeding 1/5^'' of the market value otherwise determined as per actual useir of the acquired' land (towards building potentiality) needs to be •granted. As per P.Ram.ReddVs case.the maximum increase LA.App.No.656/2008 &connected matters Page 17of18 s could be 1/5'^'' i.e. 20%. Considering that the instant lands are * in,mid-area segment and since exactness can never be achieved while determining fair market value' of large and even mid-size segment of lands, I hold that 10% increase over and above the market value determined according to Its actual user would be a just and a fair method to determine the compensation payable.

17. Concurring with the reasoning of the learned Reference Court that on actual user basis fair market value, as on 21.7^1993 comes to ?1,39,026.40 per bigha, increasing the same by 10% 1determine the fair market value payable in sum. of •.^1,52,929.04 per bigha, rounded off to n,53,0007- per bigha.

18. As a result of this discussion, the appeals preferred by the land owners are allowed as above. Decree be prepared, jt is made clear that the land owners, would also be entitled to all statutory benefits, including the benefits granted by the Supreme Court in its decision in 93 (2001) DLT 567 Sunder 1/5.' Union of.India. The appellant Would "also be entitled to proportionate costs.

JUDGE SEPTEMBER 26, 2011 mm LA;App.No.656/2008 &connected matters Page 18 of18