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PETITIONER: DADU YOGENDRENATH SINGH & ORS.

       Vs.

RESPONDENT: THE COLLECTOR, SEONI

DATE OF JUDGMENT25/01/1977

BENCH: SARKARIA, RANJIT SINGH BENCH: SARKARIA, RANJIT SINGH KHANNA, HANS RAJ SINGH, JASWANT

CITATION:  1977 AIR 1128            1977 SCR  (2) 757  1977 SCC  (2)   1

ACT:             The Land Acquisition Act, 1894, S. 23(1)--Considerations         for determination of compensation, scope of.

HEADNOTE:             Responding  to a notice under s. 9 of the Land  Acquisi-         tion  Act, 1894, the appellants flied a claim for  Rs.1500/-         per  acre at which rate the adjoining lands were sold.   The         Collector  awarded compensation at the rate of Rs.450/-  per         acre.   At the instance of the appellants under s. 18 of the         Act,  the  matter  was referred to the  District  Judge  who         enhanced the compensation to Rs.11,000/per acre.  An  appeal         by the Collector was allowed by the High Court on the ground         that  the District Judge had acted contrary to  the  mandate         contained  in s. 25(1) of the Act, by awarding  compensation         in  excess of the amount claimed. The  appellants  contended         that their land had building potentiality and its value  was         substantially  more than Rs.500/- per acre, which  had  been         paid  by  them to the Government as  diversion  charges  for         permission t.o use the adjoining land for building houses.         Allowing the appeal by certificate, the Court,             HELD:  The circumstance that the appellants  had  volun-         tarily paid Rs.500/per acre as diversion charges, for laying         out  the adjoining land into plots as building sites,  taken         in  conjunction with the other facts, namely, that the  land         in  question is within the municipal limits and  is  located         just  on  the  edge of an inhabited locality  of  the  town,         having. other buildings in the immediate vicinity, show that         its potential value as building sites is much more than  the         rate of Rs.450/- per acre, awarded by the Collector and  the         High Court. [760 C-D, 761 A-B]

JUDGMENT:         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2128 of 1969.             From  the Judgment and Order dated 4th  May,   1968   of         the Madhya Pradesh High Court in First Appeal No. 88/67.         M.S. Gupta for the Appellants..         Ram Panjwani and H.S. Parihar for Respondent.         The Judgment of the Court was delivered by

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           SARKARIA,  J.   This appeal on certificate  is  directed         against  a judgment, dated May 4, 1968, of the High Court of         Madhya Pradesh. It arises out of these facts:             The appellants were owners of 7.35 acres of land being a         part  of Khasra No. 47/1 in the area of  village  Manglipeth         District  Seoni,  Madhya Pradesh.  On November  4,  1963,  a         notification under s. 4 read with Sub-s. (1) of s. 17 of the         Land Acquisition Act, 1894 (to be hereinafter referred to as         the  Act)  was published in the Government  Gazette  stating         that this land was needed by the State Government for imple-         mentation  of  Seoni Water Supply  Scheme.  The  declaration         under  s. 6 of the Act was published on December  18,  1963,         and notices under s. 9 of the Act were issued by the Collec-         tor  on December 28, 1963.  In response to that notice,  the         appellants filed a claim         758         that they were willing to accept compensation in respect  of         this  land at the rate of Rs.1500/- per acre, "as the  lands         adjoining  this land and situated in a  lesser  advantageous         position  are  sold at this rate". The  Collector  made  his         award on August 17, 1964,   whereby he awarded  compensation         for  this land at the rate of Rs.450/- per acre.  The  total         amount awarded for this piece of land after adding  solatium         at the rate of 15%, was Rs.2,904/-.  He also awarded  inter-         est  at  the rate of 4% from September 19,  1964,  on  which         date, the Collector had taken over possession of the land.             Dissatisfied with the Collector’s award, the  appellants         made  an application under s. 18 of the Act for reference to         the District Court for enhancement of the compensation.  The         Collector  accordingly  made a  reference.   The  Additional         District Judge, Seoni, who heard the reference, enhanced the         compensation  to  Rs.11,000/- per acre. In this  way,  after         adding  solatium, he awarded to  the  appellants, herein,  a         total  amount of Rs.80,850/- together with interest  at  the         rate of 6%.             Against  that  judgment,  dated May  2,  1967,  of   the         Additional  District Judge, an appeal was preferred  by  the         Collector,  to the High Court.  The High Court accepted  the         appeal, set aside the award of the Additional District Judge         and restored that of the Collector. The High Court  however,         granted a certificate under Art; 133 of the Constitution.             The first contention of Shri M.S. Gupta,  appearing  for         the  appellants, is that the appeal flied in the High  Court         against  the award of the Additional District Judge was  not         an  appeal in the eye of law inasmuch as the Collector,  who         flied  it, was not competent to do so.  It is stressed  that         no appeal was filed by the State as such, and  consequently,         the  incompetent appeal fired by the Collector  should  have         been dismissed summarily on this preliminary ground  without         entering upon the merits.             This objection was raised before the High  Court,  also.         The High Court fully considered it against the background of         this  case, and found no substance in it.  In the  interests         of justice we are not disposed to interfere with that  find-         ing.             On  merits, we find, in agreement with the  High  Court,         that  the District Judge was palpably wrong inasmuch  as  he         awarded compensation at a rate far higher than what had been         claimed by the appellants themselves, pursuant to the notice         under  s.  9 of the Act.  The  learned  Additional  District         Judge acted contrary to the legislative mandate contained in         s. 25 (1) of the Act, according to which,  the Court  "shall         not  award"  compensation to an applicant in excess  of  the         amount claimed by him pursuant to any notice under s. 9.             The  only  question that remains for  our  decision  is,

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       whether the High Court was right in scaling down the compen-         sation to Rs.450/- per acre ?         759             Mr. Gupta contends that the High Court was not right  in         holding that there was no evidence to show that the land  in         question  had  potential  value as building  sites.   It  is         submitted  that the High Court has simply ignored that  evi-         dence.   In  this connection Counsel  has  referred  to  the         evidence  on record showing that the appellants  had  before         the  acquisition, paid diversion charges to the  Government,         at the rate of Rs.500/- per acre in respect of the adjoining         land,  for bringing it into use as building sites.   Counsel         has  further referred to the evidence showing that the  land         in question is close to a built up quarter of the town,  and         is within the Municipal limits.             Shri Ram Panjwani, appearing for the Respondent, submits         that  this evidence was much too insufficient  to  establish         the  potential value of the land as building sites,  because         the existing buildings in  the vicinity of this land are old         buildings,  and the deposit of Rs.500/as  diversion  charges         for  the  adjacent land made by the appellants, was  only  a         speculative investment with an eye on the distant future  In         support of his contention, Shri Panjwani has referred to the         decision of this Court in R.N. Singh v.U.P. Government(1).             In  our opinion, there is evidence on the  record  which         unmistakably  shows  that from the view-point of  a  willing         purchaser,  at  the relevant time, this land  had  potential         value  as building sites.  Firstly, it was admitted even  by         Gokul  Prasad who was examined by the Respondents  as  their         Witness  No. 1, that in front of the land in question  there         are  buildings  which are being used as the  office  of  the         Range Officer and as residential quarters for the  employees         of that Department.  Adjoining the Range Office is the house         of  Dewan Najaf Ali in which the Additional  District  Judge         was  residing.  The  witness further admitted that the  land         in dispute abutts on Seoni-Chhindwara Road.             Dadu  Yogendra Nath Singh, appellant, testified  in  the         witnessstand that apart from the office and the quarters  of         the Forest Department, there were other buildings also, near         this  land.   At a short distance was the bungalow  of  Shri         Bhargava, Barrister.  The Municipal Octroi Post was adjacent         to this land.  The land in question is within the  Municipal         limits  of  Seoni.  The appellant further  stated  that   he         intended  to  parcel out this land into plots and  sell  the         same  as  building sites and that was why for  the  adjacent         land,  he had obtained for that purpose, the  permission  of         the  Government by depositing diversion charges at the  rate         of  Rs.500/- per acre.  He added that negotiations  for  the         sale of two plots had already been completed at  the rate of         12  annas per foot.  He also cited other instances of  sales         of  land in the vicinity at rates ranging from 4  annas  per         foot to 6 annas per foot.             The  oral  evidence  of Dadu Yogendra  Nath  Singh  with         regard   to the fact that the adjoining land had  been  laid         out into plots for building purposes, receives full corrobo-         ration  from unimpeachable documentary evidence  on  record,         which shows that the  appellants  had         (1)[1967] 1 S.C.R 489.         760         before this acquisition, in 1963, made an application to the         Sub-Divisional Officer, Seoni, for permission to bring  6.16         acres  of  agricultural land out of Kh. No. 47/1,  "in  non-         agricultural  use  viz.,  for construction of houses".   The         order of the officer concerned was that such permission. was         granted to him on depositing diversion charges in respect of

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       that area at the rate of Rs.500/- per acre.  It is  signifi-         cant  to note that this piece of 6.16 acres was also a  part         of Khasra No. 47/1, out of which Khasra, the land, admeasur-         ing 7.35 acres, is in question.  This circumstance unerring-         ly  indicates  that the land in question  was  suitable  for         being  used as building sites, and had for that  purpose,  a         potential  value  substantially in excess of  Rs.500/-   per         acre.   The  High Court has not at all discussed  this  evi-         dence.             It  is  difficult  to accept the  argument  advanced  on         behalf  of   the  respondent that  the  appellant  had  paid         Rs.500/-  per  acre as diversion charges  for  the  adjacent         land, merely as speculative business in  the hope of  making         money in the remote future.  No  prudent  person would  make         such  an investment if there was no reasonable chance  of  a         good return over that investment in the present, or  immedi-         ate  future. In our opinion this circumstance  coupled  with         the other facts, namely, that the land-in question is within         the  Municipal limits and is located just on the edge of  an         inhabited locality of the town,   having  other buildings in         the  immediate vicinity, was sufficient  to  establish   its         potential value as building sites.             The  observations made by this Court in R.N.  Singh   v.         U.P.  Government  (supra)  do not advance the  case  of  the         respondent.   In that case, Shelat J. quoted these  observa-         tions  from  an earlier decision, in N.B. Jeejabhoy  v.  The         District  Collector,  Thana (C.A. Nos. 313 to  315  of  1965         decided on August 30, 1965):                             "A  vendor willing to sell his  land  at                       the market value will take into  consideration                       a  particular potentiality or  special  adapt-                       ability  of the land in fixing the price.   It                       is   not   the fancy or the obsession  of  the                       vendor  that enters the market value, but  the                       objective  factor namely, whether   the   said                       potentiality can be turned to account within a                       reasonably  near future.  The question  there-                       fore  turns upon the facts of each  case.   In                       the  context of building   potentiality   many                       questions will have to be asked and  answered,                       whether  there  is pressure on  the  land  for                       building activity,  whether  the acquired land                       is suitable for building purposes, whether the                       extension of the said activity is towards  the                       land   acquired,  what  is  the  pace  of  the                       progress  and how far the  said  activity  has                       extended and within what time, whether  build-                       ings  have been put up on lands purchased  for                       building  purposes, what is the  distance  be-                       tween the built-in-land and the land  acquired                       and  similar other questions will have to   be                       answered.   It is the over-all  picture  drawn                       on   the   said  relevant  circumstances  that                       affords the solution."             What has been extracted above are broad guidelines   and         not immutable absolutes.  The essence of the whole thing  is         in  the sentence which has been underlined.  It  shows  that         in  the  ultimate         761         analysis, the question, whether or not a land has  potential         value   as building site, is primarily one of fact.  in  the         present  case,  the  circumstance that  the  appellants  had         voluntarily paid Rs.500/- per acre as diversion charges, for         laying out the adjoining land into plots as building  sites,         was of a clinching character, and taken in conjunction  with

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       the other facts, noticed above, conclusively showed that its         potential  value  as building sites was much more  than  the         rate  of Rs.450/- per acre awarded by the Collector and  the         High Court.             In  their application dated 17-10-1964, under s.  18  of         the  Act,  the appellants stated that similar  land  in  the         immediate  vicinity had been sold at the rate of  Rs.1,250/-         per  acre  and another plot at the rate  of  Rs.1,350/-  per         acre.  These lands are close to the area for which they  had         paid the diversion charges at the rate of Rs.500/- per acre.         They filed a map also, showing the location of those  lands.         On an over-all view, after taking into account the potential         value  of the land, we think it will be reasonable to  award         compensation to the appellants at the rate of Rs.1,250/- per         acre  with interest at 6% per annum till payment,  from  the         date  on which the possession was taken over by the  Collec-         tor.  The appellants shall also be entitled to solatium   at         15% on the compensation amount awarded for the land.             Accordingly,  we  allow the  appeal  with  proportionate         costs  and modify the decree of the High Court to the extent         indicated above.         M.R.                   Appeal allowed.         762