vil Appeal No 2931 N of 1981
From the Judgment and Order dated 7101980 of the Madhya Pradesh High Court in Miscellaneous First Appeal No 78 of 1974
LM Singhvi D Bhandari and AK Sanghi for the Appellant
TS Krishnamurthy Iyer and SK Gambhir for the Respondent
The Judgment of the Court was delivered by KN SAIKIA J
This Civil Appeal by special leave is from the order dated 7101980 of the High Court of Madhya Pradesh Jabalpur in Misc F Appeal No 78 of 1974 allow ing the appeal and enhancing compensation for land acquired by the Improvement Trust Bhopal
The Improvement Trust Bhopal hereinafter referred to as the Trust  acquired 152 acres of land of Village Jamal pura by Notification dated 30th April 1965 issued under Section 68 of the Madhya Pradesh Town Improvement Trust Act 1960 hereinafter referred to as the Act  and took posses sion of the land sometimes in June 1967
Out of these acquired land the instant appellant owned 1262 acres where upon stood a house a well and some trees
The whole of the acquired land including that of the appellant was within the limits of Bhopal Municipal Corporation
On 2531966 Notifi cation under Section 71 of 911 the Act was issued vesting the land in the Trust
The Trust offered compensation at the rate of Rs950 per acre  14 paise per sq
ft amounting to Rs1199700 for the well Rs3108 and for the trees Rs815 and for compulsory acqui sition 15 amounting to Rs2400
The appellant made refer ence No 8 of 1970 to the Compensation Tribunal under Section 723 of the Act
The Tribunal awarded compensation at the rate of Rs6000 per acre Rs028 Paise per sqr
ft for the land Rs5000 for the building Rs3000 for the well and Rs815 for the trees
Thus the Tribunal by its award dated 25th November 1972 awarded a total sum of Rs120060 inclusive of interest as compensation to the appellant as against his claim at the rate of Rs20000 per acre for the land Rs20000 for the building Rs5000 for the well Rs2500 for the trees and Rs 10000 for loss of business and earnings his total claim amounting to Rs 1339560
On appeal being Misc
F Appeal No 78 of 1974 the High Court maintained the award in respect of the Build ing well and the trees but enhanced the compensation in respect of the land determining the market value at Rs 12000 per acre and the total area being 1262 acres the total compensation inclusive of that allowed for the house etc
and 15 solatium worked out to Rs 184293
Dissatis fied the appellant obtained leave and filed this appeal
Dr LM Singhvi learned counsel for the appellant submits inter alia that the house and the well were gross ly undervalued that both the Tribunal as well as the High Court misdirected themselves in treating the land as agri cultural land but not as urbanised developed land on the erroneous ground that there was no building activity of substantial nature at the time of acquisition in spite of the fact that a part of the land was already converted to Abadi that both the Tribunal as well as the High Court failed to take into consideration the potential value of the land and that evidence of sales of similar plots was not accepted on the ground that those pertained to small plots and that the High Court committed an error when it deducted the development charge from the agreed price instead of adding it to the agreed price while calculating the market value
Mr Krishnamurthi learned counsel for the respondent Trust submits that the house and the well were properly valued that it was not correct that the Tribunal did not correctly consider the question of the nature of the land which it held to be agricultural because it did not find therein any building activity of substantial nature
At any rate counsel submits the High Court took into considera tion the potential value of the land and as such there was no omission to consider any 912 relevant material or misdirection in this regard
Counsel however fails to explain the reason of deducting the devel opment charge from the agreed price instead of adding it while calculating market value of the lands on the basis of evidence produced by the claimant
This however according to counsel is not a sufficient ground for our interference in this appeal under Article 136 of the Constitution of India
In an appeal under Article 136 of the Constitution of India involving the question of valuation of acquired land this Court will not interfere with the award unless some erroneous principle has been invoked or some important piece of evidence has been overlooked or misapplied as was held in Atmaram Bhagwant vs Collector of Nagpur AIR 1929 PC 92
In Dollar Company Madras vs Collector of Madras the Land Acquisition Officer awarded Rs 800 per ground as compensation and the City Civil Court on reference awarded at the rate of Rs 1000 pet ground and the High Court on appeal awarded Rs1800 per ground
The appellant himself purchased the suit land about 10 months before the Notification under Section 4 was made at a price of Rs410 per ground whereafter the appellant has spent a little money on filling up a pond
Dismissing the appeal it was observed that this Court interferes with the judgment of the High Court only if the High Court applies a principle wrongly or because some important point affecting valuation has been overlooked or misapplied
A Court of appeal inter feres not when the judgment under attack is not right but only when it is shown to be wrong
As there was no error in principle in the High Court judgment nor had any of the limited grounds on which that Court s jurisdiction could be legitimately exercised was made out the appeal was dis missed
Therefore it is for the the appellant to show that there is ground for interference in this case
As regards the value of the house the Land Compensation Tribunal clearly observed that it visited the spot and found that the house was in extremely dilapidated condition having big cracks in foundation walls and pillars
The foundation was getting loose
The roof of asbestos sheets was sagging indicating that the wood rafters had been badly damaged
Doors and windows were in bad condition
The two verandahs of the house were temporary with roof of asbestos sheets  The house according to the Tribunal might be 20 to 25 years old and depreciation would be 5 per year
Considering the above factors 913 we are of the view that the compensation awarded namely Rs5000 is reasonable
Also from evidence we find that Rs3000 for the well was reasonable
There was no error of principle and hence there can be no grievance on these counts
Regarding nature of the land the Tribunal noted that the claimants in most of the references asserted that the ac quired land should be valued as urban house site because of alleged potential value and had claimed compensation between the Rs3 to Rs 1 per sqr
The Trust disputed the claim and urged that the lands at the time of acquisition were either agricultural or merely fallow land and they had absolutely no urban site value
The claimants also urged that the lands were situated within Corporation limits and lands of some of the claimants were already diverted con verted
We agree with Mr Krishnamurthi that though the Tribunal treated it as agricultural the High Court proceed ed on the principle of developed land
It is true that the market value of the land acquired has to be correctly determined and paid so that there is neither unjust enrichment on the part of the acquirer nor undue deprivation on the part of the owner
Dr Singhvi argues that failing to consider potential value is an error of principle
It is an accepted principle as was laid down in Gajapatiraju vs Rev Divisional Officer AIR 1939 PC 98 that the compensation must be determined by reference to the price which a willing vendor might reasonably expect to obtain from willing purchaser
The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy it must alike be disregarded
Neither must be considered as acting under compulsion
The value of the land is not to be estimated at its value to the purchaser but this does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded
The wish of a particular purchaser though not his compulsion may always be taken into consideration for what it is worth
Any sentimental value for the vendor need not be taken into account
The vendor is to be treated as a vendor willing to sell at the market price
Section 23 of the Land Acquisition Act 1894 enumerates the matters to be considered in determining compensation The first to be taken into consideration is the market value of the land on the date of the publication of the Notification under Sec tion 41
Market value is that of a willing vendor and a willing purchaser
A willing vendor would naturally take into consideration such factors as would contribute to the value of his land including its unearned increment
A will ing purchaser would also consider more or less the same factors
There may be many ponder 914 able and imponderable factors in such estimation or guess work
Section 24 of the Act enumerates the matters which the Court shall not take into consideration in determining compensation
Section 25 provides that the amount of compen sation awarded by the Court shall not be less than the amount awarded by the Collector under Section 11
As was observed in Gajapatiraju supra sometimes it happens that the land to be valued possesses some unusual and it may be unique features as regards its position or its potentiali ty
In such a case the court has to ascertain as best as possible from the materials before it what a willing vendor might reasonably expect to obtain from a willing purchaser for the land in that particular position and with that particular potentiality
In the instant case also the ac quired land possesses Some important features being located within the Corporation area and its potentiality for being developed as a residential area
In such a situation in determining its market value where there was no sufficient direct evidence of market price the Court was required to ascertain as best as possible from the materials before it what a willing vendor would reasonably have expected to obtain from a willing purchaser from the land in this par ticular position and with this particular potentiality
It is an accepted principle that the land is not to be valued merely by reference to the use to which it has been put at the time at which its value has to be determined that is the date of the notification under Section 4 but also by reference to the use to which it is reasonably capable of being put in the future
A land which is certainly or likely to be used in the immediate or reasonably near future for building purposes but which at the valuation date is waste land or has been used for agricultural purposes the owner however willing a vendor he is
is not likely to be content to sell the land for its value as waste or agricultural land as the case may be
The possibility of its being used for building purposes would have to be taken into account
However it must not be valued as though it had already been built upon
It is the possibilities of the land and not its realised possibilities that must be taken into considera tion In other words the value of the land should be deter mined not necessarily according to its present disposition but laid out in its lucrative and advantageous way in which the owner can dispose it of
It is well established that the special though natural adaptability of the land for the purpose for which it is taken is an important element to be taken into consideration in determining the market value of the land
In such a situation the land might have already been valued at more than its value as agricultural land if it had any other capabilities
However only rea sonable and fair capabilities but not far fetched and hypo thetical capabilities are to be taken into consideration
In sum in estimating 915 the market value of the land all of the capabilities of the land and all its legitimate purposes to which it may be applied or for which it may be adapted are to be considered and not merely the condition it is in and the use to which it is at the time applied by the owner
The proper principle is to ascertain the market value of the land taking into consideration the special value which ought to be attached to the special advantage possessed by the land namely its proximity to developed urbanised areas
The value of the potentiality has to be determined on such materials as are available and without indulgence in fits of the imagination
In Mahabir Prasad Santuka vs Col lector Cuttack 1987 1 SCC 587 the evidence on record was that the land was being used for agricultural purposes but it was fit for non agricultural purposes and it had potentiality for future use as factory or building site and that on industrialisation of the neighbouring areas the prices increased tremendously and that aspect it was held could not be ignored in determining compensation
On the question as to whether the land was urbanised developed land or not we find that the Tribunal consolidated all the 15 references arising out of the acquisition for the purpose of recording evidence and that is how it came to consider the Exts
P 1 P 2 P 3 and P 8 being agreements of sale executed by Phool Chand Gupta who was father of the claimant in reference No 1 of 1970 while the petitioners reference was No 8 of 1970
Similarly the Ext
D 1 to D 6 also pertained to small plots of land out of land in refer ence No 1 of 1970
The High Court rightly held that the Exts
P 1 P 2 P 3 and P 8 and the sale deeds Exts
D 1 to D 6 furnished a more reliable data for working out the market value
If those lands were the urban developed house site lands their prices would have reflected the same
It cannot therefore be said that High Court was in error in taking the above Exts
into consideration
However poten tial value was not separately considered
P 1 P 2 P 3 and P 8 were agreements of sale executed on 29th July 1961 in respect of small parcels of land wherein the vendor agreed to sell the land at that time at the rate of 14 annas per sqr
to Rs 1 per sqr
It was further agreed that the vendees would pay development charges at the rate of 4 annas per sqr
The vendor and the respective vend ees were examined It should be noted that the Exts were agreements to sell and not sales
The High Court observed
that the idea behind those transactions was that the vendor would apply to the revenue authority for diversion and the town planning authority for sanction of lay out plan and the sale deeds would be executed after the land was developed
The High Court also noted that 916 there was nothing to show that the agreements were prepared only to be used later as evidence of market value
In Decem ber 1960 Phool Chand Gupta applied for diversion of his land to the Sub Divisional Officer
In January 1961 application was also made to the Town Planning Authority for sanction of the lay out plan but in the meantime the land was notified for acquisition under the Land Acquisition Act sometimes in 1962 and Phool Chand Gupta tried to extricate his land from acquisition which however did not materialise and as already noted on 30465 the instant notification to ac quire under Section 68 of the Act was issued
Rejecting the contention that the agreements were spurious the High Court observed that the very fact that applications were made for diversion and for sanction of lay out plan went to show that the owner was interested in the development in the land and in selling it after dividing it into plots
Thus the High Court rightly took into consideration the above Exts which pertained to a part of the acquired land of 152 acres
The High Court also considered the sale deeds Exts
D 1 to D 6 which pertained to small plots of lands out of land in reference No 1 of 1970
Those sale deeds were registered in 1966 67 but the agreements to sale were entered into in 1959 62
The respective purchasers and the vendors were examined
The market value on the basis of Ext
D 2 made in the sale deed of 1962 selling only to 1250 sqr
for Rs260 which worked out to Rs8712 per acre
The High Court did not say that these Exts were rejected
By Ext
P 5 P 6 and P 32 small parcels of land at Kumharpura were sold
Kumharpura was noted to be two to three furlongs away from the acquired land
The market rate according to these Exts
ranged from Rs 188 to 234 per sqr
The High Court observed that these sales could not be a useful guide for determining the market value of land acquired
We are of the view that compared to Exts
P 1 P 2 P 3 and P 8 Exts
P 5 and P 6 and P 32 were less indicative of the market value of the acquired land
We feel that the appellant should have no grievance for rejection of these sales of Kumharpura
We find force in the contention of Dr Singhvi that potential value was not taken into account in this case to the extent it should have been done
From the award dated 25111972 it appears that the acquired land was situated at Village Nissatpura within Corporation limits of Bhopal Town and consisting of Khasra No 190 73 13674 17874 13575 76 the total area being 1262 acres
The High Court found that the land was bounded on three sides by three roads towards the eastern side by Berasia road towards the western side by Sultania road and towards the northern side by PGBT College Road
Southern boundary of the land was a Nala
The High 917 Court also noticed that the land abutted to roads namely Berasia road and PGBT College road and the claimant had a house on the land and that the claimant had stated that he had obtained water and electricity connection from the Corporation and the electricity Board
 760 acres of land out of 1262 acres had been diverted and the land was even
At paragraph 14 of the special leave petition it is stated that the land is approachable from two different and important localities of Bhopal Town
From Bajaria Chowk Shahjanabad a road called Sultania Infantry road proceeds Military Lines called Sultania Infantry lines
On both sides of this road there is the thickly habited locality of Shahjahanabad till about two furlongs
Slightly ahead is the enterance porch gate of the Military lines
Just before the gate a tarred road bifurcates on the right hand side and it enters the acquired land of Swatantra Kumar Ref
No 170
This tarred road was constructed by the Trust after acquisition of the lands
It goes on all sides of village Jamalpura which is surrounded on all sides by the lands of Ref
No 170
A part of land of Ref
No 170 was developed after acquisition and the tarred road reaches the developed plots
We have to note that such detail evidence was not there before the Tribunal and no benefit of development pursuant to and after the acquisition can be taken into consideration
Even so from the map and juxtaposition we have no doubt that the acquired land had potentialities which deserved to be counted
In UP Government vs
HS Gupta AIR 1957 SC 202 where in computing compensation for acquisition of an estate outside the Municipal area the High Court had given valid and weighty reasons for adopting the principle that the valuation should be on plot wise though there was certain advantages in computing the value at the block rate where vast area of land was acquired this Court held that in the circumstances of that case the proper mode of valuation was plot rate basis
In the instant case the application of the principle that if the land has to be sold in one block consisting of a large area the rate likely to be fixed per sq
ft would be lower than if an equal extent of land is parcelled out into smaller bits and sold to different pur chasers could not be found fault with
The price fetched for smaller extent of land similarly situated with the same kind of advantages and drawbacks can also be applied to a large area valued plot wise instead of block wise
In the instant case relying on Exts
P 1 P 2 P 3 and P8 and considering the fact that applications were made for diversion and for sanction of a lay out plan the High Court found that it went to show that the owner was interested in developing the land and in selling it by 918 dividing it into plots
The lowest rate of price in these agreements was 14 annas per sqr
and the agreements mentioned that 4 annas per sqr
ft Would be needed for developing the land
This charge was to be paid by the purchaser
So the price of developed land would be Rs 12 per sqr
The evidence of MP Jain DW 9 Senior Draftsman of the Improvement Trust went to show that ex penses for improvement of land ranged from Rs 150 to 2 per sqr
The statement of Shri Jain was recorded in 1972
Making some allowance for the increase in the rate the High Court considered it proper to hold that in 1965 when this land was acquired the charges for improvement would have worked at 75 paise 12 annas per sqr
It had also come in the evidence of Shri Jain that 50 to 60 per cent of the land had to be left for roads drainage gardens school etc
and it was only then that the lay out plan was sanc tioned
High Court accordingly deducted improvement charges at the rate of 12 annas per sqr
ft and the market rate for unimproved land in the light of these agreements worked out to 6 annas per sqr
As 50 of the land at least had to be left out for roads etc so the market rate of 3 annas per sqr
ft was applied for the entire unde veloped land
Market rate thus worked out to Rs8000 per acre approximately
However the High Court awarded Rs 12000 per acre
There was an additional factors in the calculation
Mr Krishnamurthi therefore submitted that the High Court took into consideration the potential value of the land as a developed area but while making calculation it may have committed mistake
To our mind the error was in wholly overlooking the basic price agreed to be paid by the purchaser and the standard of development they visualised
The whole of the basic price could not be expected to be eaten up by the development of the land to the standard contemplated by the vendor and purchaser
When the willing vendor has agreed to sell land at 14 annas per sqr
after development and the development charge was to be paid by the willing purchaser it could be reasonable to deduct only 50 on account of the land to be set apart for roads drains etc
and not beyond that
Considering this aspect of the matter and the potential value of the land as urban developed area we are of the view that the compensation may justly be enhanced by 16th to Rs 14000 per acre and we do so
We maintain 15 solatium but raise the rate of interest to 9 on the enhanced compensation from today till payment
We leave it open for the appellant to move for higher inter est and solatium if entitled by virtue of subsequent judg ment of this Court if any
In the result this appeal is allowed as above
We make no order as to costs
YL Appeal allowed


Summary:
The State Government sanctioned development plan in respect of and situated in Sholapur under the Maharashtra Regional and Town planning Act 1966
Though the sanction covered the land of petitioners also some of their land was reserved for public purpose under the said Act
Thereafter the Urban Land Ceiling  Regulation Act 1976 came into force and proceedings for acquisition of land in excess of the ceiling limit were initiated
Against such proceedings the petitioners have approached this Court by way of writ petitions
The petitioners contended that the Urban Ceiling Act would not apply to the lands reserved for a public purpose under the Town Planning Act and that the proceedings should be quashed
They also challenged the constitutional validity of sections 10 11 and 23 of the Ceiling Act as being ultra vires of Articles 14 and 31 and prayed for a Writ of Manda mus restraining the State Government from acquiring the petitioners  land under the Ceiling Act
Dismissing the writ petitions HELD 11
The Act has been placed in the Ninth Schedule to the Constitution at SI
No 132 and consequently comes under the protective umbrella of Article 31 B of the Consti tution
620A B 12
It is not the case of the petitioners that the provisions of the 617 Ceiling Act in any way damage of destroy a basic or essen tial feature of the Constitution or its bask structure
Also there is no statutory provision either in the Ceiling Act or in the Town Planning Act which would exclude the operation of the Ceiling Act with regard to lands reserved for public purpose under the Town Planning Act
620C E Maharao Sahib Shri Bheem Singh vs Union of India and others 1985 Suppl
1 SCR 862 applied
The primary object and the purpose of the Ceiling Act is to provide for the imposition of a ceiling an vacant land in urban agglomerations for the acquisition of such land in excess of the ceiling limit to regulate the con struction of building on such land and for matters connected therewith with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein to bring about an equitable distribu tion of land is urban agglomerations to subserve the common good in furtherance of the Directive Principles of Articles 39b and c
The land to the extent which falls within the ceiling area stands in a class different from the land which is in excess of the ceiling area and is liable to be de clared surplus to give effect to the purpose and object of the Ceiling Act
620G H In the instant case the purpose and object of the Ceiling Act is entirely different from just acquiring a bit of land here or a bit of land there for some public purpose
The Ceiling Act is a self contained Code having an overrid ing provision in Section 42
Once the land fails beyond the ceiling limit prescribed by the Ceiling Act and is capable of being acquired as surplus land under Section 10 thereof it would he wholly inappropriate to acquire the same very Land or a portion thereof under the Town planning Act inas much as it would inter alia apparently result in misuse of public funds by granting higher compensation when the pur pose of acquisition can he achieved on payment of the lesser amount of compensation prescribed in Section 11 of the Ceiling Act
624A B F  G Union of India etc
vs Valluri Basavaiah Chowdhary etc
   State of Gujarat  Others vs Parshottamdas Ramdas Patel  Others   relied on
Nagar Improvement Dust  Another vs Vithal Rao  Oth ers   distinguished
Prakash Chand Amichand Shah vs State of Gujarat and others   referred to
618 3
The alleged discrimination that if the purpose of reservation is construction of buildings the land will be given compensation under the Ceiling Act whereas when the purpose of reservation is parks gardens etc
compensation would be given under the Town Planning Act does not exist
The provisions of the Ceiling Act are applicable with regard to vacant land and if for same fortuitous circumstances a particular category of land does not fall within the defini tion of vacant land the provisions with regard to the vacant land can obviously not be applied to such land
The lands falling under the two categories constitute separate classes and cannot consequently be treated alike
624B C  D