Appeal No 2128 of 1969
From the Judgment and Order dated 4th May 1968 of the Madhya Pradesh High Court in First Appeal No 8867
MS Gupta for the Appellants
Ram Panjwani and HS Parihar for Respondent
The Judgment of the Court was delivered by 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 735 acres of land being a part of Khasra No 471 in the area of village Manglipeth District Seoni Madhya Pradesh
On November 4 1963 a notification under section 4 read with Sub section
1 of section 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 section 6 of the Act was published on December 18 1963 and notices under section 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 Rs1500 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 Rs450 per acre
The total amount awarded for this piece of land after adding solatium at the rate of 15 was Rs2904 
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 section 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 Rs11000 per acre
In this way after adding solatium he awarded to the appellants herein a total amount of Rs80850 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 MS 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 section 9 of the Act
The learned Additional District Judge acted contrary to the legislative mandate contained in section 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 section 9
The only question that remains for our decision is whether the High Court was right in scaling down the compen sation to Rs450 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 Rs500 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 Rs500as 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 RN Singh vs
UP Government1
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 Rs500 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 11967 1 SCR 489
760 before this acquisition in 1963 made an application to the Sub Divisional Officer Seoni for permission to bring 616 acres of agricultural land out of Kh
No 471 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 that area at the rate of Rs500 per acre
It is signifi cant to note that this piece of 616 acres was also a part of Khasra No 471 out of which Khasra the land admeasur ing 735 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 Rs500 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 Rs500 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 RN Singh vs UP Government supra do not advance the case of the respondent
In that case Shelat J quoted these observa tions from an earlier decision in NB Jeejabhoy vs The District Collector Thana CA 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 Rs500 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 the other facts noticed above conclusively showed that its potential value as building sites was much more than the rate of Rs450 per acre awarded by the Collector and the High Court
In their application dated 17 10 1964 under section 18 of the Act the appellants stated that similar land in the immediate vicinity had been sold at the rate of Rs1250 per acre and another plot at the rate of Rs1350 per acre
These lands are close to the area for which they had paid the diversion charges at the rate of Rs500 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 Rs1250 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
MR Appeal allowed


Summary:
Responding to a notice under section 9 of the Land Acquisi tion Act 1894 the appellants flied a claim for Rs1500 per acre at which rate the adjoining lands were sold
The Collector awarded compensation at the rate of Rs450 per acre
At the instance of the appellants under section 18 of the Act the matter was referred to the District Judge who enhanced the compensation to Rs11000per 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 section 251 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 Rs500 per acre which had been paid by them to the Government as diversion charges for permission to use the adjoining land for building houses
Allowing the appeal by certificate the Court HELD The circumstance that the appellants had volun tarily paid Rs500per 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 Rs450 per acre awarded by the Collector and the High Court
760 C D 761 A B