Case ID: 3709

Judgment:
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 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 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 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 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 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 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 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 vs 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 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 vs 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 vs 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 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 section 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.

Summary:
Responding to a notice under section 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 section 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 section 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]