Decided on February 18,1970



- (1.) ONE acre and twelve cents of land in T. S. No. 37-A/1b in Thokkavadi village, villupuram Taluk, South Arcot District, was acquired compulsorily for the use as a weekly cattle market. This acquisition was at the instance of the District Board, as it then was, of the district. The District Board initially applied also for the acquisition of R. S. No. 37-B/2b of the same village for purposes of the weekly shandy. Later, on the suggestion of the Collector, the proposal for the acquisition of R. S. No. 37-B/2b was withdrawn, for it was felt that the said land was on the other side of the Railway line and it cannot be reached from R. S. No. 37-A/1b excepting through crossing the railway line which is objectionable. It was also found that R. S. No. 37-B/2b was not used as a market place, whereas the land acquired was so being used as a shandy for the sale of cattle. It was with this initial background that the above extent of land in R. S. No. 37-A/1b belonging to the appellant was acquired under the provisions of the Land Acquisition Act for which purpose a notification under Section 4 (1) thereof was issued on February 29, 1956. The claimant, both before the Land Acquisition Officer and in the Court below, when the subject came to it on a reference under Section 18 of the Act, contended that the land was used as a shandy for a considerable length of time prior to the valuation date and that he was obtaining a rent of about Rs. l,500/~ per annum and therefore the land had to be valued with such potential in it by capitalising the annual rental yield with a reasonable multiple arrived at on the basis of the rate of interest prevailing on the valuation date for such securities. But the Land acquisition Officer ignoring the said contention treated the land acquired as a house site, valued it as such and awarded compensation at the rate of Rs. 25/-per cent. The Land Acquisition Officer, however, rightly in our view, did not award any interest over the compensation awarded, since the State by then was in possession of the land as a result of an arrangement between the District Board and the appellant. On a reference to Court by the interested person, the Court sustained the value at rs. 25/- per cent, but thought that some accommodation should be made' for the fact that the land had potential value to serve as a shandy. After noticing this, the court awarded an additional compensation of Rs. 3,000/-having regard to the annual income realised by the appellant from and out of the acquired land and having also regard to certain other features of the land acquired. But it gave interest on the amount awarded at four per cent thereon from the date of taking possession to the date when the compensation amount was paid. Still aggrieved by the award of the Court below, the appellant is before us.
(2.) MR. Kanakarai, learned counsel for the appellant, contends that the Court below failed to notice his main contention and, probably the only contention, that the method of valuation of the land acquired ought to be on the capitalization system and not by secured criteria from the sales of lands in the vicinity and adopting the same as the market value of the property in question. He would contend that from 1943, the land was admittedly used as a shandy and, in, fact, he had to close down the shandy which he was running on the land by the order Ex. A-3 and had to compulsorily hand over his property to the District Board to enable them to run a shandy thereon. It is seen from Exs. A-4 and A-5 that the land acquired was used as a public market from 1943 to 1948 free of rent. But in 1947 under Ex. A10, the appellant demanded rent for the acquired property as it appears from the record that the District Board was farming out the right to collect fees from the persons using the shandy and this activity of the District Board prompted the appellant to claim rent from them. P. W. 4, the claimant, says that in 1949 the district Board auctioned the right to collect fees from the market for the year 1949-50 for Rs. 6316 and the District Board agreed to pay him one-fourth of the auctioned money towards rent for that year. Thereafter he would say in his evidence that he was obtaining every year from the District Board one-fourth of such amount fetched in the public auction and that was one of the "main terms of the agreement between him and the District Board. When he was cross-examined, it was not elicited from him that such was not the arrangement and the agreement. As a matter of fact, it is seen from Exs. A-12, A14, a-20, A-29, A-30, A-31, A-52, A-59, A-61, A-62, A-63 and A-66, that the appellant was receiving on an average between 1949 and 1963 an annual rent of about Rs. 1,500/ -. On the basis of such data disclosed and spoken to by the appellant, Mr. Kanakaraj contends that the acquired land has to be valued not on the usual basis of adopting the market value of lands in the vicinity, but by capitalising the rental yield by the appropriate multiple, which has to be ascertained in the circumstances of this case. Though the learned Additional Government Pleader initially thought that the reputation acquired by the land in question, that it was used and utilised and suitable for a shandy, need not be noticed and considered as if it has a potential worth for valuation in the process of compulsory acquisition, yet he had to and he did indeed concede that, at least with reference to the principle in sub-clause (4)of Section 23 of the Act, the earnings to which the appellant was deprived does give rise to a cause of action for a claim for compensation based under that head, and for this purpose the orthodox method of adopting the values. of lands in the vicinity heed not be followed in the instant case. As a matter of fact, Mr. Ramaswami, learned Additional Government Pleader, has very fairly, but later, agreed that the method adopted by the Court below is not correct; but as the matter involved in this case raises an interesting question, we have to deal with it before we answer and consider the respective contentions of counsel.
(3.) THE interesting question that arises in this appeal is not abounding, as is usual in land acquisition cases, in judicial precedents. When a property is acquired in exercise of the powers of eminent domain of the State, the owner has to be justly compensated for the same by paying him its market value together with the money equivalent of its existing advantages and future potentialities. In fact, the claimant is entitled to receive such market value of the property including such intelligible though speculative advance therein attributable to it, consequent upon the improvement of the locality and the surroundings and its inherent advantages as well. No doubt far-fetched capabilities cannot be noticed for pur-poses of assessment. Even so, in a case where the land has obtained a reputation of being used and utilised as a public market place for well over fifteen continuous years before the valuation date and has thus acquired a secondary signification peculiar to its situation, then the problem is whether such a realised and patent potential of the property, which has become inhered in it, and whether such an advance and reputation gained, enter into the mechanics of the computation in compulsory acquisition proceedings. In the instant case the acquired land was admittedly used as a shandy place or as a public market from 1943 onwards by the District Board or latterly by the Panchayat Board. The owner, as already seen, by an agreement with the District Board, as it then was, was receiving his share of the proceeds by farming out of the right to sell in the market. He was indeed getting one-fourth of the auction amount in terms of the arrangement between himself and the District board. This land was pitched upon because of this peculiar situation in the village. This is borne out by the report of the Land Acquisition Officer as well. Though the claimant desired that the land has to be valued by capitalising the rent, it was not suggested that the continuity, of the shandy at that place was purely at the discretion of the Panchayat and there was no certainty of such annual income being derived from the property. The public authority never shifted the market from 1943 to any other place. A3 a matter of fact, their desire to extend the market to S. No. 37-B/2b wag thwarted by the Collector as it was not suited for the purpose and as one had to cross the railway line to reach it. It can therefore be fairly presumed that the appellant at or about the time when the notification under Section 4 was issued had a reasonable expectation of continuing to receive and realise such annual rent although it was considerably higher than the normal rent that might be ob-tainable under ordinary circumstances. It cannot be denied that, as a general rule, the compensation to the owner has to be estimated by reference to the uses for which the property is suitable, having regard to the existing business, or wants of the community, or such as may be reasonably be expected in the immediate future. While adopting the above criteria, impractical and unimaginative benefits ought not to be noticed, but they should be judged and valued purely on commercial considerations. The Privy Council in Vyricherla Narayana Gajapatiraiu v. Revenue Divisional officer, Vizagapatam, AIR 1939 PC 38 observed as follows at p. 101: "the compensation must be determined therefore by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded. Neither must be considered as acting under compulsion. This is implied in the common saying that 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 land in question has undoubtedly secured an adventitious value, which is something more than its normal or intrinsic value. Ordinarily, intrinsic value does not necessarily establish a fair and 5ust value, because such value does not depend upon the exterior or surrounding circumstances. Fortuitous circumstances which are continuous and apparent and which prompt a particular mode of user of land iniect into it a marketable value of a peculiar nature. It is common knowledge that persons wishing to purchase the said quality of land for the same purpose for which the land is peculiarly applicable and usable, usually give a higher price. Prima facie it may be a contingent benefit. But each case has to be decided on its own merits. If such a benefit is not sporadic, but has become annexed to the land by Ions user and if the locus of the land lends support to such a special adaptability, then such market value has to be found and such compensation found has to be awarded.;

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