Decided on July 29,1954

Rajah of Vijianagaram Appellant


- (1.) THIS appeal raised a question of compensation under the Land Acquisition Act. At the instance of the Collector, Central Excise, Madras, parts O.S. Nos. 15 and 17 of Nellimukku a proprietary village in the Vizianagaram Estate, have been acquired by Government for the extension of the salt factory, at Balacheruvu. The total extent acquired was 229 acres 59 cents. The notification under Section 4(1), Land Acquisition Act, was published on 29 -8 -1944 and that under Section 6 was issued on 6 -3 -1945. The Land Acquisition Officer awarded compensation at the rate of Rs. 12 -8 -0 per acre totalling an amount of Rs. 2869 -14 -0. Adding a sum of Rs. 430 -7 -8 towards 15 per cent. solatium for compulsory acquisition, he awarded a sum of Rs. 3,300 -5 -8. On a reference made to the Subordinate Judge he increased the rate of compensation to Rs. 25/ - an acre. On that basis, he has given additional compensation of Rs. 2,869 -14 -0 and also 15 per cent. solatium on the said amount. The claimant preferred the above appeal claiming Rs. 65,000/ - including the statutory Solatium of 15 per cent.
(2.) THE simple question in this appeal is whether the compensation awarded by the Subordinate Judge is inadequate and, if so, whether the appellant is entitled to the whole or part of the amount claimed by him. Before we consider the evidence, it will be convenient at this stage to notice the law on the subject. The principles for fixing the compensation are governed by Sections 23 and 24 of the L.A. Act. The general principles specified in the said section differ in no material respect from those laid down by English decisions. There are innumerable decisions of the English and Indian Courts but it will suffice if two decisions of the Judicial Committee relevant to the present enquiry are cited. In - "Vallabhdas Naranji v. The Collector, AIR 1929 PC 112 (A), the land acquired was an irregularly shaped piece by sea and was covered by the tides at various times, and for ordinary purposes was practically useless. It was, however, capable of being used for salt works. There is nothing on record to show that there were any salt pans adjacent to the land acquired, or there was a demand for the said land for salt manufacture. The Assistant Judge of Thana awarded Rs. 200/ - per acre. The High Court reduced it to Rs. 14/ - per acre. Viscount Dunedin made the following observations in assessing the value of the said land as follows: "What it really comes to is this: This land is absolutely worthless in itself, but it has no doubt a potentiality of being used for salt works and therefore, the owner is entitled to the market value of that potentiality". .
(3.) THE only evidence adduced was, that in one case some people had spent Rs. 7 lakhs on, salt works and had not made them pay at all, but hoped that at the end of ten years they possibly would pay. On that evidence, it was held by the High Court that it would not pay anybody to pay for land of that sort even if they were going to construct salt works upon it, more than the value as waste lands. This conclusion was accepted by the Privy Council. A more elaborate and, if I may say so, instructive discussion on the question is found in - 'Narayana Gajapathi Raju v. Revenue Divisional Officer, Vizagapatam' : AIR 1939 PC 98 (B). In that case a harbour was being constructed at Vizagapatam. The land acquired by the harbour authorities on the south of the harbour was allocated by them to oil companies and other industrial concerns. This land was malarious. The appellant's land, which was to the south of this land, contained a spring which yielded a constant and abundant supply of good drinking water, which could easily be made available for the oil companies and people engaged in the harbour works. The appellant's land was acquired for the purpose of the execution of anti -malarial works. The appellant claimed compensation on the basis that it was partly waste and partly cultivated. Before the Subordinate Judge, the appellant made a further claim on the footing of potentialities as a source of water supply. The Subordinate Judge held that the only possible buyers were the oil 'companies and the harbour authorities and that compensation for potentialities could be awarded even where the only possible buyer was the acquiring authority. That award was questioned before the Judicial Committee. The Judicial Committee held that the owner is entitled to and the valuing officer must ascertain the value of the potentialities even where the only possible purchaser of the potentialities is the authority purchasing under powers enabling compulsory acquisition. The well established principle has been re -stated by their Lordships at page 54 as follows: It is plain that in ascertaining its value, the possibility of its being used for building purposes would have to be taken into account. It is equally plan, however, that the land must not be valued as" though it had already been built upon, a proposition that is embodied in Section 24(5) of the Act and is sometimes expressed by saying that the possibilities of the land and not its realised, possibilities that must be taken into consideration. Adverting to the main question raised in that case their Lordships observed: For these reasons, their Lordships have come to the conclusion that even where the only possible purchaser of the land's" potentiality is the authority that has obtained the compulsory powers, the arbitrator in awarding compensation must ascertain to the best of his ability the price that would be, paid by a willing purchaser to a willing vendor of the land with its potentiality in the same way that he would ascertain it in a case where there are several possible purchasers and that he is no more confined to awarding the land's "poromboke" value in the former case than he is in the latter. But they were careful to point out at page 552 that the existence of the scheme must not be allowed to enhance the price, if by "scheme" is meant by the fact that compulsory powers of acquisition have been obtained for the purpose of carrying into effect a particular scheme for the profitable use of the 'potentiality. The valuation must always be made as though no such powers had been acquired, and the only use that can be made of the scheme is as evidence that the acquiring authority can properly be regarded as possible purchasers. It will be seen from the aforesaid two judgments that the main criterion for the assessment of compensation is what a willing purchaser would pay to a willing vendor. But in valuing the land acquired, the possibilities of the land, as distinguished from its realised possibilities must be taken into consideration for the vendor and the vendee necessarily would enter into a bargain with an eye on those potentialities. Though sentimental considerations and enhanced valuation by reason of the scheme itself have to be eschewed in assessing the value of the land, all its potentialities should be taken into consideration. Though the rule is easily stated, the difficulty lies in its application to the facts of each case. A land may have a particular value only to the owner of the site. It may have a particular value to a number of possible purchasers in the locality or even to the person acquiring the land. But how to value the said potentiality? Many methods, are suggested and adopted in decided cases. If there is a reasonable prospect of the acquired land being used as a salt pan, the income from a working salt pan may be taken and after taking into consideration the enormous expenditure incurred for converting a waste land into a salt pan some reasonable rate may be fixed. If sale deeds of salt pans in and around the locality are available, the value of the potentiality may be ascertained having regard to the expenditure inclined for conversion. Offers that may be made by persons intending to exploit the land as salt pans may also afford some basis. But all the aforesaid methods may not furnish precise data. There is always an element of guess and it is for the Court to come to a reasonable conclusion on the facts adduced in each case.;

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