M.N.Shukla, J. - (1.) This appeal is concerned with the question as to what would be the proper amount of compensation to be awarded to the respondent in respect of compulsory acquisition by the U. P. Government of certain land which was at the time of acquisition being used as agricultural land. In this appeal we are concerned only with an area of 1 Bigha and 16 Biswas of which the claimants were respondents Nos. 1 to 10 and reference was made under Section 18 at their instance.
(2.) The facts giving rise to this appeal are that the claimants were the owners of 23 Bighas 3 Biswas and 10 Biswansis of land in Guaba Meerut which was acquired for the Industrial Training Institute, Meerut, by the U. P. Government. The Notification under Section 4 of the Land Acquisition Act was made on 1-2-1958 and was followed by another Notification under Section 6 of the said Act dated 12-12-1958. Section 17 (1) was also applied and possession of the land under acquisition was delivered on 29-1-1958. The Land Acquisition Officer gave his award on 27-4-1961 and held that the acquired land was of agricultural nature and hence he allowed compensation at agricultural rates. The total amount of compensation awarded by him was Rs. 2215.51 np. for the land in dispute, apart from compensation for buildings and other things with which we are not concerned in this appeal as it is confined to the value of the land. Being dissatisfied with the award the claimants applied for a reference under Section 18 of the Land Acquisition Act and the learned Additional District Judge, Meerut by his judgment dated 20-3-1965 enhanced the compensation for the land by a sum of Rs. 4981.70 np, and it is this excess amount which has been challenged in this appeal preferred by the State of U. P.
(3.) In short, the proposition of law canvassed on behalf of the appellant was that the land being admittedly put to agricultural use and being under cultivation by a sitting tenant, the intrinsic nature of the land was agricultural and hence the land Acquisition Officer was right in assessing compensation at agricultural rates. It was submitted that the learned Judge acted illegally in awarding compensation upon the basis as if it were a building site, that the owner would be entitled to the value of the property in its actual condition at the time of the acquisition, that it would be a wrong approach if the basis for compensation was the future use to which the property might be put and that the clause 'fifthly of Section 24 interdicted the court from considering any prospective increase in value due to acquisition that this also by implication suggested that future probabilities of improvement in the value should be completely excluded. I find it difficult to accede to the bald propositions as stated above. It is trite that compensation must be determined by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. But in my opinion this definition of the market value referred to in Section 23 of the Land Acquisition Act which has emerged from judicial decisions cannot be equated entirely with the value of the land with reference to the manner in which it is being actually used for the time being but it includes all future possibilities which a prudent purchaser would speculate and on which the vendor would base his expectations. In other words, the potential value of1 the property cannot be left out of account. The future possibilities which should govern the assessment of the market value of a property were stated by the Privy Council in Narayan Gaja-patiraju v. Revenue Divisional Officer, Vizagapatam, AIR 1939 PC 98 . In that case Lord Romer stated the law thus: "Land is got to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined but also by reference to the uses to which it is reasonably capable of being put in the future It is possibilities of the land not its realised possibilities that must be taken into consideration." In my opinion the question which has been posed for decision in the instant case was precisely answered in the classic judgment of the Privy Council. The argument that assessment of compensation must be completely founded on the value of the property at the time of acquisition is an exploded myth. Its future possibilities excluding, of course, the remote and highly improbable contingencies, are the most pertinent factors which must be taken into account in order to arrive at the market value of the property. In Raghubans Narain Singh v. Uttar Pradesh Government, AIR 1967 SC 465 the dictum laid down was:- "Market value on the basis of which compensation is payable under S. 23 of the Act means the price that a willing purchaser would pay to a willing seller for a property having due regard to its existing condition, with all its existing advantages, and its potential possibilities when laid out in its most advantageous manner, excluding any advantage due to the carrying out of the scheme for the purposes for which the property is compulsorily acquired." If, I may say with great respect, still mere revealing is the passage quoted at page 467 of the above case from case of the earlier decisions of the Supreme Court in N.B. Jeejabhoy v. District Collector, Thana, Civil Appeals Nos. 313 to 315 of 1963, D/- 30-8-1965 (SC) : "The question, therefore, turns, open 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 pace of the progress and how far the said activity has extended and within what time, whether buildings have been put upon lands purchased for building purposes, what is the distance between the built-inland 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." The above passage I think makes it abundantly clear that the fact that the land under acquisition was at the relevant time being used purely for agricultural land has potentiality for building site in the reasonably near future can be taken into consideration if evidence is adduced to show that such development is within the realm of probabilities. Whenever such evidence and mate-trial have been adduced, the courts have been always willing to take into consideration such potentialities and award compensation even on agricultural land treating it as potential building site. Even in the oldest decisions this view had been expressed and the principle had been recognised and applied. Thus, in the matter of the Land Acquisition Act X of 1870, Munji Khetgey, (1891) ILR 15 Bom 279 it was held that where building was going on and there was a fair probability of the owner being able, owing to its situation, to sell or lease his land for building purposes, it would be most unjust to adopt for the purposes of compensation the mode of calculation applicable to agricultural land. Farran, J. ruled:- "The value of land should be determined, not necessarily according to its present disposition, but laid out in the most lucrative and advantageous way in which the owner can dispose of it." In a still earlier decision the Collector of Poona v. Kashinath Khasgiwala (1886) ILR 10 Bom 585 following the dictum in Premchand Burral v. Collector of Calcutta, (1876-77) ILR 2 Cal 103 it was held that even though the land acquired was originally devoted to agricultural purposes compensation was awarded on the footing of the most lucrative use of the land and it was not disputed that the most advantageous way was to use it for building purposes. A simple case can be that of a piece of land situated close to or in the midst of a town-area, possessing a near prospect of being used as a building site, though for the time being it is used as a garden or for other agricultural purposes. The land in such circumstances has got to be valued as a potential building site. See Atmaram Bhagwant Ghadge v. Collector of Nagpur, AIR 1929 PC 92 . Similarly in Secretary of State v. Sukkur Municipality, AIR 1931 Sind 67 it was held that in assessing the value of land originally let for purpose of agriculture and exempted from assessment on the understanding that it would be used as a footpath, its potential value as a building site could be taken into account. Somewhat parallel were the facts in Bhujabalappa v. Collector of Dharwar, (1899) 1 Bom LR 454 in which a vacant piece of land in a town without any building or other structure on it had been acquired. Such land did not ordinarily yield any actual profit and if let out for no better use than bare land, might yield only an insignificant rent. But as a rule such land in a town is attractive to builders and house occupiers and on this principle it was held in the above case that the owner of the site was entitled to the benefit of its situation and the likelihood that it would be adopted for like use. The same principle has been consistently adhered to in important judicial pronouncement thereafter and in a recent decision of the Supreme Court in Collector, Raigarh v. Dr. Harisingh Thakur, AIR 1979 SC 472 which related to the acquisition of five plots of agricultural land adjoining the railway track and situate in village Daraganuda, Tehsil and District Raigarh. The Land Acquisition Officer awarded compensation purely on the basis that it was agricultural land but on reference the IInd Additional District Judge enhanced the compensation on the ground that the plot of land in question had great potential value as a building site situated, as it was on the outskirts of a city. That decision was affirmed by the Supreme Court. The criteria for deciding whether the land should be treated as a purely agricultural land or as a potential building site were formulated in paragraph 5 of the majority judgment: "The question as to whether a land has potential value as a building site or not is primarily one of fact depending on situation, the user to which it is put or is reasonably, capable of being put, its suitability for building purposes, its proximity to residential, commercial and industrial areas and educational, cultural or medical institutions, existing amenities like water, electricity and drainage and the possibility of their future extension, whether the nearby town is a developing or a prospering town with prospects of development schemes and the presence or absence of pressure of building activity towards the "land acquired or in the neighbourhood thereof.";