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Civil Appeal No. 81/15 of 1953, decided on 5th March 1956 from the judgment and decree of the Additional District Judge, Peshawar, dated 12th May 1953.
S. 23 Compensation--- Function of assessing authority‑To find out market value, not actual price‑Compensation fixed on different principles from those relevant in fixing value of property in a pre‑emption suit.
The function of the assessing authority, under section 23 Land Acquisition Act (I of 1894) is to find out the market value of the property to be acquired, not the actual price paid for it, though the price actually paid may be taken into consideration along with other things in determining the market value.
Considerations, relevant to fixing price for purposes of a pre‑emption suit are wholly irrelevant in fixing amount of compensation under the Land Acquisition Act.
Peer Bakhsh Khan for Appellant.
Abdul Latif Khan for Respondent.
Date of hearing : 5th March 1956.
.‑On the 14th of January 1949, the Chairman of the Premier Sugar Mills Limited Mardan, applied to the Collector Mardan for the acquisition of land bearing Khasra No. 778, situated within the area of Baghi Iram, under section 17 of the Land Acquisition Act, because it was most urgently required for laying down a Railway Siding. The Collector Mardan, before issuing a Notification, consulted the owner of this land Kazi Hayatullah Advocate Mardan, who expressed his willingness to part with the land but on payment of Rs. 14,000, the amount which he was alleged to have paid to his predecessors‑in‑interest Hayat Khan etc., at the time of its purchase from them on the 9th of August 1947. A five yearly‑average of this land was worked out by the patwari, and it came to Rs. 4099‑15‑0. This amount was tendered to Kazi Hayatullah, who refused to accept it with the necessary consequence that a Notification under section 4 of the Land Acquisition Act was issued, that this land was likely to be required by the Government at the public expense for a public purpose. Kazi Hayatullah on 10th June 1949, again expressed his willingness to transfer this land to the Government but on payment of Rs. 14,000. On the 10th of August 1949, the Government of since extinct North‑West Frontier Province, made a declaration under section 6 of the Land Acquisition Act, that this land was needed for a public purpose, namely, for the Premier Sugar Mills and Distillery Company Limited Mardan. Under section 7 of the Land Acquisition Act, the then Provincial Government directed the Collector Mardan, to take order for the acquisition of this land. On 26th of January 1950, the Collector Mardan caused a public notice to be given at convenient places on or near the land to be taken, stating that the Government intended to take possession of the land, and that claims to compensation for all interests in such land might be made to him within fifteen days, failing which the said area would be taken possession of. On the 19th of February 1950, Mr. Hamesh Gul Khan, Revenue E. A. C., reported that Kazi Hayatullah purchased this land for building purposes, and that the price of the land adjoining the Premier Sugar Mills had risen on account of the construction of the Mills, and will further rise, and, therefore,, Kazi Hayatullah was entitled to Rs. 14,000. This report was submitted to the Collector, who on the 18th of March 1950, disagreed with the Revenue E. A. C., and sent the case back to him with the remarks that the Acquisition Officer has to assess the market value of the land and base his award accordingly. He could not fix the price on the basis of what was alleged to have been actually paid for the land by the owner. On the 24th of February 1951, Kazi Hayatullah made an application that the five‑yearly‑average‑statement which was on the file was wrong, and, therefore, a fresh five‑yearly average might be prepared.. In consequence of this application a fresh five‑yearly‑average was prepared, which came to Rs, 8,048‑12‑0. On the 30th of July, 1951 the Revenue E. A. C. Mardan made an award, fixing the compensation at Rs. 8,048‑12‑0, plus 15 percent for compulsory acquisition, total Rs. 9,256. Kazi Hayatullah refused to accept this award as correct, and applied on 23rd November 1951, that the award be referred to the Civil Court for the determination of the correct compensation to be awarded to him. The case was heard by Ghulam Daud Khan Additional Judge Peshawar, who framed the following issues;
(1) Was Rs. 14,000 sale price fixed in good faith and paid in full
(2) If issue No. 1 is proved, is the plaintiff entitled to receive the sum so paid as the market price of the land
(3) If issue No. 2 is proved in the negative, what is the market price of the land acquired
(4) Is the application of the plaintiff time‑barred
(5) Relief.
Finally, the judgment was delivered by Haji Arbab Ahmad Ali Jan, Additional Judge Peshawar, on the 12th of May 1953, the disposing portion of which is as under :‑
"In fact the whole question hinges on whether the price should be what was actually paid for the property or what it comes to on the basis of 5 years average of sales. 1936 Peshawar, page 12 is an authority which lays down that the mere fact that payment has been established entitles the vendee to the price claimed by him and that courts should not go into the irrelevant question as to the market value of the property or disparity between the price paid and market value. It was held in the same ruling that refund of portion of price alleged must be proved affirmatively, which has not been done in this case.
Under the circumstances it is manifestly clear that plaintiff is entitled to receive the sum actually paid by him for the land, issue No. 2 is decided accordingly,
Issue No. 3, under the circumstances, has become redun dant, and issue No. 4 was not pressed by the learned counsel for the Sugar Mills before me."
The learned Additional Judge Peshawar granted a decree in favour of Kazi Hayatullah for Rs. 14,000 plus Rs. 2,100 on account of compulsory acquisition. He, however, left the parties to bear their own costs.
The Premier Sugar Mills Ltd. Mardan has come up on appeal to this Court.
We have to note with greatest regret that both Mr. Ghulam Daud Khan and Arbab Ahmad Ali Jan have confused the case under the Land Acquisition Act with the one under the North‑West Frontier Province Pre‑emption Act. Ali Akbar v. Multan and another (A I R 1936 Pesh. 12), was a pre‑emption suit, in which it was held that under the Pre‑emption Law the Court should not go into irrelevant question as to the market value of the property, or disparity between the price paid and the market value, where it has been affirmatively proved that a certain amount was as a matter of fact paid by the vendee to the vender.
Under section 25 of the Punjab Pre‑emption Act, as adopted by the North‑West Frontier Province, if the parties are not agreed as to the price at which the pre‑emptor shall exercise his right of preemption, the Court initially must determine whether the price at which the sale purports to have taken place has been fixed in good faith or paid. It is only when the Court finds that the price was not so fixed or paid, that it has to fix as the price for purposes of the suit the market value of the land or property. The compensation payable under the Land Acquisition Act has got to be fixed on absolutely different considerations. They are given in section 23 of the Land Acquisition Act, which provides that in determining the amount of compensation to be awarded for the land acquired under this Act, the Court should take into consideration only the market value of the land at the date of the publication of the Notification under section 4 (1) of the Land Acquisition Act. The owner of the property has then got to be awarded certain damages as detailed in five other clauses of the same section. The data from which the market value of the land can be estimated is given in Rule 13 of the North‑West Frontier Province Revenue Circular No. 54 issued presumably under section 55 of the Land Acquisition Act. The word "value" is certainly distinct from the word "price". A person may pay an abnormally high or fancy price for a certain thing, but when that thing is to be acquired by the Government for the public purposes, it is not the price, which is to be paid to him, but its value. The learned trial judge's approach to the question for determination was absolutely erroneous. His function under the Land Acquisition Act was not to find out as to what was the actual price paid, but to determine the market value of the land in suit, and in order to determine this value he could legitimately take into consideration along with other things the actual price paid.
The result of the above discussion is that the issues were wrongly framed in the case, and the decision arrived at thereupon was based on mistaken point of view. The order of the learned Additional judge is, therefore, completely against law, and is hereby set aside. The case will go back to the District Judge Peshawar, to try it de novo strictly in accordance with the provisions of the Land Acquisition Act. Costs to follow the event. Pleader's fee Rs. 100. Order accordingly.
Since the appeal has been accepted and the whole case has been sent back to the District judge, the cross‑objections filed by Kazi Hayatullah do not arise, because all questions have now been left open.
A. H.
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