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Land Acquisition Act (I of 1891)--

---Ss. 23 & 18 ‑ Acquisition of land ‑ Compensation‑Previous sales of land cannot always be taken to be an accurate measure for determining price of land intended to be acquired‑Factors to be taken into consideration while determining value of land to be acquired elucidated.

There are factors which have to be taken into consideration (while determining the value of the land to be acquired) e. g. the land is not 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 a reference to the uses to which it is reasonably capable of being put in future; and the market value is the potential value of the property at the tithe of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time.

This salutary principle is often ignored by the functionaries of the Government while assessing the amount of compensation to be awarded to the persons whose land is compulsorily acquired. The principle that the use to which the land is capable of being put, to the advantage of the owner, is a factor which ought to be considered by the assessing authority, has been enunciated in a number of cases.

While determining the value of the land acquired by the Government and the price which a willing purchaser would give to the willing seller, only the past sales' should not be taken into account but the value of the land with all its potentialities may also be determined by examining (if necessary as a Court witness) local property dealers or other persons who are likely to know the price that the property in question is likely to fetch in the open market. In appropriate cases there should be no compunction even on relying upon the oral testimony with respect to the market value of the property intended to be acquired, because even while deciding cases involving questions of life and death, the Courts rely on oral testimony alone and do not insist on the production of documentary evidence. The credibility of such witnesses would, however, have to be kept in mind and it would be for the Court in each case to determine the weight to be attached to their testimony. It would be useful, and even necessary, to examine such witnesses while determining the market price of the land in question, because of the prevalent tendency 'that in order to save money on the purchase of stamp papers and to avoid the imposition of heavy Gain Tax levied on sale of property, people declare or show a much smaller amount as the price of tire land purchased by them than the price actually paid. The previous sales' of the land cannot, therefore, be always taken to be an accurate measure for determin ing the price of the land intended to be acquired.

Cedar Rapids Manufacturing and Power Co. v. Lacoste (1914) A C 569; Lacus and Chester Field Gas and Water Board (1909) 1 K B 16; Fraser v. City of Fraservile (1917) A C 187; Baily v. The Isle of Thanet Light Co. (1900) 1 Q B 722; Collector, Quetta‑Pishin, Quetta v. Habibullah and others P L D 1970 Quetta 35 and Province of Punjab v. Muhammad Fazil P L D 1968 Lah. 1360 ref.

Qasim Imam, Advocate‑on‑Record for Appellants.

Advocate‑General, N.‑W. F. P. and J. D. Akbarji, Advocate‑on‑Record for Respondent No. 1.

Respondent No. 2 : Ex parte.

Date of hearing: 11th December, 1985.

MIAN BURHANUDDIN KHAN, J.

‑The suit land was acquired by respon dent No. 2 the Land Acquisition Collector, Haripur for the benefits of respondent No. 1 General Manager, S. I. D. B. N.‑W. F. P., Peshawar, per Award dated 17‑9‑1974 wherein a sum of Rs. 2,823.60 per Kanal for Baranger Abi and Rs. 1,411.80 per Kanal for Ghair Mumkin type of land was fixed as compensation. Appellant Fazalur Rahman filed an objection petition under section 18 of the Land Acquisition Act, 1894 before the Collector who forwarded the objection petition to the Court of competent jurisdiction i. e. the Court of the, learned Senior Civil Judge, Abbottabad, which was contested by respondents Nos. 1 and 2. Evidence was led in the Court. The learned Senior Civil Judge fixed the market value of the suit at Rs. 6,621.20 per Kanal for Baranger Abi land and accordingly awarded this sum for Baranger type of land vide his judgment dated 22‑2‑1973.

2. Regular First Appeal was filed in the Peshawar High Court which was heard by a learned Division Bench and the amount of compensation was reduced to Rs. 4,235.80 per Kanal vide the impugned judgment dated 10‑6‑1980. Leave was sought to appeal against the impugned order which was granted by this Court vide order dated 24‑11‑1982.

3. We have heard the learned counsel for the parties. The main contention of the learned counsel for the appellant is that the learned High Court Judges while fixing the market value of the land in question have erred by taking into consideration the market value of the land Baher the Abi type which is situate at a‑distance from tile Colony and the land in question is adjacent to the Colony, and, therefore, its value should have been fixed at a rate higher than for the land situate at a far off place from the main Colony; that the learned Judges, in reaching the conclusion, have ignored the fact that the land in question is situated near the developed area and as such potential of the land should have been taken into con sideration. Examining these contentions the learned High Court Judges, while dealing with the question of compensation, have observed in the impugned judgment:‑

"The Court has fixed the amount of compensation on the basis of market value of village Qazian which is adjacent to village Chak Sikandarpur, where the disputed land is situate. This was done because the transactions made in village Chak Sikandarpur were not of any help. However, it may be pointed out that whereas Notification under section 4 of the Land Acquisition Act (Act I of 1894) in the case of village Chak Sikandarpur was published on 28‑6‑1973, the one relating to village Qazian was published on 23‑1‑1974 more than six months after the first Notification, The prices of land in village Qazian, quite naturally, shot up when the land in the adjacent village, Chak Sikandarpur was acquired and consequently the market value of the land in village Qazian as taken on 23‑1‑1974 is not of any help in determining the market value of the lands in village Chak Sikandarpur as it stood on 28‑6‑1973. It is pertinent to note that on 28‑6‑1973, the market value of the lands in village Chak Sikandarpur, according to the assessment made, was not more than Rs. 2,822 per Kanal. On that date, the market value of the lands in 'village Qazian was Rs. 4,235.80 per Kanal as is evident from Exh. P. W. 1/2."

4. Reason given by the learned High Court Judges for fixing the price is difference of period in the issuance of Notifications under section 4 of the Land Acquisition Act, 1894 for village Chak Sikandarpur and village Qazian. Notification in the case of village Sikandarpur was published on 28‑6‑1973 i.e. six months earlier than that of the Notification for village Qazian. This difference of period was taken by the learned Judges as material factor in fixing the compensation. It could hardly be the only reason for determining the compensation amount. There are other factors which have to be taken into consideration e. g. the land is not 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; and market‑value is the potential value of the property at the time of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time. Hence, we allow the appeal with costs.

ASLAM RIAZ HUSSAIN, J

.‑I respectfully agree with the observations of my learned brother Mr. Justice Burhanuddin Khan (with which Mr. Justice M. A. Zullah has concurred) that‑

"there are other factors which have to be taken into consideration (while determining the value of the land to be acquired) e. g. the land is not 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 a reference to the uses to which it is reasonably capable of being put in future; and the market value is the potential value of the property at the time of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time."

2. I may add that this salutary principle is often ignored by the functionaries of the Government while assessing the amount of compensa tion to be awarded to the persons whose land is compulsorily acquired. The principle that the use to which the land is capable of being put, to the advantage of the owner, is a factor which ought to be considered by the assessing authority, has been enunciated in a number of cases. For instance in Cedar Rapids Manufacturing and Power Co. v. Lacoste ((1914) A C 569), it was held that although any advantage which accrues due to the carrying out of any scheme for which the property is acquired, may be excluded, but while assessing the value of the acquired land, the probable use to which the owner might have put the land, must be taken into consideration. This includes all the advantages which the land possesses, present or future, in the hands of the owner and he is entitled to have the price assessed in reference, to these advantages. The same view was taken in :‑

Lacus Chester Field Gas and Water Board (1909) 1 K B 16;

Fraser v. City of Fraservile (1917) A C 187; and

Baily v. The Isle of Thanet Light Co. (1900) 1 Q B 722

In the same strain it was held in Collector, Quetta‑Pishin, Quetta v. Habibullah and others (P L D 1970 Quetta 35), that‑

"...the learned District Judge was justified in assessing the compensa tion for this land not merely by reference to the use to which it was being put at the time of its acquisition. Its value must be assessed as a building site with all its potentialities for its develop ment in the near future."

In Province of Punjab v. Muhammad Fazil (P L D 1968 Lah. 1360), it has been held, inter alia, that the land is not to be valued merely in accordance with the use to which it is being put but also by reference to the use to which it was reasonably capable of being put.

I would, therefore, like to emphasize that while determining the value of the land acquired by the Government and the price witch a willing purchaser would give to the willing seller, only the past sales' should not be taken into account but the value of the land with all its potentialities may also be determined by examining (if necessary as a Court witness) local property dealers or other persons who are likely to know the price that the property in question is likely to fetch in the open market. In appropriate cases there should be no compunction even on relying upon the oral testimony with respect to the market value of the property intended to be acquired, because even while deciding cases involving questions of life and death, the Courts rely on oral testimony alone and do not insist on the production of documentary evidence. The credibility of such witnesses would, however, have to be kept in mind and it would be for the Court in each case to determine the weight to be attached to their testimony. It would be useful, and even necessary, to examine such witnesses while determining the market price of the land in question, because of the prevalent tendency that in order to save money on the purchase of stamp papers and to avoid the imposition of heavy Gain Tax levied on sale of property, people declare or show a much smaller amount as the price of the land purchased by them than the price actually paid. The previous sales' of the land cannot, therefore, be always taken to be an accurate measure for determining the price of the land intended to be acquired.

With these observations I concur with my learned brothers in allowing the appeal.

M. B. A. Appeal allowed.

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