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Civil Appeal No.16 of 1987, decided on 17th November, 1987.

(On appeal from the judgment of the High Court dated January 8, 1987 in Civil Appeal No.2 of 1986).

---S. 18(2)--Acquisition of property--Mode for determination of amount for compensation by Court--Rule of limitation.

The law of acquisition provides a complete scheme for acquiring property; including the rule of limitation, applicable to a reference to the Court for determination of the amount of compensation. An application for reference shall be made:-

(i) if the applicant was present or represented before the Collector at the time of award, within six weeks from the date of award and

(ii) in other cases, within six weeks from the date of receipt of notice under section 12(2) or within six months from the date of award, whichever period shall first expire.

---S. 12(2)--Acquisition of property--Dispute relating to compensation--Application for reference--Objection to limitation for suet reference not agitated before Acquisition Judge--Neither issue on limitation framed nor evidence led--Effect--Where claimant received "compensation on protest", on the day when award was announced, assumption would be that such claimant was present before collector on date of award--Limitation being six weeks from the date of award, application for reference having been made within six weeks from, date of award, held, would be within period--Where objection to limitation could not a taken either before the Collector at time of making reference or before acquisition judge, same could not be taker later on in appeal. --[Limitation--- Appeal (civil)].

---Ss.23 & 24--Amount of compensation, determination of--Amount of compensation of land, held, would be determined on basis of principles, postulated in Ss.23 & 24 of Land Acquisition Act--Collector and Acquisition Court were enjoined upon with the power to award compensation of land by keeping in view factors listed in S.23 of the Act and by excluding factors described in S.24 thereof--Adherence to statutory conditions was obligatory--Among such conditions, market value was the primary factor.

---S. 23--Term "market value"--Meaning, scope and import ofTerm "market value", was not defined in Land Acquisition Act but could be described as an amount of price which an owner, though not obliged to sell was willing to accept and a vendee, not obliged to purchase, held, was willing to pay--Term "market value" was used in relative sense as in each case, same varies and depends upon variety of factors including shape, locality, tenure and presence of local amenities and modern facilities--Term "market value" would also include in its fold potential value of land.--[Words and phrases].

---S."23--Amount of compensation--Method for assessment of. The Collector and the Court are vested with discretion to assess the amount of compensation by fair and equitable methods. The methods evolved to determine the market value of land, rest on the following:-

(i) recent or nearest sales of part of the land under acquisition;

(ii) recent sales of similar land in the vicinity or adjoining localities;

(iii) Capitalization of net profits or average rental value;

(iv) Capitalization of land revenue, and

(v) opinion of experts or evaluators.

---S. 23--Amount of compensation on basis of market value--Restriction proximity of time--Effect--Determination of amount of compensation on basis of market value of land at the time of publication of notification under S.4 of the Act, held, would imply that proximity of time was the essence of restriction which signifies that whatever method was applied to assess compensation, same must correspond to material date of notification--Aim of such restriction was check on speculative, fancy and fictitious prices and boom in prices of land likely to result in abnormally high amount of compensation.

---S.23--Qanun-e-Shahadat Order (10 of 1984), Art. 118--Amount of compensation on basis of sale of land in vicinity--Instances of sales produced in evidence--Effect--Instances of various sales produced in Court, held, was the best evidence parties could produce--Objection to such evidence was not sustainable.

A I R 1923 Mad. 332 ref.

---S. 23--Amount of compensation on basis of market value--Assessment of market value--Fictitious transaction when discarded--Where in order to obtain higher amount of compensation," owners of land advert to fictitious transaction after the notification, such transactions if proved to have been effected by reason of notification or otherwise, were discarded--Post notification transactions, like pre-notification transactions, when found genuine and bona fide, held, could not be ignored altogether--Transactions which afford a fair-criterion of market value at the date of notification could be accepted.

---S.23--Amount of compensation, assessment of--While determining compensation on basis of sale of property in vicinity, similarity in advantages location, time of transaction falling nearest to the material date of notification, bona fide and genuineness of transaction are the factors which could not be assailed--Post notification transactions, held, could not necessarily be ignored altogether, unless accompanied by some reason to discard same.

---S.42--Land Acquisition Act (I of 1894), S. 23--Appeal, competency of--No misreading or misconstruing of evidence by High Court--Where conclusions arrived at by High Court were quite consistent with rule of appreciation of evidence, Supreme Court in consequence of independent deliberation approved such conclusions and dismissed appeal against same.

Raja Muhammad Hanif for Appellant.

Kh. Shahad Ahmad for Respondent.

--The proposition raised in the appeal pertains to the period of limitation applicable to an application for reference and methods of determination of market value of land for assessment of compensation, under the Land Acquisition Act.

2. The Collector Land Acquisition, Kotli, acquired land measuring 40 kanals 2 marlas, situate in Baliah, Kotli town, through an award on November 21, 1981. The amount of compensation was fixed at the rate of Rs.28,720 per. kanal. Mr. Hamid Akhtar Baig, owner of the land, refused to accept the award and moved the Collector for making a reference of the matter for determination of the Court, on January 2, 1982. The reference was made accordingly on the same day. The modified the award and enhanced the amount of compensation, at the rate of Rs.40,000 per kanal. The order of District Judge was challenged by an appeal before the High Court where the learned Judges affirmed the finding of District Judge, though on different reasons, and dismissed the appeal on January 8, 1987.

3. Mr. Muhammad Hanif, the learned counsel for the appellant,

(i) that the application for reference was beyond time; and

(ii) that the market value of the land determined by the District Judge and affirmed by the High Court was hypothetical and imaginary as it was not supported by legal evidence. The sale-deeds of neighbouring lands, relied upon to fix the market value, were inadmissible in evidence as their bona fide was not proved in due course of law.

4. The law of acquisition provides a complete scheme for acquiring property; including the rule of limitation, applicable to a reference to the Court for determination of the amount of compensation. Section 18(2) of the Land Acquisition Act contemplates that an application for reference shall be made:-

(i) if the applicant was present or represented before the Collector at the time of award, within six weeks from the date of award; and

(ii) in other cases, within six weeks from the date of receipt of notice under section 12(2) or within six months from the date of award, whichever period shall first expire.

5. In the present case, the objection of limitation was not agitated before the District Judge. Thus, no issue was raised and no evidence was led to know whether the claimant was present or represented before the Collector at the time of making the award. Similarly, it is unknown whether notice under section 12(2) was given by the Collector to the claimant or not. In absence of evidence on the point, it is not easy to decide the point of limitation under either of the categories laid down under section 18(2). Nevertheless, on perusal of record, we have found that the claimant received the compensation "under protest" through crossed cheque on "the day when award was announced. On the assumption that he was present before the Collector on the date of award, it is permissible to hold that limitation in this case was six weeks from the date of award. The award was announced on November 21, 1981 and the application for reference was made on January 2, 1982. It is, therefore, clear that the application was just in time. The objection of limitation is overruled. One of the views is that question of limitation if not taken before the Collector at the time of making reference or before the Court; it cannot be taken later on in appeal, as it is done in the present case. We have already repelled the objection on finding the application within time; we, therefore, do not propose to deliberate at the point here.

6. The amount of compensation of land is determined on the basis of principles postulated in sections 23 and 24 of the Act. It is enjoined upon the Collector and the Court to award compensation of land by keeping in view the factors, six in number, listed in section 23 and by excluding the factors described in section 24. It is obligatory to adhere to the statutory conditions. Among these conditions, the primary factor is the market value.

7. The term "market value" is not defined in the Act. The Select Committee also preferred to leave the term undefined as in its view, "no definition could lay down for universal guidance, in widely divergent conditions of India, any further rule by which that price should be ascertained. The superior Courts of the sub-continent equally preferred to avoid laying down any hard and fast definition. The concensus is that "market value" is an amount of price which an owner, though not obliged to sell, is willing to accept and a vendee, not obliged to purchase, is willing to pay". The term "market value" is used in relative sense as in each case it varies and depends upon variety of factors including shape, locality, tenure and presence of local amenities and modern facilities. It also includes in its fold the potential value of land.

8. The Collector and the Court are vested with discretion to assess the amount of compensation by following fair and equitable methods. The well recognised methods evolved to determine the market value of land, rest on the following:-

(i) recent or nearest sales of part of the land under acquisition;

(ii) recent sales of similar land in the vicinity of adjoining localities;

(iii) capitalization of net profits or average rental value;

(iv) capitalization of land revenue; and

(v) opinion of experts or evaluators.

9. We are alive to the fact that no two prices of land can be exactly equal a d similar in all conditions. When different data is available, it is desirable to take all or at least two of aforesaid methods of evalution to arrive at a fairly correct decision. We have described various methods in order of priority. Price previously paid for the portion of the same land affords comparatively the best material to determine market value. Second best evidence is the price of neighbouring lands possessing similar advantages. Nearest sales to land in the vicinity equally afford correct method of valuation.

10. Another important condition which regulates the market value is the time factor. It is provided in section 23 (1) that the amount of compensation of land shall be determined, among others, on the basis of the market value of the land at the time of publication of notification under section 4 (1). The proximity of time is the essence of this restriction. It signifies that whatever method may be applied to assess compensation, the value of property ascertained thereby must correspond to the material date of notification under section 4. The restriction is obviously a check on speculative, fancy and fictitious prices and boom in the prices of land likely to result in abnormally high amount of compensation.

11. In present case, the Collector fixed the compensation on working out average of various sale of lands in the vicinity of the land under acquisition, between the period of December 1976 to December 1979. The compensation was awarded-irrespective of consideration of similarity of lands in quality, locality and attached advantages. On reference, the District Judge disagreed with the Collector and enhanced the amount of compensation at the rate of Rs.40,000/- per kanal. He based his opinion on award No.43/78 dated April 30, 1979 whereby land measuring 7 kanals 10 marlas situate in village Dhangrot, adjoining to the land in question, was acquired. According to the award mentioned above, value of the land was fixed at the rate of Rs.35,000/per kanal. The learned District Judge worked out the ratio of compensation of the aforesaid land at the rate of Rs.42,150/- per kanal. He took judicial notice of the quality of the land and held that the land acquired vide award No.43, situate adjacent to his court, was far inferior to the land under acquisition. In the circumstances, he felt justified to increase the amount of compensation. In the High Court, the amount determined by the District Judge was maintained though award No.43 was excluded from consideration. It was held that the award was not proved and admitted in evidence in due course of law, as such it could not be read as such. The order of District Judge was upheld by relying upon the evidence of sales of land in the locality.

12. Mr. Muhammad Hanif contended that the sales of land relied upon by the learned Judges in the High Court were that of small plots, as such the same were not proper piece of evidence to assess the correct market value. He relied upon the authority of Rathnamasari"s case A.I.R. 1923 Madras 332 (2). In that case, a small plot of land measuring 18 cents was acquired for widening road. In subsequent acquisition proceedings, the Collector and the Court fixed the compensation on the basis of market value determined in the previous award. The learned Judge refused to agree with the Collector and held that "when very small plots are acquired, the actual rates at which they are acquired are not often properly scrutinized, for the whole cost of the compensation being very small". This was the only reason advanced to ignore the market value of small plots. The reason advanced by the learned Judge in that case appears to be fair in view of the size of the plot, but in our view, the aforesaid authority, is not applicable to the present case. The evidence led in this case consists of sales of various plots. The size of these plots is not small, as in the aforesaid case. Another distinguishing feature in this case is that transactions of sales took place in free market. It is in evidence of the parties, that land in Baliah and adjoining localities is primarily purchased for building purposes, residential and commercial. In the circumstances, plots of required size have to exchange hands. On examining the evidence, led by the parties in support of their claims, we are satisfied that instances of various sales given in the case, was the best evidence they could adduce. The objection has no force; it is not sustained.

13. The land under acquisition is situated in Balyah within the municipal limits of Kotli town. Kotli town is spread over Balyah, Pangpiran and Dhangrote, three adjoining villages. The entries in record of rights disclose the kind of land under acquisition as "Hail" and "Maira Awwal". Its possession was already with the army at the time of its acquisition, where a workshop was established. At the time of acquisition proceedings, the land in question had assumed the shape and status of urban land. Both the Collector and the learned Judges in the High Court determined the market value of the land-by relying on sales of lands adjoining the land in question. The controversy is, therefore, reduced to appreciation of evidence of sales of land relied upon by the parties in support of their respective claims. Mr. Hanif objected to admission of attested copies of the sale-deeds and contended that the bona fide of the sales was not proved by producing either of the parties to the transactions. In support of his contention, he cited Muhammad Usman"s case (1984 C.L.C. 3406) and Haji Hakim Khan and others" case (P.L.D. 1976 Peshawar 50). The crux of the principle enunciated in the aforesaid cases is that mutations cannot be made basis for determining the market value unless one of the parties appears as witness to establish the bona fide of transaction of sale. The opinion expressed in Mohammad Usman"s case is not supported by any independent reason as it follows the verdict given in Haji Hakim Khan"s case. The facts of Haji Hakim Khan"s case are that at the time of construction of Tarbela Dam, two notifications under section 4 were published on May 18, 1957 and April 30, 1958. After the first notification, the President of Pakistan visited Peshawar. The land owners made a representation to the President for payment of fair compensation to them. The President held a meeting to consider the representation, wherein it was decided that market value of the land would be determined on the basis of one year"s average of sales made through registered sale-deeds. The award made by the Collector was not accepted by the owners. They made a reference for determination of compensation. In the Court, the land owners, in support of their claim, produced mutations of sale of land. The mutations related to sales of lands having taken place after the date of first notification under section 4. The Additional District Judge who disposed of the reference, increased the compensation on the basis of prices shown in the sales through mutations. Tarbela Dam authorities preferred an appeal to the High Court. Mr. Justice Ghulam Safdar Shah, C.J. (as he then was), in the light of that case held:-

"As the transaction changed hands in abnormally high prices, it was enjoined upon the Additional District Judge to ascertain the bona fide of the sale transaction and that could only be done by appearance of one of the parties to the transaction as witness."

Adhering to the previous decision of that Court, it was further held that according to the decision arrived at in the meeting, only those mutations which were sanctioned on the basis of registered sale-deeds, were to be taken into consideration. The mutation in question in that case not having been sanctioned on account of registered sale-deed, was not to be taken into account. The same was accordingly ignored. The aforesaid principle cannot be invoked in aid of the argument advanced by the learned counsel for the appellant as" in present case, the evidence of the claimant does not rest on mutations. The evidence, conversely, consists of registered sale-deeds of lands situate in the neighbourhood of the land under acquisition. It is a matter of common experience that in order to obtain higher amount of compensation, owners of land some times advert to fictitious transactions. In such case sales after the notification, when proved to have been effected by reason of notification or otherwise, are discarded: But this is not an absolute rule. Post notification transactions, like pre-notification transactions, when found genuine and bona fide, cannot be ignored altogether. Transactions which can fairly be said to afford a fair criterion of the market value at the date of notification, are to be accepted.

14. The evidence of the claimant consists of testimony of Malik Muhammad Nawaz, Advocate, Mr. Abdul Qayyum Qadri, Advocate, and Mr. Hamid Akhtar Baig respondent. He also produced copies of registered sale-deeds Exs. PA, PB, PC, PD, PE, PF, PG and PH. In rebuttal, Military Estate Officer appeared as a witness and tendered copies of sale-deeds Exs. DA, DB, DC and DD and mutations Exs. DE, DF and DG.

15. On perusal of record, it is discovered that no instance of sale of portion of the land under acquisition, is available. Instances of sales given by the parties pertain to neighbouring land and lands situate in adjoining villages viz. Pangpiran and Dhangrote. Kotli town as observed earlier, is spread on Baliah, Pangpiran and Dhangrote. In view of adjoining boundaries of these villages and identical urban position it is permissible to consider the sales of lands of those areas, to determine the value, but in presence of evidence of sales of lands of Baliah, we prefer to exclude sales of other areas. Exs. PA, PB, PE and PF, are copies of registered sales of lands in Baliah. Other sales Exs. PC, PD, PG and PH relate to lands of Dhangrote and Pangpiran. Among these instances vide PA, land measuring one kanal ten marlas was alienated for Rs.70,000/- on August 13, 1978. The price was paid before the Sub-Registrar at the time of registration of sale-deed. The interval between this sale and the date of notification is more than a year and two months. It is enjoined to prefer nearest or recent transaction of sale and nearest transaction available in the case is the sale vide P B. Irrespective of considerable interval market value of land vide PA is found as Rs.46,000/- per kanal. Vide PB 15 marlas of land was transferred for Rs.35,000/- through registered sale on April 22, 1979. Vendee paid Rs.30,000/- before the Sub-registrar. As safeguard, we accept this amount as correct price of. land. The value of land by virtue of price paid in transaction PB is Rs.40,000/- per kanal. In our well considered view sale PB provides proper guidance to determine fairly accurate market value of the land under acquisition. In addition to similarity in advantages and location, the time of transaction is nearest to the material date of notification. The bona fide and genuineness of the transaction is not assailable. The transaction is not found influenced from any ulterior consideration. Next transaction close to the material date is vide PE by which on June 8, 1980 Javed Iqbal and others sold 9-3/4 marlas land to Mangoo Khan for R.s.48,2001. The amount was paid in presence of Sub-Registrar. The transaction reflects the value of land as Rs.98,000/- per kanal. It is not proved that aforesaid price was effected by reason of the notification or otherwise. Post notification transactions are not necessarily ignored altogether. There must exist some reason to enable to discard such sales. Price described in the aforesaid sale appears comparatively high and it definitely indicates the tendency of escalation in market value. Average of the aggregate price of aforesaid three instances of sale is above Rs.61,000/per kanal.

16. In the evidence of appellant Ex. DA is sale of land situated in village Mandi. This is not proper instance of neighbouring land as village Mandi is situate at a distance from Kotli town. There is also no apparent equality in quality and attached advantages of the lands. Vide DB one kanal three marlas site along with built-up property was transferred on January 1, 1981 for Rs.20,000/ to Mehboob, a co-sharer in possession of the property. It is mentioned in the deed that the property was sold and price was received earlier in 1973. Be as it may, the transaction is not valid instance as in this case transfer was made of a share out of joint built-up property including the site, to a co-sharer previously enjoying exclusive possession. It was a case of forced sale by the co-owner having no possession. Moreover, it is a post notification transaction with a considerable interval. This transaction when compared with transaction Ex.DD dated March 30, 1981 whereby one kanal four marlas land was sold for Rs.76,000/-, does not inspire confidence to reconcile with its bona fide. It was rightly discarded by the High Court. Vide DC six marlas including a Kacha room was sold for Rs.40,000/- on April 7, 1979. The date of transaction is close to the date of notification, in addition to vicinity and similarity in lands. In presence of a "kacha" room, accurate price of land cannot be worked out. Hypothetically speaking maximum price of Kacha room as Rs.10,000/-, when excluded, the value of land per kanal comes to Rs.1,00,000/-. This instance of sale favours the opposite party. We have examined sale DD earlier. Nevertheless, the transaction negates the stand of the appellant. Exs. DE, DF, and DG are copies of mutations. Mutations are shown attested on the basis of registered sale-deeds. Vide DE 18 marlas land was sold for Rs.11077/- on November 11, 1976. The sale precedes the notification by an interval of three years. Not being a recent sale, as required by law, it is not considered conducive; so determine market value. DF shows that one kanal land was sold for Rs.20,000/on June 18, 1978. Keeping in view the level of price prevailing in 1978, it is thought provoking as to why and how such a low price was settled in this sale. We are in possession of another instance of Ex.PA dated August 13, 1978, whereby one kanal ten marlas was sold for Rs.76,000/-. Mr. Abdul Qayyum Qadri, a senior Advocate of Kotli who settled the bargain, testified in support of bona fide of the, transaction. We have no reason not to believe the gentleman. We have already discarded PA on account of long interval, particularly as possessed evidence of recent sale. We discard DF equally. DG is another sale of land including the house. The house and site, was sold for Rs.31,000/- on July 31, 1978. The exact area of site is not disclosed in the mutation. Apart from absence of data of site, in presence of house, the actual property in sale, value of the site, cannot b2 determined. In absence of date of site the evidence renders no assistance to assess the exact market value of the land.

17. We have deeply appreciated the evidence objectively so that points raised before us are dealt exhaustively. We have not found any misreading or misconstruing of the evidence by the learned Judges in the High Court. The conclusion arrived at, is quite consistent with the rules of appreciation of evidence. In consequence of our independent deliberations, we approve the impugned order. The impugned judgment is sustained and the appeal is dismissed with costs throughout.

A.A./201/S.A Appeal dismissed.

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