1. These are seven connected first appeals arising out of compensation proceedings under the U. P. Land Acquisition (Rehabilitation of Refugees) Act, No. 26 of 1948, (hereinafter referred to as the Act). An area of land, measuring 19.99 acres belonging to several proprietors and situate in Lekhraj Muzbita within the Municipal Limits of the city of Meerut, was acquired under a notification dated 29th January, 1950, for the rehabilitation of certain refugees, who formed a society under the style of Jain Pursharthi, Housing Cooperative Society, Meerut. Possession was delivered to the Society on 27th June, 1950, The land acquired belonged to various proprietors, who claimed compensation at the rates varying from Rs. 5/- to Rs. 12/- per square yard. On a portion of the land mere were tenants, who claimed compensation for their tenancy rights as well as for trees, wells and buildings standing on their land.
The Land Acquisition Officer calculated the value of the land treating it as agricultural land. He also allowed some compensation for trees, wells and the constructions. On a request being made by some of the proprietors and tenants references were made to the Court of the learned District Judge who, after considering the entire evidence led before him, arrived at the conclusion that the land which was beine acquired should be treated as a potential building site. He, however, was of the view that the northern portion of the land which was acquired was of greater value than the southern portion which was separated from the northern portion by means of a Kachcha road. He, therefore, allowed compensation to the owners and the tenants treating the land as a potential building site. The compensation allowed for the land to the north of the kachcha road was at the rate of Rs. 1/8/- per square yard, while the compensation allowed for the land lying to the south of the kachcha road was at the rate of Re. 1/- per square yard. The learned District Judge further fixed the proportion in which the landlords and the tenants were to receive compensation. He found that the compensation awarded by the Land Acquisition Officer Jn respect of the buildings, trees and wells was adequate.
2. With the consent of the parties all the references made to the learned District Judge were disposed of by one common judgment dated 10th November, 1953. Six appeals have been filed by the State of U. P. against the valuation fixed by the learned District Judge on the ground that it was too high and compensation should have been allowed treating the land as agricultural land. Appeals Nos. 63, 64, 78 and 81 are directed against four sets of proprietors namely, Sm. Asharfi Devi, Dr. Maqsud Husain, Sm. Gomti Devi and Joti Prasad respectively, while the remaining two appeals filed by the State Government are directed against two sets of tenants, namely, Khairati and others (Appeal No. 79 of 1954) and Ramji Lal (Appeal No. 80 of 1954). Appeal No. 67 of 1954 has been filed by Dr. Maqsud Husain on the ground that the rate at which the compensation has been awarded by the learned District Judge is too low and that it should have been awarded at the rate of Rs. 5/-per square yard. Another ground was that no compensation had been awarded to the appellant in respect of six bfswas land of plot No. 1551.
3. The judgment of the learned District Judge clearly shows that due to inadvertenceno compensation has been allowed in respect of the land of plot No. 1551. The area of the plot is six biswas and there can be no reason why compensation should not have been allowed for the land of plot No. 1551 also. The learned Standing Counsel has conceded before us that the claim of the appellant (Dr. Maqsud Husain) in respect of the compensation for the area of plot No. 1551 is well-founded and that he should get compensation for that land also at the rate which is held to be reasonable for the southern portion of the land, which has been acquired.
4. The valuation fixed by the learned District Judge in respect of the trees, wells and the huts has not been questioned, before us. The points for determination in the appeals, therefore are-
(1) Whether compensation should have been allowed treating the land as agricultural land or as a potential building site,
(2) What was the proper rate at which compensation should have been allowed.
5. Four witnesses, namely, Maqsud Husain, Joti Prasad, Abrar Husain and Tribeni Prasad were examined for the proprietors of the land, while two witnesses, namely, Sain Das and Bishun Das were examined on behalf of the State of Uttar Pradesh. Maqsud Husain and Joti Prasad were two out of the several proprietors whose land has been acquired. Sain Das was the President of the Jain Pur-sharthi Housing Co-operative Society, Meerut, while Bishun Das was a member of the Society. Several exemplars and other documents were filed on behalf of both the parties. The learned District Judge also made a local inspection.
6. The following facts are abundantly clear from the inspection note recorded by the learned District Judge and the oral evidence led by both the parties and have not been disputed before us:--
The land acquired is situate about three furlongs from Meerut city railway station. It is bounded by the military grass farm on the west, Idgah road on the north, partly by Anand-puri Colony and partly by some fields on the east and by a mango grove on the south. At the time of the inspection the land was found to be open and fairly levelled. The level of the land on the whole was higher than that of the fields to the east and slightly higher than that of Anandpuri. The buildings of the Jain Boarding House, the ice factory and the Arabic College lie to the north of the land which has been acquired and are separated from the latter only by the Idgah road. Prempuri Colony is opposite Jain Boarding House on the other side of the Station Road while the Krishna Flour Mills are opposite the ice factory. It has also come in evidence and was not disputed that the scheme for the Prempuri Colony which is at a distance of 150 or 200 yards from the land which has been acquired was started In the year 1932, while the scheme for the Anandpuri Colony which lies immediately to the east of the northern portion of the land which has been acquired was started in the year 1936. There were about 100 plots in the PrempuriColony out of which about 75 have alreadybeen sold and built upon while the remaining25 still lie unconstructed.
7. Although the entire land which has been acquired lies inside the Municipal limits of Meerut and in such close proximity of the localities where residential houses and factories have been constructed it was entered in the revenue papers as agricultural land. It has come in evidence that the land of Maqsud Hu-sain which is to the south used to be cultivated by him till the year 1346 Fasli. Maqsud Hu-sain had executed a lease of the land in favour of his brother. He, however, contended and stated on oath that the deed of lease was fictitious and was executed in order to save the property from passing on to other tenants. That is probable. Sometimes in the year 1946 an application was made by Khairati and other on the allegations that the land was lying uncultivated and should be allotted to him for the purpose of cultivation. Dr. Maqsud Hu-sain thereafter re-started cultivation on that land and it was not allotted, to Khairati and others.
8. The fact that the land which has been acquired was entered in the revenue papers as agricultural land and was being used as such will not mean that it could not be treated as a potential building site. The law on the subject is clear. It was held in the case of Narasingh Das v. Secy. of State , that the principle upon which valuation of property compulsorily acquired should be measured is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantages and with its possibilities. The same principle was reiterated in the case of Atmaram Bhagwant Ghadge v. Collector of Nagpur, AIR 1929 PC 92. Again, it was held in the case of Narayana Gajapatiraju v. Revenue Divisional Officer Vizagapatam , that the land is not to be valued merely by reference to the use to which it is feeing 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 that it is possibilities of the land and not Us realised possibilities that must be taken into consideration.
9. The above proposition of law has not been disputed before us. The contention on behalf of the State Government, however, was that keeping in view the following facts the land which was being acquired should not be treated, as a potential building site:--
(1) The acquisition was made under the Act (26 of 1948). The value of the land which has been acquired had, therefore, to be calculated with reference to 1st September, 1939, it being admitted that the prices of land kept on rising after 1st September, 1939.
(2) In the year 1.939 the land which has been acquired could not be treated as a potential building site, because even in the adjoining colony of Anandpuri 25 per cent of the plots could not be built upon nor could they be sold to the intending purchasers.
10. In our opinion there is no force in any of these contentions. It is true that the value of the land which has been acquired shall have to be calculated on the basis of its market value as on 1st September, 1939. Section 11 of the Act provides that the market value of the land acquired shall be either the market value on the date of the notification under Section 3 of the Act or the market value on 1st September, 1939, whichever might be less. As has been mentioned earlier the prices of land kept on rising after 1st September, 1.939, and therefore, the market value of the land which has been acquired shall have to be fixed with reference to 1st September, 1939. It has also to be seen whether the land which was acquired could be treated as a potential building site on 1st September, 1939. Unless that was so, its value could not be calculated on that basis.
11. There can be no doubt that considering the situation of the land which was acquired and other relevant facts it could be regarded as a potential building site even on 1st September, 1939. As mentioned earlier, the land which was acquired was on a higher level than the adjoining land. Again, it was fairly levelled and quite close to important educational centres and railway station. There must have been very great demand for building sites in the city of Meerut even during the year 1939. The scheme of Prempuri Colony which is to the north of the land in suit and at a very small distance from there was started sometimes in the year , 1932. It appears that even after the establishment of the Prempuri Colony the demand did not abate. Joti Prasad succeeded in starting another scheme, to wit, that of Anandpuri Colony. That was started in the year 1936. The recitals in some of the sale deeds which have been filed as exemplars show that the organisers of the Colony had laid down very onerous terms, such as
(1) the construction to be erected on the site within two years of the date of the sale of the plot;
(2) in case of default the land to revert to the sellers on payment of the original price; and
(3) the drain to be constructed by the vendees at their expense.
In spite of these onerous conditions nearly 75 out of 100 plots in Anandpuri Colony were sold by 1st September, 1939, when the second World War was declared. Then came a period of uncertainty and of controls. During that period it might not have been possible to get materials for constructions. The evidence on that point led on behalf of the proprietors of the land has, in our opinion, to be believed. Some of the plots in Anandpuri Colony could not be constructed upon because, as has come in evidence, there was difficulty in getting the building materials and also the owners of land kept on demanding more and more price for their land. It has come in evidence that the land which was being sold in the year 1939 at Rs. 2 to Rs. 5 per square yard came to be sold in the year 1949 at Rs. 10 or Rs. 11 per square vard. In the circumstances the fact that 25 per centof the plots in Anandpuri Colony could not be built upon after 1st September, 1939, can have no effect on the determination of the question that the land in question had in the year 1939, and continued to be a potential building site.
12. It was further contended that even in case It be held that the land immediately to the west of Anandpuri and to the north of the kachcha road was a potential building site, the same could not be said about the land to the south of the kachcha road. A sale deed (Ex. A-1) was filed to show that on 12-8-1937 eight blswas of land lying to the east of the southern portion of the land which had been required was purchased for Rs. 100 only.
13. In our opinion the existence of the sale-deed (ex. A-1) is not enough to disprove that the southern portion of the land which has been acquired could be treated as a potential building site. In the first place, the sale deed is of the year 1937 and not of the year 1939. In the second place, it relates to a land which, according the inspection note of the learned District Judge, must be on a much lower level than the land which has been acquired. In the third place, it has come in evidence that the land was sold fictitiously and then repurchas ed within a very short period. In the circumstances much reliance could not be placed on the aforesaid sale-deed to establish that the southern portion of the land in question could not be treated as a potential building site.
14. It is true that the northern portion of the land acquired, being immediately to the west of Anandpuri Colony, was bound to be in greater demand than the southern portion of the land in question which it at a small distance from the Anandpuri Colony and is bounded by fields, military farm or grove. It must be for that reason that the learned District Judge has fixed the value of the southern plot at Re. 1 per square yard while he has allowed Re. 1/8 per square yard as compensation for the northern portion of the land. That its market value should be less is understandable, but we fail to appreciate the argument that it could not be treated as a potential building site on 1st September, 1939.
15. From what has been stated above it is clear that both the northern and the southern portions of the land acquired have to be treated as potential building sites even on 1st September 1939, and compensation has to be awarded in respect of them on that basis.
16. The next point that arises for consideration is: What would be the proper compensation for the land which has been acquired. The learned District Judge has allowed Re. 1/8 per square yard for the northern portion of the land and Re 1 per square yard for the southern portion of the land. In our opinion the valuation made by him is quite fair and need not be disturbed.
17-20. (His Lordship considered several exemplars and sale deeds and oral evidence and continued.)
21. No house was built inside the land when was sought to be acquired. The oral evidence about the rate of land must, therefore, relate to the rates as they obtained in the adjoining localities of Anandpuri and Prempuri. Both the aforesaid localities had been developed in the sense that plots had been demarcated and land had been earmarked for the construction of the roads, drains etc. The prices quoted by the witnesses, therefore, related to the land of the developed areas, and the same could not hold good in respect of the land which lias been acquired and which was an altogether undeveloped area.
22. The principle that the value of the plots in undeveloped land must be less than that of the plots in developed land is well recognised. It was held in the case of Bombay Improvement Trust v. Mervanji Manekji Mistry, : AIR1926Bom420 , that in all cases where there is a large area of undeveloped land under acquisition, it is the market value of the undeveloped land which has to be considered, and it is too often forgotten that a purchaser of such land will ordinarily expect to make a large profit on the original outlay because in addition he will have further expenditure to make and there will be the risk that it will be some time before he can dispose of the whole of the land. Even in cases where a person, who starts a colonisation scheme does not spend much over the improvement of the area, the inital expenditure of acquiring the land, the fact that the capital will remain locked for a considerable period and the cost of the land which has to be left out for making roads and drains etc. are relevant considerations and will go to show that the market value of the undeveloped land should be much less than the market value of the developed land. In the case of : AIR1926Bom420 (supra) the compensation awarded at Rs. 8 per square yard for developed land was considered to be fair when the evidence was that the market rate in the adjoining developed area ranged from R.s. 10 to Rs. 16 per square yard.
23. Compensation to be awarded must be that which the lessor could reasonably expect on 1st September, 1939, for the land in question, which could be treated as a potential building site.
24. Taking all the facts and circumstances of the case the compensation at the rate of Re. 1/8 per square yard for the northern portion of the land must be regarded to be fair when according to the proprietors' own evidence it is clear that the rate at which the developed land was being sold during the period 1939 to 1942 was Rs. 2 to Rs. 3 per square yard.
25. The northern portion of the land acquired was definitely better than the land to the south of the kachcha road. The southern portion of the land acquired could not on 1st September, 1939, have the same market value as the northern portion of the land acquired and the rate of Re. 1 per square yard for the southern portion of the land must, in the circumstances of the case, be considered to be fair.
26. No other point was raised in First Appeals Nos. 63, 64, 78, 79, 80 and 81 of 1954, all of which fail and must be dismissed.
27. First Appeal No. 67 of 1954 partly succeeds inasmuch as the learned District Judgehad inadvertently failed to award compensation to Dr. Maqsud Husain in respect o six biswas of land of plot No. 1551. Dr. Maqsud Husain will get compensation for the land of plot No. 1551 also at the rate of Re. 1 per square yard; To this sum will be added 15 per cent on account of the compulsory nature of acquisition, and 6 per cent per annum interest on the additional amount allowed from the date possession was taken over from Dr. Maqsud Husain till the date of payment.
28. We make no order as to costs so faras First Appeals Nos. 64 and 67 of 1954 areconcerned, The respondents of the remainingfive appeals (First Appeals Nos. 63, 78, 79, 80and 81 of 1954) shall get their costs from theappellant.