1. This is an appeal against the order dated 31-8-66 passed by Sri B Misra, Subordinate Judge, Sambalpur in Misc. Case No. 24/37 of 1963-65 assessing compensation for the land belonging to the appellant, acquired under the Land Acquisition Act (hereinafter referred to as the Act), in the following manner:--
(i) Value of the entire property--Rs. 1,76,647.50;
(ii) 15 per cent extra for the compulsory acquisition on the above value; and
(iii) 6 per cent interest as permissible under Section 28 of the Land Acquisition Act.
In fixing the value of the land as shown in item No. 1 above the court below has included therein 15 per cent of the market value as the potential value of the said land. The property acquired is 0.93 acres of land with an old building standing thereon in Municipal Holding No. 12 in Patnaik Para in Sambalpur Town. The property was acquired ley Government Notification No. 44498/R. dated 25-9-62 for the Lady Lewis Girls' High School. The Collector under the Act offered a compensation of Rs. 67,338.25 paise, including therein 15 per cent as solatium for the compulsory acquisition. On the respondent's application a reference under Section 18 of the Act was made to the court below, and the court below has fixed the compensation as stated above. The State being aggrieved by the aforesaid award has preferred this appeal under Section 26 of the Act.
2. The property is situated in the town of Sambalpur, and the court below, while assessing the market value of the land, has taken into consideration the fact that the value of the land was rising from year to year in that town. Considering that aspect of the matter the court below fixed the market value of the land in accordance with the petitioner's claim at the rate of Rs. 950 per decimal. The assessment of the market value of the land at the above rate and solatium and interest ordered to be paid thereon have not been seriously challenged by the learned Advocate-General appearing for the appellant. But he has very seriously challenged the court's award in so far as it relates to the potential value of the land assessed at 15 per cent of the market value, and included in the amount to be paid as the value of the entire property, as shown in item (i) of the preceding paragraph.
3. The compensation to be awarded under the Act, as is well settled, must be determined by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The market value, in general, can be ascertained by a consideration of the prices that have been obtained at the relevant time for land of similar quality and in similar positions, and this is what must be meant in general by the market value in Section 23 of the Act. At times, however, the land which is sought to be acquired possesses some unusual and unique features as regards its position or its potentialities. In such a case it has to be ascertained, as best as possible, from the materials available, as to what a willing vendor might reasonably expect to obtain from a willing purchaser for the land in that particular position and with those particular potentialities. In fixing the market value the court at times has to take into consideration the utility to which the land is likely to be put in the near future. Future utility or the likely opportunity of utilising the land for sortie more profitable purpose assumes relevance when there are impending prospects of development and improvement of the area of an appreciable nature in the near future. Due to such impending prospecte of development the price of lands in the locality or in the vicinity may shoot up within a short time, and in those circumstances it can be said that such lands have acquired a potential value which should not be lost sight of at the time of assessing its valuation. A fallow land in the rural area without any proximate prospect of being utilised for some profitable purpose of the nature stated above is without any potential value. But if in that area or in its neighbourhood an industry or a factory is proposed to be established in the near future, then in that case the value of the land would certainly go up in consideration of and in proportion to the importance of the work proposed, and in such eventuality th' lands in that area, which did not have any potential value in the past, would immediately have A potential value which np one can ignore. On the proof of the existence of such circumstances the court has to take into account the potential value of that land at the time of its acquisition. The assessment of the potential value on the basis of its expected user in the near future for such profitable purposes can be done only when the expected user for such purposes is almost a certainty or a proximate possibility and is so obvious that its value can be ascertained on a reasonable consideration of the realities of the situation. But where such possibilities are non-existent or are too remote, the court should not take into consideration the potentiality of the land, as in that case one would land himself in speculations and conjectures regarding the price the land is likely to fetch in the distant future for something which is uncertain and/or is yet to be envisaged.
Fallow lands situated in the town or in its vicinity, suitable for construction of buildings or for other ancillary purposes for which such lands are generally utilised, cannot be said to have a potential value, in the sense it is understood in the legal parlance, merely because somebody thinks of purchasing the same for the purpose of utilising the same for some profitable purpose, or because of the fact that a school or a college or some other important building or institution is constructed in the vicinity of such lands. Lands in different parts of a town or city have different market value, depending upon the locality and their situation and valuation of such lands has to be made on a consideration of the price which a willing vendor might reasonably expect to get from a willing purchaser for similar lands in that locality and situation. While acquiring such lands for the usual requirements of the town, consideration of their potential value, over and above their market value, would be irrelevant and unrealistic.
4. In the present case, a plot of land, with an old building standing thereon situated near the Lady Lewis Girls' High School in Sambalpur Town, has been acquired for the different requirements of that school. There is nothing in evidence to show that the said plot of Land had acquired any special importance due to its proximity to the said school or due to any other unusual and/or unique features attached to it. Merely because of its proximity to the said school it cannot be said to have a 'potential value' which has to be separably assessed and paid over and above the market value of the said land. In this case the court below has fixed the market value of the land at the rate of Rs. 9'50 per decimal, which is exactly in accordance with the appellant's claim to that effect. That being so, the appellant cannot have any grievance with regard to the assessment of the market value of the said land. For reasons stated above we are of the opinion that the land in question did not have any 'potential value' worth consideration, and so the court below was not justified in including 'potential value' of the said land in its impugned award. Accordingly, the award of the court below in so far as it relates to the potential value of the property is set aside.
5. It is urged by Mr. Misra that the court below has not taken into consideration Rs. 50.60 paise only as the valuation of the trees standing on the acquired plot of land as found and fixed by the Collector. The learned counsel appearing for the State does not oppose the inclusion of the said amount in the valuation of the property. So this amount of Rs. 50.60 paise only is to be added to the valuation of the property.
6. In the result, therefore, the award is to be corrected as stated below :
(1)Valuation of 93 decimals of land...Rs. 88,360.00(2)Valuation of the buildings...Rs. 75,160.00(3)Valuation of trees...Rs. 50.60
Total value of the entire property...Rs. 1,63,560.60
On the above valuation of the property the respondent is entitled to 15% solatium as per Section 23(2) of the Land Acquisition Act. He is also entitled to interest at 6% as permissible under Section 28 of the Act The amount if any already received by the respondent has of course to be deducted and interest calculated accordingly.
7. The award of the Court below be amended as above.
8. The appeal accordingly is partly allowed. Parties to bear their own costs of this appeal.
G.K. Misra, C.J.
9. I agree.