1. Regular First Appeals Nos. 275 and 317 of 1945 arise out of a decision of a Tribunal appointed under the U.P. Town Improvement Act.
2. By a notification dated 4th September 1937, 5980 square yards of land covered by residential houses and shops was notified for acquisition under Section 36, U.P. Town Improvement Act, VIII  of 1919, as extended to the Province of Delhi, The owner claimed compensation at the late of Rs. 65 per square yard for the land, and for the buildings a sum of Rs. 40,000 was asked by one set of claimants while another sum of as. 8,000 was demanded by Abdul Ghaffar Khan claimant No. 8.
3. There were also certain tenants in occupation of several tenements and they wanted different sums in the way of compensation. A claim was also made for 15 per cent, on account of compulsory acquisition. The Collector by his award dated 20th February 1942 gave in all a sum of Rs. 75,893-10-0 to all the claimants. For the land he awarded compensation at the rate of Rs. 10 per square yard amounting to a sum of Rs. 59,800 and for the structures he gave Rs. 9,141. The award of the Collector was based on a previous award given by him in respect of a neighbouring piece of land similarly used.
4. On 6th April 1942 an application was made by Gbias-ud-Din and others to the Collector 1949 under Section 18, Land Acquisition Act. Abdul Ghaffai Khan, however, did not join in making this application. His name was originally typed on the application but was later on struck off by Mr. Harish Chandra, the counsel appearing in the case. In this application compensation was claimed at the rate of Rs. 40 per square yard for the land and a sum of Rs. 20,000 was asked for the buildings. The Collector accordingly made the reference to the Court under Section 19, Land Acquisition Act.
5. The Tribunal gave its award on 10th April 1945. The president assessed the market value of the land under the Act in question at Rs. 20 per square yard. The compensation allowed for the buildings was not enhanced in any manner. One of the assessors agreed with the award of the president while the other assessor Mr. Rashid Ahmad thought that Rs. 30 per square yard was the proper market value of the land acquired. In the result the award of the Collector as regards the land was enhanced by Rs. 59,000 and interest was allowed at 6 per cent, per annum on the amount from the date of possession to the date of depositing it in Court. Proportionate costs were also allowed to the petitioner. Against this award the above mentioned two appeals have been preferred to this Court Regular First Appeal No. 275 of 1945 has been preferred on behalf of the Improvement Trust while Regular First Appeal No. 317 of 1945 has been preferred on behalf of Ghias-ud-Din and others.
6. It is contended by Mr. Bishan Narain on behalf of the Improvement Trust that the Tribunal has assessed the market value of the land acquired on a wholly erroneous basis. The learned Counsel suggested that under the United Provinces Town Improvement Act the market value of the property acquired haft to be assessed according to the present use of the property and by eliminating out of consideration its future use or potential value. He also urged that the only method of assessing the market value according to the use of the land to which it is being put at the time of the acquisition, is the method of capitalisation of the rents, and that evidence in the way of instances of sales of neighbouring plots similarly used, or of offers, or of previous awards by the Tribunal about similarly used land was inadmissible in making the estimate and hence the assessment made by the Tribunal after considering such evidence was erroneous.
7. It was found by the Collector and the fact was not disputed before the Tribunal that the property acquired at the time of the notification fetched a net rental of Rs. 2971-7-0. On that basis its market value did not exceed a sum of Rs. 49,523-15 0. As the Collector had awarded for the land a sum of Rs. 59,800 on the basis of his own earlier award in another case, the Improvement Trust was not competent to question it and therefore the learned Counsel was content if the award of the Collector was restored, and that of the Tribunal was set aside.
8. Mr. Shamsher Bahadur, the learned Counsel for the claimants contended that, it is not only the actual use of the property at the relevant date, but its most profitable use on that date which is the true criterion' in making the assessment of the market value of the land. It was conceded that future potentialities of the property could not be taken into consideration in arriving at the estimate but it was asserted that the land should be valued with all its existing advantages and benefits. The learned Counsel proceeded to argue that the Tribunal had underestimated the market value as it had not based its decision on the basis of instances of sales of similarly used land. It was claimed that the market-value of the land should be enhanced to Rs. 30 per square yard though in the two instances relied upon the land was sold at Rs. 37 per square yard. The claimants it was said had reduced the claim, in view of the heavy court-fee payable on it.
9. In view of the respective contentions of the learned Counsel it is necessary to ascertain the correct principles of assessment of market-value under the United Provinces Town Improvement Act, and to decide whether evidence of sales of neighbouring plots of land similarly used and other kind of evidence on the issue of market-value is admissible in making the estimate of value under the Act. Section 23, Land Acquisition Act, has been amended by the United provinces Town Improvement Act in the following manner:
For the purposes of Clause 1 of Sub-section (1) of this section--(a) the market-value of the land shall be the market value according to the use to which the land was put at the date with reference to which the market-value is to be determined under the clause.
The amendment of the section has materially narrowed down its original scope. In the determination of the market-value of the land under the United Provinces Town Improvement Act therefore the only point to be considered is the use to which the laud was being put at the relevant date. The section as it stood in the Land Acquisition Act however was not restricted in any manner and in arriving at the decision about market-value under the Act not only was the most profitable use of the property at the time of acquisition to be considered but its potentialities in the future had to be kept in view in arriving at the estimated It has, however, not to be forgotten that though the land has to be valued exclusively according to its present use, the value to be given is still the market value and it has not been laid down that in arriving at the decision the Court will only take into consideration certain kind of evidence and exclude other kinds of evidence. 'What precise meaning has to be given to the words employed in the amended section has been the subject-matter of of some controversy. In Secretary of State for India in Council v. Makhan Da : AIR1928All147 a Full Bench of the Allahabad High Court held that the correct interpretation of Section 23, Sub-section (1), Clause (1), Land Acquisition Act, 1894, as amended by para. 10, el. (3) of the Schedule to the United Provinces Town Improvement Act, 1919, is that the market-value of the land to be acquired is to be calculated exclusively in accordance with the use to which the land is being put on the date on which notice issues under Section 29 or Section 36, United Provinces Town Improvement Act. At P. 473 of this report the following observations occur:
But what is to be said in a case where on this-date the land is not being used for any apparent purpose which can bring in profit to the owner? Is it to be taken that in the absence of immediate profit the land is of no value to the owner, that its market-value to nil and that, in consequence, the Improvement Trust can expropriate the owner without paying him compensation. That is a conclusion to be avoided if possible, for it involves the inference that the Legislature has conferred upon the Trust authorities a power of confiscation. There is no express provision to the effect in the Act. It remains to be considered whether the existence of a power of confiscation must be inferred by necessary implication:
The market-value of the land shall be the market value according to the use to which the land was put at the date with reference to which the market-value is to be determined under that clause.
The language of the section is rigid. The governing words are according to the use to which the land was put etc. The determining factor is the actual use of the land at the date in question, and any use of the land prior to that date is to be disregarded. In view of this phraseology it appears to be impossible, for the purpose 'of assessing the market-value to resort to any other facts such for example, as the history of the land, its physical features or its situation; for while data of this nature might otherwise be of weight as indicating the value of the land to the owner, they could only be of service in estimating a potential value based upon the use to which the land might most profitably be put. But the section expressly excludes all consideration of potential use by laying down that the determining factor in the assessment of the market-value is the actual use to which land is being put on the date of the notification: and from this the conclusion appears to be that either intentionally or through inadvertence the Legislature has declared that in certain conditions the market-value of the land on the material date may be nil.
The learned Judges proceeded to observe that such enactment is fraught with much possible hardship to owners of property and therefore the Legislature should clearly declare whether it was intended to invest the Improvement authorities with this power of confiscation, or to amend the Act so as to avoid the results above-mentioned.
10. In Debi Din v. Secretary of State for India A.I.R.1942 All. 186 a Division Bench of the Allahabad High Court further extended the rule that was laid down by the Full Bench in the above-mentioned case. After accepting the interpretation that had been placed by the Full Bench on Section 33, as amended by the United Provinces Town Improvement Act, VII  of 1919, they observed:., exemplars do not come into the scheme of clause firstly of Section 23. Therefore, In determining the multiple, that is the number of years' purchase, while, calculating the market-value of the land under Section 23 a decision by the Improvement Tust Tribunal is not admissible. For the same reason there is no evidentiary force in the sale deeds relating to pieces of land which abut on or are even part of the land which is being acquired.
In the opinion of this Bench the only method of assessing the market-value of land under the Act was the method of capitalisation of rents.
11. The Full Bench case of the Allahabad High Court was later on examined by their Lordships of the Privy Council in Babu Kailash Chandra Jain v. Secretary of State : I.L.R. (1946) ALL. 738. In this case their Lordships ruled as follows:
It is not correct to say that a plot of land used by its owner as a garden at the relevant date, or a plot of agricultural land lying fallow at the relevant date is not being put to any use within the meaning of Section 23(3)(a) and that the market value of the land must be treated as being nil because the owner is deriving no profit there from and that consequently the owner is not entitled to any compensation on its compulsory acquisition. On the true construction of Section 23, the former plot ought to tie valued as a garden and the latter plot ought to be valued as agricultural land. The effect of Section 23(3)(a) as amended is that the possibility of the garden or agricultural plot being used, e.g., for building purposes in the future must be disregarded. It is significant that Section 23(3)(b) provides for the case of the owner having taken active steps and incurred expenditure to secure a more profitable use of the land. Apart from such a case, only the present use of the land can be considered for the purpose of arriving at the market-value.
It is quite clear that their Lordships of the Privy Council did not accept the view that had been expressed by the Full Bench of the Allahabad High Court as to the interpretation to be placed on Section 23, Land Acquisition Act, as amended by the United Provinces Town Improvement Act, VII  of 1919. As a result of the decision of their Lordships of the Privy Council, I am bound to hold that the market-value of the land under the United Provinces Town Improvement Act, Section 23, has to be assessed according to the use' to which the-property is being put at the date of acquisition as distinguished from the use to which it is capable of being put in the future. In other words, all ideas of potential value of the land have to be excluded when assessing the market-value of the property. The Tribunal in making the estimate has not taken into consideration the potential value of the property and that being so the award could not be attacked on the ground that it was (sic) inasmuch as it is based on an erroneous interpretation of the words of the Act.
12. The next contention of Mr. Bishan Narain, however, that the only method of assessing the market, value of the land on its present use, is the rental basis cannot, in my opinion, be sustained. Keliance was placed on the observations made in Debi Din's case A.I.R. 1942 ALL. 186 : 200 I.C. 634. I express my respectful dissent with this decision if it intends to lay down the proposition that the Act not only amended Section 23, Land Acquisition Act but also materially changed the provisions of the Evidence Act and excluded evidence of all kinds and varieties for being admitted and considered in estimating the market-value except evidence about the income of the land. The Tribunal has as its objective the estimate of the market value of the property, which expression means the price which a willing seller might reasonably expect to obtain from a willing purchaser. If between a willing purchaser and a willing seller a plot fetches a certain price according to the use to which it is being put at the date of the sale, then that price is the market-value of the sold plot under the amended section. In other words, if a plot of agricultural land fetching a small income is sold as such and the buyer also buys it for agricultural uses, but pays a price which bears no comparison to the price arrived at on a capitalisation of the rents then the market-value is the value for which the sale has been made and not the value arrived at by capitalising the rents. The plot notified for acquisition, may it-self have been sold between willing buyer and a willing seller according to its use in the market and may have fetched a certain price. This price is certainly its market-value even if it is considerably in excess of the estimate made by capitalising the rental of the land. Sales of neighbouring plots of land similarly used and sold for the same use at a certain price on or near the date of notification will furnish a good guide of market-value. If there is good evidence of offers regarding such plots that evidence would also be relevant provided it is held that the offers were of a genuine character. Even expert evidence as to the market-value of similarly used plots may be taken into consideration. The net yield of the land at the time of acquisition and an estimate of market-value by capitalising it on the basis of a certain period of time is only one of the modes of assessing market-value, but it is not the only mode of arriving at the decision. It is not always a satisfactory method and considerable element of conjecture always finds place in this method. Whether capitalised value is to be given on 16 years or 20 years or 25 years' basis is always a difficult question and this method can only be adopted if no satisfactory evidence of other kinds is available to estimate the market-value. Evidence of sales of the same land or of similarly used land in the neighbourhood furnishes a better criterion of market-value if it is of a satisfactory character and the sales are of a genuine character and have been made at a time when the land had no potential value at all. For the view I am taking, reference may be made to a Single Bench decision of Monroe, J. In Regular First Appeal No. 197 of 1942, decided on 10th November 1942, the learned Judge in this case made the following observations:
Keeping in mind the modification of Section 23 the assessors noted we are of opinion that the framers of the law could not have bad in their minds the desire to expropriate owners of land without payment of compensation and this in my opinion is a correct view.... I have no hestitation in saying that the main object of the amendment of Section 23 is to preclude potential value from being taken into consideration.
It was further observed that in assessing the market-value the basis of valuation may be the price at which the plot itself was sold prior to the notification or the price of similar plots in the neigh, bourhood recently sold and that oral evidence of mar ket-value should also not be ignored. With great respect, I express my respectful concurrence in the observations noted above. Recently the matter was considered by this Bench in Regular First Appeal No. 206 of 1945. In this case, the property under acquisition had previously been a old at a certain price. The question arose whether that sale could be taken into consideration in determining the market-value of the land according to its use at the relevant date. In dealing with the point, I made the following observations:
The argument that the garden should have been valued merely on the rental value and not according to the price for which it was purchased in the year 1920 does not appeal to me. When the garden was sold in 1920 it was sold as such. The use of the property in 1920 was the same as it is at present. If on the use of the property as a garden between a willing buyer and a willing seller in the year 1920 it fetched the price of Rs. 20,000 then it must be assumed that that was the market-value of the property on that date according to the use of it as a garden and that evidence is therefore very material in deciding its market-value as a garden at the relevant date.
Mr. Bishen Narain was not able to say anything in this case which could make me reconsider what I said in the passage noted above.
13. The decision of their Lordships of the Privy Council cited above also lends support to this view, Their Lordships held that even in cases where the land is lying vacant and is not being put to any use, the owner has to be given market-value. Such value obviously cannot be arrived at on rental basis and the estimate has of necessity to be made by taking into consideration other kind of evidence. It may also be pointed out that whenever rental basis is considered to be the only satisfactory method of assessing market-value there again the question whether the capitalised value is to be arrived at by considering 16 years, 20 years-or 25 years' rents is a matter which will vary with the circumstances of each case. That again has to be determined on the evidence that is placed on the record. With great deference I cannot subscribe to the view expressed by the learned Judges in the Secretary of State v, Malchan : AIR1928All147 , that the capitalisation should be done on a figure which gives to the claimant an interest at the rate of 6 percent, per annum. That method of assessing market-value is based on a rule of thumb.
14. In the light of the observations made above, we have to consider whether the Tribunal in the present case assessed the market-value of the land acquired correctly. The evidence on this record to determine this question of fact consists of instances of sales, Exs. P. 1 and P-2, made in May 1937 by one Partap Singh. These two documents were called by the Tribunal from the records of the Improvement Trust. No question was raised about their genuineness. No evidence however has been led as to the circumstances in which these sales took place and the purpose for which the property was purchased. These transactions related to residential sites adjoining the land of the claimants and yielded less income than the property in suit as no buildings existed on them while land in question has been built upon and is comprised of residential houses and shops.
15. The learned President of the Tribunal took into consideration the evidence of these two transactions but he was not prepared to give to the claimants the price which these sales fetched because of the fact that he considered that most likely this included the potential value of the property as it might have been acquired for a factory. It was so stated by the learned Counsel for the respondent in his statement before the Tribunal and the fact was not challenged by the other side. One of the members of the Tribunal said that there was no evidence in the case to the effect that the property sold by Partap Singh had been sold for the purposes of a factory. Be that as it may, we have not been able to discover any evidence as to the exact circumstances in which these two transactions were made and though they furnish relevant evidence in the case some discount has to be placed on the prices fetched by these two transactions in view of the fact that potential value may have been taken into consideration in arriving at the figure at which Partap Singh sold the property.
16. The other piece of evidence in the case is the judgment of the Tribunal given formerly in respect to plots of land situate in the neighbourhood of the plot acquired though not exactly in a similar situation. In those cases, the Tribunal allowed to the claimants a sum of Rs. 10 per square yard. The learned president of the Tri. bunal considered that he had in that case allowed a low price to the claimants as
17. The third piece of evidence in the case is about the rents of this property at the relevant date. After a careful consideration of all these pieces of evidence, the learned President of the Tribunal reached the conclusion that Rs. 20 per square yard would be a fair market, value of the property in dispute. After hearing the learned Counsel in this case, I am not able to say that that estimate is wrong or is in any way based on wrong principles of valuation under the United Provinces Town Improvement Act. The contention on behalf of the claimants that they should get the same price as was fetched in the two sale transactions of Partap Singh cannot be sustained. In the first place, the full circumstances of those sales have not been proved. The claimants themselves have not claimed the price according to those two transactions. One of the assessors, who gave the opinion that the property should be valued at Rs. 30 per square yard, did not accept the basis of these two sale transactions for his decision. The evidence on the record is wholly insufficient for enhancing the market-value to any extent whatsoever.
17. As regards the appeal of Mr. Bishan Narain only one matter remains for decision. It was contended by him that the Tribunal had allowed compensation to Ghias-ud Din and others even for the share of Abdul Ghaffar Khan who never' asked for a reference against the Collector's award. It appears that Abdul Gaffar Khan's share in the property acquired is 1032 square yards as is mentioned in a note annexed to the grounds of appeal in Regular First Appeal No. 317 of 1945. That being so, the claimants have been given a sum of Rs. 10,820 for the share of Abdul Gaffar Khan to which they were not entitled. Mr. Shamsher Bahadur argued that this matter had not been raised in the grounds of appeal and that as the award was a composite one, we should not interfere in this matter. It is very difficult to accept this argument because it is quite apparent on the face of the award that the claimants can under no circumstances claim compensation for the land of Abdul Ghaffar Khan as he himself did not attack the Collector's award by filing an application under Section 18, Land Acquisition Act.
19. The result, therefore, is that the trust's appeal is allowed to the extent that the compensation allowed by the Tribunal to the claimants is reduced by a sum of Rs. 10,320. In all other respects the Tribunal's decision is maintained and the appeal of Ghias-ud-Din and others is dismissed. In the circumstances of the case we leave the parties to bear their own costs in this Court. The order of costs made by the Tribunal is not interfered with in any way.
Teja Singh, J.