B.C. Misra, J.
(1) This judgment will dispose of five regular first appeals Nos. 67, 81, 103. 104 and 107, all D of 1965. They have been filed under section 54 of the Land Acquisition Act 1 of 1894 and are directed against the decree of the Additional District Judge, Delhi dated 14th December, 1964 by which he has determined the compensation of the land in dispute at Rs. 6,000.00 per Bigha, besides allowing certain amount of development expenses incurred by the claimants.
(2) The land in dispute is situated in village Kharera. The area of the land belonging to National Finance of India Limited (appellant in the first mentioned appeal) is 54 Bighas and the area belonging to the Traders Bank Limited (appellant in R F. As. 103-D, 104. D, and 107-D of 1965) is 72 Bighas and 4. bids was while the area of the land in respect of which compensation is claimed by the New Bank of India (appellant in R.F.A. 81- D of 1965) is only 14 bids was which is purchased from the Traders Bank Limited and formed part of the land belonging to the Traders Bank.
(3) The notification under section 4 of the Land Acquisition Act was made on 3rd September, 1957 while declaration under section 6 was made on 10th January, 1961. The Land Acquisition Collector by his award dated 24th April, 1961 determined the amount of compensation at Rs. 3,200.00 per Bigna in addition to development charges. This was enhanced by the learned Additional District Judge to Rs. 6,000.00 per Bigha as mentioned above. The claimants (who are appellants before us) had lodged a claim for Rs. 73,132.82 on accent of development charges, out of which Rs. 70. 819.11 have been allowed by the Additional District Judge and he directed its apportionment among the claimants. He, however, rejected the claim in respect of Rs. 2,313.71 which was incurred subsequent to section 4 notification. It has been abandoned and not pressed before us.
(4) The main arguments have been advanced by Mr. H.S. Tiagi, counsel for the appellant in the first appeal while Mr. Bagai and Mr. Chhabra, Advocates for the appellant in the other appeals, have adopted the same arguments The appellants have, pressed that the market value ought to have been determined by the Additional District Judge at Rs. 10.00 per square yard or Rs. 10,000.00 per Bigha. The Additional District Judge in arriving at the market value has mainly relied upon his own award (Exhibit R.8 dated 14th May, 1963 by which in the same village, in respect of land measuring 4 Bighas and 2 bids was he had awarded a compensation of Rs. 5,000.00 per Bigha. The Union of India has not filed any cross-appeal or cross objection challenging the impugned award. Mr. Tiagi in suppport of the appeals has contended that the learned Additional District Judge ought to have considered the potential value of the land as a residential colony and ought to have relied upon Exhibit A. 3 dated 13th August, 1960 whereby the appellant had agreed to sell the land in dispute to Raj Nagar Co-operative House Building society at Rs. 91 per square yard at least. 4. The principles of determining the compensation have been laid down in sections 23 and 24 of the Land Acquisition Act. Under the first clause of section 23, the Court is required to take into consideration the market value of the land at the date of the publication of the notification under section 4(1) of the Act. In The Special Land Acquisition Officer Vs . T. Adinarayan Setty , : AIR1959SC429 , the Supreme Court laid down that the function of a Court in awarding compensation under the Land Acquisition Act is to ascertain the market value of the land at the date of notification under section 4(1) and the methods of valuation may be (a) opinion of experts, (2) the price paid within a reasonable time in bonafide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and (3) a number of years purchase of the actual or immediately prospective profits of the lands acquired. They have been reiterated with approval in another decision of the Supreme Court reported as Tribeni Devi and other Vs . The Collector, Ranchi, : 3SCR208 .
(5) Mr. Tiagi does not dispute the principle but only urges that the potential value of the land has not been taken into consideration by the learned Additional District Judge in determining the market value and the same should, thereforee, be enhanced.
(6) In Inland Revenue Commissioners v. Clay, (1914) 3 KBD 466, the facts were that the value of the land in question did not exceed 750 pounds, but the special circumstance was that the trustees of a nurses home adjoining the house in dispute were ready and willing to pay 1000 pounds for the house in dispute. The question was whether the value of the said house was 750 pounds or 1000 pounds. The learned Single Judge in the King's Bench Division held that the reference was right in determining the value not because of the sale for 1000 pounds, but because of the reasonable expectation that a willing seller could get 1000 pounds or more from the nurses' home. The Master of the Rolls approving the dictum of the learned Single Judge observed that an 'open market' sale of property presupposed knowledge of its situation with all surrounding circumstances and it was absurd to say that a small farm in the middle of a wealthy landowner's estate was to be valued by reference to its ordinary agricultural value, regardless of the fact that the landowner would be willing to pay a large price for it. Lord Swinfen Eady observed that the local conditions and requirements, the advantages of the situation of the property for any particular purpose and the names of the persons who were the probable buyers, would ordinarily be matters of local knowledge to the property brokers and agents and speculators and in order to arrive at the amount which land might be expected to realise, all these matters ought to be taken into consideration ; 'Expected' refers to the expectations of properly qualified persons who had taken pains to inform themselves of all the particulars ascertainable about the property and its capabilities, the demand for it and the likely buyers and the price actually realised by a scale was not necessarily the price which it might have been expected to realise. The learned Judge then observed that the house in dispute had a potential value by reason of its proximity to the nurses' home and the very rapid increase of the work of that institution, pointing to a necessary extension at an early date, ought properly to be taken into consideration in arriving at the value it might be expected to realise.
(7) This rule of law was approved by the Judicial Committee in Gaiapatirain Vs . Revenue Divisional Officer, . Their lordships observed, in the case of land posessing the possibility of being used for building purposes, the authority would have before him the evidence of the prices paid in the neighborhood for the land immediately required for such purposes. He would then have to deduct from the value so ascertained such a sum as be would think proper by reason of the decree of the possibility that the land might never be so required or might not be so required for a considerable time ; but in the case of land possessing potentialities of such an unusual nature, the value of the land must be ascertained in some other way. In such a case, there would in all probability be very limited number of persons capable of turning the potentialities of the land to account. If the owner of the land is the only person who can do so, the value to him must be ascertained by reference to what profit he might thereby been able to derive from the land in future. Their lordships gave an illustration of an owner of vacant land that adjoined his factory and the land possessed the potentiality of being profitably used for an extension of the factory and in valuing the land as between him and a willing purchaser, the value to him of the potentiality would necessarily have to be included. Their lordships observed that the same consideration would apply to cases where the owner was not the only person but merely one of the persons able to turn the potentiality to account and so the value to him of the potentiality would not be less than the profit that would accrue to him by making use of it had he retained it in bids own possession. Another instance taken was where the owner were himself unable to turn the potentiality to account whether by promotion of a company of otherwise. In such a case there might be several other persons who would be able to do so or there may be only one and if there were more than one, it was recognised by all the authorities that the owner was entitled to be paid the value to him of the potentiality, though the ascertainment of its value might, in many cases, be a matter of considerable difficulty.
(8) The decision of the Privy Council came up for consideration before our Supreme Court in Haji Mohd. v. State of West Bengal and their lord ships quoted with approval the dietum laid down by the privy Council in Gajapatirain case (supra) and observed that the value of the potentialities was to be ascertained by the authority as best as he could from the material before him. In a later decision of the Supreme court in Tribeni Devi's case (supra) Jaganmohan Reddy. J. speaking for the Court, observed that in arriving at a reasonable correct market value, it may be necessary to adopt more than one method as the exact value was not always possible as no two lands may be same either in respect of the situation or the extent or the potentiality and the authority charged with the duty to award compensation was bound to make an estimate judged by an objective standard.
(9) Raghubans Narain Singh vs. The Uttar Pradesh Government, A.I.R. 1967 Sup Cou 465, an argument had been advanced before the Supreme Court that the High Court and the District Court had not taken into consideration the potential value of the land as a building site. The Court observed that the market value on the basis of which compensation was payable meant the price that a willing purchaser would pay to a willing seller for a property having due regard to its existing condition, with all its existing advantages, and its potential possibilities when laid out in its most advantageous manner and then the Court quoted with approval the observations made in its earlier decision in N. B. Jeejabhoy vs. District Collector, Thana, Civil Appeals Nos. 313 to 315 of 1963 decided on 30th August, 1965, to the effect that a vendor willing to sell his land at the market value would take into consideration a particular potentiality or special adaptability of the land in fixing the price; it was not the fancy or the obsession of the vendor that entered the market value but the objective factor, namely, whether the said posentiality could be turned to account within a reasonable near future ; the question, thereforee, turned upon the facts of each case. In the context of building potentiality, many questions would have to be asked and answered whether there was pressure on the land for building activity. whether the acquired land was suitable for building purposes, whether the extension of the said activity was towards the land acquired, what was the pace of the progress and how far the said activity had extended and within what time, whether the buildings had been put up on lands purchased for building purposes, what was the distance between the built-in-land and the land acquired and similar other questions would have to be answered and it was overall picture drawn on the said relevant circumstances that afforded the solution. The Supreme Court further proceeded to observe on the facts of Raghubans Narain's case that there was no evidence on record of any building activity of a substantial nature being carried on in the neighborhood of the acquired land at about the time when the notification was issued, nor was there any evidence of any trend of development of the town in the direction of the acquired land and so no question of the valuation having to be made on the basis of the potentiality of the land as building site could possibly arise.
(10) Keeping in view the aforesaid rules of law, we shall examine the facts of the present case in order to determine the market value of the land in dispute including its potential value. With regard to its situation, the Collector in the impugned award dated 24th April, 1961 observed that the land under acquisition was situated at two places, one at Mehrauli road and the second near the Ring road and the owners who owned land on the Mehrauli . road stated that their area was better situated. But the Collector found that the situation of both areas was not dissimilar the area near Mehrauli was situated between Hauz Khas Enclave and the Green Park Colony ; the Mehrauli road passed by this area although its area was at a slightly greater distance from the centre of Delhi ; even then its situation was not inferior to the area near Ring road. The other area was situated between village Humayunpur, Vinay Nagar Government Quarters and the Ring road and the whole of it was not being used for agricultural purposes ; it was lying vacant because it had come into possession of persons who were either colonisers or speculators and since the area was situated near developed colonies, it had got potential value as building site. The said report of the Collector proves the trend of development and existence of developed colonies around the land in dispute.
(11) It is in evidence and was found by the Lower Court that the appellants the National Finance of India Limited and the Traders Bank actually developed the land in dispute and commencing it in December, 1953, carried out levelling, demarcation of plots and road in two thirds of area & laying of sewage lines and spent more than Rs 70,000.00 up to the date of section 4 notification. They had a plan of the colony approved by the Land and Development Authority on 16th September, 1953 vide Exhibit A-18 subject to certain conditions mentioned in the resolution. The National Finance of India Limited entered into about 20 agreements of sale, including two sale-deeds in respect of various plots of land in this area. The agreements for sale are for various prices ranging from Rs. 10.00 to Rs. 20.00 per square yard yielding an average rate of about Rs. 12.00 per square yard. They are mentioned in Exhibit A. 23. The sale-deeds are Exhibits A. 9 & A. 1. Exhibit A. 9 is a conveyance-deed dated 12th April, 1956 in pursuance of an agreement dated 13th March, 1954 in respect of 200 square yards of land sold for Rs. 3,209.00 yielding a rate of Rs. 16.00 per square yard. The other sale-deed Exhibit A. 1 is dated 12th March, 1956 made in pursuance of an argeement dated 29th December, 1955 for an area of 168 square yards for a sum of Rs. 3,670.00 yielding a rate of Rs. 22.00 per square yard. This sale was in respect of a shop plot No. 87.
(12) Another important fact established in evidence is that on 14th September, 1958, an agreement of sale (Exhibit A. 8) was entered into between the appellants National Finance of India Limited and the Traders Bank Limited on the one hand with Raj Nagar Co-operative House Building Society Limited, a Society registered under the Bombay Co-operative Societies Act as extended to Delhi By this agreement, the land in dispute had been agreed to be sold by the said appellants to the Co-operative Society at the rate of Rs. 10.00 per square yard and it was mentioned in the agreement that the first parties had submitted a plan to the Land and Development Officer of the Government of India for sanction and a lay-out of the plan had been sanctioned by Delhi Development Sub-Committee and subsequently approved by the New Delhi Municipal Committee and that a part of the land had been sold or agreed to be sold and the other part was being conveyed to the Society and Rs. 25,000.00 were realised from the Society. It was also mentioned that the parties would fully co-operate in getting the land agreed to be sold released from the Government of India in the interest of the Society. This agreement was followed by another agreement Exhibit A. 3 dated 13th August, 1960. To this agreement, the Traders Bank was not a party and the agreement was made only between the National Finance of India Limited and the aforesaid Co-operative Society The agreement stated that the land which had been sold as undeveloped area was not exempt from the agreement of sale while only 54 Bighas and 8 bids was of land was the subject matter of agreement. The rate was fixed at Rs. 9.00 per square yard (instead of Rs. 10.00 in the previous agreement) and firstly Rs. 25,000.00 and then Rs. 5,000.00 were paid and the balance was agreed to be paid in accordance with the terms mentioned in the agreement. It contained an important term that the actual sale-deed would be executed and registered only if the land were released from acquisition by the Government of India. It was also provided that the first party would pay, at the time of registration of the saledeed, development compensation for some part of the land mentioned in the agreement at the rate of Rs. 4.00 per square yard, while the figure for a similar provision in the previous agreement was Rs. 3.00 per square yard.
(13) The learned Additional District Judge, in referring to the said documents, has stated that it was only a paper transaction and nothing had been paid. This is not correct. A sum of Rs. 55,000.00 had been paid by the Co-operative Society to the two appellants and this was eventually realised by the Co-operative Society from the amount of compensation awarded. The genuineness of the transaction is also apparent from the fact that the agreement had been made not with a view to increase the price of the land, but in order to fiully develop and sell the area as a developed colony after obtaining release from acquisition by the Government. Shri Shiv Raj Bhalla examined as A.W. 6 had deposed that when acquisition notification regarding the land had been made, they approached the concerned authority that this area be not acquired and they were advised by the Health Minister of the Government of India that they may form a Co-operative Society and then seek release of the land from the proposed acquisition and, thereforee, they formed a Co-operative Society and got it registered and the members of the Society were mainly those persons who had purchased plots from the National Finance Company and that Exhibit A.3 was just a business deal. On the record, there is no rebuttal of the said statement. Whether the Hon'ble Health Minister had or had not advised, it does show that the floating of the Co-operative Society and the argeements of sale with it were genuine transactions and ought to have been relied upon by the Additional District Judge. Mr. Bballa has further stated that they bad undertaken colonizing of the area as a business proposition and their expectation of profits was about Rs. 5 lacs, for the area of the National Finance Company and that the prices of land belonging to them had been increasing He has also stated that if the lands were sold in one block, without taking note of the plotted area, the prices would nave been Rs. 6.00 per square yard in 1953, Rs. 9.00 per square yard in 1957, Rs. 10.00 per square yard in 1958 and Rs. 11.50 per square yard in 1960.
(14) From the evidence on record, it is, thereforee, obvious that the land in dispute had a high potentiality of being sold as plots for a residential colony. The appellant had obtained sanctioned plans and invested some money and certainly had the capacity to invest further money. They actually developed and sold some of the plots. They are, in our opinion, entitled to have the potential value of the land as a residential colony to be included in determination of its market value.
(15) From Exhibit A.23 it is apparent that the average price of the plots of land agreed to be sold was Rs. 12.00 per square yard but these were plots of small area. The two appellants had agreed to sell the land to the Co- operative Society at Rs. 9.00 per square yard. The development charges were Rs. 3.00 or Rs. 4.00. Moreover the areas of land covered by roads and parks would not have been sold and so their cost would fall on the developed plots. The compensation that is being awarded to the appellants is for the land which has already been developed as well as the land which had not been developed which would have cost them substantially large amount. Under the circumstances, we consider it fair and reasonable that the market value of the land in dispute must be enhanced by Rs. 2.00 per square yard on account of its potential value on the amount of compensation awarded by the Additional District Judge. We, thereforee, determine the market value at Rs. 8.00 per square yard as against Rs. 6.00 awarded by the Additional District Judge. The appellants' will have 15 per cent solarium on the enhanced market value besides interest at the rate of 6 per cent per annum on the market value as well as solarium from the date of talcing possession till the date of payment. The appeals are accordingly allowed, but the parties are left to bear their respective costs.