"In determining the amount of compensation to be awarded for land acquired under the Act, the Court shall take into consideration -first, the market value of the land at the date of the publication of the declaration relating thereto under Section 6".
This meant, in the opinion of Mr. Justice Mulla, that the owner was to be compensated for his land the measure of compensation being the market value of the land. Mr. Justice Mulla took the view that the expression "market value" meant the value which a parcel of land would realise if sold in the market. The test then was the test of a sale in the market. The seller must be a willing seller; a forced sale afforded no criterion of market value. The purchaser must be a prudent purchaser, that is, one who made his offer after making necessary inquiries as to the value of the land; an offer made by one who knew nothing of the value of the land in the locality and who made no inquiries about it afforded no test of market value. Then Mr. Justice Mulla observed that the market value might be dull or brisk. It might be as dull as it was in 1923 or it might be as brisk as it was in 1919. But whether it be dull or brisk, said Mr. Justice Mulla it could not be excluded from consideration; there was nothing in the Land Acquisition Act which required the Court to do so. On the contrary, the state of the market at the material date was an important factor in determining the market value at that date. To quote Mr. Justice Mulla:
"You cannot possibly ascertain the market value of a piece of land at a given time if you exclude from consideration the state of the market at that time."
Upon these grounds, Mr. Justice Mulla concluded that the sale to Jamnadas could not be excluded from consideration, on the question of awarding compensation to the claimant, merely because it was a transaction during the boom.
9. In Assistant Development Trombay v. Tayaballi Allibhoy, 35 Bom LR 763 : (AIR 1933 Bom 361), it was held that in estimating the market value of property compulsorily acquired under the provisions of the Land Acquisition Act, 1894, it could not be laid down as a general rule that post-notification transaction should necessarily be ignored altogether. All transactions are relevant which can fairly be said to afford a fair criterion of the value of the property as at the date of the notification. If any considerable interval has elapsed the Court will naturally attach little or no value to subsequent sales, just as transactions long prior to the notification will usually be discarded; but transactions only a month or two after the notification may sometimes perhaps have some value as evidence. It must largely depend on the judgment which Mr. Justice Broomfield delivered on behalf of the Bench in that case, he referred to an English decision in In re : Lucas and Chesterfield Gas and Water Board (1909) 1 KB 16, where Lord Justice Fletcher Moulton observed:
"The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e. that which they were worth to him in money. His property is therefore not diminished in amount, but to the extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognised as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorised by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him."
Bombay High Court
Dhusabhai Polabhai And Ors. vs Special Land Acquisition ... on 18 July, 1957
Equivalent citations: AIR 1959 Bom 520, (1958) 60 BOMLR 532, ILR 1958 Bom 810
Bench: Vyas, Miabhoy
1. These six appeals arise out of the proceedings under the Land Acquisition Act. The acquired lands are situated within the area encircled by a dark blue dotted line on the sketch Exhibit 28. The survey numbers concerned in First Appeal No. 95 of 1953 are 222/1-2-3 and 223/1 of Vastrapur. The lands which are the subject-matter of First Appeals Nos. 96 and 253 of 1953 are Survey Nos. 167 and 113/1 respectively of Kochrab. Survey numbers in respect of which First Appeal No. 299 of 1953 is filed are 212 and 224/3 of Vastrapur. The survey numbers relating to First Appeals Nos. 335 and 439 of 1953 are 225 and 114 respectively of Vastrapur and Kochrab.
2. A large number of lands have been acquired for the Ahmedabad Education Society and those lands are situated within the limits of Vastrapur, Sheikhpur, Kanpur and Kochrab villages of the Ahmedabad District. The lands been acquired for the purpose of constructing the University buildings,engineering college and other buildings. Notification under Section 4 of the Land Acquisition Act was issued on 22nd October, 1946 and it was published in the Bombay Government Gazette on 31st October, 1946. Two notifications were issued under Section 6 of the Act, one of which was issued on 2nd March, 1948 and the other on the 15th May, 1948. Possession of the Vastrapur lands was taken on 15th April, 1948 and that of the Kochrab lands was taken on 21st June, 1948. Vastrapur lands were required for the College hostels and Kochrab lands were required for the engineering college. It may be noted that the acquired lands are outside the city municipal limits. They are also outside the limits of the Ellis Bridge town planning scheme; but they adjoin the lands which already belong to the Ahmedabad Education Society and on which are situated the Arts, Commerce and Pharmacy colleges conducted by the Society. The dark blue dotted configuration on the sketch Exhibit 28 within which the acquired lands are situated is skirted all round by the various nalias, amongst which may be mentioned the Vastrapur nalias, amongst which may be mentioned the Vastrapur nalia, the Kochrab Memnagar nalia and Sheikhpur Memnagar nalia. The Kochrab Memnagar nalia and the Sheikhpur Memnagar nalia join at the eastern boundary of Survey No. 211 of Vastrapur. They separate again at the south-east corner of Survey No. 114 of Vastrapur. Some of the acquired lands which are the subject matter-of these appeals have an access through the nalias.
3. Now, Survey No. 222/1-2-3 of Vastrapur admeasures 4 acres 14 gunthas. The Land Acquisition Officer awarded compensation at the rate of Rs. 2-8-0 per square yard. The learned Assistant Judge raised the rate by 0-4-0 a square yard and allowed compensation at the rate of Rs. 2-12-0 per square yard. In appeal No. 95 of 1953 the claimant claims a rate of Rs. 5 per square yard. Survey No. 223/1 of Vastrapur admeasures 2 acres and 14 gunthas. The Land Acquisition Officer awarded compensation for this land at the rate of Rs. 3-8-0 per square yard and on reference the learned Assistant Judge confirmed the said rate. Now the claimant claims compensation at the rate of Rs. 5 per square yard. In appeal No. 96 of 1953, for Survey No. 167 which admeasures 3 acres 35 gunthas, the Land Acquisition Officer awarded compensation at the rate of Rs. 3 per square yard and the learned Assistant Judge on reference raised it by 0-4-0 per square yard and awarded compensation at the rate of Rs. 3-4-0 per square yard. In appeal the claimant is asking for compensation at the rate of Rs. 4 per square yard. So far as appeal No. 253 of 1953 is concerned it may be remembered that for Survey No. 113/1 admeasuring 1 acre 34 gunthas, the Land Acquisition Officer awarded compensation at the rate of Rs. 6-8-0 per square yard. The learned Assistant Judge confirmed the said rate of compensation, and the claimant, feeling dissatisfied, has claimed compensation at the rate of Rs. 8-8-0 per square yard. In appeal No. 299 in which we are concerned with Survey Nos. 212 and 224/3, the Land Acquisition Officer, for Survey No. 212 admeasuring 3 acres 27 gunthas, awarded compensation at the rate of Rs. 3-12-0 per square yard. The learned Assistant Judge, on a reference to him, confirmed that said rate and now the claimant claims that he should be awarded compensation for this land (Survey No. 212) at the rate of Rs. 5 per square yard. So far as Survey No. 224/3 is concerned, it admeasures 22 gunthas, inclusive of a Kharaba of one guntha. The Land Acquisition Officer awarded compensation for this land to the claimant at the rate of Rs. 3-8-0 per square yard and the learned Assistant Judge, on a reference made to him, confirmed that order. Now, the claimant in this appeal (No. 299) claims compensation at the rate of Rs. 4-12-0 per square yard. In appal No. 335 where we are concerned with Survey No. 225 admeasuring 8 acres 9 gunthas, the Land Acquisition Officer has awarded compensation at the rate of Rs. 2-12-0 per square yard and this rate was confirmed by the learned Assistant Judge on reference. The claimant now claims in the present appeal compensation at the rate of Rs. 4 per square yard. In appeal No. 439 where we are concerned with Survey No. 114 admeasuring 2 acres 17 gunthas 13 square yards, the land Acquisition Officer awarded compensation at the rate of Rs. 2 per square yard and this was confirmed by the learned Assistant Judge on reference. Now the claimant claims compensation at the rate of Rs. 5 per square yard.
4. In the interlocutory judgment delivered by this Court on 3rd December, 1954, the Court observed that once the stage of award had passed and the claimant had moved the Civil Court, he was asking for a Judicial decision on the correctness of his claim and judicial finding on the market value of the property must inevitably depend upon legal evidence adduced before the Court. The tests that were to be applied could be applied only when purchasers and vendors stepped into the witness box, stated that the price paid for the respective transactions was the normal market price and submitted to cross-examination by the opponent. In the present case unfortunately the claimants had filed a purshis saying that they did not want to lead oral evidence and the State also followed suit by saying that it too did not wish to lead any oral evidence in the matter. The Court in its interlocutory judgment said that if it were to deal with these appeals in the light of purshises, the result would obviously be to the disadvantage of the claimants. It was pointed out by the learned Judges that
"the claimants should have realised that they were in the position of the plaintiffs and that if they did not lead oral evidence to show that the conclusions recorded in the award were inadequate and that the award offered unsatisfactory compensation",
the award would be confirmed. The learned Judges then took the view that, having regard to the fact that an irregular procedure was adopted with the concurrence of the State and without any objection from the learned Judge, it would not be fair to the claimants to take such a technical view of the onus of proof. Mr. Justice Gajendragadkar and Mr. Justice Shah said that they had come to the conclusion that they would not be able to do justice as between the parties in these appeals unless they had legal evidence on the record which might give them help in determining the question as to whether the award had made a reasonable offer to the claimants or not. By its interlocutory judgment, this Court directed that the papers in these cases be sent back to the learned Judge with a direction that the learned Judge should allow the claimants to lead such evidence as they wanted to in support of their claim. It was further directed by this Court that after the claimants had led evidence in support of their claim, the State would be at liberty to lead evidence if it so desired. Since the remand, evidence had been adduced by the various claimants who are the appellants in these appeals and the evidence adduced is the evidence of the various purchasers. It may be noted that even after the remand, no evidence has been led by the State in support of the transactions upon which the State relies.
5. It may be noted next that in assessing compensation in these cases the Land Acquisition Officer and the Court below have disregarded the sales and leases-cum-sales of lands situate nearabout the acquired lands, which had taken place about the time of, or a few months prior to, the date of the notification for these acquisitions. They have also rejected the instances of sales or leases-cum-sales, by virtue of which the claimants themselves in some cases obtained compensation for the lands acquired from them under the notification. In his note on the reasons for his awards, the Land Acquisition Officer has said that there was "feverish activity" in the area under acquisition from March 1946 onward and the "feverish activity" was to enter on transactions of leases with a right to purchase within five years or of purchases of leasehold rights. According to the Land Acquisition Officer, there was "sudden jump" in the value of the lands in this area. As there had not taken place any extension of development in this area, which could have accounted for this rise in the value of the lands, the Land Acquisition Officer thought that the reason lay elsewhere. Upon the evidence before him the Land Acquisition Officer came to the conclusion that the public knew that the University was to be established in this area and that there would be extensive acquisition for the purpose. It was significant, said the Land Acquisition Officer, that most of the transactions during the period from March to October, 1946 were in respect of purchase of leasehold rights at a great premium thus inflating the land values. In the opinion of the Land Acquisition Officer, the irresistible conclusion was that
"speculation in land in this particular area with knowledge of impending acquisition was rampant and that, therefore, the land values in the various transactions during this period of 6 of 7 months had to be accepted, for purposes of determining the market value, with a great deal of caution, if not to be discarded altogether."
The learned Assistant Judge thought that the chapter of leases with option to purchase and sales of leasehold rights had commenced in the early part of the year 1946 when speculators had got busy in this area in view of the impending acquisition for the University. The learned Judge, in the course of his judgment stated that several banakhats had also come into existence in that year (1946). The learned Judge pointed out that it could not be disputed that there was no sign of development within the limits of Vastrapur village were still in the state of agricultural lands. According to the learned Judge, on account of the distance of the Vastrapur lands from the lands Sheikhpur, Kanpur and Kochrab and on account of the situation of these lands, the lands had remained unexplored till the date of the acquisition. Then the learned Judge pointed out that the first signs of any interest taken in this locality were manifested by the purchase of a big plot of 49 acres of land by Mr. Parikh in September, 1944. Mr. Parikh would appear to have made profit of 60 percent within three months when the Western India Prospecting Syndicate appeared upon the scene in this area with all the resources at its command. This happened in November-December, 1944. This transaction appears to have weighed a great deal with the learned Judge in attributing speculative character to the various instances of sales and leases-cum-sales upon which the claimants have relied. As the learned Judge has pointed out, by March, 1945 the Prospecting Syndicate had invested more than Rs. 5 lakhs in about 125 acres of land, and even so there were not many sales worth the name in the year 1945. However, as the learned Judge has said, by the beginning of the year 1946, and especially from March-April, 1946 onward, there appeared "feverish activity on the scene" in buying and selling and leasing. To quote the words of the learned Judge in this context;
"the University acquisition was in the air and it is no use denying this fact. Some of the claimants have frankly admitted this fact before the Land Acquisition Officer. Since then anybody and everybody with some money in his pocket wanted to buy or lease some land in this area with the sole intention of making a speculative profit. Money gotten by fair or foul means was cheap in those war days and the safest investment was considered to be land. It is therefore not possible to blame the Land Acquisition Officer for his caution in accepting these instances of 1946, the speculative nature of which cannot be denied."
Consistently with this view of the matter which the learned Judge took, he generally confirmed the awards of the Land Acquisition Officer and in a few cases made slight modifications by allowing a small increase in the rate per square yard.
6. Now, Mr. Bhatt who appears for the appellants in some of these appeals has challenged the abovementioned approach made to the case both by the Land Acquisition Officer and the Court below. Mr. Bhatt's contention before us in these appeals is that in ascertaining the market value of the land from a document of sale or lease with an option or obligation of purchase, the material date for determining the market rate should be the date of the banakhat. Then Mr. Bhatt has submitted before us that the various dealings of leases with an obligation of purchase should not have been rejected by the Land Acquisition Officer and by the learned Assistant Judge, but should have been considered in all seriousness. Mr. Bhatt says that the Land Acquisition Officer and the Court below were wrong in discarding these dealings upon the ground that they were speculative dealings. Mr. Bhatt says that they were genuine dealings as consideration had passed in each case. According to Mr. Bhatt, they were not speculative or unreal transactions; their character was not bogus; they were certain, definite dealings in which a certain specific amount always passed to the lessor from the lessee. Mr. Bhatt has then contended that the fact that the profits were spaced out over periods of 5 years, 10 years or more should not make any difference to the fact that ultimately these transactions were to result in sales. In this manner, says Mr. Bhatt, it was an erroneous view to take that the various leases with either an option of purchase or a condition of purchase were nothing more than speculative transactions which could not afford a correct basis for arriving at the market value of the lands at the date of the notification. Then Mr. Bhatt contends that the transactions of leases-cum-purchases which came into existence from March or April, 1946 onward and continued right up to October, 1946 resulted in raising the tone of the market and created a new market rate. Mr. Bhatt says that even if people speculated in anticipation of the University buildings and the engineering College and the hostel coming up on this area, the speculation had entered into the market rate and that, therefore, the said rate was not an illusory rate, but a true rate, and that if people entered into transactions in respect of lands with reference to the said rate, there was no justification for not allowing them compensation for the lands acquired from them at that rate. Then Mr. Bhatt has said that by about the beginning of the year 1946, the people in the city of Ahmedabad had come to know that the acquisition of a considerable area of land was imminent and that, in view of that circumstance, if people indulged in prudent speculation and entered into transactions of leases-cum-sales and if those transactions ultimately resulted in the creation of a new market rate into which speculation had entered, there was nothing wrong in it and the Court was not entitled to ignore that rate. Upon these submissions, broadly stated, Mr. Bhatt has challenged the approach adopted by the Land Acquisition Officer and the learned Assistant Judge in these cases.
7. Having carefully examined and considered the contentions pressed before us by Mr. Bhatt for some of the appellants in these appeals, we are of the view that there is considerable substance in these contentions. Early in the year 1946 it was common knowledge that the centre of educational life was to be established in and around this area. Everybody knew that this area at none too distant a date would pulsate and throb with the educational and intellectual life of the city. Everybody expected, and it could not be said that the expectation was not a legitimate expectation, that a great deal of development would take place on this side. If a person desires to acquire land or settle down in a place which is full of promise for development and holds out such prospects as stated above, the desire could not be condemned as a mere speculative desire. There could be nothing unreal or undesirable about it. If the impress of circumstances such as the establishment of an University, the founding of constituent colleges, building of hostels where t he alumni of the University would reside, raises the tone of the market and gives impetus to the market, a new market rate would be created, may be by even speculation entering into the said rate, and the transactions would be governed by that rate. It could not be said that because of the creation of an increased market rate, no genuine or real purchases could take place. It would be too dangerous a proposition to lay down and too unfair a comment on human impulses to generalise and stigmatise every transaction of sale and lease-cum-sale entered into after the market had risen as a speculative transaction or demonstration of a profiteering tendency of a human mind. If a human mind foresees a probability of increased development towards a particular side, its natural reaction would be to acquire property on that side; and if a person wants to purchase land in that locality, he must pay the then prevailing price for the land. He may not wish to wait indefinitely; for if he waits, he might have to wait for ever and there might be left no land to purchase. If he purchases land in these circumstances and pays a price, which is the market price of the day, it cannot be said to be an unreal, bogus or speculative transaction. What is the speculation about it? Must we presume that it is not a genuine purchase and that the person does not wish to live there or that it is purely a profiteering transaction? He is attracted by the future which is held out by the area and he is really attracted. Therefore, he purchases the property there and pays the market price for it. In the year 1946 he must pay the price prevailing then. As the Privy Council pointed out in The Secretary of State for Foreign Affairs v. Charlesworth, Pilling and Co. 28 Ind. App 121 (PC), there is a general consideration of great importance which must govern land acquisition cases. As their Lordships observed the sections of the Land Acquisition Act provide that land is to be taken at its market value on a given day and that the Court is not, on the one hand, to give more because the object for which it is taken is likely to increase its value nor, on the other hand, to give less because the same object is likely to increase the value of the owner's remaining land. A speculation on the effects of establishing an educational centre in this area upon prices is permissible upto a certain extent. It is permissible to the extent to which it is shown that it had actually entered into the market value of the land on the date of the notification. In 28 Ind App 121 (PC), the lands of the plaintiffs in the island of Mombasa, part of the dominions of the Sultan of Zanzibar, were taken for a railway by the British Government under Section 6 of the Indian Land Acquisition Act, 1894, which had been brought into force in Zanzibar by Order in Council. In a suit for compensation for the value of the lands so taken, and also of the buildings previously erected thereon by the said Government without authority, it was held by the Privy Council that as regards the lands, the plaintiffs were entitled under the Act to the market value thereof at the date of service of notice under Section 6, including such actual speculative advance therein as had already taken place in consequence of the railway scheme; but excluding any future speculative advance from the like cause.
8. In Government of Bombay v. Merwan Moondigar, 25 Bom LR 1182 : (AIR 1924 Bom 161), Valimahomed and his partners bought the land with the avowed object of re-selling it at a profit. They succeeded in selling it to Jamnadas and his partner who again bought the land with the sole object of re-selling it at a profit. The Court said that if a person who bought land, not as an investment, but to re-sell it at a profit, was a speculator, both the vendors and purchasers of Jamnadas' land were speculators. But this said Mr. Justice Mulla in the course of his judgment, was certainly no ground for ignoring the transaction altogether. The real question in that case was whether the rate of Rs. 33 represented the fair price of the land in February, 1920. It was urged on behalf of Government that it was not, and the reason assigned was that there was tremendous speculatior in the land in Bombay in 1919 and 1920, which resulted in an enormous rise in the price of land. The Government contended that the rise being due to speculation, it should be disregarded in its entirety. It was also contended against the claimant that the expression "market value" in Section 23 of the Land Acquisition Act meant intrinsic value. Mr. Justice Mulla observed that it was a notorious fact that a huge wave of speculation in land passed over Bombay in 1919 and 1920 and that it started in the beginning of 1919, that the high water mark was reached in February, 1920, that it maintained itself at that level until about August 1920 and that it then began to subside. It was not disputed on behalf of the claimant in that case that the sale to Jamnadas was a sale at the top of the market, but it was urged that the claimant was entitled to the benefit of the rise on the ground that he could have obtained that benefit, had he then sold his property in the market. It was also urged for the claimant that the term "market value" in Section 23 did not mean intrinsic value. While dealing with the abovementioned rival contentions of the parties. Mr. Justice Mulla said that it had become necessary to determine whether, in assessing the market value of land under the Land Acquisition Act, the element of rise in the price of land occasioned by speculation was to taken into consideration; and he said that on principle, if an owner of land could sell his land in the market at a given time for Rs. X per square yard, it would be inequitable and unjust that because the land was compulsorily acquired under provisions of the Land Acquisition Act, he should get less than Rs. X per square yard. Mr. Justice Mulla said that if the statute under which the acquisition was made laid down in clear and unambiguous language that an acquiring body was to pay less than a purchaser in the market, it was the duty of the Court to give effect to it, regardless of considerations of what the Court might to be the equities of the case. Then Mr. Justice Mulla referred to Section of the Land Acquisition Act and Section opens with the words:
"In determining the amount of compensation to be awarded for land acquired under the Act, the Court shall take into consideration -first, the market value of the land at the date of the publication of the declaration relating thereto under Section 6".
This meant, in the opinion of Mr. Justice Mulla, that the owner was to be compensated for his land the measure of compensation being the market value of the land. Mr. Justice Mulla took the view that the expression "market value" meant the value which a parcel of land would realise if sold in the market. The test then was the test of a sale in the market. The seller must be a willing seller; a forced sale afforded no criterion of market value. The purchaser must be a prudent purchaser, that is, one who made his offer after making necessary inquiries as to the value of the land; an offer made by one who knew nothing of the value of the land in the locality and who made no inquiries about it afforded no test of market value. Then Mr. Justice Mulla observed that the market value might be dull or brisk. It might be as dull as it was in 1923 or it might be as brisk as it was in 1919. But whether it be dull or brisk, said Mr. Justice Mulla it could not be excluded from consideration; there was nothing in the Land Acquisition Act which required the Court to do so. On the contrary, the state of the market at the material date was an important factor in determining the market value at that date. To quote Mr. Justice Mulla:
"You cannot possibly ascertain the market value of a piece of land at a given time if you exclude from consideration the state of the market at that time."
Upon these grounds, Mr. Justice Mulla concluded that the sale to Jamnadas could not be excluded from consideration, on the question of awarding compensation to the claimant, merely because it was a transaction during the boom.
9. In Assistant Development Trombay v. Tayaballi Allibhoy, 35 Bom LR 763 : (AIR 1933 Bom 361), it was held that in estimating the market value of property compulsorily acquired under the provisions of the Land Acquisition Act, 1894, it could not be laid down as a general rule that post-notification transaction should necessarily be ignored altogether. All transactions are relevant which can fairly be said to afford a fair criterion of the value of the property as at the date of the notification. If any considerable interval has elapsed the Court will naturally attach little or no value to subsequent sales, just as transactions long prior to the notification will usually be discarded; but transactions only a month or two after the notification may sometimes perhaps have some value as evidence. It must largely depend on the judgment which Mr. Justice Broomfield delivered on behalf of the Bench in that case, he referred to an English decision in In re : Lucas and Chesterfield Gas and Water Board (1909) 1 KB 16, where Lord Justice Fletcher Moulton observed:
"The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e. that which they were worth to him in money. His property is therefore not diminished in amount, but to the extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognised as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorised by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him."
10. Then again in Government of Bombay v. Ismail Ahmed Hafiz, 26 Bom LR 227 : (AIR 1924 Bom 362), it was held that where the property under acquisition had been recently purchased the price paid was prima facie the market value thereof. It was observed that where the price so paid had been influenced by a boom which was followed by a fall in price, the Court should make a reasonable deduction in awarding compensation under the Land Acquisition Act. In K. P. Frenchman v. Assistant Collector, Haveli, 24 Bom LR 782 : (AIR 1922 Bom 399), a Division Bench of this Court consisting of the learned Chief Justice and Mr. Justice Shah held that the two most important questions which were to be considered in acquisition proceedings were (1) whether the claimant had paid so high a price that the Court might consider that he had not displayed the ordinary caution which a purchaser of land should display; and (2) whether there had been any increase in the value of property in the neighbourhood within the few months which elapsed between his purchase and the Government Notification. The learned Chief Justice observed that when Government notified the property for compulsory acquisition, they were bound to offer the claimant what he had given a few months before for the property, unless they were able to show conclusively that he had not given a fair value for the property. In Padmaji Miachand v. Deputy Collector. Adeni, AIR 1915 Mad 272, Mr. Justice Tyabji and Mr. Justice Spencer held that where on the date of a declaration there was a scheme of development of the town and that was known generally, enhancement in the value of the market rates consequent on such development must be taken into account for determining the market value of the land to be acquired. The Court went on to observed that where there were two data available for ascertaining the market value of the land sought to be acquired, one based on the market value of the neighbouring lands and the other on the classification of lands into agricultural and building sites, it was safer to adopt the former valuation in determining the market value of the land sought to be acquired and not the latter as it was an uncertain basis. In view of these authorities we think Mr. Bhatt is right, on principle, in his contention that the claimants in these appeals are entitled to be awarded compensation according to the market rate which was prevalent at the date of the notification.
11. It may be unfortunate that for launching a welfare scheme of acquisition in the interests of public education, a higher compensation may have to be paid on account of the market value of the land going up as the result of speculation arising out of the prospective acquisition of the lands. But so long as Section 23 stands as it is on the statute book, it is inevitable that the material rate is the market late at the date of the notification. Unless the Legislature amends the law and makes the market rate of land prevalent at some date, prior to the date of the notification, a material rate for determining the compensation, effect must be given to the provisions of Section 23 and the basis for the compensation must be the market value of the land at the date of the notification.
12. Order accordingly.
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