2026 PLP 275 (CLC)

KH. MUHAMMAD NASIM, J.

The captioned appeal, by leave of the Court, has been preferred against the judgment and decree of the High Court dated 29.12.2023, passed in Civil Appeal No.191 of 2020.

2. The facts of the case briefly stated are that vide Award No. 06/2017, dated 12.09.2017, the Collector Land Acquistion (hereinafter to be referred as Collector), acquired the land owned by respondent No.1, herein, comprising survey No. 51 min, measuring 5 marla, situate at Dhanni Syedan, Tehsil and District Muzaffarabad, for construction of water tank, in favour of the Public Works Department/Public Health Engineering, Muzaffarabad. The Collector assessed the compensation as Rs.50,000/- per marla, along with 15% compulsory acquisition charges. Being dissatisfied from the said assessment of the compensation made by the Collector, respondent No.1 (the landowner) filed a reference application before the Additional District Judge/Reference Judge, Muzaffarabad, claiming therein, that the acquired land being located within the municipal limits of Muzaffarabad, on Main Srinagar Road and nearer to the prominent amenities i.e. City International School, Punjab Science College, Al-Madina Mart as well as LPG filling station, has a market value of Rs.7,50,000/- per marla, whereas the Collector has assessed very meagre amount of compensation which may be enhanced. The reference was contested by the other side by filing objections, whereby, the claim of the landowner was refuted in toto. The learned Reference Judge framed issues in the light of the pleadings of the parties and directed them to lead evidence pro and contra. At the conclusion of the proceedings, the learned Reference Judge enhanced the compensation to the tune of Rs.3,00,000/- per marla, along with 15% compulsory acquisition charges, vide judgment and decree dated 29.09.2020. Against the said judgment of the Reference Judge, the appellants, herein, preferred an appeal before the High Court for setting aside the same. The learned High Court after hearing the parties, dismissed the appeal vide impugned judgment and decree dated 29.12.2023, which is the subject matter of the captioned appeal by leave of the Court.

3. Raja Mazhar Waheed Khan, the learned Additional Advocate-General representing the appellants submitted that the impugned judgments passed by the Courts below are against law and the record of the case, hence, are liable to be set at naught. He further submitted that the nature of the acquired land is admittedly sloppy and hilly which is away from the Srinagar Highway, hence, cannot be treated as commercial and the Collector rightly assessed its compensation to the tune of Rs.50,000/- per marla. The learned Advocate, contended that the learned Reference Judge while appreciating the evidence available on record, admitted that the landowners failed to prove from the evidence that the acquired land is adjacent to Srinagar Highway and is of commercial nature but in spite of that the compensation was enhanced, without any plausible justification. He further submitted that the learned High Court has also failed to appreciate the record in its true perspective and erred in law while maintaining the judgment passed by the Reference Judge. He added that the points raised by the appellants in the lis have not been resolved in a legal manner, hence, the illegalities committed by the Courts below may be rectified. He lastly prayed for setting aside the impugned judgments passed by the Courts below and maintaining the compensation assessed by the Collector.

4. Conversely, Mr. Nasir Masood Mughal, the learned Advocate representing the respondent/landowner, strenuously defended the impugned judgment while arguing that the land in question is admittedly located on Srinagar Highway and within the municipal limits. He further argued that the proximity of City Public School, Al-Madina Mart, Roots International School, LPG filling station and Punjab Science College to the acquired land, served an ample proof of its commercial nature and high potential value. According to learned Advocate, the enhancement of the compensation by the learned Reference Judge is based on proper appreciation of the evidence which has rightly been maintained by the learned High Court. The learned counsel prayed that no illegality or legal infirmity has been committed by the Courts below while recording findings, hence, this appeal may be dismissed.

5. We have considered the arguments advanced by the learned Advocates representing the parties and gone through the record made available along with the impugned judgment. The dispute in this lis relates to the compensation of the land measuring 5 marla, comprising survey No.51 min, situated at Dhani Syedan, Muzaffarabad, acquired for the purpose of construction of water tank, vide award No.06/17, dated 12.09.2017. The compensation of the said land was assessed/fixed by the Collector as Rs.50,000/- per marla along with 15% compulsory acquisition charges. The landowner being dissatisfied from the said assessment, filed a reference application before the Reference Judge, claiming therein, that the market value of the acquired land is not less than Rs.7,50,000/- per marla, however, the learned Reference Judge while accepting the reference application, enhanced the same to the tune of Rs.300,000/- per marla, along with 15% compulsory acquisition charges. The judgment of the learned Reference Judge has been maintained by the learned High Court in the impugned judgment.

6. The instant appeal has been filed by the appellants for curtailment of the enhancement of the compensation made by the Reference Judge on the ground that the landowner failed to establish, through oral as well as documentary evidence, that the acquired land is of commercial nature, rather the same is hilly, slopy, and distant from the main road, making it unsuitable for commercial use, hence, the enhancement of the compensation made by the Reference Judge is not justified. It is revealed from the record that the landowner, in the reference application, claimed the market value of the acquired land as Rs.7,50,000/- per marla. In support of his claim, the landowner produced sale-deeds exhibit "PA", "PB" and "PC", as documentary evidence. He also produced three witnesses and also got recorded his own statement. The sale-deed Exh. "PA", executed on 06.07.2015, produced by the landowner, evidences the sale of 2 marla land in the same vicinity at the rate of Rs.5,00,000/-. Likewise, vide sale-deed Exh. "PB", executed on 31.10.2015, land measuring 5 marla has been sold for consideration of Rs. 11,00,000/-. The same way, through sale-deed Exh. "PC", dated 09.10.2015, land measuring 5 kanal was sold in lieu of Rs.4,50,00,000/- which comes to Rs.4,50,000/- per marla. The learned Reference Judge, while considering the oral as well as documentary evidence and noting the gap between the sale-deeds and the date of the award as well as the expected hike in the price of the land due to its location and potentiality, enhanced the compensation to the tune of Rs.3,00,000/- per marla. The learned High Court has maintained the judgment passed by the learned Reference Judge. Now, it is to be seen by us that whether in the light of the available record, the enhancement made by the Reference Judge is justified or not?

7. Section 23 of the Land Acquistion Act, 1894, requires that while determining compensation for the land acquired, market value of the land must be considered and that market value means the value of similar land located in the vicinity and put to the same use. Hence, the key factors for determining market value are land similarly situated and in similar use. Potential value also has to be factored in where the land is put to different usage, so when a land is acquired for a public purpose, the provisions of Land Acquistion Act require that along with the market value, potential value is also to be considered. This is important because market value per se does not a factor in the value that can be attributed based on the capacity or potentiality of the land, meaning the value based on the use it is reasonably capable of being put to in the future. We are fortified in our view from the case reported as "Marawat Khan and 4 others v. Collector Land Acquistion, and 2 others" [2013 SCR 1224], wherein it was observed by this Court in paragraph 6, as under:- "

6. Before proceeding further, it may be observed that the basic principle laid down by the apex Court of Pakistan and the apex Court of the State of Azad Jammu and Kashmir is that the land is not to be valued merely by reference to the use to which it is being put at the relevant time, but also by a reference to the use to which it is reasonably capable of being put in future; and the market value is the potential value of the property at the time of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time. The price of the land acquired had to be fixed in accordance with the aim and rule that willing buyer was ready to pay and willing seller was prepared to receive the price so fixed for whole of the land...." Similarly, in the case reported as Ch. Salam Din v. Azad Government of the State of Jammu and Kashmir through its Chief Secretary Muzaffarabad, A.K. and 4 others [2001 MLD 204], it was observed by this Court in para 9 as under:- "

9. Even if we discard the evidence of sale-deeds relating to small portion of land to from basis for enhancement of compensation, we may point out that it has been held by this Court in numerous cases that the potential value of the land acquired to which it can be put into use in future and the locality of land where it is situated are some of the relevant considerations for determining the market value of the land. In our considered view the trial Court advanced cogent reasons in determining the market value of the land by observing that acquired land was situated on Neelum Valley road and because of its location and the potential use to which it can be put into in future. The trial Court relied upon the evidence of witnesses who were unanimous on the point that the land acquired was situated adjacent to Pattikha Bazar and was of better quality than the land situated at Balsary. In the judgment passed by the District Judge Ex.PA, the land was acquired in 1988 but the compensation amount was enhanced to the tune of Rs.56,000/- per Kanal. The trial Court also observed that the sale-deeds Ex.PC and PB were executed in 1983 and 1993 respectively whereas sale-deed Ex.PD was executed on 27.12.1987. Since these sale-deeds were executed prior to the acquisition of the land therefore they could be considered for determining the market value of land in question but as observed earlier even if we discard the sale-deeds of small portions of land for determining the market value of land is question, there is other sufficient material on record, i.e. the judgment of the District Judge Ex.PA, the findings recorded by the trial Court that the land in question was situated on the Neelum Valley road and it had the potential to be put into a better use in future. Moreover, all the witnesses produced by the appellant were unanimous on the point that the land in question was situated on the road side near Pattikha Bazar. The above evidence was further supported by the statement of Ch. Salam Din, appellant, himself that he wanted to utilise the land in question for commercial use and for that purpose he had even raised the construction of some shops which shows that the market value fixed by the trial Court suffers from no illegality or infirmity as pointed out by the learned counsel for respondents." The gist of the aforesaid case law is that the land must be valued as per its market value which is the price a willing buyer would give to a willing seller and must also include its potential value. Potential value means the value of the land based on the probability that considering its location and proximity to residential, commercial or industrial areas with amenities such as roads, water, gas, electricity, communication network and suitability, it has the potential to be developed, which will increase its value. The value of land must include the potentiality of the land because this is the value, which the landowners would benefit from if they were able to maintain their ownership over the land. So far as the determination of potential value, there is no mathematical formula, which is applied uniformly in every case. Each case is seen in the context of its own facts but potential value has to be factored along with the market value. The objective is to ensure that the landowner not only gets the actual value of the land at the time it is acquired but also gets the value based on any future prospects attached with the use of land. Consequently, factors such as entries in the revenue record and land classifications cannot form the basis of the compensation as it does not bring out the potential value of the land and it does not factor in future prospects of the land. The compensation cannot be solely based on past sales of similar land in the same vicinity because potentiality cannot be determined without examining future prospects. Hence, compensation is about the value of the land, being its market value plus its potential value, so as to ensure that the landowner is duly compensated. This is fundamental to the process of award of compensation.

8. In the present case, it is an undisputed fact that the acquired land is located near Main Srinagar Road, with neighbouring establishments such as City International School, LPG filling station, Punjab Science College, and Al-Madina Super Mart. The amenities such as road, water, gas, electricity, communication network, easy approach to the Hospital as well as schools and public offices, are also available which increase the potential value of the land. After considering all these factors, we are of the unanimous view that the learned Reference Judge has justifiably enhanced the compensation. The learned High Court has committed no illegality while maintaining the judgment passed by the Reference Judge. The argument put forth by the appellants' counsel, that the land is hilly, sloppy and unsuitable for commercial purposes, lacks merit. This claim is further contradicted by the fact that the land was acquired for the construction of a water tank, which would not have been feasible on a significantly hilly or sloppy terrain. The judgments concurrently recorded by the Courts below are consistent with the statutory provision as well as the principle of law, cited hereinabove. The crux of the discussion is that finding no force in this appeal, the same is hereby dismissed. No order as to costs. MQ/17/SC/AJ&K Appeal dismissed.