P L D 1968 Lahore 1360 (PLP)

MUHAMMAD AKRAM. J.‑

This judgment will dispose of the Regular First Appeal No. 1 of 1958 filed by the then Punjab Province (now represented by the Province of West Pakistan) and the connected Regular First Appeal No. 21 of 1958 filed by Muhammad Fazil, arising out of the award of compensation for the land acquired by the Government.

2. In pursuance to the Punjab Government Notification No. 4674‑55/2656‑R dated 13th of September 1955, issued under sections 6 and 7 of the Land Acquisition Act (I of 1894), land measuring 90 Kanals 15 Marlas belonging to Muhammad, Fazil, Muhammad Yar and Umri, comprised in the portions of Squares Nos. 15, 28, 29 and 38, situated in Chak. No. 47 N. B., village Lodhike, Tehsil and District Shahpur was acquired by the Government for providing residential accommoda tion for the staff of the Pakistan Air Force at Sargodha. The Land Acquisition Collector gave his award (Exh. D. 1) on 31st October 1955 and assessed the compensation payable to the land‑owners at the rate of Rs. 1,750 per acre in respect of the acquired land. The land‑owners preferred objections against the‑ award which were referred to the trial Court under section 18 of the Land Acquisition Act for its decision in the matter. Eventually, after the necessary enquiry, Khan Muhammad Ayub Khan, Senior Civil Judge, Sargodha, on 30th September 1957, gave his award. He assessed the compensation in the case of the land belonging to Umri, Muhammad and Muhammad Yar at the rate of Rs. 4 000 per acre and in the case of Muhammad Fazil at Rs. 5,000 per acre. This has led to the two appeals, before us against the award. In the Regular First Appeal No. 1 of 1958 the Government has objected to the enhancement of the compensation allowed by the trial Court and is directed against all the four land‑owners. In the connected Regular First Appeal No. 21 of 1958, Ch. Muhammad Fazil, one of the land‑owners alone has come up in Appeal asking for the compensation at the increased rate of Rs. 18,000 per acre for his land.

3. The land thus acquired by the Government is situated on the outskirts of the town of Sargodha, on the main road leading to Lyallpur and Lahore. Its location and vicinage would appear from the plan Exh. P. W. 7/1 prepared by P. W. 7 Ch. Zafarullah Khan. This plan read with the evidence by its author would show that there are at present the three main roads connecting Sargodha with its suburbs and the other important towns. In this case we are not concerned with the development of the town if any, in the direction of Sargodha‑Mianwali Road. The evidence in the case before us is mainly concerning the development of the town that has since taken place along the Sargodha‑Talibwala Road, and the Sargodha‑Lyallpur and Lahore Road on which this land is situated.

4. In the lower Court the land owners produced as many, as 19 witnesses and Muhammad Fazil one of the land‑owners has also appeared as his own witness (P. W. 20). They have also produced a number of documents to prove their case. In rebuttal the Government produced D. W. 1 Ch. Amjad Ali Colony Assistant, Multan, who was the Land Acquisition Collector at the relevant time to support the award (Exh. D. 1) given by him.

5. P. W. 10, S. Arif Hussain is the Mukhtar‑i‑am of Mian Shamsher Ali Kalyar owner of the land comprised in Squares Nos. 101 and 105, Chak No. 47 N. B. His evidence shows that in the year 1953 Mian Shamsher Ali Kalyar had sold about 10 Killas of the land belonging to him, comprised in Square' No. 101, by dividing it into small plots, for residential purposes, at rates ranging from Rs. 200 to Rs. 300 per Marla. People purchased the land for constructing 128 houses and 8 bungalows on it. It further transpires from his evidence that the land originally belonged to the Government and had been given to Mian Shamsher Ali as a grant for agricultural purposes. In order to convert the land into residential area, he had obtained the permission of the Government on payment of Rs. 50 per Marla as the royalty. P. W. 8 Muhammad Hussain, Patwari Chak No. 47 N. B., has similarly deposed that Mian Shamsher Ali Kalyar had entered into as many as 175 transactions relating to the sale of those plots for building purposes at the rates ranging from Rs. 100 to Rs. 300 per Marla and the Abadi that has thus sprung up there since August 1953 is called the "Kalyar Town". P. W. 1 Bashir Ahmad had purchased a plot of land measuring 15 x 25 sqr. feet in Kalyar Town at the rate of Rs. 250 per Marla by registered sale‑deed (Exh. P. W. 1/A) on 13 8‑1953. Even D. W. 1 Ch. Amjad Ali, the learned Land Acquisition Collector, had to admit in the course of his cross‑examination that the sale of plots in Kalyar Town commenced in the year 1953 at the average price between Rs. 200 to Rs. 300 per Marla. The abadi is situated on a part of Square No. 101, Chak No. 47 N. B., along the Sargodha‑Talibwala Road. It is almost contiguous to the Civil station as indicated at 'B' on the plan Exh. P. W. 7/1.

6. P. W. 6 Muhammad Amir Khan has deposed that he had purchased the land measuring 131 Kanals in Chak No. 47 N. B. for Rs. 21,000 in April 1953. Exh. P. W. 6/1 is the copy of the registered sale‑deed executed in his favour by Muhammad Sadiq (P. W. 16) on 4th April 1953. According to Muhammad Amir Khan (P. W. 6) he resold half of the land to Allah Bakhsh for Rs. 10,

500. In the "Goshwara Intakalat" (Exh. P. W. 9/1) prepared for the five years from 1st January 1951 to 31st December 1955, this transaction is entered as bearing Mutation No. 604, sanctioned on 14th November 1953, and the average sale price of the land is shown as Rs. 1,704 per Kanal. Mutation No. 626 sanctioned on 26‑2‑1954 relates to the further sale made by Muhammad Amir Khan in favour of Allah Bakhsh on an average price of Rs. 1,778 per Kanal. He is also shown to have sold the land to Lal Khan by Mutation No. 629 sanctioned on 6th April 1954 at Rs. 1,326 per Kanal and to Allah Yar by Mutation No. 630 sanctioned on 6th June 1954 at Rs. 2,000 per Kanal. The land in all these transactions is comprised in Square No. 102 situated on the Sargodha‑Talibwala Road close to the Civil Station Sargodha and is denoted by `C' in the plan Exh. P. W. 7/1.

7. According to P. W. 11 Muhammad son of Saudagar he sold the agricultural land measuring 36 Kanals comprised in Square No. 4 to Wali Dad and Sardar Ahmad Sher Khan for Rs. 32,000 on 8th August 1956. The sale was made after the date of notification in this case. This land is situated away from Sargodha‑Talibwala Road on the other side and is adjacent to the Civil Station.

8. P. W. 12 Ch. Tussadduq Hussain had purchased land measuring 5 Killas in Chak No. 47 N. B. for Rs. 70,000 in 1954 orally, on the basis of Mutation No. 637 (Exh. P. W. 12/1). According to the witness the land is situated on Bhagtanwala Road, presumably a minor road in the city running close to the Sargodha‑Talibwala Road. The vendor of the land was Muhammad Akram (P. W. 13) and from his cross‑examination it transpires that Ch. Tassaduq Hussain vendee was his real maternal‑uncle. He is said to have received the sum of Rs. 70,000 dasti from him without any receipt or other writing. This detracts considerably from the genuineness of the transaction. P. W. 15 Manzur Hussain had purchased 4 Killas of the land in Chak No. 47 N. B. for Rs. 60,000 on an average price of Rs. 1,959 per Kanal from Muhammad Sadiq and Mutation No. 636 (P. W. 15/1) was sanctioned on 5th November 1954. According to the witness soon afterwards he had reconveyed the same land to Mumtaz Ahmad, the son of Muhammad Sadiq for Rs. 60,500 as he had objected to the sale of the land by his father. Mutation No. 673 was sanctioned in respect of this further sale on the 12th August 1955. P. W. 16 Muhammad Sadiq has testified about these two transactions and has also deposed that his son Mumtaz Ahmad had protested against the sale of the land to Manzur Hussain. He organized a Mela and Manzur Hussain was thus prevailed upon to restore the land to Mumtaz Ahmad. These two transactions of sale appear to be suspicious in their very nature. At the time Mumtaz Ahmad was a student of Intermediate College between 18 to 20 years in age and has not appeared as a witness to support the transaction. Both the learned Land Acquisition Collector and the Senior Civil Judge have discarded these three mutations Nos. 636, 637 and 673 from consideration as these transactions appeared to be shady and not genuine. Even before us no attempt was made to justify these sales.

9. It appears that in 1956, the Government had decided to grant 10 Killas of the land comprised in Square No. 100, Chak No. 47 N. B. to Syed Inayat Ali Shah a Government servant. On this, P. W. 16 Muhammad Sadiq made an application (P. W. 16/1), on 26th March 1956, to the Colony Officer offering to purchase the land from the Government at the rate of Rs. 8,000 per acre. According to the statement by P. W. 19 Khan Muhammad he too gave a similar offer to the Government for the purchase of the land at Rs. 8,000 per acre. From the plan Exh. P. W. 7/1, Square No. 100 appears to be situated quite close to the civil station, at the back of the Kalyar Town.

10. P. W. 5 Saeed deposed to have purchased 24 acres of agricultural land situated in Chak No. 46 N. B. from the Government in public auction; 12 acres at Rs. 3,450 per acre and the remaining at Rs. 2,500 per acre. The copies of the two sale‑deeds are Exh. P. W. 5/1 and P. W. 5/2. According to the witness the land is situated at a distance of about two miles from Sargodha octroi post on the Talibwala‑Sargodha Road.

11. Sher Ali and Suleman Khan had separately sold their lands to Zeenat Textile Mills by Mutations Nos. 477 and 478 respectively, sanctioned on 29th May 1953. Sher Ali sold his land measuring 191 Kanals for Rs. 43,000 at Rs. 225 per Kanal and Suleman sold the land measuring 34 Kanals for Rs. 7,000 ' at Rs. 206 per Kanal. According to P. W. 17 Suleman Khan, the land sold by him was inadequately irrigated as it was situated at the tail of‑the Moga and half of it was Kallar. It is at a distance of about one mile from the land under acquisition. Similarly according to P. W. 8 Muhammad Hussain, the village Patwari, Mutation No. 477 relates to an area of 191 Kanals out of which 140 Kanals was Mazroa, 18 Kanals Banjar Qadeem, 24 Kanals Banjar Jadid and 9 Kanals Gher Mumkin, and Mutation No. 478 relates to an area of 34 Kanals, out of which 2 Kanals was Banjar Jadid and 28 Kanals Banjar Qadeem and 4 Kanals Gher Mumkin. According to P. W. 7 Ch. Zafarullah Khan the land comprised in Square No. 73, near Sultan Textile Mills, was sold to Zeenat Textile Mills on an average price of Rs. 1,760 per acre in April 1952 at a time, when neither Sultan Textile Mills, nor the T. B. Hospital and the M. E. S. Quarters were in existence. In the opinion of this witness the present potentialities of the land in the surrounding did not exist in the year 1952 and the area was stricken by Kallar at the time. Its situation is denoted at `D' in the plan Exh. P. W. 7/1. The land is situated, on the main Sargodha‑Lyallpur‑Lahore Road, at a distance of about a mile from the land under acquisition.

11. These are the broad features of the evidence read before us. The Land Acquisition Collector in this case, assessed the compensation due to the land owners at the rate of Rs. 1,750 per acre. In his award dated 31st October 1955 (Exh. D. 1) he has excluded Mutations Nos. 636, 637 and 673 out of considera tion as fictitious. In his opinion these mutations were got entered and sanctioned by the influential parties thereto for the reason that the lands in Chak No. 47 N. B. were being acquired for the Satellite Town and they had been protesting against the proposed acquisition and in order to show that the prices of their lands in the locality were prohibitive they had managed to have those mutations sanctioned. The learned Land Acquisition Collector has relied on the Mutations Nos. 477 and 478 for the sale of 225 Kanals of the land to Zeenat Textile Mills for Rs. 50,000, in order to get at the price of the acquired land. He has, however, admitted that there has been some increase in the prices in the Chak over the past five years from 1951 to 1955. According to his estimate the average sale price of the lands in the Chak after giving allowance for this rise in the prices in these five years, was Rs. 1,680 per acre. Therefore he has assessed the market value of the acquired land at the rate of Rs. 1,750 per acre.

12. On the reference made to the learned Senior Civil Judge, Sargodha, he has fully discussed the evidence led before him by the parties. He was likewise of the opinion that the three sale transactions embodied in Mutations Nos. 636, 637 and 673 (Exhs. P. W. 15/1, P. W. 12/1 and P. W. 15/2) were in the nature of a subterfuge and rightly eliminated from consideration by the Land Acquisition Collector. At the same time, the learned Senior Civil Judge was of the opinion that the land, comprised in Mutations Nos. 477 and 478 for the sale of 225 Kanals of the land to Zeenat Textile Mills for Rs. 50,000, on which the Land Acquisition Collector had relied, could not be treated as a safe guide. According to him the land covered by these mutations, though abutting on the Sargodha‑Lyallpur Road, was of a relatively poor quality as agricultural land, P. W. 17 Suleman Khan had testified to this effect. At that time Sultan Textile Mills facing the land covered by the two mutations had not yet come into existence. Afterwards with the construction of that Mill the potential value of the land in the vicinity had undergone a rapid change, since then. P. W. 16 Muhammad Sadiq had offered to purchase the land comprised in Square No. 100 in Chak No. 47 N. B. at the rate of Rs. 8,000 per Killa from the Government, on the 26th of March 1956; but this was excluded from the consideration by the learned Senior Civil Judge on the ground that it was a post notification offer. However, in coming to his conclusions, the learned Senior Civil Judge was in no small way impressed by the transaction for the sale of the land by the Government in public auction to P. W. 5 Muhammad Saeed embodied in Exh. P. W. 5/1 and Exh. P. W. 5/2. That land was situated in Chak No. 46 N. B. at a distance of about two miles from the Sargodha Octroi Post on the Talibwala‑Sargodha Road. Muhammad Saeed had in all purchased 24 acres of land, 12 acres at the rate of Rs. 3,450 per acre and the rest at Rs. 2,500 per acre. In the opinion of the learned Senior Civil Judge the land in Chak No. 46 N. B. was lying at an out of the way place as compared to the land in dispute which is centrally situated and must be treated as more valuable. According to the learned Senior Civil Judge the compensation claimed by the objectors on the strength of the sales of the land in Kalyar Town at the rate of Rs. 19,000 per acre was extortionate. On the other hand the compensation awarded by the Land Acquisition Collector was incommensurate with the potential of the market value of the land in dispute. Taking these facts into consideration, he has assessed the market value of the land belonging to Umri, Muhammad and Muhammad Yar at the rate of Rs. 4,000 per acre. As to the land belonging to Muhammad Fazil, the trial Court assessed the compensation at the rate of Rs. 5,000 per acre in view of the more favourable situation that it occupies as compared to the land belonging to the other owners.

13. It appears that at one time, originally, the land is question belonged to the Government and had been given to different land‑owners as part of the grants made to them on certain specified terms and conditions. The terms and conditions of these grants are almost similar, Exh. D. 2 is a copy of the indenture of the grant of 53 Ghumaons 5 Kanals by the Government to Umri, one of the land owners, for Rs. 2,145, made on 16‑10‑1940. This shows that the Government as the beneficial owner gave the land to him, to hold the same in proprietary rights subject to the exceptions and reservations and on the terms and conditions mentioned therein. Clause 2 stipulates that: "the grant is made for agricultural purposes only, and the land is specifically not to be used for building purposes". Again, under clause 7(k) the grantee expressly agreed: "Not to use the 4and for any purpose‑other than that far which it is granted and not to permit or suffer such usage and not to use it for building purposes except such buildings as are required for (agricultural) purposes." Clause 9 of the grant provides that: "if the grantee ‑fails to perform or commits any breach of any of the terms or conditions of this grant or suffers or permits such a breach or non‑performance, the Collector may at any time thereafter determine the grant and resume the possession of the land . ." By virtue of clause 7(g) the grantee further agreed that: If the land or any portion thereof is required for any public purpose, to surrender the whole or so much of the land as may be required on payment by the Collector without claiming compensation except as provided hereunder." Clause 10 (i)(c) provides that no compensation shall be payable by the Govern ment except "on resumption of the whole or any portion of the land otherwise than for breach of or non‑fulfillment of the terms or conditions of the grant, or for the creation of a public right of way or for construction of a water course, a proportionate refund of the purchase price, if any paid and such additional sum if any, as may be determined by the Collector in accordance with the general principles applicable to the acquisition of land for public purpose." The agreement generally provides in clause 8 of ,the grant that the same shall be subject to the provisions of the Colonization of Government Lands (Punjab) Act, 1912.

14. Relying on these stipulations and the terms and conditions of the aforesaid grant, the learned Advocate‑General contended before us in all seriousness that none of the respondents in his appeal was the full and absolute proprietor of the land. According to him they had at best, merely a defeasible interest in the land acquired, by the Government. At .one stage he was even heard to say that the position of the respondents was little better than that of tenants under the Government and as such they should rest content with a nominal compensation allowed to them for this acquisition. This argument advanced before us for the Government is least impressive and altogether devoid of any force. The deed of grant (Exh. D. 2) itself shows that the Government on behalf of the Crown "as the‑beneficial owner" gave the land to the grantee "'to hold the same in proprietary right" subject to the reservations and the terms and conditions contained therein. Thereby the respondents were constituted as to full proprietors of the land. After .the grant the Government was not left with any residuary interest in the land. The transfer of the property, to the landowners was, however, subject to the restrictive covenants attached to the land. They were, therefore, liable to be compensated in full in respect of .the property acquired from them. The land was acquired by the Government in exercise of the powers vested in it under the Land Acquisition Act and the compensation for it must, therefore, be determined in accordance with the principles contained in section 23 of that Act. In these circumstances, the Government cannot be permitted to fall back on the residuary powers of resumption of the land on payment of the proportionate price to the owners by the Government, in accordance with clause 10(i)(c), of the agreement (Exh. D. 2).

15. The learned Advocate‑General has next asserted that at any rate the market value for the land must be assessed as an agricultural land only divorced of all its potentialities as a building site. Under clauses (2) and 7(k) of the grant, the land is wedded to the use for agricultural purposes only and the land owners were committed not to use it for any other purpose. It is therefore, contended that the market value of the land must be reckoned with its potential as an agricultural land only.

16. To support his contention in this respect, the learned Advocate‑General has relied on Ujagar Lal v. The Secretary of State for India in Council (I L R 33 All. 733), in which the Court has held that although in ascertaining the market value of land sought to be acquired under the Land Acquisition Act No. 1 of 1894 the general principle to be applied is that the value of the land should be calculated with reference to the most lucrative and advantagious way in which the land might be used; if the use of such land for some special purpose, e.g. as building sites, would never be permitted, the land should not be valued as if it could be utilized for such purpose. In that case the Municipal Board, Shahjahanpur, had repeatedly refused to allow any building to, be erected on the plot which was afterwards acquired for its, purposes. In these circumstances, the fact that the appellant would never have been allowed to build on the land was taken; into consideration in ascertaining the market value. This case was based on the decision in Stebbing v. Metropolitan Board of Works (1870 L R 6 Q B 37). In this latter case, the plaintiff was the rector of three perishes in each of which there was a churchyard which had been closed under statutory authority, and the defendants, the Metropolitan Board of Works was invested with the powers to take these churchyards. The plaintiff as owner of the soil of the church yards, claimed full compensation under the Land Clause Act, in respect of his interest. In discussing the principle on which the compensation was to be paid Cockburn, C. J. observed:-- "Owing to the nature of this land, the rector never could have alienated it. He might, perhaps, have obtained an Act of Parliament for converting part of it to some purpose of a. quasi‑secular character; but he would never have been allowed to use it in any way for any secular purpose, with a view to his own interests. It was, therefore, in his hands practically,, valueless. When the Metropolitan Board of Works are enabled to acquire it for a public purpose, why should he her benefited? He can have no claim to have a new value attached to that which was before valueless, merely because the Legislature has said it shall be transferred from one public purpose to another. There is nothing to be found in the Act to support the plaintiff's contention, nor is it founded on reason. It is argued for the plaintiff, that although in his hands the churchyards are valueless, yet when they pass to the defendants, under the compulsory powers of the Act of Parliament, they acquire a value from the fact that they may be applied to secular purposes. I do not think that is the test applicable to the present case. When Parliament gives compulsory powers, and provides that compensation shall be made to the person from whom property is taken, for the loss that he sustains, it is intended that he shall be compensated to the extent of his loss; and that his loss shall be tested by what was the value of the thing to him, not by what will be its value to the persons acquiring it. The plaintiff, as rector, could never have parted with those churchyards, and therefore, to him, they were perfectly valueless. The Metropolitan Board, it is true, will be able to apply the land to purposes which will give it an increased value, but that is no loss to the rector. He has lost nothing by the land having been taken, although they may have acquired something which may prove a gain. I can quite understand that if a railway or other commercial company had been about to acquire these churchyards, and it had been suggested to the Legislature that their site would be more valuable to the company than to the person called upon to give it up, it might be said that the company ought to pay the increased value which the land would acquire from the purpose to which it was about to be applied, and that they ought in respect of that increased value to make some compensation which might be devoted to some other public purpose. But if the facts of this case had been brought before the Legislature, I cannot suppose they would have considered that principle applicable to it. They would have considered that it was only a transfer of the land from one public purpose to another. There can be no reason why the party in whose bands it was valueless, should be compensated in respect of a supposed loss of a value which, in point of fact, never existed." To illustrate his point further Cockburn, J. added:

"Suppose that a right of way exists over land, which prevents it from being built upon, and that a public body has powers conferred by statute to apply that land to some purpose inconsistent with the right of way, could the owner of the property be admitted to allege that, although he could not apply the land to a profitable purpose, and although he lost nothing by being deprived of it, yet as it would be of some value in the hands of the public body, he was to receive compensation in respect of that value? The answer would be, that as compensation is to be given for the loss which has been sustained, he would be entitled to none because he had suffered no loss. I think the same principle is applicable here. Mellor, J. in the same case under discussion said that in the hands of the rector the land was valuable to him only by reason of the occasional fees that he was to receive upon the burial of persons in the courtyard and observed "I take it that compensation is to be given only for the loss which a person sustains. And when the Legislature, simply for the benefit of the public, not for the benefit of the plaintiff, have given permission to the defendants to take this land, can it be said that the plaintiff is entitled to receive compensation, as if the burial grounds had been, at the time and before the defendants gave notice to treat, land free from restrictions? Whereas at that time they were subject to all the restrictions which their ecclesiastical character imposed. If the land had been secularised at the tine the defendants took it, I should have thought that the principle proposed by the arbitrator was right; but as the burial ground was secularised only for the benefit of the public, and not for the benefit of any private person, that principle cannot be applied, and the arbitrator ought to have assessed the value upon the principle of compensating the rector for any pecuniary, damage which he may have sustained from having this land detached from his benefice." Lush, J, in delivering his judgment in the case remarked:‑ "The compensation, whether it is to be paid between the owner and a railway company, or the owner and the present defendants, is to be awarded under that Act, on the same principle. I think it is clear from the language of the Act that the value of the land is to be assessed on the principle of compensation to the owner. The question is not what the persons who take the land will gain by taking it, but what the person from whom it is taken will lose by having it taken from him. It is contended that this land was secularised by the Act of Parliament, and being secularised, is therefore free from all restrictions in the hands of the rector. But that is not so; it was secularised not for his interest or his benefit, but secularised solely for the benefit of the defendants, and in order that it might be converted to the public purpose to which it has been applied. If they had not taken it, it‑ would have remained as it was. The Act did not intend to put the owner of the land in a better position than he would have been in if the land had not been taken from him. What the Legislature intended to give is full compensation and indemnity to the persons from whom land is taken for the loss of the land." Handen, J. was also of the same opinion and observed:‑-- "The rector was undoubtedly owner of the freehold of these churchyards, but he was the owner of it subject to a restriction, which it was not practically possible for him to remove, and while that restriction lasted it rendered the value of the free‑hold little or nothing."

17. I have quoted rather copiously from the separate judgments delivered by the Honourable Judges in Stebbing's case. In this connection they drew a distinction between the case before them and the reported case in Kilcoat v. Archbishops of Canterbury and York (1850, XXVIII Law Journal Reports 376). In that case the jury gave the direction that they were not bound to estimate the value of the ground and buildings, for which the plaintiff was entitled to be paid, as land irrevocably appropriated to spiritual purposes, of which the plaintiff could make no pecuniary advantage, but that it was competent to them to form their estimate of the value with reference to all the circumstances that had appeared in evidence before them; and the question being left upon the evidence in the cause to the unfettered judgment of the jury, the Court was of the opinion that there was no misdirection in thus submitting the question of damage to the jury. The real distinction underlying the two English cases was pointed out by Cockburn, C. J. in the Stebbing's case when he observed:‑-- "I can quite understand that if a railway or other com mercial company had been about to acquire these churchyards, and it had been suggested to the Legislature that their site would be more valuable to the company than to the person called upon to give it up, it might be said that the company ought to pay the increased value which the land would acquire from the purpose to which it was about to be applied, and that they ought in respect of that increased value to make some compensation which might be devoted to some other public purpose.

18. In re: An Arbitration between Lucas and the Chesterfield Gas and Water Board (1909 K B D 16), in this connection, Vaughan Williams, L. J. has quoted with approval the remarks by Grove, J. In re: Countess Ossalinsky and Manchester Corporation as under:‑-- "If the land has what I may call an adventitious value, that is, something beyond its mere agricultural or normal value and that is a marketable value in this sense, that persons wishing, for a purpose for which the land is peculiarly applicable, to purchase that land would give a higher price for that land‑then the arbitrator leas a fair right to take that into consideration; it is a matter no doubt contingent, but still it is a matter which is not to be ignored or put out of consideration by an arbitrator." In the same case Fletcher Moulton, L. J. 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 that 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 recognized 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." it Discussing further he has added:‑ "A public authority obtains powers to take it for a reservoir; ought it to pay any higher price than is represented by its agricultural or grazing value? Is not any price in excess of this a violation of the canon that you are only to give that which represents its worth to the seller, and that you are to disregard all questions of its worth to the buyer? The decided cases seem to me to have bit upon the correct solution of this problem. To my mind they lay down the principle that where the special value exists only for the particular purchaser who has obtained powers of compulsory purchase it cannot be taken into consideration in fixing the price, because to do otherwise would be to allow the existence of the scheme to enhance the value of the lands to be purchase under it. But when the special value exists also for other possible purchasers, so that there is, so to speak, a market, real though limited, in which that special value goes towards fixing the market price, the owner is entitled to have this element of value taken into consideration, just as he would be entitled to have the fertility or the aspect of a piece of land capable of being used for agricultural purposes. There is nothing strange or abnormal in this."

19. The learned Advocate‑General has next relied on the Government of Bombay v. Esufali Salebhai ((1910)12 BLR 34), in support of his contention, In that case in the course of the enquiry the Government Solicitor appearing before the Collector, had put forth their claim to the land as owners and averred that, as the respondent had held it as a tenant by mere sufferance he was entitled to compensation in respect of the value of the buildings only and not for the land. In this connection Chandavarkar, J. observed that "to acquire a land is not necessarily the same thing as to purchase the right of fee‑simple to it, but means the purchase of such interests as clog the right of Government to use it for any purpose they like" and according to Bachelor, J. in other words, Government was required to pay for the only outstanding interests acquired by it in the land. Eventually the Court remanded the case for a decision on the question as to whether the respondent had any interest in the land, as distinct from his interest in the building, which entitled him to the compensation. There does not appear to be any quarrel with this proposition.

20. The learned Advocate‑General has also relied on the Secretary, Cantonment Committee, Barrackpore v. Satish Chandra Sen (AIR1931PC1). In that case the property was situated within the Barrackpore Cantonment and after discussing the nature and character of the tenure of the land held by the respondent, the Privy Council found that the title of the respondent in the land was a purely possessory one and compensation was allowed to him on that basis.

21. In reply the learned counsel for the respondents had relied on Manaklal Hirabhai and others v. Land Acquisition Officer, West Khandesh (A I R 1937 Bom. 177). The facts in that case were that the Municipality wanted to acquire the sites for widening the roads and with this object in view it had been refusing permission to the owners to build over small sites abutting on the existing narrow roads after the old buildings had been destroyed by the fire. After the acquisition of the land by the Municial Committee a question arose as to the compensation payable for the land. It was said that the sites would in such circumstance be valued on the basis that they could not be built upon because the Municipality had refused permission to build. In this connection the Court observed that this proposition was "startling enough" and it was a bold position to take up that the Municipality may oppressively, and tyrannically utilize its powers, however wide or however restricted they may be for the purpose of rendering valueless lands which the Municipality may hereafter decide to acquire. It was nevertheless argued that though the permission to build had been wrongly refused and the Municipality could not have prevented any building being put up upon the land acquired, yet the facts were that the lands were subject to a prohibition from the Municipality to build a prohibition to which no exception had been taken and which was assumed to be valid. Therefore, it was argued that the sites must be valued as though in the market they would have been sold only as "lands struck with sterility". Repelling these contentions the Court held that the lands acquired were suitable for building purposes. They had been used as building sites and there was nothing in law to prevent their being used as building sites at the time when the notification for compulsory acquisition was issued. They must accordingly be valued on that footing. In the opinion of the Court the Municipality as a public body was under the necessity not to exercise its authority in a capricious, wanton, oppressive, arbitrary or tyrannical manner even when acting within the defined limits of its powers. It must use even its admitted powers considerately, with a discretion suitable to the nature and importance of the duties to be discharged, and with a fair and honest judgment. The municipality has been given no power to refuse in general terms permission to build. It has only power to impose conditions with reference to the location of the building in relation to any street existing or projected. Even such conditions cannot be so imposed as to contravene the provisions for compensation when a regular line of street is prescribed. The Municipality cannot prevent a building site from being used for building and apparently render the same valueless with the ulterior object of acquiring the site without payment.

22. Their Lordships of the Privy Council in Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam (AIR 1939 P C 98), have set out in detail the principles governing the determina tion of the market value of the land acquired under the Land Acquisition Act, 1894. The compensation must be determined' by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined, but also by reference to the uses to which it is reasonably capable of being put in the future. It is possibilities of the land and not its realized possibilities that must be taken into consideration. In this connection the Privy Council has further observed :‑-- "But where the owner is himself unable to turn the potentiality to account whether by promotion of a company or otherwise, and there are several other persons who would be able to do so, the owner is entitled to be paid the value to him of the potentiality. The value of the potentiality must be ascertained by the arbitrator on such materials as are available to him and without indulging in feats of the imagination. Where there is only one possible purchaser, the value should be the sum which the arbitrator estimates a willing purchaser will pay and not what a purchaser will pay under compulsion." The Privy Council has in conclusion added :‑-- "So where the only possible purchaser of the land's potentiality is the authority that has obtained the compulsory powers, the arbitrator in awarding compensation must ascertain to the best of his ability the price that would be paid by a willing purchaser to a willing vendor of the land with its potentiality in the same way that he would ascertain it in a case where there are several possible purchasers and he is no more confined to awarding the land's `poramboke' value in the former case than he is in the latter."

23. In this connection the learned counsel for the land‑owners has also relied on the authority in Ramchand Thawardas v. Governor‑General‑in‑Council (P L D 1957 Kar. 424). The appellants in that case had sunk a well in the acquired land and the water from the well under section 65 of the Bombay Land Revenue Code was to be used only for agricultural purposes under a grant to the predecessor‑in‑title of the appellant‑occupier. He could put the water to any other use with the permission of the Collector who could grant or refuse such permission. The land had been acquired by the Government for the purpose of the military and the Government contended that under the grant the water in the well belonged to the Government, for which the occupier was not entitled to any compensation. But the Court found that the question whether the Government was the owner of the land subject to certain rights of the occupant or whether the occupant was the owner of the land subject to certain rights of Government, was academic. In the opinion of the Court the appellant occupant had the right to construct a well for the purpose of agriculture and Government had no right to evict him from the land so long as he used the land and well for agricultural purposes and continued to pay the assessment. In these circumstances the Court observed that the market value of the land and the well should be calculated with reference to the price fixed by a "willing vendor and a willing purchaser in friendly negotiation." The water from the well being of a specified value to Government, a reasonable amount was payable to the occupier on account of water. In the hands of the Government this well had the special potentiality that it could be used for supplying the needs of the military, whereas in the hands of the appellant permission to supply water for non‑agricultural purposes might have been refused and, if permission had been granted, a fine might, and non‑agricultural assessment would, have been levied. Assuming that the parties to the deal were a willing vendor and a willing purchaser in friendly negotiation, the Court observed that the talk between them must have proceeded on something like these lines:‑ "Vendor.‑You are going to use the water of my well to supply military needs. Purchaser.‑That is true, we recognise that this is a special advantage attached to this well. But if you supplied water for these needs, you would have to obtain the permission of the Collector and pay non‑agricultural assessment and possibly a fine, so that you are not absolute owner of the water. Vendor.‑I agree. But you cannot use water for your needs without acquiring my land, and thus this land has a special value for you, and you ought to pay me something extra. Purchaser.‑Yes, we agree that there is a special value for us, and we will pay you a reasonable amount for it." Accordingly the Court proceeded to determine the market value on these consideration in that case.

24. In Secy. of State v. Sukkur Municipality (A I R 1931 Sind 67), the facts were that the land had been originally granted to the Municipality for purposes of agriculture and subsequently it was exempted from assessment on the understanding that it would be used as tow path. But at the time when the notification for acquisition was issued the land was not being used as a tow path nor was there any necessity to do so. In determining the market value of the land Wild, J. C. observed:‑-- "The learned Government Pleader relies upon these facts to show that although the land was suitable as a building site, it could never be used as such because permission to build would never be granted by the Collector of Sukkur. We do not however see any reason to suppose that in the circumstances of the case permission would be refused. If the land was originally used as a tow path and to give access to the river, it would appear that there is no necessity to reserve it for these purposes now." In this connection Rupchand, A. J. C. in the same case has observed:‑-- "It has been argued that as the land had been originally granted for purposes of agriculture and as in 1877 it was exempted from assessment on the clear understanding that it would be used as a tow path, it was open to the revenue authorities to refuse to grant the permission for converting the land into a building site and that therefore its potential value as a building site cannot be taken into account. There is no substance in this argument." A somewhat similar point was argued in the case Bhujablappa v. Collector of Dharwar ((1899)1 Bom. L R 454), where it was said: "The elements which confer on the lands their natural value as building sites are the suitableness of its situation, its salubrity, its vicinity to a large and growing industrial or populous centre and the demand for such additional building accommodation. It does not follow from sections 65 and 48, Land Revenue Code of 1879, that the payment of fine and assessment is a: preliminary condition without which no agricultural land can be appropriated for the building purposes. It is clear that the Land Revenue Code contemplates appropriation both with and without permission, the fines in the one case being larger than in the other."

25. Daya Kushal and others v. The Assistant Collector, Surat (I L R 38 Bom. 37), is another case in point. There the facts were that the land had been acquired for the purpose of quarrying and the question arose as to whether the special adaptability of the land for quarrying was a matter to be excluded from consideration or not. In determining its value the lower Court was of the opinion that it should be excluded because the appellants had never obtained from the Government permission to quarry, and under section 65 of the Land Revenue Code the right of Government to mines and mineral products in land such ay this was expressly reserved. In reversing the decision the High Court observed that under the rules the Collector was empowered, if he so chose, by private treaty with the appellants to authorize them to quarry in this land. It was admitted before the Court that in actual practice it was common for the occupants of such lands to obtain the Collector's permission to quarry on the payment of certain fees. Elaborating this point further the Court observed:‑-- "So far, therefore, the appellants appear to be in no worse case than would be the owners of agricultural land for which, on its acquisition, the claim is made that the market value should be estimated on the footing of its building site value, because in the case of agricultural land its conversion into a building site equally requires the permission of Government and is equally subject to the levy of certain fees. Yet in Bhujabalappa v. Collector of Dharwar (1899) 1 Bom. L R 454, it was held that certain land, though technically agricultural land. was rightly valued on the basis of its being suitable for building purposes by reason of its proximity to a large town." In conclusion the Court has remarked:‑-- "What the Court has to determine is the market value of this land, and it may be that a willing purchaser would increase the price otherwise payable for the land by reason of its adaptability for use as a quarry, and that the price so offered would still be an increase on the ordinary agricultural price notwithstanding that the purchaser had to allow deductions on account, first, of the risk of not obtaining the Collector's permission under rule 39, and secondly, of the fees which would he payable to the Collector in the event of permission being had. But the matter is one which, as we may, ought, in our opinion to be considered.

26. Under section 23 of the Land Acquisition Act, 1894 the endeavour has always been to determine the amount of "compensation" to be awarded for the acquired land. It is the assessment of the equivalent in terms of money for the land compulsorily acquired. It does not mean simply the value of the land according to its present disposition. It would include all the future possibilities on which a prudent purchaser would calculate and a vendor would base his expectations, both sides being actuated by business principles. The potential value of the land or in other words "any other more beneficial purpose to which in o the course of events it might within a reasonable period be applied", must necessarily enter into the bargain and is an element to be considered in arriving at its market value. But the too remote, imaginative and speculative possibilities of the land cannot be accepted. The true test is to ascertain what "a willing vendor might reasonably expect to obtain from a willing purchaser" in a "friendly negotiation" for his land. The adventitious value of the land with all its advantages and disadvantages must be calculated. The title of owner of the land under acquisition coupled with all the restrictions, reservations, and the risks to which it is subject has got to be weighed and calculated in arriving at its market value.

27. Now reverting to the facts of the present case before us, it stands proved from the evidence of P. W.

10. S. Arif Hussain and P. W. 18 Muhammad Ansar, Urban Colony Clerk, Office of the Colony Assistant, Sargodha, that in the case of the land belonging to Mian Shamsher Ali Kalyar, situated in Chak No. 47 N B., under similar circumstances he was granted permission by the Government to convert the agricultural land for residential purposes on payment of Rs. 1,000 per Kanal as the royalty. Similar applications by Ch. Muhammad Sadiq and Sh. Muhammad Din, some of the other grantees of the land, were also pending with the Government for the necessary permission to convert their lands for residential purposes. Therefore, it does not appear to be difficult to obtain the necessary permission of the Government under the grant to convert the agricultural land to building purposes on suitable terms and conditions. As far as we could ascertain, according to para. 153 of the Colony Manual, this prohibition under the terms of the grant against the conversion of agricultural land to other uses, was inserted by the Government to prevent the conversion of the land bought at reduced agricultural rates to speculative uses such as the erection of a ginning factory, to the detriment of the factories sold by the Government in the neighbouring Mandis. But this did not mean that thereby the Government was enabled to stand in the way of any bona fide development of the locality in which the land under the grant is situated. Indeed the Government is not expected to unreasonably withhold its permission against the conversion of the land required for bona fide building purposes.

28. To sum up the above discussion, we are unable to agree with the learned Advocate‑General that under the peculiar circumstances of this case the land under acquisition must be valued as adapted to agricultural use only and its all other potentialities must be ignored. The land is situated in the vicinity of the expanding town of Sargodha. Therefore the potential of the land as a building site cannot altogether be ruled out. However, the prospect that the land is subject to the restrictive covenant that it can be allowed to be converted to a building site with the permission of the Government on suitable terms must also be borne in mind. The risk that this permission may not be forthcoming in a given case cannot be ignored at the same time. It is the cumulative effect of all these considerations which has to be taken into account in arriving at the market value of this land.

29. In paras. 5 to 9 above we have discussed the different transactions for the sales of lands situated on the outskirts of the civil station Sargodha‑Talibwala road. The abadi known as the Kalyar Town has sprung up in this vicinity since 1953 and the pressure on the land in this locality for building purposes was considerable. But in the direction of the Sargodha‑Lyallpur‑cum Lahore Road, on which the land under acquisition is situated the tendency for a similar development is by no means so great. The plan (Exh. P. W. 7/1) shows that along this road there are the P. A. F. School, the M. E. S. Quarters, the T. B. Hospital and further on the Sultan Textile Mills. But for reasons best known to the parties except for the two instances of the sales of the land to Zeenat Textile Mills in the year 1953, no other instance for the sales of the land along this road have been placed on the record. As pointed out earlier Sher Ali and Suleman had sold their lands on the average price of Rs. 225 and Rs. 206 per Kanal respectively to the Zeenat Textile Mills and Mutations Nos. 447 and 448 were attested in respect thereof on 29‑5‑1953. It does appear from the record that generally in the direction of the land in question there is a tendency for the people to build their houses and the prices in the locality have also been on the raise. The learned Land Acquisition Collector in his award dated 31‑10‑1955 (Exh. D. 1) has depended upon Mutations Nos. 477 and 478 for the sales of the lands to Zeenat Textile Mills as the basis to gauge the prices of the land and assessed its value at Rs. 1,750 per acre after allowing for the rise in the prices in the locality. But the learned Senior Civil Judge, Sargodha, in his judgment dated 30‑9‑1957 was in no small way impressed with the two transactions for the purchase of lands situated in Chak No. 46 N. B. by P. W. 5 Muhammad Saeed at the rate of Rs. 3,450 per acre and Rs. 2,500 per acre (Exh. P. W. 5/1 and P. W. 5/2) in open auction from the Government and assessed the market value of the land belonging to Umri and others at Rs.4,000 per acre. In coming to this conclusion the Court below has rejected the two instances for the sale of the land covered by Mutations Nos. 477 and 478 to Zeenat Textile Mills on the ground that these were of poor quality as agricultural land. In this connection he has depended upon the statement of P. W. 17 Muhammad Suleman Khan. But we cannot rely on his oral evidence in the absence of the documentary evidence which the land owners have failed to place on the record. Therefore, in assessing the market value of the land in question these two mutations cannot be altogether ignored and must be kept in mind. At the same time it does appear to us that by the date of the notification in this case on 13‑9‑1955, the prices must have registered an appreciable rise because in the meanwhile the Sultan Textile Mills had come into existence in this locality giving a fillip to the upward tendency in the prices.

30. Looking at the land from its purely agricultural aspect, it is in evidence that one Muhammad Akram gave his land measuring 347 Kanals situated in Chak No. 47 N. B. on lease to P. W. 3 Haji Ata Muhammad for five years by a registered deed of lease (Exh. P. W. 3/1) on 12‑3‑1953 for Rs. 7,875 per annum, at an average rent of Rs. 175 per acre per annum. Similarly Abdul Khaliq gave his land belonging to him, measuring 251 Kanals situated in Chak No. 47 N. B. on lease to P. W. 3 Haji Ata Muhammad by the registered deed of lease (Exh. P. W. 3/3) on 5‑4‑1954 for Rs. 6,000 per annum, at an average rent of Rs. 184 per acre per annum. In addition to these there are the two mutations for the lease of the lands in the Chak. By mutation (Exh. P. W. 3/4) Mumtaz Ahmad son of Muhammad Sadiq, caste Jat Cheema, resident of the village appears to have given the land measuring 206 Kanals orally on lease to P. W. 3 Ata Muhammad for two years at Rs. 25,000 per annum and the lessee did not even secure any receipt for the payment of the sum of Rs. 25,000 as the lease money as admitted by him. This considerably detracts from the genuineness of this transaction of lease at a relatively high rate of Rs. 968 per acre per annum. Presumably the lessor is the son of P. W. 16 Muhammad Sadiq who was interested in creating false evidence about the value of the land in the locality and were parties to the mutations Nos. 636 and 673 already discussed by us. The other mutation (Exh. P. W. 14/1) for the oral lease of the land measuring 230 Kanals by P. W. 16 Muhammad Sadiq to P. W. 14 Sultan Ali for Rs. 15,000 per annum, on a relatively high rate of rent at Rs. 520 per acre per annum also appears to be doubtful for the same reason. In addition to these, P. W. 7 Ch. Muhammad Zafarullah Khan, Magistrate, 1st Class, Lahore, has appeared in the witness box to depose that the net yield of the land in question was R:. 400 per acre per annum and the capitalized value of the land was 20 to 25 times its net annual profits. But this estimate of the annual income from the land made by Ch. Zafarullah Khan is not based on any data. According to P. W. 3 Haji Atta Muhammad the land taken by him on lease from Abdul Khaliq was of the same quality as the land in dispute. He took the land under the registered deed of lease (Exh. P. W. 3/3), on 5‑4‑1954, at an average rent of Rs. 184 per acre per annum as mentioned above. Similarly he had taken the other land belonging to Muhammad Akram by the registered deed of lease Exh. P. W. 3/1, on 12‑3‑1953, on an average rent of Rs. 175 per acre per annum. On the basis of these two transactions of lease the average rent of the agricultural lands in the Chak may be taken at the round figure of Rs. 180 per acre per annum. Therefore, taking the capitalised value of the land at 20 times its net annual profit, as suggested by P. W.7 Ch. Zafarullah Khan, its market value shall come to Rs. 3,600 per acre. It was held in the Secretary of State v. Kaliandas and others (A I R 1931 Sind 168), that in the case of ordinary agricultural land where no labour on the part of the owner is involved beyond the signing of a lease, compensation should be awarded on the basis of 20 years purchase taking into consideration the average annual income of the land. Similarly in Bijaya Kanta Lahiri Chaudhury v. Secy. of State (A I R 1934 Cal. 97), 25 years purchase on ground rent was taken to be the value of the land. 30‑A. In the neighbouring Chak No. 46 N. B., P. W. 5 Muhammad Saeed had purchased the lands in the open auction from the Government at Rs.3, 450 per acre and Rs. 2,500 per acre in the year 1955. According to the witness these lands are situated at a distance of about two miles from Sargodha Octroi Post on the Talibwala‑Sargodha Road.

31. Taking everything into consideration, the agricultural potential of the land, its adaptability as a building site after obtaining the permission from the Government and the prevailing prices in the locality we have come to the conclusion that the learned Senior Civil Judge had rightly assessed the value of the lands in question belonging to Umri, Muhammad and Muhammad Yar at Rs. 4,000 per acre. The land belonging to Muhammad Fazil abuts on the main road and has a valuable frontage on it. Its compensation was, therefore, rightly assessed at the increased rate of Rs. 5,000 per acre by the learned Senior Civil Judge. We have, therefore, no reason to disagree with the findings by the Court below.

32. For the reasons discussed above both these appeals have no force and are dismissed with no order as to costs. Appeals dismissed.