D.R. Dhanuka, J.
1. On joint request of parties, both these references under section 18 of Land Acquisition Act I of 1894 are heard together. With consent parties are allowed to lead common evidence in both these references. The two references are interrelated only to a limited extent as would be obvious from the narration of facts in later part of this judgment.
2. The basic facts pertaining to Land Acquisition Reference No. 104 of 1975 are as under :
(a) The reference concerns vacant plot of land bearing C.S. No. 320 of Fort Division, Ward No. A 2173 situated at 244, Per in Nariman Street (Bazar Gate) Bombay. Prior to August 1961, a three storeyed building used to exist on the said plot of land. On 19th April 1961, the Municipal Corporation of Greater Bombay declared that the said building was unfit for human habitation. In or about August 1961, the said building was demolished. The said building was totally dilapidated building. Since about August 1961, this plot of land was a vacant plot of land. The area of plot of land under acquisition is 79.43 sq. meters only. Soon after demolition of the existing building, the owner of the said plot Shri Vadilal Chatrabhuj Gandhi submitted plans for construction of building on the said plot of land which was vacant since about August 1961. The Municipal Corporation of Greater Bombay did not sanction the proposal/plan submitted by or on behalf of owner for development of plan. The proposal submitted by the architect for the owner remained pending with Bombay Municipal Corporation. The said plot is a narrow plot. Sometime in the year 1966, the Municipal authorities addressed a letter to the owner Shri Vadilal Gandhi suggesting amendment in the plans for development of plot already submitted by architect for the owner so as to bring the same into conformity with the Development Control Rules. The said letter is produced in evidence and marked as an exhibit. The amended plans were submitted on behalf of the owner. The amended plans were neither approved nor rejected. The plot continued to be a vacant plot of land. The said plot could be easily developed by owner of adjoining plot/s by getting the same amalgamated with the adjoining plot. Acquisition proceedings in respect of this plot were commenced, continued and completed under Land Acquisition Act I of 1894.
(b) Land Acquisition Reference No. 105 of 1975 inter alia concerns acquisition of (1) land with building known as 'Nariman House', situated at 5, Raghunath Dadaji Street, 43, Police Court Lane, Bombay bearing C.S. No. 894 of Fort Division, Ward No. A-2340 Bombay and (2) land bearing C.S. No. 889 of Fort Division, Ward No. A-2492, Bombay along with Building constructed thereon and let out to tenants situate at 41, Police Court Lane, Bombay. The buildings constructed on these two plots of land were occupied by about 24 tenants. The said buildings were also in dilapidated condition at the material time. Sometime in the month of March 1971, the building on the plot situated at Raghunath Dadaji Street collapsed during the course of carrying out of repairs in respect thereof by the Bombay Building Repairs and Reconstruction Board. The collapsed building fell on the building situated at 41, Police Court Lane, as a result thereof, the building standing on 41 Police Court Lane also collapsed. In the result, the tenants of two buildings were dishoused.
(c) The Bombay Building Repairs and Reconstruction Board undertook reconstruction Scheme for construction of Building on the plots concerning L.A.R. No. 5 of 1975 alongwith plot No. C.S. 320 of Fort Division being the land concerning L.A.R. No. 104 of 1975. Two plots and the buildings concerning L.A.R. No. 105 of 1975 were encumbered with tenancies and there was urgent problem of rehabilitation of tenants dishoused or dislocated as a result of virtual collapse of old Buildings. Plot No. C.S. 320 of Fort Division was lying vacant since the year 1961 and was not subject to any encumbrance. If the reconstructions scheme went through as contemplated under the Act after acquiring the two built up plots with the Buildings in whatever condition and the neighbouring vacant plot, the tenants and occupants could be rehabilitated in the new building or buildings to be constructed by the Board. No such reconstruction scheme was feasible unless the vacant land bearing C.S. No. 320, which is subject matter of Land Acqn. Ref. No. 104 of 1975, was also acquired. Steps were accordingly taken to initiate proceedings for acquisition of the said vacant land under the provisions of the Land Acquisition Act, 1894. Correspondence commenced in that behalf between the Board, the Government and the Collector of Bombay since about January 1972. Proceedings for acquisition of plots and buildings in whatever condition concerning L.A.R. No. 105 of 1975 were undertaken.
3. I shall now summarise facts concerning acquisition proceedings concerning the vacant plot of land bearing C.S. No. 320 of Fort Division, Ward No. A-2173. On 30th January 1973, a preliminary notification was issued under section 4 of the Land Acquisition Act, 1894 notifying the intention of the prescribed authorities to acquire the said land for public purpose as setout therein. The said notification was duly published in Maharashtra Government Gazette Part I on 8th March 1975. The said notification was followed by publication of declaration under section 6 of the Land Acquisition Act. Ultimately The Special Land Acquisition Officer made an award on 21st November 1974. On 18th July 1974, possession of the said land was taken by authorities in view of the urgency of the situation and handed over to the Acquiring Body soon thereafter. The Special Land Acquisition Officer fixed market value of the land under acquisition at Rs. 425/- per square meter. The Special Land Acquisition Officer awarded solatium at the rate of 15% and interest at the rate of 4% per annum as set out in the award. The Special Land Acquisition Officer awarded a sum of Rs. 39,356.11 as compensation inclusive of solatium and interest. On 24th December 1974, the owner Shri Vadilal Chatrabhuj Gandhi accepted the amount offered by the said award under protest. The claimants are heirs and legal representatives of the original owner.
4. After discussing some of the sale instances, the Special Land Acquisition Officer observed in his award that the land under acquisition was vacant land without any encumbrance of tenants and the same was conveniently situate in good business locality of Bombay City. The Special Land Acquisition Officer, however, observed in his award that the plot of land was small in area and dimensions and it could not be developed as independent plot. The said plot of land falls in residential zone with shop line. The Special Land Acquisition Officer observed that the said land was acquired only because the Board prepared reconstruction scheme in connection with adjoining plots and the same were required to be developed alongwith other plots referred to in the Award. It was observed in the award that the said plot had small frontage of about 3 meters and depth of about 25 meters. A specific reference was made in the award to the D.C. Rules concerning development of narrow plots and the restrictions imposed by the said rules on development of such plots. The said plot had potentiality of being developed at least in conjunction with neighbouring plots. The said land was in fact developed by the Board alongwith other plots. The Special Land Acquisition Officer ignored the relevant aspect of potentiality of development of the plot as a building site though to a limited extent without any justification.
5. The material facts concerning acquisition of reference lands in the Companion reference i.e. L.A.R. No. 105 of 1975 in brief are as under :
(a) The Bombay Building Repairs and Reconstruction Board, hereinafter referred to as 'the Board' issued certificate under sub-section (3) of section 33 of the Bombay Building Repairs and Reconstruction Board Act 1969 declaring that the buildings existing on three plots referred to and described in the schedule to notice dated 14th April 1972 were not capable of being repaired or rendered fit for human habitation at reasonable expense and were dangerous and injurious to the health and safety of the inhabitants thereon. It must be stated here and now that L.A.R. No. 105 of 1975 concerned lands described at item Nos. 1 and 2 of the schedule to the said notice dated 14th April 1972 only. The reference does not pertain to land described at Serial No. 3 in the schedule to the notice dated 14th April 1972 referred to hereinafter. The said Board submitted a combined Draft Scheme to the Government of Maharashtra for approval and for issue of clearance and compulsory acquisition order for acquisition of the said plots of land with the buildings in whatever condition they existed as contemplated under sub-section (3) of section 38 of the Bombay Building Repairs and Reconstruction Board Act, 1969. The Government of Maharashtra provisionally approved the draft scheme. It was decided that the alternate accommodation must be provided to the occupiers affected by the scheme at the Transit Camp of the Board at Malvani. On 14th April 1972, Notice No. A.R.S. 1171/(2)774(b)--H.R.C. was issued by the Deputy Secretary to the Government of Maharashtra in Urban Development Public Health and Housing Department notifying that the Government of Maharashtra had provisionally approved the scheme, that the relevant draft scheme was kept open for inspection by the members of the public in office of the Board and the occupiers and the owners and the mortgagees could submit their objections and suggestions, if any, within the time stipulated by the said notice. Mr. Korde has tendered a copy of the said notice dated 14th April 1972. After considering all the objections and suggestions whatever, the Government of Maharashtra sanctioned the scheme and issued its final order on 4th September 1972, by issuing Notification No. 1171/(2).77417(a)--H.R.C. dated 4th September 1972. In exercise of the powers conferred on the Government under sub-section (3) of section 39 of the said Act, the Government of Maharashtra, sanctioned draft scheme submitted by the Board in respect of the land with existing buildings thereon in whatever condition without any modification, issued the clearance and compulsory acquisition order in respect of the said land with existing buildings thereon in whatever condition the same existed and fixed 5th September 1972, as the dates on which the said scheme as sanctioned shall be operative. It was clearly provided by the said notification/order that 'from the date of publication of this Order in the Official Gazette, the said land with the existing buildings thereon shall vest absolutely in the Government of Maharashtra free from all encumbrances'. The schedule to the said notice dated 14th April 1972 and the said notification dated 4th September 1972 indicates acquisition of land with building known as 'Nariman House' situate at Raghunath Dadaji Street (43 Police Court Lane) and the land with building thereon situate at 41 Police Court Lane bearing Cadestral Survey No. 889 Fort Division. The plots of land were acquired with Buildings in whatever condition i.e. as scrap. On 18th April 1974, the Special Land Acquisition Officer. Bombay Building Repairs and Reconstruction Board made his Award. The area of land bearing C.S. No. 894 of Fort Division was ascertained to be 83.61 sq.meters. The aggregate area of the two plots under acquisition was ascertainable 377.09. The Special Land Acquisition Officer fixed the market value of the lands under acquisition concerning L.A.R. No. 105 of 1975 at the rate of Rs. 500/- per square meter. By the said award, the market value of the said plots of land was ascertained to be at Rs. 1,88,545/-. The Special Land Acquisition Officer awarded solatium at the rate of 15% on the amount and interest at the rate of 4% from the date of vesting of the property in the authorities i.e. on 4th September 1972. Thus the Special Land Acquisition Officer fixed a sum of Rs. 2,30,923.91 as the total amount of compensation payable to the claimants in Land Acquisition No. 105 of 1975 i.e. inclusive of solatium and interest. A sum of Rs. 50,000/- was already paid as advance compensation to the said claimants. Accordingly the balance amount was paid to the claimants and the said amount was accepted by the claimants under protest. The properties which were subject matter of acquisition in Land Acquisition Reference No. 105 of 1975 were at all material times encumbered with tenancies except to a limited extent where a former tenant had vacated the premises. It was observed in the said award that the land under acquisition was located in a prominent locality of South Bombay but fell under residential zone with F.S.I. of 1.66 only. It was observed in the said award that the acquired lands had got good shape and frontage but the same were encumbered with tenants. The scrap value of the structures acquired was not separately provided for in the award. An overall rate of Rs. 500/- per square meter was fixed in respect of market value of the land and scrap value of Buildings which had collapsed during course of carrying out repairs for all practical purposes. Possession of the acquired lands etc. was taken over by the authority on 23rd April 1973 as stated in the reference.
6. The original claimant Shri Vadilal Chatrabhuj Gandhi in Land Acquisition Reference No. 104 of 1975 died during pendency of the reference. The heirs of the original claimants were brought on record.
7. The claimants in both the references have claimed enhancement of market value fixed in the award and benefit of provisions contained in section 23(1-A), 23(2) and 28 of the Act, as amended.
8. Documentary evidence led by Mr. Korde is liable to be read and considered for purpose of both the reference. The said documentary evidence consists of copies of sale Deeds marked as Exhibit C-1 to C-3 and S-1 to S-4. M/s. Sykes Patkar and Divecha, wellknown Architects of city of Bombay submitted their report dated 1st September 1973 (exhibit 'C-4') on behalf of claimants in L.A.R. 105 of 1975. The said claimants are Mrs. Nurgish Nariman Markar (2) Mr. Nariman Sorabji Marker (3) Mrs. Janu Noshir Engineer (4) Mrs. Roshan Yezda Ginwalla and (5) Mr. Keki Nariman Marker, Trustees of Bai Nurgish Nariman Markar. In the said report it was specifically observed by the said Architects that no instance of sale of open plots of land in the locality could be found out. It was observed in the said report that the reference lands were situated in fully developed and busy locality of city of Bombay known as 'Fort'. It was observed in the report that many commercial and residential properties were situate in the locality. The Victoria Terminus Station is nearby. The Churchgate Railway Station is also within walking distance from the acquired properties. Relying on certain instance concerning sale of plots under Backbay Reclamation Scheme situate far away from the plots under acquisition, the Architect recommended that compensation should be claimed for acquisition of the said lands (i.e. the lands which are subject matter of reference No. 105 of 1975) at the rate of Rs. 1500/- per sq.meter. During the course of arguments there was consensus at the bar and rightly so that instances of sale of plots under Backbay Reclamation Scheme could not be considered as comparable instances also. The documentary evidence led in this case also consists of consent order passed by the Court of Small Causes at Bombay concerning acquisition of setback and having frontage of 2 to 4 feet on D.N. Road, adjacent to the Fort House also known as 'Handloom House'. The total area of acquired setback land was ascertained to be 111.60 square yards. The oral evidence led on behalf of claimant No. 1 in L.A.R. No. 105 of 1975 consisted of testimony of Sarvashri Noshir Kaikhushru Engineer (P.W. 1) and Sam Phiroze Rao, an Architect (P.W. 2). The oral evidence led on behalf of claimant in Land Acquisition Reference No. 104 of 1975 consisted of testimony of Shri Pravinchandra Hiralal Doshi, Architect coupled with the valuation report made by him and the correspondence with Municipal Corporation for Greater Bombay during the years 1963-66 in connection with the proposal submitted by and/or on behalf of Shri Vadilal Gandhi for construction of building on vacant plot of land bearing C.S. No. 320. No oral evidence was led on behalf of the Special Land Acquisition Officer. Copies of 4 documents marked as Exhibits 'S-1' to 'S-4' were put to witness Sam Phiroze Rao during the course of his cross-examination. The Architect Shri Rao stated during course of his cross-examination that the instances 'S-1' to 'S-4' could not be considered as comparable instances at all for the reasons stated by him in his evidence. Even then no evidence was led on behalf of Special Land Acquisition Officer or the acquiring body. Perhaps no one took sufficient interests in the matter on behalf of the Department on this aspect.
9. Several questions of fact and law were debated at the bar and the same shall have to be dealt with by the Court at their appropriate place.
10. The following issues arise for consideration of the Court in L.A.R. No. 104 of 1975 :
(1) Whether the Special Land Acquisition Officer was in error in fixing the market value of the land under acquisition at Rs. 425/- per square meter?
(2) Whether the Special Land Acquisition Officer ignored 'potentiality' of the acquired land for being utilised in connection with construction of Buildings thereon in conjunction with neighbouring plot/s etc. while fixing the market value of the land at Rs. 425/- per square metre?
(3) If so, at what rate, the market value of the acquired land should be fixed by the Court as on date of publication of notification under section 4 of Land Acquisition Act I of 1894 i.e. as on 8th March 1973?
(4) Whether the claimants are entitled to award of additional compensation as contemplated under section 23(1-A) of Land Acquisition Act 1894?
(5) Whether the claimants are entitled to award of additional amount of solatium in view of the amendment to section 23(2) of Land Acquisition Act 1 of 1894 by Amending Act No. 68 of 1984?
(6) Whether the claimants are entitled to award of interest at higher rate/s as contemplated under section 28(2) of the Act as amended?
10. The following issues arise for consideration of the Court in Land Acquisition Reference No. 105 of 1975;
(1) Whether the Special Land Acquisition Officer erred in fixing the market value of acquired land at the overall rate of Rs. 500/- per square metre?
(2) Whether a market value of the Land is liable to be fixed on the basis of capitalisation of annual income from the buildings actually received by the owners from tenants or the rent which may be received from hypothetical tenant or tenants. If so whether the aggregate of market value of the acquired lands under the Award is less than market value worked out on basis of capitalisation method?
(3) Whether the market value of the acquired land is liable to be fixed on the footing that the land and buildings must be valued separately or whether acquired lands and buildings in whatever condition must be valued as a composite unit by applying capitalisation method thereto?
(4) Whether a case is made out for fixation of market value of the land at rate higher than the rate fixed in the Award? What was market value of the acquired property on the 'relevant date'?
(5) Whether the claimants are entitled to award of additional compensation as contemplated under section 23(1-A) of Land Acquisition Act 1 of 1894 as amended?
(6) Whether the claimants are entitled to award of additional amount of solatium in terms of section 23(2) of the Land Acquisition Act 1 of 1894 as amended?
(7) Whether the claimants are entitled to award of interest at higher rate as contemplated under section 28(2) of the Land Acquisition Act as amended?
11. I shall first deal with the principal issues concerning Land Acquisition Reference No. 104 of 1975.
12. At this stage it shall be convenient to discuss sale instances relied upon by the parties for purpose of both the references.
(a) By an Indenture dated 6th March, 1956 (Exhibit C-1), Shri ., in pursuance of an agreement dated 24th December 1955 for consideration of Rs. 5,17,000/-. The sale price in respect of property conveyed to the purchaser under the said Deed works out to Rs. 1121 per square yard. It emerges from the evidence that the plot sold under the said Deed was situated in commercial zone whereas the acquired plots are situated in residential zone and that too subject to several restrictions on development thereof under the Development Control Rules. Some of these restriction as Building of residential plots were relaxed by the authorities in case of construction of Buildings by the Board in pursuance of its rehabilitation schemes in public interest. This plot was a corner plot. Before an instance can be considered as comparable instance proximity of time and all other relevant factors shall have to be considered by the Court. In my opinion it will be too hazardous to consider such an old instance as a comparable instance. It is possible that prior to Development Control Rule coming into force the plots could be developed in a particular manner and in several respects, right to construct Buildings was restricted by Development Control Rules for the first time. After giving my anxious consideration I have come to the conclusion that this particular instance cannot be considered as a comparable instance as it is an instance of the year 1956.
13. Exhibit 'C-2' consists of an Indenture of Lease dated 1st April 1963 for term of 99 years commencing from 1st April 1962. It was stipulated by the said Indenture of lease that a sum of Rs. 18,000/- per year shall have to be paid as rent for the month commencing from 1st April 1964. The Lease was required to construct a building on the said plot of land. The leased land admeasured about 373 square yards. It was recited in the said Indenture of Lease that the lessers were trustees of the trust named therein. It is recited in the said Indenture of lease that the building standing upon the said plot had become vacant and the trustees had no funds with them to put up the building on the said land after the collapse of the building. It appears that this transaction was not a transaction at arms length. Accordingly no weightage can be attached to these transaction. This is also a very old instance. This transaction has no proximity of time with the date of acquisition of the reference lands. In my judgment this instance also cannot be considered as a comparable instance.
14. Exhibit 'C-3' consist of an indenture of sale dated 7th March 1963 between Mohamed M.F. Mullabhai and Others in favour of Keshavlal K. Verma. this property was an encumbered property at the time of the transaction. The transaction evidenced by Exhibit 'C-3' concerned sale of plot of land together with buildings standing thereon. It is not known as to what was the value of encumbrance. The total consideration stipulated was Rs. 4 lakhs. It is not known as to what was the value of the building. The Court cannot bifurcate the consideration on basis of assumption or presumption. In case of sale of buildings, it would be necessary to know as to what was the nature of the building and as to what was the quality of the construction. No such facts are available. The instance is an old instance. In my judgment, this instance is also not a comparable instance. There is no data before the Court to assess the value of buildings which were subject matter of sale under the Deed Exhibit 'C-3'. This instance is not a comparable instance.
15. I have already observed that instance of sale of plots under Backbay Reclamation Scheme referred to in Exhibit 'C-4' are totally irrelevant for purpose of valuation of the lands in question. It was practically conceded by the learned Counsel for the claimants.
16. The claimants rely upon copy of Consent Order passed by the Court of Small Causes at Bombay on 17th March 1970 in Municipal Petition No. M/22 of 1966 whereunder market value of the setback land acquired by Municipal Corporation from the Handloom House was fixed by consent at Rs. 1400/- per square yards. It is in evidence of Mr. Rao, Architect examined on behalf of the claimants that the strip of land acquired had width of 2 to 4 feet. The total area of acquired set back land was about 110 square yards. To my mind, this instance has very limited relevance for the purpose of considering market value of the acquired properties. The Municipal Corporation had already taken possession of the setback land sometime in the year 1965. The Municipal Corporation had offered compensation at the rate of about Rs. 600/- to Rs. 700/- per square yards to the claimants. It is so stated in correspondence. Ultimately dispute between the parties was settled before the Court on the footing of fixation of compensation for acquired setback land being fixed at the rate of Rs. 1400/- per square yard. Instances of award of compensation for acquisition of small strips of land for purpose of road widening can hardly be considered as true measure for fixation of market value of plots of land acquired. It cannot be forgotten that this was a case of compromise in Court. I am not prepared to hold that the market value of similar plots of land was Rs. 2800/- per square yard and parties settled dispute whereby market value of setback land was fixed at Rs. 1400/- per square yard. There is no reliable basis or adequate evidence to warrant such a finding. The strip of setback land was acquired in the year 1965. The amounts involved were small. Parties might have arrived at settlement in respect of such a claim concerning small strip of land for variety of reasons and particularly in order to put an end to the litigation in Court. I am prepared to attach some weightage to this instance while considering the question of market value of vacant land. I am not persuaded to hold that the market value of the acquired/vacant land should be taken at least at Rs. 1400/- per square metre. As regards instance S-1 to S-4 are concerned, the said instances were put to witness Rao (P.W. 2) in his cross-examination by the learned Counsel for Special Land Acquisition Officer. As regards instance S-1, it pertains to an auction sale held by the Court Receiver. The concerned property admeasures 96 square yards. The auction sale was held by the Court Receiver on 3rd December 1968 at price of Rs. 17000/-. If this instance is to be taken into consideration, market value of the land and building at the material time would work out to Rs. 211/- per square metre only. As regards this instance Mr. Rao has stated in his evidence that the plot covered under Exhibit 'S-1' has a frontage of nearly 10 ft. and depth of 85 ft. Mr. Rao had further stated in his evidence that the building standing on this plot was wholly tenanted at all times and the plot was not capable of redevelopment at all. According to Mr. Rao's evidence this instance is totally non-comparable in context of the problem of fixation of market value of the acquired lands. In respect of instances S-1 to S-4, the situation is rather peculiar. On the one hand, we have evidence of Mr. Rao to the effect that the sale instances covered by these documents are non-comparable. On the other hand, no evidence whatsoever is led on behalf of Special Land Acquisition Officer. The Special Land Acquisition Officer ought to have led proper evidence. To my mind, this instance is non-comparable.
17. Exhibit S-2 records transaction of sale dated 7th August 1969, in pursuance of an agreement dated 24th April 1969. The property covered under Exhibit 'S-2' is an encumbered property. The plot has an area of 330 square metre. The structure was fully tenanted. Mr. Rao has deposed to in his evidence that this instance is totally non-comparable in view of various factors enumerated by him in his evidence. The learned Counsel for Special Land Acquisition Officer took a chance of merely putting this instance in the cross-examination of the expert witness of the claimants but did not lead any positive evidence highlighting situation of the land in question and other relevant facts and circumstances concerning the transaction. To my mind S-2 also non-comparable in the context of problem before the Court.
18. Exhibit S-3 relates to transaction dated 26th November 1971 concerning sale of plot admeasuring 35.93 square metres only. Architect Mr. Rao has stated in his evidence that this plot of land admeasures 27 feet x 14 ft., it falls within the road line and was and is incapable of reconstruction. Mr. Rao has further deposed that the structure existing on this plot was in continuation of Municipal Reservation for parking. In my judgment this instance is equally non-comparable.
19. Exhibit S-4 cannot be considered at all as the plan attached thereto was not produced, and the document as presented is incomplete. Exhibit S-4 by itself does not throw light on the question as to what was the nature, quality and extent of the building standing on the plot covered thereunder at the material time. Mr. Rao has not been able to throw much light on this instance. No positive evidence whatsoever has been led on behalf of Special Land Acquisition Officer on the subject or otherwise. Accordingly this instance is of no assistance to the Court.
20. It is unfortunate that except the instance of concerning acquisition of setback land from handloom house, no comparable sale instance could be produced by the claimants. Even instance of acquisition of setback land has limited relevance. The onus of proving that the market value of land fixed under the Award is erroneous or that the claimant is entitled to award of higher compensation is on the claimant.
21. It has emerged from the evidence of Noshir K. Engineer that about 1400 square feet of area was in possession of the landlord trust at the material time. Shri Korde, the learned Counsel for the claimants in Land Acquisition Reference No. 105 of 1975 led considerable emphasis on this aspect in support of his claim for enhancement of compensation. With respect, I am not impressed by this submission having regard to the totality of picture which emerges from proved facts and circumstances of the case. Both the buildings were totally dilapidated. These buildings collapsed during course of repairs. In answer to the query of the Court the learned Counsel was fair enough to inform the Court that sometime back the old tenant had vacated 1400 square ft. of built up premises and these premises were not let out by the owners. The rent paid by the old tenants for these premises was not much. In my opinion 1400 square ft. of built-up premises in possession of the landlords were not even habitable at the material time. Thus the fact that the landlord trust was in possession of these premises in dilapidated building is not of much consequence. If market value of the property is to be fixed by applying capitalisation method, the Court can consider rent actually received from about 25 tenants and add thereto 'hypothetical rent' in respect of these premises, the same having been vacated by former tenant thereof.
22. Witness Shri Rao has stated in his evidence that he recommends fixation of market value of acquired lands forming part of L.A.R. No. 105 of 1975 between Rs. 2000/- to Rs. 2380/- per square metre. Shri Rao has arrived at the said market value on the footing that these lands are vacant lands, without any encumbrance. The method of valuation, adopted by the witness is faulty and contrary to ratio of judgment of Supreme Court and particularly the judgment in the case of The State of Kerala v. P.P. Hasan Koya, A.I.R. 1968 S.C. 1201.
23. Mr. Rao was specifically asked a question in his cross-examination as to whether a willing buyer would come forward to buy the acquired property in between the collapse of the structure and its acquisition. Mr. Rao answered as under :
'No one would be prepared to buy the acquired property in between the collapse of the structure and its acquisition because everyone knew that the structure being a cussed one and the collapse having taken place during the repairs by the Board, the Board alone could redevelop the property and no one else.'
The testimony of Mr. Rao strongly militates against the case of claimants in L.A.R. No. 105 of 1975.
24. The plot bearing C.S. No. 320 was vacant plot of land. To my mind the said plot had potentiality of development and new building could be put thereon at least by the owner of the adjoining plot after amalgamation thereof with the adjoining plot. Mr. Doshi's oral evidence is not quite satisfactory. However, the said evidence cannot be totally ignored. Correspondence with Municipal Corporation produced by Mr. Doshi during course of his testimony shows that Municipal Corporation was all the time considering the proposal for development of the acquired plot and had even advised the owner to amend the proposal so as to bring the same in conformity with D.C. Rules. This fact itself shows that plot C.S. No. 320 could not be considered as totally useless and incapable of being utilised for development as stated in the award.
25. Rule 12 of the Development Control Rules enables development of narrow plots only where the Commissioner prescribes building line. There is no evidence on record to show that any such building line was prescribed. Mr. Doshi stated in his testimony that some of the narrow plots similar to plot No. C.S. 320 were in fact developed as the Municipal Commissioner exercised his discretion to waive dimension of open spaces under Rule 48 of D.C. Rules. It cannot be assumed that the Municipal Commissioner would have exercised similar discretion in this case.
26. Shri Sancheti has heavily relied upon the ratio of judgment of Privy Council in the case of Shri Raja Vyricherla Naravana Gajapatiraju Bahadur Garu v. The Revenue Divisional Officer, Vizagapatnam, reported in I.L.R. 1939 Mad 532. In this case it was held by the Privy Council that 'Land compulsorily acquired must be valued not merely by reference to the use to which it was being put at the time at which it value not merely by reference to the use to which it was being put at the time at which its value has to be determined but also by reference to the uses to which it was reasonably capable of being put in the future.' In this case it was held by the Privy Council that 'Where the land has unusual features or potentialities, the valuing officer must ascertain as best as he can from the materials before him the price a willing purchaser would pay for the land with those features or potentialities.'
27. It is necessary to discuss this authority in detail and ascertain the true ratio thereof. The salient features of the Privy Council case cited above are as under :
(a) The Harbour authorities decided to construct a harbour at Vizagapatnam. For the purpose aforesaid, the Appellant's land was acquired. The appellant's land, which was to the South of this land, contained a spring which yielded a constant and abundant supply of good drinking water which could easily be made available to the oil companies to whom acquired lands were allocated by harbour authorities.
(b) The Appellant claimed compensation on the footing that the acquired land had potentiality of being developed as a Building site. The Land Acquisition Officer disallowed his claim and awarded compensation on a valuation of the land as partly waste and partly cultivated. Reference was made under section 18 of Land Acquisition Act. Before the Reference Court i.e. the Court of learned Subordinate Judge, the appellant made a further claim for compensation on the footing of the acquired land having potentiality as a source of water supply.
(c) The Subordinate Judge held that the water could be sold to the oil companies and others at a profit, that the only possible buyers were the oil companies and the harbour authorities and that compensation for potentialities could be awarded by the reference Court even where the only possible buyer was the acquiring authority and assessed the value of potentialities as part of compensation payable and made his award accordingly.
(d) On Appeal, the High Court of Madras set aside the award of the subordinate Judge and restored that if the Land Acquisition Officer, holding that the supply of drinking water had no value apart from the scheme for which the acquisition was made and the harbour authorities were the only possible purchasers and that the land had no potentiality as a building site.
(e) The appellant preferred an appeal to the Judicial Committee of the Privy Council. The issue before the Privy Council was of consideration of relevancy of mere potentiality of land as contradistinguished from actual and realised use thereof. The judgment of the Judicial Committee of Privy Council was delivered by Lord Justice Romer. During course of his judgment on behalf of Privy Council, Lord Romer observed at page 543 thereof as under :
'But this does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded.' (The underlining is done to supply emphasis). During the course of its judgment, the Privy Council took note of a situation where only a very limited number of persons could turn the potentialities of the land into reality. The Privy Council explained this crucial point under consideration with reference to an illustration as under:
'Take as an example the case of an owner of vacant land that adjoins his factory. The land possesses the potentiality of being profitably used for an extension of the factory. But the owner if the only person who can turn that potentiality to account. In valuing the land, however, as between him and a willing purchaser, the value to him of the potentiality would necessarily have to be included.' In the said judgment, the Privy Council also observed as under :
'For it has been established by numerous authorities that 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 (that time under the Indian Act being the date of the notification under section 4(1), but also by reference to the uses to which it is reasonably capable of being put in the future)' (f) The Privy Council referred to the case of Inland Revenue Commissioners v. Clay, 1914 K.B. 339. The owners of a Nurse's home situate adjoining to a particular house were desirous of extending their premises. The owners of Nurse's home purchased this house for 1000 instead of 750 in view of special use of the house to them for extension of Nurse's home. It was held by the Court of Appeal that 1000 was the value of the house to a willing seller. It was observed by the Court that if this house had been acquired compulsorily, the house ought to have been valued at 1000 and not at 750. It was argued before the Privy Council that the matter would assume a totally different complexion when the only possible purchaser was the one who had compulsory powers of Purchase. On this crucial aspect, the Privy Council differed from the High Court and allowed the Appeal and held in terms that the potentiality of the land for particular use would have to be valued even if such use could be made only by the acquiring authority. At page 556 of the judgment, the Privy Council observed as under : 'For these reasons, their Lordships have come to the conclusion that even 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 that he is no more confined to awarding the land's 'poramboke' value in the former case than he is in the latter.'
28. To my mind, the ratio of the judgment is helpful to Mr. Sancheti. In my opinion, the owner of neighbouring plot would have definitely offered appropriate price to the claimant in view of the potentially of the land for development of the acquired plot in conjunction with neighbouring plot. As a matter of fact, the acquired plot was utilised for construction of building thereon by the Board in conjunction with plots of land which are subject matter of L.A.R. No. 105 of 1975. The mere fact that such development could be undertaken only by the compulsory purchaser of the land is irrelevant for consideration of the issue as to whether the potentiality of the land as aforesaid ought to be taken into consideration for fixation of market value of the land which a willing Vendor might be reasonably expected to obtain from a willing purchaser. This relevant aspect was totally missed by the Special Land Acquisition Officer. Even the fact that no willing purchaser would normally come forward to purchase the land intended to be acquired by the Board for rehabilitation scheme is not very much relevant for the purpose of fixation of market value of land under provision of Land Acquisition Act I of 1894, after taking into consideration the value of potentiality of land as aforesaid.
29. The principles laid down in this case have been approved and followed by the Hon'ble Supreme Court in the case of Haji Mohammad Ekramul Haq v. State of West Bengal, : AIR1959SC488 .
30. It is of considerable significance as recited in the reference awards herein that the Board could not undertake a reconstruction scheme without including vacant plot of land i.e. land bearing C.S. No. 320 within its ambit. This fact itself proves the potentiality of this plot for being developed as a building site at least to a limited extent. To my mind it would not be fair to exclude the factor of potentiality of acquired land for development merely because plot could not be developed by the owner privately as an independent plot in the past. Even if the plot could not be developed as an independent plot, it could be certainly developed in conjunction with the neighbouring plot. The owner of neighbouring plot would have agreed to purchase the acquired plot for a reasonable price in view of potentiality of the plot for development as aforesaid. The plot of land bearing No. C.S. 320 was not encumbered with any tenancies or any occupancies. When the property is acquired for public purpose an attempt is required to be made to fix appropriate market value of the land according to mandate of statute and provide just equivalent' to the deprived owner to the extent possible within the frame work of the statute.
31. Unfortunately there are no sale instances of vacant land at all. All the sale instances produced before the Court except in respect of consent order pertaining to setback land are totally besides the point. Expert evidence of Mr. Doshi is not fully acceptable to the Court in full for various reasons. Mr. Doshi, the Architect stated in his evidence at page 8 'the buildings line contemplated under Rule 12 sub-rule (5) of Development Control Rules was almost prescribed by the Municipal Commissioner. No such building line was in fact prescribed. Atleast no evidence is led by the claimants to prove it, even while giving his evidence in respect of sale instance Exhibit C-3, witness Doshi did not give satisfactory answer. The oral evidence of Architect Mr. Rao does not carry the Court anywhere as the acquired lands concerning L.A.R. No. 105 of 1975 could not be valued as vacant land as done by him.
32. The only material of some relevance (i.e. limited relevance) consists of Consent Terms arrived at before the learned Chief Judge of Small Causes Court at Bombay in connection with acquisition of setback land, Fort House, Dr. Dadabhoy Naoroji Road, Bombay. I have already expressed my opinion to the effect that the instances pertaining to acquisition of setback lands to the extent of 2' to 4' in width can have very limited relevance for purpose of valuation of vacant plots of land as such. The frontage of the strip of land on the Dadabhoy Naoroji Road was merely 2 ft. to 4 ft. I have no hesitation in concluding that the market value of the land fixed by the Special Land Acquisition Officer at Rs. 425/- per sq. meter is unsatisfactory and is plainly erroneous. The Special Land Acquisition Officer ignored the factor of potentiality of land in relation to development of the land for Building construction in conjunction with neighbouring plots. In my opinion the Special Land Acquisition Officer erroneously omitted to consider the relevant aspect of potentiality of development in respect of acquired land by the owners of neighbouring plots or by the Board as in fact done. After taking into consideration the restrictions imposed on the acquired plot under Rule 12 of the Development Control Rules and taking an overall view of the matter, I fix the market value of the acquired land bearing C.S. No. 320 of Fort Division at Rs. 700/- per square metre. Valuation of land does involve reasonable guess work. It is inherent in the situation. It is not possible to fix market value of the land at the rate of Rs. 1,600/- per square yards as claimed by the claimants. There is no convincing material on record to warrant the claim for award of such a high rate. Mr. Doshi has arrived at the said valuation of the plot on the footing of certainty in his mind that the said plot could be definitely developed as an independent plot. This part of testimony of Mr. Doshi is not acceptable to the Court. There is a difference between a situation where the plot is definitely built able by the owner under the Development Control Rules as an independent plot and a situation where it has potentiality of being built-up on its amalgamation with neighbouring plot or by seeking waiver of some of the dimensions from the Municipal Commissioner under Rule 48 of Development Control Rules. The two situations are not identical.
33. I have doubt in my mind that the claimants in L.A.R. No. 104 of 1975 are entitled to avail of benefit of provisions contained in section 23(1-A) of Land Acquisition Act, 1894 as amended. The award is being made by the Court after the Amending Act has already come into force. Relying on judgment dated 7th October 1992 delivered by this Court in Land Acquisition Reference No. 3 of 1976 (The Special Land Acquisition Officer (2), Bombay City and Bombay Suburban District, Bombay and Aziz Habib Parpia and another)5, based mainly on judgment of the Hon'ble Supreme Court of India in the case of Union of India v. Zora Singh, reported in Judgment Today 1991(4) Supreme Court 1938, I hold that in all cases where Award is made or is being made by the Court on and after 24th September 1984, the claimants are entitled to benefit of provision for award of additional compensation under section 23(1-A) of the Act, higher solatium i.e. solatium at the rate of 30% of market value fixed by the Court, under section 23(2) of the Act as amended. Relying on the above referred judgment of this Hon'ble Court. I also hold that the claimant is entitled to award of interest on the excess amount ascertained to be payable under this Order/Award at the rate of 9% per annum from the date of taking possession of acquired land for period of 1 year and at the rate of 15% per annum from date of expiry of period of one year from date of taking possession of the land till payment.
34. I shall now deal with interesting questions of law raised by Shri Korde during course of his submissions concerning L.A.R. No. 105 1975. Lands with Buildings in whatever condition forming subject matter of L.A.R. No. 105 of 1975 were acquired under Chapter VI of Bombay Building Repairs and Reconstruction Board Act 1969. Acquisition under Chapter VI of the said local Act is governed by the provisions of Land Acquisition Act, 1894 mutatis mutandis subject only to two modification as setout in section 40(3) of the local Act. Notice of the provisional approval of the draft reconstruction scheme by the State Government was published on 14th April 1972 as contemplated under section 39(2) of the above referred Act of 1969. Notification sanctioning the draft scheme was published by the State Government on 4th September 1972 as required by section 39(4) of the said Act. Section 40(1) of the said Act provides that where land was acquired under the provisions of the said Chapter, the State Government shall pay compensation for acquisition of land under the said chapter as may be determined in accordance with provisions of the said section. Section 40(2) of the Act provides that where the amount of compensation was determined as a result of agreement between the State Government and the person to be compensated, it shall be determined in accordance with such agreement. Section 40(3) of the said Act is directly relevant. The said section read as under :
'Where no such agreement can be reached, the State Government shall refer the case to the Collector, who shall determine the compensation in accordance with the principles for determining compensation laid down in the Land Acquisition Act, 1984, and the provisions of that Act (including provisions for reference to Court and appeal) shall apply thereto mutatis mutandis as if the land had been acquired and compensation had to be determined, apportioned and paid under the provisions of that Act, subject to the modification that the reference in sections 23 and 24 of that Act to the date of the publication of the notification under section 4 sub-section (1), were references to the date on which the notice under sub-section (2) of section 39 of this Act is published in the Official Gazette, and the reference to the time or date of the publication of the declaration under section 6 were reference to the date of publication of the clearance and compulsory acquisition order under sub-section (4) of section 39 of this Act in the Official Gazette.'
The above quoted section expressly provides that publication of notice under section 39(2) of the Act inviting objections is liable to be equated to publication of notice under section 4 sub-section (1) of Land Acquisition Act. The said section expressly provides that the publication of notification under sub-section (4) section 39 of the Act is liable to be equated with publication of declaration under section 6 of Land Acquisition Act I of 1894. It is clearly provided by section 40(3) of the said Act that all the provisions laid down in the Land Acquisition Act shall be applicable to the proceedings for acquisition of land under the said Chapter mutatis mutandis as if the land had been acquired under the said Act. The only two modification in respect of applicability of the provisions of Land Acquisition Act 1 of 1894 to the acquisition under Chapter VI of the above referred local Act are prescribed in section 40(3) of the Act. For all other purposes, Acquisition under Chapter VI of the Act is deemed to be under Land Acquisition Act 1 of 1894 mutatis mutandis. The legal fiction contained in section 40(3) of the Act must be given full effect to for all purposes.
35. By virtue of operation of section 40(3) of Maharashtra Act No. XI.VII of 1969 i.e. The Bombay Building Repairs and Reconstruction Board Act, 1969, Acquisition under Chapter VI of the Act is deemed to be acquisition under Land Acquisition Act, 1894 for all purposes subject to modification that the reference in sections 23 and 24 of Land Acquisition Act to the date of the publication of the notification under section 4, sub-section (1) must be read as reference to the date of the publication of notification under section 4, sub-section (1) and the references to the time or date of the publication of the declaration under section 6 of Land Acquisition Act 1894 must be read as reference to the date of publication of the clearance and compulsory acquisition order under sub-section (4) of section 39 of Act of 1969 in the Official Gazette legislative intention is clear. Both Acts are supplementary to each other for purpose of their application to acquisition under Chapter VI of the Act. It does not matter to the owner whether his land is acquired under Land Acquisition Act I of 1894 or a local Act incorporating Land Acquisition Act. The legislative intention shall have to be presumed to treat all owners affected alike and on par in absence of definite indication of legislative intention to treat the owners affected by acquisition under the local Act for purposes of award of compensation in a manner different. Apart from two modification to the Central Act specified in section 40(3) of the Act to acquisitions under Chapter VI of the Act of 1969, no other modification can be inferred. Even Repeal of Act of 1969 makes no difference. The acquisition proceedings were commenced, continued and completed before the repeal of Act of 1969. The previous operation of Act 1969 is saved under section 188 of Maharashtra Housing Area and Development Act of 1977 i.e. the Successor Act.
36. It may be stated just in the passing for sake of completing legislative history of the Act that section 40 of the said Act was substantially amended by section 11 of Maharashtra Act No. 53 of 1975. By the said Amending Act the words 'for such compensation' were substituted by the words 'for such compulsory acquisition of property and an amount which shall be determined in accordance with the principle and which shall be given in the manners specified in the Chapter.' By section 11(c) of the Amending Act it was provided that if no agreement could be reached between the parties, the amount payable for acquisition of the land under the said chapter shall be determined by the Land Acquisition Officer on the footing of the net average monthly income referred to in sub-section (3) to be calculated in the manner and in accordance with the principles set out in the second schedule. By the said Amending Act it was provided that the amount payable for acquisition of the land shall be fixed at an amount equal to one hundred times not average monthly income actually derived from such land. The formula of paying compensation or amount equivalent to 100 months rent was also incorporated in Maharashtra Act No. 28 of 1977. Provisions for payment of amount for acquisition of land under Chapter VI of Act of 1969 or corresponding provision contained in Maharashtra Act 53 of 1975 on basis of 100 months rent has been upheld by the Hon'ble Supreme Court in its judgment in the case of State of Maharashtra and another v. Basantibai Mohanlal Khetan and others, : [1986]1SCR707 . The above referred Amending Act has no direct relevance for purpose of this reference. Reference to the Amending Act is however necessary for purpose of understanding legislative history of the relevant provisions.
37. I shall now refer to the judgment of the Hon'ble Supreme Court in the case of The State of Kerala v. P.P. Hassan Koya, A.I.R. 1968 S.C. 1201. In my opinion, the ratio of this judgment is complete answer to some of the contentions urged by Mr. Korde. It was held in this case by Hon'ble Justice J.C. Shah as his Lordship then was that 'In determining compensation payable in respect of land with buildings, compensation could not be determined by assessing the value of the land and the 'break-up value' of the buildings separately'. It was observed by the Apex Court that 'The land and the building constitute one unit and the same could not be valued separately. Shri Korde has submitted that the lands must be valued as vacant land forming subject matter of L.A.R. No. 105 of 1975. The subject matter of acquisition in this case is plot of land with buildings in whatever condition. Having regard to the ratio of this judgment, it is not possible to accept this submission. It was also held in this case that 'when the property sold was land with building it was often difficult to secure reliable evidence of instances of sale of similar lands with buildings proximate in time to the date of the notification under section 4'. In para 6 of his judgment, J.C., Shah J., observed that 'the value which a willing vendor might reasonably expect to receive from a willing purchaser in respect of a house generally depends upon a variety of circumstances including the nature of the construction, its age, situation the amenities available its special advantages and a host of other circumstances'. Sale instances of sale of land with building of the years 1956, 1963 or near about without availability of any dates to the Court as to the nature of the existing building on the plot sold, the nature of construction, its age, situation, amenities available etc. are of no use to the Court. It was observed further by the Apex Court in this case as under :
'Therefore, the method which is generally resorted to in determining the value of the land with building especially those used for business purposes is the method of capitalisation of return actually received or which might reasonably be received from the land and the building.'
The Hon'ble Supreme Court upheld the application of capitalisation method in this case. In this case also Land Acquisition Officer had determined the amount of compensation payable by valuing the land and the buildings separately. The Hon'ble Supreme Court held that this method of valuation on the part of the Land Acquisition Officer was unwarranted. It was held that the compensation could not be determined by assessing the value of the land separately and the break-up value of the building separately. To my mind, this is the clearest possible authority in support of the proposition that generally the method of capitalisation of return actually received or which might reasonably be received from the land and the buildings. This rule of valuation may not be an absolute rule. The proposition formulated by the Apex Court as aforesaid is undoubtedly a working and general rule.
38. Mr. Korde invited attention of the Court to the judgment of A.P. Sen, J., in the case of Special Land Acquisition Officer, Davangere v. P. Veerabhadarappa, : [1985]154ITR190(SC) . In this case the Apex Court was concerned with valuation of agricultural land and the question before the Court was as to whether the method of capitalising return could be resorted to for such valuation. Sen, J., speaking for the Bench of Hon'ble Supreme Court held as under :
'Normally, the method of capitalising the actual or immediately prospective profits or the rent of a number of years' purchase should not be resorted to if there is evidence of comparable sales or other evidence for computation of the market value. It can be resorted to only when no other method is available.'
This judgment is also a judgment of Hon'ble Division Bench of the Hon'ble Supreme Court consisting of two Hon'ble Judges as is the judgment of the Hon'ble Supreme Court reported in A.I.R. 1968 S.C. 1201. This judgment discloses a slightly different approach in respect of method of valuation which ought to be followed in such cases. In the references before this Court, there is no satisfactory evidence of comparable sales of land with similar dilapidated buildings. The consent order passed by Court of Small Causes at Bombay concerning acquisition of setback land from Handloom House is not relevant for purposes of fixation of market value of acquired property which are subject matter of L.A.R. 105 of 1975 as in this case the buildings were occupied by tenants and the gross monthly income-rent received by the landlord was about Rs. 1200/- per month. Practically all the tenants were accommodated in the new building constructed by the Board. As between the claimants and the tenants, the tenants enjoyed benefit of Bombay Rent Act. The properties were fully encumbered with tenancies. The question to be asked is as to whether the willing buyer would ever offer market value of the property on the footing as if it was a vacant plot of land ignoring factors like tenancies already created, and the claim of tenants for being rehoused. With respect, the theoretical distinction, if any, between the ratio of the two judgments cited above, is of no practical consequence in this case as no satisfactory evidence is led of comparable sale instances in respect of sale of land with structures similarly situates. For all practical purposes, the result is the same. If the capitalisation method is applied in L.A.R. No. 105 of 1975 as it ought to be, the quantum of market value already fixed under the Award is much more than what would come to on application of capitalisation method. Perhaps the rent paid by former tenant who vacated the structures admeasuring about 1400 square ft. was about Rs. 80/- per month. Mr. Korde has not sought enhancement of market value on basis of capitalisation method.
39. Mr. Sukhthankar has relied upon the ratio of the judgment of the Hon'ble Supreme Court in the case of Koyappathodi M. Ayisha Umma v. State of Kerala, : [1991]3SCR548 . It was observed by K. Ramaswamy, J., in this case that 'Method of valuation to be adopted to ascertain the market value of the land as on the date of the notification were (1) opinion of experts; (2) price paid within reasonable time in bona fide transaction in purchase or sale of lands acquired or lands adjacent to land acquired having similar advantages ; (3) number of years purchase of actual or immediately prospective profits of lands acquired'. It was held by the Apex Court in this case in a given situation the Court may take even two or all those matter into account.
40. In State of Maharashtra v. Basantibai Mohanlal Khetan and others, : [1986]1SCR707 , the Apex Court held that the valuation of vacant land by the application of the rule of capitalisation was a reasonable method. In para 11 of his judgment, Venkataramiah, J., speaking for the Bench observed that 'the method of capitalisation was also one of the recognised methods adopted for the purpose of valuation of properties acquired under the Land Acquisition Act, 1894. The Court observed that the annual return was capitalised at varying rates and explained the reason for the same. In para 11 of the judgment, the Apex Court observed as under :
'In the case of agricultural lands, the method of capitalisation is followed by our courts for several years See Raja Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer , Rustom Cavasjee Cooper v. Union of India : [1970]3SCR530 , Union of India v. Smt. Shanti Devi : [1984]1SCR217 , Special Land Acquisition Officer, Davangere v. P. Veerabhadrappa : [1985]154ITR190(SC) and Oriental Gas Co. Ltd. & others v. State of West Bengal : [1979]1SCR617 . No doubt, such calculation has been made by adopting varying methods, that is from 33 1/3 times to 8 times the annual net return as explained in Shantidevi's case (supra). Such variation has taken place on account of the variation of the rate of interest on gilt-edged securities as pointed out in that case. The higher the rate of interest, the lower would be the number of years' purchase adopted by courts to determine the market value of the property acquired.'
In para 12 of the aforesaid judgment, it was observed by the Apex Court that payment of 100 times the net monthly income i.e. 8 1/3 times the net annual income from the property could not be considered too low having regard to the rate of interest on safe investments prevailing from 1976-77. The observation made by the Apex Court in this case indicate that there is nothing wrong in applying capitalisation method where acquired property was let out almost fully and fetched rental income. I must clarify that I am not applying basis of compensation being fixed on footing of 100 months rent in this case in view of the fact that the Amending Act is not attracted in this case. However, the general observation made by the Apex Court in respect of application of capitalized method as one of recognised method of valuation are of considerable significance for the purpose of deciding L.A.R. No. 105 of 1975. I have relied on the judgment in the case of State of Maharashtra v. Basantibai only for limited purpose as aforesaid.
41. In this view of the matter the question to be asked as to what the yearly income from the properties which are subject matter of L.A.R. No 105 of 1975. It is conceded that no extra F.S.I. was available and the plots of land forming subject matter of L.A.R. No. 105 of 1975 were fully developed the structures were all let out to tenants. The Rents at which the structures were first let out would be the standard rent of the premises. The gross rental income from the two properties was about Rs. 1200/- per month only. To this amount, an income of about Rs. 100 per month may be added as the income from a hypothetical tenant in respect of the premises vacated by the former tenant which remained to be unlet. if the net annual income on the basis of this rent is capitalized by considering such income for 100 months or more or even for 12 years, the resultant figure would work out to much less than the market value of land and Building in whatever condition as fixed by the Special Land Acquisition Officer in his award. The Special Land Acquisition Officer erroneously applied the method of fixing market value of the land at the rate of Rs. 500/- per square yard. The Special Land Acquisition Officer ought to have applied the capitalisation method. If the Court applies the capitalisation method, the amount to be fixed would be less than the amount already fixed by the Special Land Acquisition Officer. No case is therefore, made out for interference in respect of fixation of higher market value of the land and the building in whatever condition concerning the Land Acquisition Reference No. 105 of 1975. I have therefore, no hesitation in confirming the market value of this land as fixed by the Special Land Acquisition Officer.
42. AS regard the issues of applicability of section 23(1-A), 23(2) and section 28 as amended to the acquisition under Chapter VI of above referred local Act, are concerned, Mr. Korde is justified in submitting that Chapter VI of Bombay Building Repair and Reconstruction Board Act, 1969 is supplemental to Land Acquisition Act I of 1894. It would be correct to state that the Land Acquisition Act I of 1894 supplements the Bombay Building Repair and Reconstruction Board Act, 1969. The legislative intention is to treat persons interested in acquired lands on par whether their lands are acquired under the Bombay Building Repair and Reconstruction Board Act, 1969 or Land Acquisition Act. The first question to be asked is as to whether the section 40(3) of the Act incorporates the Land Acquisition Act I of 1894. I answer the said question in affirmative. It was held by the Apex Court in the case of The State of Madhya Pradesh v. M.V. Narasimhan A.I.R. 1975 S.C. 1833, that even in case of an incorporation, subsequent amendments to the incorporation Act will apply where the subsequent Act and the previous Act are supplemental to each other. The provisions of Land Acquisition Act 1894 are applied mutatis mutandis in case of the acquisition under Chapter VI of the Bombay Building Repairs and Reconstruction Board Act 1969. For all practical purposes, Acquisition under Chapter VI of the above referred Act is deemed to be acquisition under Land Acquisition Act. Legal fiction enacted in section 40(3) of the Act must be given due and full effect.
43. Shri Sukhthankar has relied upon judgment of the Hon'ble Supreme Court in the case of Collector of Customs v. Sampathu Chetty, : 1983ECR2198D(SC) . Shri Sukhthankar has also relied upon judgment of the Privy Council referred to in the case of Secretary of State v. Hindustan Co-operative Insurance Society Ltd., reported in 1931 P.C. 149. To my mind both these judgments with respect are irrelevant to the problem under consideration in view of terminology of section 40(3) of the local Act and the ratio of the above referred judgment of the Hon'ble Supreme Court in the case reported in : 1975CriLJ1639 .
44. I accordingly hold that the claimants in L.A.R. No. 105 of 1975 are entitled to benefit of section 23(1-A) of Land Acquisition Act I of 1894 as amended, as well as benefit of section 23(2) and section 28 of the Act as amended. In the result I answer the issues as under :
Answer to Issues concerning L.A.R. No. 104 of 1975.
Issue No. 1 : in affirmative
Issue No. 2 : in affirmative
Issue No. 3 : Rs. 700/- per sq.metre.
Issues No. 4 to 6 : in affirmative.
Interest on differential amount awarded at rate of 9% per annum for first year from the relevant date as specified in section 28 of the Act as amended and at the rate of 13% per annum thereafter till payment.
Answer to issues concerning L.A.R. No. 105 of 1975.
Issue No. 1 : in negative. Market value fixed in the Award is confirmed.
Issue No. 2 : first part affirmative. The market value of acquired lands with buildings in scrap condition as fixed under the award as less than market value of the lands etc. worked out on basis of capitalisation method.
Issue No. 3 : Lands and Building are not required to be val ued separately. Valuation of the property as a composite unit by applying capitalisation method is appropriate having regard to facts of the case.
Issue No. 4 : in negative
Issue No. 5 : in affirmative
Issue No. 6 : in affirmative
Issue No. 7 : 9% for first year 15% for subsequent years until
payment as permissible under section 28 of the Act.
45. For filing of calculation sheet and passing of final order adjourned to 3rd December 1992.
Land Acquisition Reference No. 105 of 1975.
46. Mr. Korde tenders calculation sheet prepared in pursuance of judgment dated 24th November 1992 in Land Acquisition Reference No. 105 of 1975. Mr. Sukhthankar has scrutinised the calculation sheet.
47. Calculation sheet is marked as Exhibit 'A'. The calculation sheet shall form part of the Decree.
48. I Order the Special Land Acquisition Officer to pay a sum of Rs. 1,45,080/- alongwith interest on Rs. 37,368/- at the rate of 15 per cent per annum from 4th December 1992 till payment. No order as to costs.
Land Acquisition Reference No. 104 of 1975.
49. As regards Land Acquisition Reference No. 104 of 1975 is concerned, parties are still not ready with the scrutiny of draft calculation sheet prepared by legal advisers for the claimant. On joint request of the parties, adjourned to Tuesday, 8th December 1992.
50. In continuation of my judgment and order dated 24th November 1992, I pass this final and operative order in Land Acquisition Reference No. 104 of 1975. the calculation sheet scrutinised by both parties taken on record and marked Exhibit 'A'.
51. The Special Land Acquisition Officer, Bombay Building Repairs and Reconstruction Board Bombay and B.S.D. is directed to pay a sum of Rs. 1,53,221.88 to the claimants with further interest on Rs. 41,443.56 at the rate of 15 per cent per annum from 4th December 1992 till payment. Three months time is granted from today for making the payment. the calculation sheet shall form an integral part of the Decree Order.
52. Issue of certified copy is expedited.