Holding

The Court affirmed the land valuation, enhanced the building compensation to Rs.2,00,000 and tree‑growth compensation to Rs.7,500, and reserved the question of retrospective application of the 1972 and 1984 amendments for future determination.

Summary

The Administrator General of West Bengal appealed the award of compensation for the acquisition of the Gopal Lal Villa estate in Varanasi. The Land Acquisition Officer had valued the land at Rs.200 per decimal, the building at Rs.57,660 and the tree growth at Rs.355.85. The appellant sought higher valuations, solatium under Section 23(2) re‑introduced by the 1972 Uttar Pradesh amendment, and higher interest rates under the 1984 Central amendment. The Supreme Court held that the land valuation was correct, but enhanced the building compensation to Rs.2,00,000 and the tree‑growth compensation to Rs.7,500, while leaving the question of retrospective application of the 1972 and 1984 amendments for determination in a later case. The claim for change of residence was not permitted to be re‑agitated. The appeal was allowed in part.

Issues considered

Whether the market value of the acquired land fixed at Rs.200 per decimal is unreasonably low and ignores settled valuation principles.
Whether the building and structures valuation of Rs.57,660 should be revised upward.
Whether the award for tree‑growth is inadequate and requires enhancement.
Whether the appellant is entitled to the benefit of Section 23(2) and higher solatium/interest rates introduced by the 1972 Uttar Pradesh amendment and the 1984 Central amendment, given that the appeal was pending.
Whether compensation for change of residence under clause ‘fifthly’ of Section 23(1) can be raised anew.

Legislation cited

Central Amendment Act 68 of 1984
Land Acquisition Act, 1894s. 11, s. 18, s. 23, s. 4
U.P. Land Acquisition (Amendment) Act, 1954
U.P. Land Acquisition (Amendment) Act, 1972s. 23(2)

Subjects

land acquisitioncompensationmarket valuevaluationsolatiuminterestretrospective legislationchange of residencetree growthbuilding valuation

Judgment

y ADMINISTRATOR GENERAL OF WEST BENGAL
A
v.
' ' COLLECTOR, VARANASI

FEBRUARY 16, 1988

[S. NATARAJAN AND M.N. VENKATACHALIAH, JJ.] B

Land Acquisition Act, 1894: Sections 4, 11, 18 and 23-
Compensation-Valuation of land-Determination of market value-
Price fetched for comparative land sold at time of section 4
Notification-Best evidence of valuation-Land with building-
. Determination of value of building-Free growth on land-Whether C
~n be valued on basis of horticultural value.
I
1
Solarium and interest-Applicability of higher rates-Effect of
U.P. Land Acquisition (Amendment) Act 1972 and Central Amendment
Act 1982-Question left open in view of pendency of Bhag Singh v.
U. T. Chandigarh. D
'
Practice and Procedure: Compensation to be awarded for change
of residence-Question under Section 23 clause Fifthly L.A. Act 1894-
Raised for first time in S. L. P. under Article 136 without taking specific
ground-New plea-Disallowed.
E
The suit property known as "Gopal Lal Villa" situated on the
outskirts of the city of Varanasi was a sprawling 60 years old building,
part of the estate of a Raja, and vested in the appellant. It was acquired
pursuant to preliminary Notification dated 4. 7. 1959 under the Land
Acquisition Act 1894 for the purposes of the Education Department of
the Government of Uttar Pradesh. F

The building was of about 25,000 square feet plinth area compris-
ing 35 rooms, halls and other appurtenances, and the 23.66 acres of
ground appurtenant to the building, had 431 fruit and 13 timber trees
and 12 bamboo clumps.
G
The appellant claimed compensation of Rs.8,00,580 for the land
Y valuing it at Rs.352 per decimal. Rs.3,50,000 for the building and
structures; Rs.41,0to for the tree growth and Rs.5,000 as compensation
for change of residence.

The Land Acquisition Officer by his Award dated 4. 11. 1961 H
•
1025
1026 SUPREME COURT REPORTS. I1988) 2 S.C.R.
A under s. 11 of the Land Acquisition Act determined the market value of Y
the land at Rs.3,31,340 valuing it at Rs.140 per decimal; of the building
and superstructure at Rs.57 ,660 and of the tree growth at Rs.355.83. ! ~

Being aggrieved with the aforesaid determination of compensa-
B lion the appellant did not accept the offer contained in the Award, and
sought for a reference under s. 18 of the Act to the Civil Court.

The District Court enhanced the market value of the land to
Rs.4, 73;200 i.e. from Rs.140 to Rs.200 per decimal and left the valua-
tion of the building and the tree growth undisturbed. •

c The High Court affirmed the Award of the District Court and .
dismissed the appellant's claim for further enhancement. -~

In the appeal to this Court, it was contended on behalf of the
appellant that the claim of Rs.352 per decimal was not accepted and
that the High Court in affirming the valuation of the land at a mere
D Rs. 200 per decimal overlooked certain settled principles of valuation. It
adopted the District Judge's valuation which was the average of the
valuation reflected in Ext. 2 and Ext. 19 while the higher of the two
figures indicated by Ext. 2 should have been adopted. It was further
contended that the appellant was entitled to solatium and interest at
higher rates in view of the re-introduction of s. 23(2) in 1972 by the U.P.
E Land Acquisition (Amendment) Act, 1972 and under the Central
Amendment Act 68 of 1984.

On behalf of the respondent it was contended that the changes in
law brought about by the State Amendment Act No. 28 of 1972 and the
Central Amending Act 68 of 1984 are presumptively prospective except
F to the extent that they are made expressly or by compelling implication
retrospective in the extension of their benefits.

On the question whether:

(1) the estimate of the market-value of the acquired land at
G Rs.200 per decimal is unreasonably low and is arrived at
ignoring the evidence on record and settled principles of
valuation. Y
(2) the valuation of the buildings and structures at a mere
Rs.57 ,660 calls for an upward revision.
H
/
ADMINISTRATOR GENERAL v.·COLLECTOR 1027

'( (3) the award made for the tree-growth is inadequate and is A
required to be valued higher .
. ..
(4) appellant is entitled to the benefit of s. 23(2) of the Act as
introduced by the U.P. Land Acquisition (Amendment) Act
1972 providing for solatium and to higher rates of solatium
and interest under the Central Amending Act 1984 on the B
ground that proceedings were pending in appeal before this
Court on the dates the amendments came into force.

• Appeal allowed in part-<0mpensation awarded for land left
undisturbed, compensation for building and tree growth enhanced.

·~ HELD: l.(i) The determination of market-value or a piece of
c
f land with potentialities for urban use is an intricate exercise which calls
for collection and collation of diverse economic criteria. I1033C-D I

(ii) The market value of a piece of property for purposes of s. 23
of the Land Acquisition Act is stated to be the price at which the pro- D
• ' perty changes hands from a willing seller to a willing, but not too
anxious a buyer, dealing at arm's length. I1033D !

(iii) Prices fetched for similar lands with similar advantages and
potentialities under bonafide transactions of sale at or about the time of
the preliminary notification are the usual, and indeed the best, evi- E
dences of market value. Other methods of valuation are resorted to if
r' the evidence of sale of similar lands is not available. [t033E-FJ

(iv) Prices fetched for smaller plots cannot form safe bases
valuation of large tracts of land as the two are not comparable
properties. I1034E I F

" ( Collector of Lakhimpur v. B.C. Dutta, AIR 1971 SC 2015; Mirza
Nausherwan Khan & Anr. v. The Collector (Land Acquisition),
Hyderabad, [t97SI 2 SCR 184; Padma Uppal etc. v. State of Punjab &
Ors., [ 1977] I SCR 329 and Smt. Kaushalya Devi Bogra & Ors. v. The
·'J Land Acquisition Officer, Aurangabad & Anr., [1984 I 2 SCR 900, G
referred to.
y
(v) However, if it is shown that the large extent to be valued does
admit of and is ripe for use for building purposes; that building plots
that could be laid-out on the land would be good selllng propositions
and that valuation on the basis of the method of a hypothetical lay out H

I
1028 SUPREME COURT REPORTS , (1988] 2 S.C.R.

A could with justification be adopted, then in valuing such small, laid oat y
sites the valuation indicated by sale of comparable small sites in tlle area
at or about the time of the notification would be relevant. [1034G-H]

(vi) In a case such as the above, necessary dednctions for tile
extent of land required for the formation of roads and other ciric ~
B amenities; expenses of development of the sites by laying oat nads,
drains, sewers, water and electricity lines, and the interest on the Olll·
lays for the period of deferment of the realisation of the price; the
profits on the venture etc. are to be made. l1034H; 1035A-B]
w
Sahib Singh Ka/ha & Ors. v. Amritsar Improvement Trust and
C Ors., (1982] 1SCC419referred to.
_J,.
(vii) Prices fetched for small plots cannot directly be applied ID \
the case of large areas, for the reason that the former reflects the 'retail'
price ofland and the latter the 'wholesale' price. [103SB I

D (viii) Subsequent transactions which are not proximate in point of
time to the acquisition can be taken into account for purposes of de- r ~
termining whether as on the date of acquisition there was an upward
trend in the prices of land in the area. ll03SC]
(ix) Where it is shown that the market was stable and there were
no fluctuations in the prices between the date of the preliminary notifi-
E cation and the date of such subsequent transaction, the transaction
could also be relied upon to ascertain the market value. (a) When there
is evidence to the effect that there was no upward surge in the prices in
the interregnum. (b) The burden of establishing this would be squarely
on the party relying on such subsequent transaction. I J035C-D, G I
F State of U.P. v. Major Jitender Kumar, AIR 1982 SC 877 referred
\ {/
to.
I
In the instant case, the appellant did not endeavour to show that
between the date of preliminary notification i.e. 4. 7.1959 and the date
of Ext. 24 i.e. 18.8.1960 there was no appreciation in the value of land
G in the area. Therefore, Ext. 24 cannot be relied upon as affording
evidence of the market value as on 4. 7. 1959. I103SG-H)

(xi) The valuation of land made in the present case does not call
for or justify any upward revision at all. (a) There is no justification to
H interfere with the determination of the market value of the land
approved by the High Court. I1036C·D I
ADMINISTRATOR GENERAL v. COLLECTOR 1029

y In the instant case Rs.200 per decimal for the large extent of the A
acquired land works out to 40% of the "retail" price even if Rs.500 is
taken as the 'retail' price. That apart, in the case of land with
potentialities for a more profitable use it is necessary to acknowledge,
and make due allowance for, the possibility that the land might not be
applied for the prospective use at all or not so applied within a reason-
able time. [103611; 1037A-BJ B

Bombay Improvement v. Mervanji Manekji Mistry, AIR 1926
Bombay 420 referred to.

2.(i) Usually land and building thereon constitute one unit. Land
is one kind of property; land and building together constitute an
c
i~
altogether different kind of property. The latter must be valued as one
unit. I1037C-D I

(ii) However, where, the property comprises extensive land and
the structures standing do not show that full utilisation potential of the
land is realised it might not be impermissible to value the property D
estimating separately the market value of the land with reference to the
date of the preliminary-notification and to add to it the value of the
structures as at thattime. fl037D-EI

(iii) By the above method, building value is estimated on the basis
r of the prime-cost or replacement-cost less depreciation. The rate of
depreciation is, generally, arrived at by dividing the cost of construe-
E

' lion (less the salvage valued at the end of the period of utility) by the
number of years of utility of the building. [1037E-FI

(iv) The factors that prolong the life and utility of the building,
such as good maintenance, influence and bring down the rate of F
.. :,'-
\
depreciation. l1037FI

In the instant case, the estimate of the proper market-value of the
building bas not received the requisite attention both before the High
Court and the District Court. It is no doubt true that the Valuation
•) Report, Ext. I, was prepared on 20.7. 1960 one year after the date of the G
preliminary notification. But the extent of the built area was about
y 25,000 sq.' ft. There is no evidence to suggest that the rates mentioned
and adopted in Ext. I were not rates valid for a spread out period. No
case was made out that the building bad lost its utility and that the only
mode of valuation appropriate to the case was one of awarding merely
the salvage-value. The building, according to the evidence was quite H
1030 SUPREME COURT REPORTS [1988] 2 S.C.R.

A strong though about 60 years old at the time. The appropriate thing to y
do would have been to set aside the award in so far as the valuation of }.'
the building is concerned and remit the matter for a fresh determina-
tion of its market value as on 14.7.1959. However, in the interest of
justice it would be proper to make some ready and rough estimate
drawing such sustenance as the evidence on record could afford and
B impart a quietus to this vexed litigation. Accordingly, the compensation
for the buildings and structures is enhanced from Rs.57,660 to
Rs.2,00,000. [1038G-H; I039D-G; 1040G]

3. Where land is valued with reference to its potentiality for
building purposes and on the basis of prices fetched by small sites in a
hypothetical lay-out the tree growth on the land cannot be valued inde·
c pendently on the basis of its horticultural value or with reference to the -~ ·
value of the yield. This principle, however, does not come in the way of '\
awarding the timber-value or the salvage-value of the tree growth after
providng for the cost of cutting and removing. [1040G-H; I04IA]

D In the instant case, the evidence shows that there were 471 fruit
bearing trees and plants, l3 timber trees and 12 bamboo clusters.
Though there is some evidence as to the value of the yield, there is no
evidence about the timber value aud fuel value of the trees. The District
Judge has awarded a sum of Rs.355.85 for the entire tree growth.
Having regard to the-large number of trees and to the fact that some of
E them were timber trees, it would be appropriate to award a lump-sum
of Rs. 7 ,500 under this head. The compensation for tree growth is
accordingly enhanced from Rs.355.85 to Rs. 7,500. [1041A-C]

4. By the U.P. Land Acquisition (Amendment) Act, 1954, Section .:.
23(2) had been deleted from the statute. It was re-introduced by the
F U.P. Land Acquisition (Amendment) Act 1972. The preliminary notifi-
cation for the acquisition was issued subsequent to the deletion. 1_.,,
Whetheive-introduction of sub-section (2) would enure to the benefit of>.../
the person whose laud is acquired on the ground that proceedings in
appeal were pending on the date of introduction of that provision, and
availability for further enhancement of the solatium aud rates of in-
G terest under the Central Amendment Act 68 of 1984 are left open with (~
consent of counsel to be agitated after final decision in Bhag Singh v.
U. T. of Chandigarh, by a larger Bench of this Court. [104IE-F; 1042B] y
5. The point concerning compensation to be awarded for change
of residence under clause '(Ifthly' in section 23(1) does not appear to
H have been raised aud urged before the High Court. No specific ground
ADMINISTRATOR GENERAL v. COLLECTOR IVENKATACHAL!AH,J 1031

y has also been taken in this behalf in the appeal before this Court. The A
appellant should not, therefore, be permitted to re-agitate this question
' overagaininthisCourt. [1042D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 877
of 1974.
B
From the Judgment and Decree dated 17 .11.1971 of the Allaha-
bad High Court in First Appeal No. 171of1966.

D.N. Mukherjee, G:S. Chatterjee and A. Bhattacharjee for the
Appellant.

Prithvi Raj and Mrs. Shobha Dikshit for the Re$pondent. c
The Judgment of the Court was_ delivered by

VENKATACHALIAH, J. This appeal, for enhancement of com-
pensation, by Special leave, arises out of and is directed against the D
· ' judgment and decree dated 17th November, 1971 of the High Court
of Allahabad in First Appeal No. 171 of 1966 affirming the Award and
Decree dated 13.12.1965 of the Ist Add!. District Judge, \raranasi,
made in a Reference Under Section 18 of the Land Acquisition Act
1894.
Y E
Property known as "Gopal Lal Villa" a sprawling 60 year old
"' building of about 25,000 square feet of plinth-area comprising of 35
rooms, halls and other appurtenances, its large 23.66 acre grounds
with 431 fruit and 13 Timber trees; 12 Bamboo-clumps, situated
\ on the outskirts of the City of Varanasi, originally part of the estate of
Raja P.N. Tagore, and now vesting in the Administrator General, F
, .laWest Bengal, was acquired pursuant to the preliminary notification,
V/" published in the Gazette, dated, 4.7.1959 for the purposes of the edu-
. cation department of the Government of Uttar Pradesh.

· 2. Before the Land Acquisition Officer, Appellant claimed com-
pensation of Rs.8,00,580 (at Rs.352 per decimal) for the land; G
Rs.3,50,000 for the building and structures; Rs.41,010 for the tree
growth; and Rs.5,000 as compensation for change of residence.

The Land Acquisition Officer, however, by his Award dated
4.11.1961 under Section 11 of the Act determined the market-value of
the land at Rs.3,31,340valuing it Rs.140per decimal (or Rs.14,000 per H
1032 SUPREME COURT REPORTS 11988] 2 S.C.R.

A acre); of the building and structures at Rs.57,660 and of the·tree- 'r
growth at Rs.355.83. Appellant, not having accepted the offer con-
tained in the award, sought for a reference under Section 18 of the Act {
to the Civil Court in proceedings pursuant to which the District-Court
enhanced the market-value of the land to Rs.4,73,200 (from Rs.140 to
Rs.200 per decimal) leaving the valuation of the building and the
B tree-growth undisturbed. The High Court has affirmed the Award ~
dismissing appellant's claim for further enhancement before it.

3. We have heard Shri D.N. Mukherjee, learned counsel in
support of the appeal and Shri Prithviraj, learned Senior-Advocate for
the respondent. We have been taken through the judgment under
C appeal and the evidence on record. .
--1-c~
On the contentions urged at the hearing, the following points f311
for consideration: ·

(a) Whether the estimate of the market-value of the acquired·
D land at Rs.200 per decimal is unreasonably low and is arrived
at ignoring the evidence on record and settled principles of
valuation?

(b) Whether the valuation of the buildings and structures at a
mere Rs.57,660 calls for an upward revision?
E
(c) Whether the award made for the tree-growth is inadequate
and is required to be valued higher?

( d) Whether appellant is entitled to the benefit of Sec. 23(2) of
the Act as introduced by the U .P. Law Acquisition (Amend- ,
F ment) Act 1972 providing for solatium and, further, to.
higher rates of solatium and interest under the Central.. ·-'
Amending Act (Act No. 68 of 1984) on the ground thaf~
proceedings were pending in appeal before this court on the' '
dates these amendments came into force?

G 4. Re: Contention (a)

The acquired land had the potentiality for building purposes. "(
Learned District Judge found that:

" .... The Land Acquisition Officer himself realised this
H fact and has observed that "the land under acquisition is
ADMINISTRATOR GENERAL v. COLLECTOR (VENKATACHALIAH,J 1033
y situated within the Corporation limits in Mohalla Orderly A
Bazar, a thickly populated locality and is near to Kutchery.
It has, therefore, a potential value as building site." I may
add here that though the acquired land is at a distance of
about 3 to 3'12 miles from the main markets of Varanasi
City, yet every thing of daily need and of day today utility is
B
available in the market which exists in the locality of the
acquired land. It may also be added that the land adjacent
to the west of the acquired land known as 'Tagore Nagar'

- formerly formed part of this Gopal Lal Villa and both were
covered by one boundary. The land of Tagore Nagar has
been divided into small portions and a colony with residen-
tial quarters has grown up there. This was already in exis- c
~
t \ tence before the present acquisition ..... "

. The determination of market-value of a piece land with poten-
tialities for urban use is an intricate exercise which calls for collection
and collation of diverse economic criteria. The market-value of a piece
0
of property, for purposes of Section 23 of the Act, is stated to be the
price at which the property changes hands from a willing seller to a
willing, but not too anxious a buyer, dealing at arms length. The de-
termination of market-value, as one author put it, is the prediction of
an economic event. viz, the price-outcome of a hypothetical sale, ex-
t' pressed in terms of probabilities. Prices fetched for similar lands with
E
similar advantages and potentialities under bona fide transactions of
sale. at or about the time of the preliminary notification are the usual,
and indeed the best, evidences of market-value. Other methods of
valuation are resorted to if the evidence of sale of similar lands is not
available.
F
In the District-court, appellant relied upon eight transactions of
.,, :....What, according to him, were sale, of similar lands. The transactions
I at Ext. 18, 20, 21 and 22, dated, 25.3.1952, 1.12.1955, 11.8.1953 &
11. 7 .1957 respectively were rejected by learned District Judge on the
ground that they were long enterior in point of time to the acquisition
, 'r and lacked the element of contemporaneity. Ext. 23 dated, 25.10.1958 G
and Ext. 24 dated, 18.8.1960 were also held not to afford reliable
"-- evidence of market-value on the ground that while in the former case
1" the property was sold along with a construction thereon without any
indication as to the apportionment of the price between the land and the
construction, in the latter case the sale was about an year subsequent
to the date of the preliminary notification. H
1034 SUPREME COURT REPORTS (1988} 2 S.C.R.

"A · What remained were the evidence of sale transactior.• at Exts. 2 ~
and 19 dated 16.9.1958 and 22. U.1958 respectively indiwting & price
of Rs.U50 and Rs.900 per biswa respectively. The District ·Judge
struck all average of the two and fixed the rate at. Rs.1075 per biswa
_which worked out to about Rs.350, or thereabouts, per decimal. But
since Ext. 2 and Ext. 19 related to very small plots, the learned District~
B Judge on some calculations of his own, fixed the rate of Rs.200 per T'1
. decimal for the acquired land .

.5. Shri Mukharji in support of the appellant's claim @ Rs.352 ~
I
per decimal submitted that the High Court; in affirming the valuation
of the land at a mere Rs.200 per decimal, overlooked certain settled \
C principles of valuation in that it approved the process-adopted by the ,!'
learned District Judge-of striking an average of the valuations re-
flected in Ext. 2 and Ext. 19, while the higher of the two figures
indicated by Ext. 2, should have been adopted. Learned Counsel sub-
mitted that the acquired land, though situate' about 3112 miles away
from the heart of Varanasi City, had all the potentiality for use for
D building purposes and that the rejection of the evidence of market-
value afforded by Ext: 24, the transaction of sale dated 14.7.1960 '(
which indicated a price of Rs.2,000 per biswa on the ground that it was
an year later than the preliminary notification was erroneous.

propositio~·
6. It is. trite can~
that prices fetched for small plots
E not form safe-bases for valuation of large tracts of land as the two are
not comparable properties. (See Collector of Lakhimpur v. B.C.
__ Dutta, AIR 1971 SC 2015; Mirza Nausherwan Khan & Anr. v. The
Collector (Land Acquisition), Hyderabad, I1975} 1 SCR; Padma Uppal_J.
etc.,v. State of Punjab & Ors., (1971} 1 SCR; Smt. Kaushalya Devi
Bogra & Ors. v. The Land Acquisition Officer Aurangabad & Anr.,
' 'F [ 1984] 2 SCR. The principle that evidence of market-value of sales of
',_ small, developed plots is not a safe guide in valuing large extents of
land has to be understood in its proper perspective. The principle
_____ requires that prices fetched for small developed plots cannot directly
be adopted in valuing large extents. However, if it is shown that the
/ large extent to be.valued does admit of and is ripe for use for building
· G purposes; tliat building lots that could be laid-out on the land would be -.I..
,good selling propositions and that valuation on the basis of the method r·
of a hypothetical lay-out could with justification be adopted, then in
valuing such small, laid-out sites the valuation indicated by sale of
comparable small sites in the area at or about the time of the notifica..
tion would be relevant. Jn such a case, ·necessary deductions for the
1-l extent of land required for the formation of roads and other civic
ADMINISTRATOR GENERAL v. COLLECTOR [VENKATACHALIAH,J 1035

'( amenities; expenses of development of the sites by laying-out roads,
A
drains, sewers, water and electricity lines, and the interest on the
,,. , outlays for the period of deferment of the realisation of the price; the
profits on the venture etc. are to be made. In Sahib Singh Kalha &
Ors. v. Amritsar Improvement Trust and Ors., (See 1982 1 SCC 419,
this court indicated that deductions for land required for roads and
other developmental expenses can, together, come-up to as much as B
lr 53%. But the prices fetched for small plots cannot directly be applied
f in the case of large areas, for the reason that the former reflects the
, j 'retail' price of land and the latter the 'wholesale' price.

The sale transaction at Ext. 24 was an year later. Such subse-
quent transactions which are not proximate in point of time to the
acquisition can be taken into account for purposes of determining c
hether as on the date of acquisition there was an upward trend in the
rices of land in the area. Further under certain circumstances where it
is shown that the market was stable and there were no fluctuations in
the prices between the date of the preliminary notification and the
date of such subsequent transaction, the transaction could also be D
~ , relied upon to ascertain the market-value. This court in State of U.P.
v. Maj. Jitender Kumar, (See AIR 1982 SC 877) observed:

" ..... It is true that the sale deed Ext. 21 upon which the
High Court has relied is of a date three years later than the
Notification under S. 4 but no material was produced be- E
fore the Court to suggest that there was any fluctuation in
the market rate at Meerut from 1948 onwards till 1951 and
if so to what extent. In the absence of any material showing
any fluctuation in the market rate the High Court thought
it fit to rely upon Ex. 21 under which the Housing Society

....,. I
itself hacl purchased land in the neighbourhood of the land
dispute. On the whole we are not satisified that any error
was committed by the High Court in relying upon the sale
deed Ex. 21. .... "
F

But this principle could be appealed to only where there is evidence to
the effect that there was no upward surge in the prices in the inter- G
regnum. The burden of establishing this would be squarely on the
party relying on such subsequent transaction. In the present case
appellant did not endeavour to show that between the date of prelimi-
nary notification i.e. 4.7.1959 and the date of Ext. 24 i.e. 18.8.1960
there was no appreciation in the value of land in the area. Therefore,
Ext. 24 cannot .be relied upon as affording evidence of the market- H
1036 SUPREME COURT REPORTS I1988) 2 S.C.R.
A value as on 4.7.1959. We cannot accept the argument that the price y
indicated in Ext. 24 should be accepted after allowing an appropriate
deduction for the possible appreciation of the land-values during the (
period of one year. Apart from other difficulties in this exercise, there
is no evidence as to ihe rate and degree of appreciation in the values of
land so that the figure could be jobbed backwards from 14. 7 .1960 to
B 4.7.1959.

7. It appears to us that even if the value at Rs.1,250 as on
27.8.1958 indicated by Ext. 2 .is adopted and something is added
)
thereto for the possible appreciation for the period till the preliminary \
notification, also taking into account the trend of appreciation in the
prices in the area as indicated by Ext. 24 and the value of small deve-
c loped sites is estimated somewhere between Rs.1,400 and Rs.1,600 per '
biswa or Rs.450 to Rs.500 per decimal, yet, the valuation made in the
present case does not call for or justify any upward revision at all.
There is a simple way of cross checking these results. The value of
small plots-Rs.500 per decima.l as now estimated-represents what
D may be called the "retail" price of the land. What is to be estimated
therefrom is the "wholesale" price of land. In Bombay Improvement
v. Mervanji Manekji Mistry, (See AIR 1926 Bombay 420) Mecleod CJ
suggested a simple rule:

" ..... Valuation cases musJ be dealt with just as much
E from the point of view of the hypothetical purchase as of
the claimant. The valuation itself must often be more or
less a matter of guesswork. But it is obviously wrong to fix
•1pon a valuation which, judged by everyday principles, no
purchaser would be likely to give ..... "

F " .... I have always been adverse to elaborate hypothetical
calculations which are no more likely to lead to a fair con-
clusion than far simpler methods. But, in any event, no ~ "'
harm can be done by testing a conclusion arrived at in one '
way by a conclusion arrived at in another ...... "

G " .... A very simple method ofvaluing land wholesale from
retail prices is to take anything between one and half one-
third, according to circumstances of the expected gross valu-
ation, as the wholesale price ..... " "
(emphasis supplied)

If In the present case, Rs.200 per decimal for the largecextent of the,
ADMINISTRATOR GENERAL v. COLLECTOR (VENKATACHALIAH,J 1037

"( acquired land works out to 40% of the "retail" price even if we take, A
Rs.500 as the "retail" price. That apart, in the case of land with
potentialities for a more profitable use, it is necessary to acknowledge,
and make due allowance for, the possibility that the land might not be
applied for the prospective use at all or not so applied within a reason-
able time.
B
y There is, therefore, no justification to interfere with the determi-

.. ' nation of the market-value of the land approved by the High Court .
Contention (a) is accordingly answered against the appellant.

8. Re: Contention (b)

.-..L, The District Court proceeded to value the property on the "Land c
j and Building Method". The appositeness of this method to the present
case was not debated before us. Usually, land and building thereon
constitute one unit. Land is one kind of property; land and building
together constitute an altogether different kind of property. They must
be valued as one unit. But where, however, the property comprises D
·>-' 1 extensive land and the structures thereon do not indicate a realisation
of the full developmental potential of the land, it might not be
impermissible to value the property estimating separately the market-
value of. the land with reference to the date of the preliminary-
notification and to add to it the value of the structures as at that time.
't' In this method, building-value is estimated on the basis of the prime- E
cost or replacement-cost less depreciation. The rate of depreciation is,
generally, arrived at by dividing the cost of construction (Less the
salvage value at the end of the period of utility) by the number of
years of utility of the building. The factors that prolong the life and
utility ofthe building, such as good maintenance, necessarily influence
and bring down the rate of depreciation. F

·,._ 'J Harl Shanker Misra PW 3 referring to the nature and quality of
the building stated:

. ' l
" .... The Northern part of this Villa was double storeyed
and rest was single storeyed. Its plinth was 3 feet high and G
rooms were 14 feet high. The building bore 35 rooms and
besides this there was a big hall 65 feet x 22 feet. Its floor
was made up of some patent stones. Some monthly some
market and Vkiya were stoned. The doors were 8 feet x 4
feet and they were made up of Burma teak wood and up
ways were double doored. When Improvement Trust oc- H
1038 SUPREME COURT REPORTS I1988] 2 S.C.R.

cupied the property of Nejai at that time building was well 'f
A
maintained. Over and above the main building there were
manager quarters. Kitchen, out house, servant quarters, ( ~
Chowkidar quarters and a stable. Now they were in good
condition. Its boundary wall was 7 feet and at some places
they were 8 feet high. This also consists of 2 iron gates.
B One is main gate and the other one is by its side of some ,
distance ...... " i
Learned District Judge based his valuation almost entirely upon the
report of the Chief Engineer, estimating the building at Rs.57,660.
\ .
That report itself was not brought on record in the proceedings of
reference. It is not clear from the judgment of the High Court whether
C this estimate of Rs.57 ,660 represented the cost of replacement of the;_, .J.;;
structure less depreciation or whether it represented merely the T
salvage-value of the building. High Court rejected the Valuation
Report, Ext. 1 relied upon by the appellant on the ground that it was
made with reference to a date which was an year later than the prelimi·
D nary notification. The High Court observed:

" .... The appellant had examined Narain Chand Das, an
Overseer who had assisted the Executive Engineer, in pre·
paring the valuation of the constructions and the well. The
report of the Executive Engineer is Ext. 1 on the record. It
E appears from the said report that the valuation was deter·
mined on the basis of the rates prevailing in the year 19iio
where-as the preliminary notification in the instant case
was issued in the year 1959. Moreover, this building
appears to be about 60 years old and the market value
thereof could not be determined on the basis of the j:Ost of
F constructions prevailing in t!te year 1960. This method of
calculating the market value of the property is obviously•"
erroneous and cannot be accepted. No other evidence wiur~
produced by the appellant to determine the value of the'·-
constructions and the well. The evidence produced by him
being not satisfactory, the compensation already .deter·
f ,
G mined by the Land Acquisition Officer in respect of this
item of the property was not liable to be enhanced ..... "

We are afraid the estimate of the proper market-value of the
building has not received the requisite attention both before the High
Court and the District Court. It is no doubt true that Ext. 1 was
H prepared on 20. 7 .1960, an year after the date of the preliminary notifi·
ADMINISTRATOR GENERAL v. COLLECTOR [VENKATACHALIAH,J 1039

'( cation in the present case; but the extent of the built-area was about A
2,500 sq. ft. Ext. 1 gives a breakdown of the area of the various parts of
> the building and sets out the nature of the construction and proceeds
to estimate the value in terms of the then current PWD rates less
depreciation of 20%. The rates adopted were not particular to the date
of valuation i.e. 20.7.1960. The PWD rates are operative over a
period, generally for an year or so. The extent or the quality of con- B
struction were also not in dispute. The main building of an area of'
18828 sq. ft. consisted of 35 rooms, and a big hall with 'Marble Floor-
ing', 'Burma Teak Shutters', 'Stone Slab Roofing', a portico with
'Glazed Gracian Pillars' etc. In Ext. 1, the main portion was valued at
Rs.12 per sq. ft. Apart from the main building, there were other
appurtenances such as the Managers' quarters, kitchen-house, chow- C
~ kidars' quarters, out-house, stables, pucca wells etc. The other

1. structures have been valued area-wise at much lesser rates, according
as the nature of the construction. The decendants of Raja P.N.
Tagore, it was claimed, were residing in the building till a few days
before possession was taken. There is no evidence to suggest that, the
rates mentioned and adopted in Ext. 1 were not rates valid for a D
, spread-out period.

It appears to us somewhat unreasonable that the extensive build-
ing of 25,000 sq. ft. with big-halls and 35 rooms constructed with
quality-material, marble flooring, burma teak joinery should be
valued at a mere Rs.57,660. No case was made-out that the building E
had lost its utility and that only mode of valuation appropriate to the
case was one of awarding merely the salvage-value. The building,
according to the evidence, was quite strong though about 60 years old
atthe time.
\
Having regard to the circumstances of this case, the appropriate F

"r thing to do would have been to set-aside the award in so far as the
valuation of the building is concerned and remit the matter for a fresh
determination of its market-value as on 14.7.1959. But the parties
have been at litigation for decades. The acquisition is of the year 1959.
We, therefore, thought-and put to the learned counsel on both
sides-whether in the interests of justice, it would not be proper to G
make some rough and ready estimate, drawing such sustenance as the
evidence on record could afford and impart a ·quietus to this vexed
litigation. Learned counsel very fairly submitted that this would be the
appropriate course. In the very nature of things, the exercise that we
make, must share the imperfections of the evidence on record. But
then, so~e element of speculation is inevitable in all valuations. In the H
1040 SUPREME COURT REPORTS 11988) 2 S.C.R.

A best of exercises some measure of conjecture and guess-work is inhe- 'f
rent in the very nature of the exercise.

9. We may first proceed to estimate the prime-cost of the build-
ing. The measurement set-out in Ext. 1 is not disputed. If Ext. 1 is
taken as the starting point for the estimate of cost of replacment as on
B 4.7.1959; the depreciation of 20% allowed in Ext. 1 has to be added
back and, further, some deduction towards the possible escalation of
costs of construction between the date of preliminary-notification and
of the period of validity of the rates adopted in Ext. 1 has to be made.
On this basis, the cost of replacement could be estimated at about Rs.4
lakhs. This works out to Rs.16 sq. ft. on the average. Even in respect
of 1959, this figure may not be much, having regard to the quality of
c the construction. /~

From this sum of Rs.4 lakhs, depreciation for the past life of 60
years of building would have to be deducted. Depreciation depends
upon and is deduced from factors such as the cost of the construction;
D the expected life-span; its salvage-value realisable at the end of the
period of utility etc. Rate of depreciation is generally, the prime-cost
less salvage value divided by the life-span. These, of course, are
matters of evidence. In the present case, if we make a rough and ready
estimate of the salvage-value at say, 10% of the cost and estimate the
period of utility of life-span of the building at, say, 90 years, the
E depreciation which is the annual loss of value due to physical wear and
tear works out to about Rs.4,000 per year or roughly 1%. Without
going to the finer details of the calculation of the depreciation on the
progressive written-down values, we think, an estimate of 50% of the
cost of the building may, again on a rough and ready basis, be
deducted towards depreciation. The market-value of the building as
F on the date of the preliminary notification could accordingly be fixed
at Rs.2,00,000.

Accordingly, the compensation for the buildings and structures is
enhanced from Rs.57,660 to Rs.2,00,000, point (b) is held and ans-
wered accordingly.
G f
10. Re: Contention (c): So far as the tree-growth is concerned, it
is trite proposition that where land is valued with reference to its
potentiality for building-purposes and on the basis of prices fetched by
small sites in a hypothetical lay-out, the tree-growth on the land can-
not be valued indepenpently on the basis of its horticultural value or
H with reference to the value of the yield. But this principle does not
ADMINISTRATOR GENERAL v. COLLECTOR [VENKATACHAL!AH,[ 1041

come in the way of awarding the timber-value or the salvage value of A
the tree-growth after providing for the cost of cutting and removing.
The evidence shows that there were 471 fruit-bearing trees and plants:
13 timber trees and 12 Bamboo clusters. Though there is some evidence
as to the value of the yield, this may not be a relevant factor having
regard to the principles of valuation appropriate to the case. There is
no evidence about the timber value and the fuel value of the trees. B
Learned District Judge has awarded a sum.of Rs.355.85 for the entire
tree-growth. Having regard to the large number of trees and to the fact
that some of them were timber trees, we think we should award lump-
sum of Rs. 7,500 under this head.

Accordingly, compensation for the tree-growth is enhanced from C
~Rs.355.85 to Rs.7,500.

T 11. Re: Contention(d)

This leaves us with the question whether the benefit of Section
23(2) introduced by the UP Land Acquisition (Amendment) Act 1972 D
(Act No. 28 of 1972) providing for a solatium is available to the appel-
lant on the ground that the proceedings in appeal were pending as on
the date when that provision was introduced. It is to be recalled that by
U.P. Land Acquisition (Amendment) Act (Act No. 22 of 1954) Section
23(2) had been deleted from the statute. The preliminary notification
'r was long subsequent to this deletion. The question is whether the E
introduction or re-introduction of Section 23(2) in 1972 would enure to
..... the benefit of the appellant on the premise that rules of construction
appropriate to such remedial measures would require their benefit to
be extended to pending proceedings. Appellant has also claimed the
benefit of the. further enhancement of the solatium and the rates of
interest under Central Amending Act 68 of 1984. Shri Mukharjee F
submitted that these amendments, both by the State Law and the
. . . .Ce?tral Law, were remedial legislations and would apply to pending
~ctlons.

Shri Prithviraj, on the contrary, submitted that these changes in
the law, brought in by the amended provisions are presumptively G
prospective except to the extent that they are made expressly or by
compelling implication retrospective in the extension of their benefits.
Learned Counsel said that application of these provisions even to
pending proceedings envisages a principle of retro-active application
which must expressly be enabled by the statute or is to be inferred as
an inevitable implication. H

'
1042 SUPREME COURT REPORTS [1988) 2 S.C.R. •

A Shri Mukharjee relied upon certain observations of this court in
the case of Bhag Singh & Ors. v. Union Territory ofChandigarh, (See
1985 Suppl. 2 SCR 949). There are some observations at 958 of the
report which tend to lend support to Shri Mukharjee. But the matter is
pending decision at the hands of a larger bench.
B
12. In the circumstances, learned counsel on both sides submit-
ted that the appeal be disposed of on the other points leaving it open to
the appellant to agitate Contention (d) after a final pronouncement in
Bhag Singh's case, if in the light of the said judgment, this claim or any
part of it survives. We accept this submission and reserve liberty to the
appellant accordingly.
c
13. Shri Mukharjee sought to raise another point concerning _j,.._
compensation to be awarded for change of residence under Oause ~
'fifthly' in Sec. 23(1); but as this point does not appear to have been
raised and urged before the High Court. We think, we should not
permit the appellant to re-agitate this question over again in this court.
0 It is also to be observed that no specific ground is taken in this behalf
in this appeal either. ' ..
14. In the result, this appeal is allowed in part and while the
compensation determined and awarded for the land is left undis-
turbed, the compensation awarded for the building and tree-growth is
E enhanced from Rs.57,660 to Rs.2,00,000 and from Rs.355.85 to
Rs.7,500 respectively. Appellant shall be entitled to interest at 6% on'
the enhanced amount of compensation from the date of taking of
possession till realisation. Liberty is reserved to the appellant to seek
such additional relief on Contention (d) depending upon the ultimate
F decision in Bhag Singh's case. The appeal is disposed of accordingly.
-
The appellant shall be entitled to the costs in this appeal. The advo-
cate's fee fixed at Rs.2,500.

N.V.K. Appeal allowed.~A
f •