Muhammad Azam Khan, CJ.--The High Court through the impugned judgment and decree dated 19.10.2007 dismissed two appeals: one filed by the appellants, herein, and the other filed by Respondent No, 2,
2. Brief facts for disposal of the case are that the Collector Land Acquisition Mirpur issued Award No, 93 of 1992 on 30.12,1993, whereby, among others, the land in the ownership of the appellants measuring 36 kanal 8 marla was acquired for the extension of Mirpur town. The Collector Land Acquisition fixed the compensation as Rs, 60,000/- per kanal for Maira Awal ( CM!" ) land and Rs,55,000/- per kanal for Gher Mumkan Pabbi ( ) land. Dissatisfied from the compensation, the appellants filed an application under Section 18 of the Land Acquisition Act before the Collector Land Acquisition, which was sent to the Reference Judge/District Judge Mirpur on 2.7.1994. The learned Reference Judge through judgment and decree dated 11.2,2004 accepted the reference and enhanced the compensation amount to Rs,85,000/- per kanal along with 15% compulsory acquisition charges irrespective of the kind of land. Feeling aggrieved, the appellants as well as the Mirpur Development Authority, Mirpur filed two appeals in the High Court. A learned single Judge in the High Court dismissed both the appeals vide impugned judgment on 19.10.2007. The appellants filed a petition for leave to appeal. Leave to appeal was granted on 22.1.2008 to consider the point that the District Judge and the High Court have failed to consider the market value of the land.
3. Raja Hassan Akhtar advocate, counsel for the appellants, argued that the judgment and decree of the High Court is against the law and rules laid down for determining the compensation under Section 23(1) of the Land Acquisition Act. He argued that the acquired land is situated in between Sector F/2 and Sector Ban Khurman. It is adjacent to the Sports Stadium and residential area of Ban Khurman. He argued that Akhtar Hussain, appellant, has stated in the Court statement that the land is adjacent to the Stadium. This fact was not denied by the respondents because the witnesses were not cross-examined on this point. He further argued that from the record it is, proved that the land is located in the vicinity of Mirpur city. It is a valuable land. The Reference Judge as well as the High Court failed to consider the sale-deeds executed in the years 1991, 1992 and 1993 and tendered in the evidence. He referred to the cases reported as Province of Punjab vs. Molvi Muhammad Faizan, advocate & 10 others [PLD 1980 Lahore 632] and Malik Naseem Ahmed Aheer & 4 others vs. WAPDA & 3 others [PLJ 2005 SC 191].
4. While controverting the arguments of the counsel for the appellants. Ch. Muhammad Reaz Alam, advocate, counsel for the respondents, argued that the judgment of the High Court is perfectly legal. The land was a barren one consisting of a slopes and dry anal and is uneven. It is not valued one. The Reference Judge has already granted compensation in excess of the market value. The appeal merits dismissal. He further argued that the reference application was directly filed before the Reference Judge, which was not competent.
5. We have heard the learned counsel for the parties and perused the record. The point whether the reference was validly filed before the Reference Judge or not was raised before the Reference Judge. The Reference Judge has absolved that the award was issued on 30.12.1993 and the reference application was presented before the Collector on 9.2.1994, which was validly presented.
The argument has no merit, which is repelled.
6.A perusal of the award shows that after the issuance of notification under Section. 4, the Commissioner issued a notification under Section 7 of the Land Acquisition Act. After issuance of the said notification, notices were issued to the land owners under Sections 9 and 12 of the Land Acquisition Act. The objections were filed by the land owners. The Collector Land Acquisition inspected the site and after site-inspection he made a note that the a portion of the land, which is being acquired, is adjacent to the city and the remaining land is adjacent to the residential area of Ban Khurman. The Collector Land Acquisition observed that the land which is being acquired from Survey No, 1 is adjacent to the southern side of Sector F/2. It is a barren land. He divided the land into different categories. The land which was adjacent to Sector F/2, was recommended for a payment of 12% in excess of usual price of the land. Development charges were also recommended to be paid for the land which was developed by the owners. He also opined that the compensation for the land bearing road link shall be higher than the land away from the road.
What is admitted by the Collector Land Acquisition is that at the one side of land which is being acquired, there is Sector F/2 of the city and on the other side the houses of Sector Ban Khurman are situated, meaning thereby that the land is near to the populated area. Section 23 of the Land Acquisition Act lays down the method for determining compensation. It will be useful to reproduce the same, which reads as under:-- "23. Matters to be considered in determining compensation.--(1) In determining the amount of compensation to be awarded for land acquired under this Act, the Court shall take into consideration-- firstly, the market-value of the land at the date of the publication of the notification under Section 4, sub-section (1); secondly, the damage sustained by the person interested, by reason of the taking of any standing crops or trees which may be on the land at the time of the Collector's taking possession thereof; thirdly, the damage (if any) sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of severing such land from his other land; fourthly, the damage (if any) sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of the Acquisition injuriously affecting his other property, moveable or immovable, in any other manner, or his earnings; fifthly, if, in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence' or place of business, the reasonable expenses (if any) incidental to such change, and sixthly, the damages (if any) bond fide resulting from diminution of the profits of the land between the time of the publication of the declaration under Section 6 and the time of the Collector's taking possession of the land."
7. The superior Courts have interpreted Section 23 and laid down the guidelines for determining compensation. What shall be the fair criterion for determining the compensation. The word "market value" is not defined in the act and generally it means the value of land on which the owner is ready to sell his land to a willing buyer voluntarily. What can be the market value of the land varies from place to place. The value is to be determined according to the place where it is situated and for the purpose for which, in future, it can be utilized. Another important factor is worth consideration that for what purpose the land is being acquired. If a land is being acquired for enhancing agricultural potential of the land then the future potential of the land is to be considered while keeping in view the market value of the agricultural land but if a land is being used for a housing scheme, the formula for fixing the price of agricultural land cannot be applied. The potential value of the land, which is being acquired for housing schemes, is enhanced many times, the criterion for determining market value will be different one. In the case reported as Malik Naseem Ahmed Aheer & 4 others vs. WAPDA & 3 others [PLJ 2005 SC 191] the Supreme Court refused to enhance the compensation price on the ground that the land was being acquired for drain, winch was admittedly for an agricultural purpose and not a housing project. Although the land was situated within the municipal limits.
8. This Court in the case reported as Faiz Akbar Khan & others vs. Azad Govt & others [1996 SCR 132] observed that while assessing the market value of the land, it is not to be valued merely by reference to the use for which it was being made at the relevant time but also the use to which it can reasonably be put in future. The relevant observation is as under:-- "It may be pointed out here that admittedly the land acquired is situated near Hajira Town, where the land can be also utilized for various commercial purposes. Even the learned counsel for the Government has argued that as the sale-deeds adduced in evidence by Faiz Akbar Khan and others pertain to the lands which were either purchased for the construction of shops or private buildings; the same are not good guide for assessing the market value of the land in question. It may be pointed out that while assessing the market value, the land is not to be valued merely by reference to the use for which it was being made at the relevant time but also the use to which it can . reasonably be put in future.'
In another case reported as Azad Govt. 2 others vs. Mst. Razia Farooqi & others [1996 SCR 136] similar view was reiterated in the following words:-- "It is evident from the case law cited at Bar that the Supreme Court of Pakistan and this Court have taken the view that if the geographical position of the land acquired is such that it has the potential for being put to the use for business or the same can be used for the construction of the residential accommodation, the market value of the land can be based even on the sale-deeds which pertain to smaller portion of the land."
9. The Supreme Court of Pakistan in a landmark judgment in the case reported as Murad Khan through his widow & 13 others vs. Land Acquisition Collector, Peshawar & another [1999 SCMR 1647], after considering the whole case law on the subject, in Para 13 of the report laid down the criterion for determining the market value of the land. The relevant observation is as under:-- "13. Section 23 of the Act lays down, by way of criterion, that "market value" of land on the date of publication of notification under Section 4 (ibid) would be the amount of compensation. The expression `market value' has not been defined in the Act. But there is considerable case-law on the point encompassing the period of about nine decades in which the expression in question has come to assume almost definite meaning. In this judgment we would, however, refer to a number of very important cases in which the expression 'market value' occurring in Section 23 (ibid) has been judiciously construed by various High Courts and even the Supreme Court of Pakistan.
According to these judgments the following matters are to be taken into consideration in determining the amount of compensation:-- `(i) The data from which the market value of the land can be estimated is given in Rule 13 of the North-West Frontier Province Circular No, 54 issued presumably under Section 55 of the Act.
(Premier Sugar Mills Limited v. Hayatullah Khan (PLD 1956 (W.P.) Pesh. 67).
(ii) The best method to work out the market value is the practical method of a prudent man laid down in Section 3 of the Evidence Act to examine and analyze all the material and evidence available on the point and to determine the price which a willing purchaser would pay to willing seller of the acquired land. The Land Acquisition Collector Rawalpindi v. Lieut General Wajid Ali Khan Burki (PLD 1960 (WP)Lah. 469).
(iii)Sub-section (1) of Section 23 of the Act provides that in determining the amount of compensation the Court shall take into consideration the market value, loss by reason of severing such land from his other land, acquisition injuriously affecting his other property or his earning in consequence of change of residence or place of business and damage, if any, resulting from diminution of the profits of the land between the time of the publication of the declaration under Section 6 and the time of the Collector's taking possession of the land. This, however, is not exhaustive of other injuries or loss which maybe suffered by an owner on account of compulsory acquisition n (Province of West Pakistan and another v. M. Salim Ullah and others (PLD 1966 SC 547).
(iv) The best method of determination of the market price of the plots of land under the acquisition is to rely on instances of sale of it near about the date of notification under Section 4 (i) of the Act.
The next best method is to take in consideration the instances of sale of the adjacent lands made shortly before and after the notification. When the market value is to be determined on the basis of the instances of sale of land in the neighboring locality, the potential value of the land need not be separately awarded because such sales-cover the potential value. (Jogendra Nath Chatterjee and others vs. State of west Bengal (AIR 1971 Calcutta 458).
(Underlining provided for emphasis)
(v) It is obvious that the law provides determination of compensation not with reference to classification or nature of land but its market value at the relevant time. No doubt, for determining the market value, classification or the nature of land may be taken as relevant consideration but that is not the whole truth. An area may be Banjar Qadeem or Barani as in the present case but its market value may be tremendously high because of its location, neighborhood, potentiality or other benefits. (Pakistan & another v. Rehm Dad & another (1980 CLC 574.) (Underlining provided for emphasis.)
(vi) According to the well-settled principle, while determining the value of the compensation the market value of the land at the time of requisition/acquisition and its\ potentiality have to be kept in consideration. (Pakistan v. Din Muhammad and others (1983 CLC 1281).
(vii) Consideration should be had to all the potential uses to which the land can be put, as well as all the advantages, present or future, which the land possess in the hands of the owners. (Mst.
Khatu and others v. Barrage Mukhtiarkar, Thatta (PLD 1977 Kar. 203).
(viii) In determining the quantum of fair compensation the main criterion is the price which a buyer would pay to a seller for the property if they voluntarily entered into the transaction, (Din Muhammad v. General Manager, communication & other (PLD 1978 Lah. 1135).
(ix) The measure of fair compensation is the value of the property in open market which a seller voluntarily entering into a transaction of sale can reasonably demand from a purchaser this means that we have to determine the value of the land in the open market at the relevant time on the Assumption that the notification of acquisition did not exist. (Province of Punjab v. Sher Muhammad and another (PLD 1983 Lah. 578).
(x) While determining the value of the land acquired by the Government and the price which a willing purchaser would give to the willing seller, only the 'past sales' should not be taken into account but the value of the land with all its potentialities may; also be determined by examining (if necessary as Court witness) local property dealer or other persons who are likely to know the price that the property in question is likely to fetch in the open market. In appropriate cases there should be compunction even relying upon the oral testimony with respect to market value of the property intended to be acquired, because even while deciding cases involving question of life and death, the Courts rely on oral testimony alone and do not insist on the production of documentary evidence. The credibility of such witnesses would, however, have to be kept in mind and it would be for the Court in each case to determine the weight to be attached to their testimony. It would be useful and even necessary, to examine such witnesses while determining the market prices of the land in questions because of the prevalent tendency that in order to save money on the purchases of stamp papers and to avoid the imposition of heavy gain tax levied on sale of property, people declare or show a much smaller amount as the price of the land purchased by them than than price actually paid. The 'previous sales' of the land, cannot, therefore, be always taken to be an accurate measure for determining the price of land intended to be acquired. (Fazalur Rehman and others u. General Manager, S.LD.B and another (PLD 1986 SC 158). (Underlining provided for emphasis).
(xi) The sale-deed and mutation entries do serve as an aid to the prevailing market value.
(Government of Pakistan v. Maulvi Ahmed Saeed (1983 CLC 414).
(W) It is a well-settled law that in cases of compulsory acquisition effort has to be made to find out what the market value of the acquired land was, or could be on the material date. While so venturing the most important factor to be kept in mind would be the complexion and character of the acquired land on the material date. The potentialities it possessed on that date are also to be kept in view in determining a fair compensation to be awarded to the owner who is deprived of his and as a result of compulsory acquisition under the Act. (Central Government of Pakistan v. Sardar Fakhar-e-Alam and another (1985 CLC 2228).
(xiii) The value of the land of the adjoining area which was simultaneously acquired and for which different formula of compensation has been adopted, should be taken into consideration. (Raza Muhammad Abdullah through his Legal heirs vs. Government of Pakistan & others (1986 MLD 252).
(xiv) The phrase "market value of the land" as used in Section 23(i) of the Act means "value to the owner" and, therefore, such value must be the basis for determination of compensation. The standard must be not a subjective standard but an objective one. Ordinarily, the objective standard would be the price that owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser. The property must he Valued not only with reference to its condition at the time of the determination but its potential value must be taken into consideration.
(Abdul Wahid & others vs. The Deputy Commissioner (1986 MLD 381)'."
10. The survey of case-law referred to above shows that the market value shall be assessed after analysing all the material and evidence available on the point and determining the price which a willing purchaser will pay to a willing seller of the acquired land. The Court shall take into consideration the market value and the loss by reason of severing such land from the other land. The best method of determination of the market price of the land under the acquisition process is to rely on the instances of sale of it near about the date of notification under Section 4(i) of the Land Acquisition Act. The next best method is to take into consideration the instances of sale of the adjacent .land made shortly before and after the notification. No doubt, for determining the market value, classification or nature of the land may be taken as relevant consideration but that is not the whole truth. An area may be Banjar Qadeem or Barani but its market value may be tremendously high because of its location, neighbourhood, potentiality or Other benefits. For determining the market value the measure of fair compensation is the value of property in the open market. Only the past sales should not be taken into account but the value of the land with all its potentialities may also be determined by examining (if necessary as Court-witness) local property dealers or other persons who are likely to know the price that the property in question is likely to fetch in the open market.
11. In the present case, the notification under Section 4 was issued on 5.3.1992. The appellants have produced in evidence, the Sale-deed dated 15.1.1996, which cannot be considered because it was executed after four years of issuance of notification under Section 4 of the Land Acquisition Act.
12. Another sale-deed executed on 13.11.1991 was produced in the evidence. This sale-deed was executed only four months prior to the issuance of notification under Section 4.
13. Another sale-deed executed on 14.11.1993 was placed on the record. If we exclude the sale-deeds dated 15.1.1996 and 14.11.1993, then there remains the sale-deed dated 13.11.1991 through which one kanal land was sold for Rs,200,000/-. This sale-deed is executed from Survey No, 1, wherefrom the land of the appellants measuring 30 kanal is acquired. The learned Reference Judge has admitted the position that the relevant sale-deed was made from Survey No,
1. He also observed that the land is adjacent to the populated area of the city. He observed that lesser compensation cannot be paid only for the reason that the Mirpur Development Authority will be overburdened but in spite of considering the sale-deed, he fixed the compensation as Rs,85,000/- along with 15% compulsory acquisition charges.
14. The learned Judge in the High Court admitted that the sale-deed dated. 13.11.1991 is relevant as one kanal land has been sold for Rs,200.000/- per kanal from Survey No, 1 but it cannot be determined that the sale-deed was made from the land adjacent to the acquired land.
We may observe that the Collector Land Acquisition has admitted in the award that the land is adjacent to the populated area of Sector F/2 at one side and with the populated area of Ban Khurman, on the other side. The land of the appellants is being acquired from Survey No, 1 and 6 of village Sonkiah. The sale-deed dated 13.11.1991 is also made from Survey No 1. The findings of the learned Judge in the High Court that the sale-deed dated 13.11.1991 cannot be relied upon on the ground that it is not clear that how far the land is situated from the land being acquired. The finding is not maintainable because a perusal of the sale-deed reveals that the land has been sold from Survey No, 1 adjacent to the acquired land.
15. It is evident that the land is being acquired for extension of Mirpur town, which is a residential purpose and the land of the appellant has a potential to be sold at a higher price in the open market. The land in the vicinity of same survey number wherefrom the land is acquired, has been sold only four months prior to issuance of notification under Section 4, against a price of Rs,200,000/- per kanal. If not more, the appellants are at least entitled for the same compensation.
The result of the above discussion is that this appeal is accepted. The judgment and decree of the High Court to the extent of Civil Appeal No, 55/04 recorded on 29.10.2007 is set aside and the decree of the Reference Judge is amended. The appellants are entitled to the compensation amounting to Rs,200,000/- per kanal with 15% compulsory acquisition charges.