Kh. Muhammad Nasim, J. The captioned appeal has been directed against the judgment and decree of the High Court dated 23.02.2024, passed in Civil Appeals No. 81 and 131 of 2020.
2. The succinct facts of the case, leading to the filing of present appeal are that vide Award No. 06/2017, dated 12.09.2017, the Collector Land Acquistion (hereinafter to be referred as Collector), acquired the land measuring 5 marls, comprising Survey No. 222 min, situated at Village Dhani Syedan, Tehsil and District Muzaffarabad, for construction of a water tank in favour of the Public Works Department/Public Health Engineering, Muzaffarabad. The Collector assessed the compensation as Rs. 50,000/- per marla, along with 15% compulsory acquisition charges.
Dissatisfied from the said assessment, Respondent No. 1 (the landowner) filed a reference application before the Additional District Judge/Reference Judge, Muzaffarabad, claiming therein, that the acquired land being located within the municipal limits of Muzaffarabad, on Main Srinagar Road and nearer to the prominent institutions i.e. City International School, Punjab Science College, Al-Madina Mart as well as LPG filling station, has a market value of Rs. 7,50,000/- per marls, whereas the Collector has assessed very meagre amount of compensation. The learned Reference Judge, after conducting the necessary proceedings, enhanced the compensation to the tune of Rs.
3,00,000/- per marla, along with 15% compulsory acquisition charges, vide judgment and decree dated 08.02.2020. Dissatisfied from the said judgment, both the parties approached the High Court by filing separate appeals. The landowner filed appeal for further enhancement of the compensation, while the appellants (Acquiring Agency) filed appeal for setting aside the judgment and decree of the learned Reference Judge. After necessary proceedings, the learned High Court through the impugned consolidated judgment, while allowing the landowner's appeal, enhanced the compensation to the tune of Rs. 3,50,000/- per marla along with 15% compulsory acquisition charges, whereas the appeal filed by the appellants, herein, has been dismissed. The appellants (Acquiring Agency) have challenged the impugned judgment by way of present appeal.
3. Mr. Akhlaq Hussain Mughal, the learned Advocate representing the appellants submitted that the impugned judgment passed by the learned High Court is against law and the record of the case, which is not sustainable in the eye of law. He further submitted that the nature of the acquired land is admittedly sloppy and hilly, away from the main road of Srinagar, hence, cannot be treated as commercial and the Collector rightly assessed its compensation. The learned Advocate, contended that the learned Reference Judge while appreciating the evidence available on record, admitted that the landowners failed to prove from the evidence that the acquired land is adjacent to Srinagar Road and its nature as commercial but in spite of that the compensation was enhanced, without any plausible justification. The landowner produced only one sale-deed, i.e. dated 14.10.2015, but none of the witnesses produced by him testified that the land sold through the said sale-deed has any similarity with the land in question. He added that the learned High Court further enhanced the compensation amount on the strength of the said sale deed considering the gap between the Award and the execution of the sale-deed, which is based on assumption. The question of non-arraying the necessary party in the reference application, has also not been resolved in a legal manner, hence, the illegalities committed by the Courts below may be rectified by accepting this appeal.
4. Conversely, Raja Amjad Ali Khan, the learned counsel for the landowner/respondent, staunchly defended the impugned judgment, arguing that the land in question is admittedly located on Main Srinagar Road and within the municipal limits. He further argued that the proximity of City Public School, Al-Madina Mart, Roots International School, LPG filling station, and Punjab Science College to the acquired land, served an ample proof of its commercial nature and high potential value. The learned counsel also highlighted that compensation for similar land in Gulshan Pir Alla-u-Din Colony, was previously fixed by this Court as Rs. 7,00,000/-per marla. According to him, the enhancement of the compensation by the learned High Court is based on proper appreciation of the evidence and the land's potential value, hence, no illegality or infirmity has occurred. He therefore prayed for the dismissal of appeal.
5. We have considered the arguments advanced on behalf of the learned Advocates, representing the parties and gone through the record made available along with the impugned judgment. The dispute in this lis relates, to the compensation of the land measuring 5 marla, comprising Survey No. 222 min, situated at Dhani Syedan, Muzaffarabad, acquired for the purpose of construction of water tank, vide Award No. 06/17, dated 12.09.2017. The compensation of the said land was assessed/fixed by the Collector as Rs. 50,000/- per marla along with 15% compulsory acquisition charges. The landowner being dissatisfied from the said assessment, filed a reference application before the Reference Judge, claiming therein, that the market value of the acquired land is not less than Rs. 7,50,000/- per marla, however, the learned Reference Judge while accepting the reference application, enhanced the same to the tune of Rs. 300,000/-per marla, along with 15% compulsory acquisition charges. The judgment of the learned Reference Judge has been modified by the learned High Court through the impugned judgment and the compensation of the acquired land has been fixed as Rs. 3,50,000/- per marla, along with 15% compulsory acquisition charges.
6. The learned Advocate, representing the appellants has objected to the enhancement of the compensation by the Courts below, particularly the learned High Court, on the ground that the landowner failed to establish, through oral as well as documentary evidence, that the acquired land is of commercial nature, rather the same is hilly, slopy, and distant from the main road, making it unsuitable for commercial use, hence, the enhancement of the compensation by the Courts below is not justified. It is revealed from the record that the landowner, in the reference application, claimed the market value of the acquired land as Rs. 7,50,000/- per marla. In support of his claim, the landowner produced two witnesses and also got recorded his statement. He also produced a sale-deed (Exh. "PD"), executed on 14.10.2015, evidencing the sale of 5 kanal of land in the same vicinity at the rate of Rs. 4,50,000/- per marla. The learned Reference Judge, enhanced the compensation to Rs. 3,00,000/- per marla, on the basis of location of the land and its potential value, whereas the learned High Court through the impugned judgment while considering the sale-deed Exh. PD", further increased the compensation by Rs. 50,000/- per marla, noting the two- year gap between the sale-deed and the award date i.e. (12.09.2017) as well as the expected rise in land prices. Given these circumstances, the key issue, address by us is whether the Courts below, having discounted the landowner evidence, were justified in enhancing the compensation or not?
7. Section 23 of the Land Acquistion Act, 1894, requires that while determining compensation for the land acquired, market value of the land must be considered and that market value means the value of similar land located in the vicinity and put to the same use. Hence, the key factors for determining market value are land similarly situated and in similar use. Potential value also has to be factored in where the land is put to different usage, so when a land is acquired for a public purpose, the provisions of Land Acquistion Act require that along with the market value, potential value be considered. This is important because market value per se does not factor in the value that can be attributed based on the capacity or potentiality of the land, meaning the value based on the use it is reasonably capable of being put to in the future. We are fortified in our view from the case reported as "Marawat Khan and 4 others vs. Collector Land Acquistion, & 2 others" [2013 SCR 1224], wherein it was observed by this Court in paragraph 6, as under: "6. Before proceeding further, it may be observed that the basic principle laid down by the apex Court of Pakistan and the apex Court of the State of Azad Jammu and Kashmir is that the land is not to be valued merely by reference to the use to which it is being put at the relevant time, but also by a reference to the use to which it is reasonably capable of being put in future; and the market value is the potential value of the property at the time of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time. The price of the land acquired had to be fixed in accordance with the aim and rule that willing buyer was ready to pay and willing seller was prepared to receive the price so fixed for whole of the land ...."
In another case reported as Abdul Aziz vs. Azad Govt. and 2 others [2010 SCR 47], it was observed by this Court as under: ".... It would not be out of place to mention here that the market value of the land at the time of notification under Section 4 of the Land Acquisition Act was merely one of the modes for determining the compensation and was not absolute yardstick for the assessment of compensation. Various matters have to be considered while determining the compensation..."
Similarly, in the case reported as WAPDA vs. Akram Hussain and others [2019 SCR 172], it was observed by this Court as under: ".... In view of the settled law, the Collector Land Acquisition while assessing the market value has to be valued the land not merely with 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, but after going through the record it appears that this principle of law has not been followed in the instant case.
The Apex Court of Pakistan, while interpreting Section 23 of the Land Acquisition Act, 1894, has also provided the guidelines for determination of the market value in plethora of judgments. For ready reference some are quoted hereunder:-
(i) The land has potentiality if it is in close proximity to a residential area, or the municipal limits of a city. Also to be considered is that the acquisition of such land is proof of its potential for development. (Land Acquisition Collector, etc. V. Abdul Qayyu m Malik, etc. 1980 SCMR 63).
(ii) The land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined, but also by reference to the uses to which it is reasonably capable of being put in the future; and market-value is the potential value of the property at the time of acquisition which would be paid by a willing buyer to a willing seller, when both are actuated by business principles prevalent in the locality at that time. (Fazalur Rahman and others v. General Manager, S.I.D.B and another PLD 1986 SC 158).
(iii) Revenue record is not conclusive of the value of the land, rather it is the value of the use which the land is capable of and the use of the land in the vicinity (Sardar Abdur Rauf Khan and others v. The Land Acquisition Collector/Deputy Commissioner, Abbotabad and others 1991 SCMR 2164 and Land Acquisition Collector, G.S.C., N.T.D.C., (WAPDA), Lahore and another v. Mst. Surraya Mehmood Jan 2015 SCMR 28).
(iv) The Court is to take into consideration the potentialities of the land, which may even include the price escalation, the issuance of notification under Section 4(1) of the Act.
(Land Acquisition Collector, Abbottabad and others v. Muhammad Iqbal and others 1992 SCMR 1245) and Sarhad Development Authority, N-WFP (now KPK) through COO/CEO (Officio) and others v. Nawab Ali Khan and others 2020 SCMR 265).
(v) For determining the price which a willing purchaser would give to the willing seller relying only on past sales is not enough as the value of the land with all its potentialities may be determined by examining local property dealers or other persons who are likely to know the price that the property can fetch in the open market. Where land is acquired near the Highway, its potentiality and future prospects are to be considered (Maqbool Ahmed Fatehally and others v. The Collector, District Lasbella and others 1992 SCMR 2342).
(vi) The possibility of land being used for a different purpose in future and its potential value on account of its situation near the developed area is important (Province of Punjab through Collector Bahawalpur, District Bahawalpur and others u. Col. Abdul Majeed and others 1997 SCMR 1692).
(vii) 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 but its market value may be tremendously high because of its location, neighbourhood, potentiality or other benefits. The potential uses to which the Land can be put to is relevant. (Murad Khan through his widow and 13 others v. Land Acquisition, Collector, Peshawar and another 1999 SCMR 1647).
(viii) Amenities such as roads, water, gas, electricity are relevant as is availability of schools and colleges in the vicinity of the acquired land. Urbanization of the area shows great potentiality of the area (Ministry of Defence through Secretary, Government of Pakistan and others v. Syed Wajdi Rizvi 2009 SCMR 105 and WAPDA through S.E. Acquiring Cell CRBC Project WAPDA, D.I.
Khan and another vs. Syed Ali and others 2010 SCMR 82).
The gist of the aforesaid case law is that the land must be valued as per its market value which is the price a willing buyer would give to a willing seller and must also include its potential value.
Potential value means the value of the land based on the probability that if developed, considering its location and proximity to residential, commercial or industrial areas with amenities such as roads, water, gas, electricity communication network and suitability it has the potential to be developed, which will increase its value. The value of land must include the potentiality of the land because this is the value, which the landowners would benefit from if they were able to maintain their ownership over the land. So far as the determination of potential value, there is no mathematical formula, which is applied uniformly in every case. Each case is seen in the context of its own facts but potential value has to be factored along with the market value. The objective is to ensure that the landowner not only gets the actual value of the land at the time it is acquired but also gets the value based on any future prospects attached with the use of land. Consequently, factors such as entries in the revenue record and land classifications cannot form the basis of the compensation as it does not bring out the potential value of the land and it does not factor in future prospects of the land. The compensation cannot be solely based on past sales of similar land in the same vicinity because potentiality cannot be determined without examining future prospects. Hence, compensation is about the value of the land, being its market value plus its potential value, so as to ensure that the landowner is duly compensated. This is fundamental to the process of award of compensation.
8. In the present case, it is an undisputed fact that the acquired land is located near Main Srinagar Road, with neighbouring establishments such as City International School, LPG filling station, Punjab Science College, and Al-Madina Super Mart. The amenities such as road, water, gas, electricity, communication network, easy approach to the Hospital as well as schools and public offices, are also available which increase the potential value of the land. After considering all these factors, we are of the unanimous view that the learned High Court has justifiably enhanced the compensation.
The argument put forth by the appellants counsel, that the land is hilly and sloping and unsuitable for commercial purposes, lacks merit. This claim is further contradicted by the fact that the land was acquired for the construction of a water tank, which would not have been feasible on a significantly hilly or sloppy terrain. The impugned judgment passed by the learned High Court is consistent with the statutory provision as well as the principle of law, cited hereinabove. The issue of non-impleading of necessary party has also been addressed and resolved by the learned High Court in accordance with law. Given these circumstances, interference by this Court is not warranted.
Resultantly, finding no force, this appeal is hereby dismissed. No order as to costs.