' SYED ABDUR REHMAN, J.--This appeal is directed against the order of Mr. Justice Fakhruddin G.
Ibrahim (now retired), dated 15-10-1973 decided by him while sitting on the original Civil side of this Court, on a reference under section 18 of Land Acquisition Act.
' Briefly stated the facts of the appeal are that the appellants are heirs of deceased Haji Abdul Karim who owned Sikni land bearing Survey No, 561-562 measuring 62,391 square yards: Deh Thano Tapu Malir Taluka and District Karachi. The said land was acquired under Land Acquisition Act. On 2-5-1967, notification under section 4 of Land Acquisition Act was issued for compulsory acquisition of the said land. This was following by another notification, dated 17-7-1967 under sections 6 and 17 of the Land Acquisition Act. Deputy Commissioner Karachi was appointed as Land Acquisition Officer who made his award on 20-1-1968 and determined the market value of this land at Rs,10 per square yard. He awarded compensation of Rs,40,000 for the building of Match Factory as well as other construction on the land.
2. Being dissatisfied with said award appellants submitted an application under section 18 of the Land Acquisiton Act requesting that the matter be referred for determination to the High Court. The appellants claimed the value of the land at Rs, 36 per square yard. In addition they claimed Rs, 69,523.85 as value of the Factory building. They also claimed Rs, 2,800 as profit per house for 200 houses which they intended to construct on that land and due to the acquisition thereof lost that earning. The appellants also claimed compensation for disturbance in business as a result of compulsory acquisition. They claimed statutory allowance at 25% as the land was acquired for a company. The appellants alleged that the said land was measuring 62,391 square yards and not 62,073 square yards. They also claimed interest from the date of possession. According to the appellants this land was purchased by their father Abdul Karim in the year 1953 at Rs, 3 per square yard. From 1962 they started the development of the land till by the time of acquisition, this land had been converted from agricultural into Sikni, lay out plan for building a housing society was prepared and Engineers were engaged to survey and demarcate the land, plans were got approved from K.D.A. And preliminary arrangements were made for supply of electricity and water.
The actual construction work was in full swing. 23 plots measuring 125 square yards each with houses thereon had already been sold. The, plots were sold at the rate of Rs,36 per square yard and their price was duly received and deposited in the Bank. The cost of constructed houses as per K.D.A's approved plan was agreed and settled at Rs,14,500 per house. There was a building wherein a Match Factory of deceased Abdul Karim was housed which also existed on the land except that the A.C.C. Roof thereof had been removed from greater part of the building.
3. The leanerd Single Judge after taking down evidence adduced by the parties and after hearing them decided not to enhance the rate of Rs,10 per square yard determined by the Deputy Commissioner for the appellants' land, whereas he enhanced the value of non-agricultural land of the other claimants from Rs,2 per square yard awarded by the arbitrator to Rs,8 per square yard against which naturally no appeal has been preferred by them. The learned Single Judge also did not increase the lump sum compensation of Rs,40,000 awarded by the Deputy Commissioner for the houses and building of the Match Factory. He, however, awarded compensation of Rs,23,000 for loss of earning on account of the sale of 23 houses which were actually under construction at Rs, 1,000 per house. This is in fact the only amount awarded by the learned Single Judge to the appellants in addition to the amount which was awarded by the Deputy Commissioner and of course, he has allowed the interest from the date of possession i.e. 7-11-1967.
4. We have heard Mr. Ahmed Saeed Qureshi for the appellants and Mr. Makhdoom Abdul Wali for the respondent,at length, and have gone through the record and proceedings of the case from cover to cover. First, we will deal with the question of the value of the Sikni land of the appellants. As shown above the appellants are claiming compensation at the rate of Rs,36 per square yard. Mr. Ahmed Saeed Qureshi for the appellants took us through a number of documents produced before the arbitrator as well as the learned Single Judge of this Court. These may be summarized as follows. There was a report of the Deputy Commissioner at page 22 of the paper book Exh. 4/8 which was to the effect that the rate of the lands adjoining to the land in suit was Rs,21 per square yard. There were two search certificates from the Sub-Registrar at pages 139 Exh. 7 and 142 Exh. 7/3 of the paper book respectively which showed the rate of the adjoining lands at Rs,45 and 25 per square yard respectively. There were 3 extracts from the record of rights at pages 194, 195 and 239 which were exhibited as 8/6, 8/7 and 9/10 respectively. According to these extracts lands were sold at the rate of Rs,72, 32 and 45 per square yard respectively. The other documents were four registered sale-deeds. These are at pages 242, 248, 259 and 283 of the paper book and appear at Exhibits 9/4, 9/12, 9/14 and 9/18 sales therein were at Rs,34, 47, 25 and 38 per square yard. Finally, there are the details of the sales furnished by the Mukhtiarkar which are Exh. ,31/1 and 32/2 and are at pages 329 and 332. According to these detail's, sales during these periods were made at different rates ranging from 50 paisas per square yard to Rs, 72 per square yard. The Deputy Commissioner arbitrator as well as the learned Single Judge of this Court have dealt with appellants' evidence in a general manner. According to the learned Single Judge the reason for not allowing compensation according to the rate given in the above sale-deeds was that the plots to which the sales related were situated in Darakhshan Colony (Malir Muhajir Colony) which is at a distance of about 2 furlongs from the acquired land. He then observed that Model Colony is a fully developed Colony though 1 to 2 miles from National Highway while the present plots are 2 furlongs from Darakhshan Colony though not far away from National Highway, hence he was not prepared to award that compensation at which land in the former colony was sold. He then came to the conclusion that looking to the situation of the acquired land, its distance from National Highway, its market value after development in his opinion cannot reasonably exceed Rs, 20 per square yard.
According to the learned Single Judge since half of the land was going to be earmarked for amenities such as roads, parks and mosques, the price of remaining half would have been about Rs, 20 per square yard and therefore, the compensation of Rs, 10 per square yard for the whole of the land according to him was reasonable. With this reasoning of the learned Single Judge we find it difficult to agree. No doubt the learned Single Judge has placed reliance on the above documents but what we feel is that he has underestimated the value given in these documents by putting the same at Rs, 20 per square yard, although some of these sales were at about Rs, 35 per square yard as one of them was even for Rs,72 per square yard. The sale closest in time according to the learned Single Judge himself was at Rs, 25 per square yard. In this connection reference may be made to 1972 SCMR 138 where it was held that criterion for fixation of compensation should be on the basis of the sales which are closest in time to the notification.
5. The phrase "market value of the land" as used in section 23(1) 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 be valued not only with reference to, its condition at the time of the declaration but its potential value must be taken into consideration. The value may also be determined by capitalising the rent. Reference in this connection is to be made to 1940 Calcutta W.N.
609. In Narsinghdas v. Secretary of State I L R 19 Lah. 263, Lord Buck Master said:- "Now, the principle upon which valuation of property compulsorily acquired should be measured has been repeatedly laid down before this Board and by the House of Lords. To use the words to be found in Fruser v. City of Fraserville (1971) A C 187, it is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantages and with all its possibilities excluding any advantage due to the carrying out of the scheme for the purpose for which the property is compulsorily acquired."
6. In a recent ruling reported in 1985 CLC 2161 a D.B. Of which one of us (Mr. Justice Tanzil-ur- Rehman) was a member, it was held that undoubtedly, the state may acquire private property in public interest, but the rightful private interest is also to be respected within permissible limits and particularly, while awarding compensation, the doctrines of 'Adl and Ihsan' as propounded by Islam are to be adhered to in Islamic State. The anxiety of the Court was to see the appellant be put in the same position as far as possible in which they would have been if there was no compulsory acquisition of property which is confiscatory in nature. As such the Court, while awarding compensation should be liberal, more so where acquisition of commercial and industrial undertaking is involved. Right of State to acquire property of an individual is not absolute. It is of an exceptional nature and may in a sense be taken to directly interfere with individual's ordinary right regarding disposal of one's property". Reliance was placed in PLD 1966 SC 347. In another recent ruling reported in 1985 CLC 2228 it was held that while determining compensation for land compulsorily acquired, complexion, character and potentialities of land were to be kept in view. It was further held in this ruling that unrebutted evidence of witnesses merited acceptance and where the land had acquired status of building site on material date, compensation had to be awarded on the basis of such status of land. We are, therefore, of the view that the compensation in this case ought to have been determined keeping in view the above rulings as well as on the principles enunciated by Islam.
7. We do not want to make any further comments on this line of argument taken by the learned Single Judge but it is sufficient to point out that looking to the evidence which has been led in this case, which consists of the documents of the officers of the respondent itself such as Deputy Commissioner, District Registrar, Mukhtiarkar, etc. The price of the land in suit awarded by the Deputy Commissioner and the learned Single Judge is not commensurate with the compensation to which the appellants are entitled. During the arguments it was stated by Mr. Saeed Ahmed Qureshi, that the appellants would be satisfied if they are given at least Rs, 15 per square yard as compensation which according to him was the, reasonable minimum compensation that should have been awarded in this case. As against this Mr. Makhdoom Abdul Wall who appeared for the respondent submitted that maximum reasonable compensation according to him was Rs, 12 per square yard. From the perusal of all the documentary evidence regarding the price of the land referred to above we have come to the conclusion that at least Rs, 15 per square yard should have been allowed by the Deputy Commissioner as well as the learned Single Judge of this Court for this land of the appellants which was also converted into a Sikni land by the Revenue authorities, which fact in itself depicts the advantageous qualities and potentialities of a piece of land. We, therefore, enhance the compensation on account of valuation of land to Rs, 15 per square yard, which according to us was the minimum market value of the land at the time of its acquisition.
8. As regards the Match Factory and the houses which were actually constructed also we feel that the compensation awarded by the Arbitrator and the learned Single Judge respectively was inadequate. The learned Single Judge after referring to the evidence regarding the Match Factory has painted out that at the time of acquisition it was lying in a dilapidated condition. There were only four walls and boundary wall without any roof or other attachment. The only evidence of the value of the factory was that of contractor Muhammad Umar Exh.
11. He has given the value of the building of the Match Factory in the condition which he had inspected it on 10-10-1966. He had deducted depreciation amount to Rs, 40,000 and Rs,1,980 for the removal of A.C.C. Roof. According to the learned Single Judge the evidence of Contractor Muhammad Umar was not believable because no measurements have been produced and no account had been maintained and that the proper person to given such a value would have been the architect and not the Contractor. No doubt evidence of architect in such a case would have been proper evidence but when the other side has also not cared to examine an architect, the evidence of the Contractor which has gone unchallenged and unrebutted can also be believed. It is a matter of common knowledge that the Contractors have also expert knowledge about the valuation or price of the building and to certain extent can determine value of a particular building correctly. Reliance in this connection is placed on AIR 1971 Madh. Par. 32 where it was held that evidence of person having special knowledge of market value of land not by profession but by experience may be admitted as expert evidence. Hence, his evidence should not have been altogether, discarded by the learned Single Judge. Apart from that the appellants' evidence supported by an audited balance sheet and the bill of Contractor Exh. 11/1 and Exh 11/2 referred to about should have been believed to some extent. The Contractor has given the value of residential building constructed by him on the appellants' land at Rs, 39,395. He has also produced receipt of that amount. Looking to the evidence of appellants and the Contractor Muhammad Umar and after taking into consideration all other relevant facts and circumstances, we have come to the conclusion that the compensation for the building and Match Factory be enhanced from Rs, 40,000 to Rs, 60,000. The last claim relates to loss of earning arising from acquisition of the land. The appellants had demanded Rs, 16,00,000 as compensation for loss of earning. In his statement appellant Abdul Waheed had estimated the loss of earning on the construction alone as Rs, 6,000 for each house. He had claimed compensation at this rate for 260 plots which were to be carved out of this land. In fact 23 houses were actually constructed on 23 plots and were sold at the price of Rs, 14,500 per house. The learned Single Judge allowed Rs, 1,000 per constructed house as loss of earning to the appellants. He however, did not grant compensation for loss of earning on the remaining 227 plots on which no quarters were built. According to him these plots were yet to be sold in future and it cannot be said with reasonable certainty that the claimant would have necessarily made profits thereon for it would then depend upon several unpredictable factors including availability of the houses, price of building matrial and so on. We find ' ourselves in agreement with the latter part of the finding of the learned Single Judge that in the circumstances of the case it was not proper to grant any compensation for loss of earning on the plots which were not sold but we are of the view that the calculation of profit of Rs, 1,000 per house was much below market rate. We have decided to enhance the figure to Rs,1,500 for house and have therefore, decided to award compensation of Rs, 34,500 to the appellants on account of loss of earning from the houses just to make up the deficiency in the profits at 10% was also observed by the learned Single Judge.
9. Coming to the remaining 227 plots on which there was no construction and which were not sold, we may at the very out-set state that we are in agreement with the finding of the learned Single Judge as well as with the arbitrator that the appellants are not entitled to any compensation on account of loss of earning that would have resulted from the same. We find ourselves in agreement with the learned Single Judge who had disapproved the contention of Mr. Shakir Ali, the counsel for the respondent and had rightly observed that whereas the claimants were entitled to compensation for loss of earning on the running business, they were not entitled to any compensation for loss of earning which was prospective in nature and did not arise from a business which was at the time of the acquisition a going concern on the land. In this connection the learned counsel for the respondent had attempted to distinguish an observation made in PLD 1966 (W.P.) Pesh. 193/198, to the effect that the compensation should be for the most lucrative use to which the land can be put and future potentiality should be properly allowed for. The learned Single Judge rightly remarked that in the case under ruling the brick-kiln was actually standing on the acquired land which had been recently repaired and was about to start working when the acquisition took place.
' This distinction is further elucidated in another ruling reported in AIR 1946 Bom. 142 where it was observed that the expression loss of earning used in section 23(4) of the Land Acquisition Act means loss of earning from a business which at the time of acquisition was a running concern. In this case the land was purchased with a view to expand existing business for constructing a factory thereon of manufacturing cigarettes and a licence was prepared and approved and the work of building the factory had reached 3 feet above the plinth level when the notification for acquisition was issued. The claim of loss of prospective earning was disallowed on the ground that the business in respect of which the loss of earning was claimed was not a running concern and had yet to be established. The Court had held in this case that nothing had happened except the purchase of land, completion of plans and obtaining of the section from the Collector for erecting factory. There were numerous other factors which had to take place such as completion of building, starting of business and the earning of profits therefrom. In the present case the facts are also nearly similar. As far as these 227 plots are concerned there was only the conversion of the land into Sikni, the formation of a Housing Society and the preparation of plans and their section and so far as the remaining 23 plots were concerned besides above the appellant had engaged Engineers, constructed houses and entered into sale agreements with 23 purchasers and had taken the price from them which was deposited in the bank. Hence, the business had become a running business as far as 23 houses were concerned but had not yet become a running business so far as the remaining 227 plots were concerned. Hence, the learned Single Judge was perfectly justified in refusing compensation for loss of earning on these 227 plots.
10. We, therefore, partly allow the appeal and enhance the rate of land from Rs,10 per square yard to Rs, 15 per square yard and enhance the amount for house and Match Factory from Rs, 40,000 to Rs,60,000 and enhance the amount of loss of earning from 23 plots from Rs,23,000 to Rs,34,500.
Except to the extent of this modification the judgment of the learned Single Judge of this Court is otherwise upheld. The parties to bear their own costs.