Krisknaswami Ayyangar, J.@mdashThis appeal arises out of certain land acquisition proceedings taken for the purpose of acquiring 648 sq. ft. in
Town Survey No. 1625 /1-A in Ward No. 4, Block 39 in the Town of Rajahmundry. The land acquisition officer awarded compensation at the
rate of Rs. 4-8-0 per square yard. On a reference u/s 18 of the Act, the District Judge of East Godavari enhanced the compensation by awarding
Rs. 26 per square yard. The Government has preferred this appeal and objects to the award of the District Judge on the ground that it is too high.
2. It is contended by the Government Pleader that the learned Judge was in error in proceeding to fix the market value with reference to the rent
which was received from the property acquired. He has argued that Ex. II which is a sale-deed of neighbouring property furnishes the true basis
for the award of compensation. Ex. II is dated 23rd July, 1928, and is a sale of 1000 square yards at Rs. 3 a square yard. In view of the fact that
the notification u/s 4(1) in the present case was issued on 11th December, 1934, and the sale-deed Ex. II was more than six years prior in date,
we are of opinion that this document does not furnish proper material for fixing the market value. Moreover, there is the evidence of the second
witness for the claimant who has deposed that the value of the sites in the locality has increased by reason of the springing up of fresh amenities not
in existence before. He has stated that a large number of houses has sprung up near the site acquired and two cinema halls have also come into
existence in the locality and a petrol bunk opposite to it. The learned Government Pleader has suggested that the evidence does not make it clear
that these amenities came into existence before the notification u/s 4 (1). The learned Judge in the Court below is apparently of the opinion that
they did. If it was the case of the Government that they came into existence after the notification the matter must have been cleared by cross-
examination directed to the purpose. But no such thing has been done. ""We are prepared to hold with the District Judge that the springing up of
fresh amenities in the neighbourhood has pushed up the value of the suit site and its neighbourhood. Apart from Ex. II, there is no other sale-deed
of neighbouring land which has been put forward as furnishing data for arriving at the market value. One other sale-deed, Ex. III, dated 24th July,
1928, was filed but admittedly the property covered by it is situated about half a mile away from the suit site and cannot furnish a proper criterion
of the value.
3. The only material placed before the learned Judge in the Court below thus consisted of rental agreements of the acquired site. These are Ex. D
series. Ex. D-2 the earliest of them is dated 22nd August, 1931, and was for a period of one year at Rs. 10 per month. On 1st August, 1932,
another rental agreement, Ex. D-l, came into existence covering a period of two years and the rent fixed was Rs. 13. Ex. D was the rental
agreement in force at the time of the notification and is dated, 1st October, 1934, and the rent fixed under it was also Rs. 13 per month. The
learned Judge was right in his conclusion that Rs. 13 per month should be taken to be the gross rental received from the property. But before
capitalising the rental income he should have deducted the municipal taxes payable in respect of the property and Ex. C series show that the half-
yearly tax was Rs. 10-13-3. Out of a gross annual rent of Rs. 156, Rs. 21-10-6 must therefore be deducted in order to arrive at the net rental
annual value.
4. The learned Judge has fixed the valuation by adopting twelve years'' purchase whereas the claimant wanted the calculation to be made upon
thirty years'' purchase. There is no evidence on the record upon which it could be decided that any particular number of years'' purchase should be
taken as the basis. There was no material for the learned Judge to fix it at twelve years'' purchase and the claimant himself did not put forward any
material for persuading the Court to accept his basis, namely, thirty years'' purchase. The learned Judge is apparently of the opinion that twenty
years'' purchase is the maximum compensation payable. In, this he is wrong. The number of years purchase which should be adopted in a given
case must vary with individual cases and will have to be decided upon the material placed before the Court. As we have already pointed out, the
learned Judge also fell into an error in taking the gross rental value for purposes of capitalisation instead of the net annual value.
5. In the absence of evidence on the point, we think that twenty years'' purchase should be adopted as the basis for fixing the market value. This is
ordinarily adopted as the basis and we see no reason to depart from the rule of ordinary practice. Our attention has been drawn to two decisions
of this Court, the first of which is reported in The Collector of Kistna Vs. Sreemanthu Raja Yarlagadda Sivarama Prasad Bahadur, Zamindar of
Challapalli, . and followed in the second of the cases cited, namely, The Land Acquisition Officer Vs. S.V. Subba Rao and Another, . The first of
these cases deals with the compensation awardable in respect of the melvaram right of a zamindar on zamindari property. The second of the cases
has reference to a site with a building thereon in the town of Calicut. It extends the principle of the decision in The Collector of Kistna Vs.
Sreemanthu Raja Yarlagadda Sivarama Prasad Bahadur, Zamindar of Challapalli, . The learned Judges make the following statement:
It is clearly laid down in the case already cited that it has long been the practice of the Courts in this Presidency to calculate the profits from any
form of landed property as equal to the profits made by investing money in gilt-edged securities.
We are unable to discover in the judgment in the case referred to any statement of law to this effect. On the other hand, Venkatasubba Rao, J., has
expressly stated that there is no uniform or rigid practice in regard to the number of years purchase and cites three cases in support of the
statement, Harish Chunder Neogi v. Secretary of State for India in Council (1907) 11 C.W.N. 875. Secretary of State for India in Council v.
Shanmugaraya Mudaliar . and Secretary of State for India in Council v. Sham Bahadoor ILR (1884) Gal. 769.
6. After all the function of the Court in awarding compensation is to ascertain the market value of the land at the date of the notification u/s 4(1).
Where definite material is not forthcoming either in the shape of sales of neighbouring land at or about the date of the notification or otherwise, the
Court can only proceed to do the best, it can under the circumstances. In the present case we think we shall not be erring on the wrong side if we
say that the market value should be fixed by capitalising the net annual income at twenty years'' purchase. We accordingly hold that the
respondents should have been given compensation at the said rate.
7. In the result the appeal fails and the cross-objections are allowed to the extent of the difference between the amount awarded by the District
Judge and the amount to be calculated on the basis mentioned above. On this basis it is agreed between the parties that the respondent will be
entitled to Rs. 3,090 in all including the fifteen per cent. compensation. The amount awarded by the lower Court is varied by substituting for it the
figure Rs. 3,090. The respondent will also be entitled to the interest on the excess from the date of the taking up of possession by the Government
to the date of payment. The appeal will be dismissed with costs but the appellant will pay only half the costs of the respondent in the memorandum
of cross-objections which is partially allowed as mentioned above.
8. Appeal dismissed and memorandum of objections partially allowed.
