judgement:
Civil Appeal No. 762 of 1984.
Appeal by special leave for an interlocutory order dated August 25, 1983 of the Calcutta High Court.
K.K. Venugopal, N.N. Gooptu and H.K. Puri for the Appellants.
S.L. Aneja for the Respondent.
The Order of the Court was delivered by SEN, J.
This appeal by special leave is directed against an interlocutory order dated August 25, 1983 passed by the Calcutta High Court restraining the Siliguri Municipality, the appellant herein, from recovering a graduated consolidated rate on the annual value of the holdings in terms of the amended provisions in sections 123 and 124 of the Bengal Municipal Act, 1932, as amended by the Bengal Municipal (Amendment) Act, 1980.
We are constrained to make the observations which follows as we do feel dismayed at the tendency on the part of some of the High Court to grant interlocutory orders for the mere asking.
Normally, the High Courts should not, as a rule, in proceedings under article 226 of the Constitution grant any stay of recovery of tax save under very exceptional circumstances.
The grant of stay in such matters, should be an exception and not a rule.
It is needless to stress that a levy or impost does not become bad as soon as a writ petition is instituted in order to assail the validity of the levy.
So also there is no warrant for presuming the levy to be bad at the very threshold of the proceedings.
The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed at the conclusion of the proceedings.
This object can be attained by requiring the body or authority levying the impost to give an undertaking to refund or 346 adjust against future dues, the levy of tax or rate or a part thereof, as the case may be, in the event of the entire levy or a part thereof being ultimately held to be invalid by the Court without obliging the tax payers to institute a civil suit in order to claim the amount already recovered from them.
On the other hand, the Court cannot be unmindful of the need to protect the authority levying the tax, for, at that stage the Court has to proceed on the hypothesis that the challenge may or may not succeed.
The Court has to show awareness of the fact that in a case like the present a municipality cannot function or meet its financial obligations if its source of revenue is blocked by an interim order restraining the municipality from recovering the taxes as per the impugned provision.
And that the municipality has to maintain essential civic services like water supply, street lighting and public streets etc., apart from running public institutions like schools, dispensaries, libraries etc.
What is more, supplies have to he purchased and salaries have to be paid.
The grant of an interlocutory order of this nature would paralyze the administration and dislocate the entire working of the municipality.
It seems that these serious ramifications of the matter were lost sight of while making the impugned order.
We will be failing in our duty if we do not advert to a feature which causes us dismay and distress.
On a previous occasion, a Division Bench had vacated an interim order passed by a learned Single Judge on similar facts in a similar situation.
Even so when a similar matter giving rise to the present appeal came up again, the same learned Judge whose order had been reversed earlier, granted a nonspeaking interlocutory order of the aforesaid nature.
This order was in turn confirmed by a Division Bench without a speaking order articulating reasons for granting a stay when the earlier Bench had vacated the stay.
We mean no disrespect to the High Court in emphasizing the necessity for sell imposed discipline in such matters in obeisance to such weighty institutional considerations like the need to maintain decorum and comity.
So also we mean no disrespect to the High Court in stressing the need for self discipline on the part of the High Court in passing interim orders without entering into the question of amplitude and width of the powers of the High Court to grant interim relief.
The main purpose of passing an interim order is to evolve a workable formula or a workable arrangement to the extent called for by the demands of the situation keeping in mind the presumption regarding the constitutionality of the legislation and the vulnerability of the challenge, only in order that no irreparable injury in occasioned.
The Court has therefore to strike a delicate 347 balance after considering the pros and cons of the matter last larger public interest is not jeopardized and institutional embarrassment is eschewed.
For these reasons, the appeal must be allowed.
The order passed by the High Court dated August 25, 1983 restraining the Siliguri Municipality from recovering a graduated consolidated rate on the annual value of the holdings in terms of the amended provisions contained in sections 123 and 124 of the Bengal Municipal (Amendment) Act, 1980 is set aside.
We wish to place on record that Shri Venugopal appearing with Shri Naro Narayan Gooptu has given an undertaking on behalf of the Siliguri Municipality that the municipality shall refund the difference between the revised and the old rates within three months of the order of the High Court in case the writ petition is finally allowed by the High Court.
There shall be no order as to costs.
N.V.K. Appeal allowed.

summary:
The appellant Municipality in its Appeal by Special Leave impugned the interlocutory order of the High Court restraining the Municipality from recovering a graduated consolidated rate on the annual value of the holdings in terms of the amended provisions in sections 123 and 124 of the Bengal Municipal Act, 1932 as amended by the Bengal Municipal (Amendment) Act, 1980.
Allowing the Appeal, ^ HELD: 1.
The High Court should not in proceedings under Article 226 of the Constitution grant any stay of recovery of tax save under very exceptional circumstances.
The grant of stay in such matters, should be an exception and not a rule.
[345F] 2.
The levy or impost does not become become bad as soon as a Writ Petition is instituted to assail the validity of the levy.
There is no warrant for presuming the levy to be bad at the very threshold of the proceedings.
The main purpose of passing an interim order is to evolve a workable formula of a workable arrangement to the extent called for by the demands of the situation.
The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed.
This object can be attained by requiring the authority levying the impost to give an undertaking to refund or adjust the levied amount against future dues, in the event of the entire levy or a part thereof being ultimately held to be invalid by the Court.
[345 G H; 346 A] 3.
The main purpose of passing an interim order is to evolve a workable formula or a workable arrangement to the extent called for by the demands of the situation keeping in mind the presumption regarding the constitutionality of the legislation and the vulnerability of the challenge, only is order that no irreparable injury is occasioned.
The Court has therefore to strike a delicate balance after considering the pros and cons of the matter lest larger public interest is not jeopardized and institutional embarrassment is eschewed.
[346H; 347A] 345 4.
The Court has to show awareness of the fact that in the case of the fact that in the case of a Municipality it cannot function or meet its financial obligations if its source of revenue is blocked by an interim order restraining it from recovering the taxes as per the impugned provision.
The Municipality has to maintain essential civic services, run public institutions, purchase supplies and pay the salaries of its employees etc.
The grant of an interlocutory order would paralyze the administration and dislocate the entire working.
These serious ramifications were lost sight of by the High Court in the instant case while making the impugned order.
[346 C D]


judgement:
Appeal No. 10144 of 1983.
Appeal by Special leave from the Judgment and Order dated the 20th July, 1983 of the Allahabad High Court in Civil Revision No. 237 of 1983.
G.L. Sanghi, K.K.Jain, A.D. Sanger and Pramod Dayal for the Appellant.
J.D. Jain, Mrs Kawaljit Kochar and S.R. Yadav for the Respondent.
The Judgment of the Court was delivered by MISRA, J.
The present appeal by special leave is directed against the judgment of the High Court of Allahabad dated 20th July, 1983 disposing of a revision under s.25.
of the Small Causes Court Act arising out of suit for eviction of the appellant from the premises in suit.
The respondent filed a suit for eviction and for arrears of rent and damages for use and occupation pendent lite and future on the allegation that the appellant was inducted as a tenant of the premises in suit on a monthly rent of Rs. 250 on 7th February, 1972, that the building in suit was constructed in 1971 under the co operative housing scheme of the State Bank of India for which the Bank advanced loan.
The building in suit was assessed to house and water tax on 1st October.
1971 and as such the building was not covered by the U.P. Urban Buildings (Regulation of letting, Rent and Eviction) Act, 1972 (hereinafter referred to as the new Rent Act for short), and that the defendant defaulted in the payment of rent despite notice dated 24th March, 1977.
The Respondent therefore terminated the tenancy of the appellant.
336 The claim was resisted by the appellant on the ground that the building in question was constructed in 1968 and that it was covered by the new Rent Act.
His further stand was that rent had been cleared upto 6th April, 1977 and there was no default in the payment of rent.
He also challenged the service and the validity of the notice terminating his tenancy.
The appellant also claimed the adjustment of Rs. 1000 spent by him towards the repairs of the premises.
By a later amendment it was further pleaded that the plaint having not been amended so as to bring the suit under the provisions of the new Rent Act the suit was barred by s.20 of the Act.
The Third Additional District Judge negatived the defence and decreed the suit for eviction as also for recovery of arrears of rent and damages for use and occupation.
The learned Judge held that the building was exempt from the operation of the new Rent Act on two grounds.
The first grounds.
was based upon sub s.(2) of s.2 which provides that nothing in this Act shall apply to a building during the period of ten years from the date on which its construction is completed.
The second ground was based upon the proviso to sub s.(2) of s.2, which contemplates that where a building has been constructed substantially out of funds by way of loan or advance from the State Government, or Life Insurance Corporation of India or a bank or a Co operative society, and the period of repayment of such loan or advance exceeds the aforesaid period of ten years, then reference in this sub section to a period of ten years shall be deemed to be a reference to a period of fifteen years or the period ending with the date of actual repayment of each loan or the period ending with the date of actual repayment of each loan of advance, including interest, whichever is shorter.
As the last instalment of the loan was paid in March 1981, instead of ten years the building should be fifteen years old to attract the provisions of the new Rent Act.
He also held that the appellant had failed to prove that the spent Rs. 1000 towards repairs of the premises.
The learned Judge overruled the other pleas of the appellant and decreed the suit as prayed for.
The appellant feeling aggrieved preferred a revision in the High Court.
It was contended for the appellant that the building in question had been constructed by a co operative society and the landlord had purchased it from the society and, therefore, the view taken by the learned Judge that the building was constructed substantially out of funds obtained from the sources mentioned in the proviso to s.2(2) of the new Rent Act was manifestly erroneous.
The High Court, however, did not express any concluded opinion and rest contended by observing that it was not necessary to examine the submission 337 in any detail or to express any concluded opinion about it for disposal of the present revision.
The High Court, however, accepting the finding of the learned Additional District Judge that the building in question will be deemed to have been completed on 1st October, 1971, the date of assessment of house tax and water tax held that the building was not ten years old on the date of the suit and, therefore, the new Rent Act had no application to the building in suit and the appellant cannot get any protection of the new Rent Act.
The High Court confirmed the findings of the trial Court on all other points except the finding about the arrears of rent.
In the opinion of the High Court admittedly a sum of Rs. 1000 had been paid by the appellant to the landlord through a crossed cheque dated 16th August, 1976 which was received by the landlord on 15th September, 1976.
But when the plaintiff was in the witness box payment by cheque was not specifically put to him and it has not been established as to for which period the payment by cheque was made.
The counter foil of the cheque book also did not specify the period for which this payment by cheque was made.
The High Court, however, did not endorse the finding of the Additional District Judge that the payment through the cheque may have been made by the appellant towards rent for some period prior to April 7, 1976 and held it to be manifestly erroneous and without any basis.
In the result High Court allowed the appeal in part and set aside the decree of the trial court relating to the recovery of Rs.3158 30 as arrears of rent for the period between April 7, 1976 and April 25, 1977 and remanded the case to the trial court for redetermination of the amount of rent in arrears payable by the appellant after affording opportunity to the plaintiff to explain the payment of the amount of Rs. 1000 through cheque dated August 16, 1976.
The trial court was further directed to afford opportunity to the parties to adduce further evidence in regard to this aspect.
The appellant has now approached this Court with an application for special leave to appeal.
On the date of summary hearing of the application under article 136 of the Constitution we granted special leave and with the consent of the counsel for the parties we finally heard the appeal to obviate further delay.
338 The only point argued before this Court is whether the premises which was not ten years ' old on the date of the suit and was exempted from the operation of the new Rent Act, can be governed by it if ten years expired during the pendency of the litigation.
In order to appreciate the contention of the parties it will be relevant at this stage to refer to s 2 of the new rent Act.
It pertinently reads: "2.
Exemption from operation of Act. (I) nothing in this Act shall apply to (a). . . (b). . . (c). . . (d). . . (e). . . (f) any building built and held by a society registered under the Societies registration Act, 1860 (Act No. LVIII of 1860) or by a Co operative society, company or firm and intended solely for its own occupation or for the occupation of any of its officers or servants, whether on rent or free of rent, or as a guest house, by whatever name called, for the occupation of persons having dealings with it in the ordinary course of business.
(2) Except as provided in sub section (5) of Section 12, sub section (IA ) of section 21, sub section(2) of Section 24, Section 24 A 24 B, 24 C or sub section (3) of Section 29 nothing in this Act shall apply to a building during a period of ten years from the date on which its construction is completed: Provided that where any building is constructed substantially out of funds obtained by way of loan or advance from the State Government or the Life Insurance Corporation of India or a bank or a co operative society or the Uttar Pradesh Avas Evam Vikas Parishad, and the period of repayment of such loan or advance exceeds the aforesaid period or ten years then the reference in this sub section to the period of ten years shall be deemed to be a reference to the period of ten years or the period ending with the date of actual repayment of each loan or advance (including interest), whichever is shorter.
339 Explanation I. For the purposes of this sub section (a) the construction of a building shall be deemed to have been completed on the date on which the completion thereof is reported to or otherwise recorded by the local authority having jurisdiction and in the case of a building subject to assessment the date on which the first assessment thereof comes into effect and where the said dates are different, the earliest of the said dates, and in the absence of any such report, record or assessment, the date, on which it is actually occupied (not including occupation merely for the purposes of supervising the construction or guarding, the building under construction) for the first time.
Provided that there may be different dates of completion of construction in respect of different parts of a building which are either designed as separate units or are occupied separately by the landlord and one or more tenants or by different tenants: Explanation II . . . . . . .
Explanation III A building shall be deemed to be constructed substantially out of funds obtained from sources mentioned in the proviso, if the funds obtained from one or more of such sources account for more than one half of the cost of construction.
" Section 2 of the Act provides various kinds of buildings to which the new Rent Act has no application.
Sub section (2) of s.2 contemplates that the new Rent Act will not apply to a building during a period of ten years from the date on which its construction is completed.
Explanation I to sub s.(2) enumerates the dates on which the building shall be deemed to have been completed : (i) The date on which the completion thereof is reported to or otherwise is recorded by the local authority having jurisdiction.
(ii) In case of building subject to assessment, that date on which the first assessment thereof comes into effect.
(iii) where the said dates are different, the earliest of the said dates.
340 (iv) In the absence of any such report, record or assessment the date on which it is actually occupied for the first time.
In the case in hand the building was subject to assessment therefore it will be deemed to have been completed on the date of assessment which was 1st October, 1971.
The Additional District Judge has found that the building will be deemed to have been completed on the date of assessment of the house which has been accepted by the High Court.
The moment a building becomes ten years old to be reckoned from the date of completion, the new Rent Act would become applicable.
Admittedly the building was not ten years old on the date of suit.
But during the pendency of the litigation it completed ten years.
Then the question arises whether the new Rent Act will be attracted if the building completes ten years during the course of litigation.
The Additional District Judge decided the case on 23rd February 1982.
By that time the building in question had completed ten years.
The trial court, however, relying on a recent decision of this Court in Om Prakash Gupta vs Dig Vijendrapal Gupta ) refused to apply the new Rent Act to the building in question.
In that case a contention was raised that the building will be deemed to have been constructed on the date of occupation on 16th June, 1967 and not on the date of the first assessment and if that be so, the appellant would be entitled to the benefit of s.39 of the Act on the date when the revision came to be decided by the High Court.
On 23rd March, 1978.
This Court, however, held that it is the date of the first assessment which will be deemed to be the date of completion of the construction in the circumstances of the case and in that view of the matter the building had not become more than ten years old on the date when the revision came to be decided by the High Court and, therefore, there was no question of giving the benefit of s.39 of the Act to the appellant.
It was not at all necessary in that case to deal with the question whether the appellant would be entitled to the benefit of s.39 as the building had not become ten years old on the date their the revision petition was heard.
In the instant case, however, the building had become more than ten years old during the pendency of the litigation and, therefore, the question assumes importance in the present case.
341 It may be argued that the Court had to decide the case on the basis of cause of action that accrued prior to the date of filing the suit and not on a new cause of action, but this question need not detain us as it is covered by decision of this Court in Pasupati Venkateswrlu vs Motor and General Traders.(1) Dealing with a similar question this Court observed: "It is basic to our processual jurisprudence that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding.
Equally clear is the principle that procedure is the handmaid and not the mistress of the judicial process.
If a fact, arising after the lis has come to court and has a fundamental impact on the right to relief or the manner of moulding it, if brought diligently to the notice of the tribunal, it cannot blink at it or be blind to events which stultify or render inept the decretal remedy.
Equity justifies bending the rules of procedure, where no specific provision or fair play is not violated, with a view to promote substantial justice subject, of course to the absence of other disentitling factors or just circumstances.
Nor can we contemplate any limitation on this power to take note of updated fact to confine it to the trial Court.
If the litigation pends, the power exists, absent other special circumstances repelling resort to that course in law or justice.
Rulings on this point are legion, even as situations for applications of this equitable ruled are myriad.
We affirm the proposition that for making the right or remedy claimed by the party just and meaningful as also legally and factually in legally and factually in accord with the current realities, the Court can, and in many cases must, take cautious cognizance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed." Normally amendment is not allowed if it changes the cause of action.
But it is well recognised that where the amendment does not constitute an addition of a new cause of action, or raise a new case, but amounts to no more than adding to the facts already on the record the amendments would be allowed even after the statutory period of limitation.
The question in the present case is whether by seeking the benefit of s.39 of the new Act there is a change in the cause of action.
In A.K. Gupta & Sons.
vs Damodar 342 Valley Corporation this Court dealing with the cause of action observed as follows: "The expression "cause of action" in the present context does not mean every fact which it is material to be proved to entitle the plaintiff to succeed" as was said in Cooks vs Gill(2) in a different context, for if it were so, no material fact could ever be amended or added and, of course, no one would want to change or add an immaterial allegation by amendment.
That expression for the present purpose only means, a new claim made on a new basis constituted by new facts.
Such a view was taken in Rabinson vs Unicos Property Corporation Ltd.(3) and it seems to us to be the only possible view to take.
Any other view would make the rule futile.
" The appellant in the present case only seeks the protection of the new Rent Act which became applicable to the premises in question during the pendency of the litigation.
We see no reason why the benefit of the new Rent Act be not given to the appellant.
Section 20 of the new Rent Act provides a bar to a suit for eviction of a tenant except on the specified grounds as provided in the section.
Subsection (4) of s.20 stipulates that in any suit for eviction on the grounds mentioned in cl.
(a) to sub section
(2), viz. the arrears of rent, if at the first hearing of the suit the tenant in default pays all arrears of rent to the landlord or deposit in court the entire amount of rent and damages for use and occupation of the building due from him, such damages for use and occupation being calculated at the same rate as rent together with interest thereon at the rate of nine per cent per annum and the landlord 's cost of the suit in respect thereof after deducting there from any amount already deposited by the tenant under sub section
(1) of s.30, the court may, in lieu of passing a decree for eviction on that ground, pass an order relieving the tenant against his liability for eviction on that ground.
Sections 39 and 40 of the new rent Act also indicate that the benefit of the new Act will be given to the tenant if the conditions comtemplated in those sections are satisfied.
Section 39 also indicates that the parties are entitled to make necessary amendment in their pleadings and to adduce additional evidence where necessary.
For the reasons given above the appeal must succeed.
It is accordingly allowed in part and the judgment and decree of the High 343 Court is set aside in so far as it relates to eviction but the judgment of the High Court setting aside the decree for arrears of rent and remanding the case to the trial court remains intact, and the case is sent back to the III Additional District Judge who will apply the new Rent Act and give the protection of the new Act to the appellant and will give him an opportunity to deposit the dues contemplated by s.39 of the new rent Act after first determining whether any amount is due from the appellant towards rent as directed by the High Court.
The costs here will abide the result.
S.R. Appeal allowed in part.

dataset_name: IN-Abs

summary:
Section 2 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 exempts from operation of the Act various kinds of buildings specified in sub section (1).
Sub section (2) of Section 2 contemplates that the new Rent Act will not apply to a building during a period of ten years, from the date on which its construction is completed.
Explanation I to sub clause (2) enumerates the dates on which the building shall be deemed to have been completed viz., the date of which the completion thereof is reported to or otherwise recorded by the local authority having jurisdiction;(ii) in the case of building subject to assessment that date on which the first assessment thereof comes into effect.
(iii) where the said dates are different, the earliest of the said dates and (iv) in the absence of any report record or assessment, the date on which it is actually occupied for the first time.
The respondent landlord filed a suit for eviction and for arrears of rent and damages for use and occupation pendent lite and future on the allegation that the appellant was inducted as a tenant of the premises in suit on a monthly rent of Rs. 250 on 7th February 1972, that the building in suit was constructed in 1971 under the Cooperative Housing Scheme of the State Bank of India for which the bank advanced loan, that the building was assessed to house, and water tax on 1st of October 1971 and as such the building was not covered by the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 and that the appellant defaulted in the payment of rent despite notice dated 24th March 1977.
The appellant resisted the suit and contended that the new Act applied as the building in question was constructed in 1968, that he had cleared rent upto 6th April 77 and that as a matter of fact a sum of Rs. 1000 spent by him towards repairs etc was due from the Respondent landlord.
The Third Additional District Judge negatived the defence and decreed the suit for eviction as also for recovery of arrears of rent and damages for use and occupation.
The trial court found that not only both the conditions stated in Section 2(2) but also the 15 years ' exemption applied to the instant case.
The High Court in revision accepted the finding of the trial judge that the 334 building in question will be deemed to have been completed on 1st October 1971, the date of assessment of house tax and water tax and calculating from that date the building was not ten years old on the date of the suit and therefore, the new rent Act had no application to the building in suit and the appellant cannot get any protection of the Rent Control Act.
The High Court confirmed the findings of the trial court on all other points except the finding of the trial court on all other points except the finding about the amounts of rent and the allowed the appeal in part.
Allowing the appeal partially, the Court ^ HELD: 1:1.
The provision of the Uttar Pradesh Urban Building (Regulation of Letting, Rent and Eviction) Act 1972 will be attracted, if the building completes ten years during the course of litigation.[340 G H] 1:2.
In the instant case, the building will be deemed to have been completed on the date of assessment which was Ist October, 1971.
Reckoning from this date of completion, the new Rent Act would become applicable.
Admittedly the building was not ten years old on the date of suit.
But during the pendency of the litigation it completed ten years by 23rd February 1982 when the Additional District Judge decided the case, entitling the appellant to claim the benefit of Section 39 of the Act.
[340 B D] Om Prakash Gupta vs Dig Vijendrapal Gupta ; ; distinguished and held in applicable.
In the present case, the benefit of the new Rent Act should be given to the appellant who only seeks the protection of the new Rent Act which became applicable to the premises in question during the pendency of the litigation.[340 C D] Section 20 of the New Rent Act provides a bar to a suit for eviction of a tenant except on the specified grounds as provided in the section.(4) of s.20 stipulates that in any suit for eviction on the grounds mentioned in cl.(a) to sub s.(2), viz. the arrears of rent, if at the first hearing of the suit the tenant in default pays all arrears of rent to the landlord or deposits in court the entire amount of rent and damages for use and occupation of the building due from him, such damages for use and occupation being calculated at the same rate as rent together with interest thereon at the rate of nine per cent per annum and the landlord 's cost of the suit in respect thereof after deducting therefrom any amount already deposited by the tenant under sub s.(1) of s.30, the court may, in lieu of passing a decree for eviction on that ground, pass on order relieving the tenant against his liability for eviction on that ground.
Sections 39 and 40 of the new Rent Act also indicate that the benefit of the new Act will be given to the tenant if the conditions contemplated in those sections are satisfied.
Section 39 also indicates that the parties are entitled to make necessary amendment in their pleadings and to adduce additional evidence where necessary.[342 D G] 2:1.
Normally the Court has to decide the case on the basis of cause of action that accrued prior to the date of filing the suit and not on a new cause of action.
But it can and in many cases must take into account events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed".[341 A;F] 335 Pasupati Venkateswarlu vs Motor and General Traders,[1975] 1 S.C.C. 770; applied.
Normally amendment is not allowed, if it changes the cause of action.
But it is well recognised that where the amendment does not constitute an addition of a new cause of action or raise a new case, but amounts to no more than adding to the facts already on record, the amendment would be allowed even after the statutory period of limitation.[341 G] A.K Gupta & sons v Damodar Valley Corporation,[1966] 1.S.C.R. 796;; referred to.


judgement:
Appeals Nos.
290 348, 729 746, 802 805(N) of 1980, 2328 31 & 2350 2388 of 1981.
(Appeals by Special leave from the Judgment and decrees of the Karnataka High Court dated 12.7.79, 30.10.79, 4.6.81, 22.8.80, 4.7.80, 10.7.80, 7.8.80, 24.9.80, 21.8.79, 27.7.79, 28.5.80, 13.6.80, 5.2.80, 10.12.79, 9.8.79, 20.8.79, 8.8.79, 11.4.79, 26.3.79, 9.4.79, 24.1.79, 12.4.79, 4.6.79, 1.12.78, 6.6.79, 13.6.79, 18.6.79, 20.6.79, 26.7.79, 23.10.80 & 13.7.1979 in M.F.A. Nos.
678, 681 83, 686/78, 836 841/77, 150/78, 148 149/78, 8 16/79, 936 943/77, 567/77, 222 234/78, 256/78, 259/78, 444 448/78, 458/78, 705 707/77, 211 217/78, 736 737/78, 923 24/77, 130 131/78, 443/78, 1313,1314,1311/79, 735/78, 481, 482, 687 & 688/78, 1432 35/79, 377 388/78, 1087/80, 1352/79, 1267/78, 77/80, 486 98/78, 711/77, 925/77, 622/80, 765/80 1702/79, 717 18/77, 184/79, 260 61/78, 657/77 & 914 915/77) For the Appellants S.N. Kacker, and Swaraj Kaushal For the Respondents: S.S. Javali, B.P. Singh and Mr. Ranjit Kumar 389 S.L. Bendikar, and K.C. Dua P.R. Ramasesh K.R. Nagaraja, Naresh Kaushal and B. Krishna Prasad, Girish Chandra, A.V. Rangam and G. Gopalakrishnan The Judgment of the Court was delivered by SEN, J.
The short question involved in this appeal by special leave and the further appeals under s.54 of the Land Acquisition Act, 1894 ( 'Act ' for short) directed against the judgment and decrees of the Karnataka High Court dated January 24, 1979 and in the connected appeals is whether there has been any error in principle or in law in the method of valuation arrived at by the courts below in adopting 'fifteen ' to be the multiple for computation of capitalized value of certain agricultural lands acquired in the years 1971 and 1972.
In the connected appeals although the point was not specifically taken before the High Court, but the parties were given notice that that was the real question to be determined.
These appeals have accordingly been heard together as they involve common question.
The issue involved is as to the proper multiplier to be applied in determining the capitalized value of the lands acquired and that depends on the rate of return on investments in 1971 and 1972.
In these appeals the judgments were rendered by the High Court on appeals being preferred by the Special Land Acquisition Officer, Davangere against the appellate judgments and decrees of the District Judge, Chitradurga and of the Civil Judge, Davangere on various references made under s.18 of the Act.
The facts giving rise to these appeals are more or less similar, and the essential facts may be shortly stated.
Due to the construction of D.B. Kere Pick up Project, several thousand acres of agricultural land in two villages in the State of Karnataka videlicet Budihar village in Harihar taluq and Siraganahally village in Davangere taluq got submerged and were accordingly acquired by the State Government pursuant to different notifications issued under s.4(1) of the Act published on diverse dates in the years 1971 and 1972 followed by the usual notifications under s.6.
In response to notices issued under s.9(2) of the Act, the respondents appeared before the Special Land Acquisition Officer, Davangere and claimed compensation varying between Rs. 15,000 per acre to Rs. 25,000 per acre for dry and wet lands depending upon the quality of the soil, the nature of the yield and the income derived therefrom.
In some cases they also claimed compensation at more than rupees one lakh per acre for arecanut 390 garden lands.
The Special Land Acquisition Officer however by his various awards adopted a multiple of fifteen and awarded compensation at a flat rate of Rs. 3,300 per care for dry agricultural lands and Rs. 5,000 per acre for wet agricultural lands.
On reference under section 18 of the Act in each of these cases, the Civil Judge Davangere enhanced the amount of compensation to Rs. 19,500 per acre for wet agricultural lands and Rs. 1,10,000 for arecanut garden lands.
There was common evidence adduced by the parties in all these cases and the evidence disclosed that the acquired lands were more or less similar in nature and contiguously situated.
On a consideration of the evidence the learned Judge came to the conclusion that the lands affected were capable of yielding two crops in a year with assured facility, the first being of paddy and the second of jowar, irrigation groundnut, chillies etc.
As there was no other method of determining the market value of the land, the learned Civil Judge applied a multiple of 15 times the net annual profits.
On appeal by the Special Land ' Acquisition Officer, the High Court also adopted the capitalized value at 15 years ' purchase of the net annual profits but reduced the amount of compensation to Rs. 15,000 per acre for wet agricultural lands and Rs. 25,000 per acre for arecanut garden lands i.e. depending upon the nature of the lands acquired.
It would therefore appear that the High Court and the courts below have both adopted fifteen to be the proper multiplier for computation of the capitalized value of the lands acquired for the purpose of determining the amount of compensation payable for acquisition thereof.
Shri Kacker, learned counsel appearing on behalf of the appellant contends that the High Court was wrong in adopting the multiple of 15 of the actual or immediately prospective net annual profits of the lands acquired to be the capitalized value thereof when the rate of return in the years 1971 and 1972 was 8% per annum.
According to the learned counsel, there is an error in principle or in law in the method employed and he draws our attention to the unreported decision of the High Court in The Special Land Acquisition Officer, Davangere vs B. Basavarajappa & Ors.
laying down that the proper multiple for computation of the capitalized value should be 12 1/2 having regard to the rate of return at the relevant time i.e. on the date of the notification under s.4(1) of the Act.
The contention must, in our opinion, prevail.
In Basavarajappa 's case, supra, a Division Bench of the High 391 Court while dealing with the determination of compensation payable A for similar agricultural lands in the neighborhood of the same two villages acquired at or about the same time adopted the multiple of 121/2 times the net annual profits for purposes of determining the capitalized value thereof.
In coming to that conclusion, the High Court observed: "The rate of return from Government Security, which is Gilt edged Security, was around 6% in the year 1971 7?.
A person investing his capital in irrigated land would expect a return of about 2% more than what he obtains from Government Securities.
That means, a return of 8 % would be the normal return expected by an agriculturist investing in purchase of wet land$.
If 8% was the return expected, the number of years ' purchase value comes to 121/2.
" We regret to find that in these cases the High Court instead of having adopted the multiple of 121/2 times observed that the decision in Basavarajappa 's case, supra, was not applicable because the land 's acquired in these cases were for superior for which there is no rational basis.
If the lands acquired were of a superior quality, the actual or immediately prospective net annual profits would be more and when multiple by the proper multiplier arrived at on the rate of return at the relevant time i.e. On the date of the notification under s.4(1) of the Act, the amount of compensation for acquisition of such land 's would necessarily be more.
The quality of the soil has no relevance to the proper multiplier to be adopted in determining the capitalized value.
In Vyricherla Narayana Gajpatiraju vs Revenue Divisional Officer, Vizagapatnam the Privy Council adopted the traditional legal definition of value as the price at which the property would sell "as between a willing buyer and a willing seller".
Tn its narrowest sense it is designed to preclude a valuation based on an assumed ' forced sale; the property must be appraised at what it would probably bring if the owner allowed a reasonable opportunity for negotiations.
But the Courts have invoked a mythical willing buyer to justify a valuation higher than any attainable sale price.
According to the Privy Council, "market value" of the land 'within ' the meaning of s.23 of the Act is the price the property may fetch in the open market if sold by a willing vendor unaffected by the special needs of a parti 392 cular purpose.
The owner is entitled to the value of the property in its actual condition at the time of expropriation, with all its 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 acquired.
lt is not only realized possibilities but also the future possibilities that must be taken into consideration.
The Privy Council further observed that there is not in general any market for Indian the sense that one speaks of market for shares or commercial goods.
The value of any such article at any particular time can readily be ascertained by the prices being obtained for similar articles in the market.
In the case of land, its value.
can also be measured by a consideration of the prices that have been obtained in the past for lands of similar quantity and in similar positions, and that is what must be meant in general by the "market value" in s.23.
The function of the Court in awarding compensation under the Act is to ascertain the market value of the land at the date of the notification under s.4.(1) of the Act and the methods of valuation may be :(1) Opinion of experts.
(2) The prices paid within a reasonable time in bona fide transactions of purchase of sale of the lands acquired or of the lands adjacent to those acquired and possessing the same or similar disadvantages.
And (3) A number of years purchase of the actual or immediately prospective profits of the lands acquired.
Normally, the methods of capitalizing the actual or immediately prospective profits or the rent of a number of years ' purchase should not be resorted to if there is evidence of comparable sales or other evidence for computation of the market value.
IT Can be resorted to only when no other method is available.
It is axiomatic that the best evidence to prove what a willing purchaser would pay for the land acquisition would be the evidence of sales of comparable properties, proximate in time to the date of acquisition, similarly situate, and possessing the same or similar advantages ad subject to the same or similar disadvantages.
Market value is the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase.
Where definite material is not forthcoming either in the shapes of sales of similar lands i the neighbourhood at or about the date of notification under s.4(1) or otherwise, the Court has no other alternative but to fall back on the method of valuation by capitalization.
In valuing land or an interest in land for purposes of land acquisition proceedings, the rule as to number of years ' purchase is 393 not a theoretical or legal rule but depends upon economic factors such as the prevailing rate of interest in money investments.
The return which all investor will expect from an investment will depend upon the characteristic of income as compared to that of idle security.
The main features are: (I) Security of the income; (2) fluctuation; (3) chances of increase; (4) cost of collection etc.
The most difficult and yet the most important and crucial part of the whole exercise is ' the determination of the reasonable rate of return in respect of investment in various types of properties.
Once this rate of return and accordingly the rate of capitalization are determined, there is no problem in valuation of the property.
The traditional concept of capitalization was indicated by this Court in Rustom cavasjee cooper vs Union of India.
It was stated to be "Capitalization of the net annual profit out of the property at a rate equal in normal cases to the return from gilt edged securities, ordinarily value of the property may be determined by capitalizing the net annual value obtainable in the market at the date of the notice of acquisition.
" It is thus clear from the above enunciation that the method of determining the value of the property by application of a multiplier to the net annual income or profit should only be adopted when there is no evidence of comparable sales of similar lands in or about the neighb ourhood at the relevant time i.e. on the date of the notification under s.4(1) of the Act.
In certain circumstances however the Court has no other alternative but to fall back on the capitalized value.
Alfred D. Jahr in "Law of Eminent Domain" (1953 edn.) after a general discussion regarding the valuation of property, sums up at pp.
100 101 "lt is evident therefore, from the foregoing definitions as well as from numerous other definitions which may be cited, that the fair market value of properly taken by eminent domain is the price that the property will bring when offered for sale by one desiring, but not obliged, to sell; and purchased by one desiring to purchase but under no necessity 394 of buying.
It is the price which a piece of property will bring in the market when offered for sale and purchased by another, taking into consideration all the elements of the availability of the property, its use, potential or prospective and all other elements which combine to give a piece of property a market value." .
The learned author then deals with the fixation of market value on the basis of rental income at pp.
226 229 and states : "It is far sounder practice to avoid the use of rental value capitalization, if better evidence of market value is available.
In any event, the courts are inclined to give a greater weight to sales of similar properties in the market than to evidence of .
lease hold rentals.
" Jahr then deals with the method of capitalization of income and says at p. 230: "It is quite evident from the formula that the lower the rate of return applied, the higher the capitalized sum will be.
How ever, the rate of return on money invested is dependent upon many varied factors; (1) safety of principal; (2) liquidity of investment; (3) certainty of income; (4) possible market fluctuations; (S) appreciation of principal or income; and undoubtedly other elements too numerous to mention.
The interest rate current in the security market must be considered, as well as the investment rate to be obtained from high grade bonds or common stocks and commodities traded on the several exchanges.
" The principle deducible from the above passage is that the basic factor in applying the method of capitalization of income for ascertaining the market value of property is the rate of return that an ordinary investor would reasonably get on his investment, having due regard to all the relevant circumstances.
In the classical economic sense, as adopted by the Privy Council in Vyrricherla 's case, supra, the meaning to be placed upon the phrase "market value" of the land under s.23 of the Act is the price at which ' the land acquired.
could actually be sold at the relevant time i.e. On the date of the notification under s.4(1) of the Act by a fictitious willing buyer in a hypothetical market, with the. qualification that a forced 395 sale is hot to be assumed.
The price at which the property would A sell "as between a willing buyer and a willing seller" raises the problem of valuation.
The value of any object of wealth is simply a capitalization of the services or income which actual or potential owners of the property expect to ' derive from it i.e. earning power as a basis of valuation.
The rule of number of years ' purchase is not a theoretical or legal rule, but depends upon the economic factors such as the prevailing rate of return which a prudent investor in the class of properties in question would expect.
The most important of such economic factors is the prevailing rate of interest at the relevant time i.e. in the date of the notification under s.4(1) of the Act.
It is first necessary to ascertain the gross income from the acquired property, The next step should be to ascertain the net income, Having ascertained the net annual income, it must be capitalized by computing the number of years ' purchase.
During.
the imperial days; investment in gilt edged securities was looked upon as the only safe form of investment, But after the attainment of independence, the country has taken long strides in the growth of commerce and trade.
Due to growth of industries both in the public as well as in the private sector investment of capital such industries, if.
not any more secure, have come into the law merchant and such other alternative available securities have attracted persons who are inclined to invest, rather than gilt edged securities alone, apart from making fixed deposits in the scheduled banks.
This accounts for the variation of the proper multiple to be adopted.
The line of inquiry in such cases must therefore be .
What was the prevailing rate of interest on long term deposits with scheduled banks or in the public or private sector .
At the.
turn of the century, it was not uncommon for the Courts to adopt a rule of 20 years ' purchase for arriving at the capitalized value of agricultural lands.
It had long been the practice in the Courts of the then Madras Presidency to calculate the profits from any form of landed property as equal to the profits made by investing of money in the gilt edged, securities.
Till the early 50 's, the Courts of the then Madras Presidency held that the capitalized value of agricultural lands should be arrived at 20 years ' purchase having regard to the rate of interest on gilt edged securities at five percent per annum.
It was, however, observed that with respect to melwaram interest in a zamindari land or a vacant site, it was difficult to accept the current rate of interest on gilt edged secutries as a safe guide to the multiple to be applied to the annual profits on ryotwari land.
The 396 Landlord in such cases would not only expect to get a return on the capital invested on the land but also something in addition to that as compensation for this trouble in attending to the land and for the risks involved in the cultivating of land.
, It was observed that although the tenants might have agreed to pay him a fixed rent in money, yet if a full crop was not raised on the land either through failure of rain or because of pests or for any other reason, it was extremely difficult for the landlord to realise the rent.
For these reasons, the landlord naturally expected an appreciably larger return than he would expect from gilt edged securities which he lefts in the bank and for the realization of the interest of which he is put to no trouble whatsoever.
It would be unrealistic to adhere to the traditional view of capitalized value being linked with gilt edged securities when investment in fixed deposits with nationalized banks, National Savings Certificates, Unit Trusts and other forms of Government securities and even in the share market in the shape of blue chips command a much greater return.
More secure the capital and regular the return, lesser the rate of interest.
Most secured kind of investment is Government securities or deposits with scheduled banks or Unit Trust or National Savings Certificates.
The rate of interest on Government of India bonds for a period of 30 years in 1972 yielded: 5.75% per annum. ' As per the Government of Karnataka publication called "Finance Accounts of 1972 73" the rate of interest on the Mysore State Development Loans issued in the years 1967, 1968, 1969, 1970, 1971 and 1972 was uniformly 5.314% return.
The rate of interest on fixed deposits with State, Bank of India for a period ranging from 3 years upto 5 years yielded 7% while the rate on fixed deposits above S years was 7.25%.
The rate of dividend payable on unit trusts in 1972 was 8.25% per annum.
National Savings Certificates, 7 years, 2nd issue yielded tax free interest at 6%.
On maturity, 7 years,.
3rd ' issue 6% tax free payable annually and 7 years, 4th issue 7.5% payable annually but subject to income tax.
In oriental Gas Co. Ltd. & Ors.
vs State of West Bengal this Court held for the acquisition of an industrial undertaking in the State of West Bengal that if 12% of the capital invested was the annual return, the adoption of multiplier of "eight" could not be unreasonable in the year 1963.
That contention based on the traditional view expressed by Shah, J. in Cooper 's case, supra, that the multiplier must be related to the rate of interest on gilt edged securities 397 was repelled by Chinnapa Reddy, J.
It was stated that the observations of Shah, J. in Coopers case that capitalization of the net annual value of the property, at a rate equal in normal cases to the return from gilt edged securities was all important methods of determination of compensation, did not lay down a rule of law of universal application was observed: .
"The very use of the Word "normal" by Such, J. indicates that it was not intended to lay down any invariable rule that whenever a method of capitalization of net profit was adopted, the return from glit edged securities was to be the basis.
That .
should depend on a variety of circumstances such as the nature of the property, the normal return which may be C ' expected on like investment, the state of the capital market and several such factors.
" In Union of India & Anr. vs Smt.
Shanti Devi etc.
this Court recently had occasion to lay down the principle as to the true multiplier of "thirteen" applicable in determining the capitalized value of about 70,000 acres of agricultural land located in the Kangra valley in the State of Himachal Pradesh where the notification under s.4(1) of the Act had been issued in the years 1962 and 1963, and where there was no evidence of comparable sales of similar lands in the Kangra valley.
After referring to the judgment of this Court in Oriental Gas Co. Ltd 's case, supra, and several other decisions, one of us (Venkatramiah J.) observed: "The number of years ' purchase has gradually decreased ' as the prevailing rate of interest realisable from safe investments has gradually increased.
the higher the late of interest, the lower the number of years ' purchase.
This method of valua tion involves capitalizing the net inclose that the property c an fairly be expected to produce and the rate or capitalization is the percentage of return on his investment that a willing buyer would expect from the property during the relevant period.
" The Court explained that although alone time it was felt that interest on gilt edged securities or Government bonds should alone.
be taken into consideration, having regard to the safety and liquidity of investment, but the circumstances have now changed during the 398 recent years and deposits with the State Bank of India and other nationalized banks and even in the share market there arc many blue chips while command stability and other attendant benefits such as issue of bonus shares et cetera, and added: "A return of 10% per annum on such safe investments is almost assured.
Today nobody thinks of investing on land which would yield a net income of just 5 % to 6 % per annum.
A higher return of the order of 10% is usually anticipated.
Even in the years 1962 and 1963 an investor in agricultural land expected annual net return of at least 8 %.
It means that if the land yielded a net annual income of Rs.8 a willing under of land would have paid for it Rs. 100 i.e. a little more than 12 times the annual net income. ' ' There are certain general considerations which investors of all types take more or less into account: yield and appreciation possibilities, the ability readily to dispose of the investment (marketability) and safety.
Investments differ with respect to assurance of income and safety of principal.
In the investment market, the quality of investments evidenced by the yield or return that is produced in relation to market price higher the quality, the lower the yield.
Investors must take into account various types of risks associated with different investment mediums and therefore adopt a type of investment that is appropriate to their resources and particular investment objectives As already stated, some 20 to 30 years back i.e. till the early '50s, it was taken as.
a settled rule of practice, that the capitalized value of agricultural lands should be arrived at 20 years purchase having regard to the rate of interest on gilt edged securities at five per cent.
That rule no longer can be adhered to in view of the changed economic situation.
In the early '70s, people believed that investment in housing was more secure than other forms of Government securities in respect of safety of investment.
Investment in housing involves ' certainly of labour and effort such as maintenance, collection of rent, payment of taxes et cetera.
They rate of return expected therefore was 1.1/2% to 2.1/2% more than what was expected from gilt edged securities person investing.
capital in agricultural lands would ordinarily expect a return of 2% to 3% more than what he could obtain from gilt edged securities or other forms of safe investment such as fixed deposits in scheduled banks.
National Savings ' Certificates, Unit Trusts at cetera, or on blue chips i.e. On stocks and 399 shares in the public or private sector which yield a much greater return.
In regard to investment agricultural lands, there are many imponderables in as much as the investor runs 'a much greater risk than the risk that he runs in investment in housing which consists in vagaries of weather and other uncertainties.
There is no security of principal, no liquidity of investment nor any certainty of income.
The appreciation of principal or income is also uncertain.
The reasons for these is that agricultural lands are not readily.
transferable under the various land reform legislations e.g. laws ' relating to ceiling on agricultural holdings under the existing State laws and tenancy laws which place restrictions on transfer of such lands with concomitant danger of effacement of the rights of the absentee landlors and the creation of rights in the tillers of the soil.
In evaluating the rate of return which would ordinarily satisfy an investor in such a property, the risk factor has further to be evaluated.
There may be total or partial failure of crops either through failure of rain or drought, or inadequate or excessive rainfall.
There may be a failure of crops on account of locust invasion or insects or pests.
The cost inputs such as seeds, water fertilizer, labour charges etc. would vary from year to year.
If the overall cost goes up, the income from agricultural produce would be comparatively less.
The fluctuations in price of .
agricultural produce introduce a great deal of uncertainty in regard to the income that can be expected from the sale of the produce.
If the yield of the crop in other producing countries is large, or the market prices prevailing in such countries are low, the prices of such agricultural produce in India, would go down.
In view of these considerations, an investor would expect a much higher rate of return so that the risk factor is properly discounted.
In the premises, when the rate of return on investment was 8.25% in the years 1971 and 1972, a person investing his capital in .
agricultural lands would ordinarily expect 2% to 3% more than what he could obtain from gilt edged securities or other forms of safe investment and therefore the proper multiplier to be applied for the purpose of capitalization could not, in any event, exceed "ten".
In the present case, the State Government however contends that the proper multiple to be applied should be 12 1 in computation of the capitalized value of the lands in these cases having regard to the rate of return of 8% at the relevant 'time i.e. On the date of the notification under s.4(1) of the Act.
In view of this, it must be held that the multiple of 121/2 should be applied in computation of the capitalized value of the lands.
400 In the result, the appeals must succeed and are allowed.
The judgments and decrees of the High Court are modified by directing that the compensation awarded for acquisition of land should be reduced by one sixth in these cases wherever the amount of compensation has been determined by the method of capitalization.
The respondents shall get solatium @15.% on the compensation computed on the above basis and shall be paid interest at the rate decreed by the courts below.
The costs shall be borne by the parties throughout as incurred, N.V.K. Appeals allowed.

summary:
In the years 1971 and 1972, several thousand acres of agricultural lands in two villages were acquired by the State Government pursuant to different notifications issued under section 4(1) of the Land Acquisition Act 1894.
In response to notices under section 9(2), the respondents appeared before the Special Land Acquisition officer and claimed compensation varying between Rs. 15,000 to Rs 25,000 per acre for dry and wet lands depending upon the nature and the quality of the soil, and the income derived therefrom.
In some cases compensation was claimed at more than Rs. 1 lakh per acre for arecanut garden lands.
The Special Land Acquisition officer, by his various awards adopted a multiple of fifteen and awarded compensation at a flat rate of Rs 3,300 per acre for dry agricultural lands and Rs 5,000 per acre for wet agricultural lands.
On references under section 18, the Civil Judge adopted a multiple of fifty times the net annual profits as there was no other method of determining the market value of the land, and enhanced the amount of compensation to Rs. 19,500 per acre for wet agricultural lands and Rs 1,10,000 for arecanut garden lands.
On appeals by the Special Land Acquisition Officer, the High Court also adopted the capitalised value at 15 years ' purchase of the net annual profits but reduced the amount of compensation to Rs. 15,000 per acre for wet agricultural lands and Rs. 25,000 per acre for arecanut garden lands.
In the appeals to this Court by the Special Land Acquisition officer, it was contended relying on the unreported decision of the High Court dated November 21, 1977 in MFA Nos.
881 4/76: The Special Land Acquisition officer, Davangere vs B. Basavarajappa & Ors that the proper multiple for computation of the capitalized value should be 12/1/2 and that the High Court was wrong in adopting the multiple of 15 when the rate of return in the years 1971 and 1972 was 8 per cent per annum.
387 Allowing the Appeals; ^ HELD: 1.
The function of the Court in awarding compensation under the Land Acquisition Act 1894 is to ascertain the "market value" of the land at the date of the notification under section 4(1) of the Act, and the methods of valuation may be: (1) Opinion of experts (2) The price paid within a reasonable time in bona fide transactions of purchase or sale of the lands acquired, or of the lands adjacent to these acquired and possessing similar advantages, and (3) a number of years ' purchase of the actual or.
immediately prospective profits of the lands acquired.
[392 D E] 2.
The method of capitalising the actual or immediately prospective profits or the rent of a number of years purchase should not be resorted to if there is evidence of comparable sales or other evidence for computation of the market value.
It can be resorted to only when no other method is available.
[392 E] 3.
The meaning to be placed upon the phrase "Market Value" of the land under s.23 of the Act, is the price the land acquired could actually be sold at the relevant time i.e. on the date of the notification under s 4(1).
The owner is entitled to the value of the property in its actual condition at the time of expropriation, with all its 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 acquired.
Its value is measured by a consideration of the prices that have been obtained in the past for lands of similar quality and in similar positions.
[394 H; 392 B C) 4.
In valuing land or an interest in Land for purposes of land acquisition proceedings, the rule as to number of years ' purchase is not a theoretical or legal rule but depends upon economic factors such as the prevailing rate of return which a prudent investor in the class of properties in question would expect.
The return which an investor will expect from investment will depend upon the characteristic of income as compared to that of idle security.
The most important of such economic factors is the prevailing rate of interest at the relevant time i.e. on the date of the notification under s.4(1).
It is first necessary to ascertain the gross income from the acquired property.
The next step should be ascertain the net income.
Having ascertained the net annual income, it must be capitalized by computing the number of years ' purchase.
[395 B C] Vyricherla Narayana Gajapatiraju vs Revenue Divisional Officer, Vizagapatnam, LR (1939)66 IA 104; Rustom Cavasjee Cooper vs Union of India, ; ; Oriental Gas Co. Ltd & Ors vs State of West Bengal, ; ; Union of India & Anr vs Smt.
Shanti Devi etc.
etc ; ; referred to.
In regard to investment in agricultural lands there are many imponderables inasmuch as the investor runs a much greater risk than the risk that he runs in investment in housing which consists in vagaries of weather and other uncertainties.
There is no security of principal, no liquidity of investment nor any certainty of income.
The appreciation of principal or in come is also uncertain.
The reasons for these is that agricultural lands are not readily transferable under the various land reforms legislation, ex.
laws relating to ceiling on agricultural holding and tenancy laws.
In evaluating the rate of return which would ordinarily satisfy an investor in such a property, the risk factor has further to be evaluated.
There 388 may be total of partial failure of crops through the failure of rain or drought, or inadequate or excessive rainfall.
There may be failure of crops on account of locusts, insects or pests.
The cost inputs such as seeds, water, fertilizer etc.
vary from year to year.
The fluctuations in price of agricultural produce introduce a great deal of uncertainty in regard to income.
In view of these considerations, an investor would expect a much higher rate of return so that the risk factor is properly discounted.
[399 B E] In the instant cases, when the rate of return on investment was 8.25 per cent in the years 1971 and 1972, a person investing his capital in agricultural lands would ordinarily accept 2 per cent to 3 per cent more than what he could obtain from gilt edged securities or other forms of Safe investment and therefore the proper multiplier to be applied for the purpose of capitalization could not in any event exceeded "ten", but since the State Government in these cases contends that proper multiple for cover should be 12 1/2 [399 F G] 6.
The multiple of 12 1/2 should be applied in computation of the capitalized value of lands.
The judgments and crees of the High Court are modified.
The compensation awarded for acquisition of land reduced by one sixth wherever the amount of compensation had been determined by the method of capitalization.
The respondents shall get solatium 15% on the compensation computed as aforesaid and also interest.
[399 H; 400A B]


judgement:
ON: Criminal Misc.
Petition No. 284 of 1984 in Special Leave Petn.
(Crl.) No. 3000 of 1983.
K.L. Sharma, K.K. Mohan and Mrs. Geetanjali Mohan for the Petitioner.
K.G. Bhagat, Additional Solicitor General, R.D. Agarwal and R.N. Poddar for the Respondent.
The order of the Court was delivered by: CHINNAPPA REDDY.
By an order dated December 2, 1983, this court while dismissing a petition for special leave to appeal filed 439 against an order of the Delhi High Court refusing to grant bail to the petitioner until after examination of Rani Chaudhary as a witness, gave a direction that on the commencement of the trial, it should proceed from day to day.
Alleging that his two Advocates are not prepared to appear in the case from day to day as the trial is likely to be prolonged, the petitioner has filed, the present application for modification of the earlier order of this court by the deletion of the direction that the trial should proceed from day to day.
We think it is an entirely wholesome practice for the trial to go on from day to day.
It is must expedient that the trial before the court of a Session should proceed and be dealt with continuously from its inception to its finish.
Not only will it result in expedition, it will also result in the elimination of manoeuvre and mischief.
It will be in the interest of both the prosecution and the defence that the trial proceeds from day to day.
It is necessary to realise that Sessions cases must not be tried piecemeal.
Before commencing a trial, a Sessions Judge must satisfy himself that all necessary evidence is available, If it is not, he may postpone the case, but only on the strongest possible ground and for the shortest possible period.
Once the trial commences, he should, except for a very pressing reason which makes an adjournment inevitable, proceed de die in diem until the trial is concluded.
We are unable to appreciate the difficulty said to be experienced by the petitioner.
It is stated that his Advocate is finding it difficult to attend the court from day to day.
It is the duty of every Advocate, who accepts the brief in a criminal case to attend the trial from day today.
We cannot over stress the duty of the Advocate to attend to the trial from day to day.
Having accepted the brief, he will be committing a breach of his professional duty, if he so fails to attend.
The Criminal Miscellaneous Petition is, therefore, dismissed.
H.S.K. Petition dismissed.

summary:
The petitioner sought modification of the Court 's order that the trial should proceed from day to day on the ground that his advocates were not prepared to appear in the case from day to day as the trial was likely to be prolonged.
Dismissing the petition, ^ HELD: It will be in the interest of both the prosecution and the defence that the trial proceeds from day to day.
Before commencing a trial, a Sessions Judge must satisfy himself that all necessary evidence is available.
If it is not, he may postpone the case, but only on the strongest possible ground and for the shortest possible period.
Once the trial commences, he should, except for a very pressing reason which makes an adjournment inevitable, proceed de die in diem until the trial is concluded.
[439C D] It is the duty of every advocate who accepts the brief in a criminal case to attend the trial from day to day.
Having accepted the brief, he will be committing a breach of his professional duty, if he so fails to attend.
[439 E F]