Land valuation and statutory interest: building potentiality needs objective development evidence, and awarded interest follows the fixed statutory rate.

Market value of acquired land is to be assessed by reference to existing advantages and objectively proved potentialities, but building-site potentiality requires evidence of a reasonably near prospect of development shown by surrounding building activity, pressure for building use, or an identifiable trend of expansion. Mere proximity to a school, road access, or scattered houses is insufficient. On interest for enhanced compensation, the statute gives the court discretion only whether to award interest; once granted, the prescribed rate applies at six per cent per annum, and that legal question may be considered even if not earlier raised. The commentary also notes restoration of the enhanced valuation and application of the statutory interest rate.

---

---

Issues: (i) whether the acquired land had building-site potentiality so as to justify valuation on that basis; (ii) whether the owner was entitled to interest on the enhanced compensation at six per cent per annum under the land acquisition law.

Issue (i): whether the acquired land had building-site potentiality so as to justify valuation on that basis.

Analysis: Market value under the Land Acquisition Act is the price a willing purchaser would pay to a willing seller having regard to the land's existing advantages and its potentialities. The relevant question is whether there was an objective and reasonably near prospect of development, shown by surrounding building activity, pressure for building use, or an identifiable trend of expansion towards the acquired land. The evidence showed no substantial building activity in the neighbourhood and no real development trend in the direction of the land. The mere existence of a nearby school, road access, and a few scattered houses did not establish building potentiality.

Conclusion: The land was not to be valued on the footing of building-site potentiality.

Issue (ii): whether the owner was entitled to interest on the enhanced compensation at six per cent per annum under the land acquisition law.

Analysis: The provision governing interest on excess compensation confers discretion on the court only as to whether interest should be awarded, not as to the rate, once interest is granted. The language of the provision, read with the corresponding interest provision in the same Act, supports the conclusion that the statutory rate is six per cent per annum where interest is awarded. The question being one of law, it could be entertained even though not specifically raised earlier.

Conclusion: Interest, once awarded, had to be at six per cent per annum.

Final Conclusion: The enhanced valuation fixed by the first appellate court was restored, and the owner also succeeded on the statutory rate of interest payable on the excess compensation.

Ratio Decidendi: For land acquisition compensation, building potentiality must rest on objective evidence of reasonably near development, and where the statute fixes interest at a stated rate, the court's discretion extends only to awarding or refusing interest, not to reducing the statutory rate once interest is granted.

---