Supreme Court reverses High Court, reinstates District Judge's valuation award with interest.

The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the District Judge's award of Rs. 22,700/- for the acquired land's valuation. The interest on the excess amount was directed to be paid at 6% per annum from July 4, 1947, until payment, and the respondent was ordered to pay the appellant's costs throughout.

---

---

Issues Involved:
1. Valuation of the acquired land.
2. Potential value of the land as a building site.
3. Rejection of evidence of specimen sales and Zaidi's offer.
4. Method of valuation based on annual income.
5. Rate of interest awarded on compensation.

Detailed Analysis:

1. Valuation of the Acquired Land:
The appeal concerns the valuation of a piece of land measuring 6 pucca bighas, which was acquired for public purposes. The Collector of Bijnor initially awarded Rs. 2218/- as compensation, including solatium. Upon reference, the District Judge assessed the land's value at Rs. 18,000/- based on the offer by witness Zaidi and awarded Rs. 22,700/- including solatium. The High Court, however, rejected Zaidi's offer and valued the land at Rs. 13,000/- based on annual income, awarding Rs. 15,000/- including solatium.

2. Potential Value of the Land as a Building Site:
The appellant contended that the High Court failed to consider the potential value of the land as a building site. The Supreme Court held that market value should consider the land's existing condition and potential possibilities. However, there was no substantial evidence of building activity or development trend towards the acquired land at the time of acquisition. Hence, the contention regarding potential value was rejected.

3. Rejection of Evidence of Specimen Sales and Zaidi's Offer:
Both the District Judge and the High Court discarded the evidence of specimen sales. The District Judge accepted Zaidi's offer as genuine, while the High Court rejected it, stating it was made under peculiar circumstances. The Supreme Court found no justification for the High Court's rejection, noting that Zaidi's offer was bona fide and not made under compulsion. The evidence of Zaidi was relevant and should have been considered.

4. Method of Valuation Based on Annual Income:
The High Court resorted to valuing the land based on its annual income, estimating it at Rs. 650/- and multiplying it by 20 to fix the value at Rs. 13,000/-. The Supreme Court criticized this method, stating it is inadequate as it does not account for the land's best use or future potential. The District Judge's valuation based on Zaidi's offer was deemed more appropriate.

5. Rate of Interest Awarded on Compensation:
The High Court awarded interest at 3% per annum, while the appellant contended it should be 6% as per Section 28 of the Land Acquisition Act. The Supreme Court interpreted Section 28 to mean that once the discretion to grant interest is exercised, it must be at the rate of 6%. The High Court's decision to award a lower rate was incorrect.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the District Judge's award of Rs. 22,700/-. The interest on the excess amount was directed to be paid at 6% per annum from July 4, 1947, until payment. The respondent was ordered to pay the appellant's costs throughout.

---