Market value by rental capitalisation accepted for acquired urban buildings where rental evidence is reliable and valuation is disputed.

Market value for acquired urban property is to be assessed at the date of notification, using the price a willing purchaser would pay a willing seller. For buildings in good condition, reliable rental evidence may be capitalised to determine compensation, and separate land-and-building valuation followed by averaging is an unsafe guide. Where the rental material is satisfactory, the compensation must be reassessed on that basis, which in this instance led to an enhancement of the award and rejection of the cross-objections.

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Issues: Whether compensation for the acquired buildings and land had to be fixed on the basis of market value under the statutory standard, and whether the rental method was the proper basis of valuation.

Analysis: The compensation enquiry was governed by the requirement that market value at the date of notification be taken into account. Market value is not a rigidly defined figure and must be assessed with reference to the conditions at the relevant time and the price a willing purchaser would pay to a willing seller. For urban buildings, actual or expected rental yield is a recognised and reliable indicator of value, while separate valuation of land and building and then averaging the totals is not a dependable method. On the facts, the buildings were in good condition and the rental evidence was satisfactory, so the compensation had to be reassessed by capitalising the rent on a proper basis.

Conclusion: The rental method was accepted as the proper basis, and the compensation awarded to the appellants was enhanced accordingly.

Final Conclusion: The appeals were disposed of by maintaining the dismissal of one claim, enhancing compensation in the other, and rejecting the cross-objections.

Ratio Decidendi: In determining compensation for urban property acquired under the Land Acquisition Act, market value may properly be ascertained by capitalising the fair rental income where rental evidence is reliable and separate land-and-building valuation is an unsafe guide.

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