MUHAMMAD YAQOOB Versus COLLECTOR, LAND ACQUISITION/ADDITIONAL DEPUTY COMMISSIONER, PESHAWAR

SAIDUZZAMAN SIDDIQUI, J. ‑‑‑Leave was granted by this Court in the abovementioned four civil appeals which arise from proceedings for acquisition of land under the provisions of Land Acquisition Act 1894 (hereinafter to be referred as 'the Act' only), to consider the following contentions:‑‑

"3. The learned counsel for the petitioners in Petitions Nos.203 and 231‑P of 1994 contended that while awarding compensation the principles of section 23 were not followed and in spite of evidence on record and the report of the Commissioner, the claim was made at a lesser and inadequate amount. It was further contended that the petitioners had never' claimed compensation at the rate of Rs.25,000 per acre. The learned counsel referred to the objection filed by the petitioners in which it was stated that in no case the price of land is less than Rs.2 lass per acre and prayed that compensation may be awarded at the rate of Rs.10 per ft. The learned counsel further contended that on such statement the petitioners' claim could not be restricted to Rs.25,000 per Kanal. The learned counsel further contended that WAPDA being a Company, compulsory acquisition charges should have been at the rate of 25 % and not 15 % . It was further contended that the amending Ordinance 1983 by which 8% compound interest was abolished could not be applied to the present case which had been decided by award dated 22‑3‑1975.

4. The learned counsel for WAPDA in Petitions Nos.270 and 271‑P of 1994 contended that the interest should have been awarded from the date of taking over possession namely 21‑7‑1978 and not from the date of award i.e. 20th March, 1975. He further contended that the market value should have been calculated according to one year average at the time of notification under section 4 which has been on the basis arrived at by the Collector at Rs.73,000. He, thus, challenged the amount of compensation awarded which, according to him, was in breach of the principles laid down by section 23. of the Land Acquisition Act. Leave is granted in all the petitions to consider these questions. "

2. Proceedings for acquisition of land situated in village Mahal Gabri, Tehsil and District Peshawar, for construction of a residential colony for WAPDA employees, commenced with the issuance of a notification under section 4 of the Act by the Collector Peshawar, on 3‑12‑1973. The land proposed to be acquired under the above notification consisted of Khasra Nos.371 to 379, 381 to 392, 393 (min), 394 to 397 and 405 in all measuring 32 Acres, 3 Kanals and 3 Marlas. By award dated 20‑3‑1975, the Collector Acquisition, Peshawar, fixed the compensation of acquired land at the rate of Rs. 7,335.60 per Kanal plus 15% compulsory acquisition charges. In addition to above compensation the Collector also directed payment of cost of super structure/Abadi, on some of the survey numbers as follows:‑

" 1) Khasra No.396 belonging to Muhammad Gul etc. covered area and trees worth 15% compulsory Acquisition charges. ,Rs.12,450.00 Rs.1,867.50=Rs.14,317.50

(2) Khasra No. 376 belonging to Haji Yaqoob Khan etc. covered area and parda walls worth: Rs.21,399.00

15% compulsory acquisition charges. Rs.3,208.50=Rs.24,598.50

(3) Khasra No. 378 belonging to Haji Yaqoob Khan etc. parda wall and outer wall and trees worth. Rs.24,400.00

15 % compulsory Acquisition charges. Rs.3,660.00 Rs.28,060.00

(4) Khasra No. 390 belonging to Syed Phool Badshah etc. covered area and trees worth. Rs.3,400.00

'15% compulsory Acquisition charges. Rs.510.00=Rs.3,910.00"

3. The owners of the‑. land (appellants in C.As. Nos. 91 and 92/1995) being dissatisfied with the determination of compensation as aforesaid, applied to the Collector for making a reference to the Court under section 18 of the Act for determination of proper compensation which was allowed. The referee Court after recording evidence of the parties, rejected the compensation fixed by the Collector at the rate of Rs. 7,335.60 per Kanal, which was found to be too low and it also declined to accept the rate of compensation claimed by the owners between Rs.4,500 to 6,000 per Marla, and instead fixed the compensation at the rate of Rs.1,250, per marla (Rs.25,000 per kanal). The referee Court also awarded 15 % compulsory acquisition charges on the value of compensation fixed by it in addition to 8 % per annum compound interest from the date of award i.e. 20‑3‑1975 till 22‑5‑1983, and thereafter at the rate of 6% simple interest upto the date of actual payment. The cost of construction/abadi awarded by the Collector was maintained.

4. From the judgment of referee Court four civil appeals being R.F.As. Nos. 4, 7, 11 and 12 of 1993, the first two by the land owners and the remaining two by WAPDA, were filed before the Peshawar High Court to challenge the order of referee Court. A learned Division Bench of the High Court dismissed all the four appeals. The learned Judges of the High Court held that the compensation awarded by the referee Court was adequate and reasonable and also in accordance with the claim of the landowners and therefore, in view of the provisions of section 25 of the Act, higher compensation could not be awarded to the landowner. Leave was granted against the judgment of High Court as aforesaid.

5. In support of the appeals, the learned counsel for the landowners contended before us that the learned Judges of the High Court misread the contents of the objections/application of landowners before the Collector under Section 18 of the Act seeking reference of their cases to the Court for determination of proper compensation for the acquired land. It is urged that a proper construction of their objections/application under section 18 of the Act would show that the compensation claimed by them for the acquired land was much more than Rs.2,00,000 per acre. It is also contended by the learned counsel that besides other evidence of sale of land in the area for the relevant period which established a higher rate, the landowners had produced on record a copy of award No. 387‑P dated 7‑5‑1978 in which the Collector had awarded a sum of Rs.2,000 per Marla for a part of Khasra No. 393 in the same area which was totally overlooked by the learned Judges of the High Court. It is accordingly, argued by the learned counsel for the landowners that the Court below, therefore, in any case could not fix compensation for the acquired land at an amount which was less than the amount awarded in respect of land in award No.387‑P dated 7‑5‑1978.

6. The learned counsel for the WAPDA on the other hand, assailed the order of High Court on the ground that the learned Judges of the Division Bench failed to appreciate that the acquired land was agricultural in nature, and therefore, it had no potential value. It is further contended by the learned counsel for WAPDA that the Collector in his award had fixed the compensation for the acquired land keeping in view the sales of land in the area during the year preceding the date of notification under section 4 of the Act which was perfectly legal and, therefore. enhancement of compensation by the referee Court was wholly unjustified.

7. The learned Judges of High Court dismissed the appeals of landowners mainly on the ground that they had themselves claimed the compensation before the referee Judge at the rate of Rs.200,000 per acre, and therefore, they were not entitled to get compensation over and above this amount in view of section 25 of the Act.

8. The referee Court was referred two applications under section 18 of the Act by the Collector for adjudication. One of these objections/applications was filed by Syed Phool Badshah and 7 others which is subject matter of Civil Appeal No. 92 of 1995. In their objection/application under Section 18 of the Act seeking reference of the case to the Court for determination of the amount of compensation of the acquired land, Syed Phool Badshah and others stated as follows:‑‑

9. Principles underlying section 25 of the Act were considered at some length by this Court in the case of Mrs. Gunj Khatoon and another v. The Province of Sindh through Secretary, Revenue Department Karachi and another (1987 SCMR 2084), as follows:‑

"23. According to the provisions of section 9 of the Act the claimant is required to submit, inter alia, his claim with regard to the question of compensation payable to him and the claim made in response to the notice issued under section 9 cannot be modified during the course of the proceedings. This rule has recently been reiterated in Muhammad Sharif v. Afsar Taxtile Mills Ltd. 1985 SCMR 1181 where the dictum of the Lahore High Court in State v. Tikka Jagtar Singh AIR 1936 Lah. 733 to the effect "that under section 9 of the Act an objector must give particulars of his claims and if an item is not specified therein he will not be awarded compensation on that score. The basis for decision was also the sanctity of the claim preferred by the objector as binding on him was approved by this Court and it was observed that section 9 require the claimant/objector to fully present his case before the Collector which will be deemed to be his pleadings and that he shall be confined to them throughout the proceedings. The provisions to section 25 are also to the same effect. "

In view of the above principle of law laid down by this Court, no exception could be taken to the award of compensation by the referee Court and the learned Judges of the High Court at the rate of Rs.25,000 per Kanal, which was in accordance with claim of appellants made in their application/objections under section 18 of the Act, filed before the Collector.

10. In the other objection/application filed under Section 18 of the Act, before the Collector by Haji Muhammad Yaqoob and others, appellants in Civil Appeal No. 91 of 1995, seeking reference of their case to the Court for adjudication of compensation of the acquired land, they made the following statement:‑

The learned Judges of the High Court appear to have overlooked the above statement of appellants in Civil Appeal No. 91 of 1995. The portions referred by the learned Judges in the impugned judgment from the objection/petition under section 18 of the Act, were quoted from the case of Syed Phool Badshah and others (appellants in Civil Appeal No. 91 of 1995) and, therefore, the conclusion by the learned Judges that the appellants could not get higher compensation in view of their own claim of Rs.20,000 per acre, does not appear to be correct to the extent of appellants in Civil Appeal No. 91 of 1995. From the statement made by Haji Yaqoob and others in their objection/application under section 18 of the Act before the Collector, quoted above, it is quite clear that they claimed compensation for the acquired land Rs.10,00,000 per acre. The evidence produced before the referee Court shows that the acquired land in this case is surrounded by residential area. It has also come in the evidence that the acquired land is within the municipal limits of Peshawar City and on one side it is very close to the Peshawar Cantonment area. In these circumstances, the acquired land had all the characteristics of a potential building site. The contention of the learned counsel for WAPDA that the land was agricultural in nature, and therefore, its assessment for compensation could only be made as an agricultural land on the basis of average sales price of preceding one year before the date of notification, has no force. The relevance of one year's average of the sales taking place before the publication of notification under section 4 of the Act was considered by this Court in the case of Pakistan Burma Shell Ltd. v. Province of N.‑W. F. P. and 3 others (1993 SCMR 1700) as ` follows:‑‑

"6. We are not persuaded to strike off the award on the rectitude of these submissions. Section 23 makes mention of various matters to be considered in determining the compensation. One of such factors enumerated therein is that the date relevant for determination of market value is that date of the notification under section 4. Not unoften the market value has been described as what a willing purchaser would pay to the willing seller. It may be observed that in assessing the market value of the land, its location, potentiality and the price evidenced by the transaction of similar land at the time of notification are the factors to be kept in view. One year's average of the sales taking place before the publication of the notification under section 4 of similar land is merely one of the modes for ascertaining the market value and is not an absolute yardstick for assessment."

It is, therefore, quite well‑settled that one year's average sale price of the land in the vicinity preceding the date of notification under section 4 of the Act, is only one of the relevant factors for consideration in determining the market value of the land but it alone cannot be adopted as the basis for assessment of market value, if there is other evidence available on record to establish the potential value of acquired land at a higher 'rate. The learned counsel for Haji Yaqoob and others, amongst others, relied on an award by Collector bearing No.387‑P dated 7‑5‑1978 produced in evidence, wherein the compensation was determined at the rate of Rs.2,000 per Marla and argued that compensation of the acquired land could not be fixed less than the rate awarded by the Collector in award No.387‑P dated 7‑5‑1978. The contention of the learned counsel is not without force. The above award of Collector relied by the learned counsel relates to acquisition of a part of Khasra No.393 of village Mahal Gabri, a part whereof was also the subject‑matter of present acquisition proceedings. This important piece of evidence was neither taken into consideration by the referee Court nor by the learned Judges of the High Court while determining the compensation for acquired land in the case of Haji Muhammad Yaqoob and others. The notification under section 4 of the Act for acquisition of Khasra No.393 which culminated in the award No.387‑P dated 7‑5‑1978, was issued on 2‑10‑1973 while the notification in the present case was dated 3‑12‑103. In these circumstances, there was absolutely no ground available to assess the compensation of the acquired land at a rate less than that fixed in award No.387‑P dated 7‑5‑1978.

11. Besides, the inadequacy of compensation awarded for the acquired land leave has also been granted in the above appeals on the question of compulsory acquisition charges and rate of interest. The learned counsel for the landowners has claimed the compulsory acquisition charges at the rate of 25 % and compound interest at the rate of 8 % while the learned counsel for WAPDA has objected to the award of compound interest at the rate of 8% and urged that the interest at the‑rate of only 6% could be awarded by the referee Court and that too from the date of taking over possession of the acquired land.

12. The rate of interest is awarded by the Court under section 28 of the Act which as originally stood in the Act, reads as follows:‑‑

"28. Collector may be directed to pay interest on excess compensation. ‑If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of six per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court."

The rate of interest at 6% on the excess amount determined by the Court as originally allowed under section 28 of the 'Act was amended by the Land Acquisition (West Pakistan Amendment) Act (III of 1969) which substituted the words "shall pay compound interest on such excess at the rate of eight per centum per annum" in place of "shall pay simple interest on such excess at the rate of six per centum per annum" and at the end of the Section, the following proviso was also added:

"Provided that in all cases where the Court has directed that Collector shall pay interest on such excess at the rate of six per centum from the date of which possession was taken and the payment of compensation or a part thereof has not been made up to the commencement of the Land Acquisition (West Pakistan Amendment) Act, 1969, the rate of compound interest on such excess or balance shall be eight per centum."

Section 28 of the Act was further amended through Land Acquisition (N.‑W.F.P. Amendment) Ordinance (V of 1983 in respect of North‑West Frontier Province (N.‑W.F.P.) only which came into effect on 23‑5‑1983. Section 28 of the Act as applicable to the Province of N.‑W.F.P. after its amendment by Ordinance V of 1983 reads as follows:‑‑

"28. Collector may be directed to pay interest on excess compensation.‑‑If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay simple interest on such excess at the rate of six per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court."

It is, therefore, quite clear that both under the amended section 28 (which was amended through Act (III of 1969) as well as under the newly substituted section 28 (which was substituted by Ordinance (V of 1983) in respect of province of N.‑W.F.P.) the referee Court while awarding compensation for the acquired land, in excess of the amount determined by the Collector, was required to award interest also on the excess amount so determined by it from the date of taking over of possession of the acquired land by the Collector until the date of payment of such excess amount in the Court. However, under the above amended provision of section 28, such rate was 8% compound interest while under the newly substituted section 28, (ibid), the rate of such interest was 6% simple interest.

The learned counsel, for the landowners, however, contended before us that their clients were entitled to 8% compound interest on excess amount awarded by the Court from the date of taking over possession of acquired land till the payment was made in view of section 4 of Land Acquisition (N.‑W.F.P. Amendment) Ordinance, 1983. Section 4 of Ordinance (V of 1983) relied by the learned counsel reads as follows:

"4. Saving‑‑Notwithstanding the provisions of section 28 or section 34 of the said Act, as amended by this Ordinance, the interest already accrued, on the amount awarded, immediately before the commencement of this Ordinance, shall not be affected and shall be payable as if this Ordinance had not come into force."

Under the above saving clause, only interest already accrued on the amount awarded by the Court before the Commencement of Ordinance (V of 1983) was saved.

In the cases before us, the referee Court determined the enhanced compensation in respect of acquired land by its judgment dated 8‑10‑1992. It is quite clear that on the date the referee Court determined the amount of compensation which was in excess of the amount determined by the Collector, the law in respect of N.‑W.F.P. had already changed and under section 28 of the Act, the referee Court could only allow simple interest on the excess amount so determined by it, from the date of taking over possession of the land to the date of payment of such excess amount in the Court. Therefore, on 23rd May, 1983, when Land Acquisition (N.‑W.F.P.) Amendment Ordinance (V of 1983) was enforced, the question of any accrued interest on the amount awarded by the Court did not arise as by then, the referee Court had not yet determined the amount of compensation for the acquired land, payable to landowners. In these circumstances, we are of the view that the award of interest at the rate of 8% per annum compound interest from the date of award till coming into force of the Ordinance (V of 1983) was not warranted by law. We, accordingly, modify the impugned judgment to the extent that on the excess amount of compensation determined by the referee Court by judgment dated 8‑10‑1992, the rate of interest will be 6% per annum simple interest, from the date of taking over possession of the land by the Collector till the amount was paid in Court.

13. The last noted contention in the leave granting order relates to the compulsory acquisition charges which the landowners have claimed at the rate of 25%. It is contended by the learned counsel for the landowners that WAPDA being a company, the compensation in respect of the acquired land should have been awarded at the rate of 25 % . Subsection (2) of section 23 of the Act provided that in addition to the market‑value of the land determined in accordance with section 23 of the Act, the Court shall in every case award 15 % on such market value, in consideration of the compulsory nature of the acquisition. After the amendment introduced through Land Acquisition (West Pakistan Amendment) Ordinance (49 of 1969) subsection (2) of section 23, reads as follows:

"(2) In addition to the market‑value of the land as above provided, the Court shall award a sum of fifteen per centum on such market‑value, in consideration of the compulsory nature of the acquisition, if the acquisition has been made for a public purpose and a sum of twenty five per centum on such market‑value if the acquisition has been made for a Company."

The learned counsel for the parties agree that the amendment introduced by Ordinance (49 of 1969) still holds good in respect of N.‑W.F.P. and no further amendment has been made in the section in respect of N.‑W.F.P. although this section has been amended in its application to the Provinces of Punjab and Sindh. The abovequoted provision clearly provided that the Court while passing an award shall also award a sum equal to 15% of such market value as may be determined by the Court in consideration of compulsory nature of the acquisition if the acquisition has been made for 'a public purpose and a sum equal to 25 % of such market value if acquisition has been made for a Company. The learned counsel for landowners are unable to demonstrate that the acquisition of the land by the Government was for a 'Company' and not for a "Public purpose".

In this connection, it may be mentioned that the notification dated 3‑12-1973 issued under section 4 of the Act contained the statement "that the land is likely to be required to be taken by the Government at the public expense for public purpose, namely for the construction of WAPDA Residential Colony at Peshawar". The learned counsel for the landowners are unable to demonstrate that acquisition of land by the Government at public expense for construction of residential colony for the employees of Wapda did not constitute a public purpose. We are, therefore, of the view that the award of compulsory acquisition charges by the referee Court which was upheld by the High Court, at the rate of 15 % does not suffer from any infirmity so as to call for our interference.

14. In view of the above discussion, Civil Appeal No.92 of 1995 filed by Syed Phool Badshah is dismissed while the appeals filed by Haji Muhammad Yaqoob and others (Civil Appeal No.91/95) and WAPDA (Civil Appeals Nos. 93 & 94 of 1995) are partly accepted to the extent indicated above. In the circumstances of the cases, there will be no order as to costs.

M.B.A./R.20/S Order Accordingly