Order

This order will dispose of both appeals as they arise out of the same judgment and order of the High Court of Bombay, dated 26.9.1979.

2. Land measuring 14 acres and 9 Gunthas, which is subject matter of these appeals, situate in Village Kedgaon, Taluka Nagar, District Ahemdnagar, Maharashtra was acquired by the State. Notification under Section 4 of the Land Acquisition Act (hereinafter the Act) was issued on 1.3.1969. Notification under Section 6 of the Act was published in the gazette on 26.6.1969. The land was acquired for public purpose for extension of living place for the population as also for construction of government godowns. The Land Acquisition Collector, vide Award dated 29.9.1970 determined the market value of the land at Rs. 3,000/- per acre and Rs. 3200/- per acre. Compensation amounting to Rs. 49, 301/- was awarded. Aggrieved by the Award of the Land Acquisition Collector, the claimants sought a reference under Section 18 of the Act. The learned Joint Civil Judge, vide his Award dated 28th August, 1971, determined the market value @ Rs. 1/- per square foot, inter-alia after taking into account rates fixed by a Cooperative Housing Society for sale of plots by it to its members and outsiders in the vicinity of the acquired land. The reference Court awarded a total compensation of Rs. 6,16,118.60 ps. The respondent - State approached the High Court against the award of the reference court. On 26.9.1979, the High Court set aside the award of the reference court made under Section 18 of the Act and restored that of the Land Acquisition Col­lector, dated 29th September, 1970. Hence, these appeals by special leave by the claimants.

3. Mr. Krishan Mahajan, learned counsel appearing for the appellants has assailed the judgment and order of the High Court principally on the ground that the High Court failed to take into account future potentiality and instead based itself only on the realized possibility and thus committed an error. Learned counsel has, in support of his contention, relied on State of Orissa v. Brij Lal Misra & Ors.1 and P. Ram Reddy & Ors. v. Land Acquisition Officer, Hyderabad Urban Development Authority, Hyderabad & Ors.2. Both the judgments do support the submission of Mr. Mahajan.

4. Mr. Sathe, learned counsel appearing for the State has supported the judgment and order of the High Court and submitted that the land was agricultural land, the High Court rightly took into account that fact and disapproved the approach of the reference court which, accord­ing to the learned counsel, was influenced by the rates fixed by the Ambika Cooperative Housing Society which consideration was not a relevant consideration since the land of the Ambika Cooperative Hous­ing Society was developed land and had been sold in plots to its various members and outsiders.

5. We have given our thoughtful consideration to the submissions made at the bar.

6. The High Court has noticed in the impugned judgment and order that the ‘location’ of the land indicates that it has building potential but fell into an error in ignoring that factor by observing :

“There is no record of any income being received by any of the land owners. These lands must, therefore, be valued as agricultural land with no potentiality whatsoever in the foreseeable future.”

We are unable to find any justification for such observation and finding. The above finding of the High Court is contradictory to the earlier finding based on the location of the land. It is no doubt correct that the reference court was influenced by sale oransactions in respect of developed land and it failed to make any deduction for development of land while enhancing the compensation, but the High Court fell in error in ignoring the future potential of the land in question and instead resting its finding as realized potential only. The evidence on the record clearly establishes that the acquired land did have future potential on account of its location. It is not denied that the area