The compensation for land acquired under the Land Acquisition Act should be determined by capitalizing the annual rental yield where the land has potential value as a shandy.

RAMAPRASADA RAO, J. :- One acre and twelve cents of land in T. S. No. 37-A/1B in Thokkavadi village, Villupuram Taluk, South Arcot District, was acquired compulsorily for the use as a weekly cattle market. This acquisition was at the instance of the District Board, as it then was, of the district. The District Board initially applied also for the acquisition of R. S. No. 37-B/2B of the same village for purposes of the weekly shandy. Later, on the suggestion of the Collector, the proposal for the acquisition of R. S. No. 37-B/2B was withdrawn, for it was felt that the said land was on the other side of the Railway line and it cannot be reached from R. S. No. 37-A/1B excepting through crossing the railway line which is objectionable. It was also found that R. S. No. 37-B/2B was not used as a market place, whereas the land acquired was so being used as a shandy for the sale of cattle. It was with this initial background that the above extent of land in R. S. No. 37-A/1B belonging to the appellant was acquired under the provisions of the Land Acquisition Act for which purpose a notification under Section 4(1) thereof was issued on February 29, 1956. The claimant, both before the Land Acquisition Officer and in the Court below, when the subject came to it on a reference under Section 18 of the Act, contended that the land was used as a shandy for a considerable length of time prior to the valuation date and that he was obtaining a rent of about Rs. 1,500/-per annum and therefore the land had to be valued with such potential in it by capitalising the annual rental yield with a reasonable multiple arrived at on the basis of the rate of interest prevailing on the valuation date for such securities. But the Land Acquisition Officer ignoring the said contention treated the land acquired as a house site, valued it as such and awarded compensation at the rate of Rs. 25/- per cent. The Land Acquisition Officer, however, rightly in our, view, did not award any interest over the compensation awarded, since the State by then was in possession of the land as a result of an arrangement between the District Board and the appellant. On a reference to Court by the interested person, the Court sustained the value at Rs. 25/- per cent, but thought that some accommodation should be made for the fact that the land had potential value to serve as a shandy. After noticing this, the Court awarded an additional compensation of Rs. 3,000/- having regard to the annual income realised by the appellant from and out of the acquired land and having also regard to certain other features of the land acquired. But it gave interest on the amount awarded at four per cent thereon from the date of taking possession to the date when the compensation amount was paid. Still aggrieved by the award of the Court below, the appellant is before us.

2. Mr. Kanakaraj, learned counsel for the appellant, contends that the Court below failed to notice his main contention and, probably the only contention, that the method of valuation of the land acquired ought to be on the capitalization system and not by secured criteria from the sales of lands in the vicinity and adopting the same as the market value of the property in question. He would contend that from 1943, the land was admittedly used as a shandy and, in fact, he had to close down the shandy which he was running on the land by the order Ex. A-3 and had to compulsorily hand over his property to the District Board to enable them to run a shandy thereon. It is seen from Exs. A-4 and A-5 that the land acquired was used as a public market from 1943 to 1948 free of rent. But in 1947 under Ex. A-10, the appellant demanded rent for the acquired property as it appears from the record that the District Board was farming out the right to collect fees from the persons using the shandy and this activity of the District Board prompted the appellant to claim rent from them. P.W. 4, the claimant, says that in 1949 the District Boar