The main legal point established in the judgment is the importance of directly estimating the market value of the land acquired by comparing it with lands in the neighborhood and considering any changes in value between the date of sales and the date of acquisition notification. The court rejected the method of multiplying the annual profits by thirty as a universal rule for calculating compensation.

Horwill, J.

1. This is an appeal by the Government against the order of the Sub. ordinate Judge of Trichinopoly on a reference under Section 18, Land Acquisition Act, increasing the compensation awarded by the Land Acquisition Officer from Rs. 8-4-0 per cent. to Rs. 10 on an area of 2.75 acres in the Srirangam Municipality in Town Survey No. 2394. The Land Acquisition Officer based his award upon the sale price of two plots of land situate about a furlong from the land acquired. As he was of opinion that the land sold under those sale deeds was of the same quality as that acquired, he thought that the rate at which the land was sold in those two cases afforded a proper basis for the awarding of compensation in this case. The learned Subordinate Judge, purporting to follow Land Acquisition Officer, Calicut v. Subbarao A.I.R. 1941 Mad. 684 was of opinion that it was not proper to estimate the market value of the land by such a method and that the Land Acquisition Officer should have capitalised the annual profits at 30 years purchase, as was done in the case he purported to follow. The contention of the Government in appeal is that the basis upon which the Land Acquisition Officer valued the land was the correct one. The claimant has filed a memorandum of cross-objections in this Court on the ground that the learned Judge has not properly estimated the value of paddy, which is necessary for converting the lease amount - which is fixed in kind - into money and has omitted to take account of the fact that in the lease deed relied on a part of the rent was payable in straw, which would work out at about Rs. 3 an acre.

2. The learned Subordinate Judge is clearly wrong in thinking that Land Acquisition Officer, Calicut v. Subbarao A.I.R. 1941 Mad. 684 intended to lay down a rule that even if the value of the land could be directly estimated, that value was irrelevant and that the proper way of calculating the compensation payable was always to multiply the annual profits by thirty. The learned Judges in that case were considering the compensation payable for a vacant site in Calicut and it does not seem that in that case there was any material available whereby the actual value of the site could be directly estimated. Perhaps the learned Sub-ordinate Judge was misled by a passage in the judgment in that case in which it was said:

It is clearly laid down in the case already cited (Collector of Kistna v. Siva Rama Prasad Bahadur A.I.R. 1938 Mad. 33) that it has long been the practice of the Courts in this Presidency to calculate the profits made by investing money in gilt-edged securities.

Section 11, Land Acquisition Act, makes it clear that in awarding compensation the Land Acquisition Officer should first of all estimate the value of the land, and with that value as a basis take into consideration any other special factors and calculate the proper compensation to be paid. It is in fact not denied by the learned advocate for the claimant in this Court that if the value of the land can be directly estimated by the value of the property in the neighbourhood, then that is the best manner of estimating the value of the land acquired, provided that there has been a sale of the land in the neighbourhood at or about the time when the acquisition was notified under Section 4 of the Act.

3. Before considering the direct evidence with regard to the value of the land by comparing it with lands in the neighbourhood, a word or two with regard to the case which the learned Subordinate Judge purported to follow seems necessary. The judgment in Land Acquisition Officer, Calicut v. Subbarao A.I.R. 1941 Mad. 684 was based on two judgments in Collector of Kistna v. Siva Rama Prasad Bahadur A.I.R. 1938 Mad. 33, in which the learned Judges were considering what compensation should be paid for the acquisition of a melwaram interest in a zamindari land. In such a case direct evidence was difficult to obtain; and the learned Judges considered a melwaram