The main legal point established in the judgment is that the capital value of the melwaram interest in land being acquired for public purposes should be assessed based on the gross income of the zamindar, the nett income, and the prevailing rate of interest on the date of the acquisition. The court emphasized the importance of making necessary deductions from the gross income for essential establishment charges.

Newsam, J.

1. The short question arising for decision in all these appeals is what is the proper method of valuing the melwaram interest in land which is being acquired for public purposes. The method adopted by the Land Acquisition Officer in these cases was to deduct the proportionate peishkush from the melwaram revenue and then to multiply the nett income thus found by 20. The learned District Judge was unable to find a better method but thought that the nett income should have been multiplied by 30. Many of the reasons which he gave for adopting the figure 30 in preference to the figure 20 do not at all commend themselves to us.

2. These appeals have been filed by Government with the object of restoring the award passed by the Land Acquisition Officer. Cross-appeals have also been filed by the Zamindar.

3. Now, it seems to us that the principles which should be applied in assessing the capital value of the melwaram interest in land may be thus stated. It is necessary to start with the one known fact--the gross income of the zamindar from the land which is being acquired. The next step should be to ascertain the nett income. This can be done only roughly by deducting a proportion of the peishkush payable by the Zamindar to Government and also a proportion of the cost of revenue collection and administration. Neither calculation presents any real difficulty. We think that it would be fair and equitable to make a deduction of 10 per cent, of the gross income towards the expenses of a revenue collecting and administrative staff. Having thus ascertained the nett annual revenue of the Zamindar from the land being acquired, it must be capitalized by computing the number of years purchase. Twenty times the nett revenue from property has in the past been commonly taken to be the capital value of any property or interest in property, and the true justification for this was that approximately 5 per cent, was the prevalent rate of interest. But it is clear that the number of years purchase must depend upon the rate of interest prevailing on gilt-edged securities at the time of the acquisition, that is, on the date of the notification under Section 4 of the Act. The higher the rate of interest on that date, the fewer will be the number of years purchase. Twenty times the nett income would be fair if the prevailing rate of interest was 5 per cent, but if it was 2|- per cent, nothing less than 40 times the net income would be adequate compensation.

4. Of course, to the figure thus arrived at must be added the usual 15 per cent, for compulsory acquisition.

5. Applying these principles to the cases in hand we find that both the Land Acquisition Officer and the learned District Judge failed to make any deduction from the gross income on account of the costs of a revenue establishment. Further we find that the notifications in these cases were made at the end of 1933 in some cases and at the beginning of 1934, in others, when the rate of interest on gilt-edged securities was approximately 3| per cent. In the circumstances we are not prepared to interfere with the District Judges order adopting 30 years purchase as the proper estimate of the capital value of the melwaram, but the income to be multiplied by 30should first be reduced by 10 per cent, in order to arrive at a true estimate of the Zamindars income by allowing for essential establishment charges.

6. We direct therefore that 10 per cent, be first deducted from the gross income to allow for collection charges, then proportionate peishkush should be deducted and the result multiplied by 30. Finally 15 per cent, should be added as compensation for compulsory acquisition.

7. The Government appeals have thus succeeded in part, though not on the grounds urged, while the cross-appeals have failed. In the circumstances, each party will bear his own costs in appeals and in the memoranda of objections.

8. Let these cases fall into two batches (one batch: Appeals Nos. 290 to 295 of 1935 and sec