1. In this appeal filed under S.54(2) of the Land Acquisition Act, 1894 (in short 'the Act'), the Land Acquisition Officer has questioned the market value as determined by the District Judge, Uttara Kannada, Karwar in R.A. No. 164/89.

2. It appears that, under preliminary notification dated 9-5-1974 issued under S.4 of the Act, lands in question were acquired for construction of Police Parade Ground, Assault Course, Police play ground, Police Headquarters and wireless station etc. The learned District Judge on consideration of the materials placed before him, enhanced the market rate from Rs. 900/- to Rs. 1400/- per gunta by allowing the contention of the landowner and rejecting the appeal filed by the State for reduction of the market value. When the matter was taken up for hearing before the learned single Judge, a controversy arose as to whether while determining the potential value of the land in question, deduction by way of development charges should be taken at 33.33% or 53% as held by a Division Bench of this Court in M.F.A. 667/89, D/- 9th September, 1993, since the learned single Judge was of the opinion that the said Division Bench judgment was rendered on a misreading of the judgment of the Supreme Court in Brig. Sahib Singh Kalha v. Amritsar Improvement Trust, AIR 1982 SC 940. He found it advisable to recommend for placing the case before a Full Bench inviting attention on the following two questions :
(1) Whether in respect of costs of development, deduction can be made to the extent of 53% or to the extent ranging between 20% to 33% of the cost or price of land and not more under the law laid down by the Supreme Court in Brig. Sahib's case?
(2) Whether the Division Bench in its decision dated 9-9-1993 given in M.F.A. 667 of 89 (Asst. Commissioner v. Sarasubai) was correct and justified in reading and laying down that the Supreme Court's decision has laid down the law to the effect that to arrive at a market value of the larger tracts of land at least 53% of the price fetched for smaller site shall be deducted towards development charges?

3. We have heard Mr. P.G.C. Chengappa, learned Addl. Government Advocate appearing for the appellant and Mr. P. M. Jalisatagi, learned Counsel appearing for the respondent and have examined the judgment of the Division Bench referred to above in the context of the law laid down by the Supreme Court on the point at issue.

4. The general principles for determining compensation have been set out in S.23 and S.24 of the Act. The compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser, but as this may not be possible to ascertain with any amount of precision, the authority charged with the duty to award compensation is bound to make an estimate judged by an objective standard. The land acquired has, therefore, to be valued not only with reference to its condition at the time of the declaration under S.4 of the Act but its potential value also must be taken into account. The sale - deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of computing the market value. This, however, is not the only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalizing the rent keeping in view the prevailing rate of interest. But this also is not a conclusive method. The Supreme Court had in Special Land Acquisition Officer, Bangalore v. T. Adinarayan Setty, 1959 Suppl (1) SCR 404 : AIR 1959 SC 429, indicated at page 412 (of ILR) : (at p. 432 of AIR), the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under S.4(1) which are (i) opinion of experts, (ii) the price paid with in a reasonable time