Document Fragment View

Matching Fragments

15. Undoubtedly, when the sale instances from the locality from which the land is acquired or in the neighbourhood areas are available, question of adopting capitalization method for the purpose of valuation may not arise. However, when such evidence is not forthcoming from the claimant, the Court is left with no alternative than to adopt the method of capitalization and, for that purpose, it is necessary for the claimant to bring on record evidence regarding annual income from the agricultural land. The Apex Court in Special Land Acquisition Officer v. P. Veerabhadrappa etc. etc. has elaborately described the procedure to be followed while adopting the method of capitalization for the purpose of arriving at the market value of the agricultural land. It was held therein that "it is axiomatic that the best evidence to prove what a willing purchaser would pay for the land under acquisition would be the evidence of sales of comparable properties, proximate in time to the date of acquisition, similarly situate, and possessing the same or similar advantages and subject to the same or similar disadvantages. Market value is the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, the Court has no other alternative but to fall back on the method of valuation by capitalization. In valuing land or an interest in land for purposes of land acquisition proceedings, the rule as to number of years' purchase is not a theoretical or legal rule but depends upon economic factors such as the prevailing rate of interest in money investments. The return which an investor will expect from an investment will depend upon the characteristic of income as compared to that of idle security. The main features are : (1) Security of the income : (2) fluctuation : (3) chances of increase (4) cost of collection etc. The most difficult and yet the most important and crucial part of the whole exercise is the determination of the reasonable rate of return in respect of investment in various types of properties. Once this rate of return and accordingly the rate of capitalization are determined, there is no problem in valuation of the property." After reiterating the law laid down in Rustom Cavasjee Cooper v. Union of India to the effect that, "capitalization of the net annual profit of the property at a rate equal in normal cases to the return from giltedged securities. Ordinarily value of the property may be determined by capitalizing the net annual value obtainable in the market at the date of the notice of acquisition", it was held by the Apex Court that "it is thus clear from the above enunciation that the method of determining the value of the property by application of multiplier to the net annual income or profit should only be adopted when there is no evidence of comparable sales or similar lands in or about the neighbourhood at the relevant time i.e. on the date of notification under Section 4(1) of the Act. In certain circumstances however the Court has no other alternative but to fall back on the capitalized value".

16. The above decision of the Apex Court, therefore, clearly lays down the law that in case of failure on the part of the claimant to bring on record the comparable sale instances, the Court is left with no alternative than to fall back on the method of valuation by capitalization. The capitalization would involve application of multiplier to the net annual income from the land acquired.

17. Similarly, the Apex Court in O. Janardhan Reddy and Ors. v. Spl Dy. Collector, L.A. Unit-IV, LMD, Karimnagar, A.P. and Ors. has also narrated various things to be considered for the purpose of adopting the method of capitalization by applying the multiplier to the annual income derived from the agricultural land. The Apex Court therein held thus:--