Judgment.- This appeal raised a question of compensation under the Land Acquisition Act. At the instance of the Collector, Central Excise, Madras, parts of S. Nos. 15 and 17 of Nellimukku, a proprietary village in the Vizianagaram Estate have been acquired by Government for the extension of the Salt Factory, Balacheruvu. The total extent acquired was 229 acres, 59 cents. The notification under section 4(1) of the Land Acquisition Act was published on 29th August,, 1944 and that under section 6 was issued on 6th March, 1945. The Land Acquisition Officer awarded compensation at the rate of Rs. 12-8-0 per acre totalling an amount of Rs. 2,869-14-0. Adding a sum of Rs. 430-7-8 towards 15 percent. solatium for compulsory acquisition, he awarded a sum of Rs. 3,300-5-8. On a reference made to the Subordinate Judge, he increased the rate of compensation to Rs.25 an acre. On that basis, he has given additional compensation of Rs. 2,869-14-0 and also 15 per cent, solatium on the said amount. The claimant preferred the above appeal claiming Rs. 65,000 including the statutory solatium of 15 per cent. The simple question in this appeal is whether the compensation awarded by the Subordinate Judge is inadequate and, if so, whether the appellant is entitled to the whole or part of the amount claimed by him. Before we consider the evidence, it will be convenient at this stage to notice the law on the subject. The principles for fixing the compensation are governed by sections 23 and 24 of the Land Acquisition Act. The general principles specified in the said sections differ in no material respect from those laid down by English decisions. There are innumerable decisions of the Enghlish and Indian Courts but it will suffice if two decisions of the Judicial Committee, relevant to the present enquiry are cited. In Vallabhadas Naranji v. The Collector1, the land acquired was an irregularly shaped piece by the sea and was covered by the tide at various times and for ordinary purposes was practically useless. It was, however, capable of being used for salt works. There is nothing on record to show that there were any salt-pans adjacent to the land acquired or there was a demand for the said land for salt manufacture. The Assistant Judge of Thana awarded Rs. 200 per acre. The High Court reduced it to Rs. 14 per acre. It was, however, capable of being used for salt works. There is nothing on record to show that there were any salt-pans adjacent to the land acquired or there was a demand for the said land for salt manufacture. The Assistant Judge of Thana awarded Rs. 200 per acre. The High Court reduced it to Rs. 14 per acre. Viscount Dunedin made the following observations in assessing the value of the said land as follows: “What it really comes to is this: This land is absolutely worthless in itself, but it has no doubt a potentiality of being used for salt works and therefore the owner is entitled to the market value of that potentiality.” The only evidence adduced was that in one case some people had spent 7 lakhs of rupees on salt works and had not made them pay at all but hoped at the end of ten years they possibly would pay. On that evidence, it was held by the High Court that it would not pay anybody to pay for land of that sort even if they were going to construct salt works upon it, more than the value as waste land. This conclusion was accepted by the Privy Council. A more elaborate and, if I may say so, instructive discussion on the question is found in Raja Vyricherla Narayana Gajapathiraju v. Revenue Divisional Officer, Vizagapatam2. In that case, a harbour was being constructed at Vizagapatam. The land acquired by the harbour authorities on the south of the harbour was allocated by them to oil companies and other industrial concerns. This land was malarious. The appellant’s land, which was to the south of this land, contained a spring, which yielded a constant and abundant supply of good drinking water, which could easily be made available for the oil companies and people engaged in the harbour works. The appellant’s land was acquired for the purpose of the execution of anti-malarial works. The appellant claimed compensation on the footing of the potentialities of the land as a building site. The land acquisition officer gave compensation on the basis that it was partly waste and partly cultivated. Before the Subordinate Judge, the appellant made a further claim on the footing of potentialities as a source of water supply. The appellant claimed compensation on the footing of the potentialities of the land as a building site. The land acquisition officer gave compensation on the basis that it was partly waste and partly cultivated. Before the Subordinate Judge, the appellant made a further claim on the footing of potentialities as a source of water supply. The Subordinate Judge held that the only possible buyers were the oil companies and the harbour authorities and that compensation for potentialities could be awarded even where the only possible buyer was the acquiring authority. That award was questioned before the Judicial Committee. The Judicial Committee held that the owner is entitled to and the valuing officer must ascertain the value of the potentialities even where the only possible purchaser of the potentialities is the authority purchasing under powers enabling compulsory acquisition. The well established principle has been restated by their Lordships at page 544 as follows: “It is plain that in ascertaining its value, the possibility of its being used for building purposes would have to be taken into account. The well established principle has been restated by their Lordships at page 544 as follows: “It is plain that in ascertaining its value, the possibility of its being used for building purposes would have to be taken into account. It is equally plain, however, that the land must not be valued as though it had already been built upon, a proposition that is embodied in section 24 (5) of the Act and is sometimes expressed by saying that it is the possibilities of the land and not its realized possibilities that must be taken into consideration.” Adverting to the main question raised in that case their Lordships observed: “For these reasons, their Lordships have come to the conclusion that even where the only possible purchaser of the land’s potentiality is the authority that has obtained the compulsory powers, the arbitrator in awarding compensation must ascertain to the best of his ability the price that would be paid by a willing purchaser to a willing vendor of the land with its potentiality in the same way that he would ascertain it in a case where there are several possible purchasers and that he is no more confined to awarding the land’s ‘poramboke’ value in the former case than he is in the latter.” But they were careful to point out at page 552 that “the existence of the scheme must not be allowed to enhance the price, if by ‘scheme’ is meant the fact that compulsory powers of acquisition have been obtained for the purpose of carrying into effect a particular scheme for the profitable use of the potentiality. The valuation must always be made as though no such powers had been acquired, and the only use that can be made of the scheme is as evidence that the acquiring authority can properly be regarded as possible purchasers.” It will be seen from the aforesaid two judgments that the main criterion for assessment of compensation is what a willing purchaser would pay to a willing vendor. But, in valuing the land acquired, the possibilities of the land, as distinguished from its realized possibilities, must be taken into consideration for the vendor and the vendee necessarily would enter into a bargain with an eye on those potentialities. But, in valuing the land acquired, the possibilities of the land, as distinguished from its realized possibilities, must be taken into consideration for the vendor and the vendee necessarily would enter into a bargain with an eye on those potentialities. Though sentimental considerations and enhanced valuation by reason of the scheme itself have to be eschewed in assessing the value of the land, all its potentialities should be taken into consideration. Though the rule is easily stated, the difficulty lies in its application to the facts of each case. A land may have a particular value only to the owner of the site. It may have a particular value to a number of possible purchasers in the locality or even to the person acquiring the land. But how to value the said potentiality ? Many methods are suggested and adopted in decided cases. If there is a reasonable prospect of the acquired land being used as a salt-pan, the income from a working salt-pan may be taken and after taking into consideration the enormous expenditure incurred for converting a waste land into a salt-pan, some reasonable rate may be fixed. If sale deeds of salt-pans in and around the locality are available, the value of the potentiality may be ascertained having regard to the expenditure incurred for conversion-Offers that may be made by persons intending to exploit the land as salt-pans may also afford some basis. But all the aforesaid methods may not furnish precise data-There is always an element of guess and it is for the Court to come to a reasonable conclusion on the facts adduced in each case. What is the nature and character of the land acquired in this case? The total extent of 229 acres, 59 cents is comprised in the following survey numbers: S. No. 15-A .. 92 acres 72 cents. S. No. 15-C .. 36 “67” S. No. 17-B .. 100 “20” They are zamindari unassessed porambokes. In the Commissioner’s report Exhibit P-19 the acquired lands are described as largely swampy, uneven and rugged, necessitating extensive reclamation work. 92 acres 72 cents. S. No. 15-C .. 36 “67” S. No. 17-B .. 100 “20” They are zamindari unassessed porambokes. In the Commissioner’s report Exhibit P-19 the acquired lands are described as largely swampy, uneven and rugged, necessitating extensive reclamation work. C.W. 1 Sri C. A. Ramakrishnan, I.C.S., who was the Estate Collector during the crucial period but was the Joint Secretary, Board of Revenue, Madras, at the time he gave evidence admits in cross-examination that the land acquired is saline and had not been assigned to anybody and was waste and that it yielded no income to the estate. R.W. 1, the village karnam of Nellimukku, says that, before acquisition, the land was poramboke and there are still five or six hundred acres of poramboke land adjoining the acquired land, that the land acquired was unfit for cultivation and that even grass does not grow in it. R.W.2 for whom these lands were required also says that the acquired lands were unfit for cultivation. It is therefore, clear that at the time the lands were acquired, they were waste, unfit for cultivation and the estate was not getting any. income therefrom. But the real question is whether it has potentiality for manufacturing salt and whether that factor should be taken into consideration in fixing the valuation. It may be recalled that this land was acquired for the extension of the Balacheruvu Salt Factory. It is adjacent to the factory. C.W. 1 who has no axe to grind and who was Joint Secretary to the Board of Revenue and who had personally inspected the locality, speaks in glowing terms of the possibilities of the land acquired. He says in emphatic terms that the estate had lost for a trivial amount, land with a potential lease value of about two lakhs of rupees. He would add that he estimated the value of the land at Rs. 25,000 per acre on capitalising the lease value of Rs. 1,000 per acre per annum at 25 times. He would say, considering the favourable location of the lands, that if the lands came back to the estate, they could be leased out every year for the manufacture of salt. He had experience in land acquisition cases being himself Sub-Collector for 12 years. It is not easy to ignore his evidence when he says that the lands have high potential value as salt-pans. He had experience in land acquisition cases being himself Sub-Collector for 12 years. It is not easy to ignore his evidence when he says that the lands have high potential value as salt-pans. Still the question remains how to assess this potential value. The valuation given by C.W.1 cannot obviously be given to the lands acquired, for his valuation is of the realised possibilities of the land. He admits in his evidence that he has no idea as to what it will cost to convert a swamp into a salt-pan fit to be worked. He did not ascertain what amount of salt those lands can yield per acre. He frankly admits that the rate of Rs. 25,000 given by him as the market value of one acre was only for the purposes of putting forward the claim of the estate. From his evidence, therefore, it is not possible to fix the potential value of the lands. The potential value in this case can be fixed by adopting three methods. If there is data for expenditure incurred in respect of a definite extent of land converted into a salt-pan and the income derived therefrom thereafter, it may afford some basis for fixing the valuation. In this case the only person who could have given that evidence has not placed before the Court definite material. R.W.2 the person who is running the Balacheruvu Salt Factory, says in his evidence that he has spent about a lakh of rupees for converting the acquired lands into salt-pans and that, in the first three years, they did not realise any amount. In cross-examination he says that the acquired lands have been in his possession from October, 1943 and that they did not get any profit till 1949. But he admits that he has not maintained separate accounts for the lands acquired. He did not file any account books. It is not possible, therefore, to accept his evidence at its face value and his evidence does not help the Court in ascertaining the value of the acquired lands. R.W. 3 is a Technical Officer attached to the Balacheruvu Salt Factory. He would say that to bring 100 acres into cultivation, the cost was estimated at Rs. 1,31,000. It is not possible, therefore, to accept his evidence at its face value and his evidence does not help the Court in ascertaining the value of the acquired lands. R.W. 3 is a Technical Officer attached to the Balacheruvu Salt Factory. He would say that to bring 100 acres into cultivation, the cost was estimated at Rs. 1,31,000. He admits in cross-examination that in the first two years, the yield will be 5 to 8 hundred maunds per acre, that from the third year the yield would be 1,200 maunds per acre and that there is great demand for salt. This evidence also does not carry the matter further. But from the evidence of R.Ws. 2 and 3, it is apparent that large sums of money have to be invested before the acquired lands could yield profits. According to R.W. 2, he spent large sums of money going into lakhs. That should be borne in mind in valuing the potentialities of the acquired lands. We have then got sale deeds in respect of salt-pans. Under Exhibit D-2, dated 11th November, 1938 a salt pah of the extent of 1 acre 32 cents was sold for Rs. 100 which works out at Rs. 75 per acre. Exhibit D-3 is a sale deed, dated 8th September, 1941 under which 1 acre 37 cents of salt-pan lands were sold for Rs. 400. The rate under this sale deed is Rs. 290 per acre. Exhibit P-8, dated 26th September, 1945, is a sale deed conveying 3 acres 14 cents for a sum of Rs. 2,000. The rate under this sale deed is Rs. 635 per acre. Exhibit P-2 (a), dated 6th November, 1945, is a list of sales conducted by the Estate Collector whereunder 4 acres were sold for Rs. 4,200 at the rate of Rs.1,050 per acre. It will be seen that under the said sale deeds only the salt-pans were sold and it is not therefore possible to give the same value to the acquired lands in their unprepared state. The evidence of R.W.2, R.W.3, and C.W.2 shows that enormous amounts are required for conversion. These documents are, therefore, not of much evidentiary value. Exhibit P-13 is a letter from the Revenue Divisional Officer, Visakapatnam to the Trustee of Vizianagaram Estate forwarding the C Form voucher for Rs. 262-7-7 on account of the cost of acquisition. The evidence of R.W.2, R.W.3, and C.W.2 shows that enormous amounts are required for conversion. These documents are, therefore, not of much evidentiary value. Exhibit P-13 is a letter from the Revenue Divisional Officer, Visakapatnam to the Trustee of Vizianagaram Estate forwarding the C Form voucher for Rs. 262-7-7 on account of the cost of acquisition. The extent acquired was 3 acres 42 cents and the year of acquisition was 1915. The extent is very small and the acquisition was made 33 years prior to the present acquisition. It does not therefore afford a correct basis for the present valuation. Exhibit D-11 is a certified copy of the compromise decree in O.P.No.35 of 1926 on the file of the Court of the Subordinate Judge of Visakapatnam. The land acquired related to Survey Nos. 16, 17-2 and 18-2 of Nellimukku village of an extent of 351 acres 87 cents. Under the compromise Rs. 20 per acre were given. This is also a very old transaction and for the same reason it cannot be relied upon. There are some offers made by the villagers to the zamindar for leasing the lands acquired, Exhibit P-10 of the year 1942 and Exhibit P-9 of the year 1943 are applications filed to the Thana office asking for lease of the suit lands. They do not show the rate but they only indicate that there was demand for these lands even in 1942 and 1943. Exhibit D-1, dated 22nd February, 1943, is a notice given by the Estate Amin to Appana Ramachandra Rao. Therein it is mentioned that the sale of S. No. 17 measuring 124 acres 32 cents of Nellimukku village will be conducted by the Estate Collector in public auction on 26th February, 1943, for nazarana at the rate of Rs.1-4-0 per acre. This shows that the Estate in 1943 was intending to auction these lands, subject to the payment of nazarana. Exhibit P-12 dated 21st October, 1943, is another application by two of the villagers to the Secretary to the Commissioner of the Board of Revenue requesting the Board for a lease of 250 acres of the suit lands undertaking to pay Rs.1-8-0 per acre per annum. Exhibit P-n makes a reference to an application by the villagers to pay Rs. 1-4-0 cist per acre in addition to nazarana of Rs. 1,000. Exhibit P-n makes a reference to an application by the villagers to pay Rs. 1-4-0 cist per acre in addition to nazarana of Rs. 1,000. Exhibit P-15, dated 26th August, 1943, is an application by ten persons to the Estate Collector, Vizianagaram, offering an annual assessment of Rs. 15 per acre of the suit lands. The aforesaid documents show that offers were made to the estate agreeing to pay annual assessment of Rs. 1-4-0, Rs. 1-8-0 and Rs. 15 per acre. The estate did not accept the offers but instead they intended to auction the rights subject to payment of nazarana. In this state of evidence, we have to fix the value per acre. At the time of the acquisition, they were waste lands and were not yielding any income. There were some hundreds of acres of land belonging to the zamindar similar to that acquired but the lands acquired are adjacent to Balacheruvu Salt Factory and Balacheruvu Salt Factory would certainly have purchased them by private negotiations if the Government had not stepped in. It was one of the possible purchasers. Further, the offers showed there were people in the village, who intended to exploit the suit lands for salt purposes. The aforesaid documents show that even in 1915, similar lands were sold at the rate of Rs. 75 per acre, though in 1927 under the compromise the zamindar accepted Rs. 20 per acre. There were also offers to pay an annual assessment of Rs. 1-4-0 to Rs. 15 per acre. It is manifest from the evidence that the lands in question have high potential value as salt-pans. Having regard to the aforesaid evidence and circumstances and having regard to the fact that a large extent of land was acquired, we hold that the land if leased out would have fetched an income of Rs. 3 per acre. Capitalising it at twenty years purchase we arrive ait the rate of sixty rupees per acre and award compensation on that basis. In addition, the appellant will get the usual solatium of 15 per cent. The appellant will also be entitled to interest at 6 percent, from the date of taking of possession. The decree of the lower court is accordingly modified. The parties will pay and receive proportionate costs. D.L.N. ------- Decree modified.