JUDGMENT : G.C. Das, J. - This appeal arise out of a Reference made under Sections 18 and 30 of the Land Acquisition Act (Act I of 1894) with regard to the valuation of certain lands which are the subject matter of the acquisition proceedings and the apportionment of the compensation between several claimants. The area under acquisition is 2.07 acres with two buildings. In the present appeal, we are concerned with an area of A. 0.27. acres with a building which was purchased by the present Appellant, after the notification u/s 4(1) was made. Originally, there were five claimants out of whom two claimants, Suramma and Venkatrao dropped out during this reference and did not put forth any claim. The remaining three claimants, Atmakuri Balaramayya Chetty alias Lakshminarasimham, Ramajoganna and v. V. Apparao (Appellant) made various claims. The learned Judge refers the intermediate proceedings. 2. The Appellant was claimant No. 4 and filed a statement of claim before the learned Judge. He contended that he had purchased the building used as the quarters of the post master together with the vacant site measuring A.0.27. decimals from Balarammayya Chetty by a registered deed of sale dated 1-5-1952. Though he had informed the Land Acquisition Officer about this purchase directly and through Balarammayya Chetty, he was not given any notice u/s 9. He further contended that he was not served with any notice and on the declaration under Sections 4 and 6 only one building was notified and as such the property purchased by him was not acquired in the land acquisition proceedings. This part of the claim, however, was not contested before this Court. But he claimed one lakh of rupees as the proper market value of the property purchased by him. 3. The Government Pleader challenged the various claims made by all the three claimants. His defence in essence was that the award passed by the sub-Collector and the valuation fixed by him is correct and reasonable, and the transactions entered into by the claimants are nominal, exhorbitent and fanciful. It was further averred that in view of the valuation of the subject-matter in Title Suit No. 30/52 filed by Venkatarao in the Court of the Subordinate Judge, the claimants cannot demand the high amount they now claim. It was further averred that in view of the valuation of the subject-matter in Title Suit No. 30/52 filed by Venkatarao in the Court of the Subordinate Judge, the claimants cannot demand the high amount they now claim. Before the Land Acquisition Officer, Venkatrao made a prayer to make a reference u/s 18 and so also Jagannatham, but before the Additional District Judge, Jagannadham, Suramma or Venkatrao did not make any claim, nor did they enter appearance. This is because Venktarao's claim was satisfied by the compromise between Balarammayya Chetty and himself and Surmma dropped out from the contest. Jagannadham who was examined as witness No. 7 is a working partner of the claimant Ramajoganna who, according to him, is the financing partner under the agreement, Ext. E2 and Ext. E The land Acquisition officer, that is the Sub-Collector, Berhampur, fixed the value of the acquired site and the buildings as I have stated earlier at Rs. 25,883-10-0, as the market value and found the actual areas of the land to be A2.07 acres. Since there was some dispute with regard to the area, he arrived at the above amount of market value by capitalisation of the annual grant of Rs. 1440/-. The evidence is that the entire land and he building has been leased out to the postal department at Rs. 120/- per month since a long time. He therefore multiplied the said annual rent by twenty and added 15 percent statutory compensation to it and arrived at the aforesaid figure He, however, did not value the building or the trees standing thereon separately. Thus, the main contention of the contesting claimants was that the method of computation of the value adopted by the Land Acquisition Officer is incorrect, and that. the method of computation of the value by capitalisation of rent doubtless is one of the methods which should not have been resorted to, when the market value of the property could be fixed with reference to the value of adjacent and neighbouring Lands. 4. Three contentions were raised in respect of the reference u/s 18 before the learned Additional District Judge. 4. Three contentions were raised in respect of the reference u/s 18 before the learned Additional District Judge. They were: (i) What is the correct area of the land that has been acquired; (it) Whether the portions sold to V.V. Apparao is not covered by the land acquisition proceedings, and can be excluded as con tended by him; and (iii) Whether the valuation of the land as made by the Land Acquisition Officer correct, and if not, what should be fixed at the market value of the lands acquired. 5. With regard to the first contention, the finding is that the correct area of the land is A 2.07 acres. This finding is not challenged before this Court. The second contention is also not pressed. Hence, the only contention pressed was with regard to the proper market value of the land in dispute, that is A.0,27 acres. The learned Additional District Judge did not accept the valuation as fixed by the Land Acquisition Officer. According to him, the proper market value of the entire land was one lakh of rupees; with the statutory compensation it comes to one lakh and fifteen thousand. Accordingly, he apportioned this amount between the three claimants directing Balarammayya Chetty to get Rs. 47,890,00; Ramajoganna to get Rs. 15,000,00. It is against this fixation of the valuation that the present appeal has been preferred by V.V. Apparao. 6. The learned District Judge referred to various cases of other High Courts such as Calcutta, Madras, Patna, Bombay, Travancore-Cochin, and Mysore, besides a case decided by the Privy Council and one decided by this Court. It is unnecessary to refer to these decisions. The true principle is that the owner is entitled to the value of the property in its actual condition at the time of the expropriation notice with all its existing advantages and with all its future potentialities. In determining the amount of compensation under Sub-section (1) of Section 23 of the Land Acquisition Act, 1894, the Court shall take into consideration the market value of the land at the date of the notification under Sub-section (1) of Section 4 with reference to sale of lands in the neighbourhood at or about the time of the notification. In determining the amount of compensation under Sub-section (1) of Section 23 of the Land Acquisition Act, 1894, the Court shall take into consideration the market value of the land at the date of the notification under Sub-section (1) of Section 4 with reference to sale of lands in the neighbourhood at or about the time of the notification. It is an accepted principle that the value to be ascertained is the value to the vendor and not its value to the purchaser and the said value is to be ascertained with all its potentialities, and with all the use that could be made by the vendor. Where definite material is not forthcoming either in the shape of sales of the neighbouring land at or about the date of the notification or otherwise, the Court would not be erring on the wrong side if it fixes the market value by capitalising the net annual income at 20 years' purchase. Reliance was sought to be placed on four decisions of this Court and certain decisions of the Supreme Court. In the case of Salil Kumar Ghose Vs. State of Orissa, a Division Bench of this Court took the view that the Appellant is entitled to the market value of the potentiality of the waste land under acquisition on account of compactness of the area and the fact that it abuts on the roadside and further temporary structures can be put on some portions thereof. In this case, their Lordships relied upon two decisions of the Privy Council reported in Atmaram Bhagwant v. Collector of Nagpur AIR 1929 P.C. 92 and Gajapatiraju v. Revenue Divisional Officer Vizagapattam AIR 939 P.C 98. In the former case, their Lordships of the Privy Council observed: Now the proper principles applicable to the case were not in controversy before the Board. An owner of lands, in the position of the Appellant, is entitled, it was agreed to the value to himself of the property in its actual condition at the time of expropriation with all its then existing advantages and with all its future possibilities, excluding only any advantage due to the carrying out of the scheme for the purposes for which the property was being acquired. In the latter case, their Lordships took the view: No one can suppose in the case of land which is certain, or even likely, to be used in the immediate or reasonably near future for building purposes but which at the valuation date is waste land or is being used for agricultural purpose, that the owner, however, willing a vendor, will be content to sell the land for its value as waste or agricultural land as the case may be. 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 possibilities of the land and not its realized possibilities that must be taken into consideration. Their Lordships further observed: But sometimes it happens that the land to be valued Possesses some unusual, and it may be unique feature as regards its position or potentialities. In such a case the arbitrator in determining its value will have no market-value to guide him, and he will have to ascertain all best he may from the materials before him what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities. For it has been established by numerous authorities that the land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined, but also by reference to the uses to which it is reasonably capable of being put in the future. No authority indeed is required for this proposition, It is a self evident one. In the case of Surajmal Nagarmal v. Collector. No authority indeed is required for this proposition, It is a self evident one. In the case of Surajmal Nagarmal v. Collector. of Puri ILR 1958 Cutt 704 sitting singly I took the view hat function of the Court in awarding compensation is to ascertain the market value of the land at the date of the notification u/s 4(1) of the Act where definite material is not forthcoming either in the shape of sales of neighbouring land at or about the date of the notification or otherwise, the Court would not be erring on the wrong side if it fixes the market value by capitalizing the net annual income at twenty years' purchase. In that case no basis for the market value as contemplated under Sub-section (1) of Section 23 was available. All the evidence that was available was the estimate made by the value on behalf of the claimant. Having regard to the location of the building, its construction and the surrounding circumstances twenty times of the net annual income of the house was considered to be the proper valuation with the statutory compensation. The principle being that the method of valuation of lands acquired may be classified under three heads; (1) The opinion of the value or experts; (2) The price paid within a reasonable time in bonafide transactions of purchase of lands acquired or the lands adjacent to the land acquired; (3) A number of years purchase of the actual or immediately prospective profit from the lands acquired. In the case of Collector of Puri Vs. Hrushikesh Mitra and Others, I and my Lord the Chief Justice held that the lands covered by the sale deed, though adjacent to the disputed plot, was of a very small extent, and was sold to a private party who might have been willing to pay a high price. The District Judge, therefore, thought that a fair estimate of the exact value of the disputed land should be arrived at by striking an average between the price as shown in this sale-deed and the price as worked out by the Land Acquisition Officer on the basis of the previous sales of other plots in the locality. He then estimated this average, and he was right in taking the average of the various sale prices in the locality in fixing the rate of compensation payable. He then estimated this average, and he was right in taking the average of the various sale prices in the locality in fixing the rate of compensation payable. In a more recent case reported in Kasinath Mookhlrji v. Collector of Puri 27 (1961)C.L.T. 185 the learned Chief Justice held that where the award of the Collector is challenged, the burden undoubtedly lies primarily on the claimant to show that the Collector's estimate was wrong. Though under normal conditions sale prices over a period of years' prior to the date of acquisition may be taken into consideration for fixing the average price, this principle cannot be applied to places where the prices went up abnormally from year to year on account of their growing importance. In estimating the average price in such cases the sale-deeds of the years in which the acquisition took place should alone be taken into consideration. Therefore, in respect of the acquisition made in 1947 the sale deeds of that year should alone have been considered. For the acquisition made in the year 1940 also there is some difficulty inasmuch as the sale statements show voilent fluctuations in the prices not only of house sites but also of the pucca and kutcha structures showing thereon; Any estimate must, therefore, be only approximate. But considering the rapid expansion of Bhubaneswar as New Capital from 1947 it would be fair to hold that in 1949 the prices of houses sites increased by 50 per cent. The learned Judges took into consideration the 'potential value' of the lands acquired and granted the same. 7. I will now proceed to consider the three decisions of the Supreme Court to which reference was made. The first in point of time is a decision reported in The State of West Bengal Vs. Bela Banerjee and Others. In that case the Supreme Court held that while it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the Court. The next is the case of Uttar Pradesh Government Vs. H.S. Gupta. The facts of that case were that in estate near the Municipal area was acquired by virtue of the land acquisition proceedings. The claimant asserted that in April, 1947, the value of the land was Rs. 2-8-0 to Rs. 3/- per square foot on the basis of demand and supply. He however in his cross-examination stated that small plots were sold at higher rate than bigger plots and the price paid for bigger plots could not be compared with the price paid for smaller plots and if the entire estate was sold, it would fetch Rs. 1 or Rs 2 per square foot. The High Court based their decision on this statement by the claimant for reducing the value of the plot from Rs. 1-2-0 per square foot fixed by the District Judge to Re. 0-14-0 per square foot. In these circumstances, their Lordships of the Supreme Court held that the construction put upon the stray statement like the one in question should not have weighed with the Judges in reducing the price per square foot. There was no justification on facts of the case for any reduction in the value per sqaure foot. The conditions which appertained to the estate resembled to a considerable extent those obtaining with regard to the scheme of acquisition of another estate in close proximity and it would not be inappropriate to base a conclusion on a comparison of the factual details of that scheme. Their Lordships further held that the High Court should have concentrated its attention on the price fetched for seminar extent of land similarly situated with the same kind of advantages and drawbacks and then applied that test to the facts in the present case. Viewed in that light, it would be proper to consider the scheme of the other estate as the nearest approach. Viewed in that light, it would be proper to consider the scheme of the other estate as the nearest approach. In a more recent case reported in The Special Land Acquisition Officer, Bangalore Vs. T. Adinarayan Setty, their Lordships held that the function of the Court in awarding compensation under the Act is to ascertain the market value of the land at the date of the notification u/s 4(1) and the methods of valuation may be (1) opinion of experts, (2) the price paid within a reasonable time in bonafide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and, (3) a number to years' purchase of the actual or immediately prospective profits of the lands acquired. Where the Court adopts the second method but takes only four out of six transactions of alienations made by the claimant, during a particular period without giving sufficient reason why two transactions left out, the Court commits an error of principle by adopting a wrong method in ascertaining the market value of the land at the relevant time and the arbitrary selection of four transactions only out of six vitiates the finding of the Court. After arriving at an average from the four transactions, the Court commits another error in again taking a second average between the maximum price obtained by the claimant and the first average already arrived at. 8. Thus, there is no dispute with regard to the principle of law as enunciated above. The learned Advocate-General appearing on behalf of the Sub-Collector sought to rely upon certain decisions which it is unnecessary to discuss here as they do not decide anything more than what has been stated above. He sought to rely upon an English decision reported in Stebbing v. The Metropolitan Board of Works 1870 (6) O.B 37. The facts in that case were that the Plaintiff was rector of three parishes in the city of London in the churchyards of which burials were prohibited by order in Council; the Defendants were empowered by statute to take compulsory, upon making compensation, the whole of one and part of the other two churchyards. The land so taken was to be used partly in forming a new street, and partly for the erection of buildings. The land so taken was to be used partly in forming a new street, and partly for the erection of buildings. Cockburn, C.J., held that when land subject to restrictions as to its use is taken for a public object under compulsory powers conferred by statute, the amount of compensation to the person interested therein is to be assessed with reference to the value of his interest therein, and not with reference to its value to the person taking it. The Plaintiff was entitled to compensation only for the loss that he sustained by being deprived of his interest in the churchyard and not according to the value of which land would be to the Defendants after they had acquired it. Thus, the principle of law in England is the same as in India. 9. With this background of the law, before taking up the actual market value of the land in dispute, it would be better to state that Atmakuri Balarammayya Chetty become the sixteen annas owner of the entire land under acquisition having got it from his adoptive father Appalanarsayya Chetty by a will Ext. D/3 and by a compromise with Venketarao, one of the legatees. Subsequent to the passing of the award there was an agreement between him and Ramajganna and Jagannadham regarding the apportionment of the compensation. The finding of the learned Judge is that the method of fixing the market value by capitalisation of rent as adopted by the Land Acquisition Officer was not correct. He, however, held that the market value of the land should be fixed according to the valuation of similar lands in the neighbourhood. For that purpose, he took into consideration two sale deeds Exts. C/2 and Ex. A/2 Ext. C/2 was a sale-deed executed by P.C. Chatterjee in favour of Pollaki Srirangam in August 1948 for sum of Rs. 11,000/- and Ext. A/2 is another sale deed by P.C. Poddar in favour of Pitamhar Patra in September 1949 Rs. 13,000/-. The area sold under Ext. C/2 is 16.87 cents whereas the area sold under Ext. A/2 is 14.4 cents. The land covered by Ext. A/2 is a small elongated bit of land sold by Poddar to Patra. It is in evidence that since a very long time the owner of the land had leased out the lands under acquisition to the postal department as a rental of Rs. A/2 is 14.4 cents. The land covered by Ext. A/2 is a small elongated bit of land sold by Poddar to Patra. It is in evidence that since a very long time the owner of the land had leased out the lands under acquisition to the postal department as a rental of Rs. 120/- per month. This rent remained unchanged in spite of rise in value of the land as also the rise in rent in the postwar period. This may be due to the result of the death of the owner Appeal Narasayya Chetty and lack of enthusiasm in the various legatees under the will. The learned Judge, however, thought that this monthly rental of Rs. 120/- can never be said to represent the real rental value of the building per month. It is an admitted fact that the postmaster is living in the house which was purchased by the Appellant ever since the postal department had taken the entire land on lease. There is evidence that A 0.50 cents out of 2.07 acres is rocky lands. It was contended on behalf of the Appellant that this, A.0.50 cents of lands should not have been valued along with the other portions at equal rate. The learned Judge has not Only included this extent of A0. 50 cents, but has given no valuation to the building standing on A0.27 cents. He valued the entire land including the 0.50 cents of the rocky portion and apportioned the value between the three claimants resulting in the value being the same both for the plain and the rocky portion. While considering the sale of 1949, as evidenced by Ext.A/2 thE learned Judge referred to the evidence of P.W. 1, P.C. Poddar, a local business man. From his evidence it is clear that he sold the site to Pitambar Patra for Rs. 13,000/- the extent of the land being 24 wide and 129' long. This land is adjacent to the petrol tank of Pellaki Srirangam According to him, he had purchased this site in 1947 for Rs. 7300/-. The prices began to rise from 1947 and he sold the site for Rs. 13,000/- in 1949. Doubtless, he had stated that there is a tendency in the rise of the prices. According to him the locality is a very busy locality and has great importance being near the bus stand. 7300/-. The prices began to rise from 1947 and he sold the site for Rs. 13,000/- in 1949. Doubtless, he had stated that there is a tendency in the rise of the prices. According to him the locality is a very busy locality and has great importance being near the bus stand. P.W. 4 Appalswami Patnaik produced the sale deed, Ext.C/2 in favour of Pollaki Srirangam executed by P.C. Chatterjee. P.C. Chatterjee was examined as P.W. 6. He was a pleader of the Berhampur Bar, and was the vendor of the land under Ext.C/2. His evidence was that he was the owner of the site and sold it for Rs.ll,000/- and was satisfied with the price, there being no concession on either side. He had also stated that he knew the post-office, and the lands surrounding it, that is, the acquired site very well and except a cocky portion to the east, the rest of the area is of the same type and level, and it is very adjacent to the land sold by him. In fact, the land sold by Chatterjee is just opposite to he land in dispute. E. Venugopal, P.W. 2 is the Managing proprietor of Utkal Cinema which is Elituated at distance of about a mile or so from this locality and he deposed that he had taken lease of a vacant site of A0.50 cents from a Mahant with the permission of the Endowments Commissioner in 1951 on a rent of Rs. 1800/- per year which has been raised to Rs. 2800/- by this Court's order. According to him that site is not situated in any business locality. The only other witness of importance is P.W. 7, P. Jagannadham, partner under the agreement, Ext. E-2. He stated that when they entered into the agreement, the value of the acquired property was 2 lakhs and 80 thousands. As Balaram wanted money and there was land acquisition proceedings, he had no idea of any lay out and he wanted to sell the property cheaply for Rs. 60,000/-. The learned Judge had referred to the price fixed by the Collector on the basis of Ext. C.2 at Rs. 65,000/- per acre for the Municipality. The Municipality, however, could not take the land due to financial difficulties. The present Appellant was examined as P.W. 9 and he stated that he had purchased the house for a sum of Rs. The learned Judge had referred to the price fixed by the Collector on the basis of Ext. C.2 at Rs. 65,000/- per acre for the Municipality. The Municipality, however, could not take the land due to financial difficulties. The present Appellant was examined as P.W. 9 and he stated that he had purchased the house for a sum of Rs. 10,000/-. His sale deed, Ext. M-1 states that "The sale-deed of a house for Rs. 10,000/-". The sub-collector neither adduced any oral evidence nor filed any contemporary document of sale or lease in that locality. The Learned Judge did not take into consideration the document of 1949, presumably on the ground that it was a small elongated piece of land and was sold by Poddar by private negotiation to Patra. Poddar as P.W. 1 had admitted that he had purchased the land when the price was on the rise for Rs. 7300/- only and two year's after his purchase he had sold the same for Rs. 13,000/-. Accordingly he took the sale-deed of 1948, Ext.C/2 into consideration and fixed the value percent at Rs. 65/-. His actual finding is "By calculation it would look that the price of land as per Pollaki Srirangam would be Rs. 62,000 per acre." Thus, the value percent comes to Rs. 652;', but while passing the order he actually valued the land at a rate of Rs. 555.9-0 percent and thus awarded Rs. 15,000/- to Apparao. Once having fond that the land opposite to the Appellant's land and purchased by Pollaki Srirangam in 1948 is valued at Rs. 68,000/-per acre, he was wrong in reducing the said figure while actually calculating the compensation to be awarded to the Appellant. The learned Judge valued the buildings after giving due credit to the depreciation at Rs. 20,000/-. His finding is: "Therefore, there would be no doubt that the cost of the building on the land would be about Rs. 20,000/- in the year 1950 even giving due credit to the depreciation. The learned Judge had presumable overlooked the provisions of Section 28 and 34 of the Land Acquisition Act. There is no evidence that the money found to be due to the Appellant as ever offered or deposited into Government treasury to be with drawn by him. 20,000/- in the year 1950 even giving due credit to the depreciation. The learned Judge had presumable overlooked the provisions of Section 28 and 34 of the Land Acquisition Act. There is no evidence that the money found to be due to the Appellant as ever offered or deposited into Government treasury to be with drawn by him. Hence he is entitled under the law to the interest from the date of dispossession, that is, 5-1-1954 up to the date of payment on the value as is being fixed by this Court. The potentiality of the land appears to have been taken into consideration in the sale-deed of 1948. Accordingly, there is no question of awarding any further amount due to the potentiality of the land. In our opinion, the learned District Judge was right in not allowing any amount on account of the potentiality of the land in dispute. Thus, in view of our finding the A0.27 cents of land is valued at the rate of Rs. 652/- percent at Rs. 17,604/-; the proportionate value of the building according to the finding of the District Judge is Rs. 8400 over and above the fifteen percent statutory compensation comes to Rs. 3900/- and the total thus comes to Rs. 29,900/- which the Appellant is entitled to get. He is also entitled to get the interest on this amount from 5-1-1954 up to the date of payment. Accordingly, we would modify the award of the learned District Judge dated 20-9-1952, and direct the sub-Collector to pay the Appellant Rs 29,900/-(Rupees Twenty-nine thousand and nine hundred) for the value of his land and building with the statutory compensation. The Appellant is also entitled to the interest at 6% per annum from the date of dispossession to the date of payment. 10. The appeal is therefore allowed and the Appellant is entitled to proportionate costs. Barman, J. 11. I agree. Final Result : Allowed