JUDGMENT 1. M.F.A. No.7564/08 is filed by the Special Land Acquisition Officer, MUDA, challenging the legality and correctness of the judgment and award passed by the III Addl. Civil Judge, Mysore, dated 18.3.2008 in LAC No.63/02 and Cross Objection No.258/08 is filed by the respondent who lost the land on account of the acquisition by the appellant. In the circumstances appeal and cross objections re heard together. 2. We have heard Sri P S Manjunath, the learned counsel for the appellant and Mr. C S Kothavale, learned counsel who is appearing for Sri G P Manjunath for the respondent. 3. The facts leading to this case are as hereunder: 39 guntas of land situated in Sy.No.9/1 of Nadanahalli village, Mysore Taluk was notified for acquisition on 30.01.1997 under Section 4(1) of the Land Acquisition Act. Possession was taken on 02.12.1998. General award was passed on 04.03.1998 and individual award was passed on 12.8.1998. The Land Acquisition Officer determined the market value at the rate of Rs.1,05,000/-per acre. On the ground that the award passed by the Land Acquisition Officer is inadequate, the owner sought a reference under Section 18 of the Land Acquisition Act for determination of the actual market value. Accordingly, the matter was referred to the Reference Court. Before the Reference Court the owner of the property was examined as PW.1. He relied upon Exs.P.1 to P.8. On behalf of the Land Acquisition Officer one Malegowda was examined as RW.1. Respondent relied upon Exs.R.1 to R.10. The Reference Court formulated the following points for its consideration. 1. Whether the reference made is in time? 2. Whether the compensation awarded by Spl.Land Acquisition Officer is inadequate? 3. Whether the claimant is entitled for enhanced market value? 4. What order? 4. The Reference Court after considering the entire evidence held points 1 to 3 affirmative and determined the market value of the land acquired at the rate of Rs.10,61,000/- per acre and the Reference Court also awarded other statutory benefits. Being aggrieved by the determination of the market value at the rate of Rs.10,61,000/-per acre the Land Acquisition Officer has come up in this appeal on the ground that the respondent was not entitle for any enhancement, with a request to confirm the award passed by the Special Land Acquisition Officer. 5. Being aggrieved by the determination of the market value at the rate of Rs.10,61,000/-per acre the Land Acquisition Officer has come up in this appeal on the ground that the respondent was not entitle for any enhancement, with a request to confirm the award passed by the Special Land Acquisition Officer. 5. Per contra the cross objection is filed by the owner of the land on the ground that in addition to the market value determined by the Reference Court, hence entitled for enhancement of Rs.2,00,000/-per acre with other statutory benefits. In the circumstances we have heard the appeal as well as the cross objections. 6. Mr. P S Manjunath, the learned counsel for the appellant contends that the Reference Court has committed a serious error in determining the market value of the land acquired based on EX.P.7. According to him Ex.P7 could not have been relied upon by the Reference Court in order to determine the market value of the land in question. According to him the property contained under Ex.P.7 and the notified lands are not comparable. The property covered under Ex.P7 is a site situated within the midst of a well developed residential layout within the limits of Mysore City Corporation and in which layout was formed and sites were allotted in the year 1986 by the MUDA. The distance between the properties contained in Ex.P5 to P7 and the land notified is more than 11/2 kms. And he further contends that the calculation arrived at by the Reference Court in regard to the extent of sites formed in one acre of land and the value arrived at in regard to the cost of development a without any basis. Therefore he requests the Court to allow the appeal and set aside the order passed by the Reference Court. 7. Therefore he requests the Court to allow the appeal and set aside the order passed by the Reference Court. 7. Per contra Sri C S Kothavale, the learned counsel for the respondent contends that even though the notified land is an agricultural land as the land in question is situated at the outskirts of Mysore city and which has been notified for the formation of a residential layout the Reference Court is justified in treating the same as a land which could be used for the formation of a residential layout and the Reference Court has considered its potential value and he further contends that as per the evidence of PW.1 the distance between the property notified and the properties covered under Ex.P5 to P7 are just 50 mtrs. Therefore the market value of the property under Ex.P7 has to be considered as the market value for the notified land. He further contends that the Reference Court has committed an error in calculating the market value since the Reference Court has deducted 50% towards the area required for the formation of roads, civic amenity, etc, and thereafter deducted further 50% as cost towards the formation of the layout. In the circumstances he requests the Court to allow the cross objection by dismissing the appeal. 8. After hearing the learned counsel for the parties this Court raised a doubt in regard to the actual distance between Ex.P.7 and the notified land. In the circumstances this court had directed the learned counsel for the appellant to produce an official village map prepared by the Survey Settlement Authority maintained by the State of Karnataka in order to know the actual distance between the Ex.P7 and the notified land. Today he has Nadanahalli which discloses the actual distance between Ex.P7 and the notified land. 9. Mr. C S Kothavale by looking into this document relying upon the examination-in-chief of PW.1 submits that the land owner has deposed before the Court below that the notified land is situated at a distance of 50 mtrs, away from the well formed layout by the MUDA known as Alanahalli extension. Therefore he requests the Court to allow the cross objection. 10. Having heard the counsel for the parties we have to consider the following points in this appeal and the cross objection. Therefore he requests the Court to allow the cross objection. 10. Having heard the counsel for the parties we have to consider the following points in this appeal and the cross objection. (1) Whether the Reference Court is justified in determining the market value at the rate of Rs.10,61,000/- per acre based on Ex.P7? and (2) Whether the market value determined by the Reference Court is to be reduced or to be enhanced? And (3) Whether the methodology adopted by the Reference Court in arriving at the market value is just and proper? 11. Since all these three points are linked with each other we would like to deal with the same as here under: It is not in dispute that Nadanahalli village is situated towards the east of Alanahalli village. Certain extent of lands in Alanahalli village was acquired long back and sits were firmed by the MUDA and sites were also allotted in Alanahalli village in 1986 itself. It is not in dispute that the land notified is a potential land, which can be used for the formation of a residential layout. In otherwords the potentiality of the notified land is not disputed by the appellant – Special land Acquisition Officer. The only dispute of the appellant before us is that the trial Court has committed a serious error in determining the market value of the notified land relying upon Ex.P7. Even the counsel for the cross objector contends that the methodology adopted by the Reference Court for determining the market value is incorrect. When the learned counsel for both the parties submit that the methodology followed by the Reference Court for determining the market value is not proper and incorrect, then the market value determined by the Reference Court cannot be accepted by this Court. Therefore what is to be considered by us in this appeal is, whether sufficient evidence is let in by the parties to determine the market value and the appreciation of evidence by the Reference Court is just and proper. 12. The claimant has relied upon Ex.P7 to determine the market value. Ex.P7 is a site sold within a well developed layout of Alanahalli. As per the survey map produced by the counsel for the appellant distance between EX.P7 and the notified land is about 1.43 kms. 12. The claimant has relied upon Ex.P7 to determine the market value. Ex.P7 is a site sold within a well developed layout of Alanahalli. As per the survey map produced by the counsel for the appellant distance between EX.P7 and the notified land is about 1.43 kms. The Hon’ble Supreme Court while considering the potentiality of the land and determining the market value in SURESH KUMAR Vs. TOWN IMPROVEMENT TRUST, BHOPAL reported in AIR 1989 SC 1222 set up certain guidelines, how market value has to be considered considering the potentiality of the land. In paragraph 9 their Lordships have held as here under: “It is an accepted principle that the land is not to be valued, merely by reference to the use to which it has been put at the time at which its value has to be determined, that is, the date of the notification under S.4, but also by reference to the use to which it is reasonably capable for being put in the future. A land which is certainly or likely to be used in the immediate or reasonably near future for building purposes but which at the valuation date is waste land or has been used for agricultural purposes, the owner, however willing a vendor he is, is not likely to be content to sell the land for its value as waste or agricultural land as the case may be. The possibility of its being used for building purposes would have to be taken into account. However, it must not be valued as though it had already been built upon. It is the possibilities of the land and not its realized possibilities that must be taken into consideration. In other words, the value of the land should be determined not necessarily according to its present disposition but laid out in its lucrative and advantageous way in which the owner can dispose it of. It is well established that the special, though natural, adaptability of the land for the purpose for which it is taken , is an important element to be taken into consideration in determining the market value of the land. In such a situation the land might have already been valued at more than its value as agricultural land, if it had any other capabilities. However, only reasonable and fair capabilities but nor far-fetched and hypothetical capabilities are to be taken into consideration. In such a situation the land might have already been valued at more than its value as agricultural land, if it had any other capabilities. However, only reasonable and fair capabilities but nor far-fetched and hypothetical capabilities are to be taken into consideration. In sum, in estimating the market value of the land all of the capabilities of the land, and all its legitimate purposes to which ti may be applied or for which it may be adapted are to be considered and not merely the condition it is in and the use to which it is at the time applied by the owner. The proper principle is to ascertain the market value of the land taking into consideration the special value which ought to be attached to the special advantage possessed by the land, namely, its proximity to developed urbanized areas.” 13. In view of this legal position we are of the view that the Reference Court has not followed the principle laid down by the Hon’ble Supreme Court in the aforesaid decision. The Reference Court relying upon EX.P7 considering its value has determined the market value of the notified land which is situated about 1, 43 kms. Away from the EX.P7. It is no doubt true that the land in question was capable of being used as a residential layout for the formation of residential sites but the market value of EX.P7 cannot be a basis to determine the market value of the present notified land. Considering that though it was capable of forming residential layout, residential layout was yet to come up and the said value cannot be the value of EX.P7 and cannot be the basis to determine the market value. 14. In the circumstances we are of the opinion that, as EX.P7 could not be considered by the Reference Court for determining the market value as the methodology adopted by the Reference Court is also incorrect as contended by the learned counsel for both the parties we have to remand the matter to the trial Court to give an opportunity for both the parties to let in evidence and to determine the market value based on the principles land down by the Hon’ble Supreme Court in the aforesaid decision. At the time of admission the appellant was directed to deposit 50% of the amount determined by the Reference Court and out of which 50% of the same has been permitted to be withdrawn by the landlord. As we are remanding the matter, we are of the opinion that the respondent owner is entitled to withdraw the entire amount deposited by the appellant subject to the result of the judgment of the Reference Court without giving any security or surety. 15. Accordingly, the appeal is allowed and remanded. Since we are remanding appeal as well as cross objections the appellant as well as cross objectors are entitle for refund of full court fee under Section 54 of the Karnataka Court Fees and State Valuation Act.