# Gas Authority of India Ltd v. Ram Ashrey & Ors

- **Citation:** (2022) 2 ILRA 717
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022
- **Case number:** First Appeal No.908 of 2003
- **Bench:** Sudhir Agarwal, Rakesh Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/gas-authority-of-india-ltd-v-ram-ashrey-ors-43392
- **Pages:** 14

## Headnote

Sri Dinesh Pathak, Sri Rakesh Pathak

A. Land Acquisition - Determination of
market value of the acquired land - The
market value of land under acquisition has to
be deduced by loading the price reflected in
the instances taken for plus factors and
unloading for minus factors. In other words,
a balance sheet of plus and minus factors
may be drawn and the relevant factors may
be valuated in terms of price variation. (Para
19)

First Appeal Rejected. (E-10)

List of Cases cited:

## Text

_Characters 0–39,586 of 45,707. This is a partial read: ask again with offset=39586 for what follows._

2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
717
being only a formal order, no Second
Appeal will be maintainable against the
impugned order. This second appeal is
liable to be dismissed on this ground alone.

7. Accordingly the second appeal is
hereby dismissed.
----------
(2022)02ILR A717
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 04.11.2015

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE RAKESH SRIVASTAVA, J.

First Appeal No.908 of 2003

Gas Authority of India Ltd. ...Appellant
Versus
Ram Ashrey & Ors. ...Respondents

Counsel for the Appellant:
Sri A.K. Gaur, Sri Madhur Prakash, Sri V.K. Singh

Counsel for the Respondents:
Sri Dinesh Pathak, Sri Rakesh Pathak

A. Land Acquisition - Determination of
market value of the acquired land - The
market value of land under acquisition has to
be deduced by loading the price reflected in
the instances taken for plus factors and
unloading for minus factors. In other words,
a balance sheet of plus and minus factors
may be drawn and the relevant factors may
be valuated in terms of price variation. (Para
19)

First Appeal Rejected. (E-10)

List of Cases cited:

1. Jawajee Nagnatham Vs Revenue Divisional
Officer (1994) 4 SCC 595

2. Land Acquisition Officer Vs Jasti Rohini 1995
(1) SCC 717

3. U.P. Jal Nigam Vs M/s Kalra Properties (P)
Ltd. (1996) 3 SCC 124

4. Krishi Utpadan Mandi Samiti Vs Bipin kumar
(2004) 2 SCC 283

5. Lal Chand Vs U.O.I. & anr. (2009) 15 SCC 769

6. Ramesh Chand Bansal Vs District Magistrate/
Collector (1999) 5 SCC 62

7. R. Sai Ram Bharathi Vs J. Jayalalitha (2004) 2
SCC 9

8. Chimanlal Hargoviddas Vs Special Land
Acquisition Officer (1988) 3 SCC 751

9. V.M. Salgoacar & brother Ltd. Vs U.O.I.
(1995) 2 SCC 302

10. Shakuntalabai (Smt.) & ors. Vs St.of Mah.
1996 (2) SCC 152

11. State of U.P. Vs Major Jitendra kumar & ors.
AIR 1982 SC 876

12. Administrator General of West Bengal Vs
Collector, Varanasi AIR 1998 SC 943

13. Meerut Development Authority through its
Secretary
Vs
Basheshwar
Dayal
(since
deceased) through His L.Rs. & anr. First Appeal
No. 454 of 2003

14. Bhule Ram Vs UOI & anr. JT 2014 (5) SC
110

15. Bhupal Singh & ors. Vs St.of Har. (2015) 5
SCC 801

16. Chandrashekar Vs Land Acquisition Officer
(2012) 1 SCC 390

17. Subh Ram Vs State of Haryana (2010) 1 SCC
444

18. K. Devakimma & ors. Vs Tirumala Tirupati
Devasthanam & anr. 2015 (111) ALR 241
(Delivered by Hon'ble Sudhir Agarwal, J.
&
Hon'ble Rakesh Srivastava, J.)
718 INDIAN LAW REPORTS ALLAHABAD SERIES

1. Heard Shri V.K. Singh, learned
Senior Advocate assisted by Shri Madhur
Prakash, learned counsel for appellant and
Shri Dinesh Pathak for respondents.

2. This appeal, at the instance of
defendant-appellant i.e. Gas Authority Of
India Limited (hereinafter referred to as
GAIL), has been preferred under Section
54
of
Land
Acquisition
Act,
1894
(hereinafter referred to as "Act, 1894")
being aggrieved by award/judgment dated
31.5.2003 in Land Acquisition Reference
(hereinafter referred to as LAR) No.56 of
1995 passed by Shri D.L. Srivatava,
Additional District Judge, Court No.4,
Etawah
(hereinafter
referred
to
as
Reference Court) determining market value
of acquired land considering the factors
under Section 23 of Act, 1894, at the rate of
Rs.35,000/-
per
1800
square
feet.
Reference Court has further awarded 30%
solatium on the amount of compensation,
12% additional compensation and interest
for various periods, as per provisions of
Act, 1894.

3. Shri V.K. Singh, learned Senior
Counsel appearing for appellant stated that
challenge in this appeal is confined to the
rate
of
compensation
determined
by
Reference Court i.e. Rs.35,000/- per 1800
square feet. According to him, Reference
Court has determined market value at much
excessive and inflated rate, which does not
represent true market value at the time of
acquisition.

4. On the request of appellant GAIL,
acquisition proceedings under Act, 1894 were
initiated by publication of notification dated
10.4.1992 under Section 4 (1) of Act, 1894 in
the Gazette dated 20.6.1992. Notification
dated 26.8.1992 under Section 6 (1) of Act,
1894 was published in Gazette dated
12.9.1992 and possession of land in village
Vaisundhara was taken on 30.1.1993. It
proposed to acquire 164.35 and 53.92 acres
of land in villages Vaisundhara and Sehud,
Pargana Auraiya, District Etawah (now part
of District Auraiya), respectively, for the
purpose of constructing residential colony of
staff of Petrochemical Project, to be installed
at Auraiya. Claimant-respondent no.1 filed
objection on 23.5.1992 and thereafter,
Special Land Acquisition Officer (hereinafter
referred to as SLAO) made its award dated
24.9.1994 determining market value for the
purpose of compensation at Rs.1,80,000/- per
acre (Rs.7438/- per 1800 square feet). Land
of claimant-respondent no.1 is situated in
village Vaisundhara bearing Khasra no.185
Gata No.723, area 1.64 acres.

5.

Claimant-respondent
1
being
dissatisfied
with
aforesaid
offer
of
compensation made application for reference
under Section 18 to District Judge for
determination of market value under Section
23 of Act 1894 pursuant whereto impugned
award dated 31.5.2003 has been delivered by
Reference
Court
adjudicating
and
determining market value at Rs.35,000/- per
1800 square feet.

6. Reference Court in determining
aforesaid market value has relied upon sale
deed dated 6.7.1990 whereby 1800 square
feet land of village Sehud, adjacent to
village Vaisundhara, was transferred by
sale by Karan Singh etc. in favour of Ram
Prakash for a consideration of Rs.35,000/-.

7. Reference Court framed three
issues. Issue 1, relevant to the issue raised
in this appeal, reads as under: -

"D;k fo'ks"k Hkwfe v/;kfIr vf/kdkjh }kjk
fd;k x;k izfrdj vi;kZIr gS\ ;fn gkW rks ;kph
fdruh /kujkf'k izkIr djus dk gdnkj gS\"
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
719

8. Claimant-respondent 1 relied on
sale deeds dated 29.8.1989 (paper no.16Ga/4-5), 15.2.1988 (paper no.16-Ga/6-7),
31.7.1992 (paper no.16-Ga/8-9) and dated
6.7.1990 (paper no.16-Ga/10-12) vide list
22-Ga, besides other documents i.e. map,
chakbandi record etc. He examined in
support of his claim, himself as PW-1 and
one Sobran Singh as PW-2.

9. On behalf of defendant, one
Pradeep Kumar, Amin was examined as
DW-1 and sale deed dated 10.9.1991
(paper
no.46-Ga/1-3)
executed
by
Radhunandan in favour of Lalaram was
cited.

10. The court below with respect to
location and other potential advantages of
the land in question has recorded its
findings
that
villages
Sehud
and
Vaisundhara, both are adjacent to each
other. Before SLAO several exemplar sale
deeds of the said two villages were cited,
but none were accepted by SLAO only for
the reason that they would result in making
higher rates of compensation to the land
owners. Obviously, that could not have
been a valid reason to reject exemplars of
villages where acquired land is also
situated. Having said so, court below has
further observed that Collector, Etawah has
determined market value for the purposes
of stamp duty at the rate of Rs.35/- per
square foot and above, depending upon
location of land in aforesaid two villagers
and some other nearby area. In view
thereof, value of acquired land should not
have been below Rs.35/- to Rs.45/- per
square foot. Having said so, it rightly did
not follow circle rate determined by
Collector for the reason that the same is not
relevant for the purposes of market value
under Section 23 of Act, 1894 as held
repeatedly by Court time and again.

11. Counsel for the parties do not
dispute that circle rate fixed by Collector
cannot be a basis for determining market
value. In Jawajee Nagnatham v. Revenue
Divisional Officer, (1994) 4 SCC 595, this
question came up for consideration in the
matter arisen from State of Andhra
Pradesh. The land owners appealed against
order of Reference Court before Andhra
Pradesh High Court claiming higher
compensation on the basis of the basic
valuation register maintained by Revenue
authorities under Stamp Act, 1899. The
claim of land owners failed in High Court,
which held that such register had no
evidenciary value on statutory basis. In
appeal, Apex Court held that basic
valuation register was maintained for the
purpose of collecting stamp duty under
Section 47-A of Stamp Act, 1899 as
amended in State of Andhra Pradesh. It did
not confer expressly any power to the
Government to determine market value of
the land prevailing in a particular area, i.e.,
village, block, district or region. It also did
not provide, as a statutory obligation, to
Revenue authorities to maintain basic
valuation register for levy of stamp duty in
regard
to
instruments
presented
for
registration. Therefore, there existed no
statutory provision or rule providing for
maintaining such valuation register. In the
circumstances, such register prepared and
maintained for the purpose of collecting
stamp duty had no statutory force or basis
and cannot form a valid criteria to
determine market value of land acquired
under Act, 1894. This decision was
followed in Land Acquisition Officer Vs.
Jasti Rohini, 1995 (1) SCC 717.

12. Another matter from State of U.P.
came up for consideration involving the
same issue in U.P. Jal Nigam Vs. M/s
Kalra Properties (P) Ltd., (1996) 3 SCC
720 INDIAN LAW REPORTS ALLAHABAD SERIES
124. The land owners' demanded for
compensation in regard to land acquired
under Act, 1894 on the basis of market
value assessed as per circle rate determined
by Collector. It was accepted by High
Court, but in appeal, judgment was
reversed by Supreme Court following its
earlier decision in Jawajee Nagnatham
(supra). The Court held that market value
under Section 23 of Act, 1894 cannot be
determined on circle rates determined by
Collector for the purpose of stamp duty
under Stamp Act, 1899. This view was
reiterated in Krishi Utpadan Mandi Samiti
Vs. Bipin Kumar, (2004) 2 SCC 283.

13. The issue has again been
considered recently in Lal Chand Vs.
Union of India and another, (2009) 15
SCC 769 wherein two Judgments of Apex
Court taking a view that circle rates may
be considered, as prima facie basis, for
the purpose of ascertaining the market
value were examined. These decisions are
Ramesh
Chand
Bansal
v.
District
Magistrate/Collector, (1999) 5 SCC 62
and
R
Sai
Ram
Bharathi
v.
J
Jayalalitha, (2004) 2 SCC 9. The Court
resolved controversy in Lal Chand Vs.
Union of India holding, if in a particular
case, guideline for market values are
determined by an Expert Committees
constituted under State Stamp Law for
following a detailed procedure laid down
under the relevant rules and are published
in State Gazette, the same may be
considered as a relevant material to
determine market value. The Court said
when guideline of market values, i.e.,
minimum
rates
for
registration
of
properties,
are
so
evaluated
and
determined by Expert Committees, as per
statutory procedure, there is no reason
why such rates should not be a relevant
piece of evidence for determination of
market value. Having said so in para 44
the Court further stated as under:-

"44. One of the recognised
methods for determination of market
value is with reference to the opinion of
experts. The estimation of market value
by such statutorily constituted Expert
Committees, as expert evidence can,
therefore, form the basis for determining
the market value in land acquisition
cases, as a relevant piece of evidence. It
will be however open to either party to
place
evidence
to
dislodge
the
presumption that may flow from such
guideline market value. We, however,
hasten to add that the guideline market
value can be a relevant piece of evidence
only if they are assessed by statutorily
appointed
Expert
Committees,
in
accordance
with
the
prescribed
assessment procedure (either streetwise,
or roadwise, or areawise, or villagewise)
and finalized after inviting objections and
published in the gazette. Be that as it
may."

14. F ollowing aforesaid decisions and
applying the same to the facts of present
case, we find that it is no body's case that
circle rates fixed by Collector, Ghaziabad
do satisfy the requirement as observed in
Lal Chand Vs. Union of India so as to
form a relevant material to be considered
for determining market value under Section
23
of
Act,
1894.
It
is,
in
these
circumstances, we have no hesitation in
holding that in respect of determination of
market value of land, acquired in these
appeals, circle rates fixed by Collector
would not be relevant material to be looked
into for determining market value.

15.

Reference
Court
thereafter
referred to sale deed dated 6.7.1990 (Paper
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
721
no16-Ga/10-12) whereby Karan Singh
transferred land by sale deed to Shri Ram
Prakash at the rate of Rs.35,000/- per 1800
square feet. It was two years old exemplar
and at the time of acquisition certain
industries had already come up to acquire
land causing increase in price of land.

16. We find that SLAO determined
market value at Rs.1,80,000/- per acre,
which comes to Rs.7,438/- for every 1800
square feet and this has been enhanced by
Reference Court to Rs.35,000/- relying
upon sale deed of 1990, and that too,
without applying any appreciation. Can it
be said that about a little less than five
times increase by Reference Court, in fact,
is highly excessive and inflated?

17. We find that in last several
decades large number of authorities have
come
up
laying
down
factors
and
principles, which have to be observed and
followed by the acquiring authorities or the
Court
determining
market
value
in
reference under Section 18 of Act, 1894
following the factors enumerated under
Section 23 of Act, 1894 and these
principles almost cover the entire field. It
would be appropriate to recapture those
principles of referring authorities.

18. So far as material placed before
SLAO and his award is concerned, we find
that the same was not material to be
looked into by Reference Court since
proceedings before Reference Court are
independent and separate. An award by
SLAO is like an offer and not to be treated
as a judgment of Trial Court. It is well
settled, when the land holders are not
agreeable to accept the offer made by
Land Acquisition Officer, they have a
right to approach Collector under section
18 of the Act, 1894, by a written
application, for referring the matter to
court, for determination of the amount of
compensation or if there is any dispute
regarding measurement of land for that
also. In the present case the references in
question were made at the instance of
claimants for determining the amount of
compensation.

19. In Chimanlal Hargovinddas vs.
Special Land Acquisition Officer, (1988)
3 SCC 751, the court has said that a
Reference is like a suit which is to be
treated as an original proceeding. The
claimants are in the position of a plaintiff,
who has to show that the price offered for
his land in the award is inadequate.
However, for the said purpose the court
would not consider the material, relied
upon by Land Acquisition Officer in
award, unless the same material is
produced and proved before the court. The
Reference Court does not sit in appeal
over the award of Land Acquisition
Officer. The material used by Land
Acquisition Officer is not open to be used
by the Court suo motu unless such
material is produced by the parties and
proved
independently
before
the
Reference Court. Determination of market
value has to be made as per market rate
prevailing on the date of publication of
notification under section 4 of Act, 1894.
The basic principle which has to be
followed
by
Reference
Court
for
determining market value of land, as if,
the valuer i.e. the court is a hypothetical
purchaser, willing to purchase land from
the open market and is prepared to pay a
reasonable price, as on the crucial day,
i.e., date of publication of notification
under section 4 of the Act, 1894. The
willingness of vendor to sell land on
reasonable price shall be presumed. The
court, therefore, would co-relate market
722 INDIAN LAW REPORTS ALLAHABAD SERIES
value reflated in the most comparable
instance which provides the index of
market value. Only genuine instances
would be taken into account. Sometimes
even post-notification instances may be
taken into account if they are very
proximate, genuine and acquisition itself
has not motivated the purchaser to pay a
higher price on account of the resultant
improvement in development prospects.
Proximity from time angle and from
situation
angle
would
be
relevant
considerations
to
find
out
most
comparable instances out of the genuine
instances. From identified instances which
would provide index of market value,
price reflected therein may be taken as
norm and thereafter to arrive at the true
market value of land under acquisition,
suitable adjustment by plus and minus
factors has to be made. In other words a
balance sheet of plus and minus factors
may be drawn and the relevant factors
may be valuated in terms of price
variation, as a prudent purchaser would
do. The market value of land under
acquisition has to be deduced by loading
the price reflected in the instances taken
for plus factors and unloading for minus
factors.

20. The size of the land, therefore,
would constitute an important factor to
determine market value. It cannot be
doubted that small size plot may attract a
large number of persons being within their
reach which will not be possible in respect
of large block of land wherein incumbent
will have to incur extra liability in
preparing a lay out and carving out roads,
leaving open space, plotting out smaller
plots, waiting for purchasers etc. The Court
said that in such matters, the factors can be
discounted by making deduction by way of
an allowance at an appropriate rate ranging
between 20% to 50%, to account for land,
required to be set apart for carving out road
etc. and for plotting out small plots.

21. The concept of smaller and larger
plots should be looked into not only from
the angle as to what area has been acquired,
but also the number of land holders and
size of their plots. When we talk of concept
of a prudent seller and prudent buyer, we
cannot ignore the fact that in the category
of prudent seller the individual land holder
will come. It is the area of his holding
which will be relevant for him and not that
of actual total and collective large area
which is sought to be acquired.

22. In V.M. Salgoacar & brother Ltd.
vs. Union of India (1995) 2 SCC 302, the
land
acquired
by
notification
dated
06.07.1970 in village Chicalim near Goa
Airport belonged to a single owner. The
Court observed, when land is sold out in
smaller plots, there may be a rising trend in
the market, of fetching higher price in
comparison to the plot which are much
higher in size. Having said so the Court
further said "though the small plots ipso
facto may not form the basis per se to
determine the compensation, they would
provide foundation for determining the
market value. On its basis, giving proper
deduction, the market value ought to be
determined".

23. Again, in Shakuntalabai (Smt.)
and others vs. State of Maharashtra, 1996
(2) SCC 152, 20 acres of land in Akola
town was sought to be acquired by
notification published on 11.08.1965 under
section 4 (1) of Act, 1894 which was also
owned by a single person. It is in this
context the Court said "the reference court
committed manifest error in determining
compensation on the basis of sq. ft. when
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
723
land of an extent of 20 acres is offered for
sale in an open market, no willing and
prudent purchaser would come forward to
purchase that vast extent of land on sq. ft.
basis. Therefore, the Reference Court has
to consider valuation sitting on the
armchair of a willing prudent hypothetical
vendee and to put a question to itself
whether in given circumstances, he would
agree to purchase the land on sq. ft. basis.
No feat of imagination is necessary to reach
the conclusion. The answer is obviously
no".

24. We may also notice at this stage
that deduction for development is different
than the deduction permissible in respect of
largeness of area vis-a-vis exemplar of
small piece of land. Many times, land
owners relied on the rates on which
development authorities used to offer
allotment of developed plots cropped out
by them in residential or industrial area.
Such rates apparently cannot form the basis
for
compensation
for
acquisition
of
undeveloped lands for reasons more than
one. The market value in respect of large
tract of undeveloped agricultural land in a
rural area has to be determined in the
context of a land similarly situated whereas
allotment rates of development authorities
are with reference to small plots and in a
developed lay out falling within urban or
semi-urban area. The statutory authorities
including development authorities used to
offer rates with reference to economic
capacity by the buyer like economic
weaker sections, low income group, middle
income group, higher income group etc.
Therefore,
rates
determined
by
such
authorities are not uniform. The market
value of acquired land cannot depend upon
economic
status
of
land
loser
and
conversely on the economic status of the
body at whose instance the land is
acquired. Further, normally, land acquired
is a freehold land whereas allotment rates
determined by development authorities etc.
constitute initial premium payable on
allotment of plots on leasehold basis.

25. However, where an exemplar of
small piece of land is relied, in absence of
any other relevant material, Court may
determine market value in the light of
evidence relating to sale price of small
developed plots. In such cases, deduction
varying from 20% to 75% is liable to apply
depending upon nature of development of
lay out in which exemplar plot is situated.

26. In Lal Chand Vs. Union of India
(supra), Court noticed that this deduction
for
development
constitutes
two
components - one is with reference to area
required to be utilized for development
work and second is the cost of development
work. It further held that deduction for
development in respect of residential plot
may be higher while not so where it is an
industrial plot. Similarly, if acquired land is
in a semi-developed urban area or in any
undeveloped rural area, then deduction for
development may be much less and vary
from 25 to 40 percent since some basic
infrastructure will already be available. The
percentage is only indicative and vary
depending upon relevant factors. With
reference to exemplars of transfer of land
between private parties, Court would also
look into the intrinsic evidence, i.e., the
exemplar sale deed where the sale deed
recites financial difficulties of vendor and
urgent need to find money as a reason for
sale or other similar factors, like litigation
or existence of some other dispute. These
are all the factors constituting intrinsic
evidence of a distress sale.

27. In Lal Chand Vs. Union of India
(supra), the Court also observed, if
724 INDIAN LAW REPORTS ALLAHABAD SERIES
acquisition is in regard to a large area of
agricultural land in a village and exemplar
sale deed is also in respect of an
agricultural land in the same village, it may
be possible to rely upon the sale deed as
prima facie evidence of prevailing market
value even if such land is at the other end
of village, at a distance of one or two
kilometers. But, the same may not be the
position where acquisition relates to plots
in a town or city where every locality or
road has a different value. A distance of
about a kilometer may not make a
difference for the purpose of market value
in a rural area but even a distance of 50
meters may make a huge difference in
market value in urban properties. Thus,
distance between two properties, the nature
and situation of property, proximity to the
village or a road and several other factors
may all be relevant in determining market
value.

28. Normally, the courts have held
that exemplars should be such which are
before the date of notification under
Section 4 (1) but an exemplar sale deed of a
subsequent period of date of acquisition
notification is not completely ruled out to
be
relevant
document
provided
the
circumstances to justify the same are
available.

29. In State of U.P. Vs. Major
Jitendra Kumar and others, AIR 1982 SC
876, notification under Section 4 was
published
on
6.1.1948.
The
Court
determined rate of compensation relying on
sale deed dated 11.7.1959, i.e., a document
executed after almost three and half years
after the date of acquisition notification.
Supreme Court upheld reliance of such
document observing that if there is no
material to show that there was any
fluctuation in market rate between the date
of acquisition and the date of concerned
sale
deed,
such
document
may
be
considered as a relevant material in absence
of any other apt evidence. This view was
followed in a subsequent decision, i.e.,
Administrator General of West Bengal Vs.
Collector, Varanasi, AIR 1998 SC 943,
where the Court said as under:-

"Such subsequent transactions
which are not proximate in point of time to
the acquisition can be taken into account
for purposes of determining whether as on
the date of acquisition there was an upward
trend in the prices of land in the area.
Further under certain circumstances where
it is shown that the market was stable and
there were no fluctuations in the prices
between the date of the preliminary
notification and the date of such subsequent
transaction, the transaction could also be
relied upon to ascertain the market value."

30. Further, we need not go into a
catena of other decisions rendered in the
last several decades since we are benefitted
of a recent Division Bench decision of this
Court in First Appeal No.454 of 2003 and
other
connected
matters,
Meerut
Development
Authority
through
Its
Secretary vs. Basheshwar Dayal (since
deceased) Through His L.Rs and another
decided on 01.08.2013 wherein the legal
principles settled by Apex Court in various
judgments, relevant for determination of
market value have been crystallized as
under:-

(i) Function of the Court in
awarding compensation under the Act is to
ascertain the market value of the land on the
date of the notification under Section 4(1),

(ii) The method for determination
of market value may be : -
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
725

(a) Opinion of experts,

(b) the price paid within a
reasonable time in bona fide transactions of
purchase of the lands acquired or the lands
adjacent
to
the
lands
acquired
and
possessing similar advantages,

(c) a number of years purchase of
the actual or immediately prospective
profits of the land acquired.

[Ref. (1994) 4 SCC 595, Jawajee
Nagnatham Vs. Revenue Divisional Officer
& others (para 5)]

(iii) While fixing the market
value of the acquired land, comparable
sales method of valuation is preferred than
other methods of valuation of land such as
capitalisation of net income method or
expert opinion method. Comparable sales
method of valuation is preferred because it
furnishes the evidence for determination of
the market value of the acquired land at
which a willing purchaser would pay for
the acquired land if it had been sold in the
open market at the time of issue of
notification under Section 4 of the Act.
However, comparable sales method of
valuation of land for fixing the market
value of the acquired land is not always
conclusive but subject to the following
factors:-

(a) Sale must be a genuine
transaction,

(b) the sale deed must have been
executed at the time proximate to the date
of issue of notification under Section 4 of
the Act,

(c) the land covered by the sale
must be in the vicinity of the acquired
land,

(d) the land covered by the sales
must be similar to the acquired land

(e) the size of plot of the land
covered by the sales be comparable to the
land acquired.

(f) if there is dissimilarity in
regard to locality, shape, site or nature of
land between land covered by sales and
land acquired, it is open to the court to
proportionately reduce the compensation
for acquired land.

(iv) The amount of compensation
cannot be ascertained with mathematical
accuracy. A comparable instance has to be
identified having regard to the proximity
from time angle as well as proximity from
situation angle. For determining the market
value of the land under acquisition, suitable
adjustment has to be made having regard to
various positive and negative factors vis-avis the land under acquisition which are as
under : -

Positive
factors
Negative factors
(i) Smallness
of size
(i) Largeness of area

(ii) Proximity
to a road.
(ii) Situation in the interior
at a distance from the road.
(iii) Frontage
on a road.

(iii) Narrow strip of land
with very small frontage
compared to depth.
(iv) Nearness
to
developed
area.
(iv) Lower level requiring
the depressed portion to be
filled up.
(v)
Regular
shape.
(v) Lower level requiring
the depressed portion to be
filled up.
(vi) Level vis- (vi)
Some
special
726 INDIAN LAW REPORTS ALLAHABAD SERIES
a-vis
land
under
acquisition.

disadvantageous
factor
which
would
deter
a
purchaser.
(vii)
Special
value for an
owner of an
adjoining
property
to
whom it may
have
some
very
special
advantage.

(v) For ascertaining the market
value of the land, the potentiality of the
acquired land should also be taken into
consideration. Potentiality means capacity
or possibility for changing or developing
into state of actuality.

(vi) Deduction not to be done
when land holders have been deprived of
their holding 15 to 20 years back and have
not been paid any amount.

(vii) In fixing market value of the
acquired land, which is undeveloped or
under-developed, the Courts have generally
approved deduction of 1/3rd of the market
value towards development cost except
when no development is required to be
made for implementation of the public
purpose for which land is acquired. ( Ref.
(2011) 8 SCC page 9, Valliyammal and
another Vs. Special Tahsildar Land
Acquisition and another, paras 13, 14, 15,
16, 17, 18 and 19).

(viii) When there are several
exemplars with reference to similar lands, it
is the general rule that the highest of the
exemplars, if it is satisfied, that it is a bona
fide transaction has to be considered and
accepted.
When
the
land
is
being
compulsorily taken away from a person, he
is entitled to the highest value which
similar land in the locality shown to have
fetched in a bona fide transaction entered
into between a willing purchaser and a
willing seller near about the time of the
acquisition.(Ref. (2012) 5 SCC 432,
Mehrawal Khewaji Trust (Registered),
Faridkot and others Vs. State of Punjab
and others).

(ix) In view of Section 51A of the
Act certified copy of sale deed is
admissible in evidence, even the vendor or
vendee thereof is not required to examine
themselves
for
proving
the
contents
thereof. This, however, would not mean
that
contents
of
the
transaction
as
evidenced by the registered sale deed
would automatically be accepted. The
legislature advisedly has used the word
'may'. A discretion, therefore, has been
conferred upon a court to be exercised
judicially,
i.e.,
upon
taking
into
consideration the relevant factors. Only
because a document is admissible in
evidence, the same by itself would not
mean that the contents thereof stand
proved. Having regard to the other
materials brought on record, the court may
not accept the evidence contained in a deed
of sale. (Ref. (2004) 8 SCC 270 para 28
and 38, Cement Corpn. Of India Ltd. Vs.
Purya and others).

(x) While fixing the market value
of the acquired land, the Land Acquisition
Collector is required to keep in mind the
following factors : -

(a)
Existing
geographical
situation of the land.

(b) Existing use of the land.
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
727

(c) Already available advantages,
like proximity to National or State
Highway or road and/ or developed area,

(d) Market value of other land
situated in the same locality/ village/ area
or adjacent or very near the acquired land.

(xi) Section 23(1) of the Act
lays down what the court has to take into
consideration while Section 24 lays down
what the court shall not take into
consideration and have to be neglected.
The main object of the enquiry before the
court is to determine the market value of
the land acquired. The market value is the
price that a willing purchaser would pay
to a willing seller for the property having
due regard to its existing condition with
all its existing advantages and its
potential possibilities when led out in
most advantageous manner excluding any
advantage due to carrying out of the
scheme
for
which
the property
is
compulsorily acquired. The determination
of market value is the prediction of an
economic event viz. a price outcome of
hypothetical sale expressed in terms of
probabilities. For ascertaining the market
value of the land, the potentiality of the
acquired land should also be taken into
consideration.
Potentiality
means
capacity or possibility for changing or
developing into state of actuality.

(xii) The question whether a land
has potential value or not, is primarily one
of fact depending upon its condition,
situation, user to which it is put or is
reasonably capable of being put and
proximity to residential, commercial or
industrial areas or institutions. The existing
amenities like water, electricity, possibility
of their further extension, whether near
about town is developing.

(xiii) In fixing market value of
the acquired land, which is undeveloped or
under-developed, the Courts have generally
approved deduction of 1/3rd of the market
value towards development cost except
when no development is required to be
made for implementation of the public
purpose for which land is acquired.
Deduction of "development cost" is the
concept used to derive the "wholesale
price" of a large undeveloped land with
reference to the "retail price" of a small
developed plot. The difference between the
value of a small developed plot and the
value of a large undeveloped land is the
"development
cost".
(Ref.
Sabhia
Mohammed Yusuf Abdul Hamid Mulla (
dead) and others, (2012) 7 SCC 595 paras
16, 17, 18, 21 and 22, .

31. In Valliyammal and another v.
Special Tahsildar (Land Acquisition) and
another, (2011) 8 SCC 91 the Court has
looked into various earlier judgments
laying
down
guiding
principles
for
determination of market value of acquired
land.
The
Court
has
observed
that
comparable sales method of valuation is
preferred since it furnishes the evidence for
determination of market value of acquired
land at which a willing purchaser would
pay for acquired land if it had been sold in
open market at the time of acquisition.
However, this method is not always
conclusive and there are certain factors,
which are required to be fulfilled and on
fulfillment of those factors, compensation
can be determined. Such factors are (a) sale
must be a genuine transaction; (b) sale deed
must have been executed at the time
proximate to the date of issue of
notification under Section 4; (c) land
covered by the sale must be in the vicinity
of acquired land; (d) land covered by the
sales must be similar to acquired land; and
728 INDIAN LAW REPORTS ALLAHABAD SERIES
(e) size of plot of the land covered by the
sales be comparable to the land acquired. If
there is dissimilarity in regard to locality,
shape and size or nature of land, court can
proportionately
reduce
compensation
depending upon disadvantages attached
with the acquired land. Further, for
determining market value, potentiality of
acquired land should also be taken into
consideration. The potentiality means,
capacity or possibility for changing or
developing into state of actuality. It is well
settled that market value of property has to
be determined having due regard to its
existing condition, with all its existing
advantages and its potential possibility
when led out in its most advantageous
manner. The Court stated that when
undeveloped or underdeveloped land is
acquired the exemplar is in respect to
developed
land,
detection
towards
deduction can be made. Normally, such
deduction is 1/3, but it is not a hard and fast
rule.

32. In Bhule Ram v. Union of India
and another, JT 2014 (5) SC 110 the Court
in para 7 has observed that valuation of
immovable property is not an exact science,
nor it can be determined like algebraic
problem, as it bounds in uncertainties and
no strait-jacket formula can be laid down
for arriving at exact market value of the
land. There is always a room for
conjecture, and thus the court must act
reluctantly to venture too far in this
direction. The factors such as the nature
and position of the land to be acquired,
adaptability and advantages, the purpose
for which the land can be used in the most
lucrative way, injurious affect resulting in
damages to other properties, its potential
value, the locality, situation and size and
shape of the land, the rise of depression in
the value of the land in the locality
consequent to the acquisition etc., are
relevant factors to be considered. It further
said that value, which has to be assessed, is
the value to the owner, who parts with his
property, and not the value to the new
owner, who takes it over. Fair and
reasonable compensation means the price
of a willing buyer, which is to be paid to
the willing seller. Though the Act does not
provide
for
"just
terms"
or
"just
compensation", but the market value is to
be assessed taking into consideration the
use to which it is being put on acquisition
and whether the land has unusual or unique
features or potentialities.. The Court then
also considered as to what is the concept of
guess work and observed that it is not
unknown to various fields of law as it
applies in the cases relating to insurance,
taxation, compensation under the Motor
Vehicle Act as well as under the Labour
Laws. Having said so, the Court further
said: -

"The court has a discretion
applying the guess work to the facts of the
given case but is is not unfettered and has
to be reasonable having connection to the
facts on record adduced by the parties by
way of evidence. The court further held as
under: -

"'Guess' as understood in its
common parlance is an estimate without
any
specific
information
while
"calculations" are always made with
reference to specific data. "Guesstimate" is
an estimate based on a mixture of
guesswork and calculations and it is a
process in itself. At the same time "guess"
cannot
be
treated
synonymous
to
"conjecture". "Guess" by itself may be a
statement or result based on unknown
factors while "conjecture" is made with a
very slight amount of knowledge, which is
2 All. Gas Authority of India Ltd. Vs. Ram Ashrey & Ors.
729
just sufficient to incline the scale of
probability. "Guesstimate" is with higher
certainty
than
more
"guess"
or
a
"conjecture" per se." (para 8)

33.x In Bhupal Singh and others v.
State of Haryana, (2015) 5 SCC 801 while
the above principles laid down in various
cases were reiterated, the Court in para 18
of the judgment said: -