# U.P. Avas Evam Vikas Parishad v. Smt. Rukman Devi & Ors

- **Citation:** (2016) 4 ILRA 556
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-02-23
- **Bench:** Sudhir Agarwal, Rakesh Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-p-avas-evam-vikas-parishad-v-smt-rukman-devi-ors-43665
- **Pages:** 31

## Headnote

Land Acquisition Act, 1894 - Ss. 18, 23, 24 & 54 - Determination of market value - Burden of proof -
Exemplar sale deeds - Small plots vis-à-vis large acquired tracts - Deduction towards development - Circle
rates - Non-reliance unless statutorily fixed - Principles governing valuation - Guesswork, conjecture and
guesstimate - Comparable sales - Potentiality of land - Development charges - When permissible.
U.P. Avas Evam Vikas Parishad Act, 1965 - Ss. 28 & 32 - Acquisition proceedings - Award by SLAO -
Reference Court - Scope and jurisdiction.
Evidence - Comparable sale - Genuineness, proximity in time and situation - Highest bona fide exemplar -
Deduction ranging from 20% to 75% - Factors governing deduction.

 (A) Reference under Section 18 of the Land Acquisition Act is an original proceeding and the claimant stands
in the position of a plaintiff who must prove that the compensation awarded by the SLAO is inadequate. The
Reference Court does not sit in appeal over the SLAO's award, nor can it rely upon materials considered by
the SLAO unless the same are independently produced and proved before it. (Paras 8-10)

(B) Market value must be determined with reference to the date of publication of notification under Section
4(1) of the Act, and not on conjectures or assumptions. Reference Court must consider legally admissible
evidence only. (Paras 10, 18)

(C) Circle rates fixed for stamp duty purposes have no evidentiary value for determining market value under
the Land Acquisition Act unless such rates are statutorily fixed by an expert body following a prescribed
procedure and published. (Paras 11-16)

(D) When exemplar sale deeds of small plots are relied upon for determining the value of a large tract of
acquired land, appropriate deductions must be applied, keeping in view development costs, amenities, and
factors such as size, location, and nature of land. Such deduction may range from 20% to 75%, depending
upon facts of each case. (Paras 19-23, 30, 45, 53)

(E) If multiple exemplar sale deeds are available, the exemplar reflecting the highest bona fide market value
should ordinarily be preferred, unless shown to be unreliable. Averaging of sale prices is permitted only in
exceptional cases where prices fall within a narrow bandwidth. (Paras 29, 38)

(F)Deduction
towards
development
comprises
two
components:
(i)
deduction
for
area
to
be
set
apart
for
infrastructure;
and
(ii)
deduction
towards
expenditure
for
development.
Combined deduction ordinarily should not exceed 67%, though the exact percentage depends on the facts of
each case. (Paras 60-61)

(G)Valuation of land is not an exact science. Courts may apply "guesstimate", but not unfounded conjecture.
Guesswork must have reasonable nexus with evidence on record and relevant factors enumerated under
Sections 23 and 24 of the Act. (Paras 51-52)

(H) Potentiality of land must be existing on the date of acquisition and cannot be based on remote o

## Text

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556 INDIAN LAW REPORTS ALLAHABAD SERIES
31. Learned Additional Sessions Judge has dealt with all aspects of the matter in detail and
the findings are based on evidence on record supported by cogent reasons. Learned Additional
Sessions Judge has 12 also considered the evidence on record and has come to a conclusion that the
appellant cannot be convicted for the criminal breach of trust because the entrustment was not
proved.

32. Considering the evidence as discussed by learned court below, we are of the opinion
that the conclusion of learned Additional Sessions Judge cannot be said to be a distorted conclusion
and does not suffers from any glaring mistake. In appeal against acquittal, there is double
presumption in favour of the accused. Firstly, the presumption of innocence is available to him
under the fundamental principles of criminal jurisprudence and secondly the accused having
secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and
strengthened by the First Appellate Court. It is settled law that if two reasonable interpretations are
possible on the basis of record, the Appellate Court should not disturb the findings of acquittal
recorded by the First Appellate Court. We are conscious of the law while dealing with appeal
preferred by the State that it is the duty of the Appellate Court to marshal the entire evidence on
record and by giving cogent and adequate reasons, set aside the judgment of acquittal. In the
present case, we do not find any compelling and substantial reasons for doing so.

33. The findings of learned Additional Sessions Judge, Unnao cannot be said to be
palpably wrong, manifestly erroneous or demonstratively unsustainable.

34. For the reasons given above, we are of the view that the prosecution has failed to prove
the entrustment of property to the respondent beyond reasonable doubt and learned Additional
Sessions Judge has not committed any glaring mistake in acquitting the respondent.

35. In the result, the appeal is liable to be dismissed.

36. The appeal is dismissed.
----------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.02.2016

BEFORE

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

First Appeal No.- 86 Of 2009

U.P. Avas Evam Vikas Parishad ...Appellant
Versus
Smt. Rukman Devi & Ors. ...Respondents
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

557
Counsel for the Appellant:
Sri A.P. Srivastava

Counsel for the Respondents:
Sri Pramod Kumar Sinha and Sri P.N. Tiwari

Land Acquisition Act, 1894 - Ss. 18, 23, 24 & 54 - Determination of market value - Burden of proof -
Exemplar sale deeds - Small plots vis-à-vis large acquired tracts - Deduction towards development - Circle
rates - Non-reliance unless statutorily fixed - Principles governing valuation - Guesswork, conjecture and
guesstimate - Comparable sales - Potentiality of land - Development charges - When permissible.
U.P. Avas Evam Vikas Parishad Act, 1965 - Ss. 28 & 32 - Acquisition proceedings - Award by SLAO -
Reference Court - Scope and jurisdiction.
Evidence - Comparable sale - Genuineness, proximity in time and situation - Highest bona fide exemplar -
Deduction ranging from 20% to 75% - Factors governing deduction.

 (A) Reference under Section 18 of the Land Acquisition Act is an original proceeding and the claimant stands
in the position of a plaintiff who must prove that the compensation awarded by the SLAO is inadequate. The
Reference Court does not sit in appeal over the SLAO's award, nor can it rely upon materials considered by
the SLAO unless the same are independently produced and proved before it. (Paras 8-10)

(B) Market value must be determined with reference to the date of publication of notification under Section
4(1) of the Act, and not on conjectures or assumptions. Reference Court must consider legally admissible
evidence only. (Paras 10, 18)

(C) Circle rates fixed for stamp duty purposes have no evidentiary value for determining market value under
the Land Acquisition Act unless such rates are statutorily fixed by an expert body following a prescribed
procedure and published. (Paras 11-16)

(D) When exemplar sale deeds of small plots are relied upon for determining the value of a large tract of
acquired land, appropriate deductions must be applied, keeping in view development costs, amenities, and
factors such as size, location, and nature of land. Such deduction may range from 20% to 75%, depending
upon facts of each case. (Paras 19-23, 30, 45, 53)

(E) If multiple exemplar sale deeds are available, the exemplar reflecting the highest bona fide market value
should ordinarily be preferred, unless shown to be unreliable. Averaging of sale prices is permitted only in
exceptional cases where prices fall within a narrow bandwidth. (Paras 29, 38)

(F)Deduction
towards
development
comprises
two
components:
(i)
deduction
for
area
to
be
set
apart
for
infrastructure;
and
(ii)
deduction
towards
expenditure
for
development.
Combined deduction ordinarily should not exceed 67%, though the exact percentage depends on the facts of
each case. (Paras 60-61)

(G)Valuation of land is not an exact science. Courts may apply "guesstimate", but not unfounded conjecture.
Guesswork must have reasonable nexus with evidence on record and relevant factors enumerated under
Sections 23 and 24 of the Act. (Paras 51-52)

(H) Potentiality of land must be existing on the date of acquisition and cannot be based on remote or
speculative future development. (Paras 35-37, 41)
558 INDIAN LAW REPORTS ALLAHABAD SERIES
HELD:(Paras 82,83) . It has not recorded any reason or finding as to what was or what could have been
annual increase or appreciation in respect to value of property etc. and on mere conjectures and surmises, it
has determined market value at Rs. 100/per square yard. In our view and also considering the exposition of
law, as discussed above and the findings, as noted above, award/judgment in question is clearly erroneous
and cannot be sustained. Appeal is, accordingly, allowed. Impugned judgment/award dated 07.10.2006 is
hereby set aside. The award of Special Land Acquisition Officer dated 28.10.2000 is restored and confirmed.

Case Law discussed:

(1) Chimanlal Hargovinddas v. Special Land Acquisition Officer, (1988) 3 SCC 751 (Paras 9-10)
(2)Jawajee Nagnatham v. Revenue Divisional Officer, (1994) 4 SCC 595 (Paras 13-14)
(3) U.P. Jal Nigam v. M/s Kalra Properties (P) Ltd., (1996) 3 SCC 124 (Paras 14-15)
(4) Lal Chand v. Union of India, (2009) 15 SCC 769 (Paras 15-16, 48-49)
(5) Bhagwathula Samanna v. SLAO, (1991) 4 SCC 506 (Paras 20-21)
(6) Viluben Jhalejar Contractor v. State of Gujarat, (2005) 4 SCC 789 (Paras 29, 65)
(7) Basavva v. SLAO, (1996) 9 SCC 640 (Paras 31-33)
(8) Udho Dass v. State of Haryana, (2010) 12 SCC 51 (Paras 35-37)
(9) Nelson Fernandes v. SLAO, AIR 2007 SC 1414 (Paras 39)
(10) Anjani Molu Desai v. State of Goa, (2010) 13 SCC 710 (Paras 38)
(11)Chandrashekhar v. Land Acquisition Officer, (2012) 1 SCC 390 (Paras 53, 58-61)
(12) Bhule Ram v. Union of India, JT 2014 (5) SC 110 (Paras 51-52)
(13) Major General Kapil Mehra v. Union of India, (2015) 2 SCC 262 (Paras 62, 68-70)

(Delivered by Hon'ble Sudhir Agarwal, J.
&
Hon'ble Rakesh Srivastava, J.)

1. Filing of paper-book, as requested, is dispensed with.

2. Heard Sri A.P. Srivastava, learned counsel for appellant. None appeared on behalf of
claimants-respondents, though name of Sri Pramod Kumar Sinha and Sri P.N. Tiwari, Advocates,
is shown in the cause list as counsel for respondents and this appeal has been called in revised,
hence, we proceed to decide appeal ex-parte.

3. This appeal under Section 54 of Land Acquisition Act, 1894 (hereinafter referred to as
"Act, 1894") has arisen from award/ judgment dated 07.10.2006 passed by Smt. Pratibha Khanna,
Additional District Judge, Court No. 2, Rampur determining market value of acquired land at the
rate of Rs. 100/- per square yard.

4. The acquisition proceedings at the instance of U.P. Avas Evam Vikas Parishad
(hereinafter referred to as "UPAEVP") were initiated by publication of notice under Section 4 of
Act, 1894 (Section 28 of U.P. Avas Evam Vikas Parishad Act, 1965 - hereinafter referred to as
"Act, 1965") on 22.07.1973. Notification under Section 6 of Act, 1894 (Section 32 of Act, 1965)
was published on 27.01.1979. Appellant sought to acquire 28.84 acre land. Special Land
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

559
Acquisition Officer (hereinafter referred to as "SLAO") made award on 28.10.2000 wherein market
value was determined at the rate of Rs. 41.58 per square yard. Aggrieved thereto, claimantsrespondents moved an application before District Magistrate for making reference to District Judge
under Section 18 of Act, 1894 for determining market value. Pursuant thereto, impugned
award/judgment has been passed.

5. Learned counsel for appellant contended that in order to show market value of property
in dispute at the time when acquisition proceedings were initiated, no exemplar was produced by
claimantsrespondents before Court below, hence they did not discharge onus lying upon them
justifying higher compensation. Court below, besides some oral evidence, which relate to a period
much subsequent to the date of acquisition, also referred to sale-deed of 1999 whereby 150.57
square yard land was transferred by sale at the rate of Rs. 560/- per square yard. Court below has
observed that sale consideration in the aforesaid sale-deed appears to be excessive since area of
land was very small and market value should not have been more than 400/- per square yard and in
that view of the matter 20 years earlier thereto, rate could not have been more than Rs. 100/- per
square yard and made its award on the basis of conjectures and surmises based on assumptions and
presumptions without there being any material on record. He also pointed out that there is a specific
finding recorded by Court below that between 27.01.1976 to 27.01.1979, acquired land was being
used for agriculture and cash crops, i.e., vegetables etc. It is then submitted that award given by
Court below determining market value at the rate of Rs. 100/- per square yard is patently illegal and
liable to be set aside.

6. The questions up for consideration in the case in hand are:

(i) Whether claimants-respondents have discharged their onus that compensation
offered by SLAO was not justified and market value of property in question need be
determined at a higher rate?

(ii) Whether Reference Court has determined market value of acquired land taking
into consideration relevant principles and market value determined by it is just, valid and in
accordance with law?

7. Before answering the aforesaid questions, it would be appropriate for us to remind the
principles laid down in a catena of decisions in the last few decades which have to be considered
and taken into account for determining market value of a land acquired forcibly under Act,
1894/Act, 1965. One of the principles is that material and evidence considered by Collector/SLAO
is not to be relied on as such unless the same is placed before Reference Court and proved in
accordance with law.

8. Before us, it is not disputed that an award made by SLAO is an offer made by Collector
to land owners for compensation payable against acquired land. Reference Court does not sit in
appeal over award of SLAO to find out whether determination made by SLAO is correct or not.
The proceeding before Reference Court is original and treated like a suit. Material considered by
560 INDIAN LAW REPORTS ALLAHABAD SERIES
SLAO is not to be seen by Reference Court unless such material has been relied and proved in
accordance with law before it.

9. In Chimanlal Hargovinddas Vs. Special Land Acquisition Officer (1988) 3 SCC
751, Court has said that a reference is like a suit which is to be treated as an original proceeding.
The claimant is in the position of a plaintiff who has to show that price offered for his land in the
Award is inadequate. However, for the said purpose, Court would not consider the material, relied
upon by Land Acquisition Officer in Award, unless some material is produced and proved before
Court.

10. Thus, Reference Court does not sit in appeal over the Award of Land Acquisition
Officer. Material used by Land Acquisition Officer is not open to be used by Court suo motu unless
such material is produced by the parties and proved independently before Reference Court.
Determination of market value has to be made as per market rates prevailing on the date of
publication of notification under section 4 (1) of Act, 1894.

11. It may also be observed that circle rate is not a relevant material to be considered for
the purpose of determining market value.

12. Many a times it is seen that Collector / SLAO or even landowners justify a particular
market value with reference to circle rate published by Collector which has been determined for the
purposes of stamp duty. This approach has not been approved by Courts time and again.

13. 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
landowners 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 upon the
Government to determine market value of land prevailing in a particular area, i.e., village, block,
district or region. It also did not provide, a statutory obligation upon 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.

14. Another matter from State of U.P. came up for consideration involving same issue in
U.P. Jal Nigam Vs. M/s Kalra Properties (P) Ltd., (1996) 3 SCC 124. Landowners' demanded
compensation in regard to land acquired under Act, 1894 on the basis of market value assessed as
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

561
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). 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.

15. The issue has again been considered recently by a larger Bench 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 holding, if in a particular case, guidelines for market
values are determined by an Expert Committee 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. Court said, when guidelines of
market value, 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, Court
further said :-
"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."

16. It is thus evident that for the purposes of determining market value circle rate fixed by
Collector for the purposes of stamp duty would not be a relevant material unless such determination
is under a statutory obligation and after following a prescribed procedure.

17. When an exemplar sale-deed is relied on for the purpose of determining market value,
Court has to examine the same so as to balance rates mentioned in sale-deeds with the rates which
may be determined in respect to acquired land.

18. The basic principle which has to be followed by Reference Court for determining
market value of land, as if, the valuer i.e. Court, is a hypothetical purchaser, willing to purchase
land from 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. Court, therefore, would co-relate market value reflected in
562 INDIAN LAW REPORTS ALLAHABAD SERIES
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 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 valued 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.

19. In Kausalya Devi Bogra and others v. Land Acquisition Officer, Aurangabad and
another, (1984) 2 SCC 324, about 150 acres of land was acquired. Owners of acquired land were
in two groups, i.e. Kaushalya Devi Bogra and Syed Yusufuddin Syed Ziauddin. First group, i.e.
Kaushalya Devi Bogra owned 74 acres, while Yusuffuddin owned about 15 acres of land. In these
facts of case where almost 60% of total acquired land was owned by two sets of owners and
exemplar of smaller property was relied, Court said that "when large tracts are acquired, the
transaction in respect of small properties do not offer a proper guideline. In certain other cases, for
determining market value of a large property on the basis of a sale transaction for smaller property,
a deduction should be given.

20. In Bhagwathula Samnna and others v. Special Tehsildar and Land Acquisition
Officer, Visakhapatnam Municipality (1991) 4 SCC 506, High Court applied deduction of
33.3% observing, when large extent of land was acquired under housing scheme and exemplar is of
small land, reasonable deduction can be made. Following the decision in Tribeni Devi Vs.
Collector, Ranchi, AIR 1972 SC 1417, it was argued before Apex Court that High Court wrongly
applied deduction. Acquired land was fully developed and eminently suitable for being used as
house sites and, therefore, there was no justification for making any deduction. The land was
acquired for formation of road, High Court applied deduction on the ground that expenses have to
be incurred for development, which was not justified. Aforesaid submission was considered by
Supreme Court in the light of facts of that case. In para 7 and 11 Court said: -

"7. In awarding compensation in acquisition proceedings, the Court has
necessarily to determine the market value of the land as on the date of the relevant
notification. It is useful to consider the value paid for similar land at the material time
under genuine transactions. The market value envisages the price which a willing
purchaser may pay under bona fide transfer to a willing seller. The land value can differ
depending upon the extent and nature of the land sold. A fully developed small plot in an
important locality may fetch a higher value than a larger area in an undeveloped condition
and situated in a remote locality. By comparing the price shown in the transactions all
variables have to be taken into consideration. The transaction in regard to smaller
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

563
property cannot, therefore, be taken as a real basis for fixing the compensation for
larger tracts of property. In fixing the market value of a large property on the basis of a
sale transaction for smaller property, generally a deduction is given taking into
consideration the expenses required for development of the larger tract to make smaller
plots within that area in order to compare with the small plots dealt with under the sale
transaction.

11. The principle of deduction in the land value covered by the comparable sale is
thus adopted in order to arrive at the market value of the acquired land. In applying the
principle it is necessary to consider all relevant facts. It is not the extent of the area
covered under the acquisition, the only relevant factor. Even in the vast area there may be
land which is fully developed having all amenities and situated in an advantageous
position. If smaller area within the large tract is already and suitable for building purposes
and have in its vicinity roads, drainage, electricity, communications etc. then the principle
of deduction simply for the reasons that it is part of the large tract acquired, may not be
justified."

21. Court further held that proposition that large area of land cannot possibly fetch a price
at the same rate at which small plots are sold is not absolute proposition and in given circumstances
it would be permissible to take into account price fetched by small plots of land. If larger tract of
land, because of advantageous position, is capable of being used for the purpose for which smaller
plots are used and is also situated in a developed area with little or no requirement of further
development, the principle of deduction of value for the purposes of comparison is not warranted.
Having said so, Court in para 13 held as under: -

"13. With regard to the nature of the plots involved in these two cases, it has been
satisfactorily shown on the evidence on record that the land has facilities of road and other
amenities and is adjacent to a developed colony and in such circumstances it is possible to
utilize the entire area in question as house sites. In respect of the land acquired for the
road, the same advantages are available and it did not require any further development.
We are, therefore, of the view that the High Court has erred in applying the principle of
deduction and reducing the fair market value of land from Rs.10/- pr square yard to
Rs.6.50 paise pr square yard. In our opinion, no such deduction is justified in the facts and
circumstances of these cases."

22. The size of land 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. Courts have said that in such matters, 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.
564 INDIAN LAW REPORTS ALLAHABAD SERIES
23. 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.

24. When we talk of concept of 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.

25. In V.M. Salgoacar & brother Ltd. vs. Union of India (1995) 2 S.C.C 302, land
acquired by notification dated 06.07.1970 in village Chicalim near Goa Airport belonged to a
single owner. 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 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".

26. Again in Shakuntalabai (Smt.) and others vs. State of Maharashtra, 1996 (2) S.C.C
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, Court said, "the Reference Court committed manifest error in determining compensation
on the basis of sq. ft. When 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".

27. In order to determine market value when exemplars are adduced, normally it is found
that exemplars of small land, and that too, in developed area after plotting and development are
relied. Sometimes a single exemplar is available and sometimes more than that. It is not the
number of exemplars which is important and would determine the question whether burden has
been discharged by claimants that offer of compensation made by Collector is inadequate and he is
entitled to higher compensation but it is the genuity, authenticity and creditworthiness of the
documents. If the document is found most suitable and appropriate for determining compensation
in respect of acquired land even a single instance/exemplar cited by landowner may be relied and it
can be said that claimant-landowner has succeeded in discharging his burden.

28. In Gafar vs. Moradabad Development Authority, 2007 (7) SCC 614, the Court
observed that burden is on the claimants to establish that amount awarded to them by Collector is
inadequate. That burden has to be discharged by claimants and only if initial burden in that behalf
is discharged, the burden would shift to State to justify the compensation offered by SLAO.
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

565
29. Further, when there are more than one exemplar, one, which provides highest rate, has
to be followed. In Satish Vs. State of U.P., 2009 (14) SCC 758, Court after relying on its earlier
decision in Viluben Jhalenjar Contractor (Dead) by Lrs. Vs. State of Gujarat, 2005 (4) SCC
789, said :

"...when comparable exemplars are brought on record, the one carrying the
highest market value amongst them may be followed."

30. Whenever the area of acquired land is larger than the area of land which is subject
matter of the exemplar and smaller in size, Courts have held the same admissible subject to
appropriate deduction.

31 In Basavva (Smt.) and others Vs. Special Land Acquisition Officer and others,
(1996) 9 SCC 640, notification under Section 4(1) of Act, 1894 proposing to acquire 194 acres of
land for industrial development near Dharwad was published on 30.10.1981. Collector made award
dated 22.8.1985 offering compensation at the rate between Rs. 8,000/- to Rs.8,080/-, which was
enhanced by Reference Court vide award dated 11.10.1988 to Rs.1.72/- per square fit (Rs.74,953/-
per acre). On appeal High Court reduced compensation to Rs.56,000/- per acre. The appeal
preferred by State Government against High Court's judgment was dismissed.

32. In the appeals preferred by landowners, it was contended on behalf of landowners that
deduction towards development upto 53% was reasonable but High Court in applying 65%
deduction has erred in law. Court observed, while determining compensation, at first instance, it
has to be seen whether sales relating to smaller pieces of land are genuine and reliable; and,
whether they are in respect of comparable land. If it is found that sales are genuine and reliable and
lands have comparable features, sufficient deduction should be made to arrive at a just and fair
market value of large tracts of land. The time lag for real development and waiting period for
development are also relevant for determination of just and comparable compensation. For
deduction of development charges, nature of development, conditions and nature of land, the land
required to be set apart under building rules for roads, sewerage, electricity, parks, water etc. and
all other relevant circumstances involved are to be considered.

33. The above principles were also laid down in D. Vasundara Devi Vs. Revenue
Divisional Officer, (1995) 5 SCC 426 which was relied by Court in Basavva (Smt.) & Others Vs.
Special Land Acquisition Officer and others (supra). It then found that exemplar sale deed was
dependable but in respect of a small plot of land situated at a distance of more than 1 k.m. It also
found that the land in area is not developed and there is no development towards that area. It was
also noticed that it would take years for development in those lands though lands was capable of
user for non-agricultural purpose. It is in this background, Court applied 53% deduction for
development. It further held that since a long time would take for development and for that purpose
additional 12% deduction was allowed making total as 65% deduction.
566 INDIAN LAW REPORTS ALLAHABAD SERIES
34. In Land Acquisition Officer, Kammarapally Village Vs. Nookala Rajamallu and
others, AIR 2004 SC 1031 the Court said as under :

"It has been held that the deduction can be made where the land is acquired for
residential and commercial purpose with regard to roads and civic amenities, expenses of
development of the sites by laying out roads, drains, sewers, water and electricity lines,
and the interest on the outlays for the period of deferment of the realization of the price,
the profits on the venture etc. So far as this Court is concerned, it has discarded the
deduction policy on various grounds. One of the grounds is that if the State or its authority
acquires the land for the purpose of selling it to the ultimate purchasers upon making
available facilities, they normally recover the price inclusive of common facilities,
therefore, a Government or its authority cannot be doubly benefited either by deductions
from the payment of compensation in one hand and by collections of price of such
development from the ultimate purchasers on the other hand. It also to be seen that no law
prescribes deduction in paying compensation. It is to be remembered that deduction is an
exception not the rule."

35. In Udho Dass Vs. State of Haryana and Ors. 2010 (12) SCC 51, by notification
dated 17.5.1990, 162.5 acres of land in village Patti Musalmanan was sought to be acquired for the
purposes of housing project in Sonepat (Haryana). Collector determined compensation at the rate of
Rs. two lacs per acre, but it was enhanced by Additional District Judge on reference under Section
18 of Act, 1894 to Rs.125/per square yard for the land behind E.C.E. Factory, situated away, and
on the left side of the Sonepat Bahalgarh road, and Rs.150/- per square yard on the right side
abutting the road. Reference Court held that land on the left side did not abut the road and it had
therefore less potential value vis-a-vis land on the right side, which touched the road. In appeal
High Court enhanced compensation from Rs.125/- to Rs.135/- and from Rs.150/- to Rs.160/-. Land
owner came in appeal before Supreme Court claiming compensation at Rs.200/- per square yard.
Court, as a matter of fact, found in that case that even compensation, which was determined by
Collector or Reference Court was not paid to land owners immediately, but payment spread over
for two decades. Court said if compensation payment continued over a period of almost 20 years,
potential of land acquired from land owners must also be adjudged keeping in view development in
the area, spread over the period of 20 years if evidence so permits and cannot be limited to near
future alone. Court observed that this broad principle would be applicable where possession of land
has been taken pursuant to proceedings under an acquiring Act and not to those cases where land is
already in possession of Government and is subsequently acquired.

36. The Court also observed that in case where compensation is based exclusively on sale
instances, it creates some time a disadvantageous position to land owners, whose land is forcibly
acquired. There is wide spread tendency to undervalue sale prices. Circle rates determined by
Collector only marginally corrected anomaly, as these rates are also abnormally low and do not
reflect true value. These things cause serious disadvantage to land owners, since they have no
control over price on which some other land owners sell their property, which is often the basis for
compensation payable to land owners, whose land are forcibly acquired. Court also held that there
4 All. U.P. Avas Evam Vikas Parishad Vs Smt. Rukman Devi & Ors.

567
cannot be application of belting system in that case. Normally, land along side the road has more
value vis-à-vis the land away from, but that would have been the case where agricultural land,
which have no potential for urbanization or commercialization had been acquired and in such a
case, belting system is permissible.

37. In Udho Dass (supra) Court held that land was acquired in 1990. It had great potential
and had been completely urbanized as huge residential complexes, industrial area and estates, huge
education city have come up in the last 10 or 15 years. It further held as under:

"Moreover, insofar as land which is to be used for residential purposes is
concerned, a plot away from the main road is often of more value as the noise and the air
pollution alongside the arterial roads is almost unbearable. It also significant that the land
of Jamalpur Kalan was touching the rear side of the ECE factory and the High Court had
granted compensation of Rs.250/- per square yard for the acquisition of the year 1992. We
have also seen the site plan to satisfy ourselves and find that the land acquired from
Jamalpur Kalan and the present land share a common boundary behind the ECE factory.
The belting system in the facts of the present case would thus not be permissible."

38. In Anjani Molu Desai v. State of Goa and another, (2010) 13 SCC 710, a very large
tract comprising 3,65,375 square meter of land in Balli village, Quepem Taulak, Goa was acquired
for the purposes of Konkan Railway for laying down broad gauge line. Acquisition notification was
issued on 30.7.1991. Appellant Anjani Molu Desai owned 60,343 square meter of land in Survey
No.45/1, 45/5, 45/6, 51/1 and 51/2. Collector awarded compensation at the rate of Rs.12/per square
meter for orchard lands and Rs.6/- per square meter for paddy lands. Reference Court and High
Court affirmed said valuation by rejecting reference and appeal. Collector determined market value
relying upon two exemplars and taking an average thereof. First exemplar sale deed dated
30.8.1989 relates to 2055 square meters of land situated at the distance of 200 meter away from
acquired land and sold at the rate of Rs.43.80 per square meter. Collector deducted 45% from sale
price towards "development cost" i.e. for providing approach road and open spaces, expenses
relating to development work, conversion charge etc. This reduced price from Rs.24/- per square
meter. Since sale deed was of August, 1989 and acquisition commenced in 1991, thus there being
gap of 20 months, Collector provided an increase at the rate of 14.5% per annum and thus, arrived
at Rs.32.24 per square meter. Exemplar sale deed dated 30.1.1990 relates sale of 7600 square
meters of land at the distance of one kilometer from acquired land sale at Rs.3/- per square meter.
Here also, gap was of 18 months, thus 14.5% increase was allowed, which made sale price at
Rs.3.82 per square meter. Collector then averaged two rates derived from two sale deeds and
determined Rs.18/- per square meter (Rs.32.24 + Rs.3.82/2). This method adopted by Collector was
not approved by Supreme Court. It was held, where there are more than one exemplar, which could
be considered for determining market value, the one providing higher rate should be accepted and
followed. It is only in exceptional cases where there are several sales of similar land, whose prices
range in a narrow bandwidth, the average can be taken as representing market value. But where
values disclosed in respect of two sales are markedly different, it can only lead to an inference that
they are with reference to dissimilar land or that lower value sale is on account of under valuation
568 INDIAN LAW REPORTS ALLAHABAD SERIES
or other price depressing reasons. In respect of orchard land, therefore, Court followed exemplar
sale deed dated 30.8.1989 providing sale price at Rs.43.80 per square meter and applying
appreciation of 14.5% and odd per annum, Court determined market value at Rs.57.50 and to that
extent claim of appellant Anjani Molu Dessai was upheld.