# Madhya Pradesh Road Development Corporation v. Vincent Daniel and Others

- **Citation:** 2025 INSC 408
- **Court:** Supreme Court of India
- **Decided:** 2025-03-27
- **Case number:** Civil Appeal No. 3998 of 2024
- **Bench:** Sanjiv Khanna, Sanjay Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/madhya-pradesh-road-development-corporation-v-vincent-daniel-and-others-38331
- **Pages:** 32

## Headnote

The issue relates to the applicability of the "theory of deduction"
for determining the compensation payable under The Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013.
Headnotes†
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 - ss.26,
23, 27, 28, 105(3) - Indian Stamp Act, 1899 - Land Acquisition
Act, 1894 - ss.11, 15, 23-25 - Madhya Pradesh Preparation
and Revision of Market Value Guideline Rules, 2018 - Theory
of deduction - Non-applicability of - Acquisition made under
the 2013 Act - On facts, the market value was determined on
the basis of the circle rate (Collector's guideline framed under
the Stamp Act) - Whether the compensation was calculated in
accordance with the 2013 Act and if it can be reduced applying
the theory of deduction:
Held: The computation in the award passed by the Commissioner
directing payment of compensation on the basis of the circle rate
is upheld - In order to determine the compensation, the market
value of the land must first be computed u/s.26, 2013 Act - In
the present case, Cl.(b) of s.26(1) would have no application as
there are no exemplars in the vicinity to draw a comparison and
arrive at the average sale price in terms of Explanations 1 and 2
to s.26(1) - Further, as this acquisition does not involve private
companies or public-private partnerships, cl.(c) of s.26(1) would
also not apply - Therefore, the highest value would be the one
determined under cl.(a), i.e., the market value specified under the
Stamp Act - In the present case, this value would be the circle rate
fixed for the year 2014-2015 under the Collector's Guidelines framed
under the Stamp Act - The Commissioner applied the Collector's
* Author
1278
[2025] 3 S.C.R.
Supreme Court Reports
Guidelines by using the rate provided for non-converted agricultural
land - The Commissioner further supplemented this amount by
accounting for the assets attached to the land and adding the
solatium payable - Compensation was calculated in accordance
with the mandate of the 2013 Act - Thus, no reduction in the
amount can be granted by applying the theory of deduction - It has
been left to the Collector's discretion to make adjustments to the
market value determined through s.26(1), if deemed necessary in
the opinion of the Collector - However, in the facts of the present
case, there was no such formation of opinion by the Competent
Authority or the Commissioner - Appellant-Corporation cannot
complain about the circle rate fixed by the State Government -
Argument of the appellant, that this circle rate is not the baseline
or floor rate, and is too high not accepted - Concerned authorities
should fix circle rates scientifically and in accordance with the
law - It is their responsibility to ensure that circle rates are neither
inflated nor disproportionately low - When the citizens are required
to pay stamp duty on the notified circle rate, the public authorities,
including state development corporations acquiring land from private
individuals, must adhere to the same - If the circle rate is inflated
or does not reflect the true market value, it is incumbent upon the
State Government to take corrective steps - State Government or
the development corporation under the State Government cannot
complain that they have been compelled to acquire land at the
circle rate fixed by the State - Appeals filed by the appellant are
dismissed - Arbitration and Conciliation Act, 1996. [Paras 40-43]
Circle Rates - Importance - Proper fixation of circle rates,
advisory to State Governments:
Held: Fixing fair and accurate circle rates has a direct impact
on each citizen - An inflated rate results in an unfair financial
burden on purchasers - Conversely, an undervalued rate leads to
inadequate stamp duty collection, adversely affecting the State's
revenue - Circle rates which reflect the market price ensure proper
revenue collection for the Sta

## Text

_Characters 0–36,828 of 72,120. This is a partial read: ask again with offset=36828 for what follows._

[2025] 3 S.C.R. 1277 : 2025 INSC 408
Madhya Pradesh Road Development Corporation
v.
Vincent Daniel and Others
(Civil Appeal No. 3998 of 2024)
27 March 2025
[Sanjiv Khanna,* CJI and Sanjay Kumar, J.]
Issue for Consideration
The issue relates to the applicability of the "theory of deduction"
for determining the compensation payable under The Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013.
Headnotes†
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 - ss.26,
23, 27, 28, 105(3) - Indian Stamp Act, 1899 - Land Acquisition
Act, 1894 - ss.11, 15, 23-25 - Madhya Pradesh Preparation
and Revision of Market Value Guideline Rules, 2018 - Theory
of deduction - Non-applicability of - Acquisition made under
the 2013 Act - On facts, the market value was determined on
the basis of the circle rate (Collector's guideline framed under
the Stamp Act) - Whether the compensation was calculated in
accordance with the 2013 Act and if it can be reduced applying
the theory of deduction:
Held: The computation in the award passed by the Commissioner
directing payment of compensation on the basis of the circle rate
is upheld - In order to determine the compensation, the market
value of the land must first be computed u/s.26, 2013 Act - In
the present case, Cl.(b) of s.26(1) would have no application as
there are no exemplars in the vicinity to draw a comparison and
arrive at the average sale price in terms of Explanations 1 and 2
to s.26(1) - Further, as this acquisition does not involve private
companies or public-private partnerships, cl.(c) of s.26(1) would
also not apply - Therefore, the highest value would be the one
determined under cl.(a), i.e., the market value specified under the
Stamp Act - In the present case, this value would be the circle rate
fixed for the year 2014-2015 under the Collector's Guidelines framed
under the Stamp Act - The Commissioner applied the Collector's
* Author
1278
[2025] 3 S.C.R.
Supreme Court Reports
Guidelines by using the rate provided for non-converted agricultural
land - The Commissioner further supplemented this amount by
accounting for the assets attached to the land and adding the
solatium payable - Compensation was calculated in accordance
with the mandate of the 2013 Act - Thus, no reduction in the
amount can be granted by applying the theory of deduction - It has
been left to the Collector's discretion to make adjustments to the
market value determined through s.26(1), if deemed necessary in
the opinion of the Collector - However, in the facts of the present
case, there was no such formation of opinion by the Competent
Authority or the Commissioner - Appellant-Corporation cannot
complain about the circle rate fixed by the State Government -
Argument of the appellant, that this circle rate is not the baseline
or floor rate, and is too high not accepted - Concerned authorities
should fix circle rates scientifically and in accordance with the
law - It is their responsibility to ensure that circle rates are neither
inflated nor disproportionately low - When the citizens are required
to pay stamp duty on the notified circle rate, the public authorities,
including state development corporations acquiring land from private
individuals, must adhere to the same - If the circle rate is inflated
or does not reflect the true market value, it is incumbent upon the
State Government to take corrective steps - State Government or
the development corporation under the State Government cannot
complain that they have been compelled to acquire land at the
circle rate fixed by the State - Appeals filed by the appellant are
dismissed - Arbitration and Conciliation Act, 1996. [Paras 40-43]
Circle Rates - Importance - Proper fixation of circle rates,
advisory to State Governments:
Held: Fixing fair and accurate circle rates has a direct impact
on each citizen - An inflated rate results in an unfair financial
burden on purchasers - Conversely, an undervalued rate leads to
inadequate stamp duty collection, adversely affecting the State's
revenue - Circle rates which reflect the market price ensure proper
revenue collection for the State by preventing under-valuation
of properties - Circle rates, when determined while accounting
for factors that cause variations in the market price of land, can
facilitate predictability in transactions and curtail litigation - The
standardized circle rates should be fixed at the floor or baseline
price, as it would be grossly unfair to ask the public to pay stamp
duty on over-valued circle rates - It is advisable that the circle
rates be fixed by expert committees, which not only have officers
from the government but also other specialists who understand
[2025] 3 S.C.R.
1279
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
the market conditions - Methodically and scientifically fixed circle
rates can contribute to strengthening the economy and boosting
tax collections - While serving the interests of honest taxpayers,
accurate circle rates would simultaneously deter non-compliant
taxpayers by preventing under-valuation - Rational and fair circle
rates reflect and are a prerequisite for good governance - Given
the financial implications of fixation of circle rates on each member
of the society, the data and details for computation of circle rates
should be made public - Income Tax Act, 1961. [Paras 35, 37, 38]
Land Acquisition Act, 1894 - Theory of deduction - Purpose:
Held: The theory of deduction, though not statutorily prescribed,
has been applied by courts to compute the compensation payable
under the Acquisition Act, 1894 primarily for two reasons - First,
consideration of the potential value of the land can result in arriving
at an enhanced or increased value, especially for undeveloped
lands - Secondly, in acquisitions of large underdeveloped lands, a
significant portion of the land would have to be utilised for making
minimum amenities like roads, drains, sewers, water and electrical
lines available - Thus, making the land usable would involve a
substantial expense for the buyer in the form of development
charges. [Para 6]
Words and Phrases - The Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 - ss.23(b), 26(1), 27, 31 - "which in
his (Collector's) opinion should be allowed for the land" in
s.23(b); "criteria":
Held: s.27 relates to the determination of the amount of
compensation - The Collector having determined the market value
of the land u/s.26 has to calculate the amount of compensation to be
paid to the land owner, as mandated in terms of s.23 - While s.26(1)
uses the word "criteria" for computing the highest value under
Clauses (a) to (c), and mandates that the exercise is undertaken
applying the four Explanations, the final determination vests with
the Collector u/s.27 - This is also evident from the language of
s.26(1) as well as s.23(b), which use the expression "which in his
(Collector's) opinion should be allowed for the land". [Para 31]
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 - s.26(1)
(a)-(c) - Market value u/s.26(1):
1280
[2025] 3 S.C.R.
Supreme Court Reports
Held: The values computed in terms of Clauses (a), (b) and (c)
of s.26(1) are not to be averaged - The highest of the values as
determined by Clauses (a), (b) and (c), is to be treated as the
market value u/s.26(1). [Para 21]
Words and Phrases - The Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 - Four Explanations to s.26(1),
explained - Market value u/s.26(1) - Discretion while
computing - Explanation 4 - "and" to be read as "or" -
Interpretation - "Theory of deduction"; "Principle of belting",
discussed. [Paras 14, 19, 21-29]
Case Law Cited
Smt. Tribeni Devi and Others v. Collector of Ranchi and Vice
Versa [1972] 3 SCR 208 : (1972) 1 SCC 480; Jag Mahender and
Another v. State of Haryana and Others (2017) SCC Online SC
2160; Lal Chand v. Union of India and Another [2009] 13 SCR 622 :
(2009) 15 SCC 769; Haryana State Agricultural Market Board v.
Krishan Kumar (2011) 15 SCC 297; Dy. Director, Land Acquisition
v. Malla Atchinaidu and Others [2006] Supp. 10 SCR 885 : (2006)
12 SCC 87; Mummidi Apparao (Dead) Through LRs. v. Nagarjuna
Fertilizers and Chemicals Limited and Another, AIR 2009 SC 1506;
Bijender and Others v. State of Haryana and Another [2017] 10
SCR 534 : (2018) 11 SCC 180; Jawajee Nagnatham v. Revenue
Divisional Officer, Adilabad, A.P. and Others [1994] 1 SCR 368 :
(1994) 4 SCC 595; Krishi Utpadan Mandi Samiti. Sahaswan, District
Badaun v. Bipin Kumar and Another (2004) 2 SCC 283; R. Sai
Bharathi v. J. Jayalalitha and Others [2003] Supp. 6 SCR 85 :
(2004) 2 SCC 9; The Bengal Immunity Co. Ltd. v. State of Bihar
and Others [1955] 2 SCR 603 : AIR 1955 SC 661; Coromandel
Fertilizers Ltd. v. Union of India and Others [1985] 1 SCR 523 : 1984
Supp. SCC 457; Maharishi Mahesh Yogi Vedic Vishwavidyalaya v.
State of Madhya Pradesh and Others [2013] 13 SCR 464 : (2013)
15 SCC 677 - referred to.
Govt of NCT of Delhi Collectors of Stamps v. CTA Apparels Pvt. Ltd.,
LPA 278/2019 (High Court of Delhi); Sameer Vasudev Morajkar
and Another v. State of Goa, 2024 SCC OnLine Bom 303 (High
Court of Bombay); Narendra Kumar Berlia and Others v. Om
Prakash Berlia and Others, 2021 SCC OnLine Cal 2667 (Calcutta
High Court); K. Natarajan v. District Collector and Another, 2019
SCC OnLine Mad 26166 (Madras High Court) - referred to.
[2025] 3 S.C.R.
1281
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
List of Acts
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013; Indian
Stamp Act, 1899; Arbitration and Conciliation Act, 1996; Land
Acquisition Act, 1894; Madhya Pradesh Preparation and
Revision of Market Value Guideline Rules, 2018; Income Tax Act,
1961.
List of Keywords
Theory of deduction; Collector's guidelines; Circle rates; Marketvalue; Principles of compensation; Land acquisition; Market
rate; Non-converted agricultural land; Converted agricultural
land; Rehabilitation and resettlement; Undeveloped piece of
land; Developed land; Potential value; International Valuation
Standards Council; Estimated amount; Inflate or deflate price;
Special concessions or considerations; Underdeveloped lands;
Development charges; Principle of belting; Comparative sale/
exemplar method; Arbitral award; Commissioner; Ease of living
and doing business; Market price; Stamp duty.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3998 of 2024
From the Judgment and Order dated 13.04.2022 of the High Court
of M.P. Principal Seat at Jabalpur in ARBA No. 87 of 2021
With
Civil Appeal No(s). 3999, 4004, 4005, 4012, 4002, 4013, 4006,
4001, 4000, 4014 and 4003 of 2024
Appearances for Parties
Advs. for the Appellant:
K.M. Nataraj, ASG, Harmeet Singh Ruprah, Sharath Nambiar.
Advs. for the Respondents:
Santosh Paul, Sr. Adv., Raghvendra Kumar, Anand Kumar Dubey,
Simanta Kumar, Maneesh Pathak, Varun Singh, Nishant Verma,
Randhir Kumar Ojha, Sanjeev Kumar Chaturvedi, Sriharsh Nahush
Bundela, Vedant Mishra, Manish Jain, Virendra Mohan, Akshat
Shrivastava, Satvic Mathur, Ms. Pooja Shrivastava.
1282
[2025] 3 S.C.R.
Supreme Court Reports
Judgment / Order of the Supreme Court
Judgment
Sanjiv Khanna, CJI
The issue raised in the present batch of appeals filed by the
appellant, Madhya Pradesh Road Development Corporation, relates
to the applicability of the "theory of deduction" for determining the
compensation payable under The Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013.1
2.
Before examining the legal position, it would be appropriate to set
out the facts in brief:
 •
By a Gazette Notification dated 12.09.2014, the Central
Government declared its intention of acquiring the stretch of land
falling within 3.4 km to 22.8 km of the Jabalpur-Mandla-Chilpi
section, in the district of Jabalpur, State of Madhya Pradesh.
The purpose of the acquisition was stated to be widening, fourlaning, maintenance, management and operation of National
Highway No.12-A. On 30.10.2014, the notification was also
published in two newspapers.
 •
By a Gazette Notification dated 02.02.2015, the land was
declared to have been acquired.
 •
On 31.08.2015, the Competent Authority and Land Acquisition
Officer, Collectorate, Jabalpur passed an award determining
the compensation payable for the land acquired. The award
relies on the mandate of Section 105(3) of the Acquisition
Act, 2013 (as amended).2 It accordingly holds that for the
acquisition in question, provisions relating to the determination of
compensation shall apply in accordance with the First Schedule
of the Acquisition Act, 2013. Further, provisions for rehabilitation
1
Hereinafter, "Acquisition Act, 2013".
2
Section 105 (3) - The provisions of this Act relating to the determination of compensation in accordance
with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and
infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to
land acquisition specified in the Fourth Schedule with effect from 1st January, 2015.
[2025] 3 S.C.R.
1283
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
and resettlement would apply as per the Second Schedule, and
those relating to infrastructural amenities shall apply as per the
Third Schedule of the Acquisition Act, 2013.
 •
The First Schedule of the Acquisition Act, 2013 states that the
market value of the land has to be determined in accordance
with Section 26 of the Acquisition Act, 2013. Clause (a) to
Section 26(1) adopts the market value as specified under the
Indian Stamp Act, 18993. Based on the date of the Gazette
Notification published as per Section 11 of the Acquisition Act,
2013, i.e., on 12.09.2014, the Competent Authority deemed
it appropriate to compute the market value according to the
Collector's Guidelines for the year 2014-20154. These guidelines
have been formulated in the exercise of the powers conferred
under the Stamp Act. The Collector's Guidelines have been
annexed as 'Annexure P-1' to the present appeal.
 •
Paragraph 4.1 of the Collector's Guidelines deals with municipal
corporation areas of Jabalpur amongst other districts. It provides
for the valuation of two kinds of land - converted agricultural
land and non-converted agricultural land. These are further
divided into Categories (A) and (B). Category (A) applies when
the area of land is less than or equal to 1000 square meters,
while Category (B) applies when the area of land exceeds 1000
square meters.
 •
The Competent Authority determined the concerned area to
be non-converted land of more than 1000 square meters,
which would fall under Category (B). According to the method
prescribed under Category (B), the first 1000 square meters are
to be valued in accordance with Category (A). This corresponds
to the rate applicable to residential plots set out in Form-1 of
the Collector's Guidelines. The remaining area is to be valued
at the rate for agricultural land as specified in Form-3 of the
Collector's Guidelines. In the present case, the Competent
Authority applied the rate for Village Katiyaghat, which is
specified as Rs.1,50,00,000 per hectare under Form-3. The
3
Hereinafter, "Stamp Act".
4
Hereinafter, "Collector's Guidelines".
1284
[2025] 3 S.C.R.
Supreme Court Reports
Competent Authority determined the value of the land to be
Rs. 97,50,000. Over this amount, the Competent Authority also
factored in assets attached to the land and the solatium payable.
 •
By following the aforesaid procedure, the total compensation
payable for the acquisition of the land belonging to Respondent
No. 1, Vincent Daniel, was calculated to be Rs. 2,05,42,164/-.
 •
Dissatisfied with the compensation, Respondent No. 1, Vincent
Daniel, as the other landowners, appealed to the Commissioner
against the decision of the Competent Authority. One of the
grounds raised in the appeal was that the rate at which the
compensation was awarded was significantly lower than the
market rate.
 •
The appellant, Madhya Pradesh Road Development Corporation,
filed its reply raising several contentions. They submitted that
for an undeveloped piece of land, the compensation was
disproportionately high. A portion of the land would have to
be foregone to develop roads, drainage, electricity poles, etc.,
which would come at a significant expense. Therefore, it was
argued that the principles of compensation for developed lands
would not apply in the present case.
 •
The Commissioner in his arbitral award held that the Collector's
Guidelines were binding. However, the Competent Authority
had made an error in applying the same. For 0.650 hectares
of land situated inside the Katiyaghat road, at Khasra No. 53
of village/mauja Katiyaghat, Jabalpur, the rate of Rs. 12,000
per square meter should have been applied for the first 1000
square meters, while applying the rate of Rs. 1,50,00,000 per
hectare for the balance land. After adding 100% solatium and
interest, an additional amount of Rs. 2,21,11,562/- was found
to be payable.
 •
Against the Commissioner's award, the appellant, Madhya
Pradesh Road Development Corporation, preferred objections
before the District Court under Section 34(3) of the Arbitration
and Conciliation Act, 19965. One of the contentions raised
5
Hereinafter, "Arbitration Act".
[2025] 3 S.C.R.
1285
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
was that the compensation should not have been awarded by
solely relying upon the Collector's Guidelines, as the land was
undeveloped.
 •
The objections were dismissed by the District Judge. It was
observed that the land in question was situated within the
municipal areas on which the Collector's Guidelines were
applicable. It was noted that the compensation was enhanced
in compliance with the Collector's Guidelines. Form-1 of the
Collector's Guidelines prescribes the rate of Rs. 20,000 per
square meter for residential plots and Rs. 40,000 per square
meter for commercial ones on the Katiyaghat road. However,
for the residential areas inside the Katiyaghat road, the rate is
Rs. 12,000 per square meter, which was rightly applied by the
Commissioner. It was also observed that the award passed was
not in violation of public policy and, therefore, Clause (b)(ii) to
Section 34(2) of the Arbitration Act would not be applicable.
 •
Consequently, the appellant, Madhya Pradesh Road
Development Corporation, preferred appeals under Section
37 of the Arbitration Act before the High Court, which were
dismissed by the impugned judgment dated 13.04.2022.
 •
The impugned judgment dated 13.04.2022 passed by the High
Court of Madhya Pradesh, inter alia, distinguishes between the
provisions of the Land Acquisition Act, 18946 and the Acquisition
Act, 2013. It holds that according to Section 26(1) of the
Acquisition Act, 2013, if the market value as determined under
the Stamp Act is the highest of the other computed values, it will
be binding. The theory of deduction as applied by the courts in
determining the market value under the Acquisition Act, 1894,
will not apply when determining compensation under Section
26(1) of the Acquisition Act, 2013. Thus, the judgments applying
the theory of deduction under the Acquisition Act, 1894 do not
have any precedential value under the Acquisition Act, 2013.
The impugned judgment also refers to the Madhya Pradesh
Preparation and Revision of Market Value Guideline Rules,
6
Hereinafter, "Acquisition Act,1894".
1286
[2025] 3 S.C.R.
Supreme Court Reports
20187 for the procedure of calculating of the market value of
land under the Stamp Act. Lastly, the High Court states that it
has limited power and jurisdiction under Section 37 read with
Section 34 of the Arbitration Act to interfere with the award
passed by the Commissioner.
3.
In order to answer the issue before us, we would first refer to the
theory of deduction and the reasons for its application by this Court
under the Acquisition Act, 1894.
4.
To compute compensation under the Acquisition Act, 1894, the general
threshold applied by the courts is to ascertain the market value of the
acquired land. This also includes its potential value with reference to
the conditions prevailing at the time of making a declaration under
Section 4(1) of the Acquisition Act, 1894.8 The International Valuation
Standards Council states that the market value of the land represents
the estimated amount that a willing buyer would pay prudently to a
willing seller in an arm's length transaction, without compulsion, on
a particular valuation date.9 This estimate includes characteristics
unique to the land that would inflate or deflate its price but excludes
special concessions or considerations granted by anyone associated
with the sale. The buyer here refers to one who is motivated but is
neither over-eager nor determined to buy irrespective of the price
quoted. Similarly, the seller here is neither over-eager nor forced.
Both parties are assumed to be conducting the transaction in keeping
with market realities, rather than terms that are hypothetical or cannot
be anticipated to exist. The factual circumstances of the parties are
not part of this consideration.
5.
In Smt. Tribeni Devi and Others v. Collector of Ranchi and Vice
Versa,10 this Court acknowledged several methods for ascertaining
7
Hereinafter, "2018 Rules".
8
4. Publication of preliminary notification and powers of officers thereupon.-(1) Whenever it
appears to the appropriate Government that land in any locality is needed or is likely to be needed for any
public purpose or for a company a notification to that effect shall be published in the Official Gazette and
in two daily newspapers circulating in that locality of which at least one shall be in the regional language
and the Collector shall cause public notice of the substance of such notification to be given at convenient
places in the said locality (the last of the dates of such publication and the giving of such public notice,
being hereinafter referred to as the date of publication of the notification).
9
International Valuation Standards Council, International Valuation Standards 2025, effective 31 January
2025.
10
(1972) 1 SCC 480.
[2025] 3 S.C.R.
1287
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
the market value of land, such as - (i) the opinion of experts; (ii)
the price paid in bona fide transactions for the purchase of adjacent
lands possessing similar advantages and disadvantages; and (iii)
capitalization of the actual and immediate prospective annual profits
from the land. However, this exercise must take into consideration
subjective features and special circumstances. Land values vary
based on their qualitative and quantitative attributes, location,
proximity to developed land, potential, etc. The lack of reliable local
sale data, coupled with variable land conditions, undermines accurate
assessment. Nevertheless, framing objective standards can help arrive
at an empirical value that most closely reflects the true market price.
6.
The theory of deduction, though not statutorily prescribed, has been
applied by courts to compute the compensation payable under the
Acquisition Act, 1894 primarily for two reasons. First, consideration of
the potential value of the land can result in arriving at an enhanced
or increased value, especially for undeveloped lands. Secondly, in
acquisitions of large underdeveloped lands, a significant portion of
the land would have to be utilised for making minimum amenities
like roads, drains, sewers, water and electrical lines available. Thus,
making the land usable would involve a substantial expense for the
buyer in the form of development charges.
7.
The theory of deduction was applied in the case of Tribeni Devi
(supra), which was decided in 1971. Recently, in a 2017 decision
in Jag Mahender and Another v. State of Haryana and Others11
as well, the theory of deduction was applied to arrive at a fair
and reasonable market value. This judgment also states that the
prospective prices of smaller developed plots cannot be adopted
to determine the value of underdeveloped tracts of land. Further,
the peculiarities of the land - whether the same is plain or uneven,
the soil is soft or hard, whether the land is situated on a hill or is
low-lying, etc. are all relevant factors. A given parcel of land has
multiple dimensions - social, economic, territorial, and environmental.
Accordingly, the market value must be computed through a valuation
model based on attribute pricing rather than fixed prices. In some
cases, sale deeds for adjoining lands can be an 'exemplar', i.e., lands
that are similarly placed and have comparable attributes. However,
11
(2017) SCC Online SC 2160.
1288
[2025] 3 S.C.R.
Supreme Court Reports
computation of the market value may require calibration, taking into
consideration the advantages and disadvantages of the acquired land
relative to the exemplars. The exemplars must be carefully chosen,
especially as lands are often heuristically grouped in localities at the
same rate due to a lack of specific data.
8.
On the question of the quantum of deduction, in Jag Mahender
(supra), this Court held that the computed value can be reduced
by one-third to account for development charges, though in certain
cases deduction up to 50% has also been allowed while applying
the theory of deduction.12 In Tribeni Devi (supra) this Court had
deducted 33.3% towards the cost of development.
9.
In Lal Chand v. Union of India and Another,13 this Court stated
that 'fair deduction' for development has two components. First, the
area required to be utilised for development, and second, the cost of
such development. For instance, the Delhi Development Authority is
required to utilise as much as 40% of the area in the layout for roads,
drains, parks, playgrounds, civic amenities, community facilities, etc.
The cost of developing an underdeveloped land into a developed
layout is substantial and, in some cases, can be as much as 75% of
the cost of the developed plot. At the same time, it was observed that
if the acquired land is in a semi-developed urban area and not in an
underdeveloped rural area, the deduction for development would be
minimal. Thus, the theory of deduction is fact and situation-specific.
10. This Court has also applied other principles, such as the "principle
of belting", to arrive at an accurate market value. In Bijender and
Others v. State of Haryana and Another,14 this Court observed
that the principle of belting is a judicially accepted method for
determining the market value of the acquired land fairly. It is applied
when different parcels of land with different survey numbers, having
different locations, are acquired and put together to form a large
chunk of land. This large chunk cannot be taken as a compact
12
Haryana State Agricultural Market Board v. Krishan Kumar, (2011) 15 SCC 297; Dy. Director, Land
Acquisition v. Malla Atchinaidu and Others, (2006) 12 SCC 87; Mummidi Apparao (Dead) through LRs. v.
Nagarjuna Fertilizers and Chemicals Limited and Another, AIR 2009 SC 1506 and Lal Chand v. Union of
India, (2009) 15 SCC 769.
13
(2009) 15 SCC 769.
14
(2018) 11 SCC 180.
[2025] 3 S.C.R.
1289
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
block. The acquired land is usually divided into two or three belts
depending upon the facts of each case. The market value of the front
road abutting the main road is taken to fetch the maximum value
whereas the second belt fetches lesser value and the third belt, if
carved out, would command a value lower still.
11. The decision in Lal Chand (supra) is relevant for another reason.
It analyses whether the circle rates or guideline values fixed under
the Stamp Act can be relied upon for computing the market value,
which forms the basis for determining the compensation payable. It
refers to a series of judgments, including Jawajee Nagnatham v.
Revenue Divisional Officer, Adilabad, A.P. and Others15 and
Krishi Utpadan Mandi Samiti. Sahaswan, District Badaun v. Bipin
Kumar and Another16, which, inter alia, hold that the market value
under Section 23 of the Land Acquisition Act, 1894 cannot be fixed
solely on the basis of the rates mentioned in the basic valuation
registers. These registers are maintained to curb the under-valuation
of land, a practice adopted to evade the payment of proper stamp
duty. Jawajee Nagnatham (supra) observes that the basic valuation
register is maintained to ensure the collection of stamp duty under
Section 47A of the Stamp Act, as amended in Andhra Pradesh. Section
47A confers no express power on the Government to determine the
market value of land.
12. In its ratio, Lal Chand (supra) observes that the circle rate or guideline
value rate can only be considered a prima facie basis for ascertaining
the market value. The purpose of determination of circle rates through
the relevant guidelines is to protect the State's revenue collection.
The judgment in Lal Chand (supra) also refers to R. Sai Bharathi v.
J. Jayalalitha and Others,17 a case pertaining to the Prevention
of Corruption Act, 1988, wherein this Court observes that circle or
guideline rates fixed by the authorities under the Stamp Act are
merely prima facie rates prevailing in the area and are not final and
determinative. Thus, the guideline or circle rate fixed by the Collector
does not take away the right of a person to show that the property in
question is correctly valued. It is open, both to the registering authority
15
(1994) 4 SCC 595.
16
(2004) 2 SCC 283.
17
(2004) 2 SCC 9.
1290
[2025] 3 S.C.R.
Supreme Court Reports
as well as the person seeking registration, to prove the actual market
value of the land/property before the authorities.
13. Lal Chand (supra) also draws a distinction between guideline
values prescribed by non-statutory valuation registers, and circle
rates determined by expert committees constituted under the Stamp
Act. State legislations can lay down a detailed procedure, assigning
the task of valuation to expert committees. The expert committees
comprise valuation specialists and officers from the Departments of
Revenue, Survey and Settlement, Public Works, etc. They must follow
a scientific process for the assessment of market values of different
types of lands. The valuation framework must prescribe distinct
methods for valuing land, plots, houses, and buildings, accounting for
variable factors. For agricultural land, such variables would include the
nature of the soil, location, nature of the crop, the yield for specified
years, proximity to roads, markets, etc. The valuation committees are
required to invite objections and suggestions from the public both
before the initial fixation of rates and during their periodic revision.
Circle rates computed through a detailed and scientific exercise
would be a relevant piece of evidence for determining the market
value, being equivalent to expert evidence.
14. As observed above, to account for the unique factors affecting a piece
of land, methods such as the comparative sale/exemplar method,
belting method and expert opinion method have been evolved through
judicial pronouncements to arrive at the accurate market value.
The computation of circle rates and market values is a complex
exercise that involves detailed research, data collection, and the use
of scientific methods. International standards reflect this complexity,
noting that the concept of market value takes on different colours
depending on the subject to which it is applied.18 For example, the
valuation of land involves entirely different considerations from the
valuation of financial instruments. These standards also recognise
the wide range of variables that influence land valuation specifically,
and the need for distinct approaches to determine accurate market
value. Authorities and institutions must be cognizant of these aspects
while forming policies, as well as when giving meaning to legislation
and interpreting the law.
18
Supra note 10.
[2025] 3 S.C.R.
1291
Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others
15. We now turn our attention to the statutory provisions of the Acquisition
Act, 1894 and the Acquisition Act, 2013. At the outset, we must
observe that the impugned judgment primarily refers to Section 23 of
the Acquisition Act, 1894 and Section 26 of the Acquisition Act, 2013
and draws a distinction between the language of the two sections.
However, to address the issue before us, we must refer to a few
other provisions as well. We would like to refer to Sections 11, 15,
24 and 25 in addition to Section 23 of the Acquisition Act, 1894.
For the Acquisition Act, 2013, we would like to refer to Sections 23,
27 and 28 in addition to Section 26. However, for clarity, we have
juxtaposed Section 28 of the Acquisition Act, 2013 with Section 23 of
the Acquisition Act, 1894 as they are similar, and Section 27 of the
Acquisition Act, 2013 with Section 25 of the Acquisition Act, 1894.
1894 Act
2013 Act
11 . E n q u i r y a n d a w a r d b y
Collector.- (1) On the day so fixed, or
on any other day to which the enquiry
has been adjourned, the Collector shall
proceed to enquire into the objection
(if any) which any person interested
has stated pursuant to a notice given
under section 9 to the measurements
made under section 8, and into the
value of the land at the date of the
publication of the notification under
section 4, sub-section (1), and into
the respective interests of the persons
claiming the compensation and shall
make an award under his hand of-
(i) the true area of the land;
(ii) the compensation which in his
opinion should be allowed for the
land; and
(iii) the apportionment of the said
compensation among all the persons
known or believed to be interested
in the land, or whom, or of whose
claims, he has information, whether or
not they have respectively appeared
before him:
23. Enquiry and land acquisition
award by Collector.- On the day
so fixed, or on any other day to which
the enquiry has been adjourned, the
Collector shall proceed to enquire
into the objections (if any) which any
person interested has stated pursuant
to a notice given under Section 21,
to the measurements made under
Section 20, and into the value of the
land at the date of the publication of
the notification, and into the respective
interests of the persons claiming the
compensation and rehabilitation and
resettlement, shall make an award
under his hand of-
(a) the true area of the land;
(b) the compensation as determined
under Section 27 along with
Rehabilitation and Resettlement award
as determined under Section 31 and
which in his opinion should be allowed
for the land; and
1292
[2025] 3 S.C.R.
Supreme Court Reports
Provided that no award shall be made
by the Collector under this sub-section
without the previous approval of the
appropriate Government or of such
officer as the appropriate Government
may authorize in this behalf:
Provided further that it shall be
competent for the appropriate
Government to direct that the Collector
may make such award without such
approval in such class of cases as the
appropriate Government may specify
in this behalf.
(2) Notwithstanding anything contained
in sub-section (1), if at any stage of the
proceedings, the Collector is satisfied
that all the persons interested in the
land who appeared before him have
agreed in writing on the matters to be
included in the award of the Collector
in the form prescribed by rules made
by the appropriate Government, he
may, without making further enquiry,
make an award according to the terms
of such agreement.
(3) The determination of compensation
for any land under sub-section (2) shall
not in any way affect the determination
of compensation in respect of other
lands in the same locality or elsewhere
in accordance with the other provisions
of this Act.
(4) Notwithstanding anything contained
in the Registration Act, 1908 (16 of
1908), no agreement made under
subsection (2) shall be liable to
registration under that Act.
(c) the apportionment of the said
compensation among all the persons
known or believed to be interested
in the land, or whom, or of whose
claims, he has information, whether or
not they have respectively appeared
before him.
15. Matters to be considered and
neglected.- In determining the
amount of compensation, the collector
shall be guided by the provisions
contained in section 23 and 24.
26.