# P. RAM REDDY ETC v. LAND ACQUISITION OFFICER, HYDERABAD URBAN DEVELOPMENT AUTHORITY, HYDERABAD ETC - **Citation:** [1995] 1 S.C.R. 584 - **Court:** Supreme Court of India - **Decided:** 1995-01-27 - **Case number:** Civil Appeal Nos. 1037-.38 and 1039 of 1995 - **Bench:** K. Ramaswamy, N. Venkatachala - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-ram-reddy-etc-v-land-acquisition-officer-hyderabad-urban-development-12873 - **Pages:** 30 ## Headnote Land Acquisition Act, 1894: Sections 4(1), 6, 9, 11, 18i. 23 23(1-A), 23(2) and 51-A. Land. Acquisition-Compensation-Principles for determination of-Building potentiality-Relevance for determination ·of compensa- . tion-Releiant factors for detennining potentiality-Held potentiality should be decided on the basis of material on record-Such material should be supp01ted by documentary evidence. Basic valuation Register maintained under Stamp Act-Cannot form basis for detennination of compensation. Value of land mentioned in sale or gi.ft deed-Basis for determination of compensation-Failure to cross-examine witness-Effect of. Value fetched by sale of small extent of lan P. RAMREDDYv. URBANnEVELOPMENT AUTHORITY 585 benefits were also given. Th~ Civil Court enhanced the market value of the claimant's land @ Rs. 80 per sq. yard. In determining the enhanced compensation the Civil Court relied on (1) the amounts of consideration mentioned under sale deeds and gift deed; (ii) probable value of building plots in the locality of the acquired land; and (iii) the value of building plots as found in the basic valuation register maintained under the Stamp Act. The High Court reduced the market value of the land holding that it was not safe to determine the value on the basis of the basis valuation register. It fixed the valuation of land @ Rs. 40 per sq. yard and after deducting 20% towards layout losses awarded compensation @ Rs. 32 per sq. yards. In appeals to this Court on the questions :· 1. Whether the building potentiality of a land acquired under the Land Acquisition Act requires to be taken into consideration in determinating its market value, and if so, how has that to be done? 2. Whether the value of building plots as found in the Basic Valuation Register maintained under the Stamp Act or its Rules, could form the basis for determination of the market value of lands? 3. Whether the value of land mentioned in an instance of sale or an instance of gift claimed to compare with the acquired land warrants acceptance as the correct value. of such land merely because the witnesses who would have given evidence as regards them, on behalf of the claimants had not been cross-examined or effectivdy cross-examined on behalf of the Land Ac<1uisition Officer? 4. Whether the valuation fetched by sale of a small extent of land can be made the basis for determination of the market value of a large extent of the acquired land? A B c D E F 5. Will it not be open to a Court which rejects the evide~ce adduced by the claimant in support of his claim for enhanced compensation for his G acquired land made in a reference under Section 18, to rely upon the contents of the award of the Land Acquisition Officer made under section 11 thereof to enhance the compt:nsation awardable for such land? If the LAO's award is based on value fetched under sale deeds on their perusal as contained in the register maintained under the Registration Act, bas he H 1 586 SUPREME COURT REPORTS [1995] 1 S.C.R. A to prove those sale deeds in court for sustaining h~s award? 6. What is the amount which could be awarded under section 23 (1 ·A) in a ## Text _Characters 0–39,792 of 76,255. This is a partial read: ask again with offset=39792 for what follows._ A B c D E P. RAM REDDY ETC. v. LAND ACQUISITION OFFICER, HYDERABAD URBAN DEVELOPMENT AUTHORITY, HYDERABAD ETC. JANUARY 27, 1995 [K. RAMASWAMY AND N. VENKATACHALA, JJ.] Land Acquisition Act, 1894: Sections 4(1), 6, 9, 11, 18i. 23 23(1-A), 23(2) and 51-A. Land. Acquisition-Compensation-Principles for determination of-Building potentiality-Relevance for determination ·of compensa- . tion-Releiant factors for detennining potentiality-Held potentiality should be decided on the basis of material on record-Such material should be supp01ted by documentary evidence. Basic valuation Register maintained under Stamp Act-Cannot form basis for detennination of compensation. Value of land mentioned in sale or gi.ft deed-Basis for determination of compensation-Failure to cross-examine witness-Effect of. Value fetched by sale of small extent of lan P. RAMREDDYv. URBANnEVELOPMENT AUTHORITY 585 benefits were also given. Th~ Civil Court enhanced the market value of the claimant's land @ Rs. 80 per sq. yard. In determining the enhanced compensation the Civil Court relied on (1) the amounts of consideration mentioned under sale deeds and gift deed; (ii) probable value of building plots in the locality of the acquired land; and (iii) the value of building plots as found in the basic valuation register maintained under the Stamp Act. The High Court reduced the market value of the land holding that it was not safe to determine the value on the basis of the basis valuation register. It fixed the valuation of land @ Rs. 40 per sq. yard and after deducting 20% towards layout losses awarded compensation @ Rs. 32 per sq. yards. In appeals to this Court on the questions :· 1. Whether the building potentiality of a land acquired under the Land Acquisition Act requires to be taken into consideration in determinating its market value, and if so, how has that to be done? 2. Whether the value of building plots as found in the Basic Valuation Register maintained under the Stamp Act or its Rules, could form the basis for determination of the market value of lands? 3. Whether the value of land mentioned in an instance of sale or an instance of gift claimed to compare with the acquired land warrants acceptance as the correct value. of such land merely because the witnesses who would have given evidence as regards them, on behalf of the claimants had not been cross-examined or effectivdy cross-examined on behalf of the Land Ac<1uisition Officer? 4. Whether the valuation fetched by sale of a small extent of land can be made the basis for determination of the market value of a large extent of the acquired land? A B c D E F 5. Will it not be open to a Court which rejects the evide~ce adduced by the claimant in support of his claim for enhanced compensation for his G acquired land made in a reference under Section 18, to rely upon the contents of the award of the Land Acquisition Officer made under section 11 thereof to enhance the compt:nsation awardable for such land? If the LAO's award is based on value fetched under sale deeds on their perusal as contained in the register maintained under the Registration Act, bas he H 1 586 SUPREME COURT REPORTS [1995] 1 S.C.R. A to prove those sale deeds in court for sustaining h~s award? 6. What is the amount which could be awarded under section 23 (1 ·A) in addition to the market value of the acquired land? 7. Does the market value in respect of which solatium is awardable B u~der section 23(2) of the LA Act include the amount payable under section 23(1-A) of the Land Acquisition Act? 8. What is the amount of compensation awardable for the lands of ~ the claimant acquired under the LA Act which could be regarded as just C and reasonable? Disposing of the appeals, this Court HELD: 1. Whether the acquired land has building potentiality or not, has to be decided upon reference to the material to be placed on record or D made available by the parties concerned, the market value of the acquired .land with building potentiality, is also required to be determined with reference to the material to be placed on record or made available in that regard by the parties concerned and not solely on surmises, conjectures or pure guess. (604-E-F] E 2. Market value of the land acquired under the Land Acquisition Act is the main component of the amount of compensation awardable for such land under section 23(1). The market value of such land must relate to the last of the dates of publication of Notification or giving of public notice of substance of such Notification according to section 4(1). Such market value p of acquired land cannot only be its value with reference to the actual use to · wliich it 'was put on the r~levant date envisaged under section 4(1) of the Land Acquisition Act, but ought to be its value with reference to the better use to which it is reasonably capable of being put in the immediate or near future. Possibility of the· acquired land put to certain use on the date en:visaged under section 4(1) of the LA Act, of becoming available for better G use in the immediate or near future, is regarded as its potentiality. It is for this reason that the market value of the acquired land when has. to be determined with r~ference to the date envisaged under section 4(1), the same has to be done not merely with reference.to the use to which it was put on such-date, but also on the possibility of it becoming available in the H immediate or near future for better use, i.e., on its potentiality. [S98·D-F] P. RAMREDDYv. URBANDEVELOPMENf AUTHORITY 587 3. When the acquired land has the potentiality of being used for A building purposes in the immediate or near future it is such potentiality which is regarded as building potentiality of the acquired land. Therefore, if the acquired land has the building potentiality, its value, like the value of any other potentiality of the land should necessarily be taken into account for determining the market value of such land. Therefore, when a land with building potentiality is acquired, the price which its willing seller could reasonably expect to obtain from its willing purchaser with reference to the date envisaged under section 4(1), ought to necessarily include that portion of the price of the land attributable to its building potentiality. Such price of the acquired land then becomes its markets value envisaged under section 23(1) of the Land Acquisition Act. (598-G-H, 599-A] 4. An acquired land could be regarded as that which has a building potentiality, if such land although was used on the relevant date envisaged under section 4(1) for agricultural or horticultural or other like purposes B c or was on that date even barren or waste, had the possibility of being used D immediately or in the near future as land for putting up residential, commercial, industrial or other buildings. However, the fact that the acquired land had been acquired for building purposes, cannot be sufficient circumstance to regard it as land with building potentiality. Such possibility of user of the acquired land for building purposes can never be wholly a matter of conjecture or surmise or guess. On the other hand, it E should be a matter of inference to be drawn based on appreciation of material placed on record to establish such possibility; Material so placed on record or made available must necessarily relate to the matters such as (599-C-F] (i) The situation of the acquired land vis-a-vis the city or the town or village which had been growing in size because of its commercial, industrial, educational, religious or any other kind of importance or because of its explosive population; (599-G] F (ii) the suitability of the acquired land for putting up the buildings, G be they residentiaf, commercial or industrial, as the case may be; (599-H] (iii) Possibility of obtaining, water and electric supply for occupants of buildings to be put up on that land; (600-A] (iv) absence of statutory impediments or the like for using the H )88 SUPREME COURT REPORTS (1995] 1 S.C.R. A acquired land for building purp~se; [60~·A] · (v) existence of highways, public roads, layouts of building plots or developed residential extensions in the· vicinity or close proximity of the acquired land; [600·B] B (vi) benefits of advantages of educational institutions, health care centres, or the like in the surrounding areas of the acquired land which may become available to the occupiers of buildings, if built on the acquired land; and [600-C] C (vii) lands around the acquired land or the acquired land itself being in demand for building purpose, to specify a few. [600·D] 5. The material to the placed on record or made available in respect of the said matters and the like, cannot have the needed evidentiary value for concluding that the acquired land being used for building purposes In D the immediate or near future unless the same is supported by reliable documentary evidence, as far as the circumstances permit. [600~E] 6. The market value of the acquired land with building potentiality comprises of the market value of the land having regard to the use to which it was put on the relevant date envisaged under Section 4(1) plus the E increase in that market value because of the possibility of the acquired land being used for putting up buildings, in the immediate or near future. · If there is any other land with building potentiality similar to the acquired land which had been sold for a price obtained by a willing seller from a willing purchaser, such price could be taken to be the market value of the p acquired land, in that, it would have comprised of the market value of the la!ld as was being actually used plus increase in price attributable to its building potentiality. If the prices fetched by sale of similar land with building potentiality in the neighbourhood or vicinity of the acquired 'lands with building potentiality, as on the relevant date envisaged under Section 4(1) are unavoidable, it becomes necessary to find out whether any build· G ing p_lots laid out in a land similar to the acquired land had been sold by a .~lling seller tc. a willing buyer on or near about the relevant date under Section 4(1) when the acquired land had been proposed for acquisition and then to find out what would be the price which the acquired land would 'have fetched if had been sold by making it into ~uilding plots similar to H those sold. (600-G·H, 601·A·B] .( y I P. RAM REDDYv. URBAN DEVELOPMENT' AUTHORITY 589 Bombay Improvement Tmst v. Manvanji Manekp Mistly, AIR (1926) Born. 420, approved. 7. The value of building plots as found in the Basic Valuation Register maintained under the Stamp Act cannot form the basis for deterw_in}ng the market value of the lands acquired under the Land Acquisition Act. [604-G] Jawajee Nagnatham v.Revenue Divisional Officer, Adilabad, A.P. and Ors., [1994] 4 SCC 595, relied on. 8. It is no doubt true, that whenever oral evidence is adduced by parties on certain matters in controversy, it may become difficult for Court to overlook such evidence, if it is not shown by effective cross-examination of such witnesses who have given such evidence or by adducing contraevidence, that the oral evidence was unreliable or the witnesses themselves A B c are not creditworthy. But, in land acquisition references before Civil Courts, when witnesses given oral evidence in support of the claims of D claimants· for higher compensation the ineffective cross-examination of such witnesses, is not an uncommon feature if regard is had to the manner in which claims for enhanced compensation in land acquisition cases are defended in Courts on behalf of the State. [605-G-H, 606-A] Chaturbhuj Pande and Ors. v. Collector, Raigarh, AIR (1969) SC 255, referred to. E 9. It cannot be said that whenever the statements made by claimants' witnesses in courts are not got ~ver on behalf of the Collector or the Land Acquisition Officer by subjecting the witnesses to effective cross-examinaF tion or by not adducing evidence in rebuttal, the courts are obligated to accept such statements of witnesses as true, if tested on the basis of probabilities, become unreliable. If the courts were to accept such statements of witnesses as true merely because they are not subjected to cross-examination or effective cross-examination or because evidence in " ~ rebuttal thereof has not been adduced, it would amount to doling out G public money to the claimants far in excess of their legitimate entitlement for just compensation payable for their lands. If such situation is prevented by courts dealing with claims for compensation by testing the statements of witnesses for claimants on the basis of probabilities, the Courts wiJI have performed the duty justly expected. of them. Hence, no H 590 SUPREME COURT REPORTS [1995] 1 S.C.R. A Court which tests the oral evidence of the claimants on the touch-stone of -4probabilities calling into aid, its experience of life, men and matters and liad such evidence to be untrustworthy, the same cannot be found fault with. [606-D-F] 10. How far the price fetched by sale of small extents can be made B the basis for determining the market value of large extents must necessarily depend on the fact situation including that as to why the purchase was made, in each case, which has come on its record. However, when the value fetched by small extents, are of building plots, in a building lay-out formed of large plot, it has to be seen whether the large acquired land if is laid C out into small building plots and sold, whether they could fetch the price fetched by sale of small building plots in the already formed building lay-out. Then, the market value of the acquired land has to be determined with reference to the value fetched by sale of small plots by making allowanc~s for various factors, such as: loss of land required out of the acquired land to be used for roads, drains, parks, the expenditure in· D volved in forming the layout, waiting involved in sale of plots and several other factors which will necessarily reduce the wholesale price of the acquired land. Thus, how far the value fetched by sale of small extents of lands could form the basts for determining the market value of the acquired land has to inevitably depend upon the allowances to be made E for factors whir.h distinguish the acquired land from the plots of land sold and the sale value of which is relied upon as the basis for determining the market value of the acquired land. (607-C·F] 11. The certified copies of registered documents, though accepted as .>r p evidence of transactions, the court is not bound to act upon the contents of those documents unless persons cortnected with such documents give evidence In court as regards them and such evidence is accepted by the Court as true. But, when.the Land Acquisition Officer or the Collector has made his award, based on the contents of documents, as found in the register kept under the Registration Act and produces registration copies G of such documents in support of his award in Court, they could be "!'" " regarded acceptable as evidence by Court given in support of the award unless it is shown by contra-evidence on bebaJf of the claimant that such documents could not have been relied upon by the Collector or Land Acquisition Officer in making the award. It would be so for the reason that H when the LAO produces in court certified copies of those documents which P. RAM REDDYv. URBAN DEVELOPMENT AUTHORITY 591 he had made the basis for determ~ning the market value, that would be A only to support his award and not to establish something independent of the award. If that be so, when such documents are produced on behalf ot' the Land Acc1uisition Officer in Court, they cannot be rejected on the ground that the witnesses associated with those documents cannot be examined by the Land Acquisition Officer, inasmuch as, even without produci~g such documents he can rely upon the award by him to show that B t~ had looked into those documents and he had determined the market value on that basis. [608·E·H] 12. The mere fact that witnesses associated with certified copies of documents produced as evidence in court were not examined on behalf of C the Land Acquisition Officer will not in any way affect the award of the Land Acquisition Officer, if he has determined the market value of the acquired land having perused those documents as found in the Registers kept under the Registration Act or their certified copies, before determining the market" value of those lands on the basis of such documents. [609·A] D 13. The amount awardable under sub-section (l·A) of section 23 of the Land Acquisition Act, would be amount of 12 per centum per annum on the market value of the land determined under first clause of sub-sec· lion (1) of section 23 for the period between the date of publication of Notification under section 4(1) (i.e. the last of the date of such publication E and the giving of such public notice) and to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier. Since the amount payable under sub-section (l·A) of section 23 as well as the solatium payable under sub-section (2) are in addition to the market value of the land, they necessarily refer to the market value of the land F awardable in the first clause of sub-section (1) of section 23 of the Land Acquisition Act. [609-H, 610·A·C] 14. In the instant case what the High Court has done in determining the market value of the acquired land is to double the amount of !he market G value disclosed in the sale deeds referred to in the award and accordingly ~ .;. fixed the market value of the acquired land after giving deduction of 20 per cent out of it towards allowance of lay-out. However, the High Court could not have fixed the wholesale price of acquired lands of the claimant at Rs. 32 per square yard by deducting only 20% of Rs. 40 per sq. yard fixed as the retail value of building plots in the undeveloped layout of building plots H 592 SUPREME COURT REPORTS [1995) 1 S.C.R. A formed in the land adjacent to the acquired lands as on the. date when they were notified for acquisition under Section 4(1) of the Act. Earlier whenever the wholesale price of the acquired land with building potentiality is rec1uired to be determined on the basis of price of retail sales of building plots in an undeveloped lay.out of building plots in the vicinity of the acquired B lands, at least one-third of the retail pric.e to be got by sale of plots in an undeveloped layout of building plots had to deducted to arrive at the wholesale price of the acquired lands with building potentiality since the entire acquired land cannot be sold as building plots, and some expense wil~ have been incurred by the owners of lands in laying it into building plots and selling them even though they might not have spent any amount C on development of the layout. [611-G, 612-G-H, 613-A] 15. The wholesale price of the entire acquired lands of the claimant could be fixed at 27 per square yard, that is Rs. 40 per square yard retail price to be got by sale of plOts in the undeveloped layout minus one-third . of it to be deducted for making of layout. The claimants would also be D entitled to get solatium at the rate of 30 per cent on that market value of the land. In addition to the market value of the land the claimant would be entitled to get an amount at the rate of 12 per cent per annum thereon from the date of publication of Notification under section 4(1) of the Land Acquisition Act, i.e. 2.9.1985 till the date of the award, i.e. 14.7.1988. Again E the claimant would be entitled to get interest on the enhanced compensation at the rate of 9 per cent per annum from the date on which he gave the pos~ession of the land to the date of payment of such excess amount. However, if such amount has not been paid by the expiry of the period of one year from the date when possession was taken, enhanced compensation would be payable at the rate of 15 per cent annum from the date of your F expiry of the period of one year till the excess amount was paid to the claimant or paid into Court. [613-C-F] CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1037-.38 and 1039 of 1995 . . G From the Judgment and Order dated 19.4.93 of the Andhra Pradesh High Court in A. Nos. 1565 .& 2087 of 1991. P.P. Rao, Mr. A.O. N. Rao, Prakash Reddy, Nageshand Reddy and A.T. Rao for the Appellants. \ H AS. Nambiar and Guntur Prabhakar for the Respondents. _J P. RAM REDDYv. URBAN DEVELOPMENT AUTHORITY [VENKATACHALA, J.] 593 The Judgment of the Court w~s delivered by A ..j.. VENKATACHALA, J. Having granted leave· to appeal sought for in the above Special Leave Petitions directed against the common judgment and decree dated 19.4.1993 rendered in Appeal Nos. 1565 and 2087/91 by the High Court of Andhra Pradesh at Hyderabad· and heard arguments of B learned counsel appearing · for the contesting parties in the appeals, we propose to dispose of all these appeals by this common judgment. Sri P. Ram Reddy, the appellant in appeals arising out of S.L.P.'s Nos. 13362-63/93 and respondent in appeal arising out of S.L.P. No .. c 18202/93, to be referred to hereinafter as the 'claimant', was the owner in possession of dry land of, as large an extent as, 10 acres 17 guntas comprised in survey Nos. 48/24 and 48/26 of Katedhan village lying in the outskirts of Hyderabad. One acre 25 guntas of land out of 5 acres 22 guntas of land in Survey No. 48/24 and 2 acres 15 guntas of land out of 4 acres 35 guntas of land in survey no. 48/26 were the lands included in the total extent D ,,f ,. of 14 acres and 35 guntas of land proposed to be acquired by Hyderabad Urban Development Authority - "HUDA" for formation of inner ring road required to connect Old Karnool Road with Hyderabad-Bangalore National Highway No.7, under Land Acquisition Act, 1894 as amended by Act 68 of 1994 - 'the L.A. Act', by a Notification under Section 4(1) thereof, E published in the modes prescribed thereunder, by issuance of public notice in the locality o~ 2.9.1985. The acquisition of the said lands having been completed by a declaration made· and published under Section 6 of the LA Act, notice under section 9 was issued to the claimant calling upon him to make his claim for compensation of the acquired land before the Land Acquisition Officer of the HUDA - hereinafter to be referred to as "the F LAO". In response to the said notice, the claimant claimed award of compensation by the LAO for his acquired lands at the rate of Rs. 150 per square yard apart from the statutory benefits which he was entitled to get under the LA Act. The LAO, by his award made under Section 11 of the LA Act, determined the market value of the claimant's acquired land at G Rs. 12 per square yard and awarded to him the amount of compensation ..., I' together with statutory benefits. Since that award of the LAO was unacceptable to the claimant, he made an application to the LAO under Section 18 of the LA Act and got the application referred to the Court of the Subordinate Judge, Ranga Reddy District - "Civil Court", for determination of the just compensation payable to him. On that reference registered as H 594 SUPREME COURT REPORTS (t995] lS.C.R. A AS. 129/88, the civil court held the inquiry as required by the LA Act and on the basis of the inquiry so held, determined the market value of the .Claimant's lands at Rs. 80 per square yard and accordingly made an award and decree dated 18.4.1991 together with the statutory benefits. That award and decree being appealed against the High Court by the claimant and the B LAO respectively in A.S. No. 1565/91 and AS. No.2087/91, the former seeking grant of further enhanced compensation and the latter seeking reduction in the granted compensation. Both the appeals being clubbed together and heard by the Division Bench of the High Court, the market value of the claimant's land was reduced to Rs. 32 per square yard with proportionate reduction in the statutory benefits, by its common judgment C and decree rendered on 19.4.1993. While the Claimant questioned the correctness of the said judgment and decree of the High Court by filing appeals arising out of S.L.P.'s. Nos. 13362-13363/93, the LAO challenged the correctness of the same judgment and decree by filing appeal arising out of S.L.P. No. 18202/93, as stated at the outset. The above stated facts make it clear that the LA, by his award (Ex. B-1) fixed 'the value of the D acquired land at Rs. 20 per square yard on the basis of the value fetched by sale of residential building plots at Rs. 20 per square yard under Sale Deed dated 14.10.1982 whereunder 200 square yards of plot in Survey No. 48/13 of Katedhan Village were sold at Rs. 20 per square yard (Ex.B~3); sale deed dated 16.10.1982 whereunder 200 square yards plot in Survey No. E 48/14 was sold at Rs. 20 per square yard (Ex.B-4); and Sale Deed dated 1.2.1983 whereunder 200 square yards plot in Survey No. 48/12 had been sold at Rs. 20 per square yard, Ex.B-5. However, he fixed the market value of the acquired land at Rs. 12 per square yard by deducting 40% area towards lay-out losses. He granted statutory benefits also payable for the F acquired land. It also becomes clear from that award that the sale deeds were seen and the local inspection had been hfild by the LAO before making that award. The Civil Court by its judgment and decree, which is referred to by us earlier, enhanced the market value of the acquired land to Rs. 80 per G square yard relying upon the amounts of consideration mentioned under sale deeds and gift deeds (Bxs. A-1 to A-5) and also the probable value of >i >- building plots in the locality of the acquired land& mentioned in Ex. A6 - the extract of Basic Valuation Register, after making certain percentage of deduction out of such amount or value towards what is called as "lay-out H losses". / - P. RAM REDDYv. URBAN DEVELOPMENT AUTHORITY [VENKATACH'\LA, J.) 595 When that award and decree of the Civil Court was ch~llenged in A the High Court, it was found by the High Court that Exs. A-1 tb A-5, the Sale Deeds and Gift Deeds were unreliable and could not be acted upon by ·it· fo~ the reasons it gave in that regard. It also refused to place any reliance cin· Ex. A-6, the Basic Valuation Register extract, on its view that it was not safe to determine the market value of lands acquired under the B LA Act ori the value found in Basic Valuation Register. However, it found that the value of Rs. 20 per square Yard, on which the LAO had determined the market value of the acquired lands, was on the lower side for determining the market value of that land. Consequently, it increased the value of Rs. 20 per square yard relied upon by the LAO by another Rs. 20 per square yard. Thereafter, the High Court deducted 20% towards lay-out C losses out of Rs. 40 per square yard and determined the market value of the acquired lands at Rs. 32 per square yard. Therefore, it rendered its judgment and decree in the appeals by reducing the market value of the acquired lands from Rs. 80 per square yard awarded by the Civil Court to Rs. 32 per square yard of the claimant's acquired land of 4 acres and 3 D guntas and granted in addition 30% solatium on the market value 12% additional amount on such market value from the date of the notification i.e. 24.7.1985 till the date of the award i.e. 14.7.1988 and interest on the enhanced amount of compensation under Section 28 of the LA Act. Shri P.P. Rao, learned Senior Counsel, who appeared before us for E the claimant, raised several contentions against the correctness of the judgment and decree of the High Court. He contended, firstly, that the High Court had failed to take into consideration the very statement of the LAO made in his award that the acquired land had high potentiality for developing into a Housing Colony, in determining its market value of the p acquired land and that non-consideration had resulted in reducing the market value of the acquired lands instead of enhancing their market value; secondly, when the Civil Court had determined the market value of the acquired land of the claimant at Rs. 80 per square yard on the basis of amounts of consideration of building plots mentioned under Exs. A-1 to A-3 (Sale Deeds) and Exs, A-2, A-4 and A-5 (Gift Deeds) and Ex., A-6, G Basic Valuation Register extract, it should not have rejected Exs. A-1 to A-6 themselves as unreliable documentary evidence for fixing the market value of the acquired land; thirdly, when the Civil Court had determined the iμarket value of the acquired land of the claimant at Rs. 80 per square yard on the basis of the amounts of consideration mentioned in EXs. A-1 H 596 SUPREME COURT REPORTS. [1995] 1 S.C.R. A and A-3 (Sale Deeds) a.nd Ex. A-2, A-4 and A-5 (Gift Deeds), and Ex. A-6 (Basic Valuation Register extract), the High Court should not have rejected Exs.,A-1 to A-6 themselves as unreliable documentary evidence for fixing the market value of the acquired land, particularly, when nothing damaging was elicited in the cross-examination of the witnesses who had spoken about those documents; fourthly, when the High Court had held B that the sale Deeds, Exs. B-3 to B-5, the Certified copies of the Sale Deeds produced in evidence on behalf of the LAO had not been proved by ·examination ·of the witnesses connected with them, it could not have determined the market value of the acquired land on the basis of the value of land fixed by the LAO at the rate of Rs. 20 per square yard particularly C when that rate was referable to value of the plots of land sold under Ex. B-3 to B-5, marked in evidence under section 51 of the LA Act; fifthly, when the High Court had doubled the value that value of plots fetched under Ex. B-3 to B-5 for arriving at the correct market value of the acquired land, it could not have determined the market value of the D acquired land at Rs. 32 per square yard, by deducting 20% out of it towards lay-out losses; and lastly, that the High Court had committed an error in not granting the amount calculated at the rate of 12% per annum payable under section 23(1A) of the LA Act on the market value of the acquired land from the date of the preliminary Notification till the date of taking possession of the lands. E Shri G. Prabhakar, the learned counsel, who appeared before us for the LAO, while refuting the contentions raised for the claimant, submitted that although the High Court had held that the Sale Deeds, Ex. B-3 to B-5 had not been proved by examination of witnesses connected with them, the p High Court could not be found fault 'with, for fixing the market value of the acquired land on the basis of the award of the LAO based on Exs, B-3 to B- 5 when the claimant's evidence adduced in disproof of that award had not \Jeen accepted by it (the High Court). It was further submitted by him that the High Court could not have doubled the rate of Rs. 20 per square yard fixed as the value of the acquired land by the LAO when it G had not adverted to the basis on which. the value was so doubled. The High Court, it was also submitted by him, was not right in granting the amount in addition to the market value under section 23 (lA) of the LA Act, in the manner in which it had done. It was lastly submitted by him that the market value of the acquired land determined by the High Court· calls to H be reduced to the level of the market value of such land determined by the - .... P. RAM REDDYv. URBAN DEVELOPMENT AUTHORITY [VENKATACHALA, J.) 597 LAO and such market value should form the basis for grant of statutory A benefits urrder the L.A. Act. fo view of the aforesaid contentions and submissions of learned counsel for the contesting parties, the question which require to be considered and answered in deciding the appeals, could be formulated thus: • (1) Whether the building potentiality of a land acquired under the LA Act requires to be taken into consideration in determining its market value, and if so, how has that to be done? B (2) Whether the value of building plots as found in the Basic C Valuation Register maintained under the Stamp Act or its Rules, could form the basis for determination of the market value of lands acquired under the LA Act? (3) Whether the value of land mentioned in an instance of sale or an instance of gift claimed to compare with the acquired land D warrants acceptance as the correct value of such land merely because the witnesses who will have given evidence as regards them, on behalf of the claimants had not been cross- examined or effectively cross-examined on behalf of the L.A.O.? E ( 4) Whether the value fetched by sale of a small extent of land can be made the basis for determination of the market value of a large extent of the acquired land ? (5) Will it not be open to a Court which rejects the evidence adduced by the claimant in support of his claim for enhanced F compensation for his acquired land made in a reference under section 18 of the LA Act, to rely upon the contents of the award of the LAO made under section 11 thereof, to enhance compensation awardable for such land ? If the LAO's award is based on value fetched under sale deeds on their perusal as contained in G the registers maintained under the Registration Act, has he to prove those sale deeds in Court for sustaining his award? ( 6) What is the amount which could be awarded under section 23 (1-A) of the LA Act, in addition to the market value of the acquired land? H A B 598 SUPREME COURT REPORTS [1995] 1 S.C.R. (7) Does the market value in respect of which solatium is. awardable under section 23(2) of the IA Act include fhe amount payable under section 23. (1-A) of the LA Act? (8) What is the amount of compensation awardable for the lands of the claimant acquired under the LA Act which could~ be regarded as just and reasonable? We shall now proceed to consider and answer the ·said questions seriatwn. C Re: Question (1): Building Potentiality of acquired land • Market value of land acquired under the LA Act is the main component of the amount of compensation awardable for such land under section 23(1) of the LA Act. The market value of such land must relate to the last of the dates of publication D of Notification or giving of public notice of substance of such Notification according to section 4(1) of the LA Act. Such market value of the acquired land cannot only be its value with reference to the actual use to which it was put on the relevant date envisaged under section 4(1) of the LA Act, but ought to be its value with reference to the better use to which it is reasonably capable of being put in the immediate or near future. Possibility E of the acquired land put to certain use on the date envisaged w;ider section 4(1) of the LA Act, of becoming available for better use ill the immediate or near· future, is regarded as its potentiality. It is for this reason that the market value of the acquired land when has to be determined with reference to the date ~nvisaged under section 4(1) of the LA Act, the same has F to be done not merely with reference to the use to which it was put on such date, but also on the possibility of it becoming available in the immediate or near future for better use, i.e., on its potentiality. When the acquired land has the potentiality of being used for building purposes in the immediate or near future it is such potentiality which is regarded as building potentiality of the acquired land. Therefore, if the acquired land has the G building potentiality, its, value like the value of any other potentiality of the land should necessarily be taken into account for determining the market value of such land. Therefore, when a land with building potentiality is acquired, the price which its willing seller could reasonably expect to obtain from its willing purchaser with reference to the date envisaged under H section: 4(1) of the LA Act, ought to necessarily include that portion of the I J ... P. RAM REDDYv. URBAN DEVELOPMENT AUTHORITY [VENKATACHALA, J.) 599 price of the land attributable to its building potentiality. Such price of the A acquired land then becomes its market value .envisaged under section 23(1) of the LA Act. If that be the market value of the acquired land with building potentiality, which acquired land could be regarded to have a building potentiality and how the market value of such acquired land with such building potentiality requires to be measured or determined are B matters which remain for our consideration now. An acquired land could be regarded as that which has a building potentiality, if such land although was used on the relevant date envisaged under section 4(1) of the LA Act for agricultural or horticultural or other like purposes or was on that date even barren or waste, had the possibility C of being used immediately or in the near future as land for putting up residential, commercial, industrial or other buildings. However, the fact that the acquired land had been acquired for building purposes, cannot be sufficient circumstance to regard it as a land with building potentially, in that, under clause ( 4) of Section 24 of the LA Act that any increase to the D value of land likely to accrue from the use to which it will be put when acquired, is required to be excluded. Therefore, wherever, there is a possibility of the acquired land not used for building purposes on the relevant date envisaged under Section 4(1) of the LA Act, of being used for putting up buildings either immediately or in the near future but not in the distant future, then such acquired land would be regarded as that which E has a building potentiality. Even so, when can it be said that there is the possibility of the acquired land being used in the immediate or near future for putting up buildings, would be the real question. Such possibility of user of the acquired land for building purposes can never be wholly a matter of conjecture or surmise or guess. On the other hand, it should be a matter of inference to be drawn based on appreciation of material placed on record to establish such possibility. Material so placed on record or made available must necessarily relate to the matters· such as : F (i) the situation of the acquired land vis-a-vis the city or the town or village which had been growing in size because of its commerG cial, industrial, educational, religious or any other kind of importance or because of its explosive population; (ii) the suitability of the acquired land for putting up the buildings, be they residential, commercial or industrial, as the case may be; H 600 SUPREME COURT REPORTS [1995) 1 s.c.1i'. A (iii) possibility of obtaining water and electric supply for occupants · B c D of buildings to be put up on that land; · ' (iv) absence of statutory impediments or.