Holding

The Supreme Court upheld the High Court's valuation of Rs.240/sqm for non‑agricultural land and Rs.160/sqm for agricultural land, and held that separate compensation for godowns is not payable when rental‑value compensation is awarded.

Summary

The State of Gujarat acquired large tracts of agricultural and non‑agricultural land in three villages for the construction of a dam, leading to disputes over the compensation payable under Section 23 of the Land Acquisition Act, 1894. The appellants challenged the High Court’s awards, arguing that the market value of the land should be based on sale deeds and that separate compensation for godowns was required. The Supreme Court held that the market value must be determined by considering a host of positive and negative factors, including location, development, and potentiality, and affirmed the High Court’s rates of Rs.240 per square metre for non‑agricultural land and Rs.160 per square metre for agricultural land. It also ruled that where compensation is awarded on the basis of rental income, no separate payment for the land on which godowns stand is permissible. The Court remitted the matter to the Land Acquisition Officer to calculate the rental‑value compensation for the godowns. The appeals were disposed without any order as to costs.

Issues considered

The appropriate method for determining market value of land under Section 23 of the Land Acquisition Act, 1894, especially distinguishing agricultural from non‑agricultural land.
The relevance and admissibility of sale deeds as evidence under Section 51‑A of the Act.
Whether separate compensation should be paid for the land on which godowns are constructed when rental‑value compensation is awarded.
The impact of location, development, and potentiality on valuation of acquired land.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 23, s. 4, s. 51-A, s. 6

Subjects

land acquisitioncompensationmarket valueagricultural landnon‑agricultural landvaluationSection 23Section 51-Agodownsrental valuedam submergence

Judgment

[2009] 11 S.C.R. 523

DY. COLLECTOR, LAND ACQUISITION, GUJARAT & ANR. A
v.
MADHUBAI GOBARBHAI & ANR.
(Civil Appeal No. 204 of 2000)
JULY 29, 2009
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]

LAND ACQUISITION ACT, 1894:

s.23 - Acquisition of land that would submerge in river c
water in process of construction of a dam on the river -
Compensation - Computation of - Criteria for - Positive and
negative factors to be taken into consideration - Explained -
Exemplars considered - Market value of lands acquired
determined accordingly. D
~
s. 23 - Acquisition of land with construction -
Determination of compensation - HELD: For extent of land
on which godowns stand, separate compensation need not be
paid, when compensation based on rental value of godowns
is being paid - Land Acquisition Officer to calculate the E
compensation accordingly following the method adopted by
High Court.

Large tracts of agricultural and non-agricultural lands
situate on bo!h sides of river Thebi in three villages, F
namely, Amreli, Baxipure and Giriya in the State of Gujarat
were acquired under the Land Acquisition Act, 1894 as
the said area would sub-merge in water in the process
of construction of a dam on river Thebi. The area on
eastern bank of the river including the lands in village
G
Giriya :was developed whereas the area on the weste.rn
bank including the lands of villages Baxipura and Amreli
was under developed. A portion of the acquired land also
fell within municipal limit of Amreli town. Compensation
523 H
524 SUPREME COURT REPORTS [2009] 11 S.C.R.

-
A was awarded to land owners at different rates according
to the lands falling in different groups. For fands covered
under Group I, compensation was awarded at the rate of
Rs.75/- per sq. mtr. for the lands falling in Group II, the
Special Land Acquisition Officer awarded compensation
B at the rate of Rs.12/- per sq. mtr. for 'Baayat' land, Rs.8/-
per sq. mtr. for 'Jirayat' land, and Rs.50/- per sq. mtr. For
non-agricultural land. The reference court awarded
compensation at uniform rate of Rs.400/- per sq. mtr. The
High Court maintained the compensation for non-
e agricultural land, but reduced it to Rs.300/- per sq. mtr.
for agricultural land. For the lands of Group Ill, the Land
Acquisition Officer awarded compensation at Rs.50/- per
sq. mtr. for agricultural land, and Rs.150/- for non-
agricultural land. The reference court enhanced
compensation to Rs.160/- per sq. mtr. for agricultural
0
land, and Rs.240/- for non-agricultural land. The High
Court confirmed the order.

Disposing of the appeals, the Court

E HELD: 1.1. Determining the market value of the land
acquired would depend upon a large number of positive
and negative factors. Criteria for determinatio'1 of the
market value of the agricultural land and homestead land
may be different. Amount of consideration mentioned in
F a deed of sale executed in respect of similarly situated
land near about the date of issuance of acquisition
notification is also a relevant factor. In the absence of any
such exemplars the market value can be determined on
yield basis or in case of an orchard on the basis of
G number of fruit bearing trees. [Para 24 and 25] [543-G, H;
544-D]

Viluben Jha/ejar Contractor vs. State of Gujarat (2005)
4 sec 789, relied on.

H
-l DY. COLLECTOR, LAND ACQUISITION, GUJARAT &
ANR. v. MADHUBAI GOBARBHAI & ANR.
525

Group I A

1.2. In view of the Constitution Bench decision* an
application filed by the appellant for placing additional
documents on record was allowed by this Court's order
dated 23.10.2008. Therefore, the said transactions as well 8
would be taken into consideration. [Para 23] [543-F]

*Cement Corporation of India Ltd. etc. etc. v. Purya and
others etc. etc. (2004) 8 SCC 270; P. Ram Reddy and Ors.
Vs. Land, Acuisition Officer, Hyderabad Urban Development
Authority, Hyderabad and Ors. (1995) 2 SCC 305; Ranvir C
Singh and another v. Union of India (2005) 12 sec 59 and
Land Acquisition Officer & Manda/ Revenue Officer v. V.
Narasaiah (2001) 3 SCC 530, relied on .
. '

1.3. In the instant matters, the High Court mixed up o
the awards made in respect of the lands situated on the
eastern side of the River with that of the western side.
Admittedly, there was no development on the western
side of the river. There was no railway line connecting the
village with any big city nor was there any State highway E
passing through the area. It has also not been shown
that two crops were grown in the land. The High Court
proceeded on the basis that although the acquired lands
were situated on one side of the river, in view of the fact
that entire acquired land was to be submerged, no
F
justification can be made in regard to the nature of the
land. The High Court erred in holding that distance of a
few kilo meteFs from the Amreli town would not matter.
The High Court furthermore opined that the lands in
village Baxipura were also fertile and thus no
discrimination can be made. [Para 32,36 and 40-41] [549- G
G; 548-8, C, D; 550-F, G]

1.5. The variation in the price of the land within a few
years is a matter of great significance. It is true that no
single factor would be decisive for the purpose of arriving H
526 SUPREME COURT REPORTS (2009] 11 S.C.R.
-
A at the market value of the land. But in a case of this
nature a holistic view is required to be taken. It is wholly
improper to ignore the distinction between the
agricultural land and the non-agricultural land. Even in
the same area, value of the agricultural land and the non-
B agricultural land may be considerably different. For the
said purpose, existence of the road, railway station,
airport, schools, colleges, hospitals etc. play an
important role. It is not a case where developed area and
undeveloped area or for that matter non-agricultural and
c agricultural lands are merely divided by a road. It is also
not a case where the entire area is known and treated to
be one and the same, although a part of it may be
governed by the Panchyat and the other part comes
within a municipal area. It stands admitted that the
acquired land for all intent and purport is divided into two
0
parts. The eastern part and only a small part of the
western side is within the municipal area, and the other,
consisting of agricultural lands, is outside the municipal
area. It furthermore, stands admitted that the town has
developed only on eastern side of the river and
E agricultural lands are situated on the western side in
which there is even no residential house. In a case of this
nature, indisputably different criteria and norms are
required to be adopted for determination of the market
value. [Para 42 and 43] [551-A-F]
F
Union of India v. Pramod Gupta (2005) 12 SCC 1; Ranvir
Singh v. Union of India, (2005) 12 SCC 59; Karimbanakkal
Sulaiman (Dead) by L.Rs. v. Special Tahsildarfor K.A.K.P.l.P.
(2004) 13 SCC 643; Viluben Jhalejar Contractor v. State of
G Gujarat, (2005) 4 SCC 789; Basant Kumar v. Union of India
(1996) 11 SCC 542; Satish and Ors. vs. State of U.P. and
Ors. (2009) 9 SCALE 632 and National Thermal Power
Corporation Ltd. vs. Mahesh Dutta & Ors. (2009) 9 SCALE
591, referred to.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 527
ANR. v. MADHUBAI GOBARBHAI & ANR.

1.6. It has categorically been held by this Court that A
ordinarily the entire village should not be treated as one
.. unit as 'even in the same village, no two lands command
I
the same market value' as potentially, the fact that land
abutting a National Highway or road would command a
higher market value vis-a-vis the land which is not so B
situated. Potential development and/or likelihood of
development are also the factors which have been
considered to be relevant. Building potentiality of the land
,.
acquired would also be. a relevant consideration.
However, the purpose for which the land is sought to be c
acquired would also assume some significance. [Para
46,47,51 and 52] [555-D, F; 557-D, E]

Kanwar Singh v. Union of India (1998) 8 SCC 136 and
State of Maharashtra v. Basantibai Mohan/al Khetan (1986)
2 sec 516, referred to. D

1.7. The lands in question are purely agricultural
lands. There were no buildings; there was no residential
-t'
use; there was no factory. No development had taken
pla~e-1'1or was any development expected in immediate E
future. The lands were acquired only for the purpose of
submergence. It had thus even no building potentiality.
In view of the materials brought on record including the
various sale deeds as exemplars, the valuation of the
land should be determined at Rs.50/- (Rupees Fifty only) F
per square meter. [Para 54-55) [557-F, G]

GROUP- II

3.1. The observations made by reference court
regarding price rise due to inflation were wholly G
irrelevant. The reference court should sit in the arm chair
of a willing and prudent purchaser and put a question to
·" himself as to whether he would offer the same price
sought to be awarded for the said land. Besides, the value
of agricultural lands could not haye been compared with H
528 SUPREME COURT REPORTS [2009] 11 S.C.R.

A the value of non-agricultural lands, only because some
witnesses stated that there was a potentiality of the said
land becoming a developed one. [Para 66 and 71] [569-
D; 570-D]

3.2. The price variation and the market value shown
B
in the two different categories of the land, in the sale
transactions relied upon by the claimants, is significant.
The price variation between agricultural land and non-
agricultural land almost during the same period also is
of some significance. It is furthermore of some interest
c to note that within a short period of time, the price of the
land shot up and that too immediately after the process
of acquisition of land had started. It is furthermore
important to note that there existed a significant price
variation even in regard to the lands situated on Survey
D No. 89. which appears to be a very big plot. [Para 76 and
77] [573-D, E]

3.3. There cannot be any doubt that different
..
potentiality of land in different villages and even in f-

E diffetent parts of the same village would be existing. It
was therefore not proper for the High Court to treat all
types of lands situated even in different villages as
pertaining to a comparable category. This Court has
deprecated the practice of awarding compensation on the
F basis of an award made in regard to a neighbouring land.
It is, however, also true that the court is bound to take
into ·consideration the potentiality of the land. [Para 78
and 80] [573-G; 574-C]

Kanwar Singh & Ors. vs. Union of India (1998) 8 SCC
G 136; Basant Kumar v. Union of India (1996) 11 SCC 542;
Raghubans Narain Singh v. The Uttar Pradesh Government
Through Collector of Bijnor 1967 (1) SCR 489 and Mahabir
Prasad Santuka and Ors. v. Collector, Cuttack and Ors [(1987)
1 sec 587, referred to.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 529
ANR. v. MADHUBAI GOBARBHAI & ANR.

l 3.5. So far as deeds of sale pertaining to the years A
1988 and 1989 are 'concerned, the same were executed
more than three years prior to the date of .icquisition.
However, in respect of the deeds of sale pertaining to
Survey No. 89, in view of the under-valuation of the lands
sold, the Collector fixed the same at the rate of Rs.125/- B
per sq. mtr. Furthermore, the Collector himself has fixed
the premium of Rs.300/- per sq. mtr. for conversion from
agricultural land to non-agricultural land. Although the
same by itself would not be a safe criterion for
determining the market value, both of them may form the c
basis for arriving at a reasonable conclusion. [Para 81]
[575-C-E]

3.6. The distance of the lands sought to be acquired
apart from other factors from the Highway also plays an
important role. Evidence has been brought on record to D
I show that some lands, which are the subject matter of the
~

sale deeds on which reliance has been placed by the
claimants, are situated at a distance of 1.5 to 4 kms from
the Highway. In that view of the matter, it would be safe
to arr!ve at the market value as on the date of acquisition E
for the non-agricultural lands at Rs.250/- per sq. mtr. So
far as the agricultural lands are concerned, even if they
had the potentiality of being converted into a non-
agricultural lands as on the date of notification, they were
agricultural lands albeit in a developed area. The F
valuation thereof may be determined at 50% of the
developed land, that is, at Rs. 125/- per sq. mtr. [Para 82
and 83] [575-F-H; 576-A]

GROUP Ill
G
4.1. The reference court proceeded on the basis that
..,, the market value of the land situated in the municipal area
" was Rs.485/- per square meter at the time of acquisition
and, thus, the lands in question being outside the
municipal area, the market value thereof should be H
530 SUPREME COURT REPORTS [2009] 11 S.C.R.

A deducted by 50%, i.e., Rs.2401- per square meter. For
determining the value of agricultural land further one- f
third has been deducted. [Para 99] [584-G-H; 585-A-B]

4.2. Keeping in view the ratio laid down in the
8 decisions of this Court* as also the materials placed on
record, the amount of compensation for the lands
acquired in this matter arrived at by the High Court, that
is, Rs.2401- per sq. mtr. for non-agricultural land and
Rs.1601- sq. mtr for agricultural land does not warrant any
C interference. The High Court, in this regard, has adopted
the correct approach particularly in view of the fact that
the lands in question are not only situated within a
developed area but being situated near Aerodrome,
Schools, Hospitals, etc. the market value thereof could
not havs been determined at a lesser rate. [Para 102] [586-
D C-F]

*Administrator General of West Bengal v. Collector,
Varanasi AIR 1988 SC 943, relied on. '
E 5.1. As regards the amount payable for acquisition of
21 godowns and the land, out of the total area of 4250
sq. mtrs of land, 2972 sq. mtrs. is agricultural land and
1278 sq. mtrs. is non-agricultural land on which the
godowns have been constructed. Commercial
complexes were constructed on it in the year 1984. The
F amount of rent of the godowns has been brought on
record. The respondents have claimed compensation
under various heads, namely, price of the land, loss
suffered due to recovery of rent for 2 years of godowns,
loss for construction for deep-well, watchman quarter,
G etc. [Para 103 and 104] [586-F-G; 587-A]

5.2. For the extent of land on which the godowns
stand, separate compensation need not be paid when
compensation with respect to rental income is being paid
H for the godowns. The High Court has granted
' -
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 531
ANR. v. MADHUBAI GOBARBHAI & ANR.

~ compensation, inter alia, applying the multiplier of 10 over A
the annual income. The approach of the High Court is
correct. [Para 107] [587-E-G]

Ratan Kumar Tandon & Ors. vs. State of U.P. (1997) 2
sec 161; Airports Authority of India v. Satyagopal Roy and B
Ors. (2002) 3 sec 527; Assistant Commissioner-cum-Land
Acquisition Officer, Bellary vs. S. T. Pompanna Setty (2005)
9 SCC 662; Addi. Special Land .Acquisition Officer vs.
Yamanappa Basalingappa Cha/wadi (1994) 3 SCC 323;
State of Kera/a vs. P.P. Hassan Kaya AIR 1968 SC 1201;
and Special Land Acquisition Officer, Kalinadai (Hydro- C
Electric) Project, Dandali, Ultra Kannada District v. Vasant
Gundu Bale 1995 Supp (4) SCC 649, referred to.

5.3. However, keeping in view the ratio of the
decisions of this Court and the facts of the case, the D
decision of the High Court is modified by excluding the
payment of separate amount of compensation for the
1278 sq. mtrs. of non-agricultural land in which the 21
Godowns have been constructed and market value for
these godowns would be calculated on the rental value. E
Thus, whereas the market value of the land would be
determined at Rs.240/- per square feet, the lands on which
the godowns have been constructed, the amount of
compensation shall be calculated at the rental value
thereof by following the method adopted by the High ,....
r
Court. For the said purpose, the matter is remitted to the
Land Acquisition Officer. [Para 113) [589-F-H; 590-A]
Case Law Reference:
1995 Supp. (2) SC 168 relied on para 14 G
(1995) 2 sec 305 relied on para 22
(2001) 3 sec 530 relied on para 22

H
532 SUPREME COURT REPORTS [2009] 11 S.C.R.

A (2004) 8 sec 210 relied on para 22 '
'
(2005) 12 sec 59 relied on para 22
(2005) 4 sec 789 relied on para 25

(2005) 12 sec 1 referred to para 45
B
(2004) 13 sec 643 referred to para 45

(1996) 11 sec 542 referred to para 45

(1996) 11 sec 542 referred to para 45 •
c
(1998) 8 sec 136 referred to para 47

(1986) 2 sec 516 referred to para 49

(2009) 9 SCALE 632 referred to para 50
D (2009) 9 SCALE 591 referred to para 50

1967 (1) SCR 489 referred to para 80

(1987) 1 sec 587 referred to para 80

E AIR 1988 SC 943 relied on para 101

(1997) 2 sec 161 referred to para 106

(2002)3SCC527 referred to para 108

(2005) 9 sec 662 referred to para 109 ,..
F
(1994) 3 sec 323 referred to para 110
AIR 1968 SC 1201 referred to para 111
1995 Supp (4) SCC 649 referred to para 112
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 204
of 2000.

From the Judgment & Order dated 23.02.1998 of the High
Court of Gujrat at Ahmedabad in First Appeal No. 3119of1997.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 533
ANR. v. MADHUBAI GOBARBHAI & ANR.

WITH A

C.A. Nos. 213. 214-219, 205-212, 221-324, 325-331, ·
4090, 4091 of 2000 & 2973-2978 of 2001.

S.N. Shelati, Yashank Adhyaru, Dinesh Dwivedi,
Hemantika Wahi, L.R. Pujari, Pinky, Somanath and Kirti Renu 8
Mishra for the Appellants.

Ramesh P. Bhatt, Sunil Kr. Gupta, Sirish Amin, Dattatray
Vyas, Manish Sharma, Chirag, M. Shroff, Saroj Raichura, H.A.
Raichura, Mukesh Kumar Singh, Dr. Manish Singhvi, Atul Jha, C
Vikash Kr. Pankaj, Dharmendra Kumar Sinha, Sakesh Kumar,
Rameshwar Prasad Goyal for the Respondents.

The Judgment of the Court was delivered by

S.B. SINHA, J. 1. These appeals involving common D
questions of law and fact were taken up for hearing together
-t and are being disposed of by this common judgment.

2. The State of Gujarat issued diverse notifications for
acquisition of a huge tract of lands for construction of a dam E
over a river known as 'Thebi'. The lands sought to be acquired
were spread over in three villages, namely, Amreli, Baxipur and
Giriya. Whereas villages Amreli and Baxipur are situated on
the western side of river and within the municipal limit of the
town of Amerli; village Giriya is on the eastern bank thereof and
F
outside the municipal limit of the said town Amreli.

3. Amreli is the headquarters of the District Amreli. It is a
well developed town. A National Highway known as "Amreli -
Chittal Road" passes through the town of Amreli.
G
4. The residents of the town enjoy the facilities of
transportation, hospitals, schools, colleges,_telephone, etc. It is,
"" however, admitted that the entire development has taken place
on the eastern bank of the river and not on the western bank.
The villages situate on the western bank, however, admittedly H
534 SUPREME COURT REPORTS [2009] 11 S.C.R.

A are wholly undeveloped. The lands under acquisition are •
. agricultural lands. The land upon acquisition were to be
submerged under water.

5. The Land Acquisition Officer made three different
awards for three different villages.
8
6. For agricultural lands situate in village Baxipur, which
are the subject matters of judgment and order dated
23.02.1998 passed in F.A. No. 3119/1997 and F.A. No. 3120/
1997 and judgment and order dated 4.5.1999 passed in F.A.
C Nos. 6184-6203/1995 and other connected appeals,
compensation was awarded at the rate of Rs.75/- per square
meter.

7. Out of 350 land owners, however, only 156 land owners
0 filed applications for reference before the Collector in terms of
Section 18 of the Land Acquisition Act, 1894 (hereinafter
referred to as, "the said Act").

8. The Reference Court awarded compensation
calculating the market value thereof at the rate of Rs. 75/- per
E square meter in respect of lands situate in Baxipur village
(western side of river Thebi), Giriya village (eastern side of river
Thebi) and Amreli village (western side of river Thebi). So far
as the lands situate within the Amreli town, which is within the
municipal area and situate on the eastern side of the river
F comprising of residential and commercial area which was
developed since 1984, are concerned; the Land Acquisition
Officer awarded compensation at the rate of Rs.50/- per square
meter in respect of agricultural lands, but the Reference Court
and the High Court awarded compensation at the rate of
G Rs.160/- per square meter of land. For the same area in
respect of non-agricultural lands, the Land Acquisition Officer
awarded compensation at the rate of Rs.150/- per square
meter whereas the Reference Court as also the High Court
awarded compensation at the rate of Rs.240/- per square
H meter.
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 535
ANR. v. MADHUBAI GOBARBHAI &ANR. [S.B. SINHA, J.]
"'
9. So far as acquisition of lands which are subject matter A
of C.A. No. 325-331/2000, situated in village Giriya are
concerned; whereas the Land Acquisition Officer awarded
compensation at the rate of Rs.12/- per square meter in
respect of agricultural lands and Rs. 50/- per square meter in
respect of non-agricultural lands, the Reference Court awarded B
compensation for both categories of land at the rate of Rs.400/
- per square meter, the High Court, however, while upholding
> the said amount of compensation in respect of non-agricultural
lands reduced the amount of compensation to Rs.300/- per
square meter for agricultural lands. c
10. Aggrieved by and dissatisfied with the aforementioned
judgments, the State of Gujarat is before us. An appeal has also
been filed by some of the claimants owning non-agricultural
lands and raised constructions for use of the same as godown.
D
. 11. We may deal with the relevant facts and submissions
made before us in each group separately.

GROUP -1

12. With a view to appreciate the rival contentions of the E·
parties, we may notice heretobelow the number of matters and
the other relevant facts for our purpose which are involved in
Group -I wherein compensation has been awarded at the rate
""' of Rs. 75/- per square meter
F
Group Total C.A. No. F.A. No. Notification Date
No. matters Section 4 <i
dated Judgment

1 1 204/2000 3119/1997 5.6.1993 23.2.1998 G
2 ·1 213/2000 3120/997 17.9.1992 23.2.1998
3 20 221-240/2000 6184- 15.3.1990 4.5.1999
6203/1995
2 241-242/2000 5289- 15.3.1990 4.5.1999
5290/1996 H
536 SUPREME COURT REPORTS [2009] 11 S.C.R.

A 7 243-249/2000 269- 15.3.1990 4.5.1999
275/1997
11 250-260/2000 910- 15.3.1990 4.5.1999
920/1996
34 261-294/2000 1017- 15.3.1990 4.5.1999
B 1050/1996
7 295-301/2000 7-13/1997 20.9.1990 4.5.1999
2 302-303/2000 2358- 15.3.1990 4.5.1999
2359/1997
15 304-318/2000 1880- 10.12.1992 4.5.1999
c 1894/1997
6 319-324/2000 2061- 10.12.1992 4.5.1999
2066/1997
4 1 4090/2000 2546/1997 15.3.1990 4.5.1999
5 1 4091/2000 1166/1997 8.8.1990 4.5.1999
D
13. We may, at the outset, also notice that the Reference .,.
Court and High Court refused to take into consideration a large
number of deeds of sale (Exh. 86 to 100) produced by the State
inter alia relying on or on the basis of the decision of this Court
E in P. Ram Reddy and Ors. v. Land Acquisition Officer,
Hyderabad Urban Development Authority, Hyderabad and
Ors (1995) 2 sec 305, the same were not admissible in
evidence. As for the purpose of proving the same, neither the
vendor nor the vendee in respect of the said deeds of sale had
F been examined. An application for adduction of additional
evidence filed before us has been allowed.

14. Mr. S.N. Shelati, learned Senior Counsel appearing on
behalf of the State would submit:

G (i) The. Reference Court and the High Court committed
a serious error in not exhibiting true copies of the
Sale Deed (Exhs. 86 to 100) in view of the decision •
of this Court in P. Ram Reddy and Ors. v. Land
Acquisition Officer, Hyderabad Urban
Development Authority, Hyderabad and Ors.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 537
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]
•
(1995) 2 SCC 305 having been overruled in Land A
Acquisition Officer and Manda/ Revenue Officer
v. V. V. Narasaiah [(2001) 3 SCC 530] and
Cement Corporation of India v. Purya & ors.
[(2004) 8 SCC 270]. Cement Corporation has also
been followed by this Court in Ranvirsingh v. Union B
of India (2005) 12 sec 59.

. (ii) The Reference Court and the High Court awarded
a grossly high value towards compensation of the
acquired lands by misapplying the principle of
valuation and adopting a wrong method of valuation
c
and thus, committed a manifest error.

(iii) While making the award, the Reference Court as
also the High Court failed to take into consideration
the fact that the lands of village Baxipur being D
. situated on western bank of river Thebi far from
village Amreli as also the fact that geographic
condition of the eastern bank of river Thebi is
absolutely different vis-a-vis the lands situated on
the western bank. Whereas the lands situated on E
the eastern bank are mostly converted into non-
agricultural lands; the lands situated on the western
bank of river Thebi are only agricultural lands and
in that view of the matter it is impermissible in law
to compare the lands situated on the western bank F
of the river with those on the eastern bank
particularly when even no residential premises
have been constructed thereon. The lands situated
on the western bank of the river Thebi having not
been converted into non-agriculture land and there
G
being hardly any scope for any devel9pment and
furthermore in view of the purpose for which
acquisition has been made, namely, submergence
of the land under water, the Reference Court as
also the High Court must be held to have committed
H
538 SUPREME COURT REPORTS [2009] 11 S.C.R.

A a serious error in comparing the lands with
agricultural lands situated on the western bank with
the non-agricultural lands situated on the eastern
bank of the river Thebi.

(iv) The Land Acquisition Officer having considered the
B
comparable sales of agricultural lands both on the
western bank and eastern bank as also sale of
non-agricultural lands and having awarded
compensation at the rate of Rs.350/- per Are for
Jirayat and Rs.500/- per Are for irrigated lands and,
c .thus, having considered all relevant factors, the
same should not have been interfered with by the
Reference Court as well as by the High Court.

(v) There being no reliable evidence of comparable
D instances or to show the actual yield from the land
and, thus, the land holders having not been able to
discharge the burden of proof, the amount of
compensation awarded by the Land Acquisition
Officer should be held to have been fair and
E adequate in view of the decisions of this Court in
Special Land Acquisition Officer vs. Sidappa
Tumari [1995 Supp. (2) SC 168 (Para 22).

(vi) The Reference Court and consequently the High
Court without any material on record awarded >
F compensation at the rate of Rs.75/- per square
meter in respect of agricultural lands which
admittedly are situated in an undeveloped area and,
thus, committed a serious error of law.

G (vii) The Reference Court ought not to have disregarded
the distance between the "Amreli - Chittal Road"
and the village in question which is 1.5 kilometers
to 2 kilometers and, thus, committed a serious error
in relying upon the sale instances being Exhs.35 to
H 40 which were in respect of the lands adjacent to
- ~
DY. COLLECTOR, LAND ACQUISITION, GUJARAT &
ANR. v. MADHUBAI G03ARBHAI & ANR. [S.S. SINHA, J.]
539

"Amreli - Chittal Road" for the purpose of holding A
that the amount of compensation awarded by the
Land Acquisition Officer was unjustified.

(viii) Ignoring the distance of 1.5 to 2 kilometers (holding
it to be of not much consequence by the High Court)
B
for the purpose of ascertaining the true market value
of the land situated in an undeveloped area was
wholly erroneous particularly in view of the fact that
the witnesses examined on behalf of the
respondents categorically stated that there was no
likelihood that the said area would be developed
c
in future.

(ix) The High Court furthermore should not have failed
to take into consideration the evidence of
Jerambhai Devsinhbhai (Exh. 12) who had D
categorically admitted that except Oil Mills there
was no other industry in village Amreli and there
was neither any State High Way passing through
the said village nor there was any railway
connection. Even witness Bhagvandas had E
admitted that between the dam and Pratappura
area there were no residential houses. Similarly
witness Bharatbhai K.Mehta had admitted that he
had purchased the land for his own purpose, namely
professional and residential purpose. F
(x) The Reference Court as also the High Court should
not have relied upon the valuation report proved by
Bhikhabhai Rami who in no uncertain terms had
admitted that he had not seen any document in
respect of surrounding lands and furthermore had G
'
not taken into consideration the deeds of sale
... mentioned in the award and moreover there was
neither any road facility available nor any residential
house could 'be traced out and there was no
possibility of any industrial development also on the H
540 SUPREME COURT REPORTS [2009] 11 S.C.R.
'
•
A western side of the river.

(xi) The Reference Court as also the High Court
committed a serious error insofar as they failed to
take into consideration that the land owners failed
to discharge their burden to show that the land in
B
question had any potentiality of development.

15. Mr. R.P. Bhatt learned Senior Counsel appearing on
1
behalf of the respondents, on the other hand, would submit:

c i. As upon perusal of the award made by the Land
Acquisition Officer itself it would be evident that the
entire area is a developed one and the land owners
were progressive farmers, no infirmity can be said
to have been committed in comparing non-
D agricultural lands with agricultural lands particularly
when in respect of the lands situated in one area
he had granted compensation at the rate of Rs.50/
•
- per square meter, there was absolutely no reason
as to why the award at the rate of Rs.3.50 per
square meter for non-irrigated lands and Rs.5/- per
E
square meter for the irrigated lands should be
awarded.

ii. For determining a just and fair amount of
compensation, no sole decisive factor existed and
F each case was required to be considered on its
own merit. However, when such determination can
be made upon applying more than one factor, the
appellate court should not have interfered therewith
even if another view was possible.
G
iii. Location of a land although material keeping in view
the fact that for all intent and purpose all the three "
villages are part of one town, only because a part
of the acquired land is situated at a distance of 1.5
to 2 kilometers, the sale instances in respect of
H
: DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 541
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]
developed area can be applied subject of course A
to such deduction as is applicable in respect
thereof.

16. Notifications for acquisition of different parcels of land
were issued on diverse dates. B
17. Indisputably the purpose of acquisition was construction
of a dam over river Thebi. The lands acquired are situated in
three villages. Nature of lands acquired was both agricultural
and non-agricultural. Some are situated in the urban area which
were well developed and some were not completely developed C
and mainly agricultural lands.

18. The lands at Baxipur which are non-agricultural lands
and situate on the Western bank of river Thebi, indisputably
were agricultural lands. The purpose for their acquisition was D
that the said lands would be submerged in water.

19. It is also not in dispute that various parts of the village
Giriya and Amreli are within the municipal limits while only a
portion of the lands situate in village Baxipur is within the
municipal limit. E

20. The parties hereto in support of their respective cases
relied upon a large number of documents including deeds of
sale. A large number of witnesses including some experts were
examined in the matters. F
21. We have noticed hereinbefore the reasonings of the
Land Acquisition Collector; the Reference Judge as also the
High Court for arriving at their respective opinions.

22. The learned Reference Judge, however, rejected the G
deeds of sale produced by the acquiring authority inter alia on
the premise that to prove the same neither, vendor or the
vendee thereof had been examined. For the said purpose, it
relied upon a decision of this Court in P. Ram Reddi v. Land
Acquisition Officer, (Supra). The said decision of this Court, H
542 SUPREME COURT REPORTS [2009] 11 S.C.R.

..
A however, has since been reversed inter alia by a Three Judge
Bench of this Court in Land Acquisition Officer & Manda/
Revenue Officer v. V. Narasaiah, [ (2001) 3 SCC 530 ]. Later,
a Constitution Bench of this Court in Cement Corporation of
India Ltd. etc. etc. v. Purya and others etc. etc., [ (2004) 8 SCC
B 270 ], while interpreting Section 51-A of the Act opined that the
said provision seeks to make an exception in regard to proving
of sale deeds stating :-

"25. Section 51-A of the Land Acquisition Act seeks
to make an exception to the aforementioned rule.
c
26. In the acquisition proceedings, sale deeds are
required to be brought on record for the purpose of
determining market value payable to the owner of the land
when it is sought to be acquired.
D
27. Although by reason of the aforementioned
provision the parties are free to produce original
documents and prove the same in accordance with the
terms of the rules of evidence as envisaged under the
Indian Evidence Act, the LA Act provides for an alternative
E
thereto by inserting the said provision in terms whereof the
certified copies which are otherwise secondary evidence
may be brought on record evidencing a transaction. Such
transactions in terms of the aforementioned provision may
be accepted in evidence. Acceptance of an evidence is
F not a term of art. It has an etymological meaning. It
envisages exercise of judicial mind to the materials on
record. Acceptance of evidence by a court would be
dependent upon the facts of the case and other relevant
factors. A piece of evidence in a given situation may be
G accepted by a court of law but in another it may not be.

28. Secticn 51-A of the LA Act may be read literally and
.
having regard to the ordinary meaning which can be
attributed to the term "acceptance of evidence" relating to
H transaction evidenced by a sale deed, its admissibility in
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 543
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

evidente would be beyond any question. We are not A
oblivious of the fact that only by bringing a documentary
evidence in the record it is not automatically brought on
the record. For bringing a documentary evidence on the
record, the same must not only be admissible but the
contents thereof must be proved in accordance with law. B
But when the statute enables a court to accept a sale deed
on the records evidencing a transaction, nothing further is
required to be ,done. The admissibility of a certified copy
• of sale deed by·itself could not be held to be inadmissible
as thereby a secondary evidence has been brought on c
record without proving the absence of primary evidence.
Even the vendor or vendee thereof is not required to
examine themselves for proving the contents thereof.This,
however, would not mean that the contents of the
transaction as evidenced by the registered sale deed 0
would automatically be accepted. The legislature advisedly
has used the word "may". A dis_9retion, therefore, has been
conferred upon a court to be exercised judicially i.e. upon
taking into consideration the relevant factors.
'
(See also Ranvir Singh and another v. Union of India, E
[(2005) 12 sec 59 J. -
23. In view of the aforementioned Constitution Bench
decision we allowed an application filed by the appellant for
placing additional documents on record by our order dated F
23.10.2008. We, therefore, are required to take into
consideration the said transactions as well.

24. The core question which arises for our consideration
is what principles should be applied for determining the market
value of the land. It is now a well settled principle of law that G
the determination of the market value of the land acquired,
indisputably would depend upon a large number of factors,
nature and quality of the lands is one of them. The norms which
are required to be applied for determination of the market value
of the agricultural land and homestead land may be different H
544 SUPREME COURT REPORTS [2009] 11 S.C.R.

A In given cases location of land and in particular, closeness
thereof from any road or high-way would play an important role
for determination of the market value wherefor belting system
may in appropriate cases have to be resorted to. The position
of the land, particularly in rainy season, existence of any
B building etc. also plays an important role. A host of other factors
including development in and around the acquired land and/or
the potentiality of the development will have a bearing on
determination of the value of the land.

C 25. Determination of the market value of the land may also
depend upon the facts and circumstances of each case,
amongst them, however, would be the price of land, amount of
consideration mentioned in a deed of sale executed in respect
of similarly situated land near about the date of issuance of
Notification under Section 4( 1) of the Act ; in the absence of
D any such exemplars the market value can be determined on
yield basis or in case of an orchard on the basis of number of
fruit bearing trees. It is also well settled that for price '
determination purposes, the courts would be well advised to
consider the positive and negative factors, as has been laid
E down by this Court in Viluben Jhalejar Contractor vs. State of
Guj91.at [(2005) 4 sec 789]. namely :-

Positive factors Negative factors

(i) Smallness of size (i) Largeness of area ,
F
(ii) proximity to a road (ii) situation in the interior
at a distance from the
road

G (iii) frontage on a road (iii) narrow strip of land
with very small frontage
compared to depth

(iv) lower level requiring the
"'
(iv) Nearness to developed
area depressed portion to
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 545
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

depressed portion to be A
filled up

(v) regular shape (v) Remoteness from
developed locality

(vi) Level vis-a-vis land (vi) Some special B
under acquisition disadvantageous
factors which would
deter a purchaser

(vii) Special value for an c
owner of an adjoining
property to whom it
may have some very
special advantage.

26. The Reference Judge as also the High Court had D
proceeded to determine the market value inter alia relying upon
,. or on the basis of some deeds of sale ; valuation report; the
circular letter issued by the Collector in regard to premium
payable on conversion of land etc.
E
27. The Reference Court and the High Court while ign-C,ririg
the deeds of sale whereupon reliance was placed by the State,
for the reasons stated hereinbefore, principally relied upon a
few deeds of sale. We shall take notice of some of them,
.. namely, Exhibits 35, 36, 37, 38, 39 and 40. F
28. It will also be beneficial to consider some of the
documents upon which the State relied upon, they are Exhibits
86, 90 , 91 and 96.

29. Criticisms advanced on behalf of the State in respect G
of the deeds of sale whereupon the claimants relied are as
under.

i. Exhibit 35 pertain to a non agricultural resident plot
; construction thereon is only upto plinth level ; it is H
546 SUPREME COURT REPORTS [2009] 11 S.C.R.

A situated in a municipal area ; it a very small plot and
that is why it was not comparable.

ii. Exhibit 36 and 37 pertain to a non agricultural
residential plots of land. They are situated by the
B side of the highway and in the municipal area.

iii. Exhibit 38 relates to a non agricultural residential
plot, comes under earthen dams area. It is outside
the municipal area.

c iv. Exhibits 39 and 40 relate to non-agricultural
residential plots of land. They touch Amreli-Chittal-
Rajkot Highway and are in municipal area.

V. Bharatbhai, PW-7, purchaser of the land under
Exhibit 40, stated that the purchase of the plot by
D
him was for a special purpose, namely - i.e. for
professionai and residential purposes.

30. The Land Acquisition Officer in his Award noticed the
position and place of the land sought to be acquired in the
E following words:-

"Details of land to be acquired.

The lands of survey number 1007 to 1046 as shown at Sr.
No.1 to 28 of the statement of award are cultivable land •
F situated on west of Thebi river far away from Amreli, near
the limits of Baxipur. These land as shown in statement
Jirayat dry and Jirayat irrigated, which is black and fe11ile
giving 2 crops on monsoon and winter.

G The land proposed to be acquired is of old and new sharat.
Amreli town is the head quarter of Amreli District, is a
railway station, S.T. Buses are ravaging throughout the
year. The population of Am re Ii is near about 1, 10,000 which
consist mainly of Patel, Bania, Brahmins, Weavers etc who
H ·are progressive farmers. There are industries of oil mills,
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 547
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

land weaving etc." A

31. In the said Award, summary of sales of agricultural
lands was prepared, which read:-

"Summary of considerable sales of agricultural lands
B
Sales of western bank Sale of eastern bank

Survey Acres Date of Price of 1 Survey Acres Date of Sale
No. . sale 1 are · No. Sale 1 are

991 308 21/5/85 785-25 37/37/2 6.20 6/6/85 307-69
c
1063 2.38 13/12/85 381-00 29 0.24 23nt87 1041-66

949 2.28 15/4/87 426.00 33/AB 1.11 2/3/89 3882.35
D
1063 1.13 3/2/89 754-71 33/AB 1.10 3/3/89 3880.00

Looking to these sales of agricultural lands Rs.350/- for
Jirayat and Rs.5000/- for irrigated lands for 1 Are are
seems to be reasonable for the lands of Western b·ank of E
river Thebi. Looking of these sales and the rise in price of
land Rs.2000/- and Rs.3000/- for lands for 1 Are are
seems to be reasonable but the geographical copdition of
eastern bank is quite different as most of the land are
converted into non-agricultural lands and is either F
- populated or nearly populated area, is situated on Amreli,
Chittal State highway. Looking to all these factors it is not
possible to compare the land of western bank with land of
eastern bank. No lands are converted into non-agriculture
and then is no habitation in the western bank of river Thebi. G
Whilst there are many non-agriculture land and habitation
increases day by day. More over many lands of eastern
bank are converted into non-agriculture, which were
proposed to be acquired. Hence it seems neces§_ary to
discuss about sales of non-agricultural plotting too as the
H
548 SUPREME COURT REPORTS (2009) 11 S.C.R.

A land of eastern bank are situated on Amreli, Chittal, Rajkot
Highway and nearer to these and a statement of sales of
non-agricultural lands has been taken from the Kasba
Talati Amreli which is appending as statement number K-
2 Discussions of these sales are narrated here below."
B
32. Our attention was further drawn to the fact that
admittedly there was no development on the western side of
the river. Our attention has further been drawn to the evidence
of PW-1, Jerambhai. who is one of the claimants. He admitted
that in the village form, which he had produced, it has not been
C shown that two crops are grown and that he did not maintain
any account or balance sheet of the receipt of the crop grown.
He furthermore accepted that there was nc railway connecting
the village with any big city. It was also admitted that not any
State highway passes through Amreli and except oil mills, there
D were no other industries.

33. The claimants examined one of the experts, namely •
Bhikhubhai as PW-9, who admitted that he had examined
deeds of sale pertaining to residential land only and not
E pertaining to agricultural lands. He furthermore admitted that the
Land Acquisition Officer had taken into consideration figures
of five years' sale transactions in his Award. In his deposition
he stated:-

"(4) I know that Amreli is backward for Industrial purpose
F and as per my say Industrial Development has been
started. It is true that on the western side of river
nothing is there. Moreover for the purpose of going
towards west side, no road facility is available. As
per my say acquired land is residential purpose
G land. I have enquired from the town planning office.
It is true that" in this area no residential houses
traced out. In the year 1972, in Amereli town
planning has been endorsed and this fact I know
very well. The facts stated in column no.9 in Exh.
H
f
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 549
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.)

78, which is mentioned considering sale A
transaction."

34. On behalf of the State one Ramniklal was examined
as DW-1, He was a Deputy Executive Engineer (Thebi
Irrigation). He has not only deposed that the acquired land is B
situated outside the Amreli Municipality but according to him
they are situated at a distance of about 1 Yi km. - 2 km. from
Amreli-Chittal road. Whereas the residential area, according
to him, was on the eastern side, on the western side of the river
Tebi there was no residence. He further stated that no State
highway is passing through Amreli and also that railway is not
c
connected with big city.

35. Shri Kaushik who was·examined on behalf of the State
, as DW-2 and had been serving the State as a Deputy District
Development Officer, in his deposition admitted:- D

"I have awarded compensation at the rate of Rs.150/- per
sq. mt. for Agriculture land and which is likely to be
developed. The compensation awarded at the rate of
Rs.50/- per sq. mt. has been awarded fully and
E
compensation at the rate of Rs.150/- per sq. mt. has been
calculated after deducting price of road (way) in the case
of not taking possession road, then in such cases, I have
awarded compensation at the rate of Rs.1/- which is token
" and deduction of road was being deducted in such case
F
where possession of road has been handed over.
Generally for the purpose of converting land into not- ,
agriculture purpose, the claimant has to left (sic for leave)
40 to 43% land."

36. It appears that the High Court had mixed up the Awards G
made in respect of the lands situated on the Eastern side of
1he River with that of the Western Side.

37. We may now notice the deeds of sale whereupon the
State had relied upon.
H
550 SUPREME COURT REPORTS [2009] 11 S.C.R.

A 38. Ext. 86 is in respect of a deed of sale relating to Survey
No.991which is adjacent to Survey No.103-A in terms whereof
only 0. 77 per sq. meter of land was determined as the market
value. It was also placed on record that the vendor Lalubhai
Keshavbhai is one of the claimants before us. However, it
B appears from Ext. 90 which is a deed of sale dated 7th
January, 1987 relate to the land which is adjacent to Survey
•
No.999 K from a perusal whereof it appears that the market
value was Rs.1.85 per sq. mt. The subject matter of the said
deed of sale is the land situated near nana Ankadira village
c road near to the acquired land at the western side of the river.
39. Ext. 96 is the deed of sale dated 22nd June, 1989,
appertaining to Survey No. 1043 P; from a perusal whereof it
would appear that the market value of the land was Rs. 2.08
per sq. meter. Ext. 98 is the deed of sale dated 21st April, 1990
D which is in respect of Jiyarat land situated on the eastern side
of the river adjoining Amreli municipal area. The market value
of the same comes to Rs.8.41 per sq. met. Ext. 99 is a deed
of sale dated 27th September, 1990 appertaining to Survey
No.1047/1 and adjacent to Survey No.1031 & 1046 is t:3agayat
E land, which is stated to be situated near the acquired land on
the western side of the river and down stream of earthen dam,
the market value of which was Rs.2.50 per sq. met. .

40. The High Court, however, proceeded on the basis that
F although the acquired lands were situated on one side of the
river, in view of the fact that entire acquired land was to be
submerged, no justification can be made in regard to the nature
of the land. The High Court held (in our opinion wrongly) that
distance of a few kilo meters from the Amreli town would not
G matter.
•
41. The High Court furthermore opined that the lands in
village Baxipur were also fertile and thus no discrimination can
be made. For the said purposeihe High Court relied upon the
Awards made in the earlier case exhibited as Exhibits 68 and
I'
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 551
ANR. v. MADHUBAI GOBARBHAI &ANR. [S.B. SINHA, J.]

.. 73 in terms whereof compensation @ Rs.75/- per sq. meter A
.. was paid .

42. The variation in the price of the land within a few years
is a matter of great significance. It is true that no single factor
would be decisive for the purpose of arriving at the market value
B
of the land. But in a case of this nature a holistic view is
required to be taken. It is, in our opinion, wholly improper to
forget the distinction between the agricultural land and the non
agricultural land. Even in the same area, value of the agricultural
,. land and the non-agricultural land may be considerably different.
For the said purpose, existence of the road ; railway station ; c
airport; schools ; colleges ; hospitals etc. play an important role.
It is not a case where the developed area and the undeveloped
area or for that matter non agricultural and agricultural lands are
merely divided by a road. It is also not a case where the entire
area is known and treated to be one and the same, although a D
part of it may be governed by the Panchyat and the other part
comes within a municipal area. It stands admitted that the
acquired lands for all intent and purport is divided into two parts. /
The eastern part and only a small part of the western side is
within the municipal area and the other, consisting of agricultural E
lands, is outside the municipal area. It furthermore stands
admitted that the town has developed only on eastern side of
the' river and agricultural lands are situated on the western side
in which there is even no residential house.
F
43. In a case of this nature, indisputably different criterion
and norms are required to be adopted for determination of the
· market value.

44. Before us learned counsel for the parties have relied
upon a large number of decisions. We may notice some of G
them

45. This Court in Union of India v. Pramod Gupta, [ (2005)
. " 12 SCC 1 J, on the question of determination of market value
opined:- H
552 SUPREME COURT REPORTS (2009) 11 S.C.R.

A "24. While determining the amount of compensation
payable in respect of the lands acquired by the State, the
market value therefor indisputably has to be ascertained.
There exist different modes therefor.

25. The best method, as is well known, would be the
B
amount which a willing purchaser would pay to the owner
of the land. In absen9e of any direct evidence, the court,
however, may take recourse to various other known
methods. Evidences admissible therefor inter alia would •
be judgments and awards passed in respect of
c acquisitions of lands made in the same village and/or
neighbouring villages. Such a judgment and award, in the
absence of any other evidence like the deed of sale, report
of the expert and other relevant evidence would have only
evidentiary value.
D
26. Therefore, the contention that as'the Union of India was
a party to the said awards would not by itself be a ground
to invoke the principles of res judicata and/or estoppel.
Despite such awards it may be open to the Union of India
E to question the entitlement of the respondent claimants to
the amount of compensation and/or the statutory limitations
in respect thereof. It would also be open to it to raise other
contentions relying on or on the basis of other materials
brought on record. It was also open to the appellant to
F contend that the lands under acquisition are not similar to
the lands in respect whereof judgments have been
delivered. The area of the land, the nature thereof,
advantages and disadvantages occurring therein amongst
others would be relevant factors for determining the actual
market value of the property although such judgments/
G
aw?rds, if duly brought on record, as stated hereinbefor~.
would be admissible in evidence."

It was further opined :-

H "36. Yet again in Ras Behari Manda/ v. Raja Jagadish
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 553
ANR. v. MADHLJBAI GOBARBHAI & ANR. [S.B. SINHA, J.]
-1:
Chandra Deo Dhauba/ Deb the Patna High Court A
reiterated the presumption that the lessor retains all the
rights in mines and quarries. It also noticed the decision
of the House of Lords in Great Western R/y. Co. v.
Carpal/a United China Clay Co. Ltd.wherein a grant
reserving minerals was held to exclude a deposit of china B
clay despite the fact that the same was found near the
surface."
.. It was also held that:-

"8. In V. Hanumantha Reddy v. Land Acquisition Officer c
& Manda/ R. Officer the law is stated in the following terms:
(SCC p. 645, para 5)

"It is now a well-established principle of law that the
land abutting the national highway will fetch far more D
higher price than the land lying interior."

This Court further opined :-

"84. It is also trite to state that the market value of
agricultural land is lower than that of the land suitable for E
commercial purposes. (See Om Prakash v. Union of
India.)

It was further opined :-

"87. The courts will also have to take into consideration F
the enormity of the financial implication of enhancement in
view of the size of the land acquired for a particular
project.".
'
In Ranvir Singh v. Union of India, [(2005) 12 SCC 59], G
this Court opined as under :-
" "22. Concededly, the High Court in its impugned judgment
did not place any reliance whatsoever upon the sale
instances whereupon strong reliance has been placed by
H
554 SUPREME COURT REPORTS [2009) 11 S.C.R.

A the parties solely on the ground that neither the vendors ~

nor the vendees thereof had been examined as witnesses.
It has also not placed any reliance upon any other
judgment or award filed by the parties. The High Court
while arriving at the said finding evidently took into
-
B consideration the law as it then stood. The correctness of
the decisions wherein the aforementioned view had been
taken was doubted and the matter was referred to a larger
Bench."

Referring to Cement Corporation (supra), it was opined
c that the High Court was required to consider the deeds of sale
in their proper perspective for determining the market value of
the acquired land."

In Karimbanakkal Su/aiman (Dead) by L.Rs. v. Special
D Tahsildar for K.A.K.P.l.P., [(2004) 13 SCC 643], this Court
held:
~

"These factors have been taken into consideration by the
High Court in fixing the land value. Moreover, the land
acquired was agricultural land and it was acquired for the
E purpose of an irrigation project. There is nothing on record
to show that the land had any commercial value or future
potentialities. We do not think that the land value fixed is
too low to be interfered with by this Court."

F In Vi/uben Jha/ejar Contractor v. State of Gujarat, [(2005) •
4 SCC 789], this Court opined that :-

"24. The purpose for which acquisition is made is also a
relevant factor for determining the market value. In
Basavva v. Sp/. Land Acquisition Officer deduction to the
G
extent of 65% was made towards development charges.
"
~

In Basant Kumar v. Union of India, [ (1996) 11 SCC 542
], this Court has opined that even if the entire land is of one
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 555
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

_. village all the persons cannot be given same compensation, A
stating:-

".... It has been firmly settled law by beadroll of decisions
of this Court that the Judge determining the compensation
under Section 23(1) should sit in the armchair of a willing
prudent purchaser in an open market and see whether he
B
would offer the same amount proposed to be fixed as
market value as a willing and prudent buyer for the same
or similar land, i.e., land possessing all the advantageous
features and to the same extent. This test should always
be kept in view and answered affirmatively, taking into C
consideration all relevant facts and circumstances. If feats
of imagination are allowed to sway, he outsteps his
domain of judicial decision and lands in misconduct
amenable to disciplinary law... "
D
46. It has categorically been held that ordinarily the entire
village should not be treated as one unit as 'even in the same
village, no two lands command the same market value' as
potentially, the fact that land abutting a National Highway or
road would command a higher market value vis-a-vis the land E
situated at a location which is not so situated.

47. Potential development and/or likelihood of
development are also the factors which have been considered
to be relevant by this Court in Kanwar Singh v. Union of India,
[(1998) 8 SCC 136 ] observing:- F

"8. So far as the first argument that the appellants ought
to have been given the same rate of compensation which
was given to the claimants of the adjoining village is
concerned, the amount of compensation for the land G
acquired depends 011 the market value of land on the date
immediately before the notification under Section 4 of the
Act or when same land is acquired and offer of
compensation is made through an award. Whether such
an offer of compensation represents the market value of H
556 SUPREME COURT REPORTS [2009] 11 S.C.R.

A the land on the date of notification under Section 4 of the
..
Act, has to be determined on the basis of evidence
produced before the Court. The claimants have to prove
and demonstrate that the compensation offered by the
Collector is not adequate and the same does not reflect
B the true market value of the land on the date of notification
under Section 4 of the Act. This could only be done by the
claimants by adducing evidence to the effect that on the
relevant date, the market value of the land in question was
such at which the vendor and the vendee (buyer and seller)
•
were willing to sell or purchase the land. The consideration
c in terms of price received for land under bona fide
transactions on the date or preceding the date of
notification issued under Section 4 of the Act generally
shows the market value of the acquired land and the
market value of the acquired land to be assessed in terms
D of those transactions. Sale instances showing the price
fetched for similar land with similar advantages under bona
fide transaction of sale at or near about the issue of
notification under Section 4 of the Act is well recognized
to be the appropriate evidence for determining the market
E value of the acquired land."

48. It was opined that the amount of compensation should
not be awarded based on the market value of the land
determined for a neighbouring village.
F 49. In State of Maharashtra v. Basantibai Mohan/a/
Khetan, [(1986) 2 SCC 516] referring to capitalization method
for determining the value of the land, it was opined:

"... In order to appreciate this ground of objection, it is
G necessary to examine whether the classificatiot'! of the land
under the Act into the land in municipal area and the land
in rural area for purposes of determining the amount .
payable on acquisition is bad. It is not denied that the land
in municipal area commands various advantages which
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 557
ANR. l. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.)
... A
are not available in the case of land in rural areas."

50. Situation of the land and particularly the area in which
it is situated is indisputably a relevant factor. We, however, do
not mean to suggest that only because the land is situated within
the jurisdiction of a Gram Panchayat by itself would go to show B
that the value of the lands sought to be acquired cannot under
any circumstance be compared with the land situate within the
jurisdiction of municipality. There may be a case where the
... lands situated on one side of the road was within the Gaon
Sabha and the other side within the municipality. It is also not
a case where the area is known as one and the same area
c
although divided by a road and are under different jurisdictions.
{See also Satish & Ors. vs. State of U.P. & Ors. [(2009) 9
SCALE 632] and National Thermal Power Corporation Ltd. vs.
Mahesh Dutta & Ors. [(2009) 9 SCALE 591]}
D
51. It is furthermore beyond any doubt or dispute that
)
building potentiality of the land acquired would also be a relevant
consideration.

52. However, the purpose for which the land is sought to
E
be. acquired would also assume some significance.

53. It is on the aforementioned factual backdrop and legal
principles governing grant of compensation, the market value
k of the lands situate within Group-1 is required to be determined.
F
54. The lands are purely agricultural lands. There were no
buildings; there was no residential use; there was no factory.
No development had taken place nor was any development
expected in immediate future. The lands were acquired only for
the purpose of submergence. It had thus even no building G
potentiality.

" 55. We, therefore, are of the opinion that in view of the
materials brought on record, the valuation of the land should be
determined at Rs.50/- (Rupees Fifty only) per square meter.
H
558 SUPREME COURT REPORTS [2009] 11 S. C.R.

A GROUP- II

56. This batch of appeals (7 in all) relate to the claimants'
lands adjoining villages Giriya, Baxipura and limits of Amreli
town and the same are directed against the common judgment
and order dt. 4.5.1999 passed in First Appeal Nos. 989/98 to
8
995/98 arises out main Land Reference Case No. 1/96 with
consolidated Land Reference Cases Nos. 1/96 and 82/95 to
87/95 (7 in all) main Land Reference Case being No. 1/96. In
these cases, the Notification under Section 4 was published
in the daily news paper on 29.11.92 and 30.11.92, the same
C was notified in the Gazette on 10.12. 92 and was affixed at the
concerned places on 14.12.92 followed by Notification under
S. 6 published on 18.2.93 in the Gazette and in the news paper
on 20.2.93 and the same was affixed at the concerned places
on 24.2.93.
D
57. In Survey No. 89 of Village Giriya, lands of 153 la~
holders were acquired. The Special Land Acquisition Officer
published the Award on 23.2.95 awarding compensation at the
rate of Rs. 12/- per sq. mtr. (Rs. 1200/- per Are) for Bagayat
E land and Rs. 8/- per sq. mtr. (Rs. 800/- per Are) for Jirayat land
and Rs.50/- per sq. mtr. for non-agricultural land. Out of that 153
claimants, 132 claimants have not filed any reference under
~~ection 18 of the Act and accepted the award of Rs.50/- per
sq. mtr. awarded by the Land Acquisition Officer. Being
F aggrieved by and dissatisfied with the said Award, some of the
claimants applied for reference of their cases in terms of
Section 18 of the Act stating that they are entitled to
•
compensation at the rate of Rs. 1000/per sq. mtr. References
thereinto were made by the District Collector.

G 58. The Reference Court decided all these references by
its common order dt. 9.1.98 awarding compensation at the rate
of Rs. 400/- per sq.mt. with other benefits. The amount of
compensation in respect of agricultural lands was reduced to
Rs.300/- per square meter by the High Court while making a
H distinction between the agricultural lands and non-agricultural
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 559
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]

lands. A
59. Indisputably, there are 18 cases pending before the
Reference Court. In case of neghbouring non-agriculture Survey
No. 82 of village Giriya there were 23 claimants, 5 of them had
not prayed for reference under Section 18 of the-Act. Reference
8
Court awarded Rs.75/- per sq. mtr.. to 18 claimants and they
accepted the same.

60. In these cases the lands of the claimants are situated
adjoining the villages Giriya, Baxipura and limits of Amreli town.
Their lands have also been acquired for the 'THEBI IRRIGATION C
PROJECT'. On behalf of the claimants 7 witnesses were
examined and the Department had examined 3 witnesses. The
claimants' witness No. 1 Gunvantbhai Vallabhbhai has stated
that the land bearing S. No. 90/1 is situated on the eastern side
of Amreli Rajkot road and land S. No. 89 is also on the same o
direction touching the land of S. No. 90/1. According to this
witness, land bearing S. No. 91 is situated on the western side
of the road touching the road side. The lands of S. No .. 90/1
and 91 are situated on the east and west side of the said
Amreli-Rajkot Highway respectively and land S. No. 89 is also E-
on the eastern side touching the land of S.No. 91. The
ReferEl_nce Court referred to the Map (Exh. 39) and noted that
the land bearing S. No. 44 touches on its southern side the land
bearing S. No. 91 which is on the western side of the road and
land bearing S. No. 39 touches S. No. 43 being on the same
F
direction. The land of S. No. 39 pertains to 'Surya Garden' Hotel
and for which the District Collector has ordered to pay premium
@ Rs. 300/- per square meter for conversion thereof for use
as non-agricultural purposes from agricultural purposes. All
these three Survey Numbers are in the one line and on the
western _side of the Highway. According to the Geographic~! G
situation, on the other side of the road i.e. to say the eastern
, side of the road, the land bearing S. No. 51 is just opposite
the land of S. No. 39 and on the eastern side the land
earmarked for building an Aerodrome being S. No. 51; while
H
560 SUPREME COURT REPORTS [2009] 11 S.C.R.

A S. No. 44 touches the border of the Aerodrome land S. No. 51
..
going towards northern side of S. No. 44. The land of S. No.
91 is adjacent to it and at the same time on the western side
of S. No. 44 is S. No. 50 and S. No. 49 and the border of land
of S. No. 50 touches the land of S. No. 89 to some extent. Thus,
8 the lands bearing S. No. 39 and 51 ('Surya Garden" Hotel) and
lands of Aerodrome are situated respectively on the opposite
side of the Road. S. No. 4~ touches the border of the acquired
, land of S. No. 91. On the western side of S. No. 43, there are
lands of S. Nos. 41and42 and the land of S. No. 38 touches
C the southern side of S. No. 41. Thus the Geographical situation
of all these Survey Numbers show that these lands are around
the acquired land.

61. P.W. No. 1 Gunvantbhai Vallabhbhai deposed in
regard to the particulars of the same Survey Numbers around
D the acquired land. He has stated that the award for the land
bearing S. No. 43 is at the rate of Rs. 275/- per sq.mt.. S. No.
43 touches the border of the said Amreli-Rajkot road, which is
also clear from the Map Exh. 39. The land bearing S. No. 40
is, however, on the interior side of the road for which the amount
E of compensation awarded is at the rate of Rs. 70/- per sq.mt.
According to this witness, some other lands bearing S. Nos.
41, 43/5, 40/4, 43/2 and 43/4 were also acquired and for these
lands the Land Acquisition officer had awarded compensation
at the rate of Rs. 150/- per sq. mt. This witness furttiermore
F stated that the land of S. No. 39 touches the road and just
opposite to the land of the Aerodrome, where the "Surya
Garden" Hotel is situated and for this land the Town Planning
Department had also assessed the value at the rate of Rs. 217/
- vide letter dt. 16.10.92. He also stated that the land of S. No.
G 39 is a new tenure land and to convert this land for Non
Agriculture purposes the Collector, Amreli fixed the premium
of Rs. 300/- per sq. mtr. by a Circular letter dated 27.11.1992,
marked as Exh. 46. According to him, even in cases of some
.
other S. No. viz. S. No. 56, which is only 300 mis. away from
H the acquired land by a Registered Sale Deed No. 900 dt.
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 561
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]
~
11.5.92, land was sold out at the rate of Rs. 690/- per sq. mtr. A
and that lands being S. Nos. 34 and 4019, which are about 200
meters from the land in question i.e. plot Nus. 10, 17, 18, 60
and 6 were also sold out at a high price.

62. The order of the Reference Court was challenged by B
the appellants before the High Court mainly on the following
grounds:-

"(a) The Reference Court ought to have believed the
deposition of D.W. No. 1 examined at Exh. 69, who had
passed the award Exh. 38 becaase he had taken into c
consideration sale instances for 5 years and because he
had passed the Award Exh. 38 looking to the market value
as per the sale instances of village Giriya in the list of the
5 years sale instances at Exh. 35;
D
(b) That the Reference Court had erred in holding that S.
Nos. 90/1 and 91 are likely to be converted into non
agricultural lands;

(c) It was argued with reference to the deposition of D.W.
No. 2 at Exh. 71 that as per the copy of the sale deed Exh. E
72 the said land ad measuring 1000 sq.mts. was sold for
Rs. 18500/- on 2.11.88, that means at the rate of Rs. 18.5
per sq. mt. and this price at which the land was purchased
by the claimants should be considered to be the best
evidence and that this should form the acid test for the F
purpose of determining the rate at which the compensation
should be awarded."

63. In regard to geographical situation of the lands and
whether the lands are in developed area or in the vicinity of the G
developed area, the High Court opined:-
• "13.15 We have considered the entire evidence in this
case in its entirety and have also gone through the analysis
of the evidence, as has been made by the Reference
H
562 SUPREME COURT REPORTS [2009] 11 S.C.R.

A Court. It is clearly borne out that the lands acquired in these
cases are of S. No. 91 (in Land Refer!'lnce Case Nos. 82/
95, 83/95 and 84/95), S. No. 89 (in Land Reference Cases
Nos. 85/95, 86/95 and 87/95) and S. No. 90/1 (in Land
Reference Case No. 1/96). So far as the geographical
B situation of these lands and as to whether these lands are
in developed area or in the vicinity of the developed area
is concerned, we find that the evidence, which has come
from both the sides, is not at much variance inasmuch as
the lands are on the eastern er western side of the Amreli-
c Rajkot Highway and also as per the Map Exh. 39. The
lands of various S. Nos. , to which the reference has been
made herein-above, are all situated in a developed area
and the same are around the acquired land. If the lands of
various S. Nos. around the acquired land are developed,
there is no reason to say that the acquired lands are not
D
comparable with the lands of various S. Nos. such as S.
Nos. 38, 39, 40, 41, 42, 43, 44, 49, 50, 51 and 56. The '
situation of 'Surya Garden Hotel' in S. No. 39 and the
existence of godowns for Scoters and residential premises
between the acquired lands of the claimants and the 'Surya
E
Garden Hotel' is also established. Similarly the situation
of the Cement Factory between the lands of S. Nos. 39
and 91 is also made out. The deposition with regard to
the municipality pavilion, land of Aerodrome, houses etc.
on the eastern side of the road alongwith residential '
F houses also cannot be disbelieved. Thus in absence of any
effective and specific cross-examination with regard to the
development of the area in question, it cannot be
disbelieved that the lands around th~ acquired lands are
developed area. In the judgment itself at page 20 the
G Reference Court has recorded as under:-

"There is no cross-examination with respect to the ..
development of area and therefore there is nothing to
disbelieve the say of the witness that the area nearby
H acquired lands are not developed."
4

DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 563
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

It appears that the word "not" before the word 'developed" A
-I:
is a mistake typographical or otherwise and on that basis
no argument could be built up to say that the lands nearby
' the acquired lands are not developed.

13.16 The depositions with regard to the acquired lands
B
that it has wells, pacca houses and the trees, the details
of which have been mentioned hereinabove, has remained
untrammeled in the cross-examination of P.W.No. 1. All
these details do add to the quality of the acquired land for
" the purpose of fixing the rate at which the compensation
is to be given. The case that lands of S. No. 89, which have
c
been acquired, are non agricultural lands and the acquired
lands of S. Nos. 90/1 and 91 are likely to be converted as
non agricultural land has also remained intact. Even D.W.
No. 1, who has been claimed as a star witness on behalf
of the Department by the appellants, has admitted that D
lands of S. Nos. 90/1 and 91 are iikely to be converted into
non agricultural lands. The lands of both these S. Nos.,90
and 90/1 are also surrounded by non agricultural lands and
are in posh locality near Amreli township. Even if a land is
not a non agricultural land, if the same is surrounded by E
non agricultural lands and the same is likely to be converted
into non agricultural land as per the say of the Land
Acquisition Officer himself, it is certainly an important and
relevant factor for the purpose of fixing the rate at which
\
the compensation is to be awarded at par or with close F
proximity with the rate in respect of non agricultural land.
D.W. No. 2, who was examined by the Department, has
also admitted that going further towards Amreli town, there
are godowns, show room of Bajaj Scooter, Jalaram
Commercial Complex, Meghnath commercial Centre, and G
Surya Garden Hotel etc. He has also. admitted that area
around this land are most developed and posh area of
Amreli City and further that the lands of S. Nos. 90 and 91
"' are situated near the above S. No. 43. D.W. No. 3, who
was examined at Exh. 73 by the Department, had sold out H
564 SUPREME COURT REPORTS [2009) 11 S.C.R.

A the land bearing S. No. 35 - a part of Village Giriya on
2.10.90 to one Vithalbhai Bhanjibhai. This witness in the
cross-examination has admitted that lands of S. No. 89,
90 and 91 of the claimants are situated near Amreli-Rajkot
road and that it is surrounded by the residential houses,
B godowns etc. This witness has also stated that it is
adjacent to posh area and this area is a developed one.

64. In regard to the determination of the amount of
compensation by the Reference Court, the High Court inter alia '
opining that the rate at which the compensation was granted
c by •
the Land Acquisition Officer i.e. at the rate of Rs. 12/- per
sq.mt. for Bagayat land Rs. 8/- per sq.mt. for Jarayat land Rs.
50/- per sq. mt. for non agricultural land is wholly inadequate
and upon discussing the materials brought on record in respect
of some of the acquired lands vis-a-vis the locations of lands
D for which deeds of sale have been executed held as under:

"While the claimants shall be entitled to compensation to
be paid at the rate of Rs. 400/- per sq.mt. as decided by ~

the Reference Court in case of lands of S. No. 89 (in Land
E Reference Cases Nos. 85/95, 86/95 and 87/95) i.e. non
agricultural lands, the concerned claimants shall only be
entitled to the compensation at the rate of Rs. 300/- per
sq.mt. instead of Rs. 400/- per sq.mt. as ordered by the
Reference Court with regard to the land of S. No. 90/1 (in
F Land Reference Case No. 1/96) and that of S. No. 91 (in I·

Land Reference Cases Nos. 82/95, 83/95 and 84/95), I

which are likely to be converted to non agricultural lands."

Mr. Shelati would submit:

G i. That the Reference Court as also the High Court
committed a serious error insofar as they failed to
take into consideration that the deeds of sale
whereupon reliance has been placed by. the
claimants although parts of Survey Nos. 34 and 40/
H 9 being Plot Nos. 17 and 18 were sold at the rate
DY. COLLECTOR, LAND ACQUISITION, GUJARAT &' 565
ANR. 'v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]

of Rs. 129/- per square meter by reason of a deed A
of sale dated 28.7.1988, were in respect of a
residential plot and a small piece of land, it being
situated within Amreli city and within the municipal
limit; being situated in a highly developed area, the
same was not comparable with the lands in B
question, namely, Survey Nos. 89, 90/1 and 91
which are situated at a distance of 1.5 kilometers
therefrom.

11. Although from index it would appear that by reason · C
of a deed of sale dated 16.1.1991, One Navnitbhai
Kakubhai Ganatra who was a claimant in C.A. No.
244/ 2000 sold the land to one Shri Chunilal
Ranchhodbhai Parmar· in respect of part of plot No.
17 appertaining Survey Nos. 34 and 40/9 involving
138 square meters area of land for a sum of D
Rs.55,200/-, i.e., at the rate of Rs.400/- per square
meter, but the same could not have been relied
upon on the self same grounds. The deed of sale
dated 16. 1. 1991 executed by Navnitbhai Kakubhai
Ganatra being one of the claimants being in C.A. E ·
No.244/2000 in favour of Shri Ashokbhai Nathabhai
Parmar in respect of only 14~'.square meters of
land in Plot No. 17 for a sum of Rs.57,200/- , i.e.,
at the rate of Rs.400/- per square meter could not
have been relied uoon for the self same reasons. F

iii. No reliance could have been placed on the deeds
of sale dated'28.12.1992 and 11.5.1992
concerning Survey Nos. 34 and 40/9 being Plot No.
6 and Survey No. 56/57 comprising area of 328 G
square meter and 59.42 square meter respectively
which were sold for a sum of Rs.2,30,000/-, i.e., at
the rate of Rs. 701. 21 per square meter and
Rs.40,000/-, i.e., at the rate of Rs.673.17 per
square meter respectively. No reliance could also H
566 SUPREME COURT REPORTS (2009) 11 p.C.R.

A have been placed thereupon for the added reasons
that the said deeds of sale were executed
•
subsequent to the date of notification.

iv. No reliance could have also been placed on the
deeds of sale dated 27.10.1988 and 18.1.1991 in
B
respect of Survey No. 36/1 being Plot No. 8 and
Survey No. 34 and 40/9 being Plot No. 10
comprising area of 592.5 sq. meter and 361 sq.
meter respectively which were sold for a sum of Rs
83, 500, i.e., at the rate of Rs 140.92 per sq meter
c and Rs 150000, i.e., at the rate of Rs 415. 51 per
sq meter respectively. )·

v. No reliance furthermore could have been placed on
the deed of sale dated 27.2.1989 and 28.5.1990
D in respect of Survey Nos. 89 being Plot No. 26 and
39 and Survey No. 82 being Plot No. 12 comprising
area of 240 sq meter and 484 sq meter ..
respectively which was sold for a sum of Rs 4400,
that is, at the rate of Rs18.33 per sq meter and Rs
E 12000 respectively, that is, at the rate of Rs. 28.4
per sq meter; the price variation being apparent on
the face of the said deeds of sale; the fair market
value should have been determined on the basis of
the said deeds of sale dated 27.2.1989, 28.5.1990
F and 23.10.1990 by adding the market value at the ,
rate of 5% per year which should be a fair market
value. Market value of the agricultural lands by no
standard could have been compared with the
market value of the non-agricultural lands.
G Mr. Manish Singhvi, learned counsel appearing on behalf
of the respondents, on the other hand, urged:
~
i. The lands in question being situated by the side of
Amreli-Rajkot Highway which is a developed area
H and being on the eastern side of river 'Thebi'. this

•
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 567
... ANR. v. MADHUBAI GOBARBHAI &ANR. [S.B. SINHA, J.]

Court may not interfere with the impugned judgment. A

ii. The concurrent findings of fact having been arrived
at by the Reference Court as also the High Court,
the impugned judgment is unassailable particularly
in view of the fact that the deeds of sale in respect
of the same area are available.
B

iii. The nature of the lands although were agriculture but
they being situated within a developed area and
having great potentiality of being converted into a
non-agricultural land, the guiding principle for c
determining the market value thereof, namely, that
a willing purchaser would pay to a willing seller for
a property having due regard to its existing
condition, with all its existing advantages, and its
potential probability, should be and has rightly been D
• followed.

iv. The deeds of sale relied upon by the State being
dated 2.11.1988, 27.2.1989, 4.4.1989 and
20.4.1989 could not have been relied upon
inasmuch as admittedly they were grossly E
undervalued and the Collector had issued notices
upon them. The Collector himself having fixed the
~ prices of the land at Rs.125/-/ per square meter, the
State should not be permitted to raise any
contention contrary thereto or inconsistent therewith. F
The said deeds of sale, in any event, having been
executed four years prior to issuance of the
Notification under Section 4(1) of the Land
Acquisition Act should not be relied upon.
G
... V. The findings of fact arrived at by the learned
Reference court as also the High court relying on
or on the basis of Exhibits 30, 51 and 53 showing
the value of the land to be Rs.400/-, Rs.701/- and
Rs.673 per square meter, no case has been made H
568 SUPREME COURT REPORTS [2009] 11 S.C.R.

A out for interference with the impugned judgment.

vi. Even the deed of sale dated 27.10.1988 (t.xhibit
55) shows the value of the land as Rs.140/- per
square meter and the other deeds of sale which
were marked as Exhibits 57, 58 :ind 60 having
B been executed on 18.1.1991, 11 . I 0.1991 and
05.01.1991 i.e. being two year;:; p:·ior to the
issuance of a notification and the consideration
\
..
thereof being calculated at the rate of Rs.415/,
Rs.425/- and Rs.292/- per square meter, the
c impugned judgment should not be interfered with.

vii. D.W.3- Nandlal Trikamjibhai examined on behalf of
the State in his deposition having clearly stated that
the lands which were the subject matter of Exhibit
D 74 were situated only four kilometers away from
the acquired land of the claimants and, thus, the •
amount of consideration should not be treated to be
a sale instance for the purpose of determining the
value of the acquired land being survey Nos. 89, 90/
E 1 and 91, which were surrounded by residential
houses, godowns, etc. and also very near to the
posh area of the town.

viii. The Collector himself having fixed the conversion r
rate from agricultural land to non-agricultural land at
F Rs.300/- per square meter, it would wholly be
incorrect to contend that the same did not offer any
indicia in regard to the value of the land for the
enhancement of right in property from agricultural
to non-agricultural land.
G
65. Indisputably, the agricultural lands adj-oin Chittal Road ,.
whereas the non-agricultural lands are not.

The Reference Court while passing its award, inter alia,
opined:
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 569
., ANR. v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]

"Now a days, nobody would allow to keep a wooden cabin A
in one squ~re meter area in one's land on rental basis for
Rs.8/- to Rs.12/- per sq. mtr. while in these Land
Reference Cases, the Land Acquisition Officer has
acquired whole lands permanently from the land owners/
claimants by paying compensation of Rs.8/- and Rs.12/- B
per sq. mtr."
It was furthermore opined:
"During this period, one cup tea cost is minimum Rs.3/-
and that too in the road side cabin."
c
66. In our opinion, the said observations were wholly
irrelevant as it is now well settled that the Reference Court
should sit in the arm chair of a willing and prudent purchaser
and put a question to himself as to whether he would offer the
same price sought to be awarded for the said land. We may D
"' notice that a portion of land bearing Survey No. 89 was
converted into non-agricultural use and the sale transaction of
a portion thereof would show that 1000 sq. mtr. of land were
purchased for Rs.18,000/- by a deed of sale executed on
2.8.1988 in terms whereof the value of tho land came to Rs.18/
E
- per sq. mtr. We will advert to the question as to whether the
same ought not to be relied upon as the land under the said
deed of sale not only was converted into non-agricultural land
, but even developed as well and all other activities were being
carried out by dividing the same into plot a little later.
F
67. It is admitted that subsequently an agreement of sale
was entered into in respect of those plots of land wherefor the
market value was fixed at Rs.300/- per sq. mtr. It, however,
appears that no agreement for sale was produced before the
Reference Court. It was urged that the said purported agreement
G
.... for sale would not b~ relevant for Survey Nos, 90/1 and 91 as
the same were agricultural lands.
68. We may furthermore place on record the evidence of
Deputy Collector, Mr. Mansuri wherein he stated, "Disputed
lands are situated at a distance of 4 Kms. away from the H
570 SUPREME COURT REPORTS (2009] 11 S.C.R.
•
A residential area of Amreli." According to the said witness he,
having considered the four instances of sale which had taken ....
place in village Giriya, had made his award.

69. The Reference Court as also the High Court, however,
proceeded on the premise that as the Collector of the District
B
himself determined the market value of Survey No. 39 in terms
whereof a sum of Rs.300/- per sq. mtr. by way of premium
(which is said to have been reduced at a later stage to Rs.100/
- per sq. mtr.) was fixed.
c 70. Was it wholly irrelevant is the question.

71. A part of Survey No. 89 was non-agricultural in nature
but indisputably Survey Nos. 90/1 and 91 were agricultural lands.
The value of agricultural lands could not have been compared
D with the value of non-agricultural lands; only because some
witnesses contended that there was a potentiality of the said .
lands becoming developed.

72. We may, for the purpose of determination of the
market value of the lands in question, notice certain sale
E transactions.

73. By reason of a deed of sale dated 28. 7.1988 (Exhibit
48) Survey Nos. 34 and 40/9 (Plot No. 17 & 18) admeasuring
an area of 739.21 sq. mtr. was sold for a consideration of
., ·-
F Rs.96,000/- at the rate of Rs.129/- per sq. mtr. It is, however,
admitted that the land in question consists of residential plots
and is a small piece of land within the municipal limit of Amreli
city, being situate at a distance of about 1.5 kms. from the
acquired land. The deed of sale dated 16.1.1991 (Exhibit 30)
G shows that 143 sq. mtr. of land in Plot No. 17 was sold for a
sum of Rs.~7,200/-, that is, at the rate .of Rs.400/- per sq. mtr.
It is said to be not only a residential plot, but also a small piece
of land situate in village Amreli city in a highly developed area;
the acquired land being about 1.5 kms. away therefrom.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 571
.. ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]
74. Two deeds of sale subsequent to the date of A
notification had also been brought on record being Exhibits 51
and 53 in respect of Survey Nos. 34, 40/9 and 56/57 at the rate
of Rs.701.21 per sq. mtr. and Rs.673.17 per sq. mtr.
respectively. The lands in question are said to be 2 kms. away
from the acquired land. A deed of sale dated 27.10.1988 B
(Exhibit 55), however, show that plot No. 8 to Survey No. 36/1
admeasuring 592.50 sq. mt. was sold at a price of Rs.83,500/
1 -, i.e., at the rate of Rs.140.92 per square meter. The said land
is said to be situated in a fully de1teloped residential area of
Amreli City and is about 2 kms. away from the acquired c
agricultural land of Survey No. 90/1, 90/2 and 91 of Village
Giriya. By reason of another deed of sale dated 18.1.1991,
361.00 sq. mtr. of land in Survey Nos. 34 & 4019 Plot No. 10
was sold for a sum of Rs. 1,50,000/-, i.e., Rs.415.51 per sq.
mtr. Two other deeds of sale being Exhibits 58 and 60 being
D
,, dated 11.10.1991 and 5.1.1991 which were in respect of
Survey Nos. 34, 40/9 Plot No. 60 Survey No. 41 Plot No. 14
was sold at the rate of Rs. 425.69 per sq. mtr. and Rs.292.30
per sq. mtr. for a sum of Rs.85,000/- and Rs.38,000/-
respectively.
E
75. We may also notice the deeds of sale whereupon
reliance has been placed by the State, the details whereof are
as under:

S. Sale Vendor Vendee Revenue Area Sale Rate/ Type
No. Deed Survey Deed Sq. of
F
No. & , No. Amo- mt. Land
Date unt (Rs.)
(Rs.) 18-33

1. 258 P.O.A. Tulsidas S.No.89 240 4400/ Non
27.2.89 of Ambalal Plot No. Sq. Agri. G
Shambhu Lathigara 26 & 39 mt.
Vallabh
Kabariya

- 2. 469
4.4.89
P.O.A. of
hambhu
Chandresh
kumar
S.No. 89
Plot No.
480
Sq.
8800/ 18- Non
33 Agri.
H
572 SUPREME COURT REPORTS (2009] 11 S.C.R.

A Vallabh Mansukhlal 35, 36, mt.
Kabariya Zinzuvadiya 45 & 46
Siddik
Habib
Nagani

3. 582 Jayesh Chandrik- S.No.89 300. 70001- 23- Non
B 20.4.89 kumar aben Plot No.1 62 28 f.\gri.
Durlabhji Jashvan- Sq.
Mavani, tray mt.
Amreli Kothiya •
4. 886 P.O.A.of Hitesh S.No.89 538 9500/- 17- Non
c 3.6.89 Shambhu
Vallabh
kumar
Hiralal
Plot No.
89, 58,
Sq.
mt.
66 l\gri.

Kabariya, Zinzuvadiya 71
Shri
Siddikbhai
Habibbhai
Nagani
D
5. 955 Mrs. Dalsukh 23i2Plot 1-61- 22500/- 1- A.gri.
20.6.89 Diwaliben Hiraji 88Ha 39
Babubhai Jogani
Rokad

6. 1066 P.OAof Revatiben S.No.82 484 12000/- 24- Non
E 211.5.90 Ismail Haribhai Plot Sq. A.gri.
Jusabbhai Solanki No.12 mt.
Motiwala
etc. 6
Persons
lkbal
F 7. 1212 Ismail Karshan S.No.82 704 20000/- 28- Non
15.6.90 Jusabbhai Damji Plot No. Sq. 40 A.gri
Motiwala Pithadiya 5&6 mt.
etc.

8. 715 Asagarali Labhuben 2212. 1-53- 191510/ 8-05 C..gri.
G 13.4.92 lnayatali Kanaji ~3/1 p 78
Saiyad Khanesa 0-83
-97
2-37-
75

H
9. 1348 Shambhu Pankajbhai S.No.89,
Ha.
1016 18500/- 18- Non
-
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & ANR. 573
, v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]

3.11.88 Vallabh Mansukh- 10 Plots Sq. 20 Agri. A
Kabariya bhai Plot No. Mt.
Zinzuvadiya 178 to -
187
·•rl'11;

10. 2235 Bhanabhai Bhanabhai 35/P 3-67- 14000/- 00- Agri.
23.10.90 Naranbhai Naranbhai 04 38
~'f'4'~

'Limbasiya Limbasiya (Ha)
B
P.O.A. of Vithalbhai ~.·

Shivlal Bhanjibhai F~
Bhanjibhai Limtiasiya
Limbasiya

c
76. The price variation and the market value shown is the
two aifferent categories'6flhe land relied upon by the claimants
and the State in the aforementioned chart is significant. The
price variation between agricultural land and non-agricultural D
land almost d1~iri'ng the same period also is of some
s·ignificance.
77; It is furthermore of some interest to note that within a
short period of time, the price of the land had shot up and that
E
too immediately after, the process of acquisition of land had
started. It is furthermore important to note that there existed a
significant price variation even in regard to the lands situated
on Survey No. 89. which appears to be a very big plot.
78. There cannot be any doubt or dispute whatsoever that F
different potentiality of land in different villages and even in
different parts of the same village would be existing. It was
therefore not proper for the High Court to treat all types of lands
situated even in different villages as pertaining to a comparable
category . This Court in certain case even has deprecated the G
pra~tice of awarding compensation on the basis of an award
made in a neighbouring land.
79. In Kanwar Singh & ors. vs. Union of India ((1998) 8
sec 1361
"If we go by the compensation awarded to claimants of H
574 SUPREME COURT REPORTS [2009] 11 S.C.R.

A adjoining village it would not lead to the correct
assessment of market value of the land acquired in the
village Rangpuri. For example village 'A' adjoins village 'B',
village B adjoins village 'C, village 'C adjoins village 'D',
so on and so form and in that process the entire Delhi
B vJould be covered."
[::;ee also Basant Kumar (supra)]
80. It is, however, also true that the court is bound to take
into consideration the potentiality of the land.
c In N.B. Jeejabhoy v. The District Collector Thana C. A.
Nos. 313 to 315of1965 decided on August 30, 1965, this Court
held:
"A vendor willing to sell his land at the market value will
take into consideration a particular potentiality or special
D adaptability of the land in fixing the price. It is not the fancy
or the obsession of the vendor that enters the market value,
but the objective factor namely, whether the said
potentiality can be turned to account within a reasonably
near future ......... The question therefore turns upon the facts
E of each case. In the context of building potentiality many
questions will have to be asked and answered : whether
there is pressure on the land for building activity, whether
the acquired land is suitable for building purposes, whether
the extension of the said activity is towards the land
F acquired, what is the pace of the progress and how far the
said activity has extended and within what time, whether
buildings have been put up on lands purchased for building
purposes, what is the distance between the built-in-land
and the land acquired and similar other questions will have
to be answered. It is the overall picture drawn on the said
G
relevant circumst~mces that affords the solution."

In Raghubans Narain Singh v. The Uttar Pradesh
Government Through Collector of Bijnor [1967 (1) SCR 489],
this Court held:
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 575
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]
"Market value on the basis of which compensation is A
payable under s. 23 of the Act means the price that a
willing purchaser would pay to a willing seller fo: a property
having due regard to its existing condition, with all its
existing advantages, and its potential possibilities when
laid out in its most advantageous manner, excluding any B
advantage due to the carrying out of the scheme for the
purposes for which the property is compulsorily acquired."

{See also Mahabir Prasad Santuka and Ors. v. Collector,
Cuttack and Ors [(1987) 1 SCC 587]}
c
81. So far as deeds of sale pertaining to the years 1988
and 1989 are concerned, the same were executed more than
three years prior to the date of acquisition. However, in respect
of the deeds of sale pertaining to Survey No. 89, in view of the
under-valuation of the lands sold, the Collector fixed the same D
at the rate of Rs.125/- per sq. mtr. Furthermore, the Collector
himself has fixed the premium of Rs.300/- per sq. mtr. for
conversion from agricultural land to non-agricultural land. .
Although the same by itself would not be a safe criterion for
determining the market value, we are of the opinion that both E
of them may form the basis for arriving at a reasonable
conclusion.

82. For the aforementioned purpose, this Court must keep
in mind that the distance of the lands sought to be acquired
'1 'I apart from other factors. from the Highway also plays an F
important role. Evidence has been brought on record to show
that some lands, which are the subject matter of the sale deeds
on which reliance has been placed by the claimants, are
situated at a distance of 1.5 to 4 kms from the Highway. In that
view of the matter, it would, in our opinion, be safe to arrive at G
the market value as on the date of acquisition for the non-
agricultural lands at Rs.250/- per sq. mtr.
<(

83. So far as the agricultural lands are concerned, even if
they had the potentiality of being converted into a non- H
576 SUPREME COURT REPORTS [2009] 11 S.C.R.

A agricultural lands as on the date of notification, they were
agricultural lands albeit in a developed area. The valuation
thereof may be determined at 50% of the developed land, that
is, at Rs. 125/- per sq. mtr.

B GROUP-Ill

84. In this batch of cases, notification under Section 4 of
the Act was issued in the daily newspaper on 2.2.1990 and was
published in the Gazette on 15.3.1990. They were said to have
been affixed at or near the lands in question on 1.8.1990. On
C the lands under acquisition, indisputably godowns were also
constructed. A declaration under Section 6 of the Act was
issued on 18.6.1991 and published in the Official Gazette on
11. 7.1991.

o 85. The details of the cases falling in Group-Ill are as under:

Group Total C.A. No. FA. No. Notification Date of
No. mat- Section 4 Judgment
ters dated

E 7 8 205-212/2000 410- 15.3.1990 4.5.1999
417/1998
. ...,..
8 6 214-219/2000 2073- 15.3.1990 4.5.1999
2078/1998

F 86. An award was made by the Land Acquisition Collector r ~
on 23.7.1993. Respondents herein being aggrieved by and
dissatisfied with the quantum of compensation made in the
said awards filed applications for reference before the Collector
to the District Court. Amreli claiming a sum of Rs.500/- per
G square meter for agricultural lands and Rs.600/- to Rs. 750/- for
non-agricultural lands as also additional amount of
compensation, the details thereof are as under:

H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 577
ANR. v. MADHUBAI GOOARBHAI &ANR. (S.B. SINHA, J.]

F.A. Survey Type of Arec. Comp. Comp. Comp. Comp. A
No. No. Land in awar- claim- decreed Decreed
Sqm. ded ed in by by Guj.
by Lower Lower High
LAO. Court Court Court
Rs. Rs. Rs. Rs.
sqm Sq./ Sqm Sqm
Sqm B
1 2 3 4 5 6 7 8

410/98 44/1 Agri 57445 50 500 160 160
'
411/98 43/5A-1 Agri. 21
Godown f
c '
412/98 43/5A-1 Non- 541 150 500 240 240
Agri.

413/98 38/2 Agri 4992 150 500 160 160
D
414/98 40/4A Non- 4994 150 600 240 240
Agri
•
415/98 43/2 Non- 9407 150 500 240 240
Agri

416/98 43/2 Non- E
Agri 236 150 500 240 240

417198 43/3 Non-
Agri 632 150 500 240 240
2073/98 42/1p Agri -32104 50 600 160 160
43/1p F
2074/98 43/2 Non- 5407 150 600. 240 240
Agri

2075/98 38/1 Agri 13717 50 600 160 160

2076/98 43/5A-1 Non- G
Agri. 307 150 600 240 240
2077/98 43/5A-1 Non- 216 150 600 240 240
Agri.
2078/98 43/5A-1 Non- 216 150 600 240 240
Agri. H
578 SUPREME COURT REPORTS (2009] 11 S.C.R.

A 87. One Mahendrakumar Nathalal Adatiya said to be the
power of attorney holder of the claimants deposed twice before
the Reference Judge. His depositions was marked as Exhibit
20 and Exhibit 31. In his deposition, he inter alia stated that
the lands under acquisition are on Amreli-Rajkot Highway
B known as Chaital Road. In the said town, there is a Railway
Station, Civil Hospital, S.T. Depot. Airdrome, Colleges, and
market yard, etc. According to him, there was a possibility of
further development. The said lands were on the eastern side
of the river and the area in question had further been ,
c developing. According to the said witness, moreover apart from
a large number of houses constructed by various societies;
there is an Eye Hospital, High School and other Hospitals
situated near the lands in question. It was furthermore stated
that on the other side of the land in question, one Survey No
D 43/5 was converted into non-agricultural tenancy and in the
years 1983-1984, commercial complexes were constructed for
conversion from agricultural land to non-agricultural land. The
Collector fixed premium at the rate of Rs.300/- per square meter •
in respect of lands which was adjoining Survey No. 43/5 and
Survey No.44. According to him, the prevailing market.rate at
E
the relevant time was Rs.600/- to 8001- per square meter.

88. Apart from the claimants, some tenants of the godowns
examined themselves being witness No.3 and witness No.4.
Several other witnesses including an expert Jivanbhai Pragjibhai
F Savliya (Witness No.7) was also examined.

89. On behalf of the State, Shri Kaushik Maganlal (D.W.1)
Deputy Collector who passed the award was examined.

90. One Balubhai V. Savliya (D.W.2), a vendor proved a
G
deed of sale which was marked as Exhibit 83, whereby. and
whereunder he had sold 5 bighas of land in 1985 for a
consideration of Rs.10,000/-. The State furthermore examined
•
one Nandlai Trikamjibhai (D.W.3). He had purchased some land
near the dam site at a price of Rs.150/- per square meter.
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 579
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.S. SINHA, J.]
. ,+
91. The High Court on the basis of the materials brought A
on record awarded compensation at the rate of Rs.160/- to
Rs.240/- per square meter.

92. So far as the value of the godowns are concerned, the
yearly rent was found to be Rs.1,04,000/- whereas the B
Reference Court applied the multiplier of 20, the High Court by
reason of its impugned judgment has applied the multiplier of
10.
J.
93. Both parties have preferred appeals thereagainst.
c
94. Separate appeals have been preferred by the parties
hereto before this Court also.

95. Mr. Shelati, the learned Senior Counsel appearing on
behalf of the appellant, would submit:
D
,.,
" i. That the Reference Court wrongly proceeded on the
premise that all acquired lands are situated by the
side of Amreli - Rajkot Highway despite the fact that
Exhibit 39 (map) clearly shows that Survey Nos. 43/
E.
5A-1, 38/2, 40/4A did not abut it .

ii. The market rate fixed by the Collector at Rs.300/-
per square meter for converting agricultural land to
non-agricultural land in respect of Survey No. 39
•
'
could not have been taken into consideration for the F
purpose of determining the market value of the land
as by reason thereof the restrictions imposed in a
covenant had been removed by enlarging the ambit
of the property right over the land.

iii. No reliance could .have been placed on the deeds G

7 of sale dated 20.9.1990, 16.1.1991and16.1.1991
in respect of Survey Nos. 34 and 40/9 comprising
of an area of 240 square meter, 143 square meter
and 143 square meter respectively and sold for a
H
580 SUPREME COURT REPORTS [2009) 11 S.C.R.

A sum of Rs.1,20,000/-, i.e., at the rate of Rs.487.80
per square meter, a sum of Rs.57,200/-, i.e., at the
rate of Rs.400/- per square meter and Rs. 55,000/
-, i.e., at the rate of Rs.400/- per square meter
respectively as the sale instances being Exhibit 58,
B 60 and 61 were not comparable, as

(1) the lands under sale were small pieces of land;

(2) they were situated in highly developed area of
Amreli City;
c
(3) they were within the territorial limit of municipality;

(4) the lands were situated 1.5 to 2.5 kilometers
away from the acquired lands; and
D
(5) the deeds of sale having been executed after .. ~

'• the issuance of notification, no reliance could have
been placed thereupon.

E iv. The deeds of sale dated 21.5.1985 and
26.10.1988 in respect of Survey No. 991 measuring
1-30-51 square meter and 323 .12 square meter
respectively which were sold for a sum of Rs
10,000, i.e., at the rate of Rs 0.77 per square meter
F and Rs 45,000, i.e., at the rate of Rs.139.26 per
square meter respectively is demonstrative of the
fact that there is a huge disparity.

v. Godowns having been constructed for the purpose
of avoiding payment of octroi duty itself goes to
G show that the value of the land within.the municipal
area would be higher. .'
vi. The evidence of Dr. Bharat Kantilal Mehta who had
purchased the lands having stated that he had
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 581
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.8. SINHA, J.)
... ~
purchased the lands for professional and A
residential purpose and having taken a firm
decision to purchase the land only in that area and,
thus, the same being of some personal value to him
could not be a comparable instance.
B
vii. The potentiality of the land in a munidpal areca must
be held to be higher than the potentiality of the land
in a rural area and, thus, the Reference Court as
' also the High Court committed a serious error in
relying upon the sale instances which were in
respect of the lands situate within the illunicipal
c
area.

viii. The High Court and the Reference Court committed
a serious error insofar as they failed to take into
consideration that the sale instances whereupon D
"'• reliance had been placed by the State, viz. Exhibit
83 and Exhibit 85, namely, the deeds of sale dated
21.5.1985 and 26.10.1988 wherefrom it would
appear that whereas in the year 1985 the market
value was Rs.0.77 per Are, in the year 1988 the E
rate was Rs.139.26 ps. per Are. Both the deeds
of sale involving small plots of land and being
situated at a distance of 0. 75 kilometer from the
...
... acquired land and, thus, should have been taken
into consideration. F

ix. As it was categorically stated by Mahendrakumar,
the power of attorney holder, "we could not earn
such type of rental income if the godowns were
situated within the municipality area because the
G
godowns were being constructed outside the octroi
1 naka", and similarly H.N. Chandarana having stated
that the godowns being situated outside octroi
naka, he had hired the same to save octroi duty;
and the godowns having bee~ constructed to
H
582 SUPREME COURT REPORTS [2009) 11 S.C.R.
+..

A evade payment of levy of octroi, it did not reflect the
true market value thereof.

x. In any event, the cost of the construction of the
godowns should have been considered for
B determining the market value. Provision for
expenses incurred like taxes, labour charges,
maintenance of the godown and salary payable to
the watchman having not been taken into '
consideration while determining the actual rental
income derived by the claimants, the impugned
c judgment should be suitably modified.

xi. In any view of the matter, once the market value was
determined on the basis of the income thereof, no
separate compensation could have been granted
D towards the value of the land.
•
96. Mr. Sunil Kr. Gupta and Mr. Dinesh Dwivedi, learned
Senior Counsel appearing on behalf of the claimants -
respondents, on the other hand, urged:
E
i. The last publication of notification having been made
on 1.8.1990, the deeds of sale which were
executed in September 1990 and a few months
thereafter had rightly been relied upon by the courts ~ '
below being contemporaneous documents.
F
ii. Market value of the land in terms of Section 23 of
the Land Acquisition Act being required to be
determined as on date of issuance of the
notification, the same would connote nearness and
G not a date prior to issuance of the notification.
,..
iii. The lands acquired being situated on the eastern '
side of the river and just outside the Amreli town,
the Reference Court as also the High Court
H committed a serious error in deducting 50% from
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 583
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.]

the market value of the land situated in a municipal A
area.

iv. The map on which reliance has been placed by the
State of Gujarat would itself show that the area in
question is a highly developed one and the same
8
were situated near the Aerodrome, School, Hotel,
a large number of housing societies, and in that
view of the matter, there was absolutely no reason
as to why the sale instances whereupon reliance
has been placed by the claimants should not have
been considered to be the determinative factor for C
fixation of the amount of compensation.

v. Godowns having been constructed on non-
agricultural lands and for the purpose of proving the
rental income therefrom not only Mahendrakumar D
was examined in two reference cases as P.W. 1
and P.W.3 but also two tenants, namely, Harshad
Nathalal Chanarana (P .W .3) and Paresh
Dinkarbhai Davda (P.W. 4) who proved the
advantages of such godowns, there was no reason E
as to why the multiplier of ten should have been
used although ordinarily a multiplier of 25 is applied.

vi. The value of the godowns was required to be
determined keeping in view the loss of earning F
therefrom in terms of the 'fourthly' appended to
Section 23 of the Act.

vii. P.W. 6 - Navnitbhai Kakubhai Ganatra, who was
the vendor in respect of Exhibits 60 and 61, relating
to. Survey Nos. 34 and 40/9 having been proved, G
the sale deed which was executed within a period
..
( of six months from the date of publication of the
notification under Section 4(1) of the Act, there was
no reason as to why the same could not have
H
584 SUPREME COURT REPORTS [2009] 11 S.C.R.

A formed the basis for determining the market value. ...
viii. Even Jivanbhai Pragjibhai Savliya (P.W. 7) has
proved the assessment report and map to show
that Survey No. 43/5A was adjacent to the godown.
The lands under acquisition being small plots, the
B contention of the State of Gujarat that the deeds of
sale being Exhibits 58, 60 and 61 could not have
been relied upon must be held to be incorrect.
,.
ix. The Reference Court as also the High Court having
c arrived at a categorical finding that most of the
contemporaneous sale-deeds relied upon by the
respondents were in the vicinity of the acquired
lands, there is no reason as to why a different view
should be taken by this Court.
D
97. Notification for acquisition of the said lands was issued
on 15.3.1990. The lands under acquisition appertain to Survey •
Nos. 44/1, 43/5A-1, 38/2, 40/4A, 43/2, 43/3, 42/1p, 43/1p, 38/
1, 38/2. Whereas Survey Nos. 44/1, 38/2, 42/1p, 43/1p and 38/
"E 1 are agricultural lands; other Survey Nos. including Survey No.
43/5A-1 are non-agricultural lands.

98. On a part of Survey No. 43/5A-1, 21 godowns have
been constructed wherefor separate amount of compensation
has been awarded. The claimants in support of their claim had
F relied upon the deeds of sale dated 20.9.1990 marked as I
.
Exhibit 58. The deeds of sale which were executed on behalf
of the State are dated 21.5.1985 and 26.10.1988.

99. The Reference Court as also the High Court
G determined the amount of compensation at the rate of Rs.240/
- per square meter for non-agricultural lands and deducted one-
thi rd therefrom, i.e., Rs.160/- towards compensation for .'
agricultural lands. In arriving at the said figure, the Reference
Court proceeded on the basis that the market value of the land
H
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 585
ANR. v. MADHUBAI GOBARBHAI &ANR. [S.B. SINHA, J.]
situated in the municipal area was Rs.485/- per square meter A
at the time of acquisition, and, thus, the lands in question being
outside the municipal area, the market value thereof should be
deducted by -50%, i.e., Rs.240/- per square meter. As
indicated hereinbefore,. for determining the value of agricultural
land further one-third has been deducted. B
100. We may place on record that even before the High
Court, the claimants had preferred cross objections, which
'~ were rejected on the premise that requisite amount of court fee
had not been paid.
c
101. In Administrator General of West Bengal v.
Collector, Varanasi [AIR 1988 SC 943], this Court held:

''The determination of market-value of a piece land with
potentialities for urban use is an intricate exercise which D
calls for collection and collation of diverse economic
'• criteria. The market-value of a piece of property, for
purposes of Section 23 of the Act, is stated to be the price
at which the property changes hands from a willing seller
to a willing, but not too anxious a buyer, dealing at arms
E
length. The determination of market-value, as one author
put it, is the prediction of an economic event, viz, the price-
outcome of a hypothetical sale, expressed in terms of
probabilities. Prices fetched for similar lands with similar
... advantages and potentialities under bonafide transactions
• of sale at or about the time of the preliminary notification
F
are the usual; and indeed the best, evidences of market-
value. Other methods of valuation are resorted to if the
evidence of sale of similar lands is not available."

In 'State of Punjab and Anr. vs. Hans Raj (Dead), by Lrs. G
Sohari Singh and Ors., this Court held: '·

"As the method of averaging the prices fetched by sales
of different lands of different kinds at different times, for
H

'
I
586 SUPREME COURT REPORTS [2009] 11 S.C.R.

A fixing the market value of the acquired land, if followed, ... ·~

could bring about a figure of price which may not at all be
regarded as the price to be fetched by sale of acquired
land. One should not have, ordinarily recourse to such
method. It is well settled that genuine and bona fide sale
B transactions in respect of the land under acquisition or in
its absence the bona fide sale transactions proximate to
the point of acquisition of the lands situated in the
neighbourhood of the acquired lands possessing similar ,
;
value or utility taken place between a willing vendee and
c the willing vendor which could be expected to reflect the
true value, as agreed between reasonable prudent persons
acting in the normal market conditions are the real basis
to determine the market value."

102. Keeping in view the ratio laid down in the
D
aforementioned decisions as also the materials placed on
record, we are of the opinion that the amount of compensation •'
for the lands acquired in this matter arrived at by the High Court,
that is, Rs.240/- per sq. mtr. for non-agricultural land and
Rs.160/- sq. mtr for agricultural land does not warrant any
E interference on our part. The High Court, in this regard, has
adopted the correct approach particularly in view of the fact that
the lands in question are not only situated within a developed
area but being situated near Aerodrome, Schools, Hospitals,
etc. the market value thereof could not have been determined
F at a lesser rate.

103. Now we shall deal with the question of the amount
payable for acquisition of 21 godowns and the land on which
they stand in Survey No. 43/SA-1. Out of the total area of 4250
G mtrs of land, 2972 sq. mtrs. is agricultural land and 1278 sq.
mtrs. is non-agricultural land on which the godowns have been
constructed. Commercial complexes were constructed on it in .. ;

the year 1984.

104. Respondents have constructed 6 big god owns and
H
,__
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 587
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, 'J.]

15 small godowns. The amount of rent of the godowns has been A
brought on record. Respondents have claimed compensation
under various Heads, namely, price of the land, loss suffered
due to recovery of rent for 2 years of godowns, loss for
construction for deep-well, watchman quarter, etc.
B
105. One of the principal questions, as indicated
hereinbefore, raised on behalf of the State is that the valuation
of the land cannot be determined indirectly twice over, one on
\ the basis of the value of the land and the other on the basis of
the rental income. Matter would, however, be different where
c
only there is a construction on a land which is used for
residential or other purposes.

106. In Ratan Kumar Tandon & Ors. vs. State of UP.
[(1997) 2 SCC 161], this Court held:
D
"It is well-settled law that when land and building are
acquired by a notification, the claimant is not entitled to
separate valuation of the building and the land. They are
entitled to compensation on either of the two methods but
not both. If the building is assessed, it is settled law that E
~ the measure of assessment be based on either the rent
received from the property with suitable multiplier or the
value of the building is the proper method of valuation."
...; 107. We are in agreement with the view that for extent of
land on which the godowns stand, separate compensation
F
need not be paid when compensation with respect to rental
incom? is being paid for the godowns.

The High Court by reason of the impugned judgment has
granted compensation inter alia applying the multiplier of 10 G
over the annual income. The approach of the Hrgh Court is
'? correct.

108. In Airpotts Authority of India v. Satyagopal Roy and
Ors. [(2002)3SCC527], it was .held that: H
~
588 SUPREME COURT REPORTS [2009] 11 S.C.R.

A "8. It is settled law that in evaluating the market value of ..... ~-

the acquired property, namely, land and building or the land
with fruit-bearing trees standing thereon, value of both is
to be determined not as separate units but as one unit.
Therefore, it would be open to the Land Acquisition Officer
8 01 the Court either to assess the land with all its
advantages and fix the market value thereof on the basis
of comparable sale instances. In case where comparable
sah~ instances are not available and where there is reliable
and acceptable evidence on record of the annual income, f
c market value could be assessed and determined on the
basis of net annual income multiplied by appropriate
multiplier for its capitalization."

109. In Assistant Commissioner-cum-Land Acquisition
Officer, Bellary vs. S. T. Pompanna Setty [(2005) 9 SCC 662],
D
this Court has held:

"15. From the above cases, it is clear that normally in the
cases where compensation is awarded on yield basis,
multiplier of 10 is considered proper and appropriate. In
E the case on hand, multiplier of 15 has been applied which
is on the higher side ... ."

110. It was an agricultural land.

{See also Addi. Special Land Acquisition Officer vs.
F j "
Yamanappa Basalingappa Cha/wadi [(1994) 3 SCC 323]}

111. In State of Kera/a vs. P.P. Hassan Koya [AIR 1968
SC 1201], the method which was generally resorted to in
determining the value of the land with buildings especially those
G used for business purposes, was the method of capitalization
of return actually received or which might reasonably be
received from the land and the buildings. Whereas the •'
Reference Judge had multiplied the annual income by 35 times,
the High Court had reduced it to 33 1/3 times. The view of the
H High Court was upheld.
DY. COLLECTOR, LAND ACQUISITION, GUJARAT & 589
ANR. v. MADHUBAI GOBARBHAI & ANR. [S.B. SINHA, J.)
yr 112. In Special Land Acquisition Officer, Kalinadai A
(Hydro-Electric) Project, Dandali, Uttra Kannada District v.
Vasant Gundu Bale [1995 Supp (4) SCC 649] it was held that:

" 2. Sri Veerappa, the learned Counsel for the State, has
contended that the High Court committed grave error of
B
law in recording a finding that lands were possessed of
potential value for building purposes. We find no force in
the contention. It is seen that when 7,800 lineaments were
4 constructed in the project area, it would be clear that a
township had come into existence. It is an admitted fact
that the land under acquisition is about the township. It is
c
also an admitted fact that in Ext. A-12 sanction was
obtained on September 13, 1973 for conversion of
agricultural lands into urban lands of the layout and sale
of plots which could not take place due to the fact that mud
D
was dumped on this land. Consequently, the sanction came
to be cancelled By the Assistant Commissioner. Be that
as it may, the High Court on the basis of the rental value
had determined compensation at the rale of Rs. 1200 per
acre applying the multiplier of 15 and arrived at the net
income at Rs. 18,000 per acre. It is now settled law that E
the uniform rate of multiplier of 10 is being applied for the
lands acquired even in the State of Karnataka. Even
acceding the multiplier of 12 as held by this Court in
Special Land Acquisition Officer, Davangree v. P.
" F
" Veerabhadarappa and Ors. ( 1984 ) 2 SCC 120, the
claimant cannot get more than Rs. 14,000 per acre."

113. Hence, keeping in view the ratio of the above
mentioned decisions and the facts of the present case, we
modify the decision of the High Court to the extent of excluding G
the payment of separate amount of compensation for the 1278
...,. sq. mtrs. of non-agricultural land in which the 21 Godowns have
been constructed would be calculated on the rental value. In
other words, whereas the market value of the land would be
determined at Rs.240/- per square feet, the lands on which the H
590 SUPREME COURT REPORTS (2009) 11 S.C.R.

A godowns have been constructed, the amount of compensation '-
shall be calculated at the rental value thereof by following the
method adopted by the High Court. For the said purpose, the
matter is remitted to the Land Acquisition Officer.

114. These appeals are disposed of with the
8
aforementioned observations and directions. In the facts and
circumstances of the case, there shall be no order as to costs.

R.P. Appeals disposed Of.

,
J