Holding

Compensation under the 2013 Act must be based on the highest of the values under Section 26(1), which in this case is the circle rate prescribed by the Stamp Act, and the theory of deduction does not apply.

Summary

The Madhya Pradesh Road Development Corporation sought to acquire land for a highway project and determined compensation using the circle rate fixed under the Indian Stamp Act, as prescribed by the Collector’s Guidelines. The landowners challenged the award, arguing that the compensation was excessive and that the "theory of deduction" should reduce the amount, as applied under the older 1894 Land Acquisition Act. The Supreme Court examined the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, particularly Section 26(1), and held that the highest value – the circle rate under Clause (a) – governs and that the theory of deduction is inapplicable to the 2013 Act. It further clarified that the Collector may adjust the market value only if a reasoned opinion is recorded, which was absent here. Consequently, the Court upheld the Commissioner’s award and dismissed the corporation’s appeals.

Issues considered

The applicability of the "theory of deduction" to compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
Whether the market value of land for acquisition under the 2013 Act must be determined using the circle rate specified under the Indian Stamp Act as the highest value under Section 26(1).
The extent of the Collector’s discretion under Explanation 4 of Section 26(1) to adjust market value and whether such discretion was exercised in this case.
Whether the High Court erred in holding that the theory of deduction could be applied to reduce compensation under the 2013 Act.

Legislation cited

Arbitration and Conciliation Act, 1996s. 34(3), s. 37
Income Tax Act, 1961s. 43CA, s. 45, s. 49, s. 50C, s. 55
Indian Stamp Act, 1899s. 2
Land Acquisition Act, 1894s. 11, s. 15, s. 23, s. 24, s. 25
Madhya Pradesh Preparation and Revision of Market Value Guideline Rules, 2018
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013s. 105(3), s. 23, s. 26, s. 27, s. 28

Subjects

Theory of deductionCollector’s guidelinesCircle ratesMarket-valuePrinciples of compensationLand acquisitionMarket rateNon-converted agricultural landConverted agricultural landRehabilitation and resettlementUndeveloped piece of landDeveloped landPotential valueInternational Valuation Standards CouncilEstimated amountInflate or deflate priceSpecial concessions or considerationsUnderdeveloped landsDevelopment chargesPrinciple of beltingComparative sale/exemplar methodArbitral awardCommissionerEase of living and doing businessMarket priceStamp duty

Judgment

[2025] 3 S.C.R. 1277 : 2025 INSC 408

Madhya Pradesh Road Development Corporation
v.
Vincent Daniel and Others
(Civil Appeal No. 3998 of 2024)
27 March 2025
[Sanjiv Khanna,* CJI and Sanjay Kumar, J.]

Issue for Consideration
The issue relates to the applicability of the “theory of deduction”
for determining the compensation payable under The Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013.

Headnotes†
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 – ss.26,
23, 27, 28, 105(3) – Indian Stamp Act, 1899 – Land Acquisition
Act, 1894 – ss.11, 15, 23-25 – Madhya Pradesh Preparation
and Revision of Market Value Guideline Rules, 2018 – Theory
of deduction – Non-applicability of – Acquisition made under
the 2013 Act – On facts, the market value was determined on
the basis of the circle rate (Collector’s guideline framed under
the Stamp Act) – Whether the compensation was calculated in
accordance with the 2013 Act and if it can be reduced applying
the theory of deduction:
Held: The computation in the award passed by the Commissioner
directing payment of compensation on the basis of the circle rate
is upheld – In order to determine the compensation, the market
value of the land must first be computed u/s.26, 2013 Act – In
the present case, Cl.(b) of s.26(1) would have no application as
there are no exemplars in the vicinity to draw a comparison and
arrive at the average sale price in terms of Explanations 1 and 2
to s.26(1) – Further, as this acquisition does not involve private
companies or public-private partnerships, cl.(c) of s.26(1) would
also not apply – Therefore, the highest value would be the one
determined under cl.(a), i.e., the market value specified under the
Stamp Act – In the present case, this value would be the circle rate
fixed for the year 2014-2015 under the Collector’s Guidelines framed
under the Stamp Act – The Commissioner applied the Collector’s
* Author
1278 [2025] 3 S.C.R.

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Guidelines by using the rate provided for non-converted agricultural
land – The Commissioner further supplemented this amount by
accounting for the assets attached to the land and adding the
solatium payable – Compensation was calculated in accordance
with the mandate of the 2013 Act – Thus, no reduction in the
amount can be granted by applying the theory of deduction – It has
been left to the Collector’s discretion to make adjustments to the
market value determined through s.26(1), if deemed necessary in
the opinion of the Collector – However, in the facts of the present
case, there was no such formation of opinion by the Competent
Authority or the Commissioner – Appellant-Corporation cannot
complain about the circle rate fixed by the State Government –
Argument of the appellant, that this circle rate is not the baseline
or floor rate, and is too high not accepted – Concerned authorities
should fix circle rates scientifically and in accordance with the
law – It is their responsibility to ensure that circle rates are neither
inflated nor disproportionately low – When the citizens are required
to pay stamp duty on the notified circle rate, the public authorities,
including state development corporations acquiring land from private
individuals, must adhere to the same – If the circle rate is inflated
or does not reflect the true market value, it is incumbent upon the
State Government to take corrective steps – State Government or
the development corporation under the State Government cannot
complain that they have been compelled to acquire land at the
circle rate fixed by the State – Appeals filed by the appellant are
dismissed – Arbitration and Conciliation Act, 1996. [Paras 40-43]

Circle Rates – Importance – Proper fixation of circle rates,
advisory to State Governments:
Held: Fixing fair and accurate circle rates has a direct impact
on each citizen – An inflated rate results in an unfair financial
burden on purchasers – Conversely, an undervalued rate leads to
inadequate stamp duty collection, adversely affecting the State’s
revenue – Circle rates which reflect the market price ensure proper
revenue collection for the State by preventing under-valuation
of properties – Circle rates, when determined while accounting
for factors that cause variations in the market price of land, can
facilitate predictability in transactions and curtail litigation – The
standardized circle rates should be fixed at the floor or baseline
price, as it would be grossly unfair to ask the public to pay stamp
duty on over-valued circle rates – It is advisable that the circle
rates be fixed by expert committees, which not only have officers
from the government but also other specialists who understand
[2025] 3 S.C.R. 1279

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

the market conditions – Methodically and scientifically fixed circle
rates can contribute to strengthening the economy and boosting
tax collections – While serving the interests of honest taxpayers,
accurate circle rates would simultaneously deter non-compliant
taxpayers by preventing under-valuation – Rational and fair circle
rates reflect and are a prerequisite for good governance – Given
the financial implications of fixation of circle rates on each member
of the society, the data and details for computation of circle rates
should be made public – Income Tax Act, 1961. [Paras 35, 37, 38]

Land Acquisition Act, 1894 – Theory of deduction – Purpose:
Held: The theory of deduction, though not statutorily prescribed,
has been applied by courts to compute the compensation payable
under the Acquisition Act, 1894 primarily for two reasons – First,
consideration of the potential value of the land can result in arriving
at an enhanced or increased value, especially for undeveloped
lands – Secondly, in acquisitions of large underdeveloped lands, a
significant portion of the land would have to be utilised for making
minimum amenities like roads, drains, sewers, water and electrical
lines available – Thus, making the land usable would involve a
substantial expense for the buyer in the form of development
charges. [Para 6]

Words and Phrases – The Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 – ss.23(b), 26(1), 27, 31 – “which in
his (Collector’s) opinion should be allowed for the land” in
s.23(b); “criteria”:
Held: s.27 relates to the determination of the amount of
compensation – The Collector having determined the market value
of the land u/s.26 has to calculate the amount of compensation to be
paid to the land owner, as mandated in terms of s.23 – While s.26(1)
uses the word “criteria” for computing the highest value under
Clauses (a) to (c), and mandates that the exercise is undertaken
applying the four Explanations, the final determination vests with
the Collector u/s.27 – This is also evident from the language of
s.26(1) as well as s.23(b), which use the expression “which in his
(Collector’s) opinion should be allowed for the land”. [Para 31]

The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 – s.26(1)
(a)-(c) – Market value u/s.26(1):
1280 [2025] 3 S.C.R.

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Held: The values computed in terms of Clauses (a), (b) and (c)
of s.26(1) are not to be averaged – The highest of the values as
determined by Clauses (a), (b) and (c), is to be treated as the
market value u/s.26(1). [Para 21]
Words and Phrases – The Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 – Four Explanations to s.26(1),
explained – Market value u/s.26(1) – Discretion while
computing – Explanation 4 – “and” to be read as “or” –
Interpretation – “Theory of deduction”; “Principle of belting”,
discussed. [Paras 14, 19, 21-29]

Case Law Cited
Smt. Tribeni Devi and Others v. Collector of Ranchi and Vice
Versa [1972] 3 SCR 208 : (1972) 1 SCC 480; Jag Mahender and
Another v. State of Haryana and Others (2017) SCC Online SC
2160; Lal Chand v. Union of India and Another [2009] 13 SCR 622 :
(2009) 15 SCC 769; Haryana State Agricultural Market Board v.
Krishan Kumar (2011) 15 SCC 297; Dy. Director, Land Acquisition
v. Malla Atchinaidu and Others [2006] Supp. 10 SCR 885 : (2006)
12 SCC 87; Mummidi Apparao (Dead) Through LRs. v. Nagarjuna
Fertilizers and Chemicals Limited and Another, AIR 2009 SC 1506;
Bijender and Others v. State of Haryana and Another [2017] 10
SCR 534 : (2018) 11 SCC 180; Jawajee Nagnatham v. Revenue
Divisional Officer, Adilabad, A.P. and Others [1994] 1 SCR 368 :
(1994) 4 SCC 595; Krishi Utpadan Mandi Samiti. Sahaswan, District
Badaun v. Bipin Kumar and Another (2004) 2 SCC 283; R. Sai
Bharathi v. J. Jayalalitha and Others [2003] Supp. 6 SCR 85 :
(2004) 2 SCC 9; The Bengal Immunity Co. Ltd. v. State of Bihar
and Others [1955] 2 SCR 603 : AIR 1955 SC 661; Coromandel
Fertilizers Ltd. v. Union of India and Others [1985] 1 SCR 523 : 1984
Supp. SCC 457; Maharishi Mahesh Yogi Vedic Vishwavidyalaya v.
State of Madhya Pradesh and Others [2013] 13 SCR 464 : (2013)
15 SCC 677 – referred to.
Govt of NCT of Delhi Collectors of Stamps v. CTA Apparels Pvt. Ltd.,
LPA 278/2019 (High Court of Delhi); Sameer Vasudev Morajkar
and Another v. State of Goa, 2024 SCC OnLine Bom 303 (High
Court of Bombay); Narendra Kumar Berlia and Others v. Om
Prakash Berlia and Others, 2021 SCC OnLine Cal 2667 (Calcutta
High Court); K. Natarajan v. District Collector and Another, 2019
SCC OnLine Mad 26166 (Madras High Court) – referred to.
[2025] 3 S.C.R. 1281

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

List of Acts
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013; Indian
Stamp Act, 1899; Arbitration and Conciliation Act, 1996; Land
Acquisition Act, 1894; Madhya Pradesh Preparation and
Revision of Market Value Guideline Rules, 2018; Income Tax Act,
1961.

List of Keywords
Theory of deduction; Collector’s guidelines; Circle rates; Market-
value; Principles of compensation; Land acquisition; Market
rate; Non-converted agricultural land; Converted agricultural
land; Rehabilitation and resettlement; Undeveloped piece of
land; Developed land; Potential value; International Valuation
Standards Council; Estimated amount; Inflate or deflate price;
Special concessions or considerations; Underdeveloped lands;
Development charges; Principle of belting; Comparative sale/
exemplar method; Arbitral award; Commissioner; Ease of living
and doing business; Market price; Stamp duty.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3998 of 2024
From the Judgment and Order dated 13.04.2022 of the High Court
of M.P. Principal Seat at Jabalpur in ARBA No. 87 of 2021
With
Civil Appeal No(s). 3999, 4004, 4005, 4012, 4002, 4013, 4006,
4001, 4000, 4014 and 4003 of 2024

Appearances for Parties
Advs. for the Appellant:
K.M. Nataraj, ASG, Harmeet Singh Ruprah, Sharath Nambiar.
Advs. for the Respondents:
Santosh Paul, Sr. Adv., Raghvendra Kumar, Anand Kumar Dubey,
Simanta Kumar, Maneesh Pathak, Varun Singh, Nishant Verma,
Randhir Kumar Ojha, Sanjeev Kumar Chaturvedi, Sriharsh Nahush
Bundela, Vedant Mishra, Manish Jain, Virendra Mohan, Akshat
Shrivastava, Satvic Mathur, Ms. Pooja Shrivastava.
1282 [2025] 3 S.C.R.

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Judgment / Order of the Supreme Court

Judgment

Sanjiv Khanna, CJI

The issue raised in the present batch of appeals filed by the
appellant, Madhya Pradesh Road Development Corporation, relates
to the applicability of the “theory of deduction” for determining the
compensation payable under The Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013.1
2. Before examining the legal position, it would be appropriate to set
out the facts in brief:
• By a Gazette Notification dated 12.09.2014, the Central
Government declared its intention of acquiring the stretch of land
falling within 3.4 km to 22.8 km of the Jabalpur-Mandla-Chilpi
section, in the district of Jabalpur, State of Madhya Pradesh.
The purpose of the acquisition was stated to be widening, four-
laning, maintenance, management and operation of National
Highway No.12-A. On 30.10.2014, the notification was also
published in two newspapers.
• By a Gazette Notification dated 02.02.2015, the land was
declared to have been acquired.
• On 31.08.2015, the Competent Authority and Land Acquisition
Officer, Collectorate, Jabalpur passed an award determining
the compensation payable for the land acquired. The award
relies on the mandate of Section 105(3) of the Acquisition
Act, 2013 (as amended).2 It accordingly holds that for the
acquisition in question, provisions relating to the determination of
compensation shall apply in accordance with the First Schedule
of the Acquisition Act, 2013. Further, provisions for rehabilitation

1 Hereinafter, “Acquisition Act, 2013”.
2 Section 105 (3) – The provisions of this Act relating to the determination of compensation in accordance
with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and
infrastructure amenities in accordance with the Third Schedule shall apply to the enactments relating to
land acquisition specified in the Fourth Schedule with effect from 1st January, 2015.
[2025] 3 S.C.R. 1283

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

and resettlement would apply as per the Second Schedule, and
those relating to infrastructural amenities shall apply as per the
Third Schedule of the Acquisition Act, 2013.
• The First Schedule of the Acquisition Act, 2013 states that the
market value of the land has to be determined in accordance
with Section 26 of the Acquisition Act, 2013. Clause (a) to
Section 26(1) adopts the market value as specified under the
Indian Stamp Act, 18993. Based on the date of the Gazette
Notification published as per Section 11 of the Acquisition Act,
2013, i.e., on 12.09.2014, the Competent Authority deemed
it appropriate to compute the market value according to the
Collector’s Guidelines for the year 2014-20154. These guidelines
have been formulated in the exercise of the powers conferred
under the Stamp Act. The Collector’s Guidelines have been
annexed as ‘Annexure P-1’ to the present appeal.
• Paragraph 4.1 of the Collector’s Guidelines deals with municipal
corporation areas of Jabalpur amongst other districts. It provides
for the valuation of two kinds of land – converted agricultural
land and non-converted agricultural land. These are further
divided into Categories (A) and (B). Category (A) applies when
the area of land is less than or equal to 1000 square meters,
while Category (B) applies when the area of land exceeds 1000
square meters.
• The Competent Authority determined the concerned area to
be non-converted land of more than 1000 square meters,
which would fall under Category (B). According to the method
prescribed under Category (B), the first 1000 square meters are
to be valued in accordance with Category (A). This corresponds
to the rate applicable to residential plots set out in Form-1 of
the Collector’s Guidelines. The remaining area is to be valued
at the rate for agricultural land as specified in Form-3 of the
Collector’s Guidelines. In the present case, the Competent
Authority applied the rate for Village Katiyaghat, which is
specified as Rs.1,50,00,000 per hectare under Form-3. The

3 Hereinafter, “Stamp Act”.
4 Hereinafter, “Collector’s Guidelines”.
1284 [2025] 3 S.C.R.

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Competent Authority determined the value of the land to be
Rs. 97,50,000. Over this amount, the Competent Authority also
factored in assets attached to the land and the solatium payable.
• By following the aforesaid procedure, the total compensation
payable for the acquisition of the land belonging to Respondent
No. 1, Vincent Daniel, was calculated to be Rs. 2,05,42,164/-.
• Dissatisfied with the compensation, Respondent No. 1, Vincent
Daniel, as the other landowners, appealed to the Commissioner
against the decision of the Competent Authority. One of the
grounds raised in the appeal was that the rate at which the
compensation was awarded was significantly lower than the
market rate.
• The appellant, Madhya Pradesh Road Development Corporation,
filed its reply raising several contentions. They submitted that
for an undeveloped piece of land, the compensation was
disproportionately high. A portion of the land would have to
be foregone to develop roads, drainage, electricity poles, etc.,
which would come at a significant expense. Therefore, it was
argued that the principles of compensation for developed lands
would not apply in the present case.
• The Commissioner in his arbitral award held that the Collector’s
Guidelines were binding. However, the Competent Authority
had made an error in applying the same. For 0.650 hectares
of land situated inside the Katiyaghat road, at Khasra No. 53
of village/mauja Katiyaghat, Jabalpur, the rate of Rs. 12,000
per square meter should have been applied for the first 1000
square meters, while applying the rate of Rs. 1,50,00,000 per
hectare for the balance land. After adding 100% solatium and
interest, an additional amount of Rs. 2,21,11,562/- was found
to be payable.
• Against the Commissioner’s award, the appellant, Madhya
Pradesh Road Development Corporation, preferred objections
before the District Court under Section 34(3) of the Arbitration
and Conciliation Act, 19965. One of the contentions raised

5 Hereinafter, “Arbitration Act”.
[2025] 3 S.C.R. 1285

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

was that the compensation should not have been awarded by
solely relying upon the Collector’s Guidelines, as the land was
undeveloped.
• The objections were dismissed by the District Judge. It was
observed that the land in question was situated within the
municipal areas on which the Collector’s Guidelines were
applicable. It was noted that the compensation was enhanced
in compliance with the Collector’s Guidelines. Form-1 of the
Collector’s Guidelines prescribes the rate of Rs. 20,000 per
square meter for residential plots and Rs. 40,000 per square
meter for commercial ones on the Katiyaghat road. However,
for the residential areas inside the Katiyaghat road, the rate is
Rs. 12,000 per square meter, which was rightly applied by the
Commissioner. It was also observed that the award passed was
not in violation of public policy and, therefore, Clause (b)(ii) to
Section 34(2) of the Arbitration Act would not be applicable.
• Consequently, the appellant, Madhya Pradesh Road
Development Corporation, preferred appeals under Section
37 of the Arbitration Act before the High Court, which were
dismissed by the impugned judgment dated 13.04.2022.
• The impugned judgment dated 13.04.2022 passed by the High
Court of Madhya Pradesh, inter alia, distinguishes between the
provisions of the Land Acquisition Act, 18946 and the Acquisition
Act, 2013. It holds that according to Section 26(1) of the
Acquisition Act, 2013, if the market value as determined under
the Stamp Act is the highest of the other computed values, it will
be binding. The theory of deduction as applied by the courts in
determining the market value under the Acquisition Act, 1894,
will not apply when determining compensation under Section
26(1) of the Acquisition Act, 2013. Thus, the judgments applying
the theory of deduction under the Acquisition Act, 1894 do not
have any precedential value under the Acquisition Act, 2013.
The impugned judgment also refers to the Madhya Pradesh
Preparation and Revision of Market Value Guideline Rules,

6 Hereinafter, “Acquisition Act,1894”.
1286 [2025] 3 S.C.R.

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20187 for the procedure of calculating of the market value of
land under the Stamp Act. Lastly, the High Court states that it
has limited power and jurisdiction under Section 37 read with
Section 34 of the Arbitration Act to interfere with the award
passed by the Commissioner.
3. In order to answer the issue before us, we would first refer to the
theory of deduction and the reasons for its application by this Court
under the Acquisition Act, 1894.
4. To compute compensation under the Acquisition Act, 1894, the general
threshold applied by the courts is to ascertain the market value of the
acquired land. This also includes its potential value with reference to
the conditions prevailing at the time of making a declaration under
Section 4(1) of the Acquisition Act, 1894.8 The International Valuation
Standards Council states that the market value of the land represents
the estimated amount that a willing buyer would pay prudently to a
willing seller in an arm’s length transaction, without compulsion, on
a particular valuation date.9 This estimate includes characteristics
unique to the land that would inflate or deflate its price but excludes
special concessions or considerations granted by anyone associated
with the sale. The buyer here refers to one who is motivated but is
neither over-eager nor determined to buy irrespective of the price
quoted. Similarly, the seller here is neither over-eager nor forced.
Both parties are assumed to be conducting the transaction in keeping
with market realities, rather than terms that are hypothetical or cannot
be anticipated to exist. The factual circumstances of the parties are
not part of this consideration.
5. In Smt. Tribeni Devi and Others v. Collector of Ranchi and Vice
Versa,10 this Court acknowledged several methods for ascertaining

7 Hereinafter, “2018 Rules”.
8 4. Publication of preliminary notification and powers of officers thereupon.—(1) Whenever it
appears to the appropriate Government that land in any locality is needed or is likely to be needed for any
public purpose or for a company a notification to that effect shall be published in the Official Gazette and
in two daily newspapers circulating in that locality of which at least one shall be in the regional language
and the Collector shall cause public notice of the substance of such notification to be given at convenient
places in the said locality (the last of the dates of such publication and the giving of such public notice,
being hereinafter referred to as the date of publication of the notification).
9 International Valuation Standards Council, International Valuation Standards 2025, effective 31 January
2025.
10 (1972) 1 SCC 480.
[2025] 3 S.C.R. 1287

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

the market value of land, such as – (i) the opinion of experts; (ii)
the price paid in bona fide transactions for the purchase of adjacent
lands possessing similar advantages and disadvantages; and (iii)
capitalization of the actual and immediate prospective annual profits
from the land. However, this exercise must take into consideration
subjective features and special circumstances. Land values vary
based on their qualitative and quantitative attributes, location,
proximity to developed land, potential, etc. The lack of reliable local
sale data, coupled with variable land conditions, undermines accurate
assessment. Nevertheless, framing objective standards can help arrive
at an empirical value that most closely reflects the true market price.
6. The theory of deduction, though not statutorily prescribed, has been
applied by courts to compute the compensation payable under the
Acquisition Act, 1894 primarily for two reasons. First, consideration of
the potential value of the land can result in arriving at an enhanced
or increased value, especially for undeveloped lands. Secondly, in
acquisitions of large underdeveloped lands, a significant portion of
the land would have to be utilised for making minimum amenities
like roads, drains, sewers, water and electrical lines available. Thus,
making the land usable would involve a substantial expense for the
buyer in the form of development charges.
7. The theory of deduction was applied in the case of Tribeni Devi
(supra), which was decided in 1971. Recently, in a 2017 decision
in Jag Mahender and Another v. State of Haryana and Others11
as well, the theory of deduction was applied to arrive at a fair
and reasonable market value. This judgment also states that the
prospective prices of smaller developed plots cannot be adopted
to determine the value of underdeveloped tracts of land. Further,
the peculiarities of the land – whether the same is plain or uneven,
the soil is soft or hard, whether the land is situated on a hill or is
low-lying, etc. are all relevant factors. A given parcel of land has
multiple dimensions – social, economic, territorial, and environmental.
Accordingly, the market value must be computed through a valuation
model based on attribute pricing rather than fixed prices. In some
cases, sale deeds for adjoining lands can be an ‘exemplar’, i.e., lands
that are similarly placed and have comparable attributes. However,

11 (2017) SCC Online SC 2160.
1288 [2025] 3 S.C.R.

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computation of the market value may require calibration, taking into
consideration the advantages and disadvantages of the acquired land
relative to the exemplars. The exemplars must be carefully chosen,
especially as lands are often heuristically grouped in localities at the
same rate due to a lack of specific data.
8. On the question of the quantum of deduction, in Jag Mahender
(supra), this Court held that the computed value can be reduced
by one-third to account for development charges, though in certain
cases deduction up to 50% has also been allowed while applying
the theory of deduction.12 In Tribeni Devi (supra) this Court had
deducted 33.3% towards the cost of development.
9. In Lal Chand v. Union of India and Another,13 this Court stated
that ‘fair deduction’ for development has two components. First, the
area required to be utilised for development, and second, the cost of
such development. For instance, the Delhi Development Authority is
required to utilise as much as 40% of the area in the layout for roads,
drains, parks, playgrounds, civic amenities, community facilities, etc.
The cost of developing an underdeveloped land into a developed
layout is substantial and, in some cases, can be as much as 75% of
the cost of the developed plot. At the same time, it was observed that
if the acquired land is in a semi-developed urban area and not in an
underdeveloped rural area, the deduction for development would be
minimal. Thus, the theory of deduction is fact and situation-specific.
10. This Court has also applied other principles, such as the “principle
of belting”, to arrive at an accurate market value. In Bijender and
Others v. State of Haryana and Another,14 this Court observed
that the principle of belting is a judicially accepted method for
determining the market value of the acquired land fairly. It is applied
when different parcels of land with different survey numbers, having
different locations, are acquired and put together to form a large
chunk of land. This large chunk cannot be taken as a compact

12 Haryana State Agricultural Market Board v. Krishan Kumar, (2011) 15 SCC 297; Dy. Director, Land
Acquisition v. Malla Atchinaidu and Others, (2006) 12 SCC 87; Mummidi Apparao (Dead) through LRs. v.
Nagarjuna Fertilizers and Chemicals Limited and Another, AIR 2009 SC 1506 and Lal Chand v. Union of
India, (2009) 15 SCC 769.
13 (2009) 15 SCC 769.
14 (2018) 11 SCC 180.
[2025] 3 S.C.R. 1289

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

block. The acquired land is usually divided into two or three belts
depending upon the facts of each case. The market value of the front
road abutting the main road is taken to fetch the maximum value
whereas the second belt fetches lesser value and the third belt, if
carved out, would command a value lower still.
11. The decision in Lal Chand (supra) is relevant for another reason.
It analyses whether the circle rates or guideline values fixed under
the Stamp Act can be relied upon for computing the market value,
which forms the basis for determining the compensation payable. It
refers to a series of judgments, including Jawajee Nagnatham v.
Revenue Divisional Officer, Adilabad, A.P. and Others15 and
Krishi Utpadan Mandi Samiti. Sahaswan, District Badaun v. Bipin
Kumar and Another16, which, inter alia, hold that the market value
under Section 23 of the Land Acquisition Act, 1894 cannot be fixed
solely on the basis of the rates mentioned in the basic valuation
registers. These registers are maintained to curb the under-valuation
of land, a practice adopted to evade the payment of proper stamp
duty. Jawajee Nagnatham (supra) observes that the basic valuation
register is maintained to ensure the collection of stamp duty under
Section 47A of the Stamp Act, as amended in Andhra Pradesh. Section
47A confers no express power on the Government to determine the
market value of land.
12. In its ratio, Lal Chand (supra) observes that the circle rate or guideline
value rate can only be considered a prima facie basis for ascertaining
the market value. The purpose of determination of circle rates through
the relevant guidelines is to protect the State’s revenue collection.
The judgment in Lal Chand (supra) also refers to R. Sai Bharathi v.
J. Jayalalitha and Others,17 a case pertaining to the Prevention
of Corruption Act, 1988, wherein this Court observes that circle or
guideline rates fixed by the authorities under the Stamp Act are
merely prima facie rates prevailing in the area and are not final and
determinative. Thus, the guideline or circle rate fixed by the Collector
does not take away the right of a person to show that the property in
question is correctly valued. It is open, both to the registering authority

15 (1994) 4 SCC 595.
16 (2004) 2 SCC 283.
17 (2004) 2 SCC 9.
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as well as the person seeking registration, to prove the actual market
value of the land/property before the authorities.
13. Lal Chand (supra) also draws a distinction between guideline
values prescribed by non-statutory valuation registers, and circle
rates determined by expert committees constituted under the Stamp
Act. State legislations can lay down a detailed procedure, assigning
the task of valuation to expert committees. The expert committees
comprise valuation specialists and officers from the Departments of
Revenue, Survey and Settlement, Public Works, etc. They must follow
a scientific process for the assessment of market values of different
types of lands. The valuation framework must prescribe distinct
methods for valuing land, plots, houses, and buildings, accounting for
variable factors. For agricultural land, such variables would include the
nature of the soil, location, nature of the crop, the yield for specified
years, proximity to roads, markets, etc. The valuation committees are
required to invite objections and suggestions from the public both
before the initial fixation of rates and during their periodic revision.
Circle rates computed through a detailed and scientific exercise
would be a relevant piece of evidence for determining the market
value, being equivalent to expert evidence.
14. As observed above, to account for the unique factors affecting a piece
of land, methods such as the comparative sale/exemplar method,
belting method and expert opinion method have been evolved through
judicial pronouncements to arrive at the accurate market value.
The computation of circle rates and market values is a complex
exercise that involves detailed research, data collection, and the use
of scientific methods. International standards reflect this complexity,
noting that the concept of market value takes on different colours
depending on the subject to which it is applied.18 For example, the
valuation of land involves entirely different considerations from the
valuation of financial instruments. These standards also recognise
the wide range of variables that influence land valuation specifically,
and the need for distinct approaches to determine accurate market
value. Authorities and institutions must be cognizant of these aspects
while forming policies, as well as when giving meaning to legislation
and interpreting the law.

18 Supra note 10.
[2025] 3 S.C.R. 1291

Madhya Pradesh Road Development Corporation v.
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15. We now turn our attention to the statutory provisions of the Acquisition
Act, 1894 and the Acquisition Act, 2013. At the outset, we must
observe that the impugned judgment primarily refers to Section 23 of
the Acquisition Act, 1894 and Section 26 of the Acquisition Act, 2013
and draws a distinction between the language of the two sections.
However, to address the issue before us, we must refer to a few
other provisions as well. We would like to refer to Sections 11, 15,
24 and 25 in addition to Section 23 of the Acquisition Act, 1894.
For the Acquisition Act, 2013, we would like to refer to Sections 23,
27 and 28 in addition to Section 26. However, for clarity, we have
juxtaposed Section 28 of the Acquisition Act, 2013 with Section 23 of
the Acquisition Act, 1894 as they are similar, and Section 27 of the
Acquisition Act, 2013 with Section 25 of the Acquisition Act, 1894.

1894 Act 2013 Act

11 . E n q u i r y a n d a w a r d b y 23. Enquiry and land acquisition
Collector.— (1) On the day so fixed, or award by Collector.— On the day
on any other day to which the enquiry so fixed, or on any other day to which
has been adjourned, the Collector shall the enquiry has been adjourned, the
proceed to enquire into the objection Collector shall proceed to enquire
(if any) which any person interested into the objections (if any) which any
has stated pursuant to a notice given person interested has stated pursuant
under section 9 to the measurements to a notice given under Section 21,
made under section 8, and into the to the measurements made under
value of the land at the date of the Section 20, and into the value of the
publication of the notification under land at the date of the publication of
section 4, sub-section (1), and into the notification, and into the respective
the respective interests of the persons interests of the persons claiming the
claiming the compensation and shall compensation and rehabilitation and
make an award under his hand of- resettlement, shall make an award
under his hand of—
(i) the true area of the land;
(a) the true area of the land;
(ii) the compensation which in his
opinion should be allowed for the (b) the compensation as determined
land; and under Section 27 along with
Rehabilitation and Resettlement award
(iii) the apportionment of the said
as determined under Section 31 and
compensation among all the persons
which in his opinion should be allowed
known or believed to be interested
for the land; and
in the land, or whom, or of whose
claims, he has information, whether or
not they have respectively appeared
before him:
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Provided that no award shall be made (c) the apportionment of the said
by the Collector under this sub-section compensation among all the persons
without the previous approval of the known or believed to be interested
appropriate Government or of such in the land, or whom, or of whose
officer as the appropriate Government claims, he has information, whether or
may authorize in this behalf: not they have respectively appeared
before him.
Provided further that it shall be
competent for the appropriate
Government to direct that the Collector
may make such award without such
approval in such class of cases as the
appropriate Government may specify
in this behalf.
(2) Notwithstanding anything contained
in sub-section (1), if at any stage of the
proceedings, the Collector is satisfied
that all the persons interested in the
land who appeared before him have
agreed in writing on the matters to be
included in the award of the Collector
in the form prescribed by rules made
by the appropriate Government, he
may, without making further enquiry,
make an award according to the terms
of such agreement.
(3) The determination of compensation
for any land under sub-section (2) shall
not in any way affect the determination
of compensation in respect of other
lands in the same locality or elsewhere
in accordance with the other provisions
of this Act.
(4) Notwithstanding anything contained
in the Registration Act, 1908 (16 of
1908), no agreement made under
subsection (2) shall be liable to
registration under that Act.

15. Matters to be considered and 26. Determination of market value of
neglected.— In determining the land by Collector.— (1) The Collector
amount of compensation, the collector shall adopt the following criteria in
shall be guided by the provisions assessing and determining the market
contained in section 23 and 24. value of the land, namely:—
[2025] 3 S.C.R. 1293

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(a) the market value, if any, specified
in the Indian Stamp Act, 1899 (2 of
1899) for the registration of sale deeds
or agreements to sell, as the case
may be, in the area, where the land
is situated; or
(b) the average sale price for similar
type of land situated in the nearest
village or nearest vicinity area; or
(c) consented amount of compensation
as agreed upon under sub-section
(2) of Section 2 in case of acquisition
of lands for private companies or for
public private partnership projects,
whichever is higher:
Provided that the date for determination
of market value shall be the date on
which the notification has been issued
under Section 11.
Explanation 1.—The average sale
price referred to in clause (b) shall
be determined taking into account the
sale deeds or the agreements to sell
registered for similar type of area in the
near village or near vicinity area during
immediately preceding three years of
the year in which such acquisition of
land is proposed to be made.
Explanation 2.—For determining
the average sale price referred to
in Explanation 1, one-half of the
total number of sale deeds or the
agreements to sell in which the highest
sale price has been mentioned shall
be taken into account.
Explanation 3.—While determining the
market value under this section and
the average sale price referred to in
Explanation 1 or Explanation 2, any
price paid as compensation for land
acquired under the provisions of this
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Act on an earlier occasion in the district
shall not be taken into consideration.
Explanation 4.—While determining
the market value under this section
and the average sale price referred
to in Explanation 1 or Explanation 2,
any price paid, which in the opinion
of the Collector is not indicative of
actual prevailing market value may
be discounted for the purposes of
calculating market value.
(2) The market value calculated as
per sub-section (1) shall be multiplied
by a factor to be specified in the First
Schedule.
(3) Where the market value under sub-
section (1) or sub-section (2) cannot
be determined for the reason that—
(a) the land is situated in such area
where the transactions in land are
restricted by or under any other law for
the time being in force in that area; or
(b) the registered sale deeds or
agreements to sell as mentioned
in clause (a) of sub-section (1) for
similar land are not available for the
immediately preceding three years; or
(c) the market value has not been
specified under the Indian Stamp Act,
1899 (2 of 1899) by the appropriate
authority,
the State Government concerned shall
specify the floor price or minimum price
per unit area of the said land based
on the price calculated in the manner
specified in sub-section (1) in respect
of similar types of land situated in the
immediate adjoining areas:
Provided that in a case where the
Requiring Body offers its shares to the
owners of the lands (whose lands have
[2025] 3 S.C.R. 1295

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

been acquired) as a part compensation,
for acquisition of land, such shares in
no case shall exceed twenty-five per
cent of the value so calculated under
sub-section (1) or sub-section (2) or
sub-section (3) as the case may be:
Provided further that the Requiring
Body shall in no case compel any
owner of the land (whose land has
been acquired) to take its shares,
the value of which is deductible in
the value of the land calculated under
sub-section (1):
Provided also that the Collector shall,
before initiation of any land acquisition
proceedings in any area, take all
necessary steps to revise and update
the market value of the land on the
basis of the prevalent market rate in
that area:
Provided also that the appropriate
Government shall ensure that
the market value determined for
acquisition of any land or property of
an educational institution established
and administered by a religious or
linguistic minority shall be such as
would not restrict or abrogate the right
to establish and administer educational
institutions of their choice.

23. Matters to be considered on 28. Parameters to be considered
determining compensation.— by Collector in determination of
(1) In determining the amount of award.— In determining the amount of
compensation to be awarded for land compensation to be awarded for land
acquired under this Act, the Court shall acquired under this Act, the Collector
take into consideration shall take into consideration—
first, the market-value of the land firstly, the market value as determined
at the date of the publication of the under Section 26 and the award
[notification under section 4, sub- amount in accordance with the First
section (1)]; and Second Schedules;
secondly, the damage sustained by secondly, the damage sustained by
the person interested, by reason of the person interested, by reason of the
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the taking of any standing crops trees taking of any standing crops and trees
which may be on the land at the time which may be on the land at the time
of the Collector’s taking possession of the Collector’s taking possession
thereof; thereof;
thirdly, the damage (if any) sustained thirdly, the damage (if any) sustained
by the person interested, at the time by the person interested, at the time
of the Collector’s taking possession of the Collector’s taking possession of
of the land, by reason of serving such the land, by reason of severing such
land from his other land; land from his other land;
fourthly, the damage (if any) sustained fourthly, the damage (if any) sustained
by the person interested, at the time by the person interested, at the time
of the Collector’s taking possession of of the Collector’s taking possession of
the land, by reason of the acquisition the land, by reason of the acquisition
injuriously affecting his other property, injuriously affecting his other property,
movable or immovable, in any other movable or immovable, in any other
manner, or his earnings; manner, or his earnings;
fifthly, in consequence of the acquisition fifthly, in consequence of the acquisition
of the land by the Collector, the person of the land by the Collector, the person
interested is compelled to change interested is compelled to change
his residence or place of business, his residence or place of business,
the reasonable expenses (if any) the reasonable expenses (if any)
incidental to such change, and incidental to such change;
sixthly, the damage (if any) bona sixthly, the damage (if any) bona
fide resulting from diminution of the fide resulting from diminution of the
profits of the land between the time profits of the land between the time
of the publication of the declaration of the publication of the declaration
under section 6 and the time of the under Section 19 and the time of the
Collector’s taking possession of the Collector’s taking possession of the
land. land; and
(1A) In addition to the market value of seventhly, any other ground which
the land, as above provided, the Court may be in the interest of equity, justice
shall in every case award an amount and beneficial to the affected families
calculated at the rate of twelve per
centum per annum on such market
value for the period commencing on
and from the date of the publication of
the notification under section 4, sub-
section (1), in respect of such land to
the date of the award of the Collector
or the date of taking possession of the
land, whichever is earlier.
[2025] 3 S.C.R. 1297

Madhya Pradesh Road Development Corporation v.
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Explanation. - In computing the period
referred to in this sub-section, any
period or periods during which the
proceedings for the acquisition of the
land were held up on account of any
stay or injunction by the order of any
Court shall be excluded.
(2) In addition to the market value
of the land as above provided, the
Court shall in every case award a
sum of [thirty per centum] on such
market value, in consideration of the
compulsory nature of the acquisition.

24. Matters to be neglected in
determining compensation. -
But the Court shall not take into
consideration—
first, the degree of urgency which has
led to the acquisition;
secondly, any disinclination of the
person interested to part with the land
acquired;
thirdly, any damage sustained by him
which, if caused by a private person,
would not render such person liable
to a suit;
fourthly, any damage which is likely
to be caused to the land acquired,
after the date of the publication of the
declaration under section 6, by or in
consequence of the use to which it
will be put;
fifthly, any increase to the value of the
land acquired likely to accrue from
the use to which it will be put when
acquired;
sixthly, any increase to the value of
the other land of the person interested
likely to accrue from the use to which
the land acquired will be put;
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seventhly, any outlay or improvements
on, or disposal of the land acquired,
commenced, made or effected
without the sanction of the Collector
after the date of the publication of
the [notification under section 4,
sub-section (1); or
eighthly, any increase to the value of
the land on account of its being put
to any use, which is forbidden by law
or opposed to public policy.

25. Amount of compensation 27. Determination of amount of
awarded by Court not to be lower compensation.—The Collector
than the amount awarded by having determined the market value of
the Collector.— The amount of the land to be acquired shall calculate
compensation awarded by the Court the total amount of compensation to
shall not be less than the amount be paid to the land owner (whose land
awarded by the Collector under has been acquired) by including all
section 11. assets attached to the land.

16. Under the Land Acquisition Act, 1894, Section 11 deals with enquiry
and the award of the Collector. The award should state (i) the true
area of the land; (ii) the compensation which in the Collector’s opinion
should be allowed for the land; and (iii) the apportionment of the
compensation among interested persons. Section 15 states that
in determining the amount of compensation, the Collector shall be
guided by the factors stated in Sections 23 and 24. Section 23 sets
out the factors that must be considered while determining the amount
of compensation. The first factor specified is the market value of the
land, which must be determined as on the date of publication of the
notification under Section 4(1) of the Acquisition Act, 1894. For the
present decision, we need not refer to the other clauses, except noting
that they deal with relevant aspects for determining compensation,
such as the damage sustained by the owner, payment of solatium
for compulsory acquisitions, etc. Section 24 lists the factors to be
ignored while calculating the compensation. These include urgency,
unwillingness to part with the land, or any such damage that would
not be actionable if caused by a private person. It also excludes any
outlay, improvements, or sale made without the Collector’s approval
after publication of the notification under Section 4(1). Increases in
value due to unlawful use of the land are also to be ignored. Section
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Madhya Pradesh Road Development Corporation v.
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25 states that the amount of compensation awarded by the court
cannot be less than the compensation awarded by the Collector
under Section 11.
17. Under the Acquisition Act, 2013, Section 23 states that after
conducting an enquiry into the objections raised by interested
persons, the Collector shall make an award as to (i) the true area of
the land; (ii) the compensation determined under Section 27, along
with the Rehabilitation and Resettlement Award as per Section 31
of the Acquisition Act, 2013, and which in the Collector’s opinion
should be allowed for the land; and (iii) the apportionment of the said
compensation among interested persons. In particular, the appellant,
Madhya Pradesh Road Development Corporation, relies upon the
expression “which in his (Collector’s) opinion should be allowed for
the land” under Section 23(b), referring to the compensation under
Section 27 and Section 31 of the Acquisition Act, 2013. We will
elaborate on this submission subsequently.
18. Section 26 deals with the determination of the market value of the
land by the Collector. Sub-section (1) to Section 26 consists of three
Clauses, (a), (b) and (c), each prescribing a criterion or standard for
assessing the market value. Clause (a) prescribes the consideration
of the market value specified in the Stamp Act for the registration
of agreements/sale deeds in the area where the concerned land is
situated.
19. Clause (b) to Section 26(1) requires the Collector to consider the
average sale price for similar types of land situated in the nearest
village or the nearest vicinity. This test of average sale price is similar to
the exemplar test which is adopted and applied in cases of acquisition
under the Land Acquisition Act, 1894, but with modifications in terms
of Explanations 1 to 4. Computation under Clause (b) is in relative
terms. Therefore, while drawing a comparison with the average price
of the other lands under Clause (b), the Collector must consider all
such factors that have been held to be relevant for accurate valuation
by this Court. These include the theory of deduction, the principle of
belting, and accounting for other advantages or disadvantages of the
acquired land, in comparison to the lands existing in the same vicinity.
20. Clause (c) to Section 26(1) of the Acquisition Act, 2013 requires the
Collector to take into consideration the amount of compensation
agreed upon by the parties under Section 2(2) of the Acquisition Act,
2013 in cases involving the acquisition of land for private companies
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or public-private partnership projects. These agreements are entered
into voluntarily, based upon consent terms, and reflect the market
value as settled inter se the parties.
21. It is important to note that the values computed in terms of Clauses
(a), (b) and (c) of Section 26(1) of the Acquisition Act, 2013 are not
to be averaged. The highest of the values as determined by Clauses
(a), (b) and (c), is to be treated as the market value under Section
26(1) of the Acquisition Act, 2013.
22. There are four Explanations to Section 26(1) of the Acquisition Act,
2013. Explanations can form part of the main provision and, when so,
can be as central as the provision itself. This Court in The Bengal
Immunity Co. Ltd. v. State of Bihar and Others19 stated that an
explanation appended to a Section or Clause gets incorporated into
it, becomes an integral part of it, and has no independent existence
apart from it. There is, in the eye of law, only one enactment, of which
both the Section and the Explanation are two inseparable parts. They
move in a body if they move at all. Similarly, in Coromandel Fertilizers
Ltd. v. Union of India and Others,20 this Court, in the context of an
Explanation attached to a notification, observed that the notification/
provision has to be read as a whole and should not be construed in
terms that are contrary to the main provision. Explanations to Section
26(1) are equally important as the main provision. Apart from clarifying
the procedure under Clauses (a), (b) and (c), the Explanations also
confer and refer to the discretion which the Collector may exercise
in determining the market value of the acquired land. Thus, while the
statutory language makes the procedure under Clauses (a), (b) and
(c) mandatory, the value as computed according to the Explanations
can be increased, decreased or even discarded.
23. Explanation 1 states that the determination of the average sale price
under Clause (b) must be based on sale deeds or agreements to sell
registered for similar type of lands in the same vicinity, during the
immediately preceding three years from the year in which acquisition
was proposed. Thus, transactions older than three years would be
excluded. Explanation 2 states that to determine the average sale price
under Explanation 1, one-half of the total sale deeds or agreements
to sell in which the highest sale price is mentioned, shall be taken

19 AIR 1955 SC 661.
20 1984 Supp SCC 457.
[2025] 3 S.C.R. 1301

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into account. This also implies that there should be multiple deeds
available for reference. Singular deals may not supply adequate
and reliable data. Explanation 3 states that while determining the
market value under Section 26 and the average sale price referred
to in Explanation 1 or 2, the price paid as compensation for land
acquired under the provisions of this Act on an earlier occasion in
the district, shall not be taken into consideration. Thus, referring to
compensation paid for an earlier acquisition in the concerned district
is expressly barred.
24. Explanation 4 requires specific attention, as it brings the element of
discretion while computing the market value under Section 26(1) to
the forefront. Explanation 4 is divided into two parts. The first part
refers to sub-section (1) to Section 26 – the higher value determined
as per Clauses (a), (b) and (c) of Section 26(1) of the Acquisition Act,
2013. The second part is specific to the average sale price referred
to in Clause (b) to Section 26(1) read with Explanations 1 and 2.
In either case, where the Collector is of the opinion that the value/
price computed by applying these provisions is not indicative of the
actual prevailing market value, they may discount or enhance it to
arrive at the accurate market value.
25. Explanation 4 uses the word “and” in conjoining the values referred
to in the two parts of the Explanation. This is done to expand the
scope of application of the Collector’s discretion to the entire provision,
as is also evident from the phrase “while determining the market
value under this section”. The discretion should not be interpreted
as restricting the discretion to only the average sale price under
Explanations 1 and 2. The two parts must be given a disjunctive
reading, attracting the application of Explanation 4 when either of
the values does not reflect the actual market value. Thus, though
the word “and” is used to connect the two parts, it should be read
as “or” to effectuate the legislative intent.21
26. This interpretation is also supported by the use of the same phrase
in both Explanations 3 and 4. The first part of Explanation 3, which
refers to determining the market value under this Section, will apply
with equal vigour to both Clauses (b) and (c) of Section 26(1) of the
Acquisition Act, 2013. The latter part of Explanation 3 – as in the

21 Maharishi Mahesh Yogi Vedic Vishwavidyalaya v. State of Madhya Pradesh and Others, (2013) 15 SCC
677. See also, Justice G. P. Singh, Principles of Statutory Interpretation, 14th Edition., 530-534.
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case of Explanation 4, which refers to Explanations 1 and 2 – will
specifically apply to Clause (b).
27. Under Explanation 4, the formation of the Collector’s opinion and
any discounting or enhancing of the value must be supported by
recorded reasons. At this stage, if the Collector chooses to make
adjustments to the market value under Explanation 4, the theory of
deduction, the principle of belting and other material factors will also
be taken into account. The reason for this is two-fold. First, because
the calculation of accurate market value is not an exact science, and
therefore the Collector must be mindful of the unique factors which
affect the valuation of a piece of land. Secondly, apart from Clause
(b) to Section 26(1), the mandatory procedure of computation under
the other two Clauses, (a) and (c), does not take into account these
theories and factors, which may result in inaccuracy. Though not
determinative in the facts of the present case, a contrary interpretation
may cause injustice to the landowners in many situations.
28. Sub-section (2) to Section 26 provides that the market value computed
under sub-section (1), including any adjustment under Explanation
4, shall be multiplied by the factors set out in the First Schedule of
the Acquisition Act, 2013.
29. Sub-section (3) to Section 26 applies when the market value cannot
be determined under sub-sections (1) and (2) for the three reasons
stated in Clauses (a), (b) and (c) to Section 26(3) – (a) when land
transactions in the area are restricted by or under any law for the
time being in force; (b) if registered sale deeds and agreements
to sell for similar lands are not available for the preceding three
years as required by Clause (b) to sub-section (1); and (c) when
the market value has not been specified under the Stamp Act by
the appropriate authority. In the statutory language of Clause (b) to
Section 26(3), reference to Clause (a) to Section 26(1) appears to be
in error. The consideration of sale deeds or agreements to sell from
the preceding three years, as required by Explanation 1 to Section
26(1) is for calculating the average sale price under Clause (b) to
Section 26(1) and not Clause (a) to Section 26(1).
30. If any of the three situations stated in Clauses (a) to (c) to Section
26(3) are attracted, the State Government is required to specify the
floor price per unit area for the land. This floor price must be based
on the price of similar types of land situated in the immediately
adjoining areas, calculated according to the procedure under Section
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26(1). We are not concerned and need not interpret the first proviso
or the second proviso. The third proviso states that the Collector,
before initiating a land acquisition process in any area, shall take
all necessary steps to revise and update the market value on the
basis of the prevalent market rate in that area.
31. Section 27 relates to the determination of the amount of compensation.
The Collector having determined the market value of the land under
Section 26, has to calculate the amount of compensation to be
paid to the land owner, as mandated in terms of Section 23 of the
Acquisition Act, 2013. While Section 26(1) of the Acquisition Act,
2013 uses the word “criteria” for computing the highest value under
Clauses (a) to (c), and mandates that the exercise is undertaken
applying the four Explanations, the final determination vests with
the Collector under Section 27 of the Acquisition Act, 2013. This is
also evident from the language of Section 26(1) as well as Section
23(b), which use the expression “which in his (Collector’s) opinion
should be allowed for the land.”
32. Section 28 sets out the parameters to be considered by the Collector
in determining the award. It refers to seven factors for computing
the amount payable as compensation. The very first factor is the
market value as determined under Section 26, and the award amount
computed in accordance with the First and the Second Schedules
to the Acquisition Act, 2013. Other clauses cover damage sustained
due to factors such as loss of standing crops or trees, severance of
land, adverse effects on other property, loss of income, and costs
or losses from change in residence or place of business. Losses,
if any, bona fide resulting from the diminution of the profits are also
to be accounted for. The seventh ground is particularly important.
It states that the Collector can take into consideration any other
ground which may be in the interest of equity, justice and beneficial
to the affected families. This clause will not apply to reduce the
market value of land determined under Section 26, but the Collector
can apply it to enhance the market value in the interest of equity
and justice if it is beneficial to the affected families.
33. During the course of the hearing before us, our attention was drawn
to the process of fixing circle rates in the State of Madhya Pradesh.
The State of Madhya Pradesh formulated the Madhya Pradesh
Preparation and Revision of Market Value Guideline Rules, 2000,
in accordance with the powers conferred by the Stamp Act, which
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now stand revised as the 2018 Rules. The Collector’s Guidelines
dated 03.03.2014, formed under these rules, have been relied upon
by the competent authority to determine the market value.
34. The impugned judgment refers to the revised 2018 Rules applicable
to the State of Madhya Pradesh and has quoted Rule 6, which reads
as under:
“Procedure to prepare Market Value Guideline– While
working out the values of immovable property, the
committees shall take into account the following facts:-
(1) The case of lands:-
(a) classification of land as unirrigated or irrigated,
diverted or non-diverted and the like;
(b) classification under various categories in the
settlements register;
(c) the rate of revenue assessments for each
classification;
(d) other factors which influence the valuation of
the land in question;
(e) points, if any, mentioned by the parties to the
instrument or any other person which required
special consideration;
(f) value of adjacent land or lands in vicinity;
(g) average yield from the land, proximity to road
and market, distance from village site, level of
land transport facilities, facilities available for
irrigation in any form;
(h) the nature of Crops raised on the land;
(i) Use of land as residential, commercial or
industrial;
(j) the relative position of urban area and investment
area or development of the town.
(2) In case of house sites:-
(a) The general value of house sites in locality;
[2025] 3 S.C.R. 1305

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

(b) Proximity to roads, railway stations, bus routes;
(c) Proximity to market, shop and the like;
(d) Amenities available in the place like, Public
Offices, Hospitals and Educational Institutes;
(e) Development activities, industrial improvements
in the vicinity;
(f) Any special feature having a special bearing on
the valuation of the site; and
(g) Commercialization of home location and
affiliation of these with reserved area by master
plan or town and country planning.
(3) In case of buildings:-
(a) type and structure,
(b) locality in which constructed,
(c) plinth area,
(d) year of construction,
(e) kind of material used,
(f) rate of depreciation,
(g) fluctuation in rates,
(h) any special feature having a special bearing on
the valuation of the site;
(i) the purpose for which the building is being used,
and the income, if any, by way of rent per annum
secured on the building; and
(j) relative position and reputation of the area where
the building is located.
(4) Other factors which the Committee considers
necessary.”
The factors noted above are relevant for computation and fixing the
circle rates.
35. In the last few decades, the Union of India and the State Governments
have laid emphasis on enhancing the ease of living and doing
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business. Fixing fair and accurate circle rates has a direct impact
on each citizen. An inflated rate results in an unfair financial burden
on purchasers. Conversely, an undervalued rate leads to inadequate
stamp duty collection, adversely affecting the State’s revenue. Circle
rates which reflect the market price ensure proper revenue collection
for the State by preventing under-valuation of properties.
36. Sections 43CA, 45, 49, 50C, and 55 of the Income Tax Act, 196122
refer to circle rates, incorporating the stamp duty value of assets.
We need not, for the purpose of the present decision, interpret the
aforesaid sections. However, we have referred to these provisions
to point out the significance and importance of circle rates for the
direct tax administration as well. The Central Government had to
amend the Income Tax Act when it was noticed that the circle rates
at times in certain localities were higher than the prevailing market
value. Accordingly, the safe harbour rule under the Income Tax Act
was amended and the limit was enhanced to 10% from 5%.23 Circle
rates often become a politically and economically contentious issue.
This is reflected in the frequent litigations across various jurisdictions,
which discuss the circle rates applicable to properties.24
37. Circle rates, when determined while accounting for factors that cause
variations in the market price of land, can facilitate predictability in
transactions and curtail litigation. The standardized circle rates should
be fixed at the floor or baseline price, as it would be grossly unfair
to ask the public to pay stamp duty on over-valued circle rates.
38. It would be advisable that the circle rates be fixed by expert
committees, which not only have officers from the government but also
other specialists who understand the market conditions. Methodically
and scientifically fixed circle rates can contribute to strengthening the
economy and boosting tax collections. While serving the interests of
honest taxpayers, accurate circle rates would simultaneously deter
non-compliant taxpayers by preventing under-valuation. Rational and

22 Hereinafter, “Income Tax Act”.
23 See Section 43CA of the Income Tax Act.
24 See also Govt of NCT of Delhi Collectors of Stamps v. CTA Apparels Pvt. Ltd., LPA 278/2019 (High Court
of Delhi); Sameer Vasudev Morajkar and Another v. State of Goa, 2024 SCC OnLine Bom 303 (High
Court of Bombay); Narendra Kumar Berlia and Others v. Om Prakash Berlia and Others, 2021 SCC
OnLine Cal 2667 (Calcutta High Court); K. Natarajan v. District Collector and Another, 2019 SCC OnLine
Mad 26166 (Madras High Court).
[2025] 3 S.C.R. 1307

Madhya Pradesh Road Development Corporation v.
Vincent Daniel and Others

fair circle rates reflect and are a prerequisite for good governance.25
Given the financial implications of fixation of circle rates on each
member of the society, the data and details for computation of circle
rates should be made public.26 Regrettably, proper fixation of circle
rates has not received adequate attention from public authorities.
39. The 2018 Rules framed by the State of Madhya Pradesh attempt
to comprehensively address the variable factors that influence the
price of land, and, therefore, lay the foundation for a more accurate
valuation of land prices. In our opinion, other State Governments
would also be well advised in formulating guidelines that can act as
a ready reference for determining and revising circle rates regularly,
in order for them to reflect market realities.
40. We now proceed to apply the above analysis to the facts of the
present case, which is an acquisition under the Acquisition Act, 2013.
To determine the compensation, the market value of the land must
first be computed under Section 26 of the Acquisition Act, 2013.
This requires the application of Clauses (a), (b), and (c) of Section
26(1). Clause (b) would have no application in the present case as
there are no exemplars in the vicinity to draw a comparison and
arrive at the average sale price in terms of Explanations 1 and 2 to
Section 26(1). Further, as this acquisition does not involve private
companies or public-private partnerships, Clause (c) would also not
apply. Therefore, the highest value would be the one determined
under Clause (a), i.e., the market value specified under the Stamp
Act. In the present case, this value would be the circle rate fixed for
the year 2014-2015 under the Collector’s Guidelines framed under the
Stamp Act. The Commissioner has applied the Collector’s Guidelines
by using the rate provided for non-converted agricultural land. The
Commissioner has further supplemented this amount by accounting
for the assets attached to the land and adding the solatium payable.

25 Germany, like India, uses reference values to compute the market value of a property. This task is
undertaken by expert committees in the relevant area, and they are required to update the values
every two years. These expert committees are neutral and independent from the public authorities.
Reference values for various localities are also published online for public access. Regular revisions
and transparency have facilitated the reduction of market volatility in Germany. Public knowledge of the
variables affecting property value has increased predictability and created a more stable land market.
26 We wish to clarify that our reasons should not be read as a bar or prohibition on the Central Government/
local authorities from changing the circle rates as fixed by the State Government, when they are not in
accord with the market rate of the acquired land.
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41. In view of the above-stated reasons, we hold that the compensation
has been calculated in accordance with the mandate of the Acquisition
Act, 2013. Thus, no reduction in the amount can be granted by
applying the theory of deduction. It has been left to the Collector’s
discretion to make adjustments to the market value determined
through Section 26(1), if deemed necessary in the opinion of the
Collector. In the facts of the present case, there was no such formation
of opinion by the Competent Authority or the Commissioner.
42. In the absence of any material to support the same, we cannot
accept the argument advanced by the appellant, Madhya Pradesh
Road Development Corporation, that this circle rate is not the
baseline or floor rate, and is too high. Concerned authorities should
fix circle rates scientifically and in accordance with the law. It is
their responsibility to ensure that circle rates are neither inflated nor
disproportionately low. When the citizens are required to pay stamp
duty on the notified circle rate, the public authorities, including state
development corporations acquiring land from private individuals, must
adhere to the same. We do not appreciate the appellant, Madhya
Pradesh Road Development Corporation complaining about the
circle rate fixed by the State Government. If the circle rate is inflated
or does not reflect the true market value, it is incumbent upon the
State Government to take corrective steps. The State Government
or the development corporation under the State Government cannot
complain that they have been compelled to acquire land at the circle
rate fixed by the State.
43. Thus, while we disagree with the ratio and the reasoning of the
High Court, albeit for the reasons and findings recorded above, we
uphold the computation in the award passed by the Commissioner
directing payment of compensation on the basis of the circle rate. The
appeals filed by the appellant, Madhya Pradesh Road Development
Corporation, are accordingly, dismissed. There will be no order as
to costs.

Result of the case: Appeals dismissed.

†
Headnotes prepared by: Divya Pandey