Holding

The market value of acquired land must be fixed as of the date of preliminary notification based on comparable open‑market transactions, and deductions for development must be evidence‑based; the High Court’s valuation was not in accordance with law and the matter was remitted for fresh consideration.

Summary

The State of Madhya Pradesh sought to acquire 38.178 hectares of land in Village Sala for rehabilitation of persons displaced by the Sardar Sarovar Dam. The Land Acquisition Officer initially awarded compensation based on low market values, which the landowners challenged, leading the Reference Court to re‑determine market value using small‑plot sale deeds and to deduct 48% for development charges. The High Court later reduced the total deduction to 35% and corrected the market‑value figures, but the State appealed, arguing that the valuation methods violated established principles. The Supreme Court held that market value must be assessed as of the date of the preliminary notification using comparable open‑market sales, and that any deduction for development must be based on concrete evidence of required amenities. Finding the High Court’s methodology inconsistent with precedent, the Court set aside its orders and remitted the matter for fresh determination of compensation and deductions. The appeals were allowed.

Issues considered

How should the market value of land acquired under the Land Acquisition Act, 1894 be determined?
What deduction, if any, should be made towards utilization of land and development charges in calculating compensation?

Legislation cited

Code of Civil Procedure, 1908s. 152
Land Acquisition Act, 1894s. 17(1), s. 18, s. 23, s. 28, s. 4(1), s. 6

Subjects

land acquisitionmarket valuecompensationdevelopment chargesvaluationpreliminary notificationLand Acquisition ActSupreme Court

Judgment

[2022] 9 S.C.R. 743 743

STATE OF MADHYA PRADESH & ANR. A
v.
RADHESHYAM & ORS.
(Civil Appeal Nos. 8857-8858 of 2022)
NOVEMBER 24, 2022 B
[S. ABDUL NAZEER AND KRISHNA MURARI, JJ.]
Land Acquisition Act, 1894: s.4(1) – Market value of land
acquired – Determination of – Standard method of determination is
by evaluating the land on the date of publication of notification
C
u/s. 4(1) of the Land Acquisition Act – Thus, it is determined with
reference to the open market sale of comparable land in the
neighbourhood, by a willing seller to a willing buyer, on or before
the date of preliminary notification – In the instant case, none of
the principles were followed by High Court – Matter remitted to
High Court for fresh consideration. D
Land Acquisition Act, 1894: Deduction to be made towards
utilization of land and development charges – Deduction depends
upon the evidence to be brought on record by the parties in respect
of land under acquisition – If land under acquisition is capable of
being used for the purpose for which smaller plots are used and is E
situate in a fully developed area with no requirement of any further
development to be made, there would be no need for deduction of
the value – Where all civic and other amenities are to be provided
to make the land suitable for the purpose for which it is required,
deduction is liable to be made.
F
Allowing the appeals, the Court
HELD: 1. The market value is determined with reference
to the open market sale of comparable land in the neighbourhood,
by a willing seller to a willing buyer, on or before the date of
preliminary notification, as that would give a fair indication of the G
market value. Thus, insofar as the determination of the market
value of the land in question by the High Court is concerned, the
same is not sustainable and the matter needs to be remitted back
to the High Court to determine the valuation of compensation

H
743
744 SUPREME COURT REPORTS [2022] 9 S.C.R.

A for fresh consideration in accordance with law and the settled
principles culled out for such determination. [Paras 22, 28][753-
D; 755-H; 756-A-B]
2. The deduction to be made towards development of the
land depends on various factors and there cannot be a straight
B jacket formula. The principles are whether there should be any
deduction or not and the ratio of deduction depends upon the
evidence to be brought on record by the parties in respect of the
land under acquisition. It stands settled that if there is a large
tract of land under acquisition but is capable of being used for the
purpose for which smaller plots are used and is situate in a fully
C developed area with little or no requirement of any further
development to be made, there would be no need for deduction
of the value. Similarly, when all civic and other amenities are to
be provided to make the land under acquisition suitable for the
purpose for which it is being acquired setting aside some part of
D the land for development like roads, drainage, electricity,
communication providing for common facilities and appropriate
deduction, is liable to be made. The view taken by the High Court
in this regard, is also not liable to be sustained. Thus, this issue
also requires reconsideration by the High Court in the light of
the evidence and material on record of the case. [Paras 29, 33,
E 34, 36 and 37][756-B; 758-D-F; 759-A-B]
Viluben Jhalejar Contractor (Dead) by LRs. v. State of
Gujarat (2005) 4 SCC 789 : [2005] 3 SCR 542 –
followed.

F Special Land Acquisition Officer, Bangalore v.
T. Adinarayan Setty [1959] 1 Suppl. SCR 404;
Bhagwanthulla Samanna & Ors. v. Special Tehsildar
and Land Acquisition Officer (1991) 4 SCC 506 : [1991]
1 Suppl. SCR 172; Lal Chand v. Union of India & Anr.
(2009) 15 SCC 769 : [2009] 13 SCR 622; Charan Dass
G (Dead) by LRs. v. H.P. Housing & Urban Development
Authority & Ors. (2010) 13 SCC 398 : [2009] 14 SCR
163; Noida v. Surendra Singh 2015 SCC OnLine ALL
5945 – relied on.

H
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 745
ORS.

Kasturi & Ors. v. State of Haryana (2003) 1 SCC 354 A
: [2002] 4 Suppl. SCR 117; U.P. Awas Evam Vikas
Parishad v. Jainul Islam and Anr. (1998) 2 SCC 467 :
[1998] 1 SCR 254; Trishala Jain & Anr. v. State of
Uttarakhand & Anr. (2011) 6 SCC 47 : [2011] 8 SCR
520 – referred to.
B
Case Law Reference
[2002] 4 Suppl. SCR 117 referred to Para 8
[1998] 1 SCR 254 referred to Para 9
[2011] 8 SCR 520 referred to Para 10 C
[1959] 1 Suppl. SCR 404 relied on Para 23
[2005] 3 SCR 542 followed Para 24
[1991] 1 Suppl. SCR 172 relied on Para 29
[2009] 13 SCR 622 relied on Para 30 D
[2009] 14 SCR 163 relied on Para 31
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8857-
8858 of 2022.
From the Judgment and Order dated 20.06.2016 and 08.09.2017 E
of the High Court of Madhya Pradesh Bench at Indore in First Appeal
No. 131 of 2010 and MCC No. 304/2017.
Ms. Ankita Choudhary, Dy. AG, Abhinav Shrivastava, Sunny
Choudhary, Advs. for the Appellants.
S. R. Singh, Sr. Adv., Ardhendumauli Kumar Prasad, Ms. Shreya F
Srivastava, Ashish Madaan, Vikas Upadhyay, Rajesh Kandari, Sachin
Daga, Advs. for the Respondents.
The Judgment of the Court was delivered by
KRISHNA MURARI, J.
G
Leave granted.
2. These appeals are directed against the orders dated 20.06.2016
and 08.09.2017 passed by the High Court of Madhya Pradesh Bench at
Indore (hereinafter referred to as “High Court”) in First Appeal No.
131 of 2010 and MCC No. 304/2017 respectively. By the said orders, H
746 SUPREME COURT REPORTS [2022] 9 S.C.R.

A the High Court allowed the MCC as well as first appeal and dismissed
the appeals of the Appellant State by reducing the deduction awarded
by the Reference Court from 65% towards largeness of plot + 48%
towards development to 35% on the market value of Rs.1,04,64,000/-
per hectare for the irrigated land and Rs. 69,76,000/- per hectare for the
un-irrigated land.
B
3. Brief facts necessary for the disposal of these appeals are as
under:
3.1. A Notification dated 27.02.2004 u/s 4(1) read with Section
17(1) of the Land Acquisition Act, 1894 (hereinafter referred to as “the
C act”) was published in the official gazette for acquisition of land
admeasuring 38.178 hectares of Village Sala, Tehsil, Dharampuri, District-
Dhar for the purpose of “rehabilitation of displaced persons” of
villages which came under the submergence due to increase of height of
Sardar Sarovar Dam. A declaration under Section 6 of the Act in respect
of Village Sala was issued on 14.05.2004, 11.05.2004 and 05.05.2004,
D respectively.
3.2. The Land Acquisition Officer (hereinafter referred to as
“LAO”) vide award dated 23.12.2004 passed an award for the acquired
land in Village Sala, District- Dhar, MP, wherein the learned LAO
assessed the market value and awarded compensation which is
E enumerated as below:
i. Irrigated Land - Rs. 47,165/- per hectare
ii. Unirrigated Land - Rs. 29,621/- per hectare
iii. Solatium – 30%
F
iv. Additional Compensation -12%
3.3. The Respondent landowners being dissatisfied with the amount
of compensation, sought Reference under Section 18 of the Act claiming
enhancement of compensation. The Reference Court vide order dated
09.09.2009, after determining the market value of the irrigated land to
G the tune of Rs. 36,62,400 per hectare and unirrigated land to the tune of
Rs. 24,41,600 per hectare on the basis of sale deeds filed as exemplars
enhanced the compensation along with 48% deduction towards
development charges. The enhanced compensation made by reference
court is enumerated as below:
H
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 747
ORS. [KRISHNA MURARI, J.]

i. Unirrigated land – Rs. 24,41,600 – 48% deduction = A
Rs.11,71,968/- per hectare
ii. Irrigated Land - Rs. 36,62,400 – 48% deduction =
Rs.17,57,952/- per hectare
iii. interest @ 12% per annum on enhanced compensation from
27.02.2004 to date of passing of award on 23.12.2004 B

iv. solatium @ 30% of enhanced compensation.
It is pertinent to mention here that the Reference Court assessed
the market value of land of the village sala on the basis of sale
deed Ex- P/2 dated 11.02.2002, Ex-P/3 dated 06.05.2002 and Ex- C
P/4 dated 04.02.2004 measuring 0.017 hectare, 0.013 hectare and
0.011 hectare, respectively.
3.4. The Appellant State as well as the Respondent Landowners
filed appeals before the High Court assailing the order dated 09.09.2009
passed by the Reference Court. It was contended by the Appellant state D
that the enhancement of compensation by the Reference Court from
the amount awarded by the LAO is on the higher side and that the
enhancement on the basis of small exempliers is contrary to the law
settled by the Apex Court. It was contended by the Respondent
landowners that the Reference Court erred in law in deducting 65%
from the market value on account of development charges and other E
possible expenditure and looking to the fact that the land was acquired
for “rehabilitation of displaced persons”, deduction of around 25%
from the market value would be justifiable.
3.5. The High Court vide impugned judgment and final order dated
20.06.2016, partly allowed the appeals filed by the Respondent landowners F
and dismissed the appeals of the Petitioner State by reducing the deduction
for both the components to 35% on the market value of Rs. 1,04,64,000/
- per hectare for the irrigated land and Rs. 69,76,000/- per hectare for
the unirrigated land. The operative portion of the aforesaid judgment
reads as under: -
G
“37. In the instant case, having regard to the extent of land
acquired and the development in and around for
“rehabilitation of displaced persons” of villages which comes
under the submergence due to increase of height of Sardar
Sarovar Dam of Tehsil- Dharampuri in District – Dhar, in
H
748 SUPREME COURT REPORTS [2022] 9 S.C.R.

A our view it is appropriate to make 20% deduction towards
utilisation of the land area in the layout for roads, drains,
civic amenities etc. So far as the expenditure for development
of the large extent of land into a developed area by
construction of roads, drainage, civic amenities etc., it is
appropriate to make further deduction of 15% towards
B
development charges. Two components taken together, the
total deduction to be made would be 35%. Thus, it is a case
of less deduction. In our opinion, a deduction of 35% from
the market value on account of development charges and
other possible expenditure would be justifiable and called
C for in the facts and circumstances of the present case.”
3.6. Respondent filed an application being MCC No. 304/2017
before the High Court under Section 152 of Code of Civil Procedure,
1908 for correction of an alleged accidental slip in the judgment dated
20.05.2016 and prayed to correct the market value of the irrigated land
D as well as the unirrigated land in the impugned judgment dated 20.06.2016.
The High Court vide impugned order dated 08.09.2017 corrected the
market value (per hectare) for irrigated land as well as unirrigated land
in para 13 and 21 of the judgment dated 20.06.2016 in respect of Village
Sala from Rs. 11,71,968/- per hectare for unirrigated land to Rs. 69,76,000/
- per hectare and from Rs. 17,57,952/- for irrigated land to
E Rs. 1,04,64,000/- per hectare.
4. Being aggrieved by the impugned orders of the High Court, the
Petitioner State have preferred these appeals.
ARGUMENTS ON BEHALF OF THE APPELLANT :
F 5. Learned counsel for the appellant has submitted that the learned
Reference Court enhanced the compensation multi-fold by relying on a
small portion of land to determine the market value of large pieces of
land. It was also submitted that the High Court failed to appreciate the
point and further reduced deductions from 48% to 35% as development
G charges from market value as decided by the Reference Court.
6. It was further submitted that the Reference Court has
considered the exemplar sale deed of Ex P2 to P4 which were produced
by landowners in order to determine the market value. These are small
plots of land as follows:
H
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 749
ORS. [KRISHNA MURARI, J.]

• Ex P2 – seller Abdul Samad, sold 0.017 hectare out of A
Rakba 0.732 hectare in Village Sala to the buyer Shakil for
Rs. 2,43,000.
• Ex P3 – seller Nasru Mohd., sold 0.013 hectare out of
Rakba 0.185 hectare in Village Sala to Sadiranbai for Rs.
1,40,500. B
• Ex P4 – seller Ramkunwarbai, sold 0.011 hectare out of
Rakba 0.109 hectare in Village Sala to the buyer kamal for
Rs. 64,000.
It was submitted that the sale price of the land Ex P2 to P4 (the
small plots) mentioned comes to be Rs. 69,76,000/- per hectare C
for unirrigated land and Rs. 1,04,64,000/- per hectare for irrigated
land. Out of the per hectare sale price of small plot, 65% was
justified to get the market value of the acquired land by the
government.
7. It was submitted that as a result of impugned order dated D
08.09.2017, on the basis of misinterpreted calculation, the amount of
compensation has been raised exorbitantly i.e., six times of the
compensation awarded by the learned LAO and comes to an amount
which is actually higher than the present market rate of the land in question,
which is not sustainable in the eyes of law as well as principle laid down E
by this Hon’ble Court in respect of determining the market value of
large chunks of land on the basis of sale deeds of small areas.
8. It was vehemently submitted that the High Court has failed to
appreciate that the deduction for development charges is dependent on
the various facts and circumstances and the rationale behind the same is F
required to be considered. It was submitted that in the case at hand, no
evidence was led by the Respondent land owners regarding facility of
electricity, water, road, drainage, etc. being available on land, and as a
matter of fact admitted the land in question was being used for agricultural
purposes. The learned counsel for the Appellants placed reliance on the
judgment of this Court in case of Kasturi & Ors. Vs. State of Haryana1 G
to substantiate the above stated argument. The relevant para referred
are as hereunder: -
“7. … A claimant claiming that their land is fully developed
and nothing more is required for a development purpose has
1
(2003) 1 SCC 354 H
750 SUPREME COURT REPORTS [2022] 9 S.C.R.

A to show evidence that it is such a land. If no such evidence is
shown, merely saying that adjoining land is developed is not
enough, especially when the land is large.”
9. It was further submitted that this Court has settled that the cost
of small acquired plot cannot be made basis for fixation of price of plots
B of large area, because the price on which the small plots are sold, the big
plots cannot fetch that price. Even if there is no basis available then the
transaction of small plot can be made basis but in this regard the proper
deductions should have been done, which can be 1/3rd of cost of sale of
small plot. It was further submitted that Reference Court rightly made
deductions placing reliance on the judgment of this Court in case of U.P.
C Awas Evam Vikas Parishad Vs. Jainul Islam and Anr.2 to determine
the market value.
10. Learned counsel for the appellants also referred to judgment
rendered by this Court in Trishala Jain & Anr. Vs. State of Uttarakhand
& Anr.3 whereby it was held that deduction is to be applied on account
D of carrying out development activities like providing roads or civic
amenities.
11. A calculation chart depicting the break-up of total value of the
irrigated and unirrigated land has also been submitted on behalf of
appellants which is as under :-
E
Kind of land MV per hectare as per After reduction of After 48% deduction After 35% deduction
exemplar 65% on account of on account of on account of
largeness of area for development charges development charges
determining the MV (Reference Court (High Court order
order dated dated 20.06.2016)
09.09.2009)
Irrigated Land Rs. 1,04,64,000/- Rs. 1,04,64,000 - 65% Rs. 36,62,400 – 48% Rs. 36,62,400 – 35%
= Rs. 36,62,4000/- = Rs. 17,57,952/- = Rs. 23,80,560/-
F (valuation of land) (as calculated by
Reference Court)
Unirrigated Land Rs. 69,76,000/- Rs. 69,76,000 – 65% = Rs. 24,41,600 – 48% Rs. 24,41,600 – 35%
Rs. 24,41,600 = Rs. 11,71,968 (as = Rs. 15,87,040/-
calculated by
Reference Court)

G ARGUMENTS ON BEHALF OF THE RESPONDENTS:
12. Learned counsel for the respondents submitted that the
impugned order is a covered matter which has already been decided by

2
(1998) 2 SCC 467
3
H (2011) 6 SCC 47
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 751
ORS. [KRISHNA MURARI, J.]

this Hon’ble Court wherein the SLP (C) D No. 12907/2017 now registered A
as (SLP No. 23225-226/2017) Upendra Singh Vs. State of M.P. &
Anr. has been dismissed by this Hon’ble Court vide order dated
18.07.2017.
13. It was submitted that the High Court in the case of Upendra
Singh had determined the value of the land as per the exemplars provided B
by the land owners and laid down the principle that the total deduction
would be 35% ie., 20% towards deduction of utilization of the land and
15% towards development charges.
14. It was also submitted that in the case of Upendra Singh, the
High Court rejected the computation done by the Reference Court of C
initially deducting 65% from the valuation of land arrived on the basis of
the exemplars/sale deed and then further deducting 48% from the
remaining value.
15. It was also submitted that the order passed by the High Court
in the case of Upendra Singh has been challenged before this Hon’ble D
Court by the Land Owners only and that the order of upendra singh is
being implemented by the state government by disbursing the
compensation; which implies that the state government has accepted
the said order and did not challenge it before the Hon’ble Supreme Court
nor filed any review petition.
E
16. Following order dated 18.07.2017 was passed by this Court in
the case of Upendra Singh Vs. State of M.P :-
“Delay condoned in filing application for substitution,
abatement, if any, is set aside and application for substitution
is allowed in Diary No.13816/2017. Heard. Delay condoned. F
We do not see any ground to interfere with the impugned order
except to direct that the petitioners shall be entitled to all
statutory benefits including the one under Section 28 of the
Land Acquisition Act, 1894 in accordance with law.
The special leave petitions are accordingly disposed of. G
Pending application(s), if any, shall also stand disposed of.”
17. The impugned order of the High Court has been passed relying
upon the order passed in FA NO. 566/2010 and the connected appeals in
matters of Upendra singh Vs. State of MP, wherein the High Court
H
752 SUPREME COURT REPORTS [2022] 9 S.C.R.

A decided the principle of deduction and to what extent deduction should
be made.
18. The order of the High Court in the case of Upendra Singh
has attained finality as the SLP being Diary No. 12907 of 2017 now
registered as (SLP No. 23225-226/2017) and other connected matters,
B preferred by the land owners against the order of the High Court was
disposed of vide order dated 18.07.2017 and the state never challenged
the order of the High Court.
19. Learned counsel for the Respondents submitted a comparative
valuation of land by various authorities.
C

D

E

F

G
20. We have carefully considered the submissions made at the
bar and perused the materials placed on record.
21. The two main issues which arise for consideration before this
Court are :
H
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 753
ORS. [KRISHNA MURARI, J.]

i. Determination of market value of land acquired. A
ii. Deduction to be made towards utilization of land and
development charges.
Reference Court after determining the market value of the land
deducted 65% from the valuation so determined and further deducted
another 48% from the value so determined after deducting 65% from B
the market value.
The High Court made a total deduction of 35% from the valuation,
out of which 20% deduction was towards utilisation of land area in the
lay out for roads, drains, civic amenities, etc., and 15% towards
development charges. C

ISSUE NO. 1
22. The standard method of determination of the market value of
any acquired land by a valuer is by evaluating the land on the date of
publication of notification under Section 4(1) of the Act, acting as a D
hypothetical purchaser willing to purchase the land in open market at the
prevailing price on that day, from a seller willing to sell such land at a
reasonable price. Thus, the market value is determined with reference
to the open market sale of comparable land in the neighbourhood, by a
willing seller to a willing buyer, on or before the date of preliminary
notification, as that would give a fair indication of the market value. E
23. This Court in the case of Special Land Acquisition Officer,
Bangalore Vs. T. Adinarayan Setty4, indicated the methods of valuation
to be adopted in ascertaining the market value of the land on the date of
notification, as under:-
F
(i) Opinion of experts.
(ii) The price paid within a reasonable time in bona-fide
transactions of puirchase of the land acquired or the lands
adjacent to the lands acquired and possessing similar
advantages; and
G
(iii) A number of years’ purchase of the actual or immediately
prospective profits of the lands acquired.
24. It is well settled by various judicial pronouncements of this
Court
4
that in order to determine the market value of the land under
1959 Supp.(1) SCR 404
5
(2005) 4 SCC 789 H
754 SUPREME COURT REPORTS [2022] 9 S.C.R.

A acquisition, certain positive as well as negative factors have to be taken
into consideration. A three-Judge Bench of this Court in the case of
Viluben Jhalejar Contractor (Dead) by LRs. Vs. State of Gujarat5
has laid down the following principles for determination of market value
of the acquired land :-
B “17. Section 23 of the Act specifies the matters required to be
considered in determining the compensation; the principal
among which is the determination of the market value of the
land on the date of the publication of the notification Under
Sub-section (1) of Section 4.
C 18. One of the principles for determination of the amount of
compensation for acquisition of land would be the willingness
of an informed buyer to offer the price therefore it is beyond
any cavil that the price of the land which a willing and
informed buyer would offer would be different in the cases
where the owner is in possession and enjoyment of the property
D and in the cases where he is not.
19. Market value is ordinarily the price the property may fetch
in the open market if sold by a willing seller unaffected by
the special needs of a particular purchase. Where definite
material is not forthcoming either in the shape of sales of
E similar lands in the neighbourhood at or about the date of
notification Under Section 4(1) or otherwise, other sale
instances as well as other evidences have to be considered.
20. The amount of compensation cannot be ascertained with
mathematical accuracy. A comparable instance has to be
F identified having regard to the proximity from time angle as
well as proximity from situation angle. For determining the
market value of the land under acquisition, suitable
adjustment has to be made having regard to various positive
and negative factors vis-a-vis the land under acquisition by
G placing the two in juxtaposition.…
21. Whereas a smaller plot may be within the reach of many,
a large block of land will have to be developed preparing a
layout plan, carving out roads, leaving open spaces, plotting
out smaller plots, waiting for purchasers and the hazards of
H
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 755
ORS. [KRISHNA MURARI, J.]

an entrepreneur. Such development charges may range A
between 20% and 50% of the total price.”
25. From a perusal of the impugned judgment passed by the High
Court, we find that none of the above prinicples enunciated for determining
the valuation of the acquired land has been taken into consideration by
the High Court. The High Court blindfoldly relied on the case of Upendra B
Singh Vs. State of M.P. & Anr., on the ground that the judgment of the
High Court in the said case has attained finality on account of dismissal
of the Special Leave Petition being Diary No. 12907 of 2017 now
registered as SLP No. 23225-226 of 2017 and other connected matters,
preferred by the land owners vide judgment and order dated 18.07.2017.
C
26. From a perusal of the judgment of the High Court in the case
of Upendra Singh (Supra) filed as Annexure P-3 goes to show that in
the said case, the area of the acquired land was 49.413 hectares whereas
in the case at hands, it is 38.178 hectares. Apart from above, the
Reference Court in the case of Upendra Singh, fixed the value of non-
irrigated land at Rs.20,14,000/- per hectares with irrigated land at Rs. D
30,21,000/-. Whereas in the present case, the Reference Court fixed the
value of irrigated land to the tune of Rs. 1,04,64,000/-. The difference in
value of the land as per the exemplers/sale deeds in the two cases works
out to be 346.38%. We failed to understand that as to how the market
value determined in the case of Upendra Singh would automatically be E
applied to the land acquired in the present case, without recording any
finding that both the lands are in vicinity and identical in nature and
similarly situated. In our considered opinion, the High Court fell in a
grave error in applying the market value of the land determined in the
case of Upendra Singh to the land involved in the case at hands.
F
27. The High Court in the impugned order has failed to discuss as
to how the market value of the acquired land determined in the case of
Upendra Singh would be applicable in the facts and circumstances of
the land acquired in the present case. Except for the fact that the land in
both the matters have been acquired for the same purpose, we do not
find any material on record to draw a conclusion that the market value G
of the land determined in the case of Upendra Singh would automatically
be applicable to the land acquired in the present case. In the absence of
any such material to justify the market value determined in the case of
Upendra Singh would be applicable to the land acquired in this case,
the reliance placed by the High Court on the dismissal of the Special H
756 SUPREME COURT REPORTS [2022] 9 S.C.R.

A Leave Petition by this Court, in the case of Upendra Singh, appears to
be totally mis-founded.
28. Thus, insofar as the determination of the market value of the
land in question by the High Court is concerned, the same is not
sustainable and the matter needs to be remitted back to the High Court
B to determine the valuation of compensation for fresh consideration in
accordance with law and the settled principles culled out for such
determination.
ISSUE NO. 2
29. In so far as, issue no. 2 is concerned, the deduction to be
C made towards development of the land depends on various factors and
there can not be a straight jacket formula. Laying down the principles
for deduction to be made towards the development of the land vis-a-vis
largeness of area, this Court in the case of Bhagwanthulla Samanna
& Ors. Vs. Special Tehsildar and Land Acquisition Officer 6, observed
D as under :-
“In applying the principle it is necessary to consider all
relevant facts. It is not the extent of the area covered under
the acquisition, the only relevant factor. Even in the vast area
there may be land which is fully developed having all amenities
E and situated in an advantageous position. lf smaller area
within the large tract is already developed and suitable for
build- ing purposes and have in its vicinity roads, drainage,
electricity, communications etc. then the principle of
deduction simply for the reason that it is part of the large
tract acquired, may not be justified.
F
“…..If the larger tract of land because of advantageous
position is capable of being used for the purpose for which
the smaller plots are used and is also situated in a developed
area with little or no requirement of further development, the
principle of deduction of the value for purpose of comparison
G is not warranted.”
30. A two-Judge Bench of this Court in the case of Lal Chand
Vs. Union of India & Anr. 7 observed that the deduction towards

6
(1991) 4 SCC 506
7
H (2009) 15 SCC 769
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 757
ORS. [KRISHNA MURARI, J.]

development can range from 20% to 75%, depending on various factors. A
The Court has observed as under :-
“13. The percentage of “deduction for development” to be
made to arrive at the market value of large tracts of
undeveloped agricultural land (with potential for
development), with reference to the sale price of small B
developed plots, varies between 20% to 75% of the price of
such developed plots, the percentage depending upon the
nature of development of the layout in which the exemplar
plots are situated.
14. The “deduction for development” consists of two C
components. The first is with reference to the area required to
be utilized for developmental works and the second is the
cost of the development works. For example, if a residential
layout is formed by DDA or similar statutory authority, it may
utilize around 40% of the land area in the layout, for roads,
drains, parks, playgrounds and civic amenities (community D
facilities), etc.….
20. Therefore the deduction for the “development factor” to
be made with reference to the price of a small plot in a
developed layout, to arrive at the cost of undeveloped land,
will be far more than the deduction with reference to the price E
of a small plot in an unauthorized private layout or an
industrial layout. It is also well known that the development
cost incurred by statutory agencies is much higher than the
cost incurred by private developers, having regard to higher
overheads and expenditure.” F
31. In the case of Charan Dass (Dead) by LRs. Vs. H.P. Housing
& Urban Development Authority & Ors.8, this Court has obeserved
as under :-
“32. It is well settled that it is not every case that deduction
towards development charges has to be made when a big G
chunk of land is acquired for housing colonies, etc., where
the acquired land falls in the midst of an already developed
land with amenities of roads, electricity, etc., deduction on

8
(2010) 13 SCC 398 H
758 SUPREME COURT REPORTS [2022] 9 S.C.R.

A this account may not be warranted. At the same time, where
all civic and other amenities are to be provided to make it
suitable for building purposes or under the local building
regulations setting apart of some portion of the lands for
providing common facilities is mandatory, an appropriate
deduction may be justified….”
B
32. The same view has been reiterated by this Court in the case
of Noida Vs. Surendra Singh9, as under :-
“57. With respect to determination of rate of Rs.135/- there is
no ground that this by itself is bad. The next and last ground
C taken in these appeals is that there should not have been any
deduction. To this extent, we find substance that the land in
question was situated in an area which was already
sufficiently developed, and land was being sold there in
square yards. There was thus no justification to apply any
deduction, whatsoever, since it is not a rule of thumb that in
D every case deduction must be applied.”
33. The principles culled out from the above pronouncements
clearly go to show that whether there should be any deduction or not
and the ratio of deduction depends upon the evidence to be brought on
record by the parties in respect of the land under acquisition.
E
34. It stands settled that if there is a large tract of land under
acquisition but is capable of being used for the purpose for which smaller
plots are used and is situate in a fully developed area with little or no
requirement of any further development to be made, there would be no
need for deduction of the value. Similarly, when all civic and other
F amenities are to be provided to make the land under acquisition suitable
for the purpose for which it is being acquired setting aside some part of
the land for development like roads, drainage, electricity, communication
providing for common facilities and appropriate deduction, is liable to be
made.
G 35. The High Court again fell in error in respect to this issue as it
failed to analyse the evidence brought on record by the parties in this
regard, if any, and without recording any finding in respect of the various
factors required to be considered for making deduction, simply relying

9
H 2015 SCC OnLine ALL 5945
STATE OF MADHYA PRADESH & ANR. v. RADHESHYAM & 759
ORS. [KRISHNA MURARI, J.]

upon the case of Upendra Singh (Supra), has held that deduction of A
35% from the market value on account of development charges and
other possible expenditure is justifiable.
36. The view taken by the High Court in this regard, is also not
liable to be sustained.
37. Thus, this issue also requires reconsideration by the High Court B
in the light of the evidence and material on record of the case.
38. In view of the above and for the reasons stated above, we
hereby set aside the impugned judgment of the High Court dated
20.06.2016 and remit the matter back to the High Court for fresh
consideration to determine the compensation appropriately in accordance C
with law and by taking into account the settled principles and all the
relevant evidence and material available on record for the irrigated as
well as the unirrigated land. The High Court shall also re-determine the
deduction to be made towards development charges afresh taking into
account all the relevant evidence, facts and materials on record. Insofar D
as, the order dated 08.09.2017 passed by the High Court in application
being MCC No. 304 of 2017 for correction of alleged accidental slip in
judgment dated 20.06.2016 is concerened, the same also hereby stands
set aside as a fresh determination of the market value is to be made.
39. The appeals, accordingly, stand allowed. E

Devika Gujral Appeals allowed.
(Assisted by : Shevali Monga, LCRA)

F

G

H