Holding

Market value must be fixed on the basis of comparable sale instances proximate to the date of the acquisition notification, excluding post‑notification sales, and the compensation of Rs.120 per square yard awarded by the Reference Court is affirmed.

Summary

The Uttar Pradesh Awas Evam Vikas Parishad acquired over 1,200 acres of land under a notification dated 26‑06‑1982 (s.28 of the Uttar Pradesh Act, equivalent to s.4 of the Land Acquisition Act). The landowners challenged the compensation awarded by the Reference Court (Rs.120 per square yard) and the High Court’s enhancement to Rs.297 per square yard, relying on sale deeds that occurred after the notification and on judgments concerning later acquisitions. The Supreme Court held that market value must be based on comparable sale transactions that are proximate to the date of the acquisition notification and that post‑notification sales cannot be used under s.24 of the Land Acquisition Act. It emphasized that the potentiality of the land, its location, amenities and development prospects are relevant, but the evidence did not show large‑scale development. Consequently, the Court restored the Reference Court’s award of Rs.120 per square yard and set aside the High Court’s order.

Issues considered

The admissibility of sale deeds executed after the date of the acquisition notification for determining market value under s.24 of the Land Acquisition Act.
Whether compensation awarded in later acquisitions (Rs.297 per square yard) can be used as a yardstick for the earlier 1982 acquisition.
The proper methodology for fixing market value, including the role of potentiality, comparable sales, and deductions for development charges.
Whether the High Court erred in enhancing the compensation from Rs.120 to Rs.297 per square yard.
The relevance of judicial precedents that are temporally distant from the acquisition date.

Legislation cited

Land Acquisition Act, 1894s. 23, s. 24, s. 4, s. 6
Uttar Pradesh Awas Evam Vikas Parishad Adhiniyam, 1965s. 28, s. 32

Subjects

land acquisitionmarket valuecompensationcomparable salepotentialitydevelopment chargesUttar PradeshLand Acquisition ActSection 24Section 28valuation

Judgment

[2021] 3 S.C.R. 751 751

U.P. AWAS EVAM VIKASH PARISHAD A
v.
ASHA RAM (D) THR. LRS & ORS.
(Civil Appeal No. 337 of 2021)
MARCH 23, 2021 B
[HEMANT GUPTA AND S. RAVINDRA BHAT, JJ.]
Land Acquisition: Comparable sale – Land acquired under
s.28 of Uttar Pradesh Awas Evam Vikas Parishad Adhiniyam, 1965
– Market value should be based on the sale instances, which are
C
proximate to both the date of notification under s.28 of the Act and
to the land sought to be acquired – Sale instances four years later
than the publication of s.28 – Cannot be taken into consideration
in terms of s.24 of Land Acquisition Act – Uttar Pradesh Awas Evam
Vikas Parishad Adhiniyam, 1965 – s.28 – Land Acquisition Act,
1894 – s.24. D
Land Acquisition: Market value of land – Determination of –
Held: Potentiality of the acquired land is one of the primary factors
to be taken into consideration to determine market value of land –
The question whether a land has potential value or not primarily
depends upon its condition, situation, use to which it is put or its E
reasonable capability of being put and also its proximity to
residential, commercial or industrial areas/institutions – The existing
amenities like water, electricity as well as the possibility of their
further extension, for instance whether near about town is
developing or has prospects of development have to be taken into
F
consideration – It also depends upon the connectivity and the overall
development of the area – Uttar Pradesh Awas Evam Vikas Parishad
Adhiniyam, 1965 – s.28.
Allowing the appeals, the Court
HELD: 1. The land forming the subject matter of the G
present appeals was acquired in pursuance of notification under
Section 28 of the Act published on 26.6.1982. Therefore, firstly,
the attempt to determine the market value should be based on
the sale instances, which are proximate to both the date of
notification under Section 28 of the Act and to the land sought to
H
751
752 SUPREME COURT REPORTS [2021] 3 S.C.R.

A be acquired. The land owners have relied upon seven sale
instances in respect of villages of which the land was acquired.
Out of such seven sale instances, two are almost four years later
than the publication of notification under Section 28 of the Act,
and thus cannot be taken into consideration in terms of the Section
24 of the LA Act. [Para 28][768-G; 769-A-B]
B
2. The potentiality of the acquired land is one of the primary
factors to be taken into consideration to determine the market
value of the land. Potentiality refers to the capacity or possibility
for changing or developing into the state of actuality. The market
value of a property has to be determined while having due regard
C to its existing conditions with all the existing advantages and its
potential possibility when led out in its most advantageous
manner. The question whether a land has potential value or not
primarily depends upon its condition, situation, use to which it is
put or its reasonable capability of being put and also its proximity
D to residential, commercial or industrial areas/institutions. The
existing amenities like water, electricity as well as the possibility
of their further extension, for instance whether near about town
is developing or has prospects of development have to be taken
into consideration. It also depends upon the connectivity and the
overall development of the area. The record in the present matter
E does not suggest that there were large scale development
activities. The evidence is rather of sale of small areas. There is
nothing on record as to when the industrial units were set up and
what was the cost of land. Furthermore, there are no sale
instances of land situated in Village Makanpur prior to date of
F notification i.e. 26.6.1982. The sale instances produced by the
land owners pertain to Village Sahibabad and Jhandapur which
are at a distance of about 3.5 kms from Delhi border.
[Paras 29, 30][769-C-F]
3. The sale instances of a smaller area have to be
G considered while keeping in view the principle that where a large
area is the subject matter of acquisition, suitable deduction is
required to be made as no prudent purchaser would purchase
large extent of land on the basis of sale of a small extent in the
open market. The Court thus has to consider whether the willing
vendee would offer the rate at which the trial court proposes to
H
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 753
THR. LRS & ORS

determine the compensation. This Court has even provided for A
50% deduction for development charges on the price mentioned
in the sale deed. [Para 31][770-B-C]
Jagdish Chandra & Ors. v. New Okhla Industrial
Development Authority, NOIDA & Anr. First Appeal No.
744 of 2001 decided on 14.12.2007 – referred to. B
4. In Pradeep Kumar, after remand, the High Court awarded
Rs.297/- per square yard as the compensation in pursuance of
notification dated 15.3.1988 of the land situated in Village
Makanpur (Sr. No. 2 in the above table) for the benefit of Noida.
This Court in Narendra awarded compensation of Rs.297/- per C
square yard for the land acquired in Village Makanpur in pursuance
of the notification under Section 4 of the LA Act published on
12.9.1986 (Sr. No. 2 in the above table). Such land is in the area
of Noida on the southern side of the National Highway.
[Para 38][773-G-H]
D
5. The other villages, subject matter of acquisition i.e.
Arthla, Jhandapur, Prahladgarhi, Mahiuddin-Re-Kanawani and
Sahibabad are farther away from the National Highway than the
land situated in Village Makanpur. Since the Special Land
Acquisition Collector as well as the Reference Court has
determined uniform compensation for the entire land acquired, E
therefore, the compensation awarded of land situated in Village
Makanpur on the basis of notification 4-5 years later is not a
reasonable yardstick for determining compensation of over 1100
acres of land in the other villages. There is no judicial precedent
in respect of land situated in other five villages which are subject F
matter of the acquisition in the present group of appeals. The
orders passed by this Court relied upon are either subsequent
to the notification in question and/or for the acquisition for the
purpose of planned development of Noida. [Para 39][774-A-C]
6. A compensation of Rs. 297/- per square yard was awarded
G
for land acquired for the purpose of GDA vide notification dated
28.2.1987 and 16.8.1988 (Sr. No. 4 & 5 in the above table). The
said acquisition was five years after the acquisition in question.
The development activity initiated vide notification dated

H
754 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 26.6.1982 would be relevant to determine the market value on
account of acquisition by virtue of the subsequent notification,
but time gap of more than five years will not entail the same
amount of compensation in respect of the land acquired five years
earlier. [Para 40][774-D-E]
B 7. In respect of land situated on northern side of National
Highway, the land was acquired vide notifications dated 28.2.1987
and 12.9.1986 in the case of Narendra and Kashi;and on 16.8.1988
in the case of Jai Prakash. Whereas, on the southern side of
National Highway for the benefit of Noida, the land of Village
Makanpur became subject matter of acquisition vide notification
C dated 10.3.1988 in the case of Pradeep Kumar and on 15.3.1988
in the case of Charan Kaur. [Para 42][774-G-H]
8. For the land situated on the northern side of the National
Highway for the benefit of the Parishad, the acquisition has
attained finality with the dismissal of SLP (Civil) No. 4636 of 2016
D on 28.3.2016. The compensation assessed in the other
aforementioned cases is subsequent to the date of notification,
therefore, none of the orders are determinative of the amount of
compensation. Hence, the market value as determined by the
High Court cannot be sustained either on the basis of the sale
deeds, or on the strength of judicial orders. There is no
E justification of enhancement of compensation awarded by
the Reference Court i.e. Rs.120/- per square yard. [Para 43]
[775-A-B]
U.P. Avas Evam Vikash Parishad v. Jawahar Lal & Ors.
First Appeal No. 56 of 2005 decided on 21.7.2015;
F Asha Ram & Anr. v. U.P. Awas Evam Vikash First Appeal
No. 827 of 2000 decided on 28.10.2015; Asha Ram &
Anr. v. U.P. Awas Evam LKVikas Parishad & Anr. First
Appeal No. 552 of 2001 decided on 16.12.2015; Asha
Ram & Anr. v. U.P. Awas Evam VikasParishad & Anr.
First Appeal No. 412 of 2001 decided on 1.3.2016;
G
Narendra & Ors. v. State of Uttar Pradesh & Ors. Civil
Appeal Nos. 10429-10430 of 2017 decided on
11.09.2017; Pradeep Kumar v. State of U.P. (2016) 6
SCC 308; Smt. Tribeni Devi & Ors. v. Collector of
Ranchi and Vice Versa (1972) 1 SCC 480 : [1972] 3
H SCR 208; Gujarat Industrial Development Corpn. v.
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 755
THR. LRS & ORS

Narottambhai Morarbhai & Anr., (1996) 11 SCC 159 : A
[1996] 5 Suppl. SCR 199; Land Acquisition Officer v.
B. Vijender Reddy & Ors., (2001) 10 SCC 669; Viluben
Jhalejar Contractor (Dead) by LRs. v. State of Gujarat,
(2005) 4 SCC 789 : [2005] 3 SCR 542; General
Manager, Oil and Natural Gas Corporation Limited v.
B
Rameshbhai Jivanbhai Patel & Anr. (2008) 14 SCC 745
: [2008] 11 SCR 927; Atma Singh (Dead) through LRs
& Ors. v. State of Haryana & Anr., (2008) 2 SCC 568 :
[2007] 12 SCR 1120; Revenue Divisional Officer-cum-
Land Acquisition Officer v. Shaik Azam Saheb & Ors.,
(2009) 4 SCC 395 : [2009] 1 SCR 289; Mohammad C
Raofuddin v. Land Acquisition Officer (2009) 14 SCC
367 : [2009] 5 SCR 864l; Himmat Singh & Ors. v. State
of Madhya Pradesh & Anr. (2013) 16 SCC 392 –
referred to.
Case Law Reference D
(2016) 6 SCC 308 referred to Para 15
[1972] 3 SCR 208 referred to Para 21
[1996] 5 Suppl. SCR 199 referred to Para 21
(2001) 10 SCC 669 referred to Para 23
E
[2005] 3 SCR 542 referred to Para 24
[2008] 11 SCR 927 referred to Para 25
[2007] 12 SCR 1120 referred to Para 26
[2009] 1 SCR 289 referred to Para 27
F
[2009] 5 SCR 864 referred to Para 30
(2013) 16 SCC 392 referred to Para 31
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 337
of 2021.
From the Judgment and Order dated 19.07.2019 of the High Court G
of Judicature at Allahabad in First Appeal No. 827 of 2000.
With
Civil Appeal Nos. 360, 340, 338, 361, 362, 348, 343, 382, 363, 381,
339, 349, 383, 350, 351, 352, 384, 341, 364, 353, 354, 385, 357, 365, 355,
H
756 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 366, 347, 342, 367, 358, 368, 356, 369, 344, 370, 371, 372, 373, 374, 345,
386, 346, 375, 376, 377, 387, 359, 378, 379 and 380 of 2021.
Y. D. Sharma, P.N. Mishra, Ms.Meenakshi Arora, Pradeep Kant,
Sukumar Patjoshi, Sr.Advs., R.K. Bali, Ms. Megha Bali, Amit Korpal,
Atul Dewan, Ms.Deepkaran Dalal, Mohd. Parvez Dabas, Syed Mehdi
B Imam, Uzmi Jameel Husain, Syed Mansoor Ali Rizvi, Rajnish Kumar
Jha, Ms. Pushpa Kumari Mishra, Ms. Deepika Sharma, Kumar Gaurav,
Ms. Mehrunnisa, Mohd. Ashraff, Uday Gupta, Ms. Shivani M. Lal, Kripa
Shankar, M. K. Tripathi, Chand Qureshi, Ram Dutt Sharma, Rajeev
Kumar Gupta, Hiren Dasan, Vishwajit Singh, Pankaj Singh, Ms. Ridhima
Singh, Ms. Vijaya Singh, Sushmit Chauhan, Ms. Akansha Singh, Pranav
C Raj Singh, Aneesh Mittal, Ms.Reeta Chaudhary, Divyanshu Sahay, Sunil
Kumar Jain, Anil Kaushik, Mrs. Shashi Sharma, Ms. Arunima Dwivedi,
K. S. Rana, Ahilesh Kalra, Divyanshu Sahay, Rohit Kumar Singh, R.
Venkat Raman, Ms. Aswathi M.K., Ravindra Kumar, Pradeep Kumar
Mathur, Shailesh Upadhyaya, Chiranjeev Johri, K. S. Rana, Haraprasad
D Sahu, Kamlesh Kumar Mishra, Pranaya Kumar Mohapatra, Advs. for
the appearing parties.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.

E 1. The present appeals arise out of an order passed by the Division
Bench of the High Court of Judicature at Allahabad on 19.07.2019
whereby a compensation of Rs. 297/- per square yard was awarded for
the land acquired in six villages apart from the statutory benefits. In the
present set of 51 appeals, 38 appeals pertain to land situated at Village
Prahlad Garhi; 2 appeals pertain to land situated at Village Jhandapur; 3
F appeals pertain to land situated at Village Sahibabad; 2 appeals pertain
to land situated at Village Jhandapur/ Sahibabad; 1 appeal pertains to
land situated at Village Arthala and 5 appeals pertain to land situated at
Village Makanpur.
2. The appellant – U.P. Awas Evam Vikas Parishad1 has been
G constituted under the Uttar Pradesh Awas Evam Vikas Parishad
Adhiniyam, 19652. A notification was published on 26.06.1982 by the
Parishad under Section 28 of the Act intending to acquire 1229.914 acres
of land. Subsequently, a notification under Section 32 of the Act was
1
For Short, the ‘Parishad’
2
H For short the ‘Act’
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 757
THR. LRS & ORS [HEMANT GUPTA, J.]

published on 28.02.1987. Sections 28 and 32 of the Act are equivalent to A
Sections 4 and 6 of the Land Acquisition Act, 1894 3.
3. The Special Land Acquisition Officer announced an award on
27.02.1989 awarding compensation of Rs. 50/- per square yard in respect
of land of all the six villages and compensation of Rs. 35/- per square
yard was awarded in respect of land owners owning more than 8 acres. B
The area of the land for which the compensation was awarded in the six
villages is as under:

C

D
The remaining area measuring 72.019 acres was the land of the
Gram Panchayat or the State Government, for which no compensation
was awarded by Special Land Acquisition Officer.
4. The land owners being aggrieved of the compensation awarded
E
by the Special Land Acquisition Officer sought a Reference for
determining the market value. The Learned Additional District Judge
while deciding the Reference awarded Rs. 120/- per square yard as the
compensation apart from the statutory benefits vide award dated
23.05.2000.
F
5. The landowners as well as the Parishad filed appeals against
the decision of the Reference Court. Such appeals were decided
separately by the High Court in respect of land acquired by the above
stated notification under Section 28 of the Act. The first appeal in U.P.
Avas Evam Vikash Parishad v. Jawahar Lal & Ors.4 filed by the
G
Parishad in respect of land situated in Village Prahladgarhi was dismissed
on 21.07.2015. The land owners have relied upon the following three
sale deeds in appeal before the High Court to claim higher compensation:
3
For short, the ‘LA Act’
4
First Appeal No. 56 of 2005 decided on 21.7.2015
H
758 SUPREME COURT REPORTS [2021] 3 S.C.R.

A

B
6. The High Court considering the three sale deeds held as under:
“28. Considering the aforesaid facts and circumstances as also
the factum that the court below has already applied deduction of
25%, we do not find any fault on the part of Reference Court in
C determining market value of acquired land at Rs. 120/- per sq.
yard. It can neither be said to be excessive or unreasonable, nor it
can be said that appropriate principles in determining market value
have not been considered by court below. The two judgments
cited by appellant do not help it in any manner since the principles
laid down therein have already been noticed by court below. In
D these facts and circumstances, in our view, the aforesaid point for
determination formulated above is answered in favour of
respondents and against appellant.”
7. The compensation awarded @ Rs.120/- per square yard vide
order dated 21.7.2015 attained finality when the Special Leave Petition
E (Civil) No. 4636 of 2016 (U.P. Avas Evam Vikas Parishad v. Jawahar
Lal (D) through LRs & Ors.) filed by the Parishad was dismissed on
28.03.2016.
8. Another appeal Asha Ram & Anr. v. U.P. Awas Evam Vikash
Parishad & Anr.5 arising against the award of the Reference Court
dated 23.5.2000 filed by the land owners in respect of land situated in
F Village Jhandapur was initially dismissed by the High Court on 16.12.2015.
The land owners in the appeal relied upon the following sale deeds in
support of their contention for determining the market value:

G

5
H First Appeal No. 827 of 2000 decided on 28.10.2015
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 759
THR. LRS & ORS [HEMANT GUPTA, J.]

9. The sale deeds dated 13.1.1986 and 15.1.1986 were not relied A
upon by the High Court for the reason that such sale instances were of
more than 3½ years after the publication of notification intending to acquire
land. The High Court found that if the compensation has to be awarded
on the basis of sale deeds dated 5.5.1982 and 8.6.1982, the compensation
would be lower than what has been awarded by the Reference Court.
B
The Court in its order dated 28.10.2015 held as under:
“13. We find that reliance placed by appellants on the aforesaid
sale deeds would not help claimants in any manner. In our view
the court below has already been considerate enough in
determining market value at Rs. 120/- per square yard else the
aforesaid two sale deeds, if relied, would have cause in a lower C
market value. Before elaborating our aforesaid observation we
find it appropriate to remind ourselves with principles laid down in
last several decades on the question how market value of land
acquired forcibly under provisions of Act, 1894 should be
determined.” D
10. In Asha Ram & Anr. v. U.P. Awas Evam Vikas Parishad &
Anr.6, the above order of the High Court was taken as the basis to
determine the market value of land acquired in the said appeal. Another
appeal by the land owners Asha Ram & Anr. v. U.P. Awas Evam
Vikas Parishad & Anr.7 was decided on 01.03.2016, relying upon the E
earlier two orders.
11. The aforesaid orders dated 28.10.2015; 16.12.2015 and
1.3.2016 were set aside by this Court on 9.11.2017 and the matters
were remanded to the High Court vide the following order-
“Leave granted. F
Learned counsel for the parties have filed certain documents along
with the Special Leave Petitions. The said documents are taken
on record, particularly the decision of this Court in SLP(C)
Nos.1506-1517/2016, titled as Pradeep Kapoor vs. State of
U.P. documents were not on record before the High Court. They G
are taken on record. These appeals are remitted back to the High
Court for deciding afresh. A prayer is made for consideration of
the aforesaid documents. It is open to the parties if they so desire
6
First Appeal No. 552 of 2001 decided on 16.12.2015
7
First Appeal No. 412 of 2001 decided on 1.3.2016 H
760 SUPREME COURT REPORTS [2021] 3 S.C.R.

A to adduce additional evidence, in that event, the High Court may
ask Reference Court to record additional evidence and to record
finding and then High Court may decide the appeals afresh.
The judgment of the High Court is set aside and the appeals are
remitted to the High Court for being decided afresh in accordance
B with law.
The appeals are disposed of accordingly.”
12. The IA to produce additional documents as mentioned in the
above order has been placed along with the written submissions by the
land owners before this Court. Apart from the award by the Special
C Land Acquisition Officer and the order of the Reference Court, various
other judgments pertaining to different acquisitions were produced.
13. The High Court thereafter decided the 53 appeals on
19.07.2019, awarding a sum of Rs. 297/- per square yard as compensation
for acquiring the land of the six villages as mentioned in the notification.
D 51 appeals were preferred in respect of acquisition of land by the Parishad
and the others are in respect of the acquisition by Ghaziabad Development
Authority8. The High Court proceeded as if the notification for the
acquisition for the Parishad and GDA is the same and for the same
acquisition proceedings. The land acquired by the Parishad vide notification
E dated 26.06.1982 is the subject matter of the present appeals. It is pertinent
to note that the said land is not for the benefit of the GDA. The High
Court in the impugned judgment held as under:
“Accordingly, we find that all the appellants in both the sets of
first appeals are entitled to compensation at the rate of Rs. 297/-
F per square yard. We have mentioned in detail regarding the other
similar cases where compensation has been awarded at the rate
of Rs. 297/- per square yard even though there were gaps between
the different notifications, but the villages are same. As discussed
above, Narendra (supra) lays emphasis on fair compensation and
on parity of compensation in respect of similarly situated land. A
G careful analysis of the said judgment clearly shows that gaps of a
few years in the notifications have been ignored by the Supreme
Court and this Court also in the subsequent judgment in First Appeal
No. 522 of 2009, Pradeep Kumar v. State of U.P., which has
been affirmed by the Supreme Court. We do not find any reason
8
H For short, ‘GDA’
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 761
THR. LRS & ORS [HEMANT GUPTA, J.]

for not awarding compensation at the same rate. Accordingly, the A
orders of the Reference Court dated 13th April, 1998, 18th February,
2000, 23rd May, 2000, 29th March, 2001 and 02nd April, 2002, which
are under challenge in the respective appeals, are set aside. The
appellants are entitled to compensation of the land at the rate of
Rs. 297/- per square yard along with other statutory benefits under
B
the law which shall be calculated and paid to them expeditiously
within six months from today.”
14. The High Court referred to the judgment of this Court in
Narendra & Ors. v. State of Uttar Pradesh & Ors. 9 wherein
compensation of Rs. 297/- per square yard was provided in respect of
acquisition by the State vide notification dated 12.9.1986 for the land C
situated in Village Makanpur for planned development of Vaishali. The
High Court, in a judgment under appeal, had restricted the amount of
compensation to the amount on which Court fees was affixed. This
Court held as under:
“16) Simply because the appellants had paid court fee on the claim D
at the rate of Rs.115/- square yards could not be the reason to
deny the compensation at a higher rate. This could be taken care
of by directing the appellants to pay the difference in court fee
after calculating the same at the rate of Rs.297/- per square yards.”
15. In another matter referred by the High Court, Pradeep Kumar E
v. State of U.P.10, this Court had remanded the appeals to the High
Court on 16.2.2016 as it awarded Rs.135/- per square yard as
compensation vide its order dated 15.4.2015. The appeals arose out of a
notification under Section 4 of the LA Act published on 15.03.1988 for
acquisition of land in Village Makanpur for planned industrial development F
at New Okhla Industrial Development Authority11 constituted under “The
Uttar Pradesh Industrial Area Development Act, 1976”. After remand
by this Court, the High Court on 21.04.2016 awarded Rs. 297/- per
square yard as the compensation for the land acquired.
16. Mr. Mishra, learned senior counsel appearing for the Parishad, G
argued that the High Court has ignored the date of notification i.e.
26.6.1982 by which the land in the present matter was acquired. In the
matter of Pradeep Kumar, the notification was dated 15.03.1988 in
9
Civil Appeal Nos. 10429-10430 of 2017 decided on 11.09.2017
10
(2016) 6 SCC 308
11
For short, ‘Noida’ H
762 SUPREME COURT REPORTS [2021] 3 S.C.R.

A respect of land located in village Makanpur at Noida. However, in the
present matter, more than 1000 acres of land situated in five other villages
is to be acquired. The land in district Ghaziabad sought to be acquired by
the Parishad is on the northern side of the National Highway-24 which
passes through Village Makanpur, whereas the land on the southern side
of National Highway is a part of Noida, District Gautam Budh Nagar.
B
Noida is a well-developed town as compared to the developing town of
Ghaziabad situated on the other side of the National Highway.
17. Mr. Gupta, on the other hand, vehemently argued on behalf of
the land owners that the land situated in Village Makanpur was the subject
matter of acquisition for Noida as well as GDA apart from the Parishad.
C It was contended that the purpose for which the land is acquired or the
authority which acquired the land is inconsequential as the land owners
are entitled to compensation irrespective of any such factors. In the
written submissions, reference has been made to the statement of Inderraj
Singh (PW-1) to submit that at the time of acquisition, there were
D industrial units as well as residential colonies of Vaishali and Kaushambi.
Reliance was placed upon finding of the Reference Court which is to
the following effect:
“10. From the above averments it is proved that the position and
status of disputed acquired land is of high quality and these lands
E are of good potential with a view to productivity and other usages
and is fit for residential and commercial capacity.”
18. In the written submissions filed on behalf of the land owners,
two maps have also been referred. First map is of Ghaziabad which is
on the northern side of National Highway-24 and the second map is
F stated to be of an area now covered within the jurisdiction of Noida, i.e.
in respect of Chalera Banger, Bhangel Begampur, Nagla Charandas,
Tilpatabad, Kakrana Khawaspur. Such map submitted with the written
submissions is not legible. It is submitted that the Village Makanpur is
close to Delhi as compared to the above said villages which are now
parts of Noida. It has been stated that a compensation of Rs.297/- per
G square yard has been awarded under the notification dated 19.12.1980
for the land situated in Village Makanpur, hence, the present land owners
are also entitled to the same amount of compensation. As per the argument
of Mr. Gupta, the land acquired is better located than the land which is
the subject matter of acquisition for Noida. The distances of the villages
H presently under the jurisdiction of Noida and Ghaziabad from the borders
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 763
THR. LRS & ORS [HEMANT GUPTA, J.]

of Delhi have also been submitted before us. Though, such distances A
are not part of the pleadings or evidence before the Reference Court or
the High Court, the said table has been reproduced hereunder:
“There is no dispute that landowners of village across NH-24,
examples of which were cited before this Court during the course
of hearing have all been awarded compensation @ Rs.297/- per B
square yard. The approximate distance to Delhi from the villages
involved in the present case and those across NH-24 is as under:

C

D
The above table would show that for villages which are at a
distance of 13-14 km from Delhi, have been awarded
compensation @ Rs.297/- per square yard and therefore the
respondents in the present case deserve compensation at least @
Rs.297/- per square yard, if not more.” E
19. In the written submissions submitted on behalf of Shri Rohit
Kumar Singh, learned counsel for the land owners, it is asserted that the
State Government has decided that 731 acres of land would be carved
out from the total land acquired in 1982 and handed over to the GDA. It
is also submitted that a notification was issued under Section 4 of the LA F
Act on 28.2.1987 in respect of 731 acres of land. In the present set of
appeals, we are not dealing with the acquisition of land intended to be
acquired by way of a notification under Section 4 of the LA Act dated
28.2.1987. Mr. Singh in the written submissions has submitted that the
possession was taken over by the GDA on 14.6.1988 and 29.6.1988
which was based upon development work taken place from 1982 G
onwards. We do not find such facts emanate from the orders passed by
the Special Land Acquisition Officer, the Reference Court and the order
of the High Court. The land acquired by the GDA is not part of
determination of the compensation in the present set of appeals.
H
764 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 20. The principles of determining the market value are delineated
under Sections 23 and 24 of the LA Act and are well-settled by the
plethora of judgments on the said subject matter. The provisions of the
LA Act and some of the judgments are referred hereinafter-
“23. Matters to be considered in determining compensation. – (1)
B In determining the amount of compensation to be awarded for
land acquired under this Act, the Court shall take into consideration-
first, the market value of the land at the date of the publication of
the notification under Section 4, sub-section (1);
xx xx xx
C
24. Matters to be neglected in determining compensation. –
xx xx xx
fifthly, any increase to the value of the land acquired likely to
accrue from the use to which it will be put when acquired;
D
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;”
21. A three Judge Bench of this Court12 indicated methods of
valuation to be adopted to ascertain the market value of land on the date
E of the notification under Section 4(1) as: (i) opinion of experts, (ii) the
price paid within a reasonable time in bona fide transactions of purchase
of the lands acquired or the lands adjacent to the lands acquired and
possessing similar advantages; and (iii) a number of years’ purchase of
the actual or immediately prospective profits of the lands acquired.
F 22. This Court13 held that the acid test which the court should
always adopt in determining the market value in matters of compulsory
acquisition is to eschew feats of imagination and sit in the armchair of a
prudent willing purchaser. It was held as under:
“6. No prudent purchaser would purchase large extent of land on
G the basis of sale of a small extent of land in the open market. The
acid test the court should always adopt in determining market
value in the matter of compulsory acquisition would be to eschew
12
Smt. Tribeni Devi & Ors. v. Collector of Ranchi and Vice Versa, (1972) 1 SCC 480
13
Gujarat Industrial Development Corpn. v. Narottambhai Morarbhai & Anr., (1996)
H 11 SCC 159
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 765
THR. LRS & ORS [HEMANT GUPTA, J.]

feats of imagination, sit in the armchair of a prudent willing A
purchaser, it should consider whether the willing vendee would
offer the rate at which the trial court proposes to determine the
compensation. Taking these facts into consideration, we are of
the view that the reasonable and adequate compensation for the
lands would be at a net rate of Rs 22 per sq. mtr., after giving
B
deduction of 1/3rd of the amount towards developmental charges.
Therefore, the claimants would be entitled to the compensation
@ Rs 22 per sq. mtr. They are also entitled to the statutory benefits
on the enhanced compensation.”
23. This Court 14 has also held that in fixation of rate of
compensation under the Land Acquisition Act, there is always some C
element of guesswork but that has to spring from the totality of evidence,
the pattern of rate, the pattern of escalation and escalation of price in
the years preceding and succeeding the notification under Section 4 of
the LA Act. The Court has held that:
“13. The first question we proceed to consider is, whether the D
High Court was right to enhance the rate from the rate recorded
in Exhibits A-1 and A-2 by Rs 10,000 per acre per year for three
years. It is true, in the fixation of rate of compensation under the
Land Acquisition Act, there is always some element of guesswork.
But that has to be based on some foundation. It must spring from E
the totality of evidence, the pattern of rate, the pattern of escalation
and escalation of price in the years preceding and succeeding
Section 4 notification etc. In other words, the guesswork could
reasonably be inferable from it. It is always possible to assess the
rate within this realm. In the present case, we find there are three
exemplars i.e. Exhibits A-1 and A-2 which are three years F
preceding the date of notification and Exhibit A-3 which is of the
same point of time when Section 4 notification was issued.”
24. Further, this Court15 has held that for determining the market
value of the land under acquisition, suitable adjustments have to be made
while considering the various positive and negative factors. The following G
observations have been made-
“18. One of the principles for determination of the amount of
compensation for acquisition of land would be the willingness of
14
Land Acquisition Officer v. B. Vijender Reddy & Ors., (2001) 10 SCC 669
15
Viluben Jhalejar Contractor (Dead) by LRs. v. State of Gujarat, (2005) 4 SCC 789 H
766 SUPREME COURT REPORTS [2021] 3 S.C.R.

A an informed buyer to offer the price therefor. 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 and in the cases where
he is not.
B 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 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
C have to be considered.
xx xx xx
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
D
plots, waiting for purchasers and the hazards of an entrepreneur.
Such development charges may range between 20% and 50% of
the total price.”
25. This Court16 has delineated the following factors responsible
for increase in land prices such as situation of the land, nature of
E
development in surrounding area, availability of land for development in
the area, and demand for the land in the area. It was held:
“16. Much more unsafe is the recent trend to determine the
market value of acquired lands with reference to future sale
transactions or acquisitions. To illustrate, if the market value of a
F land acquired in 1992 has to be determined and if there are no
sale transactions/acquisitions of 1991 or 1992 (prior to the date of
preliminary notification), the statistics relating to sales/acquisitions
in future, say of the years 1994-1995 or 1995-1996 are taken as
the base price and the market value in 1992 is worked back by
G making deductions at the rate of 10% to 15% per annum. How
far is this safe? One of the fundamental principles of valuation is
that the transactions subsequent to the acquisition should be ignored
for determining the market value of acquired lands, as the very
16
General Manager, Oil and Natural Gas Corporation Limited v. Rameshbhai Jivanbhai
H Patel & Anr., (2008) 14 SCC 745
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 767
THR. LRS & ORS [HEMANT GUPTA, J.]

acquisition and the consequential development would accelerate A
the overall development of the surrounding areas resulting in a
sudden or steep spurt in the prices. Let us illustrate. Let us assume
there was no development activity in a particular area. The
appreciation in market price in such area would be slow and
minimal. But if some lands in that area are acquired for a residential/
B
commercial/industrial layout, there will be all round development
and improvement in the infrastructure/amenities/facilities in the
next one or two years, as a result of which the surrounding lands
will become more valuable. Even if there is no actual improvement
in infrastructure, the potential and possibility of improvement on
account of the proposed residential/commercial/industrial layout C
will result in a higher rate of escalation in prices. As a result, if the
annual increase in market value was around 10% per annum before
the acquisition, the annual increase of market value of lands in the
areas neighbouring the acquired land, will become much more,
say 20% to 30%, or even more on account of the development/
D
proposed development. Therefore, if the percentage to be added
with reference to previous acquisitions/sale transactions is 10%
per annum, the percentage to be deducted to arrive at a market
value with reference to future acquisitions/sale transactions should
not be 10% per annum, but much more. The percentage of standard
increase becomes unreliable. Courts should, therefore, avoid E
determination of market value with reference to subsequent/future
transactions. Even if it becomes inevitable, there should be greater
caution in applying the prices fetched for transactions in future.
Be that as it may.”
26. The relationship between the market value of land and its F
potentiality has also been discussed by this Court17 wherein it was
observed that-
“4. … The market value is the price that a willing purchaser would
pay to a willing seller for the property having due regard to its
existing condition with all its existing advantages and its potential G
possibilities when led out in most advantageous manner excluding
any advantage due to carrying out of the scheme for which the
property is compulsorily acquired. In considering market value
disinclination of the vendor to part with his land and the urgent
17
Atma Singh (Dead) through LRs & Ors. v. State of Haryana & Anr., (2008) 2 SCC 568 H
768 SUPREME COURT REPORTS [2021] 3 S.C.R.

A necessity of the purchaser to buy should be disregarded. The
guiding star would be the conduct of hypothetical willing vendor
who would offer the land and a purchaser in normal human conduct
would be willing to buy as a prudent man in normal market
conditions but not an anxious dealing at arm’s length nor facade
of sale nor fictitious sale brought about in quick succession or
B
otherwise to inflate the market value. The determination of market
value is the prediction of an economic event viz. a price outcome
of hypothetical sale expressed in terms of probabilities….
5. For ascertaining the market value of the land, the potentiality of
the acquired land should also be taken into consideration.
C Potentiality means capacity or possibility for changing or developing
into state of actuality. It is well settled that market value of a
property has to be determined having due regard to its existing
condition with all its existing advantages and its potential possibility
when led out in its most advantageous manner. The question
D whether a land has potential value or not, is primarily one of fact
depending upon its condition, situation, user to which it is put or is
reasonably capable of being put and proximity to residential,
commercial or industrial areas or institutions. The existing amenities
like water, electricity, possibility of their further extension, whether
near about town is developing or has prospect of development
E have to be taken into consideration…”
27. In another three Judge Bench of this Court18, the Court held
as under:
“13. One other important factor which also should be borne in
F mind is that it may not be safe to rely only on an award involving
a neighbouring area irrespective of the nature and quality of the
land. For determination of market value again, the positive and
negative factors germane therefor should be taken into
consideration as laid down by this Court in Viluben Jhalejar
Contractor v. State of Gujarat [(2005) 4 SCC 789] , namely:
G (SCC p. 797, para 20)…”
28. The land forming the subject matter of the present appeals
was acquired in pursuance of notification under Section 28 of the Act
18
Revenue Divisional Officer-cum-Land Acquisition Officer v. Shaik Azam Saheb &
H Ors., (2009) 4 SCC 395
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 769
THR. LRS & ORS [HEMANT GUPTA, J.]

published on 26.6.1982. Therefore, firstly, the attempt to determine the A
market value should be based on the sale instances, which are proximate
to both the date of notification under Section 28 of the Act and to the
land sought to be acquired. The land owners have relied upon seven sale
instances in respect of villages of which the land was acquired. Out of
such seven sale instances, two are almost four years later than the
B
publication of notification under Section 28 of the Act, and thus cannot
be taken into consideration in terms of the Section 24 of the LA Act.
29. The potentiality of the acquired land is one of the primary
factors to be taken into consideration to determine the market value of
the land. Potentiality refers to the capacity or possibility for changing or
developing into the state of actuality. The market value of a property has C
to be determined while having due regard to its existing conditions with
all the existing advantages and its potential possibility when led out in its
most advantageous manner. The question whether a land has potential
value or not primarily depends upon its condition, situation, use to which
it is put or its reasonable capability of being put and also its proximity to D
residential, commercial or industrial areas/institutions. The existing
amenities like water, electricity as well as the possibility of their further
extension, for instance whether near about town is developing or has
prospects of development have to be taken into consideration. It also
depends upon the connectivity and the overall development of the area.
E
30. The record in the present matter does not suggest that there
were large scale development activities. The evidence is rather of sale
of small areas. There is nothing on record as to when the industrial units
were set up and what was the cost of land. Furthermore, there are no
sale instances of land situated in Village Makanpur prior to date of
notification i.e. 26.6.1982. The sale instances produced by the land F
owners pertain to Village Sahibabad and Jhandapur which are at a
distance of about 3.5 kms from Delhi border. This Court19 while dealing
with comparable sale instances has held that-
“14. Thus, comparable sale instances of similar lands in the
neighbourhood at or about the date of notification under Section G
4(1) of the Act are the best guide for determination of the market
value of the land to arrive at a fair estimate of the amount of
compensation payable to a landowner. Nevertheless, while
ascertaining compensation, it is the duty of the Court to see that
19
Mohammad Raofuddin v. Land Acquisition Officer, (2009) 14 SCC 367 H
770 SUPREME COURT REPORTS [2021] 3 S.C.R.

A the compensation so determined is just and fair not merely to the
individual whose property has been acquired but also to the public
which is to pay for it.”
31. The sale instances of a smaller area have to be considered
while keeping in view the principle that where a large area is the subject
B matter of acquisition, suitable deduction is required to be made as no
prudent purchaser would purchase large extent of land on the basis of
sale of a small extent in the open market. The Court thus has to consider
whether the willing vendee would offer the rate at which the trial court
proposes to determine the compensation. This Court has even provided
for 50% deduction for development charges on the price mentioned in
C the sale deed.20
32. The land owners have not produced any other sale deed or
award of compensation on account of acquisition of land in the northern
side of National Highway-24 prior to notification in question. It could
thus lead to an inference that there were not many sale transactions
D prior to the notification in question. Some industries might have set up
their units keeping in view the proximity to Delhi but details regarding
when such units were set up and at what price, these units purchased
the land have not been brought on record. As mentioned earlier, the
market value has to be determined on the basis of what a purchaser is
E willing to pay on the date of notification. It cannot be as per any rule of
thumb without any reference to the prevalent market value on the date
of acquisition on record.
33. The Reference Court had applied 1/3rd deduction in respect
of land situated in Village Sahibabad on the sale price of Rs.180/- per
square meters of land measuring 130 square meters vide sale deed dated
F 26.12.1980 whereas the deduction of 40% deduction in respect of land
situated in Village Jhandapur on the sale price of Rs.200/- per square
meters of land measuring 50 square yards vide sale deed dated 5.5.1982
in view of the fact that the area sold was very small. The High Court
has affirmed such deduction. Thus, we are of the view that the same is
G reasonable and adequate deduction. Therefore, the market value
determined at Rs.120/- per square yard is the appropriate market value
on the basis of comparable sale instances.
34. The other method to determine the market value is the judicial
precedents which are proximate to the time of the acquisition and
20
H Himmat Singh & Ors. v. State of Madhya Pradesh & Anr., (2013) 16 SCC 392
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 771
THR. LRS & ORS [HEMANT GUPTA, J.]

proximate to the subject matter of land acquired. A table of judicial A
precedents with the dates of publication of notification under Section 28
of the Act and Section 4 of the LA Act; the village where the land is
situated and the authority for which the land was acquired to arrive at
the market value is produced below. Such table includes the judgments
referred to by Mr. Gupta that a sum of Rs.297/- per square yard is the
B
market value of the land acquired.

C

D

E

F

G

H
772 SUPREME COURT REPORTS [2021] 3 S.C.R.

A

B

C

D

E

F

G

H
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 773
THR. LRS & ORS [HEMANT GUPTA, J.]

35. The order passed by this Court on 9.11.2017 for fresh A
determination on the basis of additional documents was based on the
judgments pertaining to above-mentioned acquisitions. In terms of the
order passed by this Court, no additional evidence was produced before
the High Court and the submissions were confined to the material already
on record. Such judgments, as discussed above, are later in time except
B
the land situated in Chhalera Khadar, now forming part of Noida, for
which notification was published on 19.12.1980. It is pertinent to note
that the proximity from Delhi border would not be the determining factor
but the distance between the two villages inter se would be relevant as
Noida spread over a large area, has different access roads from Delhi
and Ghaziabad. However, such distance has not been disclosed. C
36. The High Court in Jagdish Chandra & Ors. v. New Okhla
Industrial Development Authority, NOIDA & Anr.21 had determined
Rs. 297/- as the market value of the land situated in Chhalera Bangar,
now forming part of Noida, intended to be acquired vide notification
published under Section 4 of the LA Act on 27.2.1988. The High Court D
had noted the advantageous location of Noida when it held that:
“…Valuation of the landed property is enormously rising day by
day. The location of the land, as stated, is nearer to developed
area of NOIDA. The land is acquired for the purpose of making
park. Neither it is required for commercial purpose nor for E
residential purpose. No question of largeness of the land is
available. Therefore, we are not aware what is the basis of
deduction.”
37. The first notification for acquisition of land in Village Makanpur,
the village which is located on both sides of National Highway-24, was
published on 26.6.1982, for the land situated on the northern side of the F
National Highway, that is the notification in question.
38. In Pradeep Kumar, after remand, the High Court awarded
Rs.297/- per square yard as the compensation in pursuance of notification
dated 15.3.1988 of the land situated in Village Makanpur (Sr. No. 2 in
the above table) for the benefit of Noida. This Court in Narendra G
awarded compensation of Rs.297/- per square yard for the land acquired
in Village Makanpur in pursuance of the notification under Section 4 of
the LA Act published on 12.9.1986 (Sr. No. 2 in the above table). Such
land is in the area of Noida on the southern side of the National Highway.
21
First Appeal No. 744 of 2001 decided on 14.12.2007 H
774 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 39. The other villages, subject matter of acquisition i.e. Arthla,
Jhandapur, Prahladgarhi, Mahiuddin-Re-Kanawani and Sahibabad are
farther away from the National Highway than the land situated in Village
Makanpur. Since the Special Land Acquisition Collector as well as the
Reference Court has determined uniform compensation for the entire
land acquired, therefore, we do not find that the compensation awarded
B
of land situated in Village Makanpur on the basis of notification 4-5
years later is a reasonable yardstick for determining compensation of
over 1100 acres of land in the other villages. There is no judicial precedent
in respect of land situated in other five villages which are subject matter
of the acquisition in the present group of appeals. The orders passed by
C this Court relied upon are either subsequent to the notification in question
and/or for the acquisition for the purpose of planned development of
Noida.
40. A compensation of Rs. 297/- per square yard was awarded
for land acquired for the purpose of GDA vide notification dated 28.2.1987
D and 16.8.1988 (Sr. No. 4 & 5 in the above table). The said acquisition
was five years after the acquisition in question. The development activity
initiated vide notification dated 26.6.1982 would be relevant to determine
the market value on account of acquisition by virtue of the subsequent
notification, but time gap of more than five years will not entail the same
amount of compensation in respect of the land acquired five years earlier.
E
41. The compensation determined on the basis of a notification
five years later cannot be a yardstick for determining compensation of
the land which is subject matter of present acquisition years earlier. Still
further, the High Court was not justified in observing that gaps of few
years in the notification have been ignored by this Court. In fact, on the
F contrary, the High Court has failed to note that the date of notification
for the acquisition of land for the benefit of Parishad is five years earlier
than those in the judgments relied upon by the High Court.
42. In respect of land situated on northern side of National Highway,
the land was acquired vide notifications dated 28.2.1987 and 12.9.1986
G in the case of Narendra and Kashi;and on 16.8.1988 in the case of Jai
Prakash. Whereas, on the southern side of National Highway for the
benefit of Noida, the land of Village Makanpur became subject matter
of acquisition vide notification dated 10.3.1988 in the case of Pradeep
Kumar and on 15.3.1988 in the case of Charan Kaur.
H
U.P. AWAS EVAM VIKASH PARISHAD. v. ASHA RAM (D) 775
THR. LRS & ORS [HEMANT GUPTA, J.]

43. For the land situated on the northern side of the National A
Highway for the benefit of the Parishad, the acquisition has attained
finality with the dismissal of SLP (Civil) No. 4636 of 2016 on 28.3.2016.
The compensation assessed in the other aforementioned cases is
subsequent to the date of notification, therefore, none of the orders are
determinative of the amount of compensation. Hence, the market value
B
as determined by the High Court cannot be sustained either on the basis
of the sale deeds, or on the strength of judicial orders. There is no
justification of enhancement of compensation awarded by the Reference
Court i.e. Rs.120/- per square yard.
44. Consequently, the present appeals are hereby allowed. The
order passed by the High Court in the appeals preferred by the land C
owners is set aside and the compensation awarded by the Reference
Court @ Rs.120/- per square yard apart from statutory benefits is
restored.

Devika Gujral Appeals allowed. D

E

F

G

H