1

Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8042 OF 2004

Anjani Molu Dessai … Appellant  

vs.

State of Goa & Anr. … Respondents  

O R D E R

R.V. RAVEENDRAN J.

An  area  of  3,65,375  sq.m.  of  land  in  Balli  

Village, Quepem Taluk, Goa was acquired for laying the New  

Broad  Gauge  line  for  Konkan  Railway  in  pursuance  of  

preliminary  notification  dated  27.6.1991  (published  on  

30.7.1991)  and  final  declaration  dated  4.11.1991.  The  

acquisition included parts of survey Nos. 45/1, 45/5, 45/6,  

51/1  and  51/2  of  Balli  village  measuring  60343  sq.m.  (for  

short the ‘acquired lands’) belonging to the appellant. The  

Land  Acquisition  Collector,  by  his  Award  dated  7.12.1993,  

awarded  compensation  at  the  rate  of  Rs.12/-  per  sq.m.  for  

bharad  (orchard)  lands  and  Rs.6/-  per  sq.m.  for  irrigated  

(paddy) lands. The Reference Court and the High Court affirmed  

the said valuation by rejecting the reference and appeal by

the appellant. The refusal to increase the compensation is  

under  challenge  in  this  appeal  by  special  leave.  The  only  

question that arises for consideration is whether compensation  

awarded, should have been at a higher rate.

Description, Location and potential of the land

2. AW-1  (power  of  attorney  holder  of  the  

appellant) has given evidence stating that the acquired lands  

are level lands, fit for construction; that all amenities and  

facilities including a market, a school, a hospital, temple  

and  the  village  panchayat  office  are  situated  within  a  

distance of half kilometer; that there is an access road right  

upto the acquired lands and the bus stop is also within half a  

kilometer; that electricity, water and telephone facilities  

are  available  for  the  acquired  lands;  and  that  there  are  

houses within a distance of 50 meters from acquired lands. He  

has also stated that the acquired lands are orchard lands with  

coconut, cashew, mango, jackfruit and other trees, with houses  

and a well. The Land Acquisition Collector has also confirmed  

in the Award that the lands are situated in Balli village;  

that the major portion of the lands with several structures  

and a well, lies on the eastern side of National Highway from  

Margao to Karwar. The award also states that the major portion  

of  acquired  lands  is  bharad  (orchard)  land  consisting  of  

cashew, coconut and other fruit bearing trees and some small

portions are paddy fields.

3. The  High  Court  has  also  referred  to  the  

situation  of  the  property  and  has  noted  that  the  acquired  

lands are in a village where all basic amenities like primary  

health centre, high school, post office were available within  

a distance of 500 meters. It can therefore be safely concluded  

that the acquired lands are not undeveloped rural land, but  

can be urbanisable land situated near a developed semi-urban  

village with access to all infrastructure facilities.  

Basis of compensation awarded

4. The Land Acquisition Collector has relied upon two  

sale transactions in his award to arrive at the market value of  

the acquired lands.  

4.1 The first is a Sale Deed dated 30.8.1989 relating to sale  

of 2055 sq.m. of land in survey No.83 which is situated at a  

distance of 200 m. from the acquired lands which was sold at the  

rate of Rs.43.80 per sq.m. The Award states that the land sold  

under the deed dated 30.8.1989 is a developed bharad type of  

land with approach road. Therefore it is similar to the acquired  

lands. The description of the land and the extent of the land  

sold, make it clear that what was sold was an orchard land and  

not a residential plot. To arrive at the market value of the

acquired land, the Land Acquisition Collector deducted 45% from  

the  sale  price  of  Rs.43.80  per  sq.m.,  towards  ‘development  

cost’, i.e. providing approach roads and open spaces, expenses  

relating to development work, conversion charges etc. He thus  

arrived at the value of the undeveloped plot as Rs.24 per sq.m.  

As there was a gap of 23 months between the date of the said  

sale and the date of preliminary notification in this case, the  

Collector provided a cumulative increase at the rate of 14.5%  

per annum over the said Rs.24/- to arrive at the market value as  

on 30.7.1991 as Rs.32.24 per sq.m.

4.2) The second sale deed relied upon by the Collector  

is dated 30.1.1990 and related to the sale of 7600 sq.m. of land  

in survey No.77 of Balli Village situated at a distance of one  

km from the acquired land, sold at the rate of Rs.3 per sq.m. As  

there was a gap of about 18 months between the date of the said  

sale  deed  and  the  date  of  preliminary  notification,  the  

collector provided a cumulative rate of 14.5% per annum over  

Rs.3/- and arrived at the market value on 30.7.1991 as Rs.3.82  

per sq.m.  

5. The  Collector  next  averaged  the  said  two  rates  

derived from the sale prices under the two sale deeds (that is,  

Rs.32.24 per sq.m. and Rs.3.82 sq.m.) and arrived at the market  

value for bharad type of land as Rs.18 per sq.m. However, as the

Collector had separately valued and awarded compensation for the  

trees (that is Rs.24,14,677/- for the entire 3,65,375 per sq.m.  

acquired) he was of the view that the average value of trees per  

sq.m. would be around Rs.6/- and that should be deducted from  

the  said  market  value  of  Rs.  18  per  sq.m.  He  thus  awarded  

compensation at the rate of Rs.12 per sq.m. for the bharad land.  

Thereafter he determined the rate of paddy lands as Rs.6/- per  

sq.m.

The appellant’s claim

6. The appellant contended that the market value  

determined by the Land Acquisition Collector was very low and  

sought  compensation  at  the  rate  of  Rs.250/-  per  sq.m.  The  

appellant  contended  that  the  Reference  Court  and  the  High  

Court had erroneously rejected the evidence produced, that is  

three comparable sales which showed that the market value was  

much more. The three exemplar sale deeds relied upon by the  

land owner relating to the said village were: (i) sale deed  

dated 6.1.1989 under which an extent of 2000 sq.m. land with  

trees was sold at a rate of Rs.100/- per sq.m.; (ii) sale deed  

dated 7.3.1991 whereby 896 sq.m. of land at a distance of 300  

m. from the acquired lands was sold at a price of Rs.150/- per  

sq.m.; (iii) sale deed dated 3.4.1991 whereby 300 sq.m. of  

land situated at a distance of 200 meter was sold at a price  

of Rs.221.66 per sq.m. The respondents, on the other hand,

contended that the three exemplars were rightly rejected and  

the valuation by the Land Acquisition Collector was rightly  

upheld.

Valuation of the acquired lands

7. The appellant examined the purchasers under the  

Sale  Deeds  dated  7.3.1991  (Ex.AW  1/C)  and  3.4.1991((Ex.AW  

1/D).  The purchaser in regard to Sale Deed dated 6.1.1989 was  

not examined. However, the power of attorney holder of the  

appellant  (AW-1)  has  referred  to  the  said  Sale  Deed  dated  

6.1.1989. On careful consideration, we find that the reference  

Court and the High Court have rightly refused to rely upon the  

said three Sale Deeds for determination of the market value of  

the acquired lands.

7.1) The first Sale Deed dated 6.1.1989 related to a sale by  

the owner of a land to his own company, that is, a private  

limited company of which he was the Director. Such a sale can  

not normally be treated as an independent sale by a willing  

seller to a willing buyer. No one connected with the sale was  

examined to establish that it was a sale at market value. This  

sale was therefore rightly rejected.

7.2)   The second Sale Deed dated 7.3.1991 was in respect of a  

small area measuring 28 m. x 32 m. (896 sq.m.) which was

carved  out  of  a  residential  property  situated  within  the  

village abadi of Balli, adjoining the Government Hospital. It  

was purchased for the purpose of construction of shop. The  

acquired lands are agricultural orchard lands situated away  

from the village abadi area. Therefore the said sale deed does  

not relate to a comparable land.

7.3) The third Sale Deed dated 3.4.1991 also related to the  

sale of a part of a residential property in the village abadi  

area and related to a corner plot measuring 300 sq.m. situated  

at a distance of 50 m. from Balli market. That sale also does  

not relate to a comparable land.  

8. We  are  of  the  view  that  the  concurrent  

rejection of these three Sale Deeds by the Reference Court and  

High  Court  are  therefore  proper  and  do  not  call  for  

interference. If the said three Sale Deeds are excluded, there  

is no other evidence from the appellant’s side for determining  

the market value. However there is no need for a remand, as  

reasonable material is otherwise available for determination  

of market value in the form of two sale transactions that were  

relied upon by the Land Acquisition Collector himself in his  

award.

9. As already noticed, the sale deed dated 30.8.1989  

relates  to  sale  of  similar  bharad  land  in  Sy.No.83  of  Balli

Village. The extent of the land sold was about half an acre. The  

distance between the acquired lands and the land in Sy.No.83  

sold under the deed dated 30.8.1989, was hardly 200 meters. The  

said sale therefore relates to a comparable land and furnishes a  

reasonable basis for assessing the market value of the acquired  

land,  by  providing  appropriate  increase  to  cover  the  

appreciation in prices during the gap of about two years between  

30.8.1989 (date of sale deed) and 30.7.1991 (date of publication  

of the preliminary notification).

10. The  Land  Acquisition  Collector  however  committed  a  

serious error in deducting 45% from the sale price disclosed  

by  the  Sale  Deed  dated  30.8.1989  towards  the  cost  of  

development. It is well settled that deduction for development  

cost  has  to  be  made  only  where  the  value  of  a  small  

residential/commercial/industrial plot of land in a developed  

layout is made the basis for arriving at the market value of a  

nearly large tract of undeveloped agricultural land. Where the  

land sold under the relied upon sale deed and the acquired  

lands are both are of similar nature (as in this case where  

both are bharad lands) the question of making any deduction  

towards development cost to arrive at the cost of ‘undeveloped  

land’  would  not  arise.  Such  a  deduction  would  have  been  

necessary if the sale deed relied upon related to a developed  

residential or commercial plot. Therefore, we are of the view  

that  the  Land  Acquisition  Collector  was  not  justified  in

making 45% deduction from the price disclosed by the Sale Deed  

dated 30.8.1989.

11. The  Sale  Deed  relied  upon  by  the  Land  Acquisition  

Collector  was  dated  30.8.1989.  The  relevant  date  for  

determination of compensation is 30.7.1991. Having regard to  

the fact that acquired lands were in an urbanisable area with  

readily available infrastructural facilities, we are of the  

view that the cumulative increase of 14.5% per annum adopted  

by  the  Collector  in  his  award,  would  be  appropriate.  By  

providing such increase, for two years, we would be able to  

arrive at the market value of the acquired land as on the date  

of publication of the preliminary notification. By providing  

such appreciation at 14.5% for two years on the base price of  

Rs.43.80 per sq.m. the market value as on 30.7.1991 for the  

acquired  bharad  lands  would  be  Rs.57.42,  rounded  of  to  

Rs.57.50 per sq.m.

12. The  next  question  that  arises  for  consideration  is  

whether  the  compensation  should  be  determined  only  with  

reference to the said sale deed dated 30.8.1989 or whether the  

other  Sale  Deed  dated  31.1.1990  relied  upon  by  the  Land  

Acquisition Collector, whereby 7600 sq.m. of land in Sy.No. 77  

at a distance of one kilometer was sold at the rate of Rs.3/-

per sq.m. should also be taken note of by averaging the two  

prices. As against the Sale Deed dated 30.8.1989 which was in

regard to a land situated at a distance of 200 meters, the  

Sale Deed dated 31.1.1990 related to a land which was more  

than one kilometer away. There is nothing to show that it was  

similar bharad land. Further the very fact that the first Sale  

Deed which is relied upon and accepted by the Land Acquisition  

Collector as relating to a comparable land is at a price of  

Rs.43.80 per sq.m., would demonstrate that the second sale  

deed showing a very low sale price of Rs.3/- per sq.m. cannot  

be considered to be a comparable sale. When the second sale  

deed relied upon is at a rate which is only 1/15th of the price  

disclosed  by  the  first  sale  deed,  obviously  they  are  not  

comparable  sales.  Further  the  award  of  the  Collector  

specifically states that the land sold under sale deed dated  

30.8.1989 is a similar land, that is, a bharad land at a  

distance of 200 meter. Significantly there is no such finding  

that the subject matter of the second sale dated 31.1.1990  

which was one kilometer away, was a similarly situated land.  

The sale deed dated 31.1.1990 should therefore be inferred to  

be either an undervalued sale or a distress sale or at all  

events not a comparable sale. The Land Acquisition Collector  

was not therefore justified in averaging the sale prices of  

the two sale deeds. Once it is found that the first sale deed  

was in regard to a comparable land and the second sale deed  

was not in regard to a comparable land, the second sale deed  

dated  31.1.1990  ought  to  have  been  excluded  from  

consideration.

13. The legal position is that even where there are several  

exemplars with reference to similar lands, usually the highest  

of the exemplars, which is a bona fide transaction, will be  

considered. Where however there are several sales of similar  

lands whose prices range in a narrow bandwidth, the average  

thereof can be taken, as representing the market price. But  

where  the  values  disclosed  in  respect  of  two  sales  are  

markedly different, it can only lead to an inference that they  

are with reference to dissimilar lands or that the lower value  

sale  is  on  account  of  under-valuation  or  other  price  

depressing reasons. Consequently averaging can not be resorted  

to.  We  may  refer  to  two  decisions  of  this  Court  in  this  

behalf.  

13.1) In  Sri Rani M. Vijayalakshmanna Rao Bahadur, Ranee of  

Vuyyur Vs. The Collector of Madras, 1969 (1) MLJ 45, a three  

Judge Bench of this  Court observed that the proper method for  

evaluation of market value is by taking the highest of the  

exemplars  and  not  by  averaging  of  different  types  of  sale  

transactions. This Court held:

“It seems to us that there is substance in the first  contention of Mr.Ram Reddy. After all, when the land is  being  compulsorily  taken  away  from  a  person,  he  is  entitled to say that he should be given the highest  value which similar land in the locality is shown to  have fetched in a bona fide transaction entered into  between a willing purchaser and a willing seller near  about the time of the acquisition. It is not disputed  that the transaction represented by Exhibit R-19 was a  few months prior to the notification under section 4,

that it was a bona fide transaction and that it was  entered into between a willing purchaser and a willing  seller.  The  land  comprised  in  the  sale  deed  is  11  grounds and was sold at Rs.1,961 per ground. The land  covered  by  Exhibit-27  was  also  sold  before  the  notification, but after the land comprised in Exhibit  R-19 was sold. It is true that this land was sold at  Rs.1,096/-  per  ground.  This,  however,  is  apparently  because of two circumstances. One is that betterment  levy at Rs.500 per ground had to be paid by the vendee  and the other that the land comprised in it is very  much more extensive, that is about 93 grounds or so.  Whatever that may be, it seems to us to be only fair  that  where  sale  deed,  pertaining  to  different  transactions are relied on behalf of the Government,  that representing the highest value should be preferred  to  the  rest  unless  there  are  strong  circumstances  justifying a different course. In any case we see no  reason why an average of two sale deeds should have  been taken in this case.”

13.2)  In State of Punjab Vs. Hans Raj (1994) 5 SCC 734, this  

court held:  

“Having  given  our  anxious  consideration  to  the  respective contentions, we are of the considered view  that  the  learned  single  Judge  of  the  High  Court  committed a grave error in working out average price  paid under the sale transactions to determine the market  value of the acquired land on that basis. As the method  of averaging the prices fetched by sales of different  lands of different kinds at different times, for fixing  the  market  value  of  the  acquired  land,  if  followed,  could bring about a figure of price which may not at all  be  regarded  as  the  price  to  be  fetched  by  sale  of  acquired land. One should not have, ordinarily recourse  to such method. It is well settled that genuine and bona  fide  sale  transactions  in  respect  of  the  land  under  acquisition  or  in  its  absence  the  bona  fide  sale  transactions proximate to the point of acquisition of  the lands situated in the neighbourhood of the acquired  lands possessing similar value or utility taken place  between a willing vendee and the willing vendor which  could be expected to reflect the true value, as agreed  between reasonable prudent persons acting in the normal  market conditions are the real basis to determine the  market value.”

Therefore, we are of the view that the averaging of the prices  

under the two Sale Deeds was not justified. The Sale Deed

dated 31.1.1990 ought to have been excluded for the reasons  

stated above. That means compensation for the acquired lands  

had to be fixed only with reference to the Sale Deed dated  

30.8.1989 relied upon by the Land Acquisition Collector which  

will be Rs.57.50 per sq.m. As the said market value has been  

fixed  with  reference  to  comparable  bharad  land  with  fruit  

trees,  the  question  of  again  separately  awarding  any  

compensation for the trees situated in the acquired land does  

not arise.  

14. The Land Acquisition Collector had valued the trees at  

Rs.6/- per sq.m. to arrive at the value of the lands without  

trees. On that basis the market value of paddy land situated  

amidst the bharad land can be arrived at by deducting Rs.6/-  

per sq.m. In the absence of any other evidence, we fix the  

said rate for paddy land on that basis, that is, Rs.51.50 per  

sq.m.

Conclusion

15. The appellant will thus be entitled to compensation at  

the  rate  of  Rs.57.50  per  sq.m.  in  respect  of  bharad  land  

without any additional or separate compensation for trees. The  

appellant  will  be  entitled  to  compensation  at  the  rate  of  

Rs.50/- per sq.m.

16. We, accordingly, allow this appeal in part as follows:  

(i) The compensation for the acquired lands (bharad lands)  

is increased to Rs.57.50 per sq.m. (instead of Rs.12/- per  

sq.m. plus value of trees awarded by the LAC) and Rs.51.50 per  

sq.m. for paddy lands (as against Rs.6/- per sq.m. awarded by  

the LAC)

(ii) The respondent shall pay to the appellant, additional  

amount under Section 23(1A) of Land Acquisition Act, 1894, at  

12%  per  annum  from  30.7.1991  to  17.3.1992  (date  of  taking  

possession) and solatium at 30% under Section 23(2) of the  

said Act, on the compensation amount.

(iii)  The respondents shall pay to the appellant, interest  

at the rate of 9% per annum from 30.7.1991 for a period of one  

year and 15% per annum thereafter till date of deposit under  

Section 28 of the said Act on the amount awarded in excess of  

what was awarded by the Land Acquisition Collector.  

(iv) The  award  made  in  regard  to  structures  is  not  

disturbed.

(v) Appellant will be entitled to costs through out from  

the respondents.

     ...................J.        ( R.V. RAVEENDRAN )

New  Delhi                   ..................J. December 07, 2010.              ( A.K. PATNAIK )