REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 204 OF 2000

DY. COLLECTOR, LAND ACQUISITION, GUJARAT & ANR.       … APPELLANTS

Versus

MADHUBAI GOBARBHAI & ANR.    … RESPONDENTS

With C.A. No. 213/2000, C.A. Nos. 214-219/2000, C.A. No. 205-212/2000,  C.A. No. 221-324/2000, C.A. No. 325-331/2000, C.A. No. 4090/2000, C.A.  No. 4091/2000, C.A. No. 2973-2978/2001.

J U D G M E N T

S.B. SINHA, J.

These  appeals  involving  common  questions  of  law  and  fact  were  

taken up for hearing together and are being disposed of by this common  

judgment.   

The State of Gujarat issued diverse notifications for acquisition of a  

huge tract of lands for construction of a dam over a river known as ‘Thebi’.  

The lands sought to be acquired were spread over in three villages, namely,  

Amreli,  Baxipur  and  Giriya.   Whereas  villages  Amreli  and  Baxipur  are

situated on the western side of river and within the municipal limit of the  

town of Amerli; village Giriya is on the eastern bank thereof and outside the  

municipal limit of the said town Amreli.    

Amreli  is  the  headquarters  of  the  District  Amreli.   It  is  a  well  

developed town.  A National Highway known as “Amreli – Chittal Road”  

passes through the town of Amreli.   

The  residents  of  the  town  enjoy  the  facilities  of  transportation,  

hospitals, schools, colleges, telephone, etc.  It is, however, admitted that the  

entire development has taken place on the eastern bank of the river and not  

on the western bank.  The villages situate on the western bank, however,  

admittedly  are  wholly  undeveloped.   The  lands  under  acquisition  are  

agricultural lands. The land upon acquisition were to be submerged under  

water.   

The Land Acquisition Officer made three different awards for three  

different villages.   

For agricultural lands situate in village Baxipur, which are the subject  

matters  of  judgment  and  order  dated  23.02.1998  passed  in  F.A.  No.  

3119/1997 and F.A. No. 3120/1997 and judgment and order dated 4.5.1999  

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passed  in  F.A.  Nos.  6184-6203/1995  and  other  connected  appeals,  

compensation was awarded at the rate of Rs.75/- per square meter.   

Out  of  350  land  owners,  however,  only  156  land  owners  filed  

applications for reference before the Collector in terms of Section 18 of the  

Land Acquisition Act, 1894 (hereinafter referred to as, “the said Act”).   

The Reference Court  awarded compensation calculating the market  

value thereof at  the rate of Rs. 75/- per square meter  in respect of lands  

situate  in  Baxipur  village  (western  side  of  river  Thebi),  Giriya  village  

(eastern side of river Thebi) and Amreli village (western side of river Thebi).  

So  far  as  the  lands  situate  within  the  Amreli  town,  which  is  within  the  

municipal  area and situate on the eastern side of the river  comprising of  

residential  and  commercial  area  which  was  developed  since  1984,  are  

concerned; the Land Acquisition Officer awarded compensation at the rate  

of  Rs.50/-  per  square  meter  in  respect  of  agricultural  lands,  but  the  

Reference Court and the High Court awarded compensation at the rate of  

Rs.160/- per square meter  of land.  For the same area in respect of non-

agricultural  lands, the Land Acquisition Officer awarded compensation at  

the rate of Rs.150/- per square meter whereas the Reference Court as also  

the High Court  awarded compensation at  the rate  of  Rs.240/-  per  square  

meter.   

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So far as acquisition of lands which are subject matter of C.A. No.  

325-331/2000, situated in village Giriya are concerned; whereas the Land  

Acquisition Officer awarded compensation at the rate of Rs.12/- per square  

meter in respect of agricultural lands and Rs. 50/- per square meter in respect  

of  non-agricultural  lands,  the  Reference Court  awarded compensation  for  

both categories of land at the rate of Rs.400/- per square meter, the High  

Court, however, while upholding the said amount of compensation in respect  

of non-agricultural lands reduced the amount of compensation to Rs.300/-  

per square meter for agricultural lands.   

Aggrieved by and dissatisfied with the aforementioned judgments, the  

State of Gujarat is before us.  An appeal has also been filed by some of the  

claimants owning non-agricultural lands and raised constructions for use of  

the same as godown.   

We may deal with the relevant facts and submissions made before us  

in each group separately.   

GROUP - I

With a view to appreciate the rival contentions of the parties, we may  

notice heretobelow the number of matters and the other relevant facts for our  

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purpose which are  involved in Group –I  wherein compensation has been  

awarded at the rate of Rs.75/- per square meter

Group No. Total  matters  

C.A. No. F.A. No. Notificatio n Section 4  dated

Date  of  Judgment

1 1 204/2000 3119/1997 5.6.1993 23.2.1998 2 1 213/2000 3120/997 17.9.1992 23.2.1998 3 20 221-240/2000 6184-

6203/1995 15.3.1990 4.5.1999

2 241-242/2000 5289- 5290/1996

15.3.1990 4.5.1999

7 243-249/2000 269- 275/1997

15.3.1990 4.5.1999

11 250-260/2000 910- 920/1996

15.3.1990 4.5.1999

34 261-294/2000 1017- 1050/1996

15.3.1990 4.5.1999

7 295-301/2000 7-13/1997 20.9.1990 4.5.1999 2 302-303/2000 2358-

2359/1997 15.3.1990 4.5.1999

15 304-318/2000 1880- 1894/1997

10.12.1992 4.5.1999

6 319-324/2000 2061- 2066/1997

10.12.1992 4.5.1999

4 1 4090/2000 2546/1997 15.3.1990 4.5.1999 5 1 4091/2000 1166/1997 8.8.1990 4.5.1999   

We may, at the outset, also notice that the Reference Court and High  

Court  refused to take into consideration a large number of  deeds of sale  

(Exh. 86 to 100) produced by the State inter alia relying on or on the basis of  

the decision of this Court in  P. Ram Reddy and Ors. v.  Land Acquisition  

Officer,  Hyderabad  Urban  Development  Authority,  Hyderabad  and  Ors  

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(1995) 2 SCC 305, the same were not admissible in evidence. As for the  

purpose of proving the same, neither the vendor nor the vendee in respect of  

the said deeds of sale had been examined.  An application for adduction of  

additional evidence filed before us has been allowed.   

Mr. S.N. Shelati, learned Senior Counsel appearing on behalf of the  

State would submit:

(i) The Reference Court and the High Court committed a serious  

error in not exhibiting true copies of the Sale Deed (Exhs. 86 to  

100) in view of the decision of this Court in P. Ram Reddy and  

Ors.  v.  Land  Acquisition  Officer,  Hyderabad  Urban  

Development  Authority,  Hyderabad and Ors.   (1995)  2  SCC  

305  having  been  overruled  in  Land  Acquisition  Officer  and  

Mandal Revenue Officer v. V.V. Narasaiah [(2001) 3 SCC 530]  

and  Cement  Corporation  of  India v.  Purya  & ors.  [(2004)  8  

SCC 270]. Cement Corporation has also been followed by this  

Court in Ranvirsingh v. Union of India (2005) 12 SCC 59.

(ii) The Reference  Court  and the  High Court  awarded  a  grossly  

high  value  towards  compensation  of  the  acquired  lands  by  

misapplying  the principle  of  valuation and adopting a wrong  

method of valuation and thus, committed a manifest error.

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(iii) While making the award, the Reference Court as also the High  

Court failed to take into consideration the fact that the lands of  

village Baxipur being situated on western bank of river Thebi  

far  from  village  Amreli  as  also  the  fact  that  geographic  

condition  of  the  eastern  bank  of  river  Thebi  is  absolutely  

different  vis-à-vis  the  lands  situated  on  the  western  bank.  

Whereas  the  lands  situated  on  the  eastern  bank  are  mostly  

converted into non-agricultural lands; the lands situated on the  

western bank of river Thebi are only agricultural lands and in  

that view of the matter it is impermissible in law to compare the  

lands situated on the western bank of the river with those on the  

eastern  bank  particularly  when  even  no  residential  premises  

have  been  constructed  thereon.   The  lands  situated  on  the  

western bank of the river Thebi having not been converted into  

non-agriculture  land and there being hardly any scope for any  

development and furthermore in view of the purpose for which  

acquisition has been made,  namely, submergence of the land  

under water, the Reference Court as also the High Court must  

be  held  to  have  committed  a  serious  error  in  comparing  the  

lands with agricultural lands situated on the western bank with  

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the non-agricultural  lands situated on the eastern bank of the  

river Thebi.   

(iv) The  Land  Acquisition  Officer  having  considered  the  

comparable sales of agricultural lands both on the western bank  

and  eastern  bank  as  also  sale  of  non-agricultural  lands  and  

having awarded compensation at the rate of Rs.350/- per Are  

for Jirayat and Rs.500/- per Are for irrigated lands and, thus,  

having considered all relevant factors, the same should not have  

been interfered with by the Reference Court as well as by the  

High Court.  

(v) There being no reliable evidence of comparable instances or to  

show the actual yield from the land and, thus, the land holders  

having  not  been  able  to  discharge  the  burden  of  proof,  the  

amount  of  compensation  awarded  by  the  Land  Acquisition  

Officer should be held to have been fair and adequate in view  

of  the  decisions  of  this  Court  in  Special  Land  Acquisition  

Officer vs. Sidappa Tumari [1995 Supp. (2) SC 168 (Para 22).

(vi) The Reference Court and consequently the High Court without  

any material  on  record  awarded  compensation  at  the  rate  of  

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Rs.75/- per square meter in respect of agricultural lands which  

admittedly  are  situated  in  an  undeveloped  area  and,  thus,  

committed a serious error of law.

(vii) The Reference Court ought not to have disregarded the distance  

between the “Amreli – Chittal Road” and the village in question  

which is 1.5 kilometers to 2 kilometers and, thus, committed a  

serious error in relying upon the sale instances being Exhs.35 to  

40 which were in respect  of the lands adjacent  to “Amreli –  

Chittal  Road” for  the  purpose of  holding that  the  amount of  

compensation  awarded  by  the  Land  Acquisition  Officer  was  

unjustified.

(viii) Ignoring the distance of 1.5 to 2 kilometers (holding it to be of  

not much consequence by the High Court) for the purpose of  

ascertaining  the  true  market  value  of  the  land situated  in  an  

undeveloped area was wholly erroneous particularly in view of  

the  fact  that  the  witnesses  examined  on  behalf  of  the  

respondents  categorically  stated  that  there  was  no  likelihood  

that the said area would be developed in future.  

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(ix) The High Court furthermore should not have failed to take into  

consideration the evidence of Jerambhai Devsinhbhai (Exh. 12)  

who had categorically admitted that except Oil Mills there was  

no other industry in village Amreli and there was neither any  

State High Way passing through the said village nor there was  

any  railway  connection.   Even  witness  Bhagvandas  had  

admitted that between the dam and Pratappura area there were  

no residential  houses.  Similarly witness Bharatbhai K.Mehta  

had  admitted  that  he  had  purchased  the  land  for  his  own  

purpose, namely professional and residential purpose.  

(x) The Reference Court as also the High Court should not have  

relied  upon the valuation report  proved by Bhikhabhai  Rami  

who in no uncertain terms had admitted that he had not seen  

any document in respect of surrounding lands and furthermore  

had not taken into consideration the deeds of sale mentioned in  

the  award  and  moreover  there  was  neither  any  road  facility  

available  nor  any  residential  house  could  be  traced  out  and  

there was no possibility of any industrial development also on  

the western side of the river.   

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(xi) The  Reference  Court  as  also  the  High  Court  committed  a  

serious error  insofar  as they failed to take into consideration  

that the land owners failed to discharge their burden to show  

that the land in question had any potentiality of development.

Mr.  R.P.  Bhatt  learned  Senior  Counsel  appearing on behalf  of  the  

respondents, on the other hand, would submit:

i. As  upon  perusal  of  the  award  made  by  the  Land  

Acquisition  Officer  itself  it  would  be  evident  that  the  

entire area is a developed one and the land owners were  

progressive  farmers,  no  infirmity  can  be  said  to  have  

been committed in comparing non-agricultural lands with  

agricultural  lands  particularly  when  in  respect  of  the  

lands situated in one area he had granted compensation at  

the rate of Rs.50/- per square meter, there was absolutely  

no reason as to why the award at the rate of Rs.3.50 per  

square meter for non-irrigated lands and Rs.5/- per square  

meter for the irrigated lands should be awarded.  

ii. For determining a just and fair amount of compensation,  

no  sole  decisive  factor  existed  and  each  case  was  

required to be considered on its  own merit.   However,  

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when  such  determination  can  be  made  upon  applying  

more than one factor, the appellate court should not have  

interfered therewith even if another view was possible.   

iii. Location of a land although material keeping in view the  

fact that for all intent and purpose all the three villages  

are part of one town, only because a part of the acquired  

land is situated at a distance of 1.5 to 2 kilometers, the  

sale instances in respect of developed area can be applied  

subject  of  course to such deduction as is  applicable in  

respect thereof.  

Notifications for acquisition of different parcels of land were issued  

on diverse dates.  

Indisputably  the  purpose  of  acquisition  was construction  of  a  dam  

over river Thebi.  The lands acquired are situated in three villages.  Nature  

of  lands  acquired  was  both  agricultural  and  non-agricultural.   Some are  

situated in the urban area which were well developed and some were not  

completely developed and mainly agricultural lands.   

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The lands at Baxipur which are non-agricultural lands and situate on  

the Western bank of river Thebi, indisputably were agricultural lands.  The  

purpose for their acquisition was that the said lands would be submerged in  

water.

It is also not in dispute that various parts of the village Giriya and  

Amreli  are within the municipal  limits  while only a portion of  the lands  

situate in village Baxipur is within the municipal limit.

The parties hereto in support of their respective cases relied upon a  

large  number of  documents  including deeds of  sale.   A large  number  of  

witnesses including some experts were examined in the matters.  

We have noticed hereinbefore the reasonings of the Land Acquisition  

Collector; the Reference Judge as also the High Court for arriving at their  

respective opinions.

The  learned  Reference  Judge,  however,  rejected  the  deeds  of  sale  

produced by the acquiring authority inter alia on the premise that to prove  

the same neither, vendor or the vendee thereof had been examined.  For the  

said purpose, it relied upon a decision of this Court in  P. Ram Reddi   v.  

Land  Acquisition  Officer, (Supra).    The  said  decision  of  this  Court,  

however, has since been reversed inter alia by a Three Judge Bench of this  

Court  in  Land  Acquisition  Officer  &  Mandal  Revenue  Officer   v.   V.  

Narasaiah, [ (2001) 3 SCC 530 ].  Later, a Constitution Bench of this Court  

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in Cement Corporation of India Ltd. etc. etc.  v.  Purya and others etc. etc.,  

[ (2004) 8 SCC 270 ], while interpreting Section 51-A of the Act opined that  

the said provision seeks to make an exception in regard to proving of sale  

deeds stating :-

“25. Section 51-A of the Land Acquisition Act  seeks to make an exception to the aforementioned  rule.

26. In the acquisition proceedings, sale deeds are  required to be brought on record for the purpose of  determining market value payable to the owner of  the land when it is sought to be acquired.

27. Although  by  reason  of  the  aforementioned  provision the parties  are free to produce original  documents and prove the same in accordance with  the  terms  of  the  rules  of  evidence  as  envisaged  under  the  Indian  Evidence  Act,  the  LA  Act  provides for an alternative thereto by inserting the  said provision in terms whereof the certified copies  which  are  otherwise  secondary  evidence  may be  brought on record evidencing a transaction. Such  transactions  in  terms  of  the  aforementioned  provision  may  be  accepted  in  evidence.  Acceptance of an evidence is not a term of art. It  has an etymological meaning. It envisages exercise  of  judicial  mind  to  the  materials  on  record.  Acceptance  of  evidence  by  a  court  would  be  dependent  upon  the  facts  of  the  case  and  other  relevant  factors.  A piece  of  evidence  in  a  given  situation may be accepted by a court of law but in  another it may not be.

28. Section  51-A  of  the  LA  Act  may  be  read  literally and having regard to the ordinary meaning  which can be attributed to the term “acceptance of  evidence”  relating  to  transaction  evidenced  by  a  sale deed, its  admissibility  in evidence would be  beyond any question. We are not oblivious of the  fact that only by bringing a documentary evidence  in the record it is not automatically brought on the  record.  For  bringing a  documentary  evidence  on  the record, the same must not only be admissible  but  the  contents  thereof  must  be  proved  in  accordance with law. But when the statute enables  a  court  to  accept  a  sale  deed  on  the  records  

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evidencing  a  transaction,  nothing  further  is  required  to  be  done.  The  admissibility  of  a  certified copy of sale deed by itself could not be  held  to  be  inadmissible  as  thereby  a  secondary  evidence  has  been  brought  on  record  without  proving the absence of primary evidence. Even the  vendor  or  vendee  thereof  is  not  required  to  examine  themselves  for  proving  the  contents  thereof.  This,  however,  would not  mean that  the  contents  of  the  transaction  as  evidenced  by  the  registered  sale  deed  would  automatically  be  accepted.  The  legislature  advisedly  has  used  the  word  “may”.  A  discretion,  therefore,  has  been  conferred upon a court  to be exercised judicially  i.e.  upon  taking  into  consideration  the  relevant  factors.

(See also  Ranvir Singh and another  v.  Union of India, [ (2005) 12  

SCC 59 ].   

In  view  of  the  aforementioned  Constitution  Bench  decision  we  

allowed  an  application  filed  by  the  appellant  for  placing  additional  

documents on record by our order dated 23.10.2008.   We, therefore, are  

required to take into consideration the said transactions as well.   

The  core  question  which  arises  for  our  consideration  is  what  

principles should be applied for determining the market value of the land.  It  

is now a well settled principle of law that the determination of the market  

value of the land acquired, indisputably would depend upon a large number  

of factors, nature and quality of the lands is one of them.  The norms which  

are  required  to  be  applied  for  determination  of  the  market  value  of  the  

agricultural  land  and  homestead  land  may  be  different.   In  given  cases  

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location of land and in particular, closeness thereof from any road or high-

way would play an important  role for determination of the market  value  

wherefor belting system may in appropriate cases have to be resorted to.  

The  position  of  the  land,  particularly  in  rainy  season,  existence  of  any  

building etc. also plays an important role.  A host of other factors including  

development in and around the acquired land and/or the potentiality of the  

development will have a bearing on determination of the value of the land.   

Determination of the market value of the land may also depend upon  

the facts and circumstances of each case, amongst them, however, would be  

the  price  of  land,  amount  of  consideration  mentioned  in  a  deed  of  sale  

executed in respect of similarly situated land near about the date of issuance  

of Notification under Section 4(1) of the Act ; in the absence of any such  

exemplars the market value can be determined on yield basis or in  case of  

an orchard on the basis  of number of fruit  bearing trees.   It  is  also well  

settled  that  for  price  determination  purposes,  the  courts  would  be  well  

advised to consider the positive and negative factors, as has been laid down  

by this Court in  Viluben Jhalejar Contractor  vs.  State of Gujarat [(2005) 4  

SCC 789], namely :-

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Positive factors Negative factors

(i) Smallness of size (i) Largeness of area

(ii) proximity to a road (ii) situation  in  the  interior  at  a  distance from the road

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

(iv) Nearness to developed area (iv) lower  level  requiring  the  depressed  portion  to  be  filled  up  

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

(vi) Level  vis-à-vis  land  under  acquisition  

(vi) Some  special  disadvantageous  factors  which  would  deter  a  purchaser

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

The  Reference  Judge  as  also  the  High  Court  had  proceeded  to  

determine the market value inter alia relying upon or on the basis of some  

deeds of sale ; valuation report; the circular letter issued by the Collector in  

regard to premium payable on conversion of land etc.   

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The Reference Court and the High Court while ignoring the deeds of  

sale  whereupon  reliance  was  placed  by  the  State,  for  the  reasons  stated  

hereinbefore,  principally  relied upon a few deeds of sale.   We shall  take  

notice of some of them, namely, Exhibits 35, 36, 37, 38, 39 and 40.

 It  will  also be beneficial  to  consider  some of  the  documents  upon  

which the State relied upon, they are Exhibits 86, 90 , 91 and 96.   

Criticisms advanced on behalf of the State in respect of the deeds of  

sale whereupon the claimants relied are as under.

i. Exhibit  35  pertain  to  a  non  agricultural  resident  plot  ;  

construction thereon is only upto plinth level ; it is situated in a  

municipal area ; it a very small plot and that is why it was not  

comparable.  

ii. Exhibit 36 and 37 pertain to a non agricultural residential plots  

of land.  They are situated by the side of the highway and in the  

municipal area.   

iii. Exhibit 38 relates to a non agricultural residential plot, comes  

under earthen dams area.  It is outside the municipal area.  

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iv. Exhibits 39 and 40 relate to non-agricultural residential plots of  

land.   They touch Amreli-Chittal-Rajkot  Highway and are in  

municipal area.   

v. Bharatbhai,  PW-7,  purchaser  of  the  land  under  Exhibit  40,  

stated that the purchase of the plot by him was for a special  

purpose, namely – i.e. for professional and residential purposes.  

The Land Acquisition Officer in his Award noticed the position and  

place of the land sought to be acquired in the following words:-

“Details of land to be acquired.  

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

The land proposed to be acquired is of old and new  sharat.  Amreli town is the head quarter of Amreli  District, is a railway station, S.T. Buses are ravaging  throughout the year.   The population of Amreli is  near about 1,10,000 which consist mainly of Patel,  Bania, Brahmins, Weavers etc who are progressive  farmers.   There  are  industries  of  oil  mills,  land  weaving etc.”

In  the  said  Award,  summary  of  sales  of  agricultural  lands  was  

prepared, which read:-

19

“Summary of considerable sales of agricultural lands          Sales of western bank               Sale of eastern bank

Survey No.

Acres Date of  sale  

Price of  1 are

Survey No.

Acres Date of Sale

Price of 1 are

991 3.08 21/5/85 785-25 37/37/2 6.20 6/6/85 307-69

1063 2.38 13/12/85 381-00 29 0.24 23/7/87 1041-66

949 2.28 15/4/87 426.00 33/AB 1.11 2/3/89 3882.35

1063 1.13 3/2/89 754-71 33/AB 1.10 3/3/89 3880.00

Looking to these sales of agricultural lands Rs.350/-  for  Jirayat  and Rs.5000/-  for  irrigated  lands  for  1  Are  are  seems  to  be  reasonable  for  the  lands  of  Western bank of river Thebi.  Looking of these sales  and the rise in price of land Rs.2000/- and Rs.3000/-  for lands for 1 Are are seems to be reasonable but  the geographical condition of eastern bank is quite  different as most of the land are converted into non- agricultural lands and is either populated or nearly  populated area, is situated on Amreli, Chittal State  highway.  Looking  to  all  these  factors  it  is  not  possible to compare the land of western bank with  land of eastern bank.  No lands are converted into  non-agriculture  and  then  is  no  habitation  in  the  western bank of river Thebi.  Whilst there are many  non-agriculture land and habitation increases day by  day.   More  over  many  lands  of  eastern  bank  are  converted  into  non-agriculture,  which  were  proposed to be acquired.  Hence it seems necessary  to  discuss  about  sales  of  non-agricultural  plotting  too  as  the  land  of  eastern  bank  are  situated  on  Amreli, Chittal, Rajkot Highway and nearer to these  and  a  statement  of  sales  of  non-agricultural  lands  has been taken from the Kasba Talati Amreli which  is appending as statement number K-2  Discussions  of these sales are narrated here below.”

20

Our attention was further drawn to the fact that admittedly there was  

no development on the western side of the river.  Our attention has further  

been  drawn  to  the  evidence  of  PW-1,  Jerambhai,  who  is  one  of  the  

claimants.  He admitted that in the village form, which he had produced, it  

has not been shown that two crops are grown and that he did not maintain  

any  account  or  balance  sheet  of  the  receipt  of  the  crop  grown.   He  

furthermore accepted that there was no railway connecting the village with  

any big city.  It was also admitted that not any State highway passes through  

Amreli and except oil mills, there were no other industries.   

The claimants  examined one of  the experts,  namely Bhikhubhai  as  

PW-9,  who  admitted  that  he  had  examined  deeds  of  sale  pertaining  to  

residential  land  only  and  not  pertaining  to  agricultural  lands.   He  

furthermore  admitted  that  the  Land  Acquisition  Officer  had  taken  into  

consideration figures of five years’ sale transactions in his Award.  In his  

deposition he stated:-

“(4) I  know  that  Amreli  is  backward  for  Industrial  purpose  and  as  per  my  say  Industrial Development has been started.  It  is  true  that  on  the  western  side  of  river  nothing is there.  Moreover for the purpose  of going towards west side, no road facility  is available.  As per my say acquired land is  residential  purpose  land.   I  have  enquired  from the town planning office.  It is true that  

21

in this area no residential houses traced out.  In the year 1972, in Amereli town planning  has been endorsed and this fact I know very  well.   The  facts  stated  in  column  no.9  in  Exh.  78,  which  is  mentioned  considering  sale transaction.”

On behalf of the State one Ramniklal was examined as DW-1.  He  

was  a  Deputy  Executive  Engineer  (Thebi  Irrigation).   He  has  not  only  

deposed that the acquired land is situated outside the Amreli Municipality  

but according to him they are situated at a distance of about 1 ½ km. – 2 km.  

from Amreli-Chittal road.  Whereas the residential area, according to him,  

was on the eastern side, on the western side of the river Tebi there was no  

residence.  He further stated that no State highway is passing through Amreli  

and also that railway is not connected with big city.   

Shri Kaushik who was examined on behalf of the State as DW-2 and  

had been serving the State as a Deputy District Development Officer, in his  

deposition admitted:-

“I  have  awarded  compensation  at  the  rate  of  Rs.150/- per sq. mt. for Agriculture land and which  is  likely  to  be  developed.   The  compensation  awarded at the rate of Rs.50/- per sq. mt. has been  awarded  fully  and  compensation  at  the  rate  of  Rs.150/-  per  sq.  mt.  has  been  calculated  after  deducting price of road (way) in the case of not  taking possession road, then in such cases, I have  awarded compensation at the rate of Rs.1/- which  

22

is token and deduction of road was being deducted  in  such case  where  possession of  road has  been  handed  over.   Generally  for  the  purpose  of  converting  land  into  not-agriculture  purpose,  the  claimant has to left (sic for leave) 40 to 43% land.”  

It  appears  that  the  High Court  had  mixed up the  Awards made in  

respect of the lands situated on the Eastern side of the River with that of the  

Western Side.   

We may now notice the deeds of sale whereupon the State had relied  

upon.   

Ext. 86 is in respect of a deed of sale relating to Survey No.991which  

is adjacent to Survey No.103-A in terms whereof only 0.77 per sq. meter of  

land was determined as the market value.   It was also placed on record that  

the  vendor  Lalubhai  Keshavbhai  is  one  of  the  claimants  before  us.  

However, it appears from Ext. 90 which is a deed of sale dated 7th January,  

1987 relate to the land which is adjacent to Survey No.999 K from a perusal  

whereof it appears that the market value was Rs.1.85 per sq. mt.  The subject  

matter of the said deed of sale is the land situated near nana Ankadira village  

road near to the acquired land at the western side of the river.   

Ext.  96  is  the  deed  of  sale  dated  22nd June,  1989,  appertaining  to  

Survey No. 1043 P; from a perusal whereof it would appear that the market  

23

value of the land was Rs. 2.08 per sq. meter.  Ext. 98 is the deed of sale  

dated 21st April,  1990 which is  in respect  of  Jiyarat  land situated on the  

eastern side of the river adjoining Amreli municipal area.  The market value  

of the same comes to Rs.8.41 per sq. met.  Ext. 99 is a deed of sale dated 27 th  

September, 1990 appertaining to Survey No.1047/1 and adjacent to Survey  

No.1031 & 1046 is Bagayat  land, which is stated to be situated near the  

acquired land on the western side of the river and down stream of earthen  

dam, the market value of which was Rs.2.50 per sq. met. .   

The High Court, however, proceeded on the basis that although the  

acquired lands were situated on one side of the river, in view of the fact that  

entire acquired land was to be submerged, no justification can be made in  

regard  to  the  nature  of  the  land.   The  High  Court  held  (in  our  opinion  

wrongly) that distance of a few kilo meters from the Amreli town would not  

matter.

The High Court furthermore opined that the lands in village Baxipur  

were  also  fertile  and thus  no  discrimination  can  be  made.   For  the  said  

purpose the High Court relied upon the Awards made in the earlier  case  

exhibited as Exhibits 68 and 73 in terms whereof compensation @ Rs.75/-  

per sq. meter was paid.   

24

The variation in the price of the land within a few years is a matter of  

great significance.  It is true that no single factor would be decisive for the  

purpose of arriving at the market value of the land.  But in a case of this  

nature a holistic view is required to be taken.  It is, in our opinion, wholly  

improper to forget the distinction between the agricultural land and the non  

agricultural land.  Even in the same area, value of the agricultural land and  

the  non-agricultural  land  may  be  considerably  different.   For  the  said  

purpose, existence of the road ; railway station ; airport; schools ; colleges ;  

hospitals etc. play an important role.  It is not a case where the developed  

area  and  the  undeveloped  area  or  for  that  matter  non  agricultural  and  

agricultural lands are merely divided by a road.  It is also not a case where  

the entire area is known and treated to be one and the same, although a part  

of it may be governed by the Panchyat and the other part comes within a  

municipal area.  It stands admitted that the acquired lands for all intent and  

purport is divided into two parts. The eastern part and only a small part of  

the western side is within the municipal area and the other, consisting of  

agricultural  lands,  is  outside  the  municipal  area.   It  furthermore  stands  

admitted that the town has developed only on eastern side of the river and  

agricultural lands are situated on the western side in which there is even no  

residential house.

25

In a case of this nature, indisputably different criterion and norms are  

required to be adopted for determination of the market value.   

Before  us learned counsel  for  the  parties  have  relied  upon a  large  

number of decisions.  We may notice some of them  

This Court in Union of India v. Pramod Gupta, [ (2005) 12 SCC 1 ], on  

the question of determination of market value opined :-  

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

25. The best method, as is well known, would be  the amount which a willing purchaser would pay to  the  owner  of  the  land.  In  absence  of  any  direct  evidence, the court, however, may take recourse to  various  other  known  methods.  Evidences  admissible therefor inter alia would be judgments  and  awards  passed  in  respect  of  acquisitions  of  lands  made  in  the  same  village  and/or  neighbouring villages. Such a judgment and award,  in the absence of any other evidence like the deed  of  sale,  report  of  the  expert  and  other  relevant  evidence would have only evidentiary value.

26. Therefore, the contention that as the Union of  India was a party to the said awards would not by  itself be a ground to invoke the principles of res  judicata  and/or  estoppel.  Despite  such  awards  it  may be open to the Union of India to question the  entitlement  of  the  respondent  claimants  to  the  amount  of  compensation  and/or  the  statutory  limitations  in  respect  thereof.  It  would  also  be  open to it to raise other contentions relying on or  on the basis of other materials brought on record. It  was also open to the appellant to contend that the  

26

lands under acquisition are not similar to the lands  in respect whereof judgments have been delivered.  The area of the land, the nature thereof, advantages  and  disadvantages  occurring  therein  amongst  others  would  be  relevant  factors  for  determining  the actual  market value of the property although  such judgments/awards, if duly brought on record,  as  stated  hereinbefore,  would  be  admissible  in  evidence.”

It was further opined :-

“36. Yet  again  in  Ras  Behari  Mandal v.  Raja  Jagadish  Chandra  Deo  Dhaubal  Deb the  Patna  High  Court  reiterated  the  presumption  that  the  lessor retains all the rights in mines and quarries. It  also noticed the decision of the House of Lords in  Great Western Rly. Co. v. Carpalla United China  Clay  Co.  Ltd.wherein  a  grant  reserving  minerals  was held to exclude a deposit of china clay despite  the fact that the same was found near the surface.”

It was also held that:-

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

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

This Court further opined :- “84. It is also trite to state that the market value of  agricultural  land  is  lower  than  that  of  the  land  suitable  for  commercial  purposes.  (See  Om  Prakash v. Union of India.)

It was further opined :-

27

“87. The  courts  will  also  have  to  take  into  consideration  the  enormity  of  the  financial  implication of enhancement in view of the size of  the land acquired for a particular project.”.

In Ranvir Singh v. Union of India, [(2005) 12 SCC 59], this Court  

opined as under :-  

“22. Concededly, the High Court in its impugned  judgment  did  not  place  any  reliance  whatsoever  upon the sale instances whereupon strong reliance  has been placed by the parties solely on the ground  that  neither  the  vendors  nor  the  vendees  thereof  had been examined as  witnesses.  It  has  also not  placed  any reliance  upon any  other  judgment  or  award filed by the parties. The High Court while  arriving  at  the  said  finding  evidently  took  into  consideration  the  law  as  it  then  stood.  The  correctness  of  the  decisions  wherein  the  aforementioned view had been taken was doubted  and the matter was referred to a larger Bench.”  

Referring to Cement Corporation (supra), it was opined that the High  

Court was required to consider the deeds of sale in their proper perspective  

for determining the market value of the acquired land.”

In Karimbanakkal Sulaiman (Dead) by L.Rs.  v.  Special Tahsildar for  

K.A.K.P.I.P., [(2004) 13 SCC 643], this Court held:    

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

28

fixed  is  too  low  to  be  interfered  with  by  this  Court.”

In  Viluben Jhalejar Contractor  v. State of Gujarat, [(2005) 4 SCC  

789], this Court opined that :-

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

In Basant Kumar v. Union of India, [ (1996) 11 SCC 542 ], this Court  

has opined that even if the entire land is of one village all the persons cannot  

be given same compensation, stating:-

“….It  has  been  firmly  settled  law  by  beadroll  of  decisions of  this  Court  that  the Judge determining  the compensation under Section 23(1) should sit in  the  armchair  of  a  willing  prudent  purchaser  in  an  open  market  and  see  whether  he  would  offer  the  same amount proposed to be fixed as market value  as  a  willing  and  prudent  buyer  for  the  same  or  similar  land,  i.e.,  land  possessing  all  the  advantageous features and to the same extent. This  test  should  always  be  kept  in  view and  answered  affirmatively,  taking into consideration all  relevant  facts and circumstances. If feats of imagination are  allowed to sway, he outsteps his domain of judicial  decision  and  lands  in  misconduct  amenable  to  disciplinary law...”

It has categorically been held that ordinarily the entire village should  

not  be  treated  as  one  unit  as  ‘even  in  the  same  village,  no  two  lands  

command the same market value’ as potentially, the fact that land abutting a  

29

National Highway or road would command a higher market value vis-à-vis  

the land situated at a location which is not so situated.    

Potential  development  and/or  likelihood  of  development  are  also  the  

factors which have been considered to be relevant by this Court in Kanwar  

Singh  v. Union of India, [(1998) 8 SCC 136 ] observing:-  

“8. So far as the first argument that the appellants  ought  to  have  been  given  the  same  rate  of  compensation which was given to the claimants of  the adjoining village is concerned, the amount of  compensation for the land acquired depends on the  market  value  of  land  on  the  date  immediately  before the notification under Section 4 of the Act  or  when  same  land  is  acquired  and  offer  of  compensation is made through an award. Whether  such  an  offer  of  compensation  represents  the  market value of the land on the date of notification  under Section 4 of the Act, has to be determined  on  the  basis  of  evidence  produced  before  the  Court.  The  claimants  have  to  prove  and  demonstrate that the compensation offered by the  Collector  is  not  adequate  and the same does not  reflect the true market value of the land on the date  of  notification  under  Section  4  of  the  Act.  This  could only be done by the claimants by adducing  evidence to the effect that on the relevant date, the  market value of the land in question was such at  which the vendor and the vendee (buyer and seller)  were  willing  to  sell  or  purchase  the  land.  The  consideration in terms of  price received for land  under  bona  fide  transactions  on  the  date  or  preceding  the  date  of  notification  issued  under  Section 4 of the Act generally shows the market  value of the acquired land and the market value of  the acquired land to be assessed in terms of those  transactions.  Sale  instances  showing  the  price  fetched  for  similar  land  with  similar  advantages  under bona fide transaction of sale at or near about  the issue of notification under Section 4 of the Act  is well recognized to be the appropriate evidence  for determining the market value of the acquired  land.”

30

It was opined that the amount of compensation should not be awarded  

based on the market value of the land determined for a neighbouring village.

In  State of Maharashtra v.  Basantibai  Mohanlal Khetan, [(1986) 2  

SCC 516] referring to capitalization method for determining the value of the  

land, it was opined:

“…In order to appreciate this ground of objection,  it  is  necessary  to  examine  whether  the  classification  of  the  land  under  the  Act  into  the  land in municipal area and the land in rural area for  purposes  of  determining  the  amount  payable  on  acquisition is bad. It is not denied that the land in  municipal  area  commands  various  advantages  which are not available in the case of land in rural  areas.”

Situation of the land and particularly the area in which it is situated is  

indisputably a relevant factor.  We, however, do not mean to suggest that  

only because the land is situated within the jurisdiction of a Gram Panchayat  

by itself would go to show that the value of the lands sought to be acquired  

cannot under any circumstance be compared with the land situate within the  

jurisdiction of municipality.  There may be a case where the lands situated  

on one side of the road was within the Gaon Sabha and the other side within  

the municipality.  It is also not a case where the area is known as one and the  

same area although divided by a road and are under different jurisdictions.  

31

{See also Satish & Ors. vs. State of U.P. & Ors. [(2009) 9 SCALE 632] and  

National Thermal Power Corporation Ltd. vs. Mahesh Dutta & Ors. [(2009)  

9 SCALE 591]}

It  is  furthermore  beyond  any  doubt  or  dispute  that  building  

potentiality of the land acquired would also be a relevant consideration.  

However,  the purpose for  which the land is  sought  to  be acquired  

would also assume some significance.  

It  is  on  the  aforementioned  factual  backdrop  and  legal  principles  

governing  grant  of  compensation,  the  market  value  of  the  lands  situate  

within Group-1 is required to be determined.

The lands  are  purely  agricultural  lands.   There  were  no  buildings;  

there was no residential  use;  there was no factory.   No development had  

taken place nor was any development expected in immediate future.  The  

lands were acquired only for the purpose of submergence.  It had thus even  

no building potentiality.   

32

We, therefore, are of the opinion that in view of the materials brought on  

record, the valuation of the land should be determined at Rs.50/- (Rupees  

Fifty only) per square meter.   

GROUP- II  

This batch of appeals (7 in all) relate to the claimants' lands adjoining  

villages  Giriya,  Baxipura  and  limits  of  Amreli  town  and  the  same  are  

directed against the common judgment and order dt. 4.5.1999 passed in First  

Appeal  Nos. 989/98 to 995/98 arises out main Land Reference Case No.  

1/96 with consolidated Land Reference Cases Nos. 1/96 and 82/95 to 87/95  

(7 in all)  main Land Reference Case being No. 1/96.  In these cases,  the  

Notification  under  Section  4  was  published  in  the  daily  news  paper  on  

29.11.92 and 30.11.92, the same was notified in the Gazette on 10.12.92 and  

was affixed at the concerned places on 14.12.92 followed by Notification  

under S. 6 published on 18.2.93 in the Gazette and in the news paper on  

20.2.93 and the same was affixed at the concerned places on 24.2.93.  

In Survey No. 89 of Village Giriya, lands of 153 land holders were  

acquired.  The  Special  Land Acquisition  Officer  published  the  Award  on  

23.2.95  awarding  compensation  at  the  rate  of  Rs.  12/-  per  sq.  mtr.  (Rs.  

1200/- per Are) for Bagayat land and Rs. 8/- per sq. mtr. (Rs. 800/- per Are)  

33

for Jirayat land and Rs.50/- per sq. mtr. for non-agricultural land. Out of that  

153 claimants, 132 claimants have not filed any reference under Section 18  

of the Act and accepted the award of Rs.50/- per sq. mtr. awarded by the  

Land Acquisition Officer. Being aggrieved by and dissatisfied with the said  

Award, some of the claimants applied for reference of their cases in terms of  

Section 18 of the Act stating that they are entitled to compensation at the  

rate of Rs. 1000/per sq. mtr.  References thereinto were made by the District  

Collector.   

The Reference Court decided all these references by its common order  

dt. 9.1.98 awarding compensation at the rate of Rs. 400/- per sq.mt. with  

other benefits.  The amount of compensation in respect of agricultural lands  

was reduced to Rs.300/- per square meter by the High Court while making a  

distinction between the agricultural lands and non-agricultural lands.   

Indisputably, there are 18 cases pending before the Reference Court.  

In case of neghbouring non-agriculture Survey No. 82 of village Giriya there  

were 23 claimants, 5 of them had not prayed for reference under Section 18  

of the Act. Reference Court awarded Rs.75/- per sq. mtr. to 18 claimants and  

they accepted the same.  

34

In these cases the lands of the claimants  are situated adjoining the  

villages Giriya, Baxipura and limits of Amreli town. Their lands have also  

been acquired for the 'THEBI IRRIGATION PROJECT'. On behalf of the  

claimants 7 witnesses were examined and the Department had examined 3  

witnesses. The claimants' witness No. 1 Gunvantbhai Vallabhbhai has stated  

that the land bearing S. No. 90/1 is situated on the eastern side of Amreli  

Rajkot road and land S. No. 89 is also on the same direction touching the  

land of S. No. 90/1. According to this witness, land bearing S. No. 91 is  

situated on the western side of the road touching the road side. The lands of  

S. No. 90/1 and 91 are situated on the east and west side of the said Amreli-

Rajkot Highway respectively and land S. No. 89 is also on the eastern side  

touching the land of  S.No. 91. The Reference Court referred to the Map  

(Exh. 39) and noted that the land bearing S. No. 44 touches on its southern  

side the land bearing S. No. 91 which is on the western side of the road and  

land bearing S. No. 39 touches S. No. 43 being on the same direction. The  

land of S. No. 39 pertains to 'Surya Garden' Hotel and for which the District  

Collector  has ordered to pay premium @ Rs.  300/-  per  square meter for  

conversion  thereof  for  use  as  non-agricultural  purposes  from agricultural  

purposes.  All these three Survey Numbers are in the one line and on the  

western side of the Highway. According to the Geographical situation, on  

the other side of the road i.e. to say the eastern side of the road, the land  

35

bearing S. No. 51 is just opposite the land of S. No. 39 and on the eastern  

side the land earmarked for building an Aerodrome being S. No. 51; while S.  

No. 44 touches the border of the Aerodrome land S. No. 51 going towards  

northern side of S. No. 44. The land of S. No. 91 is adjacent to it and at the  

same time on the western side of S. No. 44 is S. No. 50 and S. No. 49 and  

the border of land of S. No. 50 touches the land of S. No. 89 to some extent.  

Thus, the lands bearing S. No. 39 and 51 ('Surya Garden" Hotel) and lands  

of Aerodrome are situated respectively on the opposite side of the Road. S.  

No. 43 touches the border of the acquired land of S. No. 91. On the western  

side of S. No. 43, there are lands of S. Nos. 41 and 42 and the land of S. No.  

38 touches the southern side of S. No. 41. Thus the Geographical situation of  

all  these Survey Numbers show that  these lands are around the acquired  

land.  

P.W.  No.  1  Gunvantbhai  Vallabhbhai  deposed  in  regard  to  the  

particulars of the same Survey Numbers around the acquired land. He has  

stated that the award for the land bearing S. No. 43 is at the rate of Rs. 275/-  

per  sq.mt..  S.  No. 43 touches the border of  the said Amreli-Rajkot road,  

which is also clear from the Map Exh. 39.  The land bearing S. No. 40 is,  

however,  on  the  interior  side  of  the  road  for  which  the  amount  of  

compensation awarded is at the rate of Rs. 70/- per sq.mt. According to this  

36

witness, some other lands bearing S. Nos. 41, 43/5, 40/4, 43/2 and 43/4 were  

also acquired and for these lands the Land Acquisition officer had awarded  

compensation at the rate of Rs. 150/- per sq. mt. This witness furthermore  

stated that the land of S. No. 39 touches the road and just opposite to the  

land of the Aerodrome, where the "Surya Garden" Hotel is situated and for  

this land the Town Planning Department had also assessed the value at the  

rate of Rs. 217/- vide letter dt. 16.10.92.  He also stated that the land of S.  

No. 39 is a new tenure land and to convert this land for Non Agriculture  

purposes the Collector, Amreli fixed the premium of Rs. 300/- per sq. mtr.  

by a Circular letter dated 27.11.1992, marked as Exh. 46. According to him,  

even in cases of some other S. No. viz. S. No. 56, which is only 300 mts.  

away from the acquired land by a Registered Sale Deed No. 900 dt. 11.5.92,  

land was sold out at the rate of Rs. 690/- per sq. mtr. and that lands being S.  

Nos. 34 and 40/9, which are about 200 meters  from the land in question i.e.  

plot Nos. 10, 17, 18, 60 and 6 were also sold out at a high price.

The order of the Reference Court was challenged by the appellants  

before the High Court mainly on the following grounds:-

“(a) The Reference Court ought to have believed  the deposition of D.W. No. 1 examined at Exh. 69,  who had passed the award Exh. 38 because he had  taken into consideration sale instances for 5 years  and  because  he  had  passed  the  Award  Exh.  38  

37

looking  to  the  market  value  as  per  the  sale  instances of village Giriya in the list of the 5 years  sale instances at Exh. 35;

(b) That  the  Reference  Court  had  erred  in  holding that S. Nos. 90/1 and 91 are likely to be  converted into non agricultural lands;

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

In regard to geographical situation of the lands and whether the lands  

are in developed area or in the vicinity of the developed area, the High Court  

opined:-

“13.15 We have considered the entire evidence in  this case in its entirety and have also gone through  the analysis of the evidence, as has been made by  the Reference Court. It is clearly borne out that the  lands acquired in these cases are of S. No. 91 (in  Land  Reference  Case  Nos.  82/95,  83/95  and  84/95), S. No. 89 (in Land Reference Cases Nos.  85/95, 86/95 and 87/95) and S. No. 90/1 (in Land  Reference  Case  No.  1/96).  So  far  as  the  geographical  situation  of  these  lands  and  as  to  whether these lands are in developed area or in the  vicinity  of  the  developed  area  is  concerned,  we  find that the evidence, which has come from both  the sides, is not at much variance inasmuch as the  

38

lands  are  on  the  eastern  or  western  side  of  the  Amreli-Rajkot Highway and also as per the Map  Exh. 39. The lands of various S. Nos. , to which  the reference has been made herein-above, are all  situated  in  a  developed  area  and  the  same  are  around the acquired land. If the lands of various S.  Nos. around the acquired land are developed, there  is no reason to say that the acquired lands are not  comparable with the lands of various S. Nos. such  as S. Nos. 38, 39, 40, 41, 42, 43, 44, 49, 50, 51 and  56. The situation of 'Surya Garden Hotel' in S. No.  39 and the existence of godowns for Scoters and  residential premises between the acquired lands of  the claimants and the 'Surya Garden Hotel' is also  established. Similarly the situation of the Cement  Factory between the lands of S. Nos. 39 and 91 is  also made out. The deposition with regard to the  municipality pavilion, land of Aerodrome, houses  etc.  on  the  eastern  side  of  the  road  alongwith  residential houses also cannot be disbelieved. Thus  in  absence  of  any  effective  and  specific  cross- examination with regard to the development of the  area in question, it cannot be disbelieved that the  lands  around  the  acquired  lands  are  developed  area.  In  the  judgment  itself  at  page  20  the  Reference Court has recorded as under:-

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

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

13.16 The depositions with regard to the acquired  lands that it has wells, pacca houses and the trees,  the  details  of  which  have  been  mentioned  

39

hereinabove,  has  remained  untrammeled  in  the  cross-examination of P.W.No. 1. All these details  do add to the quality of the acquired land for the  purpose  of  fixing  the  rate  at  which  the  compensation is to be given. The case that lands of  S.  No.  89,  which  have  been  acquired,  are  non  agricultural lands and the acquired lands of S. Nos.  90/1  and  91  are  likely  to  be  converted  as  non  agricultural  land  has  also  remained  intact.  Even  D.W.  No.  1,  who  has  been  claimed  as  a  star  witness  on  behalf  of  the  Department  by  the  appellants, has admitted that lands of S. Nos. 90/1  and  91  are  likely  to  be  converted  into  non  agricultural lands. The lands of both these S. Nos.  90  and  90/1  are  also  surrounded  by  non  agricultural  lands  and  are  in  posh  locality  near  Amreli  township.  Even  if  a  land  is  not  a  non  agricultural land, if the same is surrounded by non  agricultural  lands  and  the  same  is  likely  to  be  converted into non agricultural land as per the say  of  the  Land  Acquisition  Officer  himself,  it  is  certainly an important and relevant factor for the  purpose  of  fixing  the  rate  at  which  the  compensation is to be awarded at par or with close  proximity  with  the  rate  in  respect  of  non  agricultural land. D.W. No. 2, who was examined  by the  Department,  has  also  admitted  that  going  further towards Amreli town, there are godowns,  show room of Bajaj Scooter, Jalaram Commercial  Complex,  Meghnath  commercial  Centre,  and  Surya Garden Hotel etc. He has also admitted that  area around this land are most developed and posh  area of Amreli City and further that the lands of S.  Nos. 90 and 91 are situated near the above S. No.  43. D.W. No. 3, who was examined at Exh. 73 by  the Department, had sold out the land bearing S.  No. 35 - a part of Village Giriya on 2.10.90 to one  Vithalbhai Bhanjibhai.  This witness in the cross- examination has admitted that lands of S. No. 89,  90  and  91  of  the  claimants  are  situated  near  Amreli-Rajkot road and that it is surrounded by the  

40

residential houses, godowns etc. This witness has  also stated that it is adjacent to posh area and this  area is a developed one.

In regard to the determination of the amount of compensation by the  

Reference Court, the High Court inter alia opining that the rate at which the  

compensation was granted by the Land Acquisition Officer i.e. at the rate of  

Rs. 12/- per sq.mt. for Bagayat land Rs. 8/- per sq.mt. for Jarayat land Rs.  

50/-  per  sq.  mt.  for non agricultural  land is  wholly inadequate and upon  

discussing the materials brought on record in respect of some of the acquired  

lands  vis-à-vis  the  locations  of  lands for  which deeds  of  sale  have been  

executed held as under:

“While  the  claimants  shall  be  entitled  to  compensation to be paid at the rate of Rs. 400/- per  sq.mt. as decided by the Reference Court in case of  lands of S. No. 89 (in Land Reference Cases Nos.  85/95, 86/95 and 87/95) i.e. non agricultural lands,  the concerned claimants  shall  only be entitled to  the compensation at the rate of Rs. 300/- per sq.mt.  instead of Rs. 400/- per sq.mt. as ordered by the  Reference Court with regard to the land of S. No.  90/1 (in Land Reference Case No. 1/96) and that of  S. No. 91 (in Land Reference Cases Nos. 82/95,  83/95 and 84/95), which are likely to be converted  to non agricultural lands.”

Mr. Shelati would submit:

i. That  the  Reference  Court  as  also  the  High  Court  

committed a serious error insofar as they failed to take  

41

into  consideration  that  the  deeds  of  sale  whereupon  

reliance has been placed by the claimants although parts  

of Survey Nos. 34 and 40/9 being Plot Nos. 17 and 18  

were sold at the rate of Rs. 129/- per square meter  by  

reason of a deed of sale dated 28.7.1988, were in respect  

of a residential plot and a small piece of land, it being  

situated  within  Amreli  city  and  within  the  municipal  

limit; being situated in a highly developed area, the same  

was not comparable with the lands in question, namely,  

Survey  Nos.  89,  90/1  and  91  which  are  situated  at  a  

distance of 1.5 kilometers therefrom.   

ii. Although from index it would appear that by reason of a  

deed of sale dated 16.1.1991, One Navnitbhai Kakubhai  

Ganatra who was a claimant in C.A. No. 244/ 2000 sold  

the land to one Shri  Chunilal  Ranchhodbhai Parmar in  

respect of part of plot No. 17 appertaining Survey Nos.  

34 and 40/9 involving 138 square meters area of land for  

a sum of Rs.55,200/-,  i.e.,   at  the rate  of  Rs.400/-  per  

square meter,  but  the same could not  have been relied  

upon on the self same grounds.  The deed of sale dated  

42

16.1.1991  executed  by  Navnitbhai  Kakubhai  Ganatra  

being one of the claimants being in C.A. No.244/2000 in  

favour of Shri Ashokbhai Nathabhai Parmar in respect of  

only 143 square meters of land in Plot No. 17 for a sum  

of Rs.57,200/-  ,  i.e.,  at  the rate of Rs.400/-  per square  

meter could not have been relied upon for the self same  

reasons.  

iii. No reliance could have been placed on the deeds of sale  

dated 28.12.1992 and 11.5.1992 concerning Survey Nos.  

34  and  40/9  being  Plot  No.  6  and  Survey  No.  56/57  

comprising area of 328 square meter  and 59.42 square  

meter  respectively  which  were  sold  for  a  sum  of  

Rs.2,30,000/-,  i.e.,  at  the  rate  of  Rs.701.21  per  square  

meter and Rs.40,000/-, i.e., at the rate of Rs.673.17 per  

square meter respectively.  No reliance could also have  

been placed thereupon for the added reasons that the said  

deeds  of  sale  were executed  subsequent  to  the date  of  

notification.    

43

iv. No reliance could have also been placed on the deeds of  

sale dated 27.10.1988 and 18.1.1991 in respect of Survey  

No. 36/1 being Plot No. 8 and Survey No. 34 and 40/9  

being Plot No. 10 comprising area of 592.5 sq. meter and  

361 sq. meter respectively which were sold for a sum of  

Rs 83, 500, i.e., at the rate of Rs 140.92 per sq meter and  

Rs 150000, i.e.,  at the rate of Rs 415. 51 per sq meter  

respectively.  

v. No reliance furthermore could have been placed on the  

deed of sale dated 27.2.1989 and 28.5.1990 in respect of  

Survey Nos. 89 being Plot No. 26 and 39 and Survey No.  

82 being Plot No. 12 comprising area of 240 sq meter  

and 484 sq meter respectively which was sold for a sum  

of Rs 4400, that is, at the rate of Rs18.33 per sq meter  

and Rs 12000 respectively, that is, at the rate of Rs. 28.4  

per sq meter; the price variation being apparent on the  

face  of  the  said  deeds  of  sale;  the  fair  market  value  

should  have  been  determined  on  the  basis  of  the  said  

deeds of sale dated 27.2.1989, 28.5.1990 and 23.10.1990  

by adding the market  value at  the rate of 5% per year  

44

which should be a fair market value.  Market value of the  

agricultural  lands  by  no  standard  could  have  been  

compared with the market value of the non-agricultural  

lands.

Mr.  Manish  Singhvi,  learned  counsel  appearing  on  behalf  of  the  

respondents, on the other hand, urged:

i. The lands  in  question  being  situated  by  the  side  of  Amreli-

Rajkot Highway which is a developed area and being on the  

eastern side of river ‘Thebi’, this Court may not interfere with  

the impugned judgment.  

ii. The concurrent findings of fact having been arrived at by the  

Reference  Court  as  also  the  High  Court,  the  impugned  

judgment is unassailable particularly in view of the fact that the  

deeds of sale in respect of the same area are available.   

iii. The  nature  of  the  lands  although  were  agriculture  but  they  

being  situated  within  a  developed  area  and  having  great  

potentiality of being converted into a non-agricultural land, the  

guiding  principle  for  determining  the  market  value  thereof,  

namely, that a willing purchaser would pay to a willing seller  

45

for a property having due regard to its existing condition, with  

all its existing advantages, and its potential probability, should  

be and has rightly been followed.

iv. The  deeds  of  sale  relied  upon  by  the  State  being  dated  

2.11.1988, 27.2.1989, 4.4.1989 and 20.4.1989 could not have  

been  relied  upon  inasmuch  as  admittedly  they  were  grossly  

undervalued and the Collector had issued notices upon them.  

The Collector  himself  having fixed the  prices  of  the  land at  

Rs.125/-/ per square meter, the State should not be permitted to  

raise any contention contrary thereto or inconsistent therewith.  

The said deeds of sale, in any event, having been executed four  

years prior to issuance of the Notification under Section 4(1) of  

the Land Acquisition Act should not be relied upon.   

v. The findings of fact arrived at by the learned Reference court as  

also the High court relying on or on the basis of Exhibits 30, 51  

and 53 showing the value of the land to be Rs.400/-, Rs.701/-  

and Rs.673 per square meter, no case has been made out for  

interference with the impugned judgment.

vi. Even the deed of sale dated 27.10.1988 (Exhibit 55) shows the  

value of the land as Rs.140/- per square meter and the other  

46

deeds of  sale which were  marked as Exhibits  57,  58 and 60  

having been executed on 18.1.1991, 11.10.1991 and 05.01.1991  

i.e. being two years prior to the issuance of a notification and  

the consideration thereof being calculated at the rate of Rs.415/,  

Rs.425/- and Rs.292/- per square meter, the impugned judgment  

should not be interfered with.  

vii. D.W.3- Nandlal Trikamjibhai examined on behalf of the State  

in his deposition having clearly stated that the lands which were  

the  subject  matter  of  Exhibit  74  were  situated  only  four  

kilometers away from the acquired land of the claimants and,  

thus, the amount of consideration should not be treated to be a  

sale instance for the purpose of determining the value of the  

acquired land being survey Nos. 89, 90/1 and 91, which were  

surrounded by residential houses, godowns, etc. and also very  

near to the posh area of the town.

viii. The Collector  himself  having fixed the  conversion rate  from  

agricultural land to non-agricultural land at Rs.300/- per square  

meter, it would wholly be incorrect to contend that the same did  

not offer any indicia in regard to the value of the land for the  

47

enhancement  of  right  in  property  from  agricultural  to  non-

agricultural land.    

Indisputably, the agricultural  lands adjoin Chittal  Road whereas the  

non-agricultural lands are not.  

The Reference Court while passing its award, inter alia, opined:

“Now  a  days,  nobody  would  allow  to  keep  a  wooden cabin in one square meter  area in one’s  land on rental  basis  for Rs.8/-  to Rs.12/-  per sq.  mtr.  while  in  these  Land  Reference  Cases,  the  Land Acquisition Officer has acquired whole lands  permanently  from  the  land  owners/claimants  by  paying compensation of Rs.8/- and Rs.12/- per sq.  mtr.”

It was furthermore opined:

“During this period, one cup tea cost is minimum  Rs.3/- and that too in the road side cabin.”

In our opinion, the said observations were wholly irrelevant as it is  

now well settled that the Reference Court should sit in the arm chair of a  

willing and prudent purchaser and put a question to himself as to whether he  

would offer the same price sought to be awarded for the said land.   We may  

notice that a portion of land bearing Survey No. 89 was converted into non-

agricultural use and the sale transaction of a portion thereof would show that  

1000 sq.  mtr.  of  land were  purchased  for  Rs.18,000/-  by  a  deed of  sale  

48

executed on 2.8.1988 in terms whereof the value of the land came to Rs.18/-  

per sq. mtr.  We will advert to the question as to whether the same ought not  

to  be  relied  upon  as  the  land  under  the  said  deed  of  sale  not  only  was  

converted into non-agricultural land but even developed as well and all other  

activities were being carried out by dividing the same into plot a little later.   

It is admitted that subsequently an agreement of sale was entered into  

in respect  of those plots of  land wherefor the market  value was fixed at  

Rs.300/- per sq. mtr.  It, however, appears that no agreement for sale was  

produced before the Reference Court.  It was urged that the said purported  

agreement for sale would not be relevant for Survey Nos. 90/1 and 91 as the  

same were agricultural lands.   

We  may  furthermore  place  on  record  the  evidence  of  Deputy  

Collector, Mr. Mansuri wherein he stated, “Disputed lands are situated at a  

distance of 4 Kms. away from the residential area of Amreli.”  According to  

the said witness he, having considered the four instances of sale which had  

taken place in village Giriya, had made his award.  

The Reference Court as also the High Court, however, proceeded on  

the  premise  that  as  the  Collector  of  the  District  himself  determined  the  

market value of Survey No. 39 in terms whereof a sum of Rs.300/- per sq.  

49

mtr. by way of premium (which is said to have been reduced at a later stage  

to Rs.100/- per sq. mtr.) was fixed.   

Was it wholly irrelevant is the question.  

A  part  of  Survey  No.  89  was  non-agricultural  in  nature  but  

indisputably Survey Nos. 90/1 and 91 were agricultural lands.  The value of  

agricultural  lands  could  not  have  been compared  with  the  value  of  non-

agricultural lands; only because some witnesses contended that there was a  

potentiality of the said lands becoming developed.  

We may, for the purpose of determination of the market value of the  

lands in question, notice certain sale transactions.   

By reason of a deed of sale dated 28.7.1988 (Exhibit 48) Survey Nos.  

34 and 40/9 (Plot No. 17 & 18) admeasuring an area of 739.21 sq. mtr. was  

sold for a consideration of Rs.96,000/- at the rate of Rs.129/- per sq. mtr. It  

is, however, admitted that the land in question consists of residential plots  

and is a small piece of land within the municipal limit of Amreli city, being  

situate at a distance of about 1.5 kms. from the acquired land.  The deed of  

sale dated 16.1.1991 (Exhibit 30) shows that 143 sq. mtr. of land in Plot No.  

17 was sold for a sum of Rs.57,200/-, that is, at the rate of Rs.400/- per sq.  

mtr.  It is said to be not only a residential plot, but also a small piece of land  

50

situate in village Amreli city in a highly developed area; the acquired land  

being about 1.5 kms. away therefrom.  

Two deeds of sale subsequent to the date of notification had also been  

brought on record being Exhibits 51 and 53 in respect of Survey Nos. 34,  

40/9 and 56/57 at the rate of Rs.701.21 per sq. mtr. and Rs.673.17 per sq.  

mtr. respectively.  The lands in question are said to be 2 kms. away from the  

acquired land.  A deed of sale dated 27.10.1988 (Exhibit 55), however, show  

that plot No. 8 to Survey No. 36/1 admeasuring 592.50 sq. mt. was sold at a  

price of Rs.83,500/-, i.e., at the rate of Rs.140.92 per square meter.  The said  

land is said to be situated in a fully developed residential area of Amreli City  

and is about 2 kms. away from the acquired agricultural land of Survey No.  

90/1, 90/2 and 91 of Village Giriya.  By reason of another deed of sale dated  

18.1.1991, 361.00 sq. mtr. of land in Survey Nos. 34 & 40/9 Plot No. 10 was  

sold for a sum of Rs. 1,50,000/-, i.e.,  Rs.415.51 per sq. mtr.  Two other  

deeds of sale being Exhibits 58 and 60 being dated 11.10.1991 and 5.1.1991  

which were in respect of Survey Nos. 34, 40/9 Plot No. 60 Survey No. 41  

Plot No. 14 was sold at the rate of Rs. 425.69 per sq. mtr. and Rs.292.30 per  

sq. mtr. for a sum of Rs.85,000/- and Rs.38,000/- respectively.   

We may also notice the deeds of sale whereupon reliance has been  

placed by the State, the details whereof are as under:

51

S.  No.

Sale  Deed  No.  &  Date  

Vendor Vendee Revenue  Survey  No.

Area Sale  Deed  Amount  (Rs.)

Rate/ Sq.  mt.  (Rs.)

Type  of  Land

1. 258 27.2.89

P.O.A.  of  Shambhu  Vallabh  Kabariya

Tulsidas  Ambalal  Lathigara

S.No.89  Plot  No.  26 & 39

240  Sq.  mt.

4400/- 18- 33

Non  Agri

2. 469 4.4.89

P.O.A.  of  Shambhu  Vallabh  Kabariya Siddik  Habib  Nagani  

Chandreshkumar  Mansukhlal  Zinzuvadiya

S.No. 89  Plot  No.  35,  36,  45 & 46

480  Sq.  mt.

8800/- 18- 33

Non  Agri.

3. 582 20.4.89

Jayeshkumar  Durlabhji  Mavani,  Amreli  

Chandrikaben  Jashvantray  Kothiya

S.No.89  Plot  No.1

300.6 2  Sq.  mt.

7000/- 23- 28

Non  Agri.

4. 886 3.6.89

P.O.A.  of  Shambhu  Vallabh  Kabariya,  Shri  Siddikbhai  Habibbhai  Nagani

Hiteshkumar  Hiralal  Zinzuvadiya

S.No.89  Plot  No.  89,  58,  71

538  Sq.  mt.

9500/- 17- 66

Non  Agri

5. 955 20.6.89

Mrs.  Diwaliben  Babubhai  Rokad

Dalsukh  Hiraji  Jogani

23/2  Plot

1-61- 88 Ha.

22500/- 1-39 Agri.

6. 1066 28.5.90

P.O.A.  of  Ismail  Jusabbhai  Motiwala  etc.  6  Persons  Ikbal

Revatiben  Haribhai Solanki

S. No.82  Plot  No.  12

484  Sq.  mt.

12000/- 24- 79

Non  Agri.

7. 1212 15.6.90

Ismail  Jusabbhai  Motiwala  etc.  

Karshan  Damji  Pithadiya  

S.No.82  Plot  No.  5 & 6

704  Sq.  Mt.

20000/- 28- 40

Non  Agri

52

8. 715 13.4.92

Asagarali  Inayatali  Saiyad

Labhuben  Kanaji Khanesa

22/2,  23/1 P

1-53- 78  0-83- 97  2-37- 75 Ha.

191510/- 8-05 Agri.

9. 1348 3.11.88

Shambhu  Vallabh  Kabariya

Pankajbhai  Mansukhbhai  Zinzuvadiya

S.No.89,  10  Plots  Plot  No.  178  to  187

1016  Sq.  Mt.

18500/- 18- 20

Non  Agri

10. 2235 23.10.90

Bhanabhai  Naranbhai  Limbasiya  P.O.A.  of  Shivlal  Bhanjibhai  Limbasiya

Bhanabhai  Naranbhai  Limbasiya  Vithalbhai  Bhanjibhai  Limbasiya

35/P 3-67- 04  (Ha)

14000/- 00- 38

Agri.

The price variation and the market value shown is the two different  

categories  of  the  land  relied  upon by the  claimants  and the  State  in  the  

aforementioned chart is significant.  The price variation between agricultural  

land and non-agricultural land almost during the same period also is of some  

significance.  

It is furthermore of some interest to note that within a short period of  

time, the price of the land had shot up and that too immediately after the  

process of acquisition of land had started.  It is furthermore important to note  

53

that there existed a significant price variation even in regard to the lands  

situated on Survey No. 89. which appears to be a very big plot.   

There  cannot  be  any  doubt  or  dispute  whatsoever  that  different  

potentiality of land in different villages and even in different parts of the  

same village would be existing.  It was therefore not proper for the High  

Court  to  treat  all  types  of  lands  situated  even  in  different  villages  as  

pertaining to a comparable category .  This Court in certain case even has  

deprecated the practice of awarding compensation on the basis of an award  

made in a neighbouring land.   

In Kanwar Singh & ors. vs. Union of India [(1998) 8 SCC 136]   

“If  we  go  by  the  compensation  awarded  to  claimants of adjoining village it would not lead to  the correct assessment of market value of the land  acquired  in  the  village  Rangpuri.  For  example  village  'A'  adjoins  village  'B',  village  B  adjoins  village 'C, village 'C adjoins village 'D', so on and  so form and in that process the entire Delhi would  be covered.”

[see also Basant Kumar (supra)]

It  is,  however,  also  true  that  the  court  is  bound  to  take  into  

consideration the potentiality of the land.  

54

In N.B. Jeejabhoy v. The District Collector Thana C. A. Nos. 313 to  

315 of 1965 decided on August 30, 1965, this Court held:

“A vendor willing  to  sell  his  land at  the  market  value  will  take  into  consideration  a  particular  potentiality  or  special  adaptability  of  the land in  fixing the price. It is not the fancy or the obsession  of the vendor that enters the market value, but the  objective  factor  namely,  whether  the  said  potentiality  can  be  turned  to  account  within  a  reasonably near future......... The question therefore  turns upon the facts of each case. In the context of  building potentiality many questions will have to  be asked and answered : whether there is pressure  on  the  land  for  building  activity,  whether  the  acquired  land  is  suitable  for  building  purposes,  whether  the  extension  of  the  said  activity  is  towards the land acquired, what is the pace of the  progress and how far the said activity has extended  and within what time, whether buildings have been  put up on lands purchased for building purposes,  what is the distance between the built-in-land and  the land acquired and similar other questions will  have to be answered. It is the overall picture drawn  on the said relevant circumstances that affords the  solution."  

In  Raghubans  Narain  Singh v.  The  Uttar  Pradesh  Government  

Through Collector of Bijnor [1967 (1) SCR 489], this Court held:

“Market value on the basis of which compensation  is payable under s. 23 of the Act means the price  that  a  willing  purchaser  would  pay  to  a  willing  seller  for  a  property  having  due  regard  to  its  existing condition, with all its existing advantages,  and its potential possibilities when laid out in its  most  advantageous  manner,  excluding  any  

55

advantage due to the carrying out of the scheme  for  the  purposes  for  which  the  property  is  compulsorily acquired.”

{See also Mahabir Prasad Santuka and Ors. v. Collector, Cuttack and  

Ors [(1987) 1 SCC 587]}  

So far  as  deeds of  sale  pertaining to the years  1988 and 1989 are  

concerned, the same were executed more than three years prior to the date of  

acquisition.  However, in respect of the deeds of sale pertaining to Survey  

No. 89, in view of the under-valuation of the lands sold, the Collector fixed  

the same at  the rate  of Rs.125/-  per  sq.  mtr.   Furthermore,  the Collector  

himself has fixed the premium of Rs.300/- per sq. mtr. for conversion from  

agricultural land to non-agricultural land. Although the same by itself would  

not  be  a  safe  criterion  for  determining  the  market  value,  we  are  of  the  

opinion that both of them may form the basis for arriving at a reasonable  

conclusion.  

For the aforementioned purpose, this Court must keep in mind that the  

distance of the lands sought to be acquired apart from other factors from the  

Highway also plays an important role.  Evidence has been brought on record  

to show that some lands, which are the subject matter of the sale deeds on  

which reliance has been placed by the claimants, are situated at a distance of  

56

1.5 to 4 kms from the Highway.  In that view of the matter, it would, in our  

opinion, be safe to arrive at the market value as on the date of acquisition for  

the non-agricultural lands at Rs.250/- per sq. mtr.  

So far as the agricultural lands are concerned, even if they had the  

potentiality of being converted into a non-agricultural lands as on the date of  

notification, they were agricultural  lands albeit in a developed area.  The  

valuation thereof may be determined at 50% of the developed  land, that is,  

at Rs. 125/- per sq. mtr.  

GROUP-III In this  batch of cases,  notification under Section 4 of the Act was  

issued in the daily newspaper on 2.2.1990 and was published in the Gazette  

on 15.3.1990.  They were said to have been affixed at or near the lands in  

question on 1.8.1990.  On the lands under acquisition, indisputably godowns  

were also constructed.    A declaration under Section 6 of the Act was issued  

on 18.6.1991 and published in the Official Gazette on 11.7.1991.   

The details of the cases falling in Group-III are as under:

Group No. Total  matters  

C.A. No. F.A. No. Notificatio n Section 4  dated

Date  of  Judgment

7 8 205-212/2000 410- 417/1998

15.3.1990 4.5.1999

8 6 214-219/2000 2073- 2078/1998

15.3.1990 4.5.1999

57

An award was made by the Land Acquisition Collector on 23.7.1993.  

Respondents herein being aggrieved by and dissatisfied with the quantum of  

compensation made in the said awards filed applications for reference before  

the Collector to the District Court, Amreli claiming a sum of Rs.500/- per  

square  meter  for  agricultural  lands  and  Rs.600/-  to  Rs.750/-  for  non-

agricultural  lands  as  also  additional  amount  of  compensation,  the  details  

thereof are as under:  

F.A. No. Survey  No.

Type  of  Land

Area  in  Sqm.

Comp.  awarded  by  L.A.O. Rs. sqm

Comp.  claimed  in  Lower  Court  Sq./sqm.

Comp.  decreed  by  Lower  Court  Rs.Sqm

Comp.  Decreed  by  Guj.  High  Court  Rs.Sqm

1 2 3 4 5 6 7 8 410/98 44/1 Agri 57445 50 500 160 160

411/98 43/5A-1 Agri. 21 Godown

412/98 43/5A-1 Non- Agri.

541 150 500 240 240

413/98 38/2 Agri 4992 150 500 160 160

414/98 40/4A Non- Agri

4994 150 600 240 240

415/98 43/2 Non- Agri

9407 150 500 240 240

416/98 43/2 Non- Agri

236 150 500 240 240

417/98 43/3 Non- Agri

632 150 500 240 240

2073/98 42/1p 43/1p

Agri 32104 50 600 160 160

2074/98 43/2 Non- Agri

5407 150 600 240 240

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

58

2076/98 43/5A-1 Non- Agri.

307 150 600 240 240

2077/98 43/5A-1 Non- Agri.

216 150 600 240 240

2078/98 43/5A-1 Non- Agri.

216 150 600 240 240

One  Mahendrakumar  Nathalal  Adatiya  said  to  be  the  power  of  

attorney holder of the claimants deposed twice before the Reference Judge.  

His depositions was marked as Exhibit 20 and Exhibit 31.  In his deposition,  

he inter alia  stated that the lands under acquisition are on Amreli-Rajkot  

Highway known as  Chaital  Road.   In  the  said  town,  there  is  a  Railway  

Station, Civil Hospital, S.T. Depot, Airdrome, Colleges, and market yard,  

etc.  According to him, there was a possibility of further development.  The  

said lands were on the eastern side of the river and the area in question had  

further  been developing.   According  to  the  said  witness,  moreover  apart  

from a large number of houses constructed by various societies; there is an  

Eye Hospital,  High School and other Hospitals situated near the lands in  

question.   It  was furthermore stated that  on the other side of the land in  

question, one Survey No 43/5 was converted into non-agricultural tenancy  

and in  the  years  1983-1984,  commercial  complexes  were  constructed for  

conversion  from agricultural  land  to  non-agricultural  land.  The  Collector  

fixed premium at the rate of Rs.300/- per square meter in respect of lands  

which was adjoining Survey No. 43/5 and Survey No.44.  According to him,  

59

the prevailing market  rate  at  the relevant  time was Rs.600/-  to 800/-  per  

square meter.   

Apart  from the  claimants,  some  tenants  of  the  godowns  examined  

themselves being witness No.3 and witness No.4.  Several other witnesses  

including an expert Jivanbhai Pragjibhai Savliya (Witness No.7) was also  

examined.   

On  behalf  of  the  State,  Shri  Kaushik  Maganlal  (D.W.1)  Deputy  

Collector who passed the award was examined.   

One Balubhai  V. Savliya (D.W.2),  a vendor proved a deed of sale  

which was marked as Exhibit 83, whereby and whereunder he had sold 5  

bighas  of  land  in  1985  for  a  consideration  of  Rs.10,000/-.  The  State  

furthermore  examined  one  Nandlal  Trikamjibhai  (D.W.3).   He  had  

purchased some land near the dam site at  a  price of Rs.150/-  per square  

meter.   

The  High  Court  on  the  basis  of  the  materials  brought  on  record  

awarded compensation at the rate of Rs.160/- to Rs.240/- per square meter.   

So far as the value of the godowns are concerned, the yearly rent was  

found  to  be  Rs.1,04,000/-  whereas  the  Reference  Court  applied  the  

60

multiplier of 20, the High Court by reason of its impugned judgment has  

applied the multiplier of 10.   

Both parties have preferred appeals thereagainst.   

Separate appeals have been preferred by the parties hereto before this  

Court also.

Mr. Shelati,  the learned Senior Counsel appearing on behalf of the  

appellant, would submit:

i. That  the  Reference  Court  wrongly  proceeded  on  the  

premise that all acquired lands are situated by the side of  

Amreli – Rajkot Highway despite the fact that Exhibit 39  

(map)  clearly  shows  that  Survey  Nos.  43/5A-1,  38/2,  

40/4A did not abut it .    

ii. The market  rate fixed by the Collector  at  Rs.300/-  per  

square  meter  for  converting  agricultural  land  to  non-

agricultural land in respect of Survey No. 39 could not  

have  been  taken  into  consideration  for  the  purpose  of  

determining the market  value of  the land as by reason  

thereof the restrictions imposed in a covenant had been  

61

removed by enlarging the ambit of the property right over  

the land.   

iii. No reliance could have been placed on the deeds of sale  

dated 20.9.1990, 16.1.1991 and 16.1.1991 in respect of  

Survey Nos. 34 and 40/9 comprising of an area of 240  

square  meter,  143  square  meter  and 143 square  meter  

respectively and sold for a sum of Rs.1,20,000/-, i.e., at  

the  rate  of  Rs.487.80  per  square  meter,  a  sum  of  

Rs.57,200/-, i.e., at the rate of Rs.400/- per square meter  

and Rs. 55,000/-, i.e., at the rate of Rs.400/-  per square  

meter respectively as the sale instances being Exhibit 58,  

60 and 61 were not comparable, as  

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

(2) they were situated in highly developed area of Amreli  

City;  

(3) they were within the territorial limit of municipality;  

(4)  the lands were  situated 1.5 to 2.5 kilometers  away  

from the acquired lands; and  

(5)  the  deeds  of  sale  having  been  executed  after  the  

issuance  of  notification,  no  reliance  could  have  been  

placed thereupon.

62

iv. The  deeds  of  sale  dated  21.5.1985  and  26.10.1988  in  

respect  of  Survey  No.  991  measuring  1-30-51  square  

meter and 323 .12 square meter respectively which were  

sold for a sum of Rs 10,000, i.e., at the rate of Rs 0.77  

per  square  meter  and  Rs  45,000,  i.e.,  at  the  rate  of  

Rs.139.26 per square meter respectively is demonstrative  

of the fact that there is a huge disparity.   

v. Godowns  having  been  constructed  for  the  purpose  of  

avoiding payment of octroi duty itself goes to show that  

the value of the land within the municipal area would be  

higher.     

vi. The  evidence  of  Dr.  Bharat  Kantilal  Mehta  who  had  

purchased the lands having stated that he had purchased  

the  lands  for  professional  and  residential  purpose  and  

having taken a firm decision to purchase the land only in  

that  area  and,  thus,  the  same  being  of  some  personal  

value to him could not be a comparable instance.  

vii. The potentiality of the land in a municipal area must be  

held to be higher than the potentiality of the land in a  

rural area and, thus, the Reference Court as also the High  

63

Court committed a serious error in relying upon the sale  

instances  which  were  in  respect  of  the  lands  situate  

within the municipal area.  

viii. The High Court  and the  Reference Court  committed  a  

serious  error  insofar  as  they  failed  to  take  into  

consideration that the sale instances whereupon reliance  

had been placed by the State, viz. Exhibit 83 and Exhibit  

85,  namely,  the  deeds  of  sale  dated  21.5.1985  and  

26.10.1988 wherefrom it  would appear that whereas in  

the year 1985 the market value was Rs.0.77 per Are, in  

the year 1988 the rate was Rs.139.26 ps. per Are.  Both  

the deeds of sale involving small plots of land and being  

situated at a distance of 0.75 kilometer from the acquired  

land and, thus, should have been taken into consideration.

ix. As it  was  categorically  stated  by  Mahendrakumar,  the  

power of attorney holder, “we could not earn such type of  

rental  income if  the  godowns were  situated  within  the  

municipality  area  because  the  godowns  were  being  

constructed outside the octroi naka”, and similarly H.N.  

Chandarana  having  stated  that  the  godowns  being  

64

situated  outside  octroi  naka,  he  had hired  the  same to  

save  octroi  duty;  and  the  godowns  having  been  

constructed to evade payment of levy of octroi, it did not  

reflect the true market value thereof.

x. In any event, the cost of the construction of the godowns  

should have been considered for determining the market  

value. Provision for expenses incurred like taxes, labour  

charges, maintenance of the godown and salary payable  

to the watchman having not been taken into consideration  

while determining the actual rental income derived by the  

claimants,  the  impugned  judgment  should  be  suitably  

modified.

xi. In any view of the matter,  once the market  value was  

determined  on  the  basis  of  the  income  thereof,  no  

separate compensation could have been granted towards  

the value of the land.

Mr. Sunil Kr. Gupta and Mr. Dinesh Dwivedi, learned Senior Counsel  

appearing  on  behalf  of  the  claimants  –  respondents,  on  the  other  hand,  

urged:

65

i. The  last  publication  of  notification  having  been  made  on  

1.8.1990, the deeds of sale which were executed in September  

1990 and a few months thereafter had rightly been relied upon  

by the courts below being contemporaneous documents.   

ii. Market value of the land in terms of Section 23 of the Land  

Acquisition Act being required to be determined as on date of  

issuance of the notification, the same would connote nearness  

and not a date prior to issuance of the notification.   

iii. The lands  acquired  being situated on the  eastern side of  the  

river and just outside the Amreli town, the Reference Court as  

also the High Court committed a serious error in deducting 50%  

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

iv. The map on which reliance  has been placed by the  State  of  

Gujarat would itself show that the area in question is a highly  

developed one and the same were situated near the Aerodrome,  

School, Hotel, a large number of housing societies, and in that  

view of the matter, there was absolutely no reason as to why the  

sale  instances  whereupon  reliance  has  been  placed  by  the  

claimants  should  not  have  been  considered  to  be  the  

66

determinative  factor  for  fixation  of  the  amount  of  

compensation.   

v. Godowns  having  been  constructed  on  non-agricultural  lands  

and for the purpose of proving the rental income therefrom not  

only Mahendrakumar was examined in two reference cases as  

P.W.  1  and  P.W.3  but  also  two  tenants,  namely,  Harshad  

Nathalal  Chanarana  (P.W.3)  and   Paresh  Dinkarbhai  Davda  

(P.W. 4)  who proved the advantages of  such godowns, there  

was no reason as to why the multiplier of ten should have been  

used although ordinarily a multiplier of 25 is applied.   

vi. The  value  of  the  godowns  was  required  to  be  determined  

keeping in view the loss of earning therefrom in terms of the  

‘fourthly’ appended to Section 23 of the Act.  

vii. P.W. 6 – Navnitbhai Kakubhai Ganatra, who was the vendor in  

respect of Exhibits 60 and 61, relating to Survey Nos. 34 and  

40/9 having been proved,  the  sale  deed which was executed  

within a period of six months from the date of publication of  

the  notification  under  Section  4(1)  of  the  Act,  there  was  no  

reason as to why the same could not have formed the basis for  

determining the market value.   

67

viii. Even  Jivanbhai  Pragjibhai  Savliya  (P.W.  7)  has  proved  the  

assessment report and map to show that Survey No. 43/5A was  

adjacent  to  the  godown.  The  lands  under  acquisition  being  

small plots, the contention of the State of Gujarat that the deeds  

of sale being Exhibits 58, 60 and 61 could not have been relied  

upon must be held to be incorrect.  

ix. The Reference Court as also the High Court having arrived at a  

categorical  finding  that  most  of  the  contemporaneous  sale-

deeds relied upon by the respondents were in the vicinity of the  

acquired lands, there is no reason as to why a different view  

should be taken by this Court.

Notification for acquisition of the said lands was issued on 15.3.1990.  

The lands under acquisition appertain to Survey Nos. 44/1, 43/5A-1, 38/2,  

40/4A, 43/2,  43/3,  42/1p,  43/1p, 38/1, 38/2.  Whereas Survey Nos. 44/1,  

38/2,  42/1p,  43/1p  and  38/1  are  agricultural  lands;  other  Survey  Nos.  

including Survey No. 43/5A-1 are non-agricultural lands.   

On a part of Survey No. 43/5A-1, 21 godowns have been constructed  

wherefor  separate  amount  of  compensation  has  been  awarded.   The  

claimants in support of their claim had relied upon the deeds of sale dated  

68

20.9.1990 marked as Exhibit 58.  The deeds of sale which were executed on  

behalf of the State are dated 21.5.1985 and 26.10.1988.

. The Reference Court as also the High Court determined the amount of  

compensation at the rate of Rs.240/- per square meter for non-agricultural  

lands and deducted one-third therefrom, i.e., Rs.160/- towards compensation  

for agricultural  lands.  In arriving at the said figure, the Reference Court  

proceeded  on the  basis  that  the  market  value of  the  land  situated  in  the  

municipal area was Rs.485/- per square meter at the time of acquisition, and,  

thus, the lands in question being outside the municipal area, the market value  

thereof  should be deducted by 50%, i.e.,  Rs.240/-  per  square meter.   As  

indicated hereinbefore, for determining the value of agricultural land further  

one-third has been deducted.    

We  may  place  on  record  that  even  before  the  High  Court,  the  

claimants had preferred cross objections, which were rejected on the premise  

that requisite amount of court fee had not been paid.  

In Administrator General of West Bengal v. Collector, Varanasi [AIR  

1988 SC 943], this Court held:

“The determination of market-value of a piece land  with  potentialities  for  urban  use  is  an  intricate  exercise which calls for collection and collation of  diverse economic criteria.  The market-value of a  

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

In State of Punjab and Anr. vs. Hans Raj (Dead) by Lrs. Sohan Singh  

and Ors., this Court held:

“As the method of averaging the prices fetched by  sales  of  different  lands  of  different  kinds  at  different times, for 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.”

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Keeping in view the ratio laid down in the aforementioned decisions  

as also the materials placed on record, we are of the opinion that the amount  

of compensation for the lands acquired in this matter arrived at by the High  

Court, that is, Rs.240/- per sq. mtr. for non-agricultural land and Rs.160/- sq.  

mtr for agricultural land does not warrant any interference on our part.  The  

High Court, in this regard, has adopted the correct approach particularly in  

view of the fact that the lands in question are not only situated within a  

developed area but being situated near Aerodrome, Schools, Hospitals, etc.  

the market value thereof could not have been determined at a lesser rate.  

Now  we  shall  deal  with  the  question  of  the  amount  payable  for  

acquisition of 21 godowns and the land on which they stand in Survey No.  

43/5A-1.  Out  of  the  total  area  of  4250  mtrs  of  land,  2972  sq.  mtrs.  is  

agricultural land and 1278 sq. mtrs.  is non-agricultural land on which the  

godowns have been constructed. Commercial  complexes were constructed  

on it in the year 1984.   

Respondents have constructed 6 big godowns and 15 small godowns.  

The  amount  of  rent  of  the  godowns  has  been  brought  on  record.  

Respondents  have  claimed  compensation  under  various  Heads,  namely,  

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price  of  the  land,  loss  suffered  due  to  recovery  of  rent  for  2  years  of  

godowns, loss for construction for deep-well, watchman quarter, etc.  

One of the principal  questions,  as indicated hereinbefore,  raised on  

behalf of the State is that the valuation of the land cannot be determined  

indirectly twice over, one on the basis of the value of the land and the other  

on  the  basis  of  the  rental  income.   Matter  would,  however,  be  different  

where only there is a construction on a land which is used for residential or  

other purposes.   

In Ratan Kumar Tandon & Ors. vs. State of U.P. [(1997) 2 SCC 161],  

this Court held:

“It is well-settled law that when land and building  are acquired by a notification, the claimant is not  entitled to separate valuation of the building and  the  land.   They  are  entitled  to  compensation  on  either  of  the  two  methods  but  not  both.   If  the  building  is  assessed,  it  is  settled  law  that  the  measure of assessment be based on either the rent  received from the property with suitable multiplier  or the value of the building is the proper method of  valuation.”

We are in agreement with the view that for extent of land on which  

the  godowns  stand,  separate  compensation  need  not  be  paid  when  

compensation with respect to rental income is being paid for the godowns.

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The  High  Court  by  reason  of  the  impugned  judgment  has  granted  

compensation  inter  alia  applying  the  multiplier  of  10  over  the  annual  

income.  The approach of the High Court is correct.   

In  Airports  Authority  of  India  v.  Satyagopal  Roy  and  Ors.  

[(2002)3SCC527], it was held that:

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

In Assistant Commissioner-cum-Land Acquisition Officer, Bellary vs.  

S.T. Pompanna Setty [(2005) 9 SCC 662], this Court has held:

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

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It was an agricultural land.

{See  also  Addl.  Special  Land  Acquisition  Officer vs.  Yamanappa  

Basalingappa Chalwadi [(1994) 3 SCC 323]}

In  State of Kerala vs.  P.P. Hassan Koya [AIR 1968 SC 1201],  the  

method which was generally resorted to in determining the value of the land  

with buildings especially those used for business purposes, was the method  

of capitalization of return actually received or which might reasonably be  

received from the land and the buildings. Whereas the Reference Judge had  

multiplied the annual income by 35 times, the High Court had reduced it to  

33 1/3 times.  The view of the High Court was upheld.   

In  Special  Land  Acquisition  Officer,  Kalinadai  (Hydro-Electric)  

Project, Dandali, Uttra Kannada District v. Vasant Gundu Bale [1995 Supp  

(4) SCC 649] it was held that:

“  2.  Sri  Veerappa,  the  learned  Counsel  for  the  State,  has  contended  that  the  High  Court  committed  grave  error  of  law  in  recording  a  finding  that  lands  were  possessed  of  potential  value for building purposes. We find no force in  the  contention.  It  is  seen  that  when  7,800  lineaments were constructed in the project area, it  would  be  clear  that  a  township  had  come  into  existence. It is an admitted fact that the land under  acquisition  is  about  the  township.  It  is  also  an  admitted  fact  that  in  Ext.  A-12  sanction  was  obtained on September 13, 1973 for conversion of  agricultural  lands  into  urban  lands  of  the  layout  

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and sale of plots which could not take place due to  the  fact  that  mud  was  dumped  on  this  land.  Consequently,  the  sanction  came to  be cancelled  by the Assistant Commissioner. Be that as it may,  the High Court on the basis of the rental value had  determined compensation at the rale of Rs. 1200  per acre applying the multiplier of 15 and arrived  at the net income at Rs. 18,000 per acre. It is now  settled law that the uniform rate of multiplier of 10  is being applied for the lands acquired even in the  State of Karnataka. Even acceding the multiplier of  12  as  held  by  this  Court  in  Special  Land  Acquisition  Officer,  Davangree  v.  P.  Veerabhadarappa and Ors. ( 1984 ) 2 SCC 120, the  claimant  cannot  get  more  than  Rs.  14,000  per  acre.”

Hence, keeping in view the ratio of the above mentioned decisions  

and the facts of the present case, we modify the decision of the High Court  

to the extent of excluding the payment of separate amount of compensation  

for the 1278 sq. mtrs. of non-agricultural  land in which the 21 Godowns  

have been constructed would be calculated on the rental  value.   In other  

words,  whereas  the  market  value  of  the  land  would  be  determined  at  

Rs.240/-  per  square  feet,  the  lands  on  which  the  godowns  have  been  

constructed,  the amount of compensation shall  be calculated at the rental  

value thereof by following the method adopted by the High Court.  For the  

said purpose, the matter is remitted to the Land Acquisition Officer.  

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These appeals are disposed of with the aforementioned observations  

and directions.  In the facts and circumstances of the case, there shall be no  

order as to costs.  

……………….…..………….J. [S.B. Sinha]

..………………..……………J.  [Cyriac Joseph]

New Delhi; July 29, 2009

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