2024 INSC 797

2024 INSC 797 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No. ________ / 2024 (Arising out of SLP (C) No. 7963 / 2023)

Horrmal (Deceased) through his LRs and …Appellant(s) others

versus

State of Haryana and others …Respondent(s)

WITH

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Signature Not Verified Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 15082-15088/2023)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 21685-21686/2022)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 19128-19129/2023)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 1984-1985/2023)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 4944/2023)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 1710-1711/2023)

Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 5594-5595/2023)

Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 1968-1969/2023)

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Civil Appeal No. _______ /2024 (Arising out of SLP (C) No. 1981-1982/2023)

Civil Appeal No. _______ /2024 (Arising out of SLP(C) No. 2581/2023)

7|Page JUDGEMENT

SURYA KANT, J.

Delay condoned.

Leave granted.

(hereinafter ‘Appellants’), impugning the judgement dated

23.08.2022 passed by the Punjab and Haryana High Court at

Chandigarh (hereinafter, ‘High Court’), whereby their appeals

seeking further enhancement in compensation for their acquired

lands, have been dismissed. As a necessary corollary, the High

Court has allowed the cross appeals filed by the Respondent State,

challenging the enhancement in compensation made by the

Reference Court. Consequently, the Awards passed by the

Reference Court have been set aside and the compensation as was

granted by the Land Acquisition Collector (hereinafter, ‘LAC’) has

been restored.

A. FACTS

compensation originated with the issuance of a notification under

Section 4 of the Land Acquisition Act, 1894 (hereinafter, ‘1894

8|Page Act’) on 11.02.2011, for the acquisition of approximately 302.75

acres of land by the Respondent State. This land, including the

Appellants’ lands, is situated in the revenue estate of Tauru village

in Mewat District. The acquisition process was initiated for the

development and utilisation of land for public purposes,

specifically for carving out Residential and Utility Areas in Sectors

7, 8 and 11 in Mewat District under the Haryana Urban

Development Authority Act, 1977. A notification under Section 6

of the 1894 Act was thereafter issued on 10.02.2012.

land admeasuring 302.75 acres and estimated the compensation

at Rupees 45,00,000/- per acre, along with 30% solatium and an

additional amount of 12% per annum for the acquired land.

Further, compensation for the lands abutting the

Mohammadpur—Sohna—Tauru bypass road were enhanced by

20% and 25%, respectively, over the already fixed rate. The LAC

assessed the compensation primarily based on the rates fixed by

the Divisional Level Rate Fixation Committee in the following

manner: (a) 2057 Kanal at Rupees 45,00,000/- per acre; (b) 113

Kanals and 9 Marlas at Rupees 54,00,000/- per acre; and (c) 251

Kanals and 11 Marlas at Rupees 56,25,000/- per acre. In addition

9|Page to this, the LAC also affixed compensation for building structures

and trees wherever subsisting on the acquired lands.

filed Reference(s) under Section 18 of the 1894 Act before the

Additional District Judge, Mewat (hereinafter, ‘Reference Court’).

The Reference Court, vide separate awards, enhanced the market

value of the acquired land to Rupees 92,62,500/- per acre, in

addition to granting other statutory benefits. The Reference Court,

in this instance, relied upon a sale exemplar, Ex. P76, to assess

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

issuance of Section 4 notification, and subsequently increased the

compensation amount. Both the Appellants and the Respondent,

being dissatisfied with the decision of the Reference Court,

preferred appeals before the High Court.

the Respondent State while dismissing those filed by the

Appellants. The High Court held that the Reference Court had

incorrectly estimated the market value and enhanced the

compensation as it ignored various sale instances of comparable

parcels of land that had been produced by the Respondents.

Additionally, the High Court also doubted the reliability of Ex. P76, 10 | P a g e which was the basis of the Reference Court’s decision, on the

ground that this sale deed belonged to a commercial plot of land

and was post the notification issued under Section 4 of the 1894

Act. Accordingly, the High Court set aside the award(s) of the

Reference Court and reverted the compensation amount to that

initially granted by the LAC. Hence, these appeals.

B. CONTENTIONS OF THE PARTIES

considerable length and meticulously perused the documents

submitted on record.

Learned Senior Counsel appearing on behalf of the Appellants, first

demonstrated the potentiality of the acquired land. They

contended that the High Court had overlooked the fact that the

acquired lands fell squarely within the municipal limits of Tauru

city and were surrounded by civic amenities such as a Bus Stand,

Hospital, School, College, a Power Station and Industrial as well

as Residential establishments. They further asserted that the

acquired land was located on the Sohna-Tauru bypass and was in

close proximity to the Gurgaon-National Capital Region, as also

the Industrial Township established at Bhiwadi, Rajasthan. 11 | P a g e Additionally, the land is situated between the Sohna—Rewari

metal road on one side and the KMP Highway on the other. This

strategic location, they argued, indicated that the market value of

the acquired land, having immense potential at the time of

acquisition, could not have been valued at less than Rupees

5,00,00,000/- per acre.

RW1/D and RW1/F, which have been relied upon by the LAC and

the High Court while assessing the rate of compensation at Rupees

45,00,000/- per acre, appertained to the smaller pieces of land and

were inferior in nature, as the sale consideration mentioned

therein was lower than the rate estimated by the LAC itself.

Instead, they urged that Ex. P76 and Ex. P3 ought to have been

relied upon, owing to their similarity and proximity to the acquired

land, as well as their temporal proximity to the date of issuance of

the Section 4 notification. They further emphasised that these sale

exemplars are the best sale instances to be considered since Ex.

P76 was registered only a few months after the Section 4

notification, whereas Ex. P3 was executed prior to the said

notification.

12 | P a g e 10. Given what had been adduced, Learned Senior Counsels

relied on a plethora of decisions in support of their arguments,

including the judgment of this Court in Dollar Co. v. Collector of

Madras,1 wherein it was held that a sale deed of a recent date

could be considered the best evidence. Additionally, they placed

reliance on the decision in Special Land Acquisition Officer and

another v. M.K. Rafiq Saheb,2 where this Court held that sale

deeds pertaining to smaller areas could be taken into

consideration by applying a cut.

Solicitor General of India, representing the Respondents,

contended that the sale deeds produced by the Appellants could

not be relied upon as they pertained to sale instances of tiny plots

of land constituting only a few Marlas. More specifically, he argued

that Ex. P3 was not reliable since it measured only 1 Kanal and

10.5 Marlas, making it significantly smaller in comparison to the

acquired land. Similarly, with respect to Ex. P76, which was also

heavily relied upon by the Appellants, he asserted that it ought to

be discarded, not only because it was subsequent to the Section 4

1 AIR 1975 SC 1670. 2 (2011) 7 SCC 714.

13 | P a g e notification but also since the land therein was purchased for a

commercial purpose by a private company for warehousing, and

thus would not accurately reflect the market value of the acquired

land.

on record by the Respondents should be relied upon despite having

been recorded post the Section 4 notification, as they lend proper

guidance for estimating the market value of the acquired land on

the crucial date of 11.02.2021. Lastly, he asserted that even if the

Court were to consider the sale instance of a smaller parcel of land,

only those sale exemplars where the land has been used towards

developmental purposes should be relied upon, and after applying

the appropriate deduction towards development charges.

C. ISSUES

dispute has arisen and the contentions put forth, the questions

that fall for our deliberation are set out as follows:

i. Whether the Appellants are entitled to higher rate of

compensation and if so, to what extent; and

14 | P a g e ii. How should the quantum of such compensation be

calculated?

D. ANALYSIS

a significant difference in the evaluations conducted by the

Reference Court and, subsequently, the High Court. The High

Court has reduced the valuation affixed by the Reference Court by

half and, instead, restored the compensation amount granted by

the LAC. Given the differences in the approaches adopted by these

courts and the variation in outcomes faced by the Appellants, it

becomes imperative for us to assess the evidence placed on record

by both parties and determine whether sufficient grounds subsist

for us to enhance the compensation so awarded.

prepared by the High Court, which, in its decision, has aptly

summarised the different evidence produced by the parties as

follows:

15 | P a g e Sr. Ex. Vasika Dated Sale Area of Rate Village No. No No. Consideratio Land Sold Per acre n (In Rs.) (K.M.S)

Sale Deeds Produced by the respective parties in the Award dated: 06.01.2017,01.03.2017, 19.07.2017, 20.07.2017, 03.10.2017, 01.08.2017 Sale Deeds Produced by the Landowners 1. P2 1539 2.2.2010 1,75,000 50 Sq. Yds. 1,69,40,000 Tauru

10 P76 1220 4.7.2011 10,18,87,500 66k (1320 M) 1,23,50,000 Tauru

Sale Deeds Produced by the State 11 RW 2481 29.8.2011 3,25,000 12.5 M 41,60,000 Tauru 1/C 12 RW1 1220 21.06.2012 60,00,000 1 Acre 4 K 40,00,000 Tauru /D (240 M) 13 RW1 1802 6.8.2012 17,25,000 3K-9M 40,00,000 Tauru /E (69M) 14 RW1 3798 25.11.2011 60,00,000 1 Acre 4k 40,00,000 Tauru /F (240 M) 15 RW 1779 3.8.2012 18,25,000 3K-13M 40,00,000 Tauru 1/G (73 M) 16 RW 4339 13.03.2013 8,32,500 225 Sq. Yds. 1,79,08,000 Tauru 1/H

17 R8 1724 17.12.10 2,00,000 10 M 32,00,000 Gvarka

16 | P a g e 18 R9 1591 01.12.10 4,80,000 17 M 45,17,648 Gvarka

19 R10 1304 20.10.2010 10,23,750 4K-11M 18,00,000 Gvarka

(91M) 20 R11 1396 3.11.2010 1,05,000 5M 33,60,000 Gvarka

21 R12 2116 31.1.2011 2,31,000 330 Sq. 33,88,000 Gvarka Yds.

22 R13 1851 29.12.2010 1,05,000 5M 33,60,000 Gvarka

25 R16 1404 8.11.2010 75000 6M 20,00,000 Gvarka

26 R18 2211 9.2.2011 36,300 2M 29,04,000 Gvarka

to us that these exemplars can be classified in the following

manner: (a) sale instances executed prior to the issuance of

Section 4 notification; and (b) sales instances executed after the

issuance of the Section 4 notification. Thereupon, we have taken

the liberty of further representing this recalibrated categorisation

in a tabular form as follows:

Pre-Section 4 Post Section-4 notification notification Appellants P2-P8, P10 P9 and P76

Respondents R8-14, R16, R18 R15, RW1/C-H

17 | P a g e 17. Having distinguished between the two sets of sale instances

executed before and after the issuance of the Section 4 notification,

we would now proceed to determine whether the Appellants are

entitled to compensation at a rate higher than the one determined

by the High Court.

tethered to precision but is rather aimed at a nuanced estimation

of pertinent factors. This task is governed by Section 23(1) of the

Land Acquisition Act of 1894, which mandates that, in

determining compensation for acquired land, the Court must

consider the ‘market value’ of the land as of the ‘date of publication

of the notification under Section 4’. The ‘market value’ is to be

assessed with reference to factors such as standing crops and

trees, the severance of part of the land, damage to movable or

immovable property or earnings, the need to relocate one’s

residence or business, and any loss of profits from the land

between the publication of the declaration under Section 6 and the

Collector's assumption of possession.

including a three-judge bench decision in Special Land 18 | P a g e Acquisition Officer v. T. Adinarayan Setty,3 held that the

‘market value’ connotes the price that a willing buyer would pay to

a willing seller, taking into account the land’s current conditions

and its advantages and potentialities. For this, typically, the best

approach is the comparable sales method, under which the bona

fide sale exemplars of similar lands are relied upon to ascertain

the market value of the land under acquisition. However, to ensure

that the valuation is just and proper, this Court has explained that

such sale exemplars must satisfy certain criteria, including that:

(a) the sale must be a genuine transaction; (b) the sale deed must

have been executed around the time of the Section 4 notification;

(c) the land must be situated near the acquired land; (d) the nature

of the land covered in the sale instance must be similar to the

acquired land; and (e) the size of the plot covered by the sale

instance should be comparable to the land acquired.4

the sale exemplars reflect the price of the land on the ‘date of

publication of the notification under Section 4’. On account of this

express condition, there are numerous instances where this Court

3 AIR 1959 SC 429. 4 Shaji Kuriakose v. Indian Oil Corporation Ltd., (2001) 7 SCC 650.

19 | P a g e has laid down that the sale exemplars executed after the Section 4

notification should not ordinarily be relied upon.5 This is grounded

in the reasoning that once the acquisition process begins, it can

impact the valuation of the land, rendering subsequent sale

exemplars to be potentially inaccurate reflections of the true

valuation of the acquired land. This principle was cogently

addressed by this Court in A. Natesam Pillai v. Tahsildar,6

which held that the commencement of acquisition often leads to

an increase in the market values of adjacent lands, thereby

discrediting post-notification transactions as reliable indicators of

the acquired land’s value.

selecting a comparable sale instance to draw an estimate from, it

is perhaps suitable to tackle the core issue and ascertain which of

the sale exemplars produced before us may be most appropriate to

be utilised in this exercise.

have disagreed on what sale exemplars could be used to determine

fair compensation. While the Reference Court relied on Ex P76, the

5 General Manager, Oil and Natural Gas Corporation Ltd. v. Rameshbhai Jivanbhai Patel, 2008 (14) SCC 745; Maya Devi v. State of Haryana, (2018) 2 SCC 474. 6 (2010) 9 SCC 118.

20 | P a g e High Court has rejected the same because it was executed after

the issuance of the Section 4 notification. Nevertheless, the High

Court has fallen prey to the same error and has relied upon the

Respondents’ sale exemplars, which were also executed after the

acquisition had already begun.

considered when better evidence is not available on record and

when the party relying on it can convincingly demonstrate that

there has been no upward trend in market prices due to the

acquisition.7 Consequently, in light of this analysis, the sale deeds

numbered P9, P76, R15 and RW1/C-H, which were executed after

the date of the issuance of the Section 4 notification, will invariably

have to be excluded from any further consideration, save and

except for exceptional and compelling circumstances.

temporally, we also deem it appropriate to exclude the sale deeds

that are not comparable geographically. It is now a firmly

entrenched principle of law that, in the ordinary course, sale

exemplars of lands located in the surrounding villages should

7 Karan Singh v. Union of India, (1997) 8 SCC 186l; Rishi Pal Singh v. Meerut Development

Authority, (2006) 3 SCC 205.

21 | P a g e generally not be relied upon, as land valuation may vary

significantly by locality. In the landmark decision of Kanwar

Singh v. Union of India,8 this Court held that sale exemplars of

lands situated in an adjacent village cannot be used to determine

the market value of the acquired land since such lands may differ

in terms of quality and other attributes. On this ground, the sale

deeds enumerated Ex. R8 to Ex. R16 and Ex. R18 shall also have

to be excluded from consideration, as they pertain to a different

village, namely Gwarka, whereas the acquired land is situated in

village Tauru.

with sale deeds numbered Ex. P2 to Ex. P8 and Ex. P10. In this

context, the Respondents have sought to argue that considering

the total area of the land in these sale deeds being very small in

size, they are also liable to be discarded. True it is, that such sale

deeds ought not to directly form the basis for determining the rate

at which compensation is to be awarded. Indeed, a thorough review

of relevant precedents in this backdrop does reveal that smaller

parcels of land conventionally command higher prices. Relying on

8 (1998) 8 SCC 136.

22 | P a g e such sale exemplars also, especially when only single solitary such

instances are presented, may thus not be appropriate.9

exemplars of smaller plots, provided they are subjected to

adequate developmental charges. The rationale behind applying

such cuts lies in the fact that smaller plots often command higher

prices due to their developed nature, whereas a larger tract of land

which is acquired for development may require significant

allocation for creating roads, parks, essential services, etc.10

Accordingly, these sale exemplars can be relied upon only after

applying appropriate cuts. This Court in Chimanlal

Hargovinddas v. LAO,11 authoritatively ruled that when valuing a

large block of land, appropriate deduction must be made for setting

aside areas for roads, open spaces and dividing the land into

smaller plots suitable for the construction of buildings.

plots, and these represent the best available evidence for

estimating compensation. Since there is no legal impediment to

considering such sale deeds, the logical progression in the

9 Administrator General of West Bengal v. Collector, Varanasi, (1988) 2 SCC 150. 10 Ibid; Atma Singh v. State of Haryana and others, (2008) 2 SCC 568. 11 (1988) 3 SCC 751.

23 | P a g e compensation estimation process would be to identify the most

suitable sale deed(s) for determining the market value and

subsequently, to apply adequate deductions on the same. The

solution to this state of flux may thus be found in the case of

Mehrawal Khewaji Trust v. State of Punjab,12 where this Court

laid down as follows:

“....It is clear that when there are several exemplars with reference to similar lands, it is the general rule that the highest of the exemplars, if it is satisfied that it is a bona fide transaction, has to be considered and accepted. When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition.” [Emphasis supplied]

of M.P.,13 where a three-judge bench of this Court consolidated

various precedents to affirm that in circumstances where there are

multiple sale deeds available for consideration, the Court shall rely

on the highest valued exemplars unless the prices fall within a

12 (2012) 5 SCC 432. 13 (2013) 16 SCC 392.

24 | P a g e narrow range, in which case calculating an average of the values

therein may be more congruous.

disparity among the sale exemplars presently under consideration.

Amongst these sale exemplars, being Ex. P2-P8 and Ex. P10, the

highest sale instance values the land at Rupees 1,81,33,867 per

acre, whereas the lowest values it at Rupees 16,94,000 per acre.

Given this wide range and in light of the judicial precedents cited

above, we are of the opinion that we should rely upon the highest

sale exemplar, which is Ex. P5, rather than solely depending upon

an average of the multiple sale deeds produced before us. Despite

the Respondents’ vehement contention that Ex. P5 should not be

relied upon owing to it being a significantly smaller parcel of land—

the detailed analysis conducted above indicates no reason why Ex.

P5 cannot be utilised to determine the amount of compensation to

be awarded to the Appellants for the acquired land.

and consequentially the base price to be Rupees 1,81,33,867 per

acre, we now proceed to the aspect of deductions to be applied to

the amount so determined. In this regard, there is no hard and fast

rule on the amount of deduction to be applied towards 25 | P a g e development charges. Instead, such deductions may, for the

purpose of making a small area of land comparable to larger tracts,

range from a minimum of 20% to a maximum of 75%.14

question of fact dependent on the unique circumstances of each

case, the particulars to be reckoned with in determining the extent

of such deduction often include a myriad of factors, such as the

relative difference in the size of the land in the sale exemplar vis a

vis the acquired land, proximity to a road, nearness to developed

areas, etc.15 Additionally, several decisions have also taken into

account the nature of the lands because of the stark difference that

may exist between the valuation of an agricultural or undeveloped

land and the sale price of a small developed plot in a private

layout.16

the land in Ex. P5 is similar in nature to the acquired land, both

being agricultural land. Its proximity to the acquired land and the

fact that it is situated in the same village of Tauru, are relevant

14 Balwan Singh v. State of Haryana and others, 2022 SCC Online SC 637; Chandrashekar

v. LAO, (2012) 1 SCC 390. 15 Subh Ram v. State of Haryana, (2010) 1 SCC 444. 16 Ibid.

26 | P a g e when determining the extent of deductions to be applied in

calculating the compensation to be granted to the Appellants.

Additionally, what is also of utmost importance is that the value of

the land is corroborated by surrounding circumstances, which

point towards its potentiality. Although Ex. P76 cannot be relied

upon since it was executed after the Section 4 notification, it

nonetheless reflects the land’s potential for being used other than

for agricultural purposes. Moreover, the acquired land’s strategic

location near the Bus Stand, Grain Market and Main Bazaar,

besides being located near Palwal-Sohna-Rewari State Highway, as

well as its proximity to the Industrial Township at Bhiwadi, and

nearby schools and colleges, further supports the assertion that

the land possesses immense potentiality.

ascertaining the appropriate extent of deduction to be made. As

already established, judicial precedents dictate that the amount of

deduction to be applied towards developmental charges can range

from anywhere between 20% to 75%. On the one hand, we must

acknowledge and recognise the stark disparity between the size of

the land covered by the sale exemplar and the acquired land. On

the other hand, it is incumbent that we take note of the various

27 | P a g e advantageous factors associated with the acquired land at the time

of issuance of the Section 4 notification. A balanced approach in

adjudicating this particular issue is therefore necessary.

Considering these militating aspects, we cannot justify applying

deduction at either extreme end of the spectrum. A prudent course

of action might be to steer a middle path, aiming for a range

approximately between 46% to 50%.

deductions from this middle course, at 50%, the compensation to

be granted to the Appellants would still surpass the amount

initially determined by the LAC and would in fact, be closer in

range to the rate granted by the Reference Court.

conclusion, even if the principle of averaging were applied, the

most suitable sale instances for this purpose, as discussed earlier,

would be Ex. P2 to Ex. P8 and Ex. P10, which are noted to be in

close proximity to the acquired land. Upon evaluation, the average

price of these lands is Rupees 1,49,71,733 per acre, which exceeds

the sale consideration shown in most comparable sale examples.

This leaves no room for doubt that the compensation awarded by

the Reference Court, at the rate of Rupees 92,62,500 per acre, was 28 | P a g e neither excessive nor beyond the fair and just value of the acquired

land.

recognizing that the subject land has not been acquired for

profiteering or commercial purposes, but primarily for the

development of a residential area, we find it appropriate to rely on

the valuation reflected in the best exemplar, Ex. P/5, as a fair and

reasonable basis for compensation.

opinion that the High Court erred in reducing the valuation of the

land and affirming the figures granted by the LAC. As

demonstrated by our analysis above, the evaluation conducted by

the Reference Court was nearly accurate and aligned with the

evidence of the sale deeds and potentiality, despite the fact that

the sale exemplar Ex. P76, on which it relied upon, may not have

been ideal, given the circumstances and its commercial nature.

E. CONCLUSION

impugned leading judgment dated 23.08.2022 of the High Court,

as well as all other judgments following the said leading judgment

29 | P a g e which are under challenge in this batch of appeals, are hereby set

aside, and the compensation amount granted by the Reference

Court is hereby restored.

partly, as per the award of the Reference Court, shall be paid to

the Appellants and other land-owners along with all the statutory

benefits including interest, within eight weeks.

terms.

………..………………… J. (SURYA KANT)

…………………………… J. (K.V. VISWANATHAN)

NEW DELHI DATED: 21.10.2024

30 | P a g e