27. Market value for acquired land

In CIVIL APPEAL NO.3332 OF 2001 T.S. Ramachandra Shetty v. Chairman, Karnataka Housing Board& Another[i], the appellant had purchased only an year ago, the that very piece of land for Rs.45,000/- and after an year, the State had given compensation of Rs.1,30,680/-. Speaking for the bench his Lordship Hon. Dalveer Bhandari, J held that the compensation amount cannot be said to be inadequate by any stretch of imagination. After making elaborate discussion of case Law, the court emphasized that a recent sale deed is the best evidence of market value of the acquired land.

In Bangaru Narasingha Rao Naidu & Ors.v. Revenue Divisional Officer, Vizianagaram[ii] the Supreme Court observed that the best evidence of the market value of the acquired land is afforded by transactions of sale in respect of the very acquired land.

In Special Tehsildar Land Acquisition, Vishakapatnam v. A. Mangala Gowri[iii], the Supreme Court observed as under: “The market value postulated in Section 23(1) of the Act designed to award just and fair compensation for the lands acquired. The word “market value” would postulate price of the land prevailing on the date of the publication of the notification under Section 4(1).The acid test that for determining the market value of the land, the price which a willing vendor might reasonably expect to obtain from a willing purchaser would form the basis to fix the market value. For ascertaining the market rate, the Court can rely upon such transactions which would offer a reasonable basis to fix the price. The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence. In its absence the price paid for a land possessing similar advantages to the land in the neighbourhood of the land acquired in or about the time of the notification would supply the data to assess the market value. But exclusion of bona fide and genuine sale transactions in respect of the same land under acquisition and to place reliance on the award of some other land is obviously illegal.

In Periyar and Pareekanni Rubbers Ltd. v. State of Kerala[iv],the Supreme Court observed as under: “..When the Courts are called upon to fix the market value of the land in compulsory acquisition, the best evidence of the value of property is the sale of the acquired land to which the claimant himself is a party, in its absence the sales of the neighbouring lands. In proof of the sale transaction, the relationship of the parties to the transaction, the market conditions, the terms of the sale and the date of the sale are to be looked into. These features would be established by examining either the vendor or vendee and if they are not available, the attesting witnesses who have personal knowledge of the transaction etc. The original sale deed or certified copy thereof should be tendered as evidence. The underlying principle to fix a fair market value with reference to comparable sales is to reduce the element of speculation. In a comparable sale the features are: (1) it must be within a reasonable time of the date of the notification; (2) it should be a bona fide transaction; (3) it should be a sale of the land acquired or land adjacent to the land acquired and (4) it should possess similar advantages. These should be established by adduction of material evidence by examining as stated above the parties to the sale or persons having personal knowledge of the sale transactions. The proof also would focus on the fact whether the transactions are genuine and bona fide transactions.”

In Printers House Pvt. Ltd. v. Cold Storage and Food Products and Ors,[v] the Supreme Court dealt with the similar proposition that the sale price of the acquired land is an important factor for determining the compensation.

In Ranvir Singh and Another v. Union of India[vi] the Supreme Court reiterated the well settled principle that the sale deeds pertaining to the portion of lands which are subject to acquisition would be the most relevant piece of evidence for assessing the market value of the acquired lands.

In the Dollar Company, Madras v. Collector of Madras [vii] the Supreme court held that: “In determining the market value the main criterion is what a willing purchaser would pay a willing vendor. Ordinarily a party will be entitled to get the amount that he actually and willingly paid for a particular property, provided the transaction be bona fide and entered into with due regard to the prevalent market conditions and is proximate in time to the relevant date under Section 23. The best evidence of the value of property is the sale of the very property to which the claimant is a party. If the sale is of a recent date, then all that need normally be proved is that the sale was between a willing purchaser and a willing seller, that there has not been any appreciable rise or fall since and that nothing has been done on the land during the short interval to raise its value. But if the sale was long ago, may be the Court would examine more recent sales of comparable lands as throwing better light on current land value. Such lands should be close by and not a mile-and-half away as one of the examples pressed here was. So, an actual transaction with respect to the specific land of recent date is a guide-book that courts may notneglect when called upon to pin the precise compensation.”

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[i] decided on 22/01/2009

[ii] (1980) 1SCC 575

[iii] (1991) 4 SCC 218

[iv] (1991) 4 SCC 195, Para 10

[v] (1994) 2 SCC 133

[vi] (2005) 12 SCC 59

[vii] (1975) 2 SCC 730