M/S Relaxo Footwears Ltd vs Union Of India & Ros

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Reserved on : 16.12.2025
Pronounced on : 30.04.2026
Uploaded on : 04.05.2026

+ LA.APP. 227/2017, CM APPL. 20214/2025
JAI KISHAN GUPTA ....Appellant
Through: Mr. Sumit Bansal, Sr. Advocate with
Mr. Pankaj Gupta, Mr. Udaibir Singh,
Ms. Tulna Rampal, Ms. Samvartika
Pathak, Mr. Utsav Garg, Mr. Pushkar
Khanna, and Ms. Nikita Gupta,
Advocates.
Mr. Badal Dayal and Mr. Nishi
Chauhan, Advocates.

versus

UNION OF INDIA & ORS .....Respondent
Through: Mr. Sanjay Kumar Pathak, Standing
Counsel with Mrs. K.K. Kiran Pathak,
Mr. Sunil Kumar Jha, Mr. Mohd Sueb
Akhtar, Mr. Divakar Kapil,
Advocates for UOI.
Mr. Tarun Johri and Mr. Ankur
Gupta, Advocates for DMRC.

+ LA.APP. 158/2017
M/S RELAXO FOOTWEARS LTD .....Appellant
Through: Mr. Sumit Bansal, Sr. Advocate with
Mr. Pankaj Gupta, Mr. Udaibir Singh,
Ms. Tulna Rampal, Ms. Samvartika
Pathak, Mr. Utsav Garg, Mr. Pushkar
Khanna and Ms. Nikita Gupta,
Advocates.
Signature Not Verified
Digitally Signed
By:NIJAMUDDEEN ANSARI
Signing Date:04.05.2026
14:08:46
LA.APP. 227/2017 & 158/2017 Page 1 of 28

Mr. Badal Dayal and Mr. Nishi
Chauhan, Advocates.

versus

UNION OF INDIA & ORS .....Respondent
Through: Mr. Sanjay Kumar Pathak, Standing
Counsel with Mrs. K.K. Kiran Pathak,
Mr. Sunil Kumar Jha, Mr. Mohd Sueb
Akhtar, Mr. Divakar Kapil,
Advocates for UOI.
Mr. Tarun Johri and Mr. Ankur
Gupta, Advocates for DMRC.

CORAM:
HON'BLE MR. JUSTICE MANOJ KUMAR OHRI

JUDGMENT
1. The present appeals, preferred under Section 54 of the Land
Acquisition Act, 1894 (hereinafter referred to as the “LA Act”), pertain to
acquisition proceedings undertaken in respect of 54 bighas 02 biswa of
“extended Lal Dora ” land falling in the revenue estate of village Mundka ,
for the purpose of “Construction of Depot, Staff Quarters and TSS of
Inderlok-Mundka Corridor of Delhi MRTS Project Phase-II” near Senior
Secondary School, Mundka and North of NH-10 ( Mundka Depot).
2. Pertinently, besides the above acquisition, 89 bighas of agricultural
land falling in the revenue estate of village Mundka was also acquired;
however, the consideration in the present proceedings is restricted to
extended Lal Dora land only.
3. Though argued separately, the submissions addressed were common.
On the prayer of learned counsels, the appeals titled “ Jai Kishan Gupta Vs.
Union of India & Ors. ”, bearing L.A. APP. 227/2017 , and “ M/s Relaxo
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Footwears Ltd. Vs. Union of India & Ors. ”, bearing L.A. APP. 158/2017 ,
are treated as the lead cases, and all the appeals pertaining to extended Lal
Dora land are disposed of vide this common judgment.
4. Notably, the appeals against the Reference Court decisions have been
preferred by both the landowners as well as the Union of India. However,
the beneficiary, i.e. the DMRC, though a party before the Reference Court,
has not challenged the impugned judgments.
5. The sequence of relevant events in the acquisition proceedings are set
out in the table below:-

LAC AWARD
6. The LAC noted that, pertaining to land falling in the extended Lal
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Dora , neither any acquisition had taken place nor was a market rate notified.
As such, he took into account 63 registered sale deeds of lands falling in the
vicinity of the acquired land. In doing so, while 31 of these deeds were
discarded for having market value per sqm less than the valuation on the
basis of twice the value fixed by the GNCTD for agricultural land, 4 were
excluded for being on the “exorbitantly higher side” considering the large
size of the land being acquired. The average of the remaining 28 deeds was
calculated to assess and determine the fair market value. As noted in the
table above, the LAC assessed the fair market value of the extended Lal
Dora land under acquisition to be Rs.1,210/- per sqm.
7. It is pertinent to note that while reaching the aforenoted conclusion,
the LAC noted the presence of structures such as boundaries and factories
on the land, but excluded them from the fair market value determination. It
was held that although Notification No. RNZ/1731 of MCD dated
24.08.1963 exempted rural village abadis from certain building regulations,
this exemption did not extend to factories, warehouses, or cold storages.
Since the joint survey report identified boundary walls and factories that
lacked evidence of municipal approval, they were treated as unauthorised
and ignored under Section 24 (eighthly) of the LA Act, 1894, with the
exception of certain boundary walls of M/s Relaxo Footwear in Khasra No.
1003.
8. Aggrieved by the LAC‟s decision, the landowners approached the
Reference Court under Section 18 of the LA Act seeking enhanced market
value for the acquired land.
REFERENCE COURT
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9. The Reference Court, treating the cases of M/s. Relaxo Footwear Ltd.
1 2
Vs. UOI & Anr. and Smt. Amita Gupta Vs. UOI & Anr. as the lead matters,
relied upon the GNCTD Notification dated 18.07.2007, issued in exercise of
powers under Sections 27 and 47A of the Indian Stamp Act, 1899, which
notified the minimum rates (circle rates) for the valuation of lands and
immovable properties in Delhi . The Reference Court considered the
„extended Lal Dora ‟ land as equivalent to „ Lal Dora ‟ land in Category „H‟
localities and applied the minimum rate of Rs.6,900/- per sqm. The said rate
was however subjected to a 25% deduction for development charges to
determine the fair market value of the acquired land.
10. In reaching this conclusion, the Reference Court not only rejected the
landowners‟ reliance on four sale deeds [exhibited as Ex. PW-3/1 to PW-3/4
in M/s. Relaxo Footwear ( supra )], but also the sale deeds cited by the Union
of India and the DMRC [exhibited as Ex. R-2 to R-6 in M/s. Relaxo
Footwear ( supra )]. It was observed that while the former reflected
exorbitantly high prices compared to the 28 other deeds considered by the
LAC, the prices reflected in the latter were too low. Consequently, it was
held that the sale deeds were not a correct indicator of fair market value.
Furthermore, the landowners‟ reliance on the decision in Jayant
3
Juneja Vs. E. Sreedharan & Ors. was held to be distinguishable on facts as
the valuation report therein did not pertain to extended Lal Dora land.
11. As noted in the table above, the Reference Court enhanced the
compensation by Rs.3,965/- per sqm and determined the fair market value of
the acquired extended Lal Dora land to be Rs.5,175/- per sqm.

1
LAC No. 17/11 (New No. 57/16), decided on 04.02.2017
2
LAC No. 28/11 (New No. 112/16), decided on 06.02.2017
3
Contempt Petition (C) No. 34 of 2011 in Civil Appeal No. 4115/2009
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12. Dissatisfied with the impugned judgments, both the landowners and
the Union of India have approached this Court.
SUBMISSIONS
13. Mr. Bansal, learned Senior Counsel appearing for the appellant
landowners contended that the Reference Court erred in not considering the
four sale deeds [Exhibits PW-3/1 to PW-3/4 in M/s. Relaxo Footwear
( supra )] that pertained to similarly situated lands in the extended Lal Dora
area of village Mundka . It is submitted that these sale deeds were executed
in the year 2005, prior to the Acquisition Notification, and demonstrate the
fair market value of the concerned land ranging between Rs.11,865/- to
Rs.14,238/- per sqm. It is contended that the Reference Court wrongly
discarded the said exemplars by vaguely stating that the project must have
been announced and publicized earlier, thereby rendering the concerned sale
deeds an unreliable indicator of the fair market value. While placing reliance
on Mehrawal Khewaji Trust (Registered), Faridkot and Others Vs. State of
4
Punjab and Others , it is argued that in case of multiple exemplars of similar
land, the bona fide exemplar having the highest transaction value ought to be
considered.
14. The impugned judgments are further assailed by contending that the
Reference Court erred by equating the appellants‟ land situated in the
„extended Lal Dora ‟ area with land falling under the „ Lal Dora ‟ category
(Category „H‟) instead of the „unauthorized colony‟ category (Category „G‟)
in determining the compensation as per the circle rates notified on
18.07.2007 and further deducting 25% towards development charges. While

4
(2012) 5 SCC 432
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the circle rate for Category „H‟ is fixed @ Rs.6,900/- per sqm, the same is
fixed @ Rs.13,700/- per sqm for Category „G‟.
15. It is next contended that the land in question has great potential value
due to its proximity to industrial zones and it can be used for both residential
and commercial purposes. It is stated that the land is adjacent to National
Highway No. 10 and touches the main Rohtak road, thereby making it fit for
commercial purposes. Further, it is close to various residential colonies such
as Swaran Park , Mundka Udyog Nagar , Rajdhani Park , etc., which have
existed for over 10 to 15 years and command much higher land values.
Reliance is also placed on Government Notifications dated 17.09.2007 and
07.02.2007, exhibited as Ex. PW-5/A in M/s. Relaxo Footwear ( supra ) to
submit that the land was categorized as an industrial cluster and was under
consideration for redevelopment. The Award also notes the presence of
some factories/godowns in the area. It is submitted that the building
potentiality of the land has to be taken into consideration while determining
its market value, and in this regard, reliance has been placed upon P. Ram
Reddy and Ors. Vs. Land Acquisition Officer, Hyderabad Urban
5
Development Authority, Hyderabad and Others . Reliance is also placed
upon Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona
6
& Anr. , which stipulates the factors for determining the fair market value of
the land.
16. Lastly, learned Senior Counsel refers to the decision in Jayant Juneja
( supra ) that pertained to the acquisition of approximately 873 sq. metres of
agricultural land in village Mundka by the DMRC, where a much higher

5
(1995) 2 SCC 305
6
(1988) 3 SCC 751
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compensation was paid. It is submitted that during pendency of proceedings
before it, the Supreme Court had appointed one M/s. ABC Valuer & Co. to
determine the market value of the land concerned. Based on the said
valuation, the DMRC paid compensation @ Rs.38,533.33/- per sqm. In the
said valuation report, the market rate of that specific agricultural land was
determined to be Rs.27,400/- per sqm. as of June 2007, i.e., at the time of
the Acquisition Notification. It is submitted that since the appellant
landowners‟ land falls under the „extended Lal Dora ‟ category and has
higher potential than agricultural land, the fair market value ought to be
significantly higher.
17. Per contra , Mr. Pathak, learned Standing Counsel appearing for the
Union of India, submits that the LAC had, in the first instance, rightly
determined the fair market value of the land. The Reference Court erred in
relying upon the Notification dated 18.07.2007 regarding circle rates to
award higher compensation as the same was issued subsequent to the
Acquisition Notification. It is contended that circle rates are merely prima
facie rates prevailing in the area and are not final and determinative. Only
the circle rates computed through a detailed and scientific exercise would be
a relevant piece of evidence for determining the market value, being
equivalent to expert evidence, which is not the situation in the present
matter.
18. It is further submitted that the Reference Court erred in holding that
the sale exemplars relied upon by the respondents could not be considered as
the sale considerations contained therein were very low. It is vehemently
argued that where sale exemplars predating the Section 4 Notification are
available, those post-dating it ought not to be considered for determining the
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fair market value.
19. With respect to the landowners‟ submission that the land situated in
the extended Lal Dora has greater potentiality and therefore warranted a
higher market value than what was determined by the Reference Court, the
learned Standing Counsel submits that not all lands can or should be
classified as possessing the same market value. The burden is always on the
claimant to prove the market value, and the Court must adopt realistic
standards and a pragmatic approach in evaluating the evidence. It is
submitted that in the present case, the landowners had failed to bring on
record any such supporting evidence to establish a higher market value.
Furthermore, it was submitted that the principle of treating the entire village
land as one unit and uniformly determining compensation is wholly
unsustainable and cannot serve as a valid ground for compensation
determination. Also, the landowners‟ submission regarding future
commercial potential of the land holds no merit as the future development
and potential prospective use of the land cannot be considered in
determining market value, owing to the statutory embargo placed under
Section 24 of the LA Act.
20. Lastly, it is submitted that the Reference Court further fell into error
by allowing only 25% deduction towards development charges whereas
higher deduction towards development charges ought to have been allowed
because the acquired land was undeveloped land.
21. Mr. Johri, learned counsel for the DMRC, also adopted Mr. Pathak‟s
submissions and further submitted that the sale exemplars relied upon by the
landowners are unrealistic and inflated and therefore, liable to be discarded
for the purpose of adjudication of the present matter.
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22. He also submitted that all plots situated in the same vicinity will not
have the same situational advantages and different land areas have to be
assessed differently. In this regard, he contended that the Reference Court
had failed to apply the judicially accepted principle of „Belting‟ to determine
the fair market value of the land.
23. In rejoinder, learned Senior Counsel for the landowners, while
reiterating his contentions, took strong objection to the applicability of the
„Belting‟ principle by arguing that the land in question is homogenous in
nature. Reliance in this regard was placed upon Baljeet Singh Vs. Union of
7
India through Land Acquisition Collector & Anr. and Trishala Jain Vs.
8
State of Uttaranchal .
ANALYSIS & FINDINGS
24. I have heard the learned counsels for the parties and also perused the
documents placed on record. Since the present batch of appeals pertains to
the determination of compensation to be granted qua the subject land, before
dealing with the above stated contentions, it is necessary to refer to the
relevant provisions of the LA Act.
Some of the factors which the Court must take into consideration
while determining compensation are enumerated in Section 23 of the LA
Act in the following manner:-
“ 23. Matters to be considered in determining compensation. – (1)
In determining the amount of compensation to be awarded for land
acquired under this Act, the Court shall take into consideration—
first, the market-value of the land at the date of the publication
of the notification under Section 4, sub-section (1);

7
Civil Appeal Nos.5480-5486 of 2013, decided on 19.09.2017
8
AIR 2011 SC 2458.
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secondly, the damage sustained by the person interested, by reason
of the taking of any standing crops or trees which may be
on the land at the time of the Collector's taking possession
thereof;
thirdly, the damage (if any) sustained by the person interested, at
the time of the Collector's taking possession of the land,
by reason of severing such land from his other land;
fourthly, the damage (if any) sustained by the person interested, at
the time of the Collector's taking possession of the land,
by reason of the acquisition injuriously affecting his other
property, movable or immovable, in any other manner, or
his earnings;
fifthly, if, in consequence of the acquisition of the land by the
Collector, the person interested is compelled to change
his residence or place of business, the reasonable
expenses (if any) incidental to such change; and
sixthly, the damage (if any) bona fide resulting from diminution of
the profits of the land between the time of the publication
of the declaration under Section 6 and the time of the
Collector's taking possession of the land. ”

25. Likewise, the factors which the Court needs to ignore while
determining compensation are given in Section 24 of the LA Act. They read
as follows:-
“ 24. Matters to be neglected in determining compensation. — But
the Court shall not take into consideration—
first, the degree of urgency which has led to the acquisition;
secondly, any disinclination of the person interested to part with
the land acquired;
thirdly, any damage sustained by him, which, if caused by a private
person, would not render such person liable to a suit;
fourthly, any damage which is likely to be caused to the land
acquired, after the date of the publication of the declaration under Section
6, by or in consequence of the use to which it will be put;
fifthly, any increase to the value of the land acquired likely to
accrue from the use to which it will be put when acquired;
sixthly, any increase to the value of the other land of the person
interested likely to accrue from the use to which the land acquired will be
put;
seventhly, any outlay or improvements on, or disposal of, the land
acquired, commenced, made or effected without the sanction of the
Collector after the date of the publication of the notification under Section
4, sub-section (1); or
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eighthly, any increase to the value of the land on account of its
being put to any use which is forbidden by land or opposed to public
policy. ”

26. The fair market value of land which is subjected to acquisition is
invariably taken on the date of publication of the Notification under Section
4 of the LA Act. It is to be computed by seeing what a hypothetical
purchaser is willing to pay to purchase that land from the open market and
also what is a reasonable price for a willing vendor. The computed market
value must be in line with the market value reflected in the most comparable
instances. Care must be taken to ensure that only genuine transactions are
taken into account, and not those inflated in expectation of prospective
acquisition. Both temporal and geographical proximity of the transactions
has to be taken into account as in how close they are to the date of the
Section 4 Notification, and situation-wise, as in how comparable the land in
question is to the land being acquired. Courts have taken into account even
post notification instances provided they are genuine, proximate, and the
purchaser has not paid a higher price due to the increased development
prospects. Once the index of market value is determined by identifying
suitable transactions, this value is taken as the norm, which is increased or
decreased based on the plus and minus factors of the particular acquisition in
a commonsensical fashion. A gainful reference may be made to the decision
in Chimanlal Hargovindas ( supra ), wherein the Supreme Court held as
under:-
“ 4. The following factors must be etched on the mental screen:
…
(5) The market value of land under acquisition has to be determined as on
the crucial date of publication of the notification under sec. 4 of the Land
Acquisition Act (dates of Notifications under secs. 6 and 9 are irrelevant).
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(6) The determination has to be made standing on the date line of
valuation (date of publication of notification under sec. 4) as if the valuer
is a hypothetical purchaser willing to purchase land from the open market
and is prepared to pay a reasonable price as on that day. It has also to be
assumed that the vendor is willing to sell the land at a reasonable price.
(7) In doing so by the instances method, the Court has to correlate the
market value reflected in the most comparable instance which provides the
index of market value.
(8) only genuine instances have to be taken into account. (Sometimes
instances are rigged up in anticipation of Acquisition of land).
(9) Even post notification instances can be taken into account (1) if they
are very proximate, (2) genuine and (3) the acquisition itself has not
motivated the purchaser to pay a higher price on account of the resultant
improvement in development prospects.
(l0) The most comparable instances out of the genuine instances have to
be identified on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) Having identified the instances which provide the index of market
value the price reflected therein may be taken as the norm and the market
value of the land under acquisition may be deduced by making suitable
adjustments for the plus and minus factors vis-a-vis land under acquisition
by placing the two in juxtaposition.
(12) A balance-sheet of plus and minus factors may be drawn for this
purpose and the relevant factors may be evaluated in terms of price
variation as a prudent purchaser would do.
(13) The market value of the land under acquisition has thereafter to be
deduced by loading the price reflected in the instance taken as norm for
plus factors and unloading it for minus factors.
(14) The exercise indicated in clauses (11) to (13) has to be undertaken in
a common -sense manner as a prudent man of the world of business would
do. … ”

9
27. In Tribeni Devi Vs. Collector of Ranchi , the Supreme Court
discussed some other indicators like rent fetched for the same or the
neighbouring lands, opinion of experts etc. for determination of the market
value. The relevant observations are extracted hereunder:-
“ 4. The general principles for determining compensation have,
been set out in Sections 23 & 24 of the Act. The compensation payable to
the owner of the land is the market value which is determined by reference

9
AIR 1972 SC 1417
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to the price which a seller might reasonably expect to obtain from a
willing purchaser, but as this may not be possible to ascertain with any
amount of precision, the authority charged with the duty to award
compensation is bound to make an estimate judged by an objective
standard. The land acquired has, therefore, to be valued not only with
reference to its condition at the time of the declaration under section 4 of
the Act but its potential value also must be taken into account. The sale-
deeds of the lands situated in the vicinity and the comparable benefits and
advantages which they have, furnish a rough and ready method of
computing the market value. This, however, is not the only method. The
rent which an owner was actually receiving at the relevant point of time or
the rent which the neighbouring lands of similar nature are fetching can
be taken into account by capitalising the rent which according to the
present prevailing rate of interest is 20 times the annual rent. But this also
is not a conclusive method. This Court had in Special Land Acquisition
Officer, Bangalore v. T. Adinarayan Setty, indicated at page 412 the
methods of valuation to be adopted in ascertaining the market value of the
land on the date of the notification under section 4(1) which are : (i)
opinion of experts, (ii) the price paid within a reasonable time in bona fide
transactions of purchase, of the lands acquired or the lands adjacent to
the lands acquired and possessing similar advantages; and (iii) a number
of years' purchase of the actual or immediately prospective profits of the
lands acquired. These methods, however, do not preclude the Court from
taking any other special circumstances into consideration, the requirement
being always to arrive as near as possible an estimate of the market value.
In arriving to a reasonably correct market value, it may be necessary to
take even two or all of those methods into account inasmuch as the exact
valuation is not always possible as no two lands may be the same either in
respect of the situation or the extent or the potentially nor is it possible in
all cases to have reliable material from which that valuation can be
accurately determined. ”

28. Now, the Reference Court‟s approach, insofar as it relied upon the
circle rate Notification dated 18.07.2007 to determine the fair market value
of the acquired land, is erroneous under the LA Act. A gainful reference in
this regard may be made to the decision of the Supreme Court in Union of
10
India Vs. Savitri Devi :-
“ 1. Leave granted. After hearing the learned counsel for the
parties, we deem it appropriate to set aside the impugned judgment and

10
2017 SCC OnLine 1400
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order as the circle rates, that have been relied upon, could not have been
made the basis for determination of the compensation. In the guidelines,
the circle rates have been provided for the purpose of payment of stamp
duty, but that cannot be made the basis to determine the actual price of the
market value of the property. It may vary considering the nature and
situation of the land. Thus, the judgment of the High Court cannot be
sustained. In addition, there is nothing to indicate that any statutory
committee has determined the said rate on a scientific basis and
methodical assessment of market value.
2. This Court in Lal Chand v. Union of India, has laid down thus:
(SCC pp. 784-85, paras 41, 44 & 46)
‘41. It should however be noted that as contrasted from the
assessment of market value contained in non-statutory basic
valuation registers, the position may be different, where the
guideline market values are determined by Expert Committees
constituted under the State Stamp Law, by following the detailed
procedure laid down under the relevant Rules, and are published
in the State Gazette. Such State Stamp Acts and the Rules
thereunder, provide for scientific and methodical assessment of
market value in different areas by Expert Committees.
*
44. One of the recognised methods for determination of
market value is with reference to the opinion of experts. The
estimation of market value by such statutorily constituted Expert
Committees, as expert evidence, can, therefore, form the basis for
determining the market value in land acquisition cases, as a
relevant piece of evidence. It will be however open to either party
to place evidence to dislodge the presumption that may flow from
such guideline market value. We, however, hasten to add that the
guideline market value can be a relevant piece of evidence only if
they are assessed by statutorily appointed Expert Committees, in
accordance with the prescribed assessment procedure (either
streetwise, or roadwise, or areawise, or villagewise) and finalised
after inviting objections and published in the Gazette. Be that as it
may.
*
46. In the instant case, there is nothing to show that the
circle rates have been determined by any statutorily appointed
committee by adopting scientific basis. Hence, the principle in
Jawajee Naganatham will apply and they will not be of any
assistance for determining the market value. Further, they do not
purport to be the market value for lands in rural areas on the
outskirts of Delhi, nor the market values relating to Rithala
Village. The circle rates relate to urban/city areas in Delhi and are
wholly irrelevant.’
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3. In State (NCT of Delhi) v. Ajay Kumar it was held that circle
rates could not form the basis. Compensation has to be determined on the
basis of objective criteria. This Court observed: (SCC p. 742, paras 7 & 8)
‘7. We have heard Shri L.N. Rao, learned Additional
Solicitor General appearing for the appellants and Shri P.S.
Narasimha, learned Senior Advocate appearing for the
respondents. Though, we appreciate the anguish expressed by the
High Court over the abysmally low market value determined by the
Land Acquisition Collectors in almost all cases, a phenomenon
which is prevalent all over the country, it is not possible to approve
the exercise undertaken by the High Court for forcing the
administration to prescribe circle rates as the criteria for fixing
market value or for determination of the compensation. The 1894
Act contains a comprehensive mechanism for fixing market value
and determination of the compensation payable. Any person, who
feels aggrieved by the award of the Land Acquisition Collector or
the determination made by the Reference Court can avail remedy
either by filing an application under Section 18 of the 1894 Act or
by filing an appeal under Section 54 thereof. Therefore, there was
no justification for the High Court to have compelled the
Government to adopt the circle rates as an important factor for
fixing market value of the acquired land. The power vested in the
Collector to determine market value of the acquired land cannot be
controlled by a judicial fiat and each case has to be decided by the
authority concerned by application of objective criteria.
8. In the result, the appeals are disposed of by making it
clear that the circle rates referred to in Notification dated 23-2-
2001 issued by Appellant 1 shall not constitute the sole criteria for
fixing market value of the acquired land and the Land Acquisition
Collector shall be free to make determination by taking into
consideration the relevant factors and the evidence which may in
an appropriate case include circle rates.’
4. It was submitted by the learned counsel appearing for the
parties that it would be appropriate to permit the parties to adduce
additional evidence. The High Court may permit the parties to adduce the
evidence before the Reference Court and call for the finding of the
Reference Court.
5. The circle rates for purpose of stamp duty could not have been
made the basis for determining the market value. Resultantly, we set aside
the judgment passed by the High Court. The appeals are allowed and the
matters are remitted to the High Court for deciding afresh. ”

29. Instead, time and again, the “Comparable Sales Method” is vouched
for as the preferred mode for assessing and determining the fair market
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value, as it provides real-world examples and eliminates the need for
speculation. In fact, the rival contentions put forth regarding the building
potentiality of the land in question may also be settled by using this method
as the market value reflected in the sale transaction would be inclusive of the
increase in price on account of building potentiality. A gainful reference in
this regard may be made to the decision of the Supreme Court in P. Ram
Reddy ( supra ):-
“ 10. Then, comes the question of determining the market value of
the acquired land with building potentiality. Undoubtedly such market
value of the acquired land with building potentiality comprises of the
market value of the land having regard to the use to which it was put on
the relevant date envisaged under Section 4(1) of the LA Act plus the
increase in that market value because of the possibility of the acquired
land being used for putting up buildings, in the immediate or near future.
If there is any other land with building potentiality similar to the
acquired land which had been sold for a price obtained by a willing
seller from a willing purchaser, such price could be taken to be the
market value of the acquired land, in that, it would have comprised of
the market value of the land as was being actually used plus increase in
price attributable to its building potentiality. … ”

(emphasis supplied)

30. However, a sale exemplar must meet certain requirements before it is
used for comparison. The exemplar must be temporally proximate to the
Section 4 Notification, the transaction should be genuine, there should be
geographical nearness of the sale exemplar land to the acquired land, and
there should be comparable sizes and a similar nature of land. The relevant
extract from the recent decision of the Supreme Court in Krishan Kumar Vs.
11
State of Haryana & Ors. in this regard is reproduced below:-
“ 28. There is no gainsaying that the willing buyer-willing seller
dynamic as well may invite a lot of subjectivity, due to the fiction it seeks
to perpetuate. As a counter-measure, over the course of various decades,

11
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this Court has come to recognise the ‘comparable sales method’ as
perhaps the best mode of determining compensation for an acquired land.
While the reasons for this may be manifold, it seems to us that the
advantage of using the comparable sales method in land acquisition is that
it provides the Court with tangible, real-world examples of transactions,
eliminating the need for speculation about how a willing buyer and seller
might negotiate a price. In Shaji Kuriakose v. Indian Oil Corporation Ltd.
[(2001) 7 SCC 650], this Court occasioned to lay down certain descriptive
factors that must be fulfilled before a sale deed can be used for the
comparison set-out hereinabove. These include, inter alia : (i) temporal
proximity of the sale exemplar to the date of the Section 4 Notification of
the subject-acquisition; (ii) genuineness of the transaction; (iii)
geographical nearness of the land sold via the sale exemplar to the land
sought to be acquired; (iv) comparable sizes of lands; and (v.) similarity
in the nature of the lands. ”

31. As noted above, the appellant landowners have heavily relied on the
following sale exemplars [Ex. PW-3/1 to PW-3/4 in M/s. Relaxo Footwear
( supra )] involving lands in the extended Lal Dora of village Mundka :-

32. At the cost of repetition, it is to be noted that the LAC discarded the
above four deeds, relying instead on the average of 28 mid-range sale deeds
to award compensation of Rs.1,210/- per sqm. While the Reference Court
rightly found this to be an undervaluation, it also fell into error by
dismissing the said four exemplars on the sole ground that they reflected a
high rate, as higher value alone without any evidence of it being a non-
genuine or sham transaction cannot be a ground for exclusion. This Court
finds merit in Mr. Bansal‟s submission that the Reference Court erred in
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discarding the four sale exemplars by vaguely observing that the project
might have been announced and publicized as early as 2005 even though no
evidence was placed on record in this regard.
33. The Supreme Court has consistently held that where multiple bona
fide sale exemplars of similar land are available, the Court ought to consider
the exemplar with the highest transaction value. In the case of Anjani Molu
12
Dessai Vs. State of Goa & Anr. , the Supreme Court, while referring to two
of its earlier decisions, held as under:-
20. The legal position is that even where there are several
“
exemplars with reference to similar lands, usually the highest of the
exemplars, which is a bona fide transaction, will be considered. Where
however there are several sales of similar lands whose prices range in a
narrow bandwidth, the average thereof can be taken, as representing the
market price. But where the values disclosed in respect of two sales are
markedly different, it can only lead to an inference that they are with
reference to dissimilar lands or that the lower value sale is on account of
undervaluation or other price depressing reasons. Consequently,
averaging cannot be resorted to. We may refer to two decisions of this
Court in this behalf.

21. In M. Vijayalakshmamma Rao Bahadur v. Collector, [(1969) 1
Mad LJ 45 (SC)], a three-Judge Bench of this Court observed that the
proper method for evaluation of market value is by taking the highest of
the exemplars and not by averaging of different types of sale transactions.
This Court held: (MLJ pp. 46-47)
‘It seems to us that there is substance in the first contention
of Mr. Ram Reddy. After all when the land is being compulsorily
taken away from a person, he is entitled to say that he should be
given the highest value which similar land in the locality is shown
to have fetched in a bona fide transaction entered into between a
willing purchaser and a willing seller near about the time of the
acquisition. It is not disputed that the transaction represented by
Ext. R-19 was a few months prior to the notification under Section
4 that it was a bona fide transaction and that it was entered into
between a willing purchaser and a willing seller. The land
comprised in the sale deed is 11 grounds and was sold at Rs. 1961
per ground. The land covered by Ext. R-27 was also sold before the
notification but after the land comprised in Ext. R-19 was sold. It is

12
(2010) 13 SCC 710
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true that this land was sold at Rs. 1096 per ground. This, however,
is apparently because of two circumstances. One is that betterment
levy at Rs. 500 per ground had to be paid by the vendee and the
other that the land comprised in it is very much more extensive,
that is about 93 grounds or so. Whatever that may be, it seems to
us to be only fair that where sale deeds pertaining to different
transactions are relied on behalf of the Government, that
representing the highest value should be preferred to the rest
unless there are strong circumstances justifying a different course.
In any case we see no reason why an average of two sale deeds
should have been taken in this case.’
22. In State of Punjab v. Hans Raj, [(1994) 5 SCC 734] this Court
held: (SCC p. 736, para 4)
‘4. Having given our anxious consideration to the
respective contentions, we are of the considered view that the
learned Single Judge of the High Court committed a grave error in
working out average price paid under the sale transactions to
determine the market value of the acquired land on that basis. As
the method of averaging the prices fetched by sales of different
lands of different kinds at different times, for fixing the market
value of the acquired land, if followed, could bring about a figure
of price which may not at all be regarded as the price to be fetched
by sale of acquired land. One should not have, ordinarily recourse
to such method. It is well settled that genuine and bona fide sale
transactions in respect of the land under acquisition or in its
absence the bona fide sale transactions proximate to the point of
acquisition of the lands situated in the neighbourhood of the
acquired lands possessing similar value or utility taken place
between a willing vendee and the willing vendor which could be
expected to reflect the true value, as agreed between reasonable
prudent persons acting in the normal market conditions are the
real basis to determine the market value.’ ”

(emphasis supplied)

34. Next, in the case of Mehrawal Khewaji Trust ( supra ), the Supreme
Court held as follows:-
“ 17 . 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
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entered into between a willing purchaser and a willing seller near about
the time of the acquisition. In our view, it seems to be only fair that where
sale deeds pertaining to different transactions are relied on behalf of the
Government, the transaction representing the highest value should be
preferred to the rest unless there are strong circumstances justifying a
different course. It is not desirable to take an average of various sale
deeds placed before the authority/court for fixing fair compensation. ”

(emphasis supplied)

13
35. Recently, in Manohar & Ors. Vs. State of Maharashtra , while
affirming the above-reproduced decisions, the Supreme Court again
observed:-
“ 33. It can thus be seen that it is a settled position of law that
when there are several exemplars with reference to similar land, usually
the highest of the exemplars, which is a bona-fide transaction, will be
considered. The same was reiterated in the judgment of this Court in the
case of Mohammad Yusuf (supra). ”

(emphasis supplied)

36. Out of the available sale exemplars, the one with the highest
transaction value per sqm is Sale Deed No. 7016 dated 12.12.2005 at
Rs.14,233.2/- per sqm. This deed was executed in December 2005, which
was about 18 months prior to the Acquisition Notification in June 2007, and
pertains to land in the extended Lal Dora area of village Mundka . It was
registered vide registration no. 7016 in additional book no. 1, vol. no. 246 on
pages 31 to 50 on 12.12.2005.
37. The plea of a sale deed being “inflated” cannot be sustained on a mere
bald or vague allegation. This Court is of the opinion that in the absence of
any evidence suggesting that the transactions were collusive, fraudulent, or
created to defeat the acquisition process, they cannot be brushed aside
lightly. It is particularly significant that the three other sale deeds also reflect

13
2025 SCC OnLine SC 1519
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market value which is much higher than the value determined by both the
LAC and the Reference Court. This consistency across multiple transactions
reinforces their reliability and demonstrates that the highest exemplar is not
a stray or suspicious outlier. Nothing has been placed on record to support
the contention that these were not bona fide transactions. Furthermore, a
comparative analysis reveals that while the 28 sale deeds relied upon by the
LAC reflect a wide variance in plot sizes, the area of the exemplar in
question, being 421.55 sq. metres, is larger than almost all of the plots
considered by the LAC. It is also significant to note that the exemplar in
question pre-dates all the 28 sale deeds that were relied upon by the LAC in
the Award, several of which date as late as 2007.
38. Bearing in mind the position of law noted hereinabove, this Court is
of the considered opinion that the highest exemplar must be considered to
arrive at the fair market value. It is only fair that when land is being
compulsorily acquired, the landowner is granted the benefit of the highest
value fetched by similar land in a bona fide transaction.
39. Insofar as landowners‟ reliance on the decision in Jayant Juneja
( supra ) is concerned, it is deemed apposite to extract the relevant order
passed by Supreme Court, which reads as under:-
“ Impleadment allowed.
An area admeasuring 2175 sq. meters in Delhi was acquired for
Planned Development (specifically for road). An area admeasuring 873
sq. meters out of total area of 2175 sq. meters are urgently required for
Delhi Metro Rail Corporation (DMRC). Vide Order dated 24th
September, 2007 this Court directed the interim order passed by the High
Court to continue.
The present Interlocutory Application seeks modification of our
th
Order dated 24 September, 2007 to the extent of the land admeasuring
873 sq. meters to be released from the subject matter of the pending
Special Leave Petition for Delhi Metro Rail Corporation. Parties
appearing before us, namely, the claimants and Delhi Metro Rail
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Corporation agree for release of 873 sq. meters of land on the basis that
the claimants would be receiving compensation for the said land
admeasuring 873 sq. meters at the market rate prevailing as on today’s
date. Delhi Development Authority and respondent Nos. 2 and 3 have no
objection subject to rider that this arrangement would be without
prejudice to their rights and contentions in the pending Special Leave
Petition.
th
Accordingly, our Order dated 24 September, 2007 stands
modified.
Interlocutory Application are disposed of accordingly. ”

40. A plain reading of the above decision shows that the order was passed
in the context of an area admeasuring 873 sq. metres that was urgently
required by the DMRC, and that both the parties to the transaction had
„agreed‟ for the release of this portion on the market rates prevailing on
08.12.2008 i.e., much after the Acquisition Notification. It was in the nature
of a „consent decree‟ and the said decision is, therefore, distinguishable from
the present facts.
41. Insofar as the issue of „Belting‟ raised on behalf of the DMRC is
concerned, it is also pointed out that neither was such a contention raised
before the Reference Court, nor any documentary evidence led in this regard
to establish any lack of homogeneity or varying potential within the acquired
land. It is further highlighted that the DMRC has not separately challenged
the impugned judgments by way of appeal, despite being arrayed as a
respondent before the Reference Court. Furthermore, this Court is guided by
the decision of the Supreme Court in Baljeet Singh ( supra ), which
specifically dealt with village Mundka . In that case, the Supreme Court
specifically noted the landowners‟ submission that the belting system
applied by the High Court for village Mundka was not appropriate as the
potential of the land was more or less the same, and ultimately set aside the
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said system after deeming it inappropriate in the facts and circumstances in
light of the principles laid down in Trishala Jain ( supra ). Since the present
matter is likewise concerned with village Mundka , this Court finds that the
application of a belting system is not warranted and the fair market value
must be applied uniformly.
42. The percentage of deduction towards development cost is primarily
determined by the extent of development already existing in the location and
the condition of the acquired land on the date of the Section 4 Notification.
While substantial deductions are typically applied to undeveloped tracts, the
Supreme Court has observed time and again that in cases involving semi-
developed areas, a more moderate deduction may be imposed. A gainful
reference may be made to Jag Mahender & Anr. Vs. State of Haryana &
14
Ors. , which reaffirmed the principles distilled from a catena of decisions as
15
discussed in Kapil Mehra Vs. Union of India , the relevant portion whereof
is reproduced below:-
“ 33. In Haryana State Agricultural Market Board v. Krishan
Kumar, it was held as under : (SCC p. 299, para 10)
‘10. It is now well settled that if the value of small
developed plots should be the basis, appropriate deductions will
have to be made therefrom towards the area to be used for roads,
drains and common facilities like park, open space, etc. Thereafter,
further deduction will have to be made towards the cost of
development, that is, the cost of levelling the land, cost of laying
roads and drains, and the cost of drawing electrical, water and
sewer lines.’

35. Reiterating the rule of one-third deduction towards

development, in Sabhia Mohammed Yusuf Abdul Hamid Mulla v. Land
Acquisition officer, this Court in para 19 held as under : (SCC pp. 606-07)
‘19. In fixing the market value of the acquired land, which
is undeveloped or underdeveloped, the courts have generally

14
(2024) 16 SCC 700
15
(2015) 2 SCC 262
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approved deduction of 1/3rd of the market value towards
development cost except when no development is required to be
made for implementation of the public purpose for which land is
acquired. In Kasturi v. State of Haryana, the Court held : (SCC pp.
359-60, para 7)
‘7. ... It is well settled that in respect of agricultural
land or undeveloped land which has potential value for
housing or commercial purposes, normally 1/3rd amount of
compensation has to be deducted out of the amount of
compensation payable on the acquired land subject to
certain variations depending on its nature, location, extent
of expenditure involved for development and the area
required for road and other civic amenities to develop the
land so as to make the plots for residential or commercial
purposes. A land may be plain or uneven, the soil of the
land may be soft or hard bearing on the foundation for the
purpose of making construction; maybe the land is situated
in the midst of a developed area all around but that land
may have a hillock or may be low-lying or may be having
deep ditches. So the amount of expenses that may be
incurred in developing the area also varies. A claimant who
claims that his land is fully developed and nothing more is
required to be done for developmental purposes, must show
on the basis of evidence that it is such a land and it is so
located. In the absence of such evidence, merely saying that
the area adjoining his land is a developed area, is not
enough, particularly when the extent of the acquired land is
large and even if a small portion of the land is abutting the
main road in the developed area, does not give the land the
character or a developed area. In 84 acres of land acquired
even if one portion on one side abuts the main road, the
remaining large area where planned development is
required, needs laying of internal roads, drainage, sewer,
water, electricity lines, providing civic amenities, etc.
However, in cases of some land where there are certain
advantages by virtue of the developed area around, it may
help in reducing the percentage of cut to be applied, as the
developmental charges required may be less on that
account. There may be various factual factors which may
have to be taken into consideration while applying the cut
in payment of compensation towards developmental
charges, maybe in some cases it is more than 1/3rd and in
some cases less than 1/3rd. It must be remembered that
there is difference between a developed area and an area
having potential value, which is yet to be developed. The
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fact that an area is developed or adjacent to a developed
area will not ipso facto make every land situated in the
area also developed to be valued as a building site or plot,
particularly when vast tracts are acquired, as in this case,
for development purpose.’
The rule of 1/3rd deduction was reiterated in Tejumal
Bhojwani v. State of U.P., V. Hanumantha Reddy v. Land
Acquisition Officer, H.P. Housing Board v. Bharat S. Negi and
Kiran Tandon v. Allahabad Development Authority.’
36. While determining the market value of the acquired land,
normally one-third deduction i.e. 33 1/3% towards development charges is
allowed. One-third deduction towards development was allowed in
Tehsildar (LA) v. A. Mangala Gowri, Gulzara Singh v. State of Punjab,
Santosh Kumari v. State of Haryana, Revenue Divl. Officer and LAO v. Sk.
Azam Saheba, A.P. Housing Board v. K. Manohar Reddy, Ashrafi v. State
of Haryana and Kashmir Singh v. State of Haryana.
37. Depending on the nature and location of the acquired land,
extent of land required to be set apart and expenses involved for
development, 30% to 50% deduction towards development was allowed in
Haryana State Agricultural Market Board v. Krishan Kumar, Director,
Land Acquisition v. Malla Atchinaidu, Mummidi Apparao v. Nagarjuna
Fertilizers & Chemicals Ltd. and Lal Chand v. Union of India.
38. In few other cases, deduction of more than 50% was upheld. In
the facts and circumstances of the case in Basavva v. Land Acquisition
Officer, this Court upheld the deduction of 65%. In Kanta Devi v. State of
Haryana, deduction of 60% towards development charges was held to be
legal. This Court in Subh Ram v. State of Haryana, held that deduction of
67% amount was not improper. Similarly, in Chandrashekar v. Land
Acquisition Officer, deduction of 70% was upheld.
39. We have referred to various decisions of this Court on
deduction towards development to stress upon the point that deduction
towards development depends upon the nature and location of the
acquired land. The deduction includes components of land required to be
set apart under the building rules for roads, sewage, electricity, parks and
other common facilities and also deduction towards development charges
like laying of roads, construction of sewerage. ”

43. In the present facts, both the LAC and the Reference Court have
recorded concurrent findings of fact noting the presence of various
structures on the acquired land. While these structures were neglected for
the purpose of individual valuation due to them being unauthorized, their
existence indicates that the land already possesses semi-developed
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characteristics.
44. It is also pertinent to note that the sale exemplar of December 2005
being relied upon to calculate the fair market value, predates the Acquisition
Notification of June 2007 by approximately 18 months. Ordinarily, the
landowners would be entitled to an annual appreciation to arrive at the fair
market value as on the date of the Acquisition Notification. However,
guided by the approach adopted by the Supreme Court in Baljeet Singh
( supra ), this potential appreciation may be balanced against „a portion‟ of
the necessary deductions that ought to be made against development costs.
rd
45. Usually, the Courts have adopted a deduction of 1/3 of the market
value towards development cost; however, considering the semi-developed
nature of the land and the fact that the 18-month appreciation effectively
offsets a significant portion of the development cost, this Court finds that a
25% deduction towards development cost is fair and equitable in the facts of
the present matter.
Fair Market Value
46. Applying a 25% deduction to the rate of Rs.14,233.2/- per sqm
reflected in the concerned exemplar, the fair market value for the extended
Lal Dora land on the date of the Acquisition Notification is determined to be
Rs.10,674.9/- per sqm.
CONCLUSION
47. In the result, this Court passes the following order:-
i. The impugned judgments passed by the Reference Court are
quashed and set aside;
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ii. The compensation granted to the landowners qua the extended
Lal Dora land is enhanced from Rs.5,175/- per sqm to
Rs.10,674.9/- per sqm;
iii. The landowners would be entitled to solatium and interest as
16
per statute and as clarified in Sunder Vs. Union of India .
iv. Wherever the Award amounts are deposited with the Registry,
the same shall be released to the landowners.
48. The present appeals, along with pending applications, if any, are
disposed of in the above terms.


MANOJ KUMAR OHRI
(JUDGE)
MAY 04, 2026
nb

16
(2001) 7 SCC 211
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