Barla Ram Reddy vs. The State Of Telangana

REPORTABLE

IN THE SUPREME COURT OF INDIA
2025 INSC 531
CIVIL APPELLATE JURISDICTION

Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) Nos. 3150 - 3151 / 2023)
Barla Ram Reddy ….Appellant(s)
versus
The State of Telangana ….Respondent(s)

With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. 18573 / 2023)
The State of Telangana ….Appellant(s)
versus
Barla Ram Reddy ….Respondent(s)

With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. 16181 / 2023)
Singanamala Ramesh Babu ….Appellant(s)
versus
State of Telangana ….Respondent(s)

Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2025.04.22
15:08:27 IST
Reason:


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With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. 18563 / 2023)
The State of Telangana ….Appellant(s)
versus
Barla Ram Reddy ….Respondent(s)

With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 44409 / 2023)
Special Deputy Collector (Land Acquisition) and another ….Appellant(s)
versus
T. Chittaiah and another ….Respondent(s)

with
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 44410 / 2023)
Special Deputy Collector (Land Acquisition) ….Appellant(s)
versus
T. V. Janardhana Rao ….Respondent(s)

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with
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 46868 / 2023)
Special Deputy Collector (Land Acquisition) ….Appellant(s)
versus
T. Chittaiah ….Respondent(s)

with
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 49529 / 2023)
The Land Acquisition Officer and Special Deputy Collector ….Appellant(s)
versus
Singanamala Ramesh Babu ….Respondent(s)

With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 21067 / 2024)
T. Chittaiah ….Appellant(s)
versus
Special Deputy Collector, LA. Unit-VI ….Respondent(s)

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With
Civil Appeal No. __________ / 2025
(Arising out of Special Leave Petition (C) No. __________ / 2025)
(Arising out of Diary No. 21070 / 2024)
T. V. Janardhana Rao ….Appellant(s)
versus
Special Deputy Collector, LA. Unit-VI ….Respondent(s)
JUDGEMENT
SURYA KANT, J.
Delay condoned. Leave granted.
2. The dispute which falls for consideration in these civil appeals pertains to
the assessment of market value of the acquired land situated in Narsingi
and Poppalguda villages, Rajendranagar Mandal, Ranga Reddy District for
the purpose of awarding compensation under the Land Acquisition Act,
1894 ( 1894 Act ). The High Court for the State of Telangana ( High Court ),
vide the impugned judgements, has enhanced the rate of compensation
from the range of INR 9,45,000 and 28,00,000 per acre to INR 1,35,00,000
per acre. The instant cases are cross-appeals preferred by:
i. the landowners;

ii. the State of Telangana; and

iii. the Hyderabad Metropolitan Development Authority ( HMDA ).
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3. While the landowners are seeking further enhancement, the State and
the HMDA are aggrieved by the enhancement granted by the High Court.
A. F ACTS
4. Although these appeals emanate from a common issue, the disputes flow
from three distinct acquisitions made for the common purpose of
construction of Outer Ring Road ( ORR ) in and around Hyderabad,
specifically in the Narsingi area. The details of the acquisitions are briefly
explained hereinafter.
4.1. Three acquisitions under the 1894 Act were initiated by the State
of Telangana for adjoining parcels of land.
4.1.1. Notification dated 13.12.2005 was issued under Section
4 of the 1894 Act for acquisition of a total of 31 acres,
33 guntas of land in Narsingi village, followed by
declaration under Section 6 issued on 29.07.2006 for a
total land of 23 acres, 33 guntas. ( First Acquisition )
4.1.2. Notification dated 13.12.2005 was issued under Section
4 of the 1894 Act for acquisition of 48 acres, 37 guntas
of land in Poppalguda village. Subsequently,
declaration under Section 6 was issued on 14.08.2006
for the land measuring 44 acres, 4 guntas. ( Second
Acquisition )
4.1.3. Notification dated 04.04.2006 was issued under Section
4 of the 1894 Act for acquiring 30 acres of land in
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Narsingi and Poppalguda village. The State also invoked
its powers under Section 17 (1) & (2) read with Section
17 (4) of the 1894 Act for urgent acquisition, and soon
thereafter, published the declaration under Section 6
on 06.04.2006. ( Third Acquisition )
4.2. Each acquisition led to separate proceedings for determining the
compensation payable to the expropriated landowners.
4.2.1. In the First Acquisition, the Special Deputy Collector,
Land Acquisition ( LAC ) passed an Award under Section
11 of the 1894 Act on 03.10.2007, setting the
compensation at INR 7,56,000 per acre. However, after
reference was made under Section 18, the XIII
Additional District and Sessions Judge, Ranga Reddy
District ( Reference Court ), vide order dated
27.12.2018, enhanced the rate of compensation to INR
28,00,000 per acre.
4.2.2. In the Second Acquisition, the LAC passed an Award
dated 03.10.2007, granting compensation at the rate of
INR 5,45,000 per acre, which was enhanced by the
Reference Court, vide order dated 17.12.2018, to INR
18,75,000 per acre.
4.2.3. In the Third Acquisition, the LAC, vide Award dated
25.05.2006, granted compensation at the rate of INR
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7,56,000 per acre, which was enhanced by the
Reference Court, vide order dated 17.12.2018, to INR
9,45,000 per acre.
4.3. During the pendency of the reference proceedings, the
landowners, under protest, accepted payment of the
compensation awarded by the LAC.
4.4. All three awards of the Reference Court were then the subject
matter of appeals and cross-objections before the High Court.
4.5. The High Court decided the appeals and cross objections in the
First and Third Acquisitions through a common judgement dated
28.09.2022 ( Lead Impugned Judgement ), while the appeal and
cross appeal in the Second Acquisition were decided by two
separate judgements dated 28.03.2023, which were passed in
terms of the Lead Impugned Judgement. As such, the High Court
granted uniform compensation at the rate of INR 1,35,00,000 per
acre in all three acquisitions, irrespective of the date on which the
notification under Section 4 was issued. While making a
substantial enhancement, the High Court has held that the
Reference Court incorrectly disregarded the sale exemplars of
considerably higher rate of sale consideration paid for comparable
lands. The High Court based its computation of payable
compensation on the sale of plots under the ‘Golden Mile’ project,
developed by the erstwhile Hyderabad Urban Development
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Authority ( HUDA ) ( which has now merged into HMDA ), wherein
plots of approximately 3 to 6 acres in a 100-acre development
scheme were sold through auction. The plots were promoted as
being ideal for the development of large hotels, hospitals, offices
for financial institutions and IT companies, and high-rise
apartments. The brochure issued by HUDA called the
development an “ absolute golden mine ”. The High Court relied on
the upset price of the auction – INR 4,50,00,000 per acre – as the
base rate. The High Court then applied a cumulative deduction of
70% to account for the smaller size of plots, the development cost,
the development waiting period, and de-escalation. The High
Court, thus, arrived at a market rate of INR 1,35,00,000 per acre.
4.6. The High Court, thereafter, through a subsequent order dated
25.11.2022 clarified that the landowners are entitled to solatium
at the rate of 30% on the enhanced amount, as well as interest at
the rate of 12% per annum on the enhanced amount of
compensation as well as the solatium.

4.7. As noticed earlier, while the landowners are seeking further
enhancement of compensation, primarily contending that the
deduction applied by the High Court was on the higher side, the
State/HMDA is questioning the enhancement as being
excessively high and unrealistic.

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B. C ONTENTIONS OF THE P ARTIES
5. In the course of their respective submissions, learned Senior
Counsel/Counsel for the parties have taken us through the voluminous
record, which has been minutely perused. The record reveals that
various sale instances were exhibited before the Reference Court. These
exhibited sale instances, for ready reference, can be categorised into
three sets:
A. Golden Mile project sales;
B. Ex.A6 to Ex.A9 in LAOP No. 632/2012 ( Set B Exhibits ); and
C. Ex.A1 to Ex.A4 & Ex.A6 to Ex.A8 in LAOP No. 56/2014 ( Set C
Exhibits ).
6. Mr. Neeraj Kishan Kaul and Mr. E. Ajay Reddy, learned Senior Counsel
and Ms. Tatini Basu, learned Counsel on behalf of the landowners,
contended that the market value of the acquired lands was greater than
that assessed by the High Court, and the compensation, therefore,
deserves to be suitably enhanced. They made the following submissions:
6.1. The auction sale under the Golden Mile project was representative
of the true market value of the acquired lands. The entire area of
Narsingi, Poppalguda, and Kokapet villages was rapidly
developing, with big multinational companies and institutions
coming up in that area. In some respects, such as distance to
airport and Express-Highway, the acquired lands were better
situated than the lands in the Golden Mile project. The acquired
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lands, thus, had very high potentiality. Accordingly, instead of the
upset price of the auction, the average of actual sale price of the
plots ought to have been taken by the High Court as the
benchmark. Relying on a decision of this Court in Karnataka
1
Housing Board v. LAO , it was urged that there is no bar on
using auction sale prices.
6.2. The Set B Exhibits could also be relied upon, since the land in
these sale instances were locationally proximate to the acquired
land. Even though the transfers took place after the Section 4
notification was issued, there was no bar on such sale exemplars
to be considered. In this regard, reliance was placed on this
Court’s decision in Mehta Ravindrarai Ajitrai v. State of
2
Gujarat . The High Court also accepted the relevance of these
sale instances, but it failed to take them into consideration at the
time of assessing computation.
6.3. The Set C Exhibits were also reliable exemplars, as the land is
proximate in location and potentiality to the acquired lands.
However, since these sale instances were executed more than a
year prior to the Section 4 notification in a rapidly developing
area, a cumulative escalation of 30% over these exemplars should
be granted.

1
(2011) 2 SCC 246.
2
(1989) 4 SCC 250.
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6.4. In the Award, a sale instance for Survey No. 204/E in Narsingi
village at the rate of over INR 1,41,00,000 per acre has been
recorded. This particular sale instance was wrongly discarded by
the LAC on the ground of being at some distance from the
acquired lands.
6.5. The deductions made for development, size of the plots, waiting
period, and de-escalation were on the higher side. The purchasers
of the Golden Mile plots would themselves have had to set aside
part of the plot for set-back and similar developmental
requirements. The acquired land and the Golden Mile project
were, thus, comparable in development. As per the principles laid
3
down in Avinash Dhavaji Naik v. State of Maharashtra , since
a part of the acquired land was already abutting the Express-
Highway, there was no need for additional deduction for
development.
6.6. Even though the Golden Mile auction was notified after the
subject acquisition stood initiated, the upset price was set before
the initiation of the acquisition. There was, thus, no need for de-
escalation on the upset price.
6.7. The High Court has legally erred in granting interest at the rate
of 12% per annum. As per Section 34 of the 1894 Act, interest

3
(2009) 11 SCC 171.
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ought to be granted at 9% per annum for the first year after taking
of possession and 15% per annum thereafter.
7. Ms. Aishwarya Bhati, Learned Additional Solicitor General of India,
representing the State of Telangana and the HMDA, argued that the
enhancement of the compensation by the High Court was totally
erroneous and that the market value of the acquired land was liable to
be reduced. She made the following submissions to substantiate her
position:
7.1. The auction sale of plots in the Golden Mile project could not be
relied upon to compute the market value of the acquired lands.
The existence of and proximity to the ORR was the primary selling
factor in the Golden Mile auction, and without the ORR, the land
prices would not be so high. Reliance was placed on Bhule Ram
4
v. Union of India to urge that the use for which land has been
acquired is immaterial when considering the potentiality of the
land.
7.2. The Golden Mile project auction was notified and held only after
the acquisition in these cases had commenced. There was
substantial difference in the development status of the Golden
Mile project and the acquired lands: features like external roads,
water supply lines, electricity lines, etc. would have been provided
at the Golden Mile project within six months. The auction sale

4
(2014) 11 SCC 307.
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under this project could, therefore, not indicate the market value
of the acquired land at the time of the acquisition.
7.3. The best sale exemplar that can be relied upon is the sale deed
through which one of the landowners himself purchased a parcel
of the acquired land. This was also the approach taken by the
LAC and the Reference Court.
7.4. Interest ought not to be granted on the enhanced amount, since
the compensation under the original Award was already paid to
the landowners. The high rate of interest on the enhanced
amount would unreasonably burden the state exchequer.
C. I SSUES
8. Having given our thoughtful consideration to the rival submissions and
having gone through the material on record, we find that the following
issues arise for consideration of this Court:
I. Whether the High Court was justified to rely on auction sale
instances of the Golden Mile project for the purpose of assessing
just and fair market value of the acquired land?

II. (a) If Issue I is answered in the affirmative, whether the
landowners are entitled to further enhancement, and to what
extent?
(b) If Issue I is answered in the negative, what other evidence
on record ought to be relied on to assess the market value of the
acquired land?
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III. What would be the just and fair market value of the acquired land?
IV. Whether the High Court has correctly granted statutory benefits like
solatium and interest on the enhanced amount in accordance with
provisions of the 1894 Act?
D. A NALYSIS

9. It may be seen at the outset that these appeals arise from three different
acquisitions, which were initiated through three separate preliminary
notifications issued under Section 4 of the 1894 Act. The lands acquired
through these notifications are adjoining each other and have been
acquired to construct successive sections of the ORR. The Section 4
notifications were also issued within four months. This time gap or the
distance between the land parcels is not so large that it would have any
significant impact on the value of the land under different acquisition
processes. We are, thus, of the considered opinion that the question of
quantum of compensation in all the instant appeals deserves to be
considered together.
D.1 Issue I: Reliability of the Golden Mile Sale Instances

10. The High Court has chosen to rely on exemplars from the auction sale of
land plots in the Golden Mile project to compute market value of the
acquired lands. The landowners have also sought to rely on this auction
sale while seeking further enhancement.

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D.1.1 General Principles
11. Before endeavouring to determine whether this sale exemplar would be
the right fit, we must recapitulate the general principles which would
steer this adjudication.
12. It is a settled position that computation of compensation for acquisition
must be guided by the “market value of the land as on the date of
publication of the Section 4 notification”. This principle is mandated by
Section 23(1) of the 1894 Act. This court has, time and again, interpreted
‘market value’ to represent ‘the price that a willing buyer would pay to a
5
willing seller in light of the land’s condition and potentiality’.
13. Of course, in ordinary circumstances, the best way to identify this price
is by considering instances of sale of similar or comparable lands. Such
exemplars can serve as a foundation for determining compensation, so
long as they fulfil the following requirements:
i. The sale exemplar depicts a genuine, open-market transaction;
ii. The land covered by the sale deed is in the vicinity of the acquired
land;

iii. The land covered by the sale deed is similar in nature to the acquired
land; and

5
State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela, (1968) 3 SCR 692; Kapil Mehra v.
Union of India, (2015) 2 SCC 262.
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iv. The sale was executed at a time proximate to the date of the
6
notification issued under Section 4 of the 1894 Act.
14. Any sale exemplar which is presented to the Court ought to be considered
on the touchstone of these requirements, so that the most representative
sale instance can be determined.

15. Sale instances, however, cannot guide us to the market value of the land
with exactitude. In some cases, direct examples of sale of comparable
land may not be available, while in other cases, there may be relevant
distinguishing features between the sale exemplar and the acquired land.
In such cases, Courts adopt the process of guesstimation to apply the
7
evidence and arrive at an equitable price for the acquired land.
16. In this legal backdrop, let us consider the correctness of using the Golden
Mile auction as the foundation for determining market value.
D.1.2 Analysis
17. The Golden Mile project was promoted as directly abutting the ORR. The
brochure for the Golden Mile project reveals that external trunk
infrastructure like roads, water supply, and electricity would be provided
by HUDA. Through an auction process, the plots were to be sold as
unencumbered parcels of land. The auction upset price was set by HUDA
at INR 4,50,00,000 per acre, and the plots were finally purchased at rates
ranging from INR 6,10,00,000 to INR 14,45,00,000 per acre. There is,

6
Shaji Kuriakose v. Indian Oil Corpn. Ltd., (2001) 7 SCC 650.
7
New Okhla Industrial Development Authority v. Harnand Singh, 2024 SCC OnLine SC 1691.
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admittedly, no averment which would indicate that the auction sale was
not bona fide .
18. To accept this sale exemplar as reliable for the purpose of calculation of
market value, its comparability with the acquired lands is crucial.
19. What ought to be noticed at the first instance is that the Golden Mile
plots are not of a similar nature or development-status as the acquired
lands. The project was being developed on land already owned by the
State, and the plots were sold on unencumbered, free-hold basis.
Further, the plots are connected to the road, with water and electricity
connections, disclosing the development being done to increase their
potentiality. These qualities make the Golden Mile plots especially potent
for large commercial and residential projects.
20. This is in stark contrast to the acquired lands. Although they had the
potentiality for an urban project being developed, the land was actually
lying barren without any developmental infrastructure. The argument
that the potentiality of the entire area is high does nothing to dispel the
substantial difference between the empty, undeveloped acquired land
and the construction-ready plots sold under the Golden Mile project.
21. Another factor that must be kept in mind while considering
comparability of potentiality is the capacity of the landowner to utilise
the acquired land. It is noteworthy that the plots in the Golden Mile
project were in the form of chunks of land. Most of the acquired lands
were, on the other hand, shaped as relatively narrow strips. Even though
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they were abutting a road, such a physical characteristic of the land
parcels would considerably reduce the capacity for them to be utilised.
This Court has previously recognised that land being in the form of a
8
strip accounts for a negative impact on its market value , and this
difference adds to the distinction between the acquired land and the
Golden Mile plots.
22. Apart from these distinctions in the qualities of the land, the details of
the sale exemplar, too, do not strike any confidence in our minds. This
is primarily because being an auction sale reduces the exemplar’s
reliability to indicate the true market value. An auction inevitably
motivates buyers to purchase at higher prices than the prevailing market
rate. The process incorporates extraneous factors, like competition, ego,
and speculation, into setting of sale price. This unreliability of auction
sale has been aptly acknowledged in some decisions of this Court, such
9
as in Raj Kumar v. Haryana State :
“ 16. … An argument was raised that the prices of lands
fetched in auction had been ignored on the basis that
prices fetched in auction-sales cannot form the basis. It
was submitted that there was no general rule that such
prices cannot be adopted. On considering the relevant
facts disclosed, it cannot be said that the High Court has
committed any error in discarding those auction-sales
while determining the compensation payable. The
element of competition in auction-sales does not
make them safeguides. …”
[Emphasis supplied]


8
Viluben Jhalejar Contractor v. State of Gujarat, (2005) 4 SCC 789.
9
(2007) 7 SCC 609.
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23. While the landowners have relied on the decision in Karnataka Housing
Board (supra) , this Court has expressly accepted the principle laid down
in Raj Kumar (supra) in that case and clarified that such auction
exemplars can only be used when no other comparable sale instances
are available.
24. The reliability takes a further dip when it is observed that the Golden
Mile auction took place after the notifications under Section 4 were
issued. The brochure announcing the project and inviting bids was
issued in July 2006, and the open auction took place in the same month,
on 20.07.2006.
25. As a rule of thumb, sale instances which take place after the initiation of
the acquisition are not reliable sources to compute land acquisition
compensation. This position arises from the tendency of land value in
the area to appreciate upon acquisition, expecting benefits from the
public purpose of the acquisition. For example, the acquisition of land
for development of commercial hubs, residential projects, and arterial
roads would inevitably shoot up the price of the other nearby land. As
such, post-Section 4 sale instances are bound to be skewed. The
Legislature has also recognised and provided for this trend. The ‘fifthly’
clause of Section 24 of the 1894 Act mandates that the price increase
due to purpose of the acquisition must be disregarded, which was also
applied by this Court in Bhule Ram (supra) .
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26. In the circumstances of the instant appeals, we find strength in the
submission of learned ASG that the acquisition for constructing ORR
could have had a drastic impact on the potentiality of adjoining lands.
The publication of the Section 4 notifications put important information
regarding the ORR and its benefit to the Golden Mile project in the public
domain. It is, thus, very likely that the auction price of the Golden Mile
plots saw a precipitous rise on account of the subject acquisitions, and
its purpose undoubtably had a lasting impact on the auction price of
these plots. This undeniable cause-and-effect relationship between the
acquisition and the subsequent auction taints these sale instances.
27. In this respect, the landowners have argued that there is no bar on taking
post-notification sale instances into consideration. We are, however, not
inclined to entertain this argument as a general principle, since there are
other, more reliable pre-Section 4 notification sale exemplars available to
be used. We find that the auction sale is also unreliable due to having
taken place after the acquisition.
28. At this stage, we may also deal with the matter of using the upset price
for the auction instead of the actual sale rates. While the High Court has
relied on the upset price of the auction, there is nothing on record to
indicate how the upset price was arrived at, what considerations were
taken into account while deciding it, and on what date the final decision
on the price was taken. It is not unreasonable to expect that market value
of the land is only a part of the consideration at the time of deciding the
upset price of the auction. HUDA would, likely, have also taken into
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account the expected increase in value of the land till the date of the
auction; the perceived value to the buyer of being part of a larger project;
and the ORR passing right next to the project. As such, HUDA’s upset
price for the auction is also unreliable for the purpose of determining
market value.
29. Considering the above stated factors and the settled position of law, the
auction sale of plots in a developed area on a date after the Section 4
notification ought to be disregarded at the outset. As such, we hold that
the High Court erred in founding its determination on the Golden Mile
project rates.
D.2 Issue II: Identifying the Most Appropriate Sale Instances
30. Now that we have disregarded the sale exemplars from the Golden Mile
auction, let us consider which of the other sale instances can be used to
compute the market value of the acquired lands.
D.2.1 Set B Exhibits
31. The Set B Exhibits comprise four sale deeds, which were executed
between 22.08.2007 and 12.09.2007. A total of 26 acres of land in Survey
Nos. 217-225 of Narsingi village and Survey Nos. 263-270 of Poppalguda
village was purchased for a residential project, at a rate of INR
12,50,00,000 per acre.
32. It is apparent from a bare perusal that these sale deeds were executed
over sixteen months after the Section 4 notifications were issued. Such
a time gap should prompt any court to disregard the sale deeds right at
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the outset. This is more so because these lands are a direct beneficiary
of the ORR, and the deeds were executed even after the declarations
under Section 6 of the 1894 Act were published. This set of sale exhibits
can in no way be reliable a basis to determine the market value of the
acquired lands. Therefore, just for the temporal incompatibility, these
exhibits ought to be discarded altogether.
33. Having held so, we now proceed to address the landowners’ submissions
regarding the comparability of the exemplar and acquired lands. Merely
being at a short distance of 270 metres from the acquired land does not
make the exemplar land comparable. It emerges from the record that the
land in these exhibits is on the east side of the Gachibowli-Shamshabad
Express Highway, i.e., towards the airport and Hyderabad city. On the
other hand, the acquired lands are to the west of the said highway.
Notwithstanding the short distance between the lands, in metropolitan
and metropolitan-adjacent areas, such locational differences have a
substantial impact on land value. Being on the city side of the highway,
the exemplar lands are bound to be of a higher value, adding to the
unreliability of these exhibits.
D.2.2 Set C Exhibits
34. The Set C Exhibits comprise seven sale deeds, which were executed
between 11.02.2004 and 04.02.2005. Parcels of land in Survey Nos. 187-
202 in Narsingi village were purchased by M/s Jayabheri Properties Pvt.
Ltd., at rates ranging from INR 20,00,000 to 31,00,000 per acre.
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35. These seven sale deeds can be presented through the following table:

36. The lands sold in these exhibits are adjoining the acquired lands. In fact,
parts of these Survey Nos. were also acquired through the same Section
4 notifications. Unlike the Set B Exhibits, these lands are on the same
side of the Express Highway. Most importantly, these sale deeds are the
only exhibited sale instances which took place prior to the publication of
the Section 4 notifications, with a time gap of not more than 26 months.
Keeping in view the above considerations, we are of the opinion that these
sale exhibits would be the only reliable foundation to determine the
market value of the acquired lands.
37. Before dealing with the rest of the sale deeds, it is clear that Ex.A6 depicts
a substantially lower sale price for lands at effectively the same time as
Ex.A1 and Ex.A2. It, therefore, follows that Ex.A6 must have been a
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distress sale, motivated by some extraneous factors, and it is, thus, liable
to be discarded.
38. This Court has, on various occasions, held that among multiple reliable
sale instances, the exemplar which depicts the highest market value
ought to be used. The exception to this general rule is that an average of
10
the rates can be taken when they are within a narrow margin.
39. In the present appeals, the six remaining sale exemplars depict rates
within the range of INR 30,00,000 - 31,00,000 per acre. This may
preliminarily appear to be narrow enough to invoke the exception to the
‘highest sale exemplar’ rule. However, this perspective fails when we take
into account the details of these sale instances. Ex.A3, Ex.A4, Ex.A7, and
Ex.A8, which are at the lower end of the range, were executed a
considerable amount of time after Ex.A1 and Ex.A2, which are at the
high end of the range. To counter this anomaly and after accounting for
rise in value due to efflux of time, Ex.A1 and Ex.A2 depict a substantially
higher value compared to the other exhibits. We are, accordingly,
satisfied that these two instances should be the foundation for
computation of market value of the acquired lands.
D.2.3 Non-Exhibited Sale Instances
40. Before we proceed to compute the true market value, we must also
consider the submission of Ms. Basu that there is one sale instance of

10
Kapil Mehra (supra) [18-20]; Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432;
Himmat Singh v. State of M.P., (2013) 16 SCC 392.
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2003, wherein comparable land was sold at a rate of over INR
1,41,00,000 per acre. She refers to Document No. 2913/2003, which
finds mention in the Award passed by the LAC. The exemplar was
disregarded by the LAC due to its marginal distance to the acquired
lands. Importantly, this sale deed was not exhibited before the Reference
Court. Ordinarily, without a sale instance being produced and proven in
evidence before the Reference Court, the Court ought not to rely on such
averred sale exemplars.
41. However, the State has, through an interlocutory application, sought to
place Document No. 2913/2003 on record for the first time before this
Court. The document is only a registered agreement of sale-cum-General
Power of Attorney dated 30.04.2003, depicting a sale of lands in Survey
Nos. 204/E and 203/E at a rate of INR 3,75,000 per acre. The process
of clearing any doubt regarding this sale instance has, thus, revealed a
factual error in the Award. As such, it would not be safe or prudent to
rely upon this purported sale instance when there are already other
exhibited sale exemplars of a higher rate on record.
D.3 Issue III: Computing the Market Value
42. As has already been held, the market value of the acquired lands at the
time of the acquisition would be based on the sale instances in Ex.A1
and Ex.A2. It has not missed our attention that these sale deeds were
executed in early 2004, almost two years before the publication of the
Section 4 notifications. Due to passage of time, the value of the land
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would have increased during this period. So, we would also need to
escalate the rates in the exemplars to meet the rise in prices over time.
The escalation, of course, cannot be decided with exactitude, and some
11
level of guesstimation has to be incorporated within our reasoning.
43. Ordinarily, this Court has applied an escalation of 10-12% per year to
12
account for the time gap. At this stage, we must take note of the
submission on behalf of the landowners that there was rapid
development in the area during this period. Concomitantly, there must
have also been a steep rise in the price of land. We find force in this
argument of the learned Counsel. The area in acquisition is close to the
municipal limits of Hyderabad city and witnessed setting up offices of
major multinational IT and financial sector organisations, even prior to
the acquisition. The acquired lands are also admittedly close to the
Hyderabad Airport. As such, even if the land may not be within the
municipal limits of Hyderabad city, the area must be treated as an
extension of the metropolitan area. It follows, then, that the escalation
for each year must also be higher. The concept of higher escalation in

metropolitan areas was also accepted by this Court in ONGC Ltd. v.
13
Rameshbhai Jivanbhai Patel . Considering all circumstances, we are
of the opinion that a compounding escalation at the rate of 20% for each

11
New Okhla Industrial Development Authority v. Harnand Singh (supra).
12
Himmat Singh v. State of M.P., (2014) 14 SCC 466; Ashok Kumar v. State of Haryana,
(2015) 15 SCC 200.
13
(2008) 14 SCC 745 [13].
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year would be just and equitable to account for the rise in prices over
time.
44. Applying 20% compounding escalation for 2004 and 2005 to the base
rate of INR 31,00,000 per acre, we find that the market value of the
acquired lands at the time of the publication of the notification under
Section 4 of the 1894 Act would be INR 44,64,000 per acre.
45. After careful consideration of the evidence produced by the parties, we,
thus, find that the High Court has erred in increasing the compensation
in an exponential manner to the rate of INR 1,35,00,000 per acre. As
demonstrated by our analysis above, the market value of the subject land
could not be derived from auction sale instances of plots in a developed
area or from post-Section 4 notification sale instances. Instead, it ought
to be arrived at by considering appropriate pre-notification sale deeds
and applying proper price escalation.
D.4 Issue IV: Interest and Solatium
46. Both, the landowners as well as the State, have also challenged the
clarification by the High Court on the grant of interest and solatium on
the enhanced amount to the landowners.
47. Section 34 of the 1894 Act is fairly clear in its mandate that interest is
payable on the “ amount awarded ”. The provision stipulates that interest
is payable at the rate of 9% per annum, from the date of taking of
possession till deposit or payment of the amount. In case this period
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extends beyond one year, the interest payable for the additional period
is set at the rate of 15% per annum.
48. As such, the High Court has erred in stipulating that the interest is
payable on the enhanced amount at the rate of 12% per annum. The
High Court cannot deviate from the explicit mandate under Section 34,
and interest has to be awarded strictly in accordance with the statutory
provision. In this respect, we accept the plea taken on behalf of the
landowners for correcting the interest rate.
49. We find that the grounds raised by the State to challenge the interest on
the enhanced amount, i.e., the acceptance of the compensation in protest
and burden on the exchequer, are wholly untenable. The clear
stipulation under Section 34 is in consonance with equitable principles,
and it vests an indefeasible right in favour of a landowner. After market
value has been originally determined by the Reference Court,
enhancement in appeal is a reflection of the true value which ought to
have been granted at the threshold.
50. There can, thus, be no dispute that all statutory benefits, including
additional amount under Section 23(1A), additional consideration
(solatium) under Section 23(2), and interest on the entire compensation
under Section 34, would be due on the enhanced amount of
compensation.
51. We, thus, hold that the High Court has rightly granted interest and
solatium, as well as interest on the solatium, on the enhanced market
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value, but it has erred in granting interest at the rate of 12% per annum.
Interest ought to be granted at the rate of 9% per annum for the first year
after taking of possession, and 15% per annum thereafter, till deposit of
the amount, in accordance with Section 34 of the 1894 Act.
E. C ONCLUSION AND D IRECTIONS
52. For the reasons stated above:
i. The appeals filed by the landowners are dismissed, except to the
extent of grant of interest as clarified in Paragraph 51 above.
ii. The appeals filed by the State and HMDA are allowed in part.
iii. The following judgements and orders of the High Court are hereby
set aside:
a. Common Judgement dated 28.09.2022 in LAAS No. 73/2019;
LAAS No. 78/2020 with Cross Objections No. 14/2022; and LAAS
No. 58/2020 with Cross Objections No. 6/2022 (being Lead
Impugned Judgement);
b. Order dated 25.11.2022 in IA No. 1/2022 in LAAS No. 73/2019;
c. Judgement dated 28.03.2023 in LAAS No. 114/2022; and

d. Judgement dated 28.03.2023 in LAAS No. 7/2023.
iv. The market value of the acquired lands is reduced from the rate of
INR 1,35,00,000 per acre granted by the High Court to the rate of
INR 44,64,000 per acre.
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v. In addition to the reduced market value, the landowners are held
entitled to additional amount at the rate of 12% per annum and
solatium at the rate of 30% as part of the compensation, as well as
interest on the entire compensation, at the rate of 9% per annum,
for the first year after taking over of possession, and 15% per
annum, for the period thereafter, till the amount is paid to the
landowners or deposited with the Court.
vi. The compensation amount, if not already paid, shall be paid to the
landowners, along with all statutory entitlements and interest,
within eight weeks.
53. All the matters stand disposed of in the aforementioned terms and
directions.

..............…….........J.
(SURYA KANT)


..............…….........J.
(UJJAL BHUYAN)

NEW DELHI;
APRIL 22, 2025

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