A genuine sale of the acquired land prevails over distant, incomparable exemplars in determining market value.

The State of Haryana acquired 67.33 acres of land situated in Villages Bhiwani Lohar and Ninan, District Bhiwani, for construction of the Third Water Works. Notifications under Sections 4 and 6 of the Land Acquisition Act, 1894 (“1894 Act”) were issued on 05.02.2010 and 25.08.2010 respectively.

The Land Acquisition Collector, by award dated 06.06.2011, assessed the market value at ₹40,00,000 per acre.

On reference under Section 18, the Reference Court initially adjudicated the claims in 2015; the matter was thereafter remanded by the High Court on 24.11.2023. Upon reconsideration, the Reference Court, by award dated 25.09.2025, enhanced the market value to ₹78,84,400 per acre.

The landowners sought further enhancement, principally relying on sale deed Ex.P-1 dated 25.06.2007, which reflected approximately ₹4,20,51,000 per acre. The State challenged the enhancement and relied upon several sale deeds relating to the acquired villages, including Ex.R-15(36), concerning 21 kanal 18 marla of land forming part of the acquired land, at approximately ₹7,95,251 per acre.

The connected appeals included claims by both landowners and the State against the Reference Court’s award.

Whether the market value of the acquired land should be determined on the basis of the landowners’ relied-upon sale deed Ex.P-1, relating to land in Village Palwas, at approximately ₹4.20 crore per acre.

Whether the sale deeds produced by the State, particularly the sale deed relating to land forming part of the acquired property, could be relied upon in determining market value despite reflecting values lower than the Collector’s award.

Whether the Reference Court was justified in applying the residential circle rate applicable within municipal limits and adding 40% for potentiality.

What was the appropriate market value of the acquired land under Sections 23 and 25 of the 1894 Act.

The Court applied Section 54 of the 1894 Act governing appeals against awards of the Reference Court, together with Sections 23 and 25 concerning determination of compensation and the statutory floor below which compensation cannot be reduced from the Collector’s award.

Under the comparable-sales method, a sale exemplar must ordinarily be genuine, proximate in time, situated in the vicinity, comparable in nature and location, and of a reasonably comparable size; where relevant differences exist, the Court may make appropriate deductions or adjustments, as stated in Shaji Kuriakose v. Indian Oil Corporation Ltd., (2001) 7 SCC 650.

In Spl. Tehsildar, Land Acquisition, Visakhapatnam v. Smt. A. Mangala Gowri, 1991(4) SCC 218, the Supreme Court held that a genuine sale transaction concerning the self-same acquired land cannot be ignored in favour of a less reliable exemplar.

Under Lal Chand v. Union of India, 2009(15) SCC 769, sale deeds relied upon by the State cannot be rejected merely because they disclose a value lower than the Collector’s award; Section 25 prevents reduction of compensation below the Collector’s award but does not exclude such evidence from the determination of market value.

The Court also applied the principle that a sale deed must either be accepted as reliable evidence of prevailing market value or rejected as unreliable; an arbitrary addition to the disclosed sale consideration on the assumption of undervaluation is impermissible.

The Court rejected Ex.P-1 as the principal basis for valuation because it concerned Village Palwas rather than the acquired villages, related to urban land within municipal limits, involved a transaction between business entities, and included substantial road frontage that was not comparable with the predominantly large agricultural tract acquired in the present case.

By contrast, the State produced numerous sale deeds from Bhiwani Lohar and Ninan, including large-area transactions, and Ex.R-15(36) specifically concerned land forming part of the acquired property.

Although that sale occurred after the Section 4 notification, it was considered highly relevant because it involved a substantial parcel, was located in the acquired land, and disclosed a transaction value materially below the Reference Court’s assessment.

The Court further held that the land was outside municipal limits and agricultural in character; consequently, the residential circle rate applicable within municipal limits, together with the additional 40% enhancement for potentiality, could not be sustained.

Nevertheless, applying Section 25, the Court held that the market value could not be reduced below the Collector’s award of ₹40,00,000 per acre.

The surrounding commercial and residential development justified retaining that figure, even though the comparable sale deeds indicated substantially lower values.

The State’s appeals were allowed, while the landowners’ appeals and cross-objections were dismissed.

The market value determined by the Land Acquisition Collector at ₹40,00,000 per acre was restored and upheld, subject to the statutory benefits otherwise payable under the 1894 Act.

Any pending applications were also disposed of.