Highest Bona Fide Sale Exemplar Governs Land Valuation Subject to Size-Based Deduction and Escalation

The Appellants/Cross-objectors were owners of lands in village Borol, Deoni (K), and Sindhikamath, Latur, acquired for the Borol Storage Tank project via a Section 4 notification under the Land Acquisition Act, 1894, dated 19.08.2004.

Possession was taken on 12.11.2003.

The Special Land Acquisition Officer (SLAO) awarded compensation between Rs. 635 to Rs. 1,045 per Are.

The Land Reference Court enhanced this to Rs. 3,500 (Jirayat) and Rs. 5,250 (Bagayat) per Are, relying on a sale exemplar (Exhibit-37) with the lowest consideration.

The claimants challenged these awards, seeking enhancement based on a higher-value sale exemplar (Exhibit-36) and compensation for fruit-bearing trees and rental loss.

1. Whether the Reference Court erred in relying on the lowest-value sale exemplar (Exh-37) instead of the highest bona fide sale exemplar (Exh-36).

2. Whether a deduction for "small size" is mandatory when using a small-plot sale exemplar to value large acquired tracts.

3. Whether the claimants are entitled to cumulative escalation for the time gap between the sale exemplar and the notification.

4. Whether the claimants are entitled to rental compensation for the period between taking possession and the Section 4 notification.

The Court applied Section 51-A of the Land Acquisition Act, 1894, regarding the admissibility of certified copies of sale transactions.

It relied on Manohar v. State of Maharashtra (2025 INSC 900), which mandates considering the highest bona fide sale exemplar for market value.

Regarding small-plot deductions, it followed Mehrawal Khewaji Trust v. State of Punjab (AIR 2012 SC 2721), allowing a 20% deduction.

For price escalation, it applied principles from General Manager ONGC v. Rameshbhai Jivanbhai Patel (2008 14 SCC 745) and Kolkata Metropolitan Development Authority v. Gobinda Chandra Makal (2011 9 SCC 207), stipulating a 5-10% annual increase excluding the base year.

For rental compensation, it followed Shankarrao Bhagwantrao Patil v. State of Maharashtra (2022 15 SCC 657).

The Court found that the Reference Court erroneously discarded Exhibit-36 (29 Are sold at Rs. 7,758/Are) simply because it was a small plot.

Applying Mehrawal Khewaji, the High Court adopted Exhibit-36 but applied a 20% deduction for the size difference, reducing the rate to Rs. 6,206/Are.

To account for the 18-month gap between the exemplar and the notification, the Court granted a 5% escalation for the half-year (excluding the base year), totaling Rs. 6,516/Are for non-irrigated land.

For irrigated lands, the Court doubled the rate to Rs. 13,032/Are, noting the presence of wells and borewells in 7/12 extracts.

Regarding trees, the Court accepted the expert's valuation report under Pandhari v. State of Maharashtra, noting that lack of notice to the State during inspection does not invalidate the report, but applied a 40% deduction for production costs not accounted for by the valuer.

Finally, it corrected the interest award to comply with the statutory scheme: 9% for the first year and 15% thereafter.

(a) Non-irrigated land compensation is increased to Rs. 6,516/Are; (b) Irrigated land compensation is increased to Rs. 13,032/Are; (c) Claimants are entitled to 60% of the tree valuation report (Exh-38); (d) Rental compensation at 9% p.a. is granted for the period between possession (12.11.2003) and notification (19.08.2004).

The Acquiring Authority was directed to deposit the enhanced amount within six months.