Market value may be sustained based on land potentiality and proximate acquisition valuations despite unsuitable sale exemplars.

The State of Haryana issued a notification under Section 4 of the Land Acquisition Act, 1894 (“1894 Act”) on 12 September 2008, followed by a declaration under Section 6 on 15 June 2009, for acquiring land in five villages for construction of a bypass road in Sirsa. The appellants’ land, measuring 1.1 acres, was situated in Village Bajekan, Tehsil and District Sirsa.

The Land Acquisition Collector, by award dated 29 June 2011, assessed the market value of the land at ₹35,00,000 per acre and separately awarded ₹1,97,330 for structures.

The landowners sought enhancement under Section 18 of the 1894 Act. By order dated 30 November 2013, the Reference Court enhanced the market value to ₹50,00,000 per acre.

Both sides appealed under Section 54 of the 1894 Act.

Whether the market value of the acquired land in Village Bajekan should be enhanced beyond ₹50,00,000 per acre on the basis of the sale deeds relied upon by the landowners?

Whether the Reference Court’s assessment of ₹50,00,000 per acre was excessive and ought to be reduced to the Collector’s valuation of ₹35,00,000 per acre or otherwise revised on the basis of the State’s sale exemplars?

Whether, in the absence of directly comparable sale evidence, the market value could be sustained by considering the land’s potentiality, location, and proximity to similarly acquired land?

The Court applied Sections 4, 6, 18 and 54 of the Land Acquisition Act, 1894: the market value is to be assessed with reference to the relevant notification, objections regarding compensation may be referred to the Reference Court, and the High Court may examine the award in appeal.

The Court considered the principle that comparable sale deeds are ordinarily the best evidence of market value, but their reliability depends on similarity of location, use, potentiality, size and other relevant characteristics.

It referred to Lal Chand v. Union of India, (2009) 15 SCC 769, particularly the principles concerning the statutory framework and appellate assessment of compensation under the 1894 Act.

It also relied on New Okhla Industrial Development Authority v. Harnand Singh (Deceased) through LRs, 2024 SCC OnLine SC 1691, which permits valuation by reasonable estimation where direct evidence is unavailable, provided the assessment is not purely hypothetical; relevant factors include the land’s physical characteristics, future potentiality and prevailing market sentiment.

The Court held that the landowners’ sale deeds, Exs. P-1 to P-3, could not be treated as directly comparable exemplars because they related to Village Khairpur, where residential and commercial sectors had been developed, whereas the acquired land was situated in Village Bajekan and the landowners failed to establish comparable commercial activity in its immediate vicinity.

Accordingly, those deeds could not justify enhancement beyond ₹50,00,000 per acre.

At the same time, the Court declined to restore the Collector’s valuation. Although the State produced sale deeds from the acquired village showing lower values, the Court found that they did not compel reduction, particularly because the Reference Court had assessed land in the nearby villages of Vaidwala and Meerpur at ₹50,00,000 per acre under the same notification and for the same public purpose.

Considering the acquired land’s proximity to Khairpur, Vaidwala and Meerpur, its future potentiality, and the Reference Court’s assessment based on surrounding development and acquisition circumstances, the Court found the valuation of ₹50,00,000 per acre reasonable and consistent with the principles governing estimation of market value.

It held that the landowners were not entitled to enhancement beyond ₹50,00,000 per acre because the relied-upon sale deeds concerned a different and more developed village.

It further held that the State had not established grounds for reducing the Reference Court’s valuation to ₹35,00,000 per acre or any lower amount.

Consequently, the appeals filed by both the landowners and the State were dismissed, and the Reference Court’s award assessing the market value at ₹50,00,000 per acre was upheld.

Pending applications, if any, were disposed of.