Market value of land should be determined using the highest bona fide sale exemplar with reasonable developmental deductions.

The Government issued a Section 4 Notification under the Land Acquisition Act, 1894 on 07.06.2007 to acquire 54 bighas 02 biswa of "extended Lal Dora" land in village Mundka for the Delhi MRTS (Metro) Phase-II project

The Land Acquisition Collector (LAC) fixed the market value at Rs. 1,210/- per sqm by averaging 28 sale deeds

On reference under Section 18, the Reference Court enhanced the compensation to Rs. 5,175/- per sqm by mistakenly relying on circle rates (Category 'H') and applying a 25% development deduction

Both landowners and the Union of India appealed to the High Court

1. Whether the Reference Court was legally justified in relying primarily on circle rates to determine the fair market value of the acquired land

2. Whether the "Comparable Sales Method" requires the Court to consider the highest value bona fide sale exemplar in the locality

3. Whether a deduction for development charges is warranted for semi-developed "extended Lal Dora" land

The Court applied Section 23 of the Land Acquisition Act, 1894, which mandates determining market value as of the date of the Section 4 notification

It followed the "Comparable Sales Method" as the preferred mode of valuation, citing Chimanlal Hargovinddas v. Special Land Acquisition Officer and Krishan Kumar v. State of Haryana

Regarding circle rates, the Court relied on Union of India v. Savitri Devi and Lal Chand v. Union of India, which establish that circle rates intended for stamp duty cannot be the sole basis for land acquisition compensation unless determined by a statutory committee on a scientific basis

Per Mehrawal Khewaji Trust v. State of Punjab, where multiple bona fide exemplars exist, the one representing the highest value must be preferred

The Court found the Reference Court’s reliance on circle rates erroneous as they do not constitute objective evidence of market value under the 1894 Act

The High Court analyzed the four sale deeds (Ex. PW-3/1 to PW-3/4) discarded by the LAC and Reference Court. It held that the Reference Court erred in dismissing these exemplars merely because they reflected high prices, noting no evidence was provided to show they were non-genuine or intended to defeat acquisition

The Court identified Sale Deed No. 7016 (dated 12.12.2005) at Rs. 14,233.2/- per sqm as the highest bona fide exemplar

Although this deed predated the notification by 18 months, the Court determined that the annual appreciation landowners might claim was effectively balanced against the necessary development deductions

Given the semi-developed nature of the "extended Lal Dora" land (presence of some structures/factories), a 25% deduction was deemed more equitable than the standard 1/3rd (33.33%) deduction

It held that the fair market value of the extended Lal Dora land is Rs. 10,674.9/- per sqm (calculated by taking the highest exemplar of Rs. 14,233.2/- and applying a 25% deduction)

The landowners are entitled to solatium and interest as per the statute and the principles in Sunder v. Union of India

All pending applications were disposed of accordingly