Non-comparable same-village sale exemplars may guide market valuation after appropriate deductions.

The appellants’ agricultural lands situated in Village Ringnod, Tehsil Sardarpur, District Dhar, Madhya Pradesh, were acquired for construction of the Hanuman Kheda Pond.

A notification under Section 4(1) of the Land Acquisition Act, 1894 (“the L.A. Act”) was issued on 19.06.2009, and the Land Acquisition Officer passed the award on 23.02.2011, determining compensation at ₹7,42,000 per hectare for irrigated land and ₹3,65,000 per hectare for unirrigated land.

In F.A. No. 501/2016, 1.945 hectares from Survey No. 969/2 were acquired, and compensation of ₹14,43,190, together with ₹21,237 for a pump, was awarded.

The Reference Court enhanced the market value to ₹9,00,000 per hectare for irrigated land and ₹6,00,000 per hectare for unirrigated land, but rejected reliance on the appellants’ sale deeds on the ground that they concerned smaller parcels.

The landowners appealed under Section 54 of the L.A. Act, relying principally on sale deeds dated 30.03.2007 and 17.02.2009, marked Ex. P/1 and Ex. P/2.

1. Whether the sale deeds Ex. P/1 and Ex. P/2, though relating to smaller parcels of land in the same village, could be relied upon as indicators for determining the market value of the acquired agricultural land?

2. Whether the market value fixed by the Reference Court at ₹9,00,000 per hectare for irrigated land and ₹6,00,000 per hectare for unirrigated land was inadequate?

3. Whether the appellants were entitled to enhanced compensation and statutory benefits under the L.A. Act?

The Court applied Sections 23, 24 and 54 of the Land Acquisition Act, 1894.

Market value under Section 23 must reflect the price that a willing purchaser would pay to a willing vendor in the open market as on the date of publication of the Section 4 notification.

The burden ordinarily lies on the claimants to establish that the compensation awarded is inadequate.

Under the comparable-sales method, an exemplar must be genuine, proximate in time, geographically comparable, and possess similar advantages and potentiality.

The Court relied on Chimanlal Hargovinddas v. Special Land Acquisition Officer, (1988) 3 SCC 751, for the applicable tests and adjustment of plus and minus factors; Chaturbhuj Mody v. State of Orissa, (2010) 12 SCC 234, and Administrator General of West Bengal v. Collector, Varanasi, (1988) 2 SCC 150, for requiring appropriate deductions where small plots are compared with large tracts; Gujarat Industrial Development Corporation v. Narottambhai Morarbhai, (1996) 11 SCC 159, for the prudent-purchaser test and development deductions; Hookiyar Singh v. Special Land Acquisition Officer, (1996) 3 SCC 766, State of Punjab v. Hans Raj, (1994) 5 SCC 734, and Land Acquisition Officer v. Karigowda, (2010) 5 SCC 708, for the burden of proof, preference for genuine comparable sales, and the need to award fair compensation; and Land Acquisition Officer, RDO v. L. Kamalamma, (1998) 2 SCC 385, for using smaller nearby transactions with suitable adjustments where comparable large-area sales are unavailable.

The Court held that Ex. P/1 and Ex. P/2 could not be adopted at their face value because the acquired land was a substantially larger agricultural tract situated away from the village and without a proper approach road, whereas the exemplars concerned small plot-like parcels located within or near the village and closer to a road.

Nevertheless, the sale deeds were not wholly irrelevant because they related to land in the same village and therefore provided some indication of local land values.

Applying the prudent-purchaser test and making an adjustment for the differences in size, location, access and character of the land, the Court preferred Ex. P/1, which covered the larger of the two exemplar parcels, rather than Ex. P/2, which concerned an extremely small plot.

From the indicative value derived from Ex. P/1, the Court determined ₹15,00,000 per hectare as the fair market value of irrigated land, taking into account the 2007 date of the transaction and the relevant adjustments.

It retained the Reference Court’s ratio that irrigated land should be valued at one and a half times unirrigated land, thereby fixing the corresponding value of unirrigated land at ₹10,00,000 per hectare.

The market value of the acquired land was enhanced to ₹15,00,000 per hectare for irrigated land and, on the applicable 1.5:1 ratio, ₹10,00,000 per hectare for unirrigated land.

The respondents were directed to pay the differential compensation to all appellants, together with all statutory benefits payable under Section 23 and other relevant provisions of the L.A. Act.