A) ABSTRACT / HEADNOTE

The appeal concerns enhancement of compensation under the Land Acquisition Act, 1894 for non-agricultural Survey No. 25 (≈33,387 sq. m.) acquired by Gujarat Housing Board. The Reference Court fixed compensation at Rs. 45/- per sq. m., the High Court raised it to Rs. 53/- per sq. m., and the claimants challenged adequacy before the Supreme Court.

The appellants relied primarily on two proximate exemplars:

(i) Exhibit 44, an allotment letter dated January 1985 allotting adjacent Survey No. 864 at Rs. 65/- per sq. m. (pre-notification); and

(ii) Exhibit 53, a sale deed dated 29.08.1985 of an adjoining plot in a developed cooperative colony at Rs. 152.37/- per sq. m. (post-notification but within one month).

Applying settled principles in Chimanlal Hargovinddas v. Special LAO and Mehta Ravindrarai Ajitrai v. State of Gujarat, the Court accepted proximate, bona fide transactions as exemplars unless there is evidence that the acquisition itself inflated prices. The Court found Exhibit 53 genuine (supported by purchaser testimony) and Exhibit 44 indicative of pre-acquisition official valuation.

Accounting for development-leftover (30% deduction for layout/development cost) and averaging the exemplars, the Court determined a fair compensation at Rs. 107/- per sq. m. (rounding the mean Rs.108.68 toward Rs.107), with statutory benefits (solatium, severance, interest) to follow as earlier awarded. Appeal partly allowed; directions issued for recalculation and payment.

Keywords: Land Acquisition Act, 1894; exemplars; proximate sale; market value; solatium; severance; Chimanlal Hargovinddas; post-notification instance; development deduction.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The present litigation traces to acquisition of a sizable non-agricultural tract for housing by Gujarat Housing Board. Notification under Section 4 was published on 30.07.1985; the acquisition process thereafter culminated in awards challenged as inadequate. The Reference Court significantly increased the LAO’s nominal award but the High Court’s further modest enhancement left parties dissatisfied.

The crucial contest concerned proper yardsticks to fix market value on the date of Section 4 notification, given availability of proximate instances: an allotment order by Collector before notification and a sale deed executed within a month thereafter. The claimants argued that these exemplars, proximate in time and adjoining in situation, established a much higher market value.

The State resisted, urging that the sale deed pertained to a developed society plot (with internal roads and amenities) and that the allotment letter could not be treated as equivalent to open market sale. The Supreme Court was called to reconcile competing evidentiary inferences and to apply settled principles permitting reliance on bona fide proximate transactions unless acquisition-driven inflation was shown.

The background thus presents the classic valuation problem where courts must balance formal awards with market reality reflected by contemporaneous exemplars and the potential impact of development costs and layout considerations on large tracts versus small plotted sale instances.

D) FACTS OF THE CASE

Survey No. 25 (non-agricultural) measuring ≈33,387 sq. m. at Mehmedabad, Kheda district, was notified under Section 4 on 30.07.1985 for residential development by the Housing Board. The LAO initially fixed compensation at Rs. 4.50/- per sq. m. The Reference Court raised the rate to Rs. 45/- per sq. m. and awarded statutory benefits (30% solatium etc.).

On appeal the High Court adjusted the figure to Rs. 53/- per sq. m. Appellants adduced Exhibit 44 Collector’s allotment (January 1985) of adjacent Survey No. 864 at Rs. 65/- per sq. m. preceding notification. They also relied on Exhibit 53, a sale deed dated 29.08.1985 (within one month of Section 4 notification) recording sale of a 59.29 sq. m. plot in Navjivan Cooperative Housing Society at Rs. 152.37/- per sq. m. Purchaser Kantibhai Veljibhai Patel testified (Exhibit 52) he and his brothers bought the plot from the society.

The State contested genuineness and argued the society-plot reflected amenities and could not be equated with the large parcel acquired. Departmental witness admitted proximity to railway and bus stations (~1 km), supporting potentiality of the acquired land. No persuasive evidence showed speculative inflation attributable to acquisition. The courts below diverged on weight to be placed on these exemplars before the Supreme Court reviewed the matter.

E) LEGAL ISSUES RAISED

i. Whether proximate bona fide transactions (pre- or post-notification) for adjoining land can be relied upon to determine compensation under the Land Acquisition Act, 1894?
ii. Whether a post-notification sale executed within a month can be taken as an exemplar despite being a society-developed plot?
iii. How should development and layout costs be accounted for when translating plot-level rates to large-parcel valuation?
iv. Whether the Reference Court/High Court’s awards (Rs. 45/53 per sq. m.) adequately reflect market value in view of exemplars?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that:
The allotment letter (Exhibit 44) at Rs. 65/- (pre-notification) and sale deed (Exhibit 53) at Rs. 152.37/- (within one month) are proximate and adjoining instances that reflect true market value. Relying on Chimanlal Hargovinddas and Mehta Ravindrarai Ajitrai, post-notification transactions proximate in time can be used unless acquisition-driven speculation is shown.

The Reference Court and High Court awards are therefore inadequate. The land’s potentiality (close to transport nodes) further supports higher valuation. They argued for averaging exemplars subject to development deduction to reach a fair figure.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that:
The allotment is an administrative instrument and not comparable to open market sale. The sale deed relates to a small plotted unit within a cooperative society with internal amenities; hence its unit rate is not transferable to a large undeveloped parcel without suitable downward adjustments. The courts below had applied discretion and the modest enhancements were reasonable. The State also implied potential bonafides concerns and contended that the acquisition itself may have influenced prices.

H) RELATED LEGAL PROVISIONS

i. Land Acquisition Act, 1894 — valuation principles under Section 4 (date of notification) and Section 23 jurisprudence on ‘market value’.
ii. Precedents: Chimanlal Hargovinddas v. Special LAO (1988) 3 SCC 751 (instances method and proximate transactions), Mehta Ravindrarai Ajitrai v. State of Gujarat (1989) 4 SCC 250, Union of India v. Raj Kumar Baghal Singh (2014) 10 SCC 422 — all applied for guidance on exemplars.

I) JUDGEMENT

The Court analyzed the evidentiary matrix and applied the long-standing instances method. It reiterated that market value must be ascertained as on the date of publication of Section 4 and that bona fide transactions proximate in time and situation may be relied upon. The Court accepted Exhibit 53 as genuine: purchaser testimony corroborated execution and there was no cogent rebuttal showing purchaser was motivated by acquisition-driven prospects.

The Court also placed weight on Exhibit 44 Collector’s allotment before notification observing that governmental allotment at Rs. 65/- indicated an official expectation of higher realization. Concerning adjustments, the Court recognized that a small plotted sale in a developed colony reflects amenities and layout costs; when extrapolating to a large parcel needed by Housing Board, part of the land would be left for development (30% deduction for roads/open spaces etc.).

Applying the 30% development deduction to the sale-plot rate brought the effective comparable down, and averaging Exhibit 44 (Rs.65) and adjusted Exhibit 53 yielded a figure near Rs. 107/- per sq. m. The Court thus held the High Court’s Rs. 53/- was manifestly low and directed enhancement to Rs. 107/- per sq. m. with solatium, severance, and interest as earlier allowed. Directions were given for recalculation and payment. The appeal was allowed in part.

a. RATIO DECIDENDI

The operative ratio is that bona fide sale transactions adjacent in location and proximate in time to the Section 4 notification may be adopted as exemplars for market valuation unless there is evidence that the acquisition inflated prices.

Post-notification instances are admissible if:

(i) very proximate,

(ii) genuine, and

(iii) the purchaser was not induced by acquisition to pay inflated prices.

Adjustments for differential advantages (size, development, frontage) and pragmatic deductions (e.g., 30% for layout/development cost when extrapolating from plotted sale to large parcel) are legitimate. Using proximate exemplars and sensible loading/unloading yields a fair market value on the valuation date.

b. OBITER DICTA 

The Court reiterated and illustrated the common-sense balancing exercise courts must perform under Chimanlal Hargovinddas: no rigid formula exists; courts must evaluate plus/minus factors (size, frontage, nearness to developed area, level) practically. The judgment underscores that administrative allotments by revenue authorities (pre-notification) may be relevant indicia of market acceptance and are not to be dismissed out of hand.

c. GUIDELINES 

1. Treat proximate genuine sales as primary indices of market value subject to comparable adjustments.

2. Where exemplar is a plotted sale in a developed society, deduct an appropriate percentage to account for development/layout cost before extrapolation to a larger parcel 30% was applied in present facts.

3. Where government allotment predates notification, its rate may be a relevant benchmark though with caution.

4. Require corroborative evidence (witnesses, document chain) to accept post-notification sale instances as genuine and non-speculative.

5. Apply common-sense “plus/minus” matrix from Chimanlal to calibrate adjustments.

J) CONCLUSION & COMMENTS

The decision aligns with established precedent and affirms that courts must engage with contemporaneous market indicators rather than rely solely on formalistic awards. By accepting Exhibit 53 (backed by purchaser evidence) and Exhibit 44 (pre-notification allotment) and by making a reasoned development deduction, the Court achieved a pragmatic valuation responsive to on-ground realities and statutory intent to ensure fair and reasonable compensation.

The approach balances protection of public project needs with constitutional safeguards guaranteeing just compensation. Practitioners should note the Court’s reinforcement of the instances method, the acceptability of short-interval post-notification sales when properly proved, and the permissibility of development cost deductions when translating parcel-level rates to plot-level comparators.

The judgment thus furnishes a useful roadmap for valuation disputes in acquisition matters.

K) REFERENCES

a. Important Cases Referred

1. Hiralal Motilal Parikh (Deceased Through Lrs) v. Spl. LAQ Officer & Anr., Civil Appeal No. 1438 of 2016, Supreme Court of India (27 Mar. 2025) [2025] 3 S.C.R. 1519.

2. Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona & Anr., (1988) 3 S.C.C. 751.

3. Mehta Ravindrarai Ajitrai (Deceased) Through His Heirs & LRs. & Ors. v. State of Gujarat, (1989) 4 S.C.C. 250.

4. Union of India v. Raj Kumar Baghal Singh (Dead) Through LRs. & Ors., (2014) 10 S.C.C. 422.

b. Important Statutes Referred

1. Land Acquisition Act, 1894 (India).