M/S. HASANALI KHANBHAI AND SONS AND ORS. versus STATE OF GUJARAT

Citation: [1995] SUPP. 2 S.C.R. 363 · Decided: 26-07-1995 · Supreme Court of India · Bench: K. RAMASWAMY, K.S. PARIPOORNAN · Disposal: Dismissed

Judgment (excerpt)

M/S. HASANALI KHANBHAI AND SONS AND ORS. 
A 
v. 
STATE OF GUJARAT 
JULY 26, 1995 
[K. RAMASWAMY AND K.S. PARIPOORNAN, JJ.] 
Land Acquisition Act, 1894 
Land Acquisition-Compensation f o,.-Dete1mination of-Capability 
of land to fetch compensation-Deduction of 60% Compensation 
from-Grounds for: Extent of land, vastness of-Distance from Municipal 
limits-Likely imposition of restrictions under the Highways Act-Held factors 
taken into account are relevant and gennane--Deduction held valid. 
B 
c 
The Respondent-State acquired 7 acres and 28 gunthas of Land for D 
establishing an orphanage at the outskirts of the Rajkot Municipality. The 
Land Acquisition officer awarded compensation @Rs. 1.25 sq. yards but 
the reference Court enhanced it to Rs. 2.05 per square yards. On appeal, 
the High Court held that the Lands acquired were capable of fetching 
market value @Rs. 10.00 per sq. yard but determined the compensation 
@Rs. 4 per sq. yard after 60% deduction by taking into account diverse E 
facts: (1) that the lands were situated far away from the municipal limits 
so as to use for building purpose; (b) possibility of the restrictions to be 
imposed by the State under Section 74 of the Highways Act was imminent; 
(c) that vast extent of lands were acquired and that sales of small extent 
do not offer as a comparable instance in determination of the compensa-
F 
tion of vast lands. 
The claimants preferred appeals before this Court challenging the 
correctness of the deduction of 60% of the price determined contending 
that (i) the reasoning of the Division Bench was legally unsustainable; (ii) G 
the restrictive conditions likely to be imposed in future on the development 
-_~f the land were not relevant to reduce the prevailing price (iii) having 
accepted the sale transactions in neighbouring survey to be genuine reduc-
tion in compensation was not justified. 
Dismissing the appeal, this Court 
363 
H 
A 
B 
c 
364 
SUPREME COURT REPORTS [1995) SUPP. 2 S.C.R. 
HELD : 1. The court is not like an umpire but is required to 
determine the correct market value after taking all the relevant cir-
cumstances, evinces active participation in adduction of evidence; calls to 
his aid his judicial experience; evalutate the relevant facts from the 
evidence on record applying correct principles of law which would be just 
and proper for the land under acquisition. It is its constitutional, statutory 
and social duty. The court should eschew aside feats of imagination but 
occupy the arm-chair of a prudent willing but not too anxious purchase 
and always ask the question as to what are the prevailing conditions and 
whether a willing purchaser would as a prudent man in the normal market 
conditions offer to purchase the acquired land at the rates mentioned in 
the sale deeds. After due evaluation taking all relevant and germane facts 
into consideration, the Court must answer as to what would be the just 
and fair market value. [366-F-H; 367-A-B] 
2. In this case, having considered the situation of the land being far 
D 
away from the outer municipal limits though situated near about the 
railway line, that itself\vould be a factor to be taken into consideration in 
determining the market value. Added to that, there is a possibility to 
impose statutory restrictions to develop the lands for building purposes. 
No prudent purchaser would hazard to purchase such large extent of land 
E 
F 
at the rates when small extents of lands are sold in plots. True that the 
purchasers hazarded to purchase lands in the neighbouring survey num-
bers and have taken grave risk. But it would not be safe guide to adopt 
the same price offered by them. Considered from this perspective and from 
the totality of facts on record, the High Court was well justified in deduct-
ing 60% of the value and giving Rs. 4 per sq. yards. Accordingly, there is 
no justification warranting interference. [368-B-E] 
Bhagwathula Samana & Ors. v. Special Tehsildar & Land Acquisition 
Officer, Vishakapatnam Municipality, AIR (1992) SC 2298, held inapplicable. 
Chimanlal Hargovingdas v. Special Land Acquisition Officer, Poona & 
G Ors., [1988] 3 SCC 751 and Administrator General of West Bengal v. 
Collector, Varanasi, AIR (1988) SC 943, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No.3263 OF 
1979. 
H 
From the Judgment and Order dated 1.7.75 of the Gujarat High 
H. KHANBHAIAND SONS v. STATE 
365 
Court in F.A. No. 242 of 1973. 
A 
S.K. Dholakia, D.L. Kothari, 

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