MEHTA RAVINDRARAI AJITRAI (DECEASED) THROUGH HIS HEIRS AND LEGAL REPRESENTATIVES & ORS. versus STATE OF GUJARAT

Citation: [1989] 3 S.C.R. 743 · Decided: 08-08-1989 · Supreme Court of India · Bench: M.H. KANIA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

' + 
';·' 
' ' 
q• 
MEHTA RAVINDRARAI AJITRAI (DECEASED) THROUGH 
A • 
HIS HEIRS AND LEGAL REPRESENTATIVES & ORS. 
v. 
STATE OF GUJARAT 
AUGUST 8, 1989 
B 
[M.H. KANIA AND KULDIP SINGH, JJ.] 
Land Acquisition Act, 1894: ss. 4 & • .23-Compensation for 
acquired. land-Market value-Determination. of-Post-acquisition 
~ _instances-Admissibility of-Prices fetched for similar lands at or about 
• · the time of preliminary notification the best evidence of market value. 
C 
Certain lands situated · on the outskirts of a large city were 
acquired by the respondent-State after issuing preliminary notification 
under s. 4(1) of the Land Acquisition Act, 1894 on August 6, 1956 for 
construction of an industrial estate. , 
D 
The appellants chiimed compensation at the rate of Rs.3 per sq. 
yard and cited in support thereof an agreement of sale dated January .. 
21, 1957 and a conveyance dated April 2, 1957 pertaining to a piece of 
land adjoining the acquired land showing the sale price at the rate of·' 
Rs-3 per sq_ yard. The respondent-State relied on an auction sale dated 
February 23, 1953 at about 4lp. per ·sq_ yard, evidenced by Ex. ll2, 
E 
and the· instance evidenced by Ex- ll8 pertaining to sale to a miitor, 
transacted by his f'lther. 
The Land Acquisition Officer classified the land as superior 
agricultural land and awarded the compensation at the rate of Rs-2200 
per acre, i.e., about 4Sp. per sq. yard. 
F 
In the reference, the Civil Judge did not rely upon any of the 
instances proved before him, but considering the general situation of 
the land and its considerable building potentiality fixed the rate of 
compensation at Rs.4400 per acre, i.e., about 90p. per sq. yard. 
Dismissing the appeal, the High Court took the view that the 
valuation fixed by the Civil Judge was justified. It held that a post-
acquisition sale could not be. regarded as a comparable instance at all, 
since the acquisition for construction of the industrial estate was bound 
to have pushed up the prices in the surrounding area_ It placed reliance 
G 
on the evidence furnished by the instance at Ex.ll2, over a year prior to; H 
743 
\,; 
'" ' 
744 
SUPREME COURT REPORTS 
[1989] 3 S.C.R. 
A the date of s. 4 notification, but discarded tbe instance evidence by Ex. 
~"'°
I I8 relied on by the State. 
Allowing the claimants' appeal by special leave, the Court, 
HELD: The market value or a piece of property for purposes of 
B s. 23 of the Land Acquisition Act, is stated to be the price at which the 
property changes hands from a willing seller to a willing, but not too 
anxious a buyer, dealing at arm's length. Prices fetched for similar 
lands with similar advantages lmd potentialities under bona fide trans-
actions of sale at or aoout till' time of the preliminary notification are 
the usual and, indeed, the best, evidence of market value. [747C] 
c 
Administrator General of West Bengal v. Collector, Varanasi, 
[I988] 2 SCC ISO, referred to. 
In the instant case, the instance evidenced by Ex. 112 pertaining 
to sale of land in government auction relied on by the High Court was a 
O distress sale. There were execution proceedings pending against the 
vendor. It could, thus, hardly furnish any reliable evidence for estimat-
ing the market value of the land in question. The instance evidenced by 
Ex. I I8 was rightly discarded by the High Court. Only a certified copy 
of the sale deed pertaining thereto was produced in the trial court. The 
evidence of the purchaser, who was minor at the time when the sale 
E 
deed was executed, had no evidentlary value as he bad no personal 
information regarding the sale. No other person conversant with the 
sale wa5 examined by the State. [748AB, CF] 
The only comparable instance on the basis of which the market 
value at the time of the s. 4 notification in respect of the acquired land 
F 
could be determined was, therefore, the sale proved by the sale deed 
dated April 2, 1957 and the preceding agreement of sale dated January 
2I, 1957. Though entered into about five months after the notification It 
could be fairly regarded as reasonably proximate to the acquisition. 
The price fixed under the said agreement was Rs.3 per sq. yard. How-
ever, there seems to have been some rise in the price of land on account 
G 
of the acquisition of the land in question for purposes of con rtructing 
the industrial estate. Further, the land proposed to be purchased under 
the agreement was adjoining the land of the purchaser

Excerpt shown. Read the full judgment & AI analysis in Lexace.