SPL. TEHSILDAR LAND ACQN. VISHAKAPATNAM versus SMT. A. MANGALA GOWRI

Citation: [1991] 3 S.C.R. 472 · Decided: 09-08-1991 · Supreme Court of India · Bench: N.M. KASLIWAL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SPL. TEHSILDAR LAND ACQN. VISHAKAPATNAM 
v. 
SMT. A. MANGALA GOWRI 
AUGUST 9, 1991 
[N.M. KASLJWAL AND K. RAMASWAMY, JJ.] 
Land Acquisition Act, 1894: Section 23-Acquisition of land-
Compensation-Market value-Fixation of-Principles to be followed 
-Acquisition for housing scheme-Valuation of land-Deduction 
from the market value for development of land-Dependant on situa-
tion of land and need for development. 
Constitution of India, 1950: Article 136---Land Acquisition-
Compensation-Valuation of /and-When Supreme Court would 
interfere. 
D 
The respondent's land admeasurin~ 5 acres-589-1/3 Sq. yards was 
E 
acquired by the State Government in 1963 for a housing scheme and 
compensation at Rs.1.58 per Sq. yard was awarded. On reference, the 
Civil Court enhanced the compensation to Rs.IO per Sq. yard with 
solatium at I5 per cent and interest at 4 per cent. On appeal and cross 
1- •. 
appeals, the High Court confirmed the award. 
In the appeal before this Court, on behalf of the Department, it 
.was contended that the respondent had purchased the land in question 
in I96I in three documents at Rs.0.42 p. per sq. yard and sold in I963 
one acre of the land at Rs.5 per sq. yard and, therefore, the deeds under 
which the transactions took place reflected the prevailing market value 
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of the land in question, and courts below committed grave error in 
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relying on a decision of the High Court awarding Rs.IO per sq. yard in 
respect of another land acquired under a Notification of I96I, and that 
when a large extent of land was acquired for a housing scheme, at least 
I/3 of the land should be deducted towards laying the roads, setting up 
parks, drainage and other amenities. 
G 
Allowing the appeal, this Court, 
HELD: I.I The market value postulated in Section 23(1) of the 
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Land Acquisition Act, I894 is designed to award just and fair compensa-
tion for the lands acquired. The word "market value" would postulate 
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price of the land prevailing on the date of the publication of the notifica-
472 
.• ...( 
TEHSILDAR v. A.M. GOWRI 
473 
lion under Section 4(1). In determining the market value of the land, 
the price which a willing vendor might reasonably expect to obtain from 
a willing purchaser would form the basis. For ascertaining the market 
rate, the Court can rely upon such transactions which would offer a 
reasonable basis to fix the price. The price paid in sale or purchase of 
the land acquired within a reasonable time from the date of the acquisi-
tion of the land in question would be .the best piece of evidence. In its 
absence the price paid for a land possessing similar advantages to the 
land in neighbourhood of the land acquired in or about the time of the 
notification would supply the data to assess the market value. [475E-G I 
Periya & Pareekanni Rubbers Ltd. v. Siate of Kera/a, [1990] 
Supp. I SCR 362, referred to. 
1.2 In the instant case, admittedly, the claimant purchased land 
at Rs.0.42 p. and in a span of one year and four months, sold at Rs.5 per 
sq yard. When the claimants themselves sold as a willing seller of an 
acre ofland @Rs.5 per sq. yard, if a large extent offive acres and odd under 
acquisition is offered to be sold as a block, it would not fetch higher rate 
h.ut surely he negotiated for a lesser rate, if not the same market value 
of Rs.5 due to time lag of nine months. May be the payment of Rs.10 per 
sq. yard to the owner of another land acquired in 1961 was a windfall. 
Taking the totality of the facts and circumstances, the High Court 
committed grave error in completely ignoring the sale transactions of the 
lands under acquisition. In view of the time lag, the prevailing market 
value of the land as on the date of the notification would be Rs.6 per 
sq. yard. [476B, E-G I 
1.3 In Building Regulations, setting apart the lands for develop-
ment of roads, drainage and other amenities like electricity etc. are 
condition precedent to approve lay out for building colonies. Therefore, 
based upon the situation of the land and the need for development, the 
deduction shall be made. Where acquired land is in the midst of already 
developed land with amenities of roads, drainage, electricity etc. 
then deduction of 1/3 would not be justified. In the rural areas 
housing schemes relating to weaker sections, deduction of 1/4 may be 
justified. [477G-H, 478A] 
Sp!. Tehsildar, Vishakapatnam v. Rednam .Dharma Rao & Ors., 
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CA No. 4187of1982 decided o

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