Holding

The market value of the acquired land must be determined from pre‑notification comparable sale deeds with appropriate escalation, not from post‑notification auction sales, and interest must be awarded at 9%/15% as per Section 34 of the Land Acquisition Act, 1894.

Summary

The Supreme Court examined three separate land acquisitions in Narsingi and Poppalguda made under the Land Acquisition Act, 1894 for the Outer Ring Road project. The High Court had enhanced compensation to INR 1.35 crore per acre by relying on post‑notification auction sales of the Golden Mile project, and also granted solatium and interest at 12% per annum. The Court held that market value must be determined using pre‑notification sale deeds that are comparable in location and nature, applying a 20% compounded annual escalation to reflect rapid metropolitan development, resulting in a fair value of INR 44.64 lakh per acre. It further ruled that interest must be awarded at 9% for the first year and 15% thereafter, as mandated by Section 34, and that the High Court's interest rate of 12% was erroneous. Consequently, the Court set aside the High Court judgments, reduced the compensation, corrected the interest rate, and ordered payment of the revised amount with statutory entitlements within eight weeks.

Issues considered

Whether the High Court was justified to rely on auction sale instances of the Golden Mile project for assessing the just and fair market value of the acquired land.
If the High Court’s reliance is justified, whether the landowners are entitled to further enhancement and to what extent; if not, what other evidence should be considered to assess market value.
What is the just and fair market value of the acquired land.
Whether the High Court correctly granted statutory benefits such as solatium and interest on the enhanced amount in accordance with the Land Acquisition Act, 1894.

Legislation cited

Land Acquisition Act, 1894s. 17(1), s. 17(2), s. 17(4), s. 23(1), s. 23(1A), s. 23(2), s. 24, s. 34, s. 4

Headnote

Issue for Consideration Issue arose whether the High Court was justified to rely on auction sale of the Golden Mile project for assessing just and fair market value of the acquired land; whether landowners are entitled to further enhancement; what other evidence on record ought to be relied on to acquired land; what would be the just and fair market value of the acquired land; and whether the High Court correctly granted statutory benefits like solatium and interest on the enhanced amount in accordance with provisions of the Land Acquisition Act, 1894. Headnotes† Land Acquisition

Subjects

Auction saleGolden Mile projectFair market value of the acquired landEnhancement of compensationSolatiumInterestAcquisition of land situated in Narsingi and Poppalguda villages, Rajendranagar Mandal, Ranga Reddy DistrictConstruct successive sections of Outer Ring Road-ORRAssessment of market valueExemplars from the auction sale of land plots in the Golden Mile projectHyderabad Metropolitan Development Authority-HMDASale exemplarsLevel of guesstimationClose to Hyderabad AirportPrice escalation

Judgment

[2025] 4 S.C.R. 2284 : 2025 INSC 531

Barla Ram Reddy
v.
The State of Telangana
(Civil Appeal No(s). 5436-5437 of 2025)
22 April 2025
[Surya Kant* and Ujjal Bhuyan, JJ.]

Issue for Consideration
Issue arose whether the High Court was justified to rely on auction
sale of the Golden Mile project for assessing just and fair market
value of the acquired land; whether landowners are entitled to
further enhancement; what other evidence on record ought to be
relied on to assess the market value of the acquired land; what
would be the just and fair market value of the acquired land; and
whether the High Court correctly granted statutory benefits like
solatium and interest on the enhanced amount in accordance with
provisions of the Land Acquisition Act, 1894.

Headnotes†
Land Acquisition Act, 1894 – Quantum of compensation –
Enhancement – Three different acquisitions of the land
situated in Narsingi and Poppalguda villages, Rajendranagar
Mandal, Ranga Reddy District initiated through three separate
preliminary notifications, within a period of four months –
Lands acquired through these notifications adjoining each
other and acquired to construct successive sections of the
Outer Ring Road-ORR – Assessment of market value of
the acquired land for awarding compensation – High Court
relying on exemplars from the auction sale of land plots in
the Golden Mile project, enhanced the rate of compensation
from the range of INR 9,45,000 and 28,00,000 per acre to INR
1,35,00,000 per acre – Cross-appeals by the landowners;
State of Telangana; and Hyderabad Metropolitan Development
Authority-HMDA:
Held: Market value of the subject land could not be derived from
auction sale instances of plots in a developed area or from post-s.4

* Author
[2025] 4 S.C.R. 2285

Barla Ram Reddy v. The State of Telangana

notification sale instances, instead, it ought to be arrived at by
considering appropriate pre-notification sale deeds and applying
proper price escalation – Auction sale of plots in a developed area
on a date after the s.4 notification ought to be disregarded – High
Court erred in founding its determination on the sale exemplars
from the Golden Mile auction – Market value of the acquired lands
at the time of the acquisition would be based on the sale deeds
executed in early 2004, almost two years before the publication
of the s.4 notifications – Due to passage of time, the value of
the land would have increased during this period – So, need to
escalate the rates in the exemplars to meet the rise in prices
over time, which cannot be decided with exactitude, and some
level of guesstimation to be incorporated within the reasoning –
Considering the rapid development in the area during this period,
a compounding escalation at the rate of 20% for each year would
be just and equitable – Applying 20% compounding escalation for
2004 and 2005 to the base rate of INR 31,00,000 per acre, the
market value of the acquired lands at the time of the publication
of the notification u/s.4 would be INR 44,64,000 per acre – High
Court erred in increasing the compensation in an exponential
manner to the rate of INR 1,35,00,000 per acre – Furthermore,
the High Court cannot deviate from the explicit mandate u/s.34,
and interest has to be awarded strictly in accordance with the
statutory provision – High Court rightly granted interest and
solatium, as well as interest on the solatium, on the enhanced
market but erred in granting interest at the rate of 12% pa –
Landowners entitled to additional amount at the rate of 12% pa
and solatium at the rate of 30% as part of the compensation, as
well as interest on the entire compensation, at the rate of 9% pa,
for the first year after taking over of possession, and 15% pa, for
the period thereafter, till the amount is paid to the landowners or
deposited. [Paras 17-52]

Land Acquisition Act, 1894 – Land Acquisition – Computation
of compensation – General principles:
Held: Computation of compensation for acquisition must be guided
by the “market value of the land as on the date of publication of
the s.4 notification”, the principle as mandated by s.23(1) – ‘Market
value’ represents ‘the price that a willing buyer would pay to a
willing seller in light of the land’s condition and potentiality – This
2286 [2025] 4 S.C.R.

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price is identified by considering instances of sale of similar or
comparable lands – Such exemplars serve as a foundation for
determining compensation, so long as they fulfil the following
requirements-sale exemplar depicts a genuine, open-market
transaction; land covered by the sale deed is in the vicinity of
the acquired land; the land covered by the sale deed is similar
in nature to the acquired land; and sale was executed at a time
proximate to the date of the notification issued u/s.4 – Any sale
exemplar presented to the Court ought to be considered on the
touchstone of these requirements – Sale instances, however,
cannot guide to the market value of the land with exactitude – In
some cases, direct examples of sale of comparable land may
not be available, while in other cases, there may be relevant
distinguishing features between sale exemplar and acquired
land – In such cases, Courts adopt the process of guesstimation
to apply the evidence and arrive at an equitable price for the
acquired land. [Paras 12-15]

Case Law Cited
Karnataka Housing Board v. LAO [2011] 1 SCR 600 : (2011) 2
SCC 246; Mehta Ravindrarai Ajitrai v. State of Gujarat [1989]
3 SCR : (1989) 4 SCC 250; Avinash Dhavaji Naik v. State of
Maharashtra [2009] 6 SCR 222 : (2009) 11 SCC 171; Bhule
Ram v. Union of India [2014] 4 SCR 247 : (2014) 11 SCC 307;
State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela [1968] 3 SCR
692; Kapil Mehra v. Union of India [2014] 10 SCR 1153 : (2015) 2
SCC 262; Shaji Kuriakose v. Indian Oil Corpn. Ltd. [2001] Supp. 1
SCR 573 : (2001) 7 SCC 650; New Okhla Industrial Development
Authority v. Harnand Singh [2024] 7 SCR 443 : 2024 SCC OnLine
SC 1691; Viluben Jhalejar Contractor v. State of Gujarat [2005] 3
SCR 542 : (2005) 4 SCC 789; Raj Kumar v. Haryana State [2007]
9 SCR 455 : (2007) 7 SCC 609; Mehrawal Khewaji Trust v. State
of Punjab [2012] 4 SCR 24 : (2012) 5 SCC 432; Himmat Singh
v. State of M.P. (2013) 16 SCC 392; ONGC Ltd. v. Rameshbhai
Jivanbhai Patel [2008] 11 SCR 927 : (2008) 14 SCC 745 [13];
Himmat Singh v. State of M.P. (2014) 14 SCC 466; Ashok Kumar
v. State of Haryana (2015) 15 SCC 200 – referred to.

List of Acts
Land Acquisition Act, 1894.
[2025] 4 S.C.R. 2287

Barla Ram Reddy v. The State of Telangana

List of Keywords
Auction sale; Golden Mile project; Fair market value of the acquired
land; Enhancement of compensation; Solatium; Interest; Acquisition
of land situated in Narsingi and Poppalguda villages, Rajendranagar
Mandal, Ranga Reddy District; Construct successive sections of
Outer Ring Road-ORR; Assessment of market value; Exemplars
from the auction sale of land plots in the Golden Mile project;
Hyderabad Metropolitan Development Authority-HMDA; Sale
exemplars; Level of guesstimation; Close to Hyderabad Airport;
Price escalation.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s).
5436-5437 of 2025
From the Judgment and Order dated 28.09.2022 and 25.11.2022
of the High Court for the State of Telangana at Hyderabad in LAAS
No. 73 of 2019 and IA No. 1 of 2022 respectively
With
Special Leave Petition No. 18573 of 2023, Civil Appeal No. 5568 of
2025, Special Leave Petition No. 18563 of 2023, Civil Appeal No(s).
5438-5439, 5540, 5441, 5442-5443, 5444-5446 and 5447-5449
of 2025

Appearances for Parties
Advs. for the Appellant:
Ms. Aishwarya Bhati, A.S.G., E. Ajay Reddy, Neeraj Kishan
Kaul Sr. Advs., S. Udaya Kumar Sagar, Ms. Bina Madhavan, K.
Ravi Kumara Chary, Tushar Singh, For M/s. Lawyer S Knit &
Co, Ms. Tatini Basu, Kumar Shashank, Rajiv Kumar Choudhry,
Ms. Praseena Elizabeth Joseph, K. Ravi Kumara Chary, Tushar
Singh, Sravan Kumar Karanam, Aniket Singh, Ms. Shivani,
Aniruddh Singh.
Advs. for the Respondents:
Ms. Aishwarya Bhati, A.S.G., E. Ajay Reddy, Sr. Adv., S. Udaya
Kumar Sagar, Ms. Bina Madhavan, Tushar Singh, For M/s. Lawyer
S Knit & Co, Ms. Tatini Basu, Kumar Shashank, Tushar Singh, Ms.
Praseena Elizabeth Joseph, Sravan Kumar Karanam, Ms. Tayade
Pranali Gowardhan, Aniket Singh, Rajiv Kumar Choudhry.
2288 [2025] 4 S.C.R.

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Judgment / Order of the Supreme Court

Judgment

Surya Kant, J.

Delay condoned. Leave granted.
2. The dispute which falls for consideration in these civil appeals pertains
to the assessment of market value of the acquired land situated in
Narsingi and Poppalguda villages, Rajendranagar Mandal, Ranga
Reddy District for the purpose of awarding compensation under the
Land Acquisition Act, 1894 (1894 Act). The High Court for the State
of Telangana (High Court), vide the impugned judgements, has
enhanced the rate of compensation from the range of INR 9,45,000
and 28,00,000 per acre to INR 1,35,00,000 per acre. The instant
cases are cross-appeals preferred by:
i. the landowners;
ii. the State of Telangana; and
iii. the Hyderabad Metropolitan Development Authority (HMDA).
3. While the landowners are seeking further enhancement, the State
and the HMDA are aggrieved by the enhancement granted by the
High Court.

A. Facts
4. Although these appeals emanate from a common issue, the disputes
flow from three distinct acquisitions made for the common purpose
of construction of Outer Ring Road (ORR) in and around Hyderabad,
specifically in the Narsingi area. The details of the acquisitions are
briefly explained hereinafter.
4.1. Three acquisitions under the 1894 Act were initiated by the
State of Telangana for adjoining parcels of land.
4.1.1. Notification dated 13.12.2005 was issued under Section
4 of the 1894 Act for acquisition of a total of 31 acres, 33
guntas of land in Narsingi village, followed by declaration
under Section 6 issued on 29.07.2006 for a total land
of 23 acres, 33 guntas. (First Acquisition)
[2025] 4 S.C.R. 2289

Barla Ram Reddy v. The State of Telangana

4.1.2. Notification dated 13.12.2005 was issued under Section
4 of the 1894 Act for acquisition of 48 acres, 37 guntas
of land in Poppalguda village. Subsequently, declaration
under Section 6 was issued on 14.08.2006 for the land
measuring 44 acres, 4 guntas. (Second Acquisition)
4.1.3. Notification dated 04.04.2006 was issued under Section
4 of the 1894 Act for acquiring 30 acres of land in
Narsingi and Poppalguda village. The State also invoked
its powers under Section 17 (1) & (2) read with Section
17 (4) of the 1894 Act for urgent acquisition, and soon
thereafter, published the declaration under Section 6 on
06.04.2006. (Third Acquisition)
4.2. Each acquisition led to separate proceedings for determining
the compensation payable to the expropriated landowners.
4.2.1. In the First Acquisition, the Special Deputy Collector, Land
Acquisition (LAC) passed an Award under Section 11 of
the 1894 Act on 03.10.2007, setting the compensation
at INR 7,56,000 per acre. However, after reference
was made under Section 18, the XIII Additional District
and Sessions Judge, Ranga Reddy District (Reference
Court), vide order dated 27.12.2018, enhanced the rate
of compensation to INR 28,00,000 per acre.
4.2.2. In the Second Acquisition, the LAC passed an Award dated
03.10.2007, granting compensation at the rate of INR
5,45,000 per acre, which was enhanced by the Reference
Court, vide order dated 17.12.2018, to INR 18,75,000
per acre.
4.2.3. In the Third Acquisition, the LAC, vide Award dated
25.05.2006, granted compensation at the rate of INR
7,56,000 per acre, which was enhanced by the Reference
Court, vide order dated 17.12.2018, to INR 9,45,000
per acre.
4.3. During the pendency of the reference proceedings, the
landowners, under protest, accepted payment of the
compensation awarded by the LAC.
4.4. All three awards of the Reference Court were then the subject
matter of appeals and cross-objections before the High Court.
2290 [2025] 4 S.C.R.

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4.5. The High Court decided the appeals and cross objections in the
First and Third Acquisitions through a common judgement dated
28.09.2022 (Lead Impugned Judgement), while the appeal
and cross appeal in the Second Acquisition were decided
by two separate judgements dated 28.03.2023, which were
passed in terms of the Lead Impugned Judgement. As such,
the High Court granted uniform compensation at the rate of
INR 1,35,00,000 per acre in all three acquisitions, irrespective
of the date on which the notification under Section 4 was
issued. While making a substantial enhancement, the
High Court has held that the Reference Court incorrectly
disregarded the sale exemplars of considerably higher rate
of sale consideration paid for comparable lands. The High
Court based its computation of payable compensation on
the sale of plots under the ‘Golden Mile’ project, developed
by the erstwhile Hyderabad Urban Development Authority
(HUDA) (which has now merged into HMDA), wherein plots
of approximately 3 to 6 acres in a 100-acre development
scheme were sold through auction. The plots were promoted
as being ideal for the development of large hotels, hospitals,
offices for financial institutions and IT companies, and high-
rise apartments. The brochure issued by HUDA called the
development an “absolute golden mine”. The High Court
relied on the upset price of the auction – INR 4,50,00,000
per acre – as the base rate. The High Court then applied a
cumulative deduction of 70% to account for the smaller size of
plots, the development cost, the development waiting period,
and de-escalation. The High Court, thus, arrived at a market
rate of INR 1,35,00,000 per acre.
4.6. The High Court, thereafter, through a subsequent order dated
25.11.2022 clarified that the landowners are entitled to solatium
at the rate of 30% on the enhanced amount, as well as interest
at the rate of 12% per annum on the enhanced amount of
compensation as well as the solatium.
4.7. As noticed earlier, while the landowners are seeking further
enhancement of compensation, primarily contending that the
deduction applied by the High Court was on the higher side,
the State/HMDA is questioning the enhancement as being
excessively high and unrealistic.
[2025] 4 S.C.R. 2291

Barla Ram Reddy v. The State of Telangana

B. Contentions Of The Parties
5. In the course of their respective submissions, learned Senior Counsel/
Counsel for the parties have taken us through the voluminous record,
which has been minutely perused. The record reveals that various
sale instances were exhibited before the Reference Court. These
exhibited sale instances, for ready reference, can be categorised
into three sets:
A. Golden Mile project sales;
B. Ex.A6 to Ex.A9 in LAOP No. 632/2012 (Set B Exhibits); and
C. Ex.A1 to Ex.A4 & Ex.A6 to Ex.A8 in LAOP No. 56/2014
(Set C Exhibits).
6. Mr. Neeraj Kishan Kaul and Mr. E. Ajay Reddy, learned Senior
Counsel and Ms. Tatini Basu, learned Counsel on behalf of the
landowners, contended that the market value of the acquired
lands was greater than that assessed by the High Court, and the
compensation, therefore, deserves to be suitably enhanced. They
made the following submissions:
6.1. The auction sale under the Golden Mile project was representative
of the true market value of the acquired lands. The entire area
of Narsingi, Poppalguda, and Kokapet villages was rapidly
developing, with big multinational companies and institutions
coming up in that area. In some respects, such as distance to
airport and Express-Highway, the acquired lands were better
situated than the lands in the Golden Mile project. The acquired
lands, thus, had very high potentiality. Accordingly, instead of
the upset price of the auction, the average of actual sale price
of the plots ought to have been taken by the High Court as the
benchmark. Relying on a decision of this Court in Karnataka
Housing Board v. LAO1, it was urged that there is no bar on
using auction sale prices.
6.2. The Set B Exhibits could also be relied upon, since the land
in these sale instances were locationally proximate to the
acquired land. Even though the transfers took place after the
Section 4 notification was issued, there was no bar on such sale

1 (2011) 2 SCC 246.
2292 [2025] 4 S.C.R.

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exemplars to be considered. In this regard, reliance was placed
on this Court’s decision in Mehta Ravindrarai Ajitrai v. State of
Gujarat.2 The High Court also accepted the relevance of these
sale instances, but it failed to take them into consideration at
the time of assessing computation.
6.3. The Set C Exhibits were also reliable exemplars, as the land
is proximate in location and potentiality to the acquired lands.
However, since these sale instances were executed more than
a year prior to the Section 4 notification in a rapidly developing
area, a cumulative escalation of 30% over these exemplars
should be granted.
6.4. In the Award, a sale instance for Survey No. 204/E in Narsingi
village at the rate of over INR 1,41,00,000 per acre has been
recorded. This particular sale instance was wrongly discarded
by the LAC on the ground of being at some distance from the
acquired lands.
6.5. The deductions made for development, size of the plots,
waiting period, and de-escalation were on the higher side.
The purchasers of the Golden Mile plots would themselves
have had to set aside part of the plot for set-back and similar
developmental requirements. The acquired land and the Golden
Mile project were, thus, comparable in development. As per
the principles laid down in Avinash Dhavaji Naik v. State of
Maharashtra3, since a part of the acquired land was already
abutting the Express-Highway, there was no need for additional
deduction for development.
6.6. Even though the Golden Mile auction was notified after the
subject acquisition stood initiated, the upset price was set before
the initiation of the acquisition. There was, thus, no need for
de-escalation on the upset price.
6.7. The High Court has legally erred in granting interest at the rate
of 12% per annum. As per Section 34 of the 1894 Act, interest
ought to be granted at 9% per annum for the first year after
taking of possession and 15% per annum thereafter.

2 (1989) 4 SCC 250.
3 (2009) 11 SCC 171.
[2025] 4 S.C.R. 2293

Barla Ram Reddy v. The State of Telangana

7. Ms. Aishwarya Bhati, Learned Additional Solicitor General of India,
representing the State of Telangana and the HMDA, argued that the
enhancement of the compensation by the High Court was totally
erroneous and that the market value of the acquired land was liable
to be reduced. She made the following submissions to substantiate
her position:
7.1. The auction sale of plots in the Golden Mile project could not be
relied upon to compute the market value of the acquired lands.
The existence of and proximity to the ORR was the primary
selling factor in the Golden Mile auction, and without the ORR,
the land prices would not be so high. Reliance was placed on
Bhule Ram v. Union of India4 to urge that the use for which
land has been acquired is immaterial when considering the
potentiality of the land.
7.2. The Golden Mile project auction was notified and held only
after the acquisition in these cases had commenced. There was
substantial difference in the development status of the Golden
Mile project and the acquired lands: features like external
roads, water supply lines, electricity lines, etc. would have been
provided at the Golden Mile project within six months. The
auction sale under this project could, therefore, not indicate the
market value of the acquired land at the time of the acquisition.
7.3. The best sale exemplar that can be relied upon is the sale
deed through which one of the landowners himself purchased
a parcel of the acquired land. This was also the approach taken
by the LAC and the Reference Court.
7.4. Interest ought not to be granted on the enhanced amount, since
the compensation under the original Award was already paid
to the landowners. The high rate of interest on the enhanced
amount would unreasonably burden the state exchequer.

C. Issues
8. Having given our thoughtful consideration to the rival submissions
and having gone through the material on record, we find that the
following issues arise for consideration of this Court:

4 (2014) 11 SCC 307.
2294 [2025] 4 S.C.R.

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I. Whether the High Court was justified to rely on auction sale
instances of the Golden Mile project for the purpose of assessing
just and fair market value of the acquired land?
II. (a) If Issue I is answered in the affirmative, whether the
landowners are entitled to further enhancement, and to what
extent?
(b) If Issue I is answered in the negative, what other evidence
on record ought to be relied on to assess the market value of
the acquired land?
III. What would be the just and fair market value of the acquired land?
IV. Whether the High Court has correctly granted statutory benefits
like solatium and interest on the enhanced amount in accordance
with provisions of the 1894 Act?

D. Analysis
9. It may be seen at the outset that these appeals arise from three
different acquisitions, which were initiated through three separate
preliminary notifications issued under Section 4 of the 1894 Act.
The lands acquired through these notifications are adjoining each
other and have been acquired to construct successive sections of
the ORR. The Section 4 notifications were also issued within four
months. This time gap or the distance between the land parcels is
not so large that it would have any significant impact on the value of
the land under different acquisition processes. We are, thus, of the
considered opinion that the question of quantum of compensation in
all the instant appeals deserves to be considered together.

D.1 Issue I: Reliability of the Golden Mile Sale Instances
10. The High Court has chosen to rely on exemplars from the auction
sale of land plots in the Golden Mile project to compute market value
of the acquired lands. The landowners have also sought to rely on
this auction sale while seeking further enhancement.

D.1.1 General Principles
11. Before endeavouring to determine whether this sale exemplar would
be the right fit, we must recapitulate the general principles which
would steer this adjudication.
[2025] 4 S.C.R. 2295

Barla Ram Reddy v. The State of Telangana

12. It is a settled position that computation of compensation for acquisition
must be guided by the “market value of the land as on the date of
publication of the Section 4 notification”. This principle is mandated
by Section 23(1) of the 1894 Act. This court has, time and again,
interpreted ‘market value’ to represent ‘the price that a willing buyer
would pay to a willing seller in light of the land’s condition and
potentiality’.5
13. Of course, in ordinary circumstances, the best way to identify this
price is by considering instances of sale of similar or comparable
lands. Such exemplars can serve as a foundation for determining
compensation, so long as they fulfil the following requirements:
i. The sale exemplar depicts a genuine, open-market transaction;
ii. The land covered by the sale deed is in the vicinity of the
acquired land;
iii. The land covered by the sale deed is similar in nature to the
acquired land; and
iv. The sale was executed at a time proximate to the date of the
notification issued under Section 4 of the 1894 Act.6
14. Any sale exemplar which is presented to the Court ought to be
considered on the touchstone of these requirements, so that the
most representative sale instance can be determined.
15. Sale instances, however, cannot guide us to the market value of
the land with exactitude. In some cases, direct examples of sale of
comparable land may not be available, while in other cases, there
may be relevant distinguishing features between the sale exemplar
and the acquired land. In such cases, Courts adopt the process of
guesstimation to apply the evidence and arrive at an equitable price
for the acquired land.7
16. In this legal backdrop, let us consider the correctness of using the
Golden Mile auction as the foundation for determining market value.

5 State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela, (1968) 3 SCR 692; Kapil Mehra v. Union of India,
(2015) 2 SCC 262.
6 Shaji Kuriakose v. Indian Oil Corpn. Ltd., (2001) 7 SCC 650.
7 New Okhla Industrial Development Authority v. Harnand Singh, 2024 SCC OnLine SC 1691.
2296 [2025] 4 S.C.R.

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D.1.2 Analysis
17. The Golden Mile project was promoted as directly abutting the
ORR. The brochure for the Golden Mile project reveals that external
trunk infrastructure like roads, water supply, and electricity would
be provided by HUDA. Through an auction process, the plots were
to be sold as unencumbered parcels of land. The auction upset
price was set by HUDA at INR 4,50,00,000 per acre, and the plots
were finally purchased at rates ranging from INR 6,10,00,000 to
INR 14,45,00,000 per acre. There is, admittedly, no averment which
would indicate that the auction sale was not bona fide.
18. To accept this sale exemplar as reliable for the purpose of calculation
of market value, its comparability with the acquired lands is crucial.
19. What ought to be noticed at the first instance is that the Golden
Mile plots are not of a similar nature or development-status as the
acquired lands. The project was being developed on land already
owned by the State, and the plots were sold on unencumbered, free-
hold basis. Further, the plots are connected to the road, with water
and electricity connections, disclosing the development being done
to increase their potentiality. These qualities make the Golden Mile
plots especially potent for large commercial and residential projects.
20. This is in stark contrast to the acquired lands. Although they had the
potentiality for an urban project being developed, the land was actually
lying barren without any developmental infrastructure. The argument
that the potentiality of the entire area is high does nothing to dispel the
substantial difference between the empty, undeveloped acquired land
and the construction-ready plots sold under the Golden Mile project.
21. Another factor that must be kept in mind while considering
comparability of potentiality is the capacity of the landowner to utilise
the acquired land. It is noteworthy that the plots in the Golden Mile
project were in the form of chunks of land. Most of the acquired lands
were, on the other hand, shaped as relatively narrow strips. Even
though they were abutting a road, such a physical characteristic of the
land parcels would considerably reduce the capacity for them to be
utilised. This Court has previously recognised that land being in the
form of a strip accounts for a negative impact on its market value8,

8 Viluben Jhalejar Contractor v. State of Gujarat, (2005) 4 SCC 789.
[2025] 4 S.C.R. 2297

Barla Ram Reddy v. The State of Telangana

and this difference adds to the distinction between the acquired land
and the Golden Mile plots.
22. Apart from these distinctions in the qualities of the land, the details
of the sale exemplar, too, do not strike any confidence in our
minds. This is primarily because being an auction sale reduces the
exemplar’s reliability to indicate the true market value. An auction
inevitably motivates buyers to purchase at higher prices than the
prevailing market rate. The process incorporates extraneous factors,
like competition, ego, and speculation, into setting of sale price. This
unreliability of auction sale has been aptly acknowledged in some
decisions of this Court, such as in Raj Kumar v. Haryana State9:
“16. … An argument was raised that the prices of lands
fetched in auction had been ignored on the basis that
prices fetched in auction-sales cannot form the basis. It
was submitted that there was no general rule that such
prices cannot be adopted. On considering the relevant
facts disclosed, it cannot be said that the High Court has
committed any error in discarding those auction-sales
while determining the compensation payable. The element
of competition in auction-sales does not make them
safeguides. …”
[Emphasis supplied]

23. While the landowners have relied on the decision in Karnataka
Housing Board (supra), this Court has expressly accepted the
principle laid down in Raj Kumar (supra) in that case and clarified
that such auction exemplars can only be used when no other
comparable sale instances are available.
24. The reliability takes a further dip when it is observed that the Golden
Mile auction took place after the notifications under Section 4 were
issued. The brochure announcing the project and inviting bids was
issued in July 2006, and the open auction took place in the same
month, on 20.07.2006.
25. As a rule of thumb, sale instances which take place after the
initiation of the acquisition are not reliable sources to compute land

9 (2007) 7 SCC 609.
2298 [2025] 4 S.C.R.

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acquisition compensation. This position arises from the tendency
of land value in the area to appreciate upon acquisition, expecting
benefits from the public purpose of the acquisition. For example, the
acquisition of land for development of commercial hubs, residential
projects, and arterial roads would inevitably shoot up the price of
the other nearby land. As such, post-Section 4 sale instances are
bound to be skewed. The Legislature has also recognised and
provided for this trend. The ‘fifthly’ clause of Section 24 of the
1894 Act mandates that the price increase due to purpose of the
acquisition must be disregarded, which was also applied by this
Court in Bhule Ram (supra).
26. In the circumstances of the instant appeals, we find strength in the
submission of learned ASG that the acquisition for constructing
ORR could have had a drastic impact on the potentiality of adjoining
lands. The publication of the Section 4 notifications put important
information regarding the ORR and its benefit to the Golden Mile
project in the public domain. It is, thus, very likely that the auction
price of the Golden Mile plots saw a precipitous rise on account of
the subject acquisitions, and its purpose undoubtably had a lasting
impact on the auction price of these plots. This undeniable cause-
and-effect relationship between the acquisition and the subsequent
auction taints these sale instances.
27. In this respect, the landowners have argued that there is no bar on
taking post-notification sale instances into consideration. We are,
however, not inclined to entertain this argument as a general principle,
since there are other, more reliable pre-Section 4 notification sale
exemplars available to be used. We find that the auction sale is also
unreliable due to having taken place after the acquisition.
28. At this stage, we may also deal with the matter of using the upset price
for the auction instead of the actual sale rates. While the High Court
has relied on the upset price of the auction, there is nothing on record
to indicate how the upset price was arrived at, what considerations
were taken into account while deciding it, and on what date the final
decision on the price was taken. It is not unreasonable to expect
that market value of the land is only a part of the consideration at
the time of deciding the upset price of the auction. HUDA would,
likely, have also taken into account the expected increase in value
of the land till the date of the auction; the perceived value to the
buyer of being part of a larger project; and the ORR passing right
[2025] 4 S.C.R. 2299

Barla Ram Reddy v. The State of Telangana

next to the project. As such, HUDA’s upset price for the auction is
also unreliable for the purpose of determining market value.
29. Considering the above stated factors and the settled position of law,
the auction sale of plots in a developed area on a date after the
Section 4 notification ought to be disregarded at the outset. As such,
we hold that the High Court erred in founding its determination on
the Golden Mile project rates.

D.2 Issue II: Identifying the Most Appropriate Sale Instances
30. Now that we have disregarded the sale exemplars from the Golden
Mile auction, let us consider which of the other sale instances can
be used to compute the market value of the acquired lands.

D.2.1 Set B Exhibits
31. The Set B Exhibits comprise four sale deeds, which were executed
between 22.08.2007 and 12.09.2007. A total of 26 acres of land in
Survey Nos. 217-225 of Narsingi village and Survey Nos. 263-270
of Poppalguda village was purchased for a residential project, at a
rate of INR 12,50,00,000 per acre.
32. It is apparent from a bare perusal that these sale deeds were
executed over sixteen months after the Section 4 notifications were
issued. Such a time gap should prompt any court to disregard the
sale deeds right at the outset. This is more so because these lands
are a direct beneficiary of the ORR, and the deeds were executed
even after the declarations under Section 6 of the 1894 Act were
published. This set of sale exhibits can in no way be reliable a basis
to determine the market value of the acquired lands. Therefore, just
for the temporal incompatibility, these exhibits ought to be discarded
altogether.
33. Having held so, we now proceed to address the landowners’
submissions regarding the comparability of the exemplar and acquired
lands. Merely being at a short distance of 270 metres from the acquired
land does not make the exemplar land comparable. It emerges from
the record that the land in these exhibits is on the east side of the
Gachibowli-Shamshabad Express Highway, i.e., towards the airport
and Hyderabad city. On the other hand, the acquired lands are to
the west of the said highway. Notwithstanding the short distance
between the lands, in metropolitan and metropolitan-adjacent areas,
2300 [2025] 4 S.C.R.

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such locational differences have a substantial impact on land value.
Being on the city side of the highway, the exemplar lands are bound
to be of a higher value, adding to the unreliability of these exhibits.

D.2.2 Set C Exhibits
34. The Set C Exhibits comprise seven sale deeds, which were executed
between 11.02.2004 and 04.02.2005. Parcels of land in Survey
Nos. 187-202 in Narsingi village were purchased by M/s Jayabheri
Properties Pvt. Ltd., at rates ranging from INR 20,00,000 to 31,00,000
per acre.
35. These seven sale deeds can be presented through the following table:

Exhibit Sale Rate of
Sr. No. in Date of the Land
Survey No.(s)
No. LAOP No. Execution (in INR per
56/2014 acre)
1. A1 187, 189, and 193 11.02.2004 31,00,000
2. A2 187, 189, and 193 11.02.2004 31,00,000
189, 190, 200,
3. A3 06.10.2004 30,00,000
201, and 202
4. A4 192 04.02.2005 30,00,000
194, 196, 197,
5. A6 25.02.2004 20,00,000
200, 201, and 202
6. A7 197, 198, and 199 08.10.2004 30,00,000
7. A8 199/A 08.10.2004 30,00,000

36. The lands sold in these exhibits are adjoining the acquired lands.
In fact, parts of these Survey Nos. were also acquired through the
same Section 4 notifications. Unlike the Set B Exhibits, these lands
are on the same side of the Express Highway. Most importantly,
these sale deeds are the only exhibited sale instances which took
place prior to the publication of the Section 4 notifications, with a
time gap of not more than 26 months. Keeping in view the above
considerations, we are of the opinion that these sale exhibits would
be the only reliable foundation to determine the market value of the
acquired lands.
37. Before dealing with the rest of the sale deeds, it is clear that Ex.A6
depicts a substantially lower sale price for lands at effectively the
[2025] 4 S.C.R. 2301

Barla Ram Reddy v. The State of Telangana

same time as Ex.A1 and Ex.A2. It, therefore, follows that Ex.A6 must
have been a distress sale, motivated by some extraneous factors,
and it is, thus, liable to be discarded.
38. This Court has, on various occasions, held that among multiple
reliable sale instances, the exemplar which depicts the highest
market value ought to be used. The exception to this general rule
is that an average of the rates can be taken when they are within
a narrow margin.10
39. In the present appeals, the six remaining sale exemplars depict rates
within the range of INR 30,00,000 - 31,00,000 per acre. This may
preliminarily appear to be narrow enough to invoke the exception
to the ‘highest sale exemplar’ rule. However, this perspective fails
when we take into account the details of these sale instances.
Ex.A3, Ex.A4, Ex.A7, and Ex.A8, which are at the lower end of the
range, were executed a considerable amount of time after Ex.A1
and Ex.A2, which are at the high end of the range. To counter this
anomaly and after accounting for rise in value due to efflux of time,
Ex.A1 and Ex.A2 depict a substantially higher value compared to
the other exhibits. We are, accordingly, satisfied that these two
instances should be the foundation for computation of market value
of the acquired lands.

D.2.3 Non-Exhibited Sale Instances
40. Before we proceed to compute the true market value, we must
also consider the submission of Ms. Basu that there is one sale
instance of 2003, wherein comparable land was sold at a rate of over
INR 1,41,00,000 per acre. She refers to Document No. 2913/2003,
which finds mention in the Award passed by the LAC. The exemplar
was disregarded by the LAC due to its marginal distance to the
acquired lands. Importantly, this sale deed was not exhibited before the
Reference Court. Ordinarily, without a sale instance being produced
and proven in evidence before the Reference Court, the Court ought
not to rely on such averred sale exemplars.
41. However, the State has, through an interlocutory application, sought
to place Document No. 2913/2003 on record for the first time before

10 Kapil Mehra (supra) [18-20]; Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432; Himmat Singh v. State
of M.P., (2013) 16 SCC 392.
2302 [2025] 4 S.C.R.

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this Court. The document is only a registered agreement of sale-
cum-General Power of Attorney dated 30.04.2003, depicting a sale
of lands in Survey Nos. 204/E and 203/E at a rate of INR 3,75,000
per acre. The process of clearing any doubt regarding this sale
instance has, thus, revealed a factual error in the Award. As such,
it would not be safe or prudent to rely upon this purported sale
instance when there are already other exhibited sale exemplars of
a higher rate on record.

D.3 Issue III: Computing the Market Value
42. As has already been held, the market value of the acquired lands
at the time of the acquisition would be based on the sale instances
in Ex.A1 and Ex.A2. It has not missed our attention that these sale
deeds were executed in early 2004, almost two years before the
publication of the Section 4 notifications. Due to passage of time,
the value of the land would have increased during this period. So,
we would also need to escalate the rates in the exemplars to meet
the rise in prices over time. The escalation, of course, cannot be
decided with exactitude, and some level of guesstimation has to be
incorporated within our reasoning.11
43. Ordinarily, this Court has applied an escalation of 10-12% per year
to account for the time gap.12 At this stage, we must take note of
the submission on behalf of the landowners that there was rapid
development in the area during this period. Concomitantly, there
must have also been a steep rise in the price of land. We find force
in this argument of the learned Counsel. The area in acquisition is
close to the municipal limits of Hyderabad city and witnessed setting
up offices of major multinational IT and financial sector organisations,
even prior to the acquisition. The acquired lands are also admittedly
close to the Hyderabad Airport. As such, even if the land may not be
within the municipal limits of Hyderabad city, the area must be treated
as an extension of the metropolitan area. It follows, then, that the
escalation for each year must also be higher. The concept of higher
escalation in metropolitan areas was also accepted by this Court

11 New Okhla Industrial Development Authority v. Harnand Singh (supra).
12 Himmat Singh v. State of M.P., (2014) 14 SCC 466; Ashok Kumar v. State of Haryana, (2015) 15 SCC
200.
[2025] 4 S.C.R. 2303

Barla Ram Reddy v. The State of Telangana

in ONGC Ltd. v. Rameshbhai Jivanbhai Patel13. Considering all
circumstances, we are of the opinion that a compounding escalation
at the rate of 20% for each year would be just and equitable to
account for the rise in prices over time.
44. Applying 20% compounding escalation for 2004 and 2005 to the
base rate of INR 31,00,000 per acre, we find that the market value
of the acquired lands at the time of the publication of the notification
under Section 4 of the 1894 Act would be INR 44,64,000 per acre.
45. After careful consideration of the evidence produced by the
parties, we, thus, find that the High Court has erred in increasing
the compensation in an exponential manner to the rate of INR
1,35,00,000 per acre. As demonstrated by our analysis above, the
market value of the subject land could not be derived from auction
sale instances of plots in a developed area or from post-Section
4 notification sale instances. Instead, it ought to be arrived at by
considering appropriate pre-notification sale deeds and applying
proper price escalation.

D.4 Issue IV: Interest and Solatium
46. Both, the landowners as well as the State, have also challenged the
clarification by the High Court on the grant of interest and solatium
on the enhanced amount to the landowners.
47. Section 34 of the 1894 Act is fairly clear in its mandate that interest
is payable on the “amount awarded”. The provision stipulates that
interest is payable at the rate of 9% per annum, from the date of
taking of possession till deposit or payment of the amount. In case
this period extends beyond one year, the interest payable for the
additional period is set at the rate of 15% per annum.
48. As such, the High Court has erred in stipulating that the interest is
payable on the enhanced amount at the rate of 12% per annum. The
High Court cannot deviate from the explicit mandate under Section
34, and interest has to be awarded strictly in accordance with the
statutory provision. In this respect, we accept the plea taken on
behalf of the landowners for correcting the interest rate.

13 (2008) 14 SCC 745 [13].
2304 [2025] 4 S.C.R.

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49. We find that the grounds raised by the State to challenge the interest
on the enhanced amount, i.e., the acceptance of the compensation
in protest and burden on the exchequer, are wholly untenable. The
clear stipulation under Section 34 is in consonance with equitable
principles, and it vests an indefeasible right in favour of a landowner.
After market value has been originally determined by the Reference
Court, enhancement in appeal is a reflection of the true value which
ought to have been granted at the threshold.
50. There can, thus, be no dispute that all statutory benefits, including
additional amount under Section 23(1A), additional consideration
(solatium) under Section 23(2), and interest on the entire
compensation under Section 34, would be due on the enhanced
amount of compensation.
51. We, thus, hold that the High Court has rightly granted interest and
solatium, as well as interest on the solatium, on the enhanced market
value, but it has erred in granting interest at the rate of 12% per annum.
Interest ought to be granted at the rate of 9% per annum for the first
year after taking of possession, and 15% per annum thereafter, till
deposit of the amount, in accordance with Section 34 of the 1894 Act.

E. Conclusion and Directions
52. For the reasons stated above:
i. The appeals filed by the landowners are dismissed, except to
the extent of grant of interest as clarified in Paragraph 51 above.
ii. The appeals filed by the State and HMDA are allowed in part.
iii. The following judgements and orders of the High Court are
hereby set aside:
a. Common Judgement dated 28.09.2022 in LAAS No.
73/2019; LAAS No. 78/2020 with Cross Objections No.
14/2022; and LAAS No. 58/2020 with Cross Objections
No. 6/2022 (being Lead Impugned Judgement);
b. Order dated 25.11.2022 in IA No. 1/2022 in LAAS No.
73/2019;
c. Judgement dated 28.03.2023 in LAAS No. 114/2022; and
d. Judgement dated 28.03.2023 in LAAS No. 7/2023.
[2025] 4 S.C.R. 2305

Barla Ram Reddy v. The State of Telangana

iv. The market value of the acquired lands is reduced from the
rate of INR 1,35,00,000 per acre granted by the High Court to
the rate of INR 44,64,000 per acre.
v. In addition to the reduced market value, the landowners are
held entitled to additional amount at the rate of 12% per annum
and solatium at the rate of 30% as part of the compensation, as
well as interest on the entire compensation, at the rate of 9%
per annum, for the first year after taking over of possession,
and 15% per annum, for the period thereafter, till the amount
is paid to the landowners or deposited with the Court.
vi. The compensation amount, if not already paid, shall be paid
to the landowners, along with all statutory entitlements and
interest, within eight weeks.
53. All the matters stand disposed of in the aforementioned terms and
directions.

Result of the case: Matters disposed of.

†
Headnotes prepared by: Nidhi Jain