DIGAMBER & ORS.versusSTATE OF MAHARASHTRA & ORS.

                    [2013) 7 &.C.R. 1037


                     DIGAMBER & ORS.                                A
                             v.
            STATE OF MAHARASHTRA & ORS.
              (Civil Appeal No. 5346 of 2013)
                      AUGUST 1, 2013
                                                                    B
      [G.S. SINGHVI AND V. GOPALA GOWDA, JJ.]

    Land Acquisition Act, 1894:

     ss. 4, 6 and 23 - Acquisition of agricultural land for         c
industrial development - Compensation - Comparative sale
transactions - Criteria for determination of market value of
acquired land - Explained - Held: That the acquisition of the
land is for commercial purpose should be the relevant criteria
for determining the market value by both the Land Acquisition       0
Officer and reference court - Reference court, while enhancing
the compensation, was right in placing reliance upon the sale
instances even in relation to small plots of land and holding
that there is a trend of escalation of the price of land situated
in the proximity of the acquired land -- The said finding of fact   E
has been erroneously set aside by High Court -- The reference
court by placing reliance upon the documentary and oral
evidence on record, and by re-determining the market value,
has awarded just and reasonable compensation - Judgment
of High Court set aside and award passed by reference court
restored.                                                           F

    Notification uls 4 of the Land Acquisition Act, 1894
for acquisition of agricultural land belonging to the
appellants, for the purpose of industrial development was
published on 7 .9.1991 and final notification was                   G
published on 12.7.1992. The Land Acquisition Officer
awarded the compensation at the rate of Rs.50,000/- per
hectare, but the reference court placing reliance on
comparable sale transactions of the dates prior and
                           1037                                     H
    1038    SUPREME COURT REPORTS                [2013) 7 S.C.R.

A subsequent to the issuance of notification u/s 4,
  enhanced the compensation to Rs.5/- per sq. foot.
  However, the High Court set aside the judgment of the
  reference court and restored the award passed by the
  Land Acquisition Officer.
B
        Allowing the appeal, the Court

       HELD: 1.1 In the instant case, the acquisition of land
  was for non residential purpose as it was required to
  establish industries through industrial entrepreneurs by
C forming industrial estate and carving out industrial plots
  by the Maharashtra Industrial Development Corporation,
  which was purely a commercial purpose. This important
  aspect of the matter was required to be kept in mind by
  the Special Land Acquisition Officer at the time of
D determining the market value of the acquired land in
  exercise of his statutory power u/s 11 of the L.A. Act. That
  the acquisition of the land is for commercial purpose
  should be the relevant criteria for determining the market
  value by both the Land Acquisition Officer and the
E reference court. [para 9 and 23] [1045-C-E; 1054-G]

       1.2 Further, the legal principles laid down in the case
  of Atma Singh, indicate the criteria to be followed for
  determination of the market value of a property keeping
  in view its existing condition with all its existing
F advantages and its potential possibility when let out in
  its most advantageous manner. The existing amenities
  like water, electricity, possibility of their further extension,
  town is developing or has prospect of development in
  future, are very much abundantly available in respect of
G the acquired land as the said land is within the proximity
  of New Venkateshnagar Layout, wherein residential sites
  are formed, and there is a school and college near the
  Highway. [para 23] [1055-C-G]

H
 DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1039


    Atma Singh Vs. State of Haryana 2007 (12) SCR 1120            A
= 2008 (2) sec 568 - relied on.
     1.3 The reference court was right in placing reliance
upon the sale instances even in relation to small plots of
land. Some sale deeds are of prior to acquisition                 8
notification and some are subsequent to it. Though it is
shown from the records that the acquired land on the date
of notification was an agricultural land, it has got non
agricultural potentiality as the said land was proposed by
the District Collector for acquisition after satisfying himself   C
that it was suitable for the purpose of industrial
development. The reference court has held that there is a
trend of escalation of the price of land situated in the
proximity of the acquired land. The said finding of fact has
been erroneously set ·aside by the High Court. [para 10,
14 and 23) [1048-F-G; 1054-G-H; 1055-A-B; 1056-C]                 D

     Sabhia Mohammed Yusuf Abdul Hamid Mui/a
Vs. Special Land Acquisition Officer (2012) 7 SCC 595;
Viluben Jhalejar Contractor vs. State of Gujarat 2005 (3) SCR
    =
542 2005 (4) sec 789 - relied on.                                 E

     Nama Padu Huddar Vs. State of Maharashtra 1994 BCJ
316, Shashikant Krishanji v. Land Acquisition Officer 1993
BCJ 27, Land Acquisition Officer Vs. L. Kamalamma 1998
(1) SCR 1153 = 1998 (2) SCC 385, Faridabad Gas Power
Project, NTPC Ltd.,etc Vs. Om Prakash & Ors., etc. (2009) 4       F
SCC 719; Vyricher/a Narayana Gajapatiraju Vs. Revenue
Divisional Officer AIR 1939 PC 98 - referred to.

     1.4 The award of compensation by the Special Land
Acquisition Officer at Rs. 50,000/- per hectare of the            G
acquired land do.es not reflect the correct market value
as the same was unrealistic and contrary to legal
evidence on record and the law laid down by this Court.
The reference court has held that the claimants are
entitled for enhanced compensation at the rate of Rs.5/-          H
    1040   SUPREME COURT REPORTS                [2013] 7 S.C.R.


A per sq. ft. as per calculations made in its judgment. The
  findings of fact and reasons recorded by the reference
  court in determining the market value of the acquired land
  are well founded and the same are based on facts, cogent
  and legal evidence adduced on record by the appellants.
B The reference court referring to the notes of inspection
  of the site made by the Assistant Collector and Land
  Acquisition Officer on 21.11.1990, and placing reliance
  upon the documentary and oral evidence on record, and
  by re-determining the market value, has passed judgment
c and awarded just and reasonable compensation. The
  findings of fact recorded by the reference court have been
  erroneously set aside by the High Court without
  assigning valid reasons. Therefore, it would be just and
  proper for this Court to restore the judgment and award
  passed by the reference court. Ordered accordingly. [para
0
  9, 11, 12, 13 and 24-25) [1045-E; 1046-G-H; 1047-B; 1048-
  B-D; 1055-H; 1056-A, B-C, E-F]

       The special Land Acquisition Officer, BTDA, Bagalkot Vs.
  Mohd. Hanif Sahbi Bawa Sahib 2002 (2) SCR 550 = JT 2002
E (3) SC 176; Saraswati Devi and others Vs. U.P. Government
  & Anr. AIR 1992 SC 1620; Union of India Vs. Zila Singh and
  Ors. (2003) 1o sec 166 - cited.

                        Case Law Reference:
F       2002 (2) SCR 550          cited               para 4
        AIR 1992 SC 1620          cited               para 7
        (2003) 1o sec 166         cited               para 7
        2005 (3) SCR 542          relied on            para 17
G
        (2012) 1 sec 595          relied on            para 23
        1994 BCJ 316              referred to          para 15
        1993 BCJ 27               referred to          para 16

H       2007 (12) SCR 1120        relied on·           para 18
  DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1041


     1998 (1) SCR 1153              referred to          para 19       A

      c2009) 4 sec 119              referred to           para 20

      AIR 1939 PC 98                referred to           para 21

     CIVIL APPELLATE JURISDICTION : Civil Appeal No.                   B
 5346 of 2013.
      From the Judgment and Order dated 05.10.2005 of the
 High Court of Judicature of Bombay Bench at Aurangabad in
 F.A. No. 646 of 1998.
                                                                       c
       Bina Madhavan, Praseena E. Joseph, Shivendra Singh,
 for the Appellants.

      Shyam Divan, Ramni Taneja, Guruprasad Pal, Umang
 Jain, Asha Gopalan Nair for the Respondents.·
                                                                       D
      The Judgment of the Court was delivered by

      V. GOPALA GOWDA, J. 1. · Leave has been granted by
 this Court V.ide order dated 8.7.2013.

      2. This appeal is directed against the judgment and order        E
 dated 05.10.2005 passed by the High Court of Judicature of
 Bombay, Bench at Aurangabad passed in First Appeal No. 646
·of 1998 whereby the High Court set aside the judgment and
 award dated 02.05.1998 of the learned Civil Judge, Senior
 Division, Nanded passed in.land acquisition reference case and        F
 restored the compensation awarded at the rate of Rs.50,000/
 - per hectare by the Special Land Acquisition Officer, Nanded
 by allowing the appeal filed by the respondents.

       3. It is contended by Ms. Bina Madhavan, the learned            G
  counsel for the appellants that the impugned judgment is
  contrary to the legal evidence on record particularly Exhs. 20-
  21 which are the sale deeds of the plots covered in the same
, area that were prior to the notification that is before 14.06.1990
  ~hich sale instances were very well considered by the reference      H
    1042    SUPREME COURT REPORTS                 [2013] 7 S.C.R.


A court for comparison and the finding of fact was recorded that
  the said instances are comparable to the acquired land to that
  of the plots covered in the sale deeds. Therefore, it is
  contended that the acquired land has the similar non agricultural
  potentiality and the State Government had acquired the said
B land in favour of the Maharashtra Industrial Development
  Corporation (in short 'the Corporation') for the purpose of
  formation of industrial estate and sale of the plots for
  commercial purposes. It is urged by the learned counsel that
  the judgment and award passed by the reference court is
c erroneously set aside by the High Court as it has found fault
  with it in placing reliance upon the sale instances and has ·
  wrongly re-determined the market value of the land which
  findings recorded by the High Court in its judgment are not only
  erroneous in law but also suffers from error in fact and therefore,
  the same is liable to be set aside.
0
        4. The further legal contention urged by the learned
  counsel for the appellants is that learned reference Judge has
  rightly awarded the compensation of the acquired land after re-
  determining its market value based on legal evidence on record
E at the rate of Rs.5/- per sq. feet. The documentary evidence
  produced by the appellants are sale deeds marked as Exhs.
  22 and 23 pertaining to years 1991 and 1993 respectively and
  Exhs. 24 and 25 pertaining to the year 1994, ie. post acquisition
  notification period. That the plots covered in the said sale
F instances are non agricultural plots of Venkateshnagar Layout
  which are comparable to the acquired land is the finding of fact
  recorded by the learned Judge of the reference court on proper
  appreciation of legal evidence on record. The same is
  supported by the decision of this Court in the case of The
G special Land Acquisition Officer, BTDA, Baga/kot Vs. Mohd.
  Hanif Sahbi Bawa Sahib 1, wherein this Court in the aforesaid
  case has held that the reference. court can take into
  consideration the plots which are covered in the sale instances
  which were small bits of land, if the acquired land is comparable
H 1.   JT 2002 (3) SC 176.
 DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1043
           [V. GOPALA GOWDA, J.]

to the land covered in sale deeds and that placing reliance on A
such sale instances by the reference court for re-determination ··
of the market value of the acquired land is permissible in law.
It is further urged by the learned counsel that this vital aspect
of the matter has been overlooked by the learned Judge of the
High Court while passing the impugned judgment and award B
by setting aside the judgment and award of the reference court
and restored the compensation awarded by the Land
Acquisition Officer which is vitiated both on facts and on law.
Therefore, the same is liable to be set aside and the judgment
of the reference court must be restored.                           c
      5. Further, it is contended by her that the learned Judge
of the High Court has erred in affirming the compensation
awarded by the Special Land Acquisition Officer at Rs.
50,000/- per hectare of the acquired land ignoring its potentiality
as it is acquired for the purpose of formation of industrial estate   D
with a view to carve out the plots and allot the same in favour
of allottees/private industrial entrepreneurs at commercial rates
for construction of the commercial and industrial buildings upon
such allotted plots.
                                                                      E
     6. It is further contended that the impugned judgment and
award of the High Court is otherwise contrary to the principles
of law laid down by this Court in a catena of cases, and,
therefore requested this Court to award just and reasonable
compensation as awarded by the reference court.                       F

     7. Mrs. Asha Gopalan Nair, the learned counsel for
respondent Nos. 1 and 2 and Mr.Shyam Divan, learned Senior
Counsel for respondent No.3 have sought to justify the
impugned judgment of the High Court, inter alia, contending that
the learned single Judge of the High Court has rightly set aside      G
the impugned judgment in the First Appeal after recording valid
and cogent reasons for rejecting the finding recorded by the
reference court on contentious issues by placing reliance upon
the pre and post sale instances in relation to the non residential
plots which are not comparable to the acquired land. Therefore,       H
    1044        SUPREME COURT REPORTS              [2013] 7 S.C.R.


A it is submitted that the High Court has rightly came to the
  conclusion on proper re-appraisal of evidence and held that the
  finding of fact recorded by the reference court in placing ·
  reliance upon the sale instances is in relation to small plots,
  whereas the lahd acquired is a bigger area. Therefore, the plots
B covered under sale instances are not comparable to the
  acquired land in order to arrive at a conclusion and record
  finding that the acquired land is comparable to the plots
  referred to supra. Further, the land of the owners has not
  acquired non agricultural potentiality and re-determination of the
c market value by the learned reference Judge on the basis of
  sale instances is erroneous and contrary to the judgments of
  this Court. The High Court, in support of its findings and
  conclusions has placed reliance upon the judgment of this
  Court reported in Saraswati Devi and Others Vs. U.P.
D Government & Anr2. and Another judgment in Union of India
  Vs. Zila Singh and Ors. 3 wherein this court after interpretation
  of Section 23 of Land Acquisition Act, 1894 (in short 'the L.A.
  Act), has held that the sale price in respect of a small piece of
  land (one bigha in that case) cannot be the basis for
  determination of market value of a vast stretch of land (5484
E bighas in that case). Therefore, the impugned judgment of the
  High Court in setting aside the judgment of the reference court
  must be accepted by this Court and does not call for
  interference by this Court. Hence, they have prayed {or
  dismissal of this appeal.
F
         8. With reference to the above rival legal contentions, the
    following points would arise for consideration of this Court:

           I.     Whether the impugned judgment passed by the
                  High Court by reversing the judgment and award of
G
                  the reference court is vitiated on the ground of
                  erroneous finding and also error in law?


  2.   AIR 1992 SC 1620.
H 3.   (2003) 10 sec 166.
 DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1045
           [V. GOPALA GOWDA, J.]

      II.   For what award the appellants are entitled to in this     A
            appeal?

     9. The first point is required to be answered in the
affirmative in favour of the appellants for the following reasons:-

     The State of Maharashtra in exercise of its statutory power B
acquired the lands in favour of the Corporation by publishing
the notification in the government gazette on 7 .09.1991, and
final notification published in the government gazette on
12.07.1992, for the purpose of industrial development by the
Corporation in the State of Maharashtra. Undisputedly the C
acquisition of land is for non residential purpose as it was
required to establish industries through industrial entrepreneurs
in the acquired land by forming industrial estate and carving out ·
the industrial plots by the Corporation, which is purely a
commercial purpose. This important aspect of the matter was D
required to be kept in mind by the Special Land Acquisition
Officer at the time of determining the market value of the
 acquired land in exercise of his statutory power under Section
 11 of the L.A. Act and the Special Land Acquisition Officer has
 awarded compensation at Rs. 50,000/- per hectare of the E
 acquired land which does not reflect the correct market value.

      10. Feeling aggrieved by the said award the appellants
herein sought for reference to the reference court by filing claim
petition under Section 34 of the Maharashtra Industrial
Development Act, 1961 for enhancement of compensation by              F
re-determining the market value. The Collector made reference
to the reference court by acceding to the request of _the land
owners for re-determination of the market value of the acquired
land. The appellants produced documentary evidence of sale
instances of the plots which are situated in the near proximity       G
of the acquired land and the reference court has examined their
claim for enhancement of compensation and rightly re-
determined the market value of their land by placing reliance
upon the sale instances. The said claim was opposed by the
respondents by filing their written statement, inter alia,            H
    1046    SWPREME COURT REPORTS                  [2013] 7 S.C.R.


A  contending that compensation awarded by the land acquisition
   officer is as per the sale consideration of the land covered in
   the sale instanees which are situated nearby the acquired land.
   The claimants have rightly placed strong reliance upon' the sale
   instances of sm~ll plots which are formed iri the New
B Venkateshnagar layout. The sale deed Exh. 21 dated
   17.3.1989 shows .that the 120 sq. feet was sold for Rs. 3500/
   - and Exhs. 20 and 22 dated 03.11.1989 which plots measuring
   1200 sq. feet sold for Rs.9000/- i.e. Rs. 7.50/- per sq. feet. The
   aforesaid sale deeds. are no doubt prior to the issuance of
c preliminary notification under Section 4 of the L.A. Act. The
   other sale instance produced by the claimants, Exh. 23 from
   GRC 136 shows that plot No.22 about 1500 sq. feet has been
   sold for 18,000/- at the rate of Rs. 12 per sq. feet. The sal~
   deed is dated 31.05.1993 i.e. three years later from the date
   of issuance of preliminary notification under Section 4 of the
0
  'L.A. Act. Another sale deed Exh. 14 is in respect of G.No.605
   wherein plot No. 8 measuring 45 x 14 sq. feet was sold for Rs.
   35,000/- on 21.12.1994. The appellants also produced the sale
   deed dated 16.02.1990 at Exh. 33 showing that plot No. 34 and
   35 admeasuring 60 x 30 feet situated at Venkateshnagar
E Layout was sold for Rs. 11,000/-. Another sale deed Exh. 34
   shows that one plot No. 13 measuring 40 x 30 feet was sold
   for Rs. 9,000/- on 02.11.1991 which are all after the preliminary
   notification under Section 4 of the L.A. Act. The learned
   reference Judge has rightly placed reliance upon the said sale
F instances for comparison and held that the acquired land is
   comparable to the plots covered in the sale deeds referred to
   supra, as it has acquired non-agricultural potentiality and the
   acquired land is situated in the near proximity to the plots
   covered in the sale deeds.
G
         11. The learned Judge of the reference court has referred
   to the notes of inspection of the site made by the Assistant
   Collector and Land Acquisition Officer on 21.11.1990, wherein
   they have stated that the acquired land is situated adjacent to
H Bhokar and on the eastern side of Bhokar Umri Road i.e.
    DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1047
             [V. GOPALA GOWDA, J.]
   towards southern side of Bhokar - Bhainsa Road, and A
   population of Bhokar is about 12000. It is further stated that
   there are various facilities in the, said area like school and
   college. Bhokar is connected by Railway and State Road
   Transport. The learned reference Judge after referring to the
   factual contention urged on behalf of the. Land Acquisition B
   Officer and the claim of the appellants and placing reliance upon
   the documentary and oral evidence on record, passed judgment
   by awarding just and reasonable compensation by re-
   determining the market value. The land G.No.133 is acquired
   for the purpose of Mini MIDC i.e. for non agricultural purpose     c
   and further with reference to Map. 4, the acquired land is on
   Nanded Bhokar - Bhainsa Highway. Further, on the basis of
    receipts produced at Exhs. 17 and 18, the claimant No. 2
   Ashok Narayan Kondalwar has converted his share of land from
    G.No. 123 into non-agricultural purpose. To substantiate this fact 0
   the claimants produced the certificate issued by the Talathi,
   which is marked as Exh. 19. The learned reference Judge has
    also taken note of the fact that there is no evidence to prove
   that the acquired land was converted for non agricultural
   purpose prior to 14.06.1990. From Exhs. 40 and 41, it is clear E
·- that the possession of this land was taken on 19.6.1995 and
    prior to that date claimant No. 2 Ashok Narayan Kondalwar had
    converted his share of land into non agricultural purpose. The
    learned Judge did not consider the said documentary evidence
    and erroneously held that they are not helpful to the appellants.
    However, he has rightly placed reliance upon the sale instances F
    on record and come to the correct conclusion and held that there
    is tendency for price of the land to increase in the locality and
    found fault with the Land Acquisition Officer in not determining
    the market value ofthe acquired land at the rate of Rs. 5/- per
    sq. feet after deducting 40% area of the acq1,1ired land which G
    is used for the purpose of development. Jherefore, the
    appellants are entitled for compensation as awarded by the
    learned Judge of the reference court.

        12. The learned reference Judge has recorded a finding        H
    1048    SUPREME COURT REPORTS                  (2013] 7 S.C.R.


A of fact stating that the acquired land is having non agricultural
  potentiality as it has been acquired for MIDC for the purpose
  of industrial development and further, it is an admitted fact that
  no crops were raised by the appellants upon the land. The claim
  of the appellants was partly allowed by the reference Judge
B holding that they are entitled for enhanced compensation at the
  rate of Rs. 5/- per sq. feet as per the calculations made in the
  judgment of the reference court.

       13. Accordingly, the reference Judge has rightly re-
  determined the market value of the acquired land and awarded
C all statutory benefits like 30% solatium and interest and
  additional compound interest from August, 1993 to 6th March,
  1995. Statutory interest under Section 38 of the L.A. Act was
  given, on enhanced compensation from 19.06.1995 to
  18.06.1996 and thereafter@ 15% from 19.06.1996 till the date
D of realization of the amount by the appellants.
       14. We have carefully examined the factual and legal
  contentions urged on behalf of the parties and also the findings
  recorded by the learned reference Judge in the judgment
E impugned in the First Appeal filed by the respondents before
  the High Court. The reference court has rightly placed reliance
  upon the sale instances for comparison with that of the acquired
  land after satisfying the fact that it has also acquired non-
  agricultural potentiality. The subsequent sale deeds in relation
F to the residential plots of New Venkateshnagar Layout, which .
  were sold after the preliminary notification was issued in relation
  to the acquired land, the learned reference Judge has noticed
  the same and held that there is a trend of escalation of the price
  of land situated in the proximity of the acquired land. The said
G finding of fact is erroneously set aside by the High Court,
  holding that the learned reference Judge has erroneously
  applied the sale instances of the small residential plots of New
  Venkateshnagar Layout to the land acquired by the State
  government in favour of the M.1.0.C. The Land Acquisition
  Officer while determining the market value has considered the
H
                                                           '"'r
 DIGAMBER &.ORS. v. STATE OF MAHARASHTRA'.:fp49.
          [V. GOPALA GOWDA, J.]             ...

acquired land as agricultural land and awarded inadequate             A
compensation in favour of the appellants.
      15. We have carefully examined the factual and legal
contentions urged on behalf of the respondents keeping in view
the decision of this Court in the case of Sabhia Mohammed
Yusuf Abdul Hamid Mui/a Vs. Special Land Acquisition                  B
Officer4, wherein this Court after interpreting Section 23 of the
L.A. Act, 1894, referred to the various legal principles laid down
by the Bombay High Court and this Court regard_ing the relevant
criteria to be followed by the Land Acquisition Collector and
Courts for determination of the market value of the land              C
acquired for public purpose. At paragraph 5 of the above
referred judgment, there is a reference to the Bombay High
Court's judgment rendered in the case of Nama Padu Huddar
 Vs. State of Maharashtra 5, the relevant extracted portion is
reproduced below:                                                     D
             "Judicial note can be taken of the fact that the
      industrial growth in and around Bombay has started with
      rapid stride from the year 1965 onwards. In fact, the growth
      is by leaps and bounds in the magnitude of industries as
      well as number of industries and virtually all the industries   E
      of the country are represented on the industrial estates
      scattered on this highway. It is also an admitted position
      that on this highway on all sides the facility of electric
      supply is available as also of abundant water supply. In the
      area in question it is also an admitted position that all the   F
      lands have suitable access roads to Zila Parishad and
      State Highway including lands which are the farthest from
      the highway."
     16. Further, in para 7 of Sabhia Mohammed Yusuf Abdul
Hamid Mu/la's judgment, reference is made to the judgments            G
in Shashikant Krishanji v. Land Acquisition Officer6 and Nama

4.   c2012) 1 sec 595.
5.   1994 BCJ 316.
6.   1993 BCJ 27.                                                     H
    1050      SUPREME COURT REPORTS                   [2013] 7 S.C.R.


A   Padu Huddar v. State of Maharashtra (supra), relevant portion
    of which is extracted below:-
          "The land involved in the reference in hand and the land
          involved in State of Maharashtra v. Ramchandra
          Damodar Kof/7 are virtually identical situated in the same
B         area bearing similar topographical and physical
          characteristics covered by the same Notification dated 3-
          2-1970, when the nearby land of the land under reference
          fetched market value @ Rs 25 per square metre. On the
          date of notification, certainly the land under reference will
c         fetch the same market value."

       17. Also paras 16 and 17 from Sabhia Mohammed Yusuf
    Abdul Hamid Mui/a (supra) are quoted hereunder:

          "16. We have considered the respective arguments and
D
          carefully perused the record. It is settled law that while
          fixing the market value of the acquired land, the Land
          Acquisition Collector is required to keep in mind the
          following factors:

E                (i) Existing geographical situation of the land.

                 (ii) Existing use of the land.

                (iii) Already available advantages, like proximity to
          National or State Highway or road and/or developed area.
F
                 (iv) Market value of other land situated in the same
          locality/Village/area or adjacent or very near the acquired
          land.

G       17. In Viluben Jhalejar Contractor v. State of Gujarat8 this
    Court laid down the following principles for determination of
    market value of the acquired land: (SCC pp. 796-97)


    7.   (1997) 2 Mah. LR 325.
                 --
H 8. (2005) 4 ;sec 789.
     DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1051
              [V. GOPALA GOWDA, J.]
       "17. Section 23 of the Act specifies the matters required       A
       to be considered in determining the compensation; the
       principal among which is the determination of the market
       value of the land on 'the date of the publication of the
       notification under sub-section (1) of Section 4.
                                                                       B
       18. One of the principles for determination of the amount
       of compensation for acquisition of land would be the
       willingness of an informed buyer to offer the price therefor.
       It is beyond any cavil that the price of the land which a
       willing and informed buyer would offer would be different       C
       in the cases where the owner is in possession and
       enjoyment of the property and in the cases where he is not.

             19. Market value is ordinarily the price the property
       may fetch in the open market if sold by a willing seller
       unaffected by the special needs of a particular purchase.       D
       Where definite material is not forthcoming either in the
       shape of sales of similar lands in the neighbourhood at or
       about the date of notification under Section 4( 1) or
       otherwise, other sale instances as well as other evidences
       have to be considered."                                         E•

    18. Further, it would be worthwhile to refer to the portion
which is extracted from Atma Singh Vs. State of Haryana 0
which para is referred to at para 18 in Sabhia Mohammed
Yusuf Abdul Hamid Muffa 's. case (supra) which reads thus:
                                                                       F
       "5. For ascertaining the market value of the land, the
       potentiality of the acquired land should also be taken into
       consideration. Potentiality means capacity or possibility for
       changing or developing into state of actuality. It is well
       settled that market value of a property has to be . G
       determined having due regard to its existing condition with
       all its existing advantages and its potential possibility when
       led out in its most advantageous manner. The question
       whether a land has potential value or not, is primarily one
9.    (2008) 2 sec 568.                                                H
    1052     SUPREME COURT REPORTS                   [2013] 7 S.C.R.


A        of fact depending upon its condition, situation, uses to
         which it is put or is reasonably capable of being put and
         proximity to residential, commercial or industrial areas or
         institutions. The existing amenities like water, electricity,
         possibility of their further extension, whether nearabout
B        town is developing or has prospect of development have
         to be taken into consideration."

       19. In para 22 of Sabhia Mohammed Yusuf Abdul Hamid
  Mu/la's case (supra), the judgment of this Court in Land
C Acquisition Officer Vs. L. Kamalamma 10 is referred to and the
  relevant portion of which is extracted hereunder:

               "7 .... When a land is acquired which has the
         potentiality of being developed into an urban land, merely
         because some portion of it abuts the main road, higher
D        rate of compensation should be paid while in respect of
         the lands on the interior side it should be at lower rate may
         not stand to reason because when sites are formed those
         abutting the main road may have its advantages as well
         as disadvantages. Many a discerning customer may prefer
E        to stay in the interior and far away from the main road and
         may be willing to pay a reasonably higher price for that site.
         One cannot rely on the mere possibility so as to indulge
         in a meticulous exercise of classification of the land as
         was done by the Land Acquisition Officer when the entire
F        land was acquired in one block and therefore classification
         of the same into different categories does not stand to
         reason." .

       20. Para 18 of this Court's judgment in the case of
  Faridabad Gas Power Project, NTPC Ltd., etc Vs. Om Prakash
G & Ors., etc11 , is extracted thus:

         "18. On the facts and circumstances of the matters before
         us and difference in quality and potentiality of the lands
    10. (1998) 2 sec 385.
H 11. c2009) 4 sec 719.
 DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1053
           [V. GOPALA GOWDA, J.]
    acquired, we are of the view that market value of the               A
    acquired lands for NTPC when compared to the lands
    acquired for Sector-II Faridabad, should be reduced by at
    least one-fifth (20%)."

   21. It would be worthwhile to refer to the judgment of Privy         B
Council decided on 23.02.1939 in the decision reported in
Vyricherla Narayana Gajapatiraju Vs. Revenue Divisional
Officer12 wherein at para 24 it reads as under:

              "24. It was then claimed on the appellant's behalf that
     the spring could but for its acquisition, have been used by        C
     him as a source of water supply either to the Harbour
     Authority or to the oil companies and others residing or
     carrying on business in the harbour area; and the appellant
     claimed to be compensated upon this footing. After a
     ler .:Jthy hearing before him in the course of which many          D
     questions of law and fact not now in issue were discussed,
     the learned Judge made his award. He found as a fact,
     and the fact cannot be disputed, that the water of the
     spring was on 13th February, 1928 capable of being used
     as a source of water supply to persol'ls outside the               E
     plaintiffs land. He also found that the only possible buyers
     of the water at that date were the Harbour authority itself
     and the oil companies and labour camps that might be
     established as a result of the development of the Harbour
     and stated that this fact would be taken into consideration        F
     in fixing the amount of compensation. But after
     considering the authorities on the subject. he came
     to the conclusion as a matter of law that the value to
     a vendor of a potentiality of his land can be assessed
     even though there are no other possible purchasers                 G
     beyond the acquiring authority. Other principles of
     law stated by him for his guidance in making his
     award were that it was the contingent possibility of
     the user that had to be taken as the basis of valuation
12. AIR 1939 PC 98.                                                     H
    1054     SUPREME COURT REPORTS                   [2013) 7 S.C.R.


A        and not the realized possibility and that the use to
         which the acquiring authority had actually put the
         property could be taken as a strong piece of evidence
         to show that the property acquired could be put to
         such use by the owner at the date of acquisition."
B
         (Emphasis supplied)

       22. The judgment of Bombay High Court extracted in
  Sabhia Mohammed Yusuf Abdul Hamid Mu/la's case (supra),
  and the principles laid down by this Court would clearly go to
C show that the relevant consideration for determination of market
  value of the acquired land is virtually identical. The nearby land
  of the land under reference fetched market value of Rs.25/- per
  sq. metre. In the judgment referred to supra it is held that judicial
  notice can be taken of the fact that the industrial growth in and
D around Bombay has started with rapid strides from the year
  1965 onwards. In fact, the growth is by leaps and bounds in
  magnitude as well as number of industries and virtually all the
  industries of the country. are represented on the industrial
  estates scattered on this highway.
E                 •
        23. The sale instances in relation to the small residential
  plots covered in the sale deeds Exhs. 20-21 are situated in the
  same area, which sales were prior to the issuance of the
  preliminary notification i.e. before 14.06.1990 and it has similar
  topographical and physical characteristics and the fact is that
F the land of the appellants is acquired for the purpose of
  industrial development, which has got the potentiality for
  development of the land as industrial estate and to carve out
  industrial plots in it. That the acquisition of the land is for
  commercial purpose should be the relevant criteria for
G determining the market value by both the Land Acquisition
  Officer and reference Court placing reliance upon the sale
  instances even in relation to small plots of land, though it is
  shown from the records that the acquired land on the date of
  notification is an agricultural land. But the acquired land has got
H
 DIGAMBER & ORS. v. STATE OF MAHARASHTRA 1055
          [V. GOPALA GOWDA, J.]
non agricultural potentiality as the said land was proposed by          A
the District Collector after identifying the land for acquisition and
stated that it is suitable for the purpose of industrial
development. Therefore, the principles laid down at para 16 of
Sabhia Mohammed Yusuf Abdul Hamid Mulla's case and the
principles laid down in Viluben Jhalejar Contractor's case              B
referred to supra laid down the criteria for determination of the
market value of the acquired land. Also, in Atma Singh's case
(supra) it was stated that the criteria for the determination of
the market value the potentiality of the acquired land should also
be taken into consideration which has been explained stating            c
that potentiality means capacity or possibility for changing or
developing into a state of actuality. Further, the legal principles
laid down in the case of Atma Singh (supra) at para 5 which
portion is extracted above, gives us the criteria to be followed
for determination of the market value of a property keeping in          D
view its existing condition with all its existing advantages and
its potential possibility when let out in its most advantageous
manner. The various criteria laid down in the above referred
case namely, the existing amenities like water, electricity,
possibility of their further extension, whether near about the          E
 acquired land, town is developing or has prospect of
 development in future, have to be taken into consideration by
 both the Land Acquisition Collector and the courts for
 determination of the market value. The aforesaid advantages
 are very much abundantly available in respect of the acquired
 land as the said land is within the proximity of New                   F
 Venkateshnagar Layout, wherein residential sites are formed,
 and it is on record and there is a school and college near the
 Highway. Therefore, the principles laid down in the aforesaid
 case are aptly applicable to the fact situation of the case in
 hand. Hence, we have to apply the aforesaid principles laid            G
 down in the cases of Atma Singh & Sabhia Mohammed Yusuf
 Abdul Hamid Mui/a (supra) to the case on hand.

     24. In view of the foregoing reasons, we are of the view
that the findings of fact and reasons recorded by the learned           H
     1056    SUPREME COURT REPORTS                  [2013] 7 S.C.R.


A  Judge of the reference court in determining the market value
   of the acquired land are well founded and the same are based
   on facts, cogent and legal evidence adduced on record by the
   appellants. The same has been rightly accepted by the learned
   reference Judge after having noticed that the Land Acquisition
 B Officer in a casual manner rejected the claim of the appellants
   and determined the meager sum of Rs. 50,000/- per hectare
   as the market value of the land which is unrealistic and contrary
   to the legal evidence on record and the law laid down by this
   Court in the cases referred to supra. The findings of fact
 c recorded by the reference Judge on the relevant issue has been
   erroneously set aside by the High Court without assigning valid
   reasons. The findings and reasons recorded by the High Court
   in its judgment are contrary to the facts and legal evidence and
   various legal principles laid down by this court in the cases
   referred to supra. Therefore, we have to record our finding that·
 0
   reversing the judgment and award of the reference court is not
   only erroneous on facts but is also erroneous in law.
   Accordingly, we answer the first point in favour of the appellants.

         25. Since, we have answered the first point in favour of the
 E appellants, the second point is also answered in favour of the
    appellants and it would be· just and proper for this Court to
--- restore the judgment and award passed by the reference court.
    Since we have affirmed the award of the reference court, having
    regard to the undisputed fact that this acquisition is of more
 F than 23 years, it would be just and proper for this Court to direct
    the respondentNo.3 - M-.1.D.C. to issue the Demand Draft in
    favour---of the landowners/appellants or their legal
    representatives or deposit the same in their bank accounts
    within six weeks from the date of receipt of a copy of this
 G judgment and submit the compliance .report before the
    reference court.

         26. The appeal is allowed accordingly. There shall be no
     order as to cost. .

 H R.P.                                             Appeal allowed.