HIRALAL MOTILAL PARIKH (DECEASED THROUGH LRS)versusSPL. LAQ OFFICER & ANR.

                 [2025] 3 S.C.R. 1519 : 2025 INSC 815

           Hiralal Motilal Parikh (Deceased Through Lrs)
                                   v.
                       Spl. LAQ Officer & Anr.
                       (Civil Appeal No. 1438 of 2016)
                                 27 March 2025
            [J.K. Maheshwari* and Aravind Kumar, JJ.]


                            Issue for Consideration
       Whether the compensation awarded by the Reference Court,
       marginally enhanced by the High Court along with other statutory
       benefits is fair and reasonable.

                                   Headnotes†
       Land Acquisition Act, 1894 – Compensation – Enhancement
       of – Document proximate to the date of notification, if can be
       considered as exemplar for determination of compensation:
       Held: Bona fide transaction of sale, if proximate to the land acquired
       and the date, in absence of any evidence that acquisition has
       not motivated the purchaser to pay a higher price on account of
       resultant improvement in development prospects, can be relied
       upon while determining the compensation – Exhibit 53 (the sale
       deed of an adjoining land, executed within a month from the date
       of notification of s.4 LAA, indicating the value at Rs.152.37/- per
       square metre) is accepted as exemplar – Purchaser of the land
       was not motivated to pay the higher price for execution of the said
       sale deed – Furthermore, even prior to the notification, the land
       was allotted at the rate of Rs.65/- per square metre [Exhibit 44,
       an allotment letter] – Said exemplar is also relevant to determine
       the fair and reasonable amount of compensation – Compensation
       as determined by the High Court at the rate of Rs.53/- per square
       metre is on the lower side – Mean of the exemplars Exhibits 44
       and Exhibit 53 [i.e., (65 + 152.37) / 2] comes to Rs.108.68/- per
       square metre – Thus, compensation of the land be determined at
       the rate of Rs.107/- per square metre. [Paras 9, 11, 15, 16]

                                Case Law Cited
       Union of India v. Raj Kumar Baghal Singh (Dead) Through Legal
       Representatives and Others [2014] 7 SCR 709 : (2014) 10 SCC 422;

* Author
1520                                                          [2025] 3 S.C.R.

                          Supreme Court Reports


     Mehta Ravindrarai Ajitrai (Deceased) Through His Heirs and LRs. and
     Others v. State of Gujarat [1989] 3 SCR 743 : (1989) 4 SCC 250;
     Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona
     and Anr. [1988] Supp. 1 SCR 531 : (1988) 3 SCC 751 – relied on.

                                List of Acts
     Land Acquisition Act, 1894.

                             List of Keywords
     Land acquisition; Fair and reasonable amount of compensation;
     Enhancement of compensation; Compensation enhanced;
     Exemplars; Exemplars Exhibits; Documents proximate to the date
     of notification and the land acquired; Exemplar for determination
     of compensation; Bona fide transaction of sale; Proximate to the
     land acquired and the date of notification; Purchaser of the land not
     motivated to pay the higher price; Reference Court; Compensation
     on the lower side; Mean of the exemplars.

                            Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1438 of 2016
     From the Judgment and Order dated 20.07.2015 of the High Court
     of Judicature at Gujarat at Ahmedabad in FA No. 1036 of 2002

                         Appearances for Parties
     Advs. for the Appellant:
     Harin P. Raval, Sr. Adv., Ms. Anushree Prashit Kapadia, Ms. Urmi
     H Raval, Ms. Shreya Bansal, Ms. Shrestha Narayan, Siddhartha
     H Raval, Ms. Shivangi Chawla.
     Advs. for the Respondents:
     Ms. Deepanwita Priyanka, Deepak Singh.

                Judgment / Order of the Supreme Court

                                 Judgment

     J.K. Maheshwari, J.

1.   Arising out of the order dated 20.07.2015 passed by the High Court
     of Gujarat in the First Appeal No. 1036 of 2002 preferred by the legal
[2025] 3 S.C.R.                                                         1521

                Hiralal Motilal Parikh (Deceased Through Lrs) v.
                             Spl. LAQ Officer & Anr.

      representatives of the original claimant, assailing the award dated
      05.11.20011 passed by the Reference Court; which was against the
      award passed on 30.07.19882 by Special Land Acquisition Officer (in
      short ‘LAO’), the present appeal has been preferred. In this appeal,
      the adequacy of compensation granted by the LAO, the Reference
      Court and also the High Court has been questioned.
2.    For the sake of convenience, it is noted that the subject land is
      non-agricultural bearing Survey No. 25, admeasuring about 33387
      sq. mtrs., situated at village/taluka ‘Mehmedabad’, District – Kheda,
      Gujarat, which was acquired by Gujarat Housing Board for residential/
      housing/construction purpose. The notification under Section 4 of the
      Land Acquisition Act, 1894 (hereinafter referred to as ‘LAA’ for brevity)
      was published on 30.07.1985, followed by notification under Section 6
      dated 31.07.1986. After inviting objections, compensation at the rate
      of Rs. 4.50/- per square metre was determined by LAO, which was
      enhanced to Rs. 45/- per square metre by the Reference Court along
      with 30% solatium on the market value, 10% severance charges, plus
      12% per annum interest from the date of publication of notification
      under Section 4 till the date of Award/date of taking possession of
      the land whichever is earlier, plus 9% interest for one year from the
      date of taking of possession and 15% per annum till realization.
      In appeal, the High Court further enhanced the compensation to
      Rs 53/- per square metre, including other statutory benefits as granted
      by the Reference Court.
3.    Mr. Harish Raval, learned senior counsel, appearing on behalf
      of the appellants has placed reliance on the letter of allotment –
      Exhibit 44, made in January, 1985 by the Collector of the district to
      one Harishchandra Hiralal Dalwadi of Survey No. 864, at the rate of
      Rs. 65/- per square metre. The said land was adjacent to the
      subject land. He further relied upon Exhibit 53, i.e., the sale deed
      dated 29.08.1985 of an adjoining land, executed within a month
      from the date of notification of Section 4 LAA, indicating the value
      at Rs. 152.37/- per square metre. In reference to these exemplars,
      learned Senior Counsel submitted that compensation as allowed by
      the Reference Court and High Court is inadequate.


1    Land Acquisition Case No. 394 of 1989.
2    LAQ Case No. 2397.
1522                                                         [2025] 3 S.C.R.

                         Supreme Court Reports


4.   It is also urged, potentiality of the land acquired is a relevant factor;
     the land belonging to appellants is a piece of Survey No. 25, and
     is one kilometre away from the railway station and bus stand, as
     admitted by the departmental witness in his statement. Therefore,
     adequacy of compensation awarded by the Reference Court,
     marginally enhanced by the High Court, is not proportionate to the
     value of the land. In support of the said submissions, reliance has
     been placed on the judgment of ‘Union of India v. Raj Kumar Baghal
     Singh (Dead) Through Legal Representatives and Others, (2014) 10
     SCC 422’ and also in ‘Mehta Ravindrarai Ajitrai (Deceased) Through
     His Heirs and LRs. and Others v. State of Gujarat, (1989) 4 SCC 250’
     and enhancement of fair and reasonable amount of compensation
     has been prayed for.
5.   Per contra, learned counsel representing the State has strenuously
     urged that exemplar Exhibit 44 is merely an allotment order made
     by the Collector and Exhibit 53, i.e., a sale deed of a small piece of
     land of Society where roads were laid with other amenities, cannot
     be used as reference to determine the compensation. It is said in
     the facts and on the material placed, the Reference Court and the
     High Court has rightly determined the compensation to which
     interference in this appeal is not warranted.
6.   In the facts and submissions made above, the short question that
     falls for consideration is, whether the compensation awarded by the
     Reference Court, marginally enhanced by the High Court along with
     other statutory benefits is fair and reasonable?
7.   After having heard and given our anxious consideration to the material
     placed, in particular the exemplar of January 1985 – Exhibit 44, relied
     upon by the appellants, i.e., allotment of land bearing Survey No. 864
     made by Collector at the rate of Rs. 65/- per square metre, which is
     prior to the date of acquisition of subject land and other documents
     Exhibits 52 and 53, i.e., testimony of purchaser Kantibhai Veljibhai and
     sale deed dated 29.08.1985 executed immediately within one month
     respectively, vis-à-vis the date of acquisition and proximity of subject
     land, in our view, no plausible reason is on record for not accepting
     these documents or not to rely upon them to determine compensation.
8.   In the present case, Exhibit 53, i.e., sale deed dated 29.08.1985
     was executed within a month from the date of notification under
     Section 4 of the LAA. The proximity of sale deed and the date of
[2025] 3 S.C.R.                                                              1523

             Hiralal Motilal Parikh (Deceased Through Lrs) v.
                          Spl. LAQ Officer & Anr.

     notification is not in dispute. In this regard, an important question is
     needed to be answered, i.e., whether a document proximate to the
     date of notification can be considered as exemplar for determination
     of compensation? The said issue has been considered by this Court
     in the case of ‘Chimanlal Hargovinddas Vs. Special Land Acquisition
     Officer, Poona and Anr., (1988) 3 SCC 751’. This Court summed up
     the principles as follows: -
           “10. It is well settled in determining compensation for the
           acquired land, price paid in a bona fide transaction of sale
           by a willing seller to a willing buyer is adopted subject to
           such transaction being for land adjacent to acquired land,
           proximate to the date of acquisition and possessing similar
           advantages. Of course, there are other well-known methods
           of valuation like opinion of experts and yield method. In
           absence of any evidence of a similar transaction, it is
           permissible to take into account transaction of nearest
           land around the date of notification under Section 4 of
           the Act by making a suitable allowance. There can be no
           fixed criteria as to what would be the suitable addition or
           subtraction from the value of the relied upon transaction.
           In Chimanlal Hargovinddas v. Land Acquisition Officer
           [(1988) 3 SCC 751] this Court summed up the principle
           as follows: (SCC pp. 753-56, para 4)
                “4. The following factors must be etched on the
                mental screen:
                (1)-(4)***
                (5) The market value of land under acquisition has to
                be determined as on the crucial date of publication of
                the notification under Section 4 of the Land Acquisition
                Act (dates of notifications under Sections 6 and 9
                are irrelevant).
                (6) The determination has to be made standing on the
                date line of valuation (date of publication of notification
                under Section 4) as if the valuer is a hypothetical
                purchaser willing to purchase land from the open
                market and is prepared to pay a reasonable price
                as on that day. It has also to be assumed that the
                vendor is willing to sell the land at a reasonable price.
1524                                                [2025] 3 S.C.R.

                 Supreme Court Reports


        (7) In doing so by the instances method, the court
        has to correlate the market value reflected in the
        most comparable instance which provides the index
        of market value.
        (8) Only genuine instances have to be taken into
        account. (Sometimes instances are rigged up in
        anticipation of acquisition of land.)
        (9) Even post-notification instances can be taken into
        account (1) if they are very proximate, (2) genuine,
        and (3) the acquisition itself has not motivated the
        purchaser to pay a higher price on account of the
        resultant improvement in development prospects.
        (10) The most comparable instances out of the
        genuine instances have to be identified on the
        following considerations:
             (i) proximity from time angle,
             (ii) proximity from situation angle.
        (11) Having identified the instances which provide the
        index of market value the price reflected therein may
        be taken as the norm and the market value of the
        land under acquisition may be deduced by making
        suitable adjustments for the plus and minus factors
        vis-à-vis land under acquisition by placing the two
        in juxtaposition.
        (12) A balance sheet of plus and minus factors may
        be drawn for this purpose and the relevant factors
        may be evaluated in terms of price variation as a
        prudent purchaser would do.
        (13) The market value of the land under acquisition
        has thereafter to be deduced by loading the price
        reflected in the instance taken as norm for plus factors
        and unloading it for minus factors.
        (14) The exercise indicated in clauses (11) to (13)
        has to be undertaken in a common sense manner
        as a prudent man of the world of business would
[2025] 3 S.C.R.                                                                   1525

             Hiralal Motilal Parikh (Deceased Through Lrs) v.
                          Spl. LAQ Officer & Anr.

                do. We may illustrate some such illustrative (not
                exhaustive) factors:

                           Plus factors                 Minus factors
                    1. smallness of size       1. largeness of area
                    2. proximity to a road     2. situation in the interior at a
                                               distance from the road
                    3. frontage on a road      3. narrow strip of land
                                               with very small frontage
                                               compared to depth
                    4. nearness to developed   4. lower level requiring the
                    area                       depressed portion to be filled
                                               up
                    5. regular shape           5. remoteness from
                                               developed locality
                    6. level vis-à-vis land    6. some special
                    under acquisition          disadvantageous factor which
                                               would deter a purchaser
                    7. special value for an
                    owner of an adjoining
                    property to whom it may
                    have some very special
                    advantage

                (15) The evaluation of these factors of course
                depends on the facts of each case. There cannot
                be any hard-and-fast or rigid rule. Common sense
                is the best and most reliable guide. For instance,
                take the factor regarding the size. A building plot of
                land say 500 to 1000 sq yd cannot be compared
                with a large tract or block of land of say 10,000 sq
                yd or more. Firstly while a smaller plot is within the
                reach of many, a large block of land will have to be
                developed by preparing a layout, carving out roads,
                leaving open space, plotting out smaller plots, waiting
                for purchasers (meanwhile the invested money will be
                blocked up) and the hazards of an entrepreneur. The
                factor can be discounted by making a deduction by
                way of an allowance at an appropriate rate ranging
                approximately between 20% to 50% to account for
                land required to be set apart for carving out lands
1526                                                         [2025] 3 S.C.R.

                         Supreme Court Reports


                and plotting out small plots. The discounting will to
                some extent also depend on whether it is a rural area
                or urban area, whether building activity is picking up,
                and whether waiting period during which the capital of
                the entrepreneur would be locked up, will be longer
                or shorter and the attendant hazards.
                (16) Every case must be dealt with on its own fact
                pattern bearing in mind all these factors as a prudent
                purchaser of land in which position the Judge must
                place himself.
                (17) These are general guidelines to be applied with
                understanding informed with common sense.”

                           xx        xx        xx        xx

9.   On perusal of the above, it is clear that bona fide transaction of sale,
     if proximate to the land acquired and the date, in absence of any
     evidence that acquisition has not motivated the purchaser to pay a
     higher price on account of resultant improvement in development
     prospects, can be relied upon while determining the compensation.
     The said judgment has been followed by this Court in the case of
     Raj Kumar Baghal Singh (Dead) (supra).
10. Similarly, in the judgment of Mehta Ravindrarai Ajitrai (supra), this
    Court has clearly spelt out that post notification instances may be
    taken into consideration while computing the compensation. The
    relevant paragraphs are reproduced as thus: -
          “4. We do not feel called upon to enter into a detailed
          scrutiny of the evidence led by the parties before the
          learned Civil Judge. The main instance relied upon by
          the claimants was by way of an agreement to sell dated
          January 21, 1957 and a sale deed dated April 2, 1957
          in respect of the sale of 42552 square yards of land
          out of survey No. 333/2 which is adjoining the land with
          which we are concerned which forms part of survey No.
          33 1. The land sold under this instance was known as
          “Kesarbagh” and was sold to Mahalaxmi Mills Limited
          by Prince Nirmalkumarsinghji. The rate at which it was
          sold works out to Rs. 3 per sq. yard. On the basis of this
          instance, the claimants had made their claim at Rs.3 per
[2025] 3 S.C.R.                                                           1527

             Hiralal Motilal Parikh (Deceased Through Lrs) v.
                          Spl. LAQ Officer & Anr.

           square yard before the Land Acquisition Officer. The High
           Court inter alia rejected this instance on the basis that
           the contents of the sale deed were not properly proved.
           However, after an order for remand made by this Court on
           August 25, 1981 evidence has been led regarding this sale
           and the sale deed has been duly proved by the evidence
           of one Dharamdas, a director of Mahalaxmi Mills Limited,
           the purchaser, and the vendor Prince Nirmalkumarsinghji. It
           was marked originally as Exhibit 87 and after the evidence
           on remand as Exhibit 152. The evidence shows that
           this land was just adjacent to the land of the purchaser,
           Mahalaxmi Mills Limited. The agreement of sale is dated
           January 21, 1957 and the conveyance or sale-deed is
           dated April 2, 1957 as aforestated. The price has been
           fixed under the agreement of sale. This agreement of sale
           was entered into about five months after the publication
           of section 4 notification in the case before us The
           High Court rejected the said instance on the ground that
           the contents of the sale-deed were not proved although
           the execution was thereof duly proved. In view of the
           evidence led after remand, it cannot be disputed that this
           agreement of sale as well as the sale deed have been
           duly proved and they have been duly marked as exhibits.
           The High Court further took the view that in any event, no
           reliance could be placed on this instance of sale because
           the acquisition of the land in question before us was for the
           construction of an industrial estate at Bhavnagar and such
           construction was bound to have pushed up the price of land
           in the surrounding area. There is, however, nothing in the
           evidence to show that there was any sharp or speculative
           rise in the price of the land after the acquisition and this
           has been noticed by the High Court. It appears that under
           these circumstances, the High Court was not justified in
           not taking this instance into account at all as it has done
           on the ground that it was a post-acquisition sale and
           could not be regarded as a comparable instance at all.
           The market value of a piece of property for purposes of
           section 23 of the Land Acquisition Act is stated to be the
           price at which the property changes hands from a willing
           seller to a willing, but not too anxious a buyer, dealing at
           arms length. Prices fetched for similar lands with similar
1528                                                        [2025] 3 S.C.R.

                         Supreme Court Reports


          advantages and potentialities under bona fide transactions
          of sale at or about the time of the preliminary notification
          are the usual and, indeed the best, evidences of market
          value. (See: Administrator General of West Bengal v.
          Collector, Varanasi, [1988] 2 SCC 150 at para 8.)
          5. Keeping these factors in mind, we feel that although the
          instance reflected in the sale deed (Exhibit 152) and the
          agreement for sale in connection with that land, pertains
          to a sale after the acquisition, it can be fairly regarded
          as reasonably proximate to the acquisition and, in the
          absence of any evidence to show that there was any
          speculative or sharp rise in the prices after the acquisition
          the agreement to sell dated January 21, 1957 must be
          regarded as furnishing some light on the market value of
          the land on the date of publication of section 4 notification.
          However, certain factors have to be taken into account and
          appropriate deductions made from the rate disclosed in
          the said agreement to sell in estimating the market value
          of the land with which we are concerned at the date of
          the acquisition. One of these factors is that there seems
          to have been some rise in the price of land on account
          of the acquisition of the land in question before us for
          purposes of constructing an industrial estate. Another factor
          is that the land proposed to be purchased under the said
          agreement to sell was adjoining the land of the purchaser
          and the purchaser might have paid some extra amount for
          the convenience of getting the neighbouring land.
11. Indeed, it is true that every case must be dealt with on its own facts
    bearing in mind that all factors are relevant to be understood by
    a prudent purchaser of land and the judge while determining the
    compensation must keep those factors in mind. In the said context,
    Exhibit 53 sale deed was executed in favour of Danjibhai Samji Patel,
    Kantibhai Veljibhai Patel and Manibhai Veljibhai Patel for plot no.
    33 of Survey No. 954 admeasuring 59.29 square metre situated in
    Navjivan Cooperative Housing Society. The purchaser Kantibhai was
    brought in witness box and his statement is Exhibit – 52, wherein
    he has categorically deposed that, he and his brothers purchased
    the plot from the Society. In rebuttal, a bald statement to say sale
    deed is not genuine, was not enough to not accept the same for a
[2025] 3 S.C.R.                                                      1529

             Hiralal Motilal Parikh (Deceased Through Lrs) v.
                          Spl. LAQ Officer & Anr.

     reason that the purchaser of the land was not motivated to pay the
     higher price for execution of the said sale deed because it was in
     colony developed by Society. The land of sale deed is proximate to
     the land acquired. In this view, relying upon the principles enunciated
     in Chimanlal Hargovinddas (supra) and Mehtra Ravindrarai (supra),
     we are constrained to accept the document Exhibit – 53 as exemplar.
     At the same time, we cannot lose sight of the fact that Collector of
     the District himself allotted the land of Survey No. 864 in the name
     of Harishchandra Hiralal Dalwadi at the rate of Rs. 65/- per square
     metre prior to acquisition, meaning thereby, the government wanted
     to fetch higher amount by allotting land to an individual. In such
     scenario, computation of compensation by Reference Court and
     High Court at a lower rate for the land acquired cannot be accepted.
     As such, said exemplar is also relevant to determine the fair and
     reasonable amount of compensation.
12. So far as contention of potentiality of the land qua compensation is
    concerned, the statement of Shripat Dattatreya (departmental witness)
    is relevant, whereby it is admitted by him that railway station and
    the bus station are one kilometer away from the place of acquisition,
    therefore, potentiality of the land cannot be doubted.
13. We have perused the reasonings given by Reference Court on
    Issue No. 1, wherein the details of Exhibit 53 have been specifically
    mentioned in paragraph 8 to 10 indicating that the said land is
    adjoining to the subject land acquired by the respondent. It is true
    that the Court has not given findings in this regard, but without
    disputing the contentions as advanced by the counsel for the appellant,
    compensation has been determined at the rate of Rs. 45/- per square
    metre. During hearing before us, it has not been objected by the
    respondent that the subject land and the land indicated in exemplar
    Exhibit 53 are not adjoining, therefore, we accept the fact that the
    land acquired, and the land of exemplar Exhibit 53 are adjoining.
14. Proceeding further, since the land acquired is a non-agricultural land
    and its acquisition is for use and occupation by Housing Board for
    residential/housing/construction purpose, therefore, it is imperative
    for the Housing Board to have development of the land. Thus, for the
    purpose of development, some part of the subject land is required to
    be left. As we are accepting the exemplar of a piece of land situated
    in a colony developed by Navjivan Cooperative Society, therefore, at
    least 30% of the acquired land is required to be left by the Housing
1530                                                         [2025] 3 S.C.R.

                            Supreme Court Reports


     Board for the development out of the subject land. In the said event,
     if we accept the value of Exhibit 53 – sale deed, which is a piece of
     plot, after leaving the land for development, in the said contingency,
     on deduction of 30% as the development cost, the compensation
     would come at the rate of Rs. 107/- per square metre, as rightly
     discussed by the Reference Court in paragraph 14.
15. As already noted above, even prior to the notification, the land was
    allotted by the Collector at the rate of Rs. 65/- per square metre
    [Exhibit 44]. Thus, even if we take mean of the documents Exhibit 44
    and Exhibit 53 [i.e., (65 + 152.37) / 2] which comes to Rs. 108.68/-
    per square metre. The said value is also nearer to the value as
    determined in the above paragraphs i.e., Rs. 107 per square metre.
16. In view of the discussions made hereinabove and considering the
    entirety of facts, the compensation as determined by the High Court
    at the rate of Rs. 53/- per square metre is on the lower side. In lieu
    of acceptance of exemplar Exhibit 53 at the rate of Rs. 53/- and
    mean of exemplars Exhibits 44 and 55 comes to Rs. 108.68/- per
    square metre. Therefore, we direct that the compensation of the
    land be determined accepting value at the rate of Rs. 107/- per
    square metre and the question as posed is answered. Accordingly,
    the present appeal is allowed in part.
17. The other benefits regarding solatium, severance charges, per annum
    interest from the date of publication of the notification, till the date of
    award/date of taking possession along with interest as specified in
    the order passed by the Reference Court shall also commensurately
    be allowed.
18. The respondents are directed to calculate the compensation and
    paid to appellants within a period of three months from the date
    of communication of this order. Pending application(s), if any, shall
    stand disposed of.

     Result of the case: Appeal partly allowed.




     †
         Headnotes prepared by: Divya Pandey