Holding

The Supreme Court fixed the market value of the agricultural land at Rs 35,000 per acre, held that the burden of proving market value lies on the claimants, barred consideration of future potentiality under Section 24, and rejected reliance on unverified sale deeds.

Summary

The case concerned acquisition of 171.46 acres of agricultural land in Moradabad for UPSIDC. The Land Acquisition Officer initially fixed compensation at Rs 15,500 per acre, which was later increased by the District Court to Rs 40,000 and by the High Court to Rs 50,000 per acre based on sale deeds and oral evidence. Both the claimants and the State appealed, raising the question of the correct market value and the evidentiary burden. The Supreme Court held that the burden of proving market value lies on the claimants, that future potentiality of the land cannot be considered under Section 24, and that sale deeds are not reliable unless genuine. Applying the “prudent purchaser” test, the Court fixed the market value at Rs 35,000 per acre and ordered that the claimants receive this amount, rejecting any claim for refund of excess compensation. The appeals were dismissed.

Issues considered

What is the appropriate market value for compensation under the Land Acquisition Act, 1894 for the agricultural land in question?
Who bears the burden of proving the market value of the land at the time of acquisition?
Whether future potentiality of the land can be taken into account under Section 24, clause fifthly of the Act?
Whether sale deeds can be relied upon as evidence of true market value?
Whether claimants are required to refund any excess compensation awarded by lower courts.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 24, s. 4(1)

Subjects

Land acquisitionCompensationMarket valueBurden of proofSection 24Agricultural landSale deedFuture potentiality

Judgment

t

A HOOKIYAR SINGH ETC. ETC.
v.
SPECIAL LAND ACQUISITION OFFICER,
MORADABAD AND ANR.

MARCH 14, 1996
B
[K. RAMASWAMY, S.P. BHARUCHA AND
K.S. PARIPOORNAN, JJ.]

Land Acquisition Act, 1894: Sections 4(1), 24 Clause Fifthly.
c
Land Acquisition-Determination of market value---l'dnciples
of-Court should not indulge in feats of imaginati01t-Burden of proof of
proving the market value-Lies on the claimant-Claimant required to refund
the difference of of compensation amount-Held not a ground for confinna-
D tion of amount detennined by Courts below-Future potentiality of land
cannot be taken into account while detemiining contpensation.

Land Acquisition-Compensation-Land Acquisition Officer class-
ifying the land and accepting the sale deed awarding highest rate of Rs. 15,500
per acre-Reference Court enhancing compensation to Rs. 40, 000 per
E acre-High Court accepted the sale deed and increased the market value to
Rs. 50, 000 per acre on the ground that oral evidence of claimant revealed that
they had paid much more than reflected in sale deed-Appeals against
enhanced compensation-Sale deeds found not reflective of true and matket
value-Keeping in view the facts that al/ lands were agdcultural claimants held
entitled to market value @ Rs. 35,000 per acre.
F
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6821 of
1996 Etc. Etc.

From the Judgment and Order dated 15.2.95 of the Allahabad High
G Court in F.A. No. 547 of 1990.
S.B. Sanyal, R.D. Upadyay, for the appellants.

Manoj Swarup and Mrs. Lalitha Kohli for the Respondents.

H The following Order of the Court was delivered :
422
(

HOOKJYAR v. SPL. LAND ACQN. OFFICER 423

Substitution allowed. A
" ~ Leave granted. We have heard learned counsel on both sides.

Notification under Section 4(1) of the Land Acquisition Act, 1894
(for short, the 'Act') acquiring an extent of 171.46 acres of Land situated
in village Tigarea Bhoor, Tehsil Hansanpur, District Moradabad for Public B
purpose, viz, UPSIDC, was published on September 28, 1981. The Land
Acquisition Officer (LAO) classified the lands into several categories and
accepting the sale deed, item 51, determined compensation at the highest
rate of Rs. 15,500 and gradually reduced the Market value basing upon the
classification. On reference under Section 18, the District Judge by his
award and decree dated May 22, 1989 increased the compensation to Rs .
c
•
40,000 per acre Dissatisfied with the determination of the compensation,
the claimants as well as the State filed appeals in the High Court.

As seen, the High Court proceeded on the premise that the clas-
sification of the lands was not warranted, the entire land commands same D
value and that, therefore, uniform rate of market value is required to be
adopted in determining the compensation. The High Court had accepted
the sale deed relied on by the LAO and ou that basis it increased the
market value by five times, holding that in the oral evidence of the
claimants they had stated that they paid n;iuch more than what was
reflected as consideration in the sale deed and that there was no cross-
E
examination in that behalf. It fixed the market value at Rs. 62,500 and
ultimately determined the compensation ·in respect of all lands at Rs. 50,000
per acre. Thus these appeals by claimants and the State as well as the
UPSIDC.
F
The question for consideration is : what is the just and adequate
compensation to which the lands would command determination? We
accept the finding of the High 'Court as the State did not seriously dispute
in the High 'court that all the lands are of equal value and, therefore,
compensation should be determined uniformly in respect of all lands. It is
seen that the market value of the lands varies from Rs. 5,000 to Rs. 49,500 G
-~
per acre. But the sale deeds are of small extents of land. Only one sale
deed in which large extent of land, i.e., one acre and odd was sold, appears
-- to be related to one of the claimants and part of the transfer was in favour
of his wife. The civil Court also pointed out that those lands are abutting
the national highway and that they do not command the same market value H
424 SUPREME COURT REPORTS [1996) 3 S.C.R.

A as the lands under acquisition. In view of those facts, we cannot accept the
sale deed to be reflective of the true and genuine market value. But the
~ •
fact remains that the LAO himself had adopted the highest rate of Rs.
15,500 and the High Court accepting the sale deed relied on by the LAO
had enhanced the market value five times accepting the oral evidence.

B
It is settled law that the burden of proof of market value prevailing
as on the date of publication of Section 4 (1) notification is always on the
claimants. Though this Court has time and again pointed out the apathy
and blatant lapse on the part of the acquiring officer to adduce evidence
and also improper or ineffective or lack of interest on the part of the
c counsel for the State to cross-examine the witnesses on material facts, it is
the duty of the Court to carefully scrutinise the evidence and determine
just and adequate compensation. If the sale deeds are found to be genuine,
the market value mentioned therein must be presumed to be correct. If the
genuineness is doubted, it cannot be relied upon. Proper tests and prin-
D ciples laid down by this Court must be applied to determine compensation.
since the LAO as well as the High Court placed reliance on the sale deed
which commanded market value of the maximum of Rs. 15,000 and odd,
the question is : what would be the just and adequate compensation to be
paid in respect of the lands? The Court must not indulge in feats of
E imagination but, sit in the arm-chair of a prudent purchaser in open market
and to put a question to itself whether as a prudent purchaser it would
offer the same price in the open market as is to be determined? This should
be the acid test. The District Court was not right in holding that the lands
are possessed of future-potentiality as public purpose is industrial develop-
ment. Section 24 clause fifthly prohibits taking into consideration future
F
user to which the land will put when acquired. Considered from the
fluctuation in the prices placed on record and large area involved in the
acquisition, situation of the lands, actual user of the lands as agricultural
lands and on the totality of the facts in this case, treating all the lands as
agricultural lands, we are of the considered view that the market value of
G the land per acre would be Rs. 35,000. The claimants arc accordingly
entitled to this amount. It is no ground for the claimants to contend that ......
as they are required to refund the difference of the compensation amount,
the amount determined by the High Court or reference Court should be '
confirmed. If that contention is given acceptance in no case proper com-
H pensation can be fixed by the appellate Court.
HOOKIYARv. SPL. LANDACQN. OFFICER 425

It is stated by Shri Manoj Swarup, learned counsel that the lands have A
been sold to the beneficiaries at the lesser rates than what was determined.
" ~ It would be obvious that if higher compensation was paid in respect -of the
lands, UPSIDC is entitled to recover the proportionate increase in the
compensation from the allottees.

The appeals arc accordingly disposed of. No. costs. B
T.N.A. Appeals disposed of.