Holding

The High Court’s reduction of the market value was erroneous; the Reference Court’s award of Rs.13,500 per acre is correct and must be restored.

Summary

The Supreme Court examined the fixation of market value for lands acquired under the Land Acquisition Act for a stadium in Karaikal. The Reference Court had classified the lands as potential house sites and fixed the market value at Rs.13,500 per acre, while the Madras High Court reduced it to Rs.7,000 per acre using an average method. The Court held that the High Court erred by ignoring the comparable method, the steep escalation in local land prices, and the correct interpretation of Section 51A, which does not require examination of parties to documents if the presumption is not rebutted. It also noted that earlier precedents requiring such examination (Meharban) had been overruled by the Cement Corporation case. Consequently, the Court set aside the High Court judgments and restored the Reference Court's award, directing the return of excess amounts deposited by the appellants.

Issues considered

The appropriate method for fixing market value of land acquired under the Land Acquisition Act (comparable method vs average method).
Whether Section 51A of the Land Acquisition Act mandates examination of parties to documents used as evidence for market value.
The relevance of potential value, location, and classification of land (wet vs urban) in determining compensation.
The effect of the Cement Corporation of India Ltd. v. Purya judgment on the earlier Meharban precedent.
Whether the Madras High Court's reduction of the market value should be upheld.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 23(1A), s. 4(1), s. 51A

Subjects

Land acquisitionMarket value fixationSection 51AComparable methodAverage methodCompensationStadiumSupreme CourtReference CourtPotential value

Judgment

PAITAMMAL AND ORS. A
v.
UNION OF INDIA AND ANR.

NOVEMBER 8, 2005

[ASHOK BHAN AND AL TAMAS KABIR, JJ.] B

Land Acquisition Act, 1894-Sec. 4(1), 18, 5l~A-Acquisition for the
purpose of construction of stadium-Reference court enhancing
compensation-Market value reduced by High Court on appeal-Adopting C
the average method overlooking the comparable method-Held, reduction of
market value based on average method incorrect.

Some lands situated in Pondicherry, spread over 11 town survey numbers
were sought to be acquired for the construction of a stadium to provide
playground facilities for the students of Schools and Colleges situated at D
Karaikal. Notifications under Section 4(1) of the Land Acquisition Act, 1894
(hereinafter referred to as 'the Act'), were published in the Official Gazette
upon receipt of the approval of the Government

The market value of the lands was fixed by the Collector at Rs. 2,550
per acre upon treating the same as 'Wet' lands. Several claimants whose lands E
were involved in the acquisition proceedings asked for references to be made
under Section 18 of the Act before the Reference Court. The Reference Court
classified the lands in question as having potential value as house sites and
fixed the market value thereof at Rs. 13500 per acre.

Union of India and the Referring Officer filed separate appeals in the F
High Court High Court reduced the market value of the lands to Rs. 7000.
Respondent filed a review petition which was dismissed.

Appellants before this Court contended that the impugned judgments of
the High Court were based on an erroneous appreciation of the law relating
to the fixation of market value of lands acquired for public purposes; that the G
law as explained in the case ofMeharban and Ors. and the two other judgments
of this Court on which reliance had been placed by the High Court had, in
fact, been reversed by a Constitution Bench of this Court in the case of Cement

41 H
42 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A Corporation of India Limited v. Purya and Ors., reported in [2004) 8 SCC
270; that it has been held that the view expressed in Meharban's case was not
the correct interpretation and that under Section 51A of the Act, a
presumption as to the genuineness of the contents of document is permitted
to be raised without examination of the parties thereto, ifthe said presumption
B is not rebutted by other evidence; that in the said cas,. this Court reiterated
the views expressed by this Court in the case of Land Acquisition Officer and
Manda/ Revenue Officer v. V. Narasaiah, reported in [2001) 3 SCC 530; that
the High Court had failed to consider the potential value of the lands for
commercial exploitation, having regard to the location of the lands sought to
be acquired; that the Land Acquisition Officer had himself admitted the steep
C escalation in the market value of lands in the locality in a span of one year
and that the market value was much higher than what was fixed by the High
Court and had been paid for similar sited even more than one year prior to
the Notification under Section 4(1) of the Act; that, in any event, the High
Court had erred in reducing the market value which had been fixed by the
Reference Court after due consideration of all the cogent materials available
D on record; and in complete disregard of the methods to be employed for fixation
of market value and instead of relying upon the comparable method had chosen
to adopt the average method which was without any evidentiary basis and also
upon an erroneous construction of the law as contained in Section 51A of the
Act; and that the judgments of the High Court were liable to be set aside and
E the Awards of the Reference Court were liable to be restored.

Respondents contended that the Reference Court had failed to take into
consideration the fact that by the sale deed Exhibit A-I, some of the appellants
had purchased land, which comprised a part of land which had been acquired,
at the rate of about Rs. 377.90 per acre and in respect of same land
F compensation was now being sought for at the rate of Rs. 13500 per acre;
that in Exhibits A-12, A-13 and A-14 where the price of certain small house
plots was fixed at Rs. 6,739 per acre and upto a maximum of Rs. 11,695.90
per Acre; that Exhibit A-15 could not be taken as a yardstick, inasmuch as,
by the said sale deed, the appellants had sold a small house plot, for the purpose
G of creating evidence; that the High Court had rightly chosen not to rely on
Exhibit A-15, although on a reasoning which had subsequently been dissented
from by this Court in a later judgment; that merely because of the potential
value of the acquired land for commercial exploitation, it could not be said
that the character of the said lands had changed, and that they continued to
be 'Wet' lands as had originally been classified by the Land Acquisition
H
PATTAMMAL v. U.O.I. 43
Collector; that as to what would be the value after development was a matter A
of conjecture and could not be the basis for fixation of the market value of the
lands when acquired; that since some of the lands had been acquired by the
appellants in one appeal in July, 1988, the same had been taken by the Madras
High Court as comparable units for fixing the market value; that in
determining the market value the Court has to mark the location and the B
features, which include both advantages and disadvantages, of the land covered
by the Award, involving the location, size, shape, potentially and tenure etc.
thereof; that in applying the comparable method, the Court also has to take
into account the size and the area of the land acquired and those forming the
basis of the comparable units; that the market value of large tracts of the
land could certainly not be the same as a small house site; that the Reference C
Court had erred in relying on the sale deeds pertaining to small house sites
when .the area under acquisitiou comprised large tracts of land to be converted
into a stadium; th1,1t G.O.M.S. No. 14 instructions had been given in regard to
the procedure to be followed for the purpose of site selection under the Act;
that the market value was required to be assessed after taking into account
the potential value of the land, thereby meaning all the reasonable properties D
which the land was likely to posses in respect of its user; that the potential
value was also required to be assessed after taking into consideration the
purpose for which the land is acquired; that while deciding upon the nature
of land, the classification shown in the revenue records should not alone be
relied upon but the potential use to which the land can be put should also be E
taken into account; that in acquiring vast extent of land for urban purposes,
the land should be valued as an urban land, diminishing 20 to 33 1/3 percent
of the assessed value towards improvement and amenities; that in assessing
the market value only the sale data, prior to the date of notification under
Section 4(1) should be taken into account, even though, the post notification
sales could be taken note of for knowing the rise in the price trend; that the F
Government Order also referred to si7.e and location of the land to be acquired
for determining the market value of the acquired lands; and that the judgments
and orders of the Madras High Court had hen based on the aforesaid principles
and did not require any interference by this Court.

Disposing the Appeals, the Court
G

HELD: 1. The Court is unable to agree with the views expressed by the
High Court and the submissions in respect thereof made by Respondents. The
submissions by Respondents only strengthen the case of the appellants since
H
44 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A the High Court has decided the matters in a manner, which is contrary to
established principles of fixation of market value for acquisition purposes,
which have been explained in detail in the aforesaid Government Order. The
High Court in making the impugned judgments relied on the earlier decisions
of this Court requiring proof of documents for the purposes of Section SIA
B of the Act, which view had ben overruled subsequently and was later reiterated
by the Constitution Bench. [52-F-H; 53-AI

Meharban and Ors. etc. v. State ofU.P. and Ors., AIR (1997) SC 2664;
A.P. State Road Transport Corporation, Hyderabad v. P. Venkaiah and Ors.,
[1997] I SCC 128; State of U.P. and Anr. v. Rajendra Singh, AIR (1996) SC
C 1564; Cement Corporation ofIndia Limited v. Purya and Ors., [2004) 8 SCC
270; Land Acquisition Officer and Manda/ Revenue Officer v. V. Narasaiah,
(2001] 3 SCC 530; Printers House Pvt. Ltd v. Saiyadan (Deceased) by Lrs.
and Ors., [1994] 2 SCC 133 and H.P. Housing Board v. Bharat S. Negi and
Ors., [2004) 2 SCC 184, referred to.

D 2. The Reference Court had adopted the correct procedure upon
examination of the location and potential value of the acquired lands in its
detailed award, as also the contemporaneous sale deeds which indicated that
there had been a steep escalation of the price oflands in the immediate vicinity
of the acquired lands, which fact had also been admitted by the Land
Acquisition Officer. There was no justification for the High Court to have
E reduced the market value of the acquired lands which had been fixed at Rs.
13,500 per acre by the Reference Court. [53-B, C]

3. The judgments and orders of the Madras High Court impugned in
these appeals are all set aside and the Awards as made by the Reference Court
F out of which these appeals arise are restored. Since, the Court has chosen to
restore the valuation as fixed by the Reference Court, the appellants will be
entitled to return of the difference amount deposited by them in terms of the
order passed in these appeals together with their title deeds which they had
deposited. Such reimbursement and return of the title deeds are to be effected
expeditiously, but positively within one month from the date of the
G communication of this Judgment. (53-D, H; 54-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1500 of2004.

From the Judgment and Order dated 23.2.2001 of the Madras High Court
in A.S. No. 594 of 1994.
H
PATTAMMAL v. U.0.1. [AL TAMAS KABIR, J.] 45
WITH A
C.A. Nos. 1501, 1502/2004 and 6651 of2005.

Dhruv Mehta, P.B. Suresh, Vipin Nair and V.K. Biju for Mis. Temple Law
Firm for the Appellant in C.A. No. 1500/2004.
B
S. Guru Krishna Kumar, Mrs. Srikalaa G.K., Senthil Kumar and S.R. Setia
for the Appellant in C.A. Nos. 1501-1502/2004.

K.V. Vishwanathan, G. Balaji, Ms. Mahalakshmi Pavani and Raghunath
for Mis. Mahalakshmi Balaji & Co. for the Appellant in C.A. No. 665112005.

T.L.V. Iyer and V.G. Pragasam for the Respondents.
c
The Judgment of the Court was delivered by

ALTAMAS KABIR, J. Leave granted in Special Leave Petition (Civil)
No. 6309/04. D
9 Hectares 75 Acres and 12 Ca of land situated in Keezhaveli Village at
Karaikal, Pondicherry, in Ward No. G, Block No. 3, spread over 11 town survey
numbers was sought to be acquired for the construction of a stadium to
provide playground facilities for the students of Schools and Colleges situated
at Karaikal. Notifications under Section 4(1) of the Land Acquisition Act, 1894 E
(hereinafter referred to as 'the Act'), were published in the Official Gazette on
26th December and 28th December, 1989, respectively, upon receipt of the
approval of the government.

The market value of the lands was fixed by the Collector at Rs.2,550 per
Acre upon treating the same as 'Wet' lands. Several claimants whose lands F
were involved in the acquisition proceedings asked for references to be made
under Section 18 of the aforesaid Act and the references were all taken up
for consideration by the Additional District Judge, Pondicherry, as the Reference
Court. By its Award dated 24th January, 1994, the Reference Court classified
the lands in question as having potential value as house sites and fixed the G
market value thereof at Rs.13,500 per Acre.

The Union of India and the Referring Officer filed separate appeals in
the High Court of Judicature at Madras against the findings and order dated
24th January, 1994, passed by the Reference Court. Three of the appeals were
H
'
'
46 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A numbered as AS 591/94, 594194 and 573/2003. AS No.591 of 1994 filed by the
Union of India against one Jayaraman and Appar was disposed of on 23rd
February, 2001, by the High Court of Judicature at Madras by reducing the
market value of the lands fixed at Rs.13 500 per Acre by the Reference Court
to Rs. 7000 per Acre. Aggrieved by the said decision the respondent filed a
B review petition No. 69 of20'll which was dismissed on 6th September, 2002.
Civil Appeal No. 150 l of 2004 is directed against the judgment of the High
Court of Judicature at Madras in the said review petition.

A separate appeal by way of special leave, being Civil Appeal No. 1502
of 2004, has been filed by the said respondents in AS No. 591 of 1994 against
C the judgment and order passed by the High Court of Judicature at Madras
on 23rd February, 2001, against the judgment and decree of the Reference
Court.

Civil Appeal No. 1500 of2004 has been filed by another set of claimants·
(Pattammal & Ors.) against the judgment and order of the High Court of
D Judicature at Madras dated 23rd February, 2001, in AS No. 594 of 1994
preferred by the Union of India and the Referring Officer.

The other appeal by way of special leave petition (Civil) 6309 of 2004
has been filed by S. Bavani against the judgment and order dated 18th
September 2004 passed by the High Court of Judicature at Madras in AS No.
E 573 of 1994.

By virtue of the impugned judgment, in respect of all claims concerning
the acquisition of the lands for construction of the stadium at Karaikal, the
market value of the acquired lands which had been fixed at Rs. 2,550 per Acre
by the Land Acquisition Officer and had been enhanced to Rs.13 500 per Acre
F by the Reference Court, was reduced to Rs. 7000 by the High Court. These
separate appeals have been preferred by the claimants and since they all
involve the lands acquired for the aforesaid purpose by Notification published
under Section 4( I) the Act on 26th December and 28th December, 1989,
respectively, the same have been taken up for hearing and disposal together.
G For the sake of convenience the Award passed by the Reference Court
in LAOP No. 42 of 1993, being the reference of Smt. Pattamal and two others,
is taken. up for consideration as the leading case, which will also govern the
other appeals.

H
PATTAMMALv. U.0.I. [ALTAMASKABIR,J.] 47
As initially mentioned hereinbefore, the Land Acquisition Collector A
classified the acquired lands as 'Wet' lands and fixed the market value thereof
at ~s.2550 per Acre. The Reference Court took note of the fact that the
petitioners before him had been doing business in real estate of purchasing
land and developing them into housing sites. It also took note of the fact that
the acquired lands are situated at a place, which had trem~ndous potential B
value and had been wrongly classified as 'wet' lands. It was noted that the
said lands are situated just behind Joseph Colony abutting Meetu Street,
which links the lands with Thomas Arul Street and is very near to the junction
of Thomas Arul Street and By-Pass Road. It was noticed further that the By-
Pass is the broadest road in Karaikal connecting the new bus stand to
Thomas Arul Street and that important Government Offices like the C
Administrative Office, Court, General Hospital, Municipal Office, Schools and
colleges are located very near to the acquired lands. It appears that there is
a residential colony called Bharat Nagar Extension situated within 200.meters
from the acquired lands and the beach road is situated within 500 meters
where there are a number of Government and Private buildings. It was further
noted that Government had acquired large tracts of land along the beach road D
for various public purposes like construction of Excursion center, Automatic
Telephone Exchange, Postal Employees quarters, etc. It was the finding of the
Reference Court that the acquired lands are potential house sites which were
ideal for house construction and that but for the acquisition the petitioners
could have sold a portion of the acquired lands as house sites. E
The Reference Court thereafter went on to consider some of the
contemporaneous conveyances and sale deeds executed and registered at
about the same time as the publication of the notification under Section 4(1)
of the Act.
F
The first sale deed to be taken into consideration was one dated 17th
October, 1988 which was marked as A-12, whereby 0.2 Acres 07 Centiares was
sold at the rate of Rs.6739 per Acre. The second sale Deed also dated 17th
October, 1988 and marked as Exhibit A-13, was in respect of 0.2 Acres 37
Centiares of land situated in the same area which was sold at the rate of Rs.
8937.34 per Acre. The third deed dated 7th December 1988 was also in respect G
of land situated in the same area measuring 0.1 Acre 71 Centiares sold at the
rate of Rs.11.695.90 per Acre. The fourth sale deed dated 3rd May, 1989 was
one executed in respect of 01 Acre 70 centiares of land situated in the same
area as the acquired lands at the rate of Rs.14,705 per Acre.
H
•
48 SUPREME COURT REPORTS [2005) SUPP. S S.C.R.

A As will appear from the Award of the Reference Court, by a subsequent
sale deed dated 2nd August, 1989 a nearby plot was sold at the rate of
Rs.13,450 per Acre.

Considering the location of the acquired lands and their high potential
for commercial exploitation the Reference Court recorded the fact that there
B had been a steep escalation in the land value in the area in question within
a short interval which fact was also admitted by the Land Acquisition Officer.
Accordingly, placing reliance on Exhibit A-15, the Reference Court fixed the
market value of the acquired property at Rs. 13,500 per Acre, together with
30 percent solatium and 12 percent additional market value in terms of Section
C 23(1A) of the Act.

As mentioned hereinbefore, the same enhancement was made in respeft
of the lands covered by the other reference cases with which we are conceme'd.

A.S. Nos. 591 of 1994 and 504 of 1994 were both disposed of by two
D separate judgments both dated 23rd February 2001 passed by the Division
Bench of the Madras High Court. The reasoning in both the judgments are
identical. Before the High Court it was sought to be contended on behalf of
the appellants-Union of India that the Reference Court had wrongly fixed the
market value of the acquired lands at Rs.13,500 per Acre on the basis of
Exhibit A-15 dated 3rd May, 1989, since none of the parties to the document
E had been examined as required under Section 51 A of Act. In support of such
contention reliance was placed on the decisions of this Court in Meharban
and Ors.etc. v. State of U.P. and Ors., reported in A.LR. (1997), SC 2664; A.P.
State Road Transport Corporation, Hyderabad v. P. Venkaiah and Ors.,
reported in [1997] 1 SCC 128 and State of U.P. and Anr. v. Rajendra Singh
p reported in AIR (1996) SC 1564.

In view of the aforesaid decisions of this Court, the Madras High Court
came to a finding that Exhibit A-15 which had been relied upon by the
Reference Court to fix the market value of the acquired lands could not be
considered in the absence of examination of the parties to the documents. In
G other matters involving some of the lands acquired for the construction of the
stadium, the Division Bench of the Madras High Court had fixed the market
value of the lands acquired at Rs. 7000 per Acre. On the basis of the above,
the Madras High Court reduced the market value of the acquired lands from
Rs.13,500 per Acre to Rs.7,000 per Acre.

H
PATTAMMAL v. U.0.1. [AL TAMAS KABIR, J.] 49
Aggrieved by the said decision of the Madras High Court in reducing A
the market value of the lands as awarded by the Reference Court from
Rs.13,500 per Acre to Rs.7,000 per Acre, the respondents in the said two
appeals have preferred CA 1500 of 2004 and CA No. 1501 of 2004. As
mentioned hereinabove, CA 1502 of 2004 was filed against the order dismissing
the review petition of the appellants in CA 150 l of 2004.
B
The fourth appeal is by way of Special Leave Petition (Civil) No. 6309
of 2004 against the judgment and order of the Division Bench of the Madras
High Court dated 18th September 2004 in A.S. No. 573 of 1994 also reducing
the market value of the acquired lands .fixed by the Reference Court at Rs.
13,500 per Acre to Rs.7000 per Acre. C
On behalf of the appellants it was sought to be urged that the impugned
judgments of the Madras High Court were based on an erroneous appreciation
of the law relating to the fixation of market value of lands acquired for public
purposes. It was urged that the law as explained in the case of Meharban and
Ors. and the two other judgments of this Court on which reliance had been D
placed by the High Court had, in fact, been reversed by a Constitution Bench
of this Court in the case of Cement Corporation of India Limited v. Purya
and Ors., reported in [2004] 8 SCC 270. In the said decision it was emphasized
that the view expressed in Meharban 's case was not the correct interpretation
and that under Section 51 A of the Act, a presumption as to the genuineness
of the contents of document is pennitted to be raised without examination of E
the parties thereto, if the said presumption is not rebutted by other evidence.
In the said case this Court reiterated the views expressed by this Court in the
case of Land Acquisition Officer and Manda/ Revenue Officer v. V. Narasaiah,
reported in (2001) 3 sec 530, wherein it was held, inter alia, as follows:·"

"14, The words "may be accepted as evidence" in the section F
indicate that there is no compulsion on the court to accept such
transaction as evidence, but it is open to the court to treat them as
evidence. Merely accepting them as evidence does not mean that the
court is bound to treat them as reliable evidence. What is sought to
be achieved is that the transactions recorded in the documents may G
be treated as evidence, just like any other evidence, and it is for the
court to weigh all the pros and cons to decide whether such transaction
can be relied on for understanding the real price of the land
concerned."

H
50 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Apart from the above, it was also contended that the Madras High
Court had failed to consider the potential value of the lands for commercial
exploitation, having regard to the location of the lands sought to be acquired
as had been commented upon by the Reference Court. It was urged that the
Land Acquisition Officer had himself admitted the steep escalation in· the
B markPt value of lands in the locality in a span of one year and that the Il"arket
value was much higher than what was fixed by the Madras High Court and
had been paid for similar sites even more than one year prior to the Notification
under Section 4( l) of the Act.

In· addition to the above, it was sought to be contended, that, in any
C event, the Madras High Court had erred in reducing the market value which
had been fixed by the Reference Court after due consideration of all the
cogent materials available on record ..

It was submitted that the Madras High Court had reduced the market
value of the lands in question in complete disregard of the methods to be
•
'

D employed for fixation of market value and instead of relying upon the
comparable method had chosen to adopt the average method which was
without any evidentiary basis and also upon an erroneous construction of the
Jaw as contained in Section 5 lA of the Act.

It was urged that the judgments of the Madras High Court were liable
E to be set aside and the Awards of the Reference Court were liable to be
restored.

, Appearing for the respondents in all the appeals Mr. T.L.V. Iyer, ~enior
Advocate,- firstly urged that the Reference Court had failed. to take into
consideration the fact that by the sale deed dated 15th July, 1988, being
F Exhibit A-I, some of the appellants had purchased 2 Hectares 9 Acres and 14
Ca of land, which comprised a part of land which had been acquired, at the
rate of about Rs. 377.90 per Acre and in respect of same land compensation
was now being sought for at the rate of Rs. 13,500 per Acre.

G Mr. Iyer also referred to Exhibits A-12, A-13 and A-14 where the price
of certain small house plots was fixed at Rs.6, 739 per Acre and upto a
maximum ofRs.11,695.90 per Acre. As to Exhibit A-15, Mr. Iyer submitted that
the same could not be taken as a yardstick, inasmuch as, by the said sale
deed, the appellants in CA No. 1500 of2004 had sold a small house plot, for
the purpose of creating evidence. Mr. Iyer submitted that the High Court of
H
PATTAMMALv. U.0.1. [ALTAMASKABIR,J.] 51
Madras had rightly chosen not to rely on Exhibit A-15, although on a reasoning A
' which had subsequently been dissented from by this Court in a later judgment.

Mr. Iyer also contended that merely because of the potential value of
the acquired land for commercial exploitation, it could not be said that the
character of the said lands had changed, and that they continued to be 'Wet'
lands as had originally been classified by the Land Acquisition Collector. As B
to what would be the value after development was a matter of conjecture and
could not be the basis for fixation of the market value of the lands when
acquired.
'"

In support of his aforesaid submissions, Mr. Iyer referred to the decision C
of this Court in the case of Printers House Pvt. Ltd v. Saiyadan (Deceased)
by Lrs. and Ors., reported in [1994] 2 SCC 133, wherein the manner in which

.. the comparable sale method was to be applied in detennining the market value
had been explained. It was explained that it is the price reflected in the sale
or award pertaining to a land closest or nearest to the acquired land in all its
features and under the average price reflected in such comparable sales or D
awards which form the basis. Mr. Iyer submitted that since some of the lands
had been acquired by the appellants in CA No. 1500 of 2004 in July 1988 at
the rate ofRs.377.90 per Acre, th€; same in keeping with the subsequent sale
deeds dated 17th October, 1988 and 7th December 1988 had been taken by
the Madras High Court as comparable units for fixing the market value.
E
The aforesaid decision of this Court was also relied upon by Mr. Iyer
in support of his contentions that in detem1ining the market value the Court
has to mark the location and the features, which include both advantages and
disadvantages, of the land covered by the Award, involving the location, size,
shape, potentiality and tenure etc. thereof.· F
Mr. Iyer contended that in applying the comparable method, the Court
also has to take into account the si1e and the area of the land acquired and
those forming the basis of the comparable units. It was urged that the market
value of large tracts of the land could certainly not be the same as a small
house site. It was urged that the Reference Court had erred in relying on the G
sale deeds pertaining to small house sites when the area under acquisition
comprised large tracts of land to be converted into a stadium. In suppor. of
the said submission Mr. Iyer referred to and relied on a decision of this Court
in H.P. Housing Boardv. Bharat S. Negi and Ors., [2004] 2 SCC 184, wherein
the said principle has been explained.
H
52 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Mr. Iyer concluded his submissions by referring to G.O. M.S. No. 14
dated Pondicherry, 8th February, 1989 in whiCh instructions had been given
in regard to the procedure to be followed for the purpose of site selection
under the Act. From the said Government Order Mr.Iyer pointed out that the
market value was required to be assessed after taking into account the
potential value of the land, thereby meaning all the re<\Sonable properties
B which the land was likely to possess in respect of its user. The potential value
was also required to be assessed after taking into consideration the purpose
for which the land is acquired. While deciding...upon the nature of land, the
classification shown in the revenue records should not alone be relied upon
but the potential use to which the land can be put should also be taken into
C account. Mr. Iyer placed special emphasis on sub-para (iii) of Paragraph 2
wherein it was explained that in acquiring vast extent of land for urban
purposes, the iand should be valued as an urban land, diminishing 20 to 33
1/3 percent of the assessed value towards improvement and amenities.
Furthermore, in assessing the market value only the sale data, prior to the date
of notification under Section 4(1) should be taken into account, even though,
D the post notification sales could be taken note of for knowing the rise in the
price trend. The said Government Order also referred to size and location of
the land to be acquired for determining the market value of the acquired lands.

Mr. Iyer urged that the judgments and orders of the Madras High Court
E had been based on the aforesaid principles and did not require any interference
by this Court.

Having carefully considered the submissions made by Mr. Iyer on
behalf of the respondents, and by the different sets of counsels for the
appellants in these four appeals, we are unable to agree with the views
F expressed by the Madras High Court and the submissions in respect thereof
made by Mr. Iyer. In fact, Mr. lyer's submissions, in our view, only strengthen
the· case of the appellants since the Madras High Court has decided the
matters in a manner, which is contrary to established principles of fixation of
market value for acquisition purposes, which have been explained in detail in
the aforesaid Government Order dated Pondicherry, 8th February, 1989, referred
G to by Mr. Iyer.

Apart from the above, the Madras High Court in making the impugned
judgments relied on the earlier decisions of this Court requiring proof of
documents for the purposes of Section 51 A of the Act, which view had been
H overruled subsequently firstly in V. Narasaiah 's, case (supra), and was later
PATTAMMALv. U.0.1. [ALTAMASKABIR,J.) 53
reiterated by the Constitution Bench in Cement Corporation of India Ltd 's A
case (supra). In fact, in the Printers House Pvt. Ltd. case (supra), relied upon
by Mr. Iyer, it has been indicated that the determination of market value of
the acquired plot on average basis was incorrect in that it overlooked the
comparable method.

In our view, the Reference Court had adopted the correct procedure B
upon examination of the location and potential value of the acquired lands
in its detailed award, as also the contemporaneous sale deeds which indicated
that there had been a steep escalation of the price of lands in the immediate
vicinity of the acquired lands, which fact had also been admitted by the Land
Acquisition Officer. C
In our view, there was no justification for the Madras High Court to
have reduced the market value of the acquired lands which had been fixed
at Rs. 13,500 per Acre by the Reference Court.

All these appeals must therefore be allowed. The Judgments and orders D
of the Madras High Court impugned in these appeals are all set aside and the
Awards as made by the Reference Court out of which these appeals arise are
restored.

Before parting with these appeals it will be necessary to indicate that E
on 24th August, 2001 when notice was issued on SLP(C) No. 3476 of2001
which was subsequently converted into CA No. 1500 of 2004, an order was
made that notice be issued on condition that the excess amount collected
would be refunded to the State within a month from the date of the order. In
other words, since the appellants had obtained compensation at a higher rate
... from the Reference Court, which had been reduced by the Madras High Court, F
the appellants were directed to deposit the difference in the two amounts as
a condition precedent for issuance of notice. Similarly, on 14th August, 2003,
when notice was issued in connection with SLP (Civil) No. 11579of2003, a
similar order was made. Along with the above, the appellants were also
directed to deposit their title deeds of the acquired lands, which directions G
had been duly complied with by the appellants in the first three appeals. As
far as the fourth appeal is concerned, leave is being granted by the present
judgment.

Since, we have chosen to restore the valuation as fixed by the Reference
Court, the appellants will be entitled to return of the difference amount H
54 SUPREME COURT REPORTS [2005] Sl,JPP. 5 S.C.R.

A deposited by them in terms of the order passed in these appeals together with
their title deeds which they had deposited.

Such reimbursement and return of the title deeds are be effected
expeditiously, but positively within one month from the ;.date of the
communication of this Judgment.
B
The appeals are disposed of accordingly.

The parties will bear their respective costs.

VM Appeals disposed of.