SANGUNTHALA (DEAD) THR. LRS.versusSPECIAL TEHSILDAR (L.A.) & ORS.

                        [2010] 3 S.C.R. 50


A              SANGUNTHALA (DEAD) THR. LRS.
                                 v.
               SPECIAL TEHSILDAR (L.A.) & ORS.
            (Civil Appeal Nos. 6240-6243 of 2001 etc.)

                       FEBRUARY 24, 2010
8
       [G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]

       Land Acquisition Act, 1894 - s. 23 - Acquired land ::...
  Classification - Market value - Determination of - The lands
C were acquired for construction of houses - They were
  potential house sites - Even at the time of acquisition, there
  were buildings on the lands - Compensation determined by
  Land Acquisition Officer - Enhanced by reference court,
  classifying the land as house sites - High Court holding the
o land as agricultural land - Held: The market value of a
  property has to be determined having due regard to its
  existing condition with all its existing advantages and its
  potential possibility - The market value of the acquired lands
  were rightly determined by reference court, classifying the
E same as house sites.
        Words and Phrases: 'Market value' - Meaning of, in the
    context of s. 23 of Land Acquisition Act, 1894.

      The land in question was acquired under Land
F Acquisition Act, 1894. Compensation amount thereof was
  determined by Land Acquisition Officer. The same was
  enhanced by reference court classifying the lands as
  house sites. High Co_urt set aside the order of reference
  court and determined the market value of the lands as
G agricultural lands , holding that the lands on the date of
  acquisition were agricultural lands. Hence, the present
  appeals.

        Allowing the appeals, the Court
H                               50
   SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL            51
             TEHSILDAR (L.A.)
     HELD: 1.1. The burden of establishing/proving the A
market value of the lands is always on the claimants. The
court has to treat the reference as an original proceeding
before it, for determination of the market value afresh on
the basis of the material produced before it. The claimant
in the position of a plaintiff has to show that the price B
offered for his land in the award is inadequate on the
basis of the materials produced in court. The material
produced and proved by the other side will also be taken
into account for this purpose. [Para 29] [65-A-B]

    Periyar and Pareekanni Rubbers Ltd. v. State of Kera/a C
AIR 1990 SC 2192; Special Deputy Collector and Anr. v.
Kurra Sambasiva Rao and Ors. (1997) 6 SCC 41; Kiran
Tandon v. Allahabad Development Authority and Anr. (2004)
10 sec 745, relied on.
                                                           D
     1.2. The 'market value' is the price that a willing
purchaser would pay to a willing seller for the property
having due regard to its existing condition with all its
existing advantages and its potential possibilities when
let out in most advantageous manner excluding any E
advantage due to carrying out of the scheme for which
the property is compulsorily acquired. In considering
market value, disinclination of the vendor to part with his
land and the urgent necessity of the purchaser to buy
should be disregarded. The guiding principle would be F
the conduct of hypothetical willing vendor who would
offer the land and that of a purchaser who, in normal
human conduct, would be willing to buy as a prudent man
in normal market conditions but not of an anxious
purchaser dealing at arm's length nor a fictitious sale G
brought about in quick succession or otherwise to inflate
the market value. The determination of market value is the
prediction of an economic event viz. a price outcome of
hypothetical sale expressed in terms of probabilities.
[Para 34] [66-G-H; 67-A-C]
                                                            H
I




        52      SUPREME COURT REPORTS                [2010] 3 S.C.R.


    A        1.3. The market value of a property has to be
        determined having due regard to its existing condition
        with all its existing advantages and its potential
        possibility when let out in its most advantageous manner.
        The question whether a land has potential value or not,
    B   is primarily one of facts depending upon its condition,
        situation, user to which it is put and whether it is
        reasonably capable of being put and proximity to
        residential, commercial or industrial areas or institutions.
        The existing amenities like water, electricity, possibility of
    c   their further extension, whether near about town is
        developing or has prospect of development have to be
        taken into consideration. [Para 35] [67-D-E]

            1.4. The reference court was right in holding that
        while determining the value of the property acquired one
    D   has to see whether the land has got the building
        potentiality to be used for the building purposes in the
        immediate or in near future. High Court fell into an error
        in concluding that the acquired lands were agriculture
        lands and erroneously reversed the conclusions arrived
    E   by the reference court. [Paras 13 and 14] [58-G; 59-H]

             1.5. The reference court has rightly appreciated the
        evidence. While examining the evidence of C.W. Nos. 1,
        2, 4, 6, 8 to 14, 17 to 19 and 21, it concluded that they
    F   have categorically stated that the lands were near the
        residential housing colonies and abutting the road. [Para
        16] [60-D]

           1.6. The evidence of RWs 1, 2 and 3 also supports
      the conclusion that even at the time of the Notification u/
    G s. 4(1 ), there were buildings on the land acquired and
      they are all abutting the main road and are at a distance
      of 1 K.M. from residenf :ti colonies. [Para 23] [63-D]

             1.7. The· presence of number of buildings on the
    H
   SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL             53
             TEHSILDAR (L.A.)
lands acquired and the said lands being occupied by the      A
buildings are to be treated as house sites. The basic
purpose that has been traced out in the evidence and as
admitted by the RWs that the lands were acquired for the
purpose of putting up residential quarters. As a portion
of the land is being considered as house site, the           B
adjoining lands have the potential of being put in better
use as house sites in the near future. [Para 24] [63-F]

    1.8. It should also be taken into consideration that
the disputed lands were situated near the factory            C
premises and further were adjoining the main road which
connects the road. As such the aforesaid lands are
potential house sites. [Para 26] [64-8)

     1.9. In view of the admitted case that the lands
acquired were potential house sites, the views taken by      D
the High Court while calculating the compensation
cannot be agreed to. R-13 and R-15 are the two sale
deeds containing particulars of the sale transactions held
3 years prior to the Section 4(1) Notification. The
reference court after close perusal of the aforesaid         E
documents held that the same discloses that out of more
than 100 sales, number of sales in respect of the lands
is sold as house sites in village Thathaiyangarpatti and
the adjacent survey numbers in Thekkampatty village
were also sold as house sites. [Para 32] [65-H; 66-A-B]      F

    Avinash Dhavaji Naik v. State of Maharashtra (2009) 11
SCC 171; Atma Singh (Dead) through Lrs. and Ors. v. State
of Haryana and Anr. (2008) 2 sec 568, relied on.

      1.10 The High Court and the Land Acquisition Officer   G
failed to take into consideration the advantages and
facilities, which were available in the acquired land. The
purpose for which the acquisition is being made is an
important factor. In the present case it has come on
evidence from R.W. 2 that the lands were acquired to build   H
    54      SUPREME COURT REPORTS               [2010) 3 S.C.R.


A quarters for the workers of the Company. The reference
  court rightly fixed the amount of compensation to be Rs.
  1,75,000/- and the said finding is upheld. [Paras 36, 37, 38
  and 39] [67-F; 67-H; 68-B; 68-C]

         Nelson Fernandes and Ors. v. Special Land Acquisition
8
    Officer, South Goa and Ors. (2007) 9 SCC 447, referred to.

       2. So fa.r as the question of grant of higher
  compensation than what is claimed by the claimants
  goes, the reference court has rightly observed, that even
C before the representation before the Land Acquisition
  Officer, the claimants had stated that in event of their
  being not satisfied with the award, they reserve the right
  to go before the Civil Court for determination of just and
  reasonable compensation. [Para 39] [68-D]
D
       3. The claim of the appellant(s) for solatium, int!!rest
  and other benefits under the statute should be governed
  by the principles laid down in Sunder's case . [Para 40]
  (68-F]

E        Sunder v. Union of India 2001 (7) sec 211 - relied on.

       P. Ram Reddy and Ors. v. Land Acquisition Officer,
  Hyderabad f,Jrban Development Authority, Hyderabad and
  Ors. (1995) 2 SCC 305; Land Acquisition Officer, ELURU and
F Ors. v. Jasti Rohini (Smt.) and Anr. (1995) 1 SCC 717; The
  Collector, Raigarh v. Dr. Harisingh Thakur and Anr. AIR 1979
  SC 472; Raghubans Narain Singh v. The Uttar Pradesh
  Government, through Collector of Bijnor AIR 1967 SC 465;
  State of Orissa v. Brij Lal Misra and Ors. (1995) 5 SCC 203;
G Viluben Jhalejar Contractor (Dead) by Lrs. v. State of Gujarat
  (2005) 4 SCC 789; Attar Singh and Anr. v. Union of India and
  Anr. (2009) 9 SCC 289, referred to.

                        Case Law Refer~nce:

H        (1995) 2 sec 305        Referred to         Para 13
   SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL              55
             TEHSILDAR (L.A.)
    (1995) 1 sec 111        Referred to          Para 15      A

    AIR 1979 SC 472         Referred to
                                                 Para 15
    AIR 1967 SC 465         Referred to          Para 15
                                                              B
    (1995) 5 sec 203        Referred to          Para 18
    (2005) 4 sec 789        Referred to          Para 19
    (2009) 9 sec 289        Referred to          Para 19
    AIR 1990 SC 2192        Relied on.           Para 28      c
    (1997) 6 sec 41         Relied on.           Para 28
    (2004) 1o sec 145       Relied on.           Para 28
    (2009) 11 sec 111       Relied on.           Para 33      D
    (2008) 2 sec 568        Relied on.           Para 34
    (2007) 9 sec 447        Referred to.         Para 37
    (2001) 1 sec 211        Relied on.           Para 40
                                                              E
    CIVIL APPELLATE JURISDICTION: Civil Appeal No(s).
6240-6243 of 2001.

    From the Judgment & Order dated 23.01.2001 of the High
Court of Judicature at Madras in AS. Nos. 135, 139, 140 and
                                                              F
143 of 1997.

                          WITH
C.A. Nos. 6244-6248 of 2001 & 495-504 of 2002.

    A.T.M Rangaramanujam, M.A. Chinnasamy, Senthil Kumar,     G
S. Rajappa (NP), V. Ramasubramanian (NP), for the
Appellants.

   S. Thananjayan, Arputham Aruna & Co. (NP), T.Harish
Kumar (NP) for the Respondents.                               H
    56      SUPREME COURT REPORTS                  [2010] 3 S.C.R.


A        The Judgment of the Court was delivered by:

         GANGULY, J. 1. These appeals have been filed
    challenging the judgment and order dated 23.1.01 of Madras
    High Court.

B        2. Facts relevant to the present dispute are that an extent
    of 196 acres of lands were acquired for the purpose of
    expansion of Tamil Nadu Magnesite Limited, a State owned
    company. Various notificat!~ms under Section 4 (1) of the Land
    Acquisition Act, 1894 (hereinafter referred to as "the Act") were
C   issued in the month of February, March and May 1984.

         3. In connection with giving compensation for that
    acquisition, the Land Acquisition Officer had fixed the market
    value at the rate of Rs.18,000/- per acre for irrigated dry land
0   and Rs.15,000/- per acre for unirrigated dry land in Award Nos.
    1 to 9 and 11 of 1986.

         4. As the claimants felt aggrieved by and dissatisfied with
    the awards, they asked for reference under Section 18 of the
    Act. The Reference Court, i.e. the Court of Subordinate Judge
E   Salem, after considering the documentary and oral evidence,
    treated the lands as potential house sites and fixed the market
    value at Rs.1,75,000/- per acre.

       5. The case as put forward by the claimants before the
F Reference Court and this Court was that the compensation was
  not fixed by the Collector on a proper basis and the acquired
  land is potential house site and the valuation ought to have
  been done on that basis. It was also their submission that
  relevant sale deeds were ignored while fixing up the value and
G the data sale deed selected by the Officer was absolutely
  unreliable. It was urged that in several cases, the Officer did
  not award compensation for well, cement channel and for the
  super structures and trees. While in some of the cases the Land
  Acquisition Officer had not awarded interest for the I.ands which
H are taken possession in advance from the land owners. N,eJ~~er
  SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL                       57
  TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
was the compensation paid for the change of residence and             A
place of avocation.

      6. Per contra.• the respondents urged that the Land
Acquisition Officer had fixed the value after verifying the records
of nearby land owners on such transactions and after verifying        8
all the aspects. It was further submitted that the value fixed by
the Land Acquisition Officer is correct and the value claimed
by the claimants is very high and there was no objection by the
owners for those lands at the time of acquisition. So there is
no necessity for enhancement of compensation. It was urged
that the documents relied upon by the claimants are in no way         C
relevant for fixing the higher values.

      7. The Reference Court taking into account the admission
of R.W. 2 that there are number of buildings on the land
acquired and the plots of land which are occupied by the D
building are to be treated as house sites, held that the
classification of lands into irrigated and unirrigated lands made
by the Land Acquisition Officer was unreasonable and
erroneous. The Reference Court held that the Officer should
have taken into consideration the proximity of lands acquired E
to the other residential colonies, the factories and that the lands
itself was used as housing plots.

    8. The Reference Court fixed Rs. 1,75,000/- per acre as
the amount taking note of the fact that although the lands            F
acquired are situated in different survey numbers but they are
adjacent to each other and are acquired as one block for the
same purpose.

     9. The High Court vide its judgment dated 23.01.2001
passed in Appeal Suit Nos. 134 to 143of1997 and C.M.P No. G
16081 of 2000 in Cross Objection Sr. No. 14276of1997 while
setting aside the order of Reference Court took into
consideration the fact that plots of lands acquired were
agricultural lands initially and continued to be so till they were
acquired. The High Court relied on the fact that the claimants H
    58       SUPREME COURT REPORTS                   (2010) 3 S.C.R.


A   in their representation before the Land Acquisition Officer have
    claimed different amounts and majority of them claimed
    compensation only at the rate of Rs. One Lakh per acre. The
    High Court held that the Reference Court had given no reason
    at all for awarding compensation higher than what had been
s   claimed. The High Court after taking into note the existence of
    2 housing colonies held that it could not be concluded that the
    vast extent of land acquired in the case would also become a
    housing colony on its own and was of the view that there was
    no sufficient material to establish that the lands in dispute could
c   be converted into a housing site in near future.

         10. It was held that lands in question were valuable
    agricultural lands where horticulture and other crops were raised
    and they were garden lands, sufficiently irrigated. The market
    value was fixed at Rs.75,000/- per acre uniformly for all the
D   lands involved in the above acquisition. The award of interest
    on solatium and on additional grounds was held to be contrary
    to the principles laid down by the Apex Court.

         11. The claimant(s)/appellant(s) being aggrieved by the
E   aforesaid order of the High Court approached this Court.

          12. The main bone of contention on behalf of the appellant
    is regarding the classification of lands and their value fixed by
    the High Court. It was argued before this Court that the acquired
    lands are potential house sites and that the High Court was not
F   justified in ignoring the documentary evidence in that regard.

         13. This Court finds that the Reference Court was right in
    holding that while determining the value of the property acquired
    one has to see whether the land has got the building potentiality
G   to be used for the building purposes in the immediate or in near
    future. In P. Ram Reddy and others v. Land Acquisition
    Officer, Hyderabad Urban Development Authority, Hyderabad
    and others (1995) 2 SCC 305, this Court held that:

         "Market value' of land acquired under the LA Act is the main
H
   SANGUNTHALA(DEAD)THR. LRS. v. SPECIAL                     59
   TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
     component of the amount of compensation awardable for A
     such land under Section 23(1) of the LA Act. The market
     value of such land must relate to the last of the dates of
     publication of notification or giving of public notice of
     substance of such notification according to Section 4(1)
     of the LA Act."                                            B

     This Court went on to further hold that:-

     "Such market value of the acquired land cannot only be its
     value with reference to the actual use to which it was put
     on the relevant date envisaged under Section 4(1) of the C
     LA Act, but ought to be its value with reference to the better
     use to which it is reasonably capable of being put in the
     immediate or near future. Possibility of the acquired land
     put to certain use on the date envisaged under Section 4(1)
     of the LA Act, of becoming available for better use in the D
     immediate or near future, is regarded as its potentiality. It
     is for this reason that the market value of the acquired land
     when has to be determined with reference to the date
     envisaged under Section 4(1) of the LA Act, the same has
     to be done not merely with reference to the use to which it E
     was put on such date, but also on the possibility of it
     becoming available in the immediate or near future for
     better use, i.e., on its potentiality ...... "

                                                   (See para 8)    F

     14. The High Court, however, has taken note of the
deposition of C.W. 1 who has admitted that excepting the plots
of land under acquisition, all other lands are agriculture lands.
The aforesaid witness also admitted that his land under
acquisition was agriculture land at the time of notification. G
C.W.6 has also admitted that initially all the acquired lands were
agriculture lands. But High Court ignored other materials on
record and fell into an error in concluding that the acquired lands
were agriculture lands and erroneously reversed the
conclusions arrived by the Reference Court.                         H
•



        60      SUPREME COURT REPORTS                    (2010] 3 S.C.R.


    A         15. The High Court relied on the case of Land Acquisition
        Officer, ELURU and others v. Jasti Rohini (Smt.) and another
        ((1995) 1 SCC 717], The Collector, Raigarh v. Dr. Harisingh
        Thakur and another (AIR 1979 SC 472] and Raghubans
        Narain Singh v. The Uttar Pradesh Government, through
    B   Collector of Bijnor, [AIR 1967 SC 465], wherein this court has
        held that the market value, on the basis of which compensation
        is payable under Section 23 of the Act, means the price that a
        willing purchaser would pay to a willing seller for a property
        having due regard to its existing condition with all its existing
    c   advantages and its potential possibilities when laid out in its
        most advantageous manner, excluding any advantages due to
        the carrying out of the scheme for which the property is
        compulsorily acquired.

              16. We, however, feel that the view taken by the learned
    D   High Court is not tenable. In our view the learned Reference
        Court has rightly appreciated the evidence in this regard. While
        examining the evidence of C.W. Nos. 1, 2, 4, 6, 8 to 14, 17 to
        19 and 21 it concluded that they have categorically stated that
        the lands were near the residential housing colonies and
    E   abutting the ltteri road which connects the Tanmag road and are
        situated abutting the road from Thekkampatti village. According
        to C.W 4 and 6 Gandhi Nagar Colony is at a distance of 100
        feet.

    F        17. It will be worthwhile to refer to Section 23 of the Act.
        Section 23 reads as under:

             "23. Matters to be considered on determining
             compensation:-

    G        (1) In determining the amount of compensation to be
             awarded for land acquired under this Act, the Court shall
             take into consideration-

             First, the market- value of the land at the date of the
             publication of the [notification under section 4, sub- section
    H
SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL                      61
TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]

 (1 )];                                                            A
 Secondly, the damage sustained by the person interested,
 by reason of the taking of any standing crops trees which
 may be on the land at the time of the Collector's taking
 possession thereof;
                                                                   B
 thirdly, the damage (if any) sustained by the person
 interested, at the time of the Collector's taking possession
 of the land, by reason of serving such land from his other
 land;
                                                                   c
 fourthly, the damage (if any) sustained by the person
 interested, at the time of the Collector' s taking possession
 of the land, by reason of the acquisition injuriously affecting
 his other property, movable or immovable, in any other
 manner, or his earnings;                                          D

 fifthly, in consequence of the acquisition of the land by the
 Collector, the person interested is compelled to change his
 residence or place of business, the reasonable expenses
 (if any) incidental to such change, and sixthly, the damage
 (if any) bona fide resulting from diminution of the profits of    E
 the land between the time of the publication of the
 declaration under section 6 and the time of the Collector's
 taking possession of the land.

 1A) In addition to the market value of the land, as above F
 provided, the Court shall in every case award an amount
 calculated at the rate of twelve per centum per annum on
 such market value for the period commencing on and from
 the date of the publication of the notification und~r section
 4, sub- section (1), in respect of such land to the date of G
 the award of the Collector or the date of taking possession
 of the land, whichever is earlier.

 Explanation: - In computing the period referred to in this
 sub- section, any period or periods during which the
 proceedings for the acquisition of the land Were held up          H
    62       SUPREME COURT REPORTS                    [2010] 3 S.C.R.


A        on account of any stay or injunction by the order of any
         Court shall be excluded.]

         (2) In addition to the market value of the land as above
         provided, the Court shall in every case award a sum of
         [thirty per centum] on such market value, in consideration
B
         of the compulsory nature of the acquisition."

        18. This Court in the case of State of Orissa It. Brij Lal
    Misra and others, [(1995) 5 SCC 203], held that:

c        "Section 23(1) of the Act charges determination of the
         amount of compensation for the acquired land taking into
         account firstly the market value of the land at the date of
         the publication of the notification under Section 4(1) of the
         Act. The question, therefore, would be that what would be
0        the market value of the land. The market value prevailing
         on the date of the notification including potentiality the land
         possessed of or realisable potentiality existing as on the
         date of the notification would be the relevant fact for
         consideration to determine market value."

E                                                        (See para 3)

         19. Further in the case of Viluben Jha/ejar Contractor
    (Dead) by Lrs. v. State of Gujarat, (2005) 4 SCC 789, this
    Court illustrated some positive and negative factors that could
F   have a bearing on the ma~ket value bf land under Section 23.
    [See para 20 pg. 797] While upholding the aforesaid view it
    was held in the case of Attar Singh and another v. Union of
    India and another, (2009) 9 SCC 289, that determination of
    market value of the land may also depend upon the facts and
G   circumstances of each case.

         20. R.W.3 in his evidence stated that about 50 company
    quarters were constructed on the acquired land and 6 or 7
    factory buildings were there. The construction made for factory
    was within 40 acres and about 30 acres were constructed for
H   residential quarters. He admitted that there are houses of
  SANGUNTHALA(DEAD)THR. LRS. v. SPECIAL                        63
  TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
agriculturists in the acquired land. He al$o admitted that the        A
acquired land was on the northern side of the road from
Thekkampatti and Anna Nagar Colony was just interior to that
being at a distance of 1 K.M. from interior to the road. He also
said that there may be terraced buildings on the acquired land.
                                                                      B
     21. R.W. 2 in his evidence stated that there are about 50-
60 houses at Anna Nagar. He also said that it was correct to
say that there were lands on both sides of the acquired land
which belong to the agriculturists. He also categorically admitted
that land was acquired to build quarters for the labourers.
                                                                      c
     22. R.W. 1 in his evidence admitted that the land adjacent
to the acquired land goes from Thekkampatti to Sengaradu.
According to him Gandhi Nagar colony has 150 residential
houses.
                                                                      D
     23. As such the evidence of these witnesses supports
conclusion that even at the time of the notification under Section
4 (1) there were buildings including the terraced buildings on
the land acquired and they are all abutting the main road and
are at a distance of 1 K.M. from residential colonies like Anna       E
Nagarand Gandhi Nagar.

      24. In the light.of the above material facts this Court feels
that the presence of number of buildings on the lands acquired
and the said lands being occupied by the buildings are to be
treated as house sites. The basic purpose that has been traced        F
out in the evidence and as admitted by the RWs that the lands
were acquired for the purpose of putting up residential quarters.
As a portion of the land is being considered as house site, the
adjoining lands have the potential of being put in better use as
house sites in the near future.                                       G

      25. The other important factor is the proximity of the plots
to two residential colonies i.e. Anna Nagar and Gandhi Nagar.
As it has come on record that the Anna Nagar colony has about
50-60 houses and Gandhi Nagar colony has about 150 houses,            H
•-       64       SUPREME COURT REPORTS                   [2010] 3 S.C.R.


     A   as such it is reasonable and proper to conclude that the present
         lands under dispute were near the residenticil colonies.

              26. It should also be taken into consideration that the
         disputed lands were situated near the factory premises and
         further were adjoining the main road whiCh connects the
     8
         Tanmag road. As such the aforesaid lands are potential house
         sites.

             27. In the judgment under appeal, the High Court took into
        consideration the fact that in the representation before the LAO,
     C the claimants have claimed different amounts ranging from
        Rs.80,000/- to Rs. Two Lakhs and the majority of the claimants
        have claimed compensation only at the rate of Rs. One Lakh
      . per acre. The High Court opined that no reason was given by
        the Reference Court for not accepting the claims of the
     D claimants excepting stating that the claimants have cf aimed
        lesser amount.

               28. It is settled that the burden of establishing/proving the
         market value of the lands is always on the claimants. In Periyar
     E   and Pareekanni Rubbers Ltd.' v. State of Kera/a [AIR 1990 SC
         2192], this Court held that it is the duty of the Court to determine
         just and fair market value. It was further held that the claimants
         should produce necessary evidence on the value of land since
         the burden of proof is on them to establist- the higher
         compensation claimed. While agreeing with the judgment in
     F   Periyar and Pareekanni Rubbers Ltd (Supra), this Court in the
         case of Special Deputy Collector & Another v Kurra
         Sambasiva Rao & Others, (1997) 6 SCC 41, held tfo~t in a
         claim for enhancement of compensation the burden ofproof
         was on 1he claimants that land was capable of fetching higher
     G   compensation. Further in the case of Kiran Tandon v.                   ..
         Allahabad Development Authority and another, [(2004) 10
         sec 745], it was held that the burden of proving that the amount
         of compensation awarded by the Collector is inadequate lies
         upon the claimant and he is in the position of a plaintiff.
     H
   SANGUNTHALA(DEAD)THR. LRS. v. SPECIAL                      65
   TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
     29. The Court, therefore, has to treat the reference as an     A
original proceeding before it for determination of the market
value afresh on the basis of the material produced before it.
The claimant in the position of a plaintiff has to show that the
price offered for his land in the award is inadequate on the
basis of the materials produced in Court. The material              B
produced and proved by the other side will also ~e taken into
account for this purpose. [See Para 10 page 754 of Kiran
Tandon (supra)]

      30. The claimants have placed reliance on sale deeds Ex.      C
C 7, 8, 11 and 12 for the purpose of valuation of land. The
Reference Court has considered that sale deeds as Ex. C 8 &
11 can be adopted as the basis for acquired lands. Ex. ·ca is
in respect of sale of house plots and is dated 11.03.83 which
is nearly one year prior to the notification under Section 4 (1)
and on that basis the value of lands/acquired under notification    D
was fixed at Rs. 1, 75,000/- per acre. It was held by the
Reference Court that though the lands were acquired in
different survey numbers but they were adjacent to each other
and are acquired as one block for the same purpose.
                                                                    E
      31. The High Court, however, refused to rely on the
aforesaid documents as the High Court opined that Ex. CB was
not admissible since the vendor or the vendee has not been
examined. The High Court held that the sale of 1% cents of land
on the condition that they should be used for house sites           F
appears to be unusual. With respect to the other document i.e.
Ex. C 11 the High Court considered the admission of CW 15
that the land was not sold as house sites. It was also held by
the High Court that the Reference Court was wrong in not
deducting developmental charges from the value arrived.             G
Basing its conclusion on the facts that the lands are agriculture
lands the market value was fixed at Rs. 75,000/ per acre.

    32. In view of the admitted case that the lands acquired
were potential house sites we do not agree with the views
taken by the High Court while calculating.the compensation. R-      H
    66       SUPREME COURT REPORTS                 [2010] 3 S.C.R.


A 13 and R-15 are the two sale deeds containing particulars of
  the sale transactions held 3 years prior to the Section 4 (1)
  notification. The Reference Court after close perusal of the
  aforesaid documents held that the same discloses that out of
  more than 100 sales, number of sales in respect of the lands
B is sold as house sites in village Thathaiyangarpatti and the
  adjacent survey numbers in Thekkampatty village were also sold
  as house sites.

     33. This Court in A vinash Dhavaji Naik v. State of
C Maharashtra, (2009) 11 SCC 171, has observed as following:

         "14. The potentiality of a land for the purpose of
         development as also for building purposes would depend
         upon a large number of factors. For the said purpose, the
         court may not only have to bear in mind the purpose for
D        which the lands were sought to be acquired but also the
         subsequent events to some extent.

         15. In a case of this nature the court may proceed on the
         presumption that such a vast tract of land viz. 96 villages
         were sought to be acquired at the same time for
E
         construction of New Bombay. We are not unmindful of the
         fact that development in the entire area was not possible
         at one point of time. Development of the area must have
         taken place in phases. We are also not unmindful of the
         fact that the price of the land may skyrocket depending
F        upon the development as also future potentiality."

        34. In Atma Singh (Dead) through Lrs., and others v. State
  of Haryana and another, [(2008) 2 sec 568], it was observed
  that the expression "market value" has been the subject-matter
G of consideration by this Court in several cases. The market
  value is the price that a willing purchaser would pay to a willing
  seller for the property having due regard to its existing condition
  with all its existing advantages and its potential possibilities
  when let out in most advantageous manner excluding any
H advantage due to carrying out of the scheme for which the
   SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL                      67
   TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
property is compulsorily acquired. In considering market value        A
disinclination of the vendor to part with his land and the urgent
necessity of the purchaser to buy should be disregarded. The
guiding principle would be the conduct of hypothetical willir1g
vendor who would offer ..the land and that of a purchaser who,
in normal human conduct, would be willing to buy as a prudent         B
man in normal market conditions but not of an anxious
purchaser dealing at arm's length nor a fictitious sale brought
about in quick succession or otherwise to inflate the market
value. The determination of market value is the prediction of
an economic event viz. a price outcome of hypothetical sale           c
expressed in terms of probabilities. [See para 4]

      35. It has been further held in Atma Singh (Supra) that the
market value of a property has to be determined having due
regard to its existing condition with all its existing advantages
and its potential possibility when let out in its most                D
advantageous manner. The question whether a land has
potential value or not, is primarily one of facts depending upon
its condition, situation, user to which it is put and whether it is
reasonably capable of being put and proximity to residential,
commercial or industrial areas or institutions. The existing          E
amenities like water, electricity, possibility of their further
extension, whether near about town is developing or has
prospect of development have to be taken into consideration.
[See para 5]
                                                                      F
     36. Following those principle laid down by this Court we
hold that the High Court and the Land Acquisition Officer failed
to take into consideration the advantages and facilities, as
discussed above, which were available in the acquired land.
Moreover, the very purpose for which the land was being               G
acquired is also a relevant factor.

     37. The purpose for which the acquisition is being made
is an important factor. This Court in the case of Nelson
Fernandes and others v. Special Land Acquisition Officer,
South Goa and others (2007) 9 SCC 447, held that both the             H
        68      SUPREME COURT REPORTS                   [2010] 3 S.C.R.


    A   Speci~I Land Acquisition Officer, the District Judge and the
        High Court have failed to notice that the purpose of acquisition
        is for Railways and that the purpose is a relevant factor to be
        taken into consideration for fixing the compensation. [See para
        29, page 459]
    B
             38. In the present case it has come on evidence from R.W.
        2 that the lands were acquired to build quarters for the workers
        of the Company.

           39. As such we observe that the Reference Court rightly
    C fixed the amount of compensation to be Rs. 1,75,000/- and we
      are inclined to uphold the said finding. As far as the question
      of grant of higher compensation than what is claimed by the
      claimants goes, the Reference Court has observed, and in our
      opinion rightly so, that even before the representation before
    D the Land Acquisition Officer, the claimants had stated that in
      event of their being not satisfied with the award, they reserve
      the right to go before the Civil Court for determination of just
      and reasonable compensation.

    E        40. For the reasons above, the judgment of the High Court
        is set aside and the order of the Reference Court is upheld.
        So far as the claim of the appellant(s) for solatium, interest and
        other benefits under the statute is concerned, we direct that the
        same should be governed by the principles laid down in Sunder
        v. Union of India, (2001) 7 SCC 211, and the principles laid
'   I
        down in para 26, page 231 of the judgment be followed. Para
        26 of tr.e judgment in Sunder (supra) is set out below:

             "Once it is held as it inevitably must be that the solatium
             provided for under Section 23(2) of the Act forms an
    G        integral and statutory part of the compensation awarded
             to a I&;~~ ~wner, then from the plain terms of Section 28 of
             the Act, it would be evident that the interest is payable on
             the compenJation awarded and not merely on the market
             value of the land. Indeed the language of Section 28 does
    H        not even remotely refer to market value alone and in terms
   SANGUNTHALA (DEAD) THR. LRS. v. SPECIAL                  69
   TEHSILDAR (L.A.) [ASOK KUMAR GANGULY, J.]
    talks of compensation or ~he sum equivalent thereto. The      A
    interest awardable under Section 28 therefore would
    include within its ambit both the market value and the
    statutory solatium. It would be thus evident that the
    provisions of Section 28 in terms warrant and authorise the
    gr~nt of interest on solatium as well."                       B

     41. In so far as the enhanced compensation as determined
by this Court is concerned, the same should be distributed to
the appellant(s) and concerned parties by the District Judge of
Salem by cheques drawn in their names as early as possible,
preferably within three months from the date of service of this   C
order on the District Judge: The respondents are to take steps
accordingly.

    42. The appeals are thus allowed with no order as to costs.
                                                                  D
K.K.T.                                      Appeals allowed.