Holding

A certified copy of a registered sale deed is admissible without party examination, and compensation under the Land Acquisition Act is limited to market value, which already incorporates potentiality, so no additional amount for potential value may be awarded.

Summary

The State of Haryana acquired about 180 acres of land for a feeder project and awarded uniform compensation rates. The High Court, relying on a single sale deed, directed the State to pay Rs.1,72,000 per acre plus an additional Rs.30,000 for "potential value". The State appealed, arguing that certified copies of other sale deeds showing lower values were improperly excluded because the parties were not examined, and that compensation cannot include a separate amount for potential value. The Supreme Court held that certified copies of registered sale deeds are admissible evidence without examining the parties, and that "potential value" is already part of market value, so no extra compensation is permissible. Consequently, the Court set aside the High Court’s award, dismissed all appeals, and remanded the matter for a fresh determination of market value taking the sale deeds into account.

Issues considered

Whether a certified copy of a registered sale deed is admissible as evidence without examination of the parties under the Evidence Act and Section 51-A of the Land Acquisition Act, 1894.
Whether the High Court erred in rejecting the sale deeds (Exhibits R/2 and R/3) on the ground that the parties were not examined.
Whether compensation under the Land Acquisition Act may include a separate amount for "potential value" over and above market value.
Whether the High Court should have remanded the valuation of market value for fresh determination.

Legislation cited

Indian Evidence Act, 1872s. 74(2), s. 76, s. 77
Land Acquisition Act, 1894s. 18, s. 23(1), s. 4, s. 51-A, s. 6
Registration Act, 1908

Subjects

Land acquisitionCompensationMarket valuePotential valueAdmissibility of certified copiesEvidence ActSection 51-AValuation

Judgment

A STATE OF HARYANA
v.
RAM SINGH ;.;....

JULY 25, 2001

B [V.N. KHARE AND RUMA PAL, JJ.]

Land Acquisition:

Land Acquisition Act, 1894-Section 51-A-Compensation for land
c acquisition-Reliance on sale deed of similar lands without examination of
parties to the document-Validity of-Held, certified copies of the sale deed
can be relied upon without examination of the parties thereto-Remanded
back to High Court for correct determination ofmarket value after considering
the sale deeds of similar lands-Evidence Act, 1872-&ctions 74(2), 76 and
77.
D
Land Acquisition-Award of further ·compensation towards potential
value besides market value of the lands acquired-Validity of-Held, invalid
as the . market value takes into consideration potential future value of the f--
land.
E
Words and Phrases:

'Market Value'-Meaning in the context of Land acquisition.

Appellant--State acquired .land covering an area of about 180 acres
F and spread over four villages after issuing necessary notifications under the
Land Acquisition Act, 1894. Compensation was awarded at an uniform rate
for all the four villages depending upon the type of the lands, namely irrigated,
non-irrigated and non-cultivable lands. On reference under the Act by the
respondent-claimants, Trial court passed widely differing awards. The awards ...
G were challenged by the claimants before Single Judge of the High Court.
The Single Judge adopted an uniform rate for all types of land in all the
villages and directed the appellant-State to pay compensation at Rs. 1,72,000 ...
per acre plus Rs. 30,000 per acre on account of potential value of the
.....
acquired land. The Division Bench of the High Court dismissed the appellant's
appeal. Hence these cross appeals by the appellant and the claimants.
H ·1178
(

STATE v. RAM SINGH 1179
The appellant-State contended that the High Court was wrong in A
determining the value of the acquired land at Rs. 1,72,000 per acre; that the
.... sale deeds of similar lands disclosed value at Rs. 29,000 and Rs. 37,000 per
acre only; that an examination of the parties to the referred sale dee~s by
- the State is not essential in view of the decision of this Court in Land
Acquisition Officer and Manda! Revenue Officer v. Narasaiah, [2001) 3 SCC
B
530 that the sale deed referred to by the respondent-claimants disclosing a
value of Rs. 2,40,000 per acre pertain to the land situated near a main road;
that the acquired lands were situated at some distance from any habitation
or road; and that the rate or Rs. 30,000 per acre on account of potential value
of the land is entirely speculative.

The respondent-claimants contended that the sale deeds produced by
c
the appellant were photostat copies of the original sale deeds, which could
not be admitted in evidence by the Court; that the sale deed relied upon was
executed prior to the issue of notification under the Land Acquisition Act;
and that the sale deed correctly reflected the market value of the acquired
land as it pertained to land of similar nature. D
Disposing of the appeal of the appellant and dismissing the appeals of
;., the claimants, the Court.

HELD : 1.1. It is not the law that a certified copy of a registered
agreement for sale is inadmissible in evidence unless the parties to the E
document are examined to prove it. That would be contrary to what Section
77 read with Sections 74(2) and 76 of the Evidence Act, 1872 and more
specifically Section 51-A of the Land Acquisition Act, 1894 provide. As far
as the provisions of the Land Acquisition Act are concerned, a certified copy
of the registered sale deed is admissible in evidence and does not need to be
proved by calling a witness. It is open to the Court to accept the certified copy F
as reliable evidence, without examining parties to the documents. This does
not however preclude the Court from re,jecting the transacti'ln itself as being
malafide or sham provided such a challenge is laid before the Court. There
was no allegation by the claimants that the sale deeds produced by the
appellant did not represent genuine transactions and the High Court was in G
error in refusing to consider the transactions evidenced therein merely
because the parties to the documents were not examined.
(1182-H; 1183-A-C; GI
~

1.2. Although the references under Section 18 of the Land Acquisition
Act had been decided on the basis of the sale deeds relied upon by the State, H
1180 SUPREME COURT REPORTS [2001] 3 S.C.R.

A in the absence of any challenge on this score before the High Court by the
claimants, the High Court did not address itself to this aspect of the matter
at all. Therefore, the matter is remanded bac~ to the High Court to take a
decision on the market value of the acquired land taking into consideration
the sale deeds relied upon by the State unless the claimants are permitted
B by the High Court to establish their inadmissibility. [1184-B)

land Acquisition Officer & Manda! Revenue Officer v. V. Narasaiah,
·12001 J 3 SCC 530 and Ramappa v. Bojappa, AIR (1963) SC 1633, relied on.

Baldev Singh & Ors. v. State of Punjab through Collector, AIR (1996)
C SC 3498, distinguished.

2.1. The Land Acquisition Act, 1894 does not allow for payment of any
further amount on account of 'potential value' over and above the market
value. Besides 'market value' means the price which the asset would or could
be expected to fetch in the open market. Where a property has the potentiality
D of more profitable use, it will command a better price than property without
such potential. In other words, potentiality forms part of the market value
and a factor to be taken into account for the purpose of determining the
market value. But once the market value is determined, there is no question
of awarding any further amount in addition thereto by reason of any further
potential. The High Court erred in grating an additional sum on account of
E 'potential value' in addition· to the market value. (1184~D-H; 1185-A)

Hasana/i Walimchand (Dead) by lrs. v. State of Maharashtra, (1998)
2 SCC 388 and The Collector, Raigarh v. Dr. Harsingh Thakur & Anr. & vice
versa, (1979) 1 sec 236, referred to.

F CIVIL APPELLATE JURISDICTION : Civil Appeal No. 60I6 of
1999.

From the Judgment and Order dated 19 .1. 1998 of the Punjab & Haryana
High Court in LPA No. 40/98 in RFA No. 1423/91.

WITH
G
CIVIL APPEAL Nos. 6017-6032 of1999.

Neeraj Kumar Jain for Mahabir Singh, Vinay Kumar Jain, Shakeel Ahmed
and Ms. Arnita Gupta, Advocates for the appeining parties. ...--

H The Judgment of the Court was delivered by
STATE v. RAM SINGH [RUMA PAL, J.] 1181
RUMA.PAL, J. The issue involved in all these appeals relates to the A
..... compensation awarded in respect of land acquired under the Land Acquisition
Act, 1894 (referred to briefly as the Act'). The acquisition was made by the
State of Haryana for constructing the Shahbad feeder. The area acquired
covered about 180 acres and cut through villages Garhi Banjaran, Telipura,
Udhampur and Bhukri. For the purposes of the acquisition, a series of
notifications under Section 4 followed by declarations under Section 6 of the B
Act were issued between 1986 to 1987. The Land Acquisition Collector awarded
the same rate for all the four villages having regard to the nature of the land,
namely, Rs. 29,000 for Chahi or irrigated land, Rs. 20,000 for Barani or non-
irrigated land and Rs. 5,000 per acre for Gairmumkin or non-cultivable land.
The References under Section 18 were disposed of by the District Judges by c
passing widely differing awards. These awards were subsequently challenge.d
by the land owners from villages Telipura and Garhi Banjaran before the High
Court of Punjab and Haryana. The Single Judge of the High Court adopting
a uniform rate for all types of land in all the villages directed the State
Government to pay each of the claimants compensation of Rs. 1,72,000 plus
Rs. 30,000 per acre, the latter sum being on account of potential value of the D
acquired land. The Division Bench of the High Court dismissed the State's
..\ appeals without giving separate reasons for upholding the decision of the
learned Single Judge.

The appeals before us have been preferred both by the State of Haryana
E
and the claimants challenging the compensation granted by the High Court.

Mr. Neeraj Kumar Jain appearing for the State of Haryana has contended
that the High Court was wrong in determining the value of the acquired land
at Rs. 1,72,000 per acre. The State had produced two sale deeds Exhibits RI
2 and R/3 pertaining to a total area of 23 kanals and 4 marlas. The two deeds F
showed that the rate of land similar to the acquired land was Rs. 29,000 and
Rs.37,000 per acre. It was contended that the learned Single Judge had relying
upon the decision of this Court in Baldev Singh and Others v. State of Punjab
through Collector, AIR ( 1996) SC 3498 excluded Exhibits R/2 and R/3 produced
by the State from consideration on the ground that neither the vendor nor
G
the purchaser had been examined. It is pointed out that Baldev Singh 's case
is no longer good law in view of the subsequent decision of this Court in
~
Land Acquisition Officer & Manda/ Revenue Officer v. V. Narasaiah, [2001]
3 SCC 530. Secondly, it was submitted by Mr. ~ain that the learned Judge erred
in relying upon Exhibit PC produced by the claimants which was a sale deed
pertaining to an area of one kanal and 6-112 marlas only which was contiguous H
1182 SUPREME COURT REPORTS [2001] 3 S.C.R.

A to a main road. It was argued that Exhibit PC could not be an exemplar relevant
to the lands which had been acquired which not only covered a much larger
area but were situated at.som_e distance from any habitation or road. It was
also submitted that in any event. having determined the market value, the
learned Judge erred in adding any further sum on account of the alleged
potential value of the land and that the rate of Rs. 30,000 per acre fixed by
B the learned Judge for determining such potential value was entirely speculative.

Mr. Vinay K~mar Garg, l.earne_d counsel ,appearing on bel,ialf of the
claimants, submitted that although the learned Judge may have ~ejected Exhibits
R/2 and R/3 on a principle which was unsustainable, no prejudice was caused
C to the State as both Exhibits were photostat copies of sale deeds. and could
never have been admitted in evidence. It was further submitted that the High
Court had taken into considerati~n the fact that Exhibit PC relied upon by the
claimants related·.to a small piece of land and that is why as against the stated
price of over Rs. 2,40,000 per acre in Exhibit PC, the learned Judge had
deducted 30% from the stated price a~d determined the value for the acquired
D land at Rs. 1,72,000 per acre. It was emphasised that Exhibit PC was executed
prior to the date of the notification under Section 4 of the Act and correctly
reflected the i::nark€'.t value of the acquired land as it pertained to land of simiiar
nature. Our attention was drawn to one of the proceedings before the District
Judge under Section 18 where evidence had been led to the effect that the
E land acquired in village Telipura was within the municipal limits of Jagadhri,
next to Bilaspur-Jagadhri road and as far as the land acquired in Garhi Bajaran
was concerned, the evidence showed that the acquired land was about 1 K.M.
from Jagadhri and that there were a poultry farm, petrol pump, octroi post,
industries, hospital and banks near the land. The learned counsel then relied
upon the decisions of this Court.in Hasanali Walimchand (Dead) by lrs. v.
F State of Maharashtra, (1998] 2 SCC 388 as well as The Collector, Raigarh v.
Dr. Harsingh Thakur and another and vice versa, [ 1979] 1 SCC 236 to sustain
his argument that the High Court was correct in awarding an amount on
account of potential value over and. above the market value of the acquired
land.
G Counsel ·for the State was right when he submitted that the High Court
erred in rejecting Exhibits R/2 and R/3 as inadmissible only on the ground that
the parties to the documents had not been examined by the State. It is not
the law that a certified copy of a registered agreement for sale is inadmissible
in evidence unless the parties to the document are examined to prove it. That
H would be contrary to what Sections 77 read with Sections }4(2) and 76 of the
STATE v. RAM SINGH [RUMA PAL, J.] 1183
Evidence Act, 1872 and more specifically Section SIA of the Act provide. As A
far as the provisions of the Evidence Act are concerned, a certified copy of
the registered sale deed is admissible in evidence and does not need to be
proved by calling a witness. (See Ramappa v. Bojappa, AIR (1963) SC 1633,
1637).

Section SIA of the Act is to the same effect. In land Acquisition Officer B
& Manda/ Revenue Officer v. V. Narasaiah, (supra), it was held that by virtue
of Section S 1-A, a certified copy of a document registered under the
Registration Act, 1908 including a copy under Section S7 of the Act may be
accepted as evidence of the transaction recorded in such documents. It is
open to the Cou~ to accept the certified copy as reliable evidence and C
without examining parties to the documents. This does not however preclude
the Court from rejecting the transaction itself as being malafide or sham
provided such a challenge is laid before the Court.

In Baldev Singh v. State of Punjab (supra), the sale deeds produced by
the claimants were challenged as collusive. It was alleged that the sale D
transactions had been entered into only for the purpose of inflating the
market value in anticipation of acquisition proceedings. It was in this context
that the learned Judges of this Court held:

" ............. There is no proof of passing of the consideration thereunder
or the circumstances in which the documents came to be executed. E
Under these circumstances, all the· documents are inadmissible in
evidence and cannot be looked into."

The decision is not an authority for the proposition that the certified
copy of a registered sale deed is inadmissible in evidence without proof of
the execution of the documents by the vendor/purchaser or any other witness. F
In the present case, there was no allegation by the claimants that
Exhibits R/2 and R/3 did not represent genuine transactions and the High
·Court was in error in refusing to consider the transactions evidenced therein
merely because the parties to the documents were not examined. G

The submission of the learned counsel for the claimants that Exhibits
R/2 and R/3 were in any event inadmissible because they were merely photostat
copies of sale deeds was not a ground of appeal raised by the claimants in
any of the appeals preferred by them from the decision of the District Judge.
The original records are·not before us and it is not possible to state with any H
1184 SUPREME COURT REPORTS [200 I] 3 S.C.R.

A certainty whether the original certified copies of Exhibits R/2 and R/3 had or
had not been produced by the State in any of the proceedings urider Section -~

18. Although the references under Section 18 had been decided on the basis
of Exhibits R/2 and R/3, in the absence of any challenge on this score before
the High Court by the claimants, the High Court did not address itself to this
s' aspect of the matter at all. Therefore, the matter will have to be remanded to
the High Court to take a de~ision .on the market value;of the acquired land
' .
taking into consideration Exhibits R/2 'and R/3 unless the
by the High Court to establish their inadmissibility.
. claimants are permitted

We are left with th{ question whether the High Court could have
C · granted a further amount on account of potential value over and above the
market value by way of compensation. Under Section 23(1) of the Act, in
determining the amount of compensation to be awarded for land acquired
under the Act, the Court shall take info consideration the market value of the
land at th~ date of publication of the notification under Section 4, sub-section
( 1). The statute does not allow for payment of any further amount on account
D of 'potential value' o.ver and above the .~ark~t value. Besides 'market value'
' .
means exactly what it says viz. the price which the_ asset would or could be
expected to fetch in the open market. Where a property has the potentiality
. - _j,

of more profitable use, it will command a better price than property without
such potential. In other words, potentiality forms part of the market value and
E may be a factor to be taken into account for the purpose of determining the
market value. But once the market value is determined, there is no question
of awarding any further amount in addition thereto by reason of any further
future potential. The decision relied upon by the claimants do not hold to the
contrary.

F . In The Collector, Raigarh v. Dr. Harisiilgh Thakur (supra), agricultural
land had been acquired. There was evidence to show that the lands were
potentially building sites. The finding was supported by the fact that the
acquired land had in fact been used for construction of staff qua1ters. This
Court held that it would be wrong to assess the m~rket value only on the
G basis of its use at the time of acquisition and that the market value should
be determined not only with reference to the actual condition of the property
at the time of acquisition but also on its future potentiality.

Similarly, in Hasanali Walimchand v. State of Maharashtra, (supra)
when the High Court had calculated the market value of the land only on its
H existing use without taking' into consideration its future potential, this Court
<.
STATE v. RAM SINGH [RUMA PAL, J.] 1185
set aside the judgment of the High Court. Neither of the decisions cited held A
that the Court could award any amount on account of potential value over
and above the market value. The High Court, therefore, erred in granting an
additional sum on account of 'potential value' in addition to the market value.

For the aforesaid reasons, we set aside the decision of the High Court
and remand the issue as to the market value of the land to be re-determined B
by the High Court in the light of the observations in this judgment.

All the appeals preferred by the claimants are accordingly dismissed
and the appeals preferred by the State are disposed of accordingly. There will
be no order as to costs .
• c
B.S. Appeals dismissed.