Determination of Market Value on the basis of average price paid under sale transactions: For ascertaining the fair market value of the acquired land, High Court adopted the ‘average method’ by averaging the sale price of Exs A-7 to A-10 and calculated the rate at Rs.37,433.75 paise per sq. yard. The appellants contend that when land is being compulsorily taken away, the landholder is entitled to claim the highest value which similar land in the locality is shown to have fetched in a bonafide transaction and High Court was not justified in averaging the sale prices of four perpetual lease deeds. Appellants placed reliance upon the judgments of this Court in M. Vijayalakshmamma Rao Bahadur vs. Collector (1969) 1 MLJ SC 45 and State of Punjab and Anr. vs. Hans Raj (D) by Lrs. And Ors., (1994) 5 SCC 734. In Hans Raj case (supra) it was held as under: “4. Having given our anxious consideration to the respective contentions, we are of the considered view that the learned Single Judge of the High Court committed a grave error in working out average price paid under the sale transactions to determine the market value of the acquired land on that basis. As the method of averaging the prices fetched by sales of different lands of different kinds at different times, for fixing the market value of the acquired land, if followed, could bring about a figure of price which may not at all be regarded as the price to be fetched by sale of acquired land. One should not have, ordinarily recourse to such method. It is well settled that genuine and bona fide sale transactions in respect of the land under acquisition or in its absence the bona fide sale transactions proximate to the point of acquisition of the lands situated in the neighbourhood of the acquired lands possessing similar value or utility taken place between a willing vendee and the willing vendor which could be expected to reflect the true value, as agreed between reasonable prudent persons acting in the normal market conditions are the real basis to determine the market value.”
Referring to Hans Raj’s case in Anjani Molu Dessai vs. State of Goa And Anr., (2010) 13 SCC 710, this Court held as under:- “20. The legal position is that even where there are several exemplars with reference to similar lands, usually the highest of the exemplars, which is a bonafide transaction, will be considered. Where however there are several sales of similar lands whose prices range in a narrow bandwidth, the average thereof can be taken, as representing the market price. But where the values disclosed in respect of two sales are markedly different, it can only lead to an inference that they are with reference to dissimilar lands or that the lower value sales is on account of undervaluation or other price depressing reasons. Consequently, averaging cannot be resorted to. We may refer to two decisions of this Court in this behalf.”
20. Where the lands acquired are of different type and different locations, averaging is not permissible. But where there are several sales of similar lands, more or less, at the same time, whose prices have marginal variation, averaging thereof is permissible. For the purpose of fixation of fair and reasonable market value of any type of land, abnormally high value or abnormally low value sales should be carefully discarded. If the number of sale deeds of the same locality and the same period with short intervals are available, the average price of the available number of sale deeds shall be considered as a fair and reasonable market price. Ultimately, it is in the interest of justice for the land losers to be awarded fair compensation. All attempts should be taken to award fair compensation to the extent possible on the basis of their accessibility to different kinds of roads, locational advantages etc. Four perpetual lease deeds A-7 to A-10 relied upon by the appellants are of the same locality – Vasant Kunj Residential Scheme and relate to the period ranging from September 1995 to December 1996, but they are just prior to Section 4(1) notification. In our view, the High Court was justified in taking the average of the said four exemplars and approach adopted by the High Court in averaging the sale prices of Exs A7 to A10 cannot be said to be perverse.
Supreme Court of India
Kapil Mehra & Ors vs Union Of India & Anr on 17 October, 2014
Bench: T.S. Thakur, R. Banumathi
Citation;2014 ALLSCR3728
