Small Shop Plots Cannot Form Basis For Determining Large Land Value: Gujarat HC

Slashing the compensation awarded for acquired agricultural land, the Gujarat High Court held that high-value sale exemplars of small, fully-developed commercial plots cannot be directly relied upon to fix the market value of large, undeveloped land parcels.

A Division Bench comprising Justice Ilesh J. Vora and Justice R. T. Vachhani partly allowed the appeal filed by the Malpur Agriculture Produce Market Committee (APMC), setting aside the Reference Court's award that relied on shop plot sale deeds to determine agricultural land compensation under Section 18 of the Land Acquisition Act, 1894.

Court Observations and Directions

The High Court observed that the nature, location, and potentiality of the land play a decisive role in evaluating comparability. Referring to established principles, the Court emphasized that fully developed land cannot be treated at par with undeveloped land situated far from commercial centers.

The Court, in its reasoning, observed: "In our opinion, the Reference Court could not have relied upon the sale exemplars (Exh.26 & 27) to determine the market value of the land under acquisition. The Reference Court failed to appreciate the various factors of both the lands as the lands of the sale instances situated in fully developed area having direct connection of highway road, whereas, the land under acquisition was situated in the under development area and even after converting land into non-agricultural land, the chances of development in future, considering the location and nature of land, are not so potential and in advantageous position."

Evaluating the alternative evidence available on record, the High Court adopted a 1973 reference award for lands acquired in the same village (Exh. 90) as the base index, granting a 10% annual increase for the 19-year gap between the notifications.

The Court has following directions:

"Accordingly, the appellant is directed to deposit the entire amount along with the statutory benefits awarded by the Reference Court, within a period of three months."

Background

In February 1992, a notification under Section 4(1) of the Land Acquisition Act, 1894 was published to acquire 8,498 sq. meters of land in Village Malpur for the construction of a godown for the Malpur APMC. The Land Acquisition Officer awarded compensation at Rs. 10 per sq. meter in October 1992.

Dissatisfied, the land owners sought a reference under Section 18 of the Land Acquisition Act, 1894 read with Section 96 of the CPC. The Principal Civil Judge (Modasa), vide order dated March 30, 2013, enhanced the compensation to Rs. 565 per sq. meter after deducting 60% from sale exemplars of two small commercial shop plots (Exhs. 26 and 27).

Aggrieved by this enhancement, Malpur APMC appealed to the High Court. Applying the settled principles laid down in Chimanlal Hargovinddas vs. Special Land Acquisition Officer and Ramveersingh vs. Union of India, as well as test criteria from Land Acquisition Officer vs. T. Adinarayan Setty and Ravindran Narain vs. Union of India, the High Court held that shop plots located 1.5 km away in a developed market could not be compared to the acquired land. Consequently, the High Court reduced the awarded compensation rate from Rs. 565 per sq. meter to Rs. 390 per sq. meter with statutory benefits.

Case Details:
Case No.: R/First Appeal No. 1911 of 2013
Neutral Citation: 2026:GUJHC:52051-DB
Case Title: Malpur Agriculture Produce Market Committee v. Bhavi Hirabhai Nathabhai (Since Deceased Through L.H. And Rep.) & Ors.
Appearances:
For the Petitioner(s): Mr. Bharat T. Rao, Advocate
For the Respondent(s): Mr. Bhavesh Desai, AGP (for Respondent Nos. 2, 3); Ms. Archana U. Amin, Advocate (for Respondent No. 1)

Source: 2026 CaseBase(GUJ) 13797