Narayan Reddy vs State Of A.P. Through Land Acquisition … on 28 May, 2025

Telangana High Court

Narayan Reddy vs State Of A.P. Through Land Acquisition … on 28 May, 2025

Author: T. Vinod Kumar

Bench: T.Vinod Kumar, P.Sree Sudha

     THE HON'BLE SRI JUSTICE T. VINOD KUMAR
                       AND
     THE HON'BLE SMT. JUSTICE P. SREE SUDHA

                      LAAS. No.256 of 2008



JUDGMENT:

(Per Hon’ble Sri Justice T. Vinod Kumar)

This appeal, under Section 54 of the Land Acquisition Act,

1894, (for short ‘the Act’) is filed by the claimants aggrieved by

the order dated 04.12.2007 passed in LAOP.No.128 of 1992 on

the file of the Senior Civil Judge, Mahbubnagar (hereinafter

referred to as “the Reference Court’).

2. The Appellants herein are Claimants in the underlying OP,

filed under section 18 of the Act for enhancement of the

compensation.

3. Heard learned Counsel for the Appellants and learned

Government Pleader for Appeals for the Respondents and

perused the record.

4. The case of appellants is that the Tahsildar of Mahbubnagar

initiated acquisition proceedings to acquire the land of the

appellants to an extent of Ac. 3-25 cents (equivalent to Ac. 3-10
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Guntas) dry Patta land situated in Sy. No. 259-A, within the

revenue limits of Amistapur village, Bhootpur Mandal,

Mahabubnagar District for the purpose of allotting houses to

persons belonging to the Backward Classes. A notification under

Section 4(1) of the Act was issued and published on 15.02.1982,

and a Draft declaration under Section 6 of the Act was published

on 13.04.1998. After conducting enquiry and following the

procedure prescribed under the Act, the Land Acquisition Officer

passed Award dated 20.11.1991 fixing the compensation at a rate

of Rs. 2,500/- per acre.

5. The appellants/claimants contend that they received the

compensation on 21.05.1992, granted by the Land Acquisition

Officer under protest and sought reference under Section 18 of

the Act and the same was referred to the competent civil Court

and numbered as LAOP.No.128 of 1992 on the file of the

Reference Court. The Reference Court had dismissed the said

petition.

6. The appellants contend that the Land Acquisition officer

failed to consider the development potential of the acquired land

as Amistapur village is adjacent to Mahbubnagar town, and by
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the time of acquisition, the urban expansion of Mahbubnagar had

already extended up to Amistapur, which has significantly

increased the market value of the acquired land.

7. The appellants contend that the acquired land is abutting the

Mahbubnagar-Srisailam-Kurnool Road and has prime

connectivity. Several infrastructural and institutional facilities

were stationed in close proximity to the acquired land, including

a power substation, Postgraduate Centre, Sathya Sai Gurukulam,

as well as various industrial establishments and seed farms.

8. The appellants contend that the reference court has failed to

take note of the fact that the land in Sy. No. 259/A and Sy. No.

260 are abutting with each other and the land in Sy. No. 260 was

sold on yard basis prior to the issuance of notification under

section 4(1). However, the land acquisition officer failed to

consider the sale transaction and did not assign any reason for

calculating the compensation on acre basis rather than on yard

basis.

9. The appellants contend that the acquired land has become

commercially viable and valuable, and there was a demand in the

market at the rate of Rs. 150/- per square yard. Despite the
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demand, the Land Acquisition Officer failed to adopt a yardage-

based valuation and instead arbitrarily determined compensation

on a per-acre basis, without any justification. In addition, no

additional benefits or interest as provided under the Act was

awarded.

10. Per contra the respondent contends that award for

compensation was passed as per the prevailing market value as

on the date of notification u/s. 4 (1) of the Act and they had

followed the fair and just procedure for fixing compensation.

The respondent further contends that the appellants had not filed

any substantial proof or evidence to show their entitlement for

enhancement of the compensation. Therefore, the claimants are

not entitled for further enhancement.

11. Before the Reference Court, on behalf of the appellants/

claimants, P. Ws-1 & 2 were examined and Exs.A-1 to A-24

were marked. On behalf of the Referring Officer, RW-1 was

examined and Ex. B1 was marked.

12. The Reference Court upon perusal of the documentary

evidence filed in support, observed that it is well-established that

the burden of proof rests with the appellants to establish the
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market value as on the date of notification and the appellants

must provide credible and acceptable evidence to justify an

increase in the compensation.

13. The Reference Court observed that, in the oral testimonies

of P.Ws. 1 and 2, they claimed to be yielding a net income of Rs.

10 to 12 lakhs per annum, appears to be exaggerated and cannot

be relied upon, inasmuch as the crops being cultivated on the

acquired land were cattle feed, jowar, and groundnuts, it is

unreasonable to expect that the claimants were generating such a

substantial income in the year of acquisition i.e. in 1982.

Therefore, the contention of appellants that they were cultivating

commercial crops is not substantiated by the any documentary

evidence.

14. The Reference Court further observed that, P.W. 2 stated

that the value of the land for house sites was between Rs. 1,800/-

and Rs. 2,000/- per square yard, yet there is no documentary

evidence filed to substantiate their claim that adjacent land was

converted into house plots and sold on a yardage basis.

15. In contrast, R.W.1, who was serving as the Mandal

Revenue
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Officer with additional charge of Bhothpur Mandal, testified

regarding the circumstances of the award. According to R.W.1,

the award was based on 40 sale transactions that took place

within a period of three years prior to the notification under

Section 4(1) of the Act. Specifically, the adjacent land in Sl.No.

39 in Sy. No. 6, similar in soil quality, was sold at Rs. 1,200/-

per acre on 03.02.1982. Whereas the appellants were granted

compensation comparatively at a higher rate of Rs. 2,500/- per

acre basing upon the fertility of the acquired land, its irrigation

potential and the advantages of cultivation. R.W.1 denied that

the adjacent plots were compensated at Rs. 1,800/- to Rs. 2,000/-

per square yard.

16. The Reference Court has observed that the claimants have

failed to establish any basis for an enhancement of compensation

beyond the amount already awarded. The valuation of the land

should be based on the market conditions prevailing at the time

of notification and acquisition, and not at the time of presenting

evidence or rendering judgment. Consequently, held that the

compensation awarded by the Land Acquisition officer is
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reasonable and the claimants are not entitled to the enhancement

of compensation.

17. Aggrieved by the aforesaid order of the reference Court, the

Appellants have filed the present Appeal, seeking for

enhancement of the compensation.

18. We have taken note of the respective contentions urged.

19. In the instant case, a notification under Section 4(1) of the

Land Acquisition Act was issued on 15.02.1982. Pursuant

thereto, the Land Acquisition Officer passed an award on

20.11.1991, and the appellants received the compensation on

21.05.1992. It is pertinent to note that there was a substantial

interregnum of a decade between the date of notification and the

date of disbursement of compensation. During this period, the

market value of the acquired land had significantly appreciated.

Despite, the Land Acquisition officer had awarded Rs. 2,500/-

per acre as compensation and the State failed to revise the market

value to reflect the prevailing rates at the time of the award. This

omission resulted in the appellants receiving compensation that

was grossly inadequate and not commensurate with the actual

value of the land at the relevant time.

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20. It is pertinent to note that Section 23 of the Land

Acquisition Act, 1894 categorically lists out the matters to be

considered in

determining compensation, and reads as under:

23. Matters to be considered in determining compensation

(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 (1)] [Substituted by
Act 38 of 1923, Section 7, for ” declaration relating thereto under
section 6“.];

secondly, the damage sustained by the person interested, by reason
of the taking of any standing crops or trees which may be on the
land at the time of the Collectors taking possession thereof;

thirdly, the damage (if any) sustained by the person interested, at
the time of the Collectors taking possession of the land, by reason of
severing such land from his other land;

fourthly, the damage (if any) sustained by the person interested, at
the time of the Collectors 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;

fifthly, if, 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 the land between the time of the publication of the
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declaration under section 6 and the time of the Collectors taking
possession of the land.

[(1-A) In addition to the market value of the land, as above
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 under section 4, sub-section (1), in respect of such
land to the date of 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 on account of any stay or
injunction by the order of any Court shall be excluded.] [Inserted by
Act 68 of 1984, Section 15 (w.e.f. 24.9.1984).]

(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]
[Substituted by Act 68 of 1984, Section 15, for ” fifteen per centum”

(w.e.f. 24.9.1984).] on such market value, in consideration of
compulsory nature of the acquisition.

21. The Hon’ble Supreme Court in Kapil Mehra vs. Union of

India 1 laid down the method of determination of the market

value and further observed that:

10. Market Value: First question that emerges is what would be the
reasonable market value which the acquired lands are capable of
fetching. While fixing the market value of the acquired land, the
Land Acquisition Officer is required to keep in mind the following
factors: (i) existing geographical situation of the land; (ii) existing

1
(2015) 2 SCC 262
10

use of the land; (iii) already available advantages, like proximity to
National or State Highway or road and/or developed area and (iv)
market value of other land situated in the same locality/village/area
or adjacent or very near to the acquired land.

11. The standard method of determination of the market value of any
acquired land is by the valuer evaluating the land on the date of
valuation publication of notification Under Section 4(1) of the Act,
acting as a hypothetical purchaser willing to purchase the land in
open market at the prevailing price on that day, from a seller willing
to sell such land at a reasonable price. Thus, the market value is
determined with reference to the open market sale of comparable
land in the neighbourhood, by a willing seller to a willing buyer, on
or before the date of preliminary notification, as that would give a
fair indication of the market value.

22. Considering the escalation/increase of market value of the

lands was elaborately dealt with and analyzed by the Hon’ble

Supreme Court in General Manager, ONGC Ltd Vs.

Rameshbhai Jivanbhai Patel and another2, paras 13 and 14 of

the judgment reads as under: –

“13. Primarily, the increase in land prices depends on four factors
situation of the land, nature of development in surrounding area,
availability of land for development in the area, and the demand for
land in the area. In rural areas unless there is any prospect of
development in the vicinity, increase in prices would be slow, steady
and gradual, without any sudden spurts or jumps. On the other
hand, in urban or semi-urban areas, where the development is

2
(2008) 14 SCC 745
11

faster, where the demand for land is high and where there is
construction activity all around, the escalation in market price is at
a much higher rate, as compared to rural areas. In some pockets in
big cities, due to rapid development and high demand for land, the
escalations in prices have touched even 30% to 50% or more per
year, during the nineties.

14. On the other extreme, in remote rural areas where there was no
chance of any development and hardly any buyers, the prices
stagnated for years or rose marginally at a nominal rate of 1% or
2% per annum. There is thus a significant difference in increases in
market value of lands in urban/semi-urban areas and increases in
market value of lands in the rural areas. Therefore, if the increase in
market value in urban/semi-urban areas is about 10% to 15% per
annum, the corresponding increases in rural areas would at best be
only around half of it, that is about 5% to 7.5% per annum. This
rule of thumb refers to the general trend in the nineties, to be
adopted in the absence of clear and specific evidence relating to
increase in prices. Where there are special reasons for applying a
higher rate of increase, or any specific evidence relating to the
actual increase in prices, then the increase to be applied would
depend upon the same.”

23. On perusal of the order dated.20.11.1991 passed by the

Land Acquisition officer, it is noted that the appellants were

awarded compensation at Rs.2,500/- per acre which equates to

approximately ₹0.51 per square yard. In this regard, it is to be

seen that the amount awarded is clearly inadequate in as per the

existing market value. Further, it is noteworthy to mention that

the given compensation by the authorities is exceptionally low.
12

24. The Land Acquisition Act, 1894 was lacking the specific

provision for the periodic revision of the market value, whereas

the section 26 of The Right to Fair Compensation and

Transparency in Land Acquisition, Rehabilitation and

Resettlement Act, 2013, Provided that the Collector shall, before

initiation of any land acquisition proceedings in any area, take all

necessary steps to revise and update the market value of the land

on the basis of the prevalent market rate in that area’. Therefore,

it is to be noted that even though there was no statutory mandate

subsisting on the date of Section 4(1) notification for periodic

revision, the land acquisition officer has to consider the nominal

rate of market value.

25. Basic market value is determined by the Collector as per the

Telangana Revision of Market Value Guideline Rules, 1998

which have been made in exercise of the power Under Section

47A of the Indian Stamp Act, 1899. Sale value cannot be less

than the basic value. Since market value is highly volatile, there

cannot be any uniform system of determining the market value.

It cannot be argued, therefore, that the land has been granted at a

concessional rate as it has been sold at basic market value. (See:
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State of Andhra Pradesh and Ors. vs. Rao, V.B.J. Chelikani

and Ors.3).

26. The Hon’ble Supreme Court in the case of Ultra Tech

Cemment Limited V. Mast Ram and Others 4 has held that:

“This Court held that a fair and reasonable compensation is
the sine qua non for any acquisition process.

47. In Roy Estate v. State of Jharkhand, (2009) 12 SCC 194; Union
of India v. Mahendra Girji, (2010) 15 SCC
682 and Mansaram v. S.P. Pathak, (1984) 1 SCC 125, this Court
underscored the importance of following timelines prescribed by the
statutes as well as determining and disbursing compensation
amount expeditiously within reasonable time.

49. This Court has held in Dharnidhar Mishra (D) v. State of
Bihar, 2024 SCC OnLine SC 932 and State of Haryana v. Mukesh
Kumar, (2011) 10 SCC 404 that the right to property is now
considered to be not only a constitutional or statutory right, but also
a human right. This Court held in Tukaram Kana Joshi thr. Power
of Attorney Holder v. M.I.D.C., (2013) 1 SCC 353 that in a welfare
State, the statutory authorities are legally bound to pay adequate
compensation and rehabilitate the persons whose lands are being
acquired. The nonfulfillment of such obligations under the garb of
industrial development, is not permissible for any welfare State as
that would tantamount to uprooting a person and depriving them of
their constitutional/human right.

52. Acquisition of land for public purpose is undertaken under the
power of eminent domain of the government much against the

3
2024 INSC 894
4
(2025) 1 SCC 798
14

wishes of the owners of the land which gets acquired. When such a
power is exercised, it is coupled with a bounden duty and obligation
on the part of the government body to ensure that the owners whose
lands get acquired are paid compensation/awarded amount as
declared by the statutory award at the earliest.”

27. The Hon’ble Supreme court in Bernard Francis Joseph Vaz
and Others V. Government of Karnataka and Others 5 has held
that:

….under exceptional circumstances, where either the Apex Court or
High Courts came to the conclusion that the acquisition proceedings
themselves were liable to be quashed on account of certain
illegalities or infirmities in the acquisition process/procedure, it was
permissible only for the Apex Court in exercise of its powers under
Article 32/142 or the High Courts under Article 226 of the
Constitution of India to shift the date to a later/subsequent date;
however, this power to shift the date is available only to either the
Apex Court or the High Courts and not definitely/certainly to the
SLAOs or the State Government; in other words, a perusal of the
decisions referred to supra, will indicate that in cases, where the
Apex Court as well as this Court deemed it necessary to shift the
date in order to do complete and substantial justice, inherent
powers of the Courts were invoked and the dates were shifted in
order to ensure no hardship, loss or prejudice would be caused to
the land losers.

48. It cannot be gainsaid that the appellants herein have been
deprived of their legitimate dues for almost 22 years ago. It can also
not be controverted that money is what money buys. The value of
money is based on the idea that money can be invested to earn a

5
2025 SCC OnLine SC 20
15

return, and that the purchasing power of money decreases over time
due to inflation. What the appellants herein could have bought with
the compensation in 2003 cannot do in 2025. It is, therefore, of
utmost importance that the determination of the award and
disbursal of compensation in case of acquisition of land should be
made with promptitude.

54. If the compensation to be awarded at the market value as of the
year 2003 is permitted, it would amount to permitting a travesty of
justice and making the constitutional provisions under Article 300-A
a mockery.

28. The Hon’ble Supreme court in Ram Chand v. Union of

India 6 has held that:

“14. … Ignoring the escalation of the market value of the lands,
especially near the urban agglomeration or metropolitan cities, will
amount to ignoring an earthquake and courts can certainly take
judicial notice of the said fact. The interest and the solatium, which
have to be paid under the provisions of the Act, are linked with the
market value of the land with reference to the date of the notification
under sub-section (1) of Section 4 of the Act. If a decision had been
taken as early as in the year 1966, by issuance of declarations under
Section 6, that the lands belonging to the different cultivators, who
held those lands within the ceiling limit for cultivation, were needed
for public purpose, respondents should have taken steps for
completion of the acquisition proceedings and payment of
compensation at an early date. In the present cases, unless a
justification is furnished on behalf of the respondents, can it be said

6
(1994) 1 SCC 44
16

that the statutory power of making an award under Section 11 has
been exercised within a reasonable time from the date of the
declaration under Section 6? Due to escalation in prices of land,
more so in this area, during the preceding two decades, in reality,
the market rate, on the date of the notification under Section 4(1) is
a mere fraction, of the rate prevailing at the time of its
determination in the Award.”

29. In light of the foregoing reasons, this Court is of the

considered opinion that the rate of market value to be adopted by

the land acquisition officers should be in accordance with the

prevalent market rate at the time of acquisition. If in any case a

lapse of compensating the claimants has occurred then as per the

ruling of the Hon’ble supreme court, the high courts are

empowered to invoke their inherent powers to shift the date for

calculating the compensation to a subsequent date in order to do

complete and substantial justice. In the instant case the rate of

compensation decided by the land acquisition officer as on the

date of the 4(1) notification was Rs. 2,500 per acre whereas the

said amount was disbursed to the claimants on 21.05.1992, there

was an inordinate delay of a decade in disbursing the

compensation by the land acquisition officer.
17

30. Hence, for the aforesaid reasons, this Court is of the view

that the order of Reference Court warranting interference by this

Court to ensure and justice and to secure just and fair

compensation to the appellants. Therefore, the impugned order

of the Reference Court in respect of granting insufficient market

value is liable to be modified and this Court is of the considered

view that this Appeal is liable to be allowed in part.

31. Applying the above principle laid in General Manager,

ONGC Ltd (Supra) it is evident that, the rate of annual increase

in market value in rural areas at best typically ranges between

5% and 7.5%. Therefore, considering the prevailing market

conditions at the time of compensation disbursed, a

compensation rate of ₹10,000 per acre would have been a

reasonable estimate to the appellants.

32. Accordingly, this Appeal is allowed in part, modifying the

market value of the subject lands acquired from Rs.2,500/- per

acre, as was fixed by the Land Acquisition Officer,to Rs.10,000/-

per acre. Thus, the appellants are entitled to the consequential

benefits on account of enhancement of the compensation granted
18

herein. The remaining part of the impugned order of the

Reference Court holds good.

As a sequel, miscellaneous petitions pending if any shall

stand closed. No order as to costs.

____________________

T. VINOD KUMAR, J

_________________

P. SREE SUDHA, J

Date: 28-05-2025

MRKR/VSV