Telangana High Court
Land Acquisition Officer Rdo vs A.Laxmareddy on 19 November, 2025
Author: K. Lakshman
Bench: K. Lakshman
THE HONOURABLE SRI JUSTICE K. LAKSHMAN
AND
THE HONOURABLE SRI JUSTICE VAKITI RAMAKRISHNA REDDY
APPEAL SUIT No. 3841 of 2004
JUDGMENT:(Per Honourable Sri Justice Vakiti Ramakrishna Reddy) This Land Acquisition Appeal, filed under Section 54 of the Land Acquisition Act, 1894 (hereinafter referred to as "the Act"), is directed against the order and decree dated 28.06.2004 passed in O.P. No. 16 of 2002 on the file of the Senior Civil Judge, Siddipet (hereinafter referred to as the "Reference Court").
2. By the impugned order, the Reference Court enhanced the compensation awarded by the Land Acquisition Officer (for short, "LAO") from Rs.20,000/- per acre to Rs.1,40,000/- in respect of acquired land and from Rs.74,000/- to Rs.99,000/- for each irrigation well. Aggrieved thereby, the present Appeal is preferred by the Land Acquisition Officer, Revenue Divisional Officer, Siddipet.
I. BRIEF FACTS:
3. The Land to an extent of Ac.0.26 guntas, Ac.3.36 guntas, Ac. 0.20 guntas in Sy. No. 281 of Vittalapur Village of China Kodur 2 KL,J & VRKR, J AS_3841_2011 Mandal of Siddipet District were acquired for the purpose of construction of an irrigation tank at Vittalapur village.
II. NOTIFICATION AND AWARD:
4. A notification under section 4(1) of the Act, was published on 04.12.2000, and pursuant thereto, notices under sections 9(3) and 10 of the Act were issued. Thereafter, along with an award enquiry was conducted by LAO in accordance with law.
5. Subsequently, the LAO passed an award dated 27.12.2001, fixing the market value of the acquired lands at Rs. 20,000/- per acre and Rs. 74,000/-for each irrigation well. Not being satisfied with the said compensation, the claimants sought a reference under Section 18 of the Act, which came to be numbered as O.P. No. 16 of 2002 before the Reference Court.
III. POINTS BEFORE THE REFERENCE COURT:
6. The Reference Court, upon the pleadings, framed the following points for determination:
1. Whether the market value estimated to the Agricultural wells belonging to claimantNo.1 and 2 is liable to be enhanced? 3
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2. Whether the market value fixed for the acquired land belonging to Claimants No.l to 3 can be enhanced? IV. EVIDENCE BEFORE THE REFERENCE COURT:
7. To substantiate their claim for higher compensation, the appellants examined PWs 1 to 3 and got marked Exhibit A1 to A6.
8. On behalf of the respondent-State, RW1 was examined and Exhibits B1 and B2 were marked.
V. FINDINGS OF THE REFERENCE COURT:
9. The learned Reference Court, upon appreciation of oral and documentary evidence, particularly the sale deeds marked as Exs.A-3 and A-4, found them to be genuine and bona fide transactions pertaining to lands situated in close proximity to the acquired lands.
Further, both the transactions under Exs.A-3 and A-4 were found to be executed within three years preceding the publication of the Section 4(1) Notification, and thus fall within the permissible time frame for consideration while determining the market value of the acquired lands. Relying upon those sale deeds, the Reference Court observed that both the above sale deeds reflected the prevailing market trend in the 4 KL,J & VRKR, J AS_3841_2011 locality, and as such, they provided the most reliable basis for fixing the compensation.
10. The learned Reference Court took note of the fact that in Ex. A-3, dated 17.05.1999, the land in Sy.No.370/AA of Vittalpur village was sold at a rate of Rs. 30/- per square yard, which is approximately Rs.1,16,000/- per acre. Similarly, Ex.A-4, dated 11.05.2000, relating to Sy.No.432 of the same village, reflected the sale of 0.09 guntas of land at the same rate of Rs.30/- per square yard, which is approximately Rs. 1,41,000/- per acre. These transactions, being genuine, were considered by the Reference Court, to be suitable sale exemplars of the prevailing market value of the lands in the area during the relevant period.
11. The learned Reference Court held that the sale deeds (Exs.A-3 and A-4) were not only proximate in time to the Section 4(1) Notification but also pertained to lands of similar nature, fertility, and location as the acquired lands. Both the lands under Exs.A-3 and A-4 and the acquired lands, were situated in Vittalpur village and enjoyed similar advantages in terms of irrigation facilities, fertility and accessibility. Hence, the Reference Court held that the market value 5 KL,J & VRKR, J AS_3841_2011 reflected in those documents should form the proper basis for determination of market value.
12. Further, the learned Reference Court concluded that the sale statistics relied upon by the L.A.O. could not be the basis for determination of market value, inasmuch as they reflected the prices not comparable either in quality or character of the acquired lands.
13. The learned Reference Court further directed payment of statutory benefits under the Act, namely 30% solatium, 12% additional market value from the date of the Section 4(1) Notification till the date of award or possession (whichever earlier) and interest at 9% per annum for the first year from the date of possession and 15% per annum thereafter till realization.
14. Consequently, the Reference was allowed. Thus, upon appreciation of the said evidence, the Reference Court enhanced the market value of the acquired lands from Rs. 20,000/- per acre to Rs. 1,40,000/- and Rs. 74,000/-for each irrigation well to Rs. 99,000/-. 6
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15. Being aggrieved by the order dated 28.06.2004 passed by the learned Reference Court, the Respondent has preferred the present Appeal.
VI. SUBMISSIONS OF THE PARTIES:
A) Contentions of the Appellant (State/LAO):
16. The learned Government Pleader for Appeals, appearing on behalf of the Appellant, contended that the Reference Court failed to appreciate that the LAO had determined the market value of the acquired lands strictly in accordance with the procedure prescribed under Section 23 of the Act. The assessment was made after due consideration of all relevant factors, including the nature, fertility, and potential of the lands.
17. It is submitted that the Reference Court has erred in placing reliance upon Exs.A-3 and A-4 for determining the market value inasmuch as the said sale deeds relate to small extents of land and could not form a reliable basis for determining market value of larger tracts.
18. The learned Government Pleader further urged that the Reference Court erred in placing reliance upon Exs.A-5 and A-6, which are merely an estimation reports prepared by a private engineer and hence, not 7 KL,J & VRKR, J AS_3841_2011 admissible in evidence. It is further submitted that the said reports, being unsupported by any official record or technical verification, could not have been the basis for enhancing the compensation.
19. It is further submitted that the Reference Court overlooked the official report filed on behalf of the LAO, which specifically assessed the value of the wells at only Rs.74,000/- in total. The Reference Court, it is contended, failed to note that in view of the law laid down by the Honourable Supreme Court, no separate compensation can be awarded for wells existing in the acquired lands.
20. On the basis of the aforesaid submissions, the learned Government Pleader for Appeals has prayed that, there being merit in the appeal, the same may be allowed.
B) Contentions of the Respondents (Claimants):
21. The learned counsel for the Respondents/Claimants submitted that the Reference Court has rightly assessed the compensation payable for the acquired lands and agricultural wells. The acquired lands were highly fertile, irrigated (wet) lands, suitable for cultivation of paddy, sugarcane, tobacco, chillies, and other commercial crops up to three times year, generating an annual yield of Rs.25,000/- per acre. Exs.A-3 8 KL,J & VRKR, J AS_3841_2011 and A-4 categorically demonstrate that the prevailing market value of comparable lands in the vicinity is at Rs.5,000/- per gunta, and as per the technical estimation reports marked under Exs.A-5 and A-6, the agricultural wells were valued at more than Rs. 3,00,000/- each.
22. It is submitted the LAO, while fixing the market value, ignored the prevailing market rates in the vicinity, as demonstrated by the registered sale deeds marked as Exs.A-3 and A-4 pertain to lands situated in the same village and locality, identical in nature, fertility, and productivity, and therefore, form reliable and comparable sale exemplars for determining the market value of the acquired lands. It is further urged that minor variation in extent or small scale transactions as argued by the appellant, do not render such comparables irrelevant.
23. The learned counsel for the Respondents/Claimants further submitted that the Reference Court was justified in taking note of Exs.A-5 and A-6, the estimation reports prepared by a qualified private engineer (P.W.-3). These reports provided a scientific and technical assessment of the agricultural wells, establishing their value at Rs.1,74,205/-per well.
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24. It is further contended that the Reference Court rightly held that separate compensation for the agricultural wells is justified, as the wells constitute valuable and permanent assets independent of the land, enhancing its productivity and overall value of the acquired lands. The Reference Court therefore, rightly observed that the market value of the acquired property must be assessed with due regard to such improvement, since the presence of irrigation wells directly contributes to the fertility yield and income potential of the land, thereby influencing its market value.
25. On the basis of the aforesaid submissions, the Learned Counsel for Respondents has prayed that, there being no merit in the present appeal, the same deserves to be dismissed.
VII. POINTS FOR DETERMINATION:
26. Having heard the learned counsel appearing for the respective parties and having carefully examined the material placed on record, the following points arise for determination in this Appeal:
(i) Whether the Reference Court was justified in enhancing the market value of the acquired lands to Rs.1,40,000/- per Acre? 10
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(ii) Whether separate compensation for agricultural wells at Rs.99,000/- per well is sustainable in law?
(iii) Whether any interference with the findings of the Reference Court is warranted?
VIII. COMPARATIVE STATEMENT OF COMPENSATION:
27. For proper appreciation, the comparative chart of compensation, as awarded by the LAO and as enhanced by the Reference Court, is tabulated as under:
Item Compensation Compensation Difference Awarded by LAO Enhanced by (Enhanced (Rs. per Reference Court Award) acre/Well) (Rs. per (Rs. per acre/well) acre/well) Land Rs. 20,000/- Rs. 1,40,000/- Rs. 1,20,000/- admeasuring Ac.
5.02 guntas Wells (2 in Nos.) Rs. 37,000/- Rs. 99,000/- Rs. 62,000/-
28. From the above tabulation, and upon a careful reappraisal of the evidence, it is manifest that the LAO had adopted a conservative approach in fixing the market value, whereas the Reference Court, on the other hand, took into account:
i. the location and potentiality of the lands; 11
KL,J & VRKR, J AS_3841_2011 ii. the sale exemplars of the proximate period; and iii. the comparability of lands situated in the vicinity of the acquired lands.
29. The critical question, therefore, is whether the reliance placed by the Reference Court on Ex. A3 and A4, and its ultimate fixation of market value at Rs.1,40,000/- per acre and Rs.99,000/- per agricultural well, can be said to be justified in law.
IX. ANALYSIS AND FINDINGS:
30. We have carefully considered the rival submissions advanced by the learned Government Pleader for appeals appearing for the Appellant and learned counsel for the Respondents/claimants and also perused the entire record of the case, including the pleadings, oral evidence of PWs 1 to 3 and RW1, and the documentary evidence under Exs.A-1 to A-6 as well as Exs.B-1 and B-2.
31. At the outset, it is not in dispute that the lands, admeasuring Ac.5.02guntas., belonging to the respondents were acquired for the purpose of construction of an irrigation tank at Vittalapur Village, pursuant to a notification under Section 4(1) of the Act dated 04.12.2000.The learned Government Pleader for appeals contended that 12 KL,J & VRKR, J AS_3841_2011 the Reference Court erred in enhancing the compensation without proper appreciation of the statutory parameters and procedure prescribed under Section 23 of the Act.
32. It is pertinent to note that Section 23 of the Act, categorically enumerates 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 13 KL,J & VRKR, J AS_3841_2011 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 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).] 14 KL,J & VRKR, J AS_3841_2011 on such market value, in consideration of compulsory nature of the acquisition."
33. The Honourable Supreme Court in Shaji Kuriakose and others v. Indian Oil Corporation Limited and others 1,laid down the method of determination of the of the market value and further observed as under:
"3. It is no doubt true that courts adopt Comparable Sales Method of valuation of land while fixing the market value of the acquired land.
While fixing the market value of the acquired land, Comparable Sales Method of valuation is preferred than other methods of valuation of land such as Capitalisation of Net Income Method or Expert Opinion Method. Comparable Sales Method of valuation is preferred because is furnishes the evidence for determination of the market value of the acquired land at which a willing purchaser would pay for the acquired land if it has been sold in open market at the time of issue of notification under Section 5 of the Act. However, Comparable Sales Method of valuation of land for fixing the market value of the acquired land is not always conclusive. There are certain factors which are required to be fulfilled and on fulfilment of those factors the compensation can be awarded, according to the value of the land reflected in the sales. The factors laid down inter alia are: (1) the sale must be a genuine transaction, that (2) the sale deed must have been executed at the time proximate of the date of issue of notification under Section 4 of the Act, that (3) the land 1 (2001) 7 SCC 650 15 KL,J & VRKR, J AS_3841_2011 covered by the sale must be in the vicinity of the acquired land, that (4) the land covered by the sales must be similar to the acquired land and that (5) the size of plot of the land covered by the sales be comparable to the land acquired. If all these factors are satisfied, then there is no reason why the sale value of the land covered by the sales be not given for the acquired land. However, if there is a dissimilarity is regard to locality, shape, site or nature of land between land covered by sales and land acquired, it is open to Court to proportionately reduce the compensation for acquired land than what is reflected in the sales depending upon the disadvantages attached with the acquired land."
34. The contention advanced by the learned Government Pleader that the Reference Court erred in relying upon Exs. A3 and A4 for determining the market value, on the ground that the said sale deeds do not pertain to comparable lands, is wholly untenable. Inasmuch as, the sale deeds relied upon relate to the lands situated within the same village and locality as the acquired lands are identical in nature and fertility. Hence, they constitute the most reliable and comparable sale exemplars for determining the prevailing market value. 16
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35. The Honourable Supreme Court in Land Acquisition Officer v. Karigowda 2, has categorically held that sale deeds pertaining to lands situated in the same or nearby villages, sharing similar physical characteristics, fertility, and development potential, provide the most reliable basis for comparison in determining market value and observed as follows:
"75. It is a settled principle of law that lands of adjacent villages can be made the basis for determining the fair market value of the acquired land. This principle of law is qualified by clear dictum of this Court itself that whenever direct evidence i.e. instances of the same villages are available, then it is most desirable that the court should consider that evidence. But where such evidence is not available court can safely rely upon the sales statistics of adjoining lands provided the instances are comparable and the potentiality and location of the land is somewhat similar. The evidence tendered in relation to the land of the adjacent villages would be a relevant piece of evidence for such determination. Once it is shown that situation and potential of the land in two different villages are the same then they could be awarded similar compensation or such other compensation as would be just and fair."
36. In the present case, the sale exemplars marked as Exs.A3 and A4 relate to lands situated within Vittalapur village itself, the very same village, where the acquired lands are located. The evidence of PWs 1 and 2, supported by Exs.A1 and A2 (village maps), clearly establishes 2 (2010) 5 SCC 708 17 KL,J & VRKR, J AS_3841_2011 that the lands covered under the said sale deeds are identical in nature, fertility and location, and possess similar irrigation facilities. Hence, these sale deeds constitute the most appropriate and proximate evidence for assessing the market value of the acquired lands.
37. The contention of the Appellant that the sale deeds under Ex. A3 and Ex. A4 pertain to small extents and therefore cannot form the basis for determination of market value is untenable. This Court is of the view that merely because the land covered under a sale transaction is of a smaller extent, the same does not become inadmissible or unreliable for comparative purposes, provided the transaction is genuine, proximate in time and relatable in situation and character.
38. In Ravinder Kumar Goel v. State of Haryana and others 3, the Honourable Supreme Court while considering whether transactions relating to smaller extents of land could be relied upon for determining the market value of large acquired tracts, observed as follows:
"13. Therefore, since we have already indicated that the High Court was not justified in merely relying on the circular fixing the floor rates when other evidence was available on the record pursuant to the remand made, it is necessary for us to take note as to whether the Reference Court had committed an error in not relying on the sale 3 2023 SCC OnLine SC 147 18 KL,J & VRKR, J AS_3841_2011 exemplars produced by the respondents without analysing the comparability. The position of law is well settled that when large extent of lands is acquired and if the sale exemplar, also for the large extent is available on record it would be safer to rely on the same if they are comparable transactions. However, as already noted above, this Court in Atma Singh (supra) has also held that the sale instances of smaller extents cannot be ignored. Further, this Court has reiterated in many cases that the sale exemplars for smaller extent can be relied upon subject to appropriate deduction being provided towards development charges."
39. It is pertinent to note that the sale instances relating to smaller extents can form a legitimate basis for comparison while determining the market value of larger holdings, subject to the application of suitable deductions to account for developmental and situational differences. In the present case, Exs.A3 and A4 relate to lands situated in the same village, proximate in time to the notification under section 4(1) of the Act and identical in nature and fertility to the acquired lands. Therefore, the Reference Court was justified in relying upon the said sale deeds as a reliable guide for assessing the prevailing market value.
40. In Sabhia Mohammed Yusuf Abdul Hamid Mulla v. Land Acquisition Officer 4, the Honourable Supreme Court observed that deduction towards development is justified only in cases of 4 (2012) 7 SCC 595 19 KL,J & VRKR, J AS_3841_2011 undeveloped or underdeveloped lands, generally to the extent of one- third. However, where no development is required for implementation of the public purpose, such deduction would be unwarranted. The relevant passage reads as follows:
"19. In fixing the market value of the acquired land, which is undeveloped or underdeveloped, the courts have generally approved deduction of 1/3rd of the market value towards development cost except when no development is required to be made for implementation of the public purpose for which land is acquired."
41. In the present case, the lands acquired are fertile and fully developed wet lands situated in Vittalapur village, acquired specifically for the purpose of constructing an irrigation tank. As per the above precedent, deduction towards development charges is justified only where the acquired land is undeveloped or underdeveloped and requires conversion into plots or layouts involving roads, drainage, and other facilities. However, where the land is directly put to public use without any such developmental activity, such deduction is wholly unwarranted.
42. In Subh Ram v. State of Haryana 5, the Honourable Supreme Court while dealing with the deduction cost has observed as follows:
"16. Therefore, when deduction is made from the value of a small residential plot towards the development cost, to arrive at 5 (2010) 1 SCC 444 20 KL,J & VRKR, J AS_3841_2011 the value of a large tract of agricultural or undeveloped land with development potential, the deduction has nothing to do with the purpose for which the land is acquired. The deduction is with reference to the price of the small residential plot, to work back the value of the large tract of undeveloped land. On the other hand, where the value of acquired agricultural land is determined with reference to the sale price of a neighbouring agricultural land, no deduction need be made towards "development cost".
32. The above observations in Atma Singh [(2008) 2 SCC 568] no doubt seems to suggest that where the acquisition is for a residential layout, deduction towards development cost is a must, but if the acquisition is for an industry which does not require forming a layout of sites, the market value of small residential plots may be adopted without any cuts towards development cost"
43. On applying the above principle to the present case, it is evident that no deduction towards development cost is warranted. The Honourable Supreme Court has categorically held that deduction towards development is not a universal rule but depends upon the nature and purpose of acquisition. Such deduction is required only when the market value of a large undeveloped tract is inferred from the price of small developed residential plots, and the deduction is applied merely to "work back" the undeveloped land value from developed land rates. However, when the acquired land and the exemplar lands are both agricultural, or when the acquisition is for a public purpose such as construction of an irrigation tank, which does not involve layout 21 KL,J & VRKR, J AS_3841_2011 formation, plotting, or infrastructural development, no deduction can be justified. In the present case, the Reference Court rightly placed reliance on Ex. A3 and Ex. A4, i.e., the sale deeds of agricultural lands in the same village, having similar fertility, potentiality, irrigation facilities and refrained from applying any developmental deduction. Thus, the market value fixed by the Reference Court based on comparable agricultural sale exemplars is reasonable and in conformity with the settled principles of law.
44. With regard to Exs.A5 and A6, this Court finds that they are technical estimation reports prepared by PW3, a qualified private engineer, who furnished a detailed account of the dimensions, construction features, and functional value of the agricultural wells situated in the lands of claimants No.1 and 2. These reports provide a scientific assessment of the cost of construction and the irrigation capacity of the wells, thereby reflecting the actual worth of the wells as independent productive assets.
45. The contention of the Appellant that the above said reports are inadmissible for want of official verification is unsustainable. There exists no statutory prohibition against relying upon private expert 22 KL,J & VRKR, J AS_3841_2011 opinion, particularly when the same is credible, supported by factual observation, and not effectively rebutted by the other party. In the present case, the valuation of the LAO at Rs.74,000/- per well was unsupported by any technical data or on-site evaluation. Hence, the Reference Court was justified in treating Exs.A5 and A6 as corroborative and reliable evidence while determining the reasonable value of the wells.
46. The further contention of the Appellant that no separate compensation is payable for the wells is not sustainable in the present case. It is important to note that the respondents/claimants themselves had made a distinct or separate claim for the wells existing in their acquired lands, and even LAO had granted separate compensation for the same, fixing the value at Rs.74,000/- per well. Therefore, the Reference Court rightly proceeded to assess the value of the wells independently, based on the evidence placed on record. The wells are permanent irrigation sources that directly improve the fertility and productivity of the lands. They enable the cultivation of commercial crops such as paddy, sugarcane, and chillies three times a year, and thus form an essential part of the value of the land. 23
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47. As per the Act, the market value of the land to be acquired is determined by calculating the total compensation payable to the landowner, including all assets or improvements attached to the land. Ordinarily, separate compensation is not granted for wells if their value is already included in the overall market value. However, in the present case, the land value was assessed separately, excluding the specific cost of the wells. The wells were also proved by technical evidence through Exs.A5 and A6, being detailed estimation reports prepared by PW3, a qualified private engineer. The Reference Court, after considering these reports and the rival submissions, found the estimated value of each well to be Rs.1,74,205/-, but reasonably reduced it to Rs.99,000/- per well by relying on Ex. B2. Hence, the Reference Court's finding in granting separate compensation is well-supported by technical evidence and is in line with Section 23(1) of the Act, which mandates that the market value shall include both the land and the improvements made thereon.
X. CONCLUSION:
48. In view of the foregoing discussion, this Court finds that the Reference Court has properly appreciated both oral and documentary 24 KL,J & VRKR, J AS_3841_2011 evidence placed before it and arrived at a just and reasonable determination of compensation. The fixation of the market value of the land at Rs.1,40,000/- per acre and the valuation of each agricultural well at Rs.99,000/- are supported by evidence, including Exs.A3 to A6 and Ex.B2, and are in consonance with the principles laid down under Section 23(1) of the Act. The sale transactions relied upon pertains to the same village and are comparable in nature, while the valuation of the wells rests upon cogent technical estimation duly examined by the Reference Court.
49. Further, the compensation granted separately for the wells and the land cannot, by itself, be a ground to interfere with the well- reasoned order of the Reference Court. The Reference Court has rightly recognized that the wells directly contribute to the productivity of the acquired lands, and that the separate valuation merely reflects a fair computation of total compensation rather than duplication of benefits.
50. Though it is settled law that the value of the well should ideally be an integrated component of the overall land valuation, a procedural separation in the award does not, in itself, vitiate the entire decision, provided that the total compensation determined is fair, reasonable and 25 KL,J & VRKR, J AS_3841_2011 based on evidence. It is to be seen that only when the income capitalization method is adopted for while assessing market value of acquired lands, no separate compensation for wells can be granted, since that method computes a composite value of the income generating asset as a whole, is possible. However, where the valuation is not strictly based on income capitalization, for wells may be permissible, particularly when the wells constitute distinct and valuable improvements that directly contribute to the productivity of the land. Moreover, the intent of not awarding compensation separately for the wells and the land is only to avoid double valuation. The rationale is that the income capitalization method determines a composite market value of the entire income-generating asset based on its potential returns. Awarding separate compensation for individual items that contribute to that income stream would amount to double valuation, which is impermissible. In the instant case, since the market value of the acquired lands was fixed based on the comparable sale exemplars under Exs.A-3 and A-4, there is no instance of following capitalization method. Thus, the approach of the Land Acquisition Officer and the Reference Court in assessing the market value of the acquired land and 26 KL,J & VRKR, J AS_3841_2011 the wells in the said acquired land separately cannot be termed as erroneous or contrary to law so as to set aside the entire Award.
51. Furthermore, it is significant to note that even the Land Acquisition Officer, who had passed award dated 27.12.2001, calculated the compensation separately in respect of acquired land and the wells. The appellant did not raise any objection to this methodology before the Reference Court and has for the first time, sought to question it before this Appellate Court which is impermissible. Even otherwise, as discussed hereinabove, the compensation awarded by the Reference Court is found to be just, reasonable and well supported by technical and documentary evidence. Hence, awarding compensation in respect of the acquired land and the wells therein separately or together is of no material consequence, as long as the total amount represents the fair market value of the acquired land. Accordingly, the above contention advanced by the learned Assistant Government Pleader for Appeals is devoid of merit and stands rejected.
52. An appellate court will ordinarily interfere with an award of the Reference Court only on well-defined legal grounds, such as a manifest 27 KL,J & VRKR, J AS_3841_2011 error in determining the market value or a violation of a fundamental legal principle, and not a mere technicality in presentation. Merely because the Reference Court awarded compensation separately in respect of acquired land and the wells existing therein cannot, by itself furnish a ground to set aside the award passed by the Reference Court. Therefore, as long as the total enhanced compensation is justifiable based on market value and evidence, the method of breaking it down into separate heads for land and wells, cannot be faulted and is not a valid basis for interference.
53. In view of the foregoing discussion, this Court finds no illegality, perversity, or procedural irregularity in the findings of the Reference Court warranting interference in the Appeal. The order of the Reference Court is based on a proper appreciation of oral and documentary evidence and represents a fair and reasonable determination of the market value and the value of improvements. Accordingly, the appeal is liable to be dismissed.
54. As regards to the statutory benefits, appellants/claimants are entitled to solatium at 30% and additional market value at 12% per annum from the date of notification till the date of award, together with 28 KL,J & VRKR, J AS_3841_2011 interest at 9% per annum for the first year from the date of taking possession and 15% per annum thereafter till the date of realization, in accordance with Sections 23(1-A), 23(2), and 28 of the Act. XI. RESULT:
55. For the reasons recorded above, the Appeal Suit is dismissed confirming the order and decree dated 28.06.2004 in O.P. No. 16 of 2002 on the file of the Senior Civil Judge, Siddipet. The Claimants shall be entitled to all statutory benefits under the Act, including but not limited to solatium, additional value and interest etc., as indicted hereinbefore. In the circumstances, there shall be no order as to costs.
As a sequel, pending miscellaneous applications, if any, in this Appeal shall also stand closed.
K. LAKSHMAN, J.
__________________________________ VAKITI RAMAKRISHNA REDDY, J.
Date: 19.11.2025 AS