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The term "market value" has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and in what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. It is interesting to note that the Act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the Act, in such case before registering the instrument the registering authority shall refer the instrument to Collector for determination of market value of the property and the proper duty payable thereon and when the Collector determines market value of the property thereafter the parties shall proceed accordingly. Therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rule by the concerned authority, inasmuch as, it is only a kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. The various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom.

The minimum value determined by the authorities under Rule 4 or 5 of 1997 Rules is only indicative of the fact that if the value set forth in the sale deed is less than such minimum value then Registering Officer before registering the instrument shall make a reference to the Collector and get the market value determined therefrom. The Collector being under an obligation to determine market value under Section 47-A(3) of the Act read with Rule 7 of 1997 Rules thereafter would make inquiry in accordance with procedure prescribed thereunder and find out the correct market value which may be the same which is stated in the instrument or may be higher or lesser as the case may be. But there is no rule of thumb that it will always be higher than the value determined by the competent authority under Rule 4 or 5 of 1997 Rules. After considering 1997 Rules this Court in Ram Khelawan v. State of U.P. and Anr. 2005 (98) RD 511 has also taken the same view and has said:
"It is quite possible that even in the first instance the instrument/deed may show the valuation of the property to be less than the minimum value determined in accordance with Rules of 1997 (popularly known as circle rate) still purchaser or seller may not be required to pay more stamp duty. The only purpose of the minimum market value fixed and circulated under Rule 4 of the Rules of 1997 is that in case on the face of it the market value of the property set-forth in the sale deed is less than minimum market value fixed under the said Rules than Registering Officer cannot register the deed and it will have to refer the same to the Collector unless on being asked by him to make good the deficiency in stamp duty, parties to the sale deed make good the requisite deficiency. In case deficiency is not made good then matter will have to be referred by Registering Officer to the Collector. However, thereafter it is quite possible that Collector may hold that even though market value of the property set-forth in the deed is less than minimum market value fixed under the Rules of 1997 still the market value set forth in the sale deed is correct and proper stamp has been paid. It is quite clear from Section 47-A(4)(i) and Rule 7(5)."

Rule 7 of 1997 Rules while providing for determination of market value nowhere refers to either minimum value fixed under Rule 4 or 5 of 1997 Rules or provides that the market value shall be determined by the Collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. The question as to how and what manner market value would have to be determined by the Collector has been discussed in detail and various aspects have been considered by this Court in Ram Khelawan (Supra). Thus, the Collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. The contention as raised by learned Standing Counsel that immediate potential user of the land is relevant for the purpose of determining market value, cannot be disputed but that is one of the relevant consideration and can not be the sole basis for holding that the value of the property as set forth in the instrument is not correct and it must be higher than that. Learned Standing Counsel also failed to point out as to which kind of land has no potential at all for user as residential purposes in future. The nature and character of land can always be changed subject to its use by its inhabitants in future. Hence future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly.