The State charges stamp duty on its own valuation guidelines. It cannot pay compensation on a lower one

The revenue record showed a well and the department’s own witness admitted the land was irrigated. The Madhya Pradesh High Court revalues it at ₹10.5 lakh a hectare and removes the 20% development deduction.

Compensation for acquired agricultural land turns on three findings that are usually made quickly and are rarely revisited: what the land was worth, whether it was irrigated, and how much should be cut for the cost of developing it. On 24 September 2026 Justice Pavan Kumar Dwivedi reopened all three in two connected appeals, and the landowners gained on each.

Land for a pond

The State acquired land at village Kampel for the construction of the Ganga Nala Talab project. The preliminary notification under Section 4(1) was published on 10 September 2010 and the declaration under Section 6 on 3 December 2010; the emergency clause was applied, so no opportunity to file objections was given. Claims were invited under Section 9(3), and the Land Acquisition Officer passed his award on 20 October 2011.

The Collector fixed the market value at ₹6,50,000 per hectare for irrigated land and ₹4,33,333 per hectare for unirrigated. Treating the appellants’ land as unirrigated, compensation came to ₹92,727 in one case and ₹1,60,728 in the other.

Their references were allowed in part by the IX Additional District Judge, Indore on 6 February 2015, but not at the rates they sought. These appeals under Section 54 of the Land Acquisition Act, 1894 followed.

Which sale deed is comparable

The appellants relied on three sale deeds of January 2010, November 2009 and April 2008, for plots of 0.032, 0.012 and 0.020 hectare. The State relied on a sale deed of the same village for 4.10 hectares, executed on 21 March 2010.

On this the Court agreed with the Reference Court and against the appellants, and the reasoning is a useful statement of the rule. Counsel was right that sale deeds of smaller areas can be considered — but, applying Ravindra Narayan v. Union of India, (2003) 4 SCC 481, that is permissible where there is no other material. In the complete absence of anything else, a court may compare prices paid for small plots; where a larger and closer transaction exists, it should not.

Here the State’s exhibit was both for a substantially larger area and nearer in date to the preliminary notification. The Reference Court had correctly declined the three small-plot deeds and correctly relied on the larger one.

The guideline the State could not disown

Where the Reference Court went wrong, the High Court held, was in ignoring the Collector’s guidelines altogether.

Section 23 of the 1894 Act requires the market value to be determined as on the date of the Section 4(1) notification. With that notification published in September 2010, the applicable guideline year was 2010-11 — under which the market value at village Kampel was ₹10,50,000 per hectare for irrigated land and ₹7,00,000 for unirrigated. Both figures are considerably above what the Collector actually paid.

The Court applied its own earlier decision on why those guidelines bind the State. They are issued by the Collector under the Madhya Pradesh Preparation and Revision of Market Value Guideline Rules, 2000, framed under Section 75 of the Indian Stamp Act, 1899, with a District Valuation Committee constituted under Rule 4 preparing them by the procedure in Rule 6, and the value affixed under Section 47-A of the Stamp Act.

The consequence is an estoppel. When the State on one hand fixes a minimum market value and charges stamp duty on documents according to it, it cannot escape liability to pay compensation where the landowner bases his claim on the same guidelines. The Collector being an authorised officer of the State, the State is estopped from assailing an award that adopts the valuation he fixed.

That is a proposition worth remembering, because it cuts against the routine argument that guideline rates are a floor for revenue purposes and say nothing about real value. The Court’s answer is that the State cannot have the benefit of the figure for stamp duty and disclaim it for compensation.

A well in the khasra

The nature of the land mattered because it is the difference between ₹10,50,000 and ₹7,00,000 a hectare.

The Reference Court had found the land unirrigated. It noted that the khasra entry of 2005-06 referred to a well in column 12 while the entry of 2008-09 did not, and it accepted a departmental witness’s evidence that the encircling of the land area — the revenue practice by which irrigated land is marked — was incomplete, so irrigation could not be inferred.

The High Court held that in doing so the Reference Court had remained completely oblivious of the rest of the record. There is encircling of the area in both khasra entries. The Patwari of the area, the best-placed witness on revenue records for that village, deposed to the encircling in his evidence.

And the decisive admission came from the respondents’ own officer, who stated in cross-examination that according to the revenue records the survey number was treated as irrigated land — but that because the mode of irrigation was not mentioned, it had been treated as unirrigated.

That last sentence is the whole point. The department had the record it needed and reclassified the land downwards for a reason the statute does not supply: the revenue record does not require the means of irrigation to be stated, and its omission does not convert irrigated land into dry land.

The appellants also pointed out that for an adjacent village the rate for irrigated land had been determined at ₹20,00,000 per hectare.

No development, so no deduction

The last issue was the 20% cut the courts below had applied for development costs — the standard discount reflecting that raw land must be laid out with roads and services before it reaches its notional value.

The Court held the question conclusively decided by its earlier decision in Kachra v. State of M.P.: where the acquisition is for submergence of land, there is no requirement of any development at all, and a deduction on that account is incorrect. The land here was being acquired for a pond. The 20% deduction was set aside.

The logic is exact. A deduction for development is compensation for expenditure the acquirer must incur to realise the value; an acquirer who intends to put the land under water incurs none.

The order

The appeals were allowed in part. The respondents are to recalculate the compensation payable to both appellants by treating the land as irrigated at a market value of ₹10,50,000 per hectare, and to pay it with all other statutory entitlements under Section 23 and the other relevant provisions of the 1894 Act. A copy of the order was directed to be placed in the connected appeal, and the record of the court below returned.

For the appellants the change is substantial: from ₹4,33,333 a hectare to ₹10,50,000, with the 20% deduction gone — before the statutory solatium and interest that Section 23 carries. For acquiring authorities, the judgment assembles three points that recur in every reference: a small-plot sale deed is a fallback and not a first choice, the Collector’s guideline binds the State that issued it, and land destined to be submerged attracts no development deduction.