22. The standard method of determination of the market value of any acquired land by a valuer is by evaluating the land on the date of 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.

23. This Court in the case of Special Land Acquisition Officer, Bangalore Vs. T. Adinarayan Setty, 4 1959 Supp (1) SCR 404, indicated the methods of valuation to be adopted in ascertaining the market value of the land on the date of notification, as under:-

(i) Opinion of experts.

(ii) The price paid within a reasonable time in bona-fide transactions of purchase of the land acquired or the lands adjacent to the lands acquired and possessing similar advantages; and

(iii) A number of years’ purchase of the actual or immediately prospective profits of the lands acquired.

24. It is well settled by various judicial pronouncements of this Court that in order to determine the market value of the land under acquisition, certain positive as well as negative factors have to be taken into consideration. A threeJudge Bench of this Court in the case of Viluben Jhalejar Contractor (Dead) by LRs. vs. State of Gujarat, (2005) 4 SCC 789 12 has laid down the following principles for determination of market value of the acquired land :-

“17. Section 23 of the Act specifies the matters required to be considered in determining the compensation; the principal among which is the determination of the market value of the land on the date of the publication of the notification Under Sub-section (1) of Section 4.

18. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefore it is beyond any cavil that the price of the land which a willing and informed buyer would offer would be different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not.

19. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification Under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered.

20. The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-a-vis the land under acquisition by placing the two in juxtaposition.…

21. Whereas a smaller plot may be within the reach of many, a large block of land will have to be developed preparing a layout plan, carving out roads, leaving open spaces, plotting out smaller plots, waiting for purchasers and the hazards of an entrepreneur. Such development charges may range between 20% and 50% of the total price.”