ivil Appeal No 2169 of 1970
From the Judgment and Order dated 12868 of the Gujarat High Court in FA No 233 of 1963
BK Mehta UA Rana Bhushan B Oza and KL Hathi for the Appellants
GA Shah and MN Shroff for the Respondent
The Judgment of the Court was delivered by KANIA J
This is an appeal by special leave granted by this Court under Article 136 of the Constitution
The appeal arises out of land acquisition proceedings
The appellants before us are the heirs and legal repre sentatives of the original claimants
Appellants Nos
1a to 1c are the heirs and legal representatives of original claimant No 1 and appellants Nos
2i to 2ii are the heirs and legal representatives of original claimant No 2
The acquisition was in respect of an area admeasuring 15 acres and 1 guntha belonging to claimant No 1 Original and area admeasuring 6 acres and 25 gunthas belonging to claimant Nos 1 and 2 Original
The lands are situated in the Bhavnagar District and are on the outskirts of the Bhavnagar City and adjoining the Bhavnagar Rajkot Road
The acquisition forms part of a larger acquisition for the construction of an industrial estate at Bhavnagar
The preliminary notification under section 41 of the Land Acquisition Act 1894 was published on August 6 1956
The claimants made their claims before the Land Acquisition Officer who classified the lands as superior of Bagayat type of agricultural land and awarded compensation at the rate of Rs2200 per acre which would come to about 048 p per sq yard
This award was not accepted by the claimants and they made a reference which came up for hearing before the learned Civil Judge Senior Division Bhavnagar
The evi dence of some instances of sale 746 was led before the learned Civil Judge by the respective parties but he did not rely upon any of the instances proved before him
He considered the general situation of the lands and held that on the evidence it was shown that the lands had a considerable building potentiality and the Land Acqui sition Officer was in error in so far as he did not take that potentiality into account
The learned Civil Judge considered the general situation of the land under acquisi tion and the potential value of the same for building pur poses and fixed the rate of compensation at Rs4400 per acre which had come to about 090p
per sq yard
Being dissatisfied the claimants preferred an appeal against the decision of the learned Civil Judge Bhavnagar to the High Court of Gujarat
The Division Bench of
the High Court which disposed of the appeal took the view that the valua tion fixed by the learned Civil Judge was justified and dismissed the appeal
This appeal is directed against the said decision of the High Court
We do not feel called upon to enter into a detailed scrutiny of the evidence led by the parties before the learned Civil Judge
The main instance relied upon by the claimants was by way of an agreement to sell dated January 21 1957 and a sale deed dated April 2 1957 in respect of the sale of 42552 square yards of land out of survey No 3332 which is adjoining the land with which we are con cerned which forms part of survey No 33 1
The land sold under this instance was known as Kesarbagh and was sold to Mahalaxmi Mills Limited by Prince Nirmal kumar singhji
The rate at which it was sold works out to Rs3 per sq yard
On the basis of this instance the claimants had made their claim at Rs3 per sq yard before the Land Acquisition Officer
The High Court inter alia rejected this instance on the basis that the contents of the sale deed were not prop erly proved
However after an order for remand made by this Court on August 25 1981 evidence has been led regarding this sale and the sale deed has been duly proved by the evidence of one Dharamdas a director of Mahalaxmi Mills Limited the purchaser and the vendor Prince Nirmal kumar singhji
It was marked originally as Exhibit 87 and after the evidence on remand as Exhibit 152
The evidence shows that this land was just adjacent to the land of the purchas er Mahalaxmi Mills Limited
The agreement of sale is dated January 21 1957 and the conveyance or sale deed is dated April 2 1957 as aforestated
The price has been fixed under the agreement of sale
This agreement of sale was entered into about five months after the publication of section 4 notification in the case before us The High Court rejected the said instance on the ground that the contents of the sale deed were not proved although the execution was thereof duly proved
In view of the 747 evidence led after remand it cannot be disputed that this agreement of sale as well as the sale deed have been duly proved and they have been duly marked as exhibits
The High Court further took the view that in any event no reliance could be placed on this instance of sale because the acqui sition of the land in question before us was for the con struction of an industrial estate at Bhavnagar and such construction was bound to have pushed up the price of land in the surrounding area
There is however nothing in the evidence to show that there was any sharp or speculative rise in the price of the land after the acquisition and this has been noticed by the High Court
It appears that under these circumstances the High Court was not justified in not taking this instance into account at all as it has done on the ground that it was a post acquisition sale and could not be regarded as a comparable instance at all
The market value of a piece of property for purposes of section 23 of the Land Acquisition Act is stated to be the price at which the property changes hands from a willing seller to a will ing but not too anxious a buyer dealing at arms length
Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual and indeed the best evidences of market value
See Administrator General of West Bengal vs Collector Varanasi  at para 8  Keeping these factors in mind we feel that although the instance reflected in the sale deed Exhibit 152 and the agreement for sale in connection with that land pertains to a sale after the acquisition it can be fairly regarded as reasonably proximate to the acquisition and in the absence of any evidence to show that there was any speculative or sharp rise in the prices after the acquisition the agreement to sell dated January 21 1957 must be regarded as furnish ing some light on the market value of the land on the date of publication of section 4 notification
However certain factors have to be taken into account and appropriate deduc tions made from the rate disclosed in the said agreement to sell in estimating the market value of the land with which we are concerned at the date of the acquisition
One of these factors is that there seems to have been some rise in the price of land on account of the acquisition of the land in question before us for purposes of constructing an indus trial estate
Another factor is that the land proposed to be purchased under the said agreement to sell was adjoining the land of the purchaser and the purchaser might have paid some extra amount for the convenience of getting the neighbouring land
We find that the High Court placed reliance on the evidence 748 furnished by the instances at Exhibit 112 relied on by the State
By Exhibit 112 land admeasuring 4 acres 19360 sq yard was sold from Survey No 384 for Rs8000
This sale deed is dated February 23 1953 that is over a year prior to the date of the section 4 notification in the case before us
The purchaser stated in the witness box that apart from Rs8000 mentioned as the consideration in the sale deed he had to pay an extra amount of Rs4000
Although the High Court has not relied upon this statement it cannot be altogether ignored
The land was sold at a Government auc tion which means that it was a distress sale
There were execution applications pending against the vendor
Under these circumstances there is a little doubt that it was a distress sale and it hardly furnishes any reliable evidence for estimating the market value of the land
Therefore although the price of the land appearing in that instance comes to about 062p
per sq
yard it furnishes no reliable guidance regarding the market price of the land
As far as the sale instance evidenced by Exhibit 118 is concerned it has been discarded by the High Court and in our view rightly so
In the Trial Court neither the vendor nor the purchaser nor any person conversant with the sale was exam ined
Not the original but only a certified copy of the sale deed was produced
After the remand the situation appears to be hardly any better
The State examined one Virbhadrasingh on whose behalf the land was purchased under the said sale deed
He was a minor at the time when the sale deed Exhibit 118 was executed
Virbhadrasingh s father had purchased the land in Virbhadrasingh s name as Virbhadrasingh was a minor only about 12 years old at that time
The evidence of Virbhadrasingh has no evidentiary value as he has no personal information regarding the sale under Exhibit 118
One Ratilal who prepared the said document gave evidence in court but he did not have any personal knowledge about the transaction either
Under these circumstances no reliance can be placed on Exhibit 118
In our view the only comparable instance on the basis of which the market value at the time of the section 4 notification in respect of the acquired land can be deter mined is the sale proved by the sale deed Exhibit 152 and the preceding agreement for sale in respect of the land sold which was entered into about five months after the notifica tion
The price thereunder is Rs3 per sq yard
From that price certain deductions have to be made on account of the various factors which have been enumerated earlier such as the rise in prices of land after the acquisition and so on
Taking into account all these factors including the situa tion and potentialities of the acquired land it ap 749 pears to us that it would be proper to fix the market value of the acquired land at Rs8800 per acre which comes to about Rs 180 per sq yard and we direct accordingly
The decree passed by the Civil Judge Senior Division Bhavnagar will be amended accordingly
The respondent will pay to the appellants one half of the costs of the appeal in this Court
There will be no change as far as the rest of the order is concerned


Summary:
Rule 58 of the Mineral Concession Rules 1960 which deals with availability of areas for regrant of a mining lease requires a notification to be published in the offi cal gazette at least 30 days in advance
Rule 59 directs the procedure laid down in Rule 58 to be followed in the case of any land in respect of which the State Government had re fused to grant a prospecting licence or a mining lease on the ground that it was required to be reserved for any purpose
The expression reserved for any purpose was earlier followed by the words other than prospecting or mining for minerals which was omitted by an amendment in 1963
An application for grant of mining lease in respect of the disputed area had been rejected earlier on the ground that it was reserved for some other purpose
Subsequently however a mining lease in regard to the said area was granted in favour of respondent No 4
The appellant chal lenged the allotment on the ground that the procedure for settlement as laid down in Rule 59 read with Rule 58 was not followed before the grant
The High Court dismissed that application on the ground that Rule 59 was confirmed to cases where earlier reservation was made for mining pur poses
Allowing the appeal HELD 1
The grant of mining lease in favour of respond ent No 4 was illegally made in violation of Rule 58 of the Mineral Concession Rules 1960
833E F 21 Rule 59 covered the instant case
Earlier the only category which was excluded from the application of this Rule was prospecting 831 or mining leases
The effect of the 1963 amendment is that by omitting the words other than prospecting or mining for minerals prospecting and mining leases have also been placed in the same position as the other cases
The other cases to which the Rule applied earlier have not thus been excluded
833E B 22 It is clearly in the public interest to notify the proposal to grant a mining lease
The State and its authori ties will in that case have the choice of selecting the most suitable person by following the just and equitable criteria laid down by the Rules
833D