The court emphasized the factors influencing the compensation awarded based on the comparable sales method of valuation and upheld the High Court's decision to lower the compensation for the acquired land.

1. A large track of land in the village Manakunnam in the district of Cochin was sought to be acquired for setting up a bottling plant by the respondent - Indian Oil Corporation Ltd. A notification under S.4 of the Land Acquisition Act (hereinafter referred to as the 'Act') was issued on 23rd August, 1990 which was followed by issue of notification under S.6 of the Act on 22nd February, 1991. The appellants' land measuring 7.13 acres is covered by the aforesaid notifications. The Collector on 5th May, 1992 gave an award and offered compensation to the claimants @ Rs. 1,225 per Are, Rs. 500 per cent. The claimants sought reference for enhancement of the compensation. The Additional Sub Judge, Ernakulam enhanced the compensation to @ Rs. 7,000 per cent. Aggrieved, the respondents filed appeals before the High Court. The High Court was of the view that the compensation awarded by the reference court was on higher side and, therefore, reduced the compensation to @ Rs. 4,000/- per cent for the wet land and Rs. 6,500 for dry land. In that view of the matter, the appeals filed by the respondents were allowed. The cross-objections filed by the claimants were rejected by the High Court. Aggrieved, the claimants have preferred these appeals against the judgment of the High Court.

2. Mr. Mathai M. Paikeday, learned Senior Counsel appearing for the appellants urged that the High Court having proceeded to give compensation for the acquired land on the basis of comparable sales method of valuation of land, it was not open to the High Court to fix the rate of compensation less than the market value of the land covered by Ext. A-4. Learned counsel relied upon a decision of this Court in Printers House Pvt. Ltd. v. Mst. Saiyadan (deceased) by L.Rs. & Ors., 1994 (2) SCC 133. The second submission of the learned counsel is that once the appellants herein opted and agreed for accepting compensation for their acquired land on the basis of comparable sales method of valuation of land, it was not open to the High Court to fix the rate of compensation of the acquired land on the basis of the valuation of the land on the capitalisation assessment of the land. Shri. D.A. Dave, learned Senior Counsel however, argued that the principle adopted by the High Court in lowering the compensation for acquired land than what was the value of land contained in Ext. A-4, is based on relevant considerations and these appeals do not require any interference and deserve to be dismissed.

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 it 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 S.4 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 fulfillment 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 to the date of issue of notification under S.4 of the Act, that (3) the land 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