Fair market value determination is essential before pre-emptive purchase; unsupported understatement finding under Chapter XX-C cannot stand.

Pre-emptive purchase under Chapter XX-C could not be sustained without a definite determination of the property's fair market value on relevant material and comparable instances. A bare assertion that the apparent consideration was understated by more than 15% was insufficient where the notice and final order did not disclose the fair market value, the adjustment for time lag, or the basis for comparing sale instances. The absence of a reasoned valuation finding showed non-application of mind, so the Gujarat HC quashed the order under section 269UD(1) and granted relief to the petitioners.

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Issues: Whether the order of pre-emptive purchase under Chapter XX-C was liable to be quashed for failure to determine the fair market value of the property and for treating the apparent consideration as understated by more than 15% without a definite valuation finding.

Analysis: For invoking pre-emptive purchase, the authority had to form a definite opinion on the fair market value of the property on the basis of relevant material and comparable instances. A mere assertion that the apparent consideration appeared to be understated by more than 15% was not enough. The notice and the final order did not disclose what the fair market value was, what increase was attributed to time lag, or how the comparable sale instance was adjusted. The absence of such a finding showed non-application of mind and rendered the valuation exercise conjectural.

Conclusion: The order under section 269UD(1) was held to be illegal and liable to be quashed, and relief was granted to the petitioners.

Ratio Decidendi: An order of pre-emptive purchase cannot be sustained unless the authority first determines the fair market value of the property on relevant material and records a definite finding that the apparent consideration is understated by more than 15%.

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