-1- IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEAL NO. 189 OF 2002 1. Deputy Collector and S.D.O. Ponda. 2. Goa Housing Board Panaji, Goa. …... Appellants V e r s u s 1. Shri Vassudev Laxman Pednekar since deceased represented by his legal heirs (a) Sushila Vassudev Pednekar widow of late Vassudev L. Pednekar of major age, housewife, Indian National, residing at Nagzarwada, Bicholim, Goa. (b) Shri Sunil Vassudev Pednekar son of late Vassudev L. Pednekar, aged 31 years, student, Indian National, resident of Nagzarwada, Bicholim, Goa. (c) Miss Deepa Vassudev Pednekar, daugher of late Vassudev L. Pednekar, aged 23 years, student, Indian National, residing at the same address. (d) Master Rushikesh Vassudev Pednekar, son of late Vassudev L. Pednekar, aged 21 years, student, Indian National, residing with his mother at the same address. …... Respondents Mr. H. D. Naik, Advocate for the Appellant. Mr. S. Vahidulla, Advocate for Respondents. -2- CORAM : A. S. OKA F. M. REIS, JJ. Judgment Reserved on : 1 st July, 2010. Judgment Pronounced on : 22 nd July, 2010. JUDGMENT (Per F. M. Reis, J.) The above appeal challenges the Judgment and Award dated 5th March, 2002, passed by learned Addl. District Judge, Mapusa, in Land Acquisition Case no.64/1991. 2. By a Notification under Section 4 of the Land Acquisition Act, 1894, (hereinafter referred to as 'the said Act'), published on 4th June, 1984, a portion of the property admeasuring an area of 46,194 square metres bearing survey no.63/2 of Borda Village in Bicholim Taluka, was intended to be acquired for the purpose of implementing the Housing Scheme at Borda, Bicholim. After complying with the formalities under the said Act, the Land Acquisition Officer by an Award dated 6th March, 1987, under Section 11 of the said Act, awarded a compensation at the rate of Rs.20/- per square metre for the land acquired. Being dissatisfied with the Award of said Land Acquisition Officer, the Respondents sought a reference under Section 18 of the said Act for enhancement of compensation claiming a sum of Rs.45/- per square metre as compensation for the land acquired. After framing the issues and recording of evidence, by the impugned Judgment and Award dated 5th March, 2002, the learned District Judge allowed the reference preferred by the Respondents and fixed the compensation for the land acquired at the rate of Rs.45/- per square metre. -3- 3. Being aggrieved by the said Judgment and Award, the Appellants have preferred the present Appeal. 4. The learned Advocate, appearing for the Appellants, has assailed the Judgment passed by the Reference Court and submitted that there is no material on record for the Reference Court to award the compensation to the Respondents at the rate of Rs.45/- per square metre. The learned Counsel has taken us through the evidence adduced by the Respondents and submitted that the evidence does not disclose that the sale instances relied upon by the Respondent at exhibit Aw.1/B, Aw.1/C and Aw.1/D as well as the Award in respect of a Notification of the year 1988, were comparable with the land acquired. The learned Counsel further stated that the Award at exhibit Aw.1/E cannot be relied upon as the Notification in the said case was issued more than five years after the Notification under Section 4 of the Act was passed in the present case. He further submitted that the Respondents have failed to establish that there was no substantial increase in price from the date of Section 4 of Notification upto the relevant day in the said Award. Learned Counsel further submitted that the Reference Court as such was not justified in relying upon a post-Notification Award, when no comparable sale instances were produced by the Respondent in proximity of Section 4 Notification. He further submitted that the Sale Deeds at exhibit Aw.1/B produced by the Respondent shows that the price for an area of 1,200 square metres was Rs.40/- per square metre and the developed plots at Borda Village were being sold at the rate of Rs.64.50 per square metre in January, 1984 and such sale instances were not in the vicinity of the acquired land. He further submitted that document at exhibit A.w.1/C in respect of plot of 998 square metres of land was sold at the rate -4- of Rs.48/- per square metre and as the said Sale Deed plot is a small plot as compared to the land acquired, deduction of 66 percent on account of development charges is to be effected to arrive at the market value of the acquired land. He further submitted that there was no justification for the Reference Court to award compensation at the rate of Rs.45/- per square metre, as the amount awarded by the Land Acquisition Officer is much more than the price prevailing in the locality. 5. On the other hand, the learned Counsel appearing for the Respondent, has vehemently submitted, that there is no infirmity committed by the Reference Court whilst deciding the market value of land as on the date of Section 4 Notification. He further submitted that the acquired land had potentialities for being used for non-agricultural purposes considering that the land was acquired for the purpose of putting up a Housing Scheme by the Goa Housing Board which itself discloses that the land had potentialities of being used for construction purpose. He further submitted that the Sale Deed at exhibit A.w.1/B wherein land admeasuring 1200 square metres was sold at the rate of Rs.40/- per square metre is situated at a distance of one kilometre to the land acquired and the Sale Deed at exhibit Aw.1/C is another plot of land admeasuring 998 square metres, which is situated at a distance of 3.5 kilometres from the acquired land and wherein the land was sold at the rate of Rs.48/- per square metre. He further submitted that the Sale Deed exhibit Aw.1/D is in respect of the plot of 302 square metres situated at a distance of 500 metres from the acquired land wherein the price was fixed at Rs.65/- per square metre and as such is a comparable sale instance. He further submitted that considering the market value of the land prevailing at the proximity of the Section 4 Notification, the compensation awarded by the Reference Court at -5- the rate of Rs.45/- per square metre, does not call for any interference. He further submitted that the Award produced by the Respondent dated 9th January, 1990, would demonstrate that the market value of land fixed by the Reference Court at the rate of Rs.45/- per square metre, is not at all excessive and the Reference Court was justified to consider it to determine the market value of the land acquired. The learned Counsel has relied upon the Judgments reported in (1995) 2 S.C.C. 305 in the case of P. Ram Reddy & Ors. vs. Land Acquisition Officer, Hyderabad & Ors.,; 1998 (1) Goa .L.T. 324 in the case of State of Goa & anr. vs. Smt. Olga Seco Gomes da Costa; 2002(3) S.C.C. 688 in the case of Special Land Acquisition Officer vs. Mohd. Hanif Sahib Bawa Sahib; (2005) 12 S.C.C. 137 in the case of Shivashnappa (Dead) By Lrs. & Ors. vs. Spl. Land Acquisition Office; AIR 1988 S.C. 1652 in the case of Chimanlal Hargovinddas vs. Spl. Land Acquisition Officer & anr.,; AIR 1976 S.C. 651 in the case of The State of Madras vs. A. M. Nanjan & anr.,; (1998) 8 S. C. Cases 179 in the case of Chander Bhan & Ors. vs. Union of India; (2001) 9 S.C.C. 584, in the case of Thakarsibhai Devjibhai & Ors. vs. Executive Engineer, Gujarat & anr.,; (1998) 2 S. C. C. 385 in the case of Land Acquisition Officer Revenue Divisional Officer vs. L. Kamalamma (Smt.) Dead by Lrs & Ors; and (2007) 9 S. C. C. 447 in the case of Nelson Fernandes & Ors. vs. Special Land Acquisition Officer, South Goa, & Ors. The learned Counsel accordingly submitted that there is no reason at all for this Court to interfere in the market value determined by the Reference Court. 6. On perusal of the records and after having heard the learned Counsel, the following point for determination arises in the present Appeal. -6- POINT FOR DETERMINATION 1. Whether the Reference Court has committed an error in fixing the market value of land as on the date of Section 4 Notification at the rate of Rs.45/- per square metre ? 7. For the purpose of determining the compensation under Section 23 or the said Act, the considerations to be taken into account have been well settled. One way is by adopting the comparable sale instance method. 8. The Reference Court whilst determining the compensation has essentially relied upon the post-Notification Award passed by the Land Acquisition Officer dated 9th January, 1990, whereby the remaining portion of the property surveyed under no. 62/3 admeasuring an area of 32000 square metres was acquired by Notification in the year 1988 and wherein by Award dated 9th January, 1990, the compensation was fixed at Rs.80/- per square metre. Considering the amount awarded in the said Award, the Reference Court has deducted 40 percent and ultimately arrived at the figure of Rs.45/- per square metre as market value of the acquired land. Though the law is well settled that post-Notification sale instances can be considered for the purpose of arriving at the market value of land as on the date of Section 4 Notification, nevertheless, such Notifications should be in the proximity of the date of Section 4 Notification in respect of the land acquired. In the present case, the post-Notification Award sought to be relied upon is more than four years from the date of Section 4 Notification. There is no evidence adduced by the Respondent to demonstrate that there was no appreciable -7- escalation in the prices from the year 1984 to 1988 on account of the present acquisition so as to enable such determination. In fact, the land acquired therein was much after the Housing Scheme had already commenced in the land acquired in the present acquisition proceedings. Naturally, when the Housing Scheme had already started, the prices of the properties in the locality would increase substantially. On perusal of the said Award at exhibit Aw.1/E, we find that the market value was arrived at on the basis of the Sale Deed dated 24th January, 1986, 30th June, 1988 and 7th March, 1989, which is much after Section 4 Notification was published in the present case. There is no evidence adduced by the Respondents to ascertain as to what extent the price had increased in view of the fact that the land in the present case was already acquired for the Housing Scheme way back in the year 1984. Without such material on record, the Reference Court was not justified to rely upon the said Award for the purpose of determining the market value of the land acquired in the present proceedings. 9. Apart from the said Award, the Reference Court though has referred to the other sale instances produced by the Respondents to come to the conclusion that market value fixed was correct, failed to consider them to form the basis to determine the market value of the land acquired. The Sale Deeds at exhibit Aw.1/B, is the plot admeasuring 1,200 square metres situated at Bicholim which was sold at the rate of Rs.40/- per square metre in the year 1982. The next sale instance at exhibit Aw.1/C is in respect of an area of 998 square metres of the land sold at the rate of Rs.48/- per square metre in May 1984. The sale instance at exhibit Aw.1/D is a plot at Bordem admeasuring 302 square metres having been sold at the rate of Rs.64.50 per square metre in the year 1984. Though the sale -8- instances in respect of the said portions of lands are of small plots, nevertheless considering the location and as they are in the proximity of Section 4 Notification, the same could be a basis in determining the market value of land as on the date of Section 4 Notification after making the requisite deductions towards development charges, etc. 9. The learned Counsel appearing for the Respondents has firstly relied upon the Judgment of the Apex Court in the case of P. Ram Reddy & Ors. vs. Land Acquisition Officer, Hyderabad & Ors. (supra). It is held in the said Judgment that the factors for considering market value should be determined with reference to the material placed on record and not solely on surmises, conjectures or guesswork. Price fetched by sale of similar land with building potentiality are relevant for determining the market value of the land. The Apex Court has also held therein that the fact that the entire land had been acquired for building purpose cannot be sufficient circumstances to regard it as such with building potentialities. Possibility of user of acquired land for building purposes can never be wholly a matter of conjecture or surmise or guess. It should be a matter of inference based on appreciation of material placed on record to establish such possibility. The Apex Court has also reiterated the fact that value fetched of small extent of land can also form a basis for determining the value of a large extent of land in specific situations. 10. The next Judgment relied upon by the learned Counsel appearing for the Respondents is State of Goa & anr. vs. Smt. Olga Seco Gomes da Costa (supra) in support of his contention that deduction of ten percent minimum can be effected in cases of which the sale deeds were three and half years subsequent to -9- the Notification. The Judgment reported in the case of Special Land Acquisition Officer vs. Mohd. Hanif Sahib Bawa Sahib (supra) is for the purpose of the well settled principles that the escalation of ten percent for subsequent year is to be allowed in cases in which the sale deed is much prior to Section 4 Notification. The Judgment in the case of Shivashnappa (Dead) By Lrs. & Ors. vs. Spl. Land Acquisition Officer (supra) is in the context of relying upon post-Notification sale deeds. The other Judgments relied upon by the learned Counsel for the Respondent are to support his contention of the well settled principles of law with regard to determining the market value of land where large chunks of lands are acquired and the sale transactions are of smaller extent. These principles are well settled and the same will be considered by us whilst determining the compensation for the land acquired. 11. In the case of Basavva (Smt) & Ors. vs. Spl. Land Acquisition Officer & Ors. reported in (1996) 9 S.C.C. 640), the Apex Court has held that the Court in the first instance has to consider whether the sale relied upon by the Applicant can be considered as genuine and reliable and whether they are in respect of comparable lands. In the event the Court finds that such sales are genuine and reliable and the lands have comparable features, sufficient deductions should be made to arrive at the just and fair market value of a larger tract of land. The time lag for real development and the waiting period for development are also relevant considerations for determination of just and adequate compensation. For deduction of development charges, the nature of the development, conditions and nature of the land, the land required to be set apart under the building rules for roads, sewerage, electricity, parks, water, etc., and all other relevant circumstances -10- which are to be considered for arriving at for the market value of land. In the case of Atma Singh (Dead) through Lrs. & Ors. vs. State of Haryana & anr., reported in ((2008) 2 S.C.C. 568), the Apex Court has said that for ascertaining the market value of land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. It is well settled that the market value of the property has to be determined having due regard to its existing condition with all its existing advantages and its potential possibility when led out in its most advantageous manner. It has further been held that exemplars of small pieces of land should not be a ground to be discarded especially when exemplars of large pieces of land were not available. This could, therefore, be used as a safe guide for determining the market value of land. 12. In view of the said Judgments of the Apex Court, in order to determine the market value of land as on the date of Section 4 Notification, the first step to be taken is to ascertain as to which of the Sale Deeds produced by the Respondents are comparable sale instances. The Respondents have produced three Sale Deeds which were executed before Section 4 Notification. The Sale Deed at exhibit Aw.1/B is in respect of the plot of land admeasuring 1200 square metres situated at a distance of one kilometre from the acquired land and is dated 14th May, 1982. The price mentioned therein is at the rate of Rs.40/- per square metre. R.w.1, Gajanand Pal has admitted in his deposition at page three that the said plot at exhibit Aw.1/B is at a distance of 500 metres from the acquired land. Aw.1 has also stated that the said Sale Deed plot is at a distance of about 500 metres from the acquired land in the interior of the main road. Aw.5/S. N. Bhobe, who is the -11- expert examined by the Respondents has stated that his said Sale Deed plot is at a distance of about one kilometre from the acquired land and is also comparable to the land acquired. 13. The other Sale Deed produced by the Respondents is at exhibit Aw.1/C, wherein an area of 998 square metres was sold on 14th May, 1984 at the rate of Rs.48/- per square metre. Rw.1 has stated that the said sale instance is at a distance of 3.5 kilometres from the acquired land though Aw.1 and the expert witness has stated that it is about 500 metres from the acquired land. 14. The next Sale Deed dated 11th January, 1984, is at exhibit Aw.1/D, which is a plot admeasuring about 302 square metres, wherein the price is fixed at Rs.65/- per square metre. Rw.1 has stated that the said plot is at a distance of about 500 metres from the acquired land. Aw.1 has stated that the said plot is at a distance of about 800 metres from the acquired land. Rw.1 has stated in the cross examination that the said Sale Deed plot is at a distance of 500 metres from the acquired land. Considering the distance as mentioned by the witnesses, we find that the Sale Deed at exhibit Aw.1/D though being in respect of a small developed plot of land but considering that the same is at a distance of 500 metres from the acquired land as admitted by Rw.1, himself could form the basis for determining the compensation of the land acquired in the present case. The price of land fixed therein is at the rate of Rs.65/- per square metre. The said plot is located in the same Village as the land acquired. Aw.4/Arvind Sawant, who has sold the said plot has also been examined. He has stated that the Sale Deed plot is at a distance of 1.5 kilometres from the Housing Board. He has further admitted in the cross -12- examination that the Sale Deed plot was developed plot having sub-divisions approved by Town Department. He has further deposed that the said plot was about 7.50 metres from the main road. He has further denied the suggestion that the market value of the land was Rs.30/- per square metre at the time when the plot was sold. 15. On the overall evidence on record, we find that considering the said Sale Deed plot is in the vicinity of the land acquired, the same could be a basis for determining the compensation in the present proceedings. As the said Sale Deed plot Aw.1/D is a sub-divided plot, substantial deduction will have to be effected to arrive at a market value of the land in respect of the land acquired. 16. The market value of the acquired land would be the price which the interested party would be willing to pay if it is sold in the open market at the time of issue of Notification under Section 4 of the Act but finding direct evidence in this behalf is not an easy exercise and, therefore, the Court has to take recourse to their own methods for arriving at a market value of the land acquired. For the purpose of arriving at deductions to be affected to determine the market value of land on the basis of a sub-divided plot, the Apex Court in the Judgment reported in 2010 (1) S.C.C. 444 in the case of Subh Ram & Ors. vs. State of Haryana and anr. has held at Paras 12, 13, 14 and 15 as under : “12. In a standard layout with plots measuring say 2500 sq ft (50' x 50') each, to provide road access to each plot, it will be necessary to provide a road after every two rows of plots. If the depth of each plot is 50', and if the road width is 25 ft, then for every two strips of plots, there will have to be -13- a strip of road of 25 ft. This means a minimum of 25% of the total land area will be utilised for roads. A typical layout will also have cross-roads, and areas earmarked for park, and/or community areas. Consequently non-saleable area (area which cannot be sold as plots) would be around 30% to 40% of the total area. 13. Therefore, in the hypothetical layout method of determination of market value, as a first step, the areas that will be used up for roads, drains, parks/playgrounds and community areas, will have to be excluded from the total extent of the acquired land. The standard deduction in this behalf is one-third (33%). 14. But merely deducting the areas required for roads, drains, parks and community areas, will not convert a large tract of agricultural or undeveloped land into a developed residential layout. For that, considerable financial outlay has to be made. The land will have to be levelled. The land will have to be converted from agricultural use to non- agricultural residential use by paying necessary fees/fine to the Revenue/development authorities. Then the roads will have to be asphalted or concreted. Drains will have to be dug and lined with reinforced cement concrete or stone, for drainage of rainwater. Electricity, water, and sewage lines will have to be laid. Deposits will have to be made to the authorities dealing with electricity, water and sewage removal. The development will also involve the service of surveyors, engineers and developers. All these involve considerable expenditure. Further, as there will be a time gap between the expenditure for development and the actual sale of plots, the cost of development will also have an element of interest on investment. The developer who undertakes the development and invests the monies for development would also expect a reasonable profit when the -14- plots are sold. All these expenditure and factors are standardised into another one-third (33%) deduction towards expenses of development. 15. Thus, if the valuation of a large extent of agricultural or undeveloped land is to be based on the sale price of a small developed plot in a private layout, then the standard deductions should be one-third (for roads, etc.) plus one- third (for expenditure of development), in all two-thirds (or 67%), as “development cost” from the value of small plot. The percentage of deduction may however vary between 20%