:1: IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEAL NO. 99 OF 2001 WITH CROSS OBJECTION STAMP NO. 2354 OF 2001 1. Deputy Collector (L.A.) & Land Acquisition Officer, Panaji. 2. Executive Engineer, Works Division XXIII, P.W.D., Panaji Goa. ... Appellants V e r s u s 1. Shri Antonio Vieira Velho (since deceased ) through L.Rs. 1a) Shri Joe Velho, major, married, businessman r/o Fontainhas, Panaji Goa. 1b) Mrs. Celina de Viera Velho e Almeida 1c) Mr. Fernando Almeida, Both r/o Fr. Agnel Road, Panaji Goa. ... Respondents Mr. A. Kakodkar, Additional Government Advocate for the Appellant. Mr. J. E. Coelho Pereira, Senior Advocate with Mr. J. Godinho, Advocate for Respondent Nos. 1(b) and 1(c). CORAM : D. G. KARNIK, J. DATED : 15th OCTOBER, 2010. ORAL JUDGMENT : 1. This appeal and cross objections by the State and the :2: original claimants respectively are directed against the judgment and order dated 4th September, 2000 passed by the learned District Judge, Panaji, in Land Acquisition Case No. 105/1994. 2. The respondents in appeal ( hereinafter referred to as 'the claimants') are the owners of the land bearing survey No.38 of village Penha Bardez Taluka situated in North Goa, District of State of Goa. An area of 4575 square metres of the land out of survey No.38 was proposed to be acquired for the purpose of State Assembly complex and the notification under Section 4 under the Land Acquisition Act, 1894 was issued on 19th August, 1993. The acquisition proceedings were conducted expeditiously and award was passed on 28th April, 1994 and the possession of the land was also taken on or about 25th August, 1994. By the award, the Land Acquisition Officer determined the compensation payable to the claimants at the rate of Rs.200/- per square metre for the acquired land. Aggrieved by the amount of compensation awarded by the Land Acquisition Officer, the claimants requested the Collector to make a reference under Section 18 of the Land Acquisition Act. Accordingly, the reference was made to the District Court ( hereinafter referred to as the Reference Court ). By the judgment and award dated 4th September, 2000, the Reference Court enhanced the amount of a compensation from Rs. 200/- to Rs.275/- per square metre. Aggrieved by the increase in the amount of a compensation, the State has filed this appeal. Aggrieved by :3: the limited increase in the amount of a compensation granted by the Reference Court to the extent of Rs.275/- as against Rs.2000/- per square metre claimed by them, the claimants have filed the cross objections. 3. Before the Reference Court, the claimants examined Mr. Joe Velho (AW1) who is the respondent No.1(a) and the son of original co- owner. The claimants also examined Mr. A. V. Radhakrishna, Executive Engineer of the Housing Board, Porvorim. The claimants produced on record the certified copies of three sale deeds, all dated 18th February, 1990 executed by Joe Velho himself as a Power of Attorney holder of his parents in respect of all three plots situated in the adjoining land bearing survey No. 35. He also relied upon an auction sale of three plots held by the Housing Board, Porvorim. The State did not examine any witness nor did it produce any documentary evidence. After considering the evidence adduced by the claimants, the Reference Court came to the conclusion that the market value of the acquired land was Rs.275/- per square metre on the date of the notification under Section 4 of the Land Acquisition Act. The Reference Court accordingly enhanced the compensation to Rs.275/- per square metre. 4. Mr. Joe Velho (AW1) in his evidence has deposed about the location of the land. He has stated that the acquired land is situated at the prime location at village Penha. The land is on the plateau of a hill and :4: has panoramic view of river Mandovi, Ribandar and Panaji city. The Panaji bus stand is at a distance of 1 Km from the acquired land. The national highway is very near at a distance of about 200 metres. There is only one property in between the national highway and the acquired land and that property viz. survey no. 35 is also of the claimants themselves. Sanjay school is located at a distance of 300 metres from the acquired land. Housing board colony known as Journalists' colony is at a distance of about 50 metres from the acquired land. In the cross examination, nothing was brought out to discredit the testimony of AW1 regarding the location and the surrounding area of the land except to say that the acquired land was 150 metres from the national highway. Thus in fact in the cross examination, the State claimed that the distance between the acquired land and the national highway was less than 200 metres. In his examination in chief, AW1 also stated that the land bearing No.35 belongs to his family ( parents ) and a lay out was prepared by the claimants of survey no.35. The three plots out of survey No.35 were sold by sale deeds, all dated 8th February, 1990 at the rate of Rs.550/- per square metre. The sale was executed by AW1 as the constituted attorney of his parents. The certified copies of the sale deeds were produced as Exhibit AW1/B, Exhibit AW1/C and Exhibit AW1/D. 5. The claimants also examined Mr. Radhakrishna (AW2), Executive Engineer, Housing Board, Porvorim. He stated that the :5: Housing Board had auctioned in respect of three plots in the vicinity of the acquired land. He deposed that the auction was held on 8th August, 1988. The offset price was fixed at Rs.500/-. In the auction each of three plots were purchased by the three auction purchasers at the rate of Rs. 501/- per square metre. The office copies of the letters confirming the auction sale issued by the Housing Board were produced by him on record. He stated that the plots sold by the housing board in the vicinity of the acquired land were at a distance of 200 metres from the Assembly complex and 150 metres from Panaji-Mapusa highway. The Reference Court held that three sale deeds in respect of plot no.9 admeasuring 510 square metres (AW1/B), plot no.12 admeasuring 572 square metres (AW1/C) and plot no.8 admeasuring 428 square metres (AW1/D) were comparable sale deeds. The learned Additional Government Advocate appearing for the State did not dispute that the sale deeds were in respect of the comparable lands but submitted few points of distinction regarding development and the facilities available on the said plots. He submitted that subject to the adjustment to be made on account of distinguishing features the sale deeds can be referred to and relied upon as sales of comparative plots. In fact he sought to derive strength to the arguments relying upon the said sale deeds subject to the deduction in the price to be made on the basis of few distinguishing features to which I will have occasion to refer later. In my view also the three sales covered by sale deeds at Exhibit AW1/B, Exhibit AW1/C and Exhibit AW1/D are :6: comparable sale instances. All the plots are situated in survey No. 35 which shares a common boundary with survey No. 38 i.e. the acquired property. The sale deeds were executed three years before the date of issuance of notification under Section 4 of the Land Acquisition Act. The sales were between willing purchaser and willing seller of the sale deed shows that the land under each of the acquired land was sold at the rate of Rs.550/- per square metre. It can be therefore safely assumed that the market value of the plots in survey No.35 was Rs.550/- per square metre on 8th August, 1988. The learned Additional Government Advocate however submitted that a deduction to the extent of 75% is required to be made for arriving at the market value of the acquired land in August, 1988. He firstly submitted that all three plots under the three sale deeds were abutting the national highway and the acquired land was about 150 metres from the national highway. Secondly he submitted that a lay out in respect of survey No.35 was prepared and the plots in the lay out were sold. The acquired land was more than one acre (4000 square metres ) and therefore it could not be used as a building site unless it was laid into similar plots. An area of 15% would be required to be kept as an open space at the time of preparation of a lay out and 10% area would be required for the purpose of internal roads while preparation of a lay out. Thus the sellable area would be reduced to the extent of 25% as compared to the smaller plots. Further more deduction would have to be made towards development costs. In my view, the costs of the development can :7: be taken as 15% considering that the acquired land was abutting the developed land bearing survey No.35. Thus the total deduction to be made while determining the value of the acquired land would be to the extent of 40% from the value derived by looking to the comparable sale instances. Thus in my view by deducting 40% from the price of Rs.550/-, the price would work out to Rs.330/- per square metre as in February, 1990. 6. The learned Senior Counsel for the claimants submitted that the relevant date for fixing of the price was exactly three years later the price of Rs.330/- per square metre arrived at on the basis of the comparable sale deeds of February, 1990. He submitted that the price should be increased at the rate of 15% per annum while determining the value as on the date of the notification dated 19th August, 1993. In support he referred to and relied upon a decision of the Supreme Court in the case of Ganeral Manager, Oil and Natural Gas Corporation Limited V/s Rameshbhai Jivanbhai Patel reported in (2008) 14 SCC 745. 7. In the case of General Manager, Oil and Natural Gas Corporation V/s Rameshbhai Patel ( supra ), the Supreme Court has laid down guidelines for the purpose of considering the increase in the price between two dates i.e. date of the comparable sale deed and the date of the notification. There the Court was required to be consider what should be :8: the appropriate rate of increase. In that regard the Supreme Court observed as follows :- “11. On the other hand, the learned counsel for the respondent claimants submitted that the rate of escalation in market value at the relevant time was in the range of 10% to 15% per annum. He relied on the decisions of this Court in Ranjit Singh v. Union Territory of Chandigarh and Land Acquisition Officer and Revenue Divisional Officer v. Ramanjulu wherein this Court had accepted an escalation of ten per cent per annum, and the decision in Krishi Utpadan Mandi Samiti v. Bipin Kumar where this Court had accepted an escalation of 15% per annum. He, therefore, submitted that escalation at the rate of 10 per cent adopted by the Reference Court and approved by the High Court is a reasonable and correct standard to be applied. 12. We have examined the facts of the three decisions relied on by the respondents. They all related to acquisition of lands in urban or semi-urban areas. Ranjit Singh related to acquisition for development of Sector 41 of Chandigarh. Ramanjulu related to acquisition of the third phase of an existing and established industrial estate in an urban area. Bipin Kumar related to an acquisition of lands adjoining Badaun-Delhi Highway in a :9: semi-urban area where building construction activity was going on all around the acquired lands. 13. Primarily, the increase in land prices depends on four factors: situation of the land, nature of development in surrounding area, availability of land for development in the area, and the demand for land in the area. In rural areas, unless there is any prospect of development in the vicinity, increase in prices would be slow, steady and gradual, without any sudden spurts or jumps. On the other hand, in urban or semi-urban areas, where the development is faster, where the demand for land is high and where there is construction activity all around, the escalation in market price is at a much higher rate, as compared to rural areas. In some pockets in big cities, due to rapid development and high demand for land, the escalations in prices have touched even 30% to 50% or more per year, during the nineties. 14. On the other extreme, in remote rural areas where there was no chance of any development and hardly any buyers, the prices stagnated for years or rose marginally at a nominal rate of 1% or 2% per annum. There is thus a significant difference in increases in market value of lands in urban/ :10: semi-urban areas and increases in market value of lands in the rural areas. Therefore, if the increase in market value in urban/semi- urban areas is about 10% to 15% per annum, the corresponding increases in rural areas would at best be only around half of it, that is, about 5% to 7.5% per annum. This rule of thumb refers to the general trend in the nineties, to be adopted in the absence of clear and specific evidence relating to increase in prices. Where there are special reasons for applying a higher rate of increase, or any specific evidence relating to the actual increase in prices, then the increase to be applied would depend upon the same.” 8. In respect of urban and semi-urban areas the rate of increase of 10% to 15% per annum is accepted as a rate of thumb rule. What should be the exact rate, whether 10% to 15% per annum, depends on the facts and circumstances of each case. The extent of the development in the locality, location of the plot and its neighbourhood would be required to be taken into consideration while considering the increase. Undoubtedly the acquired land is situated in a developing area. Even the housing board had set up a colony in the nearby. The claimants themselves had developed the adjoining land and sold the plots therein. The land had panoramic view of river Mandovi. Taking into all these :11: into consideration, in my view it would be appropriate to consider 15% as the rate by which the price would increase every year. In para 18 of the decision in the case of General Manager, Oil and Natural Gas Corporation V/s Rameshbhai Patel ( supra ), the Supreme Court says that the rate of increase would be cumulative. The cumulative increase in the price at 15% per annum for the three years would be to the extent of 50% ( rounded off ). The market price of the acquired land on the date of the acquisition would therefore be 50% more than Rs.330/- per square metre which would work out to Rs.495/- per square metre. 9. The learned Reference Court has ignored the prices realised in an auction of three plots held by the housing board on 8th August, 1988 on the ground that the price in auction cannot be safeguard in determination of the market price. The Reference Court has derived the strength to the view from a decision of the Supreme Court in Mehta Ravindrarai Ajitrai ( deceased by L.Rs ) and others V/s State of Gujarat, AIR 1989 SC 2051. In that case the Government was relying upon the price realised in an auction sale of a property as the basis for determination of the market value. The price realised in the auction was rejected as there was little doubt that it was a distress sale. Undoubtedly in a sale by way of a distress sale in an auction the price realised would be lower therefore the price realised in a distress auction can be taken as a minimum price and cannot be rejected altogether. The market price :12: would be little higher than the price realised in a distress sale like forced auction. A distinguishing feature in this case was that the auction sale by housing board was not a distress sale. It was a free sale of the several plots conducted by the housing board on the same date. In all three plots the offset price was fixed at Rs.500/- per square metre. The offset price fixed by the Government and the Government bodies in respect of sale of their properties ordinarily has a reasonable and co-relation to the market price. Further the fact that the sale price realised was near about offset price indicates that the auctioned price was the market price. It was also not a solitary auction sale where some time the price may vary on account of severe competition. All the three plots were auctioned and three plots were sold at the similar rate of Rs.501/- per square metre. The plots auctioned were about 200 metres away from the acquired land and therefore indicates the price in the locality. The auction price also indicates the price to be Rs.500/-. For these additional reasons also, I am of the view that the market price of the acquired land has to be determined at the rate of Rs.495/- per square metre on the date of the notification. 10. The learned Additional Government Advocate invited my attention to the valuation made in the cross objections which is Rs.4,75,000/-. In other words, the claimants had claimed an enhancement to the extent of Rs.4,75,000/- for an admeasuring an area of 4575 square metres i.e. they had claimed enhancement roughly at the rate of Rs.104/- :13: per square metre over and above the amount awarded by the Reference Court. Since the Reference Court had awarded Rs.275/- per square metre, the claimants had claimed the compensation at the rate of Rs.379/- per square metre only. The learned Additional Government Advocate therefore submitted that the compensation cannot be awarded in excess of Rs.379/- per square metre even if the cross objections are allowed. 11. The learned Senior Counsel for the claimants however relying upon a decision of Full Bench of this Court in the case of State of Maharashtra V/s Sitaram Narayan Patil and others reported in 2010(2) Bom. C.R. 366 prays that the claimants be allowed to amend the claim so as to claim a compensation at the rate of Rs.495/- per square metre and the claimants are willing to pay the appropriate Court fee on the enhanced claim. The learned Senior Counsel undertakes that Court fee will be paid within a week of the office computing the additional fee and intimating the same to the claimant. The undertaking is recorded and accepted. In State of Maharashtra V/s Sitaram Narayan Patil and others (supra ), the Full Bench has held that the claimant is entitled to claim an enhancement in the amount of compensation claimed even at the Appellate stage. In view of a decision of the Full Bench, the claimants are allowed to enhance the claim so as to enhance the claim to Rs.495/- per square metre subject to payment of Court fee within a week of computation by the Court office of the additional Court fee payable and intimation thereof. The decree :14: shall be drawn only after payment of additional Court fee. 12. For these reasons, the appeal is dismissed and the cross objections are allowed. The compensation awarded by the Reference Court is enhanced to Rs.495/- per square metre for the acquired land admeasuring an area of 4575 square metres. The claimants shall also be entitled to the other statutory amounts like solatium and interest on the amount of compensation. The amount paid/deposited in this Court, if any, shall be taken into consideration while computing the amount. The appellant shall pay the costs of the appeal to the respondents. D. G. KARNIK, J. at*