-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 428 OF 1991 IN L.A.R . NO. 34 OF 1984 The State of Maharashtra )...Appellant versus 1. Ishwarsharan Kedarnath Bhargava ) 2. Manharlal Kanji ) 3. Hasmukh Ratilal Vyas ) since deceased through his legal heirs : ) 3-A. Smt. Hansaben Hasmukh Vyas, Wife, age 42 years, ) 3-B) Sanjay Hasmukh Vyas, Son, age 19 years, ) 3-C) Rahul Hasmukh Vyas, Son, age 17 years, ) Nos.1 and 2 residing at Maheshwar Kiran No.1, ) Flat No.4, First Floor, Basant Street, Santacruz, ) Bombay-400 054 ) No.3-A to 3-C residing at Aashutosh Apartment, ) Ground floor, Maruti Nagar, near Aerodrome Road,) Rajkot-360 001. )..Respondents WITH F.A. NOS. 429/1991, 430/1991, 195/1992, 431/1991, 97/2000, 432/1991, 177/1995, 433/1991, 176/1995, 434/1991, 175/1995, 435/1991, 797/1994, 436/1991, 205/1991, 437/1991, 204/1991, 438/1991, 690/1991, 378/1993, 401/1995, 1002/2002 AND 1215/1996 WITH -2- CROSS OBJECTION NOS. 18000/1996, 17998/1996 AND 18002/1996. WITH CIVIL APPLICATION NOS. 183/2004, 184/2004, 185/2004, 186/2004, 2262/2004, 2263/2004, 2264/2004, 2265/2004, 2257/2004, 2258/2004, 2259/2004, AND 2260/2004 Mrs. G.P. Mulekar, Assistant Government Pleader, for the appellants. Mr. Rajesh S. Datar for the claimants. CORAM: SWATANTER KUMAR, C.J. & DR. D.Y. CHANDRACHUD, J. Judgment reserved on : July 26, 2007 Judgment delivered on: August 16, 2007 JUDGMENT (Per Swatanter Kumar, C.J.): In the year 1963-64, the Government of Maharashtra took a decision to acquire the lands on eastern and western sides of Thane- Belapur Road for a public purpose viz. development and utilisation of the same in Thane Harbour Panvel and Trans Thane Creek, for industrial, commercial and residential development. This project was to be named as New Bombay City Project. In furtherance to this public purpose, notification under Section 4 of the Land Acquisition Act, 1894, hereinafter referred to as “the Act”, was issued for acquiring different lands belonging to different land owners out of Gat Nos. 14, 28, 35,, 39, -3- 166, 170 and 285 of village Rabale in Thane District during the period 13th September, 1968 to 2nd December, 1972. The Land Acquisition Officer, vide his awards of different dates, awarded compensation to the claimants at Rs. 5.40 per sq.metre for acquisition of their respective lands. Different amounts were claimed by the owners of the land in Land Acquisition References. The claimants being dissatisfied with the Award of the Collector preferred applications under Section 18 of the Act and claimed varied amounts of compensation. The learned Reference Court vide its award dated 17th February, 1990 increased the compensation payable to the claimants to Rs. 12/- per sq.metre, in addition to other compensation payable for construction, etc., depending on the facts and circumstances of each case and also directed the State to pay solatium at the rate of 30 per cent with additional market value and also awarded interest under the provisions of the Act. 2. Aggrieved from the judgment of the Reference Court, the State filed the above 24 appeals before this Court. Some of the claimants, claiming further enhancement of the awarded compensation, have also filed three cross objections in appeals. Consequently, we would be disposing of all the cases aforereferred by this common judgment as common question of fact and law arise for consideration in -4- the present cases. 3. The learned Reference Court, after noticing the pleading of the parties, framed the following issues and answered them as follows:- “ (1) Do the Claimants prove that having regard to the potential value of the land, the land acquired was ideal for residential complex? (2a) Are the Claimants entitled to claim compensation at the enhanced rate per square metre, if yes at what rate?. (b) Are they entitled to claim additional compensation? If yes, how much? (3) Whether the claimants are entitled to claim interest on the enhanced compensation as per section 28 of the Land Acquisition Act? (4) What relief and order? Findings on the above issues are : (1) Yes. (2a) Rs. 12/- per square metre. (b) As shown in order. (3) As shown in order. (4) As per final order.” 4. The learned Assistant Government Pleader appearing for the State contended that there was no evidence before the Reference Court which could justify enhancement of the compensation for -5- acquisition of the land and the compensation fixed by the Reference Court is unreasonable and unfair. The learned counsel for the claimants has submitted that on the basis of the award and evidence led by the claimants, the claimants would be entitled to enhanced compensation at the rate of Rs. 25/- per sq.mtere. It was conceded on behalf of both the claimants and the State that the parties have not produced and proved any sale instances which could be examined by the Court of competent jurisdiction for determining the fair market value of the land payable to the claimants by way of compensation. The evidence on record is in the form of statements of the witnesses. The claimants relied upon the statements of three witnesses. The claimants, in addition to examining themselves, have examined a Valuer as witness No.3. In addition to this oral evidence, the claimants produced on record judgments of different Courts pertaining to land acquisition matters as well as certain lease deeds. The Reference Court, after discussing certain judgments of the Supreme Court and this Court in relation to determination of market value, noticed that the evidence relating to gradual rise in price of land under acquisition should also be considered in determining the amount of compensation, particularly in the light of the judgment of the Supreme Court in the case of All India Tea and Trading Company Limited vs. The Collector of Darrang, AIR -6- 1971 SC 1253. In the lease deed which was produced on record as Exhibit-50 it was stated that the land was taken by Roshanlal Lachiram Agrawal from Ramchandra Thanekar as a tenant for 20 years before 1980. Exhibit-54 is a map of the village Rabale which shows that some industries are located on the eastern side of Thane-Belapur Road. This map Exhibit-54 is a composite map of 9 villages. Village Rabale is surrounded by different villages and towards its eastern side is Thane- Belapur Road. Relying upon the judgments in Exh. 24/2, where compensation at the rate of Rs. 7.80 per square meter was determined by the Reference Court for acquisition of lands in the village Chinchavali, which is on the western side of Thane-Belapur Road and considering the oral evidence led by the parties, the Court fixed the compensation at the rate of Rs. 12/- per sq.metre. The Reference Court placed reliance on the case of State of Bihar vs. K .Thacker, AIR 1981 Patna 81, wherein it was held that judicial notice should be taken of the fact of continuous rising inflation and rising land values. 5. After determining the market value, the learned Reference Court went into the merits of each case and awarded different compensation to different claimants depending upon the area acquired, the constructed portion and other matters. It is a settled principle of law -7- that onus is upon the Claimants to prove before the Reference Court that they are entitled to enhanced amount of compensation. In Kirtan Tandon vs. Allahabad Development Authority and another, (2004) 10 SCC 745, the Supreme Court held as under: “Before examining the merits of the contentions raised, it will be useful to bear in mind the legal principle in the matter of determination of compensation. The Collector's award under Section 11 is nothing more than an offer of compensation made by the Government to the claimants whose property is acquired. The burden of proving that the amount of compensation awarded by the Collector is inadequate lies upon the claimant and he is in the position of a plaintiff. The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court. The material produced and proved by the other wise will also be taken into account for this purpose.” In the case of Major Pakhar Singh Atwal vs. State of Punjab, 1995 Supp (2) SCC 401, the Supreme Court held as under: “If we have regard to the above rival contentions, the facts and circumstances of this case do not permit our interference with the order under appeal. It is now settled law that the award is an offer and whatever amount was determined by the Collector is an offer and binds the Improvement Trust. However, the Collector also is required to collect the relevant material and award compensation on the basis of settled principles of determination of the market value of an acquired land. The Improvement Trust, -8- therefore, cannot go behind the award made by the Collector. Reference is not an appeal. It is an original proceeding. It is for the claimants to seek the determination of proper compensation by producing sale deeds and examining the vendors or the vendees as to passing of consideration among them, the nearness of the lands sold to the acquired lands, similarly of the lands sold and acquired and also by adduction of other relevant and acceptable evidence. In this case, for the Court under Section 18 of the Act, the Tribunal is constituted. Therefore, if the claimants intend to seek higher compensation to the acquired land, the burden is on them to establish by proof that the compensation granted by the Land Acquisition Officer is inadequate and they are entitled to higher compensation. That could be established only by adduction of evidence of the comparable sale transactions of the land acquired or the lands in the neighbourhood possessed of similar potentiality or advantages. Unfortunately, in this case, no witness had been examined in proof of the prevailing market value of the lands or in the neighbourhood. Only mutation entries were relied upon. They are inadmissible evidence and cannot be relied upon. No doubt, in the award itself, the Land Acquisition Officer referred to the sale transaction. Since the Land Acquisition Officer is an authority under the Act, he collected the evidence to determine the compensation as an offer. Though that award may be a material evidence to be looked into, but the sale transaction referred to therein cannot be relied upon implicitly, if the party seeking enhancement resists the claim by adducing evidence independently before the Court or the tribunal. In this case, since no steps were taken to place the sale transaction referred in the award, they cannot be evidence. So they can neither be relied upon nor can be looked into as evidence.” 6. It is also an equally settled principle that the courts, wherever direct evidence is not available, have to take into consideration -9- attendant circumstances and wherever necessary apply certain guess work to determine the fair market value of the land payable to the claimants. Of course, such a guess work has to be applied in consonance with settled principles and on the basis of some material on the Court file. At this stage it will be appropriate to refer to a recent Division Bench judgment of this Court in the case of State of Maharashtra vs. Yashwant Kahnu Shirsath (First Appeal No. 896 of 2005). The relevant portion reads as under: “ Whatever principles of computation for enhancement or otherwise of the compensation is adopted by the reference court it must support such a view by appropriate reasonings. There is documentary evidence on record that the price of the land of adjoining villages has a increasing trend and the sale deeds placed on record of the lands from the adjacent villages reflected much higher price. It may not be necessary in the given facts of the case for the court to adopt price of adjacent villages but certainly this is not impermissible. Once the instances are comparable, even of the lands acquired from different villages can form the basis of entire market value as held by the Supreme Court in the case of Union of India vs Bala Ram Gupta and anr. AIR 2004 SC 3981. In the present case evidence of sale instances from same village and part of the acquired land had been proved by the claimants. Thus it would not be necessary for the court to deliberate on the value shown in the sale instances of the adjoining lands in the village. It is equally known principle of law that the court while determining the compensation has to refer to the evidence which has greater proximity and is close to the date of notification issued under section 4 of the Act and some extent of guess work has to be applied by the court.“In the case of of Chimanlal Hargovinddas vs Special Land Acquisition Officer and anr., AIR 1988 SC 1652, the Court court stated the principles beyond ambiguity and the court capitualised the factors regulating the discretion of -10- awarding compensation by the court as under: “Before tackling the problem of valuation of the land under acquisition it is necessary to make some general observations. The compulsion to do so has arisen as the Trial Court has virtually treated the award rendered by the Land Acquisition Officer as a judgment under appeal and has evinced unawareness of the methodology for valuation to some extent. The true position therefore requires to be capsulized. 4. The following factors must be etched on the mental screen: (1) A reference under Section 18 of the Land Acquisition Act is not an appeal against the award and the Court cannot take into account the material relied upon by the Land Acquisition Officer in his Award unless the same material is produced and proved before the Court. (2) So also the Award of the Land Acquisition Officer is not to be treated as a judgment of the trial Court open or exposed to challenge before the Court hearing the Reference. It is merely an offer made by the Land Acquisition Officer and the material utilised by him for making his valuation cannot be utilised by the Court unless produced and proved before it. It is not the function of the Court to suit in appeal against the Award, approve or disapprove its reasoning, or correct its error or affirm, modify or reverse the conclusion reached by the Land Acquisition Officer, as if it were an appellate Court. (3) The Court has to treat the reference as an original proceeding before it and determine the market value afresh on the basis of the material produced before it. (4) The claimant is in the position of a plaintiff who has to show that the price offered for his land in the award is inadequate on the basis of the materials produced in the Court. Of course the materials placed and proved by the other side can also be taken into account for this purpose. (5) The market value of land under acquisition has to be determined as on the crucial date of publication of the notification under Section 4 of the Land Acquisition Act(dates of Notifications under Sections. 6 and 9 are irrelevant). (6) The determination has to be made standing on the date line -11- of valuation (date of publication of notification under Section 4) as if the valuer is a hypothetical purchaser willing to purchase land from the open market and is prepared to pay a reasonable price as on that day. It has also to be assumed that the vendor is willing to sell the land at a reasonable price. (7) In doing so by the instances method, the Court has to correlate the market value reflected in the most comparable instance which provides the index of market value. (8) Only genuine instances have to be taken into account. (Some times instances are rigged up in anticipation of Acquisition of land). (9) Even post notification instances can be taken into account (1) if they are very proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (10) The most comparable instances out of the genuine instances have to be identified on the following considerations: (i) proximity from time angle, (ii) proximity from situation angle. (11) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (14) The exercise indicated in Clauses (11) to (13) has to be undertaken in a common sense manner as a prudent man of the world of business would do. We may illustrate some such -12- illustrative (not exhaustive) factors: Plus factors Minus factors 1. smallness of size. 1. largeness of area. 2. . proximity to a road. 2. situation in the interior at a distance from the road. 3. frontage on a road. 3. narrow strip of land with very small frontage compared to depth 4. nearness to developed area. 4. lower level requiring the depressed portion to be filled up. 5. . regular shape. 5. remoteness from developed locality. 6. . level vis-a-vis land 6. some special under cultivation disadvantagious factor which would deter a purchaser. 7. special value for an owner of an adjoining property to whom it may have some very special advantage. (15) The evaluation of these factors of course depends on the facts of each case. There cannot be any hard and fast or rigid rule. Common sense is the best and most reliable guide. For instance, take the factor regarding the size. A building plot of land say 500 to 1000 sq. yds cannot be compared with a large tract or block of land of say 1000 sq. yds or more. Firstly while a smaller plot is within the reach of many, a large block of land will have to be developed by preparing a lay out, carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers (meanwhile the invested money will be blocked up) and the hazards of an entrepreneur. The factor can be discounted by making a deduction by way of an allowance at an appropriate rate ranging approx. between 20% to 50% to account for land required to be set apart for carving out lands and plotting out small plots. The discounting will to some extent also depend on whether it is a rural area or urban area, whether building activity is picking up, and whether waiting period during which the capital of the entrepreneur would be looked up, will be longer or shorter -13- and the attendant hazards. (16) Every case must be dealt with on its own facts pattern bearing in mind all these factors as a prudent purchaser of land in which position the Judge must place himself. (17)These are general guidelines to be applied with understanding informed with common sense. ...... ..... ..... 9. The more serious grievance of the appellant however is that the High Court has depressed the market value excessively in evaluating the land in question at Rs. 7,000 per acre as compared to the land abutting on the Ganeshkhand Road valued at Rs. 20,000 per acre, the land abutting in the interior of Survey No. 86 valued at Rs. 16,000, and land abutting on Pashan Road valued at Rs. 12,000 per acre. A glance at the sketch on the record shows that the appellant's land is situated very much in the interior as compared to the other parcels of land. It is in the midst of large blocks of undeveloped land. A hypothetical purchaser would not offer the same market value for lands with such a situation as lands which are nearer to the developed area and abut on a road or are nearer to a road. The development of lands which are nearer to the developed area and nearer to the road can reasonably be expected to take place much earlier. Only after such lands are developed and construction comes up, the development would proceed further in the interior. It would not be unreasonable to visualize that a considerable time would elapse before development could reach the block of undeveloped land located in the interior. Besides, the land which is situated in the interior does not fetch the same value as the land which is nearer to the developed area and nearer to the road. If a hypothetical purchaser opts to purchase the land situated in the interior in the midst of an undeveloped area, he would doubtless take into account the factor pertaining to the estimated time for development to reach the land in the interior. For, his capital would be unprofitably looked up for a very long time depending on the estimated time required for the development to reach the land in the interior. Meanwhile he would have to suffer -14- loss of interest. It is, therefore, understandable that the land in the interior would fetch much smaller price as compared to the lands situated nearer to the developed locality. More so as all these factors are incapa ble of precise or scientific evaluation. The valuer has to indulge in some amount of guess work and make the best of the situation. The High Court having accorded anxious consideration to all these factors of uncertainty has arrived at the valuation of Rs. 7000 per acre. Says the High Court in paragraph 51 of the Judgment: “This brings up for final consideration the plots which we have described as interior plots in all the survey numbers and which do not have a frontage on the roads. A lower price will have to be provided for these plots, since the plot-holders will have to spend moneys for getting water and drainage connections which are given only upto the Municipal Roads. Then again, in our opinion, the interior plots would not be sold at all as long as any of the plots having a frontage on Pashan Road or Baner Road are sold, though once such plots have been disposed of the demand for interior plots would certainly pick up. Here again, it is impossible to be precise in fixing the value; but in our opinion the interior plots may fairly be valued at Rs. 7,000 per acre. As stated earlier, the sales of these plots would commence after all the plots having a frontage on Pashan Road and Baner Road are disposed of i.e. after 12 years, and we may say that those plots would be sold within a period of about 4 years”. 10. It is not possible to find fault with the reasoning or conclusion of the High Court. The High Court was day in and day out engaged in valuation of the lands in different parts of the state and was fully aware of the landscope. There is no yardstick by which the future can be forseen with any greater degrees of preciseness. The High Court has made the estimate as regards the time lag for development to reach the appellant's land to the best of its judgment. Having taken into account all the relevant factors, the High Court has arrived at the aforesaid -15- determination. And in doing so, the High Court has not committed any error or violated any principle of valuation. It is purely a question