JUDGMENT : V. SRISHANANDA, J. 1. Claimants who lost the land for construction of a tank are appellants challenging the judgment and award passed by the Reference Court dated 18.02.2006 in LAC No. 288/2005. 2. Facts in brief which are utmost necessary for disposal of the appeal are as under: 2.1. Respondents acquired land belonging to the appellants in Korakoppa village under LAQ SR No. 120/2002-03 vide preliminary notification dated 12.02.2004 for construction of a minor irrigation tank. 3. Being not satisfied with the quantum of compensation awarded by the Land Acquisition Officer, claimants preferred an application under Section 18 of the Land Acquisition Act to the Reference Court. 4. Reference Court, on consideration of the oral and documentary evidence placed on record, enhanced the compensation at the rate of Rs. 1,80,000/- per acre. 5. Being not satisfied by the same, claimants are in appeal. 6. Reiterating the grounds urged in the appeal memorandum, counsel for the appellants contended that for similar purpose lands in Sattigeri village were acquired and compensation was awarded by the Reference Court in a sum of Rs. 1,80,000/- in the year 1997 and present lands were acquired in the year 2004. Therefore, there must be addition of 10% per year. 7. Per contra, learned High Court Government Pleader contended that in such circumstances, addition of 2 to 4% per year would be the just compensation and sought for passing suitable orders. 8. In the case on hand, acquisition of the land belonging to claimants as under is not in dispute. S. No. LAC Nos. Sy. No. of Sattigeri and Korakoppa Village in Saundatti Tq. Area of the lands acquired A---G---A 1 282/2005 169/3 02-08-00 2 280/2005 127 03-20-00 3 281/2005 165 02-28-00 4 283/2005 170/1 02-05-00 5 284/2005 170/02 02-08-00 126/1B 02-17-00 6 285/2005 172 02-35-00 (5-31) 01-09-00 (4.04) 7 286/2005 174 02-25-00 8 287/2005 9/1 00-29-00 9 288/2005 10 01-04-00 14/1 04-10-00 10 289/2005 12 01-05-00 11 290/2005 14/3 03-00-00 12 1/2006 128 03-08-00 9. Reference Court, took into consideration the fact that the notification of the year 1997 for the similar purposes and awarded Rs. 1,80,000/- as compensation per acre. 10. Unlike the purchase of land by a prospective purchaser, land acquisition is a forcible takeover of privately owned land by the government for a stated “public purpose”. Reference Court, took into consideration the fact that the notification of the year 1997 for the similar purposes and awarded Rs. 1,80,000/- as compensation per acre. 10. Unlike the purchase of land by a prospective purchaser, land acquisition is a forcible takeover of privately owned land by the government for a stated “public purpose”. The said public purpose may include government projects, public private partnership projects or may be totally private projects. 11. It is pertinent to note that Land Acquisition results in loss of land to its owner permanently. Therefore, land looser is to be compensated in terms of money judiciously by awarding just compensation. 12. Consequences of land acquisition is not only an economic issue but also a question of human rights. Therefore, Courts are expected to take into account every factor which would assist in assessment of the just compensation for acquired land. 13. Judicial pronouncements time and again have emphasised what is a just compensation. Assessment of just compensation includes the following: (i) Due consideration to potentiality of the land in a question. (ii) Highest sale exampler placed on record by land owner regarding value of land. (iii) Cumulative increase of computation of interest and solatium. (iv) Correct evaluation of value mentioned in the sale deed placed before the Court. 14. However, usually the Courts should depend on the sale sampler method and judicial presidents whenever such evidence is available on record. Other effective method which is applied in the absence of sale sample method is the capitalization method. 15. In regard to assessment of just compensation the Hon’ble Apex Court has considered as to what are the factors that needs to be considered while assessing the potentiality of the land that has been acquired in the case of P. Ram Reddy vs. Land Acquisition Officer, Hyderabad, 1995 (2) SCC 305 , has held as under: “9. An acquired land could be regarded as that which has a building potentiality, if such land although was used on the relevant date envisaged under section 4(1) of the LA Act for agricultural or horticultural or other like purposes or was on that date even barren or waste, had the possibility of being used immediately or in the near future as land for putting up residential, commercial, industrial or other buildings. However, the fact that the acquired land had been acquired for building purposes, cannot be sufficient circumstance to regard it as a land with building potentiality, in that, under clause (4) of section 24 of the LA Act that any increase to the value of land likely to accrue from the use to which it will be put when acquired, is required to be excluded. Therefore, wherever, there is a possibility of the acquired land not used for building purposes on the relevant date envisaged under Section 4(1) of the LA Act, of being used for putting up buildings either immediately or in the near future but not in the distant future, then such acquired land would be regarded as that which has a building potentiality. Even so, when can it be said that there is the possibility of the acquired land being used in the immediate or near future for putting up buildings, would be the real question. Such possibility of user of the acquired land for building purposes can never be wholly a matter of conjecture or surmise or guess. On the other hand, it should be a matter of inference to be drawn based on appreciation of material placed on record to establish such possibility. Material so placed on record or made available must necessarily relate to the matters such as: (i) the situation of the acquired land vis-a-vis, the city of the town or village which had been growing in size because of its commercial, industrial, educational, religious or any other kind of importance or because of its explosive population. (ii) the suitability of the acquired land for putting up the buildings, be they residential, commercial or industrial, as the case may be. (iii) possibility of obtaining water and electric supply for occupants of buildings to be put up on that land. (iv) absence of statutory impediments or the like for using the acquired land for building purposes. (v) existence of highways, public roads, layouts of building plots or developed residential extensions in the vicinity or close proximity of the acquired land. (vi) benefits or advantages of educational institutions, health care centres, or the like in the surrounding areas of the acquired land which may become available to the occupiers of buildings, if built on the acquired land. (v) existence of highways, public roads, layouts of building plots or developed residential extensions in the vicinity or close proximity of the acquired land. (vi) benefits or advantages of educational institutions, health care centres, or the like in the surrounding areas of the acquired land which may become available to the occupiers of buildings, if built on the acquired land. (vii) lands around the acquired land or the acquired land itself being in demand for building purposes, to specify a few. The material to be so placed on record or made available in respect of the said matters and the like, cannot have the needed evidentiary value for concluding that the acquired land being used for building purposes in the immediate or near future unless the same is supported by reliable documentary evidence, as far as the circumstances permit. When once a conclusion is reached that there was the possibility of the acquired land being used for putting up buildings in the immediate or near future, such conclusion would be sufficient to hold that the acquired land had a building potentiality and proceed to determine its market value taking into account the increase in price attributable to such building potentiality. 12. Hence, whether the acquired land has building potentiality or not, while has to be decided upon reference to the material to be placed on record or made available by the parties concerned, the market value of the acquired land with building potentiality, is also required to be determined with reference to the material to be placed on record or made available in that regard by the parties concerned and not solely on surmises, conjectures or pure guess.” 16. How a market value of the acquired land is to be determined is also no longer res-integra. 17. The Hon’ble Apex Court in the case of Major General Kapil Mehra and Others vs. Union of India and Another, (2015) 2 SCC 262 has enunciated the following consideration. Relevant portion of the judgment is culled out hereunder: “10. Market Value: First question that emerges is what would be the reasonable market value which the acquired lands are capable of fetching. While fixing the market value of the acquired land, the Land Acquisition Officer is required to keep in mind the following factors: (i) existing geographical situation of the land. (ii) existing use of the land. Market Value: First question that emerges is what would be the reasonable market value which the acquired lands are capable of fetching. While fixing the market value of the acquired land, the Land Acquisition Officer is required to keep in mind the following factors: (i) existing geographical situation of the land. (ii) existing use of the land. (iii) already available advantages, like proximity to National or State Highway or road and/or developed area. (iv) market value of other land situated in the same locality/village/area or adjacent or very near to the acquired land. 11. The standard method of determination of the market value of any acquired land is by the valuer evaluating the land on the date of valuation publication of notification under Section 4(1) of the Act, acting as a hypothetical purchaser willing to purchase the land in open market at the prevailing price on that day, from a seller willing to sell such land at a reasonable price. Thus, the market value is determined with reference to the open market sale of comparable land in the neighbourhood, by a willing seller to a willing buyer, on or before the date of preliminary notification, as that would give a fair indication of the market value. 12. In Viluben Jhalejar Contractor vs. State of Gujarat, (2005) 4 SCC 789 , this Court laid down the following principles for determination of market value of the acquired land: (SCC pp. 796-797, Paras 17-20) “17. Section 23 of the Act specifies the matters required to be considered in determining the compensation; the principal among which is the determination of the market value of the land on the date of the publication of the notification under sub-section (1) of Section 4. 18. One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefore. It is beyond any cavil that the price of the land which a willing and informed buyer would offer would be different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not. 19. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. 19. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered. 20. The amount of compensation cannot be ascertained with mathematical accuracy. A comparable instance has to be identified having regard to the proximity from time angle as well as proximity from situation angle. For determining the market value of the land under acquisition, suitable adjustment has to be made having regard to various positive and negative factors vis-a-vis the land under acquisition by placing the two in juxtaposition......” 13. The courts adopt comparable sales method for valuation of land while fixing the market value of the acquired land. Comparable sales method of valuation is preferred rather than methods of valuation of land such as capitalization of net income method or expert opinion method, because it furnishes the evidence for determination of the market value of the acquired land at which the willing purchaser would pay for the acquired land if it had been sold in the open market at the time of issuance of notification under Section 4 of the Act. 14. While taking comparable sales method of valuation of land for fixing the market value of the acquired land, there are certain factors which are required to be satisfied and only on fulfillment of those factors, the compensation can be awarded according to the value of the land stated in the sale deeds. In Karnataka Urban Water Supply and Drainage Board and Others vs. K.S. Gangadharappa and Another, (2009) 11 SCC 164 , factors which merit consideration as comparable sales are, inter-alia, laid down as under: “8.16....... “9. It can be broadly stated that the element of speculation is reduced to minimum if the underlying principles of fixation of market value with reference to comparable sales are made: (i) when sale is within a reasonable time of the date of notification under Section 4(1). (ii) It should be a bona fide transaction. (iii) It should be of the land acquired or of the land adjacent to the land acquired. (iv) It should possess similar advantages. 10. (ii) It should be a bona fide transaction. (iii) It should be of the land acquired or of the land adjacent to the land acquired. (iv) It should possess similar advantages. 10. It is only when these factors are present, it can merit a consideration as a comparable case [See Land Acquisition Officer vs. T. Adinarayan Setty, AIR 1959 SC 429 ]. These aspects have been highlighted in Ravinder Narain vs. Union of India, (2003) 4 SCC 481 .” 18. Having borne in mind the above principles while assessing the market value of the land, the Courts cannot loose sight of the escalation or increase in the market value of the acquired land, whenever the acquired land if not acquired in the same period of time. 19. As per the settled principles of law, four primary elements that would determine increase in the land prices in a rural area are: (i) location of land. (ii) development of neighborhood. (iii) extent of land that can been developed in that area. (iv) market value for the land in the vicinity in the rural area. 20. It is the common experience that the escalation of the value of the land usually remain static without any unexpected spikes and surges in rural areas. But in urban or same urban areas there would be a significant higher rate of escalation of the market prices over a period of time. 21. The Hon’ble Apex Court in the case of General Manager, Oil and Natural Gas Corporation Limited vs. Rameshbhai Jivanbhai Patel and Another, (2008) 14 SCC 745 observed that the significant difference in increases in the market value in urban and semi urban areas. 22. While so observing the Hon’ble Apex Court has held that if the said increase can be assessed as 10% to 15% per annum in urban and semi urban areas corresponding increase in rural areas would be escalation in 5% to 7.5% percent per annum. Relevant portion of the said judgment is culled out hereunder for ready reference: “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. Relevant portion of the said judgment is culled out hereunder for ready reference: “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/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. Much more unsafe is the recent trend to determine the market value of acquired lands with reference to future sale transactions or acquisitions. To illustrate, if the market value of a land acquired in 1992 has to be determined and if there are no sale transactions/acquisitions of 1991 or 1992 (prior to the date of preliminary notification), the statistics relating to sales/acquisitions in future, say of the years 1994-95 or 1995-96 are taken as the base price and the market value in 1992 is worked back by making deductions at the rate of 10% to 15% per annum. How far is this safe? One of the fundamental principles of valuation is that the transactions subsequent to the acquisition should be ignored for determining the market value of acquired lands, as the very acquisition and the consequential development would accelerate the overall development of the surrounding areas resulting in a sudden or steep spurt in the prices. Let us illustrate. Let us assume there was no development activity in a particular area. The appreciation in market price in such area would be slow and minimal. Let us illustrate. Let us assume there was no development activity in a particular area. The appreciation in market price in such area would be slow and minimal. But if some lands in that area are acquired for a residential/commercial/industrial layout, there will be all round development and improvement in the infrastructure/ amenities/facilities in the next one or two years, as a result of which the surrounding lands will become more valuable. Even if there is no actual improvement in infrastructure, the potential and possibility of improvement on account of the proposed residential/commercial/industrial layout will result in a higher rate of escalation in prices. As a result, if the annual increase in market value was around 10% per annum before the acquisition, the annual increase of market value of lands in the areas neighbouring the acquired land, will become much more, say 20% to 30%, or even more on account of the development/proposed development. Therefore, if the percentage to be added with reference to previous acquisitions/sale transactions is 10% per annum, the percentage to be deducted to arrive at a market value with reference to future acquisitions/sale transactions should not be 10% per annum, but much more. The percentage of standard increase becomes unreliable. Courts should therefore avoid determination of market value with reference to subsequent/future transactions. Even if it becomes inevitable, there should be greater caution in applying the prices fetched for transactions in future. Be that as it may.” 23. However this thumb-rule is general trend which is to be adopted in the absence of clear and specific evidence as to increase in land value while considering the escalation. 24. In a somewhat similar situation in the case of Udho Dass vs. State of Haryana, (2010) 12 SCC 51 , the Hon’ble Apex Court has considered said aspect of the matter and has held as under: “18. Concededly, the Act also provides for the payment of the solatium, interest and an additional amount but we are of the opinion, and it is common knowledge, that even these payments do not keep pace with the astronomical rise in prices in many parts of India, and most certainly in North India, in the land price and cannot fully compensate for the acquisition of the land and the payment of the compensation in driblets. The 12% per annum increase which Courts have often found to be adequate in compensation matters hardly does justice to those land owners whose land have been acquired as judicial notice can be taken of the fact that the increase is not 10 or 12 or 15% per year but is often upto 100% a year for land which has the potential of being urbanized and commercialized such as in the present case. Be that as it may, we must assume that the landowners were entitled to the compensation fixed by the High Court on the date of the award of the Collector and had this amount been made available to the landowners on that date, it would have been possible for them to rehabilitate their holdings in some other place. This exercise has been defeated for the simple reason that the payment of compensation has been spread over almost two decades.” 25. Thus, the escalation of land value by 12% per annum is an adequate escalation where the land has got potential of being urbanized or commercialized within a short reasonable span of time. But when there is no proper evidence placed on record as to the escalation of the land value in the adjoining area of the acquired land, there would not be any best evidence available by sale sampler method. When such best evidence is not available in a given case, escalation of 12% of the land value per annum may not be permissible in a given case. 26. Applying the above principles of law to the case on hand, taking note of the situation of the acquired land which is in rural area and the same is being acquired for the purpose of construction of tank, escalation of 7% per year compensation awarded for the similar land in the year 1997 being Rs. 1,80,000/- would meet the ends of justice. 27. Since the said notification is of the year 1997 and the present acquisition is of the year 2004, minimum of 7% of the value to be added per year to a sum of Rs. 1,80,000/- on the ground of escalation of land value. 28. Accordingly, the market value is to be fixed by adding 7% per year for seven years which would work out to a sum of Rs. 2,68,200/- as against Rs. 1,80,000/-. Solatium of 30% on Rs. 2,68,200/- is Rs. 1,80,000/- on the ground of escalation of land value. 28. Accordingly, the market value is to be fixed by adding 7% per year for seven years which would work out to a sum of Rs. 2,68,200/- as against Rs. 1,80,000/-. Solatium of 30% on Rs. 2,68,200/- is Rs. 80,460/- 12% additional market value from 12.02.2004 to 30.05.2005 for a period of 652 days i.e. the period between the preliminary notification and the date of taking possession is to be added which is Rs. 57,490/-. 29. Therefore, claimants would be entitled to Rs. 4,06,150/- per acre as against Rs. 1,80,000/- per acre. 30. Hence, the following: (i) Appeal is allowed. (ii) Claimants would be entitled to Rs. 4,06,150/- in all, per acre, for the loss of lands to the extent as referred to supra. (iii) No order as to costs.