BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED:16/07/2009 CORAM THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN AND THE HONOURABLE MR. JUSTICE D. HARIPARANTHAMAN Appeal Suit (MD) No.247 of 1999 And CMP (MD) Nos.7336 and 7337 of 1999 and 4147 of 2000 1.The Revenue Divisional Officer, (Land Acquisition Officer), Sivakasi. 2.The Superintending Engineer, Kamarajar Electricity Distribution Circle, Virudhunagar. .. Appellants vs. N.Janaki Ammal .. Respondent This Appeal is filed under Section 54 of the Land Acquisition Act, 1894, against the judgment and decree dated 13.1.1999 made in LAOP No.127 of 1992 on the file of the Subordinate Judge, Srivilliputhur. !For Appellants ... Mr.K.M.Vijayakumar, Additional Government Pleader. ^For Respondent ... Mr.M.S.Balasubramania Iyer for Mr.A.Sivaji. :JUDGMENT
V. RAMASUBRAMANIAN, J.
The land of the extent of 0.48.0 hectares in Survey No.357/3A1, Parapatti
Village, Hamlet of Viswanatham Village, Sathur Taluk, Sivakasi District,
belonging to the respondent herein, was acquired by the Government for the
purpose of upgrading the existing Electricity Sub Station. An award was passed
in Award No.3 of 1990 dated 26.2.1990, granting a total compensation of
Rs.51,100/-, comprising of Rs.17,784/- towards value of land, Rs.17,957.50
towards value of trees and the balance towards solatium etc.
2. On a reference under Section 18 of the Land Acquisition Act, 1894, in
L.A.O.P.No. 127 of 1992, the Tribunal, viz., Sub Court, Srivilliputhur, enhanced
the compensation to Rs.24,26,000/- together with solatium and interest, by a
judgment dated 28-4-1993. Aggrieved by such enhancement, the Referring Officer
as well as the beneficiary viz., the Tamilnadu Electricity Board filed an appeal
in A.S.No.282 of 1994, on the file of this court. Finding that the evidence of
PW-2 and his Report Ex.A-6, on the basis of which the Tribunal adopted the
capitalisation method for arriving at the compensation, was wholly unreliable,
this Court set aside the judgment of the Tribunal. However, this court remitted
the matter back to the Tribunal for a fresh consideration, in view of the
additional documents sought to be filed by both parties.
3. After remand, both parties let in additional evidence, oral as well as
documentary, and the Tribunal passed a fresh judgment dated 13-1-1999,
determining the compensation payable as Rs.21,72,000/-, to be paid together with
solatium and interest. It is against the said judgment that the Referring
Officer and the Electricity Board have come up with the present appeal.
4. We have heard Mr.K.M.Vijayakumar, learned Additional Government Pleader
appearing for the appellants and Mr.M.S.Balasubramania Iyer, learned counsel
appearing for the respondent.
5. In this case, the notification under Section 4(1) of the Act, was
approved by the Government in G.O.Ms.No.2371, Public Works Department, dated
10.12.1987. But even before the issue of the notification, the Government took
possession of the land on 28.9.1987, with the consent of the
respondent/landlady. This is seen from Exx.B-5, B-6, B-7, B-29 and B-30 and this
fact is also admitted by the respondent.
6. The land acquired, was of the extent of 0.48.0 hectares in Survey
No.357/3A1, in so far as the respondent herein is concerned. Another small
extent of land was also acquired simultaneously, but it is not the subject
matter of dispute in this appeal. It is admitted by the appellants that in the
acquired land of the extent of 0.48.0 hectares, there were a total of 405 trees,
whose break up is as follows:-
(i) Coconut - 65 (ii) Luckknow Guava - 85 (iii)Lemon - 135 (iv)Silk Cotton - 85 (v) Karuvepilai - 25 (vi)Mathulai - 10 -------- Total 405 ====
Before possession was taken over, an inspection of the land was carried out by
the Assistant Director of Horticulture, Srivilliputhur, on 20.1.1987. He
submitted a Report dated 2.2.1987, which was filed as Ex.B-9. This Assistant
Director of Horticulture was also later examined as RW-5 on the side of the
Referring Officer and Beneficiary. As per Ex.B-9 and the evidence of RW-5, the
above trees were more than two years old at the time of his inspection. The
Assistant Divisional Engineer and Assistant Executive Engineer, Tamil Nadu
Electricity Board, who took possession and handed over charge, have also
recorded in their Ex.B-7 Report that there were the above trees in the land in
question.
7. The above break up is almost admitted by the respondent/land owner and
there is no big dispute about the number and type of trees standing on the land.
The only difference in the break up given in Ex.B-9 and the break up claimed by
the respondent is with respect to Silk Cotton trees. The respondent claims that
the total number of Silk Cotton trees is 95 as against the number 85 given in
Ex.B-9. Thus there is no serious dispute on the number of trees. However there
was a dispute with regard to the age of those trees, their yield, the income
derived and the multiplier to be applied, for arriving at the market value.
While the appellants claimed that the above trees had not yet become fruit-
bearing at the time of taking possession, the respondent-landlady claimed that
the trees were more than six years old and were fruit-bearing. Therefore the
respondent wanted compensation to be paid by applying the capitalisation method.
8. But the Land Acquisition Officer accepted the Reports of the Assistant
Director of Horticulture and the Revenue Divisional Officer dated 2.2.1987 and
11.8.1987 respectively, filed as Exx.B-9 and B-32 respectively. Consequently,
the Land Acquisition Officer valued the land separately on the basis of the sale
of comparable lands in the locality and valued the trees, on the basis of the
expenditure that the landlady would have incurred, for planting, rearing and
nourishing the trees.
9. For arriving at the market value of the land alone, the Land
Acquisition Officer considered the statistics relating to 486 sales transactions
that happened in a period of 3 years immediately prior to the date of
publication of the notification under Section 4(1). Out of them, 22 transactions
were rejected on the ground that the lands covered by them were of a soil of
different quality and classification. 427 sale deeds were rejected on the ground
that they covered small extents of land sold for house site purposes only. 25
sale deeds were rejected on the ground that they related to lands situate more
than half a kilometer away from the acquired land. 8 sale deeds were rejected on
the ground that sale deeds from nearest location are available.
10. Thus, 482 out of 486 sale deeds were rejected by the Land Acquisition
Officer. Out of the remaining 4, 2 related to the sale of small extents for
house sites, made by the owner herself. Therefore they were also discarded. In
the remaining 2 sale deeds, two portions of land in Survey No.392 had been sold
at the rate of Rs.37,050/- per hectare and Rs.43,225/- per hectare respectively.
Since these two sale deeds had been registered within a gap of two days (viz.,
5.2.1986 and 7.2.1986 respectively), the Land Acquisition Officer adopted the
valuation of Rs.37,050/- per hectare, as per the sale deed document No.238 dated
5.2.1986, considered under Serial No.206 of the data sale deeds. It is relevant
to note here that the Award of the Land Acquisition Officer was filed as Ex.B-
10, the statistics relating to 486 sale deeds prepared by the Land Acquisition
Officer was filed as Ex.B-11 and the sketch of the lands, acquired as well as
surrounding, was filed as Ex.B-12.
11. After adopting the market value of the land at Rs.37,050/- per
hectare, on the basis of the sale deed dated 5.2.1986, on the ground that it
related to the land in Survey No.392, which was nearer to the acquired land in
Survey No.357/3A1, the Land Acquisition Officer proceeded further to fix the
value of the trees. For the said purpose, the Land Acquisition Officer placed
reliance upon the Report of the Assistant Director of Horticulture,
Srivilliputhur, who inspected the land on 20.1.1987 and sent a Report. In his
Report, the Assistant Director of Horticulture, fixed the age of the trees as
more than two years. Since in his opinion, the trees were not yet yielding, he
fixed the value of all the trees, other than Coconut trees, at Rs.29,967.50,
which included the value of the Pump Set Well of Rs.15,000/-. The valuation of
the trees, as stated earlier, was done by the Assistant Director of
Horticulture, by estimating the expenditure that the respondent could have
incurred in buying the saplings, planting them and nourishing them for a period
of two years. The Land Acquisition Officer found that admittedly the Well was
located outside the acquired land and hence deducted the value of the Well and
fixed the value of the trees as Rs.14,967.50. Then he added the value of the
Coconut trees estimated at Rs.2,990/-, and fixed the value of all the trees put
together at Rs.17,957.50 {Rs.14,967.50 + Rs.2,990/-}.
12. Thus, in effect, the Land Acquisition Officer estimated the value of
the acquired land measuring 0.48.0 hectares at Rs.17,784/- (at the rate of
Rs.37,050/- per hectare) and fixed the value of the trees at Rs.17,957.50. Then
he added solatium at 30% to both the above amounts and allowed interest at 12%
per annum from the date of the notification under Section 4(1) {viz.,
26.12.1987} to the date of the Award {viz., 26.2.1990}. A total amount of
Rs.51,100/- was thus arrived at by the Land Acquisition Officer, towards
compensation payable to the respondent.
13. In the reference made under Section 18 of the Act, in LAOP No.127 of
1992, the landowner examined herself as PW-1 and examined the retired Director
of Horticulture as PW-2 and filed Exx.A-1 to A-6. The Referring Officer examined
two witnesses and filed Exx.B-1 to B-12. Placing heavy reliance upon the
evidence of PW-2 and the Report given by him, filed as Ex.A-6, the Tribunal held
that the trees were fruit-bearing trees and that compensation had to be awarded
by capitalisation method. Consequently, by a judgment and decree dated
28.4.1993, the Tribunal fixed a compensation of Rs.9,20,000/- for Coconut trees,
Rs.8,17,000/- for Silk Cotton trees, Rs.4,04,000/- for Lemon trees,
Rs.2,00,000/- for Guava trees, Rs.65,000/- for Curry leaves trees and
Rs.20,000/- for Pomagranate trees, totalling to a sum of Rs.24,26,000/-. On this
amount, the Tribunal awarded solatium of 30% and interest at varying rates.
14. Aggrieved by the judgment and decree of the Tribunal, the Referring
Officer filed an appeal in A.S.No.282 of 1994 on the file of this Court. The
appeal was allowed by this Court by a judgment dated 9.11.1995, on the ground
that the evidence of PW-2 and Ex.A-6 were not reliable. However this Court
remitted the matter back to the Tribunal for a fresh consideration, since the
parties wanted to adduce additional evidence.
15. After remand, the landowner examined one more person as PW-3 and filed
Exx.A-7 to A-17 as additional documents. Similarly, the Referring Officer
examined PWs.3, 4, 5, 6 and 7 and filed Exx.B-13 to B-53.
16. Interestingly, while considering the matter afresh after remand, the
Tribunal found that among the data lands taken up for scrutiny by the Land
Acquisition Officer (486 sale deeds), there were certain lands which were
comparable to the acquired land and that the Land Acquisition Officer ought not
to have rejected them. As stated above, the land acquired was in Survey
No.357/3A1 and the Land Acquisition Officer adopted the value mentioned in the
sale deed relating to the land in Survey No.392 and arrived at the compensation
of Rs.37,050/- per hectare. The Tribunal found this to be wrong, on the ground
that the acquired land was very near Sathur-Sivakasi Road and that on the
Northern side of the acquired land, there was an Electricity Sub Station. The
Tribunal opined that the sale deeds at Serial Nos.233 and 425 of the data lands
(Ex.B-11) related to lands which were comparable to the acquired lands. These
lands were in Survey Nos.340 and 276. The land in Survey No.276, situate on the
Eastern side of the acquired land, was valued at Rs.1,93,751/- per hectare. The
land in Survey No.340 was valued at Rs.4,19,900/- per hectare. Therefore, the
Tribunal held that the Land Acquisition Officer was in error in not considering
these sale deeds which related to the lands comparable to the acquired land.
17. The Tribunal also took into account the fact that the landlady herself
had sold two small pieces of lands in Survey No.357 itself (forming the subject
matter of acquisition) under Exx.A-3 and A-4. Both Exx.A-3 and A-4 are sale
deeds dated 28.8.1986 executed by the respondent-landlady. Under Ex.A-3, the
respondent sold 5-1/6 cents in Survey No.357/3 for a value of Rs.17,500/-.
Therefore the rate per hectare would work out to Rs.8,36,613/-. Under Ex.A-4,
the respondent sold 4-1/2 cents in Survey No.357/3 for a value of Rs.15,540/-,
making the rate per hectare work out to Rs.8,52,973/-. These two sale deeds were
considered by the Land Acquisition Officer in his data sheet (Ex.B-11) at Serial
Nos.321 and 322. But the Land Acquisition Officer discarded these sale deeds on
the ground that they were executed by the very same landlady for very small
extents of land.
18. Interestingly, the Tribunal agreed with the Land Acquisition Officer
that the above two sale deeds (Exx.A-3 and A-4) cannot be taken as the basis,
since they were executed by the landlady herself. Therefore, the Tribunal held
at the end of paragraph-7 of its judgment that the Land Acquisition Officer
should have valued the acquired land at the rate of Rs.4,19,900/- per hectare,
by taking the sale transaction at Serial No.233 of the data sheet (Ex.B-11)
relating to Survey No.340.
19. Having thus concluded in paragraph-7 of its judgment that the value of
the land should have been taken as Rs.4,19,900/- per hectare, the Tribunal
dropped that conclusion without any further discussion, but proceeded to find
whether the land was a fruit-garden and how it should be valued. Therefore, the
first question that we have to consider, is whether this approach of the
Tribunal, in resorting to the capitalisation method of evaluation, is correct or
not, especially when the Tribunal found that data relating to the sale of
comparable lands were very much available.
20. It appears that the earliest decision that the Supreme Court rendered
on the several alternative methods of valuation, was in The special Land
Acquisition Officer, Bangalore vs. T.Adinarayan Setty {AIR 1959 SC 429}. It was
held in paragraph-9 therein as follows:-
“It is not disputed that the function of the Court in awarding
compensation under the Act is to ascertain the market value of the land at the
date of the notification under Section 4(1) and the methods of valuation may be
(1) opinion of experts; (2) the price paid within a reasonable time in bona fide
transactions of purchase of the lands acquired or the lands adjacent to the
lands acquired and possessing similar advantages; and (3) a number of years
purchase of the actual or immediately prospective profits of the lands
acquired.”
21. The above decision was that of a three Member Bench of the supreme
Court and it was followed by another three Member Bench in Smt. Tribeni Devi and
others vs. Collector of Ranchi {1972 (1) SCC 480}. However, the Supreme Court
also indicated the following in paragraph-4 of its decision in Tribeni Devi’s
case:-
“These methods, however, do not preclude the Court from taking any other
special circumstances into consideration, the requirement being always to arrive
as near as possible an estimate of the market-value. In arriving at a reasonably
correct market-value, it may be necessary to take even two or all of those
methods into account inasmuch as the exact valuation is not always possible as
no two lands may be the same either in respect of the situation or the extent or
the potentiality nor is it possible in all cases to have reliable material from
which that valuation can be accurately determined.”
22. In The State of Madras vs. Rev. Brother Joseph {1973 (2) SCC 504}, the
Land Acquisition Officer himself adopted the method of capitalising the net
income at 20 years’ purchase, for valuing Coconut and Orange Topes. Therefore
the Supreme Court approved of the same, without laying down as a principle of
law as to the number of years of purchase at which capitalisation should be
made.
23. Interestingly, in The State of West Bengal vs. Shyamapada {AIR 1975 SC
1723}, the Supreme Court directed the application of 20 years’ annual income,
for a land on which sabai grass was grown. However, it is seen from paragraph-4
of the said decision that the Supreme Court decided to apply the said multiplier
only on account of non-availability of sale deeds regarding sales of land on
which sabai grass was grown.
24. In Special Land Acquisition Officer vs. P.Veerabhadarappa {AIR 1984 SC
774}, the Supreme Court dealt with the principles underlying the method of
evaluation and held in paragraph-7 of its decision, as follows:-
“7.The function of the Court in awarding compensation under the Act is to
ascertain the market value of the land at the date of the notification under
Section 4(1) of the Act and the methods of valuation may be: (1) Opinion of
experts (2) The prices paid within a reasonable time in bona fide transactions
of purchase or sale of the lands acquired or of the lands adjacent to those
acquired and possessing similar advantages. And (3) A number of years’ purchase
of the actual or immediately prospective profits of the lands acquired.
Normally, the method of capitalising the actual or immediately prospective
profits or the rent of a number of years’ purchase should not be resorted to if
there is evidence of comparable sales or other evidence for computation of the
market value. It can be resorted to only when no other method is available.”
Emphasising the principle that the method of capitalisation should be adopted
only when evidence of comparable sales is not available, it was held in
paragraphs-8 and 9 of the same decision as follows:-
“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, the Court has no other alternative but to fall back
on the method of valuation by capitalisation. In valuing land or an interest in
land for purposes of land acquisition proceedings, the rule as to number of
years’ purchase is not a theoretical or legal rule but depends upon economic
factors such as the prevailing rate of interest in money investments. The return
which an investor will expect from an investment will depend upon the
characteristic of income as compared to that of idle security. The main features
are: (1) Security of the income; (2) fluctuation; (3) chances of increase; (4)
cost of collection etc. The most difficult and yet the most important and
crucial part of the whole exercise is the determination of the reasonable rate
of return in respect of investment in various types of properties. Once this
rate of return and accordingly the rate of capitalisation are determined, there
is no problem in valuation of the property.”
“It is thus clear from the above enunciation that the method of
determining the value of the property by application of a multiplier to the net
annual income or profit should only be adopted when there is no evidence of
comparable sales of similar lands in or about the neighbourhood at the relevant
time i.e., on the date of the notification under Section 4(1) of the Act. In
certain circumstances however the Court has no other alternative but to fall
back on the capitalised value.”
25. After laying down the law as aforesaid, the Supreme Court approved in
the above case, a multiplier not exceeding 10 as appropriate. However, since the
Government itself took a stand in that case that the multiplier of 12-1/2 would
be appropriate, the Supreme Court allowed a multiplier of 12-1/2. This can be
seen from paragraph-21 of the above decision which reads as follows:-
“21. In the premises, when the rate of return on investment was 8.25% in
the years 1971 and 1972, a person investing his capital in agricultural lands
would ordinarily expect 2% to 3% more than what he could obtain from gilt-edged
securities or other forms of safe investment and therefore the proper multiplier
to be applied for the purpose of capitalisation could not in any event exceed
“ten”. In the present case, the State Government however contends that the
proper multiple to be applied should be 12-1/2 in computation of the capitalised
value of the lands in these cases having regard to the rate of return of 8% at
the relevant time i.e., on the date of the notification under Section 4(1) of
the Act. In view of this, it must be held that the multiple of 12-1/2 should be
applied in computation of the capitalised value of the lands.”
26. The dicta laid down in P.Veerabhadarappa’s case, was quoted with
approval in Koyappathodi M. Ayisha Umma vs. State of Kerala {AIR 1991 SC 2027}.
However, the Supreme Court also added therein that it is open to the Court to
take into account some special circumstances in an appropriate case. It was held
in paragraph-4 as follows:-
“It is settled law that the methods of valuation to be adopted in
ascertaining the market value of the land as on the date of the notification
are:(i) opinion of experts (ii) the price paid within a reasonable time in bona
fide transaction of the purchase or sale of the lands acquired or the lands
adjacent to the lands acquired and possessing similar advantages and (iii) a
number of years purchase of the actual or immediately prospective profits of the
lands acquired. These methods, however, do not preclude the Court from taking
any other special circumstances obtained in an appropriate case into
consideration. As the object being always to arrive as near as possible in an
estimate of the market value in arriving at a reasonable correct market value,
it may be necessary to take even two or all those matters into account inasmuch
as the exact valuation is not always possible as no two lands may be the same
either in respect of the situation or the extent or the potentiality nor is it
possible in all cases to have reliable material from which that valuation can be
accurately determined.”
After referring to P.Veerabhadarappa’s case, the Supreme Court further held in
the same paragraph, as follows:-
“In Special Land Acquisition Officer vs. P.Veerabhadarappa {(1984) 2 SCR
386: AIR 1984 SC 774}, this Court held that the method of valuation by
capitalisation should not be resorted to when other methods are available.
However, 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, the Court has no other alternative but to fall back
on the method of valuation by capitalisation. In valuing land or an interest in
land for purposes of land acquisition proceedings, the rule as to number of
years’ purchase is not a theoretical or legal rule but depends upon economic
factors such as the prevailing rate of interest in money investments. The return
which an investor will expect from an investment will depend upon the
characteristic of income as compared to that of idle security. The main features
are: (1) security of the income; (2) fluctuation; (3) chances of increases; (4)
cost of collection, etc. The traditional view of capitalised value being linked
with gilt-edged securities, no longer be rigorous when investment in
fixed deposits with nationalised banks, National Savings Certificates, Unit
Trusts and other forms of Government securities and even in the share market
command a much greater return are available. The capital in agricultural lands
normally when the rate of return on investment was 8.25 per cent in the years
1971-1972, the proper multiplier to be applied for the purpose of capitalisation
would not, in any event, exceeding 10 per cent.”
27. In Additional Special Acquisition Officer vs. Yamanappa Basalingappa
Chalwadi {1994 (3) SCC 323}, the Supreme Court followed the ratio in
P.Veerabhadarappa’s case, but applied 10 years multiplier, since data of sale of
comparable lands was not available.
28. In K.A.A.Raja and others vs. State of Kerala {1994 (5) SCC 138}, the
Supreme Court held that it would be necessary in every case to place a correct
report before the Reference Court about the number of trees, their age, their
yield etc., when capitalisation method is adopted. Ultimately, the Supreme Court
took 7 years’ multiplier in that case, for want of appropriate evidence.
29. In State of Haryana vs. Gurcharan Singh and Another {1995 Supp. (2)
SCC 637}, a compensation for the land was awarded on the market value.
Additionally compensation for fruit-bearing trees was also awarded separately.
The Supreme Court held that the compensation for the land as well as fruit-
bearing trees, cannot be determined separately. Coming to the multiplier to be
adopted, the Supreme Court held in paragraph-3 of the said decision as follows:-
“Under no circumstances, the multiplier should be more than a 8 years’
multiplier, as it is a settled law of this Court in a catena of decisions that
when the market value is determined on the basis of the yield from the trees or
a plantation, 8 years’ multiplier should be the appropriate multiplier. For
agricultural land 12 years’ multiplier should be a suitable multiplier.”
30. In Collector, Land Acquisition vs. Ganaram Dhoba {1996 (1) SCC 631},
the Supreme Court held the application of a multiplier of 16 to be illegal. In
paragraph-4, it was held that “it is settled law that multiplier of 10 would be
the proper multiplier to determine the compensation when the land is assessed on
the basis of the yield on agricultural lands”.
31. Again in Special Land Acquisition Officer vs. Virupax Shankar
Nadagouda {1996 (6) SCC 124}, the Supreme Court found fault with the application
of the multiplier of 15 and held that 10 years’ multiplier would be the proper
method. While holding so, the Supreme Court specifically followed the decision
in P.Veerabhadarappa’s case.
32. In State of Gujarat vs. Rama Rana {1997 (2) SCC 693}, the Supreme
Court again reiterated in paragraph-5, the principle of law propounded in
P.Veerabhadarappa’s case. It was held in paragraph-5 as follows:-
“It is undoubtedly true that one of the methods of determination of
compensation, in the absence of best evidence, namely, sale deeds, is the
realised value of the crop.”
After holding so, the Supreme Court allowed a multiplier of 10 and directed a
deduction of 50% towards cultivation expenses, since the Court found that both
parties failed to produce the best evidence, namely, the sale deeds.
33. In Thakarsibhai Devjibhai vs. Executive Engineer {2001 (9) SCC 584},
the Supreme Court approved that part of the judgment of the High Court which
followed the decision in P.Veerabhadarappa’s case. In paragraph-9, the Supreme
Court held as follows:-
“The High Court for this relied on Special Land Acquisition Officer vs.
P.Veerabhadarappa, to hold that yield method can be referred only when there is
no other evidence in the form of sale transaction or opinion of experts
available.”
However, on a different ground the order of the High Court was found fault with.
34. In Krishi Utpadan Mandi Samiti vs. Malik Sartaj Wali Khan {2001 (10)
SCC 660}, the Supreme Court referred to the decisions in Virupax Shankar
Nadagouda, Rama Rana and Koyappathodi M. Ayisha Umma cases and ultimately held
that the multiplier of 10 years would be appropriate for fixing the value of the
land.
35. In Airports Authority of India vs. Satyagopal Roy {2002 (3) SCC 527},
the Supreme Court quoted with approval the decision in P.Veerabhadarappa’s case
and held in paragraph-8 as follows:-
“8. It is settled law that in evaluating the market value of the acquired
property namely land and building or the land with fruit-bearing trees standing
thereon, value of both is to be determined not as separate units but as one
unit. Therefore, it would be open to the Land Acquisition Officer or the Court,
either to assess the land with all its advantages and fix the market value
thereof on the basis of comparable sale instances. In case where comparable sale
instances are not available and where there is reliable and acceptable evidence
on record of the annual income, market value could be assessed and determined on
the basis of net annual income multiplied by appropriate multiplier for its
capitalisation. In the case of fruit-bearing trees, their net yield is to be
taken into consideration, that is to say, by deducting expenses incurred for
getting the yield and also the value of the timber and expenses to cut and
remove the trees from the land. For capitalising the income, previously income
from the gilt-edged securities was the basis, but thereafter rate of interest in
the Nationalized Banks where deposits are quite safe is taken into consideration
as the proper basis.”
36. In Airports Authority of India’s case, the Supreme Court also referred
to the decision in Shanti Devi’s case and Gurcharan Singh’s case and ultimately
held that the High Court was error in not applying 8 years multiplier following
Gurcharan Singh’s case. The adoption of the multiplier of 18 by the High Court
was held by the Supreme Court (in paragraph-14) to be clearly erroneous.
However, considering the small amount of compensation, the Supreme Court did not
ultimately interfere in the matter, applying dicta in State of Madras vs. Rev.
Brother Joseph.
37. In Assistant Commissioner-cum-Land Acquisition Officer, Bellary vs.
S.T.Pompanna Setty {2005 (9) SCC 662}, the Supreme Court held in paragraph-15
that normally where compensation is awarded on yield basis, multiplier of 10 is
considered proper and appropriate.
38. In Land Acquisition Officer, A.P. vs. Kamadana Ramakrishna Rao and
Another {2007 (3) SCC 526}, the Supreme Court referred to the decisions in
P.Veerabhadarappa’s case, V.S.Nada Gouda’s case and Pompanna Setty’s case and
held that the application of multiplier of 20 was contrary to the well settled
proposition of law.
39. Thus the law laid down in P.Veerabhadarappa’s case {AIR 1984 SC 774}
has held the field for the past 25 years and has been cited with approval in all
decisions upto Kamadana Ramakrishna Rao’s case {2007 (3) SCC 526}. Therefore the
capitalisation method of valuation of the acquired land is permissible only in
the absence of evidence of comparable sales or in the absence of other evidence
for computation of market value.
40. Despite the above well settled proposition of law, the Tribunal
adopted the capitalisation method, in the case on hand, even after recording in
paragraph-7 of its judgment that there is evidence of comparable sales available
on record. In the last line of paragraph-7 of its judgment, the Tribunal held
very clearly that the sale of the land in Survey No.340 mentioned at Serial
No.233 of the data sheet Ex.B-11, is a comparable sale and the sale value
indicated in that document could be taken as the guiding factor. After recording
this finding, there was no scope for the Tribunal, in view of the law laid down
by the Supreme Court to adopt the capitalisation method. Hence the approach of
the Tribunal in our considered view, is clearly erroneous.
41. Even if for the sake of argument, the sale deed at Serial No.233 of
the data sheet (Ex.B-11) relating to Survey No.340 is discarded, the landlady
herself had produced two sale deeds as Exx.A-3 and A-4. These sale deeds relate
to the sale of 5-1/6 cents and 4-1/2 cents respectively in the very same Survey
Number viz., 357/3. The acquired land is also in Survey No.357/3. Both these
sale deeds Exx.A-3 and A-4 were executed by the respondent herself in favour of
third parties, for a consideration of Rs.17,500/- and Rs.15,540/- respectively.
On the basis of this value, the value per hectare works out to Rs.8,36,613/-
under Ex.A-3 and Rs.8,52,973/- under Ex.A-4. Since the land acquired is less
than half a hectare viz., 0.48.0 hectares, the market value of the land
acquired, would only be a little above Rs.4,00,000/-.
42. Interestingly, the sale of small pieces of land under Exx.A-3 and A-4
by the respondent-landlady in the very same Survey Number, had taken place on
28.8.1986, just around the time when the officials of the Electricity Board
started surveying the land with a proposal for its acquisition for the expansion
of the Sub Station. In fact, the earliest letter seeking the consent of the
respondent for the acquisition, was filed as Ex.B-48. It is dated 9.9.1986. The
letter of consent given by the respondent-landlady, agreeing for the acquisition
of the land in question, is filed as Ex.B-30. It is seen from Ex.B-30 that it
was given by the respondent, in reply to the letter of the Divisional Engineer,
Electricity Board, dated 18.11.1986. It is only after this consent letter Ex.B-
30, that the Superintending Engineer of the Electricity Board writes a letter
dated 8.12.1986 filed as Ex.B-29, to the District Revenue Officer, requesting
him to initiate the process of acquisition.
43. Therefore, the above circumstances indicate that the sale of small
extents of land by the respondent in the very same Survey Number under Exx.A-3
and A-4 dated 28.8.1986, might have happened, perhaps, when the proposal for
acquisition was in the offing. Even according to the respondent, as seen from
her deposition as PW-1, the total extent of land in Survey No.357/3 was 4 acres,
out of which the land acquired was of the extent of acres 1.19. Therefore, the
quality of soil in the small pieces sold under Exx.A-3 and A-4, in the very same
Survey Number, could not have been different from the quality of soil in the
acquired land. Hence it is clear that the respondent-landlady herself had
estimated the market value of the land in Survey No.357/3 only at about
Rs.8,36,613/- per hectare. In such circumstances, the adoption of the
capitalisation method of valuation, by the Tribunal, is wholly unjustified.
44. Apart from adopting the capitalisation method, the Tribunal also
committed another error viz., that of placing reliance upon the evidence of PW-2
and his Report Ex.A-6. Even in the first round in A.S.No.282 of 1994, this Court
rejected the evidence of PW-2 and his Report Ex.A-6 and remanded the matter back
to the Tribunal, giving liberty to the parties to lead additional evidence. In
paragraph-3 of its judgment, dated 9.11.1995, passed in A.S.No.282 of 1994, the
Division Bench commented as follows:-
“A perusal of his deposition along with the report Ex.A-6 shows that the
witness is not speaking the truth and he has prepared the report only to help
the claimant to claim high compensation.”
Despite the above finding of the Division Bench of this Court, the Tribunal
again relied upon the evidence of PW-2 and his Report Ex.A-6, on a strange
reasoning that after remand, he was recalled and re-examined.
45. PW-2 claimed in his evidence that he first inspected the land in
January 1980 and advised the landlady to resort to high density farming. He
further claimed that he visited the Farm five time thereafter, the last time
being on 6.6.1987. He admitted that he served the State Government as the
Director of Horticulture from 1983 till the date of his retirement in April
1987. His admission shows that during the period from 1980 to 1987, he was a
Government Servant, but he did not seek the permission of the Government either
to tender advise to a private party or to submit a Report in their favour,
especially in respect of a land acquisition case. Therefore, his evidence is
unacceptable, without going into the question whether his conduct was deplorable
or not.
46. We have one more reason to discredit the evidence of PW-2. According
to him, the respondent developed the land into a farm land and planted saplings
in the year 1981, on his advise. But in the consent letter, filed as Ex.B-30,
the landlady had claimed that she had planted about 415 trees of different
varieties, in the year 1983. This consent letter Ex.B-30, was sent by the
respondent in response to the letter of the Divisional Engineer dated
18.11.1986. In the second paragraph of Ex.B-30, the respondent-landlady claimed
as follows:-
“In the required area by you, I had planted in the year 1983, the
following varieties of fruit trees in near about 1.18 acres”
47. The above statement in Ex.B-30 was the one made at the earliest point
of time by the respondent-landlady. Therefore, the credibility of that statement
is much more than that of the statements made subsequently, apart from the fact
that the probability of the same is also much more. The above statement of the
landlady in Ex.B-30 that the saplings were planted in 1983, also almost tallies
with the age of the trees given in the Inspection Report of the Assistant
Director of Horticulture, dated 2.2.1987, filed as Ex.B-9.
48. In the first round, the author of Ex.B-9, viz., the Assistant Director
of Horticulture, was not examined as a witness. The Division Bench held in
A.S.No.282 of 1994 that no reliance can be placed on Ex.B-9 unless further
evidence is adduced regarding its contents. Therefore, after remand, the
Assistant Director of Horticulture was examined as RW-5 and he confirmed the
inspection made by him on 20.1.1987 and the Report given by him on 2.2.1987. He
had stated in Ex.B-9 Report that there were 65 Coconut trees, 85 Guava trees,
135 Lemon trees, 85 Silk Cotton trees, 25 Curry leaves trees and 10 Pomagranate
trees, totalling to 405 trees and that they were more than 2 years old. His
evidence and Report were challenged by the respondent only on the ground that he
inspected the property without notice to the landlady. But, in our considered
view, such a challenge is a very weak challenge and it does not appeal to us,
for more than one reason.
49. The Report Ex.B-9, dated 2.2.1987, was submitted at least 7 months
before the landlady handed over possession. The parties were not in dispute at
the time of the inspection on 20.1.1987 and at the time of the Report, dated
2.2.1987. On the contrary, the parties were on consensus ad idem, at that time,
since the consent letter of the respondent was given in November/December 1986
and the inspection by RW-5 (Assistant Director of Horticulture) was done in
January 1987. Moreover, the contents of Ex.B-9 Report, with regard to the total
number of trees and the nature of the trees, is almost accepted by the
respondent except to the extent of 10 trees. The only dispute that the
respondent has about Ex.B-9 Report is with regard to the age of the trees
mentioned therein as just more than 2 years. But the respondent herself had
claimed in her letter Ex.B-30 (extracted earlier) that the trees were planted in
the year 1983. Therefore, the contents of Ex.B-9 Report, read with the oral
testimony of RW-5 appear to be unassailable.
50. The evidence of RW-5 and his Report Ex.B-9, in our considered view,
appear to be well balanced and not one sided, for the following reasons:-
(a) The number of each category of trees is correctly mentioned (except in
respect of Silk Cotton trees).
(b) The Report records the fact that the landlady had put up a bore well
and was irrigating the trees with 1 HP Jet Motor Pump, through rubber tubes.
(c) The Report also records the fact that the farm is well maintained,
though due to severe draught, for 2 years, the plants had not grown as
anticipated.
(d) The Report records that the soil has lime content and was suited for
cultivating lemon.
(e) The Report further records that because of being a farm, the value of
the land should be more.
(f) It is also recorded in the Report that the plants may start yielding
after 3 years and that the Guava plants have reached the stage of flowering.
(g) As per the Report, Lemon was the primary cultivation and all other
plants were inter-crops.
(h) The Report concludes that once Lemon and other plants start yielding,
the farm would become a fully developed one and the value of the land would then
increase manifold.
51. In the light of the above findings in Ex.B-9, it is highly
uncharitable on the part of the respondent, to attribute any motives to RW-5 and
his Report Ex.B-9. We are more than convinced that Ex.B-9 reflects the true
state of affairs of the land acquired, since (i) most of its contents (such as
number of trees, variety of trees etc.) are accepted by the respondent and (ii)
the dispute raised by the respondent with regard to the age of the trees, fails
in the light of the admission in Ex.B-30.
52. Apart from the fact that as per Ex.B-30, the saplings were planted
only in 1983, the claim of the respondent that the trees had started yielding
and that she was deriving a huge income, is belied by several other factors
also. The claim of the respondent was that she was deriving an income of about
Rs.5,00,000/- per annum. But she admitted that she was not assessed to
agricultural income tax. This was also confirmed by RW-3. By a letter dated
30.11.1993, filed as Ex.B-40, the Assistant Collector, Sivakasi, called for
information from the Agricultural Income Tax Officer. He sent a reply on the
same day, filed as Ex.B-41 to the effect that as per the General Index Registers
of Sathur Taluk, for the period from 1984-85 to 1991-92, the respondent was not
assessed to agricultural income tax. The concerned Register relating to payment
of agricultural income tax, for the fasli years 1391 to 1402 was also filed as
Ex.B-28. We are not for a moment, carried away by the non payment of
agricultural income tax by the respondent, to reach the conclusion that the
trees in the acquired land were not fruit-bearing and had not started yielding.
We are only taking note of the non payment of agricultural income tax as a
corroborative or additional factor, in support of the conclusion that we have
reached in the previous paragraphs.
53. In the light of the above discussion, we hold that the capitalisation
method of valuation adopted by the Tribunal, is wholly illegal and
unsustainable, especially in view of –(i) the clear evidence as well as
admission available on record with regard to comparable sales and (ii) the
unimpeachable evidence to the effect that the trees were not fruit-bearing and
had not started yielding.
54. Now coming to the compensation to be fixed, on the basis of the
evidence of comparable sales, it is seen that Exx.A-3 and A-4 relate to the sale
of small extents of land in the very same Survey Number, which is the subject
matter of the acquisition. The sale of land in Survey No.340 appearing at Serial
No.233 in the data sheet (Ex.B-11), which is accepted by the Tribunal to be
capable of a close comparison, is nevertheless situate at a distance. Though the
value indicated in Exx.A-3 and A-4 are not accepted both by the Land Acquisition
Officer and by the Tribunal, on the sole ground that those sale deeds were by
the respondent herself, we are of the considered view that the same can be
accepted. This is in view of the fact that these sale deeds are dated 28.8.1986.
The first letter seeking the consent of the landlady was sent only on 9.9.1986
under Ex.B-48. Though an element of suspicion is created, it is not established
categorically by the appellants that Exx.A-3 and A-4 were created by the
landlady for the purpose of jacking up the value of the property, in
anticipation of acquisition. Moreover, the sale of the land in Survey No.340
which is adopted by the Tribunal as an indicator, is actually situate at a
distance of just less than a kilometer from the acquired land. In Ex.B-12
sketch, the Land Acquisition Officer has shown the lands lying within a radius
of 1 kilometer from the acquired land. Survey No.340 is towards the end of the
radius. Therefore, we reject the comparison between the land in Survey No.340
and the acquired land and we accept Exx.A-3 and A-4.
55. In accepting the value indicated in Exx.A-3 and A-4, there is an
inherent advantage viz., that the respondent can be pinned down by her own
valuation of the land in the very same Survey Number. Therefore we take the
market value of the land, as reflected in Ex.A-3, as the basis. In Ex.A-3, 5-1/6
cents have been sold at Rs.17,500/-. Hence the rate per cent is about Rs.3,387/-
. The land acquired is of the extent of acres 1.19. Therefore the market value
for the entire extent of the land acquired would come to Rs.4,03,064/-.
56. In so far as the trees are concerned, we accept the valuation given by
the Assistant Director of Horticulture under Ex.B-9. In other words, we allow an
amount of Rs.14,967.50 for other trees and an amount of Rs.2,990/- for Coconut
trees, totalling to Rs.17,957.50. We round it off to Rs.18,000/-.
57. Thus the total amount of compensation payable to the respondent would
be as follows:-
Rs.
Value of the land - 4,03,064.00 Value of the trees - 18,000.00 --------------- Total - 4,21,064.00 =========
58. Coming to the question of interest, it is an admitted fact that
possession of the land was taken over by consent even before the notification
under Section 4(1). However, under Section 23(1-A) of the Land Acquisition Act,
1894, interest is payable at 12% per annum from the date of the notification
till the date of the Award or till the date of taking possession, whichever is
earlier. If the provision is literally construed, the respondent may not get any
interest from the date of possession till the date of the Award. However, under
Section 17(2), the appellants ought to have offered to the respondent,
compensation for the trees standing on the land, at the time of taking
possession. Under Sub Section (3-A) of Section 17, the Collector is obliged to
tender payment of 80% of the compensation, before taking possession. If the
Collector was prevented from making such payment, he should deposit the same
into Court, as provided under Section 31(2). But admittedly, the appellants in
this case did not make any payment at the time of taking over possession, as per
Section 17(2) or 17(3-A). Therefore the appellants are obliged to pay interest
as per Section 34 at the rate of 9% per annum from the date of possession till
the date of expiry of one year. Since the compensation is enhanced, the
appellants should also pay interest on the excess amount at 9% per annum under
Section 28 from the date of possession. Thus, in effect, the respondent would be
entitled to interest uniformly at the rate of 9% per annum from the date of
possession till the date of deposit already made into Court, on the entire
amount of compensation as fixed now in this appeal.
59. Accordingly we allow the appeal and modify the judgment of the
Tribunal in LAOP No.127 of 1992 dated 13.1.1999 by fixing the amount of
compensation payable to the respondent as Rs.4,21,064/-. The respondent will be
entitled to solatium at 30% on the said amount and interest at the rate of 9%
from 28.9.1987 (the date of possession) till the date on which the appellants
deposited the money in pursuance of the interim orders passed in A.S.No.282 of
1994.
60. It is seen from the records that during the pendency of the appeal in
the first round in A.S.No.282 of 1994, the appellants were directed to deposit a
portion of the Award and the respondent was permitted to withdraw 25% of the
same, after furnishing a Bank Guarantee. The respondent accordingly withdrew a
total amount of Rs.19,61,230/-, after furnishing the Bank Guarantee. In its
judgment dated 9.11.1995 in A.S.No.282 of 1994, the Division Bench ordered Bank
Guarantee to continue till the disposal of the LAOP after remand. After the
Tribunal passed a fresh judgment, the Bank Guarantee expired. The application
filed by the appellants for a direction to the respondent to renew the Bank
Guarantee, did not see the light of the day. However, the respondent has filed
an affidavit of undertaking, agreeing and undertaking not to alienate her some
other properties. The respondent has also filed a Valuation Report. Therefore
the property covered by the affidavit of undertaking should not and could not
have been sold by the respondent so far. The respondent should refund the excess
amount already withdrawn by her, after adjusting the amount due to her as per
this judgment. The respondent is granted two months time to deposit into the Sub
Court, Srivilliputhur, to the credit of LAOP No.127 of 1992, the excess amount
together with simple interest at 6% per annum, from the date of withdrawal of
the money till the date of deposit into Court. Till the money is deposited by
the respondent, there shall be a charge on the other properties of the
respondent. If excess amount is not deposited, it will be open to the appellants
to invoke the power conferred by Section 17(3-B).
61. In the result, the appeal is allowed to the following effect:-
(a) The judgment and decree of the Sub Court, Srivilliputhur, dated
13.1.1999 in LAOP No.127 of 1992 is modified and the compensation payable to the
respondent is fixed at a total amount of Rs.4,21,064/-, together with solatium
of 30% and interest at the rate of 9% from 28.9.1987 till the date of deposit
made by the appellants in A.S.No.282 of 1994.
(b) The appellants shall be entitled to proportionate costs in this
appeal.
(c) The respondent shall make a deposit of the excess amount now lying
with her, together with simple interest at the rate of 6% per annum from the
date of her withdrawal of the money till the date of her redepositing the same,
within two months, to the credit of LAOP No.127 of 1992 on the file of the Sub
Court, Srivilliputhur and upon such deposit, the appellants are permitted to
withdraw the same.
(d) Till the respondent deposits the excess amount before the Sub Court,
the affidavit of undertaking filed by the respondent shall remain in force and
there shall be a charge on the other properties of the respondent, for the
amount due from her.
62. The appeal is allowed on the above terms. Consequently connected
miscellaneous petitions are closed.
Svn
To
1.The Revenue Divisional Officer,
(Land Acquisition Officer),
Sivakasi.
2.The Superintending Engineer,
Kamarajar Electricity Distribution Circle,
Virudhunagar.