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CASE NO.: Appeal (civil)  6489-6490 of 2000

PETITIONER: Land Acquisition Officer, A. P.

RESPONDENT: Kamadana Ramakrishna Rao & Anr.

DATE OF JUDGMENT: 07/02/2007

BENCH: C. K. Thakker & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T

Lokeshwar Singh Panta, J.  

       These two appeals are directed against a common order  dated 11.11.1998 passed by the High Court of Judicature,  Andhra Pradesh at Hyderabad in AS No.1999/96 and AS  No.31/98.  By the impugned order, the High Court enhanced  the amount of compensation to Rs.22,000/- per acre as  against Rs.6,000/- awarded by the learned Subordinate  Judge, Eluru, West Godavari District.         These appeals are taken up and heard together and are  decided by this common judgment.         The facts, in brief, are that the State of Andhra Pradesh  issued a Notification dated 03.01.1980 under Section 4(1) of  the Land Acquisition Act, 1894 (hereinafter referred to as ’the  Act’) for the acquisition of lands admeasuring Ac 385.46 in  Borrampalem village of Chintalapudi Taluk for foreshore  submersion of Yerakalva Reservoir Scheme under Vengalaraya  Sagar Project.  Land of the claimants-respondents to the  extent of Ac 9.53 each was acquired for the said purpose.   After completion of the proceedings under the Act and after  observing all formalities, the Land Acquisition Officer awarded  compensation at the rate of Rs.1026/- per acre to the  claimants\026respondents vide his Award dated 18.05.1984.  The  claimants-respondents received the amount of compensation  under protest and submitted separate applications under  Section 18 of the Act requesting the Land Acquisition Officer  to refer the matter to the Court.  The matter was accordingly  referred to the Court of the learned Subordinate Judge, Eluru.   The Reference Court observed that the Land Acquisition  Officer had not considered the potentiality of the acquired land  with other lands of similar quality and potentiality.  However,  taking into consideration the trend in the increase of the  prices of the lands, compensation is awarded at the rate of Rs.  300/- per acre on yield basis of the crops and multiplier of 20  years capitalization was applied and an amount of Rs.600/-  per acre has been awarded to the claimants-respondents.  The  Court also found that there were no fruit-bearing trees on the  acquired lands.           The claimants-respondents, being still dissatisfied with  the enhancement of the amount of compensation awarded by  the Reference Court, filed two separate appeals under Section  54 of the Act before the High Court.         The High Court has come to the conclusion that the  Reference Court did not adopt the correct procedure in  determining the compensation, as the lands are situated in the

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important area of West Godavari District, for which the  compensation ought to have been not less than Rs. 25,000/-  per acre.  The High Court observed that for similar lands  acquired for the same purpose prior to the issue of the  Notification under Section 4 of the Act in the present cases,  the compensation was fixed at Rs. 20,000/- per acre.  If that is  taken into consideration as the basis for giving 10%  escalation, the compensation will be at Rs. 24,000/- per acre.   However, the High Court awarded the amount of  compensation at the rate of Rs. 22,000/- per acre to the  claimants-respondents, besides other benefits as prescribed  under the law.         The Land Acquisition Officer, being aggrieved against the  order of the High Court, has filed these appeals.                        We have heard learned counsel for the parties. The  learned counsel for the appellant raised two contentions.   Firstly, he submitted that the High Court has committed an  error of law in not deducting amount towards cost of  cultivation and no reasons whatsoever are given by the High  Court in its order for enhancement of the compensation from  Rs. 6,000/- per acre to Rs. 22,000/- per acre.  Secondly, it  was contended that the Reference Court had erroneously  applied multiplier of 20 for capitalizing the income. Such  multiplier should not be more than 10.  On both these  grounds, therefore, according to the learned counsel for the  appellant, the impugned order is liable to be set aside and the  order passed by the Land Acquisition Officer deserves to be  restored.         Learned counsel for the claimants-respondents, on the  other hand, submitted that having considered the rival  contentions of the parties and keeping in view the evidence on  record, the High Court awarded just and reasonable amount of  compensation to the claimants-respondents.  The present  appeals, therefore, deserve to be dismissed.         Having given our careful consideration to the  submissions of the learned counsel for the parties and after  having gone through the material on record, and having  considered the relevant decisions of this Court, we are of the  view that the appeals deserve to be dismissed.         So far as the first point is concerned, the learned counsel  for the appellant relied upon a decision of this Court in State  of Gujarat v. Rama Rana, [(1987) 2 SCC 693].  In that case,  compensation was awarded to the claimant on yield basis.  There was no sufficient evidence as to the income from  agriculture and the Reference Court noticed that the witnesses  exaggerated the yield. In the circumstances, the Reference  Court determined the market value after deducting 1/3rd  towards cultivation expenses and awarded compensation on  that basis. The High Court dismissed the appeal and  confirmed the order. The State approached this Court.  Allowing the appeal and reducing the amount of  compensation, this Court observed that it is common  knowledge that expenditure is involved in raising and  harvesting the crop and on an average, 50% of the value of the  crop realized would be spent towards cultivation expenses.  Deduction of 1/3rd, in the circumstances, was improper in  determining the compensation of the land on the basis of  yield.  The Court also applied multiplier of 10.         Learned counsel for the appellant submitted that in the  instant cases, no deduction whatsoever has been made by the  Reference Court or by the High Court.  It was submitted that  only on the basis of yield and gross income, the Reference  Court granted compensation to the claimants, which was  enhanced by the High Court without giving any plausible and  tenable reasons. He, therefore, submitted that the Award

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deserves interference.         Learned counsel for the claimants-respondents, on the  other hand, submitted that the decision in Rama Rana’s case  (supra) does not apply to the facts of these cases.  In the  present matters, upon some portion of the acquired land  cashew nut bearing trees were planted and in the rest of the  land, different variety of crops were grown.  It is in the  evidence that the trees were sufficiently old and grown up and  were giving fruits and it has been deposed by the claimants- respondents in their evidence.  Thus, there was evidence on  record to that effect.  In the circumstances, there was no  question of deduction of any amount towards expenses and  the order passed by the High Court cannot be said to be  incorrect.         In the facts and circumstances, in our opinion, the ratio  laid down in Rama Rana’s case (supra) would not strictly  apply in the present cases inasmuch as in fruit growing trees  the expenses would not be 50% as held by this Court.   Moreover, the High Court also considered an important fact  that the claimants-respondents would be entitled to much  more amount of Rs. 25,000/- per acre on yield-basis but has  fixed the market value of the land at the rate of Rs 22,000/-  per acre.  It, therefore, cannot be said that by not deducting  the amount of expenses for cultivation, the High Court had  committed any illegality.  The first contention, therefore, in the  facts of the present appeals, is rejected.         Let us now consider the second point. This Court in  Special Land Acquisition Officer, Bangalore v. T.  Adinarayan Setty, [(1959) Suppl. (1) SCR 404 : AIR 1959 SC  429] held that in awarding compensation under the Act, the  Court has to ascertain market value of the land as on the date  of Notification under Section 4(1) of the Act.  It was observed  that there were several methods of valuation, such as (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 land acquired.         In Smt. Tribeni Devi v. Collector of Ranchi, [(1972) 1  SCC 480], this Court reiterated the methods of valuation and  also stated that those methods do not preclude the Court from  taking into consideration other circumstances, the  requirement being always to arrive at the nearest correct  market value.  It was also indicated that in arriving at a  reasonably correct market value, it may be necessary to take  even two or all of those methods into account since the exact  valuation is not always possible as no two lands would be the  same either in respect of the situation or the extent or the  potentiality nor would it be possible in all cases to have  reliable material from which such valuation can be accurately  determined.         In Special Land Acquisition, Davangere v. P.  Veerabhadarappa and Ors., [(1984) 2 SCC 120], this Court  held that when capitalization method for valuation is applied,  proper multiplier should be 10.  Similarly, in Special Land  Acquisition Officer v. Virupax Shankar Nadagouda,  [(1996) 6 SCC 124], relying on P. Veerabhadarappa’s case,  this Court determined compensation on the basis of 10 years’  multiplier.  In Krishi Utpadan Mandi Samiti v. Malik  Sartaj Wali Khan and Anr., [(2001) 10 SCC 660], this Court  held that computation of compensation for determination of  market value may be carried out on yield basis and multiplier  of 10 should be applied.  Since multiplier of 20 was applied by  the High Court it was set aside by this Court by reducing the  amount of compensation.

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       Again in a recent decision in Assistant Commissioner- cum-Land Acquisition Officer, Bellary v. S.T. Pompanna  Setty, [(2005) 9 SCC 662] it is reiterated that where  compensation is awarded on yield basis, multiplier of 10 is  considered proper and appropriate.           Applying the ratio of the decisions of this Court in the  above-said cases, we are of the view that the High Court  committed no error of law or any perversity in awarding the  amount of compensation at the rate of Rs. 22,000/- per acre  to the claimants-respondents.  It is no doubt true that the  High Court has not given adequate and proper reasons in its  order, but the pith and substance of the order cannot be found  to be faulty.          The claimants-respondents have placed on record Ex. A- 2, a certified copy of the Agreement to sell and Ex. A-3, the  Registration Extract of the Sale Deed in pursuance to Ex. A-2.   PW-2, the purchaser of the land, has purchased one acre of  land for Rs. 19,800/- from Durga Prasad, a resident of  Mathannagudem village.  PW-1 has placed on record a copy of  the Award in O.P. No. 88 of 1982 (Ex. A-4), whereby and  whereunder the Reference Court enhanced the amount of  compensation at the rate of Rs. 22,000/- per acre for the land  in Mathannagudem village, which was acquired for the same  purpose.  A copy of the Award in O.P. Nos. 70 of 1982 and 71  of 1982, marked as Ex. A-5, would reveal that the Reference  Court awarded a sum of Rs. 22,000/- per acre for the lands  acquired for the same purpose in village Borrampalem.  It has  come in the evidence of PW-1 that against the said Award the  State Government preferred an appeal, which came to be  dismissed by the High Court on 10.02.1989, a certified copy  whereof was placed on record as Ex. A-6 in support of the  claims by the claimants-respondents.  The claimants- respondents made the claim of their lands at the rate of Rs.  40,000/- per acre.  The Reference Court has noticed in its  order that village Mathannagudem, village Tadavi and village  Borrampalem in which the lands of the claimants-respondents  were acquired are quite adjacent to each other.  The Land  Acquisition Officer himself awarded compensation at the rate  of Rs. 12,000/- per acre for the lands covered by S. No. 98 of  village Borrampalem vide Award Ex. A-5.   The Reference  Court has rejected the claim raised by the claimants- respondents for compensation of cashewnut plants planted in  an area to an extent of Ac. 4.50 cents in the acquired lands,  merely on the ground that no trees were found in existence on  the lands at the time of the Notification under Section 4 of the  Act or at the time of passing of the Award.  The High Court  has not recorded any finding in respect of the cashew nut  plants grown by the claimants-respondents on some portions  of the acquired land.         The Land Acquisition Officer in his order has recorded  that rain-fed crops such as horsegram, bobbara, cholum were  grown by the claimants-respondents in the acquired land No.  F. 1384 to 1388 and in F. 1388, cashew nut plants were  raised in some parts of the land to the extent of about Ac. 9.00  cents.  Therefore, the finding of the Reference Court that there  were no cashew nut trees found on the acquired land is  factually incorrect and cannot be sustained.  It has come in  the evidence of the claimants-respondents led before the  Reference Court that they had raised maize crop at one time,  which would have fetched Rs. 4,000 to Rs. 5,000 per acre to  them and other crops jowar and bobbara in the next season.   The computation of compensation for determination of market  value may be carried out on yield basis and multiplier of 20  adopted by the Reference Court in the cases on hand is on the  higher side and contrary to the well-settled proposition of law

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as laid down by this Court.  However, this Court is not  precluded from taking into consideration other circumstances  such as, the potentiality and utility of the land acquired and  awarding just compensation to the claimants who are deprived  of their lands and other property.  Keeping in view the facts  and circumstances of these cases, as discussed above, we are  of the view that the amount of compensation awarded by the  High Court at the rate of Rs. 22,000/- per acre to the  claimants-respondents is adequate, just and reasonable and  cannot be said to be excessive or unwarranted.         For the foregoing reasons, the appeals are, accordingly,  dismissed.  The parties shall bear their own costs.