17 December 2004
Supreme Court


Case number: C.A. No.-008245-008245 / 2004
Diary number: 13939 / 2003



CASE NO.: Appeal (civil)  8245 of 2004

PETITIONER: Assistant Commissioner-cum-Land Acquisition Officer, Bellary

RESPONDENT: Sri S.T. Pompanna Setty

DATE OF JUDGMENT: 17/12/2004

BENCH: Ruma Pal & C.K. Thakker


(Arising out of Special Leave Petition (c) No. 16181 of 2003)

Thakker, J.

               Delay condoned.   

               Leave granted.

               This appeal is directed against an order dated November 14,  2002 passed by the High Court of Karnataka at Bangalore in MFA No.  270 of 1996 (LAC).  By the said order, the High Court dismissed the  appeal filed by the appellant herein and confirmed the order passed by  the Reference Court on September 11, 1995 in L.A.C.  No. 72 of 1984.                 The facts in brief are that a piece of land bearing Survey No.  335/7, admeasuring 5.99 acres situated at Sovenahalli village, Sandur  Taluk was acquired for restoration of Sovenahalli tank for the village.    A notification under Section 4(1) of the Land Acquisition Act, 1894  (hereinafter referred to as "the Act") was issued and published in  Karnataka Gazette on October 7, 1982.  After completion of the  proceedings under the Act and after observing all formalities, the Land  Acquisition Officer awarded compensation at the rate of Rs.2,728/- per  acre to the claimant vide his award dated January 25, 1984.  The  claimant received the amount of compensation under protest and  submitted an application 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 Civil Judge at Hospet. The  Reference Court observed that the Land Acquisition Officer had not  considered the fertility and potentiality of the acquired land with other  lands in respect of which sale transactions were on record.  It also  stated that the land in question, as disclosed in the award, had irrigation  facilities in view of the presence of two wells on the land.  The Court  also found that there were fruit bearing trees on the land - Mango 72,  Margosa 10, Tamarind 60, Coconut 1, Sandal wood 1, Neerala 1, Hatti  1, Kanaga 1 and others 90.  The Reference Court, after considering  evidence of the claimant as well as his two witnesses, held that the  claimant was entitled to enhanced compensation.  Considering the  income of fruit bearing trees, the Court held that if it is multiplied by  capitalization of 15 years, the claimant would be entitled to an amount  more than six lacs.  In view of the fact, however, that the claimant had  claimed compensation of Rs. five lacs, he would not be entitled to  more.  But the amount claimed by him cannot be said to be  unreasonable or excessive and accordingly the said amount was  awarded.  The reference was thus allowed and the claimant was held  entitled to Rs. five lacs along with interest as mentioned in the order.  



The said order was confirmed by the High Court which is challenged in  the present appeal.  

               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.  Secondly, it was contended that the  Reference Court had erroneously applied multiplier of 15 for  capitalizing the income. Such multiplier should not be more than 10.    On both these grounds, therefore, according to the learned counsel, 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 claimant, on the other hand, submitted  that having considered the rival contentions of the parties and keeping  in view the evidence on record, the Reference Court enhanced  compensation to be payable to the claimant and the High Court rightly  did not think it proper to interfere with the said order. The present  appeal, therefore, deserves to be dismissed.

               Having given our anxious consideration to the submissions of  the parties and having considered the relevant decisions of this Court,  we are of the view that the appeal deserves to be partly allowed.   

               So far as first point is concerned, the learned counsel for the  appellant relied upon a decision of this Court in State of Gujarat vs.  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  case, 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  claimant which was confirmed by the High Court.  He, therefore,  submitted that the award deserves interference.

               Learned counsel for the claimant, on the other hand, submitted  that the ratio laid down in Rama Rana does not apply to the facts of the  case.  The case on hand relates to fruit bearing trees and not agriculture.   It is in evidence that the trees were sufficiently old and grown up and  were giving fruits and it has been deposed by the claimant and his  witnesses.  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 orders passed by the Reference Court and 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 would not stricto sensu apply in the present case  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 claimant would be entitled to much more amount  on yield-basis but as he had claimed an amount of Rs. five lacs, nothing  more could be paid to him.  It, therefore, cannot be said that by not



deducting the amount of expenses for cultivation, the courts below had  committed any illegality.  The first contention, therefore, in the facts of  the case, is rejected.

               Let us now consider the second point.  This Court in Special  Land Acquisition Officer, Bangalore vs. T. Adinarayan Setty, (AIR  1959 SC 429) held that in awarding compensation under the Act, the  Court has to ascertain market value of the land at 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 vs. 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 it would be possible in  all cases to have reliable material from which such valuation can be  accurately determined.    

               In Special Land Acquisition, Davangere vs. P.  Veerabhadarappa & Others, (1984) 2 SCC 120, this Court held that  when capitalization method for valuation is applied, proper multiplier  should be 10.  As in that case, the State Government submitted that  proper multiplier was 12\026=, the computation was made on that basis.   Similarly, in Special Land Acquisition Officer vs. Virupax Shankar  Nadagouda, (1996) 6 SCC 124, relying on P. Veerabhadarappa, this  Court determined compensation on the basis of 10 years’ multiplier.   Again, in Krishi Utpadan Mandi Samiti vs. Malik Sartaj Wali Khan  and Another, (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.

               From the above cases, it is clear that normally in the cases  where compensation is awarded on yield basis, multiplier of 10 is  considered proper and appropriate.  In the case on hand, multiplier of  15 has been applied which is on a higher side.   To that extent,  therefore, the submission of the learned counsel for the appellant is well  founded and deserves to be accepted.  At the same time, however, it  cannot be over looked that the High Court considered the fact and  observed that the claimant would be entitled to an amount of more than  Rs. six lacs.  Since he had restricted his claim to Rs. five lacs, he would  not be entitled to an amount more than that.  In the facts and  circumstances, therefore, in our opinion, ends of justice would be met if  we hold that the claimant would be entitled to Rs.4,75,000/- (Rupees  four lacs seventy five thousand only) along with interest as awarded to  him by the Reference Court as well as by the High Court.

               For the foregoing reasons, in our opinion, the appeal deserves  to be partly allowed and is allowed by reducing the amount of  compensation to Rs.4,75,000/- (Rupees four lacs seventy five thousand  only).  The rest of the directions are not disturbed.  In the facts and  circumstances of the case, there shall be no order as to costs.