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PETITIONER: THE MANIPUR TEA CO. PVT. LTD.

       Vs.

RESPONDENT: THE COLLECTOR OF HAILAKANDI

DATE OF JUDGMENT:       13/12/1996

BENCH: K. RAMASWAMY, G.T. NANAVATI

ACT:

HEADNOTE:

JUDGMENT:                THE 13TH DAY OF DECEMBER 1996 present:                Hon’ble Mr.Justice K. Ramaswamy                Hon’ble Mr.Justic G.T.Nanavati      Dr.A.M.Shighvi, Sr.Adv.,   Manoj  Arora, Ms.S.Hazarika, Ms.H.Wahi, Advs. With him for the appellant      S.N.Chaudhary, Sr.Adv.  and S.A.Syed, Adv. with him for the Respondent                          O R D E R      The following Order of the Court was delivered:      Leave granted.      We have heard learned  counsel on both sides.      These appeals  by special leave arise from the judgment of Division  Bench of  Assam High  Court, made on August 17, 1992 in  First Appeal  Nos.67/87 and  11-14/88. Notification under Section  4(1) of  the Land  Acquisition Act, 1894 (for short, the  "Act") were  published on  5.9.1981,  21.9.1982, 23.9.1982 and  24.9.1982 acquiring 123 Bighas 11 Cottahs and 13 Chitaks  of the appellants’ tea Estate for laying Railway tracks. The  Collector by his award dated March 19, 1985 and also by  another award  dated  March  25,  1985  awarded  in respect of  the  lands  acquired  a  sum  of  Rs.17,59,975/- against  the   total  claim   of  Rs.1,77,92,238/-   on  the computation made  in that Court enhanced the compensation to Rs.43,89,038/- with  solatium, and  interest thereon  in the sum  of   Rs.67,60,730/-  has  been  awarded  as  additional compensation.  On   appeal,  the   High  Court  reduced  the compensation from  Rs.43,89,038 to  Rs.40,89,038/-.  feeling aggrieved by  the impugned judgment, these appeals have been filed by the appellant.      Dr. A.m.  Singhvi, learned senior counsel appearing for the  appellant,   contents  that  the  High  Court  and  the reference Court  committed a  grievous error in relying upon the sale  statistics earlierelied on by the Land Acquisition Officer without examining any witness which formed basis for his award.  The Courts  also had wrongly rejected three sale deeds Exs.17(1)  to 17(3)  proved on behalf of the appellant and, therefore  is clear  error  of  law  in  reaching  that conclusion. On  the  face  of  it,  we  find  force  in  the contention. The  sale  statistics  relied  on  by  the  Land

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Acquisition Officer  are not  unless persons  connected with the sale  deeds and  the documents,  also made  part of  the record, are  examined. Therefore, the sale statistics cannot ipso facto  form a  basis to  determine the compensation. As regards the  three sale  deeds relied  on by  the appellant, both the  High Court  as well as the reference Court came to the conclusion  that they  relate to  the agricultural  land while  the   acquisition  is   in  respect  of  tea  garden. Therefore, they  could  not  form  the  basis  to  determine compensation. Moreover,  it was  also found that they relate to sale  transactions which  took place 5 years prior to the date of  the   notification published  under  section  4(1). Neither the  vendees were  examined as witnesses. Therefore, the rejection of those sale deeds is perfectly in accordance with law. They do not form any base for determination of the compensation. It  is settled  law that  the burden is on the claimants  to   prove  by   adducing  cogent,  reliable  and acceptable evidence  the market value under Section 23(1) of the   Act. The  burden does not shift over to the Government but it  is the  duty of  the duty of the Court to assess the evidence  adduced   by  the   claimants  and  determine  the compensation on  the touchstone  of prudent purchaser in the open market,  i.e., whether  he would  offer market value at the rates  proposed by the Court. The evidence has to be put to the  test whether  the sale  deed or the evidence adduced would offer  the market  value higher  than  that  has  been determined by the Land Acquisition Officer. The compensation awarded by  the Land  Acquisition Officer  is an  offer that blinds the  Government but  it is  not conclusive. It is for the claimants  to prove  as to  what would be the reasonable compensation which  the land  is capable  of fetching in the open  market.  The  question  is:  whether  the  Land  under acquisition, if  put to  the private sale in an open market, would be  capable to secure the same price as offered by way of  determination   of  the  compensation  after  compulsory acquisition. Considered  from this  perspective,  the  Court considered  the   evidence  adduced   and   determined   the compensation.  The  High  Court  and  the  reference  Court, therefore, correctly  applied the  test and  did not  accept three sale  deeds produced  by the  appellant in determining the compensation  which relate to the agricultural land; not the tea  garden or  estate. Having  rejected the  sale deeds relied on  by the appellant to do justice to the respondent, they  relied   on  sale   statistics  relied   by  the  Land Acquisition Officer.  Under these  circumstances, we  do not find any ground in the approach adopted by the Courts below.      It is  then contended  that tea  garden always  secured higher market  value than  the paddy fields. In that behalf, reliance was  placed upon  Section 42  of  the  West  Bengal Estate Acquisition  Act, 1953 and similar provision in Assam Land Acquisition  Act and  Assessment  Ordinance,  1989,  as applicable, to  show that  the market value of tea garden is required to  be determined  at the  rate twice  the value of paddy. A  distinction has  been  made  between  the  two  in determination of compensation, by the statute as tea gardens are required  to be  assessed at the rate 2-1/2 times higher than the  paddy fields.  Therefore, the  said  yardstick  is required to  be adopted  in determining the compensation. We do not agree with the contention.      The principle  of  determination  of  the  compensation under Section  23(1) of  the Act  is entirely  different and distinct from  the principles  applicable in determining the compensation under  Land Reforms Act. What is required to be determined is  the prevailing market value of the Land as on the date of the notification published under Section 4(1) of

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the Act  and, therefore,  the principle for determination of the  compensation   under  the   Land  Reforms  Act  or  the Acquisition Act has no relevance or bearing.      It  is  then  contended  that  the  courts  below  have committed error  in not  granting escalation charges for the determination of the compensation to the tea garden. In that behalf, it  is contended  that the reference Court proceeded in paragraph 30 on the be sis that the age of the tea bushes would  be  35  to  40  years.  The  report  of  the  Tocklai Experimental Station of Tea Research would indicate that the life of  the trees  would be  more than  25 to 30 years. The yield would  be more  than 25  to 30  years  and  thereafter gradually decrease.  The  Court  below  were  not  right  in determining 20  years as  the age  of the bushes and on that basis fix  the yield  per month at Rs.270/-. In fact even on the basis  of those calculations, the claimants are entitled to more  that Rs.367/-  per month.  It is  now  an  admitted position that  except one witness, Bharthakur who has stated about the age of the trees, there is no evidence in proof of the  above   statistics  given   by  the  Research  Station. Therefore, though  the Land  Acquisition Officer  had relied upon that  statement in  determining  the  compensation,  in trial, before the Court that did not ipso facto form part of the record  unless the  person connected  with the  Research Station was  examined as witness in that behalf. Admittedly, no witness has been examined. In fact, if State had filed an appeal perhaps  the things  would have  been different.  The High  Court  and  the  reference  Court  had  adopted  wrong principle of  law with  a view  to give  the benefit  to the appellant  rather   than  dismissing   its  application  for enhancement of  the compensation. The District Judge as well as the  High Court  preceded on the basis of the said report and fixed  the age  of the  bush at 20 years for the maximum yield. Therefore, we do not find any legal base to interfere with that.      Further, Dr. Singhvi says that it being an arithmetical mistake, liberty  may be  given to the claimants to approach the reference  Court for  amendment of the decree. It may do so, if  it is  open to it. The District Judge as well as the High Court have held that for the remaining 15 years the tea bushes would  give their  yield though  every year, it would gradually decrease. They have taken 200 gms. per bush as the average yield  as stated  in paragraph 30 of the award which reads as under:      "In other words, the tea bushes are      not likely  to produce  400 gms. of      made  tea   for  the  remaining  15      years. The  production will go down      gradually   till    the    economic      viability will  become zero  at the      end of 15 years. In order to assess      the quantum of viability, we are to      take the  mean of 200 gms. per year      in average  per  bush  for  the  15      years. The  yield per  bush  as  on      today  cannot  be  expected  during      next  15   years.   In   spite   of      increasing variable  costs such  as      costs of  manure  etc.  the  return      will gradually  go  down  till  its      economical viability  becomes  zero      after 15 years."      The finding  thus recorded  is a  pure question of fact considering the  economic viability, the nature of the yield and the  longevity of  the trees.  Therefore, the  reference

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Court rightly  had put  it as  200 gms. per year for average bush for 15 years and this calculation was made in paragraph 81 and the actual amount receivable, namely, (15 years X 200 gms.) (21.81 - 14.00) - 3 X 7.81 per bush - and Rs.23.43 per bush was  fixed. Under these circumstances, it was held that they are  entitled to compensation at that rate per bush and the Collector,  after deducting  the amount already paid was directed to  make the  balance payment. It being an arena of appreciation of  evidence on  the factual matrix, we are not inclined to interfere with that finding.      It is  next contended  that the  reference Court having noticed that  in three  months  an  area  of  90  Cottas  11 Chittaks was  sold on  May 21,  1979 @ Rs.2,539,68 per bigha and 18  Cottas 13 Chittaks of land was sold on March 7, 1980 @ Rs.1,268,83  per bigha  and a  further area  of 1  bigha 4 Cottas and  4 chittaks  was sold @ Rs. 4,948.45 per bigha on January 3,  1981, which  would show that there was a gradual rise  in  the  prices,  fixing  the  escalation  charges  at Rs.270/- per months was wrong; instead, escalation must be @ Rs.367/-. Thus  the principle  adopted by  the Court  is not correct in  law. In  fact, the above finding is incorrect in law for  the reason  that the  persons connected  with those sale deeds  were not examined to show the nature of the land under acquisition and of the lands under the sale deeds. The circumstances under  which the purchase came to be made, the relative distance  of the land and the respective prevailing prices in respect of those areas are the factors to be taken into account. In this case, such an attempt was not made. It was required  to be proved that there was really an increase in the  value of the land. As a matter of fact, it has to be established that  there is gradual increase, every month, in the value  of the land of that area and, therefore, when the compulsory acquisition  was made, the appellant was entitled to higher  compensation. Though the State has not approached this  Court,  we  can  hold  that  there  is  no  illegality committed by  the Courts below in granting the escalation at Rs.270/- per bush.      It is then contended that the reference Court awarded a sum of  Rs.4,71,312/- as  severance charges.  The High Court has found  that due  to the  severance, the appellant had to put not  only the  fencing but  also the drainage to protect the tea  garden and  the expenses  incurred therefor came to the tune  to  Rs.2,36,010/-.  Instead  of  adding  severance charges awarded  by the  reference Court, the High Court has reduced the  compensation. Therefore,  it committed an error of law. We find no force in the contention.      Clause thirdly,  of Section  23(1) envisages  that  the damage (if  any) sustained  by the person interested, at the time of  the Collector’s  taking possession  of the land, by reason of severing such land from his other land is required to determined  as  compensation  under  sub-section  (1)  of Section 23.  It is seen that by reason of the acquisition of the land  of the  appellant to  lay of  Railway tracks,  the contiguity of  the tea  estate was  severed and 2/3rd of the estate had  remained on  one side  and 1/3 on the other. The question  is:  what  would  be  the  compensation  for  that severance?  The  question  is  confined  to  the  extent  of expenditure. The  compensation has  to be  awarded for  such severance. It  is stated  by the  claimants that  they  were required to put up fencing for protecting the tea estate and also the drainage channel. It is sen that the High Court has proceeded on  that premise  and it  is not  a  case  of  the parties that  on account of the acquisition of the land, the tea estate  is exposed  to the  public and  the public  have access into  the tea  estate only  the railway  tracks would

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pass through  the estate  and, therefore,  setting up of the fencing or of the drainage to protect the tea estate may not be necessary.  We need  not go  into that question since the State has  not come  in appeal. Suffice it to state that the High Court  having found  that the appellant was required to set up  a fencing  and the  drainage channel,  and amount of Rs.2,36,000/- as  estimated, would be sufficient to meet the expenditure. It  being an estimate made by the appellant, we do not find any error of law warranting interference.      It is  then contended  that by operation of the proviso to section 28 of the Act, the claimants would be entitled to interest for  one year  from the date of taking possession @ 9% per  annum and  for the balance period @ 15% per annum on the enhanced compensation. We find force in the contention.      It is  sought to  be contended for respondents that the reference Court  and the  High Court  have proceeded  on the principle that  the Court has discretion to award interest @ 15% or  less and  on facts, the Court found that 9% would be reasonable rate  of interest.  We  find  that  the  approach adopted by the reference Court and High Court is not correct since the statute has given measure of amassment of interest for the  first year  @ 9% from the date of taking possession and on  expiry thereof @ 15% till date of deposit into Court on the  enhanced compensation. It is a legislative principle that the  claimant would be entitled to the rate of interest for the said period.      Under these  circumstances, though  the word  ’may’ has been used  in proviso  to Section  28 of  the Act, it has to construed as  ’shall’ and, therefore, the claimants would be entitled  to   interest  at  the  rate  of  9%  on  enhanced compensation for  one year and thereafter @ 15% till date of deposit in the Court.      The  appeals  are  accordingly  allowed  only  to  this extent. But, in the circumstances, without costs.