Acquisition Officer, A. P. Vs. Kamadana Ramakrishna Rao & Anr.  Insc 105 (7
C. K. Thakker & Lokeshwar Singh Panta
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
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
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 claimantsrespondents 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 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
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 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
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.
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 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.