Electricity Board Vs. Livisha Etc. Etc.  Insc 650 (18 May 2007)
S.B. Sinha & Markandey Katju
With CA 1810/06, 1938/06, 1939/06, CA 2774/2007 @ SLP(C) 2658/05, CA
2773/2007 @ SLP(C) 26214/05, CA 2772/2007 @ 1020/06, CA 2771/2007 @ SLP(C)
6451/06, CA 3769/06 and CA 145/07.
S.B. SINHA, J.
1. Leave granted in SLPs.
2. These appeals involving common questions of law and fact were taken up
for hearing together and are being disposed of by this common judgment. What
would be the amount of compensation for the trees cut and removed by the Kerala
State Electricity Board, a body corporate, constituted and incorporated under Electricity
(Supply) Act, 1948 is the question involved in these appeals. Indisputably,
amount of compensation for the said purpose is determined in terms of the
provisions of Section 10, Part
III of the Indian
Telegraph Act, 1885.
3. Before we embark upon the said question, we may notice the amount of
compensation that has been determined by the Appellant-Board as also by the Reference
Court being the District Judge.
4. Trees have been cut and removed for drawal of 110 K.V. Electric Line. The
Board/Land Acquisition Officer determined the amount of compensation whereupon
reference was made. The learned District Judge while determining the amount of
compensation followed a judgment of 5 Judge Bench of the Kearla High Court in
Kumba Amma v. K.S.E.B. [2000 (1) KLT 542], holding that annuity thereof shall
be calculated on the basis of 5% return. Revision applications having been
filed thereagainst. The High Court in some cases, as noticed hereinbefore,
enhanced the amount of compensation, fixing the rate of diminution at 50%
instead of 40%.
5. It is not in dispute that the High Court of Kerala at different point of
time took different views in the matter. To begin with, in Kerala Electricity
Board v. Thomas [1961 KLT 238], it was held that the principle which should be
resorted to for the said purpose is annuity method. Fair return of 5% interest
per annum was held to be reasonable for calculating the amount of compensation.
Allegedly, the Board was following the principle laid down in the said judgment
in determining the amount of compensation.
6. The question again came up for consideration before the High Court in
K.S.E. Board v. Marthoma Rubber Co. Ltd. reported in 1981 KLT 646, wherein a
Full Bench of the said Court opined that it would be safe to adopt the means of
return on a fixed deposit for the usual period of 5 years or 63 months
whichever is held reasonable and anticipated return for long term basis. The
usual bank rate of interest at the relevant point of time was 10% for long term
deposits, i.e., over 5 years. The said rate of interest was adopted by the
Board to be a fair return and the amount of annuity was being calculated on the
said basis. However, in Kumba Amma (supra), a 5 Judge Bench of the High Court
opined that inflation was a relevant factor which should be taken into
consideration while computing the amount of compensation for destruction of
7. We may, however, notice that in one of the impugned judgments, a learned
Single Judge of the High Court held :- "The court below has fixed the land
value at Rs.20,000/- per cent and the rate of diminution at 40%. Taking
Exhibits A1 and A2 produced, the lower court is correct in fixing the land
value at Rs.20,000/- per cent cannot be the reasonable land value in this case.
Hence I fix the land value in this case at Rs.30,000/- per cent. So also the
rate of diminution in land value is fixed at 50% instead of 40% fixed by the
court below. The order passed by the court below is modified accordingly."
No reason has been assigned in support of the above view. The materials
placed on record were not analysed. Why such a view was taken also does not
appear from the records of the case. The amount of compensation is required to
be determined keeping in view the purpose and object of the statute. There
cannot be any fixed formula therefor or the other. Although, undoubtedly one
formula laid down, may assist the Board and/or Reference Court to apply the
same but there cannot be hard and fast rule in this behalf.
A fixed formula for determining the amount of compensation although may make
the task of the Land Acquisition Officer or the Reference Court easier but in
our opinion each case is required to be taken on its own merit. We may hasten
to add that the purpose and object of the Act and the methodology laid down
therein for the purpose thereof should be the guiding factor. The 5 Judges
Bench of the Kerala High Court referred to a large number of decisions which
are applicable in the cases of death or fatal accident. It is from that point
of view that the 5 Judges Bench proceeded to consider as to what is meant by
'real rate of interest'. Ultimately opining that 5% return as held in the case
of Thomas (supra) and not a higher rate of interest as observed in K.S.E Board
(supra) should be the guiding factor, it was held :- "The dispute in this
case arose when trees standing in petitioners' property were cut down on
9.9.1980. The respondents have not made available before us any material to
show that the real rate of interest in 1980 was something different from 5%.
Their only contention based on 1981 KLT 646 is that what is relevant is the
prevalent rate of interest which was 10%. This contention we have already
rejected, as such rate does not take into account the factor of inflation.
Under these circumstances, we hold that the rate of interest to be applied
in the present case is 5%.
We hasten to add that we should not be understood as having laid down 5% as
the real rate of interest for subsequent period. The rate of interest
applicable in India has been held as 4% by Jagannadha Rao, J. in AIR 1988 AP
89. 11 years have lapsed after the above judgment. Whether it should be the
same rate of return that has to be applied for the period before and after the
above judgment or whether a higher or lower rate, is a matter to be decided in
appropriate cases where relevant data is available. Till such time, the Board
will adopt 5% as rate of return. But, we make it clear that cases finally
concluded by decisions of the Court will not be reopened."
8. The Indian
Telegraph Act was enacted to amend the law relating to telegraphs in India.
Section 51 of the Indian Electricity
Act, 1910 reads as under:- "51. Exercise in certain cases of powers of
telegraph authority.- Notwithstanding anything contained in sections 12 to 16
(both inclusive) and sections 18 and 19, the State Government in the case of
intra-State transmission system, may, by order in writing, for placing of
electric supply- lines, appliances and apparatus for the transmission of energy
or for the purpose of telephonic or telegraphic communication necessary for the
proper coordination of works, confer upon any public officer, licensee or any
other person engaged in the business of supplying energy to the public under
this Act, subject to such conditions and restrictions (if any) as the State
Government may think fit to impose, and to the provisions of the Indian
Telegraph Act, 1885 (3 of 1885), any of the powers which the
telegraph-authority possesses under the Act, with respect to the placing of
telegraph-lines and posts for the purposes of a telegraph established or
maintained by the Government or to be so establishment or maintained."
9. Both telegraph lines and electrical lines are required to be drawn over
the agricultural lands and/or other properties belonging to third parties. In
drawing such lines, the entire land cannot be acquired but the effect thereof
would be diminution of value of the property over which such line is drawn.
The Telegraph Act, 1885 provides for the manner in which the amount of
compensation is to be computed therefor. Section 10 of the Act empowers the
authority to place and maintain a telegraph line under, over, along or across,
or posts in or upon any immovable property. Section 11 empowers the officers to
enter on property in order to repair or remove telegraph lines or posts.
Section 12 empowers the authority to grant permission for laying down such
lines to a local authority in terms of clauses (c) & (d) of the proviso to
Section 10 of the Act subject to reasonable conditions as it may think fit.
Section 16 of the said Act reads as under :- "16. Exercise of powers
conferred by section 10, and disputes as to compensation, in case of property
other than that of a local authority.- (1) If the exercise of the powers
mentioned in section 10 in respect of property referred to in clause (d) of
that section is resisted or obstructed, the District Magistrate may, in his
discretion, order that the telegraph authority shall be permitted to exercise
(2) If, after the making of an order under section (1), any person resists
the exercise of those powers, or, having control over the property, does not
give all facilities for their being exercised, he shall be deemed to have
committed an offence under section 188 of the Indian Penal Code, 1860 (45 of
(3) If any dispute arises concerning the sufficiency of the compensation to
be paid under section 10, clause (d), it shall, on application for that purpose
by either of the disputing parties to the District Judge within whose
jurisdiction the property is situate, be determined by him.
(4) If any dispute arises as to the persons entitled to receive
compensation, or as to the proportions in which the persons interested are
entitled to share in it, the telegraph authority may pay into the court of the
District Judge such amount as he deems sufficient or, where all the disputing
parties have in writing admitted the amount tendered to be sufficient or the
amount has been determined under sub-section (3), that amount; and the District
Judge, after giving notice to the parties and hearing such of them as desire to
be heard, shall determine the persons entitled to receive the compensation or,
as the case may be, the proportions in which the persons interested are
entitled to share in it.
(5) Every determination of a dispute by a District Judge under sub-section
(3), or sub-section (4) shall be final:
Provided that nothing in this sub-section shall affect the right of any
person to recover by suit the whole or any part of any compensation paid by the
telegraph authority, from the persons who has received the same."
10. The situs of the land, the distance between the high voltage electricity
line laid thereover, the extent of the line thereon as also the fact as to
whether the high voltage line passes over a small track of land or through the
middle of the land and other similar relevant factors in our opinion would be
determinative. The value of the land would also be a relevant factor. The owner
of the land furthermore, in a given situation may lose his substantive right to
use the property for the purpose for which the same was meant to be used.
11. So far as the compensation in relation to fruit bearing trees are
concerned the same would also depend upon the facts and circumstances of each
12. We may, incidentally, refer to a recent decision of this Court in Land
Acquisition Officer, A.P. v. Kamandana Ramakrishna Rao & Anr. reported in
2007 AIR SCW 1145 wherein claim on yield basis has been held to be relevant for
determining the amount of compensation payable under the Land Acquisition Act,
same principle has been reiterated in Kapur Singh Mistry v. Financial
Commission & Revenue Secretary to Govt. of Punjab &
Ors. 1995 Supp. (2) SCC 635, State of Haryana v. Gurcharan Singh & Anr.
1995 Supp. (2) SCC 637, para 4, and Airports Authority of India v.
Satyagopal Roy & Ors. (2002) 3 SCC 527. In Airport Authority (Supra), it
was held :- "14. Hence, in our view, there was no reason for the High
Court not to follow the decision rendered by this Court in Gurucharan Singh's
case and determine the compensation payable to the respondents on the basis of
the yield from the trees by applying 8 years' multiplier. In this view of the
matter, in our view, the High Court committed error apparent in awarding compensation
adopting the multiplier of 18."
13. We are, therefore, of the opinion that the High Court should consider
the matter afresh on the merit of each matter having regard to the fact
situation obtaining therein. The impugned judgments, therefore, cannot be
sustained. These are set aside accordingly. The matters are remitted to the
High Court for consideration thereon afresh. The appeals are allowed. In the
facts and circumstances of the case, there shall be no order as to costs.