Sonapur
Tea Co.(P) Ltd. Vs. State of Assam [1994] INSC
158 (3 March 1994)
Venkatachala
N. (J) Venkatachala N. (J) Ramaswamy, K.
CITATION:
1994 SCC (4) 746 JT 1994 (2) 653 1994 SCALE (1)873
ACT:
HEAD NOTE:
The
Judgment of the Court was delivered by N.VENKATACHALA, J.- There was a tea
estate in an area of 1617 bighasof land in the District of Kamrup in the State
of Assam. That tea estatewas requisitioned under the Defence of India Act, 1962
by the Government of Assam and the Defence Department of the Union was put in possession of it in the year 1963.
Derequisitioning of a portion of that tea estate having taken place immediately
thereafter, the actual tea estate which continued in possession of the Defence
Department of the Union, was reduced to an extent of 1435 bighas
of land only. However, that tea estate which was not released from requisition
before 10-1-1968, as from that date, became a property which was deemed to have
been requisitioned under the Requisitioning and Acquisition of Immovable
Property Act, 1952, to be referred to hereinafter as 'the Act', by operation of
Section 25 of the Act. Even thereafter, the tea estate continued to be in
occupation of the Defence Department of the Union
and used as before, for its defence purposes. But, the compensation payable
under the Act to Appellant 1 for its requisitioned tea estate remained
unsettled since no agreement was reached on the amount 750 of such
compensation. It appeaRsthat Appellant 1 through its Director, Appellant 2,
moved the Deputy Commissioner, District of Kamrup, who was the competent
authority under the Act, for referring the matter of determination of the just
amount of compensation payable for its tea estate to an Arbitrator, required to
be appointed there under.
Subsequently,
Shri D.C. Sangma, District Judge, Land Acquisition Department, Assam, who was
appointed as an Arbitrator by the Government of Assam, determined by his award
dated 3-10-1972, the amount of compensation payable to Appellant 1 for its
requisitioned tea estate to be a sum of Rs49,08,786.50, thus:
1.
Initial one-time compensation 1425 Bhaluka bamboo at Rs2.50 each totaling Rs3562.50
960 Jati bamboo at Rs1.50 each totaling Rs1440.00 6430 Kotah bamboo at Re 1
each totaling Rs6430.00 849 Bijuli bamboo at Rs0.50 each totaling Rs424.50 143
Raiding cane at Rs35 each totaling Rs5005.00 3288 Fuel trees at Rs20 each
totaling Rs65,760.00 2. Annual recurring compensation ,for:
(a) 21
Jam trees at Rs30 each totaling Rs630
(b)
206 Kathak trees at Rs50 each totaling Rs10,300
(c) 32
Amalkhi trees at Rs40 each totaling Rs1280
(d) 10
Teteli trees at Rs20 each totaling Rs200
(e) 03
Lemon trees at Rs30 each totaling Rs90
(/) 01
Silikha tree at Rs20 each totaling Rs20
(g)
178 Bel trees at Rs20 each totaling Rs3560
(h)
167 Mango trees at Rs60 each totaling Rs10,020
(i)
005 Madhuriam trees at Rs20 each totaling Rs100
(j)
052 Simalu trees at Rs30 each totaling Rs1560
(k)
701 Orange trees at Rs70 each totaling Rs49,070
3.
Annual recurring compensation for 153 bighas, 1 khata and 10 lechas at Rs350
per bigha for 9 yea Rs (from 8-3-1963 to 11-5-1972)
4.
Annual recurring compensation for 124 bighas, 0 khata and 2 lechas at Rs300 per
bigha for 9 yea Rs (from 8-3-1963 to 11-5-1972)
5.
Annual recurring compensation for 1157 bighas, 1 khata and 10 lechas at Rs125
per bigha for 9 yea Rs (from 8-3-1963 to 11-5-1972)
6.
Annual recurring compensation for 56, 548 tea bushes at Rs4 per tea bush for 9 yeaRs(from
8-3-1963 to 1 1-5-1972)
7.
Interest at 6 per cent per annum on total amount of compensation from 11
-5-1972 till final payment.
2.
Feeling that the said award of the Arbitrator was excessive, the Defence
Department of the Union through the Deputy Commissioner, 751 Kamrup filed an
appeal against it in the Gauhati High Court.
That
appeal was partly allowed by the High Court, in that, it set aside the award of
the Arbitrator except with regard to the compensation fixed under item 1 in the
award and remitted the case for being decided afresh by the Arbitrator, by
following the guidelines given in its judgment. But the appellants, who felt
that the guidelines of the High Court given in its judgment and required to be
followed by the Arbitrator in determining the compensation payable for the
requisitioned property - the tea estate, were not in consonance with the
principles specified in the provisions of the Act, have presented this appeal
by special leave.
3. It
was submitted by the learned counsel for the appellants that the judgment under
appeal, although is a remand order and directs the Arbitrator to make a fresh
determination of compensation for the first appellant's requisitioned tea
estate, the guidelines contained therein for determination of compensation –
(i)
that in computing recurring compensation payable for the tea estate, income
from tea bushes, fruit-bearing plants or trees or even building in such estate,
which existed at the time of requisition, shall not be taken into account, if
they were destroyed after requisitioning;
(ii) that
in computing recurring compensation payable for the tea estate, the use to
which the land of the estate is put by the occupant could alone be taken into
consideration; and
(iii)
that the compensation payable for tea bushes, fruit bearing plants and trees
growth, buildings etc. in the tea estate which were likely to be destroyed
shall be their one-time lump sum value; not being in consonance with the
relevant principles specified in the Act, were unsustainable. It was also
submitted by the learned counsel for the appellants and rightly, that the appellants
will have no objection for setting aside that portion of the judgment of the
High Court by which a lump sum compensation awarded by the Arbitrator for
fruit-bearing plants, trees and other wild growth in the tea estate was
affirmed, if such award of separate compensation for plants and trees and other
wild growth in a tea estate separately, is found by us to be unwarranted by the
provisions of the Act.
4. As
the said submissions of the learned counsel for the appellants merit our
consideration, we shall proceed to deal with them.
5. The
compensation payable for the property requisitioned under the Act must be
determined on the basis of the relevant principles or determinants specified in
the Act itself, admits of no controversy. As such principles or determinants
are specified in sub-section (2) of Section 8 of the Act, 'It would be
advantageous to advert to it. It reads:
"8.
(2) The amount of compensation payable for the requisitioning of any property
shall, subject to the provisions of sub-sections (2- A) and (2-B), consist of-
(a) a recurring payment, in respect of the period of requisition, of a sum
equal to the rent which would have been payable for the use and occupation of
the property, if it had been taken on lease for that period; and 752 (b) such
sum or sums, if any, as may be found necessary to compensate the person
interested for all or any of the following matters, namely,-
(i) pecuniary
loss due to requisitioning;
(ii) expenses
on account of vacating the requisitioned premises;
(iii) expenses
on account of reoccupying the premises upon release from requisition; and
(iv)
damages (other than normal wear and tear) caused to the property during the
period of requisition, including the expenses that may have to be incurred for
restoring the property to the condition in which it was at the time of
requisition."
6.
Sub-section (2) of Section 8, as seen, makes its provision subject to the
provisions in sub-sections (2-A) and (2-B) thereof, which envisage revision and
re-revision of recurring payment to be made in respect of requisitioned
property under clause (a) of sub-section (2). Therefore, when the need to
revise or re-revise the recurring payment required to be made under clause (a)
of sub-section (2), to meet one or the other contingencies envisaged in either
sub- section (2-A) or sub-section (2-B) arises, resort to such revision or
re-revision becomes necessary and indeed is obligatory. Since the revision or
re-revision envisaged in sub-section (2-A) or subsection (2-B) also refeRsto
recurring payment to be made for the requisitioned property under clause (a) of
sub-section (2) of Section 8, it would be advantageous to ascertain, at the
first instance, as to what is that "recurring payment", which is
required to be made for the requisitioned property under that clause (a),
inasmuch as, that recurring payment is the principal sum of compensation
payable for the requisitioned property.
7.
"Recurring payment" envisaged under clause (a) of sub- section (2) of
Section 8, as could be seen therefrom, is a sum equal to the rent which would
have been payable for the use and occupation of the requisitioned property if
it had been taken on lease during that period. The recurring payment to be made
for the requisitioned property under clause (a), therefore, must be a sum which
is equal to the rent that might be fetched by the requisitioned property, if it
had been leased for the period during which it was under requisition. Although
rent payable for a property taken on lease for a period could generally be on
yearly or monthly basis, according to the nature of the property, during the
period of subsistence of such lease, a recurring payment of compensation
envisaged in clause (a) to be made for the requisitioned property has to be
fixed on yearly basis, if it is agricultural land or on quarterly basis, if it
is any other type of property, as is indicated in Rule 9(2) of the Rules made
under the Act.
8.
Thus the sum of compensation envisaged under clause (a) of subsection (2) of
Section 8 as "the recurring payment" being a sum equal to rent
payable for the requisitioned property, during the period of requisition, as if
it is the period of lease, the only course permitted by that clause is, to
assess 753 the rental of the requisitioned property on yearly basis, if it is
an agricultural land or on quarterly basis, if it is any other property, for
payment as an annual recurring payment of compensation or quarterly recurring
payment of compensation, as the case may be, for the requisitioned property.
Then, as to what sum of compensation becomes payable for the requisitioned tea
estate (an agricultural land with tea plantations), as annual recurring payment
under clause (a) of sub-section (2) of Section 8, cannot be anything other than
the annual rental it would have fetched during the requisitioned period, if it
had been leased out during that period. of course, the period of years for
which the annual recurring payment determined becomes payable, must be
according to sub-section (2-A) or sub- section (2-B), where any of them
requires its application.
9.
When a tea estate is requisitioned under the Act, it becomes necessary to find
out the rental which it could have fetched, if the whole of the tea estate had
been leased during the years of requisition. Necessity to find out the rental
of the whole tea estate arises because proper management of the 'tea estate'
which is subject to regulatory measures contained in the Tea Act, 1953, is not
otherwise feasible. When such rental is found out, fixing the sum of recurring
payment to be made for it under clause (a) of sub-section (2) of Section 8 of
the Act will pose no problem. The best evidence of rental of a requisitioned
tea estate cannot be anything other than the rental fetched by it, if it was
the subject of lease earlier to requisitioning. Rental fetched earlier or
subsequently under any lease of a comparable tea estate lying in the
surrounding area or in any other similar areas, could also prove to be of
advantage. When there is evidence of such rental paid or payable under
comparable leases of tea estates, ascertainment of the approximate amount of
rental which could have been fetched by the requisitioned tea estate during the
period of requisitioning could be done by making additions or deductions in the
rent paid or payable under comparable leases depending upon the differential
plus or minus factors involved in a given situation. When the rent of
requisitioned tea estate is so ascertained, it will not be difficult to fix the
recurring payment to be made for that tea estate under clause (a) of subsection
(2) of Section 8. But if the evidence of comparable leases needed for fixing
the recurring payment to be made under clause (a) of sub-section (2) of Section
8 for a requisitioned tea estate is not available, next thing to do is, to look
to the evidence of net income from the very tea estate got by its owner or
occupier during three to five years previous to its requisitioning and find out
there from as to what could have been the net annual income which could have
been got by the person entitled to the same in the years during which it was
under requisition. As to what is required to be made good by way of recurring
payment to the owner or lessee or other person entitled to get it, for loss of
occupation and user of the requisitioned property during the period of its
requisitioning, it must be noted, is not the annual income lost by such person
because of requisitioning but what is lost to him by way of annual rental.
Therefore, what becomes necessary is, to find out what would have been +,he
annual rental fetched by the requisitioned property if it was fetching certain
annual net income. It would be so for the reason 754 that the annual rental
which may be fetched by a property cannot be equal to annual net income likely
to be got by such property, in that, no person would take a property on lease,
if he has to pay the whole of its annual income, as annual rent. In the absence
of evidence as to how much amount could be paid as annual rental by a lessee of
a requisitioned property, such as a tea estate, it would not be unreasonable to
proceed on the basis that no lessee would be ready to pay annual rental of more
than two-third likely annual net income from such tea estate, that is, without
the possibility of keeping to himself, a marginal profit of at least one-third
annual net income, having regard to investment, trouble and risks which he as a
lessee undertakes by taking such property on lease.
10.
The net annual income of a tea estate during the concerned years, if is found
to be either on increase or decrease with the passage of yeaRsand normal change
in its condition, the annual rental also either increases or decreases,
correspondingly. This is again a factor which must weigh in fixing recurring
payment to be made under clause (a) of sub-section (2) of Section 8 of the Act.
Since
tea estates will have been generally owned or managed by companies or
partnership firms, the accounts of profits and losses of such estates are bound
to be maintained by them. When once such accounts become available, it would
not be difficult to ascertain the net income of a requisitioned tea estate for
any period of years, on their basis. However, if no evidence of net income of
the requisitioned tea estate or any other similar estate, on the basis of which
the net income of requisitioned tea estate could be ascertained, becomes
available, it becomes necessary to find out the market value of the
requisitioned tea estate taking into consideration the amount for which the
very requisitioned estate was purchased or the amount for which similar estates
were purchased. If the market value of the requisitioned tea estate cannot be
so ascertained, any appropriate well recognisedr method of valuation of
property could be adopted for fixing the market value of the requisitioned tea
estate. When once such market value of the requisitioned tea estate is fixed,
the next exercise would be to find out what percentage of such market value
could be regarded as its annual income taking into consideration the market
conditions prevailing during the relevant period of requisitioning and on the
basis of such annual net income to fix its annual rental and ultimately on the
basis of such annual rental to fix the recurring payment liable to be made good
under Section 8(2)(a) of the Act. It should, however, be reiterated that
recurring payment payable under Section 8(2)(a) of the Act for a requisitioned
tea estate could be determined not by fixing rental for each type of property
comprised in such estate separately but by arriving at a lump sum rental of
such estate. In other words, the recurring payment to be made for any period of
requisitioning under Section 8(2)(a) should be determined having regard to the
annual rental of the requisitioned tea estate as such, i.e., as a single unit
and with reference to the condition in which such tea estate could have, in the
normal course stood, during the period for which annual rental is fixed.
11.
What now remains for consideration is the component of compensation payable for
the requisitioned property under clause (b) of sub- 755 section (2) of Section
8 of the Act to the person interested for all or any of the matters enumerated
therein, which is again a principle of determination of compensation specified
in the Act. Such matters, as seen from the provision in clause (b) of
sub-section (2) of Section 8 of the Act are:
"(i)
pecuniary loss due to requisitioning;
(ii) expenses
on account of vacating the requisitioned premises;
(iii)
expenses on account of reoccupying the premises upon release from requisition;
and (iv) damages (other than normal wear and tear) caused to the property
during the period of requisition, including the expenses that may have to be
incurred for restoring the property to the condition in which it was at the
time of requisition."
12. As
regards the sum payable as compensation under sub- clause (i) to the person
interested, it is the sum of pecuniary loss caused due to requisitioning. It
would be the loss caused to the person in occupation of the requisitioned
property because of the need to suddenly give up possession of such
requisitioned property. The pecuniary loss may include certain other losses to
be suffered by the person dispossessed from the requisitioned property. For
instance, if the requisitioned property is a tea estate, the owner or occupier
may have to bear retrenchment compensation payable to laboureRsworking on the
estate, resulting in loss or may have to discard certain agricultural
implements or machinery or equipments used in cultivation of the requisitioned
tea estate, resulting in losses. Such kind of losses suffered by the person
dispossessed from the estate, if not remote in character, would be such
person's pecuniary loss and the same is required to be made good under this sub-clause.
The pecuniary loss envisaged in this sub-clause is like compensation payable in
case of property acquired under the Land Acquisition Act, as disturbance
compensation.
13.
Coming to the sums payable as compensation to the persons interested, in respect
of expenses arising on account of vacating the requisitioned premises and
expenses on account of reoccupying the premises upon release from
requisitioning, envisaged under sub-clauses (ii) and (iii) of clause (b) of
sub-section (2) of Section 8 of the Act, they are to be paid when claims are
made in that regard at the appropriate stage and supporting evidence adduced
there for. As there is no ambiguity as to the nature of expenses covered under
these clauses, it would not be difficult to fix the amount of compensation
payable under those heads. Then, the other sum of compensation payable under
sub-clause (iv) of clause (b) of sub-section (2) relates to damages (other than
normal wear and tear) caused to the property during the period of requisition including
the expenses that may have to be incurred for restoring the property to the
condition in which it was at the time of requisition. The nature of damages
envisaged under the sub- clauses, if is seen, these are damages which should be
ascertained in respect of requisitioned property after its derequisitioning and
not before. Hence, the question of fixing any damages under clause (iv) which
has to be paid by 756 way of compensation under sub-section (2) of Section 8 of
the Act, cannot arise until the property is derequisitioned.
14.
The principles of determination of compensation for a property requisitioned
under the Act, are the determinants specified in the Act, itself for the
purpose of fixing compensation for the property requisitioned there under. We
have already adverted to those principles or determinants and amplified them.
The provisions in the Act, when specifying the principles or determinants of
fixation of compensation, require that they should be applied in fixing the
compensation payable for the property requisitioned under the Act, no choice is
left. What are the methods which could be followed for fixing the compensation
payable for a property as a tea estate requisitioned under the Act in
accordance with the principles of determination specified therein, are also
indicated by us. Since the award made for the requisitioned tea estate by the
Arbitrator and the guidelines given by the High Court in its remand order for
being followed by the Arbitrator in fixing the compensation payable for the
requisitioned property under the Act are not made or given conforming to the
determinants or principles of determination of compensation for requisitioned
property amplified by us, based on the provisions of the Act, the award of the
Arbitrator as well as the (remand order) judgment of the High Court under
appeal, cannot be sustained. Hence, the award of the Arbitrator as well as the
judgment of the High Court are liable to be set aside.
15. In
the result, we allow this appeal, set aside the award of the Arbitrator and the
judgment of the High Court and remit the case to Government of Assam requiring
it to appoint an Arbitrator and place the case before him for determining
afresh the amount of compensation payable for the requisitioned tea estate,
after affording the parties opportunity to make claims or file objections
afresh, if they so desire, and to adduce evidence including that of experts, if
any, there for afresh and order payment of compensation less the amount of
compensation if any, already paid, in accordance with law and in consonance
with the guidelines laid down in this judgment. The Arbitrator to be appointed
shall dispose of the case with utmost expedition and at any rate within a
period of four months from the date of his appointment as Arbitrator. However,
in the circumstances of this appeal, there will be no order as to costs.
16.
The copy of this judgment shall be sent to the Chief Secretary, Government of
Assam to take immediate action in the matter of appointment of an Arbitrator
and to take such other steps as are permitted under the Requisitioning and
Acquisition of Immovable Property Act, 1952 and the Rules made there under.
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