Assistant Commissioner-Cum-Land Acquisition Officer, Bellary Vs. Sri S.T. Pompanna Setty  Insc 780 (17
Ruma Pal & C.K. Thakker (Arising out of Special Leave Petition (c) No. 16181 of 2003) Thakker, J. Delay condoned.
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
The said order was confirmed by the High Court which is challenged in the
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
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=,
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
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.