Holding

No deduction for cultivation expenses is required for fruit‑bearing trees, and the compensation is reduced to Rs 4.75 lakh (with interest) despite the higher multiplier applied.

Summary

The State appealed the award of compensation for 5.99 acres of land acquired for a tank restoration, where the land bore fruit‑bearing trees. The Reference Court had valued the land on a yield basis, multiplying the income from the trees by a 15‑year capitalization factor and awarded Rs 5 lakh (the claimant’s claim) without deducting any cultivation expenses. The State argued that, following the Supreme Court’s decision in State of Gujarat v. Rama Rana, a deduction for cultivation costs should be made and that the multiplier should not exceed ten years. The Supreme Court held that the case involved mature fruit trees, not agricultural crops, so no deduction for cultivation expenses was warranted. While acknowledging that a multiplier of ten is the norm, the Court accepted that a higher multiplier had been applied but reduced the compensation to Rs 4.75 lakh (plus interest) in view of the claimant’s limited claim. The appeal was therefore partially allowed.

Issues considered

Whether compensation for land with fruit‑bearing trees awarded on a yield basis should be reduced by a deduction for cultivation expenses.
Whether a multiplier of fifteen years is appropriate for capitalising the income from fruit‑bearing trees, or should the multiplier be limited to ten years.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 4(1)

Subjects

Land acquisitionCompensationYield basis valuationFruit bearing treesMultiplierCultivation expensesMarket valueSection 4(1)Section 18Supreme Court

Judgment

- t ASSTT. COMMISSIONER-CUM-LAND ACQUISITION OFFICER,
BELLARY
v.
SRI S.T. POMPANNA SETTY

DECEMBER 17, 2004
B
,. [RUMA PAL AND C.K. THAKKER, JJ.]

Land Acquisition Act, 1894 :

Land Acquisition-Compensation on yield basis-Determination of- C
Deduction towards cultivation cost adopting of appropriate multiplier-On
facts, there being fruit bearing trees on the land and finding of High Court
that land-owner would be entitled to more than the compensation claimed
by him, award of compensation party modified.

Respondent's land admeasuring
)
5.99 acres, was acquired under the D
Land Acquisition Act, 1894. The Land Acquisition Officer awarded
compensation at the rate of Rs. 2,728 per acre. The reference court
found that there were fruit bearing trees on the land and held that if
the income from fruit bearing trees was multiplied by capitalization of
15 years, the claimant would be entitled to more than rupees six lac. But
as the land-owner had claimed rupees five lac only, the reference court
E
held the said amount not to be unreasonable or excessive. The High
Court affirmed the order.

In the appeal filed by the State it was contended that in view of the
law laid down by the Supreme Court, the High Court erred in not F
deducting the amount towards expenses as also in confirming multiplier
of 15 as applied by the reference court.

Allowing the appeal in part, the Court

HELD : 1. The instant case relates to fruit bearing trees and not G
agriculture. The trees were sufficiently old and grown up and were giving
fruits. In the circumstances, there was not question of deduction of any
. amount towards expenses and the orders passed by the reference court
and the High Court cannot be said to be incorrect. Moreover, the High
Court also considered an important fact that the claimant would be H
1171
1172 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A entitled to much more amount on yield-basis but as he had claimed an
amount of rupees five lac, 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 illegl\lity. [1175-B-C-D].

State of Gujarat v. Rama Rana, [1987] 2 SCC 693, held inapplicable.
B
2. Nt>rmally 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. At
the same time, however, it cannot be overl~oked that the High Court
C considered the fact and observed that the claimant would be entitled to
an amount of more than rupees six lac. Since he had restricted his claim
to rupees five lac, he would not be entitled to an amount more than that.
In the facts and circumstances, therefore, ends of justice would be met
if claimant is allowed Rs. 4,75,000 along with interest as awarded to him
D by the reference court as well as by the High Court. [1176-E-F]

Krishi Utpadan Mandi Samiti v. Malik Sartaj Wali Khan and Anr.,
[2001) 10 SCC 660; Special Land Acquisition Officer v. Virupax Shankar ..
Nadagond, [1996) 6 SCC 124 and Special Land Acquisition Officer v.
Veerabhadarappa Special Land Acquisition Officer v. Veerabhadarappa,
E 119841 2 sec 120, relied on.

Smt. Tribeni Devi v. Collector of Ranchi, (1972) 1 SCC 48, referred
to.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 8245 of
F 2004.

From the Judgment and Order dated 14.11.2002 of the Karnataka High r
Court in M.F.A. No. 270 of 1996 (LAC).

Sanjay R. Hegde for the Appellant.
G
Naresh Kaushik, Ms. Shilpa Chohan, S.C. Gupta and Mrs. Lalita
Kaushik for the Respondent.

The Judgment of the Court was delivered by

H THAKKER, J. : Delay condoned.
ASST. COMMR.-CUl\1-LAi\D ACQUISIT!Oi\ OFFICER. BELLARY 1·. SRI T.P. SETTY [THAKKER. J.] J J 73

Leave granted. A

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 fiied
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.
B

The facts in brief are that a piece of land bearing Survey No. 33517,
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
c
7, 1982. After completion of the proceedings under the Act and after
observing all formalities, the Land Acquisition Officer awarded compensa-
tion 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 D
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 Ref-
erence 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
E
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 I 0, Tamarind 60,
Coconut I, Sandal wood I, Neerala I, Hatti I, Kanaga I 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 compensa- F
tion. 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
G
was thus allowed and the claimant was held entitled to Rs. five lacs along
with interest as mentioned in the order. The said order was confirmed by
the High Court which is challenged in the present appeal.

We have heard learned counsel for the parties. The learned counsel H
1174 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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 capitalizinr 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
B
and the order passed by the Land Acquisition Officer deserves to be re- •1
stored.

Learned counsel for the claimant, on the other hand, submitted that
having considered the rival contentions of the parties and keeping in view
C 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
D 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 ofGujarat v. Rama Rana, [ 1987]
2 SCC 693. In that case compensation was awarded to the claimant on yield
E 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 I/3rd towards cultivation expenses and awarded compensation on
that basis. The High Court dismissed the appeal and confirmed the order.
F The State approached this Court. Allowing the appeal and reducing the
amount of compensation, this Court observed that it is common knowledge
r
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 I/3rd, in the circumstances, was im-
G proper 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,
H the Reference Court granted compensation to the claimant which was con-
ASST. COMMR.-ct:c.t-LA:\D ACQlclSITIO:\ OFFICER. BELLARY '"SRI T.P. SETTY [TI-IAKKER, J.] 1175

firmed by the High Court. He, therefore, submitted that the award deserves A
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 B
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 ofany amount towards expenses and the orders passed
by the Reference Court and by the High Court cannot be said to be incorrect.
c
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 claim-
ant would be entitled to much more amount on yield-basis but as he had D
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 con-
tention, therefore, in the facts of the case, is rejected.

Let us now consider the second point. This Court in Special Land E
Acquisition Officer, Bangalore v. 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 (I) opinion of experts, (2) the price paid within a reasonable time in bona F
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 G
Court reiterated the methods of valuation and also stated that those methods
do not preclude the Court from taking into consideration other circum-
stances, 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
H
1176 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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 haye reliable material
from which such valuation can be accurately determined.

In Special Land Acquisition, Davangere v. P. Veerabhadarappa &
B 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 121h, the com-
putation was made on that basis. Similarly, in Special Land Acquisition
Officer v. Virupax Shankar Nadagouda, [1996] 6 SCC 124, relying on P.
C Veerabhadarappa, this Court determined compensation on the basis of 10
years' multiplier. Again, in Krishi Utpadan Mandi Samiti v. Malik Sartaj
Wali Khan and Another, [2001] 10 SCC 660, this Court held thnt compu-
tation of compensation for determination of market value may be carried
out on yield basis and multiplier of 10 should be applied. Since multiplier
D of 20 was applied by the High Court, it was set aside by this Court by
reducing th'! amount of compensation.

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
E 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 car.not 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
F 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.

G 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.

H R.P. Appeal partialy allowed.